CMS Finalizes $851M Pay Bump for Nursing Homes, Rolls Out PDPM Clarifications

The federal government on Tuesday finalized a predicted funding increase for nursing homes, while also formalizing changes to several key quality programs — with an eye toward clarifying some parts of the new Medicare payment model for skilled nursing facilities.

Under the terms of the 2020 final rule for Medicare skilled nursing facilities, the Centers for Medicare & Medicaid Services (CMS) will increase payments to nursing homes by $851 million in the coming fiscal year, which begins October 1 of this year.

That figure represents a slight drop-off from the increase of $887 million projected in the proposed version of the rule, which CMS released back in April; the $851 million comes from a 2.8% increase to the Medicare market basket rate in the final rule, as opposed to a 3% rise in the proposal.

The Tuesday announcement also includes several clarifications related to the Patient-Driven Payment Model, also set to take effect October 1. CMS formally changed the definition of “group therapy” to any modality with two to six residents performing the same or similar activities. That change brings group therapy in SNFs more in line with other care settings, such as inpatient rehabilitation facilities, which use the same definition; CMS currently defines group therapy as activities with exactly four residents.

“As PDPM implementation takes place, CMS believes aligning the group therapy definition serves to improve the agency’s consistency in payment policies across PAC settings,” the agency wrote in a fact sheet about the changes.

Group and concurrent therapy have emerged as areas of focus for SNF operators as they prepare for PDPM, which shifts payment incentives away from the volume of therapy provided and toward resident acuity. Because therapy minutes no longer drive revenue, providers have considered the potential for both cost savings and improved resident outcomes through group modalities.

CMS also rolled out a streamlined process for making routine changes to the list of ICD-10 codes, diagnostic classifications for residents that will soon take on outsized importance once PDPM takes effect.

“To help ensure SNFs have the most up-to-date ICD-10 code information as soon as possible, in the clearest and most useful format, CMS is finalizing a sub-regulatory process for making non-substantive changes to the list of ICD-10 codes used to classify patients into clinical categories under the PDPM,” the agency wrote.

Outside of PDPM, the rule brings changes to a pair of quality-improvement programs championed by CMS in recent years.

In order to promote more collaboration between skilled nursing facilities and other sites of care, officials finalized a pair of new quality measures to the SNF Quality Reporting Program (QRP). Starting in fiscal 2020, operators will need to prove that they provided sufficient health information to both the medical providers and the patient upon transfer or discharge.

Other changes coming to the QRP include the adoption of new standardized patient assessment data elements — such as cognitive function, mental status, impairments, and social determinants of health — as well as the exclusion of baseline nursing home residents to the Discharge to Community PAC quality measure. CMS furthermore called off plans to collect QRP information from all patients regardless of their payer source.

CMS also made some tweaks to the SNF Value-Based Purchasing (VBP) program, under which providers face a 2% Medicare cut for failing to meet certain quality benchmarks, including hospital readmission rates. The agency will change the name for its “potentially preventable readmission” measure, while also updating public reporting requirements — with the goal of more accurately presenting information about low-volume SNFs. Finally, CMS additionally implemented a new 30-day deadline for Phase One Review and Corrections requests.

“This final rule is part of our continuing efforts to strengthen the Medicare program by better aligning payment rates for these facilities with the costs of providing care and increasing transparency so that patients are able to make informed choices,” CMS noted.

Mark Parkinson, president and CEO of the American Health Care Association, thanked CMS administrator Seema Verma for the increase — while also noting that the pay bump isn’t a cure-all for the nation’s nursing homes.

“The 2.4 percent market basket increase is critical, especially as members are actively preparing for implementation of the new Patient-Driven Payment Model on October 1,” Parkinson said in a statement. “Skilled nursing facilities are coping with devastating closures, particularly in rural areas. This increase doesn’t solve this problem, but it does provide some much-needed help.”

By Alex Spanko, Skilled Nursing News