Skilled Nursing Facility 2015 Payment Rates Proposed

On May 6, 2014, CMS will publish a Proposed rule updating the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2015.

The Proposed rule also includes: (1) a proposal to adopt the most recent Office of Management and Budget (OMB) statistical area delineations to identify a facility’s urban or rural status for the purpose of determining which set of rate tables would apply to the facility and to determine the SNF PPS wage index including a proposed one-year transition with a blended wage index for all providers for FY 2015; (2) a revision to policies related to the Change of Therapy (COT) Other Medicare Required Assessment (OMRA); (3) amendment to the regulations governing the use of civil money penalties (CMPs) as required by Section 6111 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

The Proposed rule also discusses (1) observed trends related to therapy utilization among SNF providers, (2) accelerating health information exchange in SNFs, and (3) the SNF therapy payment research currently underway within CMS.

2015 Changes to Payment Rates

Based on proposed changes, CMS projects that aggregate payments to SNFs will increase by $750 million, or 2.0 percent, from payments in FY 2014, which represents a higher update factor than the 1.3 percent update finalized for SNFs last year. This estimated increase is attributable to 2.4 percent market basket increase, reduced by the 0.4 percentage point multifactor productivity adjustment required by law.

Wage Index Update / New Labor Market Delineations

CMS had delayed implementing new OMB statistical area delineations, set forth in the February 28, 2013 OMB Bulletin No. 13-01, to allow for sufficient time to assess the new changes. Because it now believes that these OMB delineations accurately reflect the local economies and wage levels of the areas in which hospitals are currently located, CMS is proposing to implement the new OMB delineations for the SNF PPS wage index effective beginning in FY 2015. In addition, CMS is proposing to implement a one-year transition with a blended wage index for all providers in FY 2015 to assist providers in adapting to the new OMB delineations.

Change of Therapy (COT) and Other Medicare Required Assessment (OMRA)

On October 1, 2011, CMS introduced the COT OMRA, which is an assessment designed to capture changes in the therapy services provided to a given SNF resident during the past 7 days. Effective for services provided on or after October 1, 2011, CMS required facilities to complete a COT OMRA for patients classified into a Resource Utilization Group, Version 4 (RUG-IV) therapy category, whenever the intensity of therapy changes to such a degree that it would no longer reflect the RUG-IV classification and payment assigned for a given SNF resident based on the most recent assessment used for Medicare payment. CMS proposes to revise the existing COT OMRA policy to permit providers to complete a COT OMRA for a resident who is not currently classified into a RUG-IV therapy group, or receiving a level of therapy sufficient for classification into a RUG-IV therapy group, but only in those rare cases where the resident had qualified for a RUG-IV therapy group on a prior assessment during the resident’s current Medicare Part A stay and had no discontinuation of therapy services between Day 1 of the COT observation period for the COT OMRA that classified the resident into his or her current non-therapy RUG-IV group and the ARD of the COT OMRA that reclassified the patient into a RUG-IV therapy group.

Under the proposed policy, while a COT OMRA may be used to reclassify a resident into a therapy RUG in the circumstances described above, it may not be used to initially classify a resident into a therapy RUG. CMS believes it is appropriate to revise the COT OMRA policy in this manner to provide for more accurate payment for services provided to those residents who have qualified for a RUG-IV therapy group during their Medicare Part A stay and continue to receive skilled therapy services during their Medicare Part A stay.

CMPs Under the ACA

Section 6111 of the ACA amended sections 1819(h) and 1919(h) of the Social Security Act to incorporate specific provisions pertaining to the imposition and collection of CMPs. These sections specify that some portion of CMPs collected may be used to support activities that benefit residents, including assistance to support and protect residents of a facility that closes or is decertified, projects that support resident and family councils and other consumer involvement in assuring quality care in facilities, and facility improvement initiatives approved by CMS.

The Proposed rule would amend the regulations at 42 CFR Sec. 488.433 to require that 90 percent of the CMPs collected must be used entirely for activities that protect or improve the quality of care for SNF residents. The Proposed rule would also requires that: (1) all activities and plans for utilizing CMP funds, including any expense used to administer grants utilizing CMP funds, must be approved in advance by CMS; (2) at a minimum, proposed activities submitted to CMS for prior approval must include a description of the intended outcomes, deliverables, and sustainability; and a description of the methods by which the activity results will be assessed, including specific measures; (3) CMP funds may not be used for activities that have been disapproved by CMS; and (4) states must maintain an acceptable plan for the effective use of CMP funds.

Observations on Therapy Utilization Trends

In the FY 2014 SNF PPS Final rule, CMS discussed its monitoring efforts associated with the impact of certain policy changes finalized in the FY 2012 SNF PPS final rule (76 FR 48486). In that 2012 rule, CMS noted that it would continue these monitoring efforts and report any new information as appropriate. In this 2015 Proposed rule, CMS does not propose new Medicare policy in the discussion of observed trends but merely highlights that it will continue to monitor these observed trends which may serve as the basis for future policy development.

Accelerating Health Information Exchange in SNFs

In the Proposed rule, CMS states it commitment to accelerating health information exchange (HIE) through the use of electronic health records (EHRs) and other types of health information technology (HIT) across the broader care continuum. Specifically, CMS expresses support for a number of initiatives, including: (1) alignment of incentives and payment adjustments to encourage provider adoption and optimization of HIT and HIE services through Medicare and Medicaid payment policies; (2) adoption of common standards and certification requirements for interoperable HIT; (3) support for privacy and security of patient information across all HIE-focused initiatives; and (4) governance of health information networks.

SNF Therapy Research Project

CMS has contracted with Acumen, LLC, and the Brookings Institution to identify potential alternatives to the existing methodology used to pay for therapy services received under the SNF PPS. In this Proposed rule, CMS updates the public on the current state of this project. According to CMS, in September 2013, it completed the first phase of the research project, which included a literature review, stakeholder outreach, supplementary analyses, and a comprehensive review of options for a viable alternative to the current therapy payment model. During the second phase of the project, which began in September 2013, CMS plans to further develop their options and perform a more comprehensive data analysis to determine which of these options would work best as a potential replacement for the existing therapy payment model.

For a look at our coverage of the FY 2014 payment rates, see here.