[Federal Register Volume 80, Number 149 (Tuesday, August 4, 2015)]
[Rules and Regulations]
[Pages 46390-46477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18950]



[[Page 46389]]

Vol. 80

Tuesday,

No. 149

August 4, 2015

Part II





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Part 483





Medicare Program; Prospective Payment System and Consolidated Billing 
for Skilled Nursing Facilities (SNFs) for FY 2016, SNF Value-Based 
Purchasing Program, SNF Quality Reporting Program, and Staffing Data 
Collection; Final Rule

  Federal Register / Vol. 80 , No. 149 / Tuesday, August 4, 2015 / 
Rules and Regulations  

[[Page 46390]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 483

[CMS-1622-F]
RIN 0938-AS44


Medicare Program; Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities (SNFs) for FY 2016, SNF Value-
Based Purchasing Program, SNF Quality Reporting Program, and Staffing 
Data Collection

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule updates the payment rates used under the 
prospective payment system (PPS) for skilled nursing facilities (SNFs) 
for fiscal year (FY) 2016. In addition, it specifies a SNF all-cause 
all-condition hospital readmission measure, as well as adopts that 
measure for a new SNF Value-Based Purchasing (VBP) Program, and 
includes a discussion of SNF VBP Program policies we are considering 
for future rulemaking to promote higher quality and more efficient 
health care for Medicare beneficiaries. Additionally, this final rule 
will implement a new quality reporting program for SNFs as specified in 
the Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act). It also amends the requirements that a long-term care 
(LTC) facility must meet to qualify to participate as a skilled nursing 
facility (SNF) in the Medicare program, or a nursing facility (NF) in 
the Medicaid program, by establishing requirements that implement the 
provision in the Affordable Care Act regarding the submission of 
staffing information based on payroll data.

DATES: Effective date: The provisions of this final rule are effective 
on October 1, 2015 with the exception of provisions in Sec.  483.75(u) 
which are effective on July 1, 2016.

FOR FURTHER INFORMATION CONTACT: 
    Penny Gershman, (410) 786-6643, for information related to SNF PPS 
clinical issues (excluding any issues raised in section III.D. of this 
final rule).
    John Kane, (410) 786-0557, for information related to the 
development of the payment rates and case-mix indexes.
    Kia Sidbury, (410) 786-7816, for information related to the wage 
index.
    Bill Ullman, (410) 786-5667, for information related to level of 
care determinations, consolidated billing, and general information.
    Shannon Kerr, (410) 786-0666, for information related to skilled 
nursing facility value-based purchasing.
    Charlayne Van, (410) 786-8659, for information related to skilled 
nursing facility quality reporting.
    Lorelei Chapman, (410) 786-9254, for information related to 
staffing data collection.

SUPPLEMENTARY INFORMATION: 

Availability of Certain Tables Exclusively Through the Internet on the 
CMS Web Site

    As discussed in the FY 2016 SNF PPS proposed rule (80 FR 22044), 
tables setting forth the Wage Index for Urban Areas Based on CBSA Labor 
Market Areas and the Wage Index Based on CBSA Labor Market Areas for 
Rural Areas are no longer published in the Federal Register. Instead, 
these tables are available exclusively through the Internet on the CMS 
Web site. The wage index tables for this final rule can be accessed on 
the SNF PPS Wage Index homepage, at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
    Readers who experience any problems accessing any of these online 
SNF PPS wage index tables should contact Kia Sidbury at (410) 786-7816.
    To assist readers in referencing sections contained in this 
document, we are providing the following Table of Contents.

Table of Contents

I. Executive Summary
    A. Purpose
    B. Summary of Major Provisions
    C. Summary of Cost and Benefits
II. Background on SNF PPS
    A. Statutory Basis and Scope
    B. Initial Transition for the SNF PPS
    C. Required Annual Rate Updates
III. Analysis of and Responses to Public Comments on the FY 2016 SNF 
PPS Proposed Rule
    A. General Comments on the FY 2016 SNF PPS Proposed Rule
    B. SNF PPS Rate Setting Methodology and FY 2016 Update
    1. Federal Base Rates
    2. SNF Market Basket Update
    a. SNF Market Basket Index
    b. Use of the SNF Market Basket Percentage
    c. Forecast Error Adjustment
    d. Multifactor Productivity Adjustment
    (1) Incorporating the Multifactor Productivity Adjustment Into 
the Market Basket Update
    e. Market Basket Update Factor for FY 2016
    3. Case-Mix Adjustment
    4. Wage Index Adjustment
    5. Adjusted Rate Computation Example
    C. Additional Aspects of the SNF PPS
    1. SNF Level of Care--Administrative Presumption
    2. Consolidated Billing
    3. Payment for SNF-Level Swing-Bed Services
    D. Other Issues
    1. SNF Value-Based Purchasing (VBP) Program
    a. Background
    (1) Overview
    (2) SNF VBP Report to Congress
    b. Statutory Basis for the SNF VBP Program
    c. Skilled Nursing Facility 30-Day All-Cause Readmission Measure 
(SNFRM)
    (1) Overview
    (2) Measure Calculation
    (3) Exclusions
    (4) Eligible Readmissions
    (5) Risk Adjustment
    (6) Measurement Period
    (7) Stakeholder/MAP Input
    (8) Feedback Reports to SNFs
    d. Performance Standards
    (1) Background
    (a) Hospital Value-Based Purchasing Program
    (b) Hospital-Acquired Conditions Reduction Program
    (c) Hospital Readmissions Reduction Program (HRRP)
    (d) End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    (2) Measuring Improvement
    e. FY 2019 Performance Period and Baseline Period Considerations
    (1) Performance Period
    (2) Baseline Period
    f. SNF Performance Scoring
    (1) Considerations
    (a) Hospital Value-Based Purchasing
    (b) Hospital-Acquired Conditions Reduction Program
    (c) Other Considerations
    (2) Notification Procedures
    (3) Exchange Function
    g. SNF Value-Based Incentive Payments
    h. SNF VBP Public Reporting
    (1) SNF-Specific Performance Information
    (2) Aggregate Performance Information
    2. Advancing Health Information Exchange
    3. SNF Quality Reporting Program (QRP)
    a. Background and Statutory Authority
    b. General Considerations Used for Selection of Quality Measures 
for the SNF QRP
    c. Policy for Retaining SNF QRP Measures for Future Payment 
Determinations
    d. Process for Adoption of Changes to SNF QRP Program Measures
    e. New Quality Measures for FY 2018 and Subsequent Payment 
Determinations
    (1) Quality Measure Addressing the Domain of Skin Integrity and 
Changes in Skin Integrity: Percent of Residents or Patients With 
Pressure Ulcers That are New or Worsened (Short Stay) (NQF #0678)
    (2) Quality Measure Addressing the Domain of the Incidence of 
Major Falls: An Application of the Measure Percent of Residents 
Experiencing One or More Falls With Major Injury (Long Stay) (NQF 
#0674)
    (3) Quality Measure Addressing the Domain of Functional Status, 
Cognitive

[[Page 46391]]

Function, and Changes in Function and Cognitive Function: 
Application of Percent of Long-Term Care Hospital Patients With an 
Admission and Discharge Functional Assessment and a Care Plan that 
Addresses Function (NQF #2631; under NQF review)
    f. SNF QRP Quality Measures Under Consideration for Future Years
    g. Form, Manner, and Timing of Quality Data Submission
    (1) Participation/Timing for New SNFs
    (2) Data Collection Timelines and Requirements for the FY 2018 
Payment Determination and Subsequent Years
    h. SNF QRP Data Completion Thresholds for FY 2018 Payment 
Determination and Subsequent Years
    i. SNF QRP Data Validation Requirements for the FY 2018 Payment 
Determination and Subsequent Years
    j. SNF QRP Submission Exception and Extension Requirements for 
the FY 2018 Payment Determination and Subsequent Years
    k. SNF QRP Reconsideration and Appeals Procedures for the FY 
2018 Payment Determination and Subsequent Years
    l. Public Display of Quality Measure Data for the SNF QRP
    m. Mechanism for Providing Feedback Reports to SNFs
    4. Staffing Data Collection
    a. Background and Statutory Authority
    b. Provisions of the Proposed Rule and Responses to Comments
    (1) Consultation on Specifications
    (2) Scope of Submission Requirements
    (3) Hours Worked and Hours of Care
    (4) Distinguishing Employees From Agency and Contract Staff
    (5) Data Format
    (6) Effective Date for Submission Requirement
    (7) Submission Schedule
    (8) Compliance and Enforcement
    (9) Other Comments
    c. Provisions of the Final Rule
IV. Collection of Information Requirements
V. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts
    4. Detailed Economic Analysis
    5. Alternatives Considered
    6. Accounting Statement
    7. Conclusion
    B. Regulatory Flexibility Act Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Federalism Analysis
    E. Congressional Review Act
    Regulation Text

Acronyms

    In addition, because of the many terms to which we refer by acronym 
in this final rule, we are listing these abbreviations and their 
corresponding terms in alphabetical order below:

AIDS Acquired Immune Deficiency Syndrome
ARD Assessment reference date
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Public Law 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Public Law 106-554
CAH Critical access hospital
CASPER Certification and Survey Provider Enhanced Reports
CBSA Core-based statistical area
CCN CMS Certification Number
CFR Code of Federal Regulations
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
COT Change of therapy
ECI Employment Cost Index
EHR Electronic health record
EOT End of therapy
EOT-R End of therapy--resumption
ESRDQIP End-Stage Renal Disease Quality Incentive Program
FAQ Frequently Asked Questions
FFS Fee-for-service
FR Federal Register
FY Fiscal year
GAO Government Accountability Office
HAC Hospital-Acquired Conditions
HACRP Hospital-Acquired Condition Reduction Program
HCPCS Healthcare Common Procedure Coding System
HIQR Hospital Inpatient Quality Reporting
HOQR Hospital Outpatient Quality Reporting
HRRP Hospital Readmissions Reduction Program
HVBP Hospital Value-Based Purchasing
ICR Information Collection Requirements
IGI IHS (Information Handling Services) Global Insight, Inc.
IMPACT Improving Medicare Post-Acute Care Transformation Act of 
2014, Public Law 113-185
IPPS Inpatient prospective payment system
IRF Inpatient Rehabilitation Facility
LTC Long-term care
LTCH Long-term care hospital
MAP Measures Application Partnership
MDS Minimum data set
MFP Multifactor productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MSA Metropolitan statistical area
NAICS North American Industrial Classification System
NF Nursing facility
NH Nursing Home
NQF National Quality Forum
OBRA Omnibus Budget Reconciliation Act of 1987, Public Law 100-203
OMB Office of Management and Budget
OMRA Other Medicare-Required Assessment
PAC Post-acute care
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PBJ Payroll-Based Journal
PPS Prospective Payment System
PQRS Physician Quality Reporting System
QIES Quality Improvement Evaluation System
QIES ASAP Quality Improvement and Evaluation System Assessment 
Submission and Processing
QRP Quality Reporting Program
RAI Resident assessment instrument
RAVEN Resident assessment validation entry
RFA Regulatory Flexibility Act, Public Law 96-354
RIA Regulatory impact analysis
RUG-III Resource Utilization Groups, Version 3
RUG-IV Resource Utilization Groups, Version 4
RUG-53 Refined 53-Group RUG-III Case-Mix Classification System
SCHIP State Children's Health Insurance Program
sDTI Suspected deep tissue injuries
SNF Skilled nursing facility
SNFRM Skilled Nursing Facility 30-Day All-Cause Readmission Measure
STM Staff time measurement
STRIVE Staff time and resource intensity verification
TEP Technical expert panel
UMRA Unfunded Mandates Reform Act, Public Law 104-4
VBP Value-based purchasing

I. Executive Summary

A. Purpose

    This final rule updates the SNF prospective payment rates for FY 
2016 as required under section 1888(e)(4)(E) of the Social Security Act 
(the Act). It also responds to section 1888(e)(4)(H) of the Act, which 
requires the Secretary to provide for publication in the Federal 
Register before the August 1 that precedes the start of each fiscal 
year (FY), certain specified information relating to the payment update 
(see section II.C.). In addition, it implements a new quality reporting 
program (QRP) for SNFs required under section 1888(e)(6) of the Act. 
The final rule also specifies a SNF all-cause all-condition hospital 
readmission measure required under section 1888(g)(1) of the Act, and 
adopts that measure for a new SNF value-based purchasing (VBP) program 
as required under section 1888(h) of the Act. Further, this final rule 
establishes new regulatory reporting requirements for SNFs and NFs to 
implement the statutory obligation to submit staffing information based 
on payroll data under section 1128I(g) of the Act.

B. Summary of Major Provisions

    In accordance with sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of 
the Act, the federal rates in this final rule reflect an update to the 
rates that we published in the SNF PPS final rule for FY 2015 (79 FR 
45628), which reflects the SNF market basket index as adjusted by the 
applicable forecast error correction and by the multifactor 
productivity adjustment for FY 2016. We are also finalizing a SNF all-
cause all-condition hospital readmission measure under section 
1888(g)(1) of the

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Act, as well as adopting that measure for a new SNF VBP Program as 
required under section 1888(h) of the Act. We are also implementing a 
new QRP for SNFs under section 1888(e)(6) of the Act, which was added 
by section 2(c)(4) of the Improving Medicare Post-Acute Care 
Transformation Act of 2014 (IMPACT Act, Pub. L. 113-185).
    For payment determinations beginning with FY 2018, we are adopting 
measures meeting three quality domains specified in section 1899B(c)(1) 
of the Act: Functional status, skin integrity, and incidence of major 
falls.
    In addition, we are adding new language at 42 CFR, part 483 to 
implement section 1128I(g) of the Act. Specifically, beginning on July 
1, 2016, long-term care (LTC) facilities that participate in Medicare 
or Medicaid will be required to submit electronically direct care 
staffing information (including information for agency and contract 
staff) based on payroll and other verifiable and auditable data in a 
uniform format.

C. Summary of Cost and Benefits

------------------------------------------------------------------------
         Provision  description                  Total transfers
------------------------------------------------------------------------
FY 2016 SNF PPS payment rate update....  The overall economic impact of
                                          this final rule will be an
                                          estimated increase of $430
                                          million in aggregate payments
                                          to SNFs during FY 2016.
------------------------------------------------------------------------

II. Background on SNF PPS

A. Statutory Basis and Scope

    As amended by section 4432 of the Balanced Budget Act of 1997 (BBA, 
Pub. L. 105-33), section 1888(e) of the Act provides for the 
implementation of a PPS for SNFs. This methodology uses prospective, 
case-mix adjusted per diem payment rates applicable to all covered SNF 
services defined in section 1888(e)(2)(A) of the Act. The SNF PPS is 
effective for cost reporting periods beginning on or after July 1, 
1998, and covers all costs of furnishing covered SNF services (routine, 
ancillary, and capital-related costs) other than costs associated with 
approved educational activities and bad debts. Under section 
1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital 
extended care services for which benefits are provided under Part A, as 
well as those items and services (other than a small number of excluded 
services, such as physician services) for which payment may otherwise 
be made under Part B and which are furnished to Medicare beneficiaries 
who are residents in a SNF during a covered Part A stay. A 
comprehensive discussion of these provisions appears in the May 12, 
1998 interim final rule (63 FR 26252). In addition, a detailed 
discussion of the legislative history of the SNF PPS is available 
online at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_07302013.pdf.
    Section 215(a) of the Protecting Access to Medicare Act of 2014 
(PAMA, Pub. L. 113-93, enacted on April 1, 2014), added section 1888(g) 
to the Act, requiring the Secretary to specify certain quality measures 
for the SNF setting. Additionally, section 215(b) of PAMA added section 
1888(h) to the Act, requiring the Secretary to implement a VBP program 
for SNFs. Finally, section 2(a) of the IMPACT Act added section 1899B 
to the Act that, among other things, requires SNFs to report 
standardized data for measures in specified quality and resource use 
domains. In addition, the IMPACT Act added section 1888(e)(6) to the 
Act, which requires the Secretary to implement a QRP for SNFs, under 
which SNFs that do not report certain data will receive a reduction in 
their payments under the SNF PPS of 2 percentage points for FYs 
beginning with FY 2018.

B. Initial Transition for the SNF PPS

    Under sections 1888(e)(1)(A) and 1888(e)(11) of the Act, the SNF 
PPS included an initial, three-phase transition that blended a 
facility-specific rate (reflecting the individual facility's historical 
cost experience) with the federal case-mix adjusted rate. The 
transition extended through the facility's first three cost reporting 
periods under the PPS, up to and including the one that began in FY 
2001. Thus, the SNF PPS is no longer operating under the transition, as 
all facilities have been paid at the full federal rate effective with 
cost reporting periods beginning in FY 2002. As we now base payments 
for SNFs entirely on the adjusted federal per diem rates, we no longer 
include adjustment factors under the transition related to facility-
specific rates for the upcoming FY.

C. Required Annual Rate Updates

    Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates 
to be updated annually. The most recent annual update occurred in a 
final rule that set forth updates to the SNF PPS payment rates for FY 
2015 (79 FR 45628, August 5, 2014).
    Section 1888(e)(4)(H) of the Act specifies that we provide for 
publication annually in the Federal Register of the following:
     The unadjusted federal per diem rates to be applied to 
days of covered SNF services furnished during the upcoming FY.
     The case-mix classification system to be applied for these 
services during the upcoming FY.
     The factors to be applied in making the area wage 
adjustment for these services.
    Along with other revisions discussed later in this preamble, this 
final rule provides the required annual updates to the per diem payment 
rates for SNFs for FY 2016.

III. Analysis of and Responses to Public Comments on the FY 2016 SNF 
PPS Proposed Rule

    In response to the publication of the FY 2016 SNF PPS proposed 
rule, we received 53 timely public comments from individuals, 
providers, corporations, government agencies, private citizens, trade 
associations, and major organizations. The following are brief 
summaries of each proposed provision, a summary of the public comments 
that we received related to that proposal, and our responses to the 
comments.

A. General Comments on the FY 2016 SNF PPS Proposed Rule

    In addition to the comments we received on specific proposals 
contained within the proposed rule (which we address later in this 
final rule), commenters also submitted the following, more general 
observations on the SNF PPS and SNF care generally. A discussion of 
these comments, along with our responses, appears below.
    Comment: One commenter expressed concern regarding the recent 
evolution of SNF care, stating that, in the commenter's opinion, while 
resident acuity is increasing, facilities worry more about money than 
about actual resident care. The commenter further stated that fewer 
staff hours should be focused on determining a resident's particular 
Resource Utilization Group (RUG) level for the purpose of managing 
facility budgets, and instead should be focused on resident care. 
Additionally, the commenter asked that we establish standards of 
practice to eliminate unwarranted variability in care, such as 
residents sharing various health characteristics but receiving very 
different amounts of care.
    Response: We appreciate the commenter raising these points and are 
mindful of the commenter's concern regarding the apparent tension 
between profit and resident care. We also agree

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that SNF care appropriately should focus on the resident's unique 
characteristics and goals, and note that RUG determinations should be 
based on the type and amount of nursing and therapy care required by 
the resident, rather than on facility budget considerations. We will 
consider the concerns the commenter raised as we identify future areas 
for analysis and program monitoring.
    Comment: One commenter recommended that we address the need for CMS 
to broaden the categories of healthcare professionals who may order 
patient diets. The commenter stated that such a change would improve 
patient health and allow SNFs to respond more quickly to resident 
nutritional needs.
    Response: We appreciate this comment, but would note as we did in 
the FY 2015 SNF PPS final rule (79 FR 45630) that the specific issues 
the commenter raised about who may prescribe diets for SNF residents do 
not relate to payment policy, but rather to certification standards for 
long-term care facilities more generally. Therefore, while we once 
again note that such comments lie outside of the scope of this final 
rule, we will share them with the relevant CMS staff that works on 
survey and certification issues.
    Comment: Several commenters made comments related to potential 
refinements or revisions of the existing SNF PPS. Some commenters 
expressed concern regarding compensation for non-therapy ancillary 
services, with one commenter stating specifically that the SNF PPS 
emphasizes therapy services and deemphasizes the care needs for 
medically complex residents, particularly in hospital-based SNFs. A 
second commenter stated that the current RUG system does not 
appropriately capture the intensity or cost of services for residents 
in certain non-therapy RUG groups, most notably those resident living 
with Alzheimer's disease and dementia. Both commenters urged CMS to 
revise the SNF PPS to account for the potentially increased intensity 
or cost of services for medically complex residents, some of which may 
result from the provision of non-therapy ancillary services. One 
commenter expressed a ``growing impatience'' with CMS's lack of 
progress in implementing a revised SNF PPS and urged CMS to move 
forward with a revised PPS design or provide a timeline for when such 
revisions will be ready given that the flaws with the current system 
are already well known. A different commenter expressed support for 
CMS's current efforts to revise the SNF PPS, while at the same time 
cautioning CMS to proceed gradually by considering an approach that 
would transition to a revised PPS design over time.
    Response: We appreciate the commenters raising these points and 
share the commenters' interest in exploring ways to revise the SNF PPS 
that may improve payment policy as well as promote appropriate resident 
care. We believe that our SNF payment model research (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) will help us establish a strong basis for 
examining potential improvements and refinements to the overall SNF 
PPS, most notably given that we recently expanded the scope of this 
research to focus not only on therapy payment but nursing and non-
therapy ancillary payments as well. With regard to comments on the 
overall approach CMS is taking in developing a revised PPS design, and 
specifically, the two comments that presented contrasting views on the 
pace of our progress, we would agree with the commenter who urged a 
certain degree of caution in moving to a revised SNF PPS. While we also 
agree that many of the issues with the current system are well known at 
this point, we believe that arriving at appropriate solutions to issues 
of this complexity will, of necessity, entail an investment of time and 
effort that goes considerably beyond simply identifying the issues 
themselves. That said, we do believe that we should continue to move as 
quickly as possible to address the issues with the existing SNF PPS 
design, though without compromising the overall integrity of our 
research and analysis for the sake of time. We also welcome additional 
comments and feedback on this research, which may be submitted to: 
[email protected].
    Comment: One commenter raised a concern regarding the potential 
impact of current Minimum Data Set (MDS) 3.0 assessment rules and 
policies during facility audits of completed MDS assessments. 
Specifically, the commenter stated that during an audit of assessments 
completed by a given facility, it might be discovered that correcting a 
given error (for example, an error in the number of therapy minutes 
coded on a given assessment) also means that a Change-of-Therapy (COT) 
Other Medicare-Required Assessment (OMRA) may have been missed during 
that timeframe when the original error occurred. Due to the missed 
assessment policy outlined in Chapters 2 and 6 of the MDS 3.0 manual, 
this could mean that the days associated with that missed assessment 
could be considered provider liable, which could have a significant 
financial impact on the facility. The commenter recommended that CMS 
re-evaluate the potentially punitive impact of not being able to 
complete an MDS after the resident's Medicare-covered SNF stay has 
ended.
    Response: The consequences associated with coding errors and the 
use of audits to identify these errors are necessary to ensure that 
SNFs take seriously the responsibility of ensuring that accurate 
information is coded on the MDS. While we appreciate that errors are 
always possible, we do not believe that this is sufficient to warrant a 
change in policy at this time. We will continue to consider this issue 
as part of our ongoing evaluation of potential refinements and 
improvements to the overall SNF PPS.

B. SNF PPS Rate Setting Methodology and FY 2016 Update

1. Federal Base Rates
    Under section 1888(e)(4) of the Act, the SNF PPS uses per diem 
federal payment rates based on mean SNF costs in a base year (FY 1995) 
updated for inflation to the first effective period of the PPS. We 
developed the federal payment rates using allowable costs from 
hospital-based and freestanding SNF cost reports for reporting periods 
beginning in FY 1995. The data used in developing the federal rates 
also incorporated a Part B add-on, which is an estimate of the amounts 
that, prior to the SNF PPS, would have been payable under Part B for 
covered SNF services furnished to individuals during the course of a 
covered Part A stay in a SNF.
    In developing the rates for the initial period, we updated costs to 
the first effective year of the PPS (the 15-month period beginning July 
1, 1998) using a SNF market basket index, and then standardized for 
geographic variations in wages and for the costs of facility 
differences in case mix. In compiling the database used to compute the 
federal payment rates, we excluded those providers that received new 
provider exemptions from the routine cost limits, as well as costs 
related to payments for exceptions to the routine cost limits. Using 
the formula that the BBA prescribed, we set the federal rates at a 
level equal to the weighted mean of freestanding costs plus 50 percent 
of the difference between the freestanding mean and weighted mean of 
all SNF costs (hospital-based and freestanding) combined. We computed 
and applied separately the payment rates for facilities located in 
urban and rural areas, and adjusted the portion of the federal rate 
attributable to wage-related

[[Page 46394]]

costs by a wage index to reflect geographic variations in wages.
2. SNF Market Basket Update
a. SNF Market Basket Index
    Section 1888(e)(5)(A) of the Act requires us to establish a SNF 
market basket index that reflects changes over time in the prices of an 
appropriate mix of goods and services included in covered SNF services. 
Accordingly, we have developed a SNF market basket index that 
encompasses the most commonly used cost categories for SNF routine 
services, ancillary services, and capital-related expenses. We use the 
SNF market basket index, adjusted in the manner described below, to 
update the federal rates on an annual basis. In the SNF PPS final rule 
for FY 2014 (78 FR 47939 through 47946), we revised and rebased the 
market basket, which included updating the base year from FY 2004 to FY 
2010.
    For the FY 2016 proposed rule, the FY 2010-based SNF market basket 
growth rate was estimated to be 2.6 percent, which was based on the IHS 
Global Insight, Inc. (IGI) first quarter 2015 forecast with historical 
data through fourth quarter 2014. However, as discussed in the FY 2016 
SNF PPS proposed rule (80 FR 22049), we proposed that if more recent 
data become available (for example, a more recent estimate of the FY 
2010-based SNF market basket and/or MFP adjustment), we would use such 
data, if appropriate, to determine the FY 2016 SNF market basket 
percentage change, labor-related share relative importance, forecast 
error adjustment, and MFP adjustment in this final rule. Since that 
time we have received an updated FY 2016 market basket percentage 
increase, which is based on the second quarter 2015 IHS Global Insight 
forecast of the FY 2010-based SNF market basket. The revised market 
basket growth rate is 2.3 percent. In section III.B.2.e. of this final 
rule, we discuss the specific application of this adjustment to the 
forthcoming annual update of the SNF PPS payment rates.
b. Use of the SNF Market Basket Percentage
    Section 1888(e)(5)(B) of the Act defines the SNF market basket 
percentage as the percentage change in the SNF market basket index from 
the midpoint of the previous FY to the midpoint of the current FY. For 
the federal rates set forth in this final rule, we use the percentage 
change in the SNF market basket index to compute the update factor for 
FY 2016. This is based on the IGI second quarter 2015 forecast (with 
historical data through the first quarter 2015) of the FY 2016 
percentage increase in the FY 2010-based SNF market basket index for 
routine, ancillary, and capital-related expenses, which is used to 
compute the update factor in this final rule. As discussed in sections 
III.B.2.c. and III.B.2.d. of this final rule, this market basket 
percentage change is reduced by the applicable forecast error 
correction (as described in Sec.  413.337(d)(2)) and by the multifactor 
productivity adjustment as required by section 1888(e)(5)(B)(ii) of the 
Act. Finally, as discussed in section II.B. of this final rule, we no 
longer compute update factors to adjust a facility-specific portion of 
the SNF PPS rates, because the initial three-phase transition period 
from facility-specific to full federal rates that started with cost 
reporting periods beginning in July 1998 has expired.
c. Forecast Error Adjustment
    As discussed in the June 10, 2003 supplemental proposed rule (68 FR 
34768) and finalized in the August 4, 2003, final rule (68 FR 46057 
through 46059), the regulations at Sec.  413.337(d)(2) provide for an 
adjustment to account for market basket forecast error. The initial 
adjustment for market basket forecast error applied to the update of 
the FY 2003 rate for FY 2004, and took into account the cumulative 
forecast error for the period from FY 2000 through FY 2002, resulting 
in an increase of 3.26 percent to the FY 2004 update. Subsequent 
adjustments in succeeding FYs take into account the forecast error from 
the most recently available FY for which there is final data, and apply 
the difference between the forecasted and actual change in the market 
basket when the difference exceeds a specified threshold. We originally 
used a 0.25 percentage point threshold for this purpose; however, for 
the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425, 
August 3, 2007), we adopted a 0.5 percentage point threshold effective 
for FY 2008 and subsequent FYs. As we stated in the final rule for FY 
2004 that first issued the market basket forecast error adjustment (68 
FR 46058, August 4, 2003), the adjustment will reflect both upward and 
downward adjustments, as appropriate.
    For FY 2014 (the most recently available FY for which there is 
final data), the estimated increase in the market basket index was 2.3 
percentage points, while the actual increase for FY 2014 was 1.7 
percentage points, resulting in the actual increase being 0.6 
percentage point lower than the estimated increase. Accordingly, as the 
difference between the estimated and actual amount of change in the 
market basket index exceeds the 0.5 percentage point threshold and 
because, in this instance, the estimated amount of change exceeded the 
actual amount of change, the FY 2016 market basket percentage change of 
2.3 percent would be adjusted downward by the forecast error correction 
of 0.6 percentage point, resulting in a SNF market basket increase of 
1.7 percent, before application of the productivity adjustment 
discussed in this section. Table 1 shows the forecasted and actual 
market basket amounts for FY 2014.

