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

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

SNF VBP Program Overview

The Centers for Medicare & Medicaid Services (CMS) awards incentive payments to skilled nursing facilities (SNFs) through the SNF VBP Program to encourage SNFs to improve the quality of care they provide to patients. For the Fiscal Year (FY) 2025 Program year, performance in the SNF VBP Program is based on a single measure of all-cause hospital readmissions.

In Section 215 of the Protecting Access to Medicare Act of 2014 (PAMA), Congress added Sections 1888(g) and (h) to the Social Security Act, which required the Secretary of the Department of Health and Human Services (HHS) to establish a SNF VBP Program. CMS began applying incentive payments for SNFs on October 1, 2018.

PAMA specifies that under the SNF VBP Program, SNFs:

  • Are evaluated by their performance on a hospital readmission measure;
  • Are assessed on both improvement and achievement, and scored on the higher of the two;
  • Receive quarterly confidential feedback reports containing information about their performance; and
  • Earn incentive payments based on their performance.

All SNFs paid under Medicare’s SNF Prospective Payment System (PPS) are subject to the SNF VBP Program. Inclusion in the SNF VBP Program does not require any action on the part of SNFs.

In Section 111 of the Consolidated Appropriations Act, 2021, Congress amended Section 1888(h) of the Social Security Act to allow the HHS Secretary to apply up to nine additional measures to the SNF VBP Program. CMS adopted additional measures in the FY 2023 SNF PPS final rule (pages 47564–47580) and the FY 2024 SNF PPS final rule (pages 53276-53304). For more information about the SNF VBP Program’s measures, see the SNF VBP Program Measures webpage.

SNF VBP Program Funding

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

CMS redistributes 60% of the withhold to SNFs as incentive payments, and the remaining 40% of the withhold is retained in the Medicare Trust Fund, as finalized in the FY 2018 SNF PPS final rule (pages 36619–36621). CMS applies incentive payments prospectively to all Medicare fee-for-service (FFS) Part A claims paid under the SNF PPS for the applicable Program year (beginning October 1).


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Page Last Modified:
01/19/2024 08:49 AM