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Proposed rule for FY 2010 SNF PPS rates

The Centers for Medicare & Medicaid Services (CMS) released its proposed rule for FY 2010 payment updates for skilled nursing facilities (SNF) on May 1. The rule calls for a market basket increase and significant cuts to Medicare payments for FY 2010. CMS also proposes a major change in the SNF Prospective Payment System (PPS) for FY 2011, which would implement the Resource Utilization Group (RUG)-IV in tandem with the MDS 3.0 on October 1, 2010. Public comments on the entire proposed rule will be accepted until June 30.

“CMS is once again proposing to make the parity adjustment correction factor to case-mix indices, which works to correct a budget neutrality forecasting error previously made by CMS,” says Peter Gruhn, director of research at the American Health Care Association in Washington, D.C. CMS estimates that the recalibration of the case-mix indices will result in a $1.05 billion decrease in payments to SNFs. “Ultimately, it works out to about a $16 reduction per patient day, which could have fairly significant implications for quality of care and could put facilities under significant financial pressure,” Gruhn says. For a chart comparing the proposed FY 2010 rates to the FY 2009 rates, visit our Resources page.

The proposed rule also calls to increase the FY 2010 market basket by 2.1%, or approximately $660 million, which could offset the decrease in Medicare payments. “There is some concern that, as part of the healthcare reform efforts, the administration may take the SNF market basket away for one or more years, potentially eliminating this update,” Gruhn says.

In addition to the SNF PPS proposed rates for FY 2010, the proposed rule includes:

  • A proposal for a FY 2011 implementation of RUG-IV, which will include changes based on the Staff Time and Resource Intensity Verification (STRIVE) project and increase the total number of RUG categories to 66. “The proposed RUG redistribution for FY 2011 means a dramatic decrease in overall reimbursement for SNFs because a very small percentage of residents will fall into the extensive services and extensive plus rehab RUG-IV categories,” says Ron Orth, RN, NHA, RAC-CT, CPC, president of Clinical Reimbursement Solutions, LLC, in Milwaukee, WI.
  • A request for comments on a possible new rate component to account for the use of non-therapy ancillaries.
  • A request for comments on a possible new requirement for the quarterly reporting of nursing home staffing data.
  • The MDS 3.0 transition and regulatory impact.
  • RUG-III and RUG-IV comparison chart, which will assist state Medicaid agencies in determining how to transition from MDS 2.0 to MDS 3.0.
  • A proposal to replace the Resident Assessment Protocols (RAP) and triggers with Care Area Triggers (CAT).

Stay tuned for updates and in-depth analysis of the proposed rule.