August 3, 2020

CMS finalizes rules updating 2021 Medicare payments for SNFs, hospices, and IPFs

Daily Briefing

    CMS on Friday finalized rules to update Medicare payments for skilled nursing facilities (SNFs), hospices, and inpatient psychiatric facilities (IPFs) for fiscal year (FY) 2021, and the agency said the updates aim to better align payments across the facilities.

    Finalized changes for SNFs

    CMS in a fact sheet said its final rule for SNFs includes updates intended to uphold the Trump administration's commitment to shifting Medicare from fee-for-service to value-based payments by continuing to implement the Patient Driven Payment Model (PDPM) for SNFs and the SNF Value-Based Purchasing program (VBP). In addition, the final rule looks to bolster interoperability, safety, and quality at SNFs, CMS said.

    Still, CMS said that, overall, the agency limited the final rule "to essential policies" in light of the substantial effects America's coronavirus epidemic has had on health care providers, which has limited their ability to review and provide feedback on policy proposals.

    Medicare payment changes

    CMS said its final rule for SNFs includes "routine technical rate-setting updates" to the SNF Prospective Payment System, as well as measures to adopt the statistical area delineations most recently approved by the Office of Management and Budget (OMB) and to implement a 5% cap on wage index decreases from FY 2020 to FY 2021.

    CMS projected that, under the changes included in the final rule, aggregate Medicare payments to SNFs will increase by about 2.2%, or $750 million, in FY 2021 when compared with FY 2020. CMS said the estimated payment increase stems from a 2.2% market basket increase factor.

    The projected payment increase in the final rule is lower than what CMS had estimated when the agency proposed its FY 2021 payment rule for SNFs in April. CMS in April had predicted that, under changes include in the proposed rule, aggregate Medicare payments to SNFs would increase by about 2.3%, or $784 million, in FY 2021 when compared with FY 2020.

    The proposed rule had included a 2.7% market basket increase factor paired with a 0.4-percentage-point reduction from the multifactor productivity adjustment. In comparison, the final rule includes a 2.2% market basket increase factor paired with no reductions from the multifactor productivity adjustment. CMS said the finalized 2.2% market basket increase factor is lower than the proposed 2.7% increase because, as a result of America's coronavirus epidemic and related economic declines, compensation growth was slower than the agency had expected.

    CMS under the final rule also will adopt revised geographic delineations provided by OMB, which the agency uses to determine a provider's status as either a rural or urban facility and to calculate the SNF wage index. CMS will apply a 5% cap to SNF wage index decreases from FY 2020 to FY 2021.

    Other changes

    CMS under the final rule also will implement certain changes related to ICD-10 mapping codes used under the SNF PDPM to classify patients into case-mix groups. For instance, CMS beginning FY 2021 will add specific surgical clinical category options to the clinical category mapping of some diagnosis codes.

    CMS under the final rule also will make administrative adjustments to bring regulatory text for the SNF VBP in line with other previously finalized policies for the program, apply the program's 30-day Phase One Review and Correction deadline to the baseline period quality measure quarterly report, and set performance periods and standards for upcoming program years. CMS said it did not propose any changes related to SNF VBP measures, payment policies, or scoring policies.

    Finalized changes for hospices

    CMS in a fact sheet said its final rule for hospices will update Medicare payments and the wage index for hospice facilities for FY 2021 in accordance with the agency's "legal requirements" to do so. CMS noted that, in acknowledgement of the strain America's coronavirus epidemic is placing on providers, the agency limited the final rule to "annual hospice rulemaking required by statute and essential policies, … as well as policies that reduce provider burden and may help providers" respond to Covid-19, the disease caused by the virus.

    CMS under the final rule also will post on an agency website examples of the hospice election statement and addendum that reflect changes finalized in CMS' FY 2020 hospice rule for elections made on or after October 1, 2020.

