Skilled nursing facilities bill under more payment systems at once than almost any other provider type. A single building can have short-stay rehab patients on Medicare Part A, long-term residents on Medicaid, Medicare Advantage members under plan-specific authorizations, and Part B therapy running alongside all of it. Each payer source has its own claim form rules, assessment requirements, and timelines.
Most SNF revenue problems trace back to the MDS rather than the claim itself. Under Medicare’s Patient Driven Payment Model, the assessment determines the payment group, so a late assessment or a weak primary diagnosis lowers reimbursement before anyone opens the billing software.
Key Takeaways
- Medicare Part A SNF payment comes from the MDS, so assessment timing and diagnosis coding set the rate for the whole stay.
- Under consolidated billing, the SNF pays for most outside labs, therapy, and supplies during a Part A stay, and those vendor invoices need tracking.
- Medicaid, Medicare Advantage, and Part B each follow their own rules for the same resident at different points in a stay.
- A change of ownership or a missed revalidation can hold Medicare payments for the entire facility.
How SNF Billing Works
SNF claims go out on the UB-04 (837I), with the type of bill telling the payer which benefit applies: 21x for a Part A inpatient stay, 22x for Part B services to an inpatient, and 23x for outpatient services. Getting the bill type wrong sends a correctly coded claim to the wrong benefit.
Medicare Part A and PDPM
Medicare covers up to 100 SNF days per benefit period after a qualifying inpatient hospital stay of at least three consecutive days. Observation days don’t count toward the three. Days 1 through 20 carry no coinsurance, and days 21 through 100 carry a daily coinsurance amount the resident or a secondary payer owes.
PDPM classifies each patient across five case-mix components: physical therapy, occupational therapy, speech-language pathology, nursing, and non-therapy ancillaries. Each component has its own case-mix index, and the PT, OT, and NTA rates change over the course of the stay under PDPM’s variable per diem adjustment. The 5-day assessment sets the HIPPS code reported on the claim, and its assessment reference date has to fall within the first eight days of the stay. A late assessment means the days before it bill at the default rate, which is the lowest rate available.
The primary diagnosis on the MDS maps to a PDPM clinical category. Some ICD-10 codes don’t map to any category and will return the assessment to the facility, so diagnosis coding has to be settled before the 5-day assessment closes.
Consolidated billing
During a Part A stay, the SNF is responsible for nearly everything the resident receives, including outside lab work, therapy, most drugs, and supplies. The outside vendor bills the SNF, not Medicare. Physician professional services, dialysis, and certain chemotherapy drugs are among the exclusions that still bill separately. When a vendor bills Medicare directly for a service that falls under consolidated billing, the claim gets rejected or recouped, and the SNF ends up sorting it out.
Part B services for long-term residents
Residents who aren’t in a covered Part A stay can still receive Part B therapy. Those claims follow outpatient therapy rules, including the KX modifier once a patient passes the annual therapy threshold and the multiple procedure payment reduction when several therapy services happen on the same day.
Medicaid and Medicare Advantage
Long-term custodial residents are usually covered by Medicaid, which pays a per diem rate after subtracting the resident’s patient liability amount. Many state Medicaid programs have moved, or are moving, from RUG-IV case-mix systems to PDPM-based methods, so MDS accuracy increasingly drives Medicaid rates as well as Medicare. MACPAC’s nursing facility overview covers how state payment approaches differ.
Medicare Advantage plans set their own rules. Most require prior authorization before admission and concurrent reviews during the stay. Many also waive the three-day hospital stay requirement, and each plan pays on its own contracted levels rather than PDPM.
Where SNF Claims Go Wrong
The most common problems show up before the claim is built. A Medicare Advantage admission without an authorization on file, or a continued stay past the last approved review date, leads to a denial no coding can fix. Eligibility and benefits verification at admission catches plan changes, coordination of benefits problems, and remaining benefit days.
Medicaid pending applications are the other large source of aging A/R. A resident’s application can sit for months while the facility provides care. Collecting the documents the state asks for and following up on the application keeps that balance from becoming bad debt.
On the Medicare side, the most frequent issues are late assessments, primary diagnoses that don’t support the clinical category, and consolidated billing services that a vendor billed to Medicare directly. Each one is cheaper to catch in a pre-billing review than to correct after payment.
Physician and NP Billing in Nursing Facilities
Physicians and nurse practitioners who round in the facility bill their own professional services separately from the SNF’s facility claim. Initial nursing facility visits bill as 99304 to 99306, subsequent visits as 99307 to 99310, and discharge management as 99315 to 99316. Place of service 31 applies to a skilled nursing facility and 32 to a nursing facility, and payers check that the place of service matches the resident’s status. Our guide to which CPT codes are used in nursing facility billing walks through each code’s documentation requirements.
Resident Billing and Collections
Resident balances come from several places: Part A coinsurance after day 20, Medicaid patient liability, private-pay days, and amounts left after a Medicare Advantage plan pays. Families usually don’t know what they’ll owe until the first statement arrives.
Clear statements that separate each payer’s portion, payment plans set up early in the stay, and steady follow-up resolve most of these balances. Where a secondary policy or Medicaid crossover should cover the coinsurance, billing it promptly keeps the balance from landing on the family at all.
SNF Credentialing and Enrollment
Facility enrollment and revalidation
SNFs enroll in Medicare with the CMS-855A and revalidate every five years. A missed revalidation deadline can deactivate the facility’s billing privileges, which stops payment on every Medicare claim in the building. Medicaid enrollment runs separately through each state, on its own revalidation schedule.
Changes of ownership
A change of ownership requires a CMS-855A filing within 30 days, and Medicare payments can be held until the change is processed. Planning the enrollment filings before the transaction closes protects cash flow during the transition. Medicaid and every Medicare Advantage contract need to be updated as well.
Practitioners who treat residents
Physicians, NPs, and therapists who treat residents need their own Medicare enrollment and, when they bill under a group, a reassignment of benefits. Each also needs to be credentialed with the Medicare Advantage plans and Medicaid managed care plans the residents carry. A practitioner who isn’t enrolled with a resident’s plan can’t be paid for that visit, which is why you can’t bill what you can’t credential.
Skilled Nursing Facility Billing FAQs
Do observation days count toward the three-day qualifying stay?
No. Only inpatient days count, and the day of discharge isn’t included. Many Medicare Advantage plans waive the three-day requirement, so check the resident’s plan before assuming a stay isn’t covered.
What happens if the 5-day PPS assessment is late?
The days before the assessment reference date bill at the default rate, which is the lowest PDPM rate. Payment returns to the assessed rate starting on the assessment reference date.
Who pays for outside lab work during a Part A stay?
The SNF does. Under consolidated billing, the lab bills the facility, not Medicare, except for the services specifically excluded from consolidated billing.
How often does a SNF revalidate its Medicare enrollment?
Every five years. CMS posts revalidation due dates in advance, and the facility should file before the deadline to avoid a deactivation that stops Medicare payments.
Why Skilled Nursing Facilities Choose Medwave for Billing & Credentialing
Medwave handles SNF billing, credentialing, and payer contracting together, so an enrollment problem that’s holding claims gets fixed by the same team that’s watching the A/R. We review assessments, diagnoses, and consolidated billing charges before claims go out, which is how we hold a 98% clean claim rate.
For facility enrollment, revalidation, and practitioner credentialing, our average turnaround is 60 days. Routine work like eligibility checks and claim status follow-up runs through robotic process automation, which leaves our billing staff more time for Medicaid pending accounts, Medicare Advantage authorizations, and denials.
Contact Medwave below to see how we can support your facility.