CMS Issues FY 2019 SNF Proposed Rule

by King & Spalding
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On April 27, 2018, CMS issued a proposed rule that would update the payments rates under the prospective payments system (PPS) for skilled nursing facilities (SNFs).  Additionally, the proposed rule includes proposals for the SNF value-based purchasing (VBP) program and the Resource Utilization Groups that will affect Medicare payment to SNFs.  The proposed changes underscore CMS’s agency-wide “Patients Over Paperwork” initiative, which aims to reduce regulatory hurdles and increase patient access to care. 

As required by the Bipartisan Budget Act of 2018 (BAA), under the proposed rule, SNF payments would increase over FY 2018 levels by 2.4 percent.  The overall economic impact of these payment updates would be an estimated increase of $850 million in payments to SNFs during FY 2019.  Absent the BAA, the SNF market update would have been 1.9 percent. 

The proposed rule also considers replacing the Resource Utilization Groups, Version IV (RUG-IV) model, with a revised case-mix methodology called the Patient-Driven Payment Model (PDPM).  The PDPM is intended to improve patient outcomes by using a holistic approach to patient treatment, rather than focusing on the volume of services.  CMS believes that the implementation of PDPM would reduce administrative burdens currently associated with the SNF PPS and allow providers the ability for more interaction with patients. 

Further, the proposed rule looks to update the SNF VBP program. The SNF VBP program rewards SNFs with incentive payments for the quality of care provided to Medicare beneficiaries.  Changes include reducing the adjusted federal per diem rate applicable to a SNF for services furnished during a fiscal year by 2 percent and adjusting the resulting rate for an SNF by the value-based incentive payment amount based on the SNF’s performance score for that fiscal year under the SNF VBP program.  CMS believes that these change will result in a reduction of $211 million in aggregate payments to SNFs during FY 2019.  The proposed rules also update the baseline period for the FY 2021 program year. 

In addition, CMS suggests adding “Extraordinary Circumstances Exception” (ECE) policies to the SNF VBP program.  ECE policies would allow SNF relief from the program requirements in the event of a natural disaster or other similar circumstances that are beyond the SNF’s control. Specifically, if an SNF demonstrated that an extraordinary circumstance affected patient care it provided, CMS would exclude this performance from the calculation of the measure rate for the applicable baseline and performance periods the calendar months during which the SNF was affected by the extraordinary circumstance. 

CMS is accepting comments on the proposed rules through June 26, 2018.  If approved, the final rules will go into effect on October 1, 2018.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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