The Fiscal Year (FY) 2024 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) final rule was filed to the Federal Register on July 31. The rule includes a finalized 4.0% payment increase for FY 2024, higher than what was initially proposed in April. Otherwise, the rule is generally consistent with what was proposed in April with the notable exception that Centers for Medicare & Medicaid Services

(CMS) chose not to finalize the adoption of the CoreQ: SS Discharge measure for the SNF Quarterly Reporting Program (QRP). Details on major provisions of the rule are outlined below.

Payment Updates

For FY 2024, CMS has finalized an approximately $1.4 billion net increase to Medicare Part A payments to SNFs. This 4.0% increase differs from the proposed rate by 0.3% and is the result of a 3.0% SNF market basket increase—plus a 3.6% forecast error adjustment, less a 0.2% productivity adjustment. This rate is then reduced by an additional 2.3% resulting from the second year of the Patient-Driven Payment Model (PDPM) parity adjustment recalibration and 0.1% budget neutrality factor. The difference between the proposed rate and the finalized rate is due to a 0.3% increase in the SNF market basket based on an updated (second quarter 2023) IHS Global Inc. forecast and is 1.3% more compared to the rate finalized for FY 2023 (2.7%).

LeadingAge is pleased with the rate increase as our members strive to provide quality care in the face of mounting costs due to forthcoming minimum staffing standards and enhanced infection control and emergency preparedness activities. Recognizing that these expenditures impact Medicare A SNF services as well as long-term care services, CMS must make use of all avenues of reimbursement to adequately compensate providers for the quality of care that nursing home residents deserve.

SNF Quality Reporting Program

CMS has finalized updates to the SNF QRP, including the addition of two measures, removal of three measures, modification of one measure, public reporting of four measures, and a change to data completion thresholds. Notably, CMS has opted not to adopt one measure as proposed.

For FY 2025, CMS has finalized the modification of the COVID-19 Vaccination Coverage Among Healthcare Personnel measure to reflect the percent of health care personnel who are up to date with COVID-19 vaccination (as defined by the Centers for Disease Control & Prevention (CDC)). Data collection on the modified measure, COVID-19 Vaccination: Percent of Healthcare Personnel Who Are Up to Date, will begin on October 1, 2023, and the CDC has made modifications to the National Healthcare Safety Network (NHSN) system from which this data derives.

Public reporting of the QRP measure on Care Compare will begin with the October 2024 refresh. Note that the percent of health care personnel who are up to date is already reported on Care Compare directly from NHSN, and the addition of the QRP measure reporting will result in two separate and likely different rates being reported on each nursing home’s Care Compare page unless CMS takes steps to rectify this situation.

Also for FY 2025, CMS has finalized the adoption of the Discharge Function Score measure to replace the SNF QRP measure Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan that Addresses Function, adopted in the FY 2016 SNF PPS final rule. Collection of MDS data for this measure will begin on October 1, 2023, and public reporting on Care Compare for this measure will begin with the October 2024 refresh.

Lastly for FY 2025, CMS has finalized removal of the Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function measure (Application of Functional Assessment / Care Plan), the Application of Inpatient Rehabilitation Facility (IRF) Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients measure (Change in Self-Care Score), and the Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients measure (Change in Mobility Score) measures.

For FY 2026, CMS has finalized the adoption of the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure for FY 2026. This assessment-based measure will collect data from a new item on the Minimum Data Set (MDS) and report the percentage of SNF stays in which residents were up to date with COVID-19 vaccination based on CDC’s definition during the reporting year. SNFs will begin reporting MDS data for residents discharged on October 1, 2024. A draft of the new MDS item is available here. CMS acknowledges that MDS reporting for this measure will duplicate currently required reporting through the NHSN system and will take this into consideration, though the QRP measure will report on a slightly different population than the NHSN data. Data from the MDS item will be publicly reported on Care Compare with the October 2025 refresh.

Notably, CMS did not finalize the adoption of the Core Q: Short Stay Discharge measure for FY 2026. CMS cited comments related to the limited amount of data that would be gathered due to the simplicity of the instrument as well as the need for providers to contract with a survey vendor and develop new workflows to submit resident information files to vendors.

Additional comments in opposition of adopting the measure included commenter preference for the Nursing Home Consumer Assessment of Healthcare Providers and Systems (NHCAHPS) survey, lack of actionable feedback from CoreQ survey results, concerns about measure validity and reliability, concerns about provider involvement and endorsement of the measure, measure exclusions, and imputation methods for missing values. While the measure was not adopted in this final rule, CMS remains committed to fixing the identified gap of a customer satisfaction measure in SNF QRP and will likely address this issue in future rulemaking.

