Key insights
- CMS proposed the 2.3% as the second phase of the PDPM parity adjustment reduction
- CMS proposes 3.7% aggregate increase in payments
- CMS proposes various changes to the Value-Based Payment and Quality Reporting programs
- CMS will continue to evaluate a minimum staffing requirement
Need further clarification on the proposed rules?
On April 4, 2023, the Centers for Medicare & Medicaid Services (CMS) issued its proposed rule updating the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for the fiscal year (FY) 2024.
Industry in Context
CLA’s reporting on the economic state of the SNF industry shows occupancy rates are not fully recovered to pre-pandemic levels and will likely not increase to those levels until 2024. Due to workforce shortages, many SNFs are relying on contract nursing. Staffing agencies are charging 22 – 28% higher rates since the beginning of the pandemic. Facilities are watching for CMS’s release of a staffing mandate and they continue to struggle with labor shortages.
According to a CLA study, the SNF industry would need to hire between 58,000 and 191,000 additional full-time equivalents to meet a potential staffing mandate. The financial impact to SNFs for meeting a mandate could result in reduced admissions and reductions in census, negatively impacting residents who need skilled care.
Also included in the proposed rule are proposals for changes to the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program 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 that reflects changes over time in the prices of an appropriate mix of goods and services included in covered SNF services.
Based on forecasting, CMS adjusted the rates based on a 2.7% SNF market basket update. CMS then increased the market basket update by 3.6 percentage points for the forecast adjustment and reduced the market basket update 0.2 percentage points for the productivity adjustment. In addition, a 2.5% decrease is included for the second phase of the Patient Driven Payment Model (PDPM) parity adjustment. This results in a net aggregate increase of 3.7%, which is approximately a $1.2 billion increase in Medicare Part A payments in FY 2024.
FY 2024 Unadjusted Federal Return Rate Per Diem — URBAN
| Rate Component | PT | OT | SLP | Nursing | NTA | Non-Case-Mix |
| Per Diem Amount | $70.08 | $65.23 | $26.16 | $122.15 | $92.16 | $109.39 |
FY 2024 Unadjusted Federal Return Rate Per Diem — RURAL
| Rate Component | PT | OT | SLP | Nursing | NTA | Non-Case-Mix |
| Per Diem Amount | $79.88 | $73.36 | $32.96 | $116.71 | $88.05 | $111.41 |
Labor-Related Share, FY 2023 and FY 2024
| Relative importance, labor-related share, FY 2023 22:2 forecast1 | Proposed Relative importance, labor-related share, FY 2024 22:4 forecast2 | |
| Wages and salaries | 51.9 | 52.2 |
| Employee benefits | 9.5 | 9.5 |
| Professional fees: Labor-related | 3.5 | 3.4 |
| Administrative & facilities support services | 0.6 | 0.6 |
| Installation, maintenance & repair services | 0.4 | 0.4 |
| All other: Labor-related services | 2.0 | 2.0 |
| Capital-related (.391) | 2.9 | 2.9 |
| Total | 70.8 | 71.0 |
1 Published in the Federal Register; Based on the second quarter 2022 IHS Global Inc. forecast of the 2018-based SNF market basket.
2 Based on fourth quarter 2022 IHS Global Inc. forecast of the 2018-based SNF market basket.
Value-based purchasing updated
CMS is proposing an expansion of the SNF VBP program including the adoption of four new quality measures, a replacement of one quality measure, and several policy changes in the SNF VBP program. The proposed adoption of the four new measures would begin with FY 2026, FY 2027, and FY 2028 SNF VBP years with data collection beginning in FY 2024.
For FY 2026, CMS proposes the adoption of the Nursing Staff Turnover measure, with a FY 2024 performance year, with a payment impact beginning in FY 2026. For FY 2027, CMS proposes the adoption of the Discharge Function Score measure with a FY 2025 performance year. This measure is also proposed for the SNF QRP. CMS is also proposing for FY 2027 the Long Stay Hospitalization measure per 100 residents and the Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) with a FY 2025 performance year.
CMS has proposed the replacement of the Skilled Nursing Facility 30-Day All-Cause Readmission measure with the Skilled Nursing Facility Within Stay Potentially Preventable Readmissions measures beginning with the FY 2025 performance year.
Finally, for the VBP program, CMS has proposed an increase of the payback percentage policy under the program from the current 60% level to 66% for FY 2027. The intent of this change is to provide bonuses to the high performing, high duals SNFs without impacting other SNFs.
Quality reporting program
The SNF quality reporting program (QRP) requires SNFs to meet certain reporting requirements, and SNFs may be subject to a 2% reduction in their annual update rate if the reporting requirements are not met.
CMS is proposing the threshold for data completion for the Minimum Data Set (MDS) items increase beginning in FY 2026. The proposal is for SNFs to report 100% of the required quality measure data and standardized resident assessment data collected using the MDS on at least 90% of the assessments submitted to CMS. The current threshold is 80%. Any SNF that does not meet the proposed requirement will be subject to a 2 percentage points reduction of the applicable fiscal year annual payment update beginning with FY 2026.
There are currently 16 measures for FY 2024.
Quality Measures Currently Adopted for the FY 2024 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 |
| NHSN | |
| HCP COVID-19 Vaccine | COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) |
| HCP Influenza Vaccine | Influenza Vaccination Coverage among Healthcare Personnel (HCP) |
CMS proposes to adopt three new measures, remove three measures, and modify one measure. The three new measures proposed for adoption include the Discharge Function Score measure beginning with FY 2025 SNF QRP; CoreQ: Short Stay Discharge measure beginning with FY 2026 SNF QRP; and the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up To Date measure, beginning with FY 2026 SNF QRP. CMS has proposed modifying the COVID-19 Vaccination Coverage among Healthcare Personnel measure beginning with FY 2025.
The measures proposed for removal include the Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function measure; the Application of the IRF Functional Outcome measures: Change in Self-Care Score for Medical Rehabilitation Patients; and the Change in Mobility Score for Medical Rehabilitation Patients measure.
Minimum staffing requirements
In the FY 2023 SNF PPS proposed rule, CMS had requested comments in response to a possible minimum staffing requirement. CMS received numerous comments in response to the request for information and continues to review the feedback received.
In addition, CMS launched a mixed-methods study in August 2022 to collect quantitative and qualitative information on staffing levels in nursing facilities. CMS will utilize the feedback and study results to make future decisions on proposals for minimum direct care staffing requirements in nursing facilities.
How we can help
Connect with CLA for further clarification on these proposed rules and how they impact skilled nursing facilities. Our health care team is on the front lines of regulatory, policy, and payment changes for providers across the continuum and can provide guidance to meet your specific needs.