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FY2024 skilled nursing facility Medicare Prospective Payment System proposed rule released

Patti Cullen, CAE
By Patti Cullen, CAE | April 7, 2023 | Skilled nursing facilities

On April 4, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payment policies and rates for skilled nursing facilities under the skilled nursing facility Prospective Payment System (SNF PPS) for fiscal year (FY) 2024, which starts October 1, 2023. While we had initially expected minimum staffing requirements for nursing facilities to be included in this payment rule, they were not, and CMS intends to issue them separately this spring. The proposed rule includes proposals for the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for FY 2024 and future years. In addition, this proposed rule would eliminate the requirement for facilities to actively waive their right to a hearing in writing and instead treat the failure to submit a timely hearing request as a constructive waiver.  

Medicare rates
CMS estimates that the aggregate impact of the payment policies in this proposed rule would result in a net increase of 3.7%, or approximately $1.2 billion, in Medicare Part A payments to SNFs in FY 2024. This estimate reflects a $2 billion increase resulting from the 6.1% net market basket update to the payment rates, which is based on a 2.7% SNF market basket increase plus a 3.6% market basket forecast error adjustment and less a 0.2% productivity adjustment, as well as a negative 2.3%, or approximately $745 million, decrease in the FY 2024 SNF PPS rates as a result of the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration. 

This is the second year the statutory forecast error provision had a profound impact on the net market basket. Under the forecast error statutory provision, CMS compares a projected market basket update with the actual market basket update using prior year data. Intended to account for inflation, the forecast increases the market basket when the projected market basket is 0.5% less than the actual market basket. Conversely, when the forecast decreases the market basket when the projected market basket is 0.5% more than the actual market basket. If the variance in either direction is less than 0.5%, no forecast error is incurred. This year, the difference between forecasted and actual, 3.6%, was applied to our unadjusted market basket of 2.7% resulting in 6.3%. This more than offset the impacts of the second, and final, year of the parity adjustment, a 2.3% reduction, as well as the productivity adjustment, a 0.2% decrease.   

Proposed changes to the skilled nursing facility Quality Reporting Program (QRP)
The SNF QRP is a pay-for-reporting program. SNFs that do not meet reporting requirements are subject to a two-percentage-point reduction in their annual payment update (APU). In the FY 2024 SNF PPS proposed rule, CMS is proposing the adoption of three measures in the SNF QRP, the removal of three measures from the SNF QRP, and the modification of one measure in the SNF QRP. In addition, this proposed rule would also make policy changes to the SNF QRP and begin public reporting of four measures.

Proposed changes to the skilled nursing facility Value-Based Purchasing (SNF VBP) program
In this proposed rule, CMS is proposing the adoption of four new quality measures, the replacement of one quality measure, and several policy changes in the SNF VBP program. The quality measure revisions include the following: nursing staff turnover measure, discharge function score measure, long stay hospitalization measure per 100 residents, and percent of residents experiencing one or more falls with major injury (long stay). CMS is proposing the replacement of the skilled nursing facility 30-day all-cause readmission measure with the skilled nursing facility within stay potentially preventable readmissions.

The proposed rule can be downloaded from the Federal Register. View the fact sheet here

Patti Cullen, CAE  |  President/CEO  |  |  952-851-2487

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