Medicare Payment Systems

We pay acute care hospitals an IPPS payment per inpatient case or inpatient discharge. The admitting hospital, or an entity wholly owned or operated by the admitting hospital, must bill all outpatient diagnostic services and admission-related outpatient non-diagnostic services provided to the patient during the 3 days before admitting the patient to the hospital on the inpatient claim. Acute care hospitals can’t separately bill Medicare Part B for these services.

Section 1886(d)(1)(B) of the Social Security Act excludes certain hospitals and hospital units from the IPPS. These hospitals and units include:

• Inpatient rehabilitation facility (IRF) hospitals and units
• Long-term care hospitals (LTCHs)
• Inpatient psychiatric facility (IPF) hospitals and units
• Children’s hospitals
• Cancer hospitals
• Extended neoplastic disease care hospitals
• Hospitals located outside the 50 states, the District of Columbia, and Puerto Rico:
  • U.S. Virgin Islands
  • Guam
  • Northern Mariana Islands
  • American Samoa
• Religious nonmedical health care institutions (RNHCIs)

Medicare Severity Diagnosis-Related Groups

We assign inpatient hospital discharges to Medicare Severity Diagnosis-Related Groups (MS-DRGs).

• We use MS-DRGs to better reflect patients’ severity of illness, complexity of service, and hospital resource consumption
• An MS-DRG is defined by a group of similar clinical conditions (diagnoses) requiring similar resource consumption
• The patient’s principal diagnosis, secondary diagnoses, procedures performed, sex, age, and discharge status determine MS-DRG assignment
• We consider up to 25 diagnosis and 25 procedure codes for MS-DRG assignment
• We review MS-DRG definitions yearly to ensure each group has clinically similar conditions that are expected to require similar amounts of inpatient resources
  • If our review demonstrates subsets of clinically similar cases within an MS-DRG use significantly different resources, we may propose to reassign them to different MS-DRG(s) with similar resource use or create new MS-DRG(s)

The 3 levels of severity in the MS-DRG system based on secondary diagnosis codes are:

1. Major Complication or Comorbidity (MCC) — the highest severity level affecting hospital resource consumption
2. Complication or Comorbidity (CC) — the next lowest severity level affecting hospital resource consumption
3. Non-Complication or Comorbidity (Non-CC) — the lowest severity level; this level doesn’t significantly affect illness severity and resource use

MS-DRGs may be subdivided (or split) into 2 or 3 severity levels according to these CC subgroups. There are also MS-DRGs that aren’t subdivided into severity levels, known as base MS-DRGs. For fiscal year (FY) 2023, we didn’t add any new MS-DRGs, which means the number of MS-DRGs remains at 767.

IPPS’s New COVID-19 Treatments Add-On Payment (NCTAP) mitigates potential financial disincentives for hospitals to provide new COVID-19 treatments. NCTAP applies for dates of service from November 2, 2020–September 30, 2023.

We base the IPPS per-discharge payment on a national base payment rate (standardized amount) for operating costs and a separate national base payment rate for capital-related costs.

We adjust these payment rates for:

• Patient’s clinical condition and related treatment costs compared to average Medicare case costs (MS-DRG relative weight)
• Market conditions in the hospital’s location compared to national conditions (wage index)

Other IPPS Hospital Payments

• Acute care hospitals’ extremely high cost cases can qualify for outlier payments.
• We pay hospitals that train residents in approved graduate medical education (GME) programs separately for the direct cost of training residents (direct GME). We also increase IPPS hospitals’ operating and capital payment rates to reflect teaching hospitals’ higher indirect patient care costs compared to non-teaching hospitals (indirect medical education [IME]).
• We increase hospitals’ operating and capital payment rates for treating a disproportionate share of low-income patients. These hospitals also get uncompensated care payments.
• We may also pay acute care hospitals to treat patients with certain newly approved, costly technologies that offer a substantial clinical improvement over existing treatments or that get certain FDA designations for breakthrough devices and antimicrobial products.
• Qualifying rural hospitals and critical access hospitals (CAHs), as defined in section 100.2 of Medicare Claims Processing Manual, Chapter 3, can get certified registered nurse anesthetist (CRNA) pass-through payments for certain CRNA services. These services include those the CRNA is legally authorized to perform in the state where they’re provided.
• We pay for the cost of nursing and allied health education activities on a reasonable cost basis subject to conditions and limitations at 42 CFR 413.85(d).
• We pay reasonable and necessary costs for the hospital to get an organ as an adjustment to a hospital’s IPPS payment. Submit acquisition charges separately using revenue codes 0811 (living donor kidney acquisition) and 0812 (cadaver donor kidney acquisition).
• Hospitals get an add-on payment for the costs of administering blood clotting factors to inpatients with hemophilia.
• We pay an add-on payment to hospitals participating in a National Institutes of Health (NIH)-sponsored islet cell transplantation clinical trial for patients with Type I diabetes.
• We reduce payment in some cases when a patient has a short length of stay (LOS) and transfers to another acute care hospital or, in certain circumstances, to a post-acute care setting.
  • This post-acute care transfer policy applies to patients assigned to certain MS-DRGs subject to this policy who transfer to a SNF, long-term care hospital, inpatient rehabilitation facility, inpatient psychiatric facility, cancer hospital, children’s hospital, or for services from a home health agency or hospice program.
• IPPS payments are adjusted under the Hospital Value-Based Purchasing (VBP) Program and the Hospital Readmissions Reduction Program (HRRP).
  • We adjust a portion of operating IPPS payments, up or down, to acute care hospitals eligible for value-based incentive payments, based on quality measures performance.
  • We reduce a portion of eligible hospitals’ operating IPPS payments for excess readmissions.
• The Hospital-Acquired Condition (HAC) Reduction Program reduces overall IPPS payments by 1.0% for applicable hospitals with the worst-performing quartile of risk-adjusted quality measures for reasonably preventable HACs.

How We Determine an IPPS Payment

1. The hospital submits a claim to its Medicare Administrative Contractor (MAC) for each patient they treat. Based on the claim information, the MAC assigns the case to an MS-DRG.
2. The base payment rate, or standardized dollar amount, includes the labor-related and non-labor-related share. We adjust the labor-related share by a wage index to reflect area labor cost differences. The labor share equals 67.6% if the hospital’s wage index is greater than 1.0. The law requires that the labor share equals 62% if the hospital’s wage index is less than or equal to 1.0. We adjust the non-labor-related share by a Cost-of-Living Adjustment (COLA) factor equal to 1.0 except for hospitals in Alaska or Hawaii. This adjustment accounts for higher cost of living in Alaska and Hawaii.
3. We multiply the wage-adjusted standardized amount by an MS-DRG weighting factor. The weight is specific to each MS-DRG. Each MS-DRG relative weight represents the average resources to treat cases in that MS-DRG compared to the average resources to treat cases in all MS-DRGs.
4. We make additional IPPS payments for:
   • Hospitals with residents in an approved GME program to reflect the higher indirect patient care costs of teaching hospitals compared to non-teaching hospitals
   • Hospitals that treat a disproportionate share of low-income patients, including incurred, uncompensated care costs
   • Certain newly approved technology cases
   • High-cost outlier cases
5. We adjust IPPS payments, as applicable, under the Hospital VBP Program, HRRP, and HAC Reduction Program.

Figure 1. Acute Care Hospital IPPS: Operating Base Payment Rate Adjusted for Geographic Factors

Figure 2. Acute Care Hospital IPPS: Capital Base Payment Rate

We determine IPPS payments by adjusting separate operating and capital base payment rates, which we update each year.

Base Payment Amounts

• We set base rates (standardized payment amounts) for the operating and capital costs we expect from efficient hospitals delivering inpatient services
• We exclude some costs, like direct GME program operating costs and organ acquisition costs, from IPPS rates and pay them separately
• Capital payments cover depreciation, interest, rent, and property-related insurance and tax costs

MS-DRG Relative Weights

• We assign a weight to each MS-DRG that reflects the average case cost in that group compared to the average Medicare case cost and use the same MS-DRG weights for operating and capital payment rates. For FY 2023, we determine the relative weights by calculating and averaging 2 sets of weights: 1 calculated with COVID-19 claims included and 1 with COVID-19 claims excluded.
• We annually adjust the MS-DRG weights without affecting overall IPPS payments, based on standardized charges and all IPPS case costs in each MS-DRG. Beginning in FY 2023, this adjustment will include a 10% cap on decreases in an MS-DRG relative weight from 1 FY to another. We standardize hospitals’ billed charges to improve comparability by adjusting:
  • Charges to remove differences in hospital wage rates across labor markets
  • For the size and intensity of the hospital’s resident training activities
  • For the number of low-income hospital patients treated

Note: We reduce charges to costs using national average hospital cost ratios to charges for 19 different hospital departments.

Market Condition Adjustments

• We adjust the operating and capital rates by an area wage index to reflect differences in local labor market prices.
• We measure differences in hospital wage rates among labor markets by comparing the average hourly wage (AHW) for hospital workers in each urban or statewide rural area to the national average.
• We use the Office of Management and Budget’s Core-Based Statistical Area (CBSA) delineations, with some modifications, to define each labor market area, and annually revise the wage index based on IPPS hospital wage data.
• If a hospital believes it competes for labor in a different area than its location, it may request geographic reclassification through the Medicare Geographic Classification Review Board (MGCRB).
• FY 2023, these policies apply to the wage index:
  • We increase the wage index for hospitals with a wage index value below the 25th percentile across all hospitals as we did in FYs 2020, 2021, and 2022.
  • For FY 2023 and subsequent years, we apply a permanent 5% cap on any decrease to a hospital’s wage index from its wage index in the previous year, regardless of what caused the decline.
  • We apply the wage index to the whole capital base rate, and raise it to a fractional power, narrowing the geographic variation in wage index values among labor market areas.
  • We apply a COLA, reflecting higher supplies and other non-labor resources costs, to the base IPPS operating and capital rates of hospitals in Hawaii and Alaska. We apply the COLA to the non-labor-related portion of the operating base rate and to the whole capital base rate.

Bad Debts

• We may pay hospital Medicare bad debts at 65% of the allowable amount if they meet all requirements under 42 CFR 413.89
• Bad debts happen when a patient doesn’t pay their Medicare coinsurance and deductible
• Providers can collect unpaid patient Medicare cost-sharing amounts, unless:
  • State Medicaid agency classifies the patient as categorically or medically needy
  • Provider determines the patient is indigent for bad debt purposes
• To have an acceptable cost report under 42 CFR 413.24(f)(5), a provider must submit a cost report with a detailed bad debt listing corresponding to their claimed bad debt amounts

Direct Graduate Medical Education

• We pay teaching hospitals or hospitals that train residents in approved medical allopathic, osteopathic, dental, or podiatry residency programs direct graduate medical education (DGME) payments
• These payments reflect the approved residency training programs’ direct operating costs
• We pay these separately from the IPPS per discharge payment and generally base DGME payments on:
  • The hospital-specific costs per resident in a historical base year, updated for inflation
  • The number of residents a hospital trains
  • The hospital’s Medicare patient load (the proportion of Medicare inpatient days to total inpatient days)

Indirect Medical Education

• Teaching hospitals or hospitals that train residents in approved medical allopathic, osteopathic, dental, or podiatry residency programs also get an indirect medical education (IME) adjustment. This adjustment reflects the higher indirect patient care costs of teaching hospitals compared to non-teaching hospitals.
• We calculate the IME adjustment factor using a hospital’s intern- and resident-to-bed ratio.

Medicare Disproportionate Share Hospitals

• We make additional payments for inpatient operating costs to hospitals that serve a disproportionate share of low-income patients, as defined in 42 CFR 412.106
• Hospitals treating a disproportionate share of low-income patients get additional operating and capital payments
• Hospitals get 25% of the amount they previously got under the traditional Medicare disproportionate share hospital (DSH) statutory formula
  • The remainder, equal to 75% of what we otherwise would pay as Medicare DSH operating payments, goes toward an uncompensated care payment after reducing the amount for the uninsured individuals’ percentage change
  • Each Medicare DSH-eligible hospital gets an uncompensated care payment based on its share of uncompensated care costs compared to all Medicare DSH-eligible hospitals
    • We annually update the factor estimates that determine each eligible hospital’s uncompensated care payments
• For most DSH-eligible hospitals, we calculate uncompensated care payments from the 2 most recent years of audited Worksheet S-10 data to determine each hospital’s share of uncompensated care payments
• For FY 2024 and subsequent years, we’ll use a 3-year average of the uncompensated care data from the 3 most recent FYs for which audited data are available

Note: Beginning in FY 2023, we no longer use low-income insured days as a proxy for uncompensated care to determine Worksheet S-10 Factor 3 for Indian Health Service (IHS), tribal hospitals, and hospitals in Puerto Rico. We’re establishing a new supplemental payment for these hospitals beginning in FY 2023.

Sole Community Hospitals

A Medicare IPPS hospital is eligible for sole community hospital (SCH) classification if it meets 1 of these criteria, as defined in 42 CFR 412.92:

• Hospital is at least 35 miles from other “like hospitals” (described below)
• Hospital is rural, located 25–35 miles from other “like hospitals,” and meets 1 of these criteria:
  • No more than 25% of hospitalized inpatient residents, or no more than 25% of hospitalized Medicare inpatients in the hospital’s service area, are admitted to other “like hospitals” within a 35-mile radius of the hospital or, if larger, within its service area
  • Has fewer than 50 beds and would meet the 25% criterion except some patients get specialized care unavailable in the hospital service area
  • Because of local topography or periods of prolonged severe weather conditions, the other “like hospitals” are inaccessible for at least 30 days in each of 2 out of 3 years
• A hospital is located 15–25 miles from other “like hospitals” that are inaccessible because of local topography or periods of prolonged severe weather conditions for at least 30 days in each of 2 out of 3 years
• Travel time between the hospital and the nearest “like hospital” is at least 45 minutes because of distance, posted speed limits, and predictable weather conditions

We don’t consider a nearby hospital to be a “like hospital” if its total inpatient days attributable to units of the nearby hospital that provides a level of care characteristic of the level of care payable under the acute care hospital IPPS are less than or equal to 8% of similarly calculated total inpatient days of the hospital seeking SCH status.

We base SCH operating payments on the higher of their hospital-specific payment rate or the federal rate and base capital payments on the capital base rate (like all other IPPS hospitals).

The annual SCH hospital-specific rate update is subject to adjustments if the hospital doesn’t submit quality data or use electronic health records (EHRs) in a meaningful way.

SCHs may qualify for a payment adjustment if they experience a significant volume decrease. 42 CFR 412.92(e) explains the volume decrease payment adjustment.

For IPPS purposes, we treat certain hospitals formerly designated as essential access community hospitals (EACHs) as SCHs. 42 CFR 412.109 has more information.

Medicare Dependent Hospitals

A Medicare IPPS hospital is eligible for Medicare dependent hospital (MDH) classification if it’s located in a rural area, as defined in 42 CFR 412.63(b) and meets these criteria, as defined in 42 CFR 412.108:

• The hospital has 100 or fewer beds during the cost reporting period, as defined in 42 CFR 412.105(b), during the cost reporting period
• The hospital isn’t also classified as a sole community hospital under 42 CFR 412.92
• At least 60% of its inpatient days or discharges were due to patients entitled to Medicare Part A during the hospital’s cost reporting periods for 1 of the following:
  • Its cost reporting period ending on or after September 30, 1987, and before September 30, 1988
  • Its cost reporting period beginning on or after October 1, 1986, and before October 1, 1987, only if the hospital doesn’t have a cost reporting period that meets the preceding requirement
  • At least 2 of the last 3 most recent audited cost reporting periods for which there’s a settled cost report

We base MDH operating payments on the higher of the federal rate payment or the federal rate payment plus 75% of the difference between the federal rate payment and its hospital-specific rate payment.

Before October 1, 2022, the MDH program was set to expire on September 30, 2022. Subsequent legislation, most recently Section 4102 of the Consolidated Appropriations Act, 2023, extended the MDH program through September 30, 2024.

Rural Referral Centers

The Rural Referral Center (RRC) Program supports high-volume rural hospitals outlined in 42 CFR 412.96. We generally classify a Medicare participating acute care hospital as an RRC if it’s in a rural area for IPPS payment purposes and meets 1 of these criteria:

1. Has 275 or more usable beds during its most recently completed cost reporting period unless the hospital submits a changed bed count with its application for 1 or more of these reasons:
   • 2 or more hospitals merged.
   • Acute care beds, previously closed for renovation, reopen.
   • Hospital transfers, to the IPPS, acute care beds previously classified as part of an IPPS-excluded unit.
   • Hospital expands the number of inpatient acute care beds and permanently maintains them. The expansion doesn’t include beds in corridors or other temporary beds.
2. Shows 1 of these elements:
   • Non-staff physicians or other hospitals refer at least 50% of the hospital’s Medicare patients
   • At least 60% of the hospital’s Medicare patients live more than 25 miles from it and the hospital supplies at least 60% of all services to Medicare patients living more than 25 miles from it
3. If a hospital doesn’t meet criteria in numbers 1 or 2, we classify it as an RRC if it’s in a rural area, meets criteria a and b below, and meets at least 1 criterion in c, d, or e:
   1. Its case-mix index (CMI) for discharges occurring during the same federal FY we use to calculate the national and regional CMIs is equal to:
      • The national CMI value or the median CMI value for urban hospitals in each region. In calculating the median case-mix index for each region, we exclude hospitals getting indirect medical education payments specified in 42 CFR 412.105.
   2. Its number of discharges in the cost reporting period that began during the same FY that we use to calculate the regional median discharges meets the requirements specified at 42 CFR 412.96(c)(2)
   3. More than 50% of its active medical staff are specialists who meet the conditions in 42 CFR 412.96(c)(3)
   4. At least 60% of all inpatients discharged live more than 25 miles from the hospital
   5. At least 40% of all inpatients treated are referred from other hospitals or non-staff physicians

Current RRCs or hospitals that previously had RRC status get certain advantages:

• Proximity for Medicare Geographic Classification Review Board (MGCRB) Reclassification:
  • A hospital currently or previously designated as an RRC doesn’t need to demonstrate proximity to the area it gets reclassified
  • A hospital can apply for reclassification to the closest urban or rural area
• Average Hourly Wage (AHW) Data Comparison for MGCRB Reclassification:
  • We exempt hospitals currently or previously designated as the requirement that a hospital’s AHW must exceed, by a certain percentage, the AHW of the labor market area where the hospital is located
• Medicare DSH Cap:
  • We exempt hospitals designated as an RRC from the 12% cap on Medicare operating DSH payments applicable to other rural hospitals
  • Medicare Disproportionate Share Hospital fact sheet has more information

Low-Volume Hospitals

• Before October 1, 2022, the temporary changes to the low-volume hospital payment adjustment were set to expire on September 30, 2022. Subsequent legislation, most recently Section 4101 of the Consolidated Appropriations Act, 2023, extended those temporary changes through September 30, 2024.
• For FY 2023, we make add-on payments to qualifying low-volume hospitals more than 15 road miles from the nearest subsection (d) hospital if it discharges less than 3,800 total patients during the FY based on its most recently submitted cost report.
• Qualifying low-volume hospitals get an additional adjustment of 25% for each Medicare patient discharge.
  • For low-volume hospitals with 500 or fewer total discharges, the low-volume hospital payment adjustment is 0.25.
  • For low-volume hospitals with more than 500 total discharges but less than 3,800 total discharges, we calculate the low-volume hospital payment adjustment as 0.25 – [0.25/3300] × (number of total discharges – 500) = (95/330) – (number of total discharges/13,200).