            Table 1--Difference Between the Forecasted and Actual Market Basket Increases for FY 2014
----------------------------------------------------------------------------------------------------------------
                                                                Forecasted FY    Actual FY 2014      FY 2014
                            Index                              2014 increase *    increase **       Difference
----------------------------------------------------------------------------------------------------------------
SNF..........................................................             2.3              1.7             -0.6
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2013 IGI forecast (2010-based index).
** Based on the first quarter 2015 IGI forecast, with historical data through the fourth quarter 2014 (2010-
  based index).

    A discussion of the general comments that we received on the 
forecast error adjustment, and our responses to those comments, appears 
below.
    Comment: One commenter requested that in determining the need for a 
market basket forecast error adjustment in a given year, CMS consider 
recalculating the wage index budget neutrality factor (discussed in 
section III.B.4 of this final rule) based on more recent data and 
utilize any error found in the original budget neutrality factor 
calculation in CMS's determination of the need for a market basket 
forecast error adjustment.
    Response: The commenter appears to be requesting a wage index 
budget

[[Page 46395]]

neutrality factor error adjustment. However, we note at the outset that 
given the limited year-to-year variance in the wage index budget 
neutrality factor, any calculation of a budget neutrality factor error 
would likely represent an error of no more than a few thousandths of a 
percentage point, and thus we do not believe a wage index budget 
neutrality factor error adjustment would be necessary. Moreover, the 
market basket forecast error adjustment and the wage index budget 
neutrality factor serve fundamentally different purposes and involve 
entirely separate aspects of the SNF PPS. As such, we do not believe it 
would be appropriate to apply a wage index budget neutrality factor 
error to a market basket forecast error in order to determine if the 
market basket forecast error adjustment should be made.
    Comment: One commenter stated that the forecast error adjustment of 
0.6 percentage point represents a significant reduction and recommended 
that we implement the forecast error correction over a 2-year period.
    Response: The forecast error adjustment is an essential aspect of 
ensuring that SNF PPS payments are as accurate as possible. Therefore, 
consistent with the way we have applied forecast error adjustments in 
the past, we do not believe that it is either appropriate or beneficial 
to the overall integrity of the SNF PPS to implement this adjustment 
over a multiple-year period.
d. Multifactor Productivity Adjustment
    Section 3401(b) of the Affordable Care Act requires that, in FY 
2012 (and in subsequent FYs), the market basket percentage under the 
SNF payment system as described in section 1888(e)(5)(B)(i) of the Act 
is to be reduced annually by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) 
of the Act, added by section 3401(a) of the Affordable Care Act, sets 
forth the definition of this productivity adjustment. The statute 
defines the productivity adjustment to be equal to the 10-year moving 
average of changes in annual economy-wide private nonfarm business 
multi-factor productivity (as projected by the Secretary for the 10-
year period ending with the applicable FY, year, cost-reporting period, 
or other annual period) (the MFP adjustment). The Bureau of Labor 
Statistics (BLS) is the agency that publishes the official measure of 
private nonfarm business multifactor productivity (MFP). We refer 
readers to the BLS Web site at http://www.bls.gov/mfp for the BLS 
historical published MFP data.
    MFP is derived by subtracting the contribution of labor and capital 
inputs growth from output growth. The projections of the components of 
MFP are currently produced by IGI, a nationally recognized economic 
forecasting firm with which CMS contracts to forecast the components of 
the market baskets and MFP. To generate a forecast of MFP, IGI 
replicates the MFP measure calculated by the BLS, using a series of 
proxy variables derived from IGI's U.S. macroeconomic models. In 
section III.F.3. of the FY 2012 SNF PPS final rule (76 FR 48527 through 
48529), we identified each of the major MFP component series employed 
by the BLS to measure MFP as well as provided the corresponding 
concepts determined to be the best available proxies for the BLS 
series.
    Beginning with the FY 2016 rulemaking cycle, the MFP adjustment is 
calculated using a revised series developed by IGI to proxy the 
aggregate capital inputs. Specifically, IGI has replaced the Real 
Effective Capital Stock used for Full Employment GDP with a forecast of 
BLS aggregate capital inputs recently developed by IGI using a 
regression model. This series provides a better fit to the BLS capital 
inputs as measured by the differences between the actual BLS capital 
input growth rates and the estimated model growth rates over the 
historical time period. Therefore, we are using IGI's most recent 
forecast of the BLS capital inputs series in the MFP calculations 
beginning with the FY 2016 rulemaking cycle. A complete description of 
the MFP projection methodology is available on our Web site at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. Although 
we discuss the IGI changes to the MFP proxy series in this final rule, 
in the future, when IGI makes changes to the MFP methodology, we will 
announce them on our Web site rather than in the annual rulemaking.
(1) Incorporating the Multifactor Productivity Adjustment Into the 
Market Basket Update
    According to section 1888(e)(5)(A) of the Act, the Secretary shall 
establish a SNF market basket index that reflects changes over time in 
the prices of an appropriate mix of goods and services included in 
covered SNF services. Section 1888(e)(5)(B)(ii) of the Act, added by 
section 3401(b) of the Affordable Care Act, requires that for FY 2012 
and each subsequent FY, after determining the market basket percentage 
described in section 1888(e)(5)(B)(i) of the Act, the Secretary shall 
reduce such percentage by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) (which we refer to as the MFP 
adjustment). Section 1888(e)(5)(B)(ii) of the Act further states that 
the reduction of the market basket percentage by the MFP adjustment may 
result in the market basket percentage being less than zero for a FY, 
and may result in payment rates under section 1888(e) of the Act for a 
FY being less than such payment rates for the preceding FY. Thus, if 
the application of the MFP adjustment to the market basket percentage 
calculated under section 1888(e)(5)(B)(i) of the Act results in an MFP-
adjusted market basket percentage that is less than zero, then the 
annual update to the unadjusted federal per diem rates under section 
1888(e)(4)(E)(ii) of the Act would be negative, and such rates would 
decrease relative to the prior FY.
    For the FY 2016 update, the MFP adjustment is calculated as the 10-
year moving average of changes in MFP for the period ending September 
30, 2016. In the FY 2016 SNF PPS proposed rule, this adjustment was 
calculated to be 0.6 percent. However, as discussed in the FY 2016 SNF 
PPS proposed rule (80 FR 22049), we proposed that if more recent data 
become available (for example, a more recent estimate of the FY 2010-
based SNF market basket and/or MFP adjustment), we would use such data, 
if appropriate, to determine, among other things, the FY 2016 SNF 
market basket percentage change and the MFP adjustment in this final 
rule. Therefore, based on IGI's most recent second quarter 2015 
forecast (with historical data through first quarter 2015), the MFP 
adjustment for FY 2016 is 0.5 percent. Consistent with section 
1888(e)(5)(B)(i) of the Act and Sec.  413.337(d)(2) of the regulations, 
the market basket percentage for FY 2016 for the SNF PPS is based on 
IGI's second quarter 2015 forecast of the SNF market basket update (2.3 
percent) as adjusted by the forecast error adjustment (0.6 percentage 
point), and is estimated to be 1.7 percent. In accordance with section 
1888(e)(5)(B)(ii) of the Act (as added by section 3401(b) of the 
Affordable Care Act) and Sec.  413.337(d)(3), this market basket 
percentage is then reduced by the MFP adjustment (the 10-year moving 
average of changes in MFP for the period ending September 30, 2016) of 
0.5 percent, which is calculated as described above and based on IGI's 
second quarter 2015 forecast. The

[[Page 46396]]

resulting MFP-adjusted SNF market basket update is equal to 1.2 
percent, or 1.7 percent less 0.5 percentage point.
e. Market Basket Update Factor for FY 2016
    Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require 
that the update factor used to establish the FY 2016 unadjusted federal 
rates be at a level equal to the market basket index percentage change. 
Accordingly, we determined the total growth from the average market 
basket level for the period of October 1, 2014 through September 30, 
2015 to the average market basket level for the period of October 1, 
2015 through September 30, 2016. This process yields a percentage 
change in the market basket of 2.3 percent.
    As further explained in section III.B.2.c. of this final rule, as 
applicable, we adjust the market basket percentage change by the 
forecast error from the most recently available FY for which there is 
final data and apply this adjustment whenever the difference between 
the forecasted and actual percentage change in the market basket 
exceeds a 0.5 percentage point threshold. Since the forecasted FY 2014 
SNF market basket percentage change exceeded the actual FY 2014 SNF 
market basket percentage change (FY 2014 is the most recently available 
FY for which there is final data) by more than 0.5 percentage point, 
the FY 2016 market basket percentage change of 2.3 percent would be 
adjusted downward by the applicable difference, which for FY 2014 is 
0.6 percent.
    In addition, for FY 2016, section 1888(e)(5)(B)(ii) of the Act 
requires us to reduce the market basket percentage change by the MFP 
adjustment (the 10-year moving average of changes in MFP for the period 
ending September 30, 2016) of 0.5 percent, as described in section 
III.B.2.d. of this final rule. The resulting net SNF market basket 
update would equal 1.2 percent, or 2.3 percent less the 0.6 percentage 
point forecast error adjustment, less the 0.5 percentage point MFP 
adjustment. We proposed in the FY 2016 SNF PPS proposed rule (80 FR 
22049) that if more recent data become available (for example, a more 
recent estimate of the FY 2010-based SNF market basket and/or MFP 
adjustment), we would use such data, if appropriate, to determine the 
FY 2016 SNF market basket percentage change, labor-related share 
relative importance, forecast error adjustment, and MFP adjustment in 
this final rule. As noted above, more recent data were used to update 
the market basket update and MFP adjustment in this final rule.
    A discussion of the general comments that we received on the market 
basket update factor for FY 2016, and our responses to those comments, 
appears below.
    Comment: We received a number of comments in relation to applying 
the FY 2016 market basket update factor in the determination of the FY 
2016 unadjusted federal per diem rates, with some commenters supporting 
its application in determining the FY 2016 unadjusted per diem rates, 
while others opposed its application. In their March 2015 report 
(available at: http://www.medpac.gov/documents/reports/chapter-8-skilled-nursing-facility-services-(march-2015-report).pdf?sfvrsn=0) and 
in their comment on the FY 2016 SNF PPS proposed rule, MedPAC 
recommended that CMS eliminate the market basket update for SNFs 
altogether and rebase payments for the SNF PPS, beginning with a 4 
percent reduction in the base payment rates.
    Response: We appreciate all of the comments received on the 
proposed market basket update for FY 2016. In response to those 
comments which opposed our applying the FY 2016 market basket update 
factor in determining the FY 2016 unadjusted federal per diem rates, 
specifically MedPAC's proposal to eliminate the market basket update 
for SNFs and to implement a 4 percent reduction to the SNF PPS base 
rates, we would need statutory authority to act on these proposals at 
the current time.
    Comment: One commenter stated that in their preliminary analyses, 
they observed a gap between the market basket and costs indexed to 2001 
dollars (which we assume to mean an index based on 2001 dollars) which 
occurs even in rebasing years. They also observed a growing gap in non-
labor components. They stated that further research is needed to 
understand the gap and they respectfully request that CMS engage in an 
ongoing dialogue.
    Response: We appreciate the commenter's review of the SNF market 
basket methodology and look forward to the commenter's analysis. While 
any comments on the SNF market basket methodology, including any 
analyses, can be emailed to [email protected], we would be happy to 
engage in further dialogue on this issue.
    Comment: One commenter noted that the weights used in calculating 
the market basket update should continue to use the most updated cost 
data available. They suggested that the market basket be revised and 
reweighted with greater frequency--on the same schedule as the hospital 
market basket, particularly given the new Medicare provisions, such as 
the IMPACT Act and also if the SNF wage index continues to be directly 
linked to the hospital wage index. The commenter also suggested that 
CMS update the market basket each year; alternatively, should such a 
process be too onerous, CMS should calculate the six major cost weights 
derived from the Medicare cost report (wages and salaries, employee 
benefits, contract labor, pharmaceuticals, professional liability 
insurance and capital-related) every year and update the market basket 
every 4 years (rather than every 6), as well as whenever the aggregate 
percentage change of the six major cost weights, when taken together, 
exceeds some set amount.
    Response: We appreciate the commenter's request for the SNF market 
basket to be revised and reweighted more frequently. As discussed in 
the FY 2006 IPPS final rule (70 FR 47387), we established a rebasing 
frequency of every 4 years for the hospital market basket, in 
accordance with section 404 of Public Law 108-173. We typically rebase 
and revise the SNF market baskets approximately every 6 years. Our 
prior analysis has shown that the major cost weights do not vary that 
much from year to year. However, we do understand the commenter's 
concern for more frequent rebasings given that any changes in the 
Medicare law could alter the way in which SNFs provide Medicare 
services--which, in turn, potentially could affect the SNF cost 
structures (that is, the market basket cost weights). Accordingly, we 
will consider the methodology presented by the commenter and evaluate 
the possible impact on the SNF market basket update by monitoring the 
percent change of the six major cost weights derived from the Medicare 
cost report (wages and salaries, employee benefits, contract labor, 
pharmaceuticals, professional liability insurance and capital-related).
    Accordingly, for the reasons specified in this final rule and in 
the FY 2016 SNF PPS proposed rule (80 FR 22047 through 22049), we are 
applying the FY 2016 market basket increase factor, as adjusted by the 
forecast error correction and MFP adjustment as described above, in our 
determination of the FY 2016 SNF PPS unadjusted federal per diem rates. 
We used the SNF market basket, adjusted as described in this section, 
to adjust each per diem component of the federal rates forward to 
reflect the change in the average prices for FY 2016 from average 
prices for FY 2015. We would further adjust the rates by a wage index 
budget neutrality factor, described later in this

[[Page 46397]]

section. Tables 2 and 3 reflect the updated components of the 
unadjusted federal rates for FY 2016, prior to adjustment for case-mix.

                             Table 2--FY 2016 Unadjusted Federal Rate Per Diem Urban
----------------------------------------------------------------------------------------------------------------
                                               Nursing--case-   Therapy--case-   Therapy--non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $171.17          $128.94           $16.98           $87.36
----------------------------------------------------------------------------------------------------------------


                             Table 3--FY 2016 Unadjusted Federal Rate Per Diem Rural
----------------------------------------------------------------------------------------------------------------
                                               Nursing--case-   Therapy--case-   Therapy--non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $163.53          $148.67           $18.14           $88.97
----------------------------------------------------------------------------------------------------------------

3. Case-Mix Adjustment
    Under section 1888(e)(4)(G)(i) of the Act, the federal rate also 
incorporates an adjustment to account for facility case-mix, using a 
classification system that accounts for the relative resource 
utilization of different patient types. The statute specifies that the 
adjustment is to reflect both a resident classification system that the 
Secretary establishes to account for the relative resource use of 
different patient types, as well as resident assessment data and other 
data that the Secretary considers appropriate. In the interim final 
rule with comment period that initially implemented the SNF PPS (63 FR 
26252, May 12, 1998), we developed the RUG-III case-mix classification 
system, which tied the amount of payment to resident resource use in 
combination with resident characteristic information. Staff time 
measurement (STM) studies conducted in 1990, 1995, and 1997 provided 
information on resource use (time spent by staff members on residents) 
and resident characteristics that enabled us not only to establish RUG-
III, but also to create case-mix indexes (CMIs). The original RUG-III 
grouper logic was based on clinical data collected in 1990, 1995, and 
1997. As discussed in the SNF PPS proposed rule for FY 2010 (74 FR 
22208), we subsequently conducted a multi-year data collection and 
analysis under the Staff Time and Resource Intensity Verification 
(STRIVE) project to update the case-mix classification system for FY 
2011. The resulting Resource Utilization Groups, Version 4 (RUG-IV) 
case-mix classification system reflected the data collected in 2006 
through 2007 during the STRIVE project, and was finalized in the FY 
2010 SNF PPS final rule (74 FR 40288) to take effect in FY 2011 
concurrently with an updated new resident assessment instrument, 
version 3.0 of the Minimum Data Set (MDS 3.0), which collects the 
clinical data used for case-mix classification under RUG-IV.
    We note that case-mix classification is based, in part, on the 
beneficiary's need for skilled nursing care and therapy services. The 
case-mix classification system uses clinical data from the MDS to 
assign a case-mix group to each patient that is then used to calculate 
a per diem payment under the SNF PPS. As discussed in section III.C.1. 
of this final rule, the clinical orientation of the case-mix 
classification system supports the SNF PPS's use of an administrative 
presumption that considers a beneficiary's initial case-mix 
classification to assist in making certain SNF level of care 
determinations. Further, because the MDS is used as a basis for 
payment, as well as a clinical assessment, we have provided extensive 
training on proper coding and the time frames for MDS completion in our 
Resident Assessment Instrument (RAI) Manual. For an MDS to be 
considered valid for use in determining payment, the MDS assessment 
must be completed in compliance with the instructions in the RAI Manual 
in effect at the time the assessment is completed. For payment and 
quality monitoring purposes, the RAI Manual consists of both the Manual 
instructions and the interpretive guidance and policy clarifications 
posted on the appropriate MDS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html.
    In addition, we note that section 511 of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (MMA, Pub. L. 108-173) 
amended section 1888(e)(12) of the Act to provide for a temporary 
increase of 128 percent in the PPS per diem payment for any SNF 
residents with Acquired Immune Deficiency Syndrome (AIDS), effective 
with services furnished on or after October 1, 2004. This special add-
on for SNF residents with AIDS was to remain in effect until the 
Secretary certifies that there is an appropriate adjustment in the case 
mix to compensate for the increased costs associated with such 
residents. The add-on for SNF residents with AIDS is also discussed in 
Program Transmittal #160 (Change Request #3291), issued on April 30, 
2004, which is available online at www.cms.gov/transmittals/downloads/r160cp.pdf. In the SNF PPS final rule for FY 2010 (74 FR 40288), we did 
not address the certification related to the add-on for SNF residents 
with AIDS in that final rule's implementation of the case-mix 
refinements for RUG-IV, thus allowing the add-on payment required by 
section 511 of the MMA to remain in effect. For the limited number of 
SNF residents that qualify for this add-on, there is a significant 
increase in payments. For example, using FY 2013 data, we identified 
fewer than 4,800 SNF residents with a diagnosis code of 042 (Human 
Immunodeficiency Virus (HIV) Infection). For FY 2016, an urban facility 
with a resident with AIDS in RUG-IV group ``HC2'' would have a case-mix 
adjusted per diem payment of $427.85 (see Table 4) before the 
application of the MMA adjustment. After an increase of 128 percent, 
this urban facility would receive a case-mix adjusted per diem payment 
of approximately $975.50.
    Currently, we use the International Classification of Diseases, 9th 
revision, Clinical Modification (ICD-9-CM) code 042 to identify those 
residents for whom it is appropriate to apply the AIDS add-on 
established by section 511 of the MMA. In this context, we note that 
the Department published a final rule in the September 5, 2012 Federal 
Register (77 FR 54664) which requires us to stop using ICD-9-CM on 
September 30, 2014, and begin using the International Classification of 
Diseases, 10th revision, Clinical Modification (ICD-10-CM), on October 
1, 2014. Regarding the above-referenced ICD-9-CM diagnosis code of

[[Page 46398]]

042, in the FY 2014 SNF PPS proposed rule (78 FR 26444, May 6, 2013), 
we proposed to transition to the equivalent ICD-10-CM diagnosis code of 
B20 upon the overall conversion to ICD-10-CM on October 1, 2014, and we 
subsequently finalized that proposal in the FY 2014 SNF PPS final rule 
(78 FR 47951 through 47952).
    However, on April 1, 2014, PAMA was enacted. Section 212 of PAMA, 
titled ``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provides 
that the Secretary of Health and Human Services may not, prior to 
October 1, 2015, adopt ICD-10 code sets as the standard for code sets 
under section 1173(c) of the Act (42 U.S.C. 1320d-2(c)) and 45 CFR 
162.1002. In the FY 2015 SNF PPS final rule (79 FR 45633), we stated 
that the Department expected to release an interim final rule in the 
near future that would include a new compliance date that would require 
the use of ICD-10 beginning October 1, 2015. In light of this, in the 
FY 2015 SNF PPS final rule, we stated that the effective date of the 
change from ICD-9-CM code 042 to ICD-10-CM code B20 for purposes of 
applying the AIDS add-on is October 1, 2015, and that until that time 
we would continue to use the ICD-9-CM code 042 for this purpose. On 
August 4, 2014, HHS released a final rule in the Federal Register (79 
FR 45128 through 45134) that included a new compliance date that 
requires the use of ICD-10 beginning October 1, 2015. The August 4, 
2014 final rule is available for viewing on the Internet at http://www.gpo.gov/fdsys/pkg/FR-2014-08-04/pdf/2014-18347.pdf. That final rule 
also requires HIPAA covered entities to continue to use ICD-9-CM 
through September 30, 2015. Thus, as we finalized in the FY 2015 SNF 
PPS final rule, the effective date of the change from ICD-9-CM code 042 
to ICD-10-CM code B20 for the purpose of applying the AIDS add-on 
enacted by section 511 of the MMA is October 1, 2015.
    Under section 1888(e)(4)(H), each update of the payment rates must 
include the case-mix classification methodology applicable for the 
upcoming FY. The payment rates set forth in this final rule reflect the 
use of the RUG-IV case-mix classification system from October 1, 2015, 
through September 30, 2016. We list the proposed case-mix adjusted RUG-
IV payment rates, provided separately for urban and rural SNFs, in 
Tables 4 and 5 with corresponding case-mix values. We use the revised 
OMB delineations adopted in the FY 2015 SNF PPS final rule (79 FR 
45632, 45634) to identify a facility's urban or rural status for the 
purpose of determining which set of rate tables apply to the facility. 
These tables do not reflect the add-on for SNF residents with AIDS 
enacted by section 511 of the MMA, which we apply only after making all 
other adjustments (such as wage index and case-mix).

                                      Table 4--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes URBAN
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Nursing         Therapy       Non-case mix     Non-case mix
           RUG-IV  Category             Nursing  index  Therapy  index     component       component      therapy comp      component       Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX...................................            2.67            1.87         $457.02         $241.12  ...............           $87.36         $785.50
RUL...................................            2.57            1.87          439.91          241.12  ...............            87.36          768.39
RVX...................................            2.61            1.28          446.75          165.04  ...............            87.36          699.15
RVL...................................            2.19            1.28          374.86          165.04  ...............            87.36          627.26
RHX...................................            2.55            0.85          436.48          109.60  ...............            87.36          633.44
RHL...................................            2.15            0.85          368.02          109.60  ...............            87.36          564.98
RMX...................................            2.47            0.55          422.79           70.92  ...............            87.36          581.07
RML...................................            2.19            0.55          374.86           70.92  ...............            87.36          533.14
RLX...................................            2.26            0.28          386.84           36.10  ...............            87.36          510.30
RUC...................................            1.56            1.87          267.03          241.12  ...............            87.36          595.51
RUB...................................            1.56            1.87          267.03          241.12  ...............            87.36          595.51
RUA...................................            0.99            1.87          169.46          241.12  ...............            87.36          497.94
RVC...................................            1.51            1.28          258.47          165.04  ...............            87.36          510.87
RVB...................................            1.11            1.28          190.00          165.04  ...............            87.36          442.40
RVA...................................            1.10            1.28          188.29          165.04  ...............            87.36          440.69
RHC...................................            1.45            0.85          248.20          109.60  ...............            87.36          445.16
RHB...................................            1.19            0.85          203.69          109.60  ...............            87.36          400.65
RHA...................................            0.91            0.85          155.76          109.60  ...............            87.36          352.72
RMC...................................            1.36            0.55          232.79           70.92  ...............            87.36          391.07
RMB...................................            1.22            0.55          208.83           70.92  ...............            87.36          367.11
RMA...................................            0.84            0.55          143.78           70.92  ...............            87.36          302.06
RLB...................................            1.50            0.28          256.76           36.10  ...............            87.36          380.22
RLA...................................            0.71            0.28          121.53           36.10  ...............            87.36          244.99
ES3...................................            3.58  ..............          612.79  ..............            16.98            87.36          717.13
ES2...................................            2.67  ..............          457.02  ..............            16.98            87.36          561.36
ES1...................................            2.32  ..............          397.11  ..............            16.98            87.36          501.45
HE2...................................            2.22  ..............          380.00  ..............            16.98            87.36          484.34
HE1...................................            1.74  ..............          297.84  ..............            16.98            87.36          402.18
HD2...................................            2.04  ..............          349.19  ..............            16.98            87.36          453.53
HD1...................................            1.60  ..............          273.87  ..............            16.98            87.36          378.21
HC2...................................            1.89  ..............          323.51  ..............            16.98            87.36          427.85
HC1...................................            1.48  ..............          253.33  ..............            16.98            87.36          357.67
HB2...................................            1.86  ..............          318.38  ..............            16.98            87.36          422.72
HB1...................................            1.46  ..............          249.91  ..............            16.98            87.36          354.25
LE2...................................            1.96  ..............          335.49  ..............            16.98            87.36          439.83
LE1...................................            1.54  ..............          263.60  ..............            16.98            87.36          367.94
LD2...................................            1.86  ..............          318.38  ..............            16.98            87.36          422.72
LD1...................................            1.46  ..............          249.91  ..............            16.98            87.36          354.25
LC2...................................            1.56  ..............          267.03  ..............            16.98            87.36          371.37
LC1...................................            1.22  ..............          208.83  ..............            16.98            87.36          313.17
LB2...................................            1.45  ..............          248.20  ..............            16.98            87.36          352.54
LB1...................................            1.14  ..............          195.13  ..............            16.98            87.36          299.47

[[Page 46399]]

