CMS Finalizes New Skilled Nursing Payment Rules, Predicts $820M Funding Boost

The Centers for Medicare & Medicaid Services (CMS) on Tuesday finalized its skilled nursing payment updates for fiscal 2019, formally enshrining the Patient-Driven Payment Model (PDPM) and other changes in a final rule.

Under the finalized proposal, the PDPM — which will see therapy payments based increasingly on the complexity of patients’ clinical needs, and not the volume of hours provided — will take effect October 1, 2019 as previously announced in April.

The CMS announcement thus formally marks the death of the Resident Classification System, Version I (RCS-I), the payment model that had originally been slated to replace the Resource Utilization Group, Version IV (RUG-IV) that currently governs case mix reimbursement rules in skilled nursing facilities.


“The 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 said in announcing the finalized payment rule.

Part of the PDPM will also include a 25% cap on group and concurrent therapy services, which CMS positioned as a way for patients to receive “the highest caliber of therapy that is best attuned to their individual needs and goals.”

“We will also continue to work with stakeholders to consider potential modifications to this finalized policy for future rulemaking, including whether to adjust the combined limit of 25 percent for concurrent and group therapy to ensure sufficient flexibility for therapists without compromising beneficiary care,” CMS said.


The upgraded rules will cut providers’ paperwork burdens by 80% and save them $2 billion in reporting costs over the coming decade, CMS claimed. The federal agency repeatedly emphasized a desire to reduce bureaucratic headaches for operators in its description of the new rule, including the paperwork reductions and a new SNF Quality Reporting Program (QRP) rule that requires CMS to weigh the potential costs of required metrics against the benefit of keeping them in the program.

All told, SNFs will see an additional $820 million in Medicare reimbursements under the final rule for fiscal 2019, according to Tuesday’s announcement. That’s slightly down from the $850 million figure cited in the spring, though it still represents a significant advantage over the $670 million gain that would have been realized if Congress did not mandate a 2.4% market basket update in the Bipartisan Budget Act of 2018.

The October 1, 2019 roll-out date will allow time for skilled nursing facilities to prepare for the changes and train their staffs, according to CMS.

Written by Alex Spanko

Companies featured in this article: