Final rule for FY 2019 SNF PPS and consolidated billing

October 4, 2023, Update

On October 4, 2023, CMS issued updates to the FY 2024 SNF PPS Final Rule due to errors that appeared in the calculations originally issued in the August 7, 2023, Federal Register. These corrections are effective as if they had been included in the FY 2024 SNF PPS Final Rule which is effective October 1, 2023.

As a result of these corrections, we have updated our interactive PPS rate calculator accordingly.

The updated, pre-reclassified, pre-rural floor hospital inpatient PPS (IPPS) wage data is used in developing the wage index to be applied to SNFs. A technical error was included in the calculation of the IPPS Final Rule, as a result the use of corrected wage data required recalculation of wage indexes as well as the:

• Wage index budget neutrality factor,
• Unadjusted SNF PPS Federal per diem rates provided in Tables 3 and 4 of the August 7th issued Federal Register,
• Case-mix adjusted SNF PPS rates provided in Tables 5 and 6 of the August 7th issued Federal Register, and
• The impact analysis provided in Table 30 of the August 7th issued Federal Register.
• There were also changes made to the FY 2024 Patient Driven Payment Model (PDPM) ICD-10 Mappings. CMS has republished an updated code mappings accordingly on the CMS website.

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August 9, 2023

The Centers for Medicare and Medicaid Services (CMS) issued the Final Rule for the PPS for SNFs for FY 2024, which was published in the Federal Register on August 7, 2023. The regulations in this rule are effective October 1, 2023, except for certain amendments that are effective January 1, 2024. 

The rule: 

• Updates the PPS payment rates for SNFs for FY 2024 using the market basket update and budget neutrality factors effective October 1, 2023, as well as changes the labor-related portion of rates. 
• Implements the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration. 
• Updates the consolidated billing provision. 
• Addresses changes to civil monetary penalties.
• Updates the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10) mappings used under PDPM. 
• Updates the Skilled Nursing Facility Quality Reporting Program (SNF QRP).
• Updates the Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP). 

2024 PPS rate calculations 

The Final Rule provides a productivity-adjusted market basket increase for SNFs of 6.4% beginning October 1, 2023, which reflects: 

• A market basket increase of 3% based on IHS Global Inc.’s (IGI’s) second quarter 2023 forecast with historical data through the first quarter of 2023.
• An added 3.6% associated with a forecast error adjustment.
• A reduction of 0.2% in accordance with the multifactor productivity adjustment.

CMS estimates that the aggregate impact of the payment policies in this Final Rule would result in an increase of 4%, or approximately $1.4 billion, in Medicare Part A payments to SNFs in FY 2024. This estimate reflects a $2.2 billion increase as a result of the 6.4% market basket update, as well as a negative 2.3%, or approximately $789 million decrease, resulting from the second phase of the PDPM parity adjustment recalibration. The PDPM parity adjustment recalibration was implemented in the FY 2023 Final Rule to balance mitigating the financial impact on providers of recalibrating the PDPM parity adjustment with ensuring accurate Medicare Part A SNF payments due to the unintended increase in payments of approximately 5%, or $1.7 billion annually with the implementation of PDPM, which was intended to be budget neutral. The adjustment factor is 4.6% with a two-year phase-in period.  

The projected overall impact to providers in urban and rural areas is an average increase of 4.1% and 3.3%, respectively, with a low of 1.6% for urban outlying providers and a high of 5.3% for urban Middle Atlantic providers―actual impact will vary.  

A labor-related share, based on the relative importance of labor-related cost categories (that is, those cost categories that are labor-intensive and vary with the local labor market) in the input price index, was calculated based on IGI’s second quarter 2023 forecast, with historical data through the first quarter of 2023. The final labor-related share applied as a result is 71.1%. 

The applicable wage index continues to be based on the inpatient prospective payment system (IPPS) hospital wage data, unadjusted for occupational mix, rural floor, or outmigration adjustment (from FY 2020) as the basis for the SNF PPS wage index in the absence of SNF specific data. 

Changes in PDPM ICD-10 Code Mappings 

The PDPM utilizes the ICD-10 codes in several ways, including using the person’s primary diagnosis to assign patients to clinical categories under several PDPM components. This year CMS finalized changes to the clinical category assignment for five new ICD-10 codes that were effective October 1, 2022, and made changes to the PDPM ICD-10 code mappings for several other codes. 

Consolidated billing

The Final Rule added marriage and family therapists and mental health counselors to the list of practitioners whose services are excluded from the consolidated billing provision, effective January 1, 2024.

Civil monetary penalties

CMS eliminated the requirements for facilities to waive their right to a hearing in writing in order to receive the 35% penalty reduction. In its place, CMS created a constructive waiver process that is automatic when no timely request for a hearing is received by CMS. 

SNF QRP update 

The SNF QRP applies to freestanding SNFs, SNFs affiliated with acute care facilities, and all non-critical access hospital (CAH) swing-bed rural hospitals. It requires the annual market basket percentage increase applicable to a SNF to be reduced by 2% for a fiscal year if the SNF does not submit required data.   

The Final Rule adds two new measures, modifies one measure, and removes three measures from the SNF QRP.

The following measures are being implemented by CMS for this program: 

• The Discharge Function (DC Function) Score measure beginning with the FY 2025 SNF QRP. This assessment-based outcome measure evaluates functional status by calculating the percentage of SNF residents who meet or exceed an expected discharge function score.  
• The COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure beginning with the FY 2026 SNF QRP. This process measure reports the percentage of stays in which residents in a SNF are up to date on their COVID-19 vaccinations per the Centers for Disease Control and Prevention's (CDC’s) most recent guidance.  

The following measures are being modified: 

• The COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) measure beginning with the FY 2025 SNF QRP.  