Outlier Payments

• We make additional payments for extremely costly outlier cases to promote seriously ill patients’ access to high quality inpatient care.
• We identify these cases by comparing their estimated operating and capital costs to a fixed-loss threshold.
• We annually set the fixed-loss threshold and adjust it to reflect local labor market costs.
• We pay outliers by offsetting reductions in the operating and capital base rates (reducing the payment rates to all cases so outlier payments don’t increase or decrease estimated aggregate Medicare spending).
• We set the national fixed-loss threshold at 5.1% of total FY payments.
• For FY 2023, we determine the outlier fixed-loss amount by calculating and averaging 2 fixed-loss amounts: 1 calculated with COVID-19 claims included and 1 with COVID-19 claims excluded. We also used charge inflation factors and cost-to-charge ratio (CCR) adjustment factors based on data from before the COVID-19 public health emergency (PHE).

Transfer Policy

We reduce MS-DRG payments when the patient’s LOS is at least 1 day less than the geometric mean MS-DRG LOS and 1 of these:

• Hospital transfers the patient to another IPPS-covered acute care hospital, or for certain MS-DRGs, a post-acute care setting
• Hospital transfers the patient to a hospital not participating in Medicare
• Hospital transfers the patient to a CAH

Our transfer policy includes these post-acute care settings:

• Long-term care hospitals
• Rehabilitation facilities
• Psychiatric facilities
• SNFs
• Home health care, when the patient gets clinically related care beginning within 3 days after a hospital stay
• Rehabilitation distinct part units located in an acute care hospital or CAHs
• Psychiatric distinct part units located in an acute care hospital or CAHs
• Cancer hospitals
• Children’s hospitals
• Hospice care

New Technology Add-On Payments (NTAPs)

• We make an additional payment for new medical services and technologies that meet certain criteria. The regulations at 42 CFR 412.87(b) specify 3 criteria for a new medical service or technology to be eligible to receive the additional payment:
  1. The medical service or technology must be new.
  2. The medical service or technology must be high cost.
  3. The medical service or technology must show a substantial clinical improvement over existing services or technologies.
• Certain new transformative devices and antimicrobial products may qualify under an alternative inpatient new technology add-on payment pathway discussed in 42 CFR 412.87(c) and (d).
• Under the alternative pathway, a new technology is considered not substantially similar to existing technologies and doesn’t need to show a substantial clinical improvement over existing technologies. However, a technology must still be new and high cost.
• The NTAP isn’t budget neutral and is limited to the 2- to 3-year period following the date the product becomes available, generally beginning with FDA market authorization.
• Once a technology is on the U.S. market for more than 2–3 years, we consider the costs included in the MS-DRG relative weights regardless of whether the technology’s use in the Medicare population is frequent or infrequent. Case volume is not a factor in determining whether a product continues to be “new” for NTAP eligibility.
• Except for certain antimicrobials, under the NTAP calculation we pay a 65% marginal cost factor of the estimated case costs that are more than the full MS-DRG payment, up to a maximum of 65% of the costs of technology.
• For antimicrobial products the FDA designated as a Qualified Infectious Disease Product (QIDP) or approved under the FDA’s limited population pathway for antibacterial and antifungal drugs (LPAD pathway), the NTAP percentage is 75% (instead of 65%).
• We approved 8 technologies that applied for NTAP for FY 2023. This includes 3 technologies submitted under the traditional new technology add-on payment pathway and 5 technologies submitted under the alternative pathway for new medical devices that are part of the FDA Breakthrough Devices Program. We also conditionally approved 1 technology under the alternative pathway for products that received FDA QIDP designation that otherwise meets the alternative pathway criteria, but hasn’t yet received FDA approval. Additionally, we’re finalizing the NTAP for 1 technology that we determined to be substantially similar to an existing technology approved for NTAP in FY 2022. In total, together with technologies we previously approved for NTAP that were eligible for NTAP renewal for another year, 25 technologies are eligible to get FY 2023 add-on payments.
• We introduced a new electronic application intake system, the Medicare Electronic Application Request Information System™ (MEARIS™), for users to submit NTAP applications, requests for ICD-10-PCS procedure codes, and other actions like MS-DRG classification change requests.

Hospital Readmissions Reduction Program

• The Hospital Readmissions Reduction Program (HRRP) adjusts the base operating MS-DRG payment for excess readmissions
• We base the reduction on a hospital’s risk-adjusted readmission rate during a 3-year period for:
  • Acute myocardial infarction (AMI)
  • Heart failure (HF)
  • Pneumonia
  • Chronic obstructive pulmonary disease (COPD)
  • Elective primary total hip or knee arthroplasty (THA/TKA)
  • Coronary artery bypass graft (CABG) surgery
• Readmission generally means an acute care hospital admission within 30 days of discharge from the same or another IPPS acute care hospital

For FY 2022, due to the COVID-19 PHE, we adopted a cross-program measure suppression policy for the HRRP, VBP Program, and HAC Reduction Program. For the FY 2024 program year, we’re resuming the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following Pneumonia Hospitalization Measure and modifying it to exclude COVID-19 diagnosed patients from the measure denominator beginning with the FY 2023 program year.

We’re also modifying all 6 condition and procedure-specific measures addressed by the HRRP to account for patient history of COVID-19 within 1 year:

• Hospital 30-Day, All-Cause, RSRR following Acute Myocardial Infarction (AMI) Hospitalization
• Hospital 30-Day, All-Cause, Unplanned, RSRR following Coronary Artery Bypass Graft (CABG) Surgery
• Hospital 30-Day, All-Cause, RSRR following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization
• Hospital 30-Day, All-Cause, RSRR following Heart Failure Hospitalization
• Hospital-Level 30-Day, All-Cause, RSRR following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty

We also adopted MedPAR data that aligns with the applicable period’s HRRP calculation for FY 2023 and all subsequent program years unless otherwise specified.

Hospital Value-Based Purchasing Program

• The Hospital Value-Based Purchasing (VBP) Program delivers upward, downward, or neutral adjustments to participating hospitals’ base operating MS-DRG payments, based on their quality measure performance
• We fund value-based incentive payments by reducing hospitals’ base operating MS-DRG payment amounts
• Hospitals may earn back more than, all, or less than the applicable reduced percentage each year
• The Hospital VBP Program generally applies to all acute IPPS hospitals, with certain exceptions
• The applicable reduction to hospitals’ base operating MS-DRG payment amount is 2%
• Each hospital gets a value-based incentive payment amount that matches their 2% reduction to the base operating MS-DRG payment amount
• We’ll continue using the revised scoring and payment methodology adopted in FY 2022 and hospitals won’t get total performance scores (TPSs)
• For FY 2023, we suppressed the Hospital 30-Day, All-Cause Risk-Standardized Mortality Rate Following Pneumonia because of COVID-19
• In 2023, we’ll suppress the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Medicare Spending per Beneficiary (MSPB) and 5 Hospital Acquired Infection (HAI) measures and update the baseline periods for certain measures for the FY 2025 program year:
  1. National Healthcare Safety Network Catheter-Associated Urinary Tract Infection
  2. National Healthcare Safety Network Central Line-Associated Bloodstream Infection
  3. American College of Surgeons — Centers for Disease Control and Prevention Harmonized Procedure Specific Surgical Site Infection
  4. National Healthcare Safety Network Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia
  5. National Healthcare Safety Network Facility-wide Inpatient Hospital-onset Clostridium difficile Infection

Hospital-Acquired Condition Reduction Program

• A Hospital-Acquired Condition (HAC) is a condition a patient gets during hospitalization (the condition wasn’t present on admission)
• The HAC Reduction Program reduces overall IPPS payments 1% for applicable hospitals with the worst-performing quartile of risk-adjusted quality measures for reasonably preventable HACs

The extraordinary circumstances exception (ECE) policy in the FY 2020 final rule doesn’t extend payment reductions or exempt hospitals from payment reductions under the HAC Reduction Program. It adopts a policy to suppress FY 2020 third and fourth quarter data from the HAC Reduction Program for FYs 2022–2024.

For FY 2023 we’ll:

• Suppress the CMS PSI 90 measure and the 5 CDC NHSN HAI measures from the calculation of measure scores and the total HAC score, thereby not penalizing any hospital under the HAC Reduction Program for the FY 2023 program year
• Publicly and confidentially report CDC NHSN HAI measure results but not calculate or report measure results for the CMS PSI 90 measure for the HAC Reduction Program FY 2023 program year
• Suppress calendar year (CY) 2021 CDC NHSN HAI measures data from the FY 2024 HAC Reduction program year
• Update the measure specification to the minimum volume threshold for the CMS PSI 90 measure
• Clarify the removal of the no mapped location policy

For FY 2024 we’ll:

• Update the measure specifications to risk-adjust for COVID-19 diagnosis in the CMS PSI 90 measure
• Update the NHSN CDC HAI data submission requirements for newly opened hospitals

• We annually update operating and capital payment rates.
• For FY 2023, the increase in operating payment rates for general acute care hospitals paid under the IPPS, that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful EHR users, is 4.3%. This reflects a hospital market basket update of 4.1% reduced by a 0.3 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by statute.
• Congress sets the operating rate update by considering the projected increase in the hospital market basket index, which measures the price increases of goods and services hospitals buy to produce patient care.

IPPS Regulations and Notices webpage has more information.

• Hospitals not reporting quality data get a 1/4 reduction to the percentage increase in the market basket index.
• For hospitals that aren’t meaningful EHR users and don’t get an exemption, 3/4 of the percentage increase is further reduced by 100% for FY 2024.
• For CY 2023, we’ll continue the EHR reporting period for new and returning participants (eligible hospitals and CAHs) to be any continuous 90-day reporting period. The EHR reporting period in CY 2024 is a minimum of any continuous 180-day period within CY 2024.
• For 2022, an Electronic Prescribing Objective’s Query of Prescription Drug Monitoring Program (PDMP) measure was optional, but bonus points increased to 10. For CY 2023, we’ll require and modify the Electronic PDMP measure while maintaining the associated points (10) beginning with the EHR reporting period in CY 2023.
• Maternal Morbidity Structural Measure begins with a shortened reporting period, October 1, 2021–December 31, 2021, affecting the CY 2021 reporting period and FY 2023 payment determination. We added a hospital designation to be publicly reported on a CMS website beginning in fall 2023. We’ll give this designation to hospitals that report “Yes” to both questions in the Maternal Morbidity Structural measure. This designation will initially be based only on data from hospitals reporting an affirmative attestation to the measure.
• All-Cause Risk Standardized Mortality measure begins with voluntary reporting July 1, 2022–June 30, 2023, followed by mandatory reporting July 1, 2023–June 30, 2024, affecting FY 2026 payment determination and subsequent years.
• COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) measure begins with a shortened reporting period, October 1, 2021–December 31, 2021, affecting CY 2021 reporting period and FY 2023 payment determination, and with quarterly reporting beginning with FY 2024 payment determination and subsequent years; 2-medication-related adverse Electronic Clinical Quality Measure (eCQM) events beginning with FY 2023 reporting period and FY 2025 payment period.
• Hospital Harm-Severe Hypoglycemia eCQM.
• Hospital Harm-Severe Hyperglycemia eCQM.

In FY 2023, we adopted 10 new measures for the IQR Program:

1. Hospital Commitment to Health Equity — Beginning with the CY 2023 reporting period/FY 2025 payment determination
2. Screening for Social Drivers of Health — Beginning with voluntary reporting for the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination
3. Screen Positive Rate for Social Drivers of Health — Beginning with voluntary reporting for the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination
4. Cesarean Birth electronic clinical quality measure (eCQM) with inclusion in the measure set — Beginning with the CY 2023 reporting period/FY 2025 payment determination, and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination
5. Severe Obstetric Complications eCQM included in the measure set — Beginning with the CY 2023 reporting period/FY 2025 payment determination, and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination
6. Hospital-Harm Opioid-Related Adverse Events eCQM (NQF #3501e) — Beginning with the CY 2024 reporting period/FY 2026 payment determination
7. Global Malnutrition Composite Score eCQM (NQF #3592e) — Beginning with the CY 2024 reporting period/FY 2026 payment determination
8. Hospital Level, Risk Standardized Patient-Reported Outcomes Performance Measure Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #3559) — Beginning with 2 voluntary periods, followed by mandatory reporting for the reporting period which runs from July 1, 2025–June 30, 2026, impacting the FY 2028 payment determination
9. Medicare Spending Per Beneficiary (MSPB) Hospital (NQF #2158) — Beginning with the FY 2024 payment determination
10. Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary THA/TKA (NQF #1550) — Beginning with the FY 2024 payment determination

We removed these measures beginning with FY 2026 payment determination:

• Discharged on Statin Medication eCQM (STK-06)
• Exclusive Breast Milk Feeding (PC-05)
• Admit Decision Time to Emergency Department (ED) Departure Time for Admitted Patients (ED-2)

Each ASC must follow the CfC quality and safety regulations according to 42 CFR 416 Subpart C. Each condition has several standards. In general, ASCs must have:

• A governing body and management
• Medical staffing
• Compliance with state licensure laws
• Safe surgical procedures
• Infection prevention and control to minimize infections and communicable diseases, including policies to ensure all staff are fully vaccinated for COVID-19
• Pharmaceutical services
• Patient admission, assessment, and discharge
• Complete, comprehensive, and accurate medical records
• Emergency preparedness
• Quality assessment and performance improvement
• Patient rights
• Lab and radiology services
• Nursing services
• A safe and sanitary environment to protect patient health and safety

The ASC Payment System establishes payment rates for eligible ASC procedures and excludes procedures posing significant patient safety risks or requiring active medical monitoring at midnight on the procedure day.

ASCs get a single payment for the procedure Medicare covers, including for ASC facility services, which include:

• Nursing services, technical personnel-provided services, and other related services
• Facility surgical procedures
• Drugs and biologicals (when we make no separate Outpatient Prospective Payment System [OPPS] payment), surgical dressings, supplies, splints, casts, appliances, and equipment
• Diagnostic or therapeutic services or items
• Administrative, recordkeeping, and housekeeping items and services
• Blood, blood plasma, and platelets, except when blood deductible applies
• Anesthesia administration and monitoring supplies and equipment
• Implantable prosthetic devices, including intraocular lenses (IOLs) and related accessories and supplies not on pass-through status
• OPPS-packaged radiology services
• The operating surgeon’s anesthetist supervision services

We pay separately for ASC ancillary services that are integral to a surgical procedure Medicare covers. Covered ancillary services, which can be done immediately before, during, or after the procedure, include:

• OPPS drugs and biologicals paid separately
• OPPS radiology services and diagnostic tests paid separately
• Brachytherapy sources
• Certain OPPS pass-through status implantable items
• Corneal tissue acquisition
• Surgical procedure, functional non-opioid pain management drug supply

42 CFR 416.164(c) includes ASC items and services we don’t cover.

We cover surgical procedures that meet 42 CFR 416.166(a)–(d) requirements.

Certified providers or suppliers may provide and bill other ASC services not considered ASC services.

ASCs should submit claims on the Health Insurance Claim Form (CMS-1500).

We charge the ASC patient their 20% coinsurance payment after they meet their yearly Part B deductible. We waive certain Medicare preventive service coinsurance and deductibles.

Under the ASC Payment System, we pay prospectively determined amounts for services the ASC provides to patients in connection with covered surgical procedures. HCPCS codes identify the surgical procedures and ancillary services Medicare covers.

We annually update the ASC Payment System using the OPPS APC relative payment weights to revise the ASC relative payment weights for covered surgical procedures since ASCs don’t submit cost reports. We then scale those ASC relative weights for the ASC Payment System to ensure budget neutrality. To calculate the ASC payment rates for most ASC-covered surgical procedures, we multiply the ASC conversion factor (CF) by the ASC relative payment weight.

We scale ASC-covered surgical procedures’ relative payment weights, covered ancillary radiology services, and certain diagnostic tests within the medicine range of CPT codes.

The weight scalar is the ratio of the current CY to the upcoming CY total payment weight. We apply it to the upcoming CY relative payment weights to maintain budget neutrality.

We annually adjust the CF for budget neutrality by removing the effects of changes in wage index values for the upcoming year compared to the current year and make a productivity adjustment. The productivity adjustment reduces the ASC Payment System annual update factor.

• In the past, without another update factor, we updated the ASC CF using the Consumer Price Index for All Urban (CPI-U) Consumers
• For CYs 2019–2023, we updated the ASC Payment System using the hospital market basket update
• For CY 2023, the hospital market basket update is 4.1%, minus the productivity adjustment of 0.3 percentage point, resulting in a hospital market basket update factor of 3.8% for ASCs meeting the quality reporting requirements
• We apply a 1.8% productivity-adjusted hospital market basket update factor to the CY 2022 ASC conversion factor for ASCs not meeting the quality reporting requirements

ASCs get the lesser of the actual charge or the ASC payment rate for each procedure or service. We set the standard ASC-covered surgical procedure’s payment rate using the ASC CF and each separately payable procedure’s or service’s ASC relative payment weight.

We use alternate payment methods for office-based surgical procedures, device-intensive procedures, covered ancillary radiology services, and drugs and biologicals.

We make a geographic payment adjustment using the pre-floor and pre-reclassified hospital wage index values, with a 50% labor-related factor for covered surgical procedures and covered ancillary services. We make an additional adjustment when the ASC provides multiple surgical procedures in the same encounter or when ASC personnel stop procedures before starting anesthesia.

