Basics of Medicare Consolidated Billing for SNFs

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Need for Consolidated Billing for SNFs

Prior to the Balanced Budget Act of 1997 (BBA), a Skilled Nursing Facility (SNF) could elect to furnish services to a resident in a covered Part A stay, either, directly using its own resources; through the SNF's transfer agreement hospital; or under arrangements with an independent therapist (for physical, occupational, and speech therapy services). In each of these circumstances, the SNF billed Medicare Part A for the services.

However, the SNF also had the further option of ‘unbundling’ a service altogether; that is, the SNF could permit an outside supplier to furnish the service directly to the resident, and the outside supplier would submit a bill to Medicare Part B, without any involvement of the SNF itself.

This practice created several problems, including the following:

• Potential for duplicate (Parts A/B) billing if both the SNF and outside supplier billed;
• An increased out-of-pocket liability incurred by the beneficiary for the Part B deductible and coinsurance even if only the supplier billed; and
• A dispersal of responsibility for resident care among various outside suppliers adversely affected quality (coordination of care) and program integrity

Then Balanced Budget Act of 1997 (BBA), was enacted, containing a Consolidated Billing (CB) requirement for SNFs. Under the CB requirement, an SNF itself must submit all Medicare claims for the services that its residents receive. Conceptually, SNF CB resembles the bundling requirement for inpatient hospital services that's been in effect since the early 1980s, assigning to the facility itself the Medicare billing responsibility for virtually the entire package of services that a facility resident receives, except for certain services that are specifically excluded.

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