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Medicare Skilled Nursing Facility Prospective Payment System

Audiology and Speech-Language Pathology Services

Skilled nursing facilities (SNFs) that provide services to Medicare beneficiaries are paid under a prospective payment system (PPS) through Part A of the Medicare benefit. Audiology and speech-language pathology services are bundled into the PPS payment and are the SNF’s responsibility to provide. If a patient needs speech-language pathology services based on his or her clinical characteristics, Medicare requires SNFs to provide them regardless of whether the services are covered under Part A or Part B of the program. However, SNFs may choose to provide audiology services under Part B. As such, it's common for audiologists to contract with SNFs and independently bill for their services to Part B (Medicare Physician Fee Schedule) as a private practice provider.  

On this page:

Reasonable and Necessary Part A and Part B Services

SNF services must be reasonable and necessary for Medicare coverage. According to the Minimum Data Set (MDS) Resident Assessment Instrument (RAI) Manual, to be considered medically reasonable and necessary, services must be

  • directly and specifically related to an active written treatment plan that is approved by the physician after any needed consultation with the qualified therapist and is based on an initial evaluation performed by a qualified therapist prior to the start of therapy services in the facility;
  • of a level of complexity and sophistication, or the condition of the resident must be of a nature that requires the judgment, knowledge, and skills of a therapist;
  • provided with the expectation, based on the assessment of the resident's restoration potential made by the physician, that the condition of the patient will improve materially in a reasonable and generally predictable period of time, or the services must be necessary for the establishment of a safe and effective maintenance program;
  • considered accepted standards of medical practice; and
  • reasonable and necessary for the treatment of the resident's condition; this includes the requirement that the amount, frequency, and duration of the services must be reasonable and they must be furnished by qualified personnel.

Although the RAI Manual provides no further detail about what constitutes "reasonable and necessary," it is addressed further in the Medicare Outpatient Benefit Policy Manual [PDF] (see chapter 15, section 220.2). The plan of care must identify goals that would benefit the patient (or train caregivers) functionally. The frequency and duration of services must also be justifiable according to the documented severity of the patient's condition, responsiveness to treatment, and demonstrated change in function. (See also: Documentation of Skilled Versus Unskilled Care)

Consolidated Billing

SNFs are subject to consolidated billing. This means that the SNF must provide and bill for all Part A and Part B services the patient needs. CMS established consolidated billing as a mechanism to prevent double billing for services. For example, if the SNF does not have a speech-language pathologist (SLP) on staff, they must contract with an SLP to provide the necessary services. In this scenario, the agency would bill Medicare for the SLP’s services and pay the SLP a negotiated rate. CMS does not dictate the amount a contract employee is paid. Additional information on consolidated billing is found in Chapter 6 of the Medicare Claims Processing Manual [PDF].

Medicare Part A Payment Policies

SNF PPS policies are reviewed and updated annually and are effective for the federal fiscal year (October 1–September 31). The Centers for Medicare & Medicaid Services (CMS) outlines regulations and guidance related to the SNF PPS in the following manuals:

Additional policies may be outlined in local coverage determinations (LCDs) from Medicare Administrative Contractors (MACs)Clinicians should become familiar with relevant manuals and LCDs rather than relying on interpretations from others, including their employers.

Qualifying for the Part A Stay

The Part A SNF benefit covers up to 100 days of post-acute care. To qualify for admission to the SNF under the Part A benefit, the patient must have had a prior stay of at least three days in an acute care hospital. The services provided in the SNF must relate directly to the prior hospitalization or must be necessary to treat a condition that arose after admission to the SNF.

Additional coverage criteria include:

  • The patient must be transferred to the SNF within 30 days of discharge from the three-day stay.
  • The patient requires daily skilled care―seven days a week―that can only be provided on an inpatient basis.

The SNF is responsible for providing all of the services a patient needs (See also: Consolidated Billing).

The Minimum Data Set (MDS)

The MDS assessment tool is a comprehensive summary of the patient’s clinical needs. It is typically completed by a nurse in consultation with a multidisciplinary care team, including SLPs. However, other professionals may sometimes score specialty areas. For SLPs, those areas are cognitive patterns, communication/hearing patterns, and oral/nutritional status. Time spent on MDS assessment does not count toward therapy minutes. A full description of how to score the MDS 3.0 is on CMS' website.

