ScottR. Talaga
Analyst in Health Care Financing
AMedicare skilled nursing facility (SNF) is an institution, or distinct part ofan institution (e.g., building, floor, wing), that provides post-acuteskilled nursing care and/or skilled rehabilitation services, has in effecta written agreement to transfer patients between one or more hospitals and theSNF, and is certified by Medicare. In general, “skilled” nursing andrehabilitative care are services ordered by a physician that require theskills of professional personnel (i.e., registered nurse, physicaltherapist) and are provided under the supervision of such personnel.
The Medicare SNF benefit has drawn attention due to the rapid increase in SNFexpenditures. In 2010, Medicare Parts A and B payments to SNF providerstotaled $27.4 billion, having grown at an average annual rate of 9.9%since 2000. SNF payment reductions have been recommended by variousdeficit reduction groups. Some of the recommendations have included reducingthe SNF reimbursement rate and reducing or eliminating Medicare bad debtreimbursement.
Given the beneficiary has met certain requirements, a Medicare beneficiary isentitled to 100 days of SNF care for each Medicare-covered SNF stay. To beeligible for SNF coverage, a Medicare beneficiary must have been aninpatient of a hospital for at least 3 consecutive calendar days and transferredto a participating SNF usually within 30 days after discharge from thehospital. Beneficiaries must also receive treatment at the SNF for acondition they were receiving treatment for during their qualifyinghospital stay (or for an additional condition that arose while in theSNF). For the first 20 days of SNF coverage, Medicare beneficiaries have nocopayment. Medicare beneficiaries have a daily SNF copayment for the 21st throughthe 100th day indexed annually at one-eighth (12.5 percent) of the currentPart A deductible. For 2012, the daily copayment is $144.50.
SNFs are reimbursed under a prospective payment system (PPS), which began onJuly 1, 1998. The PPS reimbursement is a per diem “per day” amount thatcovers most costs of furnishing SNF services to Medicare beneficiaries.With the exception of certain high-cost ancillary services, the SNF PPSbundles covered-SNF services into a single per diem reimbursement rather than Medicarepaying for each service individually.
This report describes the Medicare SNF benefit and the reimbursement system forSNF services. In addition, this report describes recent issues, as well ascongressional and other proposals designed to slow the growth of MedicareSNF expenditures.
Date of Report: August 8, 2012
Number of Pages: 19
Order Number: R42401
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