Proposed Fiscal Year 2020 Payment and Policy Changes for Medicare Skilled Nursing Facilities

April 25, 2019
Health Policy

On April 19, 2019, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (CMS-1718-P) for Fiscal Year (FY) 2020 that updates the Medicare payment rates and the quality programs for skilled nursing facilities (SNFs). This proposed rule is part of CMS’ continuing efforts to strengthen the Medicare program by better aligning payment rates for SNFs with the costs of providing care and increasing transparency so that patients are able to make informed choices.  Additionally, effective October 1, 2019, CMS will begin using a new case-mix model, the Patient Driven Payment Model (PDPM), which focuses on the patient’s condition and resulting care needs rather than on the amount of care provided in order to determine Medicare payment.

Three major provisions of the proposed rule include: the proposed changes to SNF payment policy under the SNF Prospective Payment System (PPS), the SNF Value-Based Purchasing Program (VBP), and the SNF Quality Reporting Program (QRP).  This proposed rule includes policies that would continue a commitment to shift Medicare payments from volume to value, with the continued implementation of the PDPM, SNF VBP, and SNF QRP to improve program interoperability, operational quality, and safety.

Strengthening Medicare

CMS projects aggregate payments to SNFs will increase by $887 million, or 2.5%, for FY 2020 compared to FY 2019. This estimated increase is attributable to a 3% market basket increase factor with a 0.5 percentage point reduction for multifactor productivity adjustment. 

As amended by section 4432 of the Balanced Budget Act of 1997 (BBA 1997) (Pub. L. 105-33, enacted on August 5, 1997), section 1888(e) of the Act provides for the implementation of a PPS for SNFs.  This methodology uses prospective, case-mix adjusted per diem payment rates applicable to all covered SNF services defined in section 1888(e)(2)(A) of the Act.  The SNF PPS is effective for cost reporting periods beginning on or after July 1, 1998, and covers all costs of furnishing covered SNF services (routine, ancillary, and capital-related costs) other than costs associated with approved educational activities and bad debts.

Sub-Regulatory Process for International Classification of Diseases, Tenth Version (ICD-10) Codes Revisions

PDPM, which is more focused on value rather than volume, will be effective October 1, 2019, under the SNF Prospective Payment System (PPS) for classifying patients in a covered Medicare Part A SNF stay. PDPM utilizes ICD-10 codes to classify SNF patients into certain payment groups. Each year, the ICD-10 codes and guidelines are revised in a variety of non-substantive ways, such as a single code being split into two more specific codes.  To help ensure SNFs have the most up-to-date ICD-10 code information as soon as possible, in the clearest and most useful format, CMS proposes a sub-regulatory process for making non-substantive changes to the list of ICD-10 codes used to classify patients into clinical categories under the PDPM.  This sub-regulatory process aligns with similar policies in the SNF PPS and the Inpatient Rehabilitation Facility (IRF) PPS.  The SNF PPS already uses a sub-regulatory process to make non-substantive updates to the list of Healthcare Common Procedure Coding System (HCPCS) codes that are subject to consolidated billing.  In addition, the IRF PPS uses a similar sub-regulatory updating process for the IRF tier comorbidities list and for updating the ICD-10 code lists used for the IRF presumptive compliance methodology.

Align SNF PPS Group Therapy Definitions with Other PAC Settings

Various PAC settings permit therapists to furnish therapy to their patients in three different modes: individual, concurrent, and group. Under the current SNF PPS, group therapy is defined as consisting of exactly four patients. Other payment systems, such as the IRF PPS, define group therapy as including as few as two patients. For more fair and consistent therapy definitions across care settings, CMS is proposing to adopt the definition of group therapy that is used in the IRF PPS: Group therapy consists of two to six patients doing the same or similar activities. CMS believes aligning the group therapy definition serves to improve the agency’s consistency in payment policies across PAC settings, and to create opportunities for site-neutral payments.

SNF VBP

The VBP Program began rewarding SNFs with incentive payments based on their quality measure performance on October 1, 2018.  The program currently scores SNFs on an all-cause measure of hospital readmissions; in the future it will transition to a measure of potentially preventable hospital readmissions.  As required by statute, the program reduces SNFs’ Medicare payments by two percentage points, then redistributes 60% of those funds as incentive payments.

In the FY 2020 SNF PPS proposed rule, the SNF VBP Program is changing the name of the program’s measure to the “Skilled Nursing Facility Potentially Preventable Readmissions after Hospital Discharge” measure. The measure will retain the same abbreviation (SNFPPR). The proposed rule also includes an update to the public reporting requirements to ensure that CMS publishes accurate performance information for low-volume SNFs.

Scoring & Operational Updates:  The SNF VBP Program’s scoring and operational policies for FY 2020 include:

  • An update for the Skilled Nursing Facility Potentially Preventable Readmissions (SNFPPR) Measure’s name
  • Updated public reporting requirements for SNFs with less than 25 eligible stays during the baseline period or performance period for a program year, and SNFs with zero eligible cases during the performance period for a program year
  • A 30-day deadline for Phase One Review and Corrections requests

SNF QRP

The SNF QRP is authorized by section 1888(e)(6) of the Social Security Act and applies to freestanding SNFs, any SNF affiliated with acute care facilities, and all non-critical access hospital (CAH) swing-bed rural hospitals. Under the SNF QRP, SNFs that fail to submit the required quality data to CMS will be subject to a 2-percentage point reduction from the applicable fiscal year’s annual market basket percentage update.  

As part of CMS’ MyHealthEData initiative and commitment to improve interoperability of health information and CMS’ ongoing efforts to increase quality and safety in SNF operations, CMS proposes to adopt two new quality measures in FY 2020 to assess how health information is shared: 1) transfer of health information from the SNF to another provider and 2) transfer of health information from the SNF to the patient.

In addition, CMS proposes to adopt a number of standardized patient assessment data elements that assess either cognitive function and mental status, special services, treatments and interventions, medical conditions and comorbidities, impairments, or social determinants of health (race and ethnicity, preferred language and interpreter services, health literacy, transportation, or social isolation). Finally, CMS proposes updates to specifications for the Discharge to Community PAC SNF QRP measure to exclude baseline nursing home residents.

In response to public input, CMS is proposing to collect standardized patient assessment data and other data required to calculate quality measures using the MDS on all patients, regardless of payer source.

The proposed rule is available here. Public comments on the proposed rule will be accepted until June 18, 2019.

The Society is currently reviewing the rule and will submit comments as appropriate.