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Explanation of upcoming SNF Medicare payment policy intersections

Patti CullenBy Patti Cullen, CAE, President/CEO, Care Providers of Minnesota
August 31, 2018  |  Skilled nursing facilities

After the release of the skilled nursing facility (SNF) Prospective Payment System (PPS) FY 2019 Final Rule, your national association, the American Health Care Association (AHCA) has received many questions about the order in which adjustments are made to payment rates and how the SNF Value-Based Purchasing (VBP) incentive payment multiplier (IPM) is applied. The following was provided in a bulletin released August 24, 2018:

Payment adjustments are made in the order of:
  1. Market basket adjustment
  2. Quality Reporting Program (QRP) adjustment (if any—this applies to a small number of SNFs with quality reporting data issues)
  3. Value-Based Purchasing (VBP) adjustment
  4. Sequestration

AHCA have provided an updated SNF-PPS rate calculator if you would like to see how these adjustments impact your SNF PPS rates for FY 2019. We anticipate updates from the Centers for Medicare & Medicaid Services (CMS), and minor variations due to rounding, but this tool should provide a close estimate to the impact of adjustments that go into effect in FY 2019. This tool includes the 2.4% market basket rate increase, the SNF QRP adjustment (for affected facilities), the SNF VBP incentive payment multiplier, and the sequester adjustment.

The IPM is applied directly to your facility's adjusted federal per diem rate on each claim at step three from above. It is NOT applied after a 2% cut as it already contains the cut. An IPM of 1.00000 means you will NOT see a cut, an IPM >1 means you will see a payment increase, and an IPM of <1 means you will see a cut. 

The IPM is the result of a two-step process done simultaneously: 1) CMS cuts the Medicare Part A rate for each claim by 2%; 2) they then add your earned incentive payment that resulted from your national ranking in rehospitalization (SNFRM) scores using a logistic exchange function that AHCA advocated for. This logistic exchange function allows top-ranked SNFs to earn back all 2%, plus an increase. 

If you have not already found your IPM, CMS released SNF VBP Confidential Performance Reports to each facility through their CASPER/QIES system on August 2, 2018. The reports contain each SNF’s IPM payment adjustment for FY 2019, along with information on rehospitalization rates and scores used to calculate payment adjustments beginning October 1, 2018. Visit ahcancalED to view a short video on how to understand the SNF VBP Performance Score Reports and your payment adjustment.

View the full bulletin for more information. 

Patti Cullen – 952-851-2487 – 


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