Medicare Prospective Payment System FY 2018 Proposed Rules

On April 27, 2017, Centers for Medicare and Medicaid Services (CMS) published proposed payment and policy changes for skilled nursing facilities. The proposed rule address the Medicare payment rates for FY 2018 as well as changes to the SNF Quality reporting Program (SNF-QRP) and the SNF Value Based Purchasing Program (SNF-VBP). The proposed rule also included a request for information to solicit feedback on specific components of the new Requirements of Participation that could be modified to reduce the burden and/or financial impact to the facility.

Medicare SNF Payment Update

CMS proposes to increase the market basket percentage used to determine the unadjusted federal rates by 1%. While this increase is less than what was implemented for FY2017 (2.4%), with the Medpac focus on reducing Medicare reimbursement rates, the proposed increase was seen as positive for SNF providers. The 1% increase would result in the following unadjusted federal rates for each component of the rate prior to adjustment for case mix:

Rate ComponentNursing – Case mixTherapy Case-MixTherapy Non-Case-MixNon-Case Mix
Per Diem - Urban 177.16 133.44 17.58 90.42
Per Diem-Rural 169.24 153.87 18.78 92.09

Skilled Nursing Facility Quality Reporting Program (SNF-QRP)

As a result of the IMPACT Act, Skilled Nursing Facilities (SNFs) are required to submit data that can used to calculate quality measures that are reported across all of the post acute providers including Long Term Acute Care Hospital (LTACH), Inpatient Rehabilitation Hospital/Unit (IRF) and Home Health. SNFs have been reporting clinical information since October 1, 2016 to calculate the three clinical quality measures that are currently in place (new or worsening pressure ulcers, falls with injury, and functional assessment with care plan goals). Facilities that have not submitted the data as required on at least 80% of their MDS will receive a 2% reduction in their market basket percentage starting in FY 2018 which is effective October 1, 2017. The measures were expanded for FY 2019 to a total of seven measures: four clinical and three claims based.

CMS is proposing to make changes to two of the existing QRP measures and add four new measures for FY 2020 SNF QRP. The proposed changes are:

  1. Elimination of the “Percent of Patients with new or worsening Pressure Ulcers” and replace with a new measure “Changes in Skin Integrity Post-Acute Care; Pressure Ulcer/Injury.” This new measure includes new or worsening unstageable pressure ulcers in the calculation.
  2. Modify the calculation period for the “Potentially Preventable 30 day Post Discharge Readmission Measure” from a one year calendar period CY2016 to a two year fiscal year period (FY 2019 and FY 2017). This is a claims based measure and the expansion to a two year calculation period is expected to increase the number of SNFs that will meet the minimum requirement of 25 Medicare stays or more to calculate the measure.
  3. Add four functional outcomes measures, including changes in self care score, mobility score, and the percentage of residents who meet or exceed their expected MDS discharge functional level score for self care and mobility. These functional outcomes measures are based on data collected on the MDS and are risk adjusted. These new measures would require changes to the MDS data elements starting October 1, 2018.

The proposed rules solicit comment on other data elements that may be used in the SNF QRP Program in the future including cognitive and mental status, behavioral signs and symptoms, special services, treatments and interventions, therapeutic diet, as well as, hearing and vision impairment data. CMS is also soliciting input on whether MDS based QRP data should include all residents in the facility not just Medicare Part A residents since this may be a better reflection of the quality care provided.

Skilled Nursing Facility Value Based Purchasing Program (SNF-VBP)

The SNF-VBP 30 day all cause readmission measure for FY2019 was finalized in the FY 2017 SNF PPS final rule. In FY2018 PPS rule, CMS is proposing to change the performance year and achievement year calculations for FY 2020 to a federal fiscal year rather than a calendar year.. In order to do this transition, CMS is asking for input into whether there should be overlapping quarters or a onetime three (3) quarter performance and baseline period for the calculation. CMS is also seeking comment on what social risk factors may affect the current 30 day readmission measure in order to risk adjust or stratify scores in the future.

For FY 2019, facilities will experience a 2% reduction in the Medicare adjusted federal per diem rate to fund the SNF-VBP program. CMS is proposing that the total amount to pay as value-based incentive payments would be 60% of the reductions to payments. CMS is seeking comment on whether the proposed payback percentage appropriately balances Medicare’s long term sustainability with the need to provide incentives for quality improvement to top performing but lower margin SNFs, specifically the non-profit nursing homes.

CMS is proposing to publish facility’s performance score information under the SNF-VBP Program on Nursing Home Compare no later than October 1, 2017. However, starting October 1, 2018 CMS proposes to expand the published information to include the facility’s ranking, the baseline and performance period readmission rates, as well as the achievement, improvement and performance scores.

Possible Burden Reduction in the Long Term Care Requirements

In the proposed rule, CMS is soliciting input from providers on ways to reduce the burden and financial impact as a result of the implementation of three (3) new Requirements of Participation. The areas are:

  • Grievance process which requires the identification of an official and maintaining grievance records for a three year period
  • Quality Assurance and Performance Improvement (QAPI) which is prescriptive in the program design and scope as well as the requirements for program feedback, monitoring and analysis.
  • Discharge Notices which require facilities to send copies of all discharge notices to the Ombudsman.

CMS Solicitation

CMS is soliciting ideas from stakeholders on ways to improve the Medicare program that will accelerate changes to improve care and reduce cost. The Center for Medicare and Medicaid Innovation (CMMI) authority allows CMS to be flexible in how they test new ways to manage, deliver and pay for Medicare services. They are encouraging the submission of creative ideas even if it requires a waiver of statutory or regulatory requirements.

If you have any questions concerning the proposed rule or the programs affected please contact Joanne Jones, RN, Director of Clinical Consulting at or Koy Dever, Principal,