FY 2017 CMS Skilled Nursing Facility PROPOSED PPS Regulations Issued

Brett Seekins, Healthcare Consulting Senior Manager
May 2016

On April 21, 2016 the Centers for Medicare and Medicaid Services, CMS, issued proposed Federal Register (CMS-1645-P) regulation updating the federal year 2017 PPS reimbursement and consolidated billing policy. The release additionally spoke to SNF Quality Reporting Programming, the IMPACT Act, effects on the 5-Star rating system and the introduction of language pertaining to an industry Valued Based Purchasing Program.

The policy packed Federal Register seeks to bring the SNF industry in line with other Medicare providers, invoke laws that were passed as a result of The ACA and attempt to standardize a quality reporting system that will be interoperable, easier to understand / query and speak across provider lines. 

A summary of the major tenets of the release follow:

Payment Rate Changes

  • Overall aggregate payments are expected to increase 2.1%, or $800 million dollars. Market Basket analysis projected a 2.6% rate increase but that was downgraded due to ACA provisions that included a 0.5% multi-factor productivity adjustment, netting to 2.1%.
  • The 2.1% rate increase is NOT case mix adjusted. Each facility will have to take their CBSA into consideration, and its corresponding wage index, to discern the future payment.
  • The Sequestration Adjustment is still in play which will reduce facility payments by 2%, through the year 2025. This nullifies the effects of the increase again.

SNF Quality Report Program

  • The IMPACT Act (Improving Medicare Post-Acute Transformation Act of 2014), among many things, is instituting a Quality Report Program (QRP) that will require SNF’s to continue, and expand upon, reporting a variety of facility-specific quality care metrics to CMS. Assessments and claims based measures will be added to SNF reporting responsibilities over the next several years. Those SNF’s that don’t communicate the requested information to CMS will see a rate reduction to their payments.
  • Effective FY2020, and in subsequent years, CMS is including Drug Regimen Review Conducted with Follow-Up for Identified Issues as a standard Assessment-based Measure.
  • Effective FY 2018, and in subsequent years, CMS is including
    • Discharge to Community – Post Acute Care (PAC) SNF QRP
    • Medicare Spending Per Beneficiary (MSPB) – PAC SNF QRP
    • Potentially Preventable 30 day Post-Discharge Readmission Measures for SNFs.
  • CMS is also proposing to utilize a Calendar Year for measurement and data submission purposes. Quarterly deadlines will be in play for FY2019.
  • A 30-day provider preview window will be open to allow for any errors and transmission reconciliations.

SNF Value-Based Purchasing Program (VBP)

  • Value Based incentive payments will be instituted in FY2019 and made to SNFs based upon performance. This has been talked about for a few years now. The CMS philosophy is to move away from “volume” based payments that have no direct relation to outcomes to a more sophisticated program that will incent or penalize providers based upon plans of care that effect patient outcomes. The idea now is that CMS wants “value” in return for the payments providers receive. Value is in terms of expected outcomes.
  • SNFs will need to gear up for VBP. It will be essential to have a best practice patient-centered approach to care delivery. And, have the necessary direct care work force on staff that can commit to that system. This comes at a time when staffing is very challenging in any health care provider setting.
  • To meet the requirements of VBP, CMS also expects the provider to assure a SNF 30-Day Potentially Preventable Readmission Measure as the all-cause, all condition risk-adjusted potentially preventable hospital readmission measure to meet the requirements of the Social Security Act that were revised.

The PROPOSED rule is available online.

If you have any questions, please call Brett Seekins or your BNN service provider at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.