Medicare's Skilled Nursing Facility Benefit

Publication Date: April 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

During much of the 1990s, skilled nursing facility (SNF) care under Medicare had been one of the program's fastest growing benefits, increasing from $2.5 billion in 1990 to $13.5 billion in 1998. In an effort to control this growth, Congress, in the Balanced Budget Act of 1997 (P.L. 105-33, BBA 97), established a prospective payment system (PPS) for SNF benefits. BBA 97 also enacted a consolidated billing system under which SNFs bill Medicare for all services provided to beneficiaries. As a result of several factors, including BBA 97 program changes, Medicare spending for SNF care dropped by an unexpected 12.6% in 1999.

Some observers expressed concern that these reduced payment levels would lessen beneficiaries' access to care and suggested changes to the new payment system to assure access for certain patients with complex clinical problems requiring extensive services. The 1999 Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) included in the Consolidated Appropriations Act for 2000 (P.L. 106-113) increased payments under the SNF PPS for certain "high acuity" patients. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA, a part of the Consolidated Appropriations Act 2001, P.L. 106-554), enacted in December 2000 included additional payment liberalizations. This report provides background information on the Medicare SNF benefit. It will be updated as events and legislation warrant.