FY2023 Final Rule for Skilled Nursing Facilities Reduces Payments to Compensate for New Payment Model

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The Centers for Medicare & Medicaid Services today released its final rule for fiscal year 2023 for the Skilled Nursing Facilities Prospective Payment System, which is expected to increase fiscal year 2023 payments by 2.7%, or $904 million, compared to fiscal year 2022. This includes a 3.9% market basket update, a 1.5 percentage point market basket forecast error adjustment, and a reduction in productivity of 0.3 percentage point. This figure also includes a parity adjustment lag of 2.3%; the agency has finalized its 4.6% parity adjustment compensation proposal, which it says is necessary to achieve a budget-neutral implementation of the new SNF case group system (the model patient-based payment system), but will be phased in over two years. These impact figures do not include purchase reductions based on the value of NFCs for certain NFCs. In addition, to mitigate the year-to-year instability of SNF PPS payments, CMS has also finalized a permanent 5% cap on annual wage index declines.

CMS will adopt a new quality metric for the SNF Quality Reporting Program that assesses the rate of flu vaccination coverage among healthcare workers from the SNF FY 2024 QRP, as opposed to the FY 2025 program as originally proposed. CMS will also require SNFs, effective October 1, 2023, to report certain measurements and patient data that have been delayed due to the COVID-19 public health emergency.

In addition, the SNF VBP program will adopt two new quality measures starting in the FY 2026 program year, with one additional measure in the FY 2027 program year; update the scoring methodology used to determine payout adjustments; and continue the policy of removing last year’s measures.

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