General
Your 2025 Guide to Nursing Home Billing
Written by
ExaCare
Published on
Mar 20, 2025
Getting paid fairly and promptly for the care you provide requires mastering the complex world of nursing home billing. Whether you're dealing with Medicare, Medicaid, or private insurers, understanding the fundamentals can significantly improve your facility's financial health and reduce administrative headaches.
In this article, we'll cover:
The essential components of nursing home billing and how they affect your bottom line
Practical strategies to prevent and handle unpaid bills that drain your resources
How technology solutions can streamline your billing processes and reduce errors
What to know about nursing home billing
Nursing home billing encompasses all financial transactions related to resident care, from documenting daily services to submitting claims to third-party payers.
Nursing home billing and skilled nursing home (SNF) billing operate under different payment models and regulatory frameworks. Nursing homes provide long-term custodial care, primarily focused on assisting residents with daily living activities such as bathing, dressing, and meal preparation. This care is typically paid for through Medicaid, private pay, or long-term care insurance.
In contrast, SNFs offer short-term, medically necessary rehabilitation and skilled nursing care following a hospital stay, with billing primarily handled through Medicare Part A.
SNF billing guidelines require that facilities must bill and manage payments for nearly all Medicare-covered services under a bundled per diem rate. Nursing homes, however, bill for services individually based on each resident’s care plan. Understanding these differences is critical for ensuring compliance and proper reimbursement.
Unlike simpler healthcare billing models, nursing home billing requires tracking multiple service categories, payer sources, and regulatory requirements simultaneously.
When a new resident arrives at your facility, the billing cycle begins immediately. Your team needs to capture accurate information about:
Room and board chares: The daily rate for accommodations, meals, and basic care services
Medical services: Physician visits, nursing care, medication administration, and wound care
Therapy services: Physical, occupational, and speech therapy sessions necessary for recovery
Ancillary services: Laboratory tests, imaging, medical supplies, and specialized equipment
Each of these service categories follows different billing rules depending on the payer. For example, Medicare Part A might cover all services under a consolidated billing model during a qualified stay, while Medicaid might require itemized billing with service-specific rates.
Your billing team's journey typically follows this path:
Collecting accurate admission information and insurance verification
Documenting all billable services with proper coding
Generating claims that meet payer requirements
Submitting claims through the appropriate channels
Following up on unpaid or denied claims
Posting payments and managing resident accounts
Have you noticed how small errors in any of these steps can create significant financial issues downstream? This is why establishing solid billing practices from the start saves both time and money for your facility.
Key components of nursing home billing
Success in nursing home billing hinges on three critical areas that require your attention: patient admission processes, accurate coding, and effective claim submission. Let's explore each component and how they work together to maintain your facility's financial health.
Patient admission and insurance verification
The moment a new resident arrives at your facility marks the beginning of your billing relationship. Getting this first step right sets the stage for everything that follows.
Your admission staff needs to collect comprehensive information that includes:
Complete demographic details with accurate spelling of names and birth dates
Current insurance cards with policy and group numbers
Secondary insurance information when applicable
Medicare or Medicaid ID numbers with effective dates
Verification of benefit eligibility and coverage limits
Prior authorization requirements for specific services
Responsible party contact information for billing matters
Managing unpaid nursing home bills requires both preventive strategies and thoughtful collection approaches.
Many facilities have found success by implementing a double-check system where a second staff member verifies critical insurance information before submission. This small extra step can dramatically reduce claim rejections due to demographic errors.
Coding and documentation
Translating the care you provide into the language payers understand requires precise medical coding. This is where ICD-10 diagnosis codes and CPT procedure codes become essential tools in your billing toolkit.
ICD-10 codes describe the resident's medical conditions with remarkable specificity. For example, rather than simply coding "pressure ulcer," you'll need to document the exact location, stage, and other characteristics using codes that can go seven characters deep.
This level of detail directly impacts reimbursement rates and justifies the medical necessity of your services.
CPT codes capture the procedures and services your team delivers, from therapy minutes to wound care procedures. Each code represents a specific billable service with its own documentation requirements.
Your clinical documentation must support every code you bill. This means:
Physician orders must be complete and signed.
Care plans must align with the coded diagnoses.
Daily nursing notes must reflect the services provided.
Therapy documentation must include timed minutes and progress notes.
Medication administration records must be accurate and complete.
Remember that if a service isn't documented properly, it essentially didn't happen from a billing perspective. Train your clinical staff to understand that their documentation directly affects your facility's financial stability.
Claim submission and processing
With accurate resident information and proper coding in place, your next challenge is getting claims to payers correctly and promptly. Each payer has specific submission requirements that affect how quickly you receive payment.
The typical claim submission process includes:
Generating a clean claim with all required fields completed
Validating the claim against payer-specific rules
Transmitting the claim electronically or via paper
Tracking the claim status through the adjudication process
Receiving and posting payments or following up on denials
Medicare claims generally must be submitted within 12 months of service, but many commercial payers have much shorter timelines — some as brief as 90 days. Creating a submission calendar helps ensure you never miss these critical deadlines.
