June 15, 2017

CMS Issues Two SNF Proposed Rules

By Janet Potter, Senior Manager, Advisory Services

CMS Issues Two SNF Proposed Rules

On May 4, 2017, the Centers for Medicare and Medicaid Services (CMS) released two proposed rules for skilled nursing facilities (SNFs). The first rule was the annual SNF Prospective Payment System (PPS) update rule. The second is an Advance Notice of Proposed Rulemaking (ANPRM) discussing potential revision of case mix methodology of the SNF PPS. This article will briefly discuss both proposed rules.

SNF Prospective Payment System (PPS)

Under the SNF PPS proposed rule, SNF payments for fiscal year 2018 (FY18), beginning October 1, 2017, would be increased by 1.0%. The flat 1.0% increase is due to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) which mandated the increase be limited to 1% to provide funding for the regulation. Without this limit, the SNF market basket increase would have been 2.7% less a 0.4% productivity adjustment, or a net 2.3% increase. The 1% increase translates into an aggregate payment increase of $390 million for all SNFs. In addition, CMS is proposing to revise the market basket base year from FY10 to calendar year 2014.

CMS is also proposing a 2% penalty for SNFs that fail to submit the required quality data under the SNF Quality Reporting Program (QRP) as mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). This reduction would result in a negative payment change for those SNFs which do not meet the reporting requirements.

The proposed rule also discussed SNF Value Based Purchasing (SNFVBP). This program implements a 2% withholding of payments which can be earned back based on the SNF’s rehospitalization rate and level of improvement. The proposed rule limits the total amount that can be earned back by all SNFs to 60% of the amount withheld. This program is required by the Protecting Access to Medicare Act of 2014 (PAMA). The performance period would be based on calendar year 2017. The payment adjustments would begin October 1, 2018, the start of FY19.

Finally, the SNF PPS proposed rule includes a section on the SNF Quality Reporting Program (QRP). In previous years, CMS finalized the four measures for the SNF QRP and the necessary changes in the MDS in order to collect the data. In this proposed rule, CMS proposes changes as of FY20; specifically, to remove the current pressure ulcer measure and replace it with a new modified version of the measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury.

Advance Notice of Proposed Rulemaking (ANPRM)

The APNRM requests comments from stakeholders regarding potential changes to the SNF PPS payment system. The possible changes that are outlined in the APNRM include replacing the current RUG-IV system with a new system which would base payment on resident characteristics rather than therapy minutes. The model outlined is called the Resident Classification System, Version 1 (RCS-1). It separates Speech Language Pathology (SLP) into its own category. The other three categories are Physical and Occupational Therapy (PT/OT), Non-Therapy Ancillary, and Nursing services. Another area of note is that the RCS-1 as it is currently displayed would reduce the Minimum Data Set (MDS) completion requirements to a 5-day assessment, a discharge assessment, and significant change assessments as needed.

It is important to remember that the RCS-1 is not a proposed rule at this time. The earliest any changes to the SNF payment system could occur is October 1, 2018. However, many changes are likely to be seen on the RCS-1 due to public comments and discussions between trade associations and CMS prior to a proposed rule being issued.

Comments to both the proposed SNF PPS rule for FY 2018 and the APNRM are due to CMS by June 26, 2017.

If you have any questions about these proposed rules or the potential effect on your business, please contact a Marcum advisor.

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