Proposed Rule Federal Fiscal Year 2022 for Skilled Nursing Facilities

Thoughtware Alert Published: Apr 14, 2021
Healthcare stethoscope and charts

CMS released the skilled nursing facility (SNF) proposed rule for fiscal year (FY) 2022 on April 8, 2021. As anticipated, the Patient-Driven Payment Model (PDPM) implemented October 1, 2019, isn’t proving to be budget-neutral. The proposed updates to the SNF payment rates include an increase of approximately $444 million in Medicare Part A payments to SNFs in FY 2022. The SNF market basket update is proposed to be 2.3 percent less a 0.8 percentage point forecast error adjustment and an additional 0.2 percentage point multifactor productivity adjustment. There’s also a $1.2 million decrease due to the proposed reduction to the SNF prospective payment system (PPS) rates to account for excluding certain blood factors for hemophilia and other blood disorders along with specific items and services for these conditions. In addition, there’s an anticipated SNF value-based purchasing (VBP) reduction estimated to be $184.25 million in FY 2022. 

The proposed rule includes methodology for recalibrating the PDPM parity adjustment since there has been an increase in payments to SNFs of approximately 5 percent, or $1.7 billion, in FY 2020. As encountered in the Resource Utilization Group payment model, CMS has conducted data analysis to recalibrate the parity adjustment in an attempt to achieve budget neutrality under PDPM. There’s acknowledgment throughout the proposed rule that the COVID-19 public health emergency (PHE) has significantly affected SNFs and the data used to perform these analyses. CMS is soliciting public comments on a potential methodology for recalibrating the PDPM parity adjustment. The rule includes a possible parity adjustment from 46 percent to 37 percent to provide an estimated 5 percent or $1.7 billion reduction in payments to SNFs. These adjustments would affect every case mix group for PT, OT, SLP, nursing, and the nontherapy ancillary components. The rule also includes possible delayed or phased implementation of the adjustments. 

In addition, the rule includes a proposal to rebase and revise the SNF market basket to improve payment accuracy under the SNF PPS by using the 2018-based SBNF market basket to update the PPS payment rates instead of the 2014-based market basket currently used. There are proposed changes to the PDPM ICD-10 code mappings. There are approximately a dozen codes that would be updated. Some of these would become Return-to-Provider (RTP) codes, while others that are currently RTP would map to a clinical category under PDPM. The proposed rule also includes updates to the SNF Quality Reporting Program to adopt two new measures for FY 2023 that include SNF Healthcare-Associated Infections Requiring Hospitalization and COVID-19 Vaccination Coverage among Healthcare Personnel (HCP). The rule also proposes modifications to the public reporting of SNF quality measures. For the SNF VBP program, CMS is proposing to suppress the SNF 30-Day All-Cause Readmission Measure for the FY 2022 SNF VBP program year due to the PHE. The rule also includes the possibility of expanding the SNF VBP measure set and is seeking comment on specific measures listed in the proposed rule, including assessing residents’ views of their healthcare and measures assessing staff turnover.

In light of the proposed decreases to the case mix index for each of the PDPM case mix groups, now may be a great time to determine how your team is performing under PDPM. Some areas of focus should include the following: When is the assessment reference date (ARD) being set for the majority of your Minimum Data Set (MDS) assessments? Under PDPM, it’s possible to affect the nursing component by capturing IV fluids from the acute setting when they were provided for hydration. Since IV fluids only have a seven-day lookback, consistently setting the five-day MDS assessments with an ARD of day 7 or 8 may miss the opportunity to capture IV fluids. However, there are times that day 7 or 8 would be recommended for calculating a more appropriate case mix group for the nursing component, e.g., when a patient is receiving respiratory therapy services or insulin-dependent diabetics with daily insulin injections and two or more days of insulin order changes. 

Something else to monitor are the Health Insurance Prospective Payment System (HIPPS) codes calculated from the MDS assessments for skilled patients. Most software programs allow you to print a report that contains the HIPPS codes calculated for a specific period of time. This report can be insightful and provide you with great information. The first digit of the HIPPS code is always the PT/OT case mix group. The second digit of the HIPPS code is the SLP case mix group. The third digit of the HIPPS code is the nursing case mix group. The fourth digit of the HIPPS code is the NTA case mix group. The fifth digit of the HIPPS code is the type of MDS assessment completed. The number 1 indicates a five-day MDS, and the number zero indicates an Interim Payment Assessment (IPA). Some indicators that clinical information may not be captured appropriately on the MDS include an SLP code of A, a nursing code of R-Y, or NTA codes of E or F.  

It’s important the Medicare team understands PDPM and how MDS completion not only drives care planning and delivery but also determines payment. With an anticipated decrease in PPS reimbursement in all case mix groups from the proposed rule, now is a great time to evaluate your team’s performance to date.

Please reach out to your BKD Trusted Advisor™ with questions or to request a PDPM assessment of your performance.

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