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CMS Issues FY 2022 SNF PPS Final Rule

On July 29, 2021, the Centers for Medicare and Medicaid Services (CMS) issued the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) final rule, which is the basis for Medicare Part A reimbursement starting Oct. 1, 2021. The SNF PPS final rule includes several policies that update the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for fiscal year (FY) 2022.

Providers should expect a rate increase of 1.2 percent, which is an estimated impact of $410 million for Medicare Part A in FY 2022. The final rule’s rate increase is lower than that of the proposed SNF PPS issued in April 2021, which was $444 million. The updated rate was calculated using a 2.7 percent market basket increase, reduced by 0.8 percent error correction and 0.7 percent productivity adjustment. In addition, the final rule rate was updated using a 2018 SNF market basket instead of the 2014-based SNF market basket.

As suggested in the April proposed rule, in this final rule CMS continues to seek a new methodology for recalibrating the Patient-Driven Payment Model (PDPM) parity adjustment. CMS data suggest an unintended increase in payments of approximately 5 percent, or $1.7 billion, in FY 2020, which violates the PDPM requirement of budget neutrality. Although CMS acknowledges that the COVID-19 public health emergency (PHE) likely affected the FY 2020 payment increases, they contend that the PHE was not the most important factor in PDPM increased payments. In the final rule, CMS discusses two potential strategies to maintain budget neutrality: delayed implementation and phased implementation.

The final rule also makes updates to the metrics used in the SNF QRP. Beginning in FY 2023, two measures will be added to the QRP. SNFs will have to report health care-associated infections (including sepsis, UTIs, and pneumonia) requiring hospitalizations. CMS will also use COVID-19 vaccination rates among health care personnel as a new metric. SNFs that do not meet reporting requirements for any of the metrics may be subject to a 2 percent reduction in their annual update.

For FY 2022, CMS will 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. Acknowledging the PHE impact on performance measures, the update includes a policy to suppress the SNF 30-Day All-Cause Readmission Measure (SNFRM) for the FY 2022 VBP year. CMS will assign a SNFRM performance score of zero to all participating SNFs, regardless of how they perform using the previously finalized scoring methodology. Additionally, a technical update will be made to the instructions for a SNF to request an extraordinary circumstances exception. 

To provide further guidance on the FY 2022 SNF PPS final rule, CMS is hosting a SNF/Long Term Care Open Door Forum on Thurs., Aug. 5, 2021 from 2 to 3 p.m. To join the conference call by phone, please dial 1-888-455-1397 and use conference passcode 8604468. The CMS fact sheet on the final rule is available here, and the complete (unpublished) final rule, which is scheduled to be published on Aug. 4th, is here. Members can expect an updated PDPM calculator shortly.

Contact: Ken Allison, kallison@leadingageny.org, 518-867-8820