Medicare Part D in Skilled Nursing Facilities: What SNFs Need to Know About Drug Coverage and Billing

Medicare Part D and Medicare Part A interact in the skilled nursing facility setting in ways that generate billing confusion and billing errors with surprising regularity. The fundamental rule is straightforward – during a covered Medicare Part A SNF stay, most drugs are bundled into the SNF’s per-diem payment and are therefore the SNF’s billing responsibility, not Medicare Part D’s. But the exceptions to that rule, and the specific circumstances under which Part D becomes the payer, require precise understanding to bill correctly.

Getting this wrong costs SNFs real money either through unbilled Part A drug charges or through inappropriate Part D billing for drugs that should be covered under the Part A per-diem rate.

The Fundamental Rule: Part D Does Not Pay During a Covered Part A Stay

When a Medicare beneficiary is in a covered Medicare Part A SNF stay, Medicare Part D prescription drug coverage is suspended for drugs that are covered under the Part A benefit. Under the SNF consolidated billing rules, the SNF receives a per-diem payment from Medicare that is intended to cover routine care including most prescription drugs for the duration of the covered stay. The SNF is responsible for providing those drugs and billing them under the Part A per-diem. Medicare Part D plans are not required to and generally will not pay for drugs covered under Part A for a beneficiary in a covered SNF stay.

This rule applies regardless of whether the beneficiary is enrolled in a Medicare Part D standalone Prescription Drug Plan (PDP) or has Part D coverage through a Medicare Advantage Prescription Drug (MAPD) plan. During a covered Part A stay, Part D is secondary to the Part A benefit for covered drug costs.

Drugs That Are NOT Covered Under Medicare Part A and When Part D Pays

Not all drugs provided to a Medicare Part A resident are covered under the Part A per-diem rate. CMS has established categories of drugs that are excluded from the SNF Part A payment and may be billed separately to Medicare Part D during a Part A stay. These excluded drug categories include:

• Erythropoiesis-stimulating agents (ESAs) for certain specified conditions
• Immunosuppressive drugs for organ transplant patients
• Certain oral anti-cancer drugs and anti-nausea drugs used in cancer treatment
• Drugs used to treat conditions unrelated to the reason for the SNF admission that would not be covered under the SNF’s consolidated billing responsibility

For drugs in these excluded categories, the SNF does not bill Medicare Part A the Part D plan (or in some cases the beneficiary or another insurer) is the appropriate payer. SNF billing teams must understand these exclusions to avoid both billing Part A for excluded drugs and failing to facilitate Part D coverage for drugs the resident is entitled to receive under their Part D benefit.

The Part A to Part D Transition: Days 91 and Beyond

Medicare Part A SNF coverage extends up to 100 days per benefit period days one through twenty at full coverage and days twenty-one through one hundred with daily coinsurance. After day 100, Part A coverage is exhausted. For residents who remain in the SNF beyond their Part A benefit period transitioning to Medicaid, private pay, or continuing as long-stay residents Medicare Part D becomes the drug coverage payer for covered prescription medications.

Managing the transition from Part A drug billing to Part D drug coverage requires coordination between the SNF pharmacy, the facility’s billing team, and the resident’s Part D plan. The transition date is the date on which Part A coverage ends and beginning on that date, covered drugs that were previously included in the Part A per-diem must be billed to Part D. Delays in initiating Part D coverage for transitioning residents can result in coverage gaps and drug cost liability for the facility or the resident.

The Long-Term Care Pharmacy Relationship and Part D

Medicare Part D plans serving SNF residents are required to contract with at least one long-term care (LTC) pharmacy to provide access to covered drugs for SNF residents. LTC pharmacies dispense drugs in smaller quantities (typically monthly or less) appropriate to the SNF setting and provide specialized packaging and medication management services. For SNF residents receiving Part D coverage either because they are beyond their Part A benefit period or are receiving Part D-covered drugs excluded from the Part A per-diem the LTC pharmacy bills the Part D plan directly for covered prescriptions.

The SNF’s role in Part D drug management for long-stay residents is primarily coordination: ensuring that the resident’s Part D enrolment is confirmed, that the LTC pharmacy has the necessary coverage information, and that drugs are being billed to the correct payer based on the resident’s current coverage status.

Common Part D Billing Errors in the SNF Setting

Billing Part D for drugs that are covered under Part A. If a drug is included in the Part A per-diem and is being provided to a resident in a covered Part A stay, it must be billed through the SNF’s Part A consolidated claim not to the Part D plan. Billing Part D for Part A-covered drugs creates a billing conflict and potential compliance exposure.

Failing to identify the transition date. When a resident exhausts their Part A benefit days, the drug billing responsibility transfers to Part D (for enrolled beneficiaries) or to Medicaid (for dual-eligible residents) on a specific date. Failing to identify and act on that date creates coverage gaps and potential cost liability.

Incorrect handling of Part D-excluded drugs during a Part A stay. Drugs in the CMS-excluded categories should not be billed under the Part A per-diem. Billing them under Part A when they should be billed to Part D or failing to facilitate Part D coverage for excluded drugs creates both billing accuracy issues and potential care access problems for the resident.

What this means for your facility: Medicare Part D and Part A drug coverage in the SNF setting requires ongoing coordination between clinical, pharmacy, and billing teams. A billing operation that does not have a documented process for tracking Part A benefit day status, identifying excluded drug categories, and managing the Part A-to-Part D coverage transition will generate systematic billing errors that cost the facility revenue and create compliance exposure.

Managing SNF Drug Billing Correctly

MCA Medical Billing Solutions, L.L.C. manages Medicare Part A billing including consolidated billing compliance for covered drugs for skilled nursing facilities. Our billing team tracks Part A benefit periods, manages payer transitions, and ensures that drug billing is correctly allocated between Part A and other payer sources.