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Nursing home billing generally includes the cost of basic charges, the cost of ancillary services, and any additional billing services included in the nursing home contract. Examples of ancillary services provided to residents—at an additional cost—in nursing homes include:

  • Ambulance services
  • Dialysis services
  • Laboratory services
  • Ventilator services
  • Private duty nursing
  • Radiology or diagnostic imaging

Other factors that may affect the rate of nursing home billing include the complexity of care, the level of services provided to the resident and the type of room (private or semi-private).

Nursing Home Billing Guidelines

Nursing homes provide long term care in the form of assistance with daily activities, therapy, and the administering of medication and treatment. Families of elders considering placing their loved ones in skilled nursing or assisted living will first need to understand nursing home billing guidelines so that they know what type of care they will need and who will pay for it. Some of the guidelines and factors that affect billing include: 

Billing cycle

Elderly couple analyzing their nursing home billing report
One should get as much detail as possible on the nursing home billing cycle, which is the time frame for all billing services provided to the resident.

Nursing home billing occurs on a monthly basis. When billing for Medicaid Part A, skilled nursing facilities should use a Form CMS-1450. These monthly claims should be sent in on time upon a resident’s:

  • Discharge
  • Drop from skilled care in an SNF
  • Exhaustion of their benefit period

When a patient or resident’s benefits are exhausted, the benefit period must be accurately tracked by the claims processing system in accordance with guidelines provided by the CMS.

One should get as much detail as possible on the nursing home billing cycle, which is the time frame for all billing services provided to the resident. If a resident’s stay started after the first of the month, typically they will be charged per day for room and board multiplied by the number of days since the resident was admitted.

Billing tips

Administrators and accounting staff in nursing homes need to ensure their billing process remains accurate in order to avoid penalties. The HHS offers tips that can help long term care facilities with their billing, including the following things to pay attention to: 

  • The date of discharge, date of death, or a day on which a patient or resident begins a Leave of Absence (LOA) are not counted as a utilization days.
  • If a Medicare beneficiary is discharged and returns before midnight the same day, Medicare does not count that as a discharge.
  • The HIPPS rate code that appears on a claim must match the assessment that was sent and accepted by the state in which the long term care facility operates.

Level of care provided

Long term care facilities differ in the levels of care they provide to their residents. An independent living facility will not have the same level of care services as an assisted living facility. Meanwhile, an assisted living facility will not have as intensive levels of care as a memory care facility would. 

Facilities bill according to the services and level of care provided. The level of care provided in a facility can affect how much a facility receives. This is because if a facility has a high volume of weighted DRGs, the facility stands to earn more in terms of reimbursements. The formula used to calculate payment for a specific case multiplies an individual facility’s payment rate per case by the weight of the DRG to which the case was assigned.

Senior couple doing physical therapy
Long term care facilities differ in the levels of care they provide to their residents.

As for the four levels of care, they are:

  • Primary care: This is care that deals with illnesses like colds, the flu, and injuries like skin rashes and broken bones. Physicians, nurse practitioners and physician assistants are the main primary care providers.
  • Secondary care: Secondary care is when a doctor refers a patient or resident to a specialist, such as cardiologists and oncologists.
  • Tertiary care: If a higher level of specialty care is needed, a doctor can refer the patient or resident to tertiary care. This is a level of care that uses specialized equipment and procedures such as dialysis and neurosurgery.
  • Quaternary care: This is considered an extension of tertiary care and is even more specialized. Quaternary care can include experimental medicine and procedures.

Type of insurance accepted

If a senior qualifies for Medicare Part A, Medicare will pay in full for their stay in a skilled nursing facility (SNF) for a maximum of 20 days. From day 21 to day 100, a variable daily rate of coinsurance kicks in, with Medicare continuing to pay for a portion of the stay. When the benefits period is exhausted, staff should continue to submit monthly claims of non-covered services provided to the resident. This helps ensure that the claims system can accurately track the benefit period. Services covered by Medicare Part A include:

  • Inpatient care (short term, whether in a hospital or an SNF)    
  • Hospice care    
  • Home health care

From day 101 onwards, one hundred percent of the cost of care is transferred to the resident. Meanwhile, long term care facilities are also often reimbursed for the therapy services they provide through Medicare Part B, which kicks in on day 21.  Examples of services covered by Medicare Part B include:

  • Clinical research      
  • Ambulance services    
  • Durable medical equipment (DME)   
  • Mental health (Inpatient, Outpatient, Partial hospitalization)
  • Limited outpatient prescription drugs

For long term care facilities, Medicare Part B is of particular importance as it covers physical therapy, occupational therapy and speech-language pathology.