Table 1. Alternate Payment Rate Methods

Surgical Procedure or Ancillary Service	Payment Method
Procedures CMS classifies as office based and performed in a physician’s office at least 50% of the time	Paid at the lower of the ASC rate or the non-facility practice expense (PE) relative value unit (RVU) amount of the relevant year’s Medicare Physician Fee Schedule (PFS)
Device-intensive procedures (ASC-covered surgical procedures when the estimated device offset percentage is greater than 30% of the HCPCS code’s mean cost)	Paid with the procedure’s device-related portion (we pay an ASC and OPPS the same amount) and a non-device-related portion (calculated according to the standard rate setting method)
Separately payable covered ancillary radiology services facility costs	Paid at the lower of the ASC rate or the technical component or non-facility PE RVU amount of the same year’s Medicare PFS (whichever applies)
Separately payable OPPS drugs and biologicals (except non-opioid pain management drugs that function as a supply when used in a surgical procedure)	Paid the same amount as OPPS
Non-opioid pain management drugs that function as surgical supplies, like Exparel and Omidria, when provided in the ASC setting	Average sales price (ASP) plus 6%
Brachytherapy sources	Paid the same as OPPS rates if a prospective OPPS rate is available (otherwise, we pay at contractor-priced rates); payment isn’t adjusted for geographic wage differences
Low-volume device-intensive procedures	Paid at the ASC rate (including device-intensive adjustments) not to exceed the procedure’s OPPS payment rate
Primary surgical procedure and packaged add-on code combinations that are eligible for complexity adjustments under the OPPS and also performed in the ASC setting	Paid at the ASC rate through C codes that correspond to each unique code combination, calculated based on the OPPS complexity-adjusted rate

The ASC Payment webpage explains final ASC payment policies, the ASC-covered procedures list (ASC CPL) and payment rates, and the ASC Payment System quarterly addenda updates. We evaluate the ASC CPL each year to determine whether we’ll add or remove procedures. You may send questions, concerns, suggestions, or inquiries regarding the ASC CPL to ASCPPS@cms.hhs.gov.

The ASC Quality Reporting (ASCQR) Program is a pay-for-reporting quality program for the ASC setting. It utilizes quality of care measurement, quality improvement, and information transparency through public reporting to promote better health outcomes for Medicare patients. Facilities can also view their data and compare their performance to other outpatient settings through the ASC Compare tool on the Quality Reporting Center webpage.

Participating ASCs which fail to report their quality data in compliance with program requirements get a reduction of 2.0% from their annual fee schedule update in the next payment determination year.

Find additional details about the ASCQR Program on the QualityNet webpage and in 42 CFR 416 Subpart H.

We pay for DMEPOS items and services in 1 of 2 ways:

• A fee schedule. We update the schedule in January and July (and in April and October, if needed). We base the payment amount on 80% of the supplier’s actual charge or the fee schedule amount, whichever is lower. The patient pays the remaining 20% coinsurance after they’ve paid their deductible.
• The Competitive Bidding Program, which replaced the fee schedule payment methodology for certain DMEPOS items. Contract suppliers must agree to accept assignment on all claims for bid items and we pay them a single payment amount.

We pay for certain DMEPOS items and services on a fee schedule based on Sections 1834(a), (h), and (i) of the Social Security Act and 42 CFR 414.102 for parenteral and enteral nutrition (PEN), splints, casts, and intraocular lenses inserted in a physician’s office.

The DMEPOS and PEN fee schedule files contain certain HCPCS codes that are subject to fee schedule adjustments using payment information from the Competitive Bidding Program. We determine the payments for these items under the Competitive Bidding Program and adjust the fee schedule amounts for the same items using payment information from the program when the items are provided outside the program (in non-competitive bidding areas).

The fee schedule adjustment methodologies and regulations at 42 CFR 414.210(g) consider the differences in the costs of providing the items in competitive bidding areas versus non-competitive bidding areas. The fee schedule files also include codes for items and services that aren’t subject to the program or fee schedule adjustments.

The DMEPOS Fee Schedule: CY 2023 Update has more information on DMEPOS fee schedule amounts and adjustments.

For more payment guidance:

• 42 CFR 410.38
• Medicare Benefit Policy Manual, Chapter 15
• Medicare Claims Processing Manual, Chapter 20
• National and Local Coverage Determinations

We’ve streamlined regulatory requirements to help simplify DMEPOS payment requirements and reduce provider and supplier burden through the Master List of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Items Potentially Subject to Conditions of Payment. The Master List serves as a library of fee-for-service DMEPOS codes that are flagged as potential vulnerabilities.

Providers and suppliers don’t need to act unless an item on the Master List also appears on 1 or both of these lists:

• Required Prior Authorization List
• Required Face-to-Face Encounter and Written Order Prior to Delivery List

Some DMEPOS items that are frequently subject to unnecessary use require prior authorization as a condition of payment and these items are then placed on the Required Prior Authorization List. The prior authorization process ensures you meet all coverage, coding, and clinical documentation requirements before providing the item to the patient and submitting the claim.

The Prior Authorization and Pre-Claim Review Initiatives webpage has more information.

We update the DMEPOS fee schedule annually and outline the process in Section 60 of Medicare Claims Processing Manual, Chapter 23.

Section 4139 of the Consolidated Appropriations Act, 2023, requires an increase in fee schedule amounts for certain items and services through December 31, 2023.

For CY 2023, we increased the 2022 adjusted fee schedule amounts by the projected percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) of 6.4% for the 12-month period ending January 1, 2023. Section 1834(a)(14) of the Social Security Act updates certain 2023 DMEPOS fee schedule amounts by the percentage increase in the CPI-U (U.S. city average) for the 12-month period ending June 30, 2022.

We based this adjustment on the economy-wide productivity change equal to the 10-year moving average of changes in annual economy-wide private non-farm business multi-factor productivity (MFP). The MFP adjustment is 0.4%, and the CPI-U percentage increase is 9.1%. We reduced the 9.1% increase in the CPI-U by the 0.4% increase in the MFP resulting in a net 8.7% increase update factor.

Quarterly Fee Schedule Updates

We sometimes update fee schedules in April, July, or October when we add new items (HCPCS codes), make necessary fee schedule corrections, or apply statute or regulation changes.

We cover home health services if:

• The patient is eligible for home health service coverage if they meet the criteria outlined in:
  • Section 30 of Medicare Benefit Policy Manual, Chapter 7
  • 42 CFR 409.42
  • Sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Social Security Act
• The HHA providing the services has a valid Medicare Program agreement to participate
• The HHA submits a covered-services claim
• Services provided aren’t otherwise excluded from covered services

Patient Eligibility

Patients are eligible for Medicare home health services if they meet all the following criteria:

• Are enrolled in Medicare Parts A and B
• Need reasonable and necessary skilled nursing (SN) care (on an intermittent basis), physical therapy (PT), or speech-language pathology (SLP) services, or have a continuing need for occupational therapy (OT)
• Are under a physician’s or allowed practitioner’s care
• Get services under a home health plan of care (POC) that a physician or allowed practitioner established and periodically reviews
• Are confined to home (homebound)

We consider an individual confined to home (homebound) if they meet the following criteria:

Criterion 1

The patient must meet 1 of these requirements:

• Needs supportive devices like crutches, canes, wheelchairs, or walkers; uses special transportation; or requires another person’s help to leave their home because of illness or injury
• Has a condition where leaving their home isn’t medically advised

If the patient meets 1 of the requirements in Criterion 1, they must also meet both requirements in Criterion 2:

Criterion 2

• Individual can’t normally leave home
• Leaving home requires a considerable and taxing effort

We consider a person confined to home (homebound) if they don’t leave their home often or if they leave only for a short time for health care services, religious services, adult day care, or other unique or infrequent events (for example, funeral, graduation, barber, or hairdresser services).

Confined to home (homebound) examples:

• A person who’s blind or has dementia and needs help to leave home
• A patient who returns home after surgery and a physician or allowed practitioner has restricted them to specified and limited activities (like only getting out of bed for a specified length of time or walking stairs only once a day)
• A person with a mental health disorder who refuses to leave home or whose physician or allowed practitioner considers it unsafe to leave home unattended, even if the individual has no physical limitations

Occupational therapists can complete the initial and comprehensive patient assessment when the physician or allowed practitioner only orders therapy service with another rehabilitation therapy service.

Skilled Therapy

We cover skilled therapy services (PT, SLP, and OT) to maintain the patient’s current condition or to prevent or slow further deterioration. Services must be:

• Performed safely and effectively by, or under the supervision of, a skilled therapist
• Consistent with the nature and severity of the illness or injury and the patient’s particular medical needs, including reasonable amount, frequency, and duration of services
• Specific, safe, and effective treatment for the patient’s condition
• Reassessed at least once every 30 days by a qualified therapist for each therapy discipline
• Documented in the clinical record to reflect the initial therapy assessment of the patient’s activities of daily living

Skilled Nursing

We cover SN care (other than only venipuncture for getting a blood sample) when the:

• Patient needs a registered nurse’s or licensed vocational nurse’s (when regulations allow) specialized judgment, knowledge, and skills
• Patient’s condition requires SN services to maintain their current condition or prevent or slow further deterioration

Intermittent Skilled Nursing Care

We define intermittent SN care as care that patients need less than 7 days each week or less than 8 hours each day for periods of 21 days or less (with extensions in exceptional circumstances requiring more limited and predictable care).

To meet intermittent SN care requirements, patients must need a medically predictable recurring SN service, which typically occurs when a patient needs a SN service at least once every 60 days. The exception to the intermittent requirement is daily SN services for diabetic patients unable to administer their insulin (when there’s no able and willing caregiver).

Home Health Aide

We cover home health aide services if a patient qualifies for the home health benefit. These services can include:

• Personal care
• Help with activities that support SN services
• Simple dressing changes
• Assistance with medications, which are ordinarily self-administered and don’t require the skills of a licensed nurse
• Prosthetic or orthotic device personal care

To provide these services, a home health aide must meet all the following criteria:

• Be certified with competency evaluation requirements
• Provide hands-on personal care or services that help treat a patient’s illness or injury, or maintain a patient’s health
• Do tasks allowed only under state law

Orders for home health aide services must show how often patients need these services. A registered nurse or other skilled professional must perform on-site supervision of the home health aide at least every 14 days if the patient gets SN, PT, OT, or SLP services. In rare instances outside the HHA’s control, we allow 1 virtual supervisory visit per 60-day episode of care, which HHAs must document in the patient’s medical record.

Medical Social Services

We cover medical social services when all the following criteria are met:

• The patient is eligible for the home health benefit
• The POC explains why only a qualified medical social worker or social work assistant, under the supervision of a qualified medical social worker, can provide services the patient needs safely and effectively
• Services resolve social or emotional problems that hinder effectively treating a patient’s medical condition or recovery rate

Services using telecommunications technology must be indicated on the POC and can include:

• Remote patient monitoring, defined as collecting physiologic data (for example, electrocardiogram, blood pressure, glucose monitoring) digitally stored or transmitted by the patient or caregivers, or both, and sent to the HHAs.
• Teletypewriter (TTY).
• Real-time interaction between the patient and clinician via 2-way audio-video.
• Services provided by telecommunications technology aren’t separately billable and can’t be counted as a visit for payment or eligibility requirements. Visits to a patient’s home solely to supply, connect, or train a patient on remote patient monitoring equipment, without providing another skilled service, aren’t separately billable.

Telehealth

Since January 1, 2021, physicians or allowed practitioners can use telecommunications technologies for home health benefit patient care. Payment conditions include:

• Physician or allowed practitioner must include remote patient monitoring in the POC or other services via telecommunications system or audio-only technology
• HHAs can’t substitute telecommunications or audio-only technology for a home visit as part of the POC, patient eligibility, or payment
• Telecommunications or audio-only technologies must meet patient-specific needs identified in the comprehensive assessment

PDGM & Home Health Resource Groups

• PDGM case-mix method bases 30-day period payment rates on the patient’s clinical characteristics and resource needs. It assigns each 30-day period into 1 of 432 case-mix groups called home health resource groups.
• We base case-mix payment on these groups, and each group’s case-mix weight reflects predicted mean group cost relative to the overall average across all groups.
• We apply changes to the PDGM case-mix weights in a budget-neutral manner by multiplying the CY 2023 national standardized 30-day period payment rate by a case-mix budget neutrality factor. The final CY 2023 case-mix budget neutrality factor is 0.9904.
• We base the national, standardized 30-day period payment for case-mix on the patient’s condition, care needs, and area wage differences.

Medicare Claims Case-Mix Variables

We put the 30-day periods into different subgroups for each of these categories:

• Admission Source
  • Community
  • Institutional (acute hospital, inpatient rehabilitation facility, skilled nursing facility, long-term care hospital, inpatient psychiatric facility)
• 30-Day Period Timing
  • Early (first 30-day care period)
  • Late (all subsequent 30-day care periods, unless there’s a gap of more than 60 days between the end of 1 care period and the start of another)
• Clinical Grouping
  • Musculoskeletal Rehabilitation
  • Neuro/Stroke Rehabilitation
  • Wounds: Post-Op Wound Aftercare and Skin/Non-Surgical Wound Care
  • Behavioral Health
  • Complex Nursing Interventions
  • Medication Management, Teaching, and Assessment (MMTA):
    • MMTA — Surgical Aftercare
    • MMTA — Cardiac/Circulatory
    • MMTA — Endocrine
    • MMTA — Gastrointestinal Tract/Genitourinary System
    • MMTA — Infectious Disease/Neoplasms/Blood-forming Diseases
    • MMTA — Respiratory
    • MMTA — Other
• Comorbidity Adjustment Based on Reported Secondary Diagnoses
  • None
  • Low
  • High

Case-Mix Variable Information from Outcome and Assessment Information Set (OASIS) Assessment

• Functional Impairment Level (based on 30-day care period)
  • Low
  • Medium
  • High

Labor Adjustments

• The Home Health Prospective Payment System (PPS) bases each 30-day period payment adjustment on wage levels and wage-related costs of providing patient home health care in different geographic areas.
• Beginning January 1, 2023, we’ll cap decreases to the home health wage index in a geographic area so the wage index isn’t less than 95% of the wage index in that area in the prior CY. We apply this 5% cap on negative wage index changes in a budget-neutral manner using wage index budget neutrality factors.
• We base the appropriate wage index to the home health PPS labor portion rate on the geographic area where the patient gets home health services.
• The Office of Management and Budget defines Core-Based Statistical Areas according to each labor market area.
• For the home health PPS, we adjust the labor portion of home health PPS rates using the pre-floor and pre-reclassified hospital wage index.

FY 2023 Wage Index Home Page has more information.

Continuous 60-Day Recertifications

• The home health PPS allows continuous 60-day patient recertification when the patient remains eligible
• We don’t limit the number of continuous 60-day patient recertifications when the patient remains eligible
• Each 60-day certification can include 2, 30-day payment periods
• We require patient recertification at least every 60 days when they need continuous home health care after an initial 60-day certification
• Medicare conditions of participation at 42 CFR 484.55(d)(1) require recertification assessment during the last 5 days of the previous certification period (for example, during the initial 60-day certification period, you must complete the recertification visit on days 56–60)

Notice of Admission

Since January 1, 2022, HHAs no longer submit a no-pay Request for Anticipated Payment for a home health period of care. The new requirements are:

• HHAs submit a 1-time Notice of Admission (NOA) to establish the patient is under a home health POC that covers all 30-day periods until the patient discharges.
• If the HHA doesn’t submit the NOA within 5 calendar days of the start of the patient’s care, we’ll reduce the payment for a POC, including outlier payments, by the number of days from the home health admission date until the date the A/B Medicare Administrative Contractor (MAC) Home Health and Hospice (HHH) accepts the NOA, divided by 30.
• We make no Low Utilization Payment Adjustment (LUPA) per-visit payments for days that fall within the period of care before the NOA submission. This reduction is a provider liability, and the provider can’t bill the patient.

We may waive the consequences of not submitting a NOA on time if we determine the HHA encountered a circumstance that’s exceptional and qualifies for the waiver.

HHAs may submit the NOA under these conditions:

• The certifying physician’s or allowed practitioner’s written or verbal order meets the requirements in 42 CFR 409.43(d) and 42 CFR 484.60(b)
• The initial visit happened within the 60-day certification period and the patient was admitted to home health care

Plan of Care

• The certifying physician or allowed practitioner must periodically review the POC and it must include:
  • The services necessary to meet the patient-specific needs identified in the comprehensive assessment.
  • The responsible disciplines and the frequency and duration of all visits as well as those listed in 42 CFR 484.60(a) that establish the need for services.
  • Remote patient monitoring or other services provided through a telecommunications system. The POC must also describe how using this technology is tied to the patient-specific needs identified in the comprehensive assessment and will help to achieve the goals outlined in the POC. These services can’t substitute for a home visit the provider orders as part of the POC, and we won’t consider a home visit for patient eligibility or payment.
• If the signed POC isn’t available at the time of NOA submission, the HHA must base the submission on 1 of these:
  • A physician’s or allowed practitioner’s verbal order that:
    • Is recorded in the POC
    • Has a patient-condition description and services HHA provides
    • Has a responsible registered nurse’s or qualified therapist’s signed and dated attestation for providing or supervising ordered services in the POC defined in 42 CFR 484.115
    • Is copied into the POC, which is immediately submitted to the physician or allowed practitioner
  • A referral with a required detailed services order signed and dated by the physician or allowed practitioner
• A physician or allowed practitioner, who meets the certification and recertification requirements in 42 CFR 424.22, must sign and date the POC before submitting the claim for each 30-day period
• A physician or allowed practitioner must sign and date any changes in the POC
• If any services are based on a physician’s or allowed practitioner’s oral orders, the registered nurse or qualified therapist (defined in 42 CFR 484.115) responsible for providing or supervising the ordered services must document, sign, and date the receipt
• The physician or allowed practitioner must review the POC at least every 60 days or more frequently if these apply:
  • Patient wants a transfer
  • Change in condition
  • Patient discharged with goals met or there’s no expectation that they’ll need home health care and the patient returns to home health care within 60 days
• The POC is terminated if the patient doesn’t get at least 1 covered SN, PT, SLP, or OT visit in a 60-day period unless the physician or allowed practitioner documents that the interval without this care is appropriate to treating the patient’s illness or injury

Low Utilization Payment Adjustment

• We make LUPA payments for 30-day periods with a low number of visits below the case-mix group’s threshold
• Each of the 432 case-mix group’s threshold determines if the 30-day period gets a LUPA
• For each case-mix group, the 10th percentile value of visits helps create a case-mix, group-specific LUPA threshold of at least 2 for each group
• We pay for a 30-day period with a total number of visits below the LUPA threshold per-visit rather than paying the case-mix adjusted 30-day payment amount
• We pay more for front-loading assessment and administrative costs for LUPA periods that occur as the only period or first period in a sequence of adjacent patient periods
• In CY 2023, we’ll update the LUPA thresholds using data from CY 2021

Providers must submit appropriate claims and supporting documentation for us to apply the LUPA threshold. Documentation must show the:

• Patient’s condition
• Care needs or case-mix assignment

Note: We may adjust a home health claim based on other claims a provider may or may not bill. Those claims could affect the Common Working File and the Health Insurance Prospective Payment System code already billed or paid.

