SNF PPS Medicare Part A Rates

Abstract: LeadingAge NY provides additional information on FY 2013 SNF PPS Medicare Part A rates.

Introduction

As previously advised, the Centers for Medicare and Medicaid Services (CMS) released a rate notice on Skilled Nursing Facility (SNF) Prospective Payment System (PPS) rates for the federal fiscal year (FY) beginning Oct. 1, 2012. The notice states that rates will increase by an average of 1.8 percent. This average will vary by facility based on changes in regional wage indices and changes in resident case mix. The “fiscal cliff” could also impact facility revenue for next year. CMS is issuing this rate notice in lieu of a formal notice of proposed rulemaking since they are not implementing any programmatic or policy changes to the SNF PPS system.

For member convenience, there are two attachments to this memo listing the new Part A rates by region for both regular and AIDs enhanced rates. We are also providing members with a link to the LeadingAge rate calculation tool and a listing of wage index changes.

Overall Changes

As noted, Medicare Part A payments to SNFs will increase on average by 1.8 percent for services provided during Fiscal Year (FY) 2013, which begins on Mon., Oct. 1. There are no substantive policy changes for FY 2013. Likewise, there are no changes to the Resource Utilization Group (RUG) IV classification system, which will continue to be used as the basis of payment.

The labor-related portion of the federal rate for FY 2013 will be 68.383, a change from the 2012 labor-related portion of 68.693. The 128 percent increase in the per diem payment for SNF residents with Acquired Immune Deficiency Syndrome (AIDS) will continue. The SNF market basket increased 2.5 percent, but this was reduced by 0.7 percentage points which is the multifactor productivity adjustment required by the Patient Protection and Affordable Care Act. CMS estimates that in FY 2013 overall expenditures for SNF services will increase $670 million from the amount expended in FY 2012. As noted, the 1.8 percent average increase will vary based on region specific changes in wage index.

There is no forecast error adjustment in the FY 2013 payment update. During FY 2011, the most recent year for which data is available, the actual increase in the services in the market basket was 2.2 percent and the projected increase was 2.3 percent, resulting in the actual increase being 0.1 percentage point lower than the estimated increase. Accordingly, as the difference between the estimated and actual amount of the change does not exceed the 0.5 percentage point threshold, the payment rates for FY 2013 do not include a forecast error adjustment.

Case Mix Changes

CMS has reviewed the results of monitoring activities subsequent to the Minimum Data Set (MDS)/RUG-IV changes implemented last October. As members recall, last year saw an 11.1 percent decrease in overall Medicare Part A payments in response to what CMS viewed as “RUG creep” with providers allegedly over utilizing the new higher categories. CMS is reporting that there has been very little change in overall case mix, though “the data show an increase in the percentage of service days at the highest therapy level (Ultra High Rehabilitation) in the first half of FY 2012.” They also find that group and concurrent therapy have almost disappeared in response to changes implemented last year.

To review the complete CMS notice, please click here.

LeadingAge Rate Calculation Tool

LeadingAge (Washington) is also providing members with an Excel™ spreadsheet to use in navigating the upcoming rate changes. The template is available on the LeadingAge Web site at www.leadingage.org. Once on the Web site and logged in, click on Members; then click on Nursing Homes; and then click on Payment and Finance. In addition to providing the rates included with this memo, the tool provides a format for inserting your estimated Medicare days and thereby projecting your Medicare Part A revenue. If any member has difficulty in accessing the spreadsheet please contact me and I can assist.

Deficit Reduction Cuts

Members also need to keep in mind that the Budget Control Act of 2011 imposed caps on federal spending programs slated to achieve more than $1 trillion in cuts over ten years. Because the Joint Select Committee on Deficit Reduction (a.k.a. the Supercommittee) failed to agree on measures necessary to meet the $1.2 trillion federal deficit reduction target, a process known as “sequestration” now triggers automatic spending reductions starting January 1, 2013. The combination of spending cuts and tax increases mandated by the Act is generally referred to as the “Fiscal Cliff.” The precise form that these automatic cuts would take is not clear at this time. The general sense is that Medicare providers, including nursing home and home care providers, are looking at a 2 percent across the board reduction.

If Congress allows the sequestration process to move forward, it would more than offset the net market basket increase of 1.8 percent. The 2 percent is an estimate at this time and could change based on Congressional Budget Office deficit projections. The sequestration reductions are currently in law and Congress would have to act to prevent the cuts. These reductions are not popular in Congress and the sense is that the Democrat side of the aisle will seek to eliminate the health care cuts. On the Republican side, the main concern is with even larger cuts mandated in defense spending. The two sides will have to come to some agreement on eliminating cuts to both sectors. However, there is little expectation of anything being accomplished before the election, so a final resolution will likely fall to the post-election lame duck session. LeadingAge NY and LeadingAge are strongly advocating against any cuts.

Value Based Purchasing Update

In last year’s final SNF PPS rule, CMS announced it was on track to release a congressionally-mandated report on SNF value-based purchasing by October 1, 2011. However, CMS failed to meet the deadline, and the current 3-year demonstration project of value-based purchasing is still in process, with New York being one of the demonstration states. Therefore, CMS will not be introducing a new, national “value-based purchasing” system in 2013, as has been anticipated. However, this remains on the CMS to-do list and more than likely we will see something proposed for FY 2014.

AIDS Adjustment

Section 511 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 instituted a temporary128 percent increase in the PPS per diem payment for any SNF resident with an AIDS diagnosis code 042. (Please note that the 128 percent factor is applied by multiplying the base rate by a factor of 2.28, e.g., a base rate of $100 would increase to $228.) This add-on remains in effect until such time as CMS institutes an appropriate adjustment in the patient classification system that captures the additional cost of caring for these individuals. Since CMS has yet to do so, this add-on will continue for FY 2013.

Consolidated Billing

CMS is not making any changes to the listing of services excluded under consolidated billing for FY 2013.

Administrative Presumption

Under RUG-IV the administrative presumption continues to apply to the upper 52 classifications.

Patients who are correctly assigned to one of the upper categories are automatically classified as meeting the SNF level of care up to and including the assessment reference date on the 5-day Medicare required assessment. Patients falling in one of the lower groups may still qualify for Part A coverage, but an individual level of care determination must be made.

Rate and Wage Index Analysis

The nursing and therapy components in the base rate for FY 2013 break down as follows:

Table 1. Urban Rate Components

Table 2. Non-urban Rate Components

Nursing case-mix	Therapy Case-mix	Therapy Non-case-mix	Non-case-mix component
$156.28	$142.08	$17.33	$85.03

The wage index and rate payment localities remain the same for FY 2013 and are listed here in Table 3.

Payment Locality	Counties
Albany-Schenectady-Troy	Albany, Rensselaer, Saratoga, Schenectady, Schoharie
Binghamton	Broome, Tioga
Buffalo-Niagara Falls	Erie, Niagara
Elmira	Chemung
Glens Falls	Warren, Washington
Ithaca	Tompkins
Kingston	Ulster
Nassau-Suffolk	Nassau, Suffolk
New York	Bronx, Kings, New York, Putnam, Queens, Richmond, Rockland, Westchester (NJ – Bergen, Hudson, and Passaic)
Poughkeepsie	Dutchess, Orange
Rochester	Livingston, Monroe, Ontario, Orleans, Wayne
Syracuse	Madison, Onondaga, Oswego
Utica-Rome	Herkimer, Oneida
Non-Urban	All Other Counties

The average wage index statewide increased by 0.33 percent. However, there are some dramatic swings in some payment localities as seen in Table 4 below. The large negative swings impact Elmira, Glens Falls, Kingston and NYC. Significant positive swings are noted for Buffalo, Ithaca, Nassau-Suffolk and Utica. The 1.8 overall increase in Part A rates is based upon a wage index of 1.0. Facilities in payment localities in which the FY 2013 wage index decreased compared to FY 2012 should still see an increase, but it will be lower that the average 1.8 percent. Likewise, facilities in geographic regions in which the wage index increases will see their rates increase in excess of the 1.8 percent.

Budget Neutrality Factor

?As noted above, the wage index must be applied in a manner that does not result in aggregate payments that are greater or less than would otherwise be made in the absence of the wage adjustment. This is accomplished by applying a budget neutrality factor of 1.0004 for FY 2013.

Listing of Rates

Appendices A and B list SNF PPS Medicare Part A rates by payment locality for regular and AIDs-enhanced rates. Facilities should locate their payment locality based upon the county listed and then refer to the appendix for their Part A rates. If a county is not specifically listed, then the payment locality is classified as Non-Urban. Please note that the listed rates may vary slightly from your actual rates due to rounding.

Please contact me with any questions at pcucinelli@leadingageny.org or call 518-867-8827.