New Medicare Rates for SNFs, Value-Based Purchasing Adjustments Now In Effect

As we reported in August, new Skilled Nursing Facilities (SNF) PPS rates took effect for the year that began on Monday, Oct. 1. In addition to the updated base rates, Oct. 1 is also the first year of implementation of Value-Based Purchasing. 


We calculated the base SNF rates for all regions of Minnesota. The new base rates include a 2.4 percent inflation increase and updated wage indices. The wage index change this year varied a lot between Minnesota regions and in many cases wiped out the inflation increase and more. The table below shows the percentage change in Medicare SNF base rates for each region, factoring in both the inflation in the base rates and the wage index change: 


% Rate Change

Twin Cities






St. Cloud




Grand Forks






Rural MN


First Year of Value-Based Purchasing

Under Value-Based Purchasing (VBP), rates are adjusted based on SNF-specific hospital readmission rates. The hospital readmission data used for the first year of VBP was from calendar year 2017, and individual facility results are available on the FY 2019 SNF VBP Program Performance report that facilities can download from the CASPER system. 

Based on a formula on how a SNF’s readmission rates compared to the national average, each SNF’s rates are adjusted by an incentive payment multiplier. The multiplier is designed to capture the two financial aspects of VBP in one number - the 2 percent withheld from all SNF payments and the amount paid back to the specific SNF based on their readmission performance. The incentive payment multiplier, which is multiplied by each of the base RUG rates to determine each individual SNF’s rates, varies from 0.98 to 1.023. This means the lowest performing SNFs receive a 2 percent cut with the best performers receive an increase of 2.3 percent.

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