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

In a review conducted by the Office of the Inspector General (OIG) and featured in the Semiannual Report to Congress, the Centers for Medicare and Medicaid Services (CMS) continue to reevaluate the skilled nursing facility (SNF) payment system. The report revealed that Medicare payments for therapy greatly exceeded the SNF’s costs for providing therapy services1 SNF’s have continually billed for the highest level of services even though the beneficiary population has not significantly changed, resulting in $1.1 billion in Medicare payments during the fiscal years (FY) 2012 and 2013. The OIG is recommending payment reform that would inevitably save billions of dollars and encourage SNF’s to provide more realistic therapy services to its beneficiaries.The OIG is also recommending CMS reevaluate the utilization of the three types of therapy assessments that capture when beneficiaries start therapy (SOT), end therapy (EOT) and increase or decrease therapy (COT) which were introduced in FY’s 2011 and 2012. Medicare has paid out over $143 million over the past two years because of SNF’s lack of understanding on how to use these assessment codes properly. The OIG has provided CMS with the following recommendations:

  1. Reduction in Medicare payment rates;

  2. Change the method for paying for therapy services to SNF’s;

  3. Adjust Medicare payments to eliminate increases that are unrelated to beneficiary characteristics;

  4. Reduce the financial incentives for SNF’s to use the assessments differently – COT; and

  5.  Strengthen the oversight of SNF billing.


The Medicare Payment System for Skilled Nursing Facilities Needs to Be Reevaluated. September 2015.

 Skilled Nursing Facility Billing For Changes in Therapy: Improvements Are Needed. June 2015.


Posted on January 22, 2016 .