The MDS places a patient into a diagnostic category and the SNF receives a lump sum payment based on that category for all the services the patient requires. The services are billed through the SNF, rather than the individual clinician(s) who rendered the services. Unlike Part B, Current Procedural Terminology (CPT®) codes are not used for billing purposes under the SNF PPS. However, they may be used to track services for administrative and productivity purposes. Each facility has its own criteria for tracking services and determining productivity, but these rules are separate from payment policy. (See also: Calculating Productivity)

Evaluation Time Does Not Count as Minutes Reported on the MDS
  • Time spent on evaluation should not be reported on the MDS. This is because the old PPS for Part A already accounted for evaluation minutes and only counted time clinicians spent providing therapy.
  • Although minutes of therapy no longer drive SNF payments, CMS still requires SNFs to report the minutes of therapy provided to prevent stinting on care.
  • Instructions from administration or staff to limit evaluation and/or treatment time may be an indirect way of maximizing payments. If clinically appropriate, treatment can be performed on the same day as an evaluation and counted toward the therapy minutes.
  • If the facility counts productivity using only the treatment minutes recorded in the MDS, the SLP's productivity may appear reduced because evaluation time is not counted.
Considerations for Performing Evaluations in SNFs under Part A
  • Clinicians are ethically bound to deliver services that they believe are appropriate for a patient based on their independent clinical judgment.
  • An inflexible rule governing clinical practice (e.g., "evaluations must never exceed 15 minutes") is inappropriate. Clinicians should conduct an evaluation that provides the information necessary to make a diagnosis and develop a plan of care.
  • It should be up to the discretion of the SLP as to what comprises evaluation versus treatment. Valuable information may be gathered through dynamic observation of the patient performing therapeutic activities in addition to administration of standardized or formal testing.

The Patient-Driven Payment Model (PDPM)

The Medicare Patient-Driven Payment Model (PDPM) is a major overhaul to the SNF PPS. It is designed to address concerns that a payment system based on the volume of services provided creates inappropriate financial incentives. This revised payment methodology is driven by the patient’s clinical characteristics rather than the number of therapy minutes provided. Other significant elements of the PDPM include the use of Section O of the MDS to track the delivery of therapy services and a limitation on the use of group and concurrent therapy [ZIP] combined at 25% of all therapy provided to the patient, per discipline. PDPM was implemented on October 1, 2019.

Speech-Language Pathology Case-Mix Factors

Under PDPM, payment for patients with speech-language pathology needs will be determined by the presence of the following five case-mix factors:

  1. the patient’s primary diagnosis,
  2. the presence of one or more of twelve comorbidities (aphasia; CVA, TIA, or stroke; hemiplegia or hemiparesis; TBI; tracheostomy care while a resident; ventilator or respirator while a resident; laryngeal cancer; apraxia; dysphagia; ALS; oral cancers; speech and language deficits) 
  3. a mechanically altered diet,
  4. a swallowing disorder, and/or
  5. a cognitive impairment.

For example, a SNF resident who meets the criteria for all five factors would get a higher speech-language pathology payment than a resident with only one or two of these case-mix factors. 

See: CMS Fact Sheet on PDPM Patient Classification [ZIP]

Speech-Language Pathology Diagnosis Codes

Diagnosis codes (International Classification of Diseases or ICD-10) have two distinct roles under PDPM. They are used to identify the primary diagnosis and secondary or treating diagnosis(es).

Primary Diagnosis: SNFs assign an ICD-10 code to report the patient’s primary diagnosis, which is the reason for the SNF stay. The primary diagnosis is coded within Section I0200B and maps to a clinical category. Speech-language pathology related primary diagnoses that map to the acute neurologic clinical category will factor into the speech-language pathology payment. Currently, the primary diagnoses that map to the acute neurologic clinical category and trigger a speech-language pathology payment are limited to speech, language, and swallowing disorders due to cerebrovascular accident (CVA) and aphasia.

Secondary or Treating Diagnosis(es): Clinicians will use ICD-10 codes to capture additional diagnoses and comorbidities associated with the patient. These codes can factor into the classification of patients into a speech-language pathology comorbidity payment. Currently, the diagnoses that trigger a speech-language pathology comorbidity payment within Section I800 of the MDS are limited to amyotrophic lateral sclerosis (ALS), oral and laryngeal cancers, and speech, language, and swallowing disorders due to CVA.

