Fact sheet

Medicare proposes fiscal year 2018 payment & policy changes for skilled nursing facilities

Medicare proposes fiscal year 2018 payment & policy changes for skilled nursing facilities


On April 27, 2017, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule [CMS-1679-P] outlining proposed Fiscal Year (FY) 2018 Medicare payment rates and quality programs for skilled nursing facilities (SNFs). Additionally, CMS also released an Advance Notice of Proposed Rulemaking (ANPRM) [CMS-1686-ANPRM] which solicits comment on potential revisions to the SNF payment system, based on research conducted under the SNF Payment Models Research project.

The proposed rule proposes policies that continue a commitment to shift Medicare payments from volume to value, with continued implementation of the SNF Value-based Purchasing (VBP) program.

This fact sheet discusses major provisions of the proposed rule, including proposals for the SNF Value-Based Purchasing Program, and the SNF Quality Reporting Program. The proposed rule also includes a Request for Information (RFI), a proposal for the End Stage Renal Disease (ESRD) Quality Incentive Program (QIP), and other key elements. The major FY 2018 proposals and other issues discussed in the proposed rule are summarized below.

Additionally, CMS is clarifying definitions and provisions related to investigation of complaints and team composition and to align regulatory provisions for investigation of complaints with the statutory requirements found in sections 1819 and 1919 of the Act.

CMS encourages comments, questions, or thoughts on this proposed rule and the RFI (CMS-1679-P) and will accept comments until June 26, 2017. The proposed rule and the RFI can be downloaded from the Federal Register at: 

Changes to Payment Rates under the SNF Prospective Payment System (PPS)

Based on proposed changes contained within this proposed rule, CMS projects aggregate payments to SNFs will increase in FY 2018 by $390 million, or 1.0 percent, from payments in FY 2017. This estimated increase is attributable to a 1.0 percent market basket increase required by section 411(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

SNF Quality Reporting Program (QRP)

Background: Under the SNF QRP, SNFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to the otherwise applicable annual market basket percentage update with respect to that fiscal year.

Proposed Changes:

In this FY 2018 proposed rule, CMS is proposing to replace the current pressure ulcer measure with an updated version of that measure and to adopt four new measures that address functional status for FY 2020:

1. Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury.
2. Four outcome-based functional measures on resident functional status to align with the IRF QRP for FY2020:]

a. Application of IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients (NQF #2633)
Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634)
Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635)
Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636) 




Further, CMS is also proposing to begin publically reporting six new measures for display by fall 2018.

Beginning with the FY 2019 SNF QRP, SNFs must also report standardized patient assessment data. We propose to satisfy this requirement for the FY 2019 SNF QRP using the data submitted on the existing pressure ulcer measure. For the FY 2020 program year, CMS is proposing that SNFs begin reporting standardized patient assessment data with respect to 5 specified patient assessment categories required by law that include:

1. functional status;
2. cognitive function;
3. special services, treatments and interventions;
4. medical conditions and co-morbidities; and
5. impairments.

Lastly, CMS is making proposals with respect to the applicability of current procedural requirements

SNF Value-Based Purchasing Program (VBP)  

Background: The SNF VBP Program has adopted scoring and operational policies for its first year (FY 2019) and has specified measures and program features as required by statute. The FY 2018 SNF PPS proposed rule includes additional Program proposals, including a payment exchange function approach to implement value-based incentive payment adjustments beginning October 1, 2018.

Scoring & Operational Updates: The SNF VBP Program’s scoring and operational policies for its first year (FY 2019) include:

In addition to the proposed logistical exchange function, SNF VBP Program proposed policies in the FY 2018 proposed rule include performance and baseline periods for the FY 2020 Program year, updated values for performance standards for FY 2020, additional details for the Review and Correction process for SNFs’ performance information to be made public on Nursing Home Compare, and revising the previously-adopted rounding policy for SNF performance scores. Public comments on these proposals will be accepted through June 26, 2017. 

End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)

Background: Section 153(c) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) amended the Social Security Act to require CMS to establish an ESRD QIP that selects measures, establishes performance standards, specifies a performance period for each payment year (PY), assesses the total performance of each facility, applies an appropriate payment reduction to each facility that does not meet a minimum TPS, and publicly reports the results.  The ESRD QIP is intended to promote high-quality care by dialysis facilities treating beneficiaries with ESRD. This program changes the way CMS pays for the treatment of ESRD patients by linking a portion of payment directly to facilities’ performance on quality measures. The ESRD QIP will reduce payments by up to two percent to ESRD facilities that do not meet or exceed a minimum total performance score (TPS). 

