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CMS Releases SNF PPS Final Rule for FY 2014

On August 1, 2013, the Centers for Medicare & Medicaid Services (CMS) published the final rule for the Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) for FY 2014 in the Federal Register. Effective October 1, 2013, this final rule updates the payment rates used under the prospective payment system for SNFs for FY 2014. In addition, it revises and rebases the SNF market basket, revises and updates the labor related share, and makes technical and conforming revisions in the regulations text. This final rule also includes a policy for reporting the SNF market basket forecast error in certain limited circumstances and adds a new item to the Minimum Data Set (MDS), Version 3.0 for reporting the number of distinct therapy days. Finally, this final rule adopts a change to the diagnosis code used to determine which residents will receive the AIDS add-on payment, effective for services provided on or after the October 1, 2014, implementation date for conversion to ICD-10-CM.

Updated payment rates
According to the final rule, there will be a net rate increase of 1.3% or $500 million for FY 2014. “The final rates are updated from the Notice of Proposed Rulemaking that proposed a 1.4% net increase,” says Diane Brown, director of postacute education at HCPro. “The actual change is a 1.3% net increase over FY 2013 rates based on updated data.” This update is based on the following factors:

2.3% Update factor
-0.5% Market basket forecast error or adjustment
-0.5% Multifactor productivity (MFP) adjustment per ACA 2010

1.3% Net update

Additionally, the budget neutrality factor changes to 1.006.

Commenters on the Notice of Proposed Rulemaking (NPRM) from May 2013 urged CMS to expedite the research necessary to develop a new model for Non-Therapy Ancillaries (NTAs). CMS responded that it look forward to working with providers and stakeholders in the future as they continue research. (Note: A new NTA methodology was mandated by the Benefits Improvement and Protection Act [BIPA] of 2000.)

Ongoing monitoring of the impact from potential ‘double hit’ FY 2012 policy changes
In the FY 2014 SNF PPS proposed rule, CMS discussed monitoring efforts associated with impacts of certain policy changes finalized in the FY 2012 SNF PPS final rule. In the final rule, CMS detailed its efforts in monitoring the impact of the following FY 2012 changes:

  • Recalibration of FY 2011 SNF parity adjustment
  •  Allocation of group therapy time across group (allows only 25% to be captured for each of 4 patients)
  •  Implementation of MDS 3.0 changes (includes the COT OMRA assessment, which intended to more accurately capture therapy services)

Through these efforts, CMS discovered the following:

  • Individual therapy is delivered 99.5% of the time per MDS 3.0 data
  • The ultra high category is similar
  •  Eleven percent of MDS submissions are COT OMRA assessments

According to CMS, through these monitoring efforts it found no unanticipated or undesirable changes. “There was much discussion about the prior industry concern of a ‘double hit’ from the FY 2012 policy changes of recalibration of the parity adjustment and simultaneous implementation of the COT OMRA policy,” says Brown.

“Although CMS insists there is no unanticipated impact, the industry still feels that CMS is not taking into account all the residual costs associated with those changes such as staff time for completing extra MDS, software costs, management of the process, etc. When you operationalize all those changes, obtaining the correct reimbursement RUG for the optimal number of days, not falling inadvertently into provider liability situations, and remaining compliant with all the Medicare rules is exceedingly difficult.”

Note: The COT OMRA process, rather than the concept, has created an increased workload for SNFs, and an unintended potential for provider liability situations.

Wage index adjustment
There are some minor Core-Based Statistical Areas (CBSA) changes within the final rule. These changes include:

  • The addition of a few new CBSAs
  • The shift of some urban areas to rural
  • The shift of some rural areas to urban
  • Some CBSAs have been split

Also, effective on October 1, 2013, the Wage Index for Urban Areas Based on CBSA Labor Market Areas (Table A) and the Wage Index Based on CBSA Labor Market Areas for Rural Areas (Table B) will no longer be included as an Addendum to the final rule document on the Federal Register. Instead, to be consistent with other Medicare payment systems, these tables are published on the CMS.gov Medicare website.

Rate calculation proposal: Revising and rebasing the SNF market basket index

The following are terms used by CMS that you should be aware of:

  • SNF market basket index: The mix of goods and services needed to produce SNF care and denote the input price index that includes weights and price factors. Price factor includes routine costs, costs of ancillary services, and capital-related costs.
  • Revising: Change of data source.
  • Rebasing: Shifting of base year from FY 2004 to FY 2010. CMS revised the data inputs by adding more detail to categories and adding additional categories (from 23 to 29 cost categories).

