Individual Therapy Spikes in Skilled Nursing After Medicare Payment Changes

Group therapy was virtually extinct in the first quarter of 2012 as skilled nursing providers “significantly” changed the mode of patient therapy from group to individual after the Centers for Medicare & Medicaid Services (CMS) revised the RUG reimbursement system, according to a CMS report.

Most Medicare patients are in skilled nursing for short-term stays, and between 2010 and 2011, approximately 92% of these patients were classified into a rehab category, according to a Department of Health and Human Services CMS final rule on the Medicare prospective payment system (PPS).

SNFs received about 17% of their total income from Medicare reimbursements in 2005, according to a Georgetown University survey on national long-term care financing, and they get the highest reimbursement rates for residents who receive rehabilitation services.


Providers can bill Medicare for therapy that was given in a group setting (one therapist working with residents who are all doing the same “task”), concurrent (one therapist working with multiple residents who are doing different “tasks”), and individual (one therapist working with one individual).

In previous years, providers could bill Medicare for each individual in a group therapy setting, but that was changed after government reports showed this “triggered a significant increase in overall payment levels” under that RUG system that resulted in “substantial overpayments to SNFs,” according to the August 2011 final PPS rule.

When CMS announced RUG-IV, providers were in for an 11.1% reduction in reimbursements, and according to a new government report, 2012 data for the first quarter indicates that group therapy is virtually nonexistent, with facilities almost exclusively providing individual therapy (99%), with the remaining 1% in concurrent therapy. This is a dramatic shift from 2006-2007, when about one quarter of patients were in concurrent therapy, according to CMS.



Source: Centers for Medicare & Medicaid Services

Other changes for 2012 (so far) is that the overall patient mix (of those in categories such as rehabilitation, extensive services, special care, etc.) isn’t significantly different from what was observed in 2011, with “rehabilitation plus extensive services” seeing the biggest change, from 2.38% to 1.78% in 2012, while rehabilitation alone increased 40 basis points to 88.9%.

Click here to see the fiscal year 2012 SNF PPS Monitoring Activities from CMS.

Written by Alyssa Gerace

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