On May 1, 2013, CMS issued a proposed rule that would update payment rates under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2014.  The proposal would increase aggregate payments to SNFs by 1.4 percent, or $500 million, in FY 2014.  This estimated increase is due to a 2.3 percent market basket increase, reduced by a 0.5 percentage point forecast error correction, and further reduced by the 0.4 percentage point multifactor productivity adjustment.

CMS is required to establish a SNF market basket index that reflects changes over time in the prices of a mix of services and goods for covered SNF services.  The market basket is used to update the SNF PPS payments annually.  The current SNF market basket reflects data from FY 2004, and CMS is proposing to revise and rebase the SNF market basket using more recent data from FY 2010.  CMS is also proposing to change the components of the SNF market basket index by adding five additional cost categories and revising several price proxies.

In addition, CMS proposed changes and issued clarifications to ensure SNFs are paid accurately.  The proposed rule adds an item to the Minimum Data Set (MDS) to record the number of distinct calendar days of therapy provided by all the rehabilitation disciplines to a patient over a seven-day look-back period in an effort to better enable placement of the beneficiary in the correct payment group.  CMS also proposed clarifying that the qualifying condition for the Medium Rehab (RM) Category requires five distinct calendar days of therapy, and the Low Rehab (RL) Category requires three distinct calendar days.  CMS explained that, currently, the number of days for each therapy discipline reported on the MDS is summed without regard to the number of separate and unique days per week during which the beneficiary receives therapy services across all rehabilitation disciplines.  This results in some patients receiving higher SNF payments for an RM or RL Resource Utilization Group (RUG) when the beneficiary does not actually meet the qualifying conditions for that RUG.

The proposed rule is available here, and CMS’s fact sheet regarding the proposed rule is available here. Comments are due July 1, 2013.

Reporter, Lauren Slive, Atlanta, +1 404 572 3592, lslive@kslaw.com.