On July 29^th, the Centers for Medicare and Medicaid Services (CMS) issued the final rule for the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for FY 2017. The final rule was published in the Aug. 5, 2016 Federal Register, and includes updates to SNF Medicare Part A rates and the SNF Value-Based Purchasing (VBP) and Quality Reporting (QR) programs. Rates established by the final rule go into effect for cost reporting periods beginning on or after Oct. 1, 2016. 

Medicare Part A Rates

The proposed rule would increase payments to SNFs by an estimated $920 million for Federal Fiscal Year (FFY) 2017, which runs from Oct. 1, 2016 to Sept. 30, 2017. This reflects a market basket increase of 2.7 percent reduced by the 0.3 percentage point productivity adjustment established by the Affordable Care Act for a net 2.4 percent increase. This is greater than the 2.1 percent increase reflected in the proposed rule, resulting in an increase in total payments in the final rule that exceeds the $800 million estimated in the proposed rule.

Tables showing the final updates to the wage index are available here. For FFY 2017, 68.8 percent of the rate is related to labor and therefore subject to the wage index adjustment. Whether a provider’s rate will increase by slightly more or slightly less than the 2.4 percent market basket adjustment will be determined by the change in their region’s wage index.

Value-Based Purchasing Program (VBP)

The Protecting Access to Medicare Act of 2014 (PAMA) requires that VBP apply to SNF payments beginning in October 2018. CMS specified the initial hospitalization measure, a 30-day all-cause readmission measure, as the basis of SNF VBP in last year’s SNF PPS Final Rule. Legislation requires CMS to specify a more refined hospitalization measure as soon as practicable. In the final rule, CMS specifies a SNF 30-day Potentially Preventable Readmission Measure as the refined measure.

The primary difference between the two measures is that the former focuses on all-cause unplanned readmissions, while the new one focuses on readmissions of existing SNF patients that are potentially preventable (i.e., “avoidable with sufficient medical monitoring and appropriate treatment”). For individuals discharged from a SNF but still within the 30-day window, “preventable” is when “the probability of occurrence could be minimized with adequately planned, explained and implemented post discharge instructions including the establishment of appropriate follow-up ambulatory care.” Both measures use the same statistical approach, target the 30-day window after hospital discharge, and utilize a similar set of patient characteristics for risk adjustment. The measure will be calculated using a full year’s worth of data and be calculated using claims data, thus requiring no additional data submission.

In the final rule, CMS details the scoring methodology, which would consider performance and improvement and use 2015 Calendar Year (CY) claims as the baseline period for calculating performance standards for the FFY 2019 SNF VBP. CY 2017 would be the measured performance period for the FFY 2019 SNF VBP. The final rule also establishes performance standards, a performance scoring methodology, and confidential feedback reports to SNFs.

Quality Reporting Program (QRP)

To meet the requirements enacted in the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT), CMS previously finalized quality measures to include in the SNF QRP. In this publication, the agency further defines reporting requirements, sets out review and correction timeframes, and proposes four additional measures (the top three to be used in FFY 2018 QRP, and the final one, Drug Regimen Review, to be used in 2020):

• Discharge to Community: This proposed measure assesses successful discharge to the community from a SNF setting, with successful discharge to the community including no unplanned re-hospitalizations and no death in the 31 days following discharge from the SNF.
• Medicare Spending per Beneficiary: The MSPB-PAC SNF measure holds SNF providers accountable for the Medicare payments within an “episode of care” (episode), which includes the period during which a patient is directly under the SNF's care, as well as a defined period after the end of the SNF treatment, which may be reflective of and influenced by the services furnished by the SNF.
• Potentially Preventable Readmission: The proposed measure assesses the facility-level risk-standardized rate of unplanned, potentially preventable hospital readmissions for Medicare FFS beneficiaries in the 30 days post-SNF discharge.
• Drug Regimen Review: This proposed measure assesses whether PAC providers were responsive to potential or actual clinically significant medication issue(s) when such issues were identified.

Beginning in payment year 2018, SNFs that fail to submit data required by the QRP will face a two percentage point reduction in their annual rate update. Policies and procedures associated with public reporting are also being finalized, including the reporting timelines, preview period, review and correction of assessment-based and claims-based quality measure data, and providing confidential feedback reports to SNFs.

The text of the final rule is available here. CMS background information on SNF VBP is posted here. QRP background is here. LeadingAge NY will provide a detailed summary of the final rule and charts showing SNF PPS rates for all regions of the State in the coming days. In the meantime, please contact us if you have any questions on the final rule.

Contact: Dan Heim, dheim@leadingageny.org, 518-867-8866