BREAKING NEWS: CMS Announces Proposed Rules for “Transformative” Changes to Payment Systems

Mary Madison, RN, RAC-CT, CDP
Clinical Consultant – Briggs Healthcare®

“Today, the Centers for Medicare & Medicaid Services (CMS) proposed transformative changes to the payment systems for services furnished by a range of medical facilities. The agency’s proposed payment rules also set out to continue to modernize Medicare through innovation in skilled nursing facility payment to drive value, advance meaningful quality measure reporting, and reduce paperwork and administrative costs.”

The above is the opening statement in the CMS Drives Patient-Centered Care over Paperwork in Proposals to Modernize Medicare and Reduce Burden press release posted late in the day Friday, April 27, 2018.

“We envision all elements of CMS’ healthcare delivery system working to reward value over volume and decisively focus on patients receiving quality care from their Medicare benefits,” said Administrator Seema Verma. “For skilled nursing facilities, we are taking important steps through proposed payment improvements that will reduce administrative burden, and foster innovation to improve care and quality for patients. As people face rising healthcare costs in other clinical settings, we need to leverage advances in technology that help to modernize our programs in a way that benefits patients.”

As part of the SNF PPS, the agency is proposing a Patient Driven Payment Model (PDPM), an innovative new system for SNF payment that ties payment to patients’ conditions and care needs rather than volume of services provided. PDPM would simplify complicated paperwork requirements for performing patient assessments by significantly reducing reporting burden, savings facilities approximately $2.0 billion over 10 years. The proposed new PDPM is designed to improve the incentives to treat the needs of the whole patient, instead of focusing on the volume of services the patient receives, which requires substantial paperwork to track over time. This approach advances CMS’ efforts to build a patient-driven healthcare system beginning with innovation throughout Medicare’s payment systems. Under the new SNF PPS case-mix model, patients will have more opportunity to choose a skilled nursing facility that offers services tailored to their condition and preferences, as the payment to nursing homes will be more based on the patient’s condition rather than the specific services provided by each skilled nursing facility.

“In the proposed rules announced today, the agency is also responding to comments from stakeholders and seeking to incorporate its Patients over Paperwork Initiative through avenues that reduce unnecessary burden on providers by easing documentation requirements and offering more flexibility. In SNF settings, the proposed new case-mix model, PDPM, is designed to improve the incentives to treat the needs of the whole patient, instead of focusing on the volume of services the patient receives.”

Fiscal Year 2019 – Skilled Nursing Facility Prospective Payment System (SNF PPS) (CMS-1696-P) is the April 27th posting in the Federal Register.  Public comments on the 266-page proposed rule will be accepted until June 26, 2018.


This statement is found in the Summary of the proposed rule:

“This proposed rule would update the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2019. This proposed rule also proposes to replace the existing case-mix classification methodology, the Resource Utilization Groups, Version IV (RUG-IV) model, with a revised case-mix methodology called the Patient-Driven Payment Model (PDPM) effective October 1, 2019. It also proposes revisions to the regulation text that describes a beneficiary’s SNF “resident” status under the consolidated billing provision and the required content of the SNF level of care certification. The proposed rule also includes proposals for the SNF Quality Reporting Program (QRP) and the Skilled Nursing Facility Value-Based Purchasing (VBP) Program that will affect Medicare payment to SNFs.”

The proposed rule is our introduction to PDPM – Patient-Driven Payment Model. Based on stakeholder comments to CMS, SNFs would move from the current RUG-IV case-mix classification to the PDPM effective October 1, 2019 – next year.

Other proposed changes include payment rate as well as the SNF QRP and SNF VBP programs:

  • Payment Rate Changes: Based on proposed changes contained within this proposed rule, CMS estimates that the FY 2019 aggregate impact will be an increase of $850 million in Medicare payments to SNFs, resulting from the FY 2019 SNF market basket update required to be 2.4 percent by the Bipartisan Budget Act of 2018. Absent the application of this statutory requirement, the FY 2019 market basket update factor would have been 1.9 percent which reflects the SNF FY 2019 market basket index of 2.7 percent, reduced by the multifactor productivity adjustment of 0.8 percent. This 1.9 percent update would have resulted in an estimated aggregate increase of $670 million in Medicare payments to SNFs.
  • Background: The SNF QRP is authorized by section 1888(e)(6) of the Social Security Act and applies to freestanding SNFs, SNFs affiliated with acute care facilities, and swing-bed rural hospitals except for critical access hospitals. Under the SNF QRP, SNFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to the otherwise applicable annual market basket percentage update with respect to that fiscal year.

Proposed Changes: In this proposed rule, we are proposing to adopt an additional factor to consider when evaluating measures for removal from the SNF QRP measure set. This factor takes into account costs that are associated with a measure and weighs them again the benefit of its continued use in the program. We are also proposing to publicly display the four SNF QRP assessment-based quality measures, and increase the number of years of data used to display two claims-based SNF QRP measures, Discharge to the Community and Medicare Spending per Beneficiary, from 1 year to 2 years. We are also proposing to codify policies that have been finalized under the SNF QRP.

  • Background: Beginning October 1, 2018 services, the SNF VBP Program will apply either positive or negative incentive payments to skilled nursing facilities based on their performance on the program’s readmissions measure. The single claims-based all cause 30-day hospital readmissions measure aims to improve individual outcomes through rewarding providers that take steps to limit the readmission of their patients to a hospital. This single measure does not require SNFs to report information in addition to the information they already submit as part of their claims because CMS uses existing Medicare claims information to calculate the measure.

Proposed Changes: The FY 2019 proposed rule proposes updates to policies, including the performance and baseline periods for the FY 2021 SNF VBP Program year, an adjustment to the SNF VBP scoring methodology, and an Extraordinary Circumstances Exception (ECE) policy.

A CMS SNF PPS Fact Sheet contains additional information regarding these proposed changes as well as links to even more information for providers.

Related to the April 27th posting of these significant proposed changes, CMS scheduled a SNF/LTC Open Door Forum on May 1, 2018 from 2pm to 3pm (Eastern Time). The agenda includes these and other items.

To participate in this conference call:

Dial: 1-800-837-1935 & Reference Conference ID: 32664331 Persons participating by phone do not need to RSVP. TTY Communications Relay Services are available for the Hearing Impaired. For TTY services dial 7-1-1 or 1- 800-855-2880. A Relay Communications Assistant will help.

If you miss the live conference call, you can still listen to the Encore or recording:

Encore: 1-855-859-2056; Conference ID: 32664331 Encore is an audio recording of this call that can be accessed by dialing 1-855-859- 2056 and entering the Conference ID beginning 2 hours after the call has ended. The recording expires after 2 business days.