April 14, 2020

CMS releases proposed FY 2021 payment updates for SNFs, hospices, and IPFs

Daily Briefing

    CMS on Friday released proposed rules to update Medicare payments for skilled nursing facilities (SNFs), hospices, and inpatient psychiatric facilities (IPFs) for fiscal year (FY) 2021.

    CMS is accepting public comments on all three proposed rules until June 9.

    Proposed changes for SNFs

    CMS in a fact sheet said its proposed rule for SNFs includes proposals 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 proposed rule looks to bolster interoperability, safety, and quality at SNFs, CMS said.

    Proposed Medicare payment changes

    CMS said its proposed rule for SNFs includes "routine technical rate-setting updates" to the SNF Prospective Payment System, as well as proposals 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 proposed in the rule, aggregate Medicare payments to SNFs will increase by about 2.3%, or $784 million, in FY 2021 when compared with FY 2020. CMS said the estimated payment increase stems from a 2.7% market basket increase factor paired with a 0.4-percentage-point reduction from the multifactor productivity adjustment.

    CMS under the proposed rule also would adopt OMB's recently revised geographic delineations, 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 in the rule proposed applying a 5% cap to SNF wage index decreases from FY 2020 to FY 2021.

    Other proposed changes

    In addition, CMS in the proposed rule calls for certain changes that would take effect in FY 2021 related to ICD-10 mapping codes used under the SNF PDPM to classify patients into case-mix groups. CMS under the proposed rule would incorporate additional ICD-10 codes that were suggested by stakeholders, such as surgical clinical category codes.

    CMS under the proposed rule also would make administrative adjustments that would 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.

    Proposed changes for hospices

    CMS in a fact sheet said its proposed rule for hospices calls for "routine updates to hospice payments for FY 2021, in accordance with existing statutory and regulatory requirements." The proposed rule also includes model examples of the hospice election statement and addendum that reflect changes finalized in the agency's FY 2020 hospice rule for elections made on or after October 1, 2020.

    Proposed Medicare payment changes

    CMS projected that, under the proposed rule, Medicare payments for hospices would increase by about 2.6%, or a total of $580 million, in FY 2021 when compared with FY 2020. CMS said the estimated payment increase stems from a 3% inpatient hospital market basket update minus a 0.4-percentage-point reduction from the multifactor productivity adjustment. CMS 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.

    CMS under the proposed rule would set the statutory aggregate cap for hospice payments at $30,743.86 for FY 2021. The agency said the proposed cap for FY 2021 "is equal to the FY 2020 cap amount of $29,964.78 updated by the proposed FY 2021 hospice payment update percentage of 2.6%."

    CMS under the proposed rule also would adopt OMB's recently revised geographic delineations, which the agency uses to determine a Medicare beneficiary's location when calculating the hospice wage index.

    Proposed changes for IPFs

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

    Proposed Medicare payment changes

    CMS projected that, under the changes included in the proposed rule, Medicare payments for IPFs would increase by about 2.4%, or a total of $100 million, in FY 2021 when compared with FY 2020. CMS said the estimated payment increase stems from a 3% IPF market basket increase minus a 0.4-percentage-point reduction from the multifactor productivity adjustment.

    However, CMS noted that, under the proposed rule, estimated Medicare payments to IPFs will decrease by 0.2-percentage-points because of an update to the outlier threshold amount. The decrease is intended to keep estimated outlier payments at 2% of total estimated payments to IPFs.

    CMS under the proposed rule also would adopt OMB's recently revised geographic delineations, which the agency said would bring IPF wage index values more in line with "the actual costs of labor in a given area." CMS said it proposed applying a 5% cap to wage index decreases starting in FY 2021 for IPF providers that are "negatively impacted in their wage index, regardless of the circumstance causing the decline" (Modern Healthcare, 4/10; Cirruzzo, Inside Health Policy, 4/10 [subscription required]; LaPointe, RevCycleIntelligence, 4/13; CMS Fiscal Year 2021 Proposed Medicare Payment and Policy Changes for Skilled Nursing Facilities fact sheet, 4/10; CMS Fiscal Year 2021 Hospice Payment Rate Update Proposed Rule fact sheet, 4/10; CMS Fiscal Year 2021 Proposed Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities fact sheet, 4/10).

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