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CMS Proposes Raising Payments for Skilled Nursing, Inpatient Rehabilitation and Hospice

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CMS Proposes Raising Payments for Skilled Nursing, Inpatient Rehabilitation and Hospice



On April 21st, 2016 the Centers for Medicare and Medicaid Services (CMS) issued three proposed rules to update Medicare payment rates for skilled nursing, inpatient rehabilitation and hospice respectively.  Murer provides synopses of these rules and concludes with an important takeaway: “don’t spend the money yet.”


Skilled Nursing [CMS-1645-P]

CMS projects aggregate payments to Skilled Nursing Facilities (SNFs) will increase by 2.1 percent (or $800 million) in FY2017 from FY2016.  This would nearly double the increase SNFs received in aggregate in FY2016 of 1.2 percent (or $430 million) from FY2015.

In addition to the payment rate increase, this proposed rule supplements existing regulations that establish the Skilled Nursing Facility Value Based Purchasing Program (SNF-VBP).   Under the SNF-VBP, value-based incentive payments are made to SNFs based on performance in quality of care, not just quantity of services, beginning in FY2019.  Each facility will receive a performance score and corresponding performance ranking based on performance or improvement in specified quality measures, which will be used to adjust facility per diem rates.  Per diem rates will be adjusted based on established payment percentages for high and low ranking facilities.   This proposed rule specifies the 30-day Potentially Preventable Readmission measure as the readmission measure to be assessed as part of the SNF-VBP.  As more information and clarification is released regarding the SNF-VBP in future rulemaking, Murer will provide additional guidance.

Under the Skilled Nursing Facility Quality Report Program (SNF-QRP), SNFs must implement a quality reporting program beginning with FY2018 or else face a two percent reduction to their annual payments.  The proposed rule specifies additional quality measures, including an assessment-based measure on drug regimen review (for FY2020 payment determination and beyond) and three claims-based measures (for FY2018 payment determination and beyond): Discharge to Community; Medicare Spending per Beneficiary; and a 30 day Preventable Post-discharge Readmission.


Inpatient Rehabilitation [CMS-1647-P]

The proposed rule updates Medicare payment policies and rates for the Inpatient Rehabilitation Facility Prospective Payment System (IRF-PPS).  Updated payments would reflect an estimated 1.6 percent (or $125 million) aggregate increase for FY2017 from FY2016 compared to the 1.8 percent (or $135 million) increase for FY2016 from FY2015.

In addition to the rate increase, the proposed rule specifies quality measures and public reporting requirements for the Inpatient Rehabilitation Facility Quality Reporting Program (IRF-QRP).  Four claims-based quality measures would be included in IRF-QRP (for FY2018 payment determination and subsequent years): Discharge to Community; Medicare Spending Per Beneficiary; Potentially Preventable 30 Day Post-Discharge Readmission; and Potentially Preventable Within Stay Readmission.  In addition, one new assessment based quality measure (FY2020 and subsequent years) would be included: Drug Regimen Review.  CMS also proposes adding four new measures to IRF-QRP public reporting by Fall 2017 related to MRSA, NQF, CDI and influenza vaccinations.  According to the rule, the aggregate costs in FY2017 for the new quality reporting requirements are estimated to be $5.2 million.


Hospice [CMS-1652-P]

On April 28th, 2016 Medicare published the proposed rule updating the hospice wage index and payment rate update.  As proposed, hospices in aggregate would receive a 2 percent increase (or $330 million) in their payments for FY2017 from FY2016.  The hospice cap (where per diem payments made in excess of the statutory cap are considered overpayments to be refunded by the hospice) for the 2017 cap year (October 1, 2016 to September 30, 2017) will be $28,377.17.  According to the rule, Medicare spending on hospices is projected to continue to grow 7 percent a year as beneficiaries, end-of-life care and home and community-based setting care increase.

In addition to the rate adjustments, the rule updates the Hospice Quality Reporting Program (Hospice QRP).  Revisions to the program include updates to the Hospice CAHPS survey, the addition of two new quality measures for FY2017, updates to the current Hospice Item Set data collection instrument and the initiation of public display of quality measures and other hospice data expected to begin in calendar year 2017.   Hospices that fail to meet quality reporting requirements receive a 2.0 percentage point reduction to their payments, which started in FY2014.  Finally, the rule provides information the Medicare Care Choices Model, which tests payment and service models that aim to reduce expenditures while maintaining or improving quality of care.



Most of the reporting thus far on these proposed rules focus solely on the increased Medicare payments to skilled nursing, inpatient rehabilitation and hospice.  However, these proposed rules are still subject to alteration before rule finalization and from any future, wide-sweeping, Medicare funding changes implemented by Congress.  Moreover, just as important as the rate increases, the proposed rules simultaneously implement new quality reporting measures and reporting requirements, which can significantly alter or raise the cost of conducting operations.

Please let us know if you have any questions regarding these proposed rules.   Murer is available to discuss the proposed rules in more detail or explain their potential impact to facilities.  Murer would also be happy to assist any providers that would like to submit public comments on these rules by June 20th for consideration by HHS.  We will continue to monitor the agency’s discussions of these proposed rules, and all the latest updates can be found at www.murer.com.  Please contact our office for more information at (708) 478-7030.

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