New SNF Medicare Rates Take Effect on Oct. 1

Posted on August 18, 2021 by Jeff Bostic

Based on the annual SNF Payment Rule released earlier this summer, new skilled nursing facility (SNF) Medicare rates for the third year of the Patient-Driven Payment Model (PDPM) take effect on Oct. 1. The Oct. 1 rates include an inflation update of 1.2% based on a formula in existing law. Due to the impact of the COVID-19 pandemic, the Centers for Medicare and Medicaid Services (CMS) has suspended the Value-Based Purchasing (VBP) program for the upcoming rate year.

Because the reduction in funding built into that program is required to be carried out by federal law, CMS is implementing a reduction of 0.8% to all rates for the years starting Oct. 1. As a result, the base rate adjustment for the year is a minuscule 0.4%.

In addition to the base rate update, the rates are adjusted by updated wage indices, so the actual rate changes vary by state region. This document shows the rate change by county in Minnesota. Most of them are slightly negative when the wage index is factored in, although the Mankato, Rochester and Duluth regions are seeing slight increases.

In the proposed payment rule from May of this year, CMS discussed the possibility of implementing a PDPM "parity" adjustment of up to 5%, which was intended to adjust rates so that the amount spent in aggregate would be in line with projections before the implementation of PDPM. After receiving several comments from LeadingAge and other groups indicating that the pandemic made the timing poor and that more data is needed to adjust rates, CMS withdrew that proposal for the upcoming rate year but is likely to propose such an adjustment again in the future.

The payment rule also provides for updates to the Quality Reporting Program and VBP. VBP is due to return on Oct. 1, 2022. At that time, it will still be based on a single hospital readmission measure. In future rate years, CMS is planning to expand the number of measures used under VBP, and the rule includes some discussion of potential future measures that will be used to adjust payments.