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Skilled Nursing Facility Billing for Changes in Therapy: Improvements are Needed


In fiscal years 2011 and 2012, CMS implemented new policies to address concerns that billing by skilled nursing facilities (SNFs) did not adequately reflect changes in the amount of therapy that a beneficiary receives during a SNF stay. Specifically, CMS introduced new types of assessments that capture changes in a beneficiary's therapy more quickly. This report provides information about SNF billing for changes in therapy under these new policies.


We used SNF claims to analyze billing for changes in therapy from fiscal years 2010 through 2013. We also determined whether, under the new policies, SNFs used assessments differently when decreasing therapy than when increasing it. Lastly, we determined the extent to which SNFs used the new assessments incorrectly.


CMS introduced three types of therapy assessments to more quickly capture when beneficiaries start therapy, end therapy, and decrease or increase therapy. However, we found that SNF billing for changes in therapy increased only slightly. In addition, SNFs used assessments very differently when decreasing therapy than when increasing it, costing Medicare $143 million over 2 years. Further, SNFs frequently used the new start of therapy assessment incorrectly. For example, SNFs often used a start-of-therapy assessment but billed for no therapy during the stay.


CMS's new policies are complex and create challenges for effective oversight. To better ensure that beneficiaries are receiving the amount of therapy they need, and that Medicare is paying appropriately, CMS should accelerate its efforts to implement a new method for paying for therapy. A new payment method may eliminate the need for the new assessments by basing payments on beneficiary characteristics rather than on the amount of therapy provided. In the meantime, CMS should mitigate the problems with the new therapy assessments by (1) reducing the financial incentive for SNFs to use assessments differently when decreasing and increasing therapy and (2) strengthening the oversight of SNF billing for changes in therapy. CMS concurred with both of our recommendations.