Fiscal Year (FY) 2024 Skilled Nursing Facility Prospective Payment System Final Rule - CMS-1779-F
On July 31, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for fiscal year (FY) 2024. In addition, the final rule includes updates to the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for FY 2024 and future years, including the adoption of a measure intended to address staff turnover, as outlined in the President’s Executive Order 14070 Increasing Access to High-Quality Care and Supporting Caregivers. Finally, the rule finalizes a constructive waiver process to ease administrative burdens for CMS related to processing Civil Monetary Penalty (CMP) appeals. CMS is publishing this final rule consistent with the legal requirements to update Medicare payment policies for SNFs annually. This fact sheet discusses the major provisions of the final rule.
FY 2024 Updates to the SNF Payment Rates
CMS estimates that the aggregate impact of the payment policies in this rule would result in a net increase of 4.0%, or approximately $1.4 billion, in Medicare Part A payments to SNFs in FY 2024. This estimate reflects a $2.2 billion increase resulting from the 6.4% net market basket update to the payment rates, which is based on a 3.0% SNF market basket increase plus a 3.6% market basket forecast error adjustment and less a 0.2% productivity adjustment, as well as a negative 2.3%, or approximately $789 million, decrease in the FY 2024 SNF PPS rates as a result of the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration.
On October 1, 2019, CMS implemented a new case-mix classification system, the PDPM, in a budget-neutral manner, meaning that the transition to PDPM from the prior case-mix classification model, the Resource Utilization Group, Version 4 (RUG-IV), would not result in an increase or decrease in aggregate SNF spending. However, since PDPM implementation in FY 2020, CMS’ initial data analysis showed an unintended increase in payments of approximately 5% or $1.7 billion annually. After considering the stakeholder feedback received on the FY 2023 SNF PPS proposed rule and to balance mitigating the financial impact on providers of recalibrating the PDPM parity adjustment with ensuring accurate Medicare Part A SNF payments, CMS finalized a PDPM parity adjustment factor of 4.6% in the FY 2023 SNF PPS final rule with a two-year phase-in period, resulting in a 2.3% reduction in FY 2023 and a 2.3% reduction in FY 2024 to the SNF PPS payment rates.
Note that these impact figures do not incorporate the SNF VBP reductions for certain SNFs subject to the net reduction in payments under the SNF VBP; those adjustments are estimated to total $184.85 million in FY 2024.
Changes in PDPM ICD-10 Code Mappings
The PDPM utilizes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10) codes in several ways, including using the person’s primary diagnosis to assign patients to clinical categories. In response to stakeholder feedback and to improve consistency between the ICD-10 code mappings and current ICD-10 coding guidelines, CMS is finalizing several changes to the PDPM ICD-10 code mappings. The ICD-10 code mappings and lists used under PDPM are available on the PDPM website at https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/SNFPPS/PDPM.
Exclusion of Marriage and Family Therapist and Mental Health Counselor Services from SNF Consolidated Billing
Section 4121(a)(4) of the Consolidated Appropriations Act, 2023, requires Medicare to exclude marriage and family therapist (MFT) services and mental health counselor services (MHC) from SNF consolidated billing. Exclusion from consolidated billing allows these services to be billed separately by the performing clinician rather than being included in the Medicare Part A SNF payment. We are finalizing regulatory text changes required to codify this new legislative requirement to exclude MFT and MHC services from SNF consolidated billing for services furnished on or after January 1, 2024.
Changes to the Skilled Nursing Facility Quality Reporting Program (SNF QRP)
The SNF QRP is a pay-for-reporting program. SNFs that do not meet reporting requirements are subject to a two-percentage-point reduction in their Annual Payment Update (APU). In the FY 2024 SNF PPS final rule, CMS is adopting two measures in the SNF QRP, removing three measures from the SNF QRP, and modifying one measure in the SNF QRP. In addition, this rule makes policy changes to the SNF QRP and begins public reporting of four measures.
CMS is adopting the Discharge Function Score (DC Function) measure beginning with the FY 2025 SNF QRP. This measure assesses functional status by assessing the percentage of SNF residents who meet or exceed an expected discharge function score and uses mobility and self-care items already collected on the Minimum Data Set (MDS). This measure will replace the topped-out process measure – the Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment/a Care Plan That Addresses Function (Application of Functional Assessment/Care Plan) measure, as discussed below.
CMS is adopting the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident COVID-19 Vaccine) measure beginning with the FY 2026 SNF QRP. This measure reports the percentage of stays in which residents in an SNF are up to date with recommended COVID-19 vaccinations in accordance with the Centers for Disease Control and Prevention's (CDC’s) most recent guidance. Data will be collected using a new standardized item on the MDS.
CMS is modifying the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP COVID-19 Vaccine) measure beginning with the FY 2025 SNF QRP. This measure tracks the percentage of healthcare personnel (HCP) working in SNFs who are considered up to date with recommended COVID-19 vaccination in accordance with the CDC’s most recent guidance. The prior version of this measure reported only on whether HCP had received the primary vaccination series for COVID-19, while the modified measure requires SNFs to report the cumulative number of HCP who are up to date with recommended COVID-19 vaccinations in accordance with the CDC’s most recent guidance.
