August 14, 2023

CMS Skilled Nursing Facilities Final Rule FY 2024 Summary

By Timothy Mikita, CPA, MBA, Senior Manager, Advisory Services

CMS Skilled Nursing Facilities Final Rule FY 2024 Summary Senior Living Services

On July 31, the Centers for Medicare and Medicaid Services (CMS) issued a final rule CMS 1779-F for fiscal year (FY) 2024 for the skilled nursing facility (SNF) prospective payment system (PPS). The final rule covers updates to the SNF Quality Reporting Program (QRP) and SNF Value-Based Purchasing Program (VBP) from October 1, 2023, through September 30, 2024, and future years.


Per this final rule, CMS estimates that there will be an increase in Medicare Part A payments to SNFs for FY 2024 in the amount of $1.4 billion, resulting in a 4.0% percent net increase in payment rates. This is 1.3% more than the final rule issued for FY 2023. The net increase includes a 6.4% net market basket update which contains a 3.0% SNF market basket increase plus a 3.6% market basket error adjustment less a 0.2% productivity adjustment. The remaining portion of the 4.0% net increase is a negative 2.3% factor resulting from the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration.


Medicare must exclude marriage and family therapist (MFT) services and mental health counselor (MHC) services from SNF consolidated billing due to the Consolidated Appropriations Act, 2023. Due to this change, these services will be allowed to be billed separately by the performing clinician and will go into effect for all services performed on or after January 1, 2024.


SNF QRP is a pay-for-reporting program. Any SNF that does not satisfy the reporting requirements will be subject to a 2% reduction in its Annual Payment Update (APU). In FY2024, the SNF PPS final rule will adopt, remove, and modify the following:


  • Discharge Function Score – effective FY2025 SNF QRP
  • COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident COVID-19 Vaccine) measure – effective FY2025 SNF QRP


  • Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (Application of Functional Assessment/Care Plan) measure – effective FY2025 SNF QRP
  • Application of the IRF Functional Outcome Measures: Change in Self-Care Score for Medical Rehabilitation Patients (Change in Self-Care Score) measure; and the Application of the IRF Functional Outcome Measures: Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score) measure – effective FY2025 SNF QRP


  • COVID-19 Vaccination Coverage among Healthcare Personnel (HCP COVID-19 Vaccine) measure – effective FY2025 SNF QRP


The SNF VBP program gives the opportunity for SNFs to receive incentive payments based on the quality of care provided. In the FY2024 final rule, CMS will be adopting four and replacing one quality measure while finalizing the policy changes noted below:


  • Nursing Staff Turnover Measure – effective FY 2026 program year
  • Discharge Function Score Measure – effective FY 2027 program year
  • Long Stay Hospitalization Measure Per 1,000 Resident Days – effective FY2027 program year
  • Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) – effective FY 2027 program year


  • CMS is replacing the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) with the Skilled Nursing Facility Within Stay Potentially Preventable Readmissions (SNF WS PPR) – effective FY2028 program year.

Policy Changes

  • CMS is adopting a health equity adjustment in the SNF VBP program which will reward SNFs that perform well and have 20% of residents with dual eligibility status for the performance period. This program will go into place during the FY 2027 program year.
  • CMS will increase the payback percentage policy under the SNF VBP program from 60% to 66% and adopt the audit portion of the validation process for MDS-based measures, which will be effective for the FY2027 program year.


The final rule will also streamline administrative procedures by adopting the constructive waiver process, which entails a waiver of a hearing and a reduction of the penalty amount. This process will consider a facility to have waived a hearing when CMS has not received a request within the appropriate timeframe. The 35% penalty reduction will remain unchanged, but CMS will continue to review for appropriateness of this policy and the reduction amount in the future. The purpose of this change is to allow CMS to shift resources to the appropriate areas, such as oversight, enforcement activities, and nursing home compliance.

Related Industries

Senior Living Services, Healthcare