The following measures are being removed: 

• Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function. 
• Application of the IRF Functional Outcome Measures: Change in Self-Care Score for Medical Rehabilitation Patients (Change in Self-Care Score) measure. 
• Application of the IRF Functional Outcome Measures: Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score) measure. 

Additional changes to the SNF QRP are as follows: 

• SNFs must report 100% of the required quality measures data and standardized resident assessment data collected using the MDS on at least 90% of all assessments submitted beginning with FY 2026.  
• The public reporting of the following measures will begin as follows: 

October 2024

• DC Function measure

October 2025

• Patient/Resident COVID-19 Vaccine measure. 
• Transfer of Health (TOH) Information to the Provider—Post-Acute Care (PAC) Measure and the TOH Information to the Patient—PAC Measure.  

SNF VBP Program update 

The SNF VBP Program awards incentive payments to SNFs to encourage improvements in the quality of care provided, and applies to freestanding SNFs, SNFs affiliated with acute care facilities, and all non-CAH swing bed rural hospitals.   

In this Final Rule, CMS is adopting four new quality measures as follows: 

• The Nursing Staff Turnover measure beginning with the FY 2026 program year. This is a structural measure that uses auditable electronic data reported to CMS’ Payroll-Based Journal (PBJ) system to calculate annual turnover rates for nursing staff, including registered nurses, licensed practical nurses, and nurse aids. This is currently being measured and publicly reported on Care Compare.  
• The Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) beginning with the FY 2027 program year. This measure is an outcome measure that estimates the percentage of long-stay residents who have experienced one or more falls with major injury. 
• The Discharge Function Score measure beginning with the FY 2027 program year. This measure is also an outcome measure and estimates the percentage of SNF residents who meet or exceed an expected discharge score during the reporting period. 
• The Number of Hospitalizations per 1,000 Long-Stay Resident Days measure beginning with the FY 2027 program year. This measure calculates the number of unplanned inpatient admissions to an acute care hospital, critical access hospital, or outpatient observation stays that occurred among long-stay residents per 1,000 long-stay resident days using one year of Medicare fee-for-service (FFS) claims data. 

CMS is also changing the SNF 30-Day Potentially Preventable Readmission measure (SNFPPR) (renamed the SNF Potentially Preventable Readmissions after Hospital Discharge) by changing the outcome observation window from a fixed 30-day window following acute care hospital discharge to within the SNF stay, and changing the length of time allowed between a qualified prior proximal inpatient discharge and SNF readmission from one day to 30 days. This measure is also being renamed to the SNF Within-Stay Potentially Preventable Readmission (SNF WS PPR) Measure and is replacing the SNF 30-Day All-Cause Readmission Measure (SNFRM) beginning with the FY 2028 program year. 

Lastly, a Health Equity Adjustment (HEA) is being adopted to not only appropriately measure performance by rewarding SNFs that overcome the challenges of caring for higher proportions of SNF residents with dual eligibility status (DES), but also to incentivize those who have not achieved such high-quality care to work toward improvement. A SNF’s performance will need to meet or exceed a certain threshold and its resident population during the applicable performance period for the program year will have to include at least 20% of residents with DES. This adjustment will begin with the FY 2027 program year. In addition, to support the HEA, CMS is increasing the payback percentage policy under the SNF VBP program from the current 60% to a level such that the bonuses provided to the high-performing, high-DES-serving SNFs do not come at the expense of the other SNFs.  

Calculate your facility's FY 2024 rates with our interactive SNF PPS calculator

Our experts at BerryDunn have created an interactive rate calculator to assist you with the calculation of your PPS rates for FY 2024. The calculator is now in a new web-based platform, which can be accessed now. 

If you have any specific questions about the Final Rule or how it might impact your facility, please contact Ashley Tkowski or Melissa Baez. 

Read this if you are a Senior Living Facility in Maine.

Due to the recent and significant changes to the Maine LTC Supplemental Payment program, we felt it would be helpful to provide an overview of the program and outline the recent updates. 

Round one

In September 2021, the Department of Health and Human Services (DHHS) announced they would be issuing $123 million in payments to Nursing Facilities (NF), Residential Care Appendix C Facilities (RCF), and Adult Family Care Homes (AFCH) (including over $37 million in state funds combined with approximately $87 million in federal matching funds). Payments were made in two installments, one in September 2021 and a second in October 2021. These LTC Supplemental Payments were originally required to be used to offset costs associated with the Public Health Emergency (PHE) during the period from July 1, 2021, to June 30, 2022. In March 2022, the Office of MaineCare Services announced an extension to the date for the use of the funds received in September and October 2021 from June 30, 2022, to December 31, 2022. 

Acceptable uses of these funds include: 

• To pay for increased costs related to ensuring recruitment and retention of direct care/frontline staff to meet facility needs. Compensation to staff to aid in recruitment and retention may include overtime pay and bonuses for essential personnel. Essential personnel are defined as anyone regularly working at the facility, although these payments should be primarily targeted toward direct care workers and/or those who are required to be in the facility on a day-to-day basis. Any compensation to staff is required to be reasonable. 
• Payments to assist with:
  • Retention of other essential personnel
  • Non-communal dining 
  • Visitor/vendor screening 
  • Housekeeping and supplies
• Testing supplies and/or costs
• Personal protective equipment (PPE) and other face coverings necessitated by COVID-19 

Expenses paid for by other funding sources cannot be claimed against these funds.

For NFs and RCFs, the LTC Supplemental Payments will be reconciled at the same time as the provider’s annual cost report audit; however, the reconciliation of the LTC Supplemental Payment and the audit of the cost report will be performed independently. Providers are required to submit a financial reconciliation to the DHHS-Division of Audit with their cost report filing. The financial reconciliation must document the actual costs incurred for COVID-19-related expenditures compared to the LTC Supplemental Payments received. DHHS will review the submissions for reasonableness and necessity of the expenditures and settle on any overpayment. For cost report filings, any expenditures paid by the LTC Supplemental Payment should be removed from allowable costs through a cost report adjustment.

