CMS releases final rule on 2016 Medicare payments for Skilled Nursing Facilities

The CMS final rule, effective Oct. 1, 2015, is the first step in moving Medicare away from fee-for-service.

The Centers for Medicare & Medicaid Services (CMS) issued its final rule outlining changes to payment rates and policies. Noteworthy changes include: (1) final rate setting for Medicare Skilled Nursing Facility (SNF) payments (2) the addition of an all-condition hospital readmission quality measure and adoption of the SNF Value-Based Purchasing (VBP) Program, (3) implementation of new regulatory reporting requirement.

The FY 2016 rule marks the transition away from fee-for-service and  towards value-based payment in the Medicare system with an eye on the entire health care system, according to CMS.

Payment rates changing under the SNF Prospective Payment System (PPS)

CMS estimates that the aggregate payments to SNFs during fiscal year 2016 will rise by 1.2 percent or $430 million compared to 2015.

The increase is attributed to a 2.3 percent market basket increase, reduced by a 0.6 percent point forecast error adjustment and further reduced by a 0.5 percentage point, a multifactor productivity adjustment required by law, according to CMS.

“We have developed a SNF market basket index that encompasses the most commonly-used cost categories for SNF routine services, ancillary services, and capital-related expenses,” explains the report.

The combined impact of the changes varies by location. CMS estimates that there are 1,420 Medicare SNF facilities in the Pacific region which will experience a 1.8 percent total increase in FY 2016 payments. The 103 rural SNF facilities in the same region are projected to see an increase of 1.4 percent.

New quality measures

Three new measures will be added for 2018, with intentions for more standardized measures in future rule making sessions. They are as follows:

  • Skin Integrity and Changes in Skin Integrity (NQF #0678): Percentage of residents or patients with pressure ulcers that are new or worsened.
  • Incidence of Major Falls (NQF #0674): Percentage of residents experiencing one or more falls with major injury
  • Functional Status, Cognitive Function (NQF #2631): Percentage of patients or residents with an admission and discharge functional assessment and care plan that addresses function.

The rule also adopts the all-cause, all-condition readmission measure for SNF Medicare beneficiaries within 30 days of their discharge. Those that do not report required quality data by 2018 will have their market basket percentage reduced by two percent.

Added regulations for reporting

In a move to increase accountability, long term care facilities will be required to submit staffing data to CMS. This data will include agency and contract staff based on payroll and other “auditable data” in a uniform format which will be established by Secretary Burwell and her team.

The rate provisions are effective Oct. 1. 2015. The electronic submission of direct care staffing based on payroll requirement will be effective July 1, 2016.