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


Read this is 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.

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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Please note: Due to the delay in the issuance of the final FY 2021 SNF VBP incentive payment multipliers by CMS, the rates per our calculator are prior to any VBP adjustment. When CMS releases the final VBP incentive payment multipliers for FY2021 BerryDunn 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 Kevin Ware.

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