Final Rule Delivers Big Changes for SNFs

Thoughtware Article Published: Aug 07, 2018
Nurse and Patient

On July 31, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (CMS-1696-F) outlining fiscal year (FY) 2019 Medicare payment updates and quality program changes for skilled nursing facilities (SNF). This final rule includes provisions that advance CMS’ overall direction in shifting Medicare payments from volume- to value-based, with continued implementation of the Skilled Nursing Facility Quality Reporting Program (SNF QRP) and Value-Based Purchasing (VBP) Program. Several major provisions are summarized below.

FY 2019 Market Basket Update

The final rule for FY 2019 establishes a market basket increase of 2.4 percent. CMS indicates aggregate payments to SNFs will increase in FY 2019 by $820 million or 2.4 percent from payments in FY 2018. We expect CMS to issue some technical corrections to the final rule in the coming weeks. Look for FY 2019 rates on once these corrections are made.

SNF Re-Hospitalization VBP

Beginning October 1, 2018, the SNF VBP Program will apply either positive or negative incentive payments to services furnished by SNFs based on their performance on the program’s readmissions measure. SNFs may see up to a 2 percent reduction in rates. VBP will be funded by a 2 percent withhold from provider rates.


Under the SNF QRP, effective October 1, 2018, SNFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to the otherwise applicable annual market basket percentage update with respect to that fiscal year. CMS finalized several operational aspects of the SNF QRP:

In addition, any CMS final decision regarding any reconsideration request from a SNF will be communicated in the same manner noted above

  • SNFs not complying with the SNF QRP requirements will be notified by one of the following:
    • QIES ASAP system
    • United States Postal Service
    • Email from providers’ Medicare Administrative Contractor (MAC)
  • Increased the years of data used to calculate the SNF’s Medicare Spending per Beneficiary Post-Acute Care (PAC) SNF QRP measure and Discharge to Community PAC SNF QRP measure for purposes of public display from one to two years and to begin publicly displaying data in FY 2020 or as soon thereafter as is operationally feasible
  • Added a measure removal factor provision:  Factor 8 – The costs associated with a measure outweigh the benefit of its continued use in the program

Changed Payment Policy – Patient-Driven Payment Model (PDPM)

Effective October 1, 2019, CMS will pay for skilled nursing services to Medicare beneficiaries using a new case-mix model, PDPM, which bases payment on the patient’s clinical factors and resulting care needs rather than on the amount of care provided. The model incorporates the following:

  • Per diem payments will be the sum of five independently determined case-mix-adjusted payment components plus a noncase-mix component, rather than a single hierarchical Resource Utilization Group (RUG) case-mix group
  • Use of ICD-10 diagnosis codes and other patient characteristics as the basis for patient classification
  • Requiring only five-day and Discharge Minimum Data Set assessments, with an optional interim payment assessment
  • Payments will be reduced over the course of a skilled stay to reflect expected decreases in patient needs for physical therapy and occupational therapy (rehab) and nontherapy ancillary services
  • A combined limit on group and concurrent therapy of 25 percent of total rehab for each resident

Download the final rule from the Office of the Federal Register and contact Camille or your trusted BKD advisor with questions. Be sure to check back next week as we expand on these developments in a new article.

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