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Medicare skilled nursing facilities would get a net 1.2% pay increase — totaling $430 million — in fiscal 2016 under a final rule issued by the Centers for Medicare & Medicaid Services late Thursday.

The pay hike reflects a 2.3% market basket increase, reduced by a 0.6% “forecast error adjustment” and 0.5% for a “multifactor productivity adjustment” that is required by law, CMS officials said.

The announcement, which was made at the close of the business day, is bound to cause long-term care leaders heartburn. On April 20, federal regulators published a proposal calling for a net 1.4% pay hike (worth an estimated $500 million).

CMS also announced it is finalizing adoption of three measures called for in the SNF Quality Reporting Program that is mandated in last year’s IMPACT Act. The measures come in these domains: (1) skin integrity and changes in skin integrity; (2) incidence of major falls; and (3) functional status, cognitive function, and changes in function and cognitive function.  

For the first, the outcome measure will be the percent of residents or (short-stay) patients with pressure ulcers that are new or worsened. The outcome measure for major falls (in long-stay residents) will be the percent of residents experiencing one or more falls with “major injury.”

The final measure will be gauged by the percent of patients or residents with an admission and discharge functional assessment and a care plan that addresses function, CMS said. The agency added that intends to add more measures in the future.

Starting in fiscal 2018, providers that do not provide the above quality-indicator information will have their Medicare market basket payment increases dropped by 2%. The act requires not only the implementation of a quality reporting program for SNFs but also standardized data reporting across four post-acute care settings: skilled nursing facilities, home health agencies, inpatient rehabilitation facilities facilities and long-term care hospitals.

While Thursday’s rule finalized the adoption of the Skilled Nursing Facility 30-Day All-Cause Readmission quality measure, the future of an “all-condition, risk-adjusted potentially preventable hospital readmission rate” will be addressed “in future rule making,” the agency said.

The agency said the new payment policies announced Thursday continue an intended shift toward rewarding providers for quality outcomes rather than the volume of procedures rendered. More details of the SNF Value Based Payment (VBP) program will be included in next year’s proposed payment rule, officials said.

The final rule is on display at the Federal Register’s Public Inspection Desk and will be formally published in the Aug. 4 edition.