[UPDATED] CMS final rule gives care homes 2.7% pay rise, PDPM cuts to be phased in

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The federal government will give skilled nursing facilities a 2.7% wage increase in their payments for 2023, according to the final rule released on Friday.

This reflects a $1.7 billion increase resulting from a 5.1% increase in NSF payment rates. This includes a 3.9% increase in the FNS consumption basket, a consumption basket forecast error adjustment of 1.5 percentage points and a productivity adjustment of less than 0.3 percentage points.

CMS has also indicated that it will provide a two-year phased implementation of an adjustment to SNF payment rates linked to the Patient-Based Payment Model (PDPM).

This will result in a 2.3% reduction, or approximately $780 million, in payment rates for fiscal year 2023, and a 2.3% reduction for fiscal year 2024, according to CMS.

CMS said it had taken “a more cautious approach” when calculating payments, acknowledging the ongoing Covid-19 public health emergency (PHE) and the need to mitigate potential negative impacts on the industry, including facility closures or disproportionate impacts on rural and smaller facilities. .

The rise in refunds, coupled with the gradual adjustment of the peg, has drawn mixed reactions from industry leaders.

American Health Care Association President and CEO Mark Parkinson applauded CMS’s action, calling the measures “essential” for long-term and post-acute care providers.

“We greatly appreciate an overall increase in the Medicare program over the coming fiscal year to help stabilize the profession and ensure our vulnerable residents have access to the quality care they need,” Parkinson said in a statement.

“In the meantime, we hope to resolve the historic nursing home workforce crisis by working collaboratively with the administration and other stakeholders. It is imperative that policy makers develop a comprehensive and supportive solution to help us recruit and retain more long-term carers,” he added.

LeadingAge President and CEO Katie Smith Sloan, meanwhile, pushed back on the federal government’s decision to include the parity adjustment given the difficult financial and operating environments the industry is currently facing.

“We have warned CMS that now is not the time to cut payments,” she said in a statement. “It is deeply disappointing that CMS has chosen to include the parity adjustment in today’s final rule. Spreading the impact of the adjustment over two years is helpful, but the end result adds to the financial negligence chronicle of our countries’ nursing homes – in times of real crisis.

Final rule adjustments, coupled with inflation-induced rising running costs, staffing shortages and recruitment and retention issues will increasingly threaten access to care homes, he said. she added, as well as insufficient support from policy makers.

The government agency in April 2021 determined that PDPM increased payments to nursing homes by about 5% in fiscal year 2020, for a total gain of $1.7 billion.

At this point, CMS hinted at needed parity adjustments in its rule proposal for FY2022, but those plans have been put on hold for a year to give nursing homes some breathing room while dealing with the effects of the pandemic.

CMS — in its FY23 SNF Forward Payments System Rule Proposal released in April — recommended a 3.9%, or $1.4 billion, payout increase to the industry. The government agency arrived at this figure by increasing the market basket rate for skilled nursing facilities by 2.8%, a forecast error adjustment of 1.5 percentage points and a multifactor productivity adjustment. by 0.4 percentage point.

In its proposed rule, CMS also factored in a proposed downward adjustment to SNF payment rates of 4.6%, or $1.7 billion, to achieve budget neutrality.

Carriers across the country have written to CMS expressing their concerns, with many stressing that the PDPM-related reduction should at least be spread over several years. CMS received approximately 4,717 comments during the 60-day feedback period on the proposed cuts and implementation of a federal staffing standard.

The agency also provided updates in the final rule on the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing Program (VBP).

Currently, the SNF VBP program is designed to improve patient outcomes by providing financial incentives or penalties based on 30-day hospital readmission rates; VBP defines a baseline of performance and improvement that SNFs must meet in order to avoid a penalty.

In addition, CMS has taken note of the RFI seeking comments on establishing minimum staffing requirements for nursing homes – as noted earlier this year in the State of the Health Address. Union of President Biden.

Comments ranged from the overall approach to establishing such standards, recommendations on how to implement the requirement, factors to consider as well as comments on the impending staffing review.

CMS doubled down on its commitment to release a proposed rule within a year of Biden’s SOTU address.

CMS Administrator Chiquita Brooks-LaSure called the final rule an “important step” in achieving the agency’s goal of protecting both nursing home residents and staff.

“We are continuing our work to focus on staffing and value, ensuring that residents of Medicare nursing homes can receive high-quality care based on the needs of the whole person, rather than focus on the volume of certain services provided to them,” Brooks-LaSure said in a statement.

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