SLPs can find the ICD-10 codes that map to clinical categories or trigger comorbidity payments on the CMS website (go to “PDPM Resources” and select “PDPM ICD-10 Mappings” for the most recent year). The ICD-10 codes for primary diagnosis or comorbidities that trigger a speech-language pathology payment are limited because the historical claims data CMS used to develop PDPM did not include enough information associated with cognitive, communication, and swallowing disorders. However, the lists will be modified over time, as CMS refines the payment system.

It's important for SLPs and SNFs to report the ICD-10 codes accurately and comprehensively for specific secondary medical or treating diagnoses—in addition to the primary diagnosis for the SNF stay—that support and describe cognitive, communication, and swallowing disorders, even if those codes are not on the PDPM lists. Coding to the highest level of clinical specificity supports the skilled areas SLPs treat. Secondary medical and/or treating diagnoses can and should be used even when they are noted as “return to provider” codes within the PDPM clinical category mapping. The “return to provider” note only applies to the primary diagnosis area. It’s not appropriate for the MDS or SNFs to require SLPs to change their secondary medical and/or treating diagnosis to a different diagnosis that will trigger a speech-language pathology and/or comorbidity payment.

Coding to the highest level of accuracy for diagnoses related to cognitive, communication, and swallowing disorders will help ASHA advocate for future changes to PDPM, including the addition of more ICD-10 codes that trigger a speech-language pathology and/or comorbidity payment.

See also: CMS PDPM Presentation [PDF] (Go to pg. 24 for the SLP component)

Payment for Speech-Language Pathology Services is Unique

It is also important to note that payment for speech-language pathology services is different from payment for occupational and physical therapy (OT and PT). For example, ASHA successfully advocated for the inclusion of comorbidities in the speech-language pathology portion of the SNF payment. PT and OT are not reimbursed for comorbidities. Another key distinction is that PT and OT payments decrease as the episode goes on (known as a variable per diem payment) while speech-language pathology payment is consistent across the episode.

Administrative Mandates and Ethical Considerations

The transition to PDPM underscores more than ever the importance of clinical judgment and the need to report potentially inappropriate administrative mandates and behavior. Although PDPM is meant to alleviate pressures to provide as much therapy as possible, it does not address industry-developed pressures such as productivity requirements. It also creates potential new challenges for SLPs. For example, the additional payment for patients on mechanically altered diets may create unintended payment incentives to place patients on mechanically altered diets unnecessarily or keep patients on them longer than clinically warranted.

ASHA’s resources, including free webinars on PDPM, were developed to help you know the facts and know your value. These resources should help dispel the myths surrounding PDPM and empower you to take charge of describing the value SLPs bring to patient care in SNFs, including in the area of quality improvement.

Remember, it is critical for services to be driven by patient need, not administrative or payer mandates. ASHA, the American Occupational Therapy Association (AOTA), and the American Physical Therapy Association (APTA) are committed to ensuring clinical judgment drives patient care decisions under PDPM. When faced with an inappropriate administrative mandate, please use the above resources and the ASHA, AOTA, and APTA consensus statement [PDF] to support your advocacy on behalf of your patients and in demonstrating the value of your clinical judgment in driving patient care.

Additionally, if you feel you are being asked to do things that violate ASHA’s ethical standards, payer requirements, or are contrary to patient needs, there is a mechanism available to report these concerns [PDF] to ensure that clinicians can bring inappropriate mandates and requirements to the attention of decision-makers and oversight agencies.

Connection to ASHA’s Code of Ethics

Principle of Ethics I, Rule K of ASHA's Code of Ethics states that individuals shall evaluate the effectiveness of services rendered and of products dispensed, and they shall provide services or dispense products only when benefit can reasonably be expected.

Principle of Ethics IV, Rule B also states that individuals shall exercise independent professional judgment in recommending and providing professional services when an administrative mandate, referral source, or prescription prevents keeping the welfare of persons served paramount.

