The Centers for Medicare and Medicaid Services (CMS) discovered an error in the non-labor share percentage used for calculating Skilled Nursing Facility (SNF) Prospective Payment System (PPS) reimbursement for fiscal year 2011. CMS is correcting this percentage in the SNF Pricer and, upon successful implementation; contractors will begin adjusting all previously adjudicated SNF PPS claims with discharge dates on or after October 1, 2010, to apply correct reimbursement. This adjustment process may take up to 8-10 weeks to finalize. CMS has been underpaying providers by about one to five cents per Medicare patient day. The impact per-claim is likely to be quite small.

In addition, CMS instructed contractors to suspend any newly submitted SNF claims, with discharge dates on or after October 1, 2010, at the contractor's sites until the updated SNF Pricer is installed. CMS expects to complete full testing and installation by February 14, 2011.

SNF should verify that claims submitted January 3-5 that were impacted by the January system release issues, have been reprocessed by the contractor prior to submitting claims in February. If February claims are submitted prior to January 3-5 claims being reprocessed, they will be returned to the provider (RTP) with reason code 38117 (sequential billing).