Question: For Skilled Nursing Facility (SNF) Providers, what does the Medicare Prospective Payment System (PPS) Update mean? What do providers need to do and when?

Answer: The SNF PPS is updated annually; the update usually includes a pay bump and some related policy changes. This year there is a fundamental change to the way SNFs are paid and the requirements they must comply with to be paid in full. Here’s a quick summary of what happens and when.

  • Payment increase of 2.4%, effective October 1, 2018. As long as providers comply with all requirements, the increase is automatic.
  • Under the SNF Quality Reporting Program (originating from the IMPACT Act), CMS calculates a SNF's performance on certain quality measures using MDS and claims data. If a SNF didn’t submit or complete at least 80% of the required MDS data for calendar year 2017, the provider received a notice of non-compliance, and its payment increase will be reduced 2%, leaving only a 0.4% increase, starting October 1, 2018.
  • Value Based Payment (VBP) goes into effect October 1, 2018. Every SNF gets a simultaneouus 2% reduction in payments and an incentive payment adjustment based on all-cause readmission rates. Taken together, for FY2019, each provider's rate gets back 1.97 to 2.33%.
  • The new payment system, the Patient Driven Payment Model (PDPM) takes effect on October 1, 2019. But providers must act soon to begin learning the new MDS requirements and ICD-10 coding, in order to be ready to go on October 1, 2019.

For more information about the changes to the Quality Reporting Program (QRP) and VBP, keep reading. We will continue to share more information about the PDPM model throughout the year. Stay tuned!


In the final rule, CMS adopted the changes to:

  • How to score performance for SNFs with low volumes or insufficient baseline performance data
  • Baseline and performance measurement periods for FY 2021 and beyond
  • Establish an extraordinary circumstances exception policy

The VBP program uses a single measure, the SNF 30-day all-cause readmission measure (SNFRM), to assess adjustments to SNF’s Medicare fee-for-services rates beginning October 1, 2018 (Fiscal Year (FY) 2019). CMS is required to transition from the SNFRM to the SNF 30-day Potentially Preventable Readmission (SNFPPR). This transition to the SNFPPR is to happen “as soon as practicable” but according to CMS will not occur before FY 2021. In the final rule, CMS indicates it intends to submit the SNFPPR measure for endorsement by the National Quality Forum in 2019 following further testing and would make plans to implement the measure following completion of this process.

The final rule provides key information on the implementation of the VBP program for FY 2019 and beyond:

VBP Performance Standards, Performance and Baseline Periods

Payment Impact in

Achievement Threshold


Performance Period

Baseline Period






















CMS finalized a process to make a one-time correction to the published achievement threshold and benchmarks if it discovers an error in the data used to calculate the originally published values. This type of correction could only be done once per fiscal year. These updates would be communicated through a variety of communications channels to ensure awareness.

Performance Scoring: Under the VBP program, CMS calculates a SNFs performance on SNFRM in two ways: 1) the SNF’s year-over-year improvement on the measure; and 2) the SNF’s achievement or performance on the SNFRM for that year compared to other SNFs. The better of the two scores is used in calculating the value-based incentive payment (VBIP) that the SNF will receive in that fiscal year.  CMS has proposed:

  • SNFs lacking sufficient baseline period data. CMS will not measure a SNF on improvement if it was newly-opened, open a short time, or granted an extraordinary circumstance exception and has fewer than 25 eligible stays during the baseline period. These SNFs will continue to be measured on their achievement related to readmissions.
  • Low-Volume SNFs: CMS adopted a policy to assign all low-volume SNFs a performance score that assures their per diem rate is not reduced, as if the VBP program did not apply to the facility. However, while low-volume SNFs will not be penalized with a rate cut, they also will not have the opportunity to earn an incentive payment bonus should for their strong performance on the SNFRM.  SNFs who are subject to this policy and corresponding VBIP assignment will be notified.

Value-Based Incentive Payments (VBIP): SNFs' rate adjustment notifications based on their VBIP were communicated in a SNF Performance Score Report that is accessed via the QIES-CASPER system as of August 2, 2018. SNFs have a 30-day period to review and submit corrections to their SNF performance score and ranking to: CMS will apply the 2% rate reduction required by the VBP program and the VBIP rate simultaneously to each SNF’s Medicare payment rate establishing their net rate for the fiscal year. CMS published in the final rule that application of these calculations on SNFs’ FY2019 Medicare Part A claims will range from approximately -1.97% to 2.33% which indicates net rate reductions of 0.03% for some and up to a 0.33% increase for others.


Two measures delayed another year: Originally, 2 measures related to accurate communication of health information and care preferences were to be implemented beginning October 1, 2018 and impact FY 2021 rates. Based upon public comments and pilot testing of the measures, CMS has delayed the implementation of the two measures. CMS intends to specify the measures no later than October 1, 2019 with adoption for FY 2022 and data collection is proposed to begin October 1, 2020.

Notifications of Non-compliance and CMS Reconsideration Decisions for SNF QRP: CMS has added an additional method for notifying SNFs of their non-compliance with the SNF QRP so there are now three ways through: 1) the QIES ASAP system; 2) the U.S. Mail; and 3) via email from the Medicare Administrative Contractor. CMS will use at least one of these three methods and providers will be notified by CMS which specific method will be used through the SNF QRP Reconsideration and Exception and Extension website at:  and announcements via the PAC listserv.

These announcements will be posted annually following the May 15th data submission deadline- prior to the distribution of the initial notices of non-compliance determination in late spring/early summer. Messaging will include the method of communication for the notices, instructions for sending a reconsideration request, and the final deadline for submitting the request. This policy is effective October 1, 2018.

CMS notes that, “notifications are sent to the point of contact on file in the QIES database. This information is populated via ASPEN. It is the responsibility of the facility to ensure that this information is up-to-date. For information regarding how to update provider information in QIES, we refer providers to contact their Medicare Administrative Contractor or CMS Regional Office at:

Public Display of SNF QRP measures: CMS indicated last year its plans to publicly report FY 2017 data for Medicare Spending Per Beneficiary and Discharge to Community measures on Nursing Home Compare beginning in CY 2018. Beginning in CY2019 or soon thereafter, CMS will report 2 years’ worth of data instead of 1 year for Medicare Spending Per Beneficiary and Discharge to Community measures on Nursing Home Compare. This change will ensure that data on these measures are reported for roughly 95% of SNFs and the measures are aligned with the display periods for inpatient rehabilitation facilitates and long-term care hospitals. CMS also proposes to begin displaying performance data on the 4 mobility and self care measures in CY 2020 or soon thereafter. These measures will be based upon 4 rolling quarters of data beginning with data from CY 2019. If a SNF has fewer than 20 eligible cases in any of the 4 quarters, CMS will note that the number of cases is too small to report.