September 29, 2020

Medicare Rate Updates

By Scott Manson, Managing Director, Advisory Services

Medicare Rate Updates Healthcare

On October 1, 2020, the Medicare Skilled Nursing Facility (“SNF”) and hospice rates receive updates. This is the first update in SNF rates since Medicare’s Patient Driven Payment System began a year earlier. According to the Centers for Medicare and Medicaid Services (“CMS”), Fiscal Year (“FY”) 2021 payments to SNFs are expected to increase by $750 million as a result of the 2.2% market basket update and decrease by approximately $200 million from the SNF Value Based Purchasing program, for a net increase of approximately $550 million. In the SNF payment update published in the Federal Register, CMS makes changes to the ICD-10 code mappings used to group patients into payment classifications.

Hospice rates will increase by 2.4% in FY 2021 from the market basket increase. According to CMS, the increase will result in an additional $540 million in payments to hospices. The hospice cap amount also increases by 2.4% in FY 2021 to $30,683.93. In the hospice final payment rule, CMS also provides additional information on the Advance Beneficiary Notice, Hospice Election Statement Addendum, and other items.

The wage indices used to geographically adjust payment rates are receiving updates on October 1, 2020. SNF and Hospice Providers will need to check for the proper Core Based Statistical Area (“CBSA”) for each county where services are rendered since they might have changed from the prior year. CMS has implemented a one-year phase in period in which the FY 2021 wage index for any county will not decrease by more than 5% from the FY 2020 wage index for the same county for both hospice and SNF providers.

Some of the wage index changes are significant. Approximately 100 SNFs in the counties of Middlesex, Monmouth, Ocean, and Somerset Counties in New Jersey are no longer part of the New York City area CBSA. These four counties now makeup the New Brunswick-Lakewood New Jersey CBSA. The FY 2021 SNF New York wage index is 1.3384. The New Brunswick-Lakewood SNF wage index is 1.2108 for FY 2021. If not for the one-year transition period, the New Brunswick-Lakewood SNF wage index would be 1.0623. SNF providers in this CBSA should expect another decrease in FY 2022. Hospice providers should expect similar changes; however, SNF and hospice providers each use their own set of wage index amounts.

Marcum has FY 2021 payment calculators for SNF and Hospice on its website. Contact a Marcum consultant for more information on services for the healthcare industry.

Related Industry