CMS Releases 2021Proposed Skilled Nursing Facility PPS

On April 10, 2020, the Centers for Medicare & Medicaid Services (CMS) released both the 2021 proposed skilled nursing facility (SNF) and hospice payment rules. We’ve provided a high-level overview of key provisions in the proposed rules below.

Regulations

CMS Releases 2021 Proposed Skilled Nursing Facility PPS and Hospice Rules

  • Jennifer Boese
  • 5/15/2020

Key insights

  • The 2021 proposed SNF payment rule provides a 2.3% market basket update and hospice proposed rule provides a 2.6% update.
  • CMS proposes to apply revised wage index delineations to both the SNF and hospice wage index values. Recognizing providers may experience fluctuations in their area wage index values as a result, CMS also proposes a 5% cap on any decrease for 2021.

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On April 10, 2020, the Centers for Medicare & Medicaid Services (CMS) released both the 2021 proposed skilled nursing facility (SNF) and hospice payment rules. We’ve provided a high-level overview of key provisions in the proposed rules below. To take a deeper dive, download the proposed SNF rule (CMS-1737-P) and proposed hospice rule (CMS-1733-P) from the Federal Register. You can also use the links to submit formal comments for the rules by 5 p.m. ET on June 9, 2020.

SNF prospective payment system (PPS) proposed rule

CMS indicates the proposed fiscal year (FY) 2021 SNF PPS rule would increase payment rates to SNFs in the aggregate by $784 million and decrease payments to SNFs under the Value-Based Payment program by $199.5 million.

Payment update

The market basket update for FY 2021 is 2.3%. This is obtained from the market basket increase factor of 2.7 minus 0.4, due to the statutorily requirement multi-factor productivity adjustment.

The federal unadjusted rate per diems are listed in Tables 3 and 4.

 

Patient-Driven Payment Model (PDPM)

CMS continues to monitor PDPM implementation and invites comments from stakeholders on any observations or information related to the impact of PDPM implementation on providers or patient care.

To reflect PDPM and the case-mix adjusted federal rates associated with indexes for urban and rural facilities, CMS provides two tables (see Tables 5 and 6) and a full description of the columns within the table, which can be seen in the Federal Register.

Also for PDPM, CMS proposes several technical ICD-10 code mappings and list changes.

Wage index changes

Since the inception of the SNF PPS, hospital inpatient wage data has been used in developing a wage index applied to SNFs. CMS continues to use the hospital wage index as a basis for developing the SNF wage index. The proposed wage index applicable to FY 2021 is set forth in Tables A and B and is available on the CMS website.

For FY 2021, CMS proposes to implement the revised federal Office of Management & Budget (OMB) delineations (September 2018) for the wage index. CMS indicates that, under these revisions, 42% of SNFs would experience decreases in their area wage index values, but just over 2% of providers would experience a “significant decrease (that is, greater than 5%) in their area wage index value.” On the flip side, 54% of SNFs would have higher area wage index values after these changes.

Because there are various implications of using these revisions (movement from rural to urban and urban to rural classifications, among others), CMS proposes a one-year transition policy. Under this transition, CMS would cap any decrease in the SNF’s wage index at 5% in FY 2021 compared to its wage index for the prior fiscal year (FY 2020). The changes would go into full effect in FY 2022.

Due to budget neutrality requirements, CMS will apply a budget neutrality factor. That proposed factor is 0.9982.

CMS states these changes also apply to all non-critical access hospital swing-bed rural hospitals.

SNF Quality Reporting Program (QRP)

CMS proposes no changes to this program.

Nursing Home Compare

CMS proposes to codify its previous data suppression policy for low-volume SNFs and phase one review and correction deadline policy.

SNF Value-Based Purchasing Program

CMS proposes no real changes to this program, continuing the policy where performance and baseline periods will automatically roll forward by one year from the previous year. As such, the FY 2023 performance period will be FY 2021, and the baseline period will be FY 2019.

Hospice proposed rule

Payment update

The market basket update for FY 2021 is 3% minus the required multi-factor productivity adjustment of 0.4, which results in an update of 2.6%.

The labor portion of the hospice payment rates is as follows:

  • Routine Home Care (RHC) — 68.71%
  • Continuous Home Care (CHC) — 68.71%
  • General Inpatient Care (GIP) — 64.01%
  • Inpatient Respite Care (IRC) — 54.13%

The non-labor portion is equal to 100% minus the labor portion for each level of care. Therefore, the non-labor portion of the payment rates is as follows:

  • RHC — 31.29%
  • CHC — 31.29%
  • GIP — 35.99%
  • IRC — 45.87%

Wage Index

CMS is applying revised OMB delineations for FY 2021 to the hospital wage index values. CMS recognizes that some hospices will experience fluctuations in their area wage index values as a result and is proposing a 5% cap on any decrease in the wage index value from for this year compared to the prior year. The proposed hospice wage index would be in effect October 1, 2020, through September 30, 2021. The wage index adjustments will go into full effect in FY 2022, with no cap.

When receiving RHC or CHC, the appropriate wage index value is applied to the labor portion of the hospice payment rate based on the geographic area in which the beneficiary resides. However, the appropriate wage index value is applied to the labor portion of the payment rate based on the geographic location of the facility for beneficiaries receiving GIP or IRC. CMS also applies a wage index standardization factor. See (Tables 6 and 7) which can be seen in the Federal Register for proposed rates and standardization factors.

Election statement content modifications and addendum

CMS reminds hospices about its previously finalized policies on election statements and addendums. Those will take effect October 1, 2020. CMS provides several examples of these changes and indicates more education will be forthcoming.

Hospice Quality Reporting Program (QRP)

CMS proposes no changes to this program.

How we can help

Connect with CLA for further clarification on these proposed rules and how they might impact skilled nursing facilities or hospice care providers.

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