 
CE2...................................            1.68  ..............          287.57  ..............            16.98            87.36          391.91
CE1...................................            1.50  ..............          256.76  ..............            16.98            87.36          361.10
CD2...................................            1.56  ..............          267.03  ..............            16.98            87.36          371.37
CD1...................................            1.38  ..............          236.21  ..............            16.98            87.36          340.55
CC2...................................            1.29  ..............          220.81  ..............            16.98            87.36          325.15
CC1...................................            1.15  ..............          196.85  ..............            16.98            87.36          301.19
CB2...................................            1.15  ..............          196.85  ..............            16.98            87.36          301.19
CB1...................................            1.02  ..............          174.59  ..............            16.98            87.36          278.93
CA2...................................            0.88  ..............          150.63  ..............            16.98            87.36          254.97
CA1...................................            0.78  ..............          133.51  ..............            16.98            87.36          237.85
BB2...................................            0.97  ..............          166.03  ..............            16.98            87.36          270.37
BB1...................................            0.90  ..............          154.05  ..............            16.98            87.36          258.39
BA2...................................            0.70  ..............          119.82  ..............            16.98            87.36          224.16
BA1...................................            0.64  ..............          109.55  ..............            16.98            87.36          213.89
PE2...................................            1.50  ..............          256.76  ..............            16.98            87.36          361.10
PE1...................................            1.40  ..............          239.64  ..............            16.98            87.36          343.98
PD2...................................            1.38  ..............          236.21  ..............            16.98            87.36          340.55
PD1...................................            1.28  ..............          219.10  ..............            16.98            87.36          323.44
PC2...................................            1.10  ..............          188.29  ..............            16.98            87.36          292.63
PC1...................................            1.02  ..............          174.59  ..............            16.98            87.36          278.93
PB2...................................            0.84  ..............          143.78  ..............            16.98            87.36          248.12
PB1...................................            0.78  ..............          133.51  ..............            16.98            87.36          237.85
PA2...................................            0.59  ..............          100.99  ..............            16.98            87.36          205.33
PA1...................................            0.54  ..............           92.43  ..............            16.98            87.36          196.77
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                      Table 5--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes RURAL
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Nursing         Therapy       Non-case mix     Non-case mix
           RUG-IV  Category             Nursing  index  Therapy  index     component       component      therapy comp      component       Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX...................................            2.67            1.87         $436.63         $278.01  ...............           $88.97         $803.61
RUL...................................            2.57            1.87          420.27          278.01  ...............            88.97          787.25
RVX...................................            2.61            1.28          426.81          190.30  ...............            88.97          706.08
RVL...................................            2.19            1.28          358.13          190.30  ...............            88.97          637.40
RHX...................................            2.55            0.85          417.00          126.37  ...............            88.97          632.34
RHL...................................            2.15            0.85          351.59          126.37  ...............            88.97          566.93
RMX...................................            2.47            0.55          403.92           81.77  ...............            88.97          574.66
RML...................................            2.19            0.55          358.13           81.77  ...............            88.97          528.87
RLX...................................            2.26            0.28          369.58           41.63  ...............            88.97          500.18
RUC...................................            1.56            1.87          255.11          278.01  ...............            88.97          622.09
RUB...................................            1.56            1.87          255.11          278.01  ...............            88.97          622.09
RUA...................................            0.99            1.87          161.89          278.01  ...............            88.97          528.87
RVC...................................            1.51            1.28          246.93          190.30  ...............            88.97          526.20
RVB...................................            1.11            1.28          181.52          190.30  ...............            88.97          460.79
RVA...................................            1.10            1.28          179.88          190.30  ...............            88.97          459.15
RHC...................................            1.45            0.85          237.12          126.37  ...............            88.97          452.46
RHB...................................            1.19            0.85          194.60          126.37  ...............            88.97          409.94
RHA...................................            0.91            0.85          148.81          126.37  ...............            88.97          364.15
RMC...................................            1.36            0.55          222.40           81.77  ...............            88.97          393.14
RMB...................................            1.22            0.55          199.51           81.77  ...............            88.97          370.25
RMA...................................            0.84            0.55          137.37           81.77  ...............            88.97          308.11
RLB...................................            1.50            0.28          245.30           41.63  ...............            88.97          375.90
RLA...................................            0.71            0.28          116.11           41.63  ...............            88.97          246.71
ES3...................................            3.58  ..............          585.44  ..............            18.14            88.97          692.55
ES2...................................            2.67  ..............          436.63  ..............            18.14            88.97          543.74
ES1...................................            2.32  ..............          379.39  ..............            18.14            88.97          486.50
HE2...................................            2.22  ..............          363.04  ..............            18.14            88.97          470.15
HE1...................................            1.74  ..............          284.54  ..............            18.14            88.97          391.65
HD2...................................            2.04  ..............          333.60  ..............            18.14            88.97          440.71
HD1...................................            1.60  ..............          261.65  ..............            18.14            88.97          368.76
HC2...................................            1.89  ..............          309.07  ..............            18.14            88.97          416.18
HC1...................................            1.48  ..............          242.02  ..............            18.14            88.97          349.13
HB2...................................            1.86  ..............          304.17  ..............            18.14            88.97          411.28
HB1...................................            1.46  ..............          238.75  ..............            18.14            88.97          345.86
LE2...................................            1.96  ..............          320.52  ..............            18.14            88.97          427.63
LE1...................................            1.54  ..............          251.84  ..............            18.14            88.97          358.95
LD2...................................            1.86  ..............          304.17  ..............            18.14            88.97          411.28
LD1...................................            1.46  ..............          238.75  ..............            18.14            88.97          345.86
LC2...................................            1.56  ..............          255.11  ..............            18.14            88.97          362.22
LC1...................................            1.22  ..............          199.51  ..............            18.14            88.97          306.62

[[Page 46400]]

 
LB2...................................            1.45  ..............          237.12  ..............            18.14            88.97          344.23
LB1...................................            1.14  ..............          186.42  ..............            18.14            88.97          293.53
CE2...................................            1.68  ..............          274.73  ..............            18.14            88.97          381.84
CE1...................................            1.50  ..............          245.30  ..............            18.14            88.97          352.41
CD2...................................            1.56  ..............          255.11  ..............            18.14            88.97          362.22
CD1...................................            1.38  ..............          225.67  ..............            18.14            88.97          332.78
CC2...................................            1.29  ..............          210.95  ..............            18.14            88.97          318.06
CC1...................................            1.15  ..............          188.06  ..............            18.14            88.97          295.17
CB2...................................            1.15  ..............          188.06  ..............            18.14            88.97          295.17
CB1...................................            1.02  ..............          166.80  ..............            18.14            88.97          273.91
CA2...................................            0.88  ..............          143.91  ..............            18.14            88.97          251.02
CA1...................................            0.78  ..............          127.55  ..............            18.14            88.97          234.66
BB2...................................            0.97  ..............          158.62  ..............            18.14            88.97          265.73
BB1...................................            0.90  ..............          147.18  ..............            18.14            88.97          254.29
BA2...................................            0.70  ..............          114.47  ..............            18.14            88.97          221.58
BA1...................................            0.64  ..............          104.66  ..............            18.14            88.97          211.77
PE2...................................            1.50  ..............          245.30  ..............            18.14            88.97          352.41
PE1...................................            1.40  ..............          228.94  ..............            18.14            88.97          336.05
PD2...................................            1.38  ..............          225.67  ..............            18.14            88.97          332.78
PD1...................................            1.28  ..............          209.32  ..............            18.14            88.97          316.43
PC2...................................            1.10  ..............          179.88  ..............            18.14            88.97          286.99
PC1...................................            1.02  ..............          166.80  ..............            18.14            88.97          273.91
PB2...................................            0.84  ..............          137.37  ..............            18.14            88.97          244.48
PB1...................................            0.78  ..............          127.55  ..............            18.14            88.97          234.66
PA2...................................            0.59  ..............           96.48  ..............            18.14            88.97          203.59
PA1...................................            0.54  ..............           88.31  ..............            18.14            88.97          195.42
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Wage Index Adjustment
    Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the 
federal rates to account for differences in area wage levels, using a 
wage index that the Secretary determines appropriate. Since the 
inception of the SNF PPS, we have used hospital inpatient wage data in 
developing a wage index to be applied to SNFs. We proposed to continue 
this practice for FY 2016, as we continue to believe that in the 
absence of SNF-specific wage data, using the hospital inpatient wage 
index data is appropriate and reasonable for the SNF PPS. As explained 
in the update notice for FY 2005 (69 FR 45786), the SNF PPS does not 
use the hospital area wage index's occupational mix adjustment, as this 
adjustment serves specifically to define the occupational categories 
more clearly in a hospital setting; moreover, the collection of the 
occupational wage data also excludes any wage data related to SNFs. 
Therefore, we believe that using the updated wage data exclusive of the 
occupational mix adjustment continues to be appropriate for SNF 
payments. For FY 2016, the updated wage data are for hospital cost 
reporting periods beginning on or after October 1, 2011 and before 
October 1, 2012 (FY 2012 cost report data).
    We note that section 315 of the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554) 
authorized us to establish a geographic reclassification procedure that 
is specific to SNFs, but only after collecting the data necessary to 
establish a SNF wage index that is based on wage data from nursing 
homes. However, to date, this has proven to be unfeasible due to the 
volatility of existing SNF wage data and the significant amount of 
resources that would be required to improve the quality of that data.
    In addition, we proposed to continue to use the same methodology 
discussed in the SNF PPS final rule for FY 2008 (72 FR 43423) to 
address those geographic areas in which there are no hospitals, and 
thus, no hospital wage index data on which to base the calculation of 
the FY 2016 SNF PPS wage index. For rural geographic areas that do not 
have hospitals, and therefore, lack hospital wage data on which to base 
an area wage adjustment, we would use the average wage index from all 
contiguous Core-Based Statistical Areas (CBSAs) as a reasonable proxy. 
For FY 2016, there are no rural geographic areas that do not have 
hospitals, and thus, this methodology will not be applied. For rural 
Puerto Rico, we will not apply this methodology due to the distinct 
economic circumstances that exist there (for example, due to the close 
proximity to one another of almost all of Puerto Rico's various urban 
and non-urban areas, this methodology would produce a wage index for 
rural Puerto Rico that is higher than that in half of its urban areas); 
instead, we will continue to use the most recent wage index previously 
available for that area. For urban areas without specific hospital wage 
index data, we will use the average wage indexes of all of the urban 
areas within the state to serve as a reasonable proxy for the wage 
index of that urban CBSA. For FY 2016, the only urban area without wage 
index data available is CBSA 25980, Hinesville-Fort Stewart, GA. The 
wage index applicable to FY 2016 is set forth in Table A available on 
the CMS Web site at http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
    Once calculated, we will apply the wage index adjustment to the 
labor-related portion of the federal rate. Each year, we calculate a 
revised labor-related share, based on the relative importance of labor-
related cost categories (that is, those cost categories that are labor-
intensive and vary with the local labor market) in the input price 
index. In the SNF PPS final rule for FY 2014 (78 FR 47944 through 
47946), we finalized a proposal to revise the labor-related share to 
reflect the relative importance of the revised FY 2010-based SNF market 
basket cost weights for the following cost categories: Wages and 
salaries; employee benefits; the labor-related portion of nonmedical 
professional fees; administrative and facilities support services; all 
other:

[[Page 46401]]

Labor-related services; and a proportion of capital-related expenses.
    We calculate the labor-related relative importance from the SNF 
market basket, and it approximates the labor-related portion of the 
total costs after taking into account historical and projected price 
changes between the base year and FY 2016. The price proxies that move 
the different cost categories in the market basket do not necessarily 
change at the same rate, and the relative importance captures these 
changes. Accordingly, the relative importance figure more closely 
reflects the cost share weights for FY 2016 than the base year weights 
from the SNF market basket.
    We calculate the labor-related relative importance for FY 2016 in 
four steps. First, we compute the FY 2016 price index level for the 
total market basket and each cost category of the market basket. 
Second, we calculate a ratio for each cost category by dividing the FY 
2016 price index level for that cost category by the total market 
basket price index level. Third, we determine the FY 2016 relative 
importance for each cost category by multiplying this ratio by the base 
year (FY 2010) weight. Finally, we add the FY 2016 relative importance 
for each of the labor-related cost categories (wages and salaries, 
employee benefits, the labor-related portion of non-medical 
professional fees, administrative and facilities support services, all 
other: labor-related services, and a portion of capital-related 
expenses) to produce the FY 2016 labor-related relative importance. 
Table 6 summarizes the updated labor-related share for FY 2016, 
compared to the labor-related share that was used for the FY 2015 SNF 
PPS final rule.
    We proposed for FY 2016 and subsequent FYs, to report and apply the 
SNF PPS labor-related share at a tenth of a percentage point (rather 
than at a thousandth of a percentage point) consistent with the manner 
in which we report and apply the market basket update percentage under 
the SNF PPS and the IPPS and the manner in which we report and apply 
the IPPS labor-related share. The level of precision specified for the 
IPPS labor-related share is three decimal places or a tenth of a 
percentage point (0.696 or 69.6 percent), which we believe provides a 
reasonable level of precision. We believe it is appropriate to maintain 
such consistency across all payment systems so that the level of 
precision specified is both reasonable and similar for all providers. 
Additionally, we proposed in the FY 2016 SNF PPS proposed rule (80 FR 
22049) that if more recent data become available (for example, a more 
recent estimate of the FY 2010-based SNF market basket and/or MFP 
adjustment), we would use such data, if appropriate, to determine the 
FY 2016 SNF market basket percentage change, labor-related share 
relative importance, forecast error adjustment, and MFP adjustment in 
this final rule. We note that more recent data did become available and 
that the proposed labor related share for FY 2016 of 69.2 percent has 
been updated, based on IGI's second quarter 2015 forecast, to an FY 
2016 labor related share of 69.1 percent.
    We invited public comments on these proposals. A discussion of the 
comments we received on these proposals, as well as a discussion of the 
general comments that we received on the wage index adjustment, and our 
responses to those comments, appears below.
    Comment: Several commenters stated that hospital cost data may not 
be the most reliable resource when determining geographical differences 
in salary structure for SNFs. These commenters urged CMS to establish a 
SNF-specific wage index. One commenter stated that new SNF cost 
reports, required by section 6104 of the Affordable Care Act, provide 
the requisite data in order for CMS to establish a SNF-specific wage 
index that could replace the current use of the inpatient hospital wage 
index data as the basis for the current SNF wage index.
    Response: We appreciate the commenters raising these concerns, 
particularly the one commenter who provided significant details on how 
new SNF cost-report data could be used to develop a SNF-specific wage 
index. While CMS may consider this new data source as a potential 
stepping-stone towards developing a SNF-specific wage index, we note 
that consistent with our previous responses to these recurring comments 
(most recently published in the FY 2015 SNF PPS final rule (79 FR 
45636)), developing such a wage index would require a resource-
intensive audit process similar to that used for IPPS hospital data, to 
improve the quality of the SNF cost report data in order for it to be 
used as part of this analysis. Ultimately, while we continue to review 
all available data and contemplate the potential methodological 
approaches for a SNF-specific wage index in the future, we do not 
believe that the current state of the data is sufficiently refined to 
permit any such use of this data at this time.
    Comment: Some commenters urged that CMS, to the extent that we plan 
to continue to use hospital cost data as the basis for SNF wage index 
adjustments, consider adopting certain wage index policies in use under 
the IPPS, such as reclassification or rural floor, because SNFs compete 
in a similar labor pool as acute care hospitals. Commenters also stated 
that CMS should use post-reclassification hospital wage data to 
influence SNF PPS wage index policy decisions. These commenters further 
stated that in addition to considering such policies as 
reclassification and a rural floor, CMS should consider implementing a 
floor and ceiling for annual changes to the wage index in order to 
smooth perceived volatility of such changes.
    Response: Consistent with our previous responses to these recurring 
comments (most recently published in the FY 2015 SNF PPS final rule (79 
FR 45636 through 45637), we continue to believe that in the absence of 
the appropriate SNF-specific wage data, using the pre-reclassified 
hospital inpatient wage data (without the occupational mix adjustment) 
is appropriate and reasonable for the SNF PPS. As discussed above, 
section 315 of BIPA authorized us to establish a geographic 
reclassification procedure that is specific to SNFs, only after 
collecting the data necessary to establish a SNF-specific wage index 
that is based on data from nursing homes. However, to date this has 
been infeasible due to the volatility of existing SNF wage data and the 
significant amount of resources that would be required to improve the 
quality of that data. Furthermore, we do not believe that using 
hospital reclassification data would be appropriate as this data is 
specific to the requesting hospitals and it may or may not apply to a 
given SNF in a given instance. With regard to implementing a rural 
floor, we do not believe it would be prudent at this time to adopt such 
a policy, because MedPAC has recommended eliminating the rural floor 
policy from the calculation of the IPPS wage index (see, for example, 
Chapter 3 of MedPAC's March 2013 Report to Congress on Medicare Payment 
Policy, available at http://medpac.gov/documents/reports/mar13_entirereport.pdf, which notes on page 65 that in 2007, MedPAC had 
``. . . recommended eliminating these special wage index adjustments 
and adopting a new wage index system to avoid geographic inequities 
that can occur due to current wage index policies (Medicare Payment 
Advisory Commission 2007b.'') If we adopted the rural floor at this 
time under the SNF PPS, we believe that, the SNF PPS wage index could 
become vulnerable to

[[Page 46402]]

problems similar to those that MedPAC identified in its March 2013 
Report to Congress. Additionally, at this time, we do not believe it 
would be appropriate to establish a floor and ceiling for annual wage 
index changes. Any perceived volatility in the wage index is predicated 
upon volatility in actual wages in that area and reflects real 
differences in area wage levels that should be accounted for timely. As 
stated above, under 1888(e)(4)(G)(ii) of the Act and Sec.  
413.337(a)(1)(ii) of the regulations, we adjust the SNF PPS rates to 
account for differences in area wage levels. We believe that applying a 
ceiling or floor to annual wage index changes would make the wage index 
for a given area less reflective of the area wage levels and changes. 
Additionally, we note that establishing an artificial ceiling for 
annual changes in the wage index could not only result in an inaccurate 
wage index, but also potentially have an adverse impact on those 
providers that would otherwise experience a larger increase in their 
wage index absent such a ceiling.
    Comment: One commenter requested that CMS provide more detail on 
the processes and procedures that are used in determining what hospital 
data may be excluded from forming the inpatient hospital wage index, 
which serves as the basis for the SNF wage index.
    Response: The processes and procedures for how the inpatient 
hospital wage index is developed are discussed in the Inpatient 
Prospective Payment System (IPPS) rule each year, with the most recent 
discussion appearing in the FY 2016 IPPS proposed rule (80 FR 24463 
through 24477) and subsequent FY 2016 IPPS final rule.
    After considering the comments received and for the reasons 
discussed above and in the FY 2016 SNF PPS proposed rule (80 FR 22052 
through 22056), we are finalizing the FY 2016 wage index adjustment and 
related policies as proposed in the FY 2016 SNF PPS proposed rule 
without modification. For FY 2016, the updated wage data are for 
hospital cost reporting periods beginning on or after October 1, 2011 
and before October 1, 2012 (FY 2012 cost report data). We are also 
finalizing our proposal that for FY 2016 and subsequent FYs, we will 
report and apply the SNF PPS labor-related share at a tenth of a 
percentage point (rather than at a thousandth of a percentage point) 
consistent with the manner in which we report and apply the market 
basket update percentage under the SNF PPS and the IPPS and the manner 
in which we report and apply the IPPS labor-related share. Table 6 
summarizes the updated labor-related share for FY 2016, compared to the 
labor-related share that was used for the FY 2015 SNF PPS final rule.

                         Table 6--Labor-Related Relative Importance, FY 2015 and FY 2016
----------------------------------------------------------------------------------------------------------------
                                                                  Relative importance,     Relative importance,
                                                                 labor-related, FY 2015   labor-related, FY 2016
                                                                   14:2 forecast \1\        15:2 forecast \2\
----------------------------------------------------------------------------------------------------------------
Wages and salaries............................................                   48.816                     48.8
Employee benefits.............................................                   11.365                     11.3
Nonmedical Professional fees: labor-related...................                    3.450                      3.5
Administrative and facilities support services................                    0.502                      0.5
All Other: Labor-related services.............................                    2.276                      2.3
Capital-related (.391)........................................                    2.771                      2.7
                                                               -------------------------------------------------
    Total.....................................................                   69.180                     69.1
----------------------------------------------------------------------------------------------------------------
\1\ Published in the Federal Register; based on second quarter 2014 IGI forecast
\2\ Based on second quarter 2015 IGI forecast, with historical data through first quarter 2015.

    Tables 7 and 8 show the RUG-IV case-mix adjusted federal rates by 
labor-related and non-labor-related components.

         Table 7--RUG-IV Case-Mix Adjusted Federal Rates for Urban SNFs by Labor and Non-Labor Component
----------------------------------------------------------------------------------------------------------------
           RUG-IV Category                    Total rate             Labor portion          Non-labor portion
----------------------------------------------------------------------------------------------------------------
RUX..................................  785.50.................                  $542.78                  $242.72
RUL..................................  768.39.................                   530.96                   237.43
RVX..................................  699.15.................                   483.11                   216.04
RVL..................................  627.26.................                   433.44                   193.82
RHX..................................  633.44.................                   437.71                   195.73
RHL..................................  564.98.................                   390.40                   174.58
RMX..................................  581.07.................                   401.52                   179.55
RML..................................  533.14.................                   368.40                   164.74
RLX..................................  510.30.................                   352.62                   157.68
RUC..................................  595.51.................                   411.50                   184.01
RUB..................................  595.51.................                   411.50                   184.01
RUA..................................  497.94.................                   344.08                   153.86
RVC..................................  510.87.................                   353.01                   157.86
RVB..................................  442.40.................                   305.70                   136.70
RVA..................................  440.69.................                   304.52                   136.17
RHC..................................  445.16.................                   307.61                   137.55
RHB..................................  400.65.................                   276.85                   123.80
RHA..................................  352.72.................                   243.73                   108.99
RMC..................................  391.07.................                   270.23                   120.84
RMB..................................  367.11.................                   253.67                   113.44
RMA..................................  302.06.................                   208.72                    93.34
RLB..................................  380.22.................                   262.73                   117.49

[[Page 46403]]

 
RLA..................................  244.99.................                   169.29                    75.70
ES3..................................  717.13.................                   495.54                   221.59
ES2..................................  561.36.................                   387.90                   173.46
ES1..................................  501.45.................                   346.50                   154.95
HE2..................................  484.34.................                   334.68                   149.66
HE1..................................  402.18.................                   277.91                   124.27
HD2..................................  453.53.................                   313.39                   140.14
HD1..................................  378.21.................                   261.34                   116.87
HC2..................................  427.85.................                   295.64                   132.21
HC1..................................  357.67.................                   247.15                   110.52
HB2..................................  422.72.................                   292.10                   130.62
HB1..................................  354.25.................                   244.79                   109.46
LE2..................................  439.83.................                   303.92                   135.91
LE1..................................  367.94.................                   254.25                   113.69
LD2..................................  422.72.................                   292.10                   130.62
LD1..................................  354.25.................                   244.79                   109.46
LC2..................................  371.37.................                   256.62                   114.75
LC1..................................  313.17.................                   216.40                    96.77
LB2..................................  352.54.................                   243.61                   108.93
LB1..................................  299.47.................                   206.93                    92.54
CE2..................................  391.91.................                   270.81                   121.10
CE1..................................  361.10.................                   249.52                   111.58
CD2..................................  371.37.................                   256.62                   114.75
CD1..................................  340.55.................                   235.32                   105.23
CC2..................................  325.15.................                   224.68                   100.47
CC1..................................  301.19.................                   208.12                    93.07
CB2..................................  301.19.................                   208.12                    93.07
CB1..................................  278.93.................                   192.74                    86.19
CA2..................................  254.97.................                   176.18                    78.79
CA1..................................  237.85.................                   164.35                    73.50
BB2..................................  270.37.................                   186.83                    83.54
BB1..................................  258.39.................                   178.55                    79.84
BA2..................................  224.16.................                   154.89                    69.27
BA1..................................  213.89.................                   147.80                    66.09
PE2..................................  361.10.................                   249.52                   111.58
PE1..................................  343.98.................                   237.69                   106.29
PD2..................................  340.55.................                   235.32                   105.23
PD1..................................  323.44.................                   223.50                    99.94
PC2..................................  292.63.................                   202.21                    90.42
PC1..................................  278.93.................                   192.74                    86.19
PB2..................................  248.12.................                   171.45                    76.67
PB1..................................  237.85.................                   164.35                    73.50
PA2..................................  205.33.................                   141.88                    63.45
PA1..................................  196.77.................                   135.97                    60.80
----------------------------------------------------------------------------------------------------------------


         Table 8--RUG-IV Case-Mix Adjusted Federal Rates for Rural SNFs by Labor and Non-Labor Component
----------------------------------------------------------------------------------------------------------------
           RUG-IV category                    Total rate             Labor portion          Non-labor portion
----------------------------------------------------------------------------------------------------------------
RUX..................................  803.61.................                  $555.29                  $248.32
RUL..................................  787.25.................                   543.99                   243.26
RVX..................................  706.08.................                   487.90                   218.18
RVL..................................  637.40.................                   440.44                   196.96
RHX..................................  632.34.................                   436.95                   195.39
RHL..................................  566.93.................                   391.75                   175.18
RMX..................................  574.66.................                   397.09                   177.57
RML..................................  528.87.................                   365.45                   163.42
RLX..................................  500.18.................                   345.62                   154.56
RUC..................................  622.09.................                   429.86                   192.23
RUB..................................  622.09.................                   429.86                   192.23
RUA..................................  528.87.................                   365.45                   163.42
RVC..................................  526.20.................                   363.60                   162.60
RVB..................................  460.79.................                   318.41                   142.38
RVA..................................  459.15.................                   317.27                   141.88
RHC..................................  452.46.................                   312.65                   139.81
RHB..................................  409.94.................                   283.27                   126.67
RHA..................................  364.15.................                   251.63                   112.52
RMC..................................  393.14.................                   271.66                   121.48
RMB..................................  370.25.................                   255.84                   114.41
RMA..................................  308.11.................                   212.90                    95.21

[[Page 46404]]

 
RLB..................................  375.90.................                   259.75                   116.15
RLA..................................  246.71.................                   170.48                    76.23
ES3..................................  692.55.................                   478.55                   214.00
ES2..................................  543.74.................                   375.72                   168.02
ES1..................................  486.50.................                   336.17                   150.33
HE2..................................  470.15.................                   324.87                   145.28
HE1..................................  391.65.................                   270.63                   121.02
HD2..................................  440.71.................                   304.53                   136.18
HD1..................................  368.76.................                   254.81                   113.95
HC2..................................  416.18.................                   287.58                   128.60
HC1..................................  349.13.................                   241.25                   107.88
HB2..................................  411.28.................                   284.19                   127.09
HB1..................................  345.86.................                   238.99                   106.87
LE2..................................  427.63.................                   295.49                   132.14
LE1..................................  358.95.................                   248.03                   110.92
LD2..................................  411.28.................                   284.19                   127.09
LD1..................................  345.86.................                   238.99                   106.87
LC2..................................  362.22.................                   250.29                   111.93
LC1..................................  306.62.................                   211.87                    94.75
LB2..................................  344.23.................                   237.86                   106.37
LB1..................................  293.53.................                   202.83                    90.70
CE2..................................  381.84.................                   263.85                   117.99
CE1..................................  352.41.................                   243.52                   108.89
CD2..................................  362.22.................                   250.29                   111.93
CD1..................................  332.78.................                   229.95                   102.83
CC2..................................  318.06.................                   219.78                    98.28
CC1..................................  295.17.................                   203.96                    91.21
CB2..................................  295.17.................                   203.96                    91.21
CB1..................................  273.91.................                   189.27                    84.64
CA2..................................  251.02.................                   173.45                    77.57
CA1..................................  234.66.................                   162.15                    72.51
BB2..................................  265.73.................                   183.62                    82.11
BB1..................................  254.29.................                   175.71                    78.58
BA2..................................  221.58.................                   153.11                    68.47
BA1..................................  211.77.................                   146.33                    65.44
PE2..................................  352.41.................                   243.52                   108.89
PE1..................................  336.05.................                   232.21                   103.84
PD2..................................  332.78.................                   229.95                   102.83
PD1..................................  316.43.................                   218.65                    97.78
PC2..................................  286.99.................                   198.31                    88.68
PC1..................................  273.91.................                   189.27                    84.64
PB2..................................  244.48.................                   168.94                    75.54
PB1..................................  234.66.................                   162.15                    72.51
PA2..................................  203.59.................                   140.68                    62.91
PA1..................................  195.42.................                   135.04                    60.38
----------------------------------------------------------------------------------------------------------------

    Section 1888(e)(4)(G)(ii) of the Act also requires that we apply 
this wage index in a manner that does not result in aggregate payments 
under the SNF PPS that are greater or less than would otherwise be made 
if the wage adjustment had not been made. For FY 2016 (federal rates 
effective October 1, 2015), we will apply an adjustment to fulfill the 
budget neutrality requirement. We meet this requirement by multiplying 
each of the components of the unadjusted federal rates by a budget 
neutrality factor equal to the ratio of the weighted average wage 
adjustment factor for FY 2015 to the weighted average wage adjustment 
factor for FY 2016. For this calculation, we use the same FY 2014 
claims utilization data for both the numerator and denominator of this 
ratio. We define the wage adjustment factor used in this calculation as 
the labor share of the rate component multiplied by the wage index plus 
the non-labor share of the rate component. The budget neutrality factor 
for FY 2016 would be 0.9992.
    In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4, 
2005), we adopted the changes discussed in the OMB Bulletin No. 03-04 
(June 6, 2003), available online at www.whitehouse.gov/omb/bulletins/b03-04.html, which announced revised definitions for MSAs and the 
creation of micropolitan statistical areas and combined statistical 
areas.
    In adopting the CBSA geographic designations, we provided for a 1-
year transition in FY 2006 with a blended wage index for all providers. 
For FY 2006, the wage index for each provider consisted of a blend of 
50 percent of the FY 2006 MSA-based wage index and 50 percent of the FY 
2006 CBSA-based wage index (both using FY 2002 hospital data). We 
referred to the blended wage index as the FY 2006 SNF PPS transition 
wage index. As discussed in the SNF PPS final rule for FY 2006 (70 FR 
45041), since the expiration of this 1-year transition on September 30, 
2006, we have used the full CBSA-based wage index values.
    On February 28, 2013, OMB issued OMB Bulletin No. 13-01, announcing 
revisions to the delineation of MSAs, Micropolitan Statistical Areas, 
and Combined Statistical Areas, and guidance on uses of the delineation 
of

[[Page 46405]]

these areas. This bulletin, which is available online at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf, 
provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published on June 28, 
2010, in the Federal Register (75 FR 37246 through 37252) and Census 
Bureau data.
    While the revisions OMB published on February 28, 2013 are not as 
sweeping as the changes made when we adopted the CBSA geographic 
designations for FY 2006, the February 28, 2013 bulletin does contain a 
number of significant changes. For example, there are new CBSAs, urban 
counties that became rural, rural counties that became urban, and 
existing CBSAs that were split apart.
    In the FY 2015 SNF PPS final rule (79 FR 45644 through 45646), we 
finalized changes to the SNF PPS wage index based on the newest OMB 
delineations, as described in OMB Bulletin No. 13-01, beginning in FY 
2015, including a 1-year transition with a blended wage index for FY 
2015. Because the 1-year transition period expires at the end of FY 
2015, the SNF PPS wage index for FY 2016 is fully based on the revised 
OMB delineations adopted in FY 2015. As noted in this section, the wage 
index applicable to FY 2016 is set forth in Table A available on the 
CMS Web site at http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
5. Adjusted Rate Computation Example
    Using the hypothetical SNF XYZ described below, Table 9 shows the 
adjustments made to the federal per diem rates to compute the 
provider's actual per diem PPS payment. We derive the Labor and Non-
labor columns from Table 7. The wage index used in this example is 
based on the wage index found in Table A as referenced in this section. 
As illustrated in Table 9, SNF XYZ's total PPS payment would equal 
$45,256.24.

