Health Law Daily CMS changes SNF case mix, finalizes PDPM, predicts $820M payment increase
Wednesday, August 1, 2018

CMS changes SNF case mix, finalizes PDPM, predicts $820M payment increase

By Bryant Storm, J.D.

CMS is formally replacing the Resource Utilization Group, Version IV (RUG-IV) with a new Skilled Nursing Facility (SNF) case mix classification system: the SNF Patient-Driven Payment Model (PDPM). The new model, which bases SNF reimbursement on the value of care, rather than the volume of services, was announced in an advance release of the Fiscal Year 2019 SNF prospective payment system (PPS) Final rule, which is set to publish in the Federal Register on August 8, 2018. The rule also finalizes an additional factor for the consideration of SNF Quality Reporting Program measures and sets baseline periods and an Extraordinary Circumstances Exception (ECE) policy for the SNF Value-Based Purchasing (VBP) Program. CMS predicts that the 2.4 percent market basket update for the Fiscal Year 2019 SNF PPS will result in an increase of $820 million in Medicare payments to SNFs.

PDPM. In May 2017, via Advanced Notice of Proposed Rulemaking (ANPRM) (82 FR 20980), CMS proposed a replacement case mix model for SNF reimbursement: the Resident Classification System, Version I (RCS-I) (see CMS proposes SNF PPS payment changes for 2018 and beyond, May 4, 2017). The model was designed to replace the RUG-IV case-mix model, used to classify residents in a covered Part A stay into payment groups under the SNF PPS. Following stakeholder input, CMS revised the RCS-I and renamed the model PDPM.

The new model focuses on the clinical complexity of services provided, rather than the volume of services provided. The SNF PDPM uses ICD-10 diagnostic codes and other patient characteristics as the basis for patient classification. Additionally, to address costs for medically complex patients, the model adjusts Medicare payments for Non-Therapy Ancillaries (NTAs), which are items and services not related to the provision of therapy, such as drugs and medical supplies. The model also adjusts the SNF per diem payments and sets a combined limit on group and concurrent therapy of 25 percent.

The new model represents an 80 percent reduction in the number of payment group combinations compared to the RCS-I. CMS projects, through this simplification of patient assessment paperwork, the new model will reduce reporting burden by approximately $2.0 billion over 10 years.

Payment update. The Bipartisan Budget Act of 2018 required a 2.4-percent market basket increase for the FY 2019 SNF PPS. Without that statutory requirement, the market basket update factor would have been 2.0 percent—calculated from the FY 2019 market basket index of 2.8 percent, reduced by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) multifactor productivity adjustment of 0.8 percent. The 2.0 percent update would have resulted in a $670 million increase in aggregate SNF payments. However, as a result of the higher, 2.4-percent increase, CMS projects aggregate SNF payments to rise $820 million.

VBP. As of October 1, 2018, the SNF VBP Program will apply either positive or negative incentive payments to reimbursement for services furnished by skilled nursing facilities. The inventive payments will be based on SNF performance on the VBP program’s single readmissions measure. CMS estimates the overall economic impact of the SNF VBP Program will be a reduction of $211 million in aggregate payments to SNFs during FY 2019.

The Final rule adopts FY 2019 (October 1, 2018 through September 30, 2019) as the performance period for the FY 2021 SNF VBP Program year. The Final rule also adopts FY 2017 (October 1, 2016 through September 30, 2017) hospital discharges as the baseline period for the FY 2021 SNF VBP Program year.

CMS finalized an extraordinary circumstances exception (ECE) for the VBP program. Under the exception, if a SNF is able to demonstrate an extraordinary circumstance affected the care it provided to its patients and its subsequent measure performance, CMS will exclude from the calculation of the measure rate for the applicable baseline and performance periods the calendar months during which the SNF was affected by the extraordinary circumstance.

QRP. CMS adopted an additional factor for consideration when evaluating measures for removal from the SNF QRP measure set. The factor considers the cost of the measure and weights that cost against the benefits of continuing to use the measure in the program.

MainStory: TopStory ReimbursementNews CMSNews PaymentNews PartANews ProgramIntegrityNews QualityNews SNFNews FedTracker HealthCare GCNNews

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More

Health Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on health legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.