CMS Releases Proposed Rule that Updates SNF Rates

Posted on April 14, 2021 by Jeff Bostic

Late last week, the Centers for Medicare and Medicaid Services (CMS) issued an annual Proposed Rule that updates the SNF PPS rates effective October 1, 2021.  CMS will follow up with a final rule on the October 1 rates around August 1.

The October 1, 2021 rates will include a statutory inflation adjustment of 1.3%, which was determined using a formula that looks at inflation and other factors. As usual, the rates will also be adjusted by updated wage indices, which can have a more significant impact on rates for providers than the inflation adjustment.

The new rule also addressed a couple of other SNF payment issues. CMS has been evaluating the impact of the Patient Driven Payment Model (PDPM) on payments to providers. In the proposed rule, they indicate that since the implementation of PDPM on October 1, 2019, an unintended payment increase of just over 5% for SNFs has occurred even though the PDPM system was designed to be revenue-neutral. CMS is proposing to implement a "parity adjustment" to restore revenue neutrality. They are accepting comments on how to implement that adjustment, and national associations have already raised concerns about implementing rate decreases in the wake of the COVID-19 pandemic and are asking to delay those adjustments. 

The proposed rule also addresses the Value-Based Purchasing Program (VBP). It indicates that, due to the Covid-19 pandemic, CMS will not implement the program for the year beginning October 1, 2021 based on the readmission measure results having been significantly impacted. To comply with the congressional withhold established for VBP, CMS is implementing what essentially is a 0.8% rate reduction to all SNFs, which cancels out much of the inflation increase for the year. National associations have raised concerns about this and will be pursuing congressional action to avoid it.

The proposed rule also indicates an intention to move VBP away from the single readmission measure it has used since its inception and to use a combination of up to ten measures starting with the October 1, 2023 rate year. The rule suggests possible new measures covering functional status, patient safety, care coordination, and patient experience. CMS is soliciting input from stakeholders on which quality measures should be included under an expanded SNF VBP.