Skilled Nursing Facilities to See 2.3% Medicare Raise — or $784M — Under Fiscal 2021 Proposed Rule

The federal government late Friday released its proposed rule for skilled nursing facility payments for the coming fiscal year, which will see the nation’s nursing homes receive a 2.3% Medicare pay bump.

“This estimated increase is attributable to a 2.7% market basket increase factor with a 0.4 percentage point reduction for multifactor productivity adjustment,” the Centers for Medicare & Medicaid Services (CMS) wrote in a fact sheet about the proposed rule.

Under the proposed rule, CMS would also update the SNF prospective payment system (PPS) wage index.


“We proposed to adopt revised geographic delineations provided by the Office of Management and Budget, which are used to identify a provider’s status as an urban or rural facility and to calculate the wage index and apply a 5% cap to wage index decreases,” according to CMS.

If finalized, the rule would additionally update the way ICD-10 codes map under the new Patient-Driven Payment Model (PDPM).

“In this proposed rule, we are proposing changes to the ICD-10 code mappings that would be effective beginning in FY 2021, in response to these stakeholder recommendations,” CMS observed. “We encourage stakeholders to continue to provide this essential feedback on the ICD-10 code mappings, so that we may continue to improve and refine our payment methodology.”


Finally, the proposed rule would bring slight tweaks to the SNF Value-Based Purchasing (SNF VBP) program — but no changes to measures, scoring policies, or payment terms.

Under SNF VBP, providers automatically receive a 2% cut to their Medicare payment rates, which they can earn back by hitting certain quality measures; the highest performers also receive a portion of the funds that the lowest-ranked SNFs do not recover.

Based on the current model design, SNF VBP results in savings for the federal government; CMS only redistributes 50% to 70% of the penalty amount to the facilities with the best SNF VBP performance.

In fiscal 2021, the program will account for about $199 million in reduced Medicare payments to operators.

Though the government typically releases its proposed payment rule in the spring, CMS acknowledged the unique nature of this year’s announcement.

“While CMS is focused on helping the health care system respond to the COVID-19 pandemic, we are releasing the annual Medicare payment rules as required by law to ensure providers are informed on the 2021 payment updates,” CMS noted.

American Health Care Association CEO Mark Parkinson thanked CMS administrator Seema Verma for the proposed pay raise.

“Skilled nursing facilities across the country are working around the clock to protect the people who are most vulnerable to COVID-19,” Parkinson said in a statement. “That work makes this 2.3% market basket increase more important than ever. Our long term care staff are heroically going above and beyond to care for millions of residents amid the COVID-19 pandemic.”

Stakeholders have until June 9 to submit comments on the proposed rule. The federal government’s fiscal year begins October 1.

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