shutterstock_227832421-700x467-700x467 The Distinction Between Reimbursement Sources in SNF vs Homecare Settings – Part 2 of 4 (Reimbursement Sources)

Part 2 of 4: SNF vs Homecare: An examination of the distinction in the provision of clinical services between SNF vs homecare settings.

The distinction between clinical services in SNF vs Homecare lies between 4 main points: the number of key providers within the patient’s immediate care plan, the source of reimbursement, the time frame between start of care and discharge, and the environmental scope of a patient’s rehabilitation.

This multi-part series aims to examine each of these points of distinction with a focus on Occupational Therapy. Missed part one? Read it here.

Medicaid and Medicare within Skilled Nursing Facilities and Homecare Settings

A patient’s source of reimbursement often plays a key in determining the scope of their treatment plan as well as the length and limitations of benefit coverage for skilled therapy services. Within the various sources of reimbursement, there are various levels of coverage, depending on where the services are being provided. Billing practices also vary depending on the type of setting that patient care takes place. This blog aims to compare the various insurances as they relate to skilled rehabilitation services within Skilled Nursing Facilities (SNFs) and Homecare Settings.

Billing for Medicare Part A Services Within a SNF

Both billing and payments are consolidated for Medicare Part A services within a SNF, as per the Balanced Budget Act of 1997. Meaning, all patient care services including occupational therapy (OT), physical therapy (PT) and speech therapy (SLP) are bundled when the SNF bills Medicare for Part A services, and in return, Medicare pays a lump sum to the SNF. [1]

Skilled Rehabilitation therapists may only bill for treatments, they cannot bill for evaluations, care planning, discharge planning, or documentation. Upon evaluation, the therapist determines how many total rehab minutes the patient would need, and the appropriate resource utilization group (RUG) category the patient will fall into is determined. This gives Medicare an idea as to the amount of therapy the patient will require. RUG categories can shift over the course of a patient’s care, allowing for more or less minutes of provided therapy.

Billing for Medicaid Within a SNF

Unlike Medicare, a patient with Medicaid does not require a prior hospital stay and does not need to be recovering from a procedure or illness in order to be admitted into a SNF. However, patients with a Medicaid plan must meet their state’s criteria for income and assets, and require “custodial care,” due to inability to care for themselves at home. Medicaid has no time limit on the length of stay at a SNF, and pays for a patient’s room, board, equipment and supplies, nursing, and rehabilitation services. Patients with Medicaid plans have no co-payments for SNF services.[2]

Each state pays out Medicaid services differently, although most states are utilizing the Prospective Payment System (PPS), which considers the case mix of RUGs, geographic wage differences, and other ancillary costs.[3] 

 The Effect of Insurance and State Policies on SNF outcomes

Beyond 100 days from the time of Medicare patients’ admission, SNF services are no longer covered by Medicare, and patients must either pay out of pocket or utilize a secondary insurance such as Medicaid to cover further SNF services. Because of this, a couple of patterns tend to emerge: Patients with Medicare-only plans are often incentivized to return to their homes upon discharge. Those who experience longer stays in a SNF beyond the 100 days, can wind up paying out of pocket until they have spent down their wealth and then qualify for Medicaid. On the other hand, Patients with dual insurance in Medicare and Medicaid often experience more frequent or longer stays within a SNF.

A study published in 2015 in the journal of Health Services Research[4]considered SNF patients from the 48 contiguous states with only Medicare insurance plans versus those with dual insurance of both Medicare and Medicaid, and the affect of insurance policies on 3 outcomes: 30-day re-hospitalization, becoming a long-term SNF resident, and 180 day survival. The study results found no differences in 30-day re-hospitalization. However, the study confirmed and quantified the pattern of dual members’ longer stays within a SNF, as the results proved that they were 1.8 times more likely to become long term SNF residents. The study also found a positive correlation between length of SNF stay and 180-day survival rate, and because patients with dual insurance experienced longer SNF stays, they also had a higher rate of survival.

This study is fascinating in that survival rate was based on length of stay and not clinical reasons. As this study discussed, patients with both Medicare and Medicaid are more commonly in worse health upon admission to a SNF than those with Medicare-only. Also, the facilities that accept these patients tend to be in neighborhoods with lower incomes and higher poverty rates, they have less nursing staff available, and the population served tends to be more Medicaid recipients than Medicare.

Also important to note, the study found that the 180-day survival rate also improved for those that returned to home in states that had increased Certificate of Need legislation (CON) and home and community-based services (HCBS). CON legislation requires SNFs to obtain permission from government health agencies if they wish to expand or increase the number of beds within their facility. When SNFs are restricted due to CON legislation, they are less likely to retain patients with dual Medicare and Medicaid benefits as long-term residents. This increases the need for states to rely on HCBS. When more HCBS funding is utilized, patients are less likely to be admitted to a SNF.

