SNF Medicare Part A Rates
Introduction
On May 1, 2013 the Centers for Medicare & Medicaid Services (CMS) issued the FY 2014 Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities proposed rule. In its final form, the rule would update the schedule of Medicare Part A payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2014 (effective October 1, 2013). In addition, it would revise and rebase the SNF market basket, and would make certain technical and conforming revisions in the regulations. This proposed rule also recommends a revised policy for reporting the SNF market basket forecast error adjustment and a proposed new item for the Minimum Data Set (MDS), Version 3.0.
We are currently in the comment phase of the rule making process, with the final rule is likely to be out sometime in August. Comments on the proposed rule must be received no later than 5 p.m. on July 1, 2013. Please refer to the actual rule, linked above, for details on submitting comments.
Adjustments to Part A Rates
Based on proposed changes contained within this rule, CMS estimates that aggregate payments to SNFs will increase by $500 million, or 1.4 percent, from payments in FY 2013. This estimated increase is attributable to the 2.3 percent market basket increase, reduced by the 0.5 percentage point forecast error correction (see below) and further reduced by the statutorily mandated 0.4 percentage point multifactor productivity adjustment.
Medicare provider payments were cut by 2 percent beginning April 1, 2013 as part of the spending reductions required by the Budget Control Act of 2011 (i.e., sequestration). Providers should keep in mind that we are now in the first year of the projected nine-year sequestration process. This means that while the schedule of MDS payment rates are not directly impacted, overall Medicare payments to providers will continue to be reduced by 2 percent, unless the White House and Congress can negotiate an alternative. For example, effective with dates of service of April 1st for the current FY 2013, we continue to submit claims based on the published MDS PPS rates, while overall payments are reduced by the sequestration mandated 2 percent. While we continue to fight the sequestration, conservative budgeting projections for the coming year would indicate that providers should assume that the 2 percent reduction remains in effect.
Forecast Error Adjustment
A forecast error adjustment is applied when the difference between the actual and projected market basket percentage change for a given year (the most recent available FY for which there is final data) exceeds the 0.5 percentage point threshold. While CMS normally reports the forecast error to one significant digit, CMS has found that such reporting makes it difficult to determine if the threshold has been exceeded in those instances where the difference between the projected and actual market basket percentage change rounds to 0.5 percent. Therefore, CMS is proposing a change for those instances where the difference for the forecast error rounds to 0.5 at one significant digit, to report the difference to the second significant digit to determine if the threshold has been exceeded.
The forecast error for the current year in review, FY 2012, is 0.51 percentage point. As the projected market basket exceeded the actual market basket by an amount greater than the threshold, CMS is proposing that the FY 2014 market basket update will include a downward adjustment of 0.5 percent.
Rebased Market Basket
The Medicare statute requires CMS to establish a SNF market basket index that reflects changes over time in the prices of an appropriate mix of goods and services for covered SNF services. CMS has developed a SNF market basket index that they believe encompasses the most commonly used cost categories for SNF routine services, ancillary services, and capital-related expenses. The SNF market basket index is used to update the SNF PPS payments on an annual basis. CMS is proposing to rebase and revise the SNF market basket for FY 2014 and subsequent years to reflect more recent data. The current SNF market basket reflects data from FY 2004 and CMS is proposing to update the base year to FY 2010. In addition, CMS is proposing changes to the components of the SNF market basket index by adding five cost categories for a total of 29 cost categories and revising several price proxies.
Reporting of Distinct Therapy Days
To ensure accuracy in case-mix assignment and payment, CMS is proposing to add an item to the Minimum Data Set (MDS) to record the number of distinct calendar days of therapy provided by all the rehabilitation disciplines to a beneficiary over the seven-day look-back period. Furthermore, CMS is clarifying that the qualifying condition for the Medium Rehab (RM) Category requires 5 distinct calendar days of therapy. Similarly, CMS is clarifying that the qualifying condition for the Low Rehab (RL) Category would be clarified to require 3 distinct calendar days. Currently, the number of days for each therapy disciplines reported on the MDS is summed without regard to the number of separate and unique days per week on which the patient receives therapy services across all rehabilitation disciplines. This results in some patients receiving higher SNF payments for an RM or RL Resource Utilization Group (RUG) when the patient actually does not meet the qualifying conditions for that RUG. The proposed addition to the MDS ensures SNFs are paid accurately for their patients.
Conclusion
LeadingAge New York is in the process of analyzing the proposed rule and welcomes any member recommendations regarding comments to CMS.
Contact: Patrick Cucinelli, pcucinelli@leadingageny.org, 518-867-8827