Ongoing Monitoring and Advocacy

PDPM was designed to be budget neutral but remove financial incentives to provide more therapy than necessary. SNFs receive the same level of payment, but the way in which the funds are allocated could change. For example, there might be more funding for nursing services than therapy services. Despite the obligation to implement PDPM in a budget neutral fashion and to provide all medically necessary services, many therapy positions were eliminated or subject to reduced hours or wages in the transition to PDPM. ASHA continues to monitor the impact of the PDPM transition on SLP employment and patient access to care.

ASHA actively engaged in the development of the PDPM through formal written comments, meetings with CMS staff, and speech-language pathology member representation on technical expert panels to ensure a move to such a payment model represents appropriate clinical practice. ASHA maintains its efforts to improve and refine PDPM. (See also: PDPM Advocacy)

Medicare Part B Payment Policies

Part B (medical insurance) services are often referred to as doctors' services or outpatient care; however, in SNFs, patients are reimbursed by Part B for therapy services after the first 100 days under Part A. Unlike Part A, services delivered under Part B are billed using CPT codes from the Medicare Physician Fee Schedule for each procedure. See ASHA's analysis of the current Fee Schedule for payment rates under Part B. (See also: Productivity)

Audiology Services

If a patient's Part A benefits are exhausted, the SNF may choose to provide audiology services under Part B, but is not required to. As a result, it's common for audiologists to contract with SNFs and independently bill for their services to Part B (Medicare Physician Fee Schedule) as a private practice provider. (See also: Medicare Billing of Audiology Services: Billing for Audiology Services Furnished to SNF Patients)

Other Issues In SNFs

Productivity

Productivity can be calculated in several ways. Although some facilities set productivity targets and incentivize or evaluate SLPs according to whether they reached a target, the SLP is ethically bound to use independent clinical judgment to identify an appropriate caseload and to determine the appropriate length of a session (whether shorter or longer than a "typical" session) and frequency of sessions. ASHA has developed resources in conjunction with the American Physical Therapy Association (APTA) and American Occupational Therapy Association (AOTA) to help clinicians defend the importance of using clinical judgment [PDF] and understand their reporting obligations [PDF] to corporate compliance if issues are identified.

For Part A, changes to the way productivity is calculated are still being implemented. Previously, productivity was typically based on the total number of treatment minutes divided by the total time worked by the SLP. Spending more time on evaluations (which do not count as minutes) or time or activities where the patient is not present can affect productivity calculations. Some facilities may "give credit" for other activities (such as team meetings) as part of the productivity calculation. As trends in productivity calculations emerge, ASHA will provide additional details.

For Part B, services are billed by CPT codes using rates established annually in the Medicare Physician Fee Schedule. Each CPT code is calculated by relative value units (RVUs). Unlike occupational therapy and physical therapy, the majority of SLP codes are not time-based. Some managers may assign a fixed number of minutes or RVUs to specific CPT codes. For example, if a manager calculates that all SLP treatment sessions last 30 minutes, the SLP would have to treat at least 12 patients to achieve 6 hours of productivity (75% productivity based on an 8-hour day). Some facilities may assign minutes or "give credit" for other activities that are not billable but are part of patient care (e.g., team meetings).

SLPs deliver individual treatment far more frequently than group or concurrent treatment, which may differ from physical/occupational therapy and result in differences in calculated productivity.

Student Supervision Requirements

Under Medicare, student supervision requirements vary by practice setting and whether the services are covered under Part A or Part B of the Medicare benefit. For example, Medicare is explicit that student services under Part B require 100% direct supervision of the licensed SLP. Conversely Medicare has largely been silent on the level of supervision required under Part A. 

In 2011, more restrictive regulations for skilled nursing facilities (SNFs) were removed to promote greater conformity with other inpatient settings. Medicare regulations now state "each SNF would determine for itself the appropriate manner of supervision of therapy students consistent with applicable state and local laws and practice standards." (Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2011; Federal Register, Vol. 75, No. 140, Thursday, July 22, 2010)

However, CMS clarified that the supervising clinician cannot treat another resident or supervise another student while the student is treating a resident. The CMS restrictions on billing students' services are based on two principles:

  • The student is considered an extension of the therapist, for billing purposes
  • Only one billable service can be provided at one time by the student/supervisor

Billing guidance includes the following:

  • Report as individual therapy when the SLP or student is treating one resident, while the other is not treating/supervising any other residents/students.
  • Report as concurrent therapy (i.e., patients are performing different activities) if the SLP is treating two residents while the student is not treating any residents or if the student is treating two residents while the SLP is not treating any residents.
  • Report as group therapy (i.e., patients are performing similar activities) if the full group is conducted by either the supervising SLP or the student; the other may not be supervising any other students or treating residents.

