The federal legal framework for Medicare Part B billing of consumable medical supplies in skilled nursing facilities — the statutory authority, the consolidated billing carve-outs, and the line between permissible and impermissible categories.
This memorandum addresses the federal legal framework for Medicare Part B billing of consumable medical supplies in skilled nursing facilities (“SNFs”). Specifically, it 1) affirms that SNFs may bill certain DMEPOS supply categories to Medicare Part B during a long-term care stay; 2) confirms that SNFs use their institutional NPI to submit these claims without a DMEPOS supplier number or accreditation; 3) validates the specific supply categories eligible for billing under federal rules; and 4) explains how these billing practices comply with consolidated billing exclusions and do not conflict with SNF bundling rules under Medicare Part A.
Medicare Part B, under Title XVIII of the Social Security Act and implementing regulations, allows reimbursement for certain medical supplies furnished to SNF residents who are not in a Medicare Part A-covered stay. Statutory and regulatory authority includes 42 U.S.C. § 1395x(s)(5), (s)(8), and 42 C.F.R. § 411.15(p), which authorize payment for prosthetic devices, medical supplies, and enteral nutrition if not bundled under consolidated billing.
When a resident is in a covered Part A stay, the SNF must obtain reimbursement for most services and supplies via consolidated billing and cannot bill these items separately to Part B. See 42 C.F.R. § 411.15(p); see also SNF Consolidated Billing, CMS.gov, https://www.cms.gov/medicare/coding-billing/skilled-nursing-facility-snf-consolidated-billing. If a resident is not in a Part A-covered stay, the SNF may bill Medicare Part B for certain consumable supplies, provided the SNF meets all coverage and documentation criteria. CMS guidance and the Medicare Claims Processing Manual Chapter 7 further clarify that SNFs may bill these items under their institutional NPI without a DMEPOS supplier number or accreditation, so long as the supplies do not qualify as Durable Medical Equipment (“DME”) and the resident is not in a Part A stay.
Pub. 100-07, Chapter 7, Section 7004.2 defines SNFs and requires them to meet the standards in §1819 of the Social Security Act, including primarily providing skilled nursing care or rehabilitation services, maintaining appropriate agreements with hospitals, and complying with all statutory and regulatory standards for skilled nursing facilities.
The Balanced Budget Act of 1997 requires SNFs to bundle and bill almost all services provided during a Medicare Part A stay, including those furnished directly or “under arrangement” with outside entities. If a service qualifies as an excluded service, an outside source may bill it separately to Part B. SNF consolidated billing applies to all Medicare participating SNFs, including short-term, long-term, and rehabilitation hospitals certified as swing beds, except critical access hospital swing beds.
Medicare Part B generally covers outpatient services and medical care that Part A does not include. According to the Medicare Claims Processing Manual, Chapter 7, Section, 10, the SNF may submit a claim for Part B when: 1) the inpatient stay includes services furnished to inpatients whose benefit days are exhausted or who are not entitled to have payment made for services under Part A; 2) the SNF renders covered Part B services to beneficiaries who are not inpatients of a SNF; or 3) beneficiaries in a Part A covered stay, with consolidated billing to the SNF intermediary for their covered Medicare inpatient services.
Federal law and CMS policy confirm that SNFs may bill Medicare Part B for specific categories of consumable supplies for residents not in a Part A-covered stay, using their institutional NPI. These include surgical dressings, tracheostomy supplies, ostomy supplies, urological supplies, and enteral nutrition supplies such as formula and tubing, but not enteral pumps. Federal rules recognize these categories as prosthetic devices or related supplies under 42 U.S.C. § 1395x(s)(5), (s)(8), and do not require DMEPOS supplier accreditation when SNFs bill these items as part of institutional services.
CMS guidance and the Medicare Claims Processing Manual, Chapter 7 and Chapter 20, provide detailed instructions for billing these items, including the use of appropriate revenue and HCPCS codes (e.g., revenue code 274 for orthotics and prosthetics, 270 for supplies, 623 for surgical dressings), and affirm that SNFs do not separately bill DME to Part B for SNF residents, regardless of Part A status, unless the SNF is separately enrolled as a DMEPOS supplier and bills the DME MAC.
To properly apply consolidated billing principles, SNFs must be familiar with the five major categories of consolidated billing exclusions. These primary exclusions are as follows:
According to 42 C.F.R. § 424.57, various CMS publications, and the Medicare Claims Processing Manual, SNFs may not bill Medicare Part B under their institutional NPI for the following items unless they separately enroll as a DMEPOS supplier and meet accreditation requirements:
The Medicare program defines DME as equipment that 1) withstands repeated use with an expected life of at least three years, 2) is primarily and customarily used to serve a medical purpose, 3) is medically necessary, 4) is generally not useful to a person in the absence of an illness or injury, and 5) is appropriate for use in the home. If an inpatient does not qualify for Part A, Medicare Part B does not pay for DME or oxygen provided in a hospital or SNF. Typical DMEPOS exclusions include items that require frequent and substantial servicing, customized items, parenteral or enteral nutritional supplies and equipment, and intraocular lenses.
CMS and OIG guidance emphasize that Medicare Part B does not separately pay for DME for SNF residents, and that SNFs create significant audit risk if they bill DME under the institutional NPI without DMEPOS accreditation.
Federal law and CMS guidance affirm that SNFs may bill certain DMEPOS supply categories, including surgical dressings, tracheostomy supplies, ostomy supplies, urological supplies, and enteral nutrition supplies with some exclusions noted above, to Medicare Part B for residents during a long-term care stay, provided the resident is not in a Part A-covered stay. SNFs may bill these items under their institutional NPI, without the need for a DMEPOS supplier number or accreditation, if the supplies are not classified as durable medical equipment. For DME items, SNFs must enroll as DMEPOS suppliers.
These billing practices comply with consolidated billing exclusions because they are only permitted when the resident is not in a Part A-covered stay, and the supplies are expressly carved out from SNF bundling rules under Medicare Part A. All billing must comply with applicable Medicare coverage and documentation requirements.
This document is adapted from a legal memorandum prepared for Burst Medical Billing by outside healthcare counsel and is provided for general educational and informational purposes only. It is not legal advice, does not create an attorney-client relationship, and may not reflect the most current legal developments. Medicare coverage rules, statutes, and CMS guidance change over time and vary by jurisdiction. Skilled nursing facilities should consult their own qualified counsel and verify current CMS guidance before making billing decisions.