SNF Medicare Rule Increases FY 2023 Payments by 2.7 Percent Over Prior Federal Fiscal Year
Nursing home providers have a partial respite from anticipated cuts to Medicare funding to recalibrate rates to the Patient-Driven Payment Model (PDPM) methodology. In a dynamic replicated in several other Medicare payment Final Rules, the Centers for Medicare and Medicaid Services (CMS) used newer data to update the Skilled Nursing Facility (SNF) Market Basket Increase (i.e., inflation adjustment applied to Medicare rates) from the 2.8 percent published in the Proposed Rule to 3.9 percent used in the Final Rule calculations. When the 3.9 percent inflation factor is combined with a positive 1.5 percentage point Market Basket forecast error adjustment (for prior year’s underestimate) and a negative 0.3 percentage point productivity adjustment, the increase would total 5.1 percent. However, the recalibration reduction that CMS decided to implement over two years reduces rates in the next two years by 2.3 percent each year, meaning that the Federal Fiscal Year (FFY) 2023 rates will increase by 2.7 percent.
That represents a $900 million nationwide increase starting Oct. 1, 2022, where the Proposed Rule would have cut $320 million. Although we continue to point out that the use of the hospital wage index may be unrepresentative of nursing home wage dynamics given the wider use of paraprofessionals in long term care, CMS continues to use the pre-floor, pre-reclassified hospital wage index data as the basis for the nursing home wage index that is used to adjust 70.7 percent of the Medicare rate. This year’s Final Rule caps any single-year decrease in the wage index at 5 percent to help mitigate large rate swings.
In addition, it is worth noting that by suppressing the SNF Value-Based Purchasing (VBP) 30-Day All-Cause Readmission Measure for rate adjustment purposes and applying a uniform reduction to all providers, CMS ensures that all homes will share a uniform, negative VBP impact totaling $186 million nationwide, regardless of how well a provider may have reduced or prevented hospitalizations. Performance scores will be reported publicly but will not affect payment.
CMS finalized the addition of three new measures to the SNF VBP program, two in FY 2026 and an additional one in FY 2027. In FY 2026, CMS will adopt the SNF Healthcare Associated Infections Requiring Hospitalization (HAI) and Total Nursing Hours per Resident Day measures. Providers should be familiar with the specifications of both measures since the HAI measure has been part of the SNF Quality Reporting Program (QRP) and the staffing measure is a Five-Star staffing measure. Starting in FY 2027, the program will also adopt the Discharge to Community – Post-Acute Care Measure for SNFs (DTC). We will provide additional information on how scoring of the measures will translate to payment adjustments.
The Rule adds a new quality measure for the FY 2024 SNF QRP that tracks influenza vaccination coverage among health care professionals in SNFs. To comply, SNFs will be required to submit data between Oct. 1, 2022 and March 31, 2023 through the National Healthcare Safety Network (NHSN). New York SNFs are already required to submit this data to the State, and both submission compliance and vaccination rates are part of the State’s Nursing Home Quality Initiative (NHQI) scoring calculation.
The Rule accelerates some timeframes, including the shift to the new Minimum Data Set (MDS) version (MDS 3.0 v1.18.II), which may have specific implications for New York providers regarding case mix data, which is still based on Resource Utilization Group (RUG)-III. It accompanies updated compliance dates for certain SNF QRP reporting requirements. SNFs must begin collecting Transfer of Health Information data and standardized patient assessment data, such as race, ethnicity, preferred language, and health literacy, starting Oct. 1, 2023. These timeframes have shifted significantly, from a full two years after the end of the Public Health Emergency to October 2023. The Rule also grandfathers in some facilities for purposes of determining equivalent fire prevention levels (more info curtesy of LeadingAge National and Jensen Hughes here) and provides some flexibility in the qualification requirements for directors of food and nutrition. After consideration, CMS has decided to make no changes to infection coding.
While the Proposed Rule included a Request for Information on staffing ratios, which CMS continues to reference as an initiative for which they expect to issue a proposal within a year, the Agency noted that it received many responses that are still being reviewed.
The Final Rule Fact Sheet is available here, and the full text of the Rule (preview version with publication scheduled for Aug. 3rd) is here.
Contact: Darius Kirstein, email@example.com, 518-867-8841