CMS Releases FY2023 Final Rule to Update PPS Skilled Nursing Facilities – MHA

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The Centers for Medicare and Medicaid Services (CMS) recently released a final rule to update the Medicare Fee-for-Service (FFS) Prospective Payment System (PPS) for Skilled Nursing (SNF) facilities. for fiscal year 2023. Major updates include:

  • A negative parity adjustment of 2.3% to the patient-based payment model (PDPM) case distribution indices following the implementation of PDPM to maintain budget neutrality with the previous case distribution system of the RUG-IV. CMS finalized a 2-year phase-in of the proposed 4.6% negative adjustment despite opposition from the MHA, American Hospital Association and others.
  • A net rate increase of 5.1% after the market basket update and other adjustments, up from the proposed net rate increase of 4%. NFS that fail to comply with CMS’s Quality Reporting Program (QRP) requirements are subject to a 2% federal rate update reduction. Institutions should note that the 5.1% increase will be offset by the negative parity adjustment of 2.3% described above.
  • Adoption of a new quality measure in the SNF Quality Reporting Program (QRP) beginning in FY2024: the Influenza Vaccine Coverage Measure among Healthcare Personnel (HCP) (NQF #0431).
  • Revise the compliance date for certain measures and data reporting that have been delayed due to the COVID-19 Public Health Emergency (PHE). Specifically, effective October 1, 2023, NFS will be required to collect data on certain Standardized Patient Assessment Data Elements (SPADE) and two new quality measures, namely:
    • Transfer of medical information to the patient
    • Transfer of medical information to the provider
  • Update to the SNF Value-Based Purchase (VBP) program, including the continued removal of the SNF 30-day all-cause readmission measure for the SNF VBP program year from fiscal year 2023 through scoring and payment adjustment purposes.
  • Added new metrics to the SNF VBP program beginning with the “Skilled Nursing Facility Healthcare Associated Infections Requiring Hospitalizations” and “Total Hours per Resident Day Staffing” metrics in fiscal year 2026 and the “Discharge to Community” metric in fiscal year 2027.
  • Establish a permanent policy to limit annual declines in the wage index to 5%.
  • Implement a small increase in the work-related portion of the federal rate from the current 70.4% to 70.8%, which will result in a small increase in payments for NFCs with a wage index above 1.0 .

The MHA will provide members with an updated impact analysis and additional details on the final rule in the near future. Members with questions should contact Vickie Kunz at MHA.

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