Final 2025 SNF Rule – Rate Increase, More Fines

Under the Final 2025 (PPS) rule released last Wednesday, nursing homes are set to receive a 4.2% pay increase in Medicare Part A. Additionally, the facilities will encounter a stricter fines system, with civil monetary penalties being applicable in more situations. The Final Rule is available here: SNF Final Rule 2025

In April I wrote about the then Proposed Rule for SNFs. The Final Rule is not much different than what was proposed, containing slight tweaks. For example, the rate increase in the Proposed Rule was 4.1% and the Final Rule rate increase is 4.2%. My post on the Proposed Rule is available here, including the rule text: https://rhislop3.com/2024/04/01/cms-releases-2025-pps-proposed-rule-for-snfs/

The CMS is revising SNF payment policies, leading to a 4.2% net increase, or about $1.4 billion, in Medicare Part A payments to SNFs for FY 2025. The 4.2% increase is based on a 3.0% SNF market basket increase, plus an additional 1.7% increase for forecast error, minus a 0.5 percentage point productivity adjustment.

These figures do not include the SNF Value-Based Purchasing (VBP) payment reductions for certain SNFs, which are projected to amount to $196.5 million in FY 2025. Recall, under the VBP program, failure to submit quality data or failure to meet threshold numbers for the measure – all cause 30-day hospital readmissions, post hospital stay discharge. Interested readers can find many posts on the is site regarding the SNF VBP program. One that dates back to the program formation gives good background on VBP, QRP and the Impact Act – https://rhislop3.com/2017/02/15/impact-act-vbp-care-coordination-and-the-snf-landscape/

Changes in Enforcement

The Final Rule changes CMS’ enforcement policies to impose more (purportedly) equitable and consistent civil monetary penalties (CMPs) for health and safety violations.

The CMS enforcement authority is empowered to levy CMPs for noncompliance with federal mandates. Penalties may be assessed per day or per instance of non-compliance, based on the nature of the health and safety deficiencies found, with per day CMPs continuing until the noncompliance is resolved, and per instance CMPs for isolated events. However, simultaneous imposition of per-day and per-instance penalties for deficiencies discovered in the same survey is not allowed, nor can per-instance penalties be applied concurrently for the same issue.

The level of enforcement actions is determined by the actual or potential harm to residents resulting from non-compliance. This regulatory constraint hinders CMS and state agencies from imposing CMPs that fully reflect the extent of noncompliance, as it limits the application of multiple penalties for a single deficiency, thereby undermining the full potential of CMPs to promote prompt correction and ongoing adherence to health and safety standards.

In the Final Rule, CMS has revised the regulations to broaden the types of Civil Monetary Penalties (CMPs) that can be levied, enabling a more frequent imposition of both per instance and per day CMPs. These revisions grant CMS increased flexibility to administer penalties in a way that more accurately (purportedly) represents the health and safety consequences for residents and encourages compliance. It is important to recognize that CMPs remain bound by statutory daily maximums, and CMS retains the discretion to consider a nursing home’s financial status when determining the suitable level of CMP.

Other Final Rule Provisions

• CMS is finalizing various amendments to the PDPM ICD-10 code mappings, enabling providers to deliver more precise, consistent, and suitable primary CMS diagnoses that fulfill the requirements for skilled intervention during a Part A SNF stay. The updates to the ICD-10 code mappings and lists utilized under PDPM can be found on the PDPM website. https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/SNFPPS/PDPM.
• The rule finalizes the proposal to update the SNF PPS wage index using the Core-Based Statistical Areas (CBSAs) defined within a new Office of Management and Budget (OMB) Bulletin. Recall, rates as proposed are not the final rate a facility receives as the Federal rate is adjusted by labor regions (plus or minus).
• Modifications to the Skilled Nursing Facility (SNF) Quality Reporting Program (QRP) are underway to potentially address adverse social conditions that may impact health or healthcare after facility discharge. Additionally, a pending policy will mandate SNF QRP participants to validate the data they submit starting with fiscal year 2027. Facilities that fail to report may face a 2-percentage point decrease in their annual payment update. Moreover, the data collection process for the Transportation item in the Minimum Data Set (MDS) is being simplified.
• CMS is implementing a measure retention and removal policy to ensure that the SNF VBP Program’s measure set continues to concentrate on the most relevant metrics for evaluating care quality in SNF settings. Additionally, CMS is adopting a measure selection, retention, and removal policy that is consistent with the existing policy in the SNF QRP program.

Provider reaction has been positive about the rate increase elements and strongly negative about the enforcement provisions as the Immediate Jeopardy trend has been increasing and the belief is, that CMS will become even more punitive in its enforcement approaches.  Stay tuned!