CMS data shows nearly 1 in 5 SNF Medicare claims carries an improper payment, and most of it traces back to documentation, not fraud. Here’s what actually closes that gap.
By: Paul Mason, Director of Strategic Partnerships at LTCPro
For: SNF and ALF administrators, billing and revenue cycle managers, and facility owners evaluating whether their current billing process (in-house or outsourced) is actually working.
Key Takeaway: Nearly 1 in 5 SNF Medicare claims nationwide carries an improper payment, and three out of four of those errors trace back to documentation, not fraud or bad intent. The facilities that keep their denial rates low aren’t doing anything exotic; they verify eligibility before the bed is filled, get PDPM coding right before the MDS locks, and audit their own claims before Medicare does it for them.
Table of Contents
- Why SNF Billing Efficiency Keeps Breaking Down
- The Three Numbers Worth Tracking
- Five Practices That Actually Move Those Numbers
- Outsource or Keep It In-House? Where the Math Actually Changes
- Where LTCPro Fits
- FAQ
Skilled nursing facilities across the United States lost $5.6 billion to improper Medicare payments in the most recent CMS reporting period, and 17.9% of all SNF inpatient claims carried an error of some kind. That is not a fraud number. According to CMS’s own compliance data, insufficient documentation alone accounted for 75.5% of those improper payments, with incorrect coding and missing records making up most of the rest. (CMS, Skilled Nursing Facility Services, 2024 reporting period)
That single fact reframes what “billing efficiency” actually means for a SNF. It is not primarily a software problem or a staffing problem. It is a documentation and process problem that shows up as denied claims, aged accounts receivable, and administrators spending Friday afternoons chasing down a therapy note from three weeks ago instead of running the facility.
This piece walks through what is actually breaking, the three numbers worth watching every month, and five practices that move those numbers, based on how billing efficiency actually gets fixed in SNFs and ALFs across the country, not on a generic RCM checklist.
Why SNF Billing Efficiency Keeps Breaking Down
Most SNFs do not have one billing problem. They have four or five small ones that compound:
- Eligibility gaps at admission. Coverage that looked active at intake has lapsed, changed plans, or shifted from fee-for-service to managed care by the time the first claim goes out.
- PDPM coding and MDS misalignment. The clinical picture documented at assessment does not match what gets billed, which is exactly the kind of gap CMS’s 2026 PDPM code mapping revisions were designed to catch. (King & Spalding, summarizing CMS FY 2026 SNF PPS Final Rule)
- Manual claims processing. Claims that are keyed by hand, without a scrubbing step, carry errors into the payer’s system that a five-minute pre-submission check would have caught.
- AR that ages without a trigger. Denied and pending claims sit in a queue with no owner and no follow-up cadence, so 90-day-plus balances build quietly.
- No internal audit rhythm. Facilities that only find billing problems when Medicare’s Comprehensive Error Rate Testing (CERT) program or a Targeted Probe and Educate review finds them first are always working from behind.
None of these individually sinks a facility. Together, they are why SNF improper payment rates have swung as high as 17.2% in a single fiscal year even after CMS introduced facility-level education programs specifically to bring that number down. (Skilled Nursing News, December 2025)
Get a billing efficiency snapshot. LTCPro will review 90 days of your claim and denial data and show you exactly where the leaks are, no cost, no obligation.
The Three Numbers Worth Tracking
Before fixing anything, know where the facility actually stands. Post-acute revenue cycle benchmarking data puts most organizations into one of three bands across the metrics that matter most:
| Metric | Strong performance | Typical performance | At-risk |
|---|---|---|---|
| Denial rate | 3% to 6% | 6% to 10% | 10%+ |
| AR days | 30 to 45 days | 45 to 60 days | 60+ days |
| Clean claim rate | 90% to 95%+ | 85% to 90% | Below 85% |
A facility sitting in the “typical” band on all three is not in crisis, but it is leaving money and staff time on the table it does not have to. A facility in the “at-risk” band on even one of these is usually further along the same underlying problems (documentation gaps, no verification cadence, no audit rhythm) than the number alone suggests.
Five Practices That Actually Move Those Numbers
1. Verify Eligibility Before the Bed Is Filled, Not After
Confirm active Medicaid or Medicare status, plan enrollment (fee-for-service versus managed care), and any prior authorization requirements before or at admission, then re-verify at every change event: a hospital discharge and return, a month change, a redetermination notice. Facilities that treat eligibility verification as a one-time intake task, rather than an ongoing cadence, are the ones that discover a plan switch 60 days into a stay.
2. Get PDPM Coding Right Before the MDS Locks
Under the Patient-Driven Payment Model, the clinical category assigned at assessment drives the daily reimbursement rate across five payment components: PT, OT, SLP, Nursing, and Non-Therapy Ancillary. CMS’s FY 2026 final rule made technical revisions to the PDPM ICD-10 code mappings specifically because misclassification at this step is a recurring source of both underpayment and audit exposure. (King & Spalding, CMS FY 2026 SNF PPS Final Rule) A second set of clinical eyes on PDPM coding before the MDS locks catches errors while they are still cheap to fix.
