Proposed SNF PPS Rule Aims for Recalibration
On April 8th, the Centers for Medicare and Medicaid Services (CMS) issued the proposed Skilled Nursing Facility (SNF) Prospective Payment System (PPS) rule, which will be the basis of Medicare Part A reimbursement starting Oct. 1, 2021. The rule is also the method by which CMS updates provisions of the SNF Quality Reporting Program (QRP) as well as the Value-Based Purchasing (VBP) program.
The proposed rule would increase payments by approximately $444 million, or 1.3 percent, by applying a 2.3 percent market basket increase (updated from 2014 to 2018) reduced by a 0.8 percentage point forecast error adjustment and a 0.2 percentage point multifactor productivity adjustment.
However, as anticipated, the new Patient-Driven Payment Model (PDPM) reimbursement methodology implemented in October 2019 unintentionally increased payments to SNFs in 2020 by an estimated $1.7 billion (5 percent), thereby violating the requirement that the new methodology be implemented on a budget-neutral basis. The proposed rule outlines the process that CMS undertook to analyze the data and calculate a parity adjustment that would reestablish budget neutrality. The agency acknowledges that the data used may not be reflective of typical utilization due to the public health emergency and is seeking comments on how to recalibrate rates to achieve neutrality. CMS also is specifically soliciting input on whether adjustments should be delayed or phased in to provide payment stability.
Recognizing the significant impact that the public health emergency has had on the measurement and performance scores of the SNF 30-day All-Cause Readmission measure that is the basis of annual VBP payment adjustments, CMS proposes to suppress VBP adjustments for Fiscal Year (FY) 2022. However, because the VBP provision is structured to return only 60 percent of the 2 percent withheld from providers, CMS would impose a uniform reduction on each home. Under normal circumstances, CMS applies a payment adjustment ranging between a 2 percent reduction and a 2 percent increase based on an individual home’s VBP ranking. For FY 2022, CMS would impose a uniform reduction of 0.8 percent on all homes (other than those subject to the Low Volume Adjustment policy), an aggregate reduction of approximately $184.25 million.
In the rule, CMS also describes additional quality measures that the agency is considering incorporating into an expanded SNF VBP based on recent legislation. The Consolidated Appropriations Act, 2021 authorizes up to 10 measures to be used in SNF VBP beginning in FY 2024 and specifies that they may include measures of functional status, patient safety, care coordination, and patient experience.
Finally, the proposed rule would adopt two new SNF QRP measures (Healthcare-Associated Infections Requiring Hospitalization and COVID-19 Vaccination Coverage among Healthcare Personnel) starting in FY 2023.
A CMS fact sheet on the proposal is here, and an inspection copy of the rule, which is scheduled to be published on April 15th, is available here. We will provide additional information as we continue our analysis, assess the parity adjustment calculations, and review the proposed wage index updates. CMS is accepting input until 5 p.m. on June 7th. LeadingAge will develop comments for submission, and we invite members to contact us with questions, concerns, and suggestions.
Contact: Darius Kirstein, firstname.lastname@example.org, 518-867-8841