Fact Sheets

Fiscal Year 2020 Payment and Policy changes for Medicare Skilled Nursing Facilities (CMS-1718-F)

Fiscal Year 2020 Payment and Policy changes for
Medicare Skilled Nursing Facilities (CMS-1718-F

Today, the Centers for Medicare & Medicaid Services (CMS) issued a final rule [CMS-1718-F] for Fiscal Year (FY) 2020 Medicare payment rates and quality programs for skilled nursing facilities (SNFs). This final rule is part of our continuing efforts to strengthen the Medicare program by better aligning payment rates for these facilities with the costs of providing care and increasing transparency so that patients are able to make informed choices. The final rule [CMS-1718-F] can be downloaded from the Federal Register at:


This fact sheet discusses three major provisions of the final rule:

  • SNF payment policy under the SNF Prospective Payment System (PPS)
  • SNF Value-Based Purchasing Program (VBP)
  • SNF Quality Reporting Program (QRP). 

This final rule includes policies that continue to move forward agency commitments to shift Medicare payments from volume to value, with the continued implementation of the SNF VBP and SNF QRP to improve program interoperability, operational quality and safety.

Strengthening Medicare
CMS projects aggregate payments to SNFs will increase by $851 million, or 2.4 percent, for FY 2020 compared to FY 2019. This estimated increase is attributable to a 2.8 percent market basket increase factor with a 0.4 percentage point reduction for the multifactor productivity adjustment. 

As amended by section 4432 of the Balanced Budget Act of 1997 (BBA 1997) (Pub. L. 105-33, enacted on August 5, 1997), section 1888(e) of the Act provides for the implementation of a PPS for SNFs.  This methodology uses prospective, case-mix adjusted per diem payment rates applicable to all covered SNF services defined in section 1888(e)(2)(A) of the Act.  The SNF PPS is effective for cost reporting periods beginning on or after July 1, 1998, and covers all costs of furnishing covered SNF services (routine, ancillary, and capital related costs) other than costs associated with approved educational activities and bad debts.

Sub-Regulatory Process for International Classification of Diseases, Tenth Version (ICD-10) Codes Revisions
CMS’ Patient Driven Payment Model (PDPM) will be effective October 1, 2019 under the SNF Prospective Payment System (PPS) for classifying patients in a covered Medicare Part A SNF stay. The PDPM utilizes ICD-10 codes to classify SNF patients into certain payment groups. Each year, the ICD-10 codes and guidelines are revised in a variety of non-substantive ways, such as a single code being split into two more specific codes.  To help ensure SNFs have the most up-to-date ICD-10 code information as soon as possible, in the clearest and most useful format, CMS is finalizing a sub-regulatory process for making non-substantive changes to the list of ICD-10 codes used to classify patients into clinical categories under the PDPM.  This sub-regulatory process aligns with similar policies in the SNF PPS and the Inpatient Rehabilitation Facility (IRF) PPS.  The SNF PPS already uses a sub-regulatory process to make non-substantive updates to the list of Healthcare Common Procedure Coding System (HCPCS) codes that are subject to consolidated billing.  In addition, the IRF PPS uses a similar sub-regulatory updating process for the IRF tier comorbidities list and for updating the ICD-10 code lists used for the IRF presumptive compliance methodology.

Align SNF PPS Group Therapy Definitions with Other Post Acute Care (PAC) Settings
Various PAC settings permit therapists to furnish therapy to their patients in three different modes: individual, concurrent, and group. Under the current SNF PPS, group therapy is defined as consisting of exactly four patients. Other payment systems, such as the IRF PPS, define group therapy as including as few as two patients. For more consistent therapy definitions across care settings, CMS is adopting the same definition of group therapy that is used in the IRF PPS: group therapy consists of two to six patients doing the same or similar activities. As PDPM implementation takes place, CMS believes aligning the group therapy definition serves to improve the agency’s consistency in payment policies across PAC settings.

SNF Value-Based Purchasing Program (VBP) Finalized Policy Changes
The SNF VBP Program began rewarding SNFs with incentive payments based on their quality measure performance on October 1, 2018.  The program currently scores SNFs on an all-cause measure of hospital readmissions, and in the future, will transition to a measure of potentially preventable hospital readmissions.  As required by statute, the program reduces SNFs’ Medicare payments by two percentage points, then redistributes approximately 60% of those funds as incentive payments.

In the FY 2020 SNF PPS final rule, the SNF VBP Program is adopting a new name for the Program’s potentially preventable readmission measure.  The final rule also includes an update to the public reporting requirements to ensure that CMS publishes accurate performance information for low-volume SNFs and a new 30-day deadline for Phase One Review and Corrections requests.

Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)
The SNF QRP is authorized by section 1888(e)(6) of the Social Security Act and applies to freestanding SNFs, any SNF affiliated with acute care facilities, and all non-critical access hospital (CAH) swing-bed rural hospitals. Under the SNF QRP, SNFs that fail to submit required quality data to CMS will be subject to a 2 percentage point reduction to the applicable fiscal year’s annual market basket percentage update.  

As part of CMS’ commitment to improve the interoperability of health information and our ongoing efforts to increase quality and safety in SNF operations, CMS is adopting two new quality measures in FY 2020 to assess whether certain health information is provided by the SNF at the time of transfer or discharge.  The two measures are: 1) Transfer of Health Information to the Provider-Post-Acute Care and 2) Transfer of Health Information to the Patient-Post-Acute Care.

In addition, CMS is adopting a number of standardized patient assessment data elements, each of which assesses one of the following categories: cognitive function and mental status, special services, treatments and interventions, medical conditions and comorbidities, impairments, or social determinants of health (race and ethnicity, preferred language and interpreter services, health literacy, transportation, or social isolation). CMS is also updating the specifications for the Discharge to Community PAC SNF QRP measure to exclude baseline nursing home residents.  Finally, in response to comments, CMS will not finalize its proposal to collect SNF QRP data on all patients, regardless of payer.

For more information
The final rule displayed on July 30, 2019, at the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” at

Additional information is available at:


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