Number: RL33921
Title: Medicare's Skilled Nursing Facility Payments
Authors: Julie Stone, Domestic Social Policy Division 
Abstract: Medicare pays SNFs using a prospective payment system (PPS). Under SNF PPS, Medicare makes a daily payment that varies depending upon the therapy, nursing, and special care needs of the beneficiary as described by one of 53 different payment groups, known as resource utilization groups (RUGs). Payments are updated annually by the SNF "market basket" increase (the measure of inflation of goods and services used by SNFs). For FY2007, the SNF payment update is the full market basket of 3.1 percentage points. Add-on payments are also made for care provided to persons who are HIV-positive or have Acquired Immune Deficiency Syndrome (AIDS). A refined payment system was implemented through regulation on January 1, 2006. The refinements updated and recalibrated the RUGs and added nine new Rehabilitation plus Extensive Services groups into the RUG classification system. It is still too soon to know whether the refined case mix system is adequate or will warrant additional refinements.
Pages: 12
Date: March 14, 2007