CMS Finalizes 2.7% Pay Increase for Nursing Homes in FY 2023 SNF PPS Final Rule

Regulation | August 05, 2022 | by Jodi Eyigor

CMS has finalized the FY 2023 SNF PPS rule with a 2.7% payment increase for nursing homes and several provisions within the SNF QRP and VBP programs.

The Fiscal Year (FY) 2023 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) final rule was published in the Federal Register on August 3, finalizing payment rates for FY 2023 and several provisions within the SNF Quality Reporting Program (QRP) and SNF Value-Based Purchasing (VBP) program. Read the rule here. Read the CMS Fact Sheet here. Provisions of the rule are outlined below.

FY 2023 Payment Updates and PDPM Recalibration

CMS finalized a 2.7% pay increase for nursing homes in FY 2023. This increase is based on a 3.9% market basket update, 1.5% increase based on forecast error, less a 0.3% productivity adjustment and a 2.3% reduction based on recalibration of the Patient-Driven Payment Model (PDPM). CMS finalized the total recalibration of PDPM at 4.6%, phasing in over a 2-year period beginning with FY 2023 payments. An additional 2.3% will be deducted in FY 2024 to bring the PDPM to budget neutral. CMS additionally finalized a 5% cap on wage index decreases, beginning with FY 2023.

SNF Quality Reporting Program

CMS finalized the addition of the Influenza Vaccination Coverage Among Healthcare Personnel measure to the SNF QRP in FY 2024. This NQF-endorsed measure will be reported through the National Healthcare Safety Network (NHSN) system at least once per season, which CMS has identified as running October 1 – March 31 of each year. Data collection for the FY 2024 program year begins October 1, 2022.

CMS additionally finalized a change in compliance dates for the Transfer of Health Information measures and certain standardized patient assessment data elements. SNFs will begin collecting data on the Transfer of Health Information to the Provider – Post Acute Care measure and the Transfer of Health Information to the Patient – Post Acute Care measure with discharges on or after October 1, 2023. The standardized patient assessment data elements will be collected through the Minimum Data Set (MDS) on admission and discharges beginning on or after October 1, 2023. CMS plans to release an updated MDS with relevant training ahead of the October 2023 compliance date.

SNF Value-Based Purchasing Program

CMS finalized the suppression of the 30-Day All-Cause Readmission measure (SNFRM) for FY 2023 as a result of the ongoing COVID-19 public health emergency (PHE). The measure was suppressed in FY 2022 as well. As finalized in FY 2022, CMS will utilize the previously finalized performance period FY 2021 and baseline period FY 2019 to calculate risk-standardized readmission rates. All participating SNFs will be assigned a performance score of 0, resulting in identical performance scores and identical incentive payment multipliers. Participating SNFs’ adjusted federal per diem rate will be reduced by 2%, then 60% will be awarded back to each participating SNF.

CMS also finalized the addition of 3 new measures to the SNF VBP. Beginning with FY 2026, the SNF VBP will see the addition of the SNF Healthcare Associated Infections (HAI) Requiring Hospitalization measure and the Total Nursing Hours Per Resident Day (Total Nurse Staffing) measure. These measures both have a performance year beginning FY 2024. The Discharge to Community – Post Acute Care measure was finalized for the FY 2027 program year with a performance year of FY 2025.

CMS finalized updates to the scoring methodology to accommodate these new measures, including a scoring normalization policy beginning with the FY 2026 program year. FY 2026 will also see new case minimum and measure minimum policies. A case minimum policy has been finalized for the SNFRM for FY 2023 to replace the current low volume policy.

Updates to Requirements of Participation

CMS finalized 2 updates to the Requirements of Participation (RoPs). Under Physical Environment requirements, providers operating prior to July 2016 may continue to utilize the Fire Safety Evaluation System (FSES) 2001 mandatory safety values for Life Safety Code compliance. Read more on this change here.

Under Food and Nutrition Services requirements, CMS revised requirements related to the qualifications for the Director of Food and Nutrition Services. CMS has added to existing requirements a provision that individuals with 2 or more years of experience in the position of Director of Food and Nutrition Services and who have also completed, within one year of the effective date of the rule, a minimum course of study in food safety that includes topics integral to managing dietary operations such as foodborne illness, sanitation procedures, food purchasing/receiving can continue to qualify as a Director of Food and Nutrition Services.