Policy & Regulation News

2015 skilled nursing facility PPS, consolidated billing

By Elizabeth Snell

- On Tuesday, August 5, 2014, the Center for Medicare & Medicaid Services announced its final rule updates for the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2015.  The rule also uses the most recent Office of Management and Budget (OMB) statistical area delineations to identify a facility’s urban or rural status.

The overall economic impact of this final rule is an estimated increase of $750 million in aggregate payments to SNFs during FY 2015.

Here is a quick rundown of the final rule updates:

Background, transition and required updates

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  • The SNF PPS is used for cost reporting periods beginning on or after July 1, 1998 and covers all costs of furnishing covered SNF services (routine, ancillary, and capital-related costs), with the exception of other costs associated with approved educational activities and bad debts. Covered SNF services include post-hospital extended care services for which benefits are provided under Part A. Also covered are items and most services for which payment may otherwise be made under Part B and which are furnished to Medicare beneficiaries who are residents in a SNF during a covered Part A stay.

    CMS stated that there was a three-phase transition that combined a facility-specific rate with the federal case-mix adjusted rate. This transition extended through the facility’s first three cost reporting periods under the PPS — up to and including the one that began in FY 2001. Currently, all facilities have been paid at the full federal rate effective with cost reporting periods beginning in FY 2002 and the SNF PPS is no longer operating under the transition.

    Moreover, base payments for SNFs are now wholly based on the adjusted federal per diem rates. CMS does not still include adjustment factors under the transition related to facility-specific rates for the upcoming FY.

    Each year, CMS needs to update the following: The unadjusted federal per diem rates to be applied to days of covered SNF services furnished during the upcoming FY; the case-mix classification system to be applied for these services during the upcoming FY; the factors to be applied in making the area wage adjustment for these services.

    The final rule also gives the necessary annual updates to the per diem payment rates for SNFs for FY 2015.