Tag: prospective payment system

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

Member News

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 will 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.

CMS Releases FY 2023 Final Rule to Update Long-term Care Hospital PPS

Member News

The Centers for Medicare and Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2023, which begins Oct. 1, 2022. The rule will:

  • Increase the standard federal rate by a net 3.8% for cases that meet LTCH criteria for services provided by LTCHs in compliance with CMS quality program reporting requirements.
  • Continue paying cases that fail to meet the required LTCH criteria (diagnosis-related group (DRG), intensive care unit, or ventilator criteria) at the site-neutral rate under the dual-rate payment system implemented in FY 2016.
  • Establish a high-cost outlier (HCO) threshold of $38,518 for cases paid based on the LTCH standard rate, up 17% from the current $33,015 threshold, resulting in fewer cases qualifying for an outlier payment. The CMS adjusts this threshold annually to maintain outlier payments at the targeted 8% of aggregate LTCH payments. Cases paid at the site neutral rate are subject to the inpatient PPS HCO, finalized at $38,859 for FY 2023.
  • Set a permanent cap to limit annual wage index decreases at 5%.
  • Calculate Medicare Severity-Long Term Care-DRG relative weights using an averaging approach, with COVID-19 cases included and excluded and then averaging the two sets of relative weights.
  • Set a permanent cap on annual decreases at 10% for MS-LTC-DRG relative weights to mitigate negative impacts of significant weight decreases.

The MHA is continuing to review the final rule and will provide hospitals with an updated impact analysis in the near future. Members with questions should contact Vickie Kunz at the MHA.