In sum, patients’ 180-day survival rate correlated with longer SNF stays. Those with Medicaid tended to experience longer SNF stays than those with only Medicare. However, regardless of insurance, patients that were released from SNFs with HCBS services also had a better 180-day survival rate.   The study’s results suggested that, “Nursing home care can be substituted by home-based care to some extent and that the expansion of home and community-based care programs could save money for both Medicare and Medicaid.”


Although a small percentage of Medicare and Medicaid funding goes toward Home Health Services, 80% of home health services are paid for by Medicare and Medicaid.

While Medicaid covers long term support services within a patient’s home such as nursing, home health aides, medical supplies and equipment, services such as occupational therapy (OT) and physical therapy (PT) are not always covered, and this varies from state to state. When homecare OT and PT services are covered by Medicaid, it is usually on a Fee-for-Service (FFS) basis, and under a physician’s request along with a written plan of care, however more and more states are moving toward Medicaid managed care plans, and thus OT and PT service provisions may fall under the monthly capitation or “cap” of benefits provided.

Patients who have Medicare Part B also qualify for homecare rehabilitation. Therapists must document their services using “Timed” and “Untimed” codes. Timed codes follow the 8-minute rule, meaning, the therapist documents the number of total minutes the patient was treated per treatment code, and Medicare divides the total number of minutes by 8, which would determine how many “Units” can be billed. Any minutes left over (less than 8 minutes) cannot be billed. Evaluations and re-evaluations are considered “Untimed” codes, and though they must be documented, they cannot be billed for.

Medicare Part B also requires homecare therapists to document Functional Limitation Reporting (FLR) codes at time of evaluation. These codes signify a patient’s primary functional limitation that is to be addressed in treatment, the severity of that limitation, and the goals toward that limitation which treatment sessions will address. Therapists revisit and modify the FLR codes after every 10 sessions as part of progress notes, and also upon discharge.

Lastly, patients with Medicare Part B plans have an annual “cap” of $1960 for OT services and $1960 PT/SLP services (combined). A therapist can apply a KX modifier along with documentation describing why further skilled rehabilitation services are medically necessary, which allows billing beyond the cap to a maximum of $3700 annually for OT and $3700 for PT/SLP (combined).

A 2015 Workshop Summary on Medicaid and Medicare Provisions for Home Health Care

A 2015 Forum of Aging by the National Research Counsel[5] discussed both Medicare and Medicaid provisions in an effort to understand patterns of care and the budgets that fund them.

As per the summary, “9% of the traditional (i.e., non-managed care) Medicare population receives home health care services, the health care spending for these individuals accounts for 38 percent of traditional Medicare spending.” They considered various factors regarding quality pf care and appropriateness of a homecare setting as well as the long term effect and optimization of budgeting for an aging population. While homecare services have increased in recent years, the spending for these services has leveled off, which may be due to healthcare policy changes.

In order to stay relevant in the future, Homecare service providers must continue to emphasize the opportunity to provide preventative care services in an attempt to reduce acute-care admissions, along with the potential to reduce post-acute care costs by providing the option for rehabilitative services at home rather than in a SNF.  The forum also discussed the importance of changing a homecare model that was developed almost 50 years ago from that of merely recovery services, and most recently of preventative services, to one that would include transitional services for comfort care and palliative care as well. Forum participants also brought up the need for managed care plans to consider not just the medical needs, but the social needs of patients as well, and to consider homecare services as a suitable method of merging the two, by employing rehabilitation services to aid in both health and social supports.



[1]McDermott, Erica. “Medicare Part A vs. Part B: What PTs, OTs, and SLPs Need to Know.”WebPT. N.p., 14 Oct. 2016. Web. 10 Aug. 2017.

[2]Matthews, Joseph L. “Medicaid Coverage of Nursing Home Care in 2017.”, 30 July 2017. Web. 10 Aug. 2017.

[3]Overview.” Centers for Medicare & Medicaid Services. N.p., 01 Aug. 2017. Web. 10 Aug. 2017.

[4]Rahman, Momotazur et al. “Higher Medicare SNF Care Utilization by Dual-Eligible Beneficiaries: Can Medicaid Long-Term Care Policies Be the Answer?” Health Services Research 50.1 (2015): 161–179. PMC. Web. 7 Aug. 2017.

[5] Forum on Aging, Disability, and Independence; Board on Health Sciences Policy; Division on Behavioral and Social Sciences and Education; Institute of Medicine; National Research Council. The Future of Home Health Care: Workshop Summary. Washington (DC): National Academies Press (US); 2015 Aug 4. 4, Key Issues and Trends.