CMS Releases SNF Final Rule; Increases 2024 Payments by 4%

August 4, 2023
Policy Snapshot

On July 31, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare payment policies and rates for skilled nursing facilities (SNFs) under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for fiscal year (FY) 2024. In addition, the final rule includes updates to the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for FY 2024 and future years, including the adoption of a measure intended to address staff turnover, as outlined in the president’s Executive Order 14070, Increasing Access to High-Quality Care and Supporting Caregivers. Finally, the rule finalizes a constructive waiver process to ease administrative burdens for CMS related to processing Civil Monetary Penalty (CMP) appeals.

CMS estimates that the aggregate impact of the payment policies in this rule would result in a net increase of 4%, or approximately $1.4 billion, in Medicare Part A payments to SNFs in FY 2024. This estimate reflects a $2.2 billion increase resulting from the 6.4% net market basket update to the payment rates, which is based on a 3% SNF market basket increase plus a 3.6% market basket forecast error adjustment and less a 0.2% productivity adjustment, as well as a negative 2.3%, or approximately $789 million, decrease in the FY 2024 SNF PPS rates as a result of the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration.

SNF QRP

Updates to the SNF QRP include adopting two measures, modifying one, and removing three measures.

Adopting:

  • Discharge Function Score (DC Function) Measure (FY 2025): This measure assesses functional status by assessing the percentage of SNF residents who meet or exceed an expected discharge function score and uses mobility and self-care items already collected on the Minimum Data Set (MDS). This measure will replace the topped-out process measure—the Application of the Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment/a Care Plan That Addresses Function (Application of Functional Assessment/Care Plan) Measure.
  • COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident COVID-19 Vaccine) Measure (FY 2026): This measure reports the percentage of stays in which residents in a SNF are up to date with recommended COVID-19 vaccinations in accordance with the Centers for Disease Control and Prevention's (CDC’s) most recent guidance. Data will be collected using a new standardized item on the MDS.

Modifying:

  • COVID-19 Vaccination Coverage among Health-Care Personnel (HCP COVID-19 Vaccine) Measure (FY 2025): This measure tracks the percentage of health-care personnel (HCP) working in SNFs who are considered up to date with recommended COVID-19 vaccination in accordance with the CDC’s most recent guidance. The prior version of this measure reported only on whether HCP had received the primary vaccination series for COVID-19, while the modified measure requires SNFs to report the cumulative number of HCP who are up to date with recommended COVID-19 vaccinations in accordance with the CDC’s most recent guidance.

Removing:

  • Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (Application of Functional Assessment/Care Plan) Measure (FY 2025): CMS is removing this measure for two reasons. First, the Application of Functional Assessment/Care Plan measure meets the conditions for measure removal factor one: measure performance among SNFs is so high and unvarying that meaningful distinctions in performance improvements can no longer be made. Second, this measure meets the conditions for measure removal factor six: there is an available measure (the DC Function measure, discussed above) that is more strongly associated with desired resident functional outcomes.
  • Application of the IRF Functional Outcome Measures: Change in Self-Care Score for Medical Rehabilitation Patients (Change in Self-Care Score) measure; and the Application of the IRF Functional Outcome Measures: Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score) Measure (FY 2025): CMS is removing these two measures because they meet the condition for measure removal factor eight: the costs associated with a measure outweigh the benefits of its use in the program. Additionally, these measures are similar to or duplicative of other measures within the SNF QRP.

CMS is increasing the SNF QRP Data Completion thresholds for the MDS Data Items beginning with the FY 2026 SNF QRP. SNFs must report 100% of the required quality measure data and standardized resident assessment data collected using the MDS on at least 90% of the assessments they submit to CMS. Any SNF that does not meet the requirement will be subject to a reduction of 2 percentage points to the applicable FY annual payment update beginning with FY 2026. CMS is codifying this requirement at § 413.360(f)(1)(ii).

SNF VBP

CMS is adopting four new quality measures, replacing one quality measure, and finalizing several policy changes in the SNF VBP Program. The new quality measures are as follows:

  • CMS is adopting the Nursing Staff Turnover Measure for the SNF VBP program beginning with the FY 2026 program year. This is a structural measure that has been collected and publicly reported on Care Compare and assesses the stability of the staffing within a SNF using nursing staff turnover. This is part of the administration’s focus to ensure adequate staffing in long-term care settings and delivers on a commitment included in the President’s Executive Order 14070, Increasing Access to High-Quality Care and Supporting Caregivers. Facilities would begin reporting for this measure in FY 2024, with payment effects beginning in FY 2026.
  • CMS is adopting the Discharge Function Score Measure beginning with the FY 2027 program year. This measure is also being adopted for the SNF QRP and assesses functional status by assessing the percentage of SNF residents who meet or exceed an expected discharge function score and use mobility and self-care items already collected on the MDS.
  • CMS is adopting the Long Stay Hospitalization Measure per 1,000 Resident Days beginning with the FY 2027 program year. This measure assesses the hospitalization rate of long-stay residents.
  • CMS is adopting the Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) beginning with the FY 2027 program year. This measure assesses the falls with major injury rates of long-stay residents.
  • CMS is replacing the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) with the Skilled Nursing Facility Within Stay Potentially Preventable Readmissions (SNF WS PPR) measure beginning with the FY 2028 program year.

Changes to CMP: Waiver of Hearing, Reduction of Penalty Amount (§ 488.436)

  • In this rule, CMS is streamlining an administrative procedure for CMS by adopting a constructive waiver process that will consider a facility to have waived its hearing when CMS does not receive a request for a hearing within the requisite timeframe. The accompanying 35% penalty reduction would remain unchanged, though CMS is committing to review the appropriateness of this policy and the reduction amount in the future. This revision will reduce the administrative burden for CMS and allow the agency to shift resources toward bolstering other oversight and enforcement activities, including providing additional focus on nursing home compliance.

The final rule can be downloaded from the Federal Register.