CMS Overhauls Skilled Nursing Payment Plan, Increases Rate by $850 Million

The Centers for Medicare & Medicaid Services (CMS) on Friday unveiled a new proposed model for skilled nursing reimbursements that the agency says will save providers $2 billion over the next decade.

The proposed Resident Classification System, Version I (RCS-I) is out, and the Patient Driven Payment Model (PDPM) is in, with an effective start date of October 1, 2019.

“The proposed new model is designed to improve the incentives to treat the needs of the whole patient, instead of focusing on the volume of services the patient receives, which requires substantial paperwork to track over time,” CMS wrote in the announcement of the new scheme.


CMS framed the move as a concession to providers based on feedback regarding RCS-I, pointing out that the PDPM has an 80% reduction in payment group combinations as compared to the initial plan and would slash reporting requirements, potentially saving providers $2 billion per year.

“We envision all elements of CMS’s health care delivery system working to reward value over volume and decisively focus on patients receiving quality care from their Medicare benefits,” CMS Administrator Seema Verma said in a statement announcing the plan. “For skilled nursing facilities, we are taking important steps through proposed payment improvements that will reduce administrative burden and foster innovation to improve care and quality for patients.”

Like RCS-I, the PDPM would shift incentives away from providing hours of service and toward “clinically relevant factors,” with a goal of moving toward a single payment system for post-acute care.


In the same swoop, CMS also released payment rate changes for fiscal 2019 under the new rule: SNFs will see a boost of $850 million in Medicare money based on a market basket update of 2.4%. Had CMS not taken that step, as mandated by the Bipartisan Budget Act of 2018, the increase would have been closer to $670 million.

All interested parties can weigh in on the proposed rule by submitting a comment through June 26.

Written by Alex Spanko

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