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CMS Issues FY 2022 Skilled-Nursing Facility Prospective Payment System Final Rule

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On July 29, the Centers for Medicare & Medicaid Services (CMS) issued the final fiscal year (FY) 2022 skilled-nursing facility (SNF) prospective payment system (PPS) rule.

The rule includes a payment rate update of 1.2%, based on a 2.7% SNF market basket update, minus a 0.8 percentage point forecast error adjustment and a 0.7 percentage point productivity adjustment. CMS estimates that the aggregate impact of the payment policies in this final rule will result in an increase of approximately $410 million in Medicare Part A payments to SNFs in FY 2022. This estimate does not include the SNF value-based purchasing (VBP) reductions, estimated to be $184.25 million in FY 2022. Below is a summary of key finalized policy changes included in the FY 2022 rule.

  • SNF VBP Program: CMS suppresses the SNF 30-Day All-Cause Readmission measure for FY 2022. The public health emergency for COVID-19 has significantly affected the measure. CMS will assign a performance score of zero to all participating SNFs, regardless of their performance using the SNF VBP scoring methodology. CMS will reduce the federal per diem rate for each SNF by 2% and award SNFs 60% of that withhold, resulting in a 1.2% payback percentage. SNFs that qualify for the low-volume adjustment will continue to receive 100% of that 2% withhold. 
  • SNF Healthcare-Associated Infections (HAI) Requiring Hospitalization Measure: The final rule adopts a new claims-based measure, SNF HAI, to the SNF quality reporting program (QRP), beginning with the FY 2023 SNF QRP. The SNF HAI measure uses Medicare fee-for-service (FFS) claims data to estimate the rate of HAIs that are acquired during SNF care and result in hospitalization.  
  • COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP): The final rule adopts the COVID-19 Vaccination Coverage among HCP measure beginning with the FY 2023 SNF QRP. SNFs must report staff vaccination data through the Centers for Disease Control and Prevention National Healthcare Safety Network beginning Oct. 1, 2021.
  • Transfer of Health (TOH) Information to the Patient-PAC Quality Measure: The final rule updates the denominator for the Transfer of Health (TOH) Information to the Patient-Post Acute Care (PAC) quality measure. To avoid counting the patient in both the TOH Information to the Patient-PAC and the TOH Information to the Provider-PAC measures, CMS removes patients discharged home under the care of an organized home health service organization or hospice from the definition of the denominator for the TOH Information to the Patient–PAC measure. 
  • Section 134 of the Consolidated Appropriations Act, 2021 – New Blood Clotting Factor Exclusion from SNF Consolidated Billing: The Consolidated Appropriations Act of 2021 requires that certain specified blood clotting factors be excluded from the SNF consolidated billing requirements for items furnished on or after Oct. 1, 2021. Therefore, CMS finalizes a reduction in the Medicare Part A SNF rates to account for the exclusion. The methodology results in an estimated decrease of $1.2 million in Part A SNF spending to offset the increase in Part B spending that will occur due to the clotting factors excluded from SNF consolidated billing. 
  • Changes in Patient Driven Payment Model (PDPM) ICD-10 Code Mappings: To improve consistency between the ICD-10 code mappings and current ICD-10 guidelines, the final rule makes several changes to the PDPM ICD-10 code mappings affecting the areas of sickle-cell disease, esophageal conditions, multisystem inflammatory syndrome, neonatal cerebral infarction, vaping-related disorder, and anoxic brain damage. 
  • Methodology for Recalibrating the PDPM Parity Adjustment: CMS’ data suggest implementation of the PDPM increased payments by approximately 5% ($1.7 billion in FY 2022). The final rule discusses comments received on the potential methodology for recalibrating the PDPM parity adjustment. However, given the COVID-19 public health emergency’s impact on 2020 data, CMS does not propose a parity adjustment in the final rule.
  • Closing the Health Equity Gap Request for Information: The proposed rule solicited feedback on ways to improve health equity for all patients. The comments CMS received will be taken into consideration as the agency works to develop policies to improve health equity. CMS plans to provide additional stratified quality measure information to providers related to race and ethnicity.