While More is Needed, Operators are ‘Generally Pleased’ With 4% Increase in SNF Final Rule

Nursing home operators had a mixed reaction to the Centers for Medicare & Medicaid Services (CMS) final payment rule for 2024. While some operators said that they were generally appreciative of the 4% increase in Medicare reimbursement, they are also calling for more help and understanding from federal agencies in tackling the workforce crisis – a situation measures contained in CMS’ latest issuance do not address, and perhaps exacerbate.

Some of the operators who spoke to Skilled Nursing News welcomed a jump in rates, but said that rising costs amid high inflation still won’t compensate for their expenses adequately, but they pointed to some wins, such as changes to civil monetary penalties (CMPs).

Meanwhile, CMS’ final rule was met with measured criticism from advocacy groups upon its release. Leaders like LeadingAge CEO Katie Smith Sloan said that the higher payment rate would be offset by increasing costs of care – which will no doubt continue to rise in the coming year. Smith Sloan was also critical of the new staff turnover measure.

Moreover, Martin Allen, senior vice president of reimbursement policy with the American Health Care Association (AHCA), said more must be done, especially ahead of implementing the federal minimum staffing mandate, an effort that could cost tens of billions of dollars each year, he said.

However, some operators greeted the final rule with relief. Wanda Prince, chief compliance and strategy officer for Indiana-based Brickyard Healthcare, said she was “really pleased” and “cautiously optimistic” regarding the outcome of the final rule.

“We are an incredibly important component of the health care infrastructure. The work we do is important to this country’s health care system, and we appreciate the thoughtful consideration of our needs,” Prince told Skilled Nursing News.

CMS estimates that the aggregate impact of the payment policies in the latest rule would result in a net increase of 4.0%, or approximately $1.4 billion, in Medicare Part A payments to SNFs in FY 2024. This estimate reflects a $2.2 billion increase resulting from the 6.4% net market basket update to the payment rates.

The proposed rule initially had an increase of 3.7% to Medicare reimbursement.

Prince also said, however, that there was room for improvement. “Of course, we need more. We need more understanding, we need more reimbursement, especially in some states,” she said. Overall, Prince said the increase seems to indicate that CMS recognizes post-acute care as a critically important part of the health care continuum, as patients transition to lower levels of care.

Ignite Medical Resorts CEO Tim Fields said he was also “generally pleased” with the final rule.

It’s a move in the right direction, Fields noted, even though the rule still doesn’t keep up with all of the staffing, utilities, food cost and other expenses, along with inflation.

Meanwhile, some experts said that the rate increase for SNFs when compared to other sectors seems more generous.

According to Fred Bentley, managing director for ATI Advisory’s Medicare Innovation Practice, the 4% increase is “pretty favorable” from an industry perspective, compared to home health’s proposed rule and less than stellar updates to Medicare Advantage.

Bentley said that considering that in prior years there were “battles over clawing back [Patient-Driven Payment Model] overpayment,” this final rule had decent rates and changes, especially to the value-based program and quality measures that CMS had already “telegraphed” to the industry.

Staffing minimum funding conspicuously absent

While operators knew details regarding the federal staffing minimum mandate would not be part of the final rule, CMS Administrator Chiquita Brooks-LaSure in March said that any skilled nursing funding is taken care of through the Medicare and Medicaid final payment rules.

Unless funding is baked into the 4% increase, that could potentially mean CMS still isn’t planning on funding the minimum staffing mandate, experts said. Or, it could mean that funding details are part of what is currently being reviewed by the Office of Management and Budget (OMB).

Still, it’s encouraging, Prince said, that their partners at CMS understand that not one size fits all when it comes to staffing in the space, and a staffing minimum.

“Something that works in Kansas may not work in Boston, for instance, or something that works in Atlanta might not work in rural Indiana. It definitely does depend upon the acuity of the patients we serve, the type of patients, the layout of the building … overall, we do believe that it is meaningful, it is positive, and we appreciate the thoughtful consideration.”

Disappointment with staffing-related VBP Measures

Prince said she’d like to see some more understanding from CMS with the workforce crisis, and staffing challenges the industry faces in terms of difficulty recruiting and retaining caregivers.

Despite the ongoing workforce shortage, CMS still adopted a measure intended to address staff turnover within updates to the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for FY 2024 and future years.

CMS is adopting four new quality measures, replacing one quality measure, and finalizing several policy changes in the SNF VBP Program.

“We certainly need help on that front,” Prince said of the staffing crisis. “Leaving in turnover and some other staffing metrics, [there were] no surprises, but it continues to be a challenge for us.”

Fields echoed those thoughts on staffing-related VBP measures.

“I was disappointed to see the total staff turnover value based metric not adjusted or changed, especially in light of the last couple of years of workforce challenge,” said Fields. “I hope CMS continues to listen to AHCA, Leading Age and other organizations as it prepares the minimum staffing standards.”

Fields said he’d also like to see a collective effort among government agencies and operators to reform a “very broken” Five Star Rating System.

With new ACO Reach programs going live, he said, it shines a light on how impactful the star rating system is and how misaligned it is to demonstrating quality care, resident satisfaction, and clinical and therapeutic outcomes.

CMP changes are a win

Changes to CMPs, Prince said, was a positive turn of events. Prior to the change, operators needed to send a letter within 60 days of receiving a CMS deposition if they wanted to waive the right to an appeal and receive a 35% reduction to the fine.

“In my experience, over the years there have been some waiver letters that have just been missed, fell through the cracks with turnover or communication or whatever the situation was, and it was sometimes significant,” said Prince. “We might have had no intention of appealing the civil monetary penalty.”

In the past, if a letter to “waive and pay,” as Prince puts it, wasn’t submitted in a timely manner, an operator would get stuck paying the entire fine they had no intention of appealing anyway.

It takes one more paperwork burden off the shoulders of providers because a letter only needs to be sent in case of an appeal, she said. For CMS, the change allows agency workers to shift resources toward bolstering oversight and enforcement activities, including providing additional focus on nursing home compliance, according to the rule.

Still, CMS said that it would be reviewing the appropriateness of the 35% reduction policy in future, including reduction amount.