                                       Table 9--Adjusted Rate Computation Example SNF XYZ: Located in Frederick, MD (Urban CBSA 43524) Wage Index: 0.9640
                                                                                 [See wage index in table A] \1\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                      Percent
                          RUG-IV Group                                 Labor        Wage index    Adjusted labor     Non-labor     Adjusted rate    adjustment     Medicare days      Payment
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RVX.............................................................         $483.11          0.9640         $465.72         $216.04         $681.76         $681.76              14       $9,544.64
ES2.............................................................          387.90          0.9640          373.94          173.46          547.40          547.40              30       16,422.00
RHA.............................................................          243.73          0.9640          234.96          108.99          343.95          343.95              16        5,503.20
CC2 *...........................................................          224.68          0.9640          216.59          100.47          317.06          722.90              10        7,229.00
BA2.............................................................          154.89          0.9640          149.31           69.27          218.58          218.58              30        6,557.40
                                                                  ..............  ..............  ..............  ..............  ..............  ..............             100       45,256.24
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects a 128 percent adjustment from section 511 of the MMA.
\1\ Available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.

C. Additional Aspects of the SNF PPS

1. SNF Level of Care--Administrative Presumption
    The establishment of the SNF PPS did not change Medicare's 
fundamental requirements for SNF coverage. However, because the case-
mix classification is based, in part, on the beneficiary's need for 
skilled nursing care and therapy, we have attempted, where possible, to 
coordinate claims review procedures with the existing resident 
assessment process and case-mix classification system discussed in 
section III.B.3 of this final rule. This approach includes an 
administrative presumption that utilizes a beneficiary's initial 
classification in one of the upper 52 RUGs of the 66-group RUG-IV case-
mix classification system to assist in making certain SNF level of care 
determinations.
    In accordance with section 1888(e)(4)(H)(ii) of the Act and the 
regulations at Sec.  413.345, we include in each update of the federal 
payment rates in the Federal Register the designation of those specific 
RUGs under the classification system that represent the required SNF 
level of care, as provided in Sec.  409.30. As set forth in the FY 2011 
SNF PPS update notice (75 FR 42910), this designation reflects an 
administrative presumption under the 66-group RUG-IV system that 
beneficiaries who are correctly assigned to one of the upper 52 RUG-IV 
groups on the initial 5-day, Medicare-required assessment are 
automatically classified as meeting the SNF level of care definition up 
to and including the assessment reference date on the five-day 
Medicare-required assessment.
    A beneficiary assigned to any of the lower 14 RUG-IV groups is not 
automatically classified as either meeting or not meeting the 
definition, but instead receives an individual level of care 
determination using the existing administrative criteria. This 
presumption recognizes the strong likelihood that beneficiaries 
assigned to one of the upper 52 RUG-IV groups during the immediate 
post-hospital period require a covered level of care, which would be 
less likely for those beneficiaries assigned to one of the lower 14 
RUG-IV groups.
    In the July 30, 1999 final rule (64 FR 41670), we indicated that we 
would announce any changes to the guidelines for Medicare level of care 
determinations related to modifications in the case-mix classification 
structure. In this final rule, we will continue to designate the upper 
52 RUG-IV groups for purposes of this administrative presumption, 
consisting of all groups encompassed by the following RUG-IV 
categories:
     Rehabilitation plus Extensive Services.
     Ultra High Rehabilitation.
     Very High Rehabilitation.
     High Rehabilitation.
     Medium Rehabilitation.
     Low Rehabilitation.
     Extensive Services.
     Special Care High.
     Special Care Low.
     Clinically Complex.
    However, we note that this administrative presumption policy does 
not supersede the SNF's responsibility to ensure that its decisions 
relating to level of care are appropriate and timely, including a 
review to confirm that the services prompting the beneficiary's 
assignment to one of the upper 52 RUG-IV groups (which, in turn, serves 
to trigger the administrative presumption) are themselves medically 
necessary. As we explained in the FY 2000 SNF PPS final rule (64 FR 
41667), the administrative presumption:

. . . is itself rebuttable in those individual cases in which the 
services actually received by the resident do not meet the basic 
statutory criterion of being reasonable and necessary to diagnose or 
treat a beneficiary's condition (according to section 1862(a)(1) of

[[Page 46406]]

the Act). Accordingly, the presumption would not apply, for example, 
in those situations in which a resident's assignment to one of the 
upper . . . groups is itself based on the receipt of services that 
are subsequently determined to be not reasonable and necessary.

    Moreover, we want to stress the importance of careful monitoring 
for changes in each patient's condition to determine the continuing 
need for Part A SNF benefits after the assessment reference date of the 
5-day assessment.
    We received one comment on this issue, which we discuss below along 
with our response.
    Comment: One commenter requested that CMS consider further analysis 
of the administrative presumption that utilizes a beneficiary's initial 
classification in one of the upper 52 RUGs to assist in making certain 
SNF level of care determinations. The commenter expressed concern that 
the use of such presumptions could disadvantage members of certain 
vulnerable specialty populations who might not typically group to one 
of the upper 52 RUGs, and yet still require a sufficient intensity of 
services to qualify for coverage.
    Response: While it is true that those SNF residents who group to 
one of the lower 14 RUGs on the initial 5-day, Medicare-required 
assessment are not automatically presumed to require a skilled level of 
care, neither are they automatically classified as requiring nonskilled 
care. Instead, as we have noted in this and previous SNF PPS rules, any 
such resident ``. . . receives an individual level of care 
determination using the existing administrative criteria.'' We adopted 
this approach specifically to ensure that the presumption does not 
disadvantage such residents, by providing them with an individualized 
level of care determination that fully considers all pertinent factors. 
Nevertheless, as we noted previously in the FY 2000 SNF PPS final rule 
(64 FR 41668, July 30, 1999), while we believe that the use of the 
administrative level of care presumption ``. . . represents a 
significant advancement toward achieving greater simplicity, 
predictability, and consistency in the coverage process, we will 
continue to monitor coverage determinations under the SNF PPS with a 
view toward the possibility of making further refinements and 
improvements in the future.'' Accordingly, we will keep the commenter's 
concerns in mind as we continue our ongoing SNF PPS research and 
analysis.
2. Consolidated Billing
    Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by 
section 4432(b) of the BBA) require a SNF to submit consolidated 
Medicare bills to its Medicare Administrative Contractor for almost all 
of the services that its residents receive during the course of a 
covered Part A stay. In addition, section 1862(a)(18) of the Act places 
the responsibility with the SNF for billing Medicare for physical 
therapy, occupational therapy, and speech-language pathology services 
that the resident receives during a noncovered stay. Section 
1888(e)(2)(A) of the Act excludes a small list of services from the 
consolidated billing provision (primarily those services furnished by 
physicians and certain other types of practitioners), which remain 
separately billable under Part B when furnished to a SNF's Part A 
resident. These excluded service categories are discussed in greater 
detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR 
26295 through 26297).
    A detailed discussion of the legislative history of the 
consolidated billing provision is available on the SNF PPS Web site at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_07302013.pdf. In particular, section 103 
of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA, Pub. L. 106-113) amended section 1888(e)(2)(A) of the Act 
by further excluding a number of individual ``high-cost, low 
probability'' services, identified by Healthcare Common Procedure 
Coding System (HCPCS) codes, within several broader categories 
(chemotherapy items, chemotherapy administration services, radioisotope 
services, and customized prosthetic devices) that otherwise remained 
subject to the provision. We discussed this BBRA amendment in greater 
detail in the SNF PPS proposed and final rules for FY 2001 (65 FR 19231 
through 19232, April 10, 2000, and 65 FR 46790 through 46795, July 31, 
2000), as well as in Program Memorandum AB-00-18 (Change Request 
#1070), issued March 2000, which is available online at www.cms.gov/transmittals/downloads/ab001860.pdf.
    As explained in the FY 2001 proposed rule (65 FR 19231 through 
19232), the amendments enacted in section 103 of the BBRA not only 
identified for exclusion from this provision a number of particular 
service codes within four specified categories (that is, chemotherapy 
items, chemotherapy administration services, radioisotope services, and 
customized prosthetic devices), but also gave the Secretary ``. . . the 
authority to designate additional, individual services for exclusion 
within each of the specified service categories.'' In the proposed rule 
for FY 2001, we also noted that the BBRA Conference report (H.R. Rep. 
No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the individual 
services that this legislation targets for exclusion as ``. . . high-
cost, low probability events that could have devastating financial 
impacts because their costs far exceed the payment [SNFs] receive under 
the prospective payment system. . . .'' According to the conferees, 
section 103(a) of the BBRA ``is an attempt to exclude from the PPS 
certain services and costly items that are provided infrequently in 
SNFs. . . .'' By contrast, we noted that the Congress declined to 
designate for exclusion any of the remaining services within those four 
categories (thus, leaving all of those services subject to SNF 
consolidated billing), because they are relatively inexpensive and are 
furnished routinely in SNFs.
    As we further explained in the final rule for FY 2001 (65 FR 
46790), and as our longstanding policy, any additional service codes 
that we might designate for exclusion under our discretionary authority 
must meet the same statutory criteria used in identifying the original 
codes excluded from consolidated billing under section 103(a) of the 
BBRA: they must fall within one of the four service categories 
specified in the BBRA; and they also must meet the same standards of 
high cost and low probability in the SNF setting, as discussed in the 
BBRA Conference report. Accordingly, we characterized this statutory 
authority to identify additional service codes for exclusion ``. . . as 
essentially affording the flexibility to revise the list of excluded 
codes in response to changes of major significance that may occur over 
time (for example, the development of new medical technologies or other 
advances in the state of medical practice)'' (65 FR 46791), and since 
that time, we have periodically invited the public to submit comments 
identifying codes that might meet the criteria for exclusion. In the FY 
2016 SNF PPS proposed rule (80 FR 22057-58), we specifically invited 
public comments identifying HCPCS codes in any of these four service 
categories (chemotherapy items, chemotherapy administration services, 
radioisotope services, and customized prosthetic devices) representing 
recent medical advances that might meet our criteria for exclusion from 
SNF consolidated billing, and we requested

[[Page 46407]]

commenters to identify in their comments the specific HCPCS code that 
is associated with the service in question, as well as their rationale 
for requesting that the identified HCPCS code(s) be excluded. A 
discussion of the public comments received on this topic, along with 
our responses, appears below.
    Comment: One commenter recommended a new chemotherapy drug, 
BLINCYTO[supreg], as meeting the statutory ``high-cost, low 
probability'' criteria for exclusion from consolidated billing. After 
noting that this drug currently is assigned a temporary C code, C9449 
(Injection, blinatumomab, 1 mcg.), the commenter referred to our 
explanation in the FY 2015 SNF PPS final rule that ``. . . a 
chemotherapy drug's assignment to its own specific code has always 
served as the mechanism of designating that drug for exclusion, as well 
as the means by which the claims processing system is able to recognize 
that exclusion'' (79 FR 45642, August 5, 2014). The commenter then 
suggested that until such time as this drug may be assigned a permanent 
J code of its own, CMS should devise an administrative alternative for 
effectuating its exclusion from consolidated billing, such as utilizing 
the drug's existing C code for this purpose. The commenter further 
stated that the exclusion list's current use of C codes for designating 
the excluded magnetic resonance imaging (MRI) services in Major 
Category I.C establishes the feasibility of similarly adopting such an 
approach for chemotherapy drugs like BLINCYTO[supreg] under Major 
Category III.A.
    Response: We agree with the commenter that, as described, this drug 
would appear to meet the ``high-cost, low probability'' criteria to 
qualify for the statutory carve-out of certain highly intensive 
chemotherapy drugs from consolidated billing. We note that, as 
described in the National Institutes of Health's MedlinePlus Web site 
at www.nlm.nih.gov/medlineplus/druginfo/meds/a614061.html, this is one 
of the types of drugs referenced in the BBRA Conference Report's 
legislative history on the chemotherapy exclusion (H.R. Rep. No. 106-
479 at 854 (1999) (Conf. Rep.)); namely, those chemotherapy drugs that 
``. . . are given as infusions, thus requiring special staff expertise 
to administer.'' In addition, the comment itself notes that ``In the 
six months since BLINCYTO[supreg] has been approved and available on 
the market, we are not aware of any patients who were treated with 
BLINCYTO[supreg] in the SNF setting'' (emphasis added). However, we are 
unable to adopt the commenter's suggestion that until a specific J code 
is assigned, a C code appropriately could be used on an interim basis 
as a vehicle for designating a chemotherapy drug for exclusion from 
consolidated billing. While the commenter is correct in pointing out 
some excluded MRI services that are identified by C code, we note that 
these C codes are designed specifically for use under the outpatient 
hospital PPS (OPPS), and that in contrast to the administrative 
exclusion for MRIs--which is a hospital-specific exclusion--the 
statutory chemotherapy exclusion is a categorical one that applies 
equally to hospital and non-hospital settings alike. This means that a 
temporary C code would not be suitable for the purpose of excluding 
chemotherapy drugs from consolidated billing and that, as we indicated 
previously in the FY 2015 SNF PPS final rule, we are unable to 
designate a chemotherapy drug for exclusion from consolidated billing 
prior to the point at which it is actually assigned its own permanent J 
code. Accordingly, we plan to add this drug to the exclusion list, at 
such time as it may be assigned a specific J code of its own.
    Comment: Several commenters expressed their continued support for 
the longstanding statutory exclusion from consolidated billing of 
certain specified types of customized prosthetic devices, and 
recommended the exclusion of two additional prosthetic device codes, 
L5969 (``ankle/foot power assist, including motors'') and L5987 (``all 
lower extremity prosthesis, shank foot system with vertical loading 
pylon''). One commenter further recommended that certain customized 
orthotic devices meeting the statutory ``high-cost, low probability'' 
criteria be excluded as well.
    Response: We note that code L5969 actually appears on the exclusion 
list already under Major Category III.D (``Customized Prosthetic 
Devices''), where this particular L code has, in fact, been listed ever 
since its initial assignment in January 2014. Regarding code L5987, we 
note that this particular code had been recommended for exclusion 
previously during the FY 2012 rulemaking cycle, along with two other L 
codes that, like L5987, already existed--but were not designated by the 
Congress for exclusion--upon the original 1999 enactment of the 
customized prosthetic device exclusion in the BBRA. In the FY 2012 SNF 
PPS final rule (76 FR 48531, August 8, 2011), we issued our decision to 
``. . . decline to add these codes to the exclusion list,'' explaining 
that

. . . our position has always been that the BBRA's discretionary 
authority to exclude codes within certain designated service 
categories applies solely to codes that were created subsequent to 
the BBRA's enactment, and not to those codes that were already in 
existence as of July 1, 1999 (the date that the legislation itself 
uses as the reference point for identifying the codes that it 
designates for exclusion). As we explained in the FY 2010 final rule 
(74 FR 40354), this position reflects the assumption that if a 
particular code was already in existence as of that date but not 
designated for exclusion, this meant that it was intended to remain 
within the SNF PPS bundle, subject to the BBRA Conference Report's 
provision for a GAO review of the code set that was conducted the 
following year (H.R. Rep. No. 106-479 at 854 (1999) (Conf. Rep.)).

    Regarding the suggestion on excluding certain customized orthotic 
devices under this authority, we have explained repeatedly in this and 
previous rules that the amendments enacted in section 103 of the BBRA 
only allow us to identify additional codes for exclusion within each of 
the four specified service categories: chemotherapy items, chemotherapy 
administration services, radioisotope services, and customized 
prosthetic devices (a category that is separate from and does not 
encompass orthotics). Accordingly, as we have already indicated 
previously in the SNF PPS final rules for FY 2001 (65 FR 46790, July 
31, 2000) and FY 2009 (73 FR 46436, August 8, 2008), because orthotic 
devices do not fall within any of these four specified service 
categories, excluding them from consolidated billing would require 
legislation by the Congress to amend the law.
    Comment: Several commenters on the VBP provision additionally 
alleged that there is an inherent ``tension'' between VBP and 
consolidated billing (the SNF PPS's bundling requirement), particularly 
with respect to portable x-rays and other types of diagnostic imaging, 
services that the commenters characterized as playing a key role in 
providing high-quality patient care. The commenters stated that the 
inclusion of these services within the PPS bundle incentivizes SNFs to 
select suppliers of diagnostic services solely on the basis of price, 
without considering the quality of the services. They also stated that 
the current framework allows a practice in which a supplier offers to 
furnish deeply discounted services to the SNF's Part A residents in 
return for being selected to handle the Part B services for those of 
the SNF's Medicare-eligible residents who are in noncovered stays. The 
commenters recommended that diagnostic imaging services should be 
unbundled altogether (or, alternatively,

[[Page 46408]]

if left within the bundle, that the SNF should be required to pay its 
supplier the full Part B fee schedule amount for them). They suggested 
that unbundling these services would enable SNFs to focus more on the 
quality of the services themselves rather than on the details of the 
billing process. Some of the commenters additionally noted that certain 
diagnostic radiology services such as portable x-rays are split between 
a bundled technical component (TC, representing the diagnostic test 
itself) and a separately billable professional component (PC, 
representing the physician's interpretation of the test), and they 
asserted that the portable x-ray's transportation and setup should 
appropriately be classified under the separately billable PC rather 
than the bundled TC, stating that the assignment of a Level II HCPCS 
code is sufficient in itself to identify a service as being an excluded 
``physician'' service in this context.
    Response: We have long recognized the incentives to realize 
efficiencies in providing care that are inherent in any bundled payment 
requirement, along with the attendant concerns about the potential 
effect of those incentives on quality of care. However, we do not 
believe that the commenters, in citing the SNF VBP as a new basis for 
reiterating these recurring concerns, have established sufficient 
justification for unbundling diagnostic imaging services from 
consolidated billing--an action that, in any event, would require 
legislation by the Congress. We also note that the long-term care 
facility requirements for participation, which long predate the VBP 
legislation, contain at 42 CFR 483.25 an overall mandate for Medicare 
SNFs to provide ``. . . the necessary care and services to attain or 
maintain [each resident's] highest practicable physical, mental, and 
psychosocial well-being, in accordance with the comprehensive 
assessment and plan of care.'' In addition, whenever a SNF elects to 
obtain such services from an outside source, the requirements at Sec.  
483.75(h)(2)(i) further confer on the SNF the specific responsibility 
to obtain ``. . . services that meet professional standards and 
principles that apply to professionals providing services in such a 
facility.'' Thus, a SNF that fails to provide the appropriate quantity 
or quality of care in accordance with this mandate would jeopardize its 
compliance with the requirements for participation in the Medicare 
program.
    Moreover, we do not accept the commenters' premise that placing the 
billing responsibility with the SNF itself has the effect of 
distracting from a focus on quality of care. To the contrary, the 
consolidated billing provision was itself established precisely to help 
promote the overall coordination of high-quality care in the SNF 
setting. We note that prior to the enactment of this provision, care 
for SNF residents could be fragmented among a wide variety of outside 
suppliers who were not required to bill through the SNF. The resulting 
dispersal of responsibility for resident care among various outside 
suppliers adversely affected quality (coordination of care) and program 
integrity, as documented in reports by both the Office of the Inspector 
General (OIG) and the Government Accountability Office (GAO) (see OIG 
report no. OEI-06-92-00863, ``Medicare Services Provided to Residents 
of Skilled Nursing Facilities'' (October 1994), available online at 
https://oig.hhs.gov/oei/reports/oei-06-92-00863.pdf, and GAO report no. 
HEHS-96-18, ``Providers Target Medicare Patients in Nursing 
Facilities'' (January 1996), available online at http://www.gao.gov/products/HEHS-96-18). Thus, the enactment of consolidated billing 
reflected a recognition that fully enabling SNFs to ensure the overall 
quality of their residents' services necessitated placing with the SNF 
itself not only the professional but also the financial responsibility 
for those services.
    As for the commenters' suggestions on requiring SNFs to pay 
suppliers the full Part B fee schedule amount for a bundled service, in 
the FY 2000 SNF PPS final rule (64 FR 41677, July 30, 1999), we noted 
in response to previous, similar suggestions that

. . . under current law, an SNF's relationship with its supplier is 
essentially a private contractual matter, and the terms of the 
supplier's payment by the SNF must be arrived at through direct 
negotiations between the two parties themselves. Accordingly, we 
believe that the most effective way for a supplier to address any 
concerns that it may have about the adequacy or timeliness of the 
SNF's payment would be for the supplier to ensure that any terms to 
which it agrees in such negotiations satisfactorily address those 
concerns.

    In that same final rule (64 FR 41677), we also noted in response to 
previous, similar concerns regarding supplier discounts that

. . . our discussion of the relationship between an SNF and its 
suppliers should not be construed as addressing in any manner the 
potential applicability of the statutory anti-kickback provisions, 
since matters relating specifically to the enforcement of these 
provisions lie exclusively within the purview of the Office of the 
Inspector General.

    Finally, we do not share the view of those commenters who would 
categorize a portable x-ray service's transportation and setup as part 
of the separately billable PC; rather, as noted in Sec.  90.5 of the 
Medicare Claims Processing Manual, Chapter 13 (available online at 
http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c13.pdf):

. . . When a SNF resident receives a portable x-ray service during 
the course of a Medicare-covered stay in the SNF, only the service's 
professional component (representing the physician's interpretation 
of the test results) is a separately billable physician service 
under Part B . . . By contrast, the technical component representing 
the procedure itself, including any associated transportation and 
setup costs, would be subject to consolidated billing (the SNF 
``bundling'' requirement for services furnished to the SNF's Part A 
residents), and must be included on the SNF's Part A bill for the 
resident's covered stay (Bill Type 21x) rather than being billed 
separately under Part B . . . (emphasis added).

    Moreover, notwithstanding the commenters' assertions, the 
assignment of a Level II HCPCS code to a particular service would in no 
way automatically equate to identifying it as an excluded ``physician'' 
service in this context. Rather, under the regulations at 42 CFR 
411.15(p)(2)(i), the only services that can qualify for the physician 
service exclusion from consolidated billing are those that meet the 
criteria set forth in 42 CFR 415.102(a) for payment on a fee schedule 
basis as a physician service. Sections 415.102(a)(1) and (a)(3), in 
turn, specify that such a service must be furnished personally by a 
physician, and must be a type of service that ordinarily requires such 
performance. These are criteria that a portable x-ray service's 
transportation and setup would never meet, as the service's excluded PC 
relates solely to reading the x-ray rather than taking it, and the 
physician's personal performance clearly would not be required for 
activities such as driving the supplier's vehicle to the SNF, or 
setting up the equipment once it arrives there.
3. Payment for SNF-Level Swing-Bed Services
    Section 1883 of the Act permits certain small, rural hospitals to 
enter into a Medicare swing-bed agreement, under which the hospital can 
use its beds to provide either acute- or SNF-level care, as needed. For 
critical access hospitals (CAHs), Part A pays on a reasonable cost 
basis for SNF-level services furnished under a swing-bed agreement. 
However, in accordance with section 1888(e)(7) of the Act, these 
services furnished by non-CAH rural

[[Page 46409]]

hospitals are paid under the SNF PPS, effective with cost reporting 
periods beginning on or after July 1, 2002. As explained in the FY 2002 
final rule (66 FR 39562), this effective date is consistent with the 
statutory provision to integrate swing-bed rural hospitals into the SNF 
PPS by the end of the transition period, June 30, 2002.
    Accordingly, all non-CAH swing-bed rural hospitals have now come 
under the SNF PPS. Therefore, all rates and wage indexes outlined in 
earlier sections of this final rule for the SNF PPS also apply to all 
non-CAH swing-bed rural hospitals. A complete discussion of assessment 
schedules, the MDS, and the transmission software (RAVEN-SB for Swing 
Beds) appears in the FY 2002 final rule (66 FR 39562) and in the FY 
2010 final rule (74 FR 40288). As finalized in the FY 2010 SNF PPS 
final rule (74 FR 40356 through 40357), effective October 1, 2010, non-
CAH swing-bed rural hospitals are required to complete an MDS 3.0 
swing-bed assessment which is limited to the required demographic, 
payment, and quality items. The latest changes in the MDS for swing-bed 
rural hospitals appear on the SNF PPS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html. We 
received no comments on this aspect of the proposed rule.