The full bulletin can be found at: Supplemental Payment Information for Sections 2, 67, and 97 Appendix C Providers

In October 2021, FAQs were released by DHHS, which were then updated in November 2021. Key takeaways are as follows:

• Any recruitment or retention bonuses that are in compliance with the principles of reimbursement will be allowed.
• Originally the LTC Supplemental Payments could not be used for the following direct care worker recruitment and retention efforts: housing vouchers, hotel rental fees for traveling workers, daycare subsidies, transportation assistance, etc. However, this was updated in the November 2021 FAQ update to clarify that providers may include the cost of housing expenses and daycare subsidies necessary to recruit and/or retain employees into the amount of any bonuses paid to employees. The criteria rationale for the amount of the bonus must be a part of a written policy (e.g., how much an employee may receive for housing and in what circumstances). The provider must make such payments to the employee and not directly to a landlord, hotel, daycare provider, etc. Bonus payments intended to offset housing, daycare, and transportation costs are allowable as an extraordinary circumstance during the PHE and will be excluded from rebasing calculations to determine future rates. 
• Bonuses for contracted staff are an allowable use if the payments are coordinated and paid through the contractor organization and are reasonable and necessary to ensure adequate staffing.
• Minimum wage is not a COVID-19-related cost; however, temporary increases to wages due to staffing shortages or incentive payments for recruitment or retention are allowable under the program. 
• The payments may be used for:
  • A variety of activities intended to support CNA training. This includes but is not limited to costs to the facility of conducting or partnering with an external entity to conduct CNA trainings for staff, reimbursing employees for the costs of CNA training, or providing incentive bonuses to staff to engage in and/or complete CNA training and certification.
  • Expenses associated with international nurse recruitment, such as legal expenses specific to recruiting health- care workers.
  • COVID-19-related expenses such as installation of an HVAC system and renovations to help mitigate the spread of COVID-19.
• The department recommends that providers use this funding for time-limited and/or one-time payments. 
• Providers will not be required to get to the invoice level to justify costs. However, providers will need to show that they have allowable MaineCare expenses that are not covered by their regular rate of reimbursement. This can be done by demonstrating the cost per day for a particular expense line on the cost report has increased from pre-COVID-19 levels.
• Providers cannot share the LTC Supplemental Payment for one facility with affiliated MaineCare NF or RCF providers.
• Providers do not need to track expenses that are shared across facility types (e.g., utilities) separately by provider type. Instead, providers can use the same allocation methods as they would on cost reports to determine the percentage allocation for shared expenses for each level of care.

Round two

In June 2022, DHHS announced they would be issuing an additional $25 million in state and federal funds in supplemental COVID-19 payments in August 2022 to NF, RCF, and AFCH. In August 2022, DHHS provided further information about the additional funds including the eligibility period for use of these funds, which is the state fiscal year (SFY) 2023 (July 1, 2022, to June 30, 2023). In February 2023, the date for the use of the funds received in August 2022 would be extended from June 30, 2023 to June 30, 2024. Payments were made in a lump sum in August 2022. Rules surrounding the use of funds did not change from those identified in round one.

The full bulletins can be found at:
Supplemental Payment Information for Sections 2, 67, and 97 Appendix C Providers 

COVID-19 Long Term Care Supplemental Payment Information for Section 2, 67, and 97 Appendix C Providers 

In addition, FAQs were updated by the department. Key takeaways were as follows:

• The LTC Supplemental Payments can be used for increased costs for energy (e.g., fuel, heating oil), food, and other expenses stemming from pandemic-related challenges.

Cost report treatment

In March 2022, the DHHS-Division of Audit updated the cost report templates to include a new schedule, Schedule GG, to be used to report LTC Supplemental Payments received and the related expenditures, and to serve as the financial reconciliation required by DHHS which will be used to settle on any overpayment. This first version of Schedule GG was released with the following information from DHHS: 

• The costs covered by the LTC Supplemental Payment need to be identified on Schedule GG at the expense line level. These funds were provided under the Extraordinary Circumstance Allowance principle. As such, only unforeseen and uncontrollable expenses due to the COVID-19 pandemic that are in excess of the regular rate of reimbursement are allowed for this funding. 
• Instead of calculating the incremental cost increase for every expense line on the schedule of allowable costs, providers should first show there is a loss on the direct and routine components of their rate. If there is a savings on either the direct or routine component, this demonstrates that the costs are covered by the regular rate of reimbursement and the LTC Supplemental Payments were not needed. If there is a loss on either the direct or routine component, the use and offset of the LTC Supplemental Payments can only be offset up to the amount of the loss. The provider will then need to determine which expense line on the schedule of allowable costs includes the accounts to offset. 
• There is a question included on Schedule GG asking if the identified expense is a one-time expense. This question will help DHHS at the time of NF rebasing. Any ongoing costs that were offset due to LTC Supplemental Payments will be added back at the time of rebasing. Any one-time expenses, such as retention bonuses due to COVID-19, will not be factored into the rebasing calculation.

Updates to methodology for acceptable use of funds, Schedule GG, and round three

The latest news regarding LTC Supplemental Payments came in December 2022. The DHHS-Division of Audit updated the cost report templates again and included a streamlined Schedule GG. Providers will now only have to identify the total expenses in the Direct Care, Routine, Fixed/Capital, or Personal Care Services (PCS) components that were covered by the LTC Supplemental Payments. These amounts are then offset against allowable costs on a designated timeline for each component rather than at each expense line level. In addition, DHHS removed the question asking if the identified expense is a one-time expense. The change will apply to the fiscal year ends that include the designated timeframe for the use of the funds. Providers who have already filed cost reports and wish to adjust their Schedule GG can refile just Schedule GG on the simplified form. An entire updated cost report is not necessary or suggested as the DHHS-Division of Audit will incorporate the updated Schedule GG at the time of audit. Should DHHS get audited on the use of the funds, providers will need to supply detailed backup to support their claims on Schedule GG. 

