News, Skilled Nursing Facility

CMS proposes 1% Medicare pay boost for SNFs in FY18 and new quality program provisions

On Thursday, April 27, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that increases Medicare payments to skilled nursing facilities (SNF) by $390 million in fiscal year 2018, a 1% pay raise. This number is lower than the previous year, which showed a 2.1% increase, or $800 million increase, last April. If finalized, this pay increase will begin October 1, 2017.

The proposed rule, scheduled for publication in the Federal Register on May 4, with comments due by June 26, also proposes changes to the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing Program (VBP). A fact sheet of these payment and policy changes can be found here.

The American Health Care Association summarizes additional changes, including the following:

  • “The proposed rule provides for a net market basket increase for SNFs of 1.0 percent beginning October 1, 2017. CMS is also proposing to revise and rebase the market basket index by updating the base year from FY 2010 to CY 2014.
  • “The 1.0 percent market basket update reflects a full market basket increase of 2.7 percent reduced by 0.4 percentage points, in accordance with the multifactor productivity adjustment required by Section 3401(b) of the Affordable Care Act (ACA). No forecast error was incurred.
  • “The market basket update of 1.0 percent for FY 2018 for the SNF PPS is based on the IHS Global Insight, Inc. (IGI) first quarter 2016 forecast with historical data through fourth quarter 2016. This figure could change when CMS issues the final rule based on more recent IGI data.
  • “CMS estimates that the net market basket update would increase Medicare SNF payments by approximately $390 million in FY 2018.
  • “As noted above, a forecast error correction was not needed. Since the difference between the estimated and actual amount of change in the market basket index was below the 0.5 percentage point threshold in FY 2016, the payment rates for FY 2018 are not impacted by the current IGI data.
  • “In accordance with the Medicare Modernization Act (MMA), the per diem rate for SNF patients with Acquired Immune Deficiency Syndrome (AIDS) had been increased by 128 percent as of October 1, 2004. Under the CMS proposed rule, this add-on will remain in effect for FY 2018.
  • “CMS proposes that beginning in FY 2018, SNFs that do not satisfy the reporting requirements for the FY 2018 SNF Quality Reporting Program (QRP), would have a penalty of a 2.0 percent reduction to the SNF market basket percentage change for that fiscal year, after any applicable adjustments. With application of this penalty, those SNFs that do not meet the reporting requirements would receive a market basket update of negative 1.0 percent for FY 2018.
  • “As noted earlier, the Skilled Nursing Facility VBP Program (SNF VBP) is discussed. Establishment of the program, which implements a 2 percent withhold to SNF Part A payments that can be earned back based on a SNF’s rehospitalization rate and level of improvement, is required by the Protecting Access to Medicare Act of 2014 (PAMA). CMS proposes that the performance period be based on the calendar year starting January 1, 2017. CMS proposes that the total amount of funds that would be available to for incentive payments for qualifying facilities in a fiscal year would be 60 percent of the amounts withheld from SNFs’ claims. AHCA/NCAL will continue to urge CMS to use 70 percent of the incentive pool for value-based payments.
  • The SNF NPRM contains a section on the SNF Quality Reporting Program (QRP), which is how CMS is operationalizing the IMPACT Act legislation. Last year, CMS finalized four measures for the SNF QRP and specified the changes necessary in the MDS. CMS also finalized the timeline for implementation of the SNF QRP measures from the 2016 and 2017 rules. Beginning with the FY 2020 SNF QRP, CMS proposes to remove the current pressure ulcer measure entitled Percent of Residents of Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678) and to replace it with a modified version of the measure entitled Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury.”

The full summary document can be found here, including a discussion of the proposed rule.