Unbiased Analysis of Today's Healthcare Issues

International Strategies for Skilled Nursing Facility Reimbursement

Written By: Jason Shafrin - Jul• 11•13

In the past, I have written about how Medicare pays for Skilled Nursing Facilities (SNF).  Medicare uses a case-mix adjusted per diem rate.  This approach, however, isn’t the only manner payers can use to reimburse nursing facilities.  Consider how Australia pays for nursing care under their Australian National Sub-Acute and Non-Acute Patient Classification System (AN-SNAP):

While the AN-SNAP classification was originally developed as an episode classification, a more sophisticated ‘blended payment model’ for funding was subsequently developed…Episode and per diem cost weights are derived from analysis of resource use within each of the AN-SNAP classes. The model is designed to provide incentive to move patients on (as bringing in a new patient will attract a new episode weight), but still provides payment above simple hotel costs for longer episodes. In addition, a 90-day business rule is applied so that, for patients still requiring inpatient rehabilitation beyond 90 days, the episode can be terminated and a new one started following clinical review.

The Italians also decrease reimbursement rates as the length of stay increases. Saitto et al (2005) describe the Italian model:

The Italian National Health Service currently reimburses inpatient rehabilitation care on a daily basis. Five different daily rates have been defined corresponding to 5 broad diagnostic categories, which were obtained by grouping the major diagnostic categories of the diagnosis-related group (ie, DRG) system. In all cases daily rates are cut by 40% after 60 days of stay.

Declining block pricing gives nursing home providers an incentive to discharge patients early compared to flat per diem rates, while at the same time shifting some of the financial risk for long stays to the payer compared to per stay payments. The drawback of declining block pricing is: (i) it is more complicated than flat case-mix adjusted per diem rates and (ii) estimating the slope of the decline is a nontrivial task.


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