Clarifying the PY 2020 Performance Period for the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) National Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) Influenza Vaccination Reporting Measure

In the Calendar Year (CY) 2017 ESRD Prospective Payment System (PPS) final rule, we inadvertently finalized the same performance period for the NHSN Healthcare Personnel Influenza Vaccination Reporting Measure for PY 2020 that we previously finalized for that measure for PY 2019. In this proposed rule, we are proposing to correct that performance period such that it will align with the schedule established in earlier payment years. Specifically, we are proposing to set the performance period for that measure as October 1, 2017 through March 31, 2018 for the Payment Year (PY) 2020 ESRD QIP program.

Request for Information (RFI) 

In addition to the proposed rule, CMS is releasing a Request for Information to welcome continued feedback on the Medicare Program. CMS is committed to maintaining flexibility and efficiency throughout the Medicare program. Through transparency, flexibility, program simplification and innovation, we aim to transform the Medicare program and promote the availability of high value and efficiently-provided care for its beneficiaries. We would like to start a national conversation about improving the health care delivery system and about how Medicare can contribute to making the delivery system less bureaucratic and complex, and how we can reduce burden for clinicians, providers and patients in a way that increases quality of care and decreases costs – and thereby making the health care system more effective, simple and accessible while maintaining program integrity and preventing fraud. 

CMS is soliciting ideas for regulatory, sub-regulatory, policy, practice and procedural changes to better accomplish these goals. Ideas could include recommendations regarding payment system re-design, elimination or streamlining of reporting, monitoring and documentation requirements, operational flexibility, feedback mechanisms and data sharing that would enhance patient care, supporting doctor-patient relationship in care delivery, and facilitating patient-centered care. They could also include recommendations regarding when and how CMS issues regulations and policies, and how CMS can simplify rules and policies for Medicare beneficiaries, clinicians, providers and suppliers.

In responding to the RFI, please provide CMS with clear and concise proposals that include data and specific examples. If the proposals involve novel legal questions, analysis regarding CMS’ authority is welcome for CMS’ consideration. CMS will not respond to RFI comment submissions in the final rule, but rather will actively consider all input in developing future regulatory proposals or future sub-regulatory guidance. 

Survey Team Composition

We propose to make technical changes to 42 C.F.R. §488 to reflect statutory requirements found in Sections 1819 and 1919 of the Social Security Act; to clarify the regulatory requirements for team composition for surveys conducted for investigating a complaint and to align regulatory provisions for investigation of complaints with the statutory requirements found in sections 1819 and 1919 of the Act.

The lack of clarity as to which regulatory provision, that is, §488.314 or §488.332, applies to the survey team composition related to the investigation of complaints has been the cause of recent administrative litigation.  We thus believe that regulatory changes are needed to clarify that only surveys conducted under sections 1819(g)(2) and 1919(g)(2) of the Act are subject to the requirement at §488.314 that a survey team consist of an interdisciplinary team that must include a registered nurse.  Complaint surveys and surveys related to on-site monitoring, including revisit surveys, are subject to the requirements of sections 1819(g)(4) and 1919(g)(4) of the Act and §488.332, which allow the state survey agency to use a specialized investigative team that may include appropriate health care professionals but need not include a registered nurse. 

Advance Notice of Proposed Rulemaking (ANPRM)

CMS is issuing an advance notice of proposed rulemaking (ANPRM) to solicit public comments on potential options we may consider for revising certain aspects of the existing SNF PPS payment methodology to improve its accuracy, based on the results of our SNF Payment Models Research (SNF PMR) project. In particular, we are seeking comments on the possibility of replacing the SNF PPS’ existing case-mix classification model, the Resource Utilization Groups, Version 4 (RUG-IV), with a new model, the Resident Classification System, Version I (RCS-I). To support commenters on this ANPRM, CMS also released a Technical Report on the development of RCS-I, which is available at

For more information…

The proposed rule and ANPRM displayed on April 27, 2017, at the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” at Public comments on the proposed rule and ANPRM will be accepted until June 26, 2017. 

Additional information is available at:



    • The Program is limited to one readmission measure for each year.
    • The Program requires the Secretary to reduce the total amount of Medicare payments to SNFs in a fiscal year by 2 percent reduction to fund the value-based incentive payments for that fiscal year.
    • The total amount of value-based incentive payments that can be made to SNFs in a fiscal year is statutorily limited to between 50 percent and 70 percent of the total amount of the reduction to SNF Medicare payments for that fiscal year.
    • The Program must pay SNFs ranked in the lowest 40 percent less than the amount they would otherwise be paid in the absence of the SNF VBP.
    • Both public and confidential facility performance reporting will be conducted.