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Skilled Nursing Facility Reimbursement

On Oct. 1, 2019, the Centers for Medicare and Medicaid Services (CMS) replaced its skilled nursing facility (SNF) Resource Utilization Groups (RUG)-IV classification system with a new case-mix classification model called the Patient-Driven Payment Model (PDPM). Under PDPM, there are six payment components. Five are case-mix adjusted to allow for variances in diagnoses, severity of illness and other variables associated with the probability of improvement with treatment:

  • Physical therapy (PT) – includes a variable per diem factor
  • Occupational therapy (OT) – includes a variable per diem factor
  • Speech language pathology (SLP)
  • Nursing
  • Non-therapy ancillary (NTA) services – includes a variable per diem factor

Additionally, there is a non–case-mix adjusted component to cover utilization of SNF resources that do not vary according to patient characteristics. 

The payment for each component is calculated as follows:

Patient’s case-mix group X wage-adjusted component base payment rate X day in variable per diem adjustment schedule, when applicable  

The payments for each component are then added together along with the non–case-mix component payment rate. This creates the patient's total SNF PPS per diem rate under the PDPM:   

PT + OT + SLP + Nursing + NTA + Non–Case-Mix = SNF PPS per diem rate

Visit www.cms.gov for fact sheets, FAQs, training presentations, and additional PDPM resources.

Interrupted stay billing

TRICARE has adopted Medicare’s interrupted stay policy for SNF admissions. An interrupted SNF stay is one in where a patient is discharged from an SNF and subsequently readmitted to the same SNF within three days. 

The three-day interruption or leave of absence window begins on the first non-covered day following the SNF stay and ends at 11:59 p.m. on the third consecutive non-covered day. Follow Medicare guidelines when billing:

  • Use revenue code 018x and occurrence span code 74,
  • Indicate the interruption “from” and “through” dates and 
  • Put the number of non-covered days as units.

The interrupted stay policy does not apply if:

  • The patient is readmitted to the same SNF outside the three-day interruption window.
  • The patient is admitted to a different SNF (regardless of the length of time between stays).

See our SNF Care page for benefit information and approval requirements.