Skilled Nursing Facility (SNF) Prospective Payment System (PPS)

10 - Skilled Nursing Facility (SNF) Prospective Payment System (PPS) and Consolidated Billing Overview (Rev.4163, Issued: 11-02-18, Effective: 12-04-18, Implementation: 12-04-18) All SNF Part A inpatient services are paid under a prospective payment system (PPS). Under SNF PPS, beneficiaries must meet the regular eligibility requirements for a SNF stay. That is, the beneficiary must have been an inpatient of a hospital for a medically necessary stay of at least three consecutive calendar days. In addition, the beneficiary must have been transferred to a participating SNF within 30 days after discharge from the hospital, unless the patient’s condition makes it medically inappropriate to begin an active course of treatment in an SNF within 30 days after hospital discharge, and it is medically predictable at the time of the hospital discharge that the beneficiary will require covered care within a predetermined time period. (See the Medicare Benefit Policy Manual, Chapter 8, “Coverage of Extended Care Services Under Hospital Insurance,” §20.2, for further information on the 30-day transfer requirement and exception.) To be covered, the extended care services must be needed for a condition which was treated during the patient’s qualifying hospital stay, or for a condition which arose while in the SNF for treatment of a condition for which the beneficiary was previously treated in a hospital. Also under SNF PPS all Medicare covered Part A services that are considered within the scope or capability of SNFs are considered paid in the PPS rate. In some cases this means that the SNF must obtain some services that it does not provide directly. Neither the SNF nor another provider or practitioner may bill the program for the services under Part B, except for services specifically excluded from PPS payment and associated consolidated billing requirements. Any DME or oxygen furnished to inpatients in a covered Part A stay is included in the SNF PPS rate. The definition of DME in §1861(n) of the Social Security Act (the Act) provides that DME is covered by Part B only when intended for use in the home, which explicitly does not include a SNF. This definition applies to oxygen also. (See the Medicare Benefit Policy Manual, Chapter 15, “Covered Medical and Other Health Service,” §110.) Most prosthetics and all orthotic devices are included in the Part A PPS rate. An exception involves certain designated customized prosthetic devices that are specifically identified as being outside the rate (see the regulations at 42 CFR 411.15(p)(2)(xvi) and Major Category III.D of the SNF consolidated billing editing). Those customized prosthetic devices that are considered outside the PPS rate are billed by the qualified outside entity that furnished the service. That entity bills its normal MAC. Services that are not considered to be furnished within SNF PPS are identified in sections §§20.1 - 20.4. These may be billed separately under Part B. Some services must be billed by the SNF. (This is referred to as “consolidated billing.”) Some services must be billed by the rendering provider (SNF or otherwise). These are discussed further in §§20.1 - 20.4.