What is a Skilled Nursing Facility?

A skilled nursing facility (SNF) is a healthcare center that provides 24-hour nursing care and rehabilitation to people who need more help than can be provided at home or in assisted living. These facilities are staffed with registered nurses, licensed practical nurses, certified nursing assistants, and therapists who offer services such as physical, occupational, and speech therapy.

Patients often stay in an SNF after a hospital visit to recover safely, get specialized medical attention, and work towards regaining independence. In addition to medical services, SNFs also support daily living activities and offer access to meals, medication management, and socialization.

Skilled Nursing Facility vs. Nursing Home

Skilled Nursing Facility (SNF) Coverage

Eligibility Criteria

To qualify for Medicare Part A coverage at an SNF, all of the following must apply:

• The patient has Medicare Part A and available days left in their benefit period.
• There was an inpatient hospital stay of at least three consecutive days (not counting the day of discharge).
• Admission to the SNF occurs within a short time frame, generally within 30 days after leaving the hospital.
• Skilled care is medically necessary, ordered by a physician, and provided in a Medicare-certified SNF.

Coverage Details

• For the first 20 days of the SNF stay, Medicare covers approved costs in full.
• From days 21 to 100, the patient must pay a daily coinsurance amount.

Payment Model: Skilled Nursing Facility Prospective Payment System (SNF PPS)

• SNFs are paid under the Prospective Payment System, which was introduced in 1998 as part of the Balanced Budget Act of 1997.
• Payment is based on a fixed daily rate (“per diem”), with adjustments made for case-mix (the complexity of resident needs) and local wage levels.
• In the 2025–2026 fiscal updates, Medicare raised daily rates for SNFs by about 4% to account for inflation and changing costs.
• The SNF Value-Based Purchasing Program withholds 2% of payments each year, then returns a portion based on quality and performance metrics.

Minimum Data Set (MDS) in Skilled Nursing Facilities (SNFs)

• Federally required clinical assessment tool for all Medicare and Medicaid-certified SNFs.
• Completed at admission and regularly thereafter to assess residents’ physical, cognitive, and psychological status.
• Helps staff create personalized care plans based on resident needs.
• Drives case-mix classification, grouping residents by care intensity, which impacts Medicare reimbursement.
• Assessment done by a multidisciplinary team including nurses, therapists, and social workers.
• Required at set intervals, typically every three months, or when significant health changes occur.
• MDS data is submitted electronically for quality monitoring, compliance, and research.

Role of Post-Hospitalist Physicians in SNFs

• Specialize in caring for patients transitioning from hospitals to SNFs, focusing on post-acute management.
• Have in-depth knowledge of SNF regulations, care protocols, and transitional care challenges.
• Provide frequent, on-site medical oversight to reduce hospital readmissions and emergency room visits.
• Coordinate closely with nursing staff, therapists, and families to ensure continuity of care.
• Manage complex medical conditions and multiple comorbidities common in SNF residents.
• Enhance patient outcomes by offering timely interventions and consistent follow-ups.
• Improve communication between acute care hospitals and SNFs for smoother care transitions.

Revenue Cycle Management (RCM) in Skilled Nursing Facilities (SNFs)

• Efficient RCM is critical in SNFs due to complex billing requirements, multiple payers, and strict reimbursement rules.
• Front-end RCM focuses on capturing accurate resident information, verifying insurance eligibility, and documenting the medical necessity of services to reduce claim denials.
• Automated billing systems streamline claims submission, pre-authorizations, and reporting, improving payment speed and accuracy.
• Charge capture and correct medical coding ensure that all billable services are properly documented for reimbursement.
• Strong RCM practices help SNFs maintain financial stability, allowing them to focus on quality resident care and regulatory compliance.

Challenges and Considerations in Skilled Nursing Facilities

• Documentation rigor: Accurate and thorough coding and documentation, especially linked to the Minimum Data Set (MDS) and Patient-Driven Payment Model (PDPM), are critical to ensure correct reimbursement.
• Staying current: SNFs must keep up with annual updates to the Prospective Payment System (PPS) rates and any legislative or regulatory changes that impact payment and operations.
• Quality programs compliance: Failure to meet requirements of the Quality Reporting Program (QRP) or Value-Based Purchasing (VBP) Program can result in financial penalties or missed incentive payments.
• Revenue cycle management complexity: Administering multiple payer rules, managing consolidated billing, and navigating intricate Medicare regulations demand strong administrative systems and trained staff.
• Financial pressures: Rising operational costs and workforce shortages challenge the sustainability of many SNFs despite rate increases.
• Regulatory scrutiny: Increased audits, claim denials, and medical reviews require proactive compliance efforts to mitigate financial risk.

In Summary

A Skilled Nursing Facility (SNF) is a specialized post-acute care provider that delivers intensive nursing and rehabilitation services to patients recovering from illness, surgery, or injury.

SNFs operate under strict Medicare payment rules, especially the Part A Prospective Payment System (PPS), and rely on the federally mandated Minimum Data Set (MDS) to ensure accuracy in clinical assessments and billing.

To maintain financial stability while providing high-quality care, SNFs also implement robust Revenue Cycle Management (RCM) strategies that navigate complex billing, payer requirements, and documentation regulations.