When claims come back rejected or denied, quick action is essential. Common rejection reasons include:
Missing or invalid patient information
Incorrect insurance policy numbers
Non-covered services or benefits exhausted
Missing prior authorization
Duplicate claim submission
Invalid diagnosis or procedure codes
Missing documentation
The most successful facilities track denial patterns and create targeted improvement plans. For instance, if you notice a spike in denials related to prior authorization, you might need to strengthen your admission verification process or create better communication channels with your utilization review team.
Staying current with nursing home billing guidelines saves your facility from costly denials and compliance issues.
Consolidated billing in nursing homes
Medicare's consolidated billing system dramatically changes how you bill for Medicare Part A residents. Under this system, your facility becomes the central billing entity for almost all services provided to residents during their Medicare-covered stay — even when those services come from outside providers.
This "bundling" approach means Medicare pays your facility a comprehensive per diem rate that covers most services, and then you're responsible for paying any outside providers who deliver care to your residents. Think of your facility as the financial hub through which all payments flow.
Why does this matter to your bottom line? When outside providers bill Medicare directly for services that should be included in your consolidated billing, Medicare will reject your facility's claim — potentially leaving you with unpaid services.
Medicare regularly updates nursing home billing guidelines, making continuous education essential for your team.
Services included and excluded
Understanding what falls inside and outside the consolidated billing umbrella helps prevent costly billing errors. Here's a simplified breakdown:
Services included in consolidated billing:
Physical, occupational, and speech therapy
Respiratory therapy
Standard laboratory tests
Most radiology services
Most medications
Medical supplies and equipment used during the stay
Non-emergency transportation
Services excluded from consolidated billing:
Physician services
Certain specialized prosthetics
Certain chemotherapy drugs and administration
Certain radiation therapy services
Customized prosthetic devices
Ambulance transportation for dialysis
Specific high-cost diagnostic tests
The CMS website provides complete exclusion lists organized by Healthcare Common Procedure Coding System (HCPCS) codes that your billing team should reference regularly.
Challenges and solutions
Common Challenges | Practical Solutions |
|---|---|
Outside providers billing | Create written agreements with |
Tracking excluded services | Develop a quick-reference guide |
Coordinating with | Establish clear communication |
Managing payment timing | Set up standardized payment |
Identifying when consolidated | Flag charts during |
One particularly effective approach is creating a consolidated billing committee that meets monthly to review problematic claims and update your facility's processes. This cross-functional team can identify patterns and implement targeted training for both clinical and administrative staff.
Handling unpaid nursing home bills
Unpaid bills can quickly accumulate and create significant cash flow problems for your facility. Understanding why bills go unpaid is the first step toward preventing revenue leakage and improving your collection rate.
Common causes
Unpaid nursing home bills typically stem from several predictable sources:
Claim denials: Payers reject claims due to coding errors, missing documentation, or lack of medical necessity. Effective nursing home billing practices start with accurate clinical documentation and proper coding.
Coverage gaps: Residents exhaust their Medicare benefits or have services not covered by their insurance.
Authorization issues: Services are provided without required prior approvals from payers.
Patient financial responsibility: Residents or families are unable or unwilling to pay their portion.
Secondary payer delays: Slow processing occurs between primary and secondary insurers.
Coordination of benefits problems: Confusion arises about which insurer should pay first.
Missed filing deadlines: Claims are submitted after payer-specific time limits.
Which of these causes most frequently affects your facility? Tracking the patterns helps you focus your improvement efforts where they'll have the greatest impact.
Preventive measures
The best strategy for handling unpaid bills is preventing them in the first place. Implement financial screenings before admission, verify benefits thoroughly, have clear payment agreements, track authorizations, monitor Medicare benefit periods, review claims weekly, and assist with Medicaid applications when appropriate.
Consider implementing weekly team huddles to review residents approaching benefit limits or authorization expirations — one administrator reduced unpaid bills by 30% with this simple practice.
Collection strategies
When prevention isn't enough, balance financial needs with resident relationships through thoughtful collection approaches.
Start with early intervention within 10 days of missed payments, offer reasonable payment plans, send regular clear statements, use multiple contact methods, provide face-to-face financial counseling for large balances, establish a clear escalation protocol, and partner with healthcare-specialized collection agencies when necessary.
Remember that compassionate but direct conversations typically yield better results than formal demands.
Best practices for nursing home billing
The most financially successful nursing facilities don't leave billing to chance. They implement systematic practices that promote accuracy, compliance, and efficiency throughout the revenue cycle.
Staff training and education
Schedule quarterly training sessions on common denial reasons and prevention strategies.
Create role-specific training for new staff during onboarding.
Send key team members to coding update workshops when major changes occur.
Cross-train staff so absences don't create bottlenecks.
Share actual examples of properly documented charts and successful claims.
Utilizing technology
Implement EHR systems with integrated billing modules.
Use claim scrubbing software to catch errors before submission.
Set up automated eligibility verification tools.
Create dashboards to monitor key billing metrics.
Implement electronic remittance advice processing.
What technology investments would make the biggest difference for your team? Often, the return on investment comes quickly through improved clean claim rates and faster payments.
Regular audits and compliance checks
Conduct monthly random chart audits to verify documentation supports billing.
Review a sample of claims from each payer type quarterly.
Analyze denial trends monthly and adjust processes accordingly.
Compare actual reimbursement against expected rates.
Verify provider credentials are current for all billable services.
Many facilities find that designating a compliance champion who conducts regular mini-audits prevents costly retrospective corrections.
The most important factor is creating a culture where billing accuracy and compliance are everyone's responsibility — from frontline caregivers documenting services to the financial team submitting claims.
Challenges in nursing home billing
What makes nursing home billing particularly challenging? Unlike other healthcare settings, you're managing extended stays rather than discrete visits, coordinating multiple service types under various payment models, and often transitioning residents between payer sources as their needs and coverage change.
Let's examine the three biggest challenges you'll need to overcome for billing success.
Navigating Medicare and Medicaid regulations
Medicare and Medicaid rules create a complex landscape that constantly shifts. Each program has unique coverage policies, documentation requirements, and claim submission rules that change annually.
Stay ahead by subscribing to CMS newsletters, attending quarterly updates, and building relationships with your Medicare Administrative Contractor representatives who can clarify confusing policies.
Managing multiple payers
Most nursing homes juggle five or more payer types, each with different rules. This payer mix creates challenges when coordinating benefits, tracking filing limits, and managing authorization requirements. Create payer-specific checklists and consider designating staff members as specialists for particular payer types to develop deeper expertise in each area.
Understanding Medicare's Consolidated billing requirements prevents payment disputes with outside service providers.
Addressing coding errors
Even small coding mistakes can have big financial consequences. Common errors include using outdated diagnosis codes, mismatching services with diagnoses, and incorrect sequencing. Regular coding audits and continuous education help prevent these issues and reduce denials, payment delays, and compliance risks.
How technology streamlines billing processes
Facilities that embrace digital solutions typically see faster payment cycles, lower denial rates, and more time for staff to focus on complex revenue issues rather than paperwork.
The initial investment quickly pays for itself through improved cash flow and reduced administrative costs. Here's how specific technologies can transform your billing operations.
Electronic health records (EHRs)
EHR systems connect clinical documentation directly to billing, capturing billable services at the point of care, linking diagnoses to treatments, flagging missing documentation, and transferring data to your billing system. This integration reduces double entry, speeds up claim submission, and improves accuracy.
Billing software solutions
Specialized billing software automates claim scrubbing to catch errors before submission, tracks claims through adjudication, alerts you to denials, and generates reports that identify problem areas. The initial investment typically pays for itself through improved clean claim rates and faster payments.
Telehealth services billing
Telehealth services require specific modifiers, place-of-service codes, and documentation. Create a telehealth billing guide outlining requirements for each payer, as Medicare, Medicaid, and private insurers may have different rules for these services.
AI-powered admissions technology
AI-driven admissions platforms like ExaCare complement your billing process by starting with clean, accurate data. These systems analyze referral documents, extract key clinical and financial information, and flag potential coverage issues before admission.
This front-end intelligence reduces claim denials, speeds up the revenue cycle, and helps identify potential reimbursement risks before they become billing problems.
Discover how ExaCare's AI-driven admissions can streamline your nursing home's operations
Technology alone won't solve all your nursing home billing challenges, but the right tools can dramatically reduce errors and improve efficiency. The most effective approach combines proper staff training, solid processes, and specialized software designed for the unique needs of nursing facilities. When these elements work together, your team can focus less on paperwork and more on strategic financial management.
ExaCare’s AI-powered admissions system helps solve many financial challenges before they reach your billing department. By starting with clean, accurate data at the point of admission, your facility can avoid many common billing pitfalls.
Insurance verification: ExaCare analyzes referral packets and extracts critical insurance information, helping you quickly identify coverage details and potential red flags. No more manually reviewing hundreds of pages to find the essential policy numbers, coverage limits, or prior authorization requirements.
Clinical complexity assessment: With ExaCare, you can spot high-cost medications and treatments that might affect reimbursement before admission. The system identifies complex care needs that could impact your financial outcomes, giving you time to plan accordingly or negotiate rates when necessary.
Appropriate care level matching: ExaCare helps match resident needs with your facility's capabilities to reduce costly transfers after admission. By thoroughly understanding clinical requirements upfront, you avoid accepting residents whose care might exceed your resources or result in unreimbursed services.
Seamless system integration: ExaCare works alongside your current EHR and billing systems, connecting with major platforms like PointClickCare, and others to send clean data where it needs to go.
Financial insights before admission: Make financially sound decisions by understanding the complete picture before accepting a resident. ExaCare helps you preview potential reimbursement rates based on diagnoses and payer mix, identify residents who might exceed therapy caps, and flag high-cost medications that could affect your bottom line.
Improved hospital relationships: Faster, more accurate admissions responses help you win more referrals. ExaCare enables you to reduce response times to hospital referrals, provide clear, data-backed reasons for acceptance or denial, and build trust with hospital discharge planners through consistency. Better relationships with referral sources lead to higher census and improved financial performance.
Ready to see how ExaCare can help your facility win more referrals? Talk with our team to learn more.
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