News, Payment/economy, Regulations, Skilled Nursing Facility

SNF PPS final rule published, new payment model to begin October 1, 2019

It’s official: According to CMS’ Skilled Nursing Facility (SNF) Prospective Payment System (PPS) final rule published in the Federal Register yesterday evening, the Patient-Driven Payment Model (PDPM)—the new case-mix methodology to replace RUG-IV)—is effective October 1, 2018. Facilities will have a year to transition to PDPM from RUG-IV by the October 1, 2019 implementation date.

PDPM is considered to be a more simplified payment model compared to RUG-IV and is expected to reduce administrative burdens, including projections from regulators of a $2 billion reduction in provider costs over 10 years as a result of simplified paperwork requirements for resident assessments.

The new model shifts care delivery under Medicare away from fee-for-service, which in the past has based reimbursement on the amount of care provided, to a focus on value-based care, which will base reimbursement on clinical complexity and the resident’s conditions and care needs. “PDPM is a much needed overhaul to RUG-IV, eliminating therapy-related incentives and focusing more on resident characteristics. Ultimately, PDPM will create better alignment between SNF PPS payments and resource use,” says Stefanie Corbett, DHA, Post-Acute Regulatory Specialist for HCPro.

The final rule also establishes a 2.4% market basket update, meaning an $820 million raise for SNFs beginning October 1, 2018. Additional items of note for SNFs include:

  • An update to the scoring methodology for low-volume providers and the Extraordinary Circumstances Exception policy under the SNF Value-based Purchasing Program.
  • Finalized changes to the SNF Quality Reporting Program, including increasing the number of years of data used for display on Nursing Home Compare from one to two years, and considerations for measures selection and removal.
  • Finalized revisions to the requirements of the SNF level of care certification and the consolidated billing provision. As stated in the proposed rule, CMS will continue to make updates to the list of exclusions under consolidated billing, identified by Healthcare Common Procedure Coding System (HCPCS) codes, and any additional substantive changes may be made in the future rulemaking process.

To view the final rule, click here.