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Payment Sources Defined
Revenue sources for the nursing home include Medicare, Medicaid, hospice, private insurance and private pay. Each source offers different levels of payment directly related to the care provided.
Medicare
The Center for Medicare and Medicaid Services (CMS), administers the Medicare program and works with individual states to administer the Medicare program. Medicare is a social insurance program enacted in 1965 and provides health insurance to people age 65 and older, to those who have permanent kidney failure requiring dialysis or transplant, and to certain individuals under 65 with disabilities.
Medicare has three parts: Hospital Insurance (Part “A”), Medical Insurance (Part “B”), and Prescription Drug Coverage (Part "D"). Medicare pays for skilled nursing facility services upon admission for skilled services.
Medicare Part “A” nursing home enrollees receive full pay coverage for the first 20 days of utilization and partial coverage for an additional 80 days, as long as they continue to qualify for skilled care. Residents can then transition to an intermediate care level.
Medicare Part "B" pays for physician services, outpatient services, and other services. An example of Medicare "B" coverage would be a Private Pay resident requiring physical therapy.
Medicare Part "D" became effective January 1, 2006 and covers prescription drugs for all Medicare eligible participants, regardless of income, health status, or current healthcare coverage. All Medicaid residents are automatically enrolled under "dual eligible" status. St. Barnabas works with each resident to ensure appropriate coverage.
Medicare contracts with fiscal intermediaries to pay Part A and some Part B bills. St. Barnabas must meet all conditions to participate in the Medicare Program. Blue Cross Blue Shield of Tennessee Inc. works with Riverbend Government Benefits Administrator to serve as our Medicare fiscal intermediary. The Balanced Budget Act of 1997 introduced the implementation of the Medicare Prospective Payment System (PPS) for skilled nursing facilities. This system uses a case mix approach to payment using the Resource Utilization Groups (RUG). Information from the MDS assessment is utilized to classify skilled nursing residents into a series of fifty-three groups representing direct care requirements. Each resident is classified into a group and skilled nursing facilities are paid based on that grouping. Payment can change with each assessment based on the care provided during that period.
Medicaid
Medicaid is health insurance that helps low-income individuals and families who fit into an eligibility group recognized by federal and state law. Medicaid pays money directly to health care providers. There is a medically needy option that allows eligibility to additional persons who may have too much income to qualify under normal circumstances, but now qualify them by allowing them to spend down to Medicaid eligibility by incurring medical expenses. Most elderly residents in nursing homes become eligible for Medicaid through this program. Residents can qualify for either Medicaid Skilled or Medicaid Intermediate Care. Medicaid skilled residents must meet the same requirements as Medicare skilled residents. They must require skilled nursing services, as ordered by a physician, and which must be medically necessary and provided on a 24-hour basis, seven days a week. Intermediate care, as ordered by a physician, must be provided on a 24-hour basis, with a minimum of eight hours of licensed nurse coverage daily. Payment rates are set per day for each category by Medicaid. However, unlike Medicare, medications and certain treatments are paid separately.
Hospice
Hospice care meets Medicare conditions of participation and contracts with Medicare to take care of a certain group of residents. Hospice residents must meet requirements set forth by Medicare that place them in a category for the terminally ill. St. Barnabas contracts with several agencies in the area. Hospice is responsible for payment for these residents, except for conditions and needs meeting the requirements for “non-covered hospice services.” These services may be billed to the appropriate payer source. Hospice also has skilled and intermediate levels of care that have set per day rates.
Private Insurance
Private insurance is another payer source. This includes all private insurance companies that have contractual agreements with St. Barnabas, and payment is based on these contracts. Some providers will negotiate “out of contract” admission and payment.
Private Pay
Private Pay means the resident or family pays for all care provided. This is usually at an intermediate level of care and the resident does not meet eligibility requirements for Medicaid. The resident pays room and board rates, as well as for all medications and treatments.
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