On August 7, 2023, the Centers for Medicare & Medicaid Services (“CMS”) released a final rule (“Final Rule”) that updated Medicare payment policies and rates for skilled nursing facilities (“SNFs”) under the Skilled Nursing Facility Prospective Payment System (“SNF PPS”) for fiscal year (“FY”) 2024.
The Final Rule also finalizes changes and additions to the SNF Quality Reporting Program (“SNF QRP”) and the SNF Value-Based Purchasing (“SNF VBP”) Program for FY 2024 and future years. Additionally, the Final Rule also eliminates the requirement for SNFs to actively waive their right to a hearing in writing and instead treat the failure to submit a timely hearing request as a constructive waiver.
Changes to Civil Money Penalties
The Final Rule changes to Civil Money Penalties (“CMP”) allow SNFs to receive by default the 35% penalty reduction when the SNF has not appealed within the 60-day timeframe. The change to 42 CFR § 488.436(a) reduces and streamlines the path SNFs take to resolve and settle these penalties with CMS and the states since SNFs would not need to submit a written waiver of a hearing to appeal deficiencies that resulted in the CMP being imposed. Previously, the enforcement process required SNFs to submit written requests to waive hearing rights when a civil monetary penalty were imposed.
Changes to SNF QRP
For FY 2024, CMS finalized an aggregate approximate $1.4 billion increase in Medicare Part A payments to SNFs. CMS sees this as a 4.0% increase, which is based on a 3.0% SNF market basket increase, plus a 3.6% market basket forecast error adjustment and less a 0.2% productivity adjustment.
The SNF QRP is a pay-for-reporting program. SNFs that do not meet reporting requirements are subject to a two-percentage-point reduction in their Annual Payment Update. In the Final Rule, CMS adopts three measures in the SNF QRP.
The Final Rule completes the creation of:
- Discharge Function Score (known as the “DC Function”) measure beginning with the FY 2025. This measure evaluates functional status by assessing the percentage of SNF residents who meet or exceed an expected discharge function score and uses mobility and self-care items already collected on the Minimum Data Set (“MDS”).
- CMS is also adopting the COVID Vaccine: Percent of Patients/Residents Who Are Up to Date (known as the “Patient/Resident COVID-19 Vaccine”) measure beginning with the FY 2026. This measure reports the percentage of stays in which residents in an SNF are up to date with recommended COVID vaccinations in accordance with the Centers for Disease Control and Prevention’s most recent guidance.
CMS chose not to finalize the adoption of the CoreQ: Short Stay Discharge (known as the “CoreQ: SS DC”) measure that was proposed to begin with the FY 2026. This measure would calculate the percentage of individuals discharged from an SNF, within 100 days of admission who are satisfied with their SNF stay.
CMS also finalized an increase of the SNF QRP data completion thresholds for the MDS Data Items beginning with FY 2026. Under the Final Rule, SNFs must report 100% of the required quality measure data and standardized resident assessment data collected using the MDS on at least 90% of the assessments they submit to CMS. Any SNF that does not meet the proposed requirement that 90% of all MDS assessments submitted contain 100% of required data items will be subject to a reduction of 2 percentage points to the applicable fiscal year.
Changes to the SNF VBP Program
The SNF VBP rewards SNFs with incentive payments based on the quality of care they provide. All SNFs paid under Medicare’s SNF PPS are included in the SNF VBP. In the Final Rule, CMS adopts four new quality measures.
The Final Rule creates:
- The Long Stay Hospitalization Measure per 100 residents beginning with the FY 2027 program year and FY 2025 performance year. This measure assesses the hospitalization rate of long-stay residents.
- The Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) beginning with the FY 2027 program year and FY 2025 performance year. This measure assesses the falls with major injury rates of long‑stay residents.
- The Nursing Staff Turnover Measure for the SNF VBP program beginning with the FY 2026 program year and FY 2024 performance year.
- The Discharge Function Score measure beginning with the FY 2027 program year and FY 2025 performance year.
Practical Takeaways
- SNFs subject to the SNF QRP and SNF VBP rules should review the Final Rule’s changes to determine the potential impact on their operations.
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