3. Run a Triple Check Before Every Medicare Part A Claim Goes Out
A Triple Check, a joint pre-billing review by billing, MDS, and therapy or nursing staff, catches the mismatches a single department misses on its own: a diagnosis charted one way and billed another, a discharge date that does not match the UB-04, a missing physician certification. This is the single highest-leverage manual review most SNFs are not doing consistently, and it directly targets the 75.5% of improper payments CMS attributes to documentation gaps.
4. Automate Submission and Scrubbing, Not Just Data Entry
Electronic claims submission with an automated scrubbing step, checking for missing fields, mismatched codes, and consolidated billing exclusions before the claim ever reaches the payer, removes the most common source of first-pass rejections. This is not about replacing billing staff. It is about not asking them to catch by eye what software catches in seconds.
5. Put a Real Owner and Cadence on Aged AR
Every claim over 30 days needs a named owner and a follow-up date, not a spot in a shared queue nobody is accountable for. Facilities that reduce 90-day-plus AR consistently do it the same way: they separate denials by root cause (eligibility, authorization, documentation, timely filing) and route each type to whoever can actually fix it, instead of treating every denial as a generic “rebill and hope” task.
See how your denial rate compares. Share your last quarter’s denial data, and LTCPro will benchmark it against the ranges above at no cost.
Outsource or Keep It In-House? Where the Math Actually Changes
This is usually framed as an all-or-nothing decision, and it rarely is. The more useful question is where the facility’s current bottleneck actually sits.
If the problem is capacity (a small billing team drowning in volume, or turnover that keeps resetting institutional knowledge), a fully outsourced billing and AR function solves it directly. If the problem is more about visibility and consistency (the facility has staff, but no standardized workflow or audit rhythm across shifts and locations), pairing existing staff with dedicated software built for SNF and ALF billing, rather than replacing the team, often closes the gap faster.
The facilities that get this wrong tend to buy software when they actually needed process and staffing support, or add staff when what they actually needed was a system that catches errors before a person ever sees the claim. Diagnosing which one applies before picking a fix is worth doing before signing anything.
Where LTCPro Fits
LTCPro works with SNFs and ALFs across the United States on exactly this mix: revenue cycle management, billing and accounts receivable, and back-office operations, paired with proprietary software covering financial, clinical, and management functions. Facilities can license the software on its own or combine it with LTCPro’s back-office staffing, depending on whether the gap is a system gap or a people gap.
Talk to LTCPro about your billing operation. Fifteen minutes to walk through where your facility’s denials and AR are actually coming from.
FAQ
What is a good clean claim rate for a skilled nursing facility?
Most post-acute organizations that are performing well land between 90% and 95% or higher on first-pass clean claims. A rate between 85% and 90% is typical but leaves room for improvement, and anything below 85% usually points to upstream problems in intake, eligibility verification, or documentation rather than a billing-department-only issue.
Why do most SNF Medicare claims get denied or flagged as improper payments?
According to CMS’s own compliance data, insufficient documentation is the leading cause, accounting for 75.5% of improper payments in SNF inpatient claims during the most recent reporting period. Incorrect coding and missing documentation account for most of the remainder. Very little of the national improper payment rate is attributable to fraud.
How often should a SNF audit its own billing?
At minimum, quarterly internal audits catch drift before an external audit does. Facilities with higher denial rates, recent staff turnover in billing, or a recent PDPM coding change should audit more frequently, since documentation habits and process discipline erode faster than most administrators expect.
What is a Triple Check in SNF billing, and who should be involved?
A Triple Check is a pre-billing review, typically involving billing, MDS, or nursing and therapy staff, that verifies a Medicare Part A claim before it is submitted. It exists specifically to catch mismatches between what was documented clinically and what is about to be billed, which is the largest single category of improper SNF payments nationally.
Should a facility outsource billing or keep it in-house?
It depends on whether the underlying problem is capacity or consistency. A facility short on staff or losing institutional knowledge to turnover usually benefits from outsourcing the function outright. A facility with adequate staff but no standardized workflow across shifts often gets more value from adding purpose-built software to the team it already has.
Does PDPM coding accuracy actually affect claim denials, or just the reimbursement amount?
Both. Incorrect PDPM classification can trigger both underpayment (the facility is paid less than the resident’s actual clinical complexity warrants) and denials or audit flags when the classification does not match supporting documentation. CMS’s FY 2026 PDPM code mapping revisions were specifically intended to reduce this kind of misclassification.
LTCPro provides revenue cycle management, billing, and back-office support for skilled nursing and assisted living facilities across the United States, pairing proprietary software with hands-on staffing support.
