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May 1, 2017

How CMS want to change payments for rehab, skilled nursing, and hospice facilities

Daily Briefing

    Read Advisory Board's take on this story.

    CMS on Thursday issued proposed rules increasing payments for inpatient rehabilitation facilities (IRF), skilled nursing facilities (SNF), and hospice providers for fiscal year (FY) 2018.

    In conjunction with the proposed rules for IRFs and hospices, CMS released a request for information seeking "feedback on the Medicare program." CMS also issued an advance notice of proposed rulemaking seeking public input on ways to potentially revise Medicare's current SNF payment system. For instance, CMS cited the possibility of changing the payment system's current payment classifications.

    CMS is accepting public comments on the proposals until June 26.

    Inpatient rehabilitation facilities proposed rule

    Under CMS' proposed rule for IRF payments, IRFs would see their Medicare payments for FY 2018 increase by 1 percent, or about $80 million in FY 2018, when compared with FY 2017 payments—an increase called for under MACRA.

    CMS proposed keeping facility-level adjustment factors for FY 2018 at their current levels. Further, CMS, in accordance with a three-year phase-out of the rural adjustment for such providers, proposed no longer applying a 14.9 percent rural adjustment for 20 IRF providers that were designated as rural in FY 2015 and then changed to urban under FY 2016 regulations.

    In addition, CMS proposed eliminating a 25 percent payment penalty on late IRF patient assessment instrument submissions.

    CMS also proposed adding standardized patient assessment data to the IRF Quality Reporting Program beginning in FY 2020, as well as changes to some IRF quality reporting measures.

    Skilled nursing facilities proposed rule

    Under CMS' proposed rule for SNFs, would see their FY 2018 Medicare payments increase by 1 percent, or about $390 million for FY 2018, when compared with FY 2017 payments—an increase also called for under MACRA.

    Further, CMS proposed beginning in FY 2018 implementing a 2 percentage point reduction to net SNF payment increase percentages if SNFs do not meet reporting requirements under the SNF quality reporting program. CMS also proposed adding standardized patient assessment data to the SNF quality reporting program beginning in FY 2019, and in FY 2020, CMS proposed having SNFs report such data under five specific patient assessment categories:

    • Cognitive function;
    • Functional status;
    • Impairments;
    • Medical conditions and co-morbidities; and
    • Special services, treatments, and interventions.

    CMS also detailed proposed performance standards for the SNF value-based purchasing program, which is slated to start FY 2019. For instance, CMS proposed limiting the program to one readmission for each year and reducing by 2 percent the total amount of Medicare payments to SNFs to fund the value-based payment incentives.

    Hospice provider proposed rule

    Under its proposed rule for hospices, CMS would increase payment rates by 1 percent for FY 2018, up by $180 million from FY 2017. CMS proposed a cap of $28,689.04 for hospices in FY 2018.

    CMS also proposed adding certain measures under the hospice quality reporting program, as well as "requirements for the Hospice CAHPS Survey for the FY 2020, FY 2021, and FY 2022 annual payment updates." For future years, CMS proposed two new measure concepts for hospices:

    • Access to levels of hospice care; and
    • Potentially avoidable hospital care transitions.

    'In addition, CMS proposed publishing the Hospice Compare website in the summer of 2017.

    CMS in the proposed rule also sought public comment on the clinical certification of medical prognoses that patients will live no longer than six months. CMS wrote in the proposed rule, "We have recognized in previous rules that prognostication is not an exact science … and thus, a beneficiary may be under a hospice election longer than six months, as long as there remains a reasonable expectation that the individual has a life expectancy of six months or less."


    Mark Parkinson, president and CEO of the American Health Care Association/National Center for Assisted Living, said his group is "pleased to see that the [proposed rule for SNF payments] contains a 1 percent market basket update, which all post-acute care providers received for" FY 2018 under MACRA, "with no negative adjustments." He added, "Skilled nursing providers operate on a 1.6 percent margin, based on [the Medicare Payment Advisory Commission's] all-payer margin, so any increase is critical."

    Parkinson also said the group "appreciate[s] CMS' opportunities to provide input on a number of issues, including ideas to innovate within SNF policy" (AHA News, 4/27; CMS fact sheet on proposed IRF changes, 4/27; CMS fact sheet on proposed SNF changes, 4/27; CMS fact sheet on hospice providers proposed rule, 4/27; Cancryn, Politico Pro, 4/27 [subscription required]; Connole, Provider, 4/28; Baxter, Home Health Care News, 4/27; Berklan, McKnight's Long Term Care News, 4/28).

    Advisory Board's take

    By Jared Landis and Monica Westhead, Post-Acute Care Collaborative

    While a 1 percent increase in Medicare payments may not seem like much, this proposed rule should come as a pleasant surprise for post-acute providers. MedPAC has consistently recommended holding post-acute reimbursement rates flat, so this small increase is a reprieve.

    Post-acute care providers shouldn't get complacent, however. Even with an increase, we expect downward pressure on margins to continue due to rising Medicare Advantage penetration and the coming implementation of the SNF Value-Based Purchasing Program. In addition, MedPAC's recommendation that Congress implement a site-neutral payment system has become louder recently—a call that could upend the industry. 

    Here are two things PAC providers can do now to set themselves up for success:

    1. Develop effective partnerships with upstream and downstream providers to improve patient flow between settings and stabilize volumes. To learn more, download our infographic.

    2. Download Now

    3. Evaluate how your post-acute continuum can diversify its payer mix by engaging in voluntary risk, via capitated arrangements with payers or gainsharing with providers—or even becoming a payer yourself. Learn more by registering for Post-Acute Care Collaborative's summer webconference series, "Key Strategies to Achieve Success in an Era of Risk."
    4. Register Now

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