AHA Opposes Proposed Payment Cut for Skilled Nursing Facilities

The American Hospital Association (AHA) has urged CMS not to cut Medicare payments for skilled nursing facilities in fiscal year 2023, as the agency put forth in its Skilled Nursing Facility (SNF) Prospective Payment System (PPS) proposed rule.

CMS released the proposed rule for FY 2023 in April, which included proposals for payment updates and new quality measures for the SNF Quality Reporting Program (QRP) and the Value-Based Purchasing (VBP) program.

In a letter to CMS Administrator Chiquita Brooks-LaSure, AHA voiced concern about the 0.9 percent proposed decrease in SNF PPS payments, amounting to a $320 million cut. The payment rate reflects the SNF market basket update of 2.8 percent, a 1.5 percentage point increase for market basket forecast error adjustment, and a 0.4 percentage decrease for productivity adjustment.

AHA noted that this payment decrease is ill-timed given the financial challenges SNFs and nursing homes have faced during the COVID-19 public health emergency. Hospital-based SNFs and their host hospitals faced supply chain, workforce, and over-crowding difficulties.

In addition, AHA stated that the proposed SNF PPS labor-related share would only increase from 70.4 percent in FY 2022 to 70.7 percent in FY 2023. Hospital labor expenses per adjusted discharge were 52 percent higher in January 2022 compared to pre-pandemic levels.

AHA has urged CMS to avoid a payment reduction for SNFs and instead continue providing financial support to help facilities maintain stability during the pandemic.

“While the AHA supports the proposed forecast error correction of 1.5 percentage points, we are deeply concerned that the overall net decrease in SNF payments does not reflect the increased costs hospitals, their hospital-based SNFs and other distinct part units are facing,” the letter read. “We urge CMS to discuss in the final rule how the agency will account for these increased costs.”

The letter also voiced concerns about the proposed 0.4 percent productivity reduction, with AHA asking CMS to elaborate in the final rule on the specific productivity gains that are the basis for this offset. According to the organization, the reduction contradicts the actual losses of productivity SNFs experienced during the pandemic.

AHA also opposed the proposed 4.6 percent Patient-driven Payment Methodology (PDPM) parity adjustment. The adjustment will help ensure the budget-neutral implementation of the PDPM case-mix system, CMS said. The proposed adjustment would result in a $1.7 billion payment cut in FY 2023.

SNFs and nursing homes are not prepared to bear the weight of this cut, AHA asserted. If CMS moves forward with the parity adjustment, AHA asked the agency to consider phasing it in through substantial fluctuations.

The SNF PPS proposed rule included a permanent 5 percent cap on annual wage index decreases to limit year-to-year changes in SNF payments. AHA supported this proposal but asked CMS to implement the change in a non-budget-neutral manner.

Regarding additions to quality reporting programs, AHA had mixed opinions.

CMS proposed adopting a measure for the SNF QRP that would assess the influenza vaccination coverage rate among healthcare personnel. AHA supported the adoption of the measure.

The rule also proposed a new compliance date of October 1, 2023, for certain SNF QRP reporting requirements, including Transfer of Health Information measures and standardized patient assessment data. AHA urged CMS to retain the reporting deadlines adopted in the interim final rule instead, stating that organizations do not have the administrative capacity to meet the new deadline.

CMS has proposed adding the SNF Healthcare Associated Infections Requiring Hospitalization (HAI) measure to the SNF VBP program beginning in FY 2026. The measure assesses SNF performance in infection prevention and management.

AHA has objected to the adoption of the measure, stating that HAIs are so important and complex that CMS should develop a measure that delivers more timely, accurate, and actionable information.

CMS also proposed adding the Total Nursing Hours per Resident Day measure to the SNF VBP, which uses auditable electronic data to calculate total nursing hours per resident day. AHA was against this measure, asserting that it oversimplifies the relationship between higher RN staffing levels in nursing homes and improved care for residents and is unlikely to provide an accurate indication of care quality.

Finally, AHA supported the addition of the Discharge to Community measure to the SNF VBP, which assesses the rate of successful discharges to the community from an SNF setting.