SNFs Under Scrutiny

Some of you may have noticed that I am not always very nice to some insurance companies. And deservedly so. But I also point out the failings of the provider community when they come to light. And a recent study from researchers in Texas and New York took a close look at skilled nursing facility (SNF) billing. They titled their article “Overbilling and Killing? An Examination of the Skilled Nursing Industry.”

First, though, I want to make reference to data published two years ago looking at the day of discharge from SNFs for Medicare patients.

Most of you know that Medicare Part A pays for the first 20 days in a SNF at 100 percent. As you can see, the probability of discharge on day 20, especially for those patients without a supplement, was significantly higher than other days. Is this coincidence? It’s hard to imagine.

Now, this recent study, just published in October, looked at SNF billing patterns before and after the implementation of the Patient-Driven Payment Model (PDPM) in 2019. Prior to this, SNFs were paid based on the amount of therapy provided to patients, but PDPM looks at nursing needs, therapy needs, and non-therapy ancillary services, which are all based on the patient’s diagnoses. And the reporting of those diagnoses that raised the payment rates increased markedly as PDPM started.

The authors note that the data shows that systems with higher levels of excess rehab during the pre-PDPM era subsequently experience more intense billing under the PDPM era. Not a good look for the SNFs, is it?

In another SNF topic, I suspect all of you have had a patient refused at a SNF because of excess medication costs. Now, in this case, the SNFs have a reasonably valid reason for their actions. The consolidated billing system the Centers for Medicare & Medicaid Services (CMS) has in place for Part A SNF stays does not account for the ever-increasing costs of many drugs.

Well, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) published a study last month looking at this issue from a unique viewpoint; they looked for Medicare Part D expenditures for medications when the patient was in a Part A SNF stay. In other words, that suggested that the patient’s medication, instead of being provided by the SNF, was being filled at a pharmacy and then brought to the SNF for the patient to take, or the pharmacy that supplies medications to the SNF was billing the patient’s Part D plan, rather than the SNF.

The most important part of this report, which I hope opens some eyes at CMS, is a case they describe. Let me quote it directly: “a SNF accepted admission of a Part D enrollee from a hospital only when the family assured the SNF that it would provide to the facility the drug the enrollee was taking. The SNF obtained from the family a drug used for the treatment of lung cancer and administered 27 tablets, which cost $15,494.

According to the SNF, the cost of this drug was more than Medicare paid the SNF for the entire stay, and this was the only way they could provide the needed care to the patient to allow them to successfully return home.”

Let’s hope CMS realizes it is time to reform the consolidated billing system.

Finally, the 2025 Inpatient-Only list is out, and there are three additions and one removal. You can find the list and changes on my web page: ronaldhirsch.com.