Fiscal Year 2021 Proposed Medicare Payment and Policy Changes for Skilled Nursing Facilities (CMS-1737-P)
On April 10, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule [CMS-1737-P] for Fiscal Year (FY) 2021 that updates the Medicare payment rates and the quality programs for skilled nursing facilities (SNFs). CMS is publishing this proposed rule consistent with the legal requirements to update Medicare payment policies for skilled nursing facilities on an annual basis. CMS recognizes that the entire healthcare system is focused on responding to the COVID-19 public health emergency. As a result, the proposed rule includes proposals required by statute and that affect Medicare payment to SNFs, as well as proposals that reduce provider burden and may help providers in the COVID-19 response.
These updates include routine technical rate-setting updates to the SNF PPS payment rates, as well as a proposal to adopt the most recent Office of Management and Budget (OMB) statistical area delineations and apply a 5 percent cap on wage index decreases from FY 2020 to FY 2021. We are also proposing changes to the ICD-10 code mappings that would be effective beginning in FY 2021, in response to stakeholder feedback. Finally, this rule includes minor administrative proposals related to the SNF Value-Based Purchasing (VBP) Program, further described below.
2019 Coronavirus (COVID-19) Outbreak:
The health and safety of America’s patients and provider workforce in the face of the Coronavirus Disease 2019 (COVID-19) outbreak is the top priority of the Trump Administration and CMS. We are working around the clock to equip the American healthcare system with maximum flexibility to respond to the 2019 Novel Coronavirus (COVID-19) pandemic. Recently, at President Trump’s direction, CMS issued an unprecedented array of temporary regulatory waivers and new rules to equip the American healthcare system with maximum flexibility to respond to the COVID-19 pandemic, including waiving the SNF benefit’s 3-day qualifying inpatient hospital stay requirement (pursuant to section 1812(f) of the Social Security Act), which allows SNF patients to be admitted without the typically required 3-day inpatient hospital stay and additional flexibility in relation to how beneficiaries may access a new SNF benefit period without the typical 60-day “wellness” period.
To keep up with the important work the Task Force is doing in response to COVID-19, go to . For information specific to CMS, please visit the .
While CMS is focused on helping the healthcare system respond to the COVID-19 pandemic, we are releasing the annual Medicare payment rules as required by law to ensure providers are informed on the 2021 payment updates. This fact sheet discusses several major provisions of the proposed rule: the proposed changes to SNF payment policy under the SNF Prospective Payment System (PPS) and the SNF Value-Based Purchasing Program (VBP). This proposed rule includes proposals that would continue a commitment to shift Medicare payments from volume to value, with the continued implementation of the Patient Driven Payment Model (PDPM) and the SNF VBP, to improve program interoperability, operational quality and safety.
CMS encourages comments on this proposed rule and will accept comments until June 9, 2020. The proposed rule [CMS-1737-P] can be downloaded from the Federal Register at:
CMS projects aggregate payments to SNFs will increase by $784 million, or 2.3 percent, for FY 2021 compared to FY 2020. This estimated increase is attributable to a 2.7 percent market basket increase factor with a 0.4 percentage point reduction for 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 Social Security Act (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 Social Security 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 excluded under the statute, such as costs associated with approved educational activities and bad debts.
Changes in SNF PPS Wage Index
Under section 1888(e)(4)(G)(ii) of the Act, we adjust the federal rates to account for differences in area wage levels. We proposed to adopt revised geographic delineations provided by the Office of Management and Budget, which are used to identify a provider’s status as an urban or rural facility and to calculate the wage index and apply a 5 percent cap to wage index decreases.
Updates to PDPM Clinical Diagnosis Mappings
CMS’ Patient Driven Payment Model (PDPM) is an innovative and historic change in how we pay for care that is more focused on patient characteristics, rather than volume, under the SNF PPS and is used for classifying patients in a covered Medicare Part A SNF stay into case-mix groups. Implemented on October 1, 2019, PDPM utilizes International Classification of Diseases, Version 10 (ICD-10) codes to classify SNF patients into payment groups. Each year, CMS considers recommendations from stakeholders on changes to the ICD-10 code mappings used under the PDPM. In this proposed rule, we are proposing changes to the ICD-10 code mappings that would be effective beginning in FY 2021, in response to these stakeholder recommendations. We encourage stakeholders to continue to provide this essential feedback on the ICD-10 code mappings, so that we may continue to improve and refine our payment methodology.
SNF Value-Based Purchasing (VBP) Program
The SNF VBP Program began distributing SNFs with incentive payments on October 1, 2018. The SNF VBP Program scores SNFs on a single all-cause claims-based measure of hospital readmissions, as required by law, and adjusts Medicare Part A fee-for-service (FFS) payments under the SNF Prospective Payment System (PPS). The Program aims to improve quality of care by incentivizing SNFs to reduce unplanned hospital readmissions. The law requires that CMS reduce SNFs’ Medicare Part A FFS payments by 2 percent, then redistribute between 50 to 70 percent of that reduction to SNFs as incentive payments. Because of this legislative requirement, the Program results in Medicare savings.
In the FY 2021 SNF PPS proposed rule, CMS is proposing to align the SNF VBP Program regulation text at 42 CFR § 413.338 with previously finalized policies, to apply the 30-day Phase One Review and Correction deadline to the baseline period quality measure quarterly report, and to establish performance periods and performance standards for upcoming program years. CMS is not proposing to make any changes to the measures, SNF VBP scoring policies, or payment policies.
For more information
The proposed rule displayed on April, XX, 2020, at the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” at http://www.federalregister.gov/inspection.aspx.
Additional information is available at:
- SNF VBP:
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