CMS Finalizes 2.2% Boost in Skilled Nursing Facility Reimbursement

August 03, 2020 - In one of three Medicare payment rules recently released by CMS, the agency announced that it will increase skilled nursing facility reimbursement by $750 million, or 2.2 percent, for fiscal year (FY) 2021.

The reimbursement increase is attributable to a 2.2 percent market basket increase factor, according to the Skilled Nursing Facility Prospective Payment System (SNF PPS) final rule published Friday.

CMS, however, will neither increase nor decrease the productivity factor for skilled nursing facilities next year.

Additionally, CMS announced in the final rule that the SNF PPS will adopt the revised Office of Management and Budget (OMB) statistical area delineations for identifying urban and rural facilities. According to the agency, the new delineations will result in wage index values better reflecting actual costs of labor in a specific area.

The rule will also apply a 5 percent cap on any decreases in a skilled nursing facility’s wage index from FY 2020 to FY 2021.

Other updates in the SNF PPS final rule include ICD-10 code mapping changes in the Patient-Driven Payment Model (PDPM), a new case-mix classification model implemented in FY 2019, and the finalization of updates to the SNF Value-Based Purchasing (VBP) Program.

The final rule will update the 30-day Phase One Review and Correction deadline for the baseline quality measure quarterly report under the SNF VBP Program. CMS also announced performance periods and performance standards for the FY 2023 program year in the final rule.

The other two final rules published on Friday updated the prospective payment systems for inpatient psychiatric facilities and hospices.

Inpatient psychiatric facilities (IPF) will see a 2.2 percent, or $95 million, increase in Medicare reimbursement in FY 2021, according to the new IPF PPS final rule.

The reimbursement increase reflects a 2.2 percent IPF market basket increase and no productivity adjustment. Total reimbursement will also increase by another 0.1 percentage point due to an updated outlier threshold amount, CMS stated.

Additionally, the IPF PPS final rule will also finalize CMS’ proposal to adopt the revised OMB statistical area delineations. Any wage index decrease will also be capped at 5 percent in FY 2021.

Next year, physician assistants, nurse practitioners, and other advanced practice providers will also be able to operate within the scope of practice allowed by state law by documenting progress notes in the medical record of patients, the IPF PPS final rule stated.

Hospice reimbursement rates are slated to increase by $540 million in FY 2021 based on a market basket increase of 2.4 percent, the Hospice Wage Index and Payment Rate Update final rule revealed.

However, hospices that fail to meet quality reporting requirements next year will receive a 2-percentage point reduction to the annual market basket percentage increase, CMS stated.

The aggregate cap on hospice reimbursements in FY 2021 will be $30,683.93, which is equal to the FY 2020 cap amount ($29,964.78) updated by the final FY 2021 hospice payment update percentage of 2.4 percent.

Like the other payment rules released last week, the final rule will also apply the revised OMB statistical area delineations and a 5 percent cap on any wage index decreases from FY 2020 to FY 2021.

In conjunction with the hospice final rule, CMS also provided examples on a CMS website of the hospice election statement and the hospice election statement addendum. The examples reflect the changes finalized in the FY 2020 hospice final rule for increased coverage transparency for beneficiaries electing to use the Medicare hospice benefit, CMS stated.

To view the complete SNF PPS final rule, click here.

To view the complete IPF PPS final rule, click here.

To view the complete Hospice Wage Index and Payment Rate Update final rule, click here.