D. Other Issues

1. SNF Value-Based Purchasing (VBP) Program

a. Background
(1) Overview
    In recent years, we have undertaken a number of initiatives to 
promote higher quality and more efficient health care for Medicare 
beneficiaries. These initiatives, which include demonstration projects, 
QRPs, and VBP programs, have been implemented in various health care 
settings, including physician offices, ambulatory surgical centers 
(ASCs), hospitals, nursing homes, home health agencies (HHAs), and 
dialysis facilities. Many of these programs link a portion of Medicare 
payments to provider reporting or performance on quality measures. The 
overarching goal of these initiatives is to transform Medicare from a 
passive payer of claims to an active purchaser of quality health care 
for its beneficiaries.
    We view VBP as an important step toward revamping how care is paid 
for, moving increasingly toward rewarding better value, outcomes, and 
innovations instead of merely volume.
(2) SNF VBP Report to Congress
    Section 3006(a) of the Affordable Care Act required the Secretary 
to develop a plan to implement a VBP program under the Medicare program 
for SNFs (as defined in section 1819(a) of the Act) and to submit that 
plan to Congress. In developing the plan, this section required the 
Secretary to consider several issues, including the ongoing 
development, selection, and modification process for measures, the 
reporting, collection, and validation of quality data, the structure of 
value-based payment adjustments, methods for public disclosure of SNF 
performance, and any other issues determined appropriate by the 
Secretary. The Secretary was also required to consult with relevant 
affected parties and consider experience with demonstrations relevant 
to the SNF VBP Program.
    HHS submitted the Report to Congress required under section 3006 of 
the Affordable Care Act in March 2012. The report explains that a 
significant number of elderly Americans receive care in SNFs/NFs, 
either as short-term post-acute care or as long-term custodial care, 
and that quality of care is a significant concern for a subset of SNFs/
NFs. The report also states that the SNF PPS does not strongly 
incentivize SNFs to furnish high quality care to this very fragile 
patient population. The report concludes that the Medicare program 
could incentivize SNFs to improve the quality of care for their 
patients.
    In the report, we explained our belief that the implementation of a 
SNF VBP Program is a central step in revamping Medicare's payments for 
health care services to reward better value, outcome, and innovations, 
rather than the volume of care. We also explained our belief that a SNF 
VBP Program should promote the development and use of robust quality 
measures, including measures that assess functional status, to promote 
timely, safe, and high-quality care for Medicare beneficiaries. We 
noted that the creation of a SNF VBP Program would align with numerous 
HHS and CMS efforts to improve care coordination, and would be 
consistent with the National Quality Strategy and its aims of Better 
Care, Healthy People and Communities, and Affordable Care.
    The full report is available on our Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/SNF-VBP-RTC.pdf.
b. Statutory Basis for the SNF VBP Program
    Section 215 of PAMA added sections 1888(g) and (h) to the Act. 
Section 1888(g)(1) of the Act requires the Secretary to specify a SNF 
all-cause all-condition hospital readmission measure (or any successor 
to such a measure) not later than October 1, 2015. Section 1888(g)(2) 
of the Act requires the Secretary to specify an all-condition risk-
adjusted potentially preventable hospital readmission rate for SNFs not 
later than October 1, 2016. Section 1888(g)(3) of the Act directs the 
Secretary to develop a methodology to achieve high reliability and 
validity for these measures, especially for SNFs with a low volume of 
readmissions. Section 1888(g)(4) of the Act makes the pre-rulemaking 
Measure Applications Partnership process of Section 1890A of the Act 
optional for these measures. Under section 1888(g)(5) of the Act, the 
Secretary is directed to provide quarterly confidential feedback 
reports to SNFs on their performance on the readmission or resource use 
measure beginning on October 1, 2016. Under section 1888(g)(6) of the 
Act, not later than October 1, 2017, the Secretary must establish 
procedures for making performance data on readmission and resource use 
measures public on Nursing Home Compare or a successor Web site. That 
paragraph also requires that the procedures ensure that a SNF has the 
opportunity to review and submit corrections to the information that is 
to be made public for it before that information is made public.
    Section 1888(h)(1)(A) of the Act requires the Secretary to 
establish a SNF VBP program under which value-based incentive payments 
are made in a FY to SNFs, and section 1888(h)(1)(B) of the Act requires 
that the Program apply to payments for services furnished on or after 
October 1, 2018. Under section 1888(h)(2)(A) of the Act, the Secretary 
must apply the readmission measure specified under section 1888(g)(1) 
of the Act for purposes of the Program, and section 1888(h)(1)(B) of 
the Act requires the Secretary to apply the resource use measure 
specified under section 1888(g)(2) of the Act instead of the 
readmission measure specified under section 1888(g)(1) as soon as 
practicable. Sections 1888(h)(3)(A) and (B) of the Act require the 
Secretary to establish performance standards for the measure applied 
under section 1888(h)(2) of the Act for a performance period for a FY 
and that those performance standards include levels of achievement and 
improvement. In addition, in calculating the SNF performance score for 
the

[[Page 46410]]

measure under the Program, section 1888(h)(3)(B) of the Act requires 
the Secretary to use the higher of achievement or improvement scores. 
Further, the performance standards established under section 1888(h)(3) 
of the Act must, under section 1888(h)(3)(C), be established and 
announced by the Secretary not later than 60 days prior to the 
beginning of the performance period for the FY involved.
    Section 1888(h)(4) of the Act directs the Secretary to develop a 
methodology to assess each SNF's total performance based on the 
performance standards for the applicable measure for each performance 
period. Under section 1888(h)(4)(B) of the Act, SNF performance scores 
for the performance period for each FY must be ranked from low to high.
    Section 1888(h)(5) of the Act outlines several requirements for 
value-based incentive payments under the SNF VBP Program. Under section 
1888(h)(5)(A) of the Act, the Secretary is directed to increase the 
adjusted federal per diem rate determined under section 1888(e)(4)(G) 
for services furnished by a SNF by the value-based incentive payment 
amount determined under section 1888(h)(5)(B). This section also 
directs that the value-based incentive payment amount be equal to the 
product of the adjusted federal per diem rate and the value-based 
incentive payment percentage specified under section 1888(h)(5)(C) of 
the Act for the SNF for the FY. Section 1888(h)(5)(C) requires the 
Secretary to specify a value-based incentive payment percentage for a 
SNF for a FY, which may include a zero percentage. The Secretary is 
further directed under section 1888(h)(5)(C) to ensure that such 
percentage is based on the SNF performance score for the performance 
period for the FY, that the application of all such percentages in a FY 
results in an appropriate distribution of value-based incentive 
payments, and that the total amount of value-based incentive payments 
for all SNFs for a FY be greater than or equal to 50 percent, but not 
greater than 70 percent, of the total amount of the reductions to 
payments for the FY under section 1888(h)(6), as estimated by the 
Secretary.
    Section 1888(h)(6) of the Act requires the Secretary to reduce the 
adjusted federal per diem rate for SNFs otherwise applicable to each 
SNF for services furnished by that SNF during the applicable FY by the 
applicable percent, which is defined in paragraph (b) as 2 percent for 
FY 2019 and subsequent years. Section 1888(h)(7) of the Act requires 
the Secretary to inform each SNF of its payment adjustments under the 
Program not later than 60 days prior to the FY involved, and under 
section 1888(h)(8) of the Act, the value-based incentive payments 
calculated for a FY apply only for that FY.
    Section 1888(h)(9)(A) of the Act requires the Secretary to publish 
SNF-specific performance information on the Nursing Home Compare Web 
site or a successor Web site, including SNF performance scores and 
rankings. Section 1888(h)(9)(B) of the Act requires the Secretary to 
post aggregate information on the SNF VBP Program, including the range 
of SNF performance scores and the number of SNFs receiving value-based 
incentive payments and the range and total amount of those payments.
    We received a number of general comments on the SNF VBP Program.
    Comment: Commenters suggested that we phase-in the SNFRM to ensure 
that providers are fully capable of reporting the measure accurately 
and to ensure that it is fully valid and accurate. Commenters suggested 
that such a phase-in should include a period of ``hold-harmless 
reporting'' and data collection that does not include penalties or 
incentive payments.
    Response: We do not have the administrative discretion to phase-in 
the SNF VBP Program as the commenter suggests, since section 
1888(h)(1)(B) of the Act requires us to apply the Program to payments 
for services furnished on or after October 1, 2018. However, section 
1888(g)(5) requires us to provide quarterly, confidential feedback 
reports to SNFs on their performance on measures specified for the 
program beginning October 1, 2016. We believe those feedback reports 
will meet the commenter's request that we provide feedback on the 
measure during a time period that would not involve penalties or 
incentive payments. Additionally, we would remind commenters that the 
SNFRM is a claims-based measure, and therefore will not require any 
additional data to be submitted by SNFs.
    Comment: Commenters recommended that proposed measures should 
align, where possible, with existing quality measures across settings 
and by payment type (such as ACO or bundled payments).
    Response: We will take the recommendation into account as we 
further develop and implement the Program.
    Comment: Commenters urged us to adopt an Extraordinary 
Circumstances Exception process for the SNF VBP Program to ensure that 
facilities do not incur penalties under the program during major 
weather events or other circumstances beyond their control.
    Response: We will take the recommendation into account as we 
further develop and implement the Program.
    Comment: Commenters suggested that we set up a regular workgroup to 
discuss the SNF VBP Program's development with stakeholders.
    Response: We intend to continue outreach efforts to the SNF 
community as we develop the Program.
    Comment: Commenters suggested that we should adopt a rule 
prohibiting value-based incentive payments under the SNF VBP Program to 
any SNF that does not accurately report staffing data or does not have 
sufficient nursing staff to meet residents' needs.
    Response: We thank the commenters for this suggestion and will 
consider it, if legally feasible, as part of the Program's scoring 
policies in the future.
    Comment: Commenters suggested that we adopt a nutritional status 
domain and implement a malnutrition-related quality measure in the 
future for the SNF VBP Program. Other commenters suggested measures 
that are currently displayed on Nursing Home Compare, those that were 
part of the SNF VBP demonstration, or those that are part of the new 
SNF QRP.
    Response: We do not believe we have the authority to adopt measures 
covering additional clinical topics beyond those specified in sections 
1888(g)(1) and (2) of the Act at this time.
    Comment: Commenters urged us to make SNF VBP Program data as 
contemporaneous as possible. Commenters noted that more recent 
hospitalization data allow SNFs to monitor their performance and better 
realize the connection between their performance rates and their 
payment rates.
    Response: We intend to make SNFs' performance data available as 
quickly as is practicable to ensure that facilities are able to 
understand their performance and undertake quality improvement efforts.
    Comment: Commenters encouraged us to develop the statutorily-
mandated resource use measure specified under section 1888(g)(2) of the 
Act as soon as possible, and to share a timeline for when the measure 
will replace the SNFRM. Some commenters also stated that the 
potentially preventable hospital readmissions measure needs additional 
testing and more detailed public information.
    Response: We thank the commenters for this request. At this time, 
we have not specified the resource use measure under section 1888(g)(2) 
of the Act. We

[[Page 46411]]

will make all details available, including technical reports presenting 
results of measure testing and technical expert input, in the future 
and will seek public comment.
    We thank the commenters for this general feedback, and will take it 
into account in future rulemaking.
c. Skilled Nursing Facility 30-Day All-Cause Readmission Measure 
(SNFRM) (NQF #2510; Measure Steward: CMS)
(1) Overview
    Reducing hospital readmissions is important for quality of care and 
patient safety. Readmission to a hospital may be an adverse event for 
patients and in many cases imposes a financial burden on the health 
care system. Successful efforts to reduce preventable readmission rates 
will improve the quality of care furnished to beneficiaries while 
simultaneously decreasing the cost of that care. Hospitals and other 
health care providers can work with their communities to lower 
readmission rates and improve patient care in a number of ways, such as 
by ensuring that patients are clinically ready to be discharged, 
reducing infection risk, reconciling medications, improving 
communication with community providers responsible for post-discharge 
patient care, improving care transitions, and ensuring that patients 
understand their care plans upon discharge.
    Many studies have demonstrated the effectiveness of these types of 
in-hospital and post-discharge interventions in reducing the risk of 
readmission, confirming that hospitals and their partners have the 
ability to lower readmission rates.1 2 3 These types of 
efforts during and after a hospitalization have been shown to be 
effective in reducing readmission rates in geriatric populations 
generally,4 5 as well as for multiple specific conditions. 
Moreover, such interventions can result in cost saving. Financial 
incentives to reduce readmissions will in turn promote improvement in 
care transitions and care coordination, as these are important means of 
reducing preventable readmissions.\6\ In its 2007 Report to Congress on 
Promoting Better Efficiency in Medicare,\7\ MedPAC noted the potential 
benefit to patients of lowering readmissions and suggested payment 
strategies that would incentivize hospitals to reduce these rates. 
Readmission rates are important markers of quality of care, 
particularly of the care of a patient in transition from an acute care 
setting to a non-acute care setting, and improving readmissions can 
positively influence patient outcomes and the cost of care.
---------------------------------------------------------------------------

    \1\ Gwadry-Sridhar FH, Flintoft V, Lee DS, Lee H, Guyatt GH: A 
systematic review and meta-analysis of studies comparing readmission 
rates and mortality rates in patients with heart failure. Arch 
Intern Med. 2004;164(21):2315-2320.
    \2\ McAlister FA, Lawson FM, Teo KK, Armstrong PW.: A systematic 
review of randomized trials of disease management programs in heart 
failure. AmJMed. 2001;110(5):378-384.
    \3\ Krumholz HM, Amatruda J, Smith GL, et al.: Randomized trial 
of an education and support intervention to prevent readmission of 
patients with heart failure. J Am Coll Cardiol. 2002;39(1):83-89.
    \4\ Coleman EA, Parry C, Chalmers S, Min SJ.: The care 
transitions intervention: Results of a randomized controlled trial. 
Arch Intern Med. 2006;166:1822-8.
    \5\ Naylor MD, Brooten D, Campbell R, Jacobsen BS, Mezey MD, 
Pauly MV, Schwartz JS.: Comprehensive discharge planning and home 
follow-up of hospitalized elders: A randomized clinical trial. JAMA. 
1999;281:613-20.
    \6\ Coleman EA.: 2005. Background Paper on Transitional Care 
Performance Measurement. Appendix I. In: Institute of Medicine, 
Performance Measurement: Accelerating Improvement. Washington, DC: 
National Academy Press.
    \7\ Medicare Payment Advisory Commission (MedPAC). Report to 
Congress: Promoting Greater Efficiency in Medicare; 2007. Available 
at http://www.medpac.gov/documents/Jun07_EntireReport.pdf. Accessed 
January 10, 2011.
---------------------------------------------------------------------------

    We proposed to specify the SNF 30-Day All-Cause Readmission Measure 
(SNFRM) (NQF #2510) as the SNF all-cause, all-condition hospital 
readmission measure under section 1888(g)(1) of the Act. This measure 
assesses the risk-standardized rate of all-cause, all-condition, 
unplanned inpatient hospital readmissions of Medicare fee-for-service 
(FFS) SNF patients within 30 days of discharge from an admission to an 
inpatient prospective payment system (IPPS) hospital, CAH, or 
psychiatric hospital. This measure is claims-based, requiring no 
additional data collection or submission burden for SNFs.
    We also proposed to apply this measure for purposes of the SNF VBP 
Program under section 1888(h)(2)(A) of the Act. We believe that this 
measure will (1) incentivize SNFs to make quality improvements that 
result in successful transitions of care for patients discharged from 
the hospital (IPPS, CAH or psychiatric hospital) setting to a SNF, and 
subsequently to the community or to another post-acute care setting, 
(2) reduce unplanned readmission rates of these patients to hospitals; 
and (3) align the SNF VBP Program with the National Quality Strategy 
priorities of safer, better coordinated care and lower costs.\8\
---------------------------------------------------------------------------

    \8\ Wilson, N. U.S. Department of Health and Human Services, 
Agency for Healthcare Research and Quality. (2014). National quality 
strategy: Overview.
---------------------------------------------------------------------------

    We developed this measure based upon the NQF-endorsed Hospital-Wide 
All-Cause Unplanned Readmission Measure (HWR) (NQF #1789) (http://www.qualityforum.org/QPS/1789) \9\ implemented in the Hospital 
Inpatient QRP. To the extent methodologically and clinically 
appropriate, we harmonized the SNFRM with the HWR measure 
specifications.
---------------------------------------------------------------------------

    \9\ Adopted for the Hospital IQR Program in the FY 2013 IPPS/
LTCH PPS Final Rule (77 FR 53521 through 53528).
---------------------------------------------------------------------------

    A discussion of the general comments that we received on the SNFRM, 
and our responses to those comments, appears below.
    Comment: One commenter expressed concern about our proposal to 
adopt the SNFRM, stating that it does not align with the unplanned 
readmission measure for IRFs (NQF #2502), particularly in reporting 
period duration. The commenter stated that we should strive for 
alignment between post-acute care settings, particularly given the 
ongoing implementation of the IMPACT Act.
    Response: We thank the commenter for their comments regarding 
alignment of these measures. The SNFRM (NQF #2510) is based on 12 
months of data as this ensures an accurate sample size for calculating 
the Risk-Standardized Readmission Rate (RSRR). However, 24 months of 
data were needed to ensure sufficient sample sizes to reliably estimate 
and develop the all-cause, unplanned hospital readmission measures used 
in the Inpatient Rehabilitation Facility Quality Reporting Program (NQF 
#2502) and the Long-Term Care Hospital Quality Reporting Program, due 
to the substantially lower number of IRF and LTCH stays.
    While we recognize that the SNFRM does not align with the unplanned 
readmission measure for IRFs (#2502), we are currently developing an 
unplanned readmission measure for IRFs that is analogous to the SNFRM 
in that it assesses readmissions among IRF patients following discharge 
from an acute care hospital. This second IRF measure is intended to 
exist in tandem with the existing IRF measure #2502, which assesses 
readmissions for 30 days following discharge from the IRF.
    Comment: Some commenters supported our proposal to adopt the SNFRM, 
noting that the measure is consistent with other CMS readmission 
measures, and that it will decrease costs, improve patient safety, and 
promote the best possible clinical outcomes. Commenters suggested that 
we consider adopting additional measures in the future in the SNF VBP 
Program that cover resource use,

[[Page 46412]]

functional outcomes, and return to the community following discharge.
    Response: We do not have the authority to adopt additional measures 
in the SNF VBP Program beyond those specified in sections 1888(g)(1) 
and (2) of the Act.
    Comment: Some commenters suggested that we either adopt a 
readmission measure that includes all SNF patients, regardless of 
payer, or clarify that the SNFRM is an ``all-cause fee-for-service 
measure'' because it excludes Medicare Advantage beneficiaries.
    Response: This measure is based on FFS claims, consistent with 
other hospital readmission measures used in other programs. The measure 
as specified requires Medicare claims to determine if any readmissions 
are deemed to be planned or unplanned and for comprehensive risk 
adjustment.
    Comment: One commenter recommended that we ask the MAP to review 
PointRight OnPoint-30 SNF Rehospitalizations (NQF #2375) before taking 
a final position on the SNFRM (NQF #2510). The commenter explained that 
#2375 is an MDS-based measure that captures patients regardless of 
payer type and also includes observation admissions. The commenter 
further noted that #2375 risk adjusts for functional and clinical 
symptoms that are strong predictors of readmissions.
    Response: We recognize the desirability of implementing an all-
payer readmission measure. However, we have some concerns with 
including the measure (NQF #2375) in the SNF VBP program. The MDS-based 
measure excludes readmissions that occur after discharge from the SNF, 
which creates a perverse incentive for SNFs to discharge patients 
prematurely to avoid being penalized if the patients are considered a 
high risk for readmission. The MDS-based measure also does not exclude 
planned readmissions which are not indications of poor quality. 
Additionally, while NQF #2375 adjusts for functional and clinical 
symptoms, analyses conducted jointly by the developers of that measure 
and the SNFRM concluded that there is no substantial distinction in the 
risk models' capacity to assess readmission rates at the facility 
level.
    Comment: One commenter asked that we clarify that the MAP process 
is not restricted to reviewing and commenting only on CMS-sponsored 
measures or measures presented by CMS to the MAP, per section 1890 of 
the Act. The commenter also requested that we clarify that the input 
from the MAP is not with the view that the measure is used for VBP, as 
they believed that a measure for payment should be evaluated in a 
different manner.
    Response: It is correct that other measures are eligible for 
consideration in the MAP process. While the MAP provides input on 
measures selected by the Secretary, the pre-rulemaking provisions of 
the Act do not restrict the MAP from reviewing or recommending measures 
and methodologies in lieu of those under consideration by the 
Secretary. Therefore, we refer readers to the MAP Web site at http://www.qualityforum.org/map/. Additionally, we intend to provide the 
commenters' input to the NQF.
    In addition, at times we request additional measures from external 
stakeholders and measure developers, which are also reviewed by the 
MAP. The MAP's input is responsive to the particular program for which 
its review was sought. In this case, the SNFRM was submitted via an ad 
hoc Measures Under Consideration list to the MAP for consideration in 
SNF-VBP. The MAP's 2015 recommendations, available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711, show that the MAP supported 
the SNFRM's adoption for the SNF VBP Program.
    Comment: One commenter opposed the proposed SNFRM, stating that the 
measure is self-reported because it is based on MDS information and 
that it is industry-developed and controlled.
    Response: The proposed SNFRM is based on Medicare claims data and 
the measure does not use MDS information. Furthermore, the proposed 
measure was developed by CMS working with an independent CMS 
contractor, RTI International, and was not industry-developed. The 
proposed measure was endorsed by the National Quality Forum (NQF), and 
its specifications are available in our technical report, which is 
available on our Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Downloads/SNFRM-Technical-Report-3252015.pdf.
    Comment: Some commenters expressed concern that SNFs will not have 
access to the data used to calculate the SNFRM, and will therefore not 
be able to validate CMS's calculations.
    Response: While we intend to make as much information related to 
SNFRM performance as possible available to SNFs through confidential 
quarterly feedback reports required under section 1888(g)(5) of the 
Act, we understand that claims-based quality measurement is difficult 
for providers to replicate. It would require familiarity with a number 
of data sources that are used to develop the risk-adjustment model for 
SNFRM in order to account for variation across SNFs in case-mix and 
patient characteristics predictive of readmission (including the 
MedPAR, Medicare Enrollment Database (EDB), Medicare Denominator files, 
Agency for Healthcare Research & Quality (AHRQ)'s Clinical 
Classification Software (CCS) groupings of ICD-9 codes, and CMS's 
hierarchical condition category (HCC) mappings of ICD-9 codes). We view 
this as a necessary compromise to minimize reporting burden on 
participating SNFs by using claims data while ensuring that we obtain 
timely data for quality measurement.
    Comment: One commenter suggested that our longer-term goal should 
be to align the SNFRM with other relevant hospitalization measures 
planned for use, such as those being developed by states under section 
1115 waivers and new value-based initiatives for the Medicare fee-for-
service program.
    Response: We thank the commenter for this feedback, and will 
consider how best to align our programs with these efforts in the 
future.
    Comment: Some commenters expressed concerns about our proposal to 
adopt the SNFRM, stating that further vetting of the measure is 
warranted given commenter's belief that research cited on the measure 
is spare and includes only effectiveness studies limited to certain 
conditions.
    Response: The SNFRM was developed using the Measures Management 
System (MMS) Blueprint, a process that included input from a TEP and a 
public comment period. The measure was also reviewed by the NQF, and 
supported by that body for endorsement in December 2014. We believe 
that this represents sufficient vetting for the purpose of implementing 
a measure in a VBP program. We welcome additional input regarding the 
research supporting or questioning the appropriateness of this, or any 
other measure.
    Comment: One commenter urged us to consider adjusting the SNFRM for 
situations beyond facilities' control, such as family members insisting 
on a patient being hospitalized, and for patients with increased risks 
of hospitalization, including medically complex, frail elderly patients 
and those with certain primary diagnoses. The commenter also noted that 
avoidable hospital admissions frequently result from poorly managed 
transitions, and suggested that we investigate meaningful ways to 
capture and incentivize care transitions using this measure.
    Response: The SNFRM, which was endorsed by the NQF, has been risk

[[Page 46413]]

adjusted for case-mix to account for differences in patient 
populations. The goal of risk adjustment is to account for these 
differences so that providers who treat sicker or more vulnerable 
patient populations are not unnecessarily penalized for factors that 
are outside of their control. The current measure accounts for: 
Principal diagnosis from the Medicare claim corresponding to the prior 
proximal hospitalization as categorized by AHRQ's CCS groupings, length 
of stay during the patient's prior proximal hospitalization, length of 
stay in the intensive care unit (ICU), end-stage renal disease (ESRD) 
status, whether the patient was disabled, the number of prior 
hospitalizations in the previous 365 days, system-specific surgical 
indicators, individual comorbidities as grouped by HCCs or other 
comorbidity indices, and a variable counting the number of 
comorbidities if the patient had more than two HCCs. Many of the 
factors, such as family preference, suggested by the commenter are not 
feasibly captured by any existing data source of which we are aware. 
The medical complexity of patients is captured to the extent possible 
through the comorbidity data described above. In this way, we are able 
to capture poorly managed transitions through risk adjusted 
readmissions rates.
    Comment: One commenter encouraged us to consider creating 
safeguards for SNFs participating in the Program to ensure that 
patients are fully protected from unintended consequences resulting 
from the SNFRM's adoption, potentially including functional declines 
and resident deaths. The commenter suggested that a companion measure 
of death and decline of residents would determine whether SNFs 
improperly avoided hospitalizing residents who should have been 
hospitalized.
    Response: We intend to monitor the effects of the SNFRM on clinical 
care closely, and we intend to take any necessary steps to ensure that 
SNFs do not avoid hospitalizing patients. Additional measures may be 
implemented in other SNF-related programs such as the QRP. However, as 
stated above, we do not have the authority to adopt additional measures 
under the Program beyond the ones required under sections 1888(g)(1) 
and (2) of the Act.
(2) Measure Calculation
    The SNFRM estimates the risk-standardized rate of all-cause, 
unplanned, hospital readmissions for SNF Medicare FFS beneficiaries 
within 30 days of discharge from their prior proximal acute 
hospitalization. The SNF admission must have occurred within one day 
after discharge from the prior proximal hospitalization. The prior 
proximal hospitalization is defined as an inpatient admission to an 
IPPS, CAH, or a psychiatric hospital. Because the measure denominator 
is based on SNF admissions, each Medicare beneficiary may be included 
in the measure multiple times within a given year if they have more 
than one SNF stay meeting all measure inclusion criteria including a 
prior proximal hospitalization.
    Patient readmissions included in the measure are identified by 
examining Medicare claims data for readmissions of SNF Medicare FFS 
beneficiaries to an IPPS, or CAH occurring within 30 days of discharge 
from the prior proximal hospitalization. If the patient was admitted to 
the SNF within 1 day of discharge from the prior proximal 
hospitalization and the hospital readmission occurred within the 30-day 
risk window, it is counted in the numerator regardless of whether the 
patient is readmitted directly from the SNF or has been discharged from 
the SNF. Because patients differ in complexity and morbidity, the 
measure is risk-adjusted for patient case-mix. The measure also 
excludes planned readmissions, because these are not considered to be 
indicative of poor quality of care by the SNF. Details regarding how 
readmissions are identified are available in our SNFRM Technical 
Report.\10\
---------------------------------------------------------------------------

    \10\ Available on the Nursing Home Quality Initiative Web site 
at https://www.cms.gov/Medicare/Quality-nitiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/index.html?redirect=/nursinghomequalityinits/.
---------------------------------------------------------------------------

    The SNFRM (NQF #2510) assesses readmission rates while accounting 
for patient demographics, principal diagnosis in the prior 
hospitalization, comorbidities, and other patient factors. While 
estimating the predictive power of patient characteristics, the model 
also estimates a facility-specific effect common to patients treated at 
that SNF.
    The SNFRM is calculated based on the ratio, for each SNF, of the 
number of risk-adjusted all-cause, unplanned readmissions to an IPPS or 
CAH that occurred within 30 days of discharge from the prior proximal 
hospitalization, including the estimated facility effect, to the 
estimated number of risk-adjusted predicted unplanned inpatient 
hospital readmissions for the same patients treated at the average SNF. 
A ratio above 1.0 indicates a higher than expected readmission rate, or 
lower level of quality, while a ratio below 1.0 indicates a lower than 
expected readmission rate, or higher level of quality. This ratio is 
referred to as the standardized risk ratio or SRR. The SRR is then 
multiplied by the overall national raw readmission rate for all SNF 
stays. The resulting rate is the risk-standardized readmission rate 
(RSRR). The full methodology is detailed in the SNFRM Technical Report.
    The patient population includes SNF patients who:
     Had a prior hospital discharge (IPPS, CAH or psychiatric 
hospital) within 1 day of their admission to a SNF.
     Had at least 12 months of Medicare Part A, FFS coverage 
prior to their discharge date from the prior proximal hospitalization.
     Had Medicare Part A, FFS coverage during the 30 days (the 
30-day risk window) following their discharge date from the prior 
proximal hospitalization.
    A discussion of the general comments that we received on the SNFRM 
measure calculation, and our responses to those comments, appears 
below.
    Comment: One commenter expressed concern about the SNFRM's 
readmission window, noting that just over one-third of SNF stays exceed 
the 30-day readmission window. The commenter suggested that adopting 
the 30-day window as proposed could relieve SNFs of accountability for 
longer-stay patients and could create incentives for SNFs to delay 
needed care until after day 30. The commenter further stated that SNFs 
should be responsible for every readmission that occurs while the 
beneficiary is in the SNF.
    Response: We agree with the commenter's concerns that SNFs should 
be accountable for longer-stay patients who are admitted to an acute 
care hospital. The SNFRM is designed to assess failed transitions from 
an acute care hospital to the SNF, and is not intended to capture all 
hospitalizations that may occur in a SNF population. Including all 
admissions beyond 30 days in the population would attenuate the 
association between the transitions of care at the proximate discharge 
from an acute care hospital to the readmission.
    Comment: Some commenters stated that the SNFRM does not hold SNFs 
fully accountable for transitions to the next care setting, and 
suggested that we should adopt separate measures of readmissions after 
discharge from the SNF and from the hospital. One commenter stated that 
the SNFRM's measurement period should capture rehospitalizations within 
90 days, not just 30 days. The commenter noted that other efforts to 
reduce rehospitalizations

