Fiscal Year (FY) 2024 Skilled Nursing Facility Prospective Payment System Proposed Rule (CMS 1779-P)
On April 4, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update 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 proposed rule includes proposals for the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for FY 2024 and future years. Finally, this proposed rule would eliminate the requirement for facilities to actively waive their right to a hearing in writing and instead treat the failure to submit a timely hearing request as a constructive waiver. CMS is publishing this proposed rule consistent with the legal requirements to update Medicare payment policies for SNFs on an annual basis. This fact sheet discusses the major provisions of the proposed rule.
These actions support the Administration’s plan to improve safety and quality of care in nursing homes, and CMS remains committed to proposing minimum staffing standards for nursing facilities later this spring.
Minimum Staffing Requirements
In the FY 2023 SNF PPS proposed rule, CMS solicited public comments on minimum staffing requirements. We appreciate the comments we received in response to the request for information. Additionally, CMS launched a new mixed-methods study in August 2022 collecting quantitative and qualitative evidence on staffing levels within nursing homes. CMS continues to review the feedback and evidence from both the comment solicitation and mixed-methods study, all of which will be used to inform proposals for minimum direct care staffing requirements in nursing homes in rulemaking this Spring.
FY 2024 Proposed Updates to the SNF Payment Rates
CMS estimates that the aggregate impact of the payment policies in this proposed rule would result in a net increase of 3.7%, or approximately $1.2 billion, in Medicare Part A payments to SNFs in FY 2024. This estimate reflects a $2 billion increase resulting from the 6.1% net market basket update to the payment rates, which is based on a 2.7% 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 $745 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 per year. 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.
Proposed 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 proposing several changes to the PDPM ICD-10 code mappings. The proposed changes to 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.
Proposed 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 proposed rule, CMS is proposing the adoption of three measures in the SNF QRP, the removal of three measures from the SNF QRP, and the modification of one measure in the SNF QRP. In addition, this proposed rule would also make policy changes to the SNF QRP, and begin public reporting of four measures.
CMS is proposing the adoption of 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 would 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 proposing the adoption of the CoreQ: Short Stay Discharge (CoreQ: SS DC) measure beginning with the FY 2026 SNF QRP. This measure calculates the percentage of individuals discharged from an SNF, within 100 days of admission, who are satisfied with their SNF stay. The questionnaire that would be administered under the CoreQ: SS DC measure asks individuals to rate their overall satisfaction with their care using a 5-point Likert scale. The areas of care include: staff, the care received, recommending the facility to friends and family, and how well their discharge needs were met.
CMS is proposing the adoption of 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 would be collected using a new standardized item on the MDS.
CMS is proposing to modify 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 proposed modification would require 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 proposing to remove 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 proposing this measure removal 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 improvements in performance can no longer be made. Second, this measure meets the conditions for measure removal factor six: there is an available measure (the proposed DC Function measure, discussed above) that is more strongly associated with desired resident functional outcomes.
CMS is proposing to remove 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 Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score) measure beginning with the FY 2025 SNF QRP. CMS proposes to remove these two measures because these measures 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 or duplicative of other measures within the SNF QRP.
CMS is proposing to increase the SNF QRP Data Completion thresholds for the Minimum Data Set (MDS) Data Items beginning with the FY 2026 SNF QRP. CMS proposes 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 proposed requirement that 90% of all MDS assessments submitted contain 100% of required data items, will be subject to a reduction of 2 percentage points to the applicable FY annual payment update beginning with FY 2026.
CMS is proposing to begin 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 beginning with the October 2025 Care Compare refresh or as soon as technically feasible. The measures report the percentage of patient stays with a discharge assessment indicating that a current reconciled medication list was provided to the subsequent provider and/or to the patient/family/caregiver at discharge or transfer.
Proposed 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 proposed rule, CMS is proposing the adoption of four new quality measures, the replacement of one quality measure, and several policy changes in the SNF VBP Program. The quality measure revisions include the following:
- CMS is proposing the adoption of the Nursing Staff Turnover Measure for the SNF VBP program beginning with the FY 2026 program year and FY 2024 performance 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. Facilities would begin reporting for this measure in FY 2024, with payment effects beginning in FY 2026.
- CMS is proposing the adoption of the Discharge Function Score measure beginning with the FY 2027 program year and FY 2025 performance year. This measure is also being proposed for 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 proposing the adoption of the Long Stay Hospitalization Measure per 100 residents beginning with the FY 2027 program year and FY 2025 performance year. This measure assesses the hospitalization rate of long-stay residents.
- CMS is proposing the adoption of the Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) beginning with the FY 2027 program year and FY 2025 performance year. This measure assesses the falls with major injury rates of long-stay residents.
- CMS is proposing the replacement of 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 and FY 2025 performance year.
To prioritize the achievement of health equity and the reduction of disparities in health outcomes in SNFs, CMS is proposing the adoption of a Health Equity Adjustment in the SNF VBP Program that rewards SNF that perform well and whose resident population during the applicable performance period includes at least 20% of residents with dual eligibility status. This adjustment would begin with the FY 2027 program year and FY 2025 performance year. CMS is adjusting the scoring methodology to provide bonus points to high-performing facilities that provide care to a higher proportion of duals.
In addition, CMS is proposing to increase the payback percentage policy under the SNF VBP program from 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 estimates for FY 2027 program year is 66%.
CMS is also proposing to update administrative methodology policies that are required to address the changes needed to accommodate the proposed addition of quality measures into the SNF VBP Program’s scoring methodology. beginning with the FY 2027 program year and FY 2025 performance year.
In addition, the proposed rule provides additional updates on the validation process being established for the quality measures and standardized assessment data for SNFs. CMS is proposing the addition of the audit portion of the validation process for MDS-based measures beginning with the FY 2027 program year and FY 2025 performance year as required by Section 1888(h)(12) of the Act.
In the FY 2024 SNF PPS rule, we are requesting comments about possible future methodologies for selecting and prioritizing quality measures to focus on underserved populations.
Proposed Changes to Civil Money Penalties (CMP): Waiver of Hearing, Reduction of Penalty Amount (§ 488.436)
In this proposed rule, we are streamlining a procedure for facilities facing a civil money penalty to actively waive their right to a hearing in writing in order to receive a penalty reduction. Nearly 95% of facilities facing CMPs are following this process, by which they then receive a 35% penalty reduction. We would create, in its place, a system in which a failure to submit a timely request for a hearing would be treated as a constructive waiver. The accompanying 35% penalty reduction would remain. This proposed revision would reduce burden on not only the facilities, but on the states and CMS as well as they would no longer have to track and manage the written waiver requests.
The proposed rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-07137/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.