When determining the appropriate level of supervision of a student, the supervising SLP should consider payer policy, the requirements of the university from which they have received the student intern, state law, ASHA standards, the needs of the patient, and the skills of the student. It is possible that some patients may not be suitable for treatment by a student, regardless of the level of supervision. Additionally, some students may require a greater degree of supervision than their counterparts with more experience.

See also: Medicare Coverage of Students & Clinical Fellows for Speech-Language Pathology Services

Group and Concurrent Therapy

Medicare provides detailed guidance for group and concurrent therapy in SNFs. Groups in therapy must include two to six patients. In addition, the use of group and concurrent therapy combined cannot exceed 25% of a patient’s episode of care per therapy discipline (physical or occupational therapy or speech-language pathology).

Medicare defines concurrent therapy as treatment of two residents at the same time who are not performing the same or similar activities, regardless of payer source, both of whom must be in line-of-sight of the treating therapist or assistant for Medicare Part A.

Part B residents may not be treated concurrently. A clinician may treat one resident at a time, and the minutes during the day when the resident is treated individually are added, even if the therapist provides that treatment intermittently (first to one resident and then to another).

The transition to PDPM made group and concurrent therapy financially appealing options for SNFs. In fact, ASHA received many reports that SLPs in SNFs were being pressured to increase the amount of group/concurrent therapy and decrease the amount of individual therapy provided to patients. Use ASHA's resource on modes of service delivery to help make treatment decisions and educate your administration and supervisors about the clinical appropriateness of the different modes of treatment. 

Instrumental Dysphagia Studies

Resistance to ordering videofluoroscopic or FEES studies for Part A patients may arise because the cost of the procedure (and transportation) is paid by the SNF out of the patient's per diem rate (called Consolidated Billing). The SLP must clearly justify the need for an instrumental assessment to identify the cause and severity of dysphagia, not only to identify possible aspiration risk and appropriate texture, but to identify an effective treatment plan that would be incorporated in the Plan of Care (see ASHA document Clinical Indicators for Instrumental Assessment). Instrumental studies can potentially save money by preventing patients from being placed on unnecessarily restrictive diets or alternative feedings (Martin-Harris & Logemann, 2000, Clinical utility of the modified barium swallow. Dysphagia, 141, 136–141.) (Note that in most states an in-house FEES procedure requires a physician, nurse practitioner, physician assistant, or clinical nurse specialist to be immediately available.)

Payroll-Based Journal Reporting Requirements

SNFs are required to electronically submit direct-care staffing information (including agency and contract staff) based on payroll and other auditable data. The data, when combined with census information, can then be used not only to report on the level of staff in each nursing home but also to report on employee turnover and tenure, which can affect the quality of care delivered. To facilitate this data collection, CMS has developed a system for facilities to submit staffing and census information called the Payroll-Based Journal (PBJ). This system will allow staffing and census information to be collected on a regular and more frequent basis than currently collected. It will also be auditable to ensure accuracy. All long-term care facilities will have access to this system at no cost. 

Improving Medicare Post-Acute Transformation (IMPACT) Act

In 2014, Congress passed the IMPACT Act in an effort to better understand the differences in payments and outcomes among four post-acute care settings: skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), home health, and long-term care hospitals (LTCHs). The IMPACT Act requires the standardization of data across these four post-acute care settings. Currently, each setting has its own distinct assessment tool (SNFs use the MDS). These separate assessment tools do not collect or track data in a consistent manner, making it difficult to evaluate the distinctions between the settings. However, CMS has already begun—and will continue—to change the assessment tools in order to comply with the mandates of the IMPACT Act. The Act also requires reports examining the possibility of implementing a unified PPS across all four settings. 

Free ASHA Webinars and Podcast

Changes in Medicare Payments for Skilled Nursing Facilities

This two-part series about PDPM dispels the myths surrounding the transition, discusses your role in patient care, and demonstrates the value of speech-language pathology in SNFs. 

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