Lastly, CMS has finalized increased data completion thresholds for the SNF QRP, beginning with the FY 2026 SNF QRP program year. Thresholds have been increased from 80% to 90%, meaning that SNFs will be required to complete 100% of the data on at least 90% of submitted MDSs in a year to be in compliance with SNF QRP reporting requirements, beginning with calendar year 2024.

We note that the assessments subject to the new data completion thresholds will be submitted beginning only three months after the implementation of the updated MDS 3.0 v.1.18.11 on October 1, 2023. For this reason, it will be important to ensure all interdisciplinary team members are trained on proper and timely data completion and submission. Be sure to check out the MDS webinar on the LeadingAge Learning Hub, the CMS training videos on the CMS YouTube channel, and the CMS resources available in the Downloads section of the SNF QRP Training page on the CMS website.

SNF Value-Based Purchasing Program

CMS has finalized several changes to the SNF Value-Based Purchasing (VBP) program, including the modification of one measure to replace one measure, adoption of four measures, increase of the payback percentage and adoption of a health equity payment incentive, and new data validation processes. CMS has also finalized case minimums, measure minimums, scoring methodologies, and reporting periods for the various program years and measures as proposed.

CMS has finalized the modification of the SNF Potentially Preventable Readmissions After Hospital Discharge measure (SNFPPR) to change the outcome observation window from a fixed 30-day window following acute care hospital discharge to within the SNF stay and to change the time allowed between a qualifying prior proximal inpatient discharge and SNF admission from one day to 30 days. With these changes, the SNFPPR will be renamed the SNF Within-Stay Potentially Preventable Readmissions (SNF WS PPR) measure. CMS has also finalized the replacement of the SNF All-Cause 30-Day Potentially Preventable Readmissions Measure (SNFRM) with the SNF WS PPR beginning with the FY 2028 SNF VBP program year.

CMS has finalized the adoption of the Total Nursing Staff Turnover measure for the FY 2026 program year, with data collection beginning in FY 2024. While this measure is already posted publicly on Care Compare, it will be important to remember to measure specifications as we anticipate the implementation of federal staffing standards. Nursing homes using an agency or other contracted staff will want to ensure that employee identifiers in the Payroll-Based Journal (PBJ) system remain consistent to avoid unnecessary inflation of turnover rates. Information on linking employee identifiers can be found in this QSO memo from January 2022.

For FY 2027 program year, CMS has finalized adoption of Percent of Residents Experiencing One or More Falls with Major Injury (Long-Stay), Discharge Function Score, and Number of Hospitalizations per 1,000 Long-Stay Resident Days. Data collection on these measures will begin with FY 2025.

CMS has finalized a variable payback percentage effective with the FY 2027 program year to include a Health Equity Adjustment incentive bonus. SNFs that perform in the top third of a given measure and also serve a resident population that includes at least 20% of SNF patients with dual-eligible status will receive a Health Equity Adjustment. In order to accommodate this new incentive, a variable payback percentage has been finalized to ensure value-based payments are at least 60% of the withheld amount but do not exceed the 70% maximum allowed.

CMS has finalized application of previously-finalized validation processes for claims-based measures and PBJ-based measures for the SNF VBP. CMS has also finalized a validation process for MDS-based measures that could potentially include penalties for providers that fail the validation process. LeadingAge opposed inclusion of penalties and CMS will take this into consideration in future rulemaking.

Changes to Enforcement Processes for Civil Money Penalties

CMS has finalized a change to the enforcement process that requires SNFs to submit written requests to waive hearing rights when a civil monetary penalty has been imposed. CMS will replace the written waiver process with a constructive waiver process in which a SNF is deemed to have waived its right to a hearing if the period for requesting a hearing has expired and no request for a hearing has been received. SNFs will retain the option of requesting a hearing to contest the noncompliance that led to imposition of the CMP and SNFs that do not request a hearing will continue to receive the 35% reduction in penalty previously granted under the written waiver process. LeadingAge notes that CMS has stated in the final rule that, based on comments submitted during the rulemaking process, they intend to revisit the 35% reduction in penalty in future rulemaking to evaluate its appropriateness.

For more information on the final rule, read the CMS Fact Sheet here and access the final rule here, scheduled to be published in the Federal Register on August 7.