[[Page 46414]]

focus on a 90-day time period, and suggested that the 30-day period may 
reflect poor hospital care more than care problems in the SNF.
    Response: The 30-day readmission window was developed to harmonize 
with other hospital readmission measures and reflects a transitional 
time period during which the acute care hospital and SNF are 
responsible for coordinating the care of a patient moving from one 
setting to another. While there is no definitive timeframe for which 
such a measure may be applied, the 30-day window is consistent with 
similar measures applied in other VBP programs, such as the ESRD 
Quality Incentive Program and the Hospital Readmission Reduction 
Program, as well as a number of QRPs. Furthermore, this 30-day post-
hospital discharge window was reviewed by a TEP. Analysis of 
readmission rates showed no patterns indicating that using a shorter or 
longer period would produce very different comparative results, though 
the overall rates would change. In addition, the NQF Standing Committee 
generally agreed that 30 days post-hospital discharge is an accepted 
standard for measuring readmissions. Longer windows may be subject to 
greater ``noise'' or statistical variability in the readmission rate. 
The measure as specified has the potential for this unintended 
consequence of delaying hospital care beyond the 30-day readmission 
window, but this issue may occur with any selected day threshold. We 
will be closely monitoring this and continue to analyze whether there 
are changes in the number of days to hospital readmission over time to 
assess whether a change to the readmissions window is needed for this 
measure in the future.
    Comment: One commenter expressed concern about the time lag between 
the end of the measurement period and the release of clean, adjudicated 
claims data. The commenter was concerned that these delays could affect 
timely notice and payment for SNFs participating in the Program.
    Response: We share the commenters' concern. As required by statute, 
we intend to provide quarterly feedback to SNFs to ensure that 
facilities have as much information as possible to inform their quality 
improvement efforts.
    Comment: Commenters expressed concern that while the SNFRM accounts 
for principal diagnosis, that diagnosis may not be the reason for 
admission to a SNF. Commenters suggested that the SNFRM should also 
account for comorbidities, diagnoses from prior hospitalizations during 
the prior year, length of stay during the prior proximal 
hospitalization, length of stay in the ICU, body system specific 
surgical indicators, ESRD status, disability status, and number of 
prior hospitalizations during the previous year. Commenters also 
requested that we develop a list of comorbidities that are being 
evaluated in the SNFRM's risk adjustment model.
    Response: We would like to clarify that the SNFRM is risk-adjusted 
for all of the factors cited by the commenter. The SNFRM accounts for 
all of the factors proposed in the comment above, including first 
diagnosis from the Medicare claim corresponding to the prior proximal 
hospitalization as coded by the AHRQ's CCS, length of stay during the 
patient's prior proximal hospitalization, indicator of a stay in the 
ICU, ESRD status, whether the patient was disabled, the number of prior 
hospitalizations in the previous 365 days, system-specific surgical 
indicators, individual comorbidities as grouped by CMS's (HCCs, and a 
variable counting the number of comorbidities if the patient had more 
than two HCCs. To capture comorbidities, we used the secondary medical 
diagnoses listed on the patient's prior proximal hospital claim as well 
as all diagnoses listed on acute care hospitalizations that occurred in 
the prior 12 months. We refer the commenter to the Technical Report for 
the SNFRM for additional information, which can be found on the Nursing 
Home Quality Initiative Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/index.html.
    Comment: Some commenters disagreed with our proposal to adopt a 
measure based on claims data, stating that determining readmission 
rates will be difficult for SNFs since claims data are cumbersome to 
use or access. Commenters stated that the SNFRM will not provide 
meaningful insights or otherwise impact quality improvement efforts 
when facilities are unable to interpret or access the data.
    Response: This measure was developed to harmonize with other 
hospital-based measures that are claims-based. Despite the commenter's 
concern that these data are difficult to access, the measure developer 
(RTI) cited evidence that these data are both reliable and valid. 
Further detail on this evidence is available in the SNFRM Technical 
Report, Section 3.5 (Validity Testing), available on the Nursing Home 
Quality Initiative Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/index.html.
    Furthermore, we intend to make performance reports available to 
facilities that are easy to interpret and present information on the 
facility-level readmission rates and relative standing on this measure, 
rather than information from the claims data directly. We intend to 
make SNFs' performance data available as quickly as is practicable. 
This will serve to provide information on a facility's performance and 
aid in informing quality improvement efforts at the facility level.
    Comment: One commenter stated that readmission measures should be 
``normalized'' instead of reported in simple percentage rates. The 
commenter believed that reductions in hospital admissions could result 
in more measured readmissions, even if the normalized readmission rate 
has remained constant. The commenter also suggested that undue 
variation may result for smaller facilities and fewer admissions.
    Response: The percentages computed by the measure are normalized in 
the sense that they are computed with risk adjustment and may be 
compared to one another and to the national rate for SNFs. A ratio of 
the risk-adjusted predicted rate for each facility to the expected rate 
for the same patients at the average facility produces a normalized 
value (referred to as the standardized risk ratio) which is 1.0 for a 
facility with readmissions at the expected rate for its own patients, 
and higher or lower than 1.0 if the readmission rate is higher or 
lower. For ease of interpretation, this standardized risk ratio is 
converted to a standardized rate by multiplying it by the national raw 
rate. This is an accepted method for producing standardized rates that 
are comparable across facilities. There is no external percentage 
target that every facility must meet and the national mean rate is 
driven by the data for the measurement period. The national mean may go 
up or down over time reflecting a changing pool of patients, medical 
conditions, and treatments.
    Variation in rates that may occur in facilities with low volume is 
dealt with by averaging the volatile facility data with the national 
mean when the hierarchical models are used. In addition, we will 
consider appropriate facility volume thresholds for reporting depending 
on the use of the measure.
    Comment: One commenter recommended that we adopt a minimum of 30 
qualified FFS admissions per 12-month period to calculate a 
statistically valid SNFRM rate. The commenter further stated that

[[Page 46415]]

any SNFs with fewer events should be excluded from the measure's 
calculation.
    Response: We will consider whether we should establish a minimum 
number of qualifying admissions for the SNFRM in future rulemaking. The 
SNFRM utilizes shrinkage estimates to address the possibility of undue 
variation for smaller facilities. This is a design feature common to 
many of our readmission measures, including those implemented in the 
aforementioned programs, to ensure statistically valid rates.
    Comment: One commenter stated that we should only count 
readmissions that occur while the patient resides in the SNF, not after 
discharge. The commenter stated that measure readmissions within the 
30-day window but after SNF discharge necessitates measurement of 30-
day rehospitalization rates for other providers as well. Commenters 
also noted that PAMA does not specify that the SNF measure align with 
the hospital's 30-day window and the Act uses ``Skilled Nursing 
Facility Measure'' throughout, which some commenters read to mean SNF 
only, not SNF plus follow on care after discharge.
    Response: We agree that readmission rates for other providers are 
necessary, and this is one reason we have taken steps to implement 
readmissions measures in multiple settings across a wide variety of 
relevant quality programs. We believe that excluding readmissions that 
occur after discharge creates a perverse incentive for facilities to 
prematurely discharge patients who represent the highest risk for 
readmission to avoid penalty. Given that this measure is the sole 
determinant of a VBP program for SNFs, we believe it is appropriate to 
include readmissions that occur post-discharge but within the 30-day 
window, aligning with other readmission measures implemented by CMS. 
The goal of this measure is to capture readmissions that are 
attributable to care provided by the SNF, even those that occur after 
discharge. We have already established a panel of readmission measures 
(such as those utilized for hospitals, ESRD care, IRFs, and LTCHs) that 
similarly seek to identify readmissions attributable to care received 
within the facility, even if the patient has been discharged. Those 
developed for ESRD facilities and Home Health agencies follow a 30-day 
window as well. We believe that the 30-day window is consistent with 
PAMA and that it is also consistent with the standard implemented in 
multiple settings. Absent a compelling reason to limit the measure to 
within stay, and given the potential for unintended consequences if 
such a measure were implemented as the sole determining factor of a VBP 
program, we believe remaining consistent with other programs is 
appropriate. We might consider a purely within-stay measure were it 
paired with a post-discharge measure, as this would allow us to avoid 
unintended consequences to patients, such as inappropriate early 
discharge from the SNF, but the statutory mandate does not allow us to 
implement additional measures in the SNF-VBP program.
    Comment: One commenter requested that we clarify whether the SNFRM 
includes all hospitalizations billed to Medicare or if it is limited to 
hospitalizations of residents who are in a Part A stay in a SNF. The 
commenter suggested that a broader measure of readmissions, including 
Medicare claims for dually-eligible residents not in a Part A stay or 
for private-pay residents could be used.
    Another commenter suggested that we explore merging FFS and 
Medicare Advantage data sets given the relative prevalence of MA 
patients in the SNF setting. The commenter also noted that the IMPACT 
Act does not separate Medicare beneficiaries by MA status. The 
commenter also recommended that facilities be allowed to complete and 
submit a combined Admission Assessment with the 5-day Assessment for 
Medicare Advantage beneficiaries to track readmission outcome data for 
all payer types in the facility.
    Response: The index stays that are included in the proposed SNFRM 
are for those that have FFS Part A Medicare enrollment. We do not have 
claims data for managed care, private pay, or Medicaid residents who 
may be receiving skilled services. Thus, this measure only includes 
Medicare FFS patients.
    For private-pay residents, we do not always have claims for the 
index hospital stay (the proximate stay at an acute-care hospital that 
precedes care with a SNF and defines the denominator), even if the 
related readmissions could be identified in Medicare data. In addition, 
we do not have reliable sources of data for Medicare Advantage 
patients. The most reliable data available for determining readmissions 
during a SNF stay are for Part A FFS beneficiaries.
    We agree that as penetration of the Medicare Advantage market in 
the SNF setting increases, finding ways of including readmissions for 
these patients should be a priority. We will continue to explore ways 
to include these patients in future years, given the differences in 
data sources.
    Comment: Another commenter also expressed concern that the SNFRM 
captures only Medicare FFS beneficiaries. The commenter noted that the 
SNF VBP Program's statute does not specifically restrict the measure to 
FFS beneficiaries, and urged us to find an all-payer measure. The 
Commenter further noted that the SNFRM does not capture hospital 
admissions that are classified as ``observation status,'' which are 
paid under Part B, and stated that the measure should be broadened to 
include residents not in a Medicare Part A stay.
    Response: At present, we are not able to include all payers in the 
SNFRM, as the measure is dependent upon Medicare claims data to 
identify readmissions and risk-adjust for patient comorbidities. While 
an all-payer measure based on the MDS does exist, it has several 
characteristics that we believe are potentially problematic for use in 
a VBP program. The MDS-based measure excludes readmissions that occur 
after discharge from the SNF, which creates a perverse incentive for 
SNFs to discharge patients prematurely to avoid being penalized if they 
are considered a high risk for readmission. The MDS-based measure also 
does not exclude planned readmissions, which are not indications of 
poor quality. We do not believe observation stays are appropriate for 
inclusion in the readmission measure, because the statute requires a 
measure of readmissions, not of rehospitalizations, which could also 
include ED and outpatient visits, including observation stays. We have 
tested the inclusion of observation stays, and note that doing so would 
have little or no impact on facility assessment by the measure. In 
addition, evidence suggests that the number of observation stays of 
patients originating from a SNF is quite small in comparison to the 
total number of SNF stays (0.7 percent of all SNF stays), and very few 
readmissions occur after an observation stay. Including observation 
stays from the SNF hospital readmission measure will not make a 
meaningful difference in the SNF facility-level rate of hospital 
readmissions or in the relative ranking of SNF providers according to 
this measure.
    Comment: One commenter requested that we clarify whether the 
SNFRM's condition list has been tested for the ICD-10 transition 
scheduled to be completed on October 1, 2015.
    Response: We will monitor and test the measure performance and 
update the risk adjustment model with the transition to ICD-10. We are 
prepared

[[Page 46416]]

for the implementation of ICD-10 for this measure. Mappings of ICD-10 
codes for the diagnoses and procedures have been prepared by the AHRQ 
for the CCS groups used in the risk-adjustment models. Similarly, 
mappings to the HCC groups have been done. These are used in the risk 
adjustment of the measure and the definition of planned readmissions. 
The effects of the change of codes will be system-wide and the models 
will be re-estimated when the necessary new data become available with 
the implementation of ICD-10.
    Comment: One commenter suggested that we use SNFs' actual 
readmission rate rather than predicted actual. The commenter noted that 
the predicted actual rate mutes the differences in rates for small 
sample size (for example, a facility with an actual count of 0 
readmissions could have a projected rate that is greater than 0).
    Response: This measure and several other post-acute care measures 
were designed to align with the Hospital-Wide Readmission measure for 
all-cause readmissions, and these measures utilize a hierarchical 
modeling approach that relies on generating a predicted rate consistent 
with recommendations made in the 2011 Committee of Presidents of 
Statistical Societies commissioned paper Statistical Issues in 
Assessing Hospital Performance.\11\ This decision was made based on the 
validity of calculating the standardized risk ratio (SRR), which is the 
predicted number of readmissions at the facility divided by the 
expected number of readmissions for the same patients if these patients 
had been treated at the average SNF. The predicted number of 
readmissions for each SNF is calculated as the sum of the predicted 
probability of readmission for each patient in the facility, including 
the SNF-specific (random) effect. The measure developer (RTI 
International) also designed a test to explore calibration over ranges 
of predicted probabilities by doing a comparison of the observed and 
predicted readmissions by decile (for a table of results, please refer 
to the SNFRM Technical Report, Section 3.3 Model Validation). These 
results indicate that the difference between the predicted number of 
readmissions and the observed number of readmissions in percentage 
points is minimal, less than one percentage point across deciles of 
expected rates of readmission, which suggests that the differences in 
rates will not be muted by using the predicted rate.
---------------------------------------------------------------------------

    \11\ The COPSS-CMS White Paper Committee: Arlene S. Ash, Ph.D.; 
Stephen E. Fienberg, Ph.D.; Thomas A. Louis, Ph.D.; Sharon-Lise T. 
Normand, Ph.D.; Therese A. Stukel, Ph.D., Jessica Utts, Ph.D. 
Available for download here: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Statistical-Issues-in-Assessing-Hospital-Performance.pdf.
---------------------------------------------------------------------------

    Comment: One commenter suggested that we increase the minimum 
denominator size to address small volume variation. The commenter noted 
many SNFs admit fewer than 50 Medicare FFS beneficiaries per year and 
some of these would be excluded if the proposed minimum denominator 
size of 25 stays is adopted. They also noted that for facilities with 
Ns smaller than 40, the confidence intervals of the readmission rate 
start to increase; for Ns smaller than 30, the confidence intervals 
increase rapidly. The commenter recommended that we should show both 
the impact that different minimum denominator sizes have on the number 
of SNFs excluded and the range of confidence intervals of the SNFs 
rehospitalization rates for Ns smaller than 50 to below 20. They also 
recommended that bootstrap analysis be conducted to test minimum 
denominator size to see how the confidence interval around small 
facilities increases as the denominator decreases as was done for NQF 
#2375.
    Response: We did not propose a minimum denominator size of 25 
stays, nor did we specify any minimum SNF size for inclusion. We will 
consider whether we should establish a minimum denominator for the 
SNFRM in future rulemaking along with the scoring methodology we are 
developing for the SNF VBP Program.
(3) Exclusions
    Patients whose prior proximal hospitalization was for the medical 
treatment for cancer are excluded. Analyses of this population during 
measure development showed them to have a different trajectory of 
illness and mortality than other patient populations, which is 
consistent with findings in studies in other patient populations.\12\
---------------------------------------------------------------------------

    \12\ National Quality Forum. ``Patient Outcomes: All-Cause 
Readmissions Expedited Review 2011''. July 2012. pp. 12.
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    SNF stays excluded from the measure are:
     SNF stays where the patient had one or more intervening 
post-acute care (PAC) admissions (inpatient rehabilitation facility 
(IRF), long-term care hospital (LTCH), or another SNF) which occurred 
either between the prior proximal hospital discharge and SNF admission 
(from which the patient was readmitted) or after the SNF discharge but 
before the readmission, within the 30-day risk window.
     SNF stays with a gap of greater than 1 day between 
discharge from the prior proximal hospitalization and the SNF 
admission.
     SNF stays in which the patient was discharged from the SNF 
against medical advice (AMA).
     SNF stays in which the principal diagnosis for the prior 
proximal hospitalization was for rehabilitation care; fitting of 
prostheses and for the adjustment of devices.
     SNF stays in which the prior proximal hospitalization was 
for pregnancy.
     SNF stays in which data were missing on any variable used 
in the SNFRM construction.
    Readmissions within the 30-day risk window that are usually 
considered planned due to the nature of the procedures and principal 
diagnoses of the readmission are also excluded from the measure. In 
addition to the list of planned procedures is a list of diagnoses 
(provided in the SNFRM Technical Report), which, if found as the 
principal diagnosis on the readmission claim, would indicate that the 
usually planned procedure occurred during an unplanned acute 
readmission. In addition to the HWR Planned Readmission Algorithm, the 
SNFRM incorporates procedures that are considered planned in post-acute 
care settings as identified in consultation with TEPs. Full details on 
the planned readmissions criteria used, including the additional 
procedures considered planned for post-acute care may be found in the 
SNFRM Technical Report. Details regarding the TEP proceedings can be 
found in the SNFRM TEP Report.
    A discussion of the general comments that we received on the SNFRM 
exclusions, and our responses to those comments, appears below.
    Comment: One commenter suggested that we should not limit the SNFRM 
to a 30-day readmission window, and should hold SNFs accountable for 
all readmissions that occur while a beneficiary is in a SNF. The 
commenter also suggested that we adopt a SNF measure that holds SNFs 
accountable for readmissions 30 days after discharge from the SNF, 
which commenters stated would help ensure smooth care transitions.
    Response: We agree with the commenter's concerns that SNFs should 
be accountable for longer-stay patients who are readmitted to an acute 
care hospital. The SNFRM is designed to assess failed transitions from 
acute care to the SNF, and is not intended to capture all 
hospitalizations that may

[[Page 46417]]

occur in a SNF population. Including all admissions beyond 30 days in 
the population would attenuate the association between the transitions 
of care at the proximate discharge from an acute care hospital to the 
readmission. Adding additional measures to account for readmissions 
post discharge from the SNF seems a reasonable suggestion, but we lack 
the statutory authority to include additional quality measures in the 
SNF VBP program.
    Comment: One commenter expressed concern about the SNFRM's 
exclusion of patients admitted to SNFs from inpatient rehabilitation 
facilities and long-term care hospitals. The commenter agreed that 
these patients may be in a different phase of recovery than acute care 
hospital patients, but suggested that they should still be included in 
the measure with a separate risk adjustment method.
    Response: We excluded patients who have intervening IRF or LTCH 
admissions before their first SNF admission. While developing the 
measure specifications, we found that these patients started their SNF 
admission later in the 30-day readmission window and received other 
additional types of services as compared with patients admitted 
directly to the SNF from the prior proximal hospitalization. Thus, they 
are clinically different, and their risk for readmission is different 
from the rest of SNF admissions. We report details on this exclusion in 
the SNFRM Technical Report.\13\ SNF patients with intervening IRF/LTCH 
stays had the lowest rates of readmission (8.6 percent) as compared 
with those with no intervening IRF/LTCH stay.
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    \13\ Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Downloads/SNFRM-Technical-Report-3252015.pdf.
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    Additionally, we found that those with intervening IRF/LTCH 
admissions had longer hospital lengths of stay and more prior proximal 
hospitalizations involving surgical procedures compared to those 
without an intervening stay. This observation supports the rationale 
that patients who had intervening IRF/LTCH stays are entering the SNF 
at a later stage of their recovery and are therefore at a different 
risk for readmission than patients who were admitted directly to the 
SNF from their prior proximal hospitalization. This issue also impacts 
a relatively small number of SNF stays; 6 percent have an intervening 
PAC stay (IRF, LTCH, or another SNF) or go home from their prior 
proximal hospitalization and are later admitted to a SNF within the 30-
day readmission window.
    Combined, these analyses provide justification for excluding SNF 
admissions with intervening IRF or LTCH admissions, or with multiple 
SNF stays, by showing these exclusions will not have a substantial 
effect on the SNFRM. Patients with multiple PAC stays after a prior 
proximal hospitalization are not systematically different from those 
with only one SNF stay with regard to comorbidities, but are very 
different with regard to readmission risk. Additionally, concerns about 
attribution, given the mix of providers these patients have received 
services from during the risk period, argues for the appropriateness of 
excluding these patients. Lastly, patients with multiple PAC stays do 
not cluster in a small group of facilities, so no facilities are 
disproportionately impacted by these exclusions.
    Comment: One commenter strongly disagreed with the SNFRM's 
exclusion criteria where the patient had one or more intervening 
admissions to an IRF which occurred either prior to the proximal 
hospital discharge and SNF admission or after the SNF discharge but 
before the readmission. The commenter stated that the criteria would 
not take into account medically complex patients who may be readmitted 
to the hospital for issues treated as comorbidities. The commenter 
stated that admission to an IRF should be considered as a proximal 
hospitalization.
    Response: With regard to considering an IRF stay as a proximal 
hospitalization, we would like to clarify that this measure was 
developed to harmonize with other hospital readmission measures which 
do not consider post-acute care settings, like IRFs, as proximal 
hospitalizations. We have previously adopted a hospital readmission 
measure for the IRF QRP and have adopted the NQF-endorsed version of 
the All-Cause Unplanned Readmission Measure for 30 Days Post Discharge 
from an IRF (NQF #2502) for the IRF QRP. Although IRFs are licensed as 
hospitals, we include them in the PAC continuum of care and as such, 
have proposed NQF #2502 to account for readmissions following discharge 
from the IRF setting.
    Comment: One commenter suggested that we exclude ventilator-
dependent residents from the readmission measure when those patients' 
prior proximal hospitalization required being placed on a ventilator 
for the first time. The commenter noted that these patients require 
frequent rehospitalizations as part of the adjustment to ventilator 
dependency.
    Response: This measure of all-cause unplanned hospital readmission 
measures was harmonized with measures adopted in other inpatient and 
post-acute care programs. Consistent with these other measures, we do 
not exclude these types of patients. Rather, the measure is designed to 
take into account a variety of patient-level risk factors through risk 
adjustment, including principal diagnoses or comorbidities that require 
use of mechanical ventilation.
    Comment: One commenter supported our proposal to exclude from the 
measure those patients whose prior proximal hospitalization was for 
medical treatment of cancer, and encouraged us to examine whether other 
populations should be excluded from the measure as well.
    Response: The rationale for excluding from the measure patients 
whose prior proximal hospitalization was for medical treatment of 
cancer is that these patients with these admissions have a very 
different mortality and readmission risk from the rest of the Medicare 
population, and outcomes for these admissions do not correlate well 
with outcomes for other patients, as determined in the development of 
the Hospital-Wide Readmission (HWR) measure (NQF #1789). Further detail 
and relevant analyses supporting this exclusion criterion are available 
in the SNFRM Technical Report, section 2.3.1. In the development of the 
HWR and SNFRM measures, we have not identified additional patient 
populations or medical conditions whose post-discharge trajectory of 
readmissions was not consistent with other patient groups such that 
they would require exclusion from the measure as well.
    Comment: One commenter suggested that we include planned 
readmissions in the denominator but exclude them from the numerator of 
the SNFRM. The commenter noted that the way planned readmissions are 
counted is not clear in the rule. In one section, commenter noted, the 
rule stated that they are excluded; in another, it states that they are 
included in the denominator but excluded from the numerator.
    Response: We would like to clarify that the measure includes 
planned readmissions in the denominator but excludes them from the 
numerator. This is consistent with how planned readmissions are treated 
in in the Hospital-Wide All-Cause Unplanned Readmission Measure (HWR), 
upon which this measure is based.

[[Page 46418]]

(4) Eligible Readmissions
    An eligible SNF admission is considered to be in the 30-day risk 
window from the date of discharge from the proximal acute 
hospitalization until: (1) The 30-day period ends; or (2) the patient 
is readmitted to an IPPS or CAH. If the readmission is unplanned, it is 
counted as a readmission in the numerator of the measure. If the 
readmission is planned, the readmission is not counted in the numerator 
of the measure. The occurrence of a planned readmission ends further 
tracking for readmissions in the 30-day period.
    We did not receive any comments on the specific topic of eligible 
readmissions. However, we addressed comments on exclusions from the 
measure above.
(5) Risk Adjustment
    Readmission rates are risk-adjusted for patient case-mix 
characteristics, independent of quality. The risk adjustment modeling 
estimates the effects of patient characteristics, comorbidities, and 
select health status variables on the probability of readmission. More 
specifically, the risk-adjustment model for SNFs accounts for 
demographic characteristics (age and sex), principal diagnosis during 
the prior proximal hospitalization, comorbidities based on the 
secondary medical diagnoses listed on the patient's prior proximal 
hospital claim and diagnoses from prior hospitalizations that occurred 
in the previous 365 days, length of stay during the patient's prior 
proximal hospitalization, length of stay in the ICU, body system 
specific surgical indicators, ESRD status, whether the patient was 
disabled, and the number of prior hospitalizations in the previous 365 
days.
    A discussion of the general comments that we received on the SNFRM 
risk adjustment, and our responses to those comments, appears below.
    Comment: Some commenters urged us to adjust the proposed 
readmission measure for sociodemographic factors before the SNF VBP 
Program is implemented in FY 2019. Commenters stated that factors 
outside the control of the hospital, such as availability of primary 
care, mental health services, access to medications and appropriate 
food, may significantly influence the likelihood of a patient's health 
improving after hospital discharge and whether a readmission may be 
necessary. Commenters suggested that we consider using proxy data on 
sociodemographic status, such as census-derived data on income and 
education level, and claims data on the proportion of patients dually 
eligible for Medicare and Medicaid, to adjust the SNFRM.
    One commenter stated that we should submit the SNFRM to NQF under 
its pilot program for socioeconomic risk adjustment evaluation. The 
commenter stated that many SNFs provide care to the most vulnerable 
residents of their communities and that those patients present greater 
challenges in maintaining optimal medical and functional outcomes, 
including greater risk for readmission.
    Another commenter stated that the SNFRM, and any other measures 
used in the VBP program, should be appropriately risk adjusted for the 
population served. The commenter stated that there is significant 
variation in size, patient populations, and scope of service that are 
not fully accounted for by current risk adjustments. The commenter also 
stated that readmission predictors are more highly linked to functional 
needs and family/caregiver support resources, neither of which are 
included in risk adjustment.
    Response: While we appreciate these comments and the importance of 
the role that sociodemographic status plays in the care of patients, we 
continue to have concerns about holding providers to different 
standards for the outcomes of their patients of low sociodemographic 
status because we do not want to mask potential disparities or minimize 
incentives to improve the outcomes of disadvantaged populations. We 
routinely monitor the impact of sociodemographic status on facilities' 
results on our measures.
    NQF is currently undertaking a 2-year trial period in which new 
measures and measures undergoing maintenance review will be assessed to 
determine if risk-adjusting for sociodemographic factors is appropriate 
for each measure. For 2 years, NQF will conduct a trial of a temporary 
policy change that will allow inclusion of sociodemographic factors in 
the risk-adjustment approach for some performance measures. At the 
conclusion of the trial, NQF will determine whether to make this policy 
change permanent. Measure developers must submit information such as 
analyses and interpretations as well as performance scores with and 
without sociodemographic factors in the risk adjustment model.
    Furthermore, the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) is conducting research to examine the impact of 
socioeconomic status on quality measures, resource use, and other 
measures under the Medicare program as directed by the IMPACT Act. We 
will closely examine the findings of these reports and related 
Secretarial recommendations and consider how they apply to our quality 
programs at such time as they are available.
    Comment: One commenter requested that residents identified as 
residing in a designated sub-acute unit within a SNF be considered 
under the ``other health status'' variable for risk adjustment.
    Response: We undertake annual maintenance of our quality measures. 
We will consider this suggestion through this process. We thank the 
commenters for their contribution.
    Comment: One commenter noted that certain SNFs specialize in 
serving certain patient populations that are associated with higher 
rates of hospitalization, and stated that our risk adjustment model 
should not inadvertently penalize SNFs that offer these programs.
    Response: We believe that the risk adjustment model that we have 
proposed for the SNFRM will ensure that SNFs serving more complex 
patient populations will not be penalized inadvertently under the SNF 
VBP Program.
    Comment: One commenter stated that we should consider adjusting the 
SNFRM using HCCs based on hospital and outpatient claims during the 
prior year rather than the number of prior hospital stays for a 
facility. The commenter suggested that HCCs are more likely to capture 
the full risk of a patient's comorbidities than secondary diagnoses 
coded during the immediately preceding hospital stay.
    Response: To clarify, we note that this measure uses for risk 
adjustment the HCCs based on hospital claims from the prior year in 
addition to secondary diagnoses coded during the immediately preceding 
hospital stay. Consistent with other hospital readmission measures, 
this measure captures HCCs based only on inpatient claims and does not 
include outpatient claims.
(6) Measurement Period
    The SNFRM utilizes 1 year of data to calculate the measure rate. 
Given that there are more than 2 million Medicare FFS SNF admissions 
per year in more than 15,000 SNFs, 1 year of data is sufficient to 
calculate this measure with a model in which the risk adjusters have 
sufficient sample size to have good precision. The relevant reliability 
testing may be found in the SNFRM Technical Report.
    We sought public comments on the SNFRM's measurement period, and 
have responded to them in the ``FY 2019 Performance Period and Baseline 
Period Considerations'' section below.

