CMS Proposes 4.1% Increase in 2025 for Skilled Nursing Facilities

 

The Centers for Medicare & Medicaid (CMS) issued its final rule updating the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for the fiscal year (FY) 2024. It includes a net increase of 4%, or approximately $1.4 billion, in Medicare Part A payments.

Also included in the final rule are changes to the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing Program (VBP) for 2024 and future years.

For more information, download the proposed rule from the Federal Register.

Market basket and payment updates

CMS is required to establish a market basket index reflecting changes over time in the prices of an appropriate mix of goods and services included in covered SNF services. 

Based on forecasting, for 2025 CMS adjusts the rates based on a 2.8% SNF market basket update. CMS then increased the market basket update by 1.7% due to a forecast adjustment. For FY 2023, the forecasted increase in the SNF market basket was 3.9%, whereas the actual increase for FY 2023 was 5.6% — resulting in the actual increase being 1.7% points higher than the estimated increase.

This 1.7% is added to the proposed market basket and then reduced by 0.4% for the required productivity adjustment, resulting in the 4.1% update. This is an estimated increase of $1.3 billion in aggregate Medicare Part A payments in FY 2025.

 

 

Table 3: FY 2025 Unadjusted Federal Return Rate Per Diem — URBAN

Rate Component	PT	OT	SLP	Nursing	NTA	Non-Case-Mix
Per Diem Amount	$73.16	$68.10	$27.31	$127.52	$96.21	$114.20

Table 4: FY 2025 Unadjusted Federal Return Rate Per Diem — RURAL

Rate Component	PT	OT	SLP	Nursing	NTA	Non-Case-Mix
Per Diem Amount	$83.39	$76.59	$34.41	$121.83	$91.92	$116.31

Table 7: Labor-Related Share, FY 2024 and FY 2025

	Final FY 2024 labor-related share based on 2023q2 forecast of the 2018-based SNF market basket1	Proposed FY 2025 labor-related share based on 2023q4 forecast of the proposed 2022-based SNF market basket2
Wages and salaries	52.5	53.2
Employee benefits	9.3	9.1
Professional fees: Labor-related	3.4	3.5
Administrative & facilities support services	0.6	0.4
Installation, maintenance & repair services	0.4	0.5
All other: Labor-related services	2.0	2.0
Capital-related (.391)	2.9	3.2
Total	71.1	71.9

¹ Published in the Federal Register; Based on the second quarter 2023 IHS Global Inc. forecast of the 2018-based SNF market basket.
² Based on fourth quarter 2023 IHS Global Inc. forecast of the 2022-based SNF market basket.

Value-based purchasing update

CMS proposes several policy changes in the SNF VBP program. However, it’s not proposing any new measures or measure set adjustments. The proposed changes’ impact is an estimated reduction of $187.69 million in aggregate payments to SNFs during FY 2025.

CMS also proposes to include additional components of the Minimum Data Set (MDS) validation process finalized in FY 2024. This includes SNF selection, medical record request, and medical record submission for the validation. The Nursing Staff Turnover (FY 2024 final rule), SNF Healthcare-Associated Infection (HAI), and Total Nurse Staffing measures will be scored beginning in FY 2026. The other three measures from FY 2024 along with the FY 2023 Discharge to Community-Post Acute Care (DTC PAC) SNF measure will be scored beginning FY 2027.

Finally, for the VBP program, CMS proposed to apply the measure minimum finalized for FY 2027 to FY 2028 and forward. This requires SNFs to report the minimum number of cases for four of the eight measures. SNFs not meeting this requirement would be excluded from the applicable program year and would receive their adjusted federal per-diem rate for that fiscal year.

Quality reporting program validation process

CMS proposes requiring SNFs to participate in a validation process applying to data submitted using the MDS and SNF Medicare fee-for-service claims as a SNF QRP requirement beginning with the FY 2027 SNF QRP. This validation process would align with the SNF VBP process adopted in the FY 2024 final rule. 

For standardized patient assessment data, up to 1,500 SNFs submitting at least one MDS record in the calendar year (CY) three years prior to the applicable FY SNF QRP would be selected. Further, CMS proposes the same SNFs randomly selected for VBP validation would also be selected for the QRP validation process. 

SNFs would be required to submit one MDS and 10 medical records. If requested documents aren’t submitted, the SNF’s applicable annual market basket would be reduced by 2%. This reduction would be applied to the payment update two fiscal years after the fiscal year for which the records were requested. For claims-based measures, CMS proposes to apply the Medicare Administrative Contractor’s existing validation process for the SNF QRP claims-based measures beginning with the FY 2027 program year.

Quality reporting program

There are currently 15 adopted measures, and CMS is not proposing to adopt any new measures.

Table 28: Quality Measures Currently Adopted for the SNF QRP

Short Name	Measure Name & Data Source
Resident Assessment Instrument Minimum Data Set (Assessment-Based)
Pressure Ulcer/Injury	Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
Application of Falls	Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)
Application of Functional Assessment/Care Plan	Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
Change in Mobility Score	Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients
Discharge Mobility Score	Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients
Change in Self-Care Score	Application of the IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients
Discharge Self-Care Score	Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients
DRR	Drug Regimen Review Conducted With Follow-Up for Identified Issues-Post Acute Care (PAC) Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)
TOH-Provider*	Transfer of Health (TOH) Information to the Provider Post-Acute Care (PAC)
TOH-Patient*	Transfer of Health (TOH) Information to the Patient Post-Acute Care (PAC)
Claims-Based
MSPB SNF	Medicare Spending Per Beneficiary (MSPB)-Post Acute Care (PAC) Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)
DTC	Discharge to Community (DTC)-Post Acute Care (PAC) Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)
PPR	Potentially Preventable 30-Day Post-Discharge Readmission Measure for Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)
SNF HAI	SNF Healthcare-Associated Infections (HAI) Requiring Hospitalization
National Healthcare Safety Network
HCP COVID-19 Vaccine	COVID-19 Vaccination Coverage among Healthcare Personnel (HCP)
HCP Influenza Vaccine	Influenza Vaccination Coverage among Healthcare Personnel (HCP)

For standardized patient assessment data collected, CMS proposes to require SNFs to collect and submit — through the MDS — four new items and to modify one. The four new items proposed as standard assessment data elements are one item for living situation, two items for food, and one item for utilities. The collection of these items would begin with the FY 2027 SNF QRP.

The item proposed for modification is the current transportation item in the MDS so it aligns with a transportation item collected on the AHC HRSN Screening Tool. The modification would change item A1250 on the MDS to have a defined 12-month look-back period and to simplify the response options.

The overall impact of this proposal is an estimated cost of $2.3 million annually to SNFs beginning with the FY 2027 QRP.

Civil monetary penalties

Currently, the state and/or CMS decides whether to select a per day (PD) or per instance (PI) civil monetary penalty (CMP) when considering whether a CMP will be used as a remedy to a noncompliance instance. CMS proposes to change this and define ‘‘instance’’ or ‘‘instance of noncompliance’’ as a separate factual and temporal occurrence when a facility fails to meet a participation requirement. 

CMS proposes each instance of noncompliance would be sufficient to constitute a deficiency and a deficiency may be comprised of multiple instances of noncompliance. Doing so allows CMS and the states to impose multiple PI CMPs for the same type of noncompliance in a survey, thereby incentivizing facilities to take meaningful steps to permanently resolve their deficiencies.

CMS proposes for each instance of noncompliance, CMS and the state may impose a PD CMP of $3,050 to $10,000, a PI CMP of $1,000 to $10,000, or both. CMS proposes when a survey contains multiple instances of noncompliance, CMS and the state may impose any combination of PI or PD CMP for each instance of noncompliance within the same survey. Additionally, CMS proposes to allow for each instance of noncompliance, a PD CMP, PI CMP, ‘‘or both’’ may be imposed, regardless of whether the deficiencies constitute immediate jeopardy. 

CMS proposes when a survey contains multiple instances of noncompliance, a combination of PI and PD CMPs for each instance of noncompliance may be imposed within the same survey. This allows for penalties to be better aligned with noncompliance and for more consistency of CMP amounts across the nation. This proposed change is estimated to result in an additional penalty amount of $25 million annually to long-term care facilities and $163,800 annual administrative costs to CMS and states.

Other policies

The proposed rule includes several changes to ICD-10 code mappings along with two requests for information (RFI). The first RFI seeks comments on potential future updates to the non-therapy ancillary component of the patient-driven payment model, and the second RFI seeks comments on future measure concepts for the QRP.

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