CMS finalizes fiscal year 2014 payment and policy changes for Medicare skilled nursing facilities
On July 31, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a final rule [CMS-1446-F] outlining fiscal year (FY) 2014 Medicare payment rates for skilled nursing facilities (SNFs). The major provisions of the final rule are summarized below.
Changes to payment rates under the SNF Prospective Payment System (PPS) for FY 2014
Based on the changes contained within this final rule, CMS estimates that aggregate payments to SNFs will increase by $470 million, or 1.3 percent, for FY 2014 relative to payments in FY 2013. This estimated increase is attributable to the 2.3 percent market basket increase, reduced by the 0.5 percentage point forecast error correction (explained below) and further reduced by the 0.5 percentage point multi-factor productivity adjustment required by law.
The FY 2014 SNF PPS payment rates and policies will be effective on October 1, 2013.
Revise and rebase the market basket
The Medicare statute requires CMS to establish a SNF market basket index that reflects changes over time in the prices of an appropriate mix of goods and services included in covered SNF services. CMS has developed a SNF market basket index that encompasses the most commonly used cost categories for SNF routine services, ancillary services, and capital-related expenses. The SNF market basket index is a factor used to update the SNF PPS payments on an annual basis. CMS is rebasing and revising the SNF market basket for FY 2014 and subsequent years to reflect more recent data. The current SNF market basket reflects data from FY 2004 and CMS is updating the SNF market basket using data from FY 2010. In addition, CMS will make changes to the components of the SNF market basket index by adding five new cost categories and dividing the existing Nonmedical Professional Fees cost category into two separate categories, labor-related and non labor-related Nonmedical Professional Fees (for a total of 29 cost categories), and revising several price proxies, including the price proxy for the Wages and Salaries and Employee Benefit cost component.
Reporting of distinct therapy days
To ensure accuracy in case-mix assignment and payment, CMS is adding an item to the Minimum Data Set (MDS) to record the number of distinct calendar days of therapy provided by all the rehabilitation disciplines to a beneficiary over the seven-day look-back period. CMS is clarifying that the qualifying condition for the Medium Rehab (RM) Category requires five distinct calendar days of therapy. Similarly, CMS is clarifying that the qualifying condition for the Low Rehab (RL) Category requires three distinct calendar days. Currently, the number of days for each therapy discipline reported on the MDS is summed without regard to the number of separate and unique days per week during which the patient receives therapy services across all rehabilitation disciplines. This results in some residents qualifying inappropriately for an RM or RL Resource Utilization Group (RUG). The addition to the MDS ensures SNFs are paid accurately for the therapy services they provide to their residents.
Forecast error correction
A forecast error correction is applied when the difference between the actual and projected market basket percentage change for a given year (the most recent available FY for which there is final data) exceeds the 0.5 percentage point threshold. While CMS normally reports the forecast error to one significant digit, such reporting makes it difficult to determine if the threshold has been exceeded in those instances where the difference between the projected and actual market basket percentage change rounds to 0.5 percentage point. Therefore, only in those instances where the difference between the projected and actual market basket percentage change rounds to 0.5 percentage point at one significant digit, CMS will report the difference to the second significant digit to determine if the threshold has been exceeded. The most recent available FY for which there is final data is FY 2012. For FY 2012, the projected market basket percentage change exceeded the actual market basket percentage change by 0.51 percentage point. As the projected market basket percentage change exceeded the actual market basket percentage change by an amount greater than the 0.5 percentage point threshold, the FY 2014 market basket update will include a downward adjustment of 0.5 percentage point.
A link to the final rule, which will be published in the Federal Register on August 6, 2013, is available at: https://www.federalregister.gov/public-inspection.
For further information about the SNF PPS, please visit http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html.