As a result of the updated and streamlined Schedule GG, and discussions between the DHHS-Division of Audit, BerryDunn, and Maine Health Care Association (MHCA), MHCA released a follow-up correspondence which stated that the $123 million in COVID-19 Supplemental Funds (round one) can be used for all allowable costs to offset Medicaid shortfalls for 2021 and/or 2022. These funds need to be expended by December 31, 2022. The $25 million in COVID-19 Supplemental Funds (round two) can be used until June 30, 2023.

Finally, in February 2023, the Appropriations Committee voted unanimously to approve an additional $25 million in COVID-19 Supplemental Payments that was proposed in the Governor’s Supplemental Budget (LD 206) (round three). They also approved an extension on the use of the current $25 million in LTC Supplemental Payments (round two) to be used through June 30, 2024 (so both allocations will be available to facilities to use through June 30, 2024).

We believe there will be more information to come regarding the LTC Supplemental Payment program. 

If you have any questions on these changes or would like to talk about your specific needs, please contact our senior living team. We are here to help.

Read this if you are a provider who works with MaineCare and files an annual cost report.

Each year the Department of Health and Human Services (DHHS) Division of Audit releases updated MaineCare cost report templates in Excel format. In the most recent revision of the templates, DHHS has made some significant changes that providers should be aware of when preparing to file their cost reports. We’ve highlighted them here. 

• Supplemental Payments (Schedule GG)—DHHS has updated the format of Schedule GG to a new simplified form where providers no longer need to report expenses in each individual cost center, but rather will only need to identify the total expense in each component (i.e., direct, fixed, routine, and PCS for Residential Care Facilities (RCF) Appendix C). DHHS has designated specific cost centers for each offset in each component. In addition, there are now multiple Schedule GGs, including a separate schedule for each level of service within each template. Each level of service must complete one schedule for the payments received in the first round (September and October 2021) and a second to reflect the payments received in the second round (August 2022). Each Schedule GG includes a line to report supplemental payments earned in a prior period and a reconciliation of any amounts unearned.
  • For providers who have already filed their 2022 cost reports and wish to adjust their Schedule GG, they can refile just Schedule GG on the simplified form. An entire updated cost report is not necessary or suggested as the Division of Audit will incorporate the updated Schedule GG at the time of audit. This also applies to any providers wishing to amend and refile their 2021 Schedule GG. 
• RCF High MaineCare Utilization (HMU)—Effective 7/1/2022, HMU is a new component of the RCF rate pursuant to 2022 P.L. Ch. 635. The new HMU payment required DHHS to update the cost report forms to include a settlement of these payments. As such, DHHS has added a new schedule, Schedule HH, to all RCF Appendix C, including multi-level cost reports that report HMU earned. In addition, a table was added to the bottom of Schedule L-R&B to calculate the payments received. The payments received flows to Schedule HH, where a settlement is calculated that flows to the RCF room and board settlement page. 
• Minimum Occupancy Penalty—Per the Office of MaineCare Services News Release from November 15, 2022, the Office of MaineCare Services is temporarily waiving the minimum occupancy penalty for nursing facilities (NF), found in Chapter III, Section 67, principle 18.9, through the end of the federal Public Health Emergency (PHE). Additionally, DHHS is temporarily waiving the minimum occupancy penalty for RCF, Private Non-Medical Institution (PNMI) Appendix C facilities, found in DHHS Rule Chapter 115, principle 34.3, through the end of the federal PHE. In order to accommodate this within the cost report, the penalty calculation has been removed from Schedule G (NF), Schedule X (multi-level), and Schedule A (RCF free-standing). 
• Revenue—DHHS also added a new schedule, Schedule D (B-1 on the ICF template), which is a summary of revenue by payor.

There were also some minor changes made last summer including:

• Schedule F & R (NF), Schedule E (RCF/PNMI), and Schedule B (Intermediate Care Facilities (ICF))—Added a new cost center to the fixed costs section for “COVID Staff Universal & Surveillance Testing.” 
• Schedule B (NF)—Added a Direct Care add-on column for the AAAA add-on (125% of minimum wage) based on updated rate letters. 
• Schedule E (NF)—Removed the median question due to LD 684. There is now no need to be under the medians to qualify for ultra-high MaineCare utilization (over 80% utilization). 
• Schedule J (NF and ICF), Schedule L-PNMI (RCF/PNMI), and Schedule B (Appendix F)—Updated wording from TRI (temporary rate increase) to ECA (extraordinary circumstances allowance) funding.

Cost reports must be submitted in Excel format and DHHS is no longer accepting locked or protected cost report files or files that have hidden tabs. Cost reports and supporting documentation should be filed using MOVEit. If you have not established an account with DHHS yet for MOVEit, please reach out to Lucas Allen, Manager of Data Analytics. 

Please note the following specifications for online submission to MOVEit:

• Each filename will need to contain: facility/agency name, four-digit year, what the document relates to, and what the document is (i.e., cost report).
• Files cannot be a zipped file.
• Files cannot be password protected or restricted in any way.
• No folders are to be uploaded.
• It is recommended that supporting documentation be combined into one PDF document with appropriate bookmarks for each supporting document, but this is not a requirement. If the supporting documentation is not in one PDF file, label all files with the facility/agency name, four-digit year, and what the document is.
• Files need to be in one of the following formats: Microsoft product or Adobe PDF to ensure it is machine readable.

