A proposal that would boost Medicare payments to skilled nursing providers by 1.3% next fiscal year also could trigger additional reporting requirements and increase the potential for penalties.

Adjustments to the SNF Quality Reporting Program and the SNF Value-Based Program were wrapped into an updated Skilled Nursing Facility Prospective Payment System announced late Thursday afternoon by the Centers for Medicare & Medicaid Services.

The proposed rule would net providers an additional $444 million in overall Medicare Part A payments, a boost that comes as many providers say they’re operating at a loss due to the ongoing pandemic.

But CMS acknowledged the aggregate amount did not incorporate SNF VBP reductions estimated at $184.25 million for FY 2022. The agency is also pledging future adjustments to the Patient-Driven Payment Model to balance out a perceived but unintended increase in payments. 

And the proposal makes clear CMS is pursuing plans to expand programs that tie pay to performance, such as VBP and QRP.

The CMS administrator can expand the VBP program to as many as 10 measures beginning in FY 2024, thanks to a provision in the Consolidated Appropriations Act of 2021. Those future reporting requirements can measure functional status, patient safety, care coordination or patient experience, and the agency said Thursday it is specifically seeking comments on how best to capture resident impressions and staff turnover data. 

Some data elements already mandated for reporting by both SNFs and long-term care facilities could be in the running, as the agency attempts to increase pay parity.

“The expanded SNF VBP measure set would assess the quality of care that LTCFs provide to all LTCF residents, regardless of payer, as it would best represent the quality of care provided to all Medicare beneficiaries in the facility,” the agency said.

QRP shows signs of growth

In addition, the proposed rule would expand QRP to include reporting of staff COVID-19 vaccination rates. Skilled nursing facilities would have to report staff COVID-19 vaccination rates to the Centers for Disease Control and Prevention National Healthcare Safety Network starting Oct. 1. Currently, staff vaccination reporting is voluntary.

The proposed COVID-19 vaccination coverage measure would require skilled nursing facilities to report worker vaccination rates to gauge “whether SNFs are taking steps to limit the spread of COVID-19 among their HCP, reduce the risk of transmission within their facilities and help sustain the ability of SNFs to continue serving their communities throughout the COVID-19 PHE and beyond.”

The proposal also calls for a new measure regarding healthcare-associated infections, with a reporting requirement and potential penalties linked to the rate of sepsis, urinary tract infections and pneumonia.

Medicare fee-for-service claims data would be used to estimate the rate of HAIs acquired in a SNF that lead to hospitalization. The goal, CMS said, is to determine which SNFs have notably higher rates of HAIs and provide information about a facility’s infection prevention and management program.

While nursing homes have collected quality data for years, hospital readmission rates, the first and so far only measure to tie performance to pay, have failed to benefit many providers. The Medicare Payment Advisory Commission found that in the first three years of the SNF VBP program, payments were lowered for about three-quarters of SNFs. Between 21% and 39% didn’t earn back any withheld funding and just 2% to 3% of providers earned maximum payment increases.

CMS will provide some relief on quality measures. Because of the COVID-19 public health emergency, the agency previously granted a reporting exception for several quarters. The agency is proposing to adjust the number of quarters used in QRP calculations to limit data that could be greatly impacted.

The agency is also seeking requests for information on policy solutions that might help close an existing health equity gap in skilled nursing, as evidenced by the adoption of standardized patient assessment data elements, or SPADES, and on its future plans to define digital quality measures for the QRP. 

The proposed rule would take effect Oct. 1, 2021, the start of the new fiscal year.

Pay hike likely to be offset by future adjustments

Even a small pay boost should come as welcome news to providers. Nursing homes lost an estimated $22.6 billion in revenue during 2020 and are on track to lose another $11.3 billion this year, according to a projection from the American Health Care Association. 

“This ongoing work makes government support and robust reimbursement rates more important than ever,” Mark Parkinson, president and CEO of AHCA said in a statement Thursday. “With the skilled nursing profession grappling with an economic crisis and hundreds of facilities on the brink of closure due to the pandemic, it is critical that Medicare remain a reliable funding source and reflect the increasing costs providers are facing.”

But even as occupancy declined, many providers said PDPM was one of COVID’s bright spots, supporting higher pay for higher-need patients. It turns out that might have been too bright a light.

CMS found PDPM spurred an unintended average hike of about 5%, or $1.7 billion, in payments to nursing homes. It is soliciting comments as to how the system can be returned to the agency’s original, payment-neutral vision.

“CMS is soliciting broad public comments on a potential methodology for recalibrating the PDPM parity adjustment that would account for the potential effects of the COVID-19 PHE without compromising the accuracy of the adjustment,” the agency said. “CMS also seeks comment on whether any necessary adjustment should be delayed or phased in over time to provide payment stability.”

CMS also proposes to rebase and revise the SNF market basket index, including updating the base year from 2014 to 2018. 

Last year, for fiscal 2021, nursing homes wound up with a net 2.2% Medicare raise, which was 0.1% less than the 2.3% rate originally proposed in April 2020. The increase amounted to an additional $750 million injected into the skilled nursing funding stream. 

A CMS fact sheet on the proposed 2022 rule can be found here. CMS will be taking comments on the proposals until June 7. The agency will announce any adjustments to the rule this summer, after collecting and making decisions about comments gathered.