Leave of absence   

If a resident chooses to temporarily leave a nursing home, either they or a family member can sign a bed hold waiver in order to reserve their room until their return. One should note that nursing home billing will still occur in the resident’s absence, though the charges may be lower than if the resident was staying in the facility.

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8 Long Term Care Revenue Strategies for Nursing Homes

You now know how nursing home billing works, but you may be asking what facilities can do to improve their long term care revenue strategies. In addition to mastering nursing home billing codes and knowing how to bill Medicare Part B as a provider, leaders should consider eight long term care revenue strategies to boost their nursing home revenue:

Two people shaking hands after reaching an agreement.
Marketing without sales is pointless. Hence, the marketing team of a nursing home needs to remain in sync with the sales team.
  1. Align marketing with sales: There are over 28,900 assisted living communities in the US. Competition for residents in long term care has never been fiercer, and marketing is still the best tool to capture attention, build a brand, maintain a following and grow in market share. However, marketing without sales is pointless. This is why the marketing team of a nursing home needs to remain in sync with the sales team. When both marketing and sales work together, nursing homes can convert leads into sales for their business.
  2. Establish a unique selling proposition (USP): To be successful, you need to differentiate yourself from your competitors. This is what a USP is. A long term care team needs to identify what makes it different from its competitors and clearly communicate the benefit of this difference to their potential residents. By making the USP about them and how it benefits potential residents, a nursing home stands to attract and retain more residents.
  3. Diversify with on-demand services: A recent trend in long term care is toward focusing on qualify of life. One example is the Eden alternative model. For example, a simple excursion to the local park will improve a resident’s quality of life. Also, a nursing home can go the extra mile by arranging a yoga class for the residents during their park excursion. These on-demand services can help attract residents and their families to a nursing home.
  4. Strategically implement time management: Time is money. Every service delivered to residents has a cost, and the longer it takes to deliver a service, the more it costs. Nursing home administrators can calculate the time it takes to deliver a service. Then, they can create itemized invoicing for each resident. This allows for better care delivery through the long term care EHR and better time management.
  5. Use telemedicine and related technologies: Telemedicine allows physicians to evaluate, diagnose and treat patients from a distance. Its related technologies include ePrescribing, eCharting and eResults, all of which should be part of a nursing home software. These technologies can increase the efficiency of a nursing home, resulting in lower service costs, better quality of care for residents, and more admissions due to a higher CMS 5-star quality rating.
  6. Use smart energy management systems: Energy consumption, like climate control and lighting, can be a huge cost in nursing homes. By using a smart energy management system together with their care plan software, nursing homes can save money while still providing a high quality of care for their residents.
  7. Keep good metrics: The best long term care software systems offer dashboards that make it easy to track a facility’s important metrics. Ritcher notes that if nursing home staff is constantly looking at its metrics and finding patterns, it becomes easier to identify current and future problems.
  8. Keep tabs on private pay and collect regularly: By using their nursing home software, nursing homes can keep track of resident funds, ensuring they are properly managed. Also, a nursing home EHR with intuitive financial modules can provide tracking and alerts related to private payors.

The Value of Understanding Nursing Home Billing

Understanding how to maximize and improve the nursing home billing process can result in more revenue for nursing homes. When nursing home administrators understand their nursing home billing guidelines and apply various long term care revenue strategies—such as aligning marketing with sales, diversifying with more on-demand services for residents and keeping good metrics using their long term care software— they ensure their facilities can maximize on their reimbursements for their services they provide.  

For more on recent trends in long term care, read our blog and subscribe to the LTC Heroes podcast

Elijah Oling Wanga