As a reminder, when submitting your cost report and supporting documentation:

• Complete all schedules in the cost report. If a specific schedule does not apply to your facility, mark “N/A” on the schedule.  
• Do not alter the schedules in the cost report.  
• Submit a completed cost report checklist, and place a checkmark for each section that applies to your facility or “N/A” for any section that does not apply.  
• Submit all supporting documentation identified on the checklist in an acceptable format (Microsoft product or Adobe PDF).

If you have any questions on these changes or would like to talk about your specific needs, please contact our senior living team. We are here to help.

The Centers for Medicare & Medicaid Services (CMS) has issued the final rule for FY 2023 SNF PPS which was published in the Federal Register on August 3, 2022. The rule:

• Updates the PPS rates for SNFs for FY 2023 using the market basket update and budget neutrality factors effective October 1, 2022;
• Recalibrates the Patient Driven Payment Model (PDPM) parity adjustment;
• Establishes a permanent 5% cap on annual wage index decreases;
• Finalizes proposed changes in PDPM International Classification of Diseases, Version 10 (ICD-10) code mappings;
• Updates the SNF Quality Reporting Program (SNF QRP); and
• Updates the SNF Value-Based Purchasing (SNF VBP) Program.

2023 PPS rate calculations

The final rule provides a net market basket increase for SNFs of 5.1 percent beginning October 1, 2022 which reflects:

• An unadjusted market basket increase of 3.9 percent adjusted upward by 1.5 percent associated with a forecast error adjustment;
• A reduction of 0.3 percentage points in accordance with the multifactor productivity adjustment required by Section 3401(b) of the Affordable Care Act (ACA).

In addition, as discussed in the Recalibration of the PDPM parity adjustment section below, the net market basket increase of 5.1 percent is further reduced by 2.3 percent related to accounting for year one of a two-year PDPM parity adjustment phase-in.

CMS projects an overall increase in Medicare Part A SNF payments of approximately 2.7 percent or $904 million in FY 2023 related to the payment rate updates. The final rule also estimates an increase in costs to SNFs of $31 million related to the FY 2023 SNF QRP changes and an estimated reduction of $186 million in aggregate payments to SNFs during FY 2023 as a result of the changes to the SNF VBP program.

The projected overall impact to providers in urban and rural areas is an average increase of 2.7% and 2.5%, respectively, with a low of 1.4% for urban outlying providers and a high of 3.6% for urban Pacific providers―actual impact will vary. 

The applicable wage index continues to be based on the hospital wage data, unadjusted for occupational mix, rural floor, or outmigration adjustment (from FY 2019) in the absence of SNF specific data.

Recalibration of the PDPM parity adjustment

When CMS finalized PDPM in October 2019 it also finalized that this new case-mix classification model would be implemented in a budget neutral manner. However, since PDPM implementation, CMS has closely monitored SNF utilization data which has indicated an unintended increase in payments to providers. In order to achieve budget neutrality under PDPM, CMS is finalizing their proposal to recalibrate the PDPM parity adjustment using a factor of 4.6 percent (an impact of $1.5 billion) using the combined methodology of a subset population that excludes patients whose stay utilized a coronavirus (COVID-19) public health emergency (PHE)-related waiver or who were diagnosed with COVID-19 and control period data using months with low COVID-19. CMS is finalizing the implementation of the parity adjustment with a two-year phase-in period (2.3 percent applied in FY 2023, and 2.3 percent in FY 2024), which means that, for each of the PDPM case-mix adjusted components, CMS will lower the PDPM parity adjustment factor from 46 percent to 42 percent in FY 2023 and would further lower the PDPM parity adjustment factor from 42 percent to 38 percent in FY 2024. CMS applied the parity adjustment equally across all components.

Permanent cap on wage index decreases

To mitigate instability in SNF PPS payments due to significant wage index decreases that may affect providers in any given year, CMS is finalizing a permanent 5% cap on annual wage index decreases to smooth year-to-year changes in providers’ wage index payments.

Changes in PDPM ICD-10 code mappings

Beginning with the updates for FY 2020 nonsubstantive changes to the ICD-10 codes included on the PDPM code mappings and lists are applied through a subregulatory process consisting of posting updated code mappings and lists on the PDPM website. Substantive changes will be proposed through notice and comment rulemaking. The final rule finalized several proposed changes to the PDPM ICD-10 mappings.

SNF QRP update

CMS is finalizing the adoption of a new process measure, the Centers for Disease Control and Prevention (CDC)-developed Influenza Vaccination Coverage Among Healthcare Personnel (HCP) (NQF#0431) measure, beginning with the FY 2024 SNF QRP. The measure is intended to increase influenza vaccination coverage in SNFs, promote patient safety, and increase the transparency of quality of care in the SNF setting. Residents of long-term care facilities have greater susceptibility for acquiring influenza. Therefore, monitoring and reporting influenza vaccination rates among HCP is important as HCP are at risk for acquiring influenza from residents and exposing residents to influenza. The measure reports the percentage of HCP who receive an influenza vaccine. SNFs will submit the measure data through the CDC National Healthcare Safety Network.

CMS is also revising the compliance date for certain SNF QRP reporting requirements, including the Transfer of Health Information measures and certain standardized patient assessment data elements to October 1, 2023. This will align the collection of data with the Inpatient Rehabilitation Facilities and Long-Term Care Hospitals and Home Health Agencies.

SNF VBP program

The rule finalizes a proposal to suppress the SNF 30-Day All-Cause Readmission Measure (SNFRM) as part of the performance scoring for the FY 2023 SNF VBP program year due to the combination of fewer admissions to SNFs, regional differences in the prevalence of COVID-19 throughout the PHE and changes in hospitalization patterns in FY 2021 which has impacted the ability to use the SNFRM to calculate payments for the FY 2023 program year. For FY 2023, CMS will assign a performance score of zero to all participating SNFs and will reduce the otherwise applicable adjusted Federal per diem rate for each SNF by 2% and award SNFs 60% of that withhold, resulting in a 1.2% payback. Any SNFs that do not report a minimum of 25 stays for the SNFRM will be excluded from the VBP program for FY 2023.

