CMS Releases FY 2023 Final Rule to Update Skilled Nursing Facilities PPS


Soraya Marashi


The Centers for Medicare and Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) prospective payment system (PPS) for skilled nursing facilities (SNF) for fiscal year (FY) 2023. Key updates include:

  • A negative 2.3% parity adjustment to the Patient Driven Payment Model (PDPM) case mix indices following implementation of the PDPM to maintain budget neutrality with the prior RUG-IV case-mix system. The CMS finalized a 2-year phase-in of the proposed 4.6% negative adjustment despite opposition from the MHA, the American Hospital Association and others.
  • A 5.1% net rate increase after the market basket update and other adjustments, up from the proposed 4% net increase. SNFs that fail to comply with CMS quality reporting program (QRP) requirements are subject to a 2%-point reduction to the federal rate update. Facilities should note that the 5.1% increase will be offset by the negative 2.3% parity adjustment described above.
  • Adopting one new quality measure in the SNF quality reporting program (QRP) beginning in FY 2024: The Influenza Vaccination Coverage among Healthcare Personnel (HCP) (NQF # 0431) measure.
  • Revising the compliance date for certain measures and data reporting that were delayed due to the COVID-19 public health emergency (PHE). Specifically, beginning Oct. 1, 2023, SNFs will be required to collect data on certain standardized patient assessment data elements (SPADEs) and two new quality measures, which are:
    • Transfer of Health Information to the Patient
    • Transfer of Health Information to the Provider
  • Updating the SNF value-based purchasing (VBP) program including continued suppression of the SNF 30-day all-cause readmission measure for the FY 2023 SNF VBP program year for scoring and payment adjustment purposes.
  • Adding new measures to the SNF VBP program starting with the “Skilled Nursing Facility Healthcare Associated Infections Requiring Hospitalizations and “Total Hours per Resident Day Staffing” measures in FY 2026 and the “Discharge to Community” measure in FY 2027.
  • Establishing a permanent policy to limit annual wage index decreases to 5%.
  • Implementing a slight increase in the labor-related share of the federal rate from the current 70.4% to 70.8% which will result in a slight payment increase for SNFs with a wage index greater than 1.0.

The MHA with provide members with an updated impact analysis and additional detail on the final rule in the near future. Members with questions should contact Vickie Kunz at the MHA.

This press release was provided by the Michigan Health & Hospital Association.