Partial Episode Payments

• We adjust payments if a patient transfers from 1 HHA to another or discharges and re-admits to the same agency within 30 days of the original 30-day period start date.
• We prorate case-mix adjusted payments for 30-day periods of that type based on length of the 30-day period ending in transfer or discharge and re-admission, resulting in partial-period payment.
• We recognize discharge and return to the same HHA during the 30-day episode period only when a patient reaches treatment goals in the original home health POC.
• You must terminate the original home health POC if there’s no anticipated need for more home health services for the rest of the 30-day period.
• We adjust partial episode payments by proportionally adjusting the original 30-day episode payment to reflect the number of days the patient was under HHA care before an intervening event.
• We calculate partial payment adjustments using a span of days (the first billable service date through and including the last billable service date) under the original POC as a proportion of the 30-day period. We then multiply the proportion by the original case-mix and wage index to produce the 30-day payment.
• Partial payment adjustments don’t apply for transfers among HHAs of common ownership. We consider those situations as services provided under arrangement on behalf of the originating HHA by the receiving HHA with ownership interest until the end of the 30-day period.

Outlier Payments

• We allow outlier payments when a 30-day period has unusually large, costly patient home health care needs
• We add these outlier payments to the regular 30-day case-mix and wage-adjusted period payments when estimated costs exceed a threshold amount for each home health resource group

To calculate the imputed 30-day period cost, we:

• Calculate per-unit payment amounts (1 unit = 15 minutes) using national, discipline-specific per-visit payment amounts
• Multiply per-unit amounts by number of units per discipline
• Total all discipline imputed costs (added across 6 disciplines of care)

We compute the wage-adjusted outlier threshold amount by:

• Adding the case-mix and wage-adjusted 30-day period payment amount and wage-adjusted fixed dollar loss (FDL) amount (the national standardized 30-day period payment amount multiplied by the FDL ratio, adjusted to account for area wage differences). In CY 2023, the FDL ratio is 0.35 to ensure aggregate outlier payments don’t exceed 2.5% of total aggregate payments.
• Subtracting the wage-adjusted outlier threshold amount from the wage-adjusted outlier costs.
• Paying 80% of the loss-sharing ratio to HHAs as an outlier payment.
• Capping outlier payments as a percentage of total annual payments for each HHA at 10%.

Consolidated Billing Requirements

We include all HHA patient services and supplies in the home health PPS 30-day period payment rate under a home health POC except:

• Certain covered injectable osteoporosis drugs where patients meet specific criteria
• Durable medical equipment (DME), including home infusion drugs and related services
• Negative pressure wound therapy (NPWT) using a disposable device

You must provide all other covered home health services directly or under arrangement (an outside supplier provides services under arrangement and looks to the HHA for payment). You must bill the HHA for covered home health services.

Home Health Services & Medical Supplies Subject to Consolidated Billing Requirements

We subject these home health services to the consolidated billing home health PPS requirements:

• Part-time or intermittent SN and home health aide services
  • Provide these services any number of days per week if they’re provided (combined) less than 8 hours each day and 28 or fewer hours each week (or subject to review), on a case-by-case basis, as to care need, less than 8 hours each day or 35 or fewer hours per week
• PT
• OT
• SLP services
• Medical social services
• Routine and non-routine medical supplies, except when they’re provided incident to Medicare physician services (parenteral and enteral nutrition, prosthetics, orthotics, DME, and DME supplies aren’t considered medical supplies and aren’t subject to bundling while the patient is under a home health POC)
• Providing NPWT using a disposable device
• Covered osteoporosis drugs defined in Section 1861(kk) of the Social Security Act (but excluding other drugs and biologicals)
• Medical services from a hospital intern or resident-in-training program (if the HHA is affiliated or under common hospital control with an approved teaching program)
• Home health services defined in Section 1861(m) of the Social Security Act under arrangement at hospitals, skilled nursing facilities, or rehabilitation centers when services involve equipment too cumbersome to bring to the home, or provided while the patient is at the facility to get them

These services and supplies must meet consolidated billing requirements and get billed with the 30-day period payment:

• Certain covered injectable osteoporosis drugs (get more billing instructions in Section 90.1 of Medicare Claims Processing Manual, Chapter 10)
• NPWT using disposable device (get more billing instructions in Section 90.3 of Medicare Claims Processing Manual, Chapter 10)

Since January 1, 2021, allowed practitioners and physicians, including clinical nurse specialists, physician assistants, and nurse practitioners, can certify and recertify eligibility, order home health services, and review the POC. Certifying physicians or allowed practitioners must authorize physicians or non-physician practitioners (NPPs) to care for the patients in their absence, but they don’t have to be in the same group practice as the certifying physician or allowed practitioner.

Certifying & Recertifying Eligibility Codes

Certification and recertification claims are Part B claims paid under the Physician Fee Schedule (PFS). Physicians or allowed practitioners use these HCPCS codes for claims when certifying and recertifying home health service eligibility:

• G0179: Physician or allowed practitioner re-certification for medicare-covered home health services under a home health plan of care (patient not present), including contacts with home health agency and review of reports of patient status required by physicians and allowed practitioners to affirm the initial implementation of the plan of care
• G0180: Physician or allowed practitioner certification for medicare-covered home health services under a home health plan of care (patient not present) including contacts with home health agency and review of reports of patient status required by physicians and allowed practitioners to affirm the initial implementation of the plan of care

We won’t cover a physician’s or allowed practitioner’s claim for home health service eligibility certification (G0180) or recertification (G0179) if they didn’t complete the eligibility certification or recertification or if documentation doesn’t support the patient’s home health benefit eligibility.

• Section 30.5.1 of Medicare Benefit Policy Manual, Chapter 7 explains certifying patient eligibility for Medicare home health services
• Section 30.5.1.1 of Medicare Benefit Policy Manual, Chapter 7 discusses the home health face-to-face encounter
• Section 30.5.4 of Medicare Benefit Policy Manual, Chapter 7 outlines billing for certification and recertification

For HHAs that submit the required quality data for CY 2022, the home health payment update is a 4.0% increase.

HHAs not reporting quality data get a 2.0% annual market basket update reduction.

HHAs must submit admission and discharge OASIS assessments for at least 90% of patients with care episodes occurring during the reporting period.

HHAs must report data using OASIS and Home Health Care CAHPS Survey (HHCAHPS). HHAs use additional measures on each claim.

FY 2024 Quality Reporting Measures

• NQF #0167 — Improvement in Ambulation/locomotion
• NQF #0171 — Acute Care Hospitalization During the First 60 Days of Home Health*
• NQF #0173 — Emergency Department Use without Hospitalization During the First 60 Days of Home Health*
• NQF #0174 — Improvement in bathing
• NQF #0175 — Improvement in bed transferring
• NQF #0176 — Improvement in management of oral medications
• NQF #0517 — CAHPS® Home Health Care Survey (experience with care)
• NQF #0526 — Timely Initiation of Care
• NQF #0674 — Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)
• NQF #2631 — Percent of Long-Term Care Hospital (LTCH) Patients With an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
• NQF #3477 — Discharge to Community-Post Acute Care Home Health (HH) Quality Reporting Program (QRP)
• N/A — Drug Regimen Review Conducted with Follow-Up for Identified Issues – Post-Acute Care (PAC) HH QRP
• N/A — Drug Education on All Medications Provided to Patient/Caregiver During All Episodes of Care**
• N/A — Improvement in Dyspnea
• N/A — Influenza Immunization Received for Current Flu Season
• N/A — Changes in Skin-Integrity Post-Acute Care
• N/A — Total Estimated Medicare Spending Per Beneficiary (MSPB) Post-Acute Care (PAC) HH QRP
• N/A — Potentially Preventable 30-Day Post-Discharge Readmission Measure for HH Quality Reporting Program
• N/A — Transfer of Health Information to Provider-Post-Acute Care***
• N/A — Transfer of Health Information to Patient-Post-Acute Care
• N/A — Home Health Within Stay Potentially Preventable Hospitalization

Since April 2022, we publicly report the Percent of Residents Experiencing One or More Falls with Major Injury.

*Starting in CY 2023, the Home Health Within Stay Potentially Preventable Hospitalization measure replaces the Acute Care Hospitalization During the First 60 Days of HH and Emergency Department Use Without Hospitalization During the First 60 Days of Home Care measures.

**Starting January 1, 2023, we’re removing the Drug Education on All Medications Provided to Patient/Caregiver During All Episodes of Care, and HHAs will no longer need to submit OASIS Item M2016.

***Starting January 1, 2023, we’ll collect the Transfer of Health Information (TOH) to Provider Post-Acute Care measure, the TOH to Patient-PAC measure, and certain Standardized Patient Assessment Data Elements. We’ll report data on the 2 TOH measures and the 6 categories of Standardized Patient Assessment Data Elements on the OASIS-E, with the care start, care resumption, and discharges (except for the hearing, vision, race, and ethnicity Standardized Patient Assessment Data Elements, collected at care start only).

Internet Quality Improvement and Evaluation System (iQIES), which includes survey and certification functions, replaces and consolidates the QIES, CASPER, and ASPEN legacy systems.

The Medicare hospice benefit includes these services to reduce pain or disease severity and manage terminal illness:

• Hospice-employed physician, nurse practitioner (NP), or services from other physicians
• Nursing care
• Medical equipment
• Medical supplies
• Pain and symptom management drugs
• Hospice aide and homemaker services
• Physical therapy
• Occupational therapy
• Speech-language pathology services
• Medical social services
• Dietary counseling
• Spiritual counseling
• Individual and (in some cases) family grief and loss counseling before and after death
• Short-term inpatient pain control, symptom management, and respite care
• Other Medicare hospice services specified in the patient’s plan of care (POC) that you offer or arrange as reasonable and necessary, and we may pay

When a patient elects hospice care, we don’t pay for:

• Hospice care from another hospice other than the hospice the patient designates (unless provided under arrangement by the designated hospice)
• Medicare hospice terminal prognosis treatment services or equivalent to hospice care, except:
  • Hospice care from a designated provider
  • Hospice care from another hospice arranged by a designated provider
  • Hospice care from the patient’s attending physician if the physician isn’t an employee of the designated hospice or the hospice pays those services
• Room and board, unless the hospice arranges short-term inpatient care
• Emergency room, hospital, or other inpatient facility; outpatient services; or ambulance transportation, unless the hospice arranges these services or they’re services unrelated to the patient’s terminal prognosis

Attending Physician

Starting January 1, 2022, a Rural Health Clinic (RHC) or Federally Qualified Health Center (FQHC) can bill and get paid under the RHC All-Inclusive Rate (AIR) or FQHC Prospective Payment System (PPS), respectively. This applies when a designated attending physician is an employee of, or has a contract with, those facilities that provide attending physician services during a patient’s hospice election.

To get the RHC AIR or FQHC PPS payment, the RHC or FQHC must report the GV modifier (attending physician not employed or paid under arrangement by the patient's hospice provider) when a physician, NP, or physician assistant (PA) employed by, or contracted with, an RHC or FQHC provides hospice services to a patient electing hospice.

42 CFR 418.52 requires you to provide the patient or representative with verbal and written notice of the patient’s rights and responsibilities during their initial assessment.

42 CFR 418.54 requires you to identify patient, family, and caregiver needs, including physical, emotional, psychosocial, and spiritual care.

42 CFR 418.56(c) requires that the POC state all necessary palliation, terminal illness, and related conditions, items, and services, including:

• Pain and symptom management
• Details about patient and family scope and frequency of service needs
• Measurable POC-expected outcomes
• Patient treatment and drug needs
• Patient medical supplies and appliance needs
• Patient or representative documented understanding, involvement, and plan agreement

You must develop and maintain a communication and integration system among all providers delivering terminally ill patient care. This helps minimize fragmented care and improve quality of life. Clearly identify related and unrelated conditions and those responsible to deliver services for those conditions. You must share information with non-hospice providers delivering services unrelated to the terminal illness, according to 42 CFR 418.56(e)(5).

Hospice aides deliver a significant portion of direct care. A past employer may train an aide (for example, a hospice, home health agency [HHA], or nursing home) and get certified before their current employment. You must evaluate new aides’ competence, ensuring they provide appropriate care.

Fiscal Year (FY) 2022 Hospice Wage Index and Payment Rate Update allows you to observe and assess an aide’s skill competencies with a patient or a pseudo-patient simulation. If the hospice verifies an area of concern during the onsite visit, it must conduct, and the hospice aide must complete, a competency evaluation of the deficient skill and all related skill(s).

According to Medicare Benefit Policy Manual, Chapter 9, the hospice’s medical director, or the hospice interdisciplinary group (IDG) physician designee, and the patient’s attending physician (if they have an attending physician), must certify that the patient is terminally ill no later than 2 calendar days after starting hospice care for their initial 90-day coverage period.

When a patient chooses hospice care, they identify an attending physician who will mainly decide treatment and deliver their medical care. Attending physicians can be a doctor of medicine (MD), a doctor of osteopathy (DO), an NP, or a PA. Only an MD or DO can certify or recertify that the patient is terminally ill. If a patient’s attending physician is an NP or a PA, the hospice medical director or the hospice physician IDG member certifies the patient as terminally ill.

The initial election period certification lasts 90 days. After the initial period, the patient gets another 90-day period and unlimited 60-day election periods. An MD or DO must certify or recertify each election period.

You must document certification in the patient’s clinical record before submitting a claim to your Medicare Administrative Contractor (MAC), and it must have all these items:

• Statement certifying the patient is terminally ill with 6 months or less to live if the terminal illness runs its normal course
• Specific clinical findings and documentation supporting life expectancy of 6 months or less
• Certified physician’s brief narrative explaining clinical findings supporting life expectancy of 6 months or less
• Physician signature(s), certification signature date, and benefit period dates
• Physician or NP face-to-face visit with the hospice patient no more than 30 days before:
  • Third benefit period recertification
  • Each recertification afterwards to decide continued hospice benefits eligibility

When you newly admit a patient in their third or later benefit period, exceptional circumstances may prevent a face-to-face encounter before the benefit period starts. Medicare Benefit Policy Manual, Chapter 9 has more information about exceptional cricumstances.

The hospice physician or NP must document that they had a face-to-face patient encounter. The attestation must:

• Include the face-to-face visit date
• State that the certifying physician got clinical face-to-face findings to determine continued hospice care eligibility

Hospice care is available for 2, 90-day periods and an unlimited number of 60-day periods. Patients meeting eligibility requirements must file an election statement, which must:

• Identify the hospice and attending physician providing care. The patient or representative must acknowledge they chose the attending physician, if applicable.
• Show that the patient or representative understands hospice is for palliative care rather than curative care.
• Show that the patient or representative waives certain Medicare services by electing hospice benefits.
  • You must inform the patient that it’s exceptional and unusual that their services aren’t related to terminal illness.
  • You should supply virtually all needed care.
• Show the effective election date; this means the first day of hospice care or a later date, but no earlier than the election date statement.
• Provide individual hospice cost-sharing information.
• If you find conditions, items, services, and drugs unrelated to the patient’s terminal illness and related conditions that the hospice won’t cover, notify the patient (or representative) of their right to get an election statement addendum. 42 CFR 418.24(c)(1–10) has more information about election statement addendum content requirements.
• Provide Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) information, including the right to immediate advocacy and BFCC-QIO contact information.
• Include the patient’s or representative’s signature.

Notice of Election

You must file a Notice of Election (NOE) with your MAC within 5 calendar days after the hospice election date. You may submit the NOE through electronic data interchange (EDI). MLN Matters® Article SE18007 describes how to submit NOEs. If you file the NOE after the 5-day period, we hold you liable for services between the hospice election date and the NOE filing date.

Note: We allow exceptions when it’s beyond the hospice’s control to file the NOE within 5 calendar days. Section 20.1.1 of Medicare Claims Processing Manual, Chapter 11 has more information.

When you admit patients, you must inform them in writing that their care is subject to QIO review and discuss potential review results. 42 CFR 476.78(b)(3) has more information.

Revoking Hospice Election

If a patient wants to change attending physicians, they must file a signed statement with the hospice indicating the change.

A patient or representative may revoke hospice election at any time. Revoking a hospice election is the patient’s or representative’s choice they make without undue influence from the hospice provider. To revoke the election, the patient must file a written document with the hospice that includes:

• Signed statement saying they revoke hospice care for the remainder of that election period
• Revocation effective date

The patient gives up their remaining days in that election period and their previously waived Medicare coverage restarts.

If a Medicare Advantage (MA) enrollee revokes their hospice election, they can continue services through their MA plan or Medicare Fee-for-Service (FFS) providers (subject to the FFS deductible) until the beginning of the next month when they get services only through their MA plan.

Unless submitting a final claim, you must file a MAC Notice of Termination/Revocation (NOTR) within 5 calendar days after a patient or representative revokes a hospice election, or the patient discharges.

Hospice Patient Discharge

You may only discharge a patient alive if:

• The patient moves out of the hospice service area or transfers to another hospice
• You find the patient is no longer terminally ill
• You discharge for cause that meets requirements in 42 CFR 418.26(3)(i–iv)

Discharging a patient only to avoid exceeding the cap limit violates these regulations and may cause undue distress and potential harm to terminally ill patients who must find care outside the hospice benefit.

Change of Designated Hospice

A patient can change their hospice election designation once each election period with a transfer, which isn’t considered a revocation. To change the designated hospice, the patient must file a signed statement with the hospice where they got care and the newly designated hospice. The statement must have:

• Previous hospice provider name
• New hospice provider name
• Effective date of change

We require HHAs, skilled nursing facilities (SNFs), hospices, and comprehensive outpatient rehabilitation facilities (CORFs) to provide a Notice of Medicare Non-Coverage (NOMNC) to patients ending their Medicare-covered service(s). The NOMNC tells patients how to request a BFCC-QIO determination and lets them request an expedited determination. A patient gets a Detailed Explanation of Non-Coverage (DENC) only if they ask for an expedited determination. The DENC explains specific reasons for ending covered services.