In addition, Section 111(a)(2) of the Consolidated Appropriations Act, 2021 allows the secretary to add up to an additional nine new measures with respect to payments beginning in FY 2023 to the VBP program, which may include measures of functional status, patient safety, care coordination, or patient experience. CMS is using this authority to finalize the adoption of three new measures into the VBP program—two measures in FY 2026 and one measure in FY 2027.

CMS is also finalizing a number of updates to its scoring methodology:

• Updating the policy for scoring SNFs that do not have sufficient baseline period data beginning with the FY 2026 VBP Program year.
• Adoption of a measure minimum policy beginning with the FY 2026 SNF VBP program year which will require a two-measure minimum for a SNF to receive a SNF performance score for FY 2026 and a three-measure minimum for FY 2027.
• Adoption of a case minimum policy for the SNFRM that replaces the Low-Volume Adjustment policy beginning with the FY 2023 program year. 
• Adoption of a case minimum policy for the SNF HAI, Total Nurse Staffing, and DTS PAC SNF Measures beginning between FY 2026 and FY 2027.

Our experts at BerryDunn have created an interactive rate calculator to assist you with the calculation of your PPS rates for FY 2023. You can access the PPS rate calculator now:

If you have any specific questions about the final rule or how it might impact your facility, please contact Ashley Tkowski or Melissa Baez.

The Centers for Medicare & Medicaid Services (CMS) issued the final rule for the PPS and consolidated billing for SNFs for FY 2022 (published in the Federal Register on August 4, 2021). The rule:

• Updates the PPS payment rates for SNFs for FY 2022 using the market basket update and budget neutrality factors effective October 1, 2021.
• Makes changes based on Section 134 of the Consolidated Appropriations Act, 2021—New Blood Clotting Factor Exclusion from SNF Consolidated Billing.
• Updates the SNF Quality Reporting Program (QRP).
• Makes changes to the SNF Value-Based Purchasing (VBP) program due to the public health emergency (PHE).
• Adopts changes in Patient Driven Payment Model (PDPM) International Classification of Diseases, Version 10 (ICD-10) code mappings.
• Updates the methodology for recalibrating the PDPM parity adjustment.

2022 PPS rate calculations

CMS rebased and revised the SNF market basket index to improve payment accuracy under the SNF PPS by using 2018 Medicare–allowable total cost data to update the PPS payment rates, instead of 2014 data. The final rule includes:

• A 1.2% net market basket increase based on a 2.7% SNF market basket update, less a 0.8 percentage point forecast error adjustment and a 0.7 percentage point productivity adjustment.
• A budget neutrality factor of 1.0006.
• A decrease in the labor-related weight from 71.3% for FY 2021 to 70.4% for FY 2022.

CMS projects an overall impact of this final rule to be an estimated increase of $410 million in aggregate payments to SNFs during FY 2022. This reflects a $411 million increase from the update to the payment rates and a $1.2 million decrease due to the reduction to rates to account for the excluded blood-clotting factors. 

The final rule also estimates an increase in costs to SNFs of $6.63 million related to the FY 2022 SNF QRP changes and an estimated reduction of $191.64 million in aggregate payments to SNFs during FY 2022 as a result of the changes to the SNF VBP Program.

The projected overall impact to providers in urban and rural areas is an average increase of 1.1% and 1.6%, respectively, with a low of .2% for rural New England providers and a high of 2.6% for rural South Atlantic providers―actual impact will vary. 

The applicable wage index continues to be based on the hospital wage data, unadjusted for occupational mix, rural floor, or outmigration adjustment (from FY 2018) in the absence of SNF specific data.

Section 134 of the Consolidated Appropriations Act, 2021—New Blood Clotting Factor Exclusion from SNF Consolidated Billing

Section 134 in Division CC of the Consolidated Appropriations Act, 2021 added blood clotting factors used for the treatment of patients with hemophilia and other bleeding disorders and items and services related to the furnishing of such factors under section 1842(o)(5)(C) to the list of items and services excluded from the consolidated billing requirements under the SNF PPS effective for items and services furnished on or after October 1, 2021.

CMS is finalizing a reduction in the SNF rates to account for this new exclusion. This methodology will result in a proportional reduction of $0.02 in the unadjusted urban and rural rates which equates to an estimated decrease of approximately $1.2 million in aggregate Part A SNF spending to offset the increase in Part B spending that will occur due to these items and services being excluded from SNF consolidated billing.

SNF QRP update

CMS adopted two new measures beginning with FY2023; the SNF Healthcare-Associated Infections Requiring Hospitalization measure (SNF HAI) and the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) measure, and updated the calculation for another measure, the Transfer of Health (TOH) Information to the Patient—Post-Acute Care (PAC) measure. In addition, CMS made a modification to revise the number of quarters used for publicly reporting certain SNF quality measures due to the PHE. 

SNF VBP Program

CMS will suppress the SNF readmission measure for scoring and payment adjustment purposes for the FY 2022 SNF VBP Program Year because circumstances caused by the PHE for COVID-19 have significantly affected the measure and the ability to make fair, national comparisons of SNFs’ performance scores. As part of a special scoring policy for FY 2022, CMS will assign a performance score of zero to all participating SNFs, irrespective of how they perform using the previously finalized scoring methodology, to mitigate the effect that PHE-impacted measure results would otherwise have on SNF performance scores and incentive payment multipliers. CMS will also reduce the adjusted Federal per diem rate for each SNF by 2% and award SNFs 60% of that withhold, resulting in a 1.2% payback percentage for FY2022. Finally, SNFs that qualify for the low-volume adjustment will continue to receive 100% of that 2% withhold.

Finally, CMS revised the performance period for the FY 2022 SNF VBP program and finalized the performance period for the FY 2023 and FY 2024 SNF VBP Program.

BerryDunn created an interactive rate calculator to assist you with the calculation of your PPS rates for FY 2022, which has been updated and now reflects VBP adjustments. You can access the PPS interactive rate calculator now.

If you have any specific questions about the Final Rule or how it might impact your facility, please contact Ashley Tkowski or Melissa Baez.

Read this if you are involved with PPS and work at a SNF.

The Centers for Medicare & Medicaid Services (CMS) issued the final rule for the PPS and consolidated billing for SNFs for FY 2021 (published in the Federal Register on August 5, 2020). The final rule also updates the SNF Value-Based Purchasing (VBP) Program. The rule:

• Updates the PPS payment rates for SNFs for FY 2021 using the market basket update and budget neutrality factors effective October 1, 2020.
• Makes revisions to the International Classification of Diseases, Version 10 (ICD-10) code mappings used under SNF PPS to classify patients into case-mix groups.
• Adopts the recent revisions in Office of Management and Budget (OMB) statistical area delineations used to identify a facility’s status as urban or rural and calculate the wage index. 
• Updates the SNF VBP Program, including a 30-day Phase One Review and Correction deadline for the baseline period quality measure report.

2021 PPS rate calculations
The final rule includes:

• A 2.2% net market basket increase. As the forecasted error adjustment did not exceed the 0.5% threshold, there is no multifactor productivity adjustment for FY 2021. 
• A budget neutrality factor of .9992.
• An increase in the labor-related weight from 70.9% for FY 2020 to 71.3% for FY 2021.

CMS projects aggregate payments in FY 2021 to SNFs will increase $750 million. In addition, CMS projects the overall impact of the SNF VBP to be a reduction of $199.54 million in aggregate payments to SNFs during FY 2021, for an estimated net increase of $550.46 million. 

The projected overall impact to providers in urban and rural areas is an average increase of 2.2% and 2.4%, respectively, with a low of 1% for urban New England providers and a high of 3.2% for urban Middle Atlantic providers―actual impact will vary depending on the provider’s CBSA. These estimated payment increases include the impact of the Patient Driven Payment Model (PDPM), updated wage data, the net market basket increase for FY 2021, and updated OMB statistical area delineations; but does not reflect the impact of SNF VBP, which as previously noted is estimated to total $199.54 million in FY 2021. 

The applicable wage index continues to be based on the hospital wage data, unadjusted for occupational mix, rural floor, or outmigration adjustment (from FY 2017) in the absence of SNF specific data.

ICD-10 code mapping changes
Each year the ICD-10 Coordination and Maintenance Committee publishes updates to the ICD-10 medical code data sets. In the final rule several changes to the PDPM ICD-10 code mappings and lists were finalized. The updated FY 2021 PDPM ICD-10 Code Mappings as reported on the CMS website can be found here. 

Core-Based Statistical Areas (CBSA) changes 
On September 14, 2018, OMB issued OMB bulletin No. 18-04, which established revised statistical area delineations. The final rule includes implementation of the delineations effective October 1, 2020. The revisions adopted resulted in 34 urban counties becoming rural, 47 rural countries becoming urban, some urban CBSAs undergoing a change to the CBSA name and/or number only, and some urban counties moving to another newly established or modified urban CBSA under the revised delineations as detailed in the federal register. 

As a result of these changes, CMS is including a one-year transition for FY 2021 under which a 5% cap on any decrease in a wage index compared to that of the prior fiscal year will be applied.

Click here to be taken to the Federal Register to see if your county is one that is impacted by the changes which are located in Tables 11, 12, 13 and 14. 

VBP program
The final rule includes a 30-Day Phase One Review and Correction deadline applied to the baseline period quality measure report. This was done in order to align the Phase One Review and Correction deadlines for the quarterly reports that contain the underlying claims and measure rate information for the baseline period or performance period. SNFs will now have 30 days following the issuance of those reports to review the underlying claims, measure rate information, and submit a correction request, if any of the information is thought to be inaccurate. 

CMS also published the FY 2023 performance standards based on the baseline period of FY 2019, finalized a policy to codify the data suppression policy, and finalized a policy to amend the regulations to reflect that they will publicly report SNF performance information on the Nursing Home Compare website or a successor website.

Finally, CMS adopted a policy changing the name of the SNF 30-Day Potentially Preventable Readmission Measure (SNFPPR) to SNF Potentially Preventable Readmission after Hospital Discharge. Consistent with this finalized policy, the FY 2021 final rule includes the amended definition of SNF Readmission Measure to reflect the updated SNF Potentially Preventable Readmission after Hospital Discharge measure name. The final rule also amends the definition of performance standards to reflect their ability to update the numerical values of performance standards if they determine there is an error that affects the achievement threshold or benchmark.

COVID-19
The final rule did not address any PDPM COVID-19 related payment policy changes. Regarding SNF consolidated billing, several commenters cited the COVID-19 Public Health Emergency (PHE) as justification for excluding services from consolidated billing that would not otherwise qualify for such exclusion. However, CMS stated that while they recognize the unique circumstances excluding services under SNF consolidated billing that would not otherwise meet the statutory conditions for exclusion would require congressional action.

BerryDunn created an interactive rate calculator to assist you with the calculation of your PDPM rates for FY 2021. You can access the PPS rate calculator now.

If you have any specific questions about the Final Rule or how it might impact your facility, please contact Ashley Tkowski or Kevin Ware.

Rates, Patient Driven Payment Model, Value-Based Purchasing, and much more!

