2.3% Medicare Payment Hike Planned for Skilled Nursing Facilities

Skilled nursing facilities are slated to see a 2.3 percent, or $784 million, increase in Medicare payments in the 2021 fiscal year (FY), according to a rule proposed by CMS late on Friday.

CMS also released proposed rules detailing FY 2021 Medicare payment rates for hospices and inpatient psychiatric facilities. The federal agency pitched a 2.6 percent, of $580 million, increase for hospices and a 2.4 percent, of $100 million, increase for inpatient psychiatric facilities. The statutory aggregate cap on overall payments per patient to a hospice annually would be $30,743.86 in FY 2021 under the proposed Medicare payment rule for hospices.

Under the proposed rules, CMS would also update the wage indexes used to calculate Medicare payments for the three providers in FY 2021.

“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,” the federal agency stated in a fact sheet on the proposed skilled nursing facility rule.

The proposed rule would also update clinical diagnosis mappings for the Patient Driven Payment Model (PDPM), a new Medicare payment system for skilled nursing facilities that reimburses based on patient characteristics, rather than volume of services rendered.

PDPM uses International Classification of Diseases, Version 10 (ICD-10) codes to classify patients into payment groups. CMS considers recommendations from stakeholders each year on updating the ICD-10 coding mappings used to calculate value-based Medicare payments for skilled nursing facilities.

If finalized, changes to PDPM clinical diagnosis mappings will include the addition of surgical clinical category options to the clinical category mapping of certain diagnoses when a major procedure occurs. These changes are in response to stakeholder recommendations and would be effective in FY 2021, CMS stated.

Additionally, the proposed rule would also adjust the Skilled Nursing Facility Value-Based Purchasing Program.

Since Oct. 1, 2018, skilled nursing facilities have had their Medicare payments cut by two percent under the program. CMS redistributes between 50 to 70 percent of that cut as incentive payments for skilled nursing facilities that meet quality standards measured by a single all-cause claims-based measure of hospital readmissions. The program as resulted in Medicare savings, CMS highlighted.

The proposed rule would not apply major changes to the program, but would apply a 30-day Phase One Review and Correction deadline to the baseline period quality measure report in the Skilled Nursing Facility Value-Based Purchasing Program. The rule would also establish performance periods and standards for FY 2021 and beyond.

CMS did not propose changes to the Inpatient Psychiatric Facilities Quality Reporting Program.

The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) applauded the proposed rule for skilled nursing facility payments next year.

“Skilled nursing facilities across the country are working around the clock to protect the people who are most vulnerable to COVID-19. That work makes this 2.3 percent market basket increase more important than ever,” Mark Parkinson, president and CEO of AHCA, said in a statement emailed to RevCycleIntelligence.

The proposed rule comes at a difficult time for skilled nursing facilities. The outbreak of COVID-19 is putting immense strain on the entire healthcare system, including skilled nursing facilities and other post-acute care providers that are dealing with a sudden influx of COVID-19 patients and sudden losses of elective procedures.

CMS acknowledged the unprecedented public health crisis in the fact sheet, stating that  “the entire healthcare system is focused on responding to the COVID-19 public health emergency.” The agency highlighted flexibilities granted to skilled nursing facilities during the crisis, including the waiving of the 3-day quality inpatient hospital stay requirement for Medicare payment.

Medicare beneficiaries also have access to a new skilled nursing facility benefit period without the typical 60-day wellness period, CMS stated.

“This proposed rule, combined with the Patient-Driven Payment Model implemented last year, helps us continue our work to provide the highest quality care possible,” Parkinson said. “With an all-in margin of -0.3 percent, there are still real challenges for skilled nursing providers. However, this increase gets us headed in the right direction. We thank Administrator Verma and the Administration for this action.”

CMS will be taking comments on the proposed rules until June 9, 2020.