    Medicare payment changes

    CMS projected that, under the final rule, Medicare payments for hospices will increase by about 2.4%, or a total of $540 million, in FY 2021 when compared with FY 2020. CMS said the estimated payment increase stems from a 2.4% inpatient hospital market basket update and no reduction from the multifactor productivity adjustment.

    The projected payment increase in the final rule is lower than what CMS had estimated when the agency proposed its FY 2021 payment rule for hospices in April. CMS in April had predicted that, under changes include in the proposed rule, aggregate Medicare payments to hospices would increase by 2.6%, or a total of $580 million, in FY 2021 when compared with FY 2020. That estimated payment increase would have stemmed from a 3% market basket update minus a 0.4-percentage-point reduction from the multifactor productivity adjustment.

    CMS in the final rule noted that hospices that do not meet certain quality reporting requirements would receive a two-percentage-point reduction in the annual market basket update for FY 2021.

    In addition, CMS under the final rule will set the statutory aggregate cap for hospice payments at $30,683.93 for FY 2020, which the agency said is "is equal to the FY 2020 cap amount" of $29,964.78 updated by the 2.4% finalized FY 2021 percentage update for hospice payments. The finalized aggregate cap also is lower than the $30,743.86 cap CMS had included in the proposed rule, as the proposed cap would have been equal to the FY 2020 cap of $29,964.78 updated by the proposed 2.6% payment update.

    Further, CMS under the final rule will adopt OMB's revised geographic delineations, which the agency uses to determine a Medicare beneficiary's location when calculating the hospice wage index. CMS will apply a 5% cap to hospice wage index decreases from FY 2020 to FY 2021.

    Finalized changes for IPFs

    CMS in a fact sheet said its final rule for IPFs includes measures to progress the Trump administration's efforts to bolster Medicare by better aligning IPF payments with IPFs' actual costs of providing care. In addition, the final rule aims to ensure that Medicare beneficiaries can access needed care at the site of their choosing, according to CMS.

    Medicare payment changes

    CMS projected that, under the changes included in the final rule, Medicare payments for IPFs will increase by about 2.3%, or a total of $95 million, in FY 2021 when compared with FY 2020. CMS said that estimated payment increase stems from a 2.2% IPF market basket increase with no reduction from the multifactor productivity adjustment, plus a 0.1-percentage-point increase generated by updating the IPF outlier threshold amount to keep estimated outlier payments at 2% of total estimated payments.

    The finalized payment increase is lower than CMS had proposed in April. Under CMS' proposed rule, the agency had predicted that Medicare payments for IPFs would have increased by about 2.4%, or a total of $100 million, in FY 2021 when compared with FY 2020. CMS said that estimated payment increase would have stemmed from a 3% IPF market basket increase minus a 0.4-percentage-point reduction from the multifactor productivity adjustment, as well as a 0.2-percentage-point reduction to update the outlier threshold amount.

    CMS under the final rule also will adopt OMB's revised geographic delineations, which the agency said will bring IPF wage index values more in line with "the actual costs of labor in a given area." In addition, CMS said it will apply a 5% cap in FY 2021 to any wage index decreases when compared with the FY 2020 wage index for IPF providers, "regardless of the circumstances causing the decline."

    Other changes

    Further, CMS under the final rule will finalize updates to certain regulatory language that will allow advanced practice providers—including clinical nurse specialists, NPs, PAs, and psychologists—to document progress notes in the medical records of their patients who are receiving services in psychiatric hospitals if doing so is permitted within the providers' scopes of practice under state law. CMS said the updates are needed because current regulatory language "is inconsistent with other recent changes finalized throughout the hospital conditions of participation and unnecessarily imposes regulatory burden on psychiatric hospitals" (Kacik, Modern Healthcare, 7/31; CMS release 7/31; CMS' FY 2021 Payment and Policy Changes for Medicare Skilled Nursing Facilities fact sheet, 7/31; SNF final rule, 7/31; CMS' FY 2021 Hospice Payment Rate Update fact sheet, 7/31; CMS' FY 2021 Final Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities fact sheet, 7/31).

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