Final Medicare payment rule builds upon commitment to advance health equity, drive high-quality person-centered care, and promote sustainability
Today, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for fiscal year (FY) 2023. These actions further the Biden-Harris Administration’s commitment to ensuring the safety of both nursing home residents and staff, and improving the quality of services, as President Biden called for in his State of the Union address. In addition, the final rule includes updates for the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for FY 2023 and future years.
“Today’s action is an important step in fulfilling our goal to protect people living in nursing homes and staff,” said CMS Administrator Chiquita Brooks-LaSure. “We are continuing our work to focus on staffing and value, making sure that Medicare nursing home residents can receive high-quality care based on the needs of the whole person, rather than focusing on the volume of certain services provided to them.”
The SNF PPS provides Medicare payments to more than 15,000 nursing homes, serving approximately 1.3 million people. Medicare spending to nursing homes is projected to be approximately $33.5 billion in FY 2022. For FY 2023, CMS is finalizing a net increase of 2.7%, or approximately $904 million, in Medicare payments to SNFs. This estimate reflects a $1.7 billion increase resulting from a 5.1% to the payment rates for SNFs, which includes a 3.9% SNF market basket increase, plus a 1.5 percentage point market basket forecast error adjustment, and less a 0.3 percentage point productivity adjustment (as required by law). The SNF market basket increase of 3.9% is the highest market basket update CMS has implemented in a final rule since the beginning of the SNF PPS.
CMS is also finalizing a two-year phase-in of an adjustment to the SNF payment rates due to the transition to the Patient Driven Payment Model (PDPM), a SNF payment classification model. When PDPM was finalized on October 1, 2019, it was determined that this model would be implemented in a budget neutral manner, meaning it would not result in an increase or decrease in aggregate SNF spending. Since PDPM implementation, CMS’ initial analysis of FY 2020 and FY 2021 data found an unintended increase of approximately 5%, or $1.7 billion, in Medicare Part A SNF spending per year. After considering the stakeholder feedback received in the FY 2022 SNF PPS rulemaking cycle and on the FY 2023 SNF PPS proposed rule, to better account for the effects of the COVID-19 public health emergency (PHE) on SNF spending, CMS is finalizing the adjustment factor of 4.6% to the SNF payment rates.
CMS also recognizes that the ongoing COVID-19 PHE provides a basis for taking a more cautious approach to mitigate the potential negative impacts on the nursing home industry, such as facility closures or disproportionate impacts on rural and smaller facilities. Therefore, to balance ensuring accurate Medicare Part A SNF payments and mitigating the financial impact on providers, CMS is finalizing to phase in the parity adjustment factor over a two-year period, resulting in a 2.3% or approximately $780 million reduction to FY 2023 payment rates, and a 2.3% reduction in FY 2024.
The proposed rule included a Request for Information (RFI) seeking input on establishing minimum staffing requirements for long-term care facilities, as outlined in the President Biden’s State of the Union Address. CMS received a significant response to the RFI from a wide range of interested parties. While CMS is continuing to review the comments, many commenters focused on the overall approach for establishing staffing standards, recommendations for implementing a minimum staffing requirement, factors for consideration (such as payment, cost, barriers, etc.), and input on the forthcoming staffing study. The Biden-Harris Administration has set a goal to improve the quality of nursing homes so that nursing home residents get the reliable, high-quality care they deserve. A key part of reaching this goal is ensuring adequate staffing levels in nursing homes, which have a substantial impact on the quality of care and outcomes residents experience. CMS will continue to review the comments — all of which the agency anticipates will be used to help inform future rulemaking on minimum staffing requirements for long-term care facilities. The Biden-Harris Administration is committed to issuing the proposed rule within one year of President Biden’s State of the Union announcement.
For a fact sheet on the FY 2023 SNF PPS final rule, please visit: https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2023-skilled-nursing-facility-prospective-payment-system-final-rule-cms-1765-f
To view the FY 2023 SNF PPS final rule, please visit: https://www.federalregister.gov/public-inspection/2022-16457/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities
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