CMS Releases Final SNF PPS Rule; Includes Cuts Related to Impact of PDPM

Posted on August 4, 2022 by Jeff Bostic

Late last week, the Centers for Medicare and Medicaid Services (CMS) published the annual final rule that updates the Prospective Payment System (PPS) rates for care centers.

In the proposed rule earlier this year, CMS announced a plan to implement a 4.6% "parity adjustment," which would correct for unexpected increases since implementing the Patient Driven Payment Model (PDPM) in 2019. In the final rule, CMS decided to spread the parity adjustment over two years, which mitigates the impact on care centers in the first year. As a result, the final rates for the year starting Oct. 1 will increase on average by 2.7%, which is net of a more significant than usual inflation increase (5.1%) minus the first year of the parity adjustment (2.3%). While it is good news that care centers will see a Medicare rate increase, implementing the PDPM rate adjustment when occupancy is low and workforce shortages are significant is highly problematic.

Along with our national affiliate, LeadingAge, and numerous other providers and provider groups, we submitted comments on the proposed rule that reflected our concerns with implementing a parity adjustment when the federal public health emergency is still in effect and providers are dealing with an unprecedented workforce shortage. CMS responded to those comments by agreeing to spread the parity adjustment over two years. However, in their responses to comments, the agency's analysis indicates that they believe the implementation of PDPM led to an increase in payments unrelated to the pandemic and that rates need to be adjusted to remove that impact and not allow it to be part of rates going forward.

Other Factors Impacting PPS Rates

A few additional factors are impacting PPS rates for the year that starts Oct. 1. CMS is again suspending the Value Based Purchasing (VBP) program due to the COVID-19 public health emergency. Because of the congressionally-mandated savings in that program, they will be applying a 0.8% reduction to all care centers except those with a Medicare volume too low to be included in that program. That will reduce the average rate increase to less than 2%. Rates will, as always, also include updated wage indices, which will result in larger or smaller increases by region.

CMS justifies freezing the VBP program for the second consecutive year as an appropriate response to the pandemic. This policy creates winners and losers, with those who did well on the readmission measure used in VBP unable to get credit for that and still having to accept the VBP rate reduction for a second straight year. The rule also finalizes longer-term changes to the VBP program, shifting from using a single readmission measure to multiple measures for a composite score.

For the year beginning Oct. 1, 2025, the VBP program will include two additional measures- infections requiring hospitalization and total nursing hours per resident day based on what is used in Care Compare. The following year the rule proposes to include the rate of successful discharge from SNF to the community. The details of how those measures will be factored into VBP scores and rate adjustments will be determined later.

Impact on the Quality Reporting Program

The rule also includes SNF Quality Reporting Program (QRP) updates. The most notable changes to the SNF QRP include the addition of one new measure, a revised compliance date for the Transfer of Information Measures and other standardized patient assessment data elements, and a revision to the data submission threshold requirements.

The new measure being adopted is the process measure "Influenza Vaccination Coverage among Healthcare Personnel" (HCP) (NQF #0432). The measure reports on the percentage of HCP who receive an influenza vaccine any time from when it first becomes available through March 31 of the following year. CMS proposed adding this measure beginning FY 2025 in the proposed rule but revised the requirement in the final rule to start with the FY 2024 SNF QRP. 

SNFs will need to begin reporting data on this measure through the CDC National Healthcare Safety Network (NHSN) for the period Oct. 1, 2022, through March 31, 2023, with a reporting deadline of May 15, 2023. To meet the minimum data submission requirements, SNFs would enter a single influenza vaccination summary report at the end of the measure reporting period (May 15, 2023). A reminder that SNF QRP is a pay-for-reporting program with providers at risk of a 2% Medicare FFS rate reduction for failure to adequately report the data needed to calculate the measures in this program. SNFs would not have to reach a particular threshold of HCP influenza vaccination among HCP to achieve compliance.

CMS is also revising the compliance date for collecting two Transfer of Health (TOH) Information measures (current reconciled medication list) and specific standardized patient assessment data, including race, ethnicity, preferred language, health literacy, and social isolation. These measures were delayed in the interim final rule in 2020 until Oct. 1 of the year at least two full fiscal years after the end of the Public Health Emergency. The final rule revises the compliance date to Oct. 1, 2023. One of the impacts of this change is that an updated version of the Minimum Data Set (MDS) 3.0 (MDS 3.0 v1.18.11) will need to be implemented to collect this information. CMS plans to provide multiple training resources in early 2023 to support training on the updated version of the MDS assessment tool.

Lastly, CMS is revising the regulatory text to include a new paragraph to reflect that SNFs must meet or exceed two separate data completeness thresholds to meet the compliance thresholds for the annual payment update. One threshold is set at 80% for completion of required quality measures data, and standardized patient assessment data is collected using the MDS submitted through the CMS-designated data submission system. A second threshold is set at 100% for measures collected and submitted through the CDC NHSN beginning with FY 2023 and for all subsequent payment updates. Currently, this threshold change would impact two SNF QRP measures: 1) the HCP COVID-19 Vaccine measure and 2) the newly added HCP Influenza Vaccine measure.

For questions about the final rule, contact Jeff Bostic or Julie Apold, both LeadingAge Minnesota staff team members.