Five Highlights of the Proposed SNF Medicare Payment Rule
The Centers for Medicare and Medicaid Services (CMS) published the proposed Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Rule in the Federal Register on April 10th. The agency will accept comments until June 5th and will finalize the rule later in the summer. After last year’s rule which implemented recalibration to adjust for overspending attributed to the shift from Resource Utilization Group (RUG)-IV to the Patient-Driven Payment Model (PDPM) methodology and solicited input on staffing ratios, this year’s rule is comparatively staid. Here are five highlights from an early look at the proposal.
1. Change in Rate. CMS estimates that the proposed increase would raise Medicare Part A reimbursement by $1.2 billion nationwide, a 3.7 percent increase over the current year. What is called a trend factor in New York is called the market basket increase by CMS. That market basket increase is comprised of a 2.7 percent bump for the most recent inflation and a significant forecast error adjustment to make up for underestimates of prior inflation. This figure is then reduced by the 2.3 percent adjustment to reflect the second year of recalibration, which is meant to negate the cost increase attributed solely to the change in reimbursement methodology.
2. Ratios. One top highlight is what is not there – the proposed rule has no staffing ratios provision. All that means, however, is that CMS intends to issue a proposal separate from the PPS rule later in the spring. What staffing requirements might look like and how they might compare or interact with the New York State nursing staffing requirements is yet to be seen. We know that CMS received copious feedback on the topic when they requested it in last year’s proposed PPS rule and that the agency has been studying the topic with the stated intent to propose something this year.
3. Wage Index. The wage index is a sleeper issue that can neutralize or supercharge the market basket adjustment for a region whose wage index increases or decreases by a significant amount. The wage index is applied to approximately 70 percent of the rate. Based on the proposed rule, New York City would see a 3.3 percent increase relative to the current year, Dutchess would rise by 5 percent, while areas of the state designated as non-urban would increase by 0.4 percent. Watertown and Utica would drop, with Ithaca and Elmira facing the possibility of the maximum 5 percent decrease.
4. CMS Proposes to Give Back. Historically, the SNF Value-Based Purchasing (VBP) program has reduced rates by 2 percent, returning 60 percent of that funding through VBP to facilities that perform better on the VBP measure. During the COVID-19 years, including this year, CMS was not sufficiently confident of the veracity of the hospitalization data and suppressed facility-specific VBP payment adjustments, opting instead to reduce the rates of all providers by a uniform 0.8 percent to achieve the required savings. However, in the coming year, not only is CMS proposing to return to facility-specific adjustments and looking to expand the number of measures in the VBP program, but it is also looking to increase the give-back to 66 percent as part of an initiative to reduce health disparities. To prioritize the achievement of health equity and the reduction of disparities in health outcomes in SNFs, CMS is proposing the adoption of a Health Equity Adjustment in the SNF VBP program that would reward SNFs that perform well on the VBP measures and whose resident population during the applicable performance period includes at least 20 percent of residents with dual eligibility status. This adjustment would begin with the Fiscal Year (FY) 2027 program year and FY 2025 performance year. CMS would adjust the scoring methodology to provide bonus points to high-performing facilities that provide care to a higher proportion of duals.
5. Presumptive Waiving. The proposed rule would eliminate the requirement for facilities facing a civil money penalty (CMP) to actively waive their right to a hearing in writing and instead treat the failure to submit a timely hearing request as a constructive waiver. CMS notes that nearly 95 percent of facilities facing CMPs are following this process already, which provides those opting for it a 35 percent penalty reduction. This proposed revision would reduce the burden on not only the facilities, but on the states and CMS as well, as they would no longer have to track and manage the written waiver requests.
A more comprehensive analysis is forthcoming. Those seeking more information may want to tune in to CMS's April 13th SNF Open Door Forum at 2 p.m. A fact sheet is available here, and the published proposed rule is here.
Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841