CMS Finalizes Skilled Nursing Facility FY 2018 PPS Update

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule that will update the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs), for fiscal year (FY) 2018.

Major provisions of the final rule also include policies related to the SNF Value-Based Purchasing Program, and the SNF Quality Reporting Program, and an updated performance period for the National Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) Influenza Vaccination Reporting Measure included in the End Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for Payment Year 2020.

The prepublication document was 380 pages. The final rule was published August 4 and is available at https://www.gpo.gov/fdsys/pkg/FR-2017-08-04/pdf/2017-16256.pdf.cqd.

Comment

CMS notes that the overall economic impact of this rule will be an estimated increase of $370 million in aggregate payments to SNFs during FY 2018. This amount is $20 million lower than the proposed rate of increase.

CMS also states that the overall cost for SNFs to submit data for the SNF Quality Reporting Program for the provisions in this final rule is ($29 million).

The SNF update is, for the most part, straightforward, it’s just long with quality and value-based purchasing details.

The rule spends considerable effort explaining both the SNF quality reporting requirements and the potential adoption of a value-based measure. These are complex subjects and have lengthy discussions. Discussions that need in-depth review to understand and comprehend. Medicare is moving quickly to adopt quality and value-based measures. Such measures will dominate and impact payments.

SNF PPS Rate Setting Methodology and FY 2018 Update

Section 411(a) of the Medicare Access and CHIP Reauthorization Act of 2015, (MACRA), requires CMS to use a 1.0 percent market basket percentage instead of a 2.6 percent market basket percentage increase for FY 2018. The 2.6 percent amount would be further reduced by a 0.6 Multi Factor Productivity adjustment for a net increase of 2.0 percent.

The proposed values were a market basket increase of 2.7 percent offset by a MFP of 0.4 percent for an increase of 2.3 percent.

SNFs that fail to submit required quality data to CMS will be subject to a 2.0 percentage point reduction to the otherwise applicable annual market basket percentage update with respect to that fiscal year.

Forecast error correction

The SNF PPS is the only PPS that requires a market basket forecast for errors. However, CMS’s rule only makes corrections if the error is 0.5 percent or more.

There will be no correction for FY 2018.

FY 2017 Annual Update of Payment Rates Under the Prospective Payment System for Skilled Nursing Facilities

AIDS Add-On

The temporary increase of 128 percent in the per diem adjusted payment rates for SNF residents with AIDS, enacted by section 511 of the Medicare Modernization Act (MMA), remains in effect.

Case-Mix and Rates

Tables 4 and 5 starting on page 36537 of the final rule contain the case-mix adjusted RUG-IV payment rates, and labor/non-labor values. These tables do not reflect the AIDS add-on, which CMS applies only after making all other adjustments (such as the wage index).

Wage Index

The area wage index budget neutrality factor for FY 2018 is 1.0013. The wage indexes applicable to FY 2018 are set forth in Tables A and B available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.

Labor Share and revised and rebased market basket

The FY 2018 SNF labor share will be 70.8 percent.

Comment

CMS spends some 47 pages discussing its data and inputs it used to revise the SNF market basket.

SNF Quality Reporting Program (QRP)

Measures Currently Adopted

The SNF QRP currently has seven adopted measures as outlined in table below.

SNF QRP Quality Measures Beginning With the FY 2020 SNF QRP

Beginning with the FY 2020 SNF QRP, CMS will remove the current pressure ulcer measure entitled Percent of Residents or Patients with Pressure Ulcers that Are New or Worsened (Short Stay) (NQF #0678) and replace it with a modified version of the measure entitled Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury.

CMS will also adopt four function outcome measures on resident functional status. The four outcome measures are:

• Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633),
• Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634),
• Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635),
• Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636), beginning with the FY 2020 SNF QRP.

Modifications to Potentially Preventable 30-Day Post-Discharge Readmission Measure for Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)

CMS is finalizing its proposal to increase the measurement period from 1 year to 2 years for the calculation of the Potentially Preventable 30-day Post-Post Discharge Readmission Measure for SNF QRP measure. CMS is also finalizing its proposal to shift from calendar to fiscal years for public reporting of this measure.

CMS is finalizing that it will begin publicly reporting six new measures for display by fall 2018. In addition, CMS is finalizing that beginning with the FY 2019 SNF QRP, the data SNFs report on the measure Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678) meet the definition of standardized resident assessment data and that beginning with the FY 2020 SNF QRP, the data SNFs report on the measures.

Comment

The discussion on quality consumes more than 150 pages of the display copy of this final rule. On the surface, CMS appears to be leaving no room for misunderstandings of its rationales for requiring various SNF data elements. It’s also evident based on the number of comments received the entire aspect of quality reporting is time consuming and burdensome.

Providers need to pay special attention to both existing and new quality measures to be in compliance or risk payment reductions.

SNF Value-Based Purchasing Program (VBP)

Section 1888(h)(1)(B) of the Act requires that the SNF VBP Program apply to payments for services furnished on or after October 1, 2018 (FY 2019).

In the FY 2016 SNF PPS final rule, CMS finalized the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) (NQF #2510) that it will use for the SNF VBP Program. CMS is finalizing baseline and performance periods for the FY 2020 program year based on the federal fiscal year rather than the calendar year as it has finalized for the FY 2019 program year.

A CMS fact sheet issued with this rulemaking says the following:

“The SNF VBP Program’s scoring and operational policies for its first year (FY 2019) include:

• The Program will include one readmission measure for each year.
• The Secretary will reduce the adjusted Federal per diem rate applicable to each SNF in a fiscal year by 2 percent to fund the value-based incentive payments for that fiscal year
• The total amount of value-based incentive payments that can be made to SNFs in a fiscal year will be 60 percent of the total amount withheld from SNFs’ Medicare payments for that fiscal year, as estimated by the Secretary. The Program will pay SNFs ranked in the lowest 40 percent less than the amount they would otherwise be paid in the absence of the SNF VBP.
• Both public and confidential facility performance reporting will be conducted.”

CMS is finalizing the numerical values of the achievement threshold and the benchmark for the FY 2020 program year as shown below.

The rule describes in detail how CMS will calculate SNF VBP payments.

Correction to the Performance Period for the National Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) Influenza Vaccination Immunization Reporting Measure in the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for Payment Year (PY) 2020

In the Calendar Year (CY) 2017 ESRD Prospective Payment System (PPS) final rule, CMS notes that it inadvertently finalized the same performance period for the NHSN Healthcare Personnel Influenza Vaccination Reporting Measure for PY 2020 that it previously finalized for that measure for PY 2019.

In the FY 2018 SNF PPS proposed rule, CMS proposed to correct that performance period such that it will align with the schedule established in earlier payment years. Based on the comments received, the final rule finalizes the updated performance period for the NHSN Healthcare Personnel Influenza Vaccination Reporting Measure for PY 2020 as proposed: The performance period for that measure is October 1, 2017, through March 31, 2018, for the Payment Year (PY) 2020 ESRD QIP program.