[[Page 46419]]

(7) Stakeholder/MAP Input
    Our measure development contractor convened a TEP which provided 
input on the technical specifications of this quality measure. The TEP 
was supportive of the design of this measure. We also solicited 
stakeholder feedback on the development of this measure through a 
public comment process from July 15th to 29th, 2013. In December 2014, 
the NQF endorsed the SNF 30-Day All-Cause Readmission Measure (NQF 
#2510).
    We also considered input from the Measures Application Partnership 
(MAP) when selecting measures under the CMS SNF VBP Program. The MAP is 
composed of multi-stakeholder groups convened by the NQF, our current 
contractor under section 1890(a) of the Act. The MAP has noted the need 
for care transition measures in PAC/Long Term Care (LTC) performance 
measurement programs and stated that setting-specific admission and 
readmission measures under consideration would address this need.\14\ 
We included the SNFRM on the December 1, 2014 List of Measures under 
Consideration (MUC List), and the MAP supported the measure. A 
spreadsheet of MAP's 2015 Final Recommendations is available at NQF's 
Web site at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
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    \14\ National Quality Forum. Measure Applications Partnership 
Pre-Rulemaking Report: 2013 Recommendations of Measures Under 
Consideration by HHS: February 2013. Available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=72738.
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    We sought public comments on our proposal to adopt the SNF 30-Day 
All-Cause Readmission Measure (SNFRM) (NQF #2510) for use in the SNF 
VBP Program, and our responses appear in subsections i. through vii. 
above, as well as in subsection viii. below.
(8) Feedback Reports to SNFs
    Section 1888(g)(5) of the Act requires that beginning October 1, 
2016, SNFs be provided quarterly confidential feedback reports on their 
performance on measures specified under sections 1888(g)(1) or (2) of 
the Act.
    We intended to address this topic in future rulemaking. However, we 
requested public comment on the best means by which to communicate 
these reports to SNFs. For example, we could consider providing 
confidential, downloadable feedback reports to SNFs through a secure 
portal, such as QualityNet. We also invited comment on the level of 
detail that would be most helpful to SNFs in understanding their 
performance on the new quality measures. The comments we received on 
these topics, with their responses, appear below.
    Comment: One commenter supported our suggested plan to provide 
SNFRM feedback reports to SNFs via a secure portal such as QualityNet. 
The commenter suggested that we provide full details on how their 
scores were determined, including data on readmitted beneficiaries and 
details on SNFs' rankings, so that facilities may validate their 
performance and perform quality improvement efforts.
    Response: We will provide information to providers on facilities' 
scores on this measure. As discussed further below, we intend to 
consider what information should be included in SNFRM feedback reports 
in the future, and we will further consider the commenter's feedback 
when we develop our proposals on that topic. However, while we may 
provide information pertaining to a patient's readmission episode, we 
cannot interpret such determinations and readmission rationales, or 
provide post-discharge information. As part of their quality 
improvement and care coordination efforts, SNFs are encouraged to 
monitor hospital readmissions and follow up with patients post 
discharge. Therefore, although we will not be providing specific 
information at the patient level in the feedback reports, we believe 
that SNFs will monitor their overall hospital readmission rates and 
assess their performance.
    Comment: One commenter noted that the quarterly feedback reports 
required under the Program will use claims data, but that these data 
may not be accurate if SNFs do not submit their claims timely. The 
commenter noted that SNFs have up to 12 months to submit claims, which 
may affect performance measurement.
    Response: We intend to monitor SNFRM performance to ensure that 
unintended consequences related to the time facilities have to submit 
or resubmit claims do not result.
    After consideration of the public comments that we have received, 
we are finalizing our proposal to specify the SNF 30-Day All-Cause 
Readmission Measure (SNFRM) (NQF #2510) and to adopt the measure for 
the SNF VBP as the SNF all-cause, all-condition hospital readmission 
measure under section 1888(g)(1) of the Act as proposed.
d. Performance Standards
(1) Background
    Section 1888(h)(3) of the Act requires the Secretary to establish 
performance standards for the SNF VBP Program. The performance 
standards must include levels of achievement and improvement, and must 
be established and announced not later than 60 days prior to the 
beginning of the performance period for the FY involved. To assist us 
in developing our proposals to establish performance standards for the 
SNF VBP program, we reviewed a number of innovative health care 
programs and demonstration projects, both public and private, to 
discover if any could serve as a prototype for the SNF VBP program. One 
methodology of important note that provides us an analogous framework 
for implementation of performance standards is the Performance 
Assessment Model, implemented for our Hospital VBP program. We also 
reviewed the Hospital Acquired Conditions Reduction Program, as well as 
the Hospital Readmissions Reduction Program and the End-Stage Renal 
Disease Quality Incentive Program (ESRD QIP).
    We invited comment on several potential approaches for calculating 
performance standards under the SNF VBP Program. The comments we 
received on this topic, with their responses, appear below after 
discussion of these potential approaches.
(a) Hospital Value-Based Purchasing Program
    Under the Hospital VBP Program, a hospital's Total Performance 
Score is determined by aggregating and weighting domain scores, which 
are calculated based on hospital performance on measures within each 
domain. The domain scores are then weighted to calculate a TPS that 
ranges between 0 and 100 points. At this time, we do not anticipate 
proposing to adopt quality measurement domains akin to other CMS 
quality programs under the SNF VBP Program due to fact that this 
program is based on only one measure.
    To calculate HVBP measure scores, hospital performance on specified 
quality measures is compared to performance standards established by 
the Secretary. These performance standards include levels of 
achievement and improvement and enable us to award between 0 and 10 
points to each hospital based on its performance on each measure during 
the performance period. An achievement threshold, generally defined as 
the median of all hospital performance on most measures during a 
specified baseline period, is the minimum level of performance required 
to receive achievement points. The benchmark, generally defined as the

[[Page 46420]]

mean of the top decile of all hospital performance on a measure during 
the baseline period, is the performance level required for receiving 
the maximum number of points on a given measure. The Program also 
establishes an improvement threshold for each measure, set at each 
individual hospital's performance on the measure during the baseline 
period, to award points for improvement over time.
    We believe that the Hospital VBP Program's performance standards 
methodology is a well-understood methodology under which health care 
providers and suppliers can be rewarded both for providing high-quality 
care and for improving their performance over time. The statutory 
authority for the Hospital VBP Program is structured similarly to the 
statutory authority for the SNF VBP Program, and we are considering 
adoption of a similar methodology for establishing performance 
standards under the SNF VBP Program. We also seek to align our pay-for-
performance and QRPs as much as possible. Specifically, we could 
consider adopting performance standards based on all SNF performance 
during the baseline period on the measure specified under section 
1888(g)(1) or (2) of the Act in the form of the achievement threshold--
median of all SNF performance during a baseline period--and the 
benchmark--mean of the top decile of all SNF performance during a 
baseline period. We could then consider awarding points along a 
continuum relative to those performance levels.
(b) Hospital-Acquired Conditions Reduction Program
    We also considered whether we should adopt any components of the 
scoring methodology that we have finalized for the HAC Reduction 
Program under the SNF VBP Program. The HAC Reduction Program requires 
the Secretary to reduce eligible hospitals' Medicare payments to 99 
percent of what would otherwise have been paid for discharges when 
hospitals rank in the worst performing quartile for risk-adjusted HAC 
quality measures. These quality measures comprise efforts to promote 
quality of care by reducing the number of HACs in the acute inpatient 
hospital setting.
    We determine a hospital's Total HAC Score by first assigning each 
hospital a score of between 1 and 10 for each measure based on the 
hospital's relative performance ranking in 10 groups (or deciles) for 
that measure. Second, the measure score is used to calculate the domain 
score. We discuss other details of the HAC Reduction Program's scoring 
methodology in further detail in this section.
    Although the HACRP statutory authority is not structured the same 
as the SNF VBP statutory authority, we view the HACRP's use of decile-
based performance standards as one conceptual possibility for 
constructing performance standards under the SNF VBP Program. 
Specifically, we could consider setting performance standards based on 
SNFs' ranked performance on the measures specified under sections 
1888(g)(1) or (2) of the Act during the performance period. We could 
divide SNFs' performance on the measures into deciles and award between 
1 and 10 points to all SNFs within each decile. While this type of 
performance standards calculation would measure and reward achievement, 
we are concerned that it would not incorporate improvement, and we 
invited comment on the best means by which we could include improvement 
in this type of calculation.
(c) Hospital Readmissions Reduction Program (HRRP)
    We also considered aspects of the Hospital Readmissions Reduction 
Program (HRRP) for adaptation under the SNF VBP Program. HRRP reduces 
Medicare payments to hospitals with a higher number of readmissions for 
applicable conditions over a specified time period.
    Hospital readmissions are defined as Medicare patients who are 
readmitted to the same or another hospital within 30 days of a 
discharge from the same or another hospital, which includes short-term 
inpatient acute care hospitals. The initial hospital inpatient 
admission (the discharge from which starts the 30-day potential penalty 
clock) is termed the index admission. The hospital inpatient 
readmission (which can be used to determine application of a penalty if 
the readmission occurs within 30 days of the index inpatient admission 
stay) can be for any cause, that is, it does not have to be for the 
same cause as the index admission.
    Using historical data, we determine whether eligible IPPS hospitals 
have readmission rates that are higher than expected, given the 
hospital's case mix, while accounting for the patient risk factors, 
including age, and chronic medical conditions identified from inpatient 
and outpatient claims for the 12 months prior to the hospitalization. A 
hospital's excess readmission ratio for each condition is a measure of 
a hospital's readmission performance compared to the national average 
for the hospital's set of patients with that applicable condition. If 
the hospital's actual readmission rate, based on the hospital's actual 
performance, for the year is greater than its CMS-expected readmission 
rate, the hospital incurs a penalty up to the maximum cap. If a 
hospital performs better than an average hospital that admitted similar 
patients, the hospital will not be subjected to a payment reduction. If 
a hospital performs worse than average (below a 1.000 score), the 
poorer performance triggers a payment reduction. For FY 2013, the 
reduction was capped at 1 percent, for FY 2014 at 2 percent, and at 3 
percent for FY 2015 and for subsequent years.
    We view the Hospital Readmissions Reduction Program as a potential 
model for the SNF VBP Program because that program does not weight 
scores based on domains. That is, under the HRRP, hospitals' risk-
adjusted readmissions ratios form the basis for Medicare payment 
adjustments. Under SNF VBP (and as discussed further in this section), 
the Program's statute requires us to select only one measure to form 
the basis for the SNF Performance Score. We believe that this 
conceptual similarity stands distinct from certain other CMS quality 
programs that incorporate quality measurement domains and domain 
weighting into the scoring calculations. However, the HRRP sets an 
effective performance standard based on the average readmissions 
adjustment factor of 1.000. We invited comment on whether we should 
adopt a similar form of performance standard under the SNF VBP Program.
    This performance standard could take the form of the median or mean 
performance on the specified quality measure during the performance 
period. However, we believe we would also need to consider more 
granular delineations in SNF scoring to ensure an appropriate 
distribution of value-based incentive payments under the Program, and 
we invited comment on what additional policies we should consider 
adopting in this topic area.
(d) End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    The ESRD QIP is authorized by section 1881(h) of the Act. The 
program promotes patient health by providing a financial incentive for 
renal dialysis facilities to deliver high-quality care to their 
patients.
    Section 1881(h)(3)(A)(i) of the Act requires the Secretary to 
develop a methodology for assessing the total performance of each 
provider and facility based on performance standards. For each clinical 
measure adopted under the ESRD QIP, we assess

[[Page 46421]]

performance on both achievement and improvement. For the achievement 
score, facility performance on a measure during a performance period is 
compared against national facility performance on that measure during a 
specified baseline period. To calculate the improvement score, we 
compare a facility's performance during the performance period to its 
performance during a specified baseline period. In determining a 
clinical measure score for each measure, we take the higher of the 
improvement or achievement score.
    For each reporting measure, we assess performance based on whether 
the facility completed the reporting for that measure as specified. If 
a facility reports data according to the specifications we have 
adopted, then the facility earns the maximum number of points on the 
measure. If the facility partially reports data according to the 
specifications we have adopted, the hospital earns some points on the 
measure, but less than the maximum.
    We believe that the ESRD QIP performance standards methodology is a 
well-understood methodology under which health care providers and 
suppliers can be rewarded both for providing high-quality care and for 
improving their performance over time. The scoring methodology rewards 
achievement and improvement, and is generally aligned with other pay-
for-performance and QRPs. Like the Hospital VBP Program statutory 
language, the ESRD QIP statutory language is structured similar to the 
SNF VBP Program statutory language, and we are considering adoption of 
a similar methodology for calculating performance standards under the 
SNF VBP Program. Specifically, we could consider adopting performance 
standards based on all SNF performance during the baseline period on 
the measure specified under sections 1888(g)(1) or (2) of the Act in 
the forms of the achievement threshold--median of all SNF performance--
and the benchmark--mean of the top decile of all SNF performance. We 
could then consider awarding points for those performance levels.
    A discussion of the comments that we received on potential 
approaches to calculating performance standards, and our responses to 
those comments, appears below.
    Comment: One commenter suggested that we reconsider using the 
``higher of'' achievement and improvement requirement when determining 
the performance score and we should focus the SNF VBP Program on having 
all providers furnish high quality of care.
    Response: We do not believe we have the authority to reconsider 
using the ``higher of'' achievement and improvement requirement given 
the statutory requirement in section 1888(h)(3)(B) of the Act, which 
requires us to adopt performance standards that include levels of 
achievement and improvement, and further directs us to use the higher 
of either improvement or achievement in calculating the SNF performance 
score under paragraph (4).
    Comment: Commenters urged us to establish performance standards 
prior to the beginning of the performance period, as we do in the 
Hospital VBP Program. Commenters stated that this policy enables 
providers to understand in advance what level of performance they must 
reach under the Program.
    Response: We intend to establish and announce performance standards 
in advance of the performance period in accordance with the requirement 
in section 1888(h)(3)(C) of the Act.
    We will consider these comments further in future rulemaking.
(2) Measuring Improvement
    We are considering several methodologies for improvement scoring 
under the SNF VBP Program, and we invited public comments on these 
options or others that we should consider as we develop our SNF VBP 
Program policies for future rulemaking.
    Section 1888(h)(4)(B) of the Act specifically requires us to 
construct a ranking of SNF performance scores. While we view such a 
ranking system as fairly straightforward when based on achievement 
scoring--for example, ranking SNFs based on their performance on a 
measure during the performance period could be achieved by ordering SNF 
performance rates on the measure specified for the Program year--we are 
considering several approaches for including improvement in the SNF 
scoring methodology because we are limited to one measure for each SNF 
Program year. These approaches include:
     Improvement points, awarded using a similar methodology as 
the one we use to award improvement points in the Hospital VBP Program.
     Measure rate increases, in which a SNF's performance rate 
on a measure would be increased as a result of its improvement over 
time.
     Ranking increases, in which a SNF's ranking relative to 
other SNFs would be increased as a result of improvement.
     Performance score increases, in which a SNF's performance 
score would be increased as a result of improvement.
    We discuss each of these options in further detail in the FY 2016 
SNF PPS proposed rule (80 FR 22063 through 22064).
    The comments we received on this topic, along with their responses, 
appear below.
    Comment: Commenters stated that we should not adjust SNFs' measure 
rates directly to reward improvement, cautioning that making those 
types of adjustments could make valid comparisons of SNF performance 
more difficult.
    Response: We thank the commenters for this feedback.
    Comment: Some commenters did not believe that improvement 
measurement should apply to providers in the top quartile of SNFRM 
performance. Commenters supported recognizing improvement efforts, but 
believed that the top quartile should recognize top performers.
    Response: We thank the commenters for this feedback, and we will 
take it into account as we develop our performance standards policy 
proposals in the future.
    Comment: One commenter suggested that we not adopt an achievement 
threshold under the SNF VBP Program to ensure that all SNFs may qualify 
for points. The commenter also suggested that we place equal emphasis 
on improvement under the program, and noted that the Hospital VBP 
Program separately calculates achievement and improvement and awards 
the higher of the two to participating hospitals.
    Response: We thank the commenter for this feedback, and we will 
take it into account as we develop our performance standards policy 
proposals in the future.
    Comment: One commenter urged us not to set an absolute level of 
performance to which SNFs would have to aspire to receive points. The 
commenter stated that adopting performance standards in this manner 
would disincentivize improvement, as some SNFs would be unable to 
receive value-based incentive payments.
    Response: We thank the commenter for this feedback, and will 
consider it in the future.
    Comment: One commenter requested that we solicit public comments on 
performance standards, performance scoring, and the exchange function 
after releasing detailed analysis of the various options, as well as 
performance data on the SNFRM.
    Response: We thank the commenter for this feedback. We intend to 
provide as much information as possible on our proposals for this 
Program in the future.

[[Page 46422]]

    Comment: One commenter recommended that we award points to SNFs for 
achievement and improvement, but ensure that low-performing SNFs that 
improve are not ranked higher than high-performing SNFs.
    Response: We thank the commenter for this feedback and will take it 
into account when developing our proposals in the future.
    We will consider these comments further in future rulemaking.
e. FY 2019 Performance Period and Baseline Period Considerations
(1) Performance Period
    We intended to specify a performance period for a payment year 
close to the payment year's start date. We strive to link performance 
furnished by SNFs as closely as possible to the payment year to ensure 
clear connections between quality measurement and value-based payment. 
We also strive to measure performance using a sufficiently reliable 
population of patients that broadly represent the total care provided 
by SNFs. As such, we anticipate that our annual performance period end 
date must provide sufficient time for SNFs to submit claims for the 
patients included in our measure population. In other programs, such as 
HRRP and the Hospital Inpatient Quality Reporting Program (HIQR), this 
time lag between care delivered to patients who are included in the 
readmission measures and application of a payment consequence linked to 
reporting or performance on those measures has historically been close 
to 1 year. We also recognize that other factors contribute to this time 
lag, including the processing time we need to calculate measure rates 
using multiple sources of claims needed for statistical modeling, time 
for providers to review their measure rates and included patients, and 
processing time we need to determine whether a payment adjustment needs 
to be made to a provider's reimbursement rate under the applicable PPS 
based on its reporting or performance on measures.
    For the FY 2019 SNF VBP Program's performance period, we are also 
considering the necessary timeline we need to complete measure scoring 
to announce the net result of the Program's adjustments to Medicare 
payments not later than 60 days prior to the FY, in accordance with 
section 1888(h)(7) of the Act. We are also considering the number of 
SNF stays typically covered by Medicare each year. As discussed 
previously, Medicare typically covers more than 2 million Medicare Part 
A stays per year in more than 15,000 SNFs. Therefore, we believe that 1 
year of SNFRM data is sufficient to ensure that the measure rates are 
statistically reliable.
    We intended to propose a performance period for the FY 2019 SNF VBP 
Program in future rulemaking. We invited public comment on the most 
appropriate performance period length. The comments we received on this 
topic, with their responses, appear below.
    Comment: Commenters supported a one-year performance period, and 
suggested that we also consider establishing a minimum annual case 
count which data from multiple years could be pooled to create more 
statistically-reliable measure scores.
    Response: We thank the commenters for their support. We will 
consider whether we should establish a minimum annual case count for 
the SNFRM in future rulemaking.
    We will consider these comments further in future rulemaking.
(2) Baseline Period
    As described previously, in other Medicare quality programs such as 
the Hospital VBP Program and the ESRD Quality Incentive Program, we 
generally adopt a baseline period that occurs prior to the performance 
period for a FY to measure improvement and establish performance 
standards.
    We view the SNF VBP Program as necessitating a similarly-adopted 
baseline period for each FY to measure improvement (as required by 
section 1888(h)(3)(B) of the Act) and to enable us to calculate 
performance standards that we must establish and announce prior to the 
performance period (as required by section 1888(h)(3)(A) of the Act). 
As with the Hospital VBP Program, we intend to adopt baseline periods 
that are as close as possible in duration as the performance period 
specified for a FY. However, we may occasionally need to adopt a 
baseline period that is shorter than the performance period to meet 
operational timelines. We also intended to adopt baseline periods that 
are seasonally aligned with the performance periods to avoid any 
effects on quality measurement that may result from tracking SNF 
performance during different times of the calendar year.
    We stated our intent to propose a baseline period for purposes of 
calculating performance standards and measuring improvement in future 
rulemaking. We invited public comment on the most appropriate baseline 
period for the FY 2019 Program, including what considerations we should 
take into account when developing this policy for future rulemaking. 
The comments we received on this topic, with their responses, appear 
below.
    Comment: Commenters supported our proposal to adopt a 12-month 
baseline period for purposes of quality measurement. Some commenters 
suggested that we test longer time periods, however, to see whether 
more time improves the measure's variation. Commenters further 
suggested that we align the baseline and performance periods under the 
SNF VBP Program to the calendar year.
    Response: We thank the commenters for their support. We will 
consider testing longer time periods in the future.
    We will consider these comments further in future rulemaking.
f. SNF Performance Scoring
(1) Considerations
    As with our performance standards policy considerations described 
above, we considered how other Medicare quality programs score eligible 
facilities. Specifically, we considered how the Hospital VBP Program 
and the Hospital-Acquired Conditions Reduction Program score eligible 
hospitals. We discussed the Hospital Readmissions Reduction Program's 
scoring above in relation to performance standards.
(a) Hospital Value-Based Purchasing
    A Hospital VBP domain score is calculated by combining the measure 
scores within that domain, weighting each measure equally. The domain 
score reflects the number of points the hospital has earned based on 
its performance on the measures within that domain for which it is 
eligible to receive a score. After summing the weighted domain scores, 
the TPS is translated using a linear exchange function into the 
percentage multiplier to be applied to each Medicare discharge claim 
submitted by the hospital during the applicable FY. (We discuss the 
Exchange Function in further detail below).
    Unlike the Hospital VBP Program, the SNF VBP program focuses on a 
single readmission measure, one that will be replaced by a single 
resource use measure as soon as is practicable. As described above, we 
do not anticipate adopting quality measure domains akin to other CMS 
quality programs under the SNF VBP Program. We therefore invited 
comment on how, if at all, we should adapt the HVBP Program's scoring 
methodology to accommodate both the smaller number of measures and the 
ranking required under the SNF VBP Program. We responded to comments on 
this topic below.

