CMS Providing 4% Compensation Bump for Skilled Nursing Facilities

The Centers for Medicare & Medicaid Services (CMS) announced plans to increase compensation for skilled nursing facilities (which includes nursing homes) by 4% (or $1.4 billion) in the Fiscal Year of 2024. These payments are set to partially offset the $2.2 billion underpayment for facilities that stemmed from the Patient Driven Payment Model (PDPM) that took the place of the old compensation model in 2020. This change was meant to reflect a changing market, which puts into consideration the following:

  • 3% increase in market basket for skilled nursing facilities
  • 3.6% increase stemming from the market basket forecast adjustment,
  • 0.2% reduction thanks to productivity
  • 2.3% decrease as a result of the PDPM’s adjustment parity recalibration.

This increase was instituted to prevent ongoing loss of staff, as a result of turnover partially due to the underpayment of skilled nursing facilities. One of the major causes of this was a failure to consider the Consolidated Appropriations Act, during the original PDPM. That law mandated that mental health services and marriage/family therapist services would not be considered in the billing of skilled nursing facilities. This allowed these facilities to bill their services separately, instead of including them in a patient’s Medicare Part A SNF payment. The CMS is currently working on regulation text changes that will codify the exclusion of these services from skilled nursing facility billing, for services provided on or after 1 January 2024.

The CMS’s final ruling also made crucial changes to the Value-Based Purchasing Program and the Skilled Nursing Facility Quality Reporting Program. To determine payments, and to ensure that skilled nursing facilities are operating safely, the ruling will also require facilities to report all kinds of data, regarding their patients and personnel. Failure to do so falls under the a SNF Quality Reporting Program will be applied in Fiscal Year 2025 and reduces the compensation a facility receives by two percentage points. For example: In the same financial year, the CMS’s Discharge Function Score is planned to be utilized as another determining factor for a facility’s remuneration. Put simply, this function will assess how many patients in a facility either hit or surpass their “expected” discharge function score. This function utilizes the mobility and self-car statistics that are already collected under the Minimum Data Set.

The CMS will take extra measures to monitor and protect nursing home operations, in particular. The organization will track turnover and staffing movement in these facilities, from Fiscal Year 2026 and onwards, in order to ensure that these facilities maintain proper nurse to patient staffing ratios. COVID-19 hit these facilities particularly hard, as they became a hub for the disease to spread throughout the nation. Per this legislation, the CMS will require nursing facilities to record and report the ratio and percentage of healthcare providers in their staff who are up to date with their COVID-19 vaccinations. In Fiscal Year 2026, facilities will also be asked to report the percentage of patients and residents who are up to date with their COVID vaccinations. By Fiscal Year 2026, facilities will be required to publicly report 90% of these qualitative assessments that they submit to the CMS.

For more information, you can refer to the full final ruling here.

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