In Depth: Skilled Nursing Facilities

In 2007, Medicare paid $21 billion for approximately 2.5 million skilled nursing facility (SNF) admissions.

Eligibility for SNF Coverage
Scope and Duration of Coverage
Coverage and Copayments
Provider Payments: Payment to SNFs

Eligibility for SNF Coverage

Medicare covers skilled nursing care when an individual meets the following criteria:

• The patient has had a hospital stay of at least three days, not including the day of discharge, and the patient is admitted to a SNF within a short time following hospital discharge, generally no longer than 30 days.
  
  
• The admission to the SNF is related to the hospitalization, either due to the injury or illness that led to the hospitalization or to a condition that arose during the hospital stay. Medicare will also cover care for conditions that arise during the SNF stay.
  
  
• A physician certifies that the patient needs skilled nursing care.
  
  
• The patient needs skilled nursing or skilled rehabilitation services on a daily basis (this can be satisfied when services are provided five times a week). 
  
  
• Care is provided in a Medicare-approved SNF.
  
  
• The patient has days left in his or her skilled nursing facility “benefit period” (see “Scope and Duration of Coverage,” below).

Scope and Duration of Coverage

• Medicare covers 100 days of SNF care per “benefit period.” A benefit period begins when a patient starts using his or her skilled nursing facility benefit. A benefit period ends when a patient has not been in a hospital or SNF for 60 consecutive days or, if the patient has remained in the facility, when the patient has not received skilled nursing care for 60 days. There is no limit on benefit periods in a person’s lifetime.
  
  If a patient is discharged from a SNF and needs to be readmitted, whether a hospital readmission is required for continued Medicare coverage depends on how long the patient has been out of the facility.
   
  • If a patient is discharged from a SNF and readmitted within fewer than 30 days, care will be covered under the same benefit period as the initial SNF admission.
    
    
  • If a patient has had a break in SNF care of more than 30 days but fewer than 60 days, Medicare will not cover additional SNF care without a new hospital stay of three days. The stay does not have to be for the same condition. SNF days following the hospitalization will be considered part of the same benefit period as the initial SNF admission.
    
    
  • After a break in SNF care of 60 days or more, a new 100 day benefit period begins. A hospitalization of at least three days will be required for Medicare to cover SNF services.
      
• Coverage includes services of registered nurses; physical, occupational, or speech therapy; social services; medications; needed supplies; and bed and board in a licensed skilled nursing facility.
  
  
• Coverage is based on costs of a semi-private room.

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Coverage and Copayments

There is no copayment for the first 20 days of care in a skilled nursing facility. From days 21 through 100, the copayment is $139 per day (2010 copayment rates). After 100 days, there is no coverage for skilled nursing care, and patients must pay all costs.

Provider Payments: Payment to SNFs

Medicare pays SNFs using a prospective payment system. That means that they are paid a predetermined rate for each case. Payment is provided for each day of care.

Payment is calculated based on a SNF base rate. There is a SNF base rate for urban and rural facilities. This was developed based on historic facility operating costs and is adjusted annually.

For each SNF that Medicare covers, the base rate is adjusted for geographic variations in wages and non-labor costs. The per diem payment for each admission is then adjusted based on the estimated costs of resources the patient will use. Each patient is assigned to a “resource utilization group” based on his or her medial condition, therapy needs, and need for assistance with activities of daily living (like bathing and dressing). Payment is adjusted using a value associated with each utilization group.

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