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Fiscal Year (FY) 2023 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) final rule

08.10.22

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:

Click to download SNF PPS Rate Calculator

Please note: The rates per our calculator are prior to any FY 2023 VBP adjustment based on the final rule which includes special scoring and payment policies for FY 2023. When CMS releases the final VBP incentive payment multipliers for FY 2023 by facility, we will update the interactive rate calculator as necessary.

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

Related Professionals

Principals

BerryDunn experts and consultants

Editor's note: read this if you are a CFO, controller, accountant, or business manager.

We auditors can be annoying, especially when we send multiple follow-up emails after being in the field for consecutive days. Over the years, we have worked with our clients to create best practices you can use to prepare for our arrival on site for year-end work. Time and time again these have proven to reduce follow-up requests and can help you and your organization get back to your day-to-day operations quickly. 

  1. Reconcile early and often to save time.
    Performing reconciliations to the general ledger for an entire year's worth of activity is a very time consuming process. Reconciling accounts on a monthly or quarterly basis will help identify potential variances or issues that need to be investigated; these potential variances and issues could be an underlying problem within the general ledger or control system that, if not addressed early, will require more time and resources at year-end. Accounts with significant activity (cash, accounts receivable, investments, fixed assets, accounts payable and accrued expenses and debt), should be reconciled on a monthly basis. Accounts with less activity (prepaids, other assets, accrued expenses, other liabilities and equity) can be reconciled on a different schedule.
  2. Scan the trial balance to avoid surprises.
    As auditors, one of the first procedures we perform is to scan the trial balance for year-over-year anomalies. This allows us to identify any significant irregularities that require immediate follow up. Does the year-over-year change make sense? Should this account be a debit balance or a credit balance? Are there any accounts with exactly the same balance as the prior year and should they have the same balance? By performing this task and answering these questions prior to year-end fieldwork, you will be able to reduce our follow up by providing explanations ahead of time or by making correcting entries in advance, if necessary. 
  3. Provide support to be proactive.
    On an annual basis, your organization may go through changes that will require you to provide us documented contractual support.  Such events may include new or a refinancing of debt, large fixed asset additions, new construction, renovations, or changes in ownership structure.  Gathering and providing the documentation for these events prior to fieldwork will help reduce auditor inquiries and will allow us to gain an understanding of the details of the transaction in advance of performing substantive audit procedures. 
  4. Utilize the schedule request to stay organized.
    Each member of your team should have a clear understanding of their role in preparing for year-end. Creating columns on the schedule request for responsibility, completion date and reviewer assigned will help maintain organization and help ensure all items are addressed and available prior to arrival of the audit team. 
  5. Be available to maximize efficiency. 
    It is important for key members of the team to be available during the scheduled time of the engagement.  Minimizing commitments outside of the audit engagement during on site fieldwork and having all year-end schedules prepared prior to our arrival will allow us to work more efficiently and effectively and help reduce follow up after fieldwork has been completed. 

Careful consideration and performance of these tasks will help your organization better prepare for the year-end audit engagement, reduce lingering auditor inquiries, and ultimately reduce the time your internal resources spend on the annual audit process. See you soon. 

Article
Save time and effort—our list of tips to prepare for year-end reporting

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.

Download the 2022 SNF PPS Rate Calculator

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

Article
FY 2022 Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) Final Rule

Read this if you are a Skilled Nursing Facility (SNF) providing services to Medicare beneficiaries.

Skilled Nursing Facility (SNF) bad debt expenses resulting from uncollectible Medicare Part A and Part B deductible and coinsurance amounts for covered services are reimbursable under the Medicare Program on a full-utilization Medicare cost report. SNF providers can report allowable Medicare bad debt expense on Worksheet E, form CMS-2540-10. Currently Medicare reimburses 65% of the allowable amount, less sequestration, if applicable.  

BerryDunn maintains a database of SNF as filed Medicare cost reports nation-wide. We analyze data annually, looking for trends and opportunities to help providers optimize available reimbursement. Cost reports data shows that in 2018–2020, on average, 75% of facilities nation-wide reported allowable bad debts, and claimed, on average, close to $63,000 of reimbursable bad debts for Medicare Part A. 

To compare facilities of different sizes and Medicare utilization rate, we also show bad debts on per Medicare patient day basis (figure 2). In FY 2020, all US regions experienced an increase in reimbursable Medicare Part A debt, averaging $19.43 per Medicare patient day.  

Understanding the requirements for bad debts and utilizing this reimbursing opportunity could help your facility’s bottom line. 

Medicare bad debt checklist now available

To support SNFs with reimbursement for these costs, BerryDunn’s healthcare consulting team has developed a checklist that provides insight into the Medicare cost report opportunities. 

Download the checklist, and please contact us if you have any questions about your specific situation or would like to learn more.

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Medicare bad debt: Review sample procedures for Skilled Nursing Facilities

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.

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

Article
FY 2021 Prospective Payment System (PPS) and consolidated billing for Skilled Nursing Facilities (SNFs) final rule

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.