CMS is removing the Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (Application of Functional Assessment/Care Plan) measure beginning with the FY 2025 SNF QRP. CMS is removing this measure for two reasons. First, the Application of Functional Assessment/Care Plan measure meets the conditions for measure removal factor one: measure performance among SNFs is so high and unvarying that meaningful distinctions in performance improvements can no longer be made. Second, this measure meets the conditions for measure removal factor six: there is an available measure (the DC Function measure, discussed above) that is more strongly associated with desired resident functional outcomes.
CMS is removing the Application of the IRF Functional Outcome Measures: Change in Self-Care Score for Medical Rehabilitation Patients (Change in Self-Care Score) measure; and the Application of the IRF Functional Outcome Measures: Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score) measure beginning with the FY 2025 SNF QRP. CMS is removing these two measures because they meet the condition for measure removal factor eight: the costs associated with a measure outweigh the benefits of its use in the program. Additionally, these measures are similar to or duplicative of other measures within the SNF QRP.
CMS is increasing the SNF QRP Data Completion thresholds for the Minimum Data Set (MDS) Data Items beginning with the FY 2026 SNF QRP. SNFs must report 100% of the required quality measure data and standardized resident assessment data collected using the MDS on at least 90% of the assessments they submit to CMS. Any SNF that does not meet the requirement will be subject to a reduction of 2 percentage points to the applicable FY annual payment update beginning with FY 2026. We are codifying this requirement at § 413.360(f)(1)(ii).
CMS is beginning the public reporting of the Transfer of Health Information to the Provider—PAC Measure and the Transfer of Health Information to the Patient—PAC Measure with the October 2025 Care Compare refresh or as soon as technically feasible. These measures report the percentage of patient stays with a discharge assessment indicating that a current reconciled medication list was provided to the subsequent provider or the patient/family/caregiver at discharge or transfer. In response to the COVID-19 Public Health Emergency, we initially delayed the compliance date for the collection and reporting of these two measures in the SNF QRP, and data collection will begin on these measures with patients discharged on or after October 1, 2023.
After consideration of the public comments received, CMS is not adopting the CoreQ: Short Stay Discharge (CoreQ: SS DC) measure for inclusion in the SNF QRP.
Changes to the Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program
The Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program rewards SNFs with incentive payments based on the quality of care they provide. All SNFs paid under Medicare’s SNF PPS are included in the SNF VBP Program.
In this final rule, CMS is adopting four new quality measures, replacing one quality measure, and finalizing several policy changes in the SNF VBP Program. The new quality measures are as follows:
- CMS is adopting the Nursing Staff Turnover Measure for the SNF VBP program beginning with the FY 2026 program year. This is a structural measure that has been collected and publicly reported on Care Compare and assesses the stability of the staffing within an SNF using nursing staff turnover. This is part of the Administration’s focus to ensure adequate staffing in long-term care settings and delivers on a commitment included in the President’s Executive Order 14070, Increasing Access to High-Quality Care and Supporting Caregivers. Facilities would begin reporting for this measure in FY 2024, with payment effects beginning in FY 2026.
- CMS is adopting the Discharge Function Score Measure beginning with the FY 2027 program year. This measure is also being adopted for the SNF QRP and assesses functional status by assessing the percentage of SNF residents who meet or exceed an expected discharge function score and use mobility and self-care items already collected on the MDS.
- CMS is adopting the Long Stay Hospitalization Measure per 1,000 Resident Days beginning with the FY 2027 program year. This measure assesses the hospitalization rate of long-stay residents.
- CMS is adopting the Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) beginning with the FY 2027 program year. This measure assesses the falls with major injury rates of long-stay residents.
- CMS is replacing the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) with the Skilled Nursing Facility Within Stay Potentially Preventable Readmissions (SNF WS PPR) measure beginning with the FY 2028 program year.
To prioritize the achievement of health equity, improve care that all beneficiaries receive and reduce disparities in health outcomes in SNFs, CMS is adopting a Health Equity Adjustment in the SNF VBP Program. This adjustment rewards SNFs that perform well and whose resident population during the applicable performance period include at least 20% of residents with dual eligibility status. This adjustment will begin with the FY 2027 program year. CMS is adjusting the scoring methodology to provide bonus points to high-performing facilities that provide care to a higher proportion of duals. This approach of rewarding excellent care for underserved populations is consistent with other approaches in other quality and value-based programs, including the Medicare Shared Savings Program, Medicare Advantage and Part D Star Ratings, and the policy changes in the Hospital VBP program.
In addition, CMS is increasing the payback percentage policy under the SNF VBP program from the current 60% to a level such that the bonuses provided to the high-performing, high duals SNFs do not come at the expense of the other SNFs. The estimated payback percentage for the FY 2027 program year is 66%.
CMS is adopting the audit portion of the validation process for MDS-based measures beginning with the FY 2027 program year.
Changes to Civil Money Penalties (CMP): Waiver of Hearing, Reduction of Penalty Amount (§ 488.436)
In this rule, we are streamlining an administrative procedure for CMS by adopting a constructive waiver process that will consider a facility to have waived its hearing when CMS does not receive a request for a hearing within the requisite timeframe. The accompanying 35% penalty reduction would remain unchanged, though CMS is committing to review the appropriateness of this policy and the reduction amount in the future. This revision will reduce the administrative burden for CMS and allow the agency to shift resources toward bolstering other oversight and enforcement activities, including providing additional focus on nursing home compliance.
The final rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-16249/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities