Headshot of CMS Administrator Chiquita Brooks-LaSure
CMS Administrator Chiquita Brooks-LaSure

The Centers for Medicare & Medicaid Services Thursday proposed a 4.1% pay increase for nursing homes in fiscal 2025 but declined to issue an update on its staffing minimum proposal as part of its annual payment rule proposal.

In addition, the agency has proposed an expanded Civil Monetary Penalty process that would allow “for more per instance and per day” to be imposed.

The proposal also includes changes in the Patient-Driven Payment Model ICD-10 Code Mappings and Value-Based Purchasing updates.

Top executives had been hoping for more than the “modest” Medicare pay hike from CMS this year.

“While we appreciate this proposed increase, this funding will not stem the tide for the billions of dollars that will be required by providers each year to meet the agency’s proposed staffing minimum requirement,” said American Health Care Association President and CEO Mark Parkinson in a statement. “We implore the Administration and CMS to reverse course on this staffing mandate; otherwise, more nursing homes will close, more vulnerable residents will be displaced by these closures, and more seniors won’t be able to access the long term care they need. A modest Medicare payment bump is woefully inadequate when coupled with an unfunded staffing mandate.”

Under this year’s proposed rule, which kicks in Oct. 1, there’s a SNF market basket update of 2.8%, plus a 1.7% market basket forecast error adjustment, and a negative 0.4% productivity adjustment. 

Last year, the market basket update was a whopping 6.1%, which included a 3.6% market basket forecast error boost but also clickdowns for productivity and PDPM recalibration adjustments. 

Nursing home operators and their various stakeholders remain on pins and needles about the fate of the proposed first-ever minimum staffing mandate. The comment period on the initial rule closed in November and CMS workers have been poring through more than 40,000 submitted comments on it since. 

The staffing mandate measure was sent to the Office of Budget Management more than a week ago, where it will stay for an indeterminate period before a final rule could be issued and set off what would likely be a firestorm among adamant providers and those who would like tougher standards enacted.

The future of VBP, PBJ, NTA

Proposed changes to the SNF value-based pay program released on Thursday would include tweaking the case-mix methodology used as part of the Total Nurse Staffing measure.

Additionally, the agency has proposed an update of the Review and Correction policy that it previously finalized, to ensure that SNFs can review and correct Payroll-Based Journal (PBJ) data beginning Oct. 1, 2025, and MDS data beginning Oct. 1, 2026.

Proposed changes to the ICD-10 code mappings and lists used under PDPM are available on the PDPM website. 

Regulators also have asked for comments on potential future updates to the highly watched non-therapy ancillary (NTA) component of PDPM. Stakeholders see this as a good way, after more than four years under PDPM, to add items in the list of NTA comorbidities and the points assigned to each.

Help for labor costs         

The new pay hike proposal comes on the heels of a notably high net 4.0% bump a year earlier, which was fueled by recent inflation spikes. It was originally proposed to be 3.7% in April 2023, but was increased when finalized four months later. A similar adjustment could occur this year, up or down.

“The payment update reflects the increased costs that providers have experienced over the past couple of years. There is a shortage of staff, including nursing and therapists, and in this kind of climate, our labor costs are higher because it costs us more to recruit and retain,” said ADVION Executive Vice President Cynthia Morton in response to the proposed rule. “The payment update of 4.1% will greatly help with these increased labor costs and all the other categories of costs that have increased in order to continue providing high-quality patient care.” 

The impact figures issued Thursday notably do not incorporate the approximately $196.5 million in SNF VBP reductions for certain SNFs subject to the net reduction in payments under the SNF VBP, officials explained.

CMP powers expanded

Thursday’s proposed would change CMS enforcement policies to “impose more equitable and consistent civil monetary penalties (CMP) for SNFs for health and safety violations.”

Officials explained that penalties now can be imposed either per-day or per-instance but not both during the same survey. Per-instance penalties also may not be imposed concurrently for the same deficiency.

“CMS is proposing to expand its ability to impose financial penalties to drive sustained correction of health and safety deficiencies,” an agency noticed said. “These revisions will allow CMS to expand the mix and number of penalties in response to situations that put residents’ health and safety at risk.”

CMS issued a fact sheet detailing its plans for the FY 2025 SNF pay rule.

It describes how the agency plas to improve the accuracy of facilities’ wages and wage-related costs to better account for regional variations. New OMB Bulletin 23-01 defines Core-Based Statistical Areas that will be used to update the SNF PPS wage index.

Changes proposed for the Quality Reporting Program (QRP) include the addition of four new social determinants of health items.

The 211-page proposed rule is set to be officially published in the Federal Register on Wednesday. A 60-day comment period is expected to follow, after which officials will have until the end of July to announce a final rule.

This is a developing story. Please check back for more details.