Download the 2020 PPS Rates and Calculator

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

Article
Final rule for FY 2020 SNF PPS and consolidated billing

2019 SNF PPS Final Rule: Rates and so much more

CMS has issued the final rule for the Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) for FY 2019 (scheduled to be published in the Federal Register on August 8, 2018). The rule:

  • Updates the PPS payment rates for SNFs for FY 2019 effective October 1, 2018.
  • Finalizes the payment system called the Patient-Driven Payment Model (PDPM) to replace the current Resource Utilization Groups, Version IV (RUG-IV) model beginning on October 1, 2019.
  • Finalizes revisions to the regulation text that describes a beneficiary’s SNF “resident” status under the consolidated billing provision and the required content of the SNF level of care certification.
  • Finalizes several operational aspects of the SNF Quality Reporting Program (QRP), which implements a 2% reduction to the SNF market basket percentage for that fiscal year to SNFs that do not satisfy reporting requirements.
  • Finalizes changes to the SNF Value Based Purchasing Program (VBP), which implements a 2% withhold to SNF Part A payments that can be earned back, based on a SNFs rehospitalization rate and level of improvement, as follows:
    • The 2% reductions and the SNF specific value-based incentive payment adjustment to SNF claims will occur simultaneously,
    • Continuation of the achievement and benchmark threshold rates as previously finalized in the FY 2018 SNF PPS final rule for FY 2020 and finalized the numerical values for FY 2021 based on the FY 2017 baseline period,
    • Adopted FY 2019 as the performance period for the FY 2021 SNF VBP program year and FY 2017 hospital discharges as the baseline period for the FY 2021 SNF VBP program year, 
    • Beginning with the FY 2022 program year and for subsequent program years adoption of a performance period and baseline period that is the 1-year period following the performance and baseline period for the previous program year,
    • SNFs with insufficient baseline period data will be scored based only on their achievement during the performance period, 
    • Low-volume SNFs, with less than 25 eligible stays during a performance period for a program year, will be assigned a performance score based on the average of all SNF performance scores, 
    • SNFs with observed readmission rates of zero may receive risk-standardized readmission rates that are greater than zero, and 
    • Adopted an Extraordinary Circumstances Exceptions policy that will exclude from the calculation of  the measure rate for the applicable baseline and performance periods the calendar months during which the SNF was affected by the extraordinary circumstance.

FY 2019 PPS rate calculations - CORRECTION

CMS issued a correction notice to the 2019 SNF PPS Final Rule on October 3, 2018.

The Interactive Rate Calculator incorporates provider-specific Value Based Purchasing (VBP) adjustments. Enter your facility’s provider number, to calculate your provider-specific VBP adjusted rates. 

Our senior living experts have calculated the FY 2019 SNF Medicare PPS rates based on the final rule for urban and rural areas of Maine, Massachusetts, New Hampshire, and Vermont. CMS projects that aggregate payments in FY 2019 to SNFs will increase $820 million, a 2.4% increase as required by the Bipartisan Budget Act of 2018. Absent this statutory requirement, the FY 2019 market basket update factor would have been 2%, a market basket index of 2.8% reduced by the multifactor productivity adjustment of 0.8%.

In addition to the estimated increase in Medicare payments to SNF’s of $820 million, CMS projects the overall impact of the SNF VBP as a reduction of $211 million in aggregate payments to SNFs during FY 2019, for an estimated net increase of $609 million.

The projected overall impact to providers in urban and rural areas is an average increase of 2.4% and 2.5%, respectively, in estimated payments compared with FY 2018. Providers in rural New England will experience an estimated increase in payments of approximately 1.6% while urban New England providers will experience an estimated increase in payments of 1.7% – actual impact will vary depending on the provider’s CBSA.

The updated rates reflect:

  • A 2.4% net market basket increase for FY 2019—the maximum market basket update allowed as a result of the Bipartisan Budget Act of 2018 which establishes a special rule for FY 2019 that requires the market basket percentage, after the application of the productivity adjustment, to be 2.4%.
  • A decrease in the labor-related weight from 70.8% for FY 2018 to 70.5% for FY 2019.

The applicable wage index continues to be based on the hospital wage data (from FY 2015) in the absence of SNF specific data.

BerryDunn has provided an interactive rate calculator to assist with the calculation of applicable rates and projected Medicare revenues for FY 2019. To access the interactive rate calculator click here.

Please note errors have been identified in the case-mix adjusted rates of the final rule; we believe our interactive rate calculator has corrected these errors; however, if CMS proposes any corrections to these rates, BerryDunn will update the interactive rate calculator as necessary.

Patient-Driven Payment Model

The final rule establishes a new classification system, the Patient-Driven Payment Model (PDPM), which ties SNF payments to patient conditions and care needs rather than volume of services provided to replace the current RUG-IV model. The new classification system is an updated version of the 2017 Advanced Notice of Proposed Rulemaking Resident Classification System Version 1 (RCS-1).

The implementation date for the final system is October 1, 2019 (FY 2020). The PDPM would completely replace RUGs for Medicare Part A Fee-For-Service payment to SNFs. Payment will be based on patient characteristics associated with care components. CMS finalized several core PDPM elements:

  • Payments will be the sum of five independently-determined, case-mix adjusted payment components plus a non-case-mix component (CMG).
  • Therapy minutes are no longer relevant in determining payment, rather patients are assigned to a CMG for each component using clinical information which differs by component.
  • A variable payment schedule was finalized in which payments will taper for physical therapy, occupational therapy and nontherapy ancillary services and will begin on different days for each component.
  • Elimination of multiple mandatory SNF PPS Assessments. PDPM requires only an admission and a discharge assessment and would permit an optional interim payment assessment which is intended to allow SNFs to reclassify patients into CMGs based on changes in condition.
  • Requirement to use ICD-10 diagnosis codes on the admission MDS and as part of physical therapy, occupational therapy, and nontherapy ancillary services classification into a CMG. ICD-10 coding on claims will now drive payment by assigning a diagnosis at admission and a CMG.
  • Combined limit on group and concurrent therapy of up to 25% of a resident’s treatment time per discipline per stay.

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

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Final rule for FY 2019 SNF PPS and consolidated billing