The Centers for Medicare & Medicaid Services will adjust nursing home payment rates downward by 4.6% to account for unintentional overpayments in the transition to the Patient Driven Payment Model, the agency announced late Monday. That $1.7 billion decrease will result in a new, $320 million annual decrease after accounting for a market basket increase and other factors, officials explained.
“To do this during a pandemic is actually heartless. We were comfortable with them spreading it out and thought that would be the case,” Rick Matros, president and CEO of Sabra Health Care REIT, told McKnight’s Long-Term Care News.
In issuing its 2023 Skilled Nursing Facilities Prospective Payment System, CMS also said it was proposing a 3.9%, or $1.4 billion, payment boost for the sector. That includes a 2.8% market basket update and a 1.5 percentage point forecast error adjustment, as well as a 0.4% lower productivity adjustment. The 3.9% Part A adjustment is significantly more than CMS proposed for providers in recent years.
Combined, the two adjustments will result in an estimated aggregate decrease of about $320 million in Medicare Part A payments to SNFs in fiscal 2023.
In the same announcement, CMS also addressed two separate workforce issues.
In a major foreshadowing of a minimum staffing rule it plans to introduce early next year, CMS said it will add total nursing hours per resident, per day to its value based purchasing program. Observers have said tying a federal minimum to incentive payments could lead to better compliance. Staffing hours are one of three proposed VBP additions.
The agency also said it will cap its annual wage index adjustments at 5% given the ongoing workforce challenges and volatile labor costs
PDPM take back
CMS last April originally announced that it intends to recalibrate PDPM’s parity adjustment. The agency had found that aggregate spending under the new model unintentionally increased by 5.3%, or $1.7 billion, when compared to what it would have paid SNFs under the old Resource Utilization Group model.
PDPM went into effect Oct. 1, 2019. Though it was the biggest change to the nursing home reimbursement system in at least a generation, it was supposed to be budget neutral.
Experts have warned that providers should take advantage of PDPM — in the way it’s currently constructed — so they don’t miss out on reimbursement opportunities as CMS officials decided on changing the model.
“After considering the stakeholder feedback received in the FY 2022 SNF PPS rulemaking cycle to better account for the effects of the COVID-19 PHE in this proposed rule, CMS is proposing a recalibration of the PDPM parity adjustment using a combined methodology of a subset population that excludes those patients whose stays utilized a COVID-19 PHE-related waiver or who were diagnosed with COVID-19, and control period data using months with low COVID-19 prevalence from FY 2020 and FY 2021,” the agency wrote.
SNF VBP updates
CMS also said it intends to add three new metrics to its value-based purchasing program, which rewards rewards high-performing providers but penalizes those who fail to meet benchmarks through a sector-wide withholding. The additions include:
- Healthcare Associated Infections Requiring Hospitalization, an outcome measure that assesses performance on infection prevention and management.
- Total nursing hours per resident day, a a structural measure that uses auditable electronic data to calculate total nursing hours per resident each day.
- Discharge to community, which will encourage SNFs to successfully discharge patients back to the community.
The agency’s Monday release also included plans to address President Joe Biden’s minimum staffing initiative. CMS said it’s specifically seeking input on establishing minimum staffing requirements that nursing homes “will need to meet to ensure all residents are provided safe, high-quality care, and nursing home workers have the support they need.”
The agency is also seeking stakeholder comment on the implementation of a nursing home staff turnover measure in the SNF VBP. The measure would detail the percent of total nurse staff that have left the SNF over the last year, and would include a facility’s annual turnover for total nurses and aides.
CMS said its spending impact calculations did not incorporate an estimated $186 million in SNF VBP reductions for certain SNFs that it expects to make in 2023.
In addition to other changes, the agency said, “In order to mitigate instability in SNF PPS payments due to significant wage index decreases that may affect providers in any given year,” it is proposing a 5% cap on annual wage index increases “to smooth year-to-year changes in providers’ wage index payments.”
This is a developing story. Please check back for additional updates.