It’s that time of year again where CMS begins to drop various rule proposals for updates to provider groups under PPS. From Hospitals, to SNFs, to Home Health and Hospice, each industry segment will see a proposed series of rate and programmatic (rule) updates from CMS. This is normal and it occurs at about the 6th month period post the start of the Federal Fiscal Year on October 1 (January 1 for Home Health).
The proposed changes/updates under the SNF PPS program break into two categories – meaningful and technical. The most meaningful changes to providers under these rules tend to be rate followed by rate methodology changes, such that the same are new or wholesale, revisions. Every once in a while, big regulatory changes occur such as we saw a few years back with new survey and certification rules and update. For this Proposed Rule, nothing struck me as “groundbreaking”. The full rule text is here: SNF Proposed PPS Rule FY 2025 For readers interested in the “Cliff Notes” version, the Fact Sheet on the rule is accessible here: https://www.cms.gov/newsroom/fact-sheets/fy-25-skilled-nursing-facility-prospective-payment-system-proposed-rule-cms-1802-p
Note, these proposals do tend to change a bit such as last year when we saw the actual PPS rate increase move up a touch from the 3.7% proposed to 4%. Recall, the formula for rate calculations is in typical government, convoluted fashion – very contrived. Similarly, the proposed rules tend to follow-up on initiatives or adjustments from prior rules. Such is the case in this recent release. Finally, these proposals can be as noteworthy for what is not included as for what is included. Such is the case in this rule proposal as it is moot on any additional information, refinement or implementation delays in the staffing mandate (clinical staff, hours per resident day). For a trip down Memory Lane, my post on last year’s SNF PPS proposed rule is available here (posted on April 7, 2023): https://rhislop3.com/2023/04/07/snf-proposed-rule-2024/
Below is a summary of the highlights from this year’s SNF proposed rule.
- Updates to SNF PPS rates by 4.1% based on the proposed SNF market basket of 2.8%, plus a 1.7% market basket forecast error adjustment, and a negative 0.4% productivity adjustment. These figures do not incorporate the SNF VBP reductions for certain SNFs subject to the net reduction in payments (rate reductions for performance). Those adjustments are estimated to total $196.5 million.
- CMS is proposing several changes to the PDPM ICD-10 code mappings to allow providers to provide more accurate, consistent, and appropriate primary diagnoses that meet the criteria for skilled care during a Part A SNF stay. The number one reason for billing errors and/or claims rejections is coding such that the diagnosis does not sufficiently correlate to skilled services, unsupported by documentation or assessment. More information on these proposed updates is available at CMS PDPM page: https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/patient-driven-model
- The proposed rule includes revisions to CMS’ existing nursing home enforcement authority. CMS is proposing to expand its ability to impose financial penalties. The revisions will allow CMS to expand the mix and number of penalties. For example, currently, CMS can impose penalties that classify as Per Instance (PI) or Per Day (PD). Per instance penalties are for citations that are singular instances of non-compliance. Per day penalties apply to situations where violations are more than one-off circumstances. PD and PI penalties may not be imposed during the same survey, and PI penalties may not be imposed concurrently for the same deficiency. CMS is proposing to change this limitation, allowing the agency to impose both levels of enforcement as it deems necessary to correct serious issues of non-compliance.
- CMS proposes adding four new social determinants of health (SDOH) items and modifying one SDOH assessment item for the SNF QRP. Additionally, CMS proposes that SNFs included in the SNF QRP participate in a process to validate data submitted under the SNF QRP through the Minimum Data Set (MDS) beginning with the FY 2027 SNF QRP. Social determinants of health examples are language and literacy skills, environmental factors such as clean air and water, and education, job opportunities, and income (not an exhaustive list). Recall, QRP is a reporting element such that SNFs are required to gather data (assessment) and report in a specified timeframe. Failure to report the data can result in a 2% reduction in Medicare payment. The Fact Sheet (available via link above) contains decent detail on the QRP proposed changes.
- SNF VBP (value-based purchasing) proposed changes include an update on the Review and Correction policy that was previously finalized allowing SNFs to make adjustments in data reporting for PBJ (payroll-based journal) as well as a case-mix methodology tweak used as part of the Total Nurse Staffing measure.
If anything substantively changes between now and the release of the Final Rule (typically mid-summer), I will certainly provide an update. Recall, these proposed rules include comment periods and no doubt, this proposal will generate a fair amount of commentary, particularly on the proposed changes for enforcement (fines and penalties). From my perspective, I think the enforcement changes fit CMS’ approach to nursing homes post-COVID. The draconian, punitive approach has not improved performance before, and it won’t now. The industry has significant challenges already due to over-regulation and inadequate payments. Piling on so to speak, is not going to help, even with a 4% rate increase. With 50% of all SNF patients covered by Medicare participating in a Medicare Advantage plan, providers won’t see the full effect of the rate adjustment. Medicare Advantage plans are not required to use Medicare Fee-For-Service rates for payment, typically paying providers markedly less.