COVID-19 UPDATES: Find news and resources for audiologists, speech-language pathologists, and the public.
Latest Updates | Telepractice Resources | Email Us

Medicare Skilled Nursing Facility Prospective Payment System

Audiology and Speech-Language Pathology Services

Skilled nursing facilities (SNFs) that provide services—including audiology and speech-language pathology services—to Medicare beneficiaries are paid under a prospective payment system (PPS) through Part A of the Medicare benefit. If a patient requires 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 is 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.  

The SNF payment system changed significantly on October 1, 2019. See the Medicare Patient-Driven Payment Model (PDPM) for more information.

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 from Medicare Administrative Contractors (MACs).

On this page:

Qualifying for the SNF 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:

  • Transferred to the SNF within 30 days of discharge from the three-day stay.
  • Require the need for skilled care on a daily basis, 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).

Part B Services

If a Medicare beneficiary does not qualify for a Part A stay, their services may be paid under the Part B benefit through the Medicare Physician Fee Schedule. For example, if the patient requires post-acute care in excess of 100 days, the services provided after this period might be covered under Part B. In these instances, all of the Medicare Part B coverage criteria apply (e.g., multiple procedures payment reductions [MPPR], annual financial limitations on outpatient therapy services). Additional information on SNF Medicare Part B services is found in Chapter 7 of the Medicare Claims Processing Manual [PDF].

Reasonable and Necessary Services for Part A and Part B

According to the RAI Manual (directly quoted from pages O18- 19),

  • the 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;
  • the services must be 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;
  • the services must be 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;
  • the services must be considered accepted standards of medical practice;
  • the services must be 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 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)

How Services are Reimbursed

The Minimum Data Set (MDS)

The MDS assessment tool is a comprehensive summary of the patient’s mental and physical issues, completed by the fifth day after admission to a SNF. It is typically completed by a nurse, and triggers are provided for assessment of MDS elements by other professionals. However, other professionals may sometimes score specialty areas. For speech-language pathologists, 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 of 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: Productivity and Corporate Compliance)

Currently, a SNF receives a base rate (known as a per diem) and receives additional reimbursement based on the number of therapy minutes and/or nursing services provided to a patient. This payment system may incentivize some providers or agencies to provide medically unnecessary care. As such, it is critical that services provided are clearly documented and are reasonable, necessary, and individualized to the needs of each patient.

    The Medicare Patient-Driven Payment Model (PDPM)

    The Medicare Patient-Driven Payment Model (PDPM) is a major overhaul to the current skilled nursing facility (SNF) prospective payment system (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. See the Medicare Patient-Driven Payment Model (PDPM) for more information.

    Evaluation Time Does not Count as Minutes Reported on the MDS
    • When prospective payment for Part A stays in SNFs was established, the RUG rate was based on observation of time actually spent by clinicians. Time spent on evaluation was included in the calculation of the RUG rates; therefore, evaluation minutes are already accounted for and are not to be reported.
    • Instructions from administration or staff to limit evaluation time may be an indirect way of reminding clinicians to maximize therapy time (e.g., in an hour session, 45 minutes would be counted as therapy if the clinician did a 15-minute evaluation). 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.

    What are considerations for the clinician regarding 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.
    Ethical Responsibility

    ASHA's Code of Ethics (Principle of Ethics 1, Rule K) 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.

    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 provided to the patient. Consolidated billing is a mechanism established by CMS to prevent double billing for services. For example, if the SNF does not have an 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].

    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

    Productivity and Corporate Compliance

    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.

    Other Issues In SNFs

    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. 

    Instrumental Dysphagia Studies

    Due to consolidated billing requirements, the cost of instrumental procedures (including transportation) for Part A patients is paid by the SNF out of the patient’s per diem rate. As such, SLPs may experience resistance from the facility to ordering videofluoroscopic studies or fiberoptic endoscopic evaluations of swallowing (FEES) for Part A patients. 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 effective compensatory strategies or treatment techniques that would be incorporated in the plan of care. In some cases, instrumental assessments may not be warranted if clinical indicators suggest that the study is not likely to provide beneficial information. However, 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. 

    Free ASHA Webinars and Podcast

    Upcoming 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 skilled nursing facilities. 

    ASHA Resources

    Other Resources


    ASHA Corporate Partners