[UPDATED] CMS’ 2024 SNF Final Rule Seen as Insufficient for Payment Rates While Advancing Unfair Measures

The Centers for Medicare & Medicaid Services (CMS) issued a final rule Monday that updates Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System for fiscal year 2024.

The federal agency estimates that the aggregate impact of the payment policies in the latest rule would result in a net increase of 4.0%, or approximately $1.4 billion, in Medicare Part A payments to SNFs in FY 2024. This estimate reflects a $2.2 billion increase resulting from the 6.4% net market basket update to the payment rates.

The final rule also brings forth updates to the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program for FY 2024 and future years, including the adoption of a measure intended to address staff turnover.

Experts said that given the rising costs associated with labor and other expenses, the payment rate might be insufficient to meet the needs of the moment.

“While it is nice to see a more significant market basket increase (in the 6.2% range) than the prior years’ 2% and 3% adjustments, it is important to note that much of this increase is making up for last years’ significant under-reimbursement,” Brian Ellsworth, VP public policy and payment transformation for Health Dimensions Group, told Skilled Nursing News.

Moreover, Ellsworth noted that the expenses for the nursing home Industry have gone up. “[The] average hourly nursing wage went up by 17% between 2019 and 2021, so CMS had ample indication that the market basket update needed to be adjusted upward. Adequate payment for nursing staff is of vital importance and will need to be factored into the staffing standards when they come out,” he said.

Ellsworth also recommends that CMS revisit consolidated billing policy to better ensure that patients with high-cost medications get more timely access to skilled nursing. “It is long past due to make some adjustments to that policy,” he said.

Meanwhile, this expert view is backed by nursing home advocates as well, who said that even though they welcome the payment rate increase, it doesn’t go far enough to ensure quality given the tough labor and economic environment.

“The final rule released today does not address the reality of providers’ operating environments, and will, ultimately, limit older adults’ access to much-needed care and services,” said Katie Smith Sloan, president and CEO of LeadingAge, the largest association of nonprofit providers of aging services, including nursing homes. “[The] 4% provided in this rule will surely be offset by the increasing costs of care, which will most certainly continue to rise in the coming year – on top of the expected staffing standards.”

And, Martin Allen, senior vice president of Reimbursement Policy at the American Health Care Association (AHCA), acknowledged that while the Medicare increase will help nursing homes enhance their services and support their caregivers, more must be done, especially if the Biden Administration implements a federal staffing mandate – an effort that AHCA estimates could cost tens of billions of dollars each year. “It is vital to fund government mandates and to ensure Medicare remains a viable program to ensure our nation’s seniors can access the care they need,” Allen said.

Moreover, advocates pointed out that several of the measures stand out as “concerning” on quality reporting and value-based purchasing. Among these measures, they especially noted the staff and resident vaccination measure and the total Nurse Staffing Turnover measure for the VBP as not being practical.

LeadingAge also said that it disagreed with how CMS was defining gaps in employment with a 60 day-timeframe, saying that it was contradictory to the Department of Labor’s guarantee of 12 weeks per year of family/medical leave (FMLA).

“These measures aren’t fair, reasonable or within providers’ control,” Smith Sloan said.

The final 2024 payment rule is expected to be published in the Federal Register on Aug. 7.

Updates to payment rates

The market basket update is based on a 3.0% SNF market basket increase plus a 3.6% market basket forecast error adjustment and minus a 0.2% productivity adjustment, as well as a negative 2.3%, or approximately $789 million, decrease in the FY 2024 SNF PPS rates as a result of the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration, CMS said in its press release.

“After considering the stakeholder feedback received on the FY 2023 SNF PPS proposed rule and to balance mitigating the financial impact on providers of recalibrating the PDPM parity adjustment with ensuring accurate Medicare Part A SNF payments, CMS finalized a PDPM parity adjustment factor of 4.6% in the FY 2023 SNF PPS final rule with a two-year phase-in period, resulting in a 2.3% reduction in FY 2023 and a 2.3% reduction in FY 2024 to the SNF PPS payment rates,” CMS said.

CMS also noted that the impact figures do not incorporate the VBP reductions for certain SNFs subject to the net reduction in payments under the VBP. Those adjustments are estimated to total $184.85 million in FY 2024.

CMS’ other changes include those made to the PDPM ICD-10 Code Mappings, in response to stakeholder feedback.

The federal agency also announced changes to the SNF QRP by adopting two measures in the QRP, removing three measures from the SNF QRP, and modifying one measure in the QRP. In addition, this rule makes policy changes to the QRP and begins public reporting of four measures.

And CMS said that it is also adopting the Discharge Function Score (DC Function) measure beginning with the FY 2025 SNF QRP. This measure assesses 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 removing certain measures as well beginning in FY 2025, including one pertaining to self care score for medical rehab measure. 

Changes to the VBP Program

CMS had also proposed initially to gauge patient satisfaction as part of quality reporting and VBP programs through the CoreQ: Short Stay Discharge measure but decided to nix it in the final rule given that it lacked support during the comment period.

“While we and our members support this type of reporting, the measure as proposed did not provide adequate funding to ensure its success – so it was rightly excluded in the final rule,” Smith Sloan said.

CMS is adopting four new quality measures, replacing one quality measure, and finalizing several policy changes in the SNF VBP Program. The new quality measures are as follows:

• CMS is adopting the Nursing Staff Turnover measure for the SNF VBP program beginning with the FY 2026 program year. This is a structural measure that has been collected and publicly reported on Care Compare and assesses the stability of the staffing within an SNF using nursing staff turnover. Facilities would begin reporting for this measure in FY 2024, with payment effects beginning in FY 2026.
• CMS is adopting the Discharge Function Score Measure beginning with the FY 2027 program year. This measure is also being adopted for the SNF QRP and assesses functional status by assessing the percentage of SNF residents who meet or exceed an expected discharge function score and use mobility and self-care items already collected on the MDS.
• CMS is adopting the Long Stay Hospitalization Measure per 1,000 Resident Days beginning with the FY 2027 program year. This measure assesses the hospitalization rate of long-stay residents.
• CMS is adopting the Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) beginning with the FY 2027 program year. This measure assesses the falls with major injury rates of long-stay residents.
• CMS is replacing the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) with the Skilled Nursing Facility Within Stay Potentially

The rule also finalizes a constructive waiver process to ease administrative burdens for CMS related to processing Civil Monetary Penalty (CMP) appeals, the federal agency said in a press release. CMS publishes the final rule consistent with the legal requirements to update Medicare payment policies for SNFs annually.

2024 projected Medicare Part D coverage

CMS also announced that the average total monthly premium for Medicare Part D coverage is projected to be approximately $55.50 in 2024. This expected amount is a decrease of 1.8% from $56.49 in 2023. Stable premiums for Medicare prescription drug coverage in 2024 are supported by improvements to the Part D program in the Inflation Reduction Act that allow people with Medicare to benefit from reduced costs.