Hospice Level of Care Payment

Even if you don’t provide a service on a given day, we pay for hospice care each day a patient is under hospice election. Payments cover service costs in the patient’s POC, including services directly from, or arranged by, the hospice. We base payments on 4 levels of care to meet the patient’s and family’s needs:

1. Routine home care at:
   1. Higher payment rate for the first 60 hospice care days
   2. Lower payment rate for days 61 and over
2. Continuous home care (CHC)
3. Inpatient respite care (IRC)
4. General inpatient care

We also pay a Service Intensity Add-on (SIA) with the routine daily care rate during the patient’s last 7 days of life, if their care meets these criteria:

• Day is a routine level-of-health care
• Day happens during the patient’s last 7 days of life, and the patient is discharged as deceased
• Registered nurse (RN) or social worker provides direct patient care that day, defined in 42 CFR 418.114(c) and 42 CFR 418.114(b)(3)

The SIA payment is the continuous home care hourly payment rate multiplied by the amount of direct patient care an RN or social worker provides during the 7-day period for a minimum of 15 minutes and up to 4 total hours per day.

• We adjust daily hospice payment rates to account for different market wage rates.
• Each level of care’s base rate has a labor share and a non-labor share. We adjust the base payment rate labor share of the hospice wage index, and annually update the base rates shown on the hospital market basket update. The Social Security Act requires a hospital market basket productivity adjustment reduction.
• For FY 2023, we updated the hospice payment rates by a market basket increase of 4.1%. The updated final payment rate is 3.8% after the 0.3 percentage point reduction per the productivity adjustment. The hospice payment system has a statutory aggregate cap, which limits overall annual hospice payments. The final FY 2023 hospice cap is $32,486.92.

Hospice Regulations and Notices webpage has more information.

Table 2. Hospice Labor Share

Level of Care	Revised Labor Share	Non-Labor Share
Routine Home Care	66%	34%
Continuous Home Care	75.2%	24.8%
Inpatient Respite Care	61%	39%
General Inpatient Care	63.5%	36.5%

Prescription drugs or biologicals — When a patient isn’t a hospice inpatient and getting routine or continuous home care, you may bill a coinsurance amount for each palliative drug or biological prescription. Coinsurance for each prescription is about 5% of its cost to the hospice. You establish the drug copayment schedule. The coinsurance for each prescription can’t be more than $5.00. We don’t cover the patient's prescription coinsurance when they get general inpatient or respite care.

Respite care — You may bill patients a coinsurance amount each respite care day equal to 5% of the Medicare respite care day payment. A patient’s respite care coinsurance liability during a hospice coinsurance period can’t be more than the inpatient hospital deductible for the year the hospice coinsurance period began.

These caps affect Medicare hospice payments:

• We limit the number of inpatient care days that hospices may provide to 20% of a hospice’s aggregate Medicare hospice days (the inpatient cap).
• You may get an aggregate Medicare payment for delivered services. We limit the cap year to the cap amount multiplied by the number of patients served (the aggregate cap) and use 2 methods for counting patient numbers.

The 2023 cap year starts on October 1, 2022, and ends on September 30, 2023. We require updating the hospice aggregate cap by the hospice payment update percentage, rather than using the Consumer Price Index for All Urban (CPI-U) Consumers for a specified time.

The Improving Medicare Post-Acute Care Transformation Act (IMPACT) requires you to renew certifications every 3 years starting April 6, 2015–September 30, 2025. Division CC, section 404 of the Consolidated Appropriations Act, 2021 extended the accounting years affected by the adjustment to the hospice cap calculation until 2030. For accounting years ending after September 30, 2016, and before October 1, 2030, we updated the hospice cap amount by the hospice payment update percentage rather than using the CPI-U.

For FY 2023 and subsequent years, we’ll apply a permanent 5% cap on any decrease to a geographic area’s wage index from its wage index in the previous year, regardless of what caused the decline. A geographic area’s wage index for FY 2023 wouldn’t be less than 95% of its final FY 2022 wage index, regardless of whether the geographic area is part of an updated CBSA.

For subsequent years, a geographic area’s wage index wouldn’t be less than 95% of its previous FY’s wage index. If we base a geographic area’s previous FY wage index on the 5% cap, then the following year’s wage index wouldn’t be less than 95% of the geographic area’s capped wage index in the previous FY.

MA plans must cover all services Medicare FFS covers, except hospice care. MA enrollees get Medicare FFS hospice benefits and may choose treatment unrelated to their terminal prognosis (including care from their attending physician) from providers outside the MA plan. When MA enrollees get services unrelated to their terminal prognosis from Medicare FFS providers (not through their MA plan), we subject them to the 20% coinsurance.

For MA plan patients, check with the MA plan for information on eligibility, coverage, and payment. Each plan can have different patient out-of-pocket costs and specific rules for getting and billing for services. You must follow the plan’s terms and conditions for payment.

MA enrollees needing treatment unrelated to their terminal prognosis may also choose services through their MA plan at the plan cost-sharing level. Benefit costs and coverage may vary by plan. At enrollment and annually thereafter, MA plans must inform enrollees about Medicare hospice option availability and approved hospices in the MA plan’s service area, including:

• Those the MA organization owns, controls, or has a financial interest in
• If it’s common practice to refer patients to hospice programs outside the plan’s service area

On January 1, 2021, we started including the Part A hospice benefit within the MA benefits package as a test through the Hospice Benefit Component of the Value-Based Insurance Design (VBID) Model. This allows us to assess care delivery impact and quality of care, especially palliative and hospice care, when participating MA plans are financially responsible for all Parts A and B benefits.

Hospices not reporting quality data get a 2.0% annual market basket update reduction.

Beginning in FY 2024, hospices not reporting quality data will get a 4% annual market basket update reduction.

FY 2024 Quality Reporting Measures

• National Quality Forum (NQF) #1617 — Patients Treated with an Opioid who are Given a Bowel Regimen
• NQF #1634 — Pain Screening
• NQF #1637 — Pain Assessment
• NQF #1638 — Dyspnea Treatment
• NQF #1639 — Dyspnea Screening
• NQF #1641 — Treatment Preferences
• NQF #1647 — Beliefs/Values Addressed (if desired by the patient)
• NQF #2651 — Communication with Family
• NQF #2651 — Getting Timely Help
• NQF #2651 — Treating Patient with Respect
• NQF #2651 — Emotional and Spiritual Support
• NQF #2651 — Help for Pain and Symptoms
• NQF #2651 — Training Family to Care for Patient
• NQF #2651 — Rating of this Hospice
• NQF #2651 — Willingness to Recommend this Hospice
• NQF #3235 — Hospice and Palliative Care Composite Process Measure—Comprehensive Assessment at Admission
• NQF #3645 — Hospice Visits in Last Days of Life (HVLDL)
• N/A — Hospice Visits When Death is Imminent
• N/A — Hospice Care Index (HCI)

We removed 7 Hospice Item Set (HIS) measures from public reporting on Care Compare and the Preview Reports but continue to have them publicly available in the data catalog no earlier than May 2022:

• NQF #1617 — Patients Treated with an Opioid who are Given a Bowel Regimen
• NQF #1634 — Pain Screening
• NQF #1637 — Pain Assessment
• NQF #1638 — Dyspnea Treatment
• NQF #1639 — Dyspnea Screening
• NQF #1641 — Treatment Preferences
• NQF #1647 — Beliefs/Values Addressed (if desired by the patient)

The Current Measures, Hospice Quality Reporting, and Public Reporting: Key Dates for Providers webpages discuss quality data submission and reporting requirements.

The Extensions & Exemption Requests webpage explains instances where extraordinary or extenuating circumstances are beyond the hospice’s control.

Hospice Outcomes & Patient Evaluation

The Hospice Outcomes & Patient Evaluation (HOPE) tool can help you understand care needs throughout the patient’s dying process and contribute to the patient’s POC. It assesses patient interactions in real-time, as opposed to the HIS retrospective chart review.

• CMS created the inpatient only (IPO) list when creating the OPPS. Although a policy to eliminate this list was finalized in the CY 2021 OPPS and ASC final rule, we stopped that elimination and added a small number of procedures back to the list.
• For CY 2023, we removed 11 services from the IPO list after determining these codes meet the current removal criteria.
• To ensure a standard minimum supervision level for each hospital outpatient service incident to a physician’s service, hospital and critical access hospital (CAH) outpatient therapeutic services physician supervision level is considered general supervision.
• In CY 2023, we’re revising 42 CFR 410.28(e) to allow certain non-physician practitioners, like nurse practitioners, physician assistants, clinical nurse specialists, and certified nurse midwives, to supervise diagnostic testing as authorized under their scope of practice and applicable state law.
• Section 340B allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices. We continue paying 340B-acquired drugs the average sales price, minus 22.5%. For CY 2023, we’re applying a –3.09% reduction to the payment rates for non-drug services to achieve budget neutrality for the 340B drug payment rate change. We exempt sole community hospitals (SCHs), children’s hospitals, and PPS-exempt cancer hospitals from the 340B payment policy. These hospitals continue to report informational modifier TB for 340B-acquired drugs, and we continue to pay the average sales prices, plus 6%.
• For cost reporting periods beginning January 1, 2023, we’ll adjust payments to hospitals under the OPPS for the additional resource costs domestic National Institute for Occupational Safety & Health (NIOSH)-approved surgical N95 respirators to improve hospital preparedness and readiness.

OPPS ambulatory payment classifications (APCs) are the unit of payment in most cases. We assign individual services (HCPCS codes) to APC groups based on similar clinical characteristics and similar costs.

• OPPS assigns a payment status indicator to every HCPCS code, which identifies if the service payment falls under OPPS and (if so) whether it’s paid separately or packaged. The status indicator may provide information about how the code payment falls under OPPS or under another payment system or fee schedule.
• APC payment rate and calculated copayment apply to each APC service.
• Hospitals may get multiple APC payments for patient services on a single day. We discount multiple surgical procedures on the same day.

We sometimes assign new services to New Technology APCs based only on resource-similarity use because we don’t have the cost data to assign to a clinical APC. We set a New Technology APC payment rate at the midpoint of the applicable New Technology APC’s cost range. 42 CFR 419.31 describes the APC system and payment weights.

We pay for some services separately, including, but not limited to:

• Many surgical, diagnostic, and non-surgical therapeutic procedures
• Blood and blood products
• Most clinic and emergency department visits
• Some drugs, biologicals, and radiopharmaceuticals
• Brachytherapy sources
• Corneal tissue acquisition costs
• Certain preventive services
• Certain COVID-19 vaccine administration services

We pay for partial hospitalization on a per diem basis. The payment represents the expected daily facility care costs in hospital outpatient departments and community mental health centers. We replaced the previous 2-tiered partial hospitalizations APC structure with a single APC by provider type for providing 3 or more services per day.

Packaged Costs

• Packaging is a critical OPPS feature or grouping of associated, integral, ancillary, supportive, dependent, and adjunctive services into a primary procedure or service payment.
• Packaging encourages better hospital resource use as we don’t make separate packaged service payments.
• 42 CFR 419.2(b) lists some types of packaged items and services.
• 42 CFR 419.2(c) lists costs not included in the hospital OPPS.
• We typically group our policy package items and services payment under OPPS. It also packages other items and services payment not typically grouped under OPPS.
• A single comprehensive APC payment doesn’t include services we can’t cover under outpatient department services, services we can’t pay for under OPPS statute, and services that require separate payment under OPPS statute.

We determine separately payable medical and surgical rates by multiplying the service’s clinical APC, prospectively established scaled relative weight by a conversion factor (CF) to get a national unadjusted APC payment rate. The relative APC weight measures the resource service needs based on the APC geometric mean services cost.

The CF translates the scaled relative weights into dollar payment rates. The Hospital Outpatient Regulations and Notices webpage has the national unadjusted payment rates and copayments for each HCPCS code in each rulemaking page’s addendums section.

To account for geographic input price differences, we further adjust the labor portion of the national unadjusted payment rate (60%) by the hospital wage index for the area where we make payment. We don’t adjust the remaining 40%.

For CY 2023, we use the Inpatient Prospective Payment System (IPPS) post-reclassified wage index for urban and rural areas to determine the wage adjustments for both the OPPS payment rate and the copayment standardized amount. We limit all copayment amounts to 40% of the maximum APC payment rate.

Hospitals may get these payments added to standard OPPS payments:

• Pass-through payments for delivering specific drugs, biologicals, and device services that meet pass-through status criteria (generally, these items are too new to produce payment rate setting data).
• Individual services outlier payments that cost hospitals much more than the services’ APC group rates. Community mental health centers get a separate, capped hospital outlier threshold.
• Transitional outpatient payments for certain cancer hospitals and children’s hospitals.
• Certain cancer hospitals adjustment.
• Rural adjustment (currently 7.1% increased payment) for most sole community hospital (SCH) services, including rural area essential access community hospitals (EACHs).
• Annual APC review and their relative weights consider:
  • Changes in hospital and medical practices
  • Changes in technology
  • Adding new services and removing obsolete services
  • New cost data
  • Hospital Outpatient Payment Panel recommendations
  • Other relevant information

We calculate the OPPS update factor by reducing the hospital market basket update by a multi-factor productivity adjustment. For CY 2023, we increased the OPPS payment rates by a 3.8% outpatient department fee schedule factor based on the hospital inpatient market basket of 4.1% for inpatient services paid under the hospital IPPS, reduced by a 0.3 percentage point productivity adjustment.

We create other items and service category payment rates through alternative methods, like:

• Separately payable drugs and biologicals
• Separately acquired 340B Program payable drugs and biologicals
• Brachytherapy sources
• Therapeutic radiopharmaceuticals
• Services assigned to New Technology APCs

We update OPPS payment files quarterly to account for mid-year changes, like:

• New pass-through drugs or devices
• New services and procedures to clinical and New Technology APCs
• Removing inpatient only list procedures
• New HCPCS codes added during the year
• Updated payment rates for separately payable drugs and biologicals based on the most recent available average sales price data

We pay for items and services based on annual scaled relative weights and generally don’t update them quarterly. Medicare Claims Processing Manual, Chapter 4 has more APC payment adjustment information.

We apply a PFS-equivalent clinic visit payment rate when an OPPS off-campus provider-based department (PBD) provides the service. For CY 2020, we paid these departments the site-specific PFS clinic visit service rate. The clinic visit is the most billed OPPS service. CY 2019 Hospital OPPS final rule has more update information.

We’re exempting rural SCHs from the site-specific Medicare PFS-equivalent payment for the clinic visit service when an off-campus PBD provides the service, as HCPCS code G0463 describes.

Figure 3. Calculating OPPS Payments

Since January 1, 2022, we increased the penalty for some hospitals that didn’t comply with the Hospital Price Transparency final rule. We set a minimum civil monetary penalty, $300 per day, for smaller hospitals with a bed count of less than 30, and a $10 per bed per day penalty for hospitals with a bed count greater than 30, not to exceed a maximum of $5,500 daily.

The Hospital Outpatient Quality Reporting (OQR) Program is a hospital outpatient department pay-for-reporting quality program. Hospitals that don’t report quality data get a 2.0% annual payment update reduction.

Hospitals qualify for the full OPPS update factor by submitting required quality data for specific quality of care measures. The QualityNet Hospital OQR Program webpage has more information.

We’re offering an alternative pathway for transformative devices with an FDA Breakthrough Device designation to qualify for device pass-through payment status when the substantial clinical improvement criterion wouldn’t apply to these devices. This alternative pathway applies to devices with pass-through payment status on or after January 1, 2020, and devices must still meet the other pass-through status criteria.

First, we’re creating a new G-code to describe dental rehabilitation services that need monitored anesthesia and an operating room. We’re assigning this new G-code to APC 5871 (Dental Procedures), effectively increasing the payment for these dental rehabilitation services from about $200 to about $2,000. Use this code to bill covered services provided to patients with special health needs that require general anesthesia in an operating room for dental care.

Second, we’re clarifying that you should use the existing unlisted CPT code 41899, that’s not assigned to an existing dental code, to bill for covered, non-surgical dental services, or surgical dental services you don’t perform under monitored anesthesia in an operating room.

CPT only copyright 2022 American Medical Association. All rights reserved.

Since July 1, 2020, you must request prior authorization for these outpatient department services:

• Blepharoplasty
• Botulinum toxin injections
• Panniculectomy
• Rhinoplasty
• Vein ablation

Since July 1, 2021, you must request prior authorization for these outpatient department services:

• Cervical fusion with disc removal
• Implanted spinal neurostimulators

Beginning July 1, 2023, you must request prior authorization for this outpatient department service:

• Facet joint interventions

Medical necessity documentation requirements remain the same.

Certification begins with an inpatient admission order. The certification statement helps us pay only for appropriate services.

Medicare Part A pays for IPF services if a physician certifies:

• The patient needs inpatient psychiatric services that could reasonably expect to improve their condition or for diagnostic study; inpatient psychiatric services require active treatment documented in the patient’s hospital records
• Your order meets requirements at 42 CFR 412.3:
  • Qualified, licensed physician orders patient’s admission and has admitting privileges at the hospital, permitted by state law
  • Knowledgeable about patient’s hospital course, medical plan of care, and current condition
  • Decision (order) isn’t delegated to another person on the hospital's medical staff that isn't state-authorized to admit patients, or has no patient-admitting privileges
• The patient needs services at the time of admission or as soon as possible; you must complete and document certification in the patient’s medical record before they discharge:
  • Recertification must happen by the twelfth hospitalization day
  • All other required recertifications happen at least every 30 days
  • Utilization Review Committee can create different review intervals on a case-by-case basis (for example, every third day)

Recertification must include:

• Documented inpatient treatment since the last certification or recertification was, and continues to be, required
• Resonable expectations to improve the patient’s condition or for diagnostic study
• Hospital records showing intensive treatment services, and admission or related services are necessary for diagnostic study or equivalent services
• Proof the patient still needs daily active treatment directly from, or under supervision of, IPF personnel

The physician responsible for the case, or another physician with case knowledge authorized by the responsible physician or the hospital’s medical staff, must sign certifications and recertifications.

Under 42 CFR 412.422, we pay a per diem base rate adjusted by factors for facility and patient resource use. The IPF must provide all necessary Medicare-covered services directly or under arrangement. The IPF PPS payment is payment in full for Medicare-covered inpatient hospital services in an IPF.

