Regulations Issued for Skilled Nursing Facilities and Hospitals

August 21, 2013

The Centers for Medicare & Medicaid Services (CMS) has released Medicare regulations, effective October 1, 2013, that govern skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), acute care hospitals, and long-term care hospitals (LTCHs).

Skilled Nursing Facilities

For skilled nursing facilities, the revision that significantly affects speech-language pathologists is the addition of an item to the Minimum Data Set (MDS) that requires identification of the distinct calendar day of therapy service. This will ensure accuracy in assigning the patient's Resource Utilization Group (RUG) level.

Aggregate payments will increase by about 1.3% due to several factors: an inflationary increase, a forecast error associated with the inflation adjustment, and a multifactor productivity reduction of 0.5%.

Inpatient Rehabilitation Facilities

Inpatient rehabilitation facilities will see minimal changes affecting speech-language pathology services. The list of codes that are used to determine compliance under the "60 percent rule"—diagnoses for which at least 60% of discharged patients must be assigned—has been modified to remove certain diagnosis codes related to orthopedic, viral, and burns. Preadmission screening for Medicare Part A patients must be reviewed and approved by a rehabilitation physician prior to the patient's admission. The IRF-Patient Assessment Instrument (IRF-PAI) has also been revised for the first time since its implementation in 2002. Additions effective October 1, 2013, include identification of the patient's pre-hospital settings and space for 15 additional ICD comorbid conditions. Entries regarding swallowing and communication status are unchanged.

Medicare payments to IRFs will increase by 2.3%.

Acute Care Hospitals

If a Part A stay is retroactively denied, payment of reasonable and necessary therapy or other services can now be covered in acute care hospitals. For further information, see ASHA Advocacy Preserves the Ability for Rebilling of Therapy Services. Medicare base payments for acute hospitals will increase by 0.7% in fiscal year 2014. This represents inflationary adjustments and a temporary reduction because of overpayment from past years as a result of a new patient classification system that better recognizes severity of illness. Penalties for readmission within 30 days will increase from 1% to 2% but affect only cardiac and pneumonia patients.

Long-Term Care Hospitals (LTCH)

A reduction of .013% payment applies in a transition to the standard Federal rate, but there is a 2% penalty to that reduction if the LTCH fails to submit quality reporting measures.


Medicare annually releases rules and rates for the Medicare Part A services provided in skilled nursing facilities (SNFs), IRFs, acute care hospitals, and long-term care hospitals (LTCHs) that are paid under Prospective Payment Systems (PPS). Acute care hospitals and LTCHs fall under the inpatient prospective payment system (IPPS), which uses diagnosis-related groups (DRGs) as the basis for payment. Each DRG has a payment weight assigned based on the average resources used to treat Medicare patients in that DRG. The IRF PPS collects information from the IRF-PAI to classify patients into distinct groups based on clinical characteristics and expected resource needs. Separate payments are calculated for each group, including the application of case-mix and facility level adjustments. The latest figures show there are 435 LTCHs, and of the 1,180 IRFs, 230 are freestanding. In SNFs, the PPS payment rates are adjusted for case-mix and rehabilitation intensity or RUGs that cover all costs of furnishing covered SNF services (i.e., routine, ancillary, and capital-related costs). The Medicare Payment Advisory Commission has estimated SNF Medicare profit margins of 22% to 24% (2011 data).


For more information, contact a member of ASHA's health care economics and advocacy team at [email protected].

ASHA Corporate Partners