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SNF PPS Proposal Seeks to Recalibrate PDPM

After delaying recalibration of the Patient-Driven Payment Model (PDPM) reimbursement system for a year, the Centers for Medicare and Medicaid Services (CMS) is again proposing to go forward with the adjustment. CMS is seeking to address what the agency says is a reimbursement increase of nearly 5 percent that is driven by the change in methodology from Resource Utilization Group (RUG)-IV to PDPM. The proposal would recalibrate the parity adjustment by 4.6 percent in Fiscal Year (FY) 2023, reducing Medicare Part A payments to skilled nursing facilities (SNFs) by approximately 4.6 percent (negative $1.7 billion) in FY 2023. Importantly, this reduction would be substantially mitigated by the proposed FY 2023 net SNF market basket (i.e., inflation) update factor of 3.9 percent, which combines a market basket increase of 2.8 percent, a positive 1.5 percentage point forecast error correction, and a negative 0.4 percentage point productivity adjustment. The result would be a nationwide decrease of $320 million.

Along with updating SNF Medicare Part A reimbursement rates, CMS uses the SNF Prospective Payment System (PPS) rule to propose policy changes to the SNF Value-Based Purchasing (VBP) program and the SNF Quality Reporting Program (QRP) and often includes specific Requests for Information to help inform their rule-making. This year’s proposed rule includes a number of changes to the QRP and notably seeks to expand the number of measures in the VBP program that governs the opportunity for homes to earn back some or all of the 2 percent of revenue that CMS withholds. For FY 2023, the agency proposes to again suspend the SNF VBP program due to data instability and reduce payments to all providers by a uniform 0.8 percent. It proposes to add SNF Healthcare Associated Infections Requiring Hospitalization and Nursing Hours per Resident Day as VBP measures in FY 2026 and Discharge to Community – Post Acute Care in FY 2027.

CMS released the SNF PPS proposed rule for FY 2023 on April 11th. A fact sheet is available here, and a link to the rule text is here. CMS will accept comments on the proposed rule until June 10th and issue the final rule likely in late July or early August. LeadingAge NY will provide a more thorough summary of the proposal in the next two weeks.

Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841