CMS has issued the final rule for the Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) for FY 2020 (published in the Federal Register on August 7, 2019). Here is what you need to know. The rule:

• Updates the PPS payment rates for SNFs for FY 2020 effective October 1, 2019.
• Finalizes minor revisions to the regulation text to reflect the revised assessment schedule under the Patient Driven Payment Model (PDPM) which replaces the current Resource Utilization Groups, Version IV (RUG-IV) model beginning on October 1, 2019. Specifically, to revise the prescribed PPS assessment schedule to reflect the elimination of all scheduled assessments after the initial assessment which is due no later than the 8th day of post hospital SNF care and to allow for any such interim payment assessments as the SNF determines are necessary to account for changes in patient care needs.  
• Finalizes revisions to the definition of group therapy under the SNF PPS, to state qualified rehabilitation therapist or therapy assistant treating two to six patients at the same time who are performing the same or similar activities. 
• Finalizes implementation of a subregulatory process for updating the code lists (International Classification of Diseases, Tenth Version (ICD-10) codes) used under PDPM beginning with the updates for FY 2020. The subregulatory process will consist of posting updated code mappings and lists on the PDPM website. More specifically, nonsubstantive changes to the codes included on code mappings and lists under PDPM will be applied through the subregulatory process and substantive revisions to the codes on the code mappings and lists used under PDPM will be proposed and finalized through notice and comment rulemaking.
• Finalizes updates to the requirements for the SNF Quality Reporting Program (SNF QRP) as follows:
  • Adopts two Transfer of Health Information quality measures; Transfer of Health Information to the Provider-Post-Acute Care and Transfer of Health Information to the Patient-Post-Acute Care.
  • Updates the specifications for the Discharge to Community Measure to exclude baseline nursing facility residents from the measure.
  • Adopts the standardized patient assessment data elements that SNFs will be required to begin reporting with respect to admissions and discharges that occur on or after October 1, 2020, to begin collection in FY 2022, in satisfaction of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). 
  • Adopts public display of the quality measure, Drug Regimen Review Conducted with Follow-Up for Identified Issues-Post Acute Care Skilled Nursing Facility Quality Reporting Program.
  • Revises references in regulation text to reflect enhancements to the system user for submission of data.
• Finalizes updates to certain policies for the SNF Value-Based Purchasing Program (SNF VBP) which implemented a 2% withhold to SNF Part A payments that can be earned back based on a SNF’s rehospitalization rate and level of improvement in FY 2019 as follows: 
  • Changes the name of the Skilled Nursing Facility 30-Day Potentially Preventable Readmission Measure to the Skilled Nursing Facility Potentially Preventable Readmissions after Hospital Discharge.
  • Adopts FY 2020 as the performance period for the FY 2022 program year and FY 2018 as the baseline period. 
  • Published numerical values for performance standards.
  • Suppresses the SNF information available for public display on the Nursing Home Compare website as follows:
    • SNFs with fewer than 25 eligible stays during the baseline period for a Program year will not have the baseline Risk-Standardized Readmission Rate (RSRR) or improvement score displayed, though the performance period RSRR, achievement score and total performance score will be displayed if the SNF had sufficient data during the performance period.
    • SNFs with fewer than 25 eligible stays during the performance period for a Program year and receives an assigned SNF performance score as a result, will report the assigned SNF performance score and not display the performance period RSRR, the achievement score or improvement score.
    • SNFs with zero eligible cases during the performance period for a Program year will not display any information.
  • Adopts a 30-day deadline for Phase One correction requests.

2020 PPS rate calculations
CMS projects that aggregate payments in FY 2020 to SNFs will increase $851 million. In addition, CMS projects the overall impact of the SNF VBP as a reduction of $527.4 million (which is prior to the redistribution of incentive payments) in aggregate payments to SNFs during FY 2020. The projected overall impact to providers in urban and rural areas is an average increase of 1.7% and 6.2%, respectively, in estimated payments compared with FY 2019. Providers in rural New England will experience an estimated increase in payments of approximately 6.3% while urban New England providers will experience an estimated increase in payments of 4.0%. Providers in rural Middle Atlantic will experience an estimated increase in payments of approximately 4.8% while urban Middle Atlantic providers will experience the largest estimated decrease of .8% (actual impact will vary depending on the provider’s CBSA). 

The updated rates reflect:

• A 2.4% net market basket increase for FY 2020―results from a 2.8% market basket increase reduced by the multifactor productivity adjustment of 0.4%. This is not adjusted to account for the forecast error correction as the difference between the estimated and actual amount of change in the market basket index does not exceed the 0.5 percentage point threshold.  
• An increase in the labor-related weight from 70.5% for FY 2019 to 70.9% for FY 2020.
• Implementation of the new case-mix classification system called PDPM.

The applicable wage index continues to be based on the hospital wage data, unadjusted for occupational mix and rural floor, (from FY 2016) in the absence of SNF specific data.

Patient Driven Payment Model
As discussed in the FY 2019 SNF PPS final rule, PDPM will completely replace RUGs for Medicare Part A Fee-For-Service payment to SNFs effective October 1, 2019. The implementation of PDPM was finalized in a budget neutral manner. Payment will be based on patient characteristics associated with six care components (five case-mix adjusted: physical therapy, occupational therapy, speech language pathology, nursing and non-therapy ancillaries; and one non-case-mix adjusted component), using clinical data from the MDS to assign case-mix classifiers to each patient that are then used to calculate a per diem payment under the SNF PPS. 

BerryDunn has calculated the FY 2020 SNF Medicare PPS rates under PDPM based on the final rule for urban and rural areas of all 50 states and US territories. 

Access the PPS rate calculator now.

If you have any specific questions about the final rule or how it might impact your facility, please contact Kevin Ware or Ashley Tkowski.