FY 25 Skilled Nursing Facility Prospective Payment System Proposed Rule (CMS 1802-P)

On March 28, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for fiscal year (FY) 2025. CMS is publishing this proposed rule consistent with the legal requirements to update Medicare payment policies for SNFs annually. This fact sheet discusses the major provisions of the proposed rule.

FY 2025 Proposed Updates to the SNF Payment Rates

For FY 2025, CMS proposes updating SNF PPS rates by 4.1% based on the proposed SNF market basket of 2.8%, plus a 1.7% market basket forecast error adjustment, and a negative 0.4% productivity adjustment. Note that these impact figures do not incorporate the SNF VBP reductions for certain SNFs subject to the net reduction in payments under the SNF VBP; those adjustments are estimated to total $196.5 million in FY 2025. 

In this proposed rule, CMS proposes to update the SNF market basket base year from the current 2018 base year to a new base year of 2022 and to update the payment rates used under the SNF PPS based on the FY 2025 SNF market basket increase factor, as adjusted by the productivity adjustment and forecast error correction. CMS proposes updates to the SNF Quality Reporting Program (QRP) to better account for adverse social conditions that negatively impact individuals’ health or health care. Additionally, this proposed rule would make changes to CMS’ enforcement policies to impose more equitable and consistent civil monetary penalties (CMP) for SNFs for health and safety violations. CMS also proposes to update the SNF PPS wage index using the Core-Based Statistical Areas (CBSAs) defined within the new OMB Bulletin 23-01^[1]  to improve the accuracy of wages and wage-related costs for the area in which the facility is located. 

Proposed Changes in Patient-Driven Payment Model (PDPM) ICD-10 Code Mappings 

The PDPM utilizes the International Classification of Diseases, 10^th Revision, Clinical Modification (ICD‑10) codes in several ways, including using the person’s primary diagnosis to assign patients to clinical categories. CMS is proposing several changes to the PDPM ICD-10 code mappings to allow providers to provide more accurate, consistent, and appropriate primary diagnoses that meet the criteria for skilled intervention during a Part A SNF stay. The proposed changes to the ICD-10 code mappings and lists used under PDPM are available on the PDPM website at https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/SNFPPS/PDPM. The proposed rule also includes a Request for Information (RFI) seeking input from commenters on potential future updates to the Non-Therapy Ancillary (NTA) component of PDPM.

Nursing Home Enforcement

The proposed rule includes revisions to CMS’ existing nursing home enforcement authority to enhance the safety and quality of care provided in the nation’s nursing homes. In February 2022, the Biden-Harris Administration signaled a commitment to ensure that all residents living in nursing homes receive safe, quality care. ^[2] CMS is proposing to expand its ability to impose financial penalties to drive sustained correction of health and safety deficiencies. These revisions will allow CMS to expand the mix and number of penalties in response to situations that put residents’ health and safety at risk and, therefore, encourage facilities to promptly correct and maintain lasting compliance with CMS’s health and safety requirements.

CMS’ current enforcement authority allows imposition of civil money penalties (CMPs) for noncompliance. Penalties can currently be imposed per day (PD) or per instance (PI) depending on the health and safety deficiencies identified, with PD CMPs applied until the noncompliance is corrected and PI CMPs for isolated instances. However, PD and PI penalties may not be imposed during the same survey, and PI penalties may not be imposed concurrently for the same deficiency. The severity of enforcement sanctions is based on the harm or potential harm to residents caused by non-compliance. This regulatory limitation prevents CMS and the State from imposing CMPs commensurate with the identified noncompliance by restricting the use of multiple penalties for one deficiency, which prevents full use of CMPs to encourage faster correction and sustain compliance with health and safety requirements. 

In this proposed rule, CMS proposes to expand the penalties that can be imposed through regulatory revision to allow for more per instance and per day CMPs to be imposed. The proposals in this rule will permit both types of penalties to be imposed, not to exceed the statutory daily limits, providing CMS with greater flexibility to impose penalties in a manner that more directly reflects the health and safety impact to residents and incentivizes permanent correction. We look forward to receiving comments on how to use this proposed flexibility to better hold nursing homes accountable for failing to provide safe, quality care for their residents. 

Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)

CMS proposes adding four new social determinants of health (SDOH) items and modifying one SDOH assessment item for the SNF QRP. Additionally, CMS proposes that SNFs included in the SNF QRP participate in a process to validate data submitted under the SNF QRP through the Minimum Data Set (MDS) beginning with the FY 2027 SNF QRP. Finally, CMS is also seeking feedback on future measure concepts for the SNF QRP with a Request for Information (RFI) on quality measure concepts under consideration for future SNF QRP years.

The SNF QRP is a pay-for-reporting program. SNFs that do not meet reporting requirements are subject to a two-percentage-point reduction in their Annual Payment Update (APU) in accordance with section 1886(e)(6)(A) of the Act. Additionally, CMS publicly reports each SNF’s performance on measures adopted into the SNF QRP on the Care Compare website.

Proposed Updates to the SNF QRP:

• Beginning with the FY 2027 SNF QRP (beginning with residents admitted on October 1, 2025), we are proposing the adoption of four new items in the MDS under the following SDOH categories: (1) Living Situation, (2) Food (2 items), and (3) Utilities. Among other reasons, screening for SDOH via collecting these items may assist SNFs in better addressing those identified needs with the residents, their caregivers, and community partners during the discharge planning process, if indicated.
• Beginning with the FY 2027 SNF QRP (beginning with residents admitted on and after October 1, 2025), we propose modifying the Transportation item under the SDOH category. As part of our routine item and measure monitoring work, we have identified an opportunity to improve the data collection for this item. Specifically, the proposed Transportation item modification would improve and align data collection in three ways: (1) the guidance would clarify the look-back period for when a patient experienced a lack of reliable transportation, (2) the response options would be simplified for the resident, and (3) the revised assessment item would be collected at admission only, which would decrease provider burden since the current assessment item is collected at both admission and discharge.
• Beginning with the FY 2027 SNF QRP, we propose requiring SNFs participating in the SNF QRP to participate in an MDS validation process. Specifically, we propose adopting the same validation process for the SNF QRP that we have adopted for the SNF Value-Based Purchasing Program in the FY 2024 SNF PPS final rule (88 FR 53323 through 53325). We are required by section 1888(h)(12)(A) of the Act (as added by section 111(a)(4) of Division CC of the Consolidated Appropriations Act, 2021 (Pub. L. 116–260)) to apply a process to validate data submitted under the SNF QRP.

Skilled Nursing Facility (SNF) Value-Based Purchasing Program VBP

For the SNF VBP program, CMS is proposing several operational and administrative proposals as part of this year’s rule. Operationally, this includes adopting a measure retention and removal policy to the SNF VBP program, as well as updating the case-mix methodology for the Total Nurse Staffing measure and a review and correction policy update. 

The SNF VBP program is a pay-for-performance program. As required by statute, CMS withholds 2% of SNFs’ Medicare fee-for-service (FFS) Part A payments to fund the SNF VBP Program. This 2% is referred to as the “withhold”. CMS is then required to redistribute between 50% and 70% of this withhold to SNFs as incentive payments depending on their performance in the program. 

Proposed Updates to the SNF VBP

• We are proposing adopting a measure retention and removal policy to help ensure that the SNF VBP Program’s measure set remains focused on the best and most appropriate metrics for assessing care quality in the SNF setting. We are also proposing adopting a measure removal policy that aligns with the measure and retention and removal policy currently in place in the SNF QRP program. 
• We are proposing an update to the case-mix methodology utilized as part of the Total Nurse Staffing measure. 
• We are proposing administrative policy updates, including an update of the Review and Correction policy that we previously finalized for the Program, to ensure that SNFs can review and correct Payroll-Based Journal (PBJ) data beginning with the FY 2026 program year and MDS data beginning with the FY 2027 program year.

To view the proposed rule, visit the Federal Register: https://www.federalregister.gov/public-inspection/2024-06812/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities