BREAKING NEWS: CMS gives skilled nursing 2.4% Medicare pay raise, unveils another new resident classification system

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CMS Administrator Seema Verma announced the changes Friday.
CMS Administrator Seema Verma announced the changes Friday.

In a flurry of activity late Friday, the Centers for Medicare & Medicaid Services announced an $850 million pay raise for skilled nursing facilities for fiscal 2019 that comes along with major simplifications to a previously pitched resident classification system.

The proposed Patient-Driven Payment Model (PDPM), a switch from last spring's originally pitched RCS-1, will replace the Resource Utilization Group system, or RUG-IV, used to categorize Part A residents into various payment groups based on their level of need.

In its announcement, CMS said the new model would reduce the number of payment group combinations by 80%, use more standardized items for payment calculations and “greatly simplify” providers' paperwork.

The agency said it estimates the changes would reduce reporting requirements enough to amount to $2 billion in systemwide savings over the next decade and help “to create greater contact between healthcare professionals and their patients.”

“For skilled nursing facilities, we are taking important steps through proposed payment improvements that will reduce administrative burden, and foster innovation to improve care and quality for patients,” CMS Administrator Seema Verma said in announcing a total of four proposed post-acute care payment rules. “As people face rising healthcare costs in other clinical settings, we need to leverage advances in technology that help to modernize our programs in a way that benefits patients.”

The proposals would allow rehabilitation physicians to conduct some meetings without being physically in the room and also remove overly prescriptive admission documentation requirements.

The agency said the new SNF classification system model would also allow patients to choose a skilled nursing facility with services tailored to their condition because payments will be tied to condition rather than each specific service provided.

The 2.4% market basket increase is slated to go into effect Oct. 1, the Patient Driven Payment Model (PDPM) a year later. The rate hike, mandated by the 2018 Bipartisan Budget Act, will infuse the industry with an additional $850 million.

The proposed rule for Fiscal 2019, available as a PDF now but to be formally published in the Federal Register on May 8, also updates the SNF Quality Reporting Program to add costs of current measures so that CMS can better evaluate when the price outweighs the benchmarking benefit. No new reporting requirements would be implemented as part of the meaningful use initiative. But the agency does expect to begin publicly displaying the four assessment-based quality measures, as well as displaying two years worth of data connected to community discharges and Medicare spending per beneficiary.

The rule would also update performance and baseline periods for the 2021 value-based payment program and adjust the scoring methodology.

All of the rules are purported to support the agency's Patients over Paperwork Initiative, incentivizing person-centered care and continuing the movement away from paying for volume.

CMS has scheduled an Open Door Forum conference call for Tuesday at 2 p.m. ET that will allow providers to learn more about the proposed rule and the various programs it effects. Check back with McKnight's for continuing coverage.