The federal government on Monday proposed its payment rate update to skilled nursing facility (SNF) reimbursements for fiscal 2024, which includes a net increase of 3.7%, or approximately $1.2 billion, in Medicare Part A payments to SNFs. No updates were issued on staffing minimums.
That rate increase from the Centers for Medicare & Medicaid Services (CMS) reflects a $2 billion increase resulting from the 6.1% net market basket update to the payment rates. This is based on a 2.7% SNF market basket increase plus a 3.6% market basket forecast error adjustment and minus a 0.2% productivity adjustment, as well as a negative 2.3%, or approximately $745 million, decrease in the 2024 SNF Payment Prospective Systems (PPS) rates as a result of the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration, the federal agency said.
CMS issued the proposed rule to update Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System (PPS).
The rule also includes proposals for the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for 2024 and future years, CMS said in the press release.
The proposed rule would eliminate the requirement for facilities facing civil monetary penalties to actively waive their right to a hearing in writing and instead treat the failure to submit a timely hearing request as a constructive waiver and result in the usual 35% penalty reduction.
In responding to CMS’s latest recommendations, the American Health Care Association (AHCA), the largest trade association for the sector, said it welcomed CMS factoring in the rising costs of care.
“We appreciate that CMS has considered the soaring costs nursing home providers are grappling with due to the labor crisis and record inflation in recent years,” AHCA President and CEO Mark Parkinson said in a press release. “It is vital that Medicare reflect the increasing costs—including those imposed by government mandates—nursing homes are facing to ensure our vulnerable residents can access the care they need. We look forward to submitting comments to CMS on this proposed rule.”
Ruth Katz, SVP of policy at LeadingAge, said in a statement that the bump in funding acknowledges the “critical reality” of increased dollars going hand in hand with quality of care, but the association remains cautious.
“These increases could be offset by the costs of staffing standards expected soon,” Katz said. “Nonprofit and mission-driven nursing homes appreciate CMS’s attention to the difficult operating environment for these providers—from inflation-induced increases in operating costs and insufficient support from policymakers, to staff shortages and recruitment and retention issues in a tight labor market.”
Proposed updates to payment rates
CMS also noted that its initial analysis of the PDPM’s implementation in 2020 showed that an unintended increase in payments of approximately 5%, or $1.7 billion, occurred per year.
And so, the federal agency proposed to ease the impact from this shift.
“After considering the stakeholder feedback received on the FY 2023 SNF PPS proposed rule, and to balance mitigating the financial impact on providers of recalibrating the PDPM parity adjustment with ensuring accurate Medicare Part A SNF payments, CMS finalized a PDPM parity adjustment factor,” CMS said.
This parity adjustment amounts to 4.6% in 2023 with a two-year phase-in period, resulting in a 2.3% reduction in 2023 and a 2.3% reduction in 2024 to the SNF PPS payment rates, the agency said.
Proposed changes to quality reporting program
CMS is also proposing changes to the SNF QRP, under which providers are subject to a 2-percentage point reduction in their annual payment update if they fail to meet reporting requirements.
CMS is floating the adoption of three new quality measures, the removal of three measures, and the modification of one measure.
Some changes related to the QRP include those stemming from discharge of patients and Covid vaccinations records. For Covid vaccinations, data would be collected using a new standardized item on the MDS, and facilities would be required to report the number of staff that are up to date with their vaccinations.
Proposed changes to value-based purchasing program
For the VBP, which rewards SNFs with incentive payments based on the quality of care they provide, CMS is recommending the adoption of four new quality measures.
One such measure is the Nursing Staff Turnover Measure, for which nursing homes would be expected to begin reporting in 2024, with payment effects beginning in 2026. The metrics for this measure are collected and publicly reported on Care Compare and assess the stability of the staffing within a SNF using nursing staff turnover numbers.
“This is part of the Administration’s focus to ensure adequate staffing in long-term care settings,” CMS said.
Among other measures, CMS is proposing the adoption of a discharge function score, a measure to assess the hospitalization rate of long-stay residents, both beginning in 2027, as well as a measure that assesses patient falls with major injury rates of long-stay residents.
In the interest of advancing health equity, CMS also is proposing to reward SNFs that serve people dually eligible for Medicare and Medicaid. Facilities with a resident population consisting of at least 20% duals during the reporting period would be eligible for bonus points for high performance.
“In addition, CMS is proposing to increase the payback percentage policy under the SNF VBP program from current 60% to a level such that the bonuses provided to the high performing, high duals SNFs do not come at the expense of the other SNFs,” the CMS Fact Sheet stated.
Minimum staffing requirements
CMS has been soliciting public comments and analyzing data from a dedicated study on minimum staffing requirements in 2023, but the agency did not issue an update on Tuesday.
“CMS continues to review the feedback and evidence from both the comment solicitation and mixed-methods study, all of which will be used to inform proposals for minimum direct care staffing requirements in nursing homes in rulemaking this Spring,” the agency stated.
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