CMS Proposes 4.1 Percent Increase to Nursing Home Medicare Rates
The Centers for Medicare and Medicaid Services (CMS) has released the Federal Fiscal Year (FFY) 2025 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) proposed rule that sets SNF Medicare Part A rates and makes other payment and reporting policy updates. The proposal would increase Medicare Part A rates by 4.1 percent for the FFY that starts Oct. 1, 2024; update policies governing the SNF Value-Based Purchasing (VBP) Program and Quality Reporting Program (QRP); and expand the mix and number of civil monetary penalties (CMPs) that can be imposed for health and safety citations. CMS proposes no additional funding to offset the costs of federal staffing requirements, which are expected to be issued shortly in a separate rule.
Payment Update
The proposed rule includes a 4.1 percent increase in SNF Medicare Part A rates which is comprised of a 2.8 percent market basket (i.e., inflation) adjustment, a 1.7 percent forecast error adjustment due to the underestimate of inflation from two years prior, and a negative 0.4 percent productivity adjustment. CMS estimates that this would result in a nationwide reimbursement increase of $1.3 billion. The rule would update the base year for the market basket calculation from 2018 to 2022 and make several changes to the International Classification of Diseases (ICD)-10 mapping used to determine a resident’s Patient-Driven Payment Model (PDPM) category.
Members will recall that the regional wage index is an integral part of the rate calculation and can have a significant impact on reimbursement. The proposed rule would adjust 71.9 percent of the rate by the facility’s regional wage index (up from 71.1 percent currently). Regional wage index values in the proposed rule, which continue to be based on hospital wages, decreased by 5 percent (the capped, maximum year-to-year drop) in the Watertown, Binghamton, and Long Island regions, and by about 4 percent in the NYC and Syracuse regions. If enacted as proposed, the wage index decreases in these regions would offset much of the market basket increase. In most other regions, the index would change by less than 2 percent (up or down), although the Glens Falls region and non-urban counties would see an increase of about 2.4 percent.
While the recalibration adjustment related to the shift from Resource Utilization Groups (RUGs) to the PDPM methodology that reduced rates in each of the prior two years is complete and CMS is not proposing any structural changes to the methodology, the agency did include a request for information in the proposal asking for feedback on possible updates to the way that the Non-Therapy Ancillary (NTA) component is constructed. During the original development of PDPM, CMS identified a list of 50 conditions and extensive services that were associated with increases in NTA costs. Each of the 50 comorbidities used for NTA classification was assigned a certain number of points based on its relative costliness. In the proposed rule, CMS provides a list of conditions that the agency is considering using for NTA classification and requests stakeholder input through the comment process.
Civil Monetary Penalties
In conformance with the Biden administration’s stated intent in a February 2022 fact sheet to enhance the safety and quality of care provided in the nation’s nursing homes, CMS proposes to expand enforcement sanctions. Specifically, the rule proposes to allow per-instance and per-day CMPs to be imposed during the same survey, something that is currently prohibited. CMS indicates that this change would provide regulators greater flexibility to impose penalties in a manner that better reflects the health and safety impact of the deficiency and would incentivize permanent correction. Additionally, the rule proposes to allow CMS to impose multiple per-instance CMPs when the same type of non-compliance (i.e., F-tag) is identified on more than one day.
Value-Based Purchasing
SNF Medicare Part A rates are adjusted by a VBP multiplier that can increase or decrease reimbursement by approximately 2 percent based on the facility’s performance on the VBP measure(s). The program was expanded from one to eight measures in the past two years, with some of the measures yet to be implemented. This year’s proposal makes no structural changes, but includes several administrative and operational proposals that would align the measure retention and removal policies with those used in the QRP. CMS also proposes an update to the case-mix methodology used for the VBP Total Nurse Staffing measure, an update of the Review and Correction policy to ensure that SNFs can review and correct Payroll-Based Journal (PBJ) data starting with FFY 2026 and Minimum Data Set (MDS) data beginning in FFY 2027, and the use of a sub-regulatory process for incorporating minor changes, such as specification updates to existing VBP measures.
Quality Reporting Program
Provider rates are not impacted by the publicly reported QRP measures. However, failure to report sufficient data to meet the set threshold requirements will result in a reimbursement reduction of 2 percent. While CMS is not proposing any new QRP measures in the rule, the proposal would require SNFs to collect and submit through the MDS four new standardized patient assessment data elements (SPADEs) and would modify an additional item. The four new items fall under the social determinants of health (SDOH) category: one item for Living Situation, two items for Food, and one item for Utilities. The modification would be to the SDOH Transportation item. In addition, a similar data validation process that was adopted last year for VBP measures would be implemented for the QRP. Finally, CMS seeks input on four concepts for potential future QRP measures. These include a composite vaccination measure, depression, pain management, and patient satisfaction.
While the proposed rule is scheduled to be published on April 3rd, a public inspection version is available here and the fact sheet is here. CMS will accept comments until May 28th, with the rule expected to be finalized in mid-summer.
Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841