CMS Releases Proposed SNF PPS Rule that Calls for Rate Cuts

Posted on April 14, 2022 by Jeff Bostic

Earlier this week, the Centers for Medicare and Medicaid Services (CMS) released its annual proposed rule for updating the Medicare Prospective Payment System (PPS) rates for skilled nursing facilities (SNFs). In addition to the rate update, the proposed rule covers numerous topics impacting SNFs, including proposed staffing standards and updates to quality reporting and value-based purchasing (VBP).

The proposal to update rates on Oct. 1 will result in a decrease for most SNFs if it is implemented without changes. CMS is proposing a "parity adjustment" to adjust for unexpected payment increases since the 2019 implementation of the Patient Driven Payment Model (PDPM). The parity adjustment is a rate cut of 4.6%, representing the unexpected increase under PDPM and will result in a reduction in payments to SNFs nationwide of $1.7 billion in the year starting Oct. 1. The rate update includes an inflation adjustment of 3.9%, which offsets about $1.4 billion of the parity adjustment. As always, wage indices will also be updated for the new year, and those will also significantly influence rates in particular regions. Those figures will be available along with the final rule in late July.

LeadingAge, our national partner, and other provider groups have already raised objections to the parity adjustment, particularly its timing in a year when SNFs are dealing with pandemic fallout and struggling with low occupancy and an unprecedented workforce crisis. LeadingAge and LeadingAge Minnesota will be submitting comments on that and other issues in the proposed rule. We will share suggested comments with members in advance of the June 10 deadline to submit comments.

For the second year in a row, CMS is also proposing to suspend the VBP program due to the impact of the pandemic on the readmission measure used to assign those scores. Unfortunately, the authorizing legislation for that program requires a withholding of 2% with only 60% of that paid back, which means that again all SNFs will see an additional rate reduction of 0.8% in the year beginning Oct. 1, 2023, which will reduce payments by an additional $186 million nationwide.

The proposed rule also includes long-term changes to the VBP program, which would shift from using a single readmission measure to using multiple measures for a composite score. For the year beginning Oct. 1, 2025, the rule proposes to include two additional measures:

• A measure of infections requiring hospitalization and
• A measure of 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. CMS is also asking for comment on a potential staff turnover measure based on PBJ data, which could be added to the VBP formula in the future.

The proposed rule also includes updates to the Quality Reporting Program (QRP). Most significantly, it calls for making staff influenza vaccination rates a measure with the year starting Oct. 1, 2024. CMS is seeking comment on two potential additional measures:

• A measure of functional status that includes self-care and mobility and
• A COVID-19 vaccination rate for residents.

They are also looking for comments on developing a health equity measure and whether to include a short stay discharge measure.

CMS included in the proposed rule a formal Request for Information (RFI) on topics relating to the establishment of minimum staffing requirements for nursing facilities. This is not a proposed staffing rule but rather a mechanism for CMS to take feedback about what that proposed rule should include. A staffing requirement is a centerpiece of President Biden's recommendations for improving nursing home quality. The RFI is part of a comprehensive study CMS will undertake before proposing a specific standard.

The RFI invites comments on a range of topics, such as:

• Scope and methodology: How should the standard be defined and measured – hours per resident day, staff to resident ratios? Should CMS require the presence of an RN on a 24/7 basis?
• Who counts: What fields and professions should be considered to count towards a minimum staffing requirement? Should RNs, LPNs, and CNAs be grouped under a single nursing care expectation? How or when should they be separated? Should mental health workers be counted as direct care staff?
• Specific considerations: What resident and facility factors should be relevant? How should the facility assessment of resident needs and acuity impact the minimum staffing requirement? How should geographic disparities in workforce availability be considered and mitigated?
• Feasibility: What factors impact a facility's capability to successfully recruit and retain nursing staff? What should CMS do if facilities cannot obtain adequate staffing despite good faith efforts to recruit workers?

Precisely when CMS will issue a proposed staffing rule is unknown. The White House directed CMS to issue a rule by March 2023, but the agency may move faster than that. LeadingAge Minnesota will submit responses to CMS on these issues and develop materials to support members in submitting their comments as well.