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CMS Finalizes 4.2 Percent SNF Medicare Increase for FY 2025

(Aug. 6, 2024) Nationwide, nursing homes are expected to see an increase of $1.4 billion in Medicare Part A payments in the federal fiscal year (FFY) starting in October. Today, Aug. 6th, the Centers for Medicare and Medicaid Services (CMS) published the final Skilled Nursing Facility (SNF) Prospective Payment System (PPS) rule that provides an overall 4.2 percent increase in payments for FFY 2025, slightly higher than the 4.1 percent originally proposed. As was the case last year, a good part of the increase is due to the “forecast error adjustment,” an adjustment that corrects for an underestimate of the inflation growth two years prior. The 4.2 percent is comprised of a 3 percent market basket (i.e., inflation) increase, a positive 1.7 percentage point forecast error adjustment, and a negative 0.5 percentage point productivity adjustment.

Members will recall that an increase to the base payment is just half of the story; the rest of the story is how year-to-year changes in the regional wage index play out. Wage index values, regional adjustment factors that will be applied to 72 percent of the rate for FFY 2025, were finalized pretty much as proposed. NY's rural areas fare OK: the wage index change will confer a benefit of about 2 percent (in addition to 4.2 percent) to non-urban counties. The Albany and Utica regions also see slight increases. The Rochester area will experience a slight drop, while wage index changes will make the overall increase in the Buffalo area about 3 percent. Syracuse, NYC, Long Island, Watertown, Binghamton, and Hudson Valley wage index decreases will mean that Medicare rates will remain fairly flat. Provisions enacted in prior years limit the year-to-year wage index decrease to 5 percent.

Other provisions were adopted largely as proposed. Key among them were proposals to authorize greater flexibility for CMS in issuing Civil Monetary Penalties (CMPs) for survey deficiencies. CMS had argued that existing regulatory limitations restricting the use of multiple penalties for one deficiency prevented CMS and the State from imposing CMPs that were appropriate for the deficiency, inhibiting the agency’s ability to encourage faster correction and sustained compliance. The revisions permit both per-day and per-instance penalties to be imposed in the same survey. In addition, CMS will now have the ability to impose per-instance CMPs for multiple instances of non-compliance regardless of the scope and severity that the non-compliance was assigned. While the rule also finalizes the agency’s ability to impose CMPs for non-compliance that occurred during the prior three surveys, CMS clarified that this does not apply to the identification of new deficiencies that may have occurred in prior inspection cycles, but only applies to issues that were already cited in one of the prior three surveys. The new CMP authority will be operationalized in March 2025.

The full rule published in the Aug. 6th version of the Federal Register is available here; the CMS fact sheet is here. LeadingAge NY will compile and issue the FFY 2025 Patient-Driven Payment Model (PDPM) Rate Calculator with the updated figures and provide a full summary of the minor changes made to the Value-Based Purchasing (VBP) program and the Quality Reporting Program (QRP) in the coming weeks.

Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841