Under 42 CFR 409.10, inpatient hospital services don’t include physician services that meet the requirements of 42 CFR 415.102(a) or services of:

• Physician assistants
• Nurse practitioners
• Clinical nurse specialists
• Certified nurse-midwives
• Qualified psychologist services
• Certified registered nurse anesthetists

We pay for these covered professional services separately under Medicare Part B.

Under the IPF PPS, the federal per diem base rate covers all IPF patient costs, including inpatient operating and capital-related costs (routine and ancillary services). It doesn’t include pass-through costs, such as bad debts and graduate medical education.

We calculate the IPF PPS per diem payment after adjusting the IPF PPS per diem base rate for facility and patient characteristics.

Facility Characteristics

• We adjust the federal per diem base rate for geographic differences by adjusting the labor portion (LP) of the base rate with an appropriate IPF wage index
• IPFs in rural locations get a 17% payment adjustment
• IPFs with a qualifying emergency department (ED) get a 31% payment adjustment for the first day’s stay
• IPFs without a qualifying ED get a 19% payment adjustment for the first day’s stay
• Teaching hospitals get paid for indirect medical education costs
• We adjust the federal per diem base rate non-labor portion (NLP) for a Cost of Living Adjustment (COLA) factor for IPFs in Alaska and Hawaii

Patient Characteristics

• Principal psychiatric diagnosis, which determines determines Medicare Severity-Diagnosis Related Group (MS-DRG)
• Age
• Selected comorbidities
• Length of stay (LOS) (a variable per diem adjustment)

Additional IPF Payments

• Electroconvulsive therapy (ECT) treatments.
• IPF-eligible “outlier cases” (cases with extraordinarily high costs) when estimated total case cost exceeds the fixed dollar loss threshold amount multiplied by the IPF’s applicable facility-level adjustments, plus the federal per diem payment amount for the case. We pay 80% of the difference between the total cost and the adjusted threshold amount for the first 9 days, and 60% of the difference for all days after 9.

Calculating IPF Prospective Payment

Step 1. Adjust applicable federal per diem base rate for geographic differences in wages and COLA (Alaska and Hawaii only). The “applicable federal per diem base rate” is either the full federal per diem base rate or the reduced federal IPF per diem base rate for IPFs that don’t report quality data.

Step 2. Calculate the total adjustment factor for all other applicable facility and patient adjustments, except the variable per diem and ED adjustments:

Step 3. Multiply Step 2’s adjustment factor by Step 1’s wage and COLA-adjusted base rate to get a partially adjusted federal per diem base rate, without variable per diem and ED adjustments.

Step 4. Multiply the partially adjusted federal per diem base rate for each day of the stay by its applicable variable per diem adjustment factor. For Day 1, the factor is 1.31 if IPF has qualifying ED or 1.19 if IPF has no qualifying ED.

Step 5. Add the IPF PPS payments for each day of the stay to get the total IPF PPS payment amount.

Calculating ECT Treatment Payment

Multiply ECT treatment units provided during the stay by appropriate wage and COLA-adjusted ECT per treatment amount to get total ECT payment. The appropriate ECT per treatment amount is the full ECT per treatment amount or the reduced ECT per treatment amount for IPFs that don’t report quality data.

When submitting claims, reasonably and consistently record the items and services patients get during an IPF stay. Even though IPFs get a per diem payment, you must completely and accurately report claims charges. This information helps us accurately calculate outlier payments and periodically refine the IPF PPS.

CMS IPF PPS webpage has more information.

The fiscal year (FY) 2023 IPF factor increase is 3.8%, which is a 4.1% market basket update reduced by a 0.3 percentage point productivity adjustment.

IPF PPS Regulations and Notices webpage has more information.

Medicare freestanding and hospital-based IPFs cost report data helps calculate the major market basket stand-alone IPF cost weights:

• We calculate average freestanding IPF LOS from data reported on Worksheet S–3, Part I, Line 14
• We calculate average hospital-based IPF LOS from data reported on Worksheet S–3, Part I, Line 16

Provider Reimbursement Manual — Part 2, Chapter 40, (CMS-2552.10) explains these worksheets.

Market Basket Updates

• We annually adjust the per diem base rate by the IPF market basket update percentage
• The FY 2023 LRS of the federal per diem base rate is 77.4%
• FY 2023 Final IPF PPS Rates and Adjustment Factors Addendum A has the federal per diem base rate and other payment-related updates
• No change to MS-DRG, comorbidity, age, teaching, and rural adjustment factors
• For FY 2023, we’ll continue to base the IPF wage index on the concurrent pre-floor, pre-reclassified IPPS hospital wage index:
  • FY 2023 IPF wage index uses the revised core-based statistical area delineations adopted in FY 2021 based on the Office of Management and Budget’s OMB Bulletin No. 18-04
  • For FY 2021, we began a 2-year transition to mitigate negative wage index changes by applying a 5% cap on any decrease in an IPF’s wage index from the IPF’s final wage index from the last FY; for FY 2023 and subsequent years, we’ll apply a permanent 5% cap on annual wage decreases to smooth year-to-year changes in providers’ wage index payments
• National median CCRs apply to IPFs in these situations:
  • New IPFs that haven’t submitted their first Medicare cost report
  • IPF’s operating or capital CCR exceeds 3 standard deviations above corresponding national urban or rural average (the ceiling)
  • Other IPFs that the Medicare Administrative Contractor (MAC) gets inaccurate or incomplete data from to calculate a CCR

IPFs not reporting quality data get a 2.0% annual market basket update reduction.

FY 2024 Quality Reporting Measures

• National Quality Forum (NQF) #0560 — Patients Discharged on Multiple Antipsychotic Medications with Appropriate Justification
• NQF #0576 — Follow-up After Hospitalization for Mental Illness*
• NQF #0640 — Hours of Physical Restraint Use
• NQF #0641 — Hours of Seclusion Use
• NQF #1659 — Influenza Immunization
• NQF #2860 — 30-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an Inpatient Psychiatric Facility
• NQF #3205 — Medication Continuation Following Inpatient Psychiatric Discharge
• N/A — Alcohol Use Brief Intervention Provided or Offered and SUB-2a Alcohol Use Brief Intervention
• N/A — Alcohol and Other Drug Use Disorder Treatment Provided or Offered at Discharge and the SUB-3a Alcohol and Other Drug Use Disorder Treatment at Discharge
• N/A — Tobacco Use Treatment Provided or Offered and TOB-2a Tobacco Use Treatment
• N/A — Tobacco Use Treatment Provided or Offered at Discharge and TOB-3a Tobacco Use Treatment at Discharge
• N/A — Transition Record with Specified Elements Received by Discharged Patients (Discharges from an Inpatient Facility to Home/Self Care or Any Other Site of Care)
• N/A — Timely Transmission of Transition Record (Discharges from an Inpatient Facility to Home/Self Care or any other Site of Care)*
• N/A — Screening for Metabolic Disorders
• N/A — CDC developed the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) Measure to track COVID-19 vaccination coverage among HCP in facilities like IPFs

IPFs must annually report aggregate total discharges as a single number as well as by payer, age strata, and diagnostic category.

*For FY 2024, we’re removing 2 measures: Timely Transmission of Transition Record (Discharges from an Inpatient Facility to Home/Self Care or Any Other Site of Care) and Follow-up After Hospitalization for Mental Illness (FUH).

For FY 2024 payment determination and subsequent years, we’re adopting voluntary patient-level data reporting for chart-abstracted measures for FY 2023 data to determine payment and mandatory patient-level data reporting for chart-abstracted measures.

For FY 2024 payment determination and subsequent years, we’re adopting the Follow-Up After Psychiatric Hospitalization (FAPH) measure to the IPF Quality Reporting Program (QRP). The FAPH measure will use Medicare Fee-for-Service (FFS) claims to decide the percentage of inpatient discharges from an IPF stay with a principal diagnosis of select mental illness or substance use disorder (SUD) when the patient got a follow-up treatment visit for mental illness or SUD.

IPF QRP webpage has more information.

Under the IRF PPS, IRFs get a pre-determined payment for goods and services provided during each patient’s IRF stay. Federal rates reflect all IRF patient care costs, including routine, ancillary, and capital costs. Federal rates don’t include operating-approved educational activities costs described in CFR 413.75(a)(1) and 42 CFR 413.85(c), bad debts, or hemophilia blood product costs.

To determine the federal payment amount for each IRF patient, we group patients by clinical condition and expected resource use:

• Rehabilitation Impairment Categories (RICs) according to primary IRF admitting condition.
• Case-Mix Groups (CMGs) according to their functional status (motor and cognitive scores) and age.
  • An unweighted motor score determines a patient’s CMG placement. The 18 items scored have an equal weight of 1.
  • Within each CMG, we categorize cases into 1 of 4 tiers based on the patient's comorbidities (conditions secondary to principal admitting diagnosis). We make 1 tier payment for the case based on the patient’s highest-paying tier comorbidity.

We adjust for interrupted stays, short stays less than 3 days, short-stay transfers (transfers to another institutional setting with an IRF length of stay [LOS] less than the average CMG LOS), deaths, and high-cost outlier cases.

For fiscal year (FY) 2024 and subsequent years, we’ll apply a permanent 5% cap on annual wage index decreases to smooth year-to-year changes in providers’ wage index payments.

Facility Characteristics

• We adjust the hospital wage index to reflect geographic wage rate differences.
• We apply an adjustment to the base rate for IRFs that treat a higher proportion of low-income patients.
• IRFs with residency training programs get higher payment rates based on the number of interns and residents trained compared to their average daily census. We cap this adjustment.

We annually update rates to reflect:

• Inflation costs for IRF goods and services using a market basket index calculated for free-standing and hospital-based IRFs
• Changes in local wage rates

The fiscal year (FY) 2023 IRF market basket increase factor is 3.9%, which is a 4.2% market basket update reduced by a 0.3 percentage point productivity adjustment.

Compliance Threshold

• A facility must meet IRF classification requirements in 42 CFR 412.29 to get IRF PPS payment
• 42 CFR 412.29(b) requires at least 60% of the facility’s total inpatient population to need intensive IRF treatment for 1 or more of 13 medical conditions
• We include comorbidities in the compliance threshold if they meet 42 CFR 412.29(b) criteria

Medicare Administrative Contractors Compliance Percentage

• An IRF’s compliance percentage is the percentage of the total inpatient population requiring intensive IRF treatment for 1 or more of 13 medical conditions
• Medicare Administrative Contractors (MACs) use compliance review period data to calculate the compliance percentage
• Each compliance review period (except for new IRFs) is 1 continuous 12-month period, beginning 4 months before starting a cost reporting period and ending 4 months before the next cost reporting period

MACs calculate a compliance percentage using:

• Presumptive Method: MACs use CMS software to analyze IRF PPS impairment group codes and etiologic diagnosis and comorbidity codes. The etiologic diagnosis and comorbidity codes are ICD-10-CM codes on the IRF-PAIs sent to CMS via the iQIES system.
  • If at least 60% of the IRF’s inpatient population requires IRF treatment for 1 or more of the 13 medical conditions in 42 CFR 412.29(b), then the IRF meets the 60% rule.
  • If the IRF doesn’t meet the 60% rule requirements based on the first part of the process, MACs must review IRF Arthritis Verification Report cases ensuring they meet regulatory requirements in the IRF’s presumptive method compliance percentage, explained in Section 140 of the Medicare Claims Processing Manual, Chapter 3.
  • If at least 50% of your inpatient population consists of Medicare Fee-for-Service or Medicare Advantage patients, then your MAC may use the presumptive methodology to determine if you meet the 60% compliance threshold. However, your MAC can always review a random medical records sample if it believes that’s a more accurate way of calculating your compliance percentage. Your MAC must conduct a manual medical review if the IRF doesn’t meet the 60% compliance threshold using the presumptive methodology.
  • A MAC-calculated, random medical record sample always replaces the presumptive compliance percentage review.
• Medical Records Review: MACs analyze a random medical records sample representing IRF inpatients during the compliance review period.

MACs must use the random sample medical record method to calculate the compliance percentage when:

• Facility’s presumptive compliance percentage is less than the required 60% compliance threshold
• Facility’s Medicare population, Medicare Fee-for-Service + Medicare Advantage patients, is less than half its total patient population

MACs must send results to the appropriate CMS Survey & Operations Group (CMS Location(s)). The CMS Location determines an IRF’s classification before the next cost reporting period starts and is effective for the entire cost reporting period.

If the CMS Location doesn’t classify a Medicare provider as an IRF, they aren’t eligible for payment under the IRF PPS. We may pay them under the Inpatient Prospective Payment System (IPPS).

Documentation Requirements

MACs must consider these items in a patient’s IRF medical record when determining if an IRF admission was reasonable and necessary:

• Pre-admission screening
• Individual overall plan of care completed within 4 days of IRF admission
• Physician visit notes
• Patient’s in-house medical record IRF-PAI forms (electronic or paper format)
  • IRF-PAI admission and discharge assessments together after patient-discharge. A corresponding IRF-PAI must match to the IRF claim for Medicare to pay the claim.

Reasonable & Necessary Criteria

For Medicare to pay an IRF claim, the patient’s IRF stay must be reasonable and necessary according to the requirements at 42 CFR 412.622(a)(3)(4)(5) and section 110 of Medicare Benefit Policy Manual, Chapter 1.

Note: We removed the physician post-admission evaluation verifying the patient’s pre-admission screening requirement on October 1, 2020. However, you still need to do a history and physical under the Conditions of Participation (CoP) at 42 CFR 482.24(c)(4)(i)(A).

• Licensed or certified clinician(s) must complete a pre-admission patient screening within 48 hours before IRF admission. Get this information:
  • Detailed, comprehensive review of each patient’s condition and medical history, including:
    • Prior function level
    • Expected improvement level and time expected to reach that level
    • Clinical complications risk
    • Conditions causing rehabilitation
    • Required treatments (for example, physical therapy, occupational therapy, speech-language pathology, prosthetics, or orthotics)
    • Anticipated discharge destination
  • A preadmission screening that includes all the required elements, but that’s conducted more than 48 hours immediately preceding the IRF admission, will be accepted if an update is conducted in person or by phone to document the patient’s medical and functional status within the 48 hours immediately preceding the IRF admission in the patient's medical record at the IRF.
• Interdisciplinary team meetings held at least once each week throughout the IRF stay:
  • Rehabilitation physician may lead the weekly interdisciplinary team meetings by video or phone, with no more documentation. Team meetings should involve a registered nurse with rehabilitation training or experience, a social worker or case manager, and a licensed or certified therapist from each treating therapy discipline.
  • The team conference should include participant names and professional titles. You don’t need signatures from interdisciplinary team meeting participants other than the rehabilitation physician’s concurrence in the form of a signature.
• Patient must:
  • Need active and ongoing therapeutic intervention from multiple therapy disciplines (physical therapy, occupational therapy, speech-language pathology, or prosthetics or orthotics therapy), 1 of which must be physical or occupational therapy.
  • Generally need and get at least 3 hours of therapy per day at least 5 days a week and show measurable improvement in functional capacity or adapting to impairments. The facility staff must deliver the first session within 36 hours from midnight the day of admission. In certain well-documented cases, this intensive rehabilitation therapy program might instead consist of at least 15 hours per week within a 7 consecutive calendar day period, beginning with the date of admission to the IRF.
  • Be stable enough to benefit from intensive IRF services at admission. Patients who are unable to actively participate in, and benefit from, the intensive rehabilitation therapy services because they’re still completing their treatment course in the referring hospital should stay in the referring hospital until they can participate.
  • Have rehabilitation physician document an individualized plan of care by day 4.
  • Have at least 3 face-to-face meetings with rehabilitation physician to assess the patient’s medical and functional status within the first week of admission. Starting the week after admission, a non-physician practitioner, with specialized training and experience, may conduct 1 of the 3 required face-to-face visits each week.

Starting May 12, 2023, rehabilitation physicians or non-physician practitioners must visit IRF patients face-to-face at least 3 times per week, even after the first week.

Note: Only patients admitted before May 11, 2023, were allowed to have telehealth face-to-face visits.

IRF Rules and Related Files has more information.

IRFs not reporting quality data get a 2.0% annual market basket update reduction. IRFs may qualify for a Quality Reporting Program (QRP) reconsideration and exception and extension process.

We’re expanding the IRF quality data reporting requirements, which currently apply to all admitted IRF patients with Medicare Part A FFS and MA plans, so IRFs begin collecting data on all IRF patients, regardless of payer. This policy will ensure all IRF patients are getting the same quality of care and that provider metrics reflect performance across the IRF patient spectrum. This reporting requirement will start with the FY 2026 IRF QRP. Providers collect the IRF-PAI assessment on all patients getting IRF care, regardless of payer, beginning October 1, 2024.

FY 2024 Quality Reporting Measures

• National Quality Forum (NQF) #0138 — National Healthcare Safety Network (NHSN) Catheter Associated Urinary Tract Infection (CAUTI) Outcome Measure
• NQF #0431 — Influenza Vaccination Coverage Among Healthcare Personnel
• NQF #0674 — Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)
• NQF #1717 — NHSN Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure
• NQF #2631 — Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
• NQF #2633 — IRF Functional Outcome Measure: Change in Self-Care for Medical Rehabilitation Patients
• NQF #2634 — IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients
• NQF #2635 — IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients
• NQF #2636 — IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients
• NQF #3561 — Medicare Spending Per Beneficiary (MSPB)-Post Acute Care (PAC) IRF QRP
• NQF #3479 — Discharge to Community-Post Acute Care (PAC) IRF QRP
• Potentially Preventable 30-Day Post-Discharge Re-Admission Measure for IRF QRP
• Potentially Preventable Within Stay Re-Admission Measure for IRF QRP
• Drug Regimen Review Conducted with Follow-Up for Identified Issues-Post-Acute Care (PAC) IRF QRP
• Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
• Transfer of Health (TOH) Information to the Provider Post-Acute Care
• Transfer of Health (TOH) Information to the Patient Post-Acute Care
• COVID-19 Vaccination Coverage among HCP

FY 2023 IRF QRP Changes

• CDC developed the COVID-19 Vaccination Coverage among HCP Measure to track COVID-19 vaccination coverage among IRF HCP.
• FY 2020 IRF PPS Final Rule adopted the TOH-Provider PAC and TOH-Patient PAC Quality Measures.
• FY 2022 IRF PPS Final Rule changed the data specifications to exclude patients discharged to the home under the care of an organized home health service or hospice from the denominator of the TOH-Patient PAC Quality Measure. Final measure specifications for IRF QRP Quality Measures and Standardized Patient Assessment Data Elements (SPADEs) has more technical information about the TOH-Patient Quality Measure and will be updated soon.
• On October 1, 2022, we start collecting TOH Quality Measures and certain Standardized Patient Assessment Data Elements. IRFs must collect this data for both Medicare Part A and MA patients.

