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J Oncol Pract. 2008 September; 4(5): 245–248.
PMCID: PMC2794012

Billing Challenges for Residents of Skilled Nursing Facilities

Short abstract

Consolidated billing is a commonly used but little understood form of reimbursement for medical services provided in skilled nursing facilities.

Mrs B, one of your patients with metastatic breast cancer, enters your office to receive pamidronate as regularly scheduled. She first has blood drawn to determine the creatinine level, and the 2-hour infusion is administered. The patient is a Medicare beneficiary, and your office submits for reimbursement through Medicare Part B. Weeks later, the office receives a notice from Medicare that all charges on the claim have been denied. Why? Because Mrs B was a Medicare patient in a covered Medicare Part A stay in a skilled nursing facility (SNF) at the time of her appointment in your office.

Similar scenarios play out in oncology practices across the United States every day. How to obtain reimbursement for services provided to a SNF resident is among the most frequently asked coding and billing-related questions. The challenge is related to consolidated billing, a prospective payment system that covers services within the scope of care at an SNF. Oncology practices can submit for reimbursement through Medicare Part B for those services excluded from the consolidated billing package. Thus, an understanding of the inclusions and exclusions of consolidated billing is essential for appropriate reimbursement.

Overview of SNF Consolidated Billing

Consolidated billing was established by the Centers for Medicare & Medicare Services (CMS) in 1998 to help eliminate duplicate billings for services rendered to SNF residents by multiple providers. With consolidated billing, an SNF receives a basic per diem rate per level of care for each resident. The SNF is generally the only entity that can bill Medicare for the services provided to patients while they are residents. However, CMS excludes some categories of services from consolidated billing because they are costly or require specialization; these exclusions are specifically identified in legislation. Oncology practices can seek reimbursement for excluded services directly through Medicare Part B but must obtain reimbursement for services included in SNF consolidated billing from the SNF itself.

The list of drugs and services included in consolidated billing is not clear-cut. Chemotherapy is one of the four major categories of services excluded from SNF consolidated billing, but not all chemotherapy drugs are excluded. For example, fluorouracil, interferon, methotrexate, mesnex, leuprolide, and goserelin are included in SNF consolidated billing. Many nonchemotherapy drugs that are commonly given to patients with cancer, such as antiemetics, pain relievers, bisphosphonates, and erythropoietin are also included. The complexity of consolidated billing extends beyond drugs to a range of services provided in the practice setting. Physicians' professional services (such as all levels of office visits) and most chemotherapy administration services are excluded and thus reimbursable directly through Medicare Part B. On the other hand, administration of nonchemotherapy drugs, laboratory studies, and most procedures are included in consolidated billing and are reimbursable only through the SNF.

To bill an SNF, the oncology practice must submit a CMS-1500 form complete with correct revenue codes, dates of services, and a CPT or HCPCS code for each item billed to the SNF. The practice should also include a disclaimer stating that the bill reflects Medicare rates. Many oncology practices report that reimbursements from SNFs are difficult to obtain. Indeed, the cost of oncology services increases the total cost of care for an SNF resident beyond the per diem rate the SNF will receive. But the potential for oncology services should be expected by the SNF, given that the total care needs of the patient are known and carefully evaluated before the patient is admitted. Although the reasons for the challenges in reimbursement from a SNF are unclear, there are steps that oncology practices can take to increase the likelihood of accurate billing and timely reimbursement for services provided to Medicare beneficiaries.

Increasing the Likelihood of Appropriate Reimbursement for SNF Residents

Knowing which services are excluded from SNF consolidated billing and which are included is the most important step in ensuring appropriate billing (Table 1). Lisa Gahara, Health Plan Manager and Billing Supervisor, New Hampshire Oncology-Hematology PA (Hooksett, NH), maintains a detailed list of services with columns for appropriate J codes or CPT codes, the billing unit, and the source of reimbursement (Medicare or SNF). She modifies the list according to information provided on the CMS Web site (www.cms.hhs.gov/SNFConsolidatedBilling/01_Overview.asp) and in periodic issues of MLN Matters, a CMS electronic newsletter that provides updates to excluded services. For example, a May 2008 issue of the newsletter noted that panitumumab injection (code J9303) was added to the list of drugs excluded from consolidated billing, retroactive to January 1, 2008. Gahara's list allows her and other billers and coders in the office to bill accurately for services provided, but problems can still arise. She says that a long list of outstanding bills to a local SNF prompted the office administrator of the SNF to ask for a face-to-face meeting with the oncology practice to sort through the charges and discuss the possibility of developing a direct contract between the practice and the SNF.

Table 1.
Reimbursement for Drugs and Services Commonly Provided in the Oncology Practice Setting

Identifying patients as SNF residents is an equally important step toward appropriate billing. Ideally, the practice should know the patient's status at the time the appointment is scheduled. Oncology practice staff should educate their patients and their families about the need to inform staff about the patient's status when making an appointment. Staff should also encourage local SNFs to note that a patient is a resident when calling for an appointment. Oncology practice staff who make appointments should ask if the patient is a resident of a SNF if this information is not provided. The initial conversation between the practice and the SNF provides an opportunity to discuss the potential charges for services that may be included in consolidated billing.

If the patient's status has not been clarified when the appointment is made, it should be documented at the time the patient is seen in the oncology office. If the patient is a SNF resident, Gahara suggests alerting the SNF before rendering services that are included in consolidated billing. “It's a good idea to call the SNF, to verify that the patient is truly considered an SNF resident and to let it know what services the practice will be providing,” she says. She explains that this call is a courtesy to the SNF in case it wants to purchase the drug and administer it at the SNF.

Timeliness of reimbursement from a SNF is often an issue, even when billing is done appropriately. Although the invoice from the oncology practice is processed at the SNF, the invoice may need review and approval by staff at a corporate office, which is sometimes in another state. This can delay payment by 60 days or more. Gahara acknowledges the difficulty in receiving timely reimbursement from a SNF. “You have to stay on top of it and have someone from the practice monitor the charges sent to SNFs to make sure you receive payment,” she says. She adds that if payment is not received within 90 days, she calls the accounts payable office manager at the SNF. “Typically, we are paid within another 30 to 60 days after the call,” she said.

It may also be helpful for an oncology practice to develop a contract or agreement with local SNFs to establish a reimbursement process for services included in consolidated billing. The CMS Web site offers a template for an under arrangement agreement, which provides written documentation of an agreement between a SNF and a supplier of services about a process and terms of payment. The template is available at www.cms.hhs.gov/SNFPPS/Downloads/bpsampleagr1.pdf.

Reimbursement Tips from Medicare and Skilled Nursing Facilities (SNFs)

  • Maintain an up-to-date list of drugs and services included and excluded in SNF consolidated billing
  • Determine whether a patient is a SNF resident, preferably at the time an appointment is scheduled
  • Educate patients, their families, and staff at local SNFs about the need to inform the practice about the patient's status when making an appointment
  • Alert the SNF to charges for services included in consolidated billing before the services are provided
  • Continually monitor the status of invoices sent to SNFs and prompt as necessary
  • Establish written payment arrangements with local SNFs

Articles from Journal of Oncology Practice are provided here courtesy of American Society of Clinical Oncology