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Last Modified: 3/12/2021 Location: FL, PR, USVI Business: Part A

Prospective payment system (PPS) skilled nursing facilities (SNFs)

Skilled nursing facilities are paid under a prospective payment system for Part A services. SNFs are reimbursed for Medicare Part A claims under a prospective payment system (PPS).
To recognize the differences in the resources used by SNF residents, each resident is classified into a Resource Utilization Group (RUG), based on data from the Minimum Data Set (MDS 2.0). There are different payment rates for each RUG. Thus, PPS allows greater reimbursement for patients requiring more care, i.e., more resources. The RUG rates for each federal fiscal year can be found here.
The PPS payments are based on per diem rates and cover all costs of furnishing covered SNF services - routine, ancillary and capital-related costs - except for the costs associated with approved educational activities and Medicare bad debts.
Please refer to the CMS website for additional information on SNFs external link.
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