Revises and updates labor related share (LRS)
The total labor related share for FY 2014 is 69.545% or .69545. This is based on the FY 2010-based index instead of the FY 2004-based index.

Additional MDS item effective October 1, 2013
According to the final rule, CMS will add MDS item O0420, Distinct Calendar Days of Therapy, to the MDS assessment form sets. This item will also be added to the RUG-IV grouper.

“The addition of the new MDS item, that reports the number of distinct therapy days, does not represent a change to the SNF PPS system, it just aligns the MDS and RUG process with existing coverage and level of care requirements,” Brown says. “It should help ensure compliance with the level of care requirements.”

Medicare Part A skilled coverage guidelines (IOM 100-02 MBPM, Ch. 8 ) require therapy to be delivered to a beneficiary on at least five days—if therapy is the only skilled service—in order to meet the daily skilled coverage requirement. However, a beneficiary can currently obtain a RUG score in the medium categories through the MDS without meeting the five-day requirement, as the MDS does not record distinct calendar days of therapy.

For example, a patient may receive three days of physical therapy, two days of occupational therapy, and one day of speech-language pathology services. The MDS records these services as six days of therapy, generating a RUG score in the medium category (provided that the other essential requirements are met).

On April 1, 2013, through Transmittal R161BP, CMS added clarifying regulatory language to the MBPM under §30.6 – Daily Skilled Services Defined:

The daily basis requirement can be met by furnishing a single type of skilled service every day, or by furnishing various types of skilled services on different days of the week that collectively add up to “daily” skilled services. However, arbitrarily staggering the timing of various therapy modalities though the week, merely in order to have some type of therapy session occur each day, would not satisfy the SNF coverage requirement for skilled care to be needed on a “daily basis.” To meet this requirement, the patient must actually need skilled rehabilitation services to be furnished on each of the days that the facility makes such services available.

It is not sufficient for the scheduling of therapy sessions to be arranged so that some therapy is furnished each day, unless the patient’s medical needs indicate that daily therapy is required. For example, if physical therapy is furnished on 3 days each week and occupational therapy is furnished on 2 other days each week, the “daily basis” requirement would be satisfied only if there is a valid medical reason why both cannot be furnished on the same day. The basic issue here is not whether the services are needed, but when they are needed. Unless there is a legitimate medical need for scheduling a therapy session each day, the “daily basis” requirement for SNF coverage would not be met.

This means that if different disciplines distribute therapy across five days, there must be documentation to indicate the clinical need for staggering the services. Without that documentation, medical reviewers will deny all or part of a claim. The issue here is not whether the services are needed, but when they are needed in order to satisfy a daily basis.

SNF PPS AIDS payment add-on
Currently, SNFs that care for residents with AIDs, ARC-related conditions, or active HIV add the ICD-9-CM diagnosis code, 042, to the UB-04 to activate the additional 128% add-on. When the transition to ICD-10 is completed on October 1, 2014, CMS will link the add-on to ICD-10 –CM code B20, which no longer includes AIDS-like syndrome.

Addressing public comments and suggestions
Within the final rule, CMS addressed the public comments and suggestions on the following:

  • SNF therapy research project. CMS has contracted with Acumen, LLC, and Brookings Institute to identify potential alternatives to the current method of payment for therapy services. CMS solicited comments and ideas for methods to pay for those services from the provider community in the NPRM. The comments received supported CMS’ broad objective to develop a new methodology for paying for therapy services received in a SNF and urged CMS to expedite the research. Although CMS feels it is too early to establish a time frame, a therapy research email box has been created at: SNFTherapyPayments@cms.hhs.gov.
  • Consolidated billing excluded services that are high cost but low probability. The services discussed in this section include chemotherapy, chemotherapy administration, radioisotopes, and customized prosthetics that are tied to HCPCS codes. Although there was much discussion between providers and CMS, there are no new changes. However, a correction to the files will show that HCPCS codes 11042, 11043, and 11044 (surgical debridement codes) will be corrected to ensure that they are excluded from consolidated billing. “These consolidated billing corrections are important corrections,  as they have been listed—erroneously—as being included in consolidated billing when they are actually excluded,” Brown says.

Technical and conforming revisions in regulatory text
With the final rule, CMS has also finalized revisions to the regulation texts. This corrected text relates to the SNF level of care certification and recertifications by including physician assistants in the provision authorizing nurse practitioners and clinical nurse specialists to sign SNF level of care certifications and recertifications. This was enacted by the Affordable Care Act of 2010.