IRF QRP webpage has more information.

The fiscal year (FY) 2023 LTCH PPS market basket update is 3.8%, which is a 4.1% market basket update reduced by a 0.3 percentage point productivity adjustment.

The LTCHPPS Regulations and Notices webpage has more information.

The LTCH Prospective Payment System (PPS) uses the Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-DRG) to classify patient stays. MS-LTC-DRGs mirror Medicare Severity Diagnosis-Related Groups (MS-DRGs) that we use in the Inpatient Prospective Payment System (IPPS), weighted to show different resources that LTCH patients use.

We group each patient stay using:

• 1 principal diagnosis
• Up to 24 secondary diagnoses
• Up to 25 surgical procedure codes
• Age
• Gender
• Patient discharge status

We annually update each MS-LTC-DRG based on the latest LTCH discharge data and its predetermined Average Length of Stay (ALOS). We pay LTCHs for each discharge based on the MS-LTC-DRG if it meets exclusion requirements from the site neutral payment rate. We pay for cases assigned to an MS-LTC-DRG based on the federal payment rate, including payment and policy adjustments.

When a patient doesn’t meet specific criteria, we pay LTCH discharges at a site neutral payment rate. The site neutral payment rate is generally the lower of:

• IPPS equivalent to per diem amount (calculated under the Short-Stay Outlier [SSO] policy, including the applicable High-Cost Outlier [HCO] payment)
• Estimated case costs calculated by multiplying allowable charges by the LTCH’s Cost-to-Charge Ratio (CCR)

We exclude site neutral discharges from the payment rate and pay based on the standard federal payment rate if the:

• Provider directly admits the patient from the IPPS hospital and the patient had at least 3 days in an intensive care or coronary care unit but no psychiatric or rehabilitation MS-LTC-DRG LTCH care
• Provider directly admits the patient from the IPPS hospital and the patient got at least 96 hours of LTCH respiratory ventilation services but no psychiatric or rehabilitation MS-LTC-DRG LTCH care

Short-Stay Outlier (SSO), High-Cost Outlier (HCO), fixed-loss amounts, and interrupted stay payment policy adjustments all apply to site neutral and standard federal payment rate discharges except where noted.

Short-Stay Outlier

The SSO policy helps prevent inappropriately paying cases without a full episode of care. SSO payment adjustments apply only to the standard federal payment rate discharges and may happen when a patient:

• Experiences an acute condition that needs urgent treatment or more intensive rehabilitation and discharges to another facility
• Doesn’t need an LTCH-care-level and discharges to another facility
• Discharges to home
• Dies within the first days of LTCH admission
• Exhausts LTCH benefits during the stay

We apply an adjustment when the LOS ranges from 1 day through 5/6 of the ALOS for the MS-LTC-DRG where we group that case. We subject the MS-LTC-DRG payment to the SSO adjustment.

We don’t apply an adjustment when the LOS is more than 5/6 of the ALOS for the MS-LTC-DRG where we group that case. In this situation, the LTCH gets the full MS-LTC-DRG payment.

Note: When calculating the SSO adjustment, we cap the SSO threshold (5/6 of the ALOS for the MS-LTC-DRG) at 25 days. We never subject stays of 25 days or more to the SSO policy.

This policy doesn’t apply to site neutral discharges.

We blend the MS-LTC-DRG per diem amount with what the program would pay under the IPPS, calculated as a per diem and capped at the full IPPS comparable amount.

SSO Payments When Patient Benefits Exhaust During an LTCH Stay

We base LTCH payments on the patient’s covered benefit days until the LOS triggers a full MS-LTC-DRG payment. This means a patient’s remaining benefit days and length of hospital stay affects LTCH payments and may result in an SSO payment adjustment.

Table 3. Benefits Exhaust & LOS is Below MS-LTC-DRG Threshold

If	Then	Example
Patient uses regular episode benefit days during a LOS below the SSO MS-LTC-DRG threshold	Patient pays non-covered days LTCH gets SSO payment for patient’s covered hospital stay	MS-LTC-DRG SSO threshold is 25 days and the patient’s LOS is 20 days; LTCH gets SSO payment Patient benefit days end on day 15 We pay for 15 covered days under the LTCH SSO policy Patient pays for days 16–20

Table 4. Benefits Exhaust & LOS Exceeds MS-LTC-DRG Threshold

If	Then	Example
Patient uses all episode benefit days during a LOS exceeding the SSO MS-LTC-DRG threshold	Patient doesn’t pay for non-covered days (until they reach HCO threshold) LTCH gets full MS-LTC-DRG payment	MS-LTC-DRG SSO threshold is 25 days and patient’s benefit days end on day 30; patient’s LOS is 35 days Patient doesn’t pay for days 31–35 (SSO policy doesn’t apply) LTCH gets full MS-LTC-DRG payment; patient pays for first day stay; LOS qualifies as HCO

Note: We allow 90 covered episode benefit days of care under the inpatient hospital benefit. Each patient has 60 lifetime reserve days. The patient may use these lifetime reserve days to cover non-covered episode days of care exceeding 90 days.

High-Cost Outlier

The HCO policy adjusts the applicable LTCH PPS payment rate (site neutral rate or standard federal rate) for LTCH stays with costs exceeding typical cases of similar case-mix cost. To qualify for an HCO payment, an LTCH’s estimated treatment costs must exceed the outlier threshold. We calculate the applicable outlier threshold as the case’s applicable LTCH PPS payment plus the applicable fixed-loss amount.

The HCO payment equals 80% of the difference between the estimated case-cost and the outlier threshold.

For SSO cases, we calculate the outlier threshold by adding the applicable fixed-loss amount to the adjusted SSO MS-LTC-DRG payment. If the estimated SSO case cost exceeds the outlier threshold, it qualifies for an HCO payment.

We set 2 fixed-loss amounts: 1 for the site neutral payment rate and 1 for the standard federal rate.

The HCO adjustment:

• Improves LTCH PPS hospital- and patient-resource cost accuracy
• Cuts LTCH financial losses from treating patients needing more costly care
• Limits LTCH loss to fixed-loss amount and cost percentages above the marginal cost factor
• Cuts incentives to under-serve high-cost patients

Medicare Administrative Contractors (MACs) use PRICER software to determine if there’s enough medically necessary benefit days in the outlier period. If a patient has enough benefit days, the MAC processes the claim as usual and the LTCH takes no other action. If a patient’s benefit days exhaust, the MAC returns the claim to the LTCH for correction, indicating the correct HCO threshold amount.

HCO Payments When Patient Benefits Exhaust During an LTCH Stay

We make HCO payments for:

• Days the patient has Medicare coverage (regular, coinsurance, or lifetime reserve days) for part of the stay beyond the HCO threshold
• Medically necessary covered cost days when the patient has a benefit day available

Table 5. Patient Benefits Exhaust Before Qualifying for Full LTCH PPS Standard Federal Rate Payment

If	Then	Example
Patient’s benefits exhaust before qualifying for the full MS-LTC-DRG payment Covered care costs exceed the standard federal rate HCO threshold for an SSO adjusted payment	LTCH gets HCO payment with SSO adjusted payment for covered medically necessary benefit days	LTCH admits standard federal rate patient with 5 remaining benefit days grouped to an MS-LTC-DRG with a 30-day ALOS Patient doesn’t have enough regular benefit days to trigger a full MS-LTC-DRG standard federal rate payment (5/6 of MS-LTC-DRG ALOS) qualifying case for an SSO-adjusted payment LTCH-covered services cost during 5 benefit days exceeds the standard federal rate HCO threshold qualifying case HCO payment for all costs above the HCO threshold days 1–5 Patient pays for days 6–discharge

Table 6. Patient Benefits Exhaust After Qualifying for Full Applicable LTCH PPS Payment

If	Then	Example
Patient’s benefits exhaust after qualifying for the full applicable LTCH PPS payment Covered care cost exceeds the applicable HCO threshold	LTCH gets HCO payment with the full LTCH PPS payment for covered medically necessary benefit days	LTCH admits standard federal rate patient with 36 remaining benefit days grouped to an MS-LTC-DRG with a 30-day ALOS On day 33, the patient’s care cost exceeds the standard federal rate HCO threshold qualifying case for the full MS-LTC-DRG standard federal rate payment and the HCO payment for all covered costs (available benefit days) above the HCO threshold Patient pays for days 37–discharge

Table 7. Patient Benefits Exhaust Before Exceeding Applicable HCO Threshold

If	Then	Example
Patient qualifies for the full applicable LTCH PPS payment Patient uses all regular benefit days for the stay before exceeding the applicable HCO threshold	LTCH gets the full LTCH PPS payment (and doesn’t get the HCO payment) Patient pays costs incurred the day after case exceeds the applicable HCO threshold	LTCH admits standard federal rate patient with 36 remaining benefit days grouped to an MS-LTC-DRG with a 30-day ALOS Patient care-cost exceeds the standard federal HCO threshold on day 45 Patient exhausted all benefit days before reaching the HCO threshold; case isn’t eligible for HCO payment Patient doesn’t pay covered costs for days 37–45 Patient pays for days 46–discharge

If the patient’s benefits exhaust during the LTCH stay, determine the:

• Day when the case-cost reaches the applicable HCO threshold (use charges per day and CCR)
• Number of benefit days the patient has left

To calculate the HCO, use the costs for the days after the patient’s case cost reaches the HCO threshold of available benefit days. If the patient remains under care after benefits exhaust, they pay the costs of those remaining days.

Under Medigap or Medicaid, changes to HCO payments under the LTCH PPS outlier reconciliation policy won’t retroactively affect a patient’s lifetime reserve days or coverage status, benefits, and payments.

HCO Fixed-Loss Amounts

• Under the dual-rate LTCH PPS payment structure, we set 2 HCO fixed-loss amounts: 1 for standard federal payment rate cases and 1 for site neutral payment rate cases.
• Fixed-loss amount for standard federal payment rate cases is the amount allowing yearly projected total HCO payments to equal 7.975% of the total LTCH PPS standard federal payment rate payments estimated for that year (full MS-LTC-DRG payments or adjusted SSO amount plus HCO payments).
  • For FY 2023, we determined the outlier fixed-loss amount for standard federal payment rate cases by calculating and averaging 2 fixed-loss amounts: 1 calculated with COVID-19 claims included and 1 with COVID-19 claims excluded. We also used charge inflation factors and CCR adjustment factors based on data before the COVID-19 Public Health Emergency (PHE).
• The applicable HCO threshold for site neutral payment rate cases is the sum of the case’s site neutral payment rate and the IPPS fixed-loss amount. For FY 2023, we set the site neutral case fixed-loss amount to the same as the IPPS fixed-loss amount.
• We estimate each case’s cost using provider specific file (PSF) CCRs:
  • Use the applicable statewide average CCR when the LTCHs’ PSF CCRs aren’t available.
  • MACs estimate a case’s cost by multiplying the Medicare-covered charges by the LTCH’s overall CCR, based on the most recently settled or tentatively settled cost report.
• These CCR revisions or determinations may also apply:
  • We may ask MACs to use an alternate CCR showing recent substantial increases or decreases in a hospital’s charges.
  • LTCHs may ask their MAC(s) to use a higher or lower CCR based on substantial evidence when their CMS Regional Office approves it.
  • MACs annually assign the statewide average CCR to LTCHs with CCRs above the maximum ceiling.
  • MACs use an LTCH’s actual CCR rather than the statewide average LTCH CCR with CCRs below the minimum floor.
  • MACs may use the statewide average CCR when the LTCH CCR isn’t determined (for example, before a new LTCH submits its first Medicare cost report or when data isn’t available to calculate the CCR because it’s missing or incorrect).
• LTCH PPS outlier policy allows for reconciling HCO payments at cost report settlement and looks for differences between the estimated and actual CCR.

Interrupted Stay

An interrupted stay happens when an LTCH discharges a patient to an acute care hospital, inpatient rehabilitation facility (IRF), skilled nursing facility (SNF), swing bed, or home, and the patient readmits to the same LTCH for more medical treatment within a specified period. For example, an LTCH patient discharges for treatment and services unavailable in the LTCH.

There are 2 types of interrupted stays:

• 3-day or less
• Greater than 3-day

Interruption day count begins the day of discharge (first day the patient’s away from the LTCH at midnight).

3-Day or Less Interruption Example

• If an LTCH discharges a patient on September 2, the 3-day or less interrupted stay policy determines payment if the LTCH readmits the patient to the same LTCH on September 2, 3, or 4
• If an LTCH discharges a patient and readmits them to the same LTCH within 3 days, the patient may:
  • Get outpatient or inpatient tests, treatment, or care at an inpatient acute care hospital, IRF, SNF, or swing bed:
    • Outpatient or inpatient care during interruption is part of a single LTCH care episode and bundled into the LTCH payment
    • If a patient gets tests or procedures during a 3-day interruption and the LTCH pays the provider under arrangements, the total patient day count includes all interrupted days
  • Have an intervening patient stay at home for up to 3 days with no tests, treatment, or care:
    • If the patient doesn’t get care during the 3-day interruption, the LTCH can’t use days away in the total LOS
    • However, if the patient gets care during an interruption that the LTCH pays for under arrangements, the LTCH uses all interruption days in that patient’s LOS

Greater Than 3-Day Interruption Example

If a patient discharges from an LTCH on September 2, the greater than 3-day interrupted stay policy determines payment if the patient is readmitted to the same LTCH between September 5 and the applicable provider’s fixed period threshold.

For a greater than 3-day interruption, the LTCH must discharge the patient, admit them directly to an inpatient acute care hospital, IRF, SNF, or swing bed, and readmit them to the original LTCH within a specified period.

Table 8. Greater Than 3-Day Interruption

Facility Discharge to	Interrupted Stay Fixed Period
Inpatient acute care hospital	Between 4–9 consecutive days
IRF	Between 4–27 consecutive days
SNF or swing bed	Between 4–45 consecutive days

• We treat an interrupted stay episode as 1 discharge for payment and make 1 LTCH PPS payment
• Interrupted stays are eligible for HCO payments
• We pay separately for an intervening inpatient stay at the acute care hospital, IRF, SNF, or swing bed

Uninterrupted Stay Examples

• Patient’s facility-stay (acute care inpatient hospital, IRF, SNF, or swing bed) exceeds the fixed-day period
• Patient discharges to a facility type other than an acute care inpatient hospital, IRF, SNF, or swing bed
• Patient discharges to more than 1 facility or goes home between LTCH stays
• If stay disruption doesn’t meet the interrupted stay definition, the original discharge ends the patient’s first stay
• If an LTCH readmits the patient, the second admission begins a new stay
• LTCH gets 2 LTCH PPS payments (full MS-DRG payment or adjusted SSO payment, as applicable) for 2 patient stays:
  • Payment for the first stay
  • Payment for the stay after an LTCH readmission

Interrupted Stay Billing Requirements

• From date is the original admission date.
• Through date is the final discharge date.
• Report payable days in the Covered Days field (value code 80).
• Report interrupted days in the Non-Covered Days field (value code 81).
• Occurrence Span Code (OSC) 74 with dates the patient is absent at midnight (interruptions of more than 1 day).
  • OSC from date is the initial LTCH discharge date.
  • OSC through date is the last LTCH date the patient isn’t present at midnight.
• Don’t change the principal diagnosis when the patient readmits to an LTCH. If the patient has other medical conditions when they return, report the diagnosis codes on the claim.
• Use revenue code 018X to show the number of interruption days.

Discharge Payment Percentage Adjustment

An LTCH’s discharge payment percentage is the ratio of the LTCH’s discharges that got the standard federal rate payment to its total Medicare discharges number under the LTCH PPS. If an LTCH’s discharge payment percentage for a cost reporting period isn’t at least 50%, this payment adjustment policy applies after we calculate the percentage and notify the LTCH. For cost reporting periods subject to this adjustment, the discharge payment percentage adjustment is:

• An amount like the hospital IPPS payment
• An added HCO-cases payment based on the fixed-loss amount for an IPPS hospital in effect at the time of the LTCH discharge

The payment adjustment ends when the calculated cost reporting period’s discharge payment percentage is at least 50%. We may subject the LTCH to this adjustment again if, after reinstatement, the discharge payment percentage falls below 50%.

LTCHs subject to a cost reporting period payment adjustment can get a special probationary reinstatement. They can do this by getting the payment adjustment delayed if, for at least 5 consecutive months of the 6 months before the cost reporting period, they calculate the discharge payment percentage to at least 50%.

For any cost reporting period that the payment adjustment would apply without a delay, the payment adjustment applies for all discharges if the discharge payment percentage isn’t at least 50%.

LTCHs not reporting quality data get a 2.0 percentage point reduction to the annual market basket update. LTCHs may qualify for a Quality Reporting Program (QRP) reconsideration and exception and extension process.

FY 2024 Quality Reporting Measures

LTCH Continuity Assessment Record and Evaluation (CARE) Data Set Measures:

• National Quality Forum (NQF) #0674 — Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)
• NQF #2631 — Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
• NQF #2631 — Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
• NQF #2632 — Functional Outcome Measure: Change in Mobility Among Long-Term Care Hospital Patients Requiring Ventilator Support
• Drug Regimen Review Conducted with Follow-Up for Identified Issues-Post Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)
• Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
• Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of the LTCH Stay
• Ventilator Liberation Rate
• Transfer of Health Information to the Provider Post-Acute Care
• Transfer of Health Information to the Patient Post-Acute Care

Data for the National Healthcare Safety Network (NHSN) measures submitted to the CDC:

• NQF #0138 — National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure
• NQF #0139 — National Healthcare Safety Network (NHSN) Central Line-Associated Blood Stream Infection Outcome Measure
• NQF #0431 — Influenza Vaccination Coverage Among Healthcare Personnel
• NQF #1717 — National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-onset Clostridium difficile Infection Outcome Measure
• COVID-19 Vaccination Coverage among Healthcare Personnel (HCP)

Medicare Fee-for-Service claims-based measures. LTCH QRP data collection or submission is no longer associated with these measures:

• NQF #3480 — Discharge to Community-Post-Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)
• NQF #3562 — Medicare Spending Per Beneficiary-Post-Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)
• Potentially Preventable 30-Day Post-Discharge Readmission Measure for Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)

In FY 2022, we finalized proposals to begin publicly reporting:

• Quality measures with fewer than standard numbers of quarters due to the COVID-19 PHE exemptions
• Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of LTCH stay
• Ventilator Liberation Rate

LTCH QRP webpage and LTCH QRP FAQs have more information.

