CMS Seeks to Stop Diversion of Some Medicare Advantage Patients from SNFs to Home Health

The Centers for Medicare & Medicaid Services (CMS) is taking steps to ensure that patients are not inappropriately denied coverage for post-acute care in particular settings — including skilled nursing facilities — by Medicare Advantage organizations (MAOs).

CMS raised the issue as part of a proposed rule issued on Dec. 15, stating that MAOs generally cannot apply coverage criteria that is more restrictive than traditional Medicare coverage, as determined by national coverage determination (NCDs), local coverage determinations (LCDs) and Medicare laws. This also applies to certain “substantive coverage criteria and benefit conditions” that are not governed by an NCD or LCD, including transfers to post-acute settings.

“For example, if an MA patient is being discharged from an acute care hospital and the attending physician orders post-acute care at a SNF because the patient requires skilled nursing care on a daily basis in an institutional setting, the MA organization cannot deny coverage for the SNF care and redirect the patient to home health care services unless the patient does not meet the coverage criteria required for SNF care in §§ 409.30-409.36 and proposed §422.101(b) and (c),” the proposed rule states.


The agency is proposing to revoke the current policy that “when a health care service can be Medicare-covered and delivered in more than one way, or by more than one type of practitioner, an MA plan could choose how the covered services will be provided.”

MA organizations will not be restricted in prior authorization and post-claim review, as ways to ensure services meet Medicare coverage rules.

CMS also expressed a hope that these steps will help resolve complaints about early termination of care in post-acute settings by MAOs.


CMS solicited comment on various related topics, including how MAOs preauthorize treatment in discrete increments; enrollee timelines to file appeals regarding termination of services; and how reinstatement of services is handled following quality improvement organization (QIO) decisions.

The American Hospital Association (AHA) praised the proposed rule.

“The AHA has previously raised concerns about the negative effects of certain Medicare Advantage practices and policies that have the potential to directly harm patients through unnecessary care delays or outright denial of covered services,” stated Ashley Thompson, AHA senior vice president of public policy analysis and development. “CMS’ proposed rule includes helpful provisions to ensure more consistency between Medicare Advantage and traditional Medicare by curtailing overly restrictive policies that can impede access to care and add cost and burden to the health care system.”

The proposed rule comes as skilled nursing facility admissions have dwindled, while home health admissions have surged.

“In March 2020, at the onset of the COVID-19 public health emergency, the share of inpatient hospital discharges referred to SNFs declined to 16.6% and by October 2020 had reached 14.9%,” MedPAC’s July 2022 data book stated. “By contrast, the share receiving home health care services increased to 20.9%.”

Medicare Advantage insurers and other managed care organizations have incentives to favor lower-cost home health care versus skilled nursing facility care, as they seek to deliver services in settings that consumers prefer and at lower costs. This trend has been enabled by the creation of SNF-at-home models and other programs for delivering more advanced care in the home. However, SNF-at-home has been a slow-growing offering and is still in its early stages.

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