CMS Plans 1.3% Medicare Payment Hike for Skilled Nursing Facilities

April 09, 2021 - CMS has proposed a $444 million increase in Medicare payments to skilled nursing facilities (SNFs) in the federal fiscal year (FY) 2022, according to a new proposed rule.

The rule released late Thursday would update the Medicare payment rates under the prospective payment system for SNFs starting Oct. 1, 2021, and make several changes to the new Patient Driven Payment Model and SNF Quality Reporting and Value-Based Purchasing Programs.

The approximate 1.3 percent boost in Medicare prospective payment system rates in FY 2022 reflects a 2.3 percent market basket update, less a 0.8 percentage point forecast error adjustment and a 0.2 percentage point multifactor productivity adjustment.

The proposed Medicare payment increase also incorporates a $1.2 million reduction in aggregate SNF payments next year from recently excluded blood-clotting factors as part of the Consolidated Appropriations Act of 2021.

The Act stated that blood-clotting factors and related items and services should be excluded from the Part A SNF prospective payment system per diem payment by the federal FY 2022.

READ MORE: Skilled Nursing Facility Staffing Impacted by New Payment Rules

However, CMS acknowledged that the proposed aggregate increase in SNF Medicare reimbursement in the rule does not account for the 2 percent payment reduction under the SNF Value-Based Purchasing Program, which holds back reimbursement if facilities do not meet quality metrics.

CMS estimated in the proposed rule SNF Value-Based Purchasing Program reductions to total about $184.25 million in FY 2022.

The agency would also expand the Value-Based Purchasing Program under the proposed rule.

The proposed rule plans to add ten quality measures starting in federal FY 2024, again as part of the Consolidated Appropriations Act of 2021. The new measures may assess functional status, patient safety, care coordination, or patient experience, as well as long-term care facility quality since many of the facilities are dually certified as both SNF and nursing facility, CMS stated.

If finalized, the proposed rule would also suppress the 30-Day All-Cause Readmission Measure for the FY 2022 SNF Value-Based Purchasing Program Year because of the impact of the COVID-19 pandemic on SNF performance.

READ MORE: CMS Finalizes 2.2% Boost in Skilled Nursing Facility Reimbursement

SNFs would also be subject to more quality reporting under an SNF-specific program run by CMS.

The agency said in the proposed rule that it plans to expand the SNF Quality Reporting Program, which also reduces Medicare payment to facilities for failing to meet quality metrics. The rule would add a claims-based measure on healthcare-associated infections that result in hospitalization and a new measure on COVID-19 vaccination coverage among healthcare personnel.

The COVID-19 vaccination measure is also being floated around other quality reporting programs for post-acute and long-term care providers, including inpatient rehabilitation and psychiatric facilities. The measure aims to ensure facilities are working to stop the spread of COVID-19.

In light of COVID-19, CMS said it would also provide some quality reporting relief for SNFs by adjusting the number of quarters used to calculate penalties under the Quality Reporting Program.

The agency is also seeking comments on how to close health equity gaps through quality measurement. Health disparities were made worse by the recent surges of COVID-19.

READ MORE: Skilled Nursing Facilities Facing a Financial Crisis from COVID-19

Finally, the proposed rule would update the consolidated billing system it implemented for SNF Medicare payment.

The rule would correct an “unintended increase in payments” under the Patient Driven Payment Model of about 5 percent, or $1.7 billion, in FY 2020. Since the Patient Driven Payment Model must be budget neutral, CMS plans to recalibrate the parity adjustment.

Although, the agency recognized in the rule that the COVID-19 pandemic could have impacted data for the parity adjustment and is soliciting feedback from SNFs on how to account for the effects of COVID-19 without “compromising the accuracy of adjustment,” it said in an accompanying fact sheet.

The proposed rule would also update ICD-10 code mappings under the Patient Driven Payment Model, particularly around PT, OT, SLP, and NTA components. CMS would also revise the ICD-10 code mappings impacting sickle-cell disease, esophageal conditions, multisystem inflammatory syndrome, neonatal cerebral infarction, vaping-related disorder, and anoxic brain damage, as requested by SNFs.

The Patient Driven Payment Model is a case-mix classification model implemented in federal FY 2019 that ties Medicare reimbursement for SNFs to patient characteristics rather than the volume of services provided.

The overall boost in Medicare prospective payment system rates in FY 2022 comes at a time when SNFs and other post-acute and long-term care providers are struggling financially because of the COVID-19 pandemic, according to industry leaders.

“Nursing homes across the country continue to dedicate extensive resources to protect their residents and staff from COVID-19. This ongoing work makes government support and robust reimbursement rates more important than ever,” Mark Parkinson, president and CEO of the American Health Care Association (AHCA), said in a statement on behalf of AHCA and the National Center for Assisted Living (NCAL).

“With the skilled nursing profession grappling with an economic crisis and hundreds of facilities on the brink of closure due to the pandemic, it is critical that Medicare remain a reliable funding source and reflect the increasing costs providers are facing.”

CMS will accept comments on the proposed rule through June 7, 2021.