Payment rates include an add-on to the Medicare Part B services cost-estimate we pay for SNF patients during a Part A covered stay.

We base the standardized per diem rates on national data from urban and rural areas. Case-mix and wage adjustments apply to these per diem rates. We pay SNFs at the full federal rate.

Federal rate adjustments reflect:

• For FY 2023 and subsequent years, a permanent 5% cap on any decrease to a provider’s wage index from its wage index in the previous year
  • A SNF’s wage index for FY 2023 wouldn’t be less than 95% of its final FY 2022 wage index, regardless of whether the SNF is part of an updated Core-Based Statistical Area (CBSA)
  • For subsequent years, a provider’s wage index wouldn’t be less than 95% of its previous FY’s wage
• The patient case-mix (showing the number of resources typically needed for each patient’s clinical condition identified during the resident assessment process) using the Patient Driven Payment Model (PDPM) patient classification system

We update federal rates annually to reflect:

• Cost changes in SNF care goods and services using the SNF market basket index. The FY 2023 growth rate of the 2018-based SNF market basket is 3.9%.
• A 0.3 percentage point SNF market basket index productivity adjustment, showing provider productivity increases that could reduce the cost of delivering services.
• A forecast error adjustment when the difference between forecasted and actual changes in the market basket exceeds a 1.5% threshold for the most recently available final FY data.
• Changes in local wage rates using the latest hospital wage index.
• Changes in facility performance in the SNF Value Based Purchasing (VBP) Program.

List of SNF Federal Regulations webpage has more information.

PDPM classifies patients into 5 separate Case-Mix Index (CMI) adjusted components:

1. Physical Therapy (PT)
2. Occupational Therapy (OT)
3. Speech-Language Pathology (SLP)
4. Nursing
5. Non-Therapy Ancillary (NTA)

Under the PDPM, only PT, OT, and NTA payments get variable per diem (VPD) resource-use adjustment rate changes over the stay.

Each patient classification component uses different measures:

• PT: Clinical Category, Functional Score
• OT: Clinical Category, Functional Score
• SLP: Presence of Acute Neurologic Condition, SLP-related Comorbidity or Cognitive Impairment, Mechanically Altered Diet, Swallowing Disorder
• Nursing: Functional Score
• NTA: NTA Comorbidity Score

To calculate each payment component, multiply the CMI linked to the patient’s Case Mix Group (CMG) by the wage-adjusted component base rate, then by the VPD schedule-specific day, when applicable. Add each component payment to the non-case mix component payment rate to create the patient’s PDPM per diem rate.

Figure 4. Calculating PDPM Classification

SNF PDPM Calculation Worksheets have more information.

Clinical Category & Functional Status

PT and OT components use 2 classifications: clinical category and functional status.

Clinical Category

We base the clinical category on the primary SNF stay diagnosis code by mapping the ICD-10-CM codes on the Minimum Data Set (MDS) in Item I0020B to a PDPM clinical category.

A surgical procedure during the previous inpatient stay may adjust the clinical category and map to 1 of these primary diagnosis clinical categories:

• Acute Infections
• Acute Neurologic
• Cancer
• Cardiovascular and Coagulations
• Major Joint Replacement or Spinal Surgery
• Medical Management
• Non-Orthopedic Surgery
• Non-Surgical Orthopedic/Musculoskeletal
• Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery)
• Pulmonary

Mapping the ICD-10-CM diagnosis or surgical category classifies a SNF resident into each of the clinical categories. Each year we consider stakeholder ICD-10-CM mapping suggestions. The PDPM webpage has more information.

Given similar costs among certain PT and OT clinical categories, we grouped certain patient clinical classification categories together.

PDPM PT & OT Clinical Categories

• Major Joint Replacement or Spinal Surgery
  • Major Joint Replacement
  • Spinal Surgery
• Non-Orthopedic Surgery and Acute Neurologic
  • Non-Orthopedic Surgery
  • Acute Neurologic
• Other Orthopedic
  • Non-Surgical Orthopedic/Musculoskeletal
  • Orthopedic — Surgical Extremities Not Major Joint
• Medical Management
  • Acute Infections
  • Cancer
  • Cardiovascular & Coagulations
  • Medical Management
  • Pulmonary

Functional Status

We calculate the PDPM PT and OT functional score in Table 9 using MDS 3.0 data based on 10 Section GG items that proved highly predictive of PT and OT costs per day:

• 2 bed mobility items
• 3 transfer items
• 1 eating item
• 1 toileting item
• 1 oral hygiene item
• 2 walking items

Table 9. Section GG Items Included in PT & OT Functional Score

Section GG Item	Functional Score Range
GG0130A1 — Self-care: Eating Admission Performance	0–4
GG0130B1 — Self-care: Oral Hygiene Admission Performance	0–4
GG0130C1 — Self-care: Toileting Hygiene Admission Performance	0–4
GG0170B1 — Mobility: Sit to Lying Admission Performance	0–4 (average of 2 items)
GG0170C1 — Mobility: Lying to Sitting on Side of Bed Admission Performance	0–4 (average of 2 items)
GG0170D1 — Mobility: Sit to Stand Admission Performance	0–4 (average of 3 items)
GG0170E1 — Mobility: Chair- or Bed-to-Chair Transfer Admission Performance	0–4 (average of 3 items)
GG0170F1 — Mobility: Toilet Transfer Admission Performance	0–4 (average of 3 items)
GG0170J1 — Mobility: Walk 50 Feet with 2 Turns	0–4 (average of 2 items)
GG0170K1 — Mobility: Walk 150 Feet	0–4 (average of 2 items)

Table 10. Section GG Items Included in Nursing Functional Score

Section GG Item	Functional Score Range
GG0130A1 — Self-care: Eating	0–4
GG0130C — Self-care: Toileting Hygiene	0–4
GG0170B1 — Mobility: Sit to Lying	0–4 (average of 2 items)
GG0170C1 — Mobility: Lying to Sitting on Side of Bed	0–4 (average of 2 items)
GG0170D1 — Mobility: Sit to Stand	0–4 (average of 3 items)
GG0170E1 — Mobility: Chair- or Bed-to-Chair Transfer	0–4 (average of 3 items)
GG0170F1 — Mobility: Toilet Transfer	0–4 (average of 3 items)

Under PDPM, we assess a patient’s cognitive status using the Brief Interview for Mental Status (BIMS). In cases where you can’t complete the BIMS, complete a Staff Assessment for Mental Status. We use the Cognitive Performance Scale (CPS) to score the patient based on the Staff Assessment responses. We base the new PDPM cognitive score on the Cognitive Function Scale (CFS), which combines scores from the BIMS and CPS into 1 scale that compares cognitive function across all patients.

These 12 SLP-related comorbidities predict higher SLP costs:

• ALS
• Aphasia
• Apraxia
• Dysphagia
• Laryngeal Cancer
• Oral Cancers
• Speech & Language Deficits
• Hemiplegia or Hemiparesis
• CVA, TIA, or Stroke
• Tracheostomy Care (while a resident)
• Traumatic Brain Injury
• Ventilator or Respirator (while a resident)

The PDPM webpage has more information about mapping between ICD-10-CM diagnoses and SLP comorbidities.

After completing the BIMS or CPS, use the cognitive measure classification methodology in Table 11 to determine the BIMS and CPS scores.

Table 11. Cognitive Measure Classification

PDPM Cognitive Level	BIMS Score	CPS Score
Cognitively Intact	13–15	0
Mildly Impaired	8–12	1–2
Moderately Impaired	0–7	3–4
Severely Impaired	N/A	5–6

NTA Comorbidity Score

We found NTA costs increase with 50 conditions and extensive services:

• Providers report these conditions and extensive services on the MDS 3.0 with the ICD-10-CM codes identified in Item MDS I8000. PDPM has SNF PPS policy changes along with case-mix changes.
• The PDPM NTA accounts for relative costliness between comorbidity scores and comes from a patient’s weighted comorbidities count, rather than a simple comorbidities count.
• To get this weighted count, we assign points between 1–8 to each of the 50 PDPM comorbidities to classify the patient’s NTA based on its relative costliness.

To determine the patient’s NTA comorbidity score, determine all the patient’s qualifying comorbidities and add each comorbidity’s points. This sum is the patient’s NTA comorbidity score putting that patient into an NTA component classification group. The NTA Commorbidity Score fact sheet lists these comorbidities and scores.

Streamlined Assessment Schedule

• PDPM PPS assessments include:
  • Initial 5-day PPS assessment
  • Interim Payment Assessment (IPA), an optional assessment completed at any point during the patient’s stay when clinical change occurs
  • Discharge assessment
• Providers bill default Health Insurance Prospective Payment System (HIPPS) late assessments code for non-compliant days
• Use the 5-day assessment HIPPS code for the rest of the stay unless the provider completes an IPA
• Late assessments affect VPD (for example, if a 5-day assessment is 2 days late, we adjust VPD for days 1 and 2 and calculate it using the default HIPPS code)
• 5-day assessment HIPPS code controls payment beginning on day 3 of the VPD schedule

PDPM HIPPS Coding

The PDPM HIPPS algorithm:

• Character 1: PT and OT Payment Group
• Character 2: SLP Payment Group
• Character 3: Nursing Payment Group
• Character 4: NTA Payment Group
• Character 5: Assessment Indicator

IPA Item Set

• Providers may complete the IPA to report the patient’s PDPM classification change with no VPD schedule change
• IPA changes payment starting on the assessment review date, ending when the Part A stay stops, unless the provider completes another IPA

State Assessments

• States can choose PDPM item sets to calculate Medicaid payments.
• Each state determines if providers use PDPM comparisons and payment data for Medicaid. If so, states may require Omnibus Budget Reconciliation Act (OBRA) PDPM assessment data such as comprehensive and quarterly assessments.
• These item sets use Section GG, Item I0020B ICD-10-CM primary medical condition and J2100 recent surgery requiring active SNF care.

MDS 3.0 Technical webpage has more information.

MDS Items

• Section I: SNF Primary Diagnosis: I0020B lets providers use an ICD-10-CM code to report a patient’s primary diagnosis. This item asks, “What’s the main reason for admitting this person to the SNF?” Code Item I0020B when Item I0020 is coded as any response 1–13. We retired Item I0020A. Use only I0020 and I0020B.
• Section J: Patient Surgical History: J2100–J5000 capture major surgical procedures during the hospital stay immediately before SNF admission. We use these items with the diagnosis captured in I0020B to classify patients into PT and OT case-mix categories. PDPM Classification Walkthrough instructions have more information.
• Section O: Discharge Therapy Items: MDS, Section O uses Items O0425A1–O0425C5 for each therapy discipline mode (for example, individual, group, or concurrent therapy), and therapy amount (in minutes) the patient gets. Users get an error message if that discipline’s group and concurrent minutes total more than 25% of total therapy.
• Section GG: Interim Performance: To get a patient’s interim performance, use MDS Section GG items for patient functional assessments. The new column look-back period is a 3-day window before the IPA’s Assessment Reference Date (ARD).
• Swing Bed PPS PDPM Assessment uses several existing MDS items:
  • K0100: Swallowing Disorder
  • I1300: Inflammatory Bowel Disease
  • I4300: Active Diagnosis: Aphasia
  • O0100D2: Special Treatments & Programs: Suctioning Post-Admit Code
• Existing MDS item added to the 5-day PPS Assessment and IPA:
  • I1300: Inflammatory Bowel Disease

Concurrent & Group Therapy Limit

• The PDPM combined limit for both concurrent (1 therapist with 2 patients doing different activities) and group therapy (1 therapist with 2–6 patients doing the same or similar activities) can’t equal more than 25% of the therapy that SNF patients get for each therapy discipline.
• The PPS Discharge Assessment checks therapy limit compliance. It has the number of minutes per mode, per discipline, for the entire PPS stay.

Concurrent and Group Therapy Limit fact sheet has more information about calculating therapy minutes.

Interrupted SNF Stay Policy

An interrupted SNF stay happens when a patient leaves Part A-covered SNF care and then re-admits to Part A-covered SNF care in the same SNF (not a different SNF) within the interruption window.

• The interruption window is a 3-day period beginning on the first non-covered day after a Part A-covered SNF stay and ending at 11:59 pm on the third consecutive non-covered day.
• The first non-covered day may be different if the patient leaves the facility or Part A coverage.
  • If the patient physically leaves the SNF, the first interruption window is the departure day.
  • If the patient stops Part A coverage but stays in the SNF, the first interruption window is the day after the final Part A coverage day.
• If the patient meets both conditions, we consider the subsequent stay a continuation of the last interrupted stay because of VPD and assessment schedules.
  • The VPD schedule continues from the last discharge day. For example, if the SNF patient discharges from Part A on day 17 (that is, day 17 was the last covered SNF day), payment rates start on day 18 upon re-admission.
  • The assessment schedule continues from the Part A discharge day. We don’t require a new 5-day assessment when the patient re-admits, but the provider may decide to complete the IPA.
• If the patient re-admits to the same SNF outside the interruption window, or in any case when the patient re-admits to a different SNF (regardless of length of time between stays), the Interrupted Stay Policy doesn't apply and we consider the subsequent stay a new stay.
  • In these cases, the VPD schedule resets to day 1 payment rates, and the assessment schedule also resets to day 1, requiring a new 5-day assessment.

Interrupted Stay fact sheets have more information.

Administrative Level of Care Presumption Under PDPM

• SNF PPS administrative presumption automatically classifies a patient who’s correctly assigned 1 of the designated, more intensive case-mix classifiers on the 5-day PPS assessment to a SNF level of care through the assessment reference date.
• Patients not assigned to a designated classifier get an individual determination using existing administrative criteria. This doesn’t automatically classify as meeting or not meeting the level of care definition.
• PDPM classifiers designated under this administrative presumption use:
  • Nursing groups covered by Extensive Services, Special Care High, Special Care Low, and Clinically Complex nursing categories
  • PT and OT groups TA, TB, TC, TD, TE, TF, TG, TJ, TK, TN, and TO
  • SLP groups SC, SE, SF, SH, SI, SJ, SK, and SL
  • NTA component’s uppermost (12+) comorbidity group

Administrative Level of Care Presumption under the PDPM fact sheet has more information.

PDPM Payment for AIDS Patients

PDPM focuses AIDS patient costs by assigning the highest classification point value (8 points) of any condition or service under its NTA component and adds 18% to the nursing component.

PDPM Payments for SNF Patients with HIV/AIDS fact sheet has more information.

The Consolidated Billing (CB) provision is like hospital bundling. It requires SNFs to include all Medicare-covered services a patient gets during a covered Part A stay on the Part A bill, except a small list of excluded services billed separately under Part B by an outside entity.

Whether Part A covers the patient’s stay, CB requires SNFs to bill us for all patient PT, OT, and SLP services. You must submit all Part A stay claim services performed by an outside entity, except specifically excluded services outside the PPS bundle, which are separately billable under Part B.

While CB excludes the services above and applies to the practitioner’s personally performed professional services, the exclusion doesn’t apply to a physician’s incident to services provided by someone else as incident to the practitioner’s professional service. We subject these incident to services provided to SNF residents by others to CB and, accordingly, the SNF must bill us.

Consolidated Billing has a list of services categorically excluded from SNF CB. Learn more about CB in the SNF Consolidated Billing web-based training.

The SNF Quality Reporting Program (QRP) applies to freestanding SNFs, SNFs affiliated with acute care facilities, all non-critical access hospitals (CAHs), and non-swing bed rural hospitals.

SNFs not reporting quality data get a 2.0% annual market basket update reduction. SNFs may qualify for a QRP reconsideration and exception and extension.

FY 2024 Quality Reporting Measures

• National Quality Forum (NQF) #0674 — Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)
• NQF #0431 — Influenza Vaccination Coverage among Healthcare Personnel (HCP)
• NQF #2631 — Application of Percent of Long-Term Care Hospital Patients (LTCH) with an Admission and Discharge Functional Assessment and a Care Plan that Addresses Function
• NQF #2633 — Application of IRF Functional Outcome Measure: Change in Self-Care for Medical Rehabilitation Patients
• NQF #2634 — Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients
• NQF #2635 — Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients
• NQF #2636 — Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients
• NQF #3481 — Discharge to Community (DTC) — Post Acute Care (PAC) SNF QRP
• Potentially Preventable 30-Days Post-Discharge Readmission Measure (PPR) for SNF QRP
• Medicare Spending Per Beneficiary (MSPB) — PAC SNF QRP
• Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
• Drug Regimen Review Conducted with Follow-Up for Identified Issues — PAC SNF QRP
• Transfer of Health (TOH) Information to the Provider — Post-Acute Care (PAC)
• Transfer of Health (TOH) Information to the Patient — Post-Acute Care (PAC)
• SNF Healthcare Associated Infections (HAI) Requiring Hospitalization
• CDC developed the COVID-19 Vaccination Coverage among HCP Measure to track COVID-19 vaccine coverage among HCP in facilities like SNFs

SNFs must report certain standardized Social Determinants of Health (SDOH), including race, ethnicity, preferred language, interpreter services, health literacy, transportation, and social isolation patient assessment data elements.

SNF QRP webpage has more information.

Under the SNF Value-Based Purchasing (VBP) Program, we base SNF performance payments on the SNF 30-Day All-Cause Re-admission Measure (SNFRM) (NQF #2510). We’ll soon transition the SNFRM to the Skilled Nursing Facility Potentially Preventable Readmissions after Hospital Discharge (SNFPPR) measure. SNFs get incentive payments at the start of each FY. The SNFRM and SNFPPR assess the risk-adjusted rate of readmissions to hospitals for SNF residents within 30 days of discharge from a previous hospital stay.

We reduce the adjusted federal per diem rate by 2% and adjust the resulting rate by the earned FY SNF amount.

The claim-based SNFRM determines the risk-standardized rate of all-cause, all-condition, and unplanned Medicare Fee-for-Service SNF patients’ hospital readmissions, discharged within 30 days from an Inpatient Prospective Payment System (IPPS) hospital, CAH, or psychiatric hospital.

SNFs get quarterly and annual performance reports. We use this data to publicly report SNF performance information on the Care Compare website.

42 CFR 413.338 has more information.