CMS Releases Skilled Nursing Facility PPS Proposed Rule for FY 2023

April 15, 2022
Policy Snapshot

Last week, the Centers for Medicare & Medicaid Services (CMS) released its proposed Skilled Nursing Facility (SNF) Prospective Payment System (PPS) rule for fiscal year 2023 (FY 2023). The proposed rule decreases payments under Medicare Part A to SNFs by about $320 million for FY 2023. CMS says the decrease reflects a $1.4 billion increase due to the 3.9% payment rate update, based on the SNF market basket update of 2.8%. The payment rate update reflects a 1.5 percentage point increase for market basket forecast error adjustment and a 0.4 percentage decrease for productivity adjustment. The $320 million reduction reflects a $1.7 billion, or 4.6%, decrease in the SNF PPS rates due to the proposed recalibrated parity adjustment.

In the proposed rule, CMS is seeking input on the effect of direct care staffing requirements to improve the long-term care requirements for participation and promote thoughtful, informed staffing plans and decisions within facilities to meet residents’ needs, including maintaining or improving resident function and quality of life. Specifically, CMS is seeking input on establishing minimum staffing requirements for LTC facilities.

CMS is also proposing to recalibrate the Patient Driven Payment Model (PDPM) parity adjustment. It is proposing a parity adjustment that would reduce SNF spending by 4.6%, or $1.7 billion, in FY 2023. Since PDPM implementation, CMS’ data analysis has shown an unintended increase in payments of approximately 5%, or $1.7 billion, in FY 2020.

The proposed rule includes potential changes to the SNF Value-Based Purchasing (VBP) program. CMS is proposing to assign all participating SNFs a performance score of zero to mitigate the effect of public health emergency-related measures on final scores. Additionally, CMS will reduce the federal per diem rate for each SNF by 2% and award SNFs 60% of that withhold, resulting in a 1.2% payback to SNFs.

Beginning in FY 2026, the VBP program would adopt the Skilled Nursing Facility Healthcare Associated Infections Requiring Hospitalization (SNF HAI) measure, which would assess SNF performance in infection prevention and management.  It will also adopt the Total Nursing Hours per Resident Day measure, which would also take effect in FY 2026 and uses auditable electronic data to calculate total nursing hours per resident day.

CMS is proposing to update to the SNF Quality Reporting Program (QRP). They are proposing a new process measure that would assess the rate of influenza vaccination coverage among health-care personnel (HCP). CMS is also proposing adding three new quality measures to the QRP.

The agency proposed several changes to ICD-10 code mappings and coding guidelines and has requested stakeholder feedback on the criteria for coding infection isolation.

The Society will review the proposed rule and comment as needed.

Access the proposed rule in its entirety.