Health Law Daily CMS stirs up the SNF case-mix, proposes $850M payment increase for 2019
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Monday, April 30, 2018

CMS stirs up the SNF case-mix, proposes $850M payment increase for 2019

By Bryant Storm, J.D.

Proposed changes to the payment rates for the Skilled Nursing Facilities (SNFs) Prospective Payment System (PPS) would result in an aggregate payment increase of $850 million in Fiscal Year (FY) 2019, according to an advance release of a CMS Proposed rule. Proposed changes to the SNF value based purchasing (VBP) program are estimated to reduce FY 2019 payments to SNFs by $211 million. The Proposed rule also proposes to replace the current case-mix classification methodology—the Resource Utilization Groups, Version IV (RUG-IV) model—with a revised case-mix methodology called the Patient-Driven Payment Model (PDPM), which would take effect on October 1, 2019.

The Proposed rule will publish in the Federal Register on May 5, 2018. CMS is accepting comments on its proposals through June 26, 2018.

Payment update. The Bipartisan Budget Act of 2018 required a 2.4-percent market basket increase for the SNF PPS. Without that statutory requirement, the market basket update factor would have been 1.9 percent—calculated from the FY 2019 market basket index of 2.7 percent, reduced by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) multifactor productivity adjustment of 0.8 percent. The 1.9-percent update would have resulted in a $650 million increase in aggregate SNF payments. As a result of the higher, 2.4-percent increase—aggregate payments are expected to rise $850 million.

PDPM. The new case-mix methodology is designed to focus on patient needs as opposed to the volume of services an individual receives. The goal is a streamlined, value-based, unified post-acute care system. Under the PDPM, reimbursement would be based upon each aspects of a patient’s care, including Non-Therapy Ancillaries (NTAs)—items and services not related to the provision of therapy such as drugs and medical supplies. Additionally, under the PDPM, reimbursement would adjust per diem rates to reflect changes in patient needs throughout a stay. SNFs would also receive incentives to ensure consistent care. The PDPM would also create a more efficient reimbursement model, through an 80-percent reduction in the number of payment group combinations. To assist stakeholders with understanding the PDPM and to facilitate comments, CMS developed a technical report on the model.

QRP. CMS reviewed the SNF QRP in accordance with the Meaningful Measures Initiative and determined that all of the current measures are satisfactory. Accordingly, CMS did not propose any new measures or any measure changes under the rule. However, CMS is proposing to begin considering costs associated with a measure. Under the proposal, CMS would weigh those costs against the benefit of a measure’s continued use in the program.

VBP. As of October 1, 2018, the VBP will apply incentive payments (either positive or negative) based upon a SNFs performance on the SNF VBP single claims-based all cause 30-day hospital readmissions measure. The Proposed rule proposes to adopt FY 2019 as the as the performance period for the FY 2021 SNF VBP Program year. CMS also proposes to adopt FY 2017 as the baseline period for the FY 2021 SNF VBP Program year. In subsequent years, CMS proposes to adopt—for each program year—a performance period that is the one-year period following the performance period for the previous program year. Additionally, CMS is proposing an extraordinary circumstances exception 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 would 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.

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