[[Page 46423]]

(b) Hospital-Acquired Conditions Reduction Program
    The Hospital-Acquired Conditions (HAC) Reduction Program scores 
measures that have been categorized into domains, in a manner that is 
similar to the HVBP Program's domain structure. For Domain 1, the 
points awarded to the single assigned measure yield the Domain 1 score, 
since Domain 1 only contains one measure. For Domain 2, the points 
awarded for the domain measures are averaged to yield a Domain 2 score. 
A hospital's Total HAC Score is determined by the sum of weighted 
Domain 1 and Domain 2 scores. Higher scores indicate worse performance 
relative to the performance of all other eligible hospitals. Hospitals 
with a Total HAC Score above the 75th percentile of the Total HAC Score 
distribution are subject to a payment reduction.
    Unlike the Hospital VBP program, referenced above, there is no 
requirement in the HAC Reduction Program that measures or performance 
standards must incorporate improvement and achievement scores. As with 
the HVBP Program above, we invited public comments on the extent to 
which, if at all, we should adopt components of the HAC Reduction 
Program's scoring methodology for purposes of the SNF VBP Program. We 
specifically invited comments on whether we should set an absolute 
level of performance that must be reached to receive a positive SNF 
value-based incentive payment. We responded to comments on this topic 
below.
(c) Other Considerations
    We stated our intention to consider several additional factors when 
developing the performance scoring methodology. We believe that it is 
important to ensure that the performance scoring methodology is 
straightforward and transparent to SNFs, patients, and other 
stakeholders. SNFs must be able to clearly understand performance 
scoring methods and performance expectations to maximize their quality 
improvement efforts. The public must understand the scoring methodology 
to make the best use of the publicly reported information when choosing 
a SNF. We also believe that scoring methodologies for all Medicare VBP 
programs should be aligned as appropriate given their specific 
statutory requirements. This alignment will facilitate the public's 
understanding of quality information disseminated in these programs and 
foster more informed consumer decision making about health care. We 
believe that differences in performance scores must reflect true 
differences in performance. To ensure that these beliefs are 
appropriately reflected in the SNF VBP Program, we stated our intention 
to assess the quantitative characteristics of the measures specified 
under sections 1888(g)(1) and (2) of the Act, including the current 
state of measure development, to ensure an appropriate distribution of 
value-based incentive payments as required by the SNF VBP statute.
    We invited public comment on what other considerations we should 
take into account when developing our proposed scoring methodology for 
the SNF VBP Program in future rulemaking. The comments we received on 
this topic, as well as all other comments on considerations we should 
take into account when developing the SNF VBP Program's scoring 
methodology, along with their responses, appear below.
    Comment: Some commenters agreed that adapting the Hospital VBP 
Program's scoring methodology is advantageous for the SNF VBP Program 
because it is well-understood and tested. Other commenters noted that 
we have substantial experience with this type of approach and stated 
that this approach provides the strongest incentive for all SNFs to 
improve their performance.
    Response: We thank the commenters for their support and will take 
this feedback into account when developing our proposals in the future.
    Comment: One commenter provided general suggestions for us as we 
develop the SNF VBP Program's scoring methodology, including the 
beliefs that the methodology should be easy to understand and that we 
should provide education to SNFs in the first years of the program. The 
commenter also expressed support for public reporting of SNF 
performance scores and quality measure performance, and suggested that 
we provide regular feedback to SNFs prior to publication.
    Response: We thank the commenters for the feedback and support. We 
will take these recommendations into account in future rulemaking.
    Comment: One commenter outlined several principles for our 
consideration while designing the SNF VBP Program, including aligning 
incentives, involving stakeholders, focusing on improving quality 
instead of cost-cutting, providing rewards that motivate change, 
implementing the program incrementally, rewarding both high levels of 
performance and substantial improvements, using measures developed in 
an open, consensus-based manner, including evidence-based measures, and 
designing the program to avoid perpetuating care disparities.
    Response: We thank the commenter for the feedback and will take it 
into account when developing our proposals in the future.
    Comment: One commenter urged us to continue engaging stakeholders 
in discussions on the SNF VBP Program's design, particularly given the 
commenter's opinion that the program is more characteristic of a 
penalty program than an incentive program.
    Response: We disagree with the commenter's characterization of the 
Program as a ``penalty program.'' The SNF VBP Program is designed to 
reward SNFs based on their quality performance, whether accomplished 
through achievement or improvement over time.
    Comment: One commenter urged us to consider the variations in the 
types and intensity of SNF-based care when developing performance 
standards and the ranking for the SNF VBP Program, stating that we 
should distinguish between primarily short-term, transitional care and 
medically complex, longer-term patients. The commenter suggested that 
we consider adopting a similar policy to the long-term care hospital 
interrupted stay policy for the SNF PPS to ensure that facilities are 
not provided with incentives to withhold medically necessarily care for 
fear of loss of significant revenue.
    Response: The SNFRM, which was endorsed by the NQF, has been risk 
adjusted for case-mix to account for differences in patient 
populations. The goal of risk adjustment is to account for these 
differences so that providers who treat sicker or more vulnerable 
patient populations are not unnecessarily penalized. The current 
measure accounts for all of the factors proposed in the comment above, 
including the following: principal diagnosis from the Medicare claim 
corresponding to the prior proximal hospitalization as categorized by 
AHRQ's CCS groupings, length of stay during the patient's prior 
proximal hospitalization, length of stay in the ICU, ESRD status, 
whether the patient was disabled, the number of prior hospitalizations 
in the previous 365 days, system-specific surgical indicators, 
individual comorbidities as grouped by CMS's HCC or other comorbidity 
indices, and a variable counting the number of comorbidities if the 
patient had more than two HCCs. However, as discussed above, this 
measure does not currently adjust for beneficiaries that are dually 
eligible in Medicare and Medicaid. Based on the results of the NQF 
trial period for risk-

[[Page 46424]]

adjustment for socioeconomic status, as well as work being conducted on 
this issue by ASPE, the measure specifications may be revised to 
include additional risk adjusters in the future related to 
socioeconomic status or sociodemographics.
    Comment: One commenter suggested that we conduct data analyses to 
determine whether different measures or scoring should be applied to 
hospital-based and freestanding SNFs.
    Response: We thank the commenter for this feedback and will 
consider whether this type of adjustment is appropriate in the future.
    Comment: One commenter suggested that we modify the ESRD QIP's 
scoring methodology for adoption under the SNF VBP Program. The 
commenter stated that the other models described in the proposed rule 
do not meet the Program's statutory requirements.
    Response: We thank the commenter for this feedback. We intend to 
ensure that any proposed scoring methodology under the SNF VBP Program 
complies fully with applicable statutory requirements.
    We will consider these comments further in future rulemaking.
(2) Notification Procedures
    As described above, we stated our intention to address the topic of 
quarterly feedback reports to SNFs related to measures specified under 
sections 1888(g)(1) and (2) of the Act in future rulemaking. We also 
stated that we intend to address how to notify SNFs of the adjustments 
to their PPS payments based on their performance scores and ranking 
under the SNF VBP Program, in accordance with the requirement in 
section 1888(h)(7) of the Act, in future rulemaking.
    We invited public comment on the best means by which to so notify 
SNFs. We responded to comments on this topic below in the ``SNF-
Specific Performance Information'' subsection.
(3) Exchange Function
    As described above in reference to the Hospital VBP Program's 
scoring methodology, we use a linear exchange function to translate a 
hospital's Total Performance Score under that Program into the 
percentage multiplier to be applied to each Medicare discharge claim 
submitted by the hospital during the applicable FY. We refer readers to 
the Hospital Inpatient VBP Program Final Rule (76 FR 26531 through 
26534) for detailed discussion of the Hospital VBP Program's Exchange 
Function, as well as responses to public comments on this issue.
    We believe we could consider adopting a similar exchange function 
methodology to translate SNF performance scores into value-based 
incentive payments under the SNF VBP Program, and we invited comment on 
whether we should do so. However, as we did for the Hospital VBP 
Program, we believe we would need to consider the appropriate form and 
slope of the exchange function to determine how best to reward high 
performance and encourage SNFs to improve the quality of care provided 
to Medicare beneficiaries. As illustrated in figure 1, we could 
consider the following four mathematical exchange function options: 
Straight line (linear); concave curve (cube root function); convex 
curve (cube function); and S-shape (logistic function), and we seek 
comment on what form of the exchange function we should consider 
implementing if we adopt such a function under the SNF VBP Program.
[GRAPHIC] [TIFF OMITTED] TR04AU15.000


[[Page 46425]]


    We also invited comment on what considerations we should take into 
account when determining the appropriate form of the exchange function 
under the SNF VBP Program. We stated our intention to consider how such 
options would distribute the value-based incentive payments among SNFs, 
the potential differences between the value-based incentive payment 
amounts for SNFs that perform poorly and SNFs that perform very well, 
the different marginal incentives created by the different exchange 
function slopes, and the relative importance of having the exchange 
function be as simple and straightforward as possible. We requested 
public comments on what additional considerations, if any, we should 
take into account. The comments we received on this topic, with their 
responses, appear below.
    Comment: One commenter expressed support for a linear exchange 
function under the SNF VBP Program, stating that such a function is 
easily understood by providers and may encourage practice pattern 
changes more easily than a more complex function. Commenters also noted 
that a linear exchange function gives equal importance to improvement 
for lower- and higher-performing SNFs, and gives all providers an equal 
opportunity to earn an incentive payment.
    Response: We thank the commenter for the feedback on this topic. We 
will take these recommendations into account in future rulemaking.
    Comment: One commenter suggested that we adopt a logistic exchange 
function and ensure that top-performing SNFs earn back more than 2 
percent of their payments from the Program.
    Response: We thank the commenter for the feedback on this topic. We 
will take these recommendations into account in future rulemaking.
    We will consider these comments further in future rulemaking.
g. SNF Value-Based Incentive Payments
    Sections 1888(h)(5) and (6) of the Act outline several requirements 
for value-based incentive payments under the SNF VBP Program, including 
the value-based incentive payment percentage that must be determined 
for each SNF and the funding available for value-based incentive 
payments.
    We stated our intention to address this topic in future rulemaking. 
A discussion of the general comments that we received on the SNF Value-
Based incentive payments, and our responses to those comments, appears 
below.
    Comment: Commenters recommended that we distribute the maximum 70 
percent of the funds withheld from participating SNF payments under the 
SNF VBP Program to ensure that the program offers payment for value 
instead of becoming a penalty program. Some commenters also suggested 
that the remaining 30 percent of funds withheld be used to fund SNF 
quality improvement initiatives. Other commenters requested that we 
explain how the remaining 30-50 percent of funds will be used.
    Response: We thank the commenters for this feedback. As the 
commenters noted, section 1888(h)(5)(C)(ii)(III) of the Act requires 
that the total amount of value-based incentive payments under the SNF 
VBP Program for all SNFs in a fiscal year must be greater than or equal 
to 50 percent, but not greater than 70 percent, of the total amount of 
the reductions to the SNF PPS payments for that fiscal year, as 
estimated by the Secretary. We do not believe we have the authority to 
use the balance of funds that will remain after paying out value-based 
incentive payments to SNFs under the Program for other SNF quality 
improvement initiatives. We believe these funds are required to remain 
in the Medicare Trust Fund.
    We will consider these comments further in future rulemaking.
h. SNF VBP Public Reporting
(1) SNF-Specific Performance Information
    Section 1888(h)(9)(A) of the Act requires the Secretary to post 
information on the performance of individual SNFs under the SNF VBP 
Program on the Nursing Home Compare Web site or its successor. This 
information is to include the SNF performance score for the facility 
for the applicable FY and the SNF's ranking for the performance period 
for such FY.
    We stated our intention to address this topic in future rulemaking. 
We invited public comment on how we should display this SNF-specific 
performance information, whether we should allow SNFs an opportunity to 
review and correct the SNF-specific performance information that we 
will post on Nursing Home Compare, and how such a review and correction 
process should operate. The comments we received on this topic, with 
their responses, appear below.
    Comment: One commenter requested that SNFs have an opportunity to 
review and correct their performance information prior to its posting 
on Nursing Home Compare. Commenters requested that the information 
furnished to SNFs for this purpose should incorporate sufficient detail 
for SNFs to validate their performance and ranking. The commenters also 
stated that any public reporting should include explanations of the 
SNFRM's methodology, what the measure is intended to show, and any of 
its limitations.
    Response: We thank the commenters for this feedback. We will take 
it into account as we develop our policies on posting SNF-specific 
information in the future.
    Comment: One commenter supported our intention to distribute 
confidential feedback reports to SNFs via a secure portal. However, the 
commenter suggested that we use QIES rather than QualityNet, as the 
former is familiar to SNFs.
    Response: We thank the commenter for this feedback, and will take 
it into account in the future.
    Comment: Other commenters suggested that we use the existing 
mechanism, QIES, for providing SNFs feedback reports and access to 
their quality measures as to provide quarterly performance reports. The 
commenters noted that these reports should provide information on 
performance relative to others and ranking relative to the payment 
adjustment. Commenters requested that the reports include actual, non-
adjusted measures, predicted actual, expected rate, standardized RR, 
risk adjusted rate, actual numerator, actual denominator, list of 
patients in numerator, improvement score, achievement score, 
performance score and performance rank.
    Response: We thank the commenters for these suggestions. We will 
provide details on infrastructure decisions such as this in future 
rulemaking. We interpret the comment to indicate that it would be 
useful for providers to receive from CMS readmission-related 
information so that they can better understand why a given patient was 
readmitted and for care-related improvement purposes. We support the 
intent to seek information that will drive improved quality; however, 
as described above, while we may provide information pertaining to a 
patient's readmission episode, we cannot interpret such determinations 
and readmission rationales, or provide post-discharge information. As 
part of their quality improvement and care coordination efforts, SNFs 
are encouraged to monitor hospital readmissions and follow up. 
Therefore, although this measure will not provide specific information 
at the patient level, we believe that SNFs will be able to monitor 
their overall hospital readmission rates and assess their performance.

[[Page 46426]]

    Comment: Commenters requested that we make claims available to 
providers and others to calculate the SNFRM measure on an ongoing basis 
(for example quarterly) such as we are doing by providing claims data 
to the Bundled Payments for Care Improvement (BPCI) initiative 
participants. Commenters also recommended that we make available Part A 
claims on a much more frequent basis (for example, quarterly) so that 
organizations, vendors, and other stakeholders can calculate the 
rehospitalization rates for SNF patients and provide additional 
analyses and profiling that can help SNFs with their quality 
improvement efforts such as what is currently done with MDS data and 
quality measures.
    Response: We thank the commenters for these suggestions. We will 
address data availability in future rulemaking.
    We will consider these comments further in future rulemaking.
(2) Aggregate Performance Information
    Section 1888(h)(9)(B) of the Act requires the Secretary to post 
aggregate information on the SNF VBP Program on the Nursing Home 
Compare Web site, or a successor Web site, to include the range of SNF 
performance scores and the number of SNFs that received value-based 
incentive payments and the range and total amount of such value-based 
incentive payments.
    We stated our intention to address this topic in future rulemaking. 
We invited public comment on the most appropriate form for posting this 
aggregate information to make such information easily understandable 
for the public. The comments we received on this topic, with their 
responses, appear below.
    Comment: One commenter suggested that we combine aggregate 
performance information with individual rehospitalization performance 
scores and rankings when posting SNFs' performance information on 
Nursing Home Compare. The commenter stated that the ranking and SNF 
performance score alone will be confusing because they will combine 
achievement and improvement.
    Response: We thank the commenter for this feedback, and will take 
it into account in the future rulemaking.
2. Advancing Health Information Exchange
    HHS has a number of initiatives designed to encourage and support 
the adoption of health information technology and to promote nationwide 
health information exchange (HIE) to improve health care. As discussed 
in the August 2013 Statement ``Principles and Strategies for 
Accelerating Health Information Exchange'' (available at http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf), HHS believes that all 
individuals, their families, their healthcare and social service 
providers, and payers should have consistent and timely access to 
health information in a standardized format that can be securely 
exchanged between the patient, providers, and others involved in the 
individual's care. Health information technology (IT) that facilitates 
the secure, efficient and effective sharing and use of health-related 
information when and where it is needed is an important tool for 
settings across the continuum of care, including SNFs and NFs. While 
these facilities are not eligible for the Medicare and Medicaid EHR 
Incentive Programs, effective adoption and use of health information 
exchange and health IT tools will be essential as these settings seek 
to improve quality and lower costs through initiatives such as VBP.
    The Office of the National Coordinator for Health Information 
Technology (ONC) has released a document entitled ``Connecting Health 
and Care for the Nation: A Shared Nationwide Interoperability Roadmap 
Draft Version 1.0 (draft Roadmap) (available at http://www.healthit.gov/sites/default/files/nationwide-interoperability-roadmap-draft-version-1.0.pdf) which describes barriers to 
interoperability across the current health IT landscape, the desired 
future state that the industry believes will be necessary to enable a 
learning health system, and a suggested path for moving from the 
current state to the desired future state. In the near term, the draft 
Roadmap focuses on actions that will enable a majority of individuals 
and providers across the care continuum to send, receive, find and use 
a common set of electronic clinical information at the nationwide level 
by the end of 2017. The draft Roadmap's goals also align with the 
IMPACT Act of 2014 which requires assessment data to be standardized 
and interoperable to allow for exchange of the data. Moreover, the 
vision described in the draft Roadmap significantly expands the types 
of electronic health information, information sources and information 
users well beyond clinical information derived from electronic health 
records (EHRs). This shared strategy is intended to reflect important 
actions that both public and private sector stakeholders can take to 
enable nationwide interoperability of electronic health IT such as: (1) 
Establishing a coordinated governance framework and process for 
nationwide health IT interoperability; (2) improving technical 
standards and implementation guidance for sharing and using a common 
clinical data set; (3) enhancing incentives for sharing electronic 
health information according to common technical standards, starting 
with a common clinical data set; and (4) clarifying privacy and 
security requirements that enable interoperability.
    In addition, ONC has released the draft version of the 2015 
Interoperability Standards Advisory (available at http://www.healthit.gov/standards-advisory), which provides a list of the best 
available standards and implementation specifications to enable 
priority health information exchange functions. Providers, payers, and 
vendors are encouraged to take these ``best available standards'' into 
account as they implement HIE across the continuum of care, including 
care settings such as behavioral health, long-term and post-acute care, 
and home and community-based service providers.
    We encourage stakeholders to utilize HIE and certified health IT to 
effectively and efficiently help providers improve internal care 
delivery practices, support management of care across the continuum, 
enable the reporting of electronically specified clinical quality 
measures (eCQMs), and improve efficiencies and reduce unnecessary 
costs. As adoption of certified health IT increases and 
interoperability standards continue to mature, HHS will seek to 
reinforce standards through relevant policies and programs.
    The comments we received on this topic, with their responses, 
appear below.
    Comment: All of the comments received on this topic supported the 
overall agency goal to accelerate HIE within SNFs, and among the post-
acute care providers generally. One commenter asked CMS to keep in mind 
that certain types of clinicians, such as physical therapists, operate 
in different provider settings. Another commenter urged CMS to consider 
the potential impact of HIE regulations and policies on innovation and 
business practices. Finally, one commenter urged CMS to provide the 
same type of incentives and considerations to post-acute care providers 
as they do in other areas with regard to accelerating HIE.
    Response: We appreciate the broad support for this initiative and 
the helpful suggestions provided by the commenters. We will share these 
comments with the appropriate CMS staff and other governmental agencies 
to ensure they are taken into account as we

[[Page 46427]]

continue to encourage adoption of health information technology.
3. SNF Quality Reporting Program (QRP)
a. Background and Statutory Authority
    We seek to promote higher quality and more efficient health care 
for Medicare beneficiaries, and our efforts are furthered by QRPs 
coupled with public reporting of that information. Such QRPs already 
exist for various settings such as the Hospital Inpatient Quality 
Reporting (HIQR) Program, the Hospital Outpatient Quality Reporting 
(HOQR) Program, the Physician Quality Reporting System, the Long-Term 
Care Hospital (LTCH) QRP, the Inpatient Rehabilitation Facility (IRF) 
QRP, the Home Health Quality Reporting Program (HHQRP), and the Hospice 
Quality Reporting Program (HQRP). We have also implemented QRPs for 
home health agencies (HHAs) that are based on conditions of 
participation, and an ESRD QIP and a Hospital Value-Based Purchasing 
(HVBP) Program that link payment to performance.
    SNFs are providers that must meet conditions of participation for 
Medicare to receive Medicare payments. Some SNFs are also certified 
under Medicaid as nursing facilities (NFs), and these types of long-
term care facilities furnish services to both Medicare beneficiaries 
and Medicaid enrollees. SNFs provide short-term skilled nursing 
services, including but not limited to rehabilitative therapy, physical 
therapy, occupational therapy, and speech-language pathology services. 
Such services are provided to beneficiaries who are recovering from 
surgical procedures, such as hip and knee replacements, or from medical 
conditions, such as stroke and pneumonia. SNF services are provided 
when needed to maintain or improve a beneficiary's current condition, 
or to prevent a condition from worsening. The care provided in a SNF 
(as a free-standing facility or part of a hospital), is aimed at 
enabling the beneficiary to maintain or improve his/her health and to 
function independently. SNF care is a benefit under Medicare Part A and 
such care is covered for up to 100 days in a benefit period if all 
coverage requirements are met.\15\ In 2014, 2.6 million covered 
Medicare Part A stays occurred within 15,421 SNFs.
---------------------------------------------------------------------------

    \15\ Section 1812(a)(2) and (b)(2) of the Act; 42 CFR 409.61; 
http://www.medicare.gov/Pubs/pdf/10153.pdf.
---------------------------------------------------------------------------

    Section 1888(e)(6)(B)(i)(II) of the Act requires that each SNF 
submit, for FYs beginning on or after the specified application date 
(as defined in section 1899B(a)(2)(E) of the Act), data on quality 
measures specified under section 1899B(c)(1) of the Act and data on 
resource use and other measures specified under section 1899B(d)(1) of 
the Act in a manner and within the timeframes specified by the 
Secretary. In addition, section 1888(e)(6)(B)(i)(III) of the Act 
requires, for FYs beginning on or after October 1, 2018, that each SNF 
submit standardized patient assessment data required under section 
1899B(b)(1) of the Act in a manner and within the timeframes specified 
by the Secretary. Section 1888(e)(6)(A)(i) of the Act requires that, 
for FYs beginning with FY 2018, if a SNF does not submit data, as 
applicable, on quality and resource use and other measures in 
accordance with section 1888(e)(6)(B)(i)(II) of the Act and on 
standardized patient assessment in accordance with section 
1888(e)(6)(B)(i)(III) of the Act for such FY, the Secretary reduce the 
market basket percentage described in section 1888(e)(5)(B)(ii) of the 
Act by 2 percentage points.
    The IMPACT Act adds section 1899B to the Act that imposes new data 
reporting requirements for certain PAC providers, including SNFs. 
Sections 1899B(c)(1) and 1899B(d)(1) of the Act collectively require 
that the Secretary specify quality measures and resource use and other 
measures with respect to certain domains not later than the specified 
application date in section 1899B(a)(2)(E) of the Act that applies to 
each measure domain and PAC provider setting. The IMPACT Act also 
amends section 1886(e)(6) of the Act, to require the Secretary to 
reduce the PPS payments to a SNF that does not submit the data required 
in a form and manner, and at a time, specified by the Secretary. 
Section 1886(e)(6)(A)(i) of the Act would require the Secretary in a FY 
beginning with FY 2018 to reduce by 2 percentage points the market 
basket percentage increase as adjusted by the productivity adjustment 
for SNFs that do not submit the required data.
    Under the SNF QRP, we proposed that the general timeline and 
sequencing of measure implementation would occur as follows: (1) 
Specification of measures; (2) proposal and finalization of measures 
through notice-and-comment rulemaking; (3) SNF submission of data on 
the adopted measures; analysis and processing of the submitted data; 
(4) notification to SNFs regarding their quality reporting compliance 
with respect to a particular FY; (5) review of any reconsideration 
requests; and (6) imposition of a payment reduction in a particular FY 
for failure to satisfactorily submit data with respect to that FY. We 
also proposed that any payment reductions that are taken for a FY for 
the QRP would begin approximately 1 year after the end of the data 
submission period for that FY and approximately 2 years after we first 
adopt the measure.
    This timeline, which is similar in the other QRPs, reflects 
operational and other practical constraints, including the time needed 
to specify and adopt valid and reliable measures, collect the data, and 
determine whether a SNF has complied with our quality reporting 
requirements. It also takes into consideration our desire to give SNFs 
enough notice of new data reporting obligations so that they are 
prepared to start reporting the data in a timely fashion. Therefore, we 
stated our intention to follow the same timing and sequence of events 
for measures specified under section 1899B(c)(1) and (d)(1) of the Act 
that we currently follow for the other QRPs. We stated our intention to 
specify each of these measures no later than the specified application 
dates set forth in section 1899B(a)(2)(E) of the Act and proposed to 
adopt them consistent with the requirements in the Act and 
Administrative Procedure Act. To the extent that we finalize to adopt a 
measure for the SNF QRP that satisfies an IMPACT Act measure domain, we 
stated our intention to require SNFs to report data on the measure for 
the FY that begins 2 years after the specified application date for 
that measure. Likewise, we stated our intention to require SNFs to 
begin reporting any other data specifically required under the IMPACT 
Act for the FY that begins 2 years after we adopt requirements that 
would govern the submission of that data.
    We received multiple public comments pertaining to the general 
timeline and plan for implementation of the IMPACT Act, sequencing of 
measure implementation, standardization of PAC assessment tools, and 
timing of payment consequences for the failure to comply with reporting 
requirements. The following is a summary of the comments received on 
this topic and our responses.
    Comment: We received several comments regarding the timing of the 
development of the IMPACT Act measures, the development of associated 
data elements, data collection and reporting. One commenter noted the 
considerable time constraints under which the Secretary is required to 
implement the provisions of the IMPACT Act. Several commenters 
requested that CMS communicate estimated implementation timelines for 
all data collection and reporting

[[Page 46428]]

requirements. One commenter requested that CMS provide more detailed 
information in the rule regarding multiple topics, including the 
replacement of existing data elements in the PAC assessment tools with 
a suggested common assessment tool, endorsement of quality measures, 
and the sequence and timeline of events for measure implementation.
    Response: We appreciate the public's feedback regarding the timing 
issues related to IMPACT Act implementation. We recognize the need for 
transparency as we move forward to implement the provisions of the 
IMPACT Act and we intend to continue to engage stakeholders and ensure 
that our approach to implementation and timing is communicated in an 
open and informative manner. We will use the rulemaking process to 
communicate timelines for implementation, including timelines for the 
replacement of items in PAC assessment tools, timelines for 
implementation of new or revised quality measures and timelines for 
public reporting. We will also provide information through pre-
rulemaking activities surrounding the development of quality measures, 
which includes public input as part of our process. Additionally, we 
intend to engage stakeholders and experts in developing the assessment 
instrument modifications necessary to meet data standardization 
requirements of the IMPACT Act.
    We will also continue to provide information about measures at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014-and-Cross-Setting-Measures.html.
    Comment: We received several comments requesting the development of 
a comprehensive overall plan for implementation across all settings 
covered by the IMPACT Act. Commenters stated that a comprehensive 
implementation plan would give PAC providers an opportunity to plan for 
the potential impacts on their operations, and enable all stakeholders 
to understand CMS's approach to implementing the IMPACT Act across care 
settings. One commenter requested that CMS plans be communicated as 
soon as possible and that CMS develop setting-specific communications 
to facilitate understanding of the IMPACT Act requirements.
    Response: We appreciate the request for a comprehensive plan to 
allow PAC providers to plan for implementation of the IMPACT Act, as 
well as the need for stakeholder input, the development of reliable, 
accurate measures, clarity on the level of standardization of items and 
measures, and avoidance of unnecessary burden on PAC providers. Our 
intent has been to comply with these principles in the implementation 
and rollout of QRPs in the various care settings, and we will continue 
to adhere to these principles as the agency moves forward with 
implementing IMPACT Act requirements.
    In addition, in implementing the IMPACT Act requirements, we will 
follow the strategy for identifying cross-cutting measures, timelines 
for data collection and timelines for reporting as outlined in the 
IMPACT Act. As described more fully above, the IMPACT Act requires CMS 
to specify measures that relate to at least five stated quality domains 
and three stated resource use and other measure domains. The IMPACT Act 
also outlines timelines for data collection and timelines for 
reporting. In addition, we must follow all processes in place for 
adoption of measures including the MAP and the notice and comment 
rulemaking process. In our selection and specification of measures, we 
employ a transparent process in which we seek input from stakeholders 
and national experts and engage in a process that allows for pre-
rulemaking input on each measure, as required by section 1890A of the 
Act. This process is based on a private-public partnership, and it 
occurs via the MAP. The MAP is composed of multi-stakeholder groups 
convened by the NQF, our current contractor under section 1890 of the 
Act, to provide input on the selection of quality and efficiency 
measures described in section 1890(b)(7)(B). The NQF must convene these 
stakeholders and provide us with the stakeholders' input on the 
selection of such measures. We, in turn, must take this input into 
consideration in selecting such measures. In addition, the Secretary 
must make available to the public by December 1 of each year a list of 
such measures that the Secretary is considering under Title XVIII of 
the Act. Additionally, proposed measures and specifications are to be 
announced through the Notice of Proposed Rulemaking (NPRM) process in 
which proposed rules are published in the Federal Register and are 
available for public view and comment.
    Comment: We received several comments about the level of 
standardization of data collection instruments across PAC settings as 
required by the IMPACT Act. Commenters noted the importance of 
standardized resident assessment data for cross-setting comparisons of 
patient outcomes. Some commenters recognized the need to have as much 
standardization of measures and data collection across PAC settings as 
possible, while recognizing that some variations among settings may be 
necessary. Those commenters cautioned that complete standardization of 
PAC data may not be possible and urged CMS to consider standardization 
around topics or domains but allowing different settings to use 
assessment instruments that were most appropriate for the patient 
populations assessed. One commenter requested that the specific items 
added to achieve standardization to the Minimum Data Set (MDS) for NFs, 
the Outcome and Assessment Information Set (OASIS) for home healthcare, 
the Inpatient Rehabilitation Facility Patient Assessment Instrument 
(IRF PAI), and Long-Term Care Hospitals Continuity Assessment Record 
and Evaluation data set (LTCH-CARE) be published for comments.
    Response: We agree that standardization is important for data 
comparability and outcome analysis. The IMPACT Act requires the 
modification of the assessment instruments to include standardized data 
for multiple purposes including quality reporting, interoperability and 
data comparison, and we will work to ensure that items pertaining to 
measures required under the IMPACT Act that are used in assessment 
instruments are standardized. We agree that there may be instances 
where such data is not necessary or applicable to all four of the post-
acute settings' assessment instruments, but is used in more than one 
assessment instrument. In that circumstance, we work to ensure that 
such data is standardized.
    With regard to the commenter's suggestion that a common assessment 
tool be developed for PAC settings, we wish to clarify that while the 
IMPACT Act requires the modification of PAC assessment instruments to 
revise or replace certain existing patient assessment data with 
standardized patient assessment data as soon as practicable, it does 
not require a single data collection tool. We intend to modify the 
existing PAC assessment instruments as soon as practicable to ensure 
the collection of standardized data. While we agree that it is possible 
that within the PAC assessment instruments certain sections could 
incorporate a standardized assessment data collection tool, for 
example, the Brief Interview for Mental Status (BIMS), we have not yet 
concluded that this kind of modification of the PAC assessment 
instruments is necessary.
    All proposed and finalized changes to the PAC instruments are, and 
will

[[Page 46429]]

continue to be, published on the applicable CMS Web sites. As 
previously mentioned, it is our intention to develop such 
standardization through clinical and expert input as well as 
stakeholder and public engagement where we would receive input.
    Comment: We received many comments about the burden on PAC 
providers of meeting new requirements imposed as a result of the 
implementation of the IMPACT Act. Commenters requested that CMS 
consider minimizing the burden for PAC providers when possible and 
avoid duplication in data collection.
    Response: We appreciate the importance of avoiding undue burden and 
will continue to evaluate and consider any burden the IMPACT Act and 
the SNF QRP places on SNFs. In implementing the IMPACT Act thus far, we 
have taken into consideration the new burden that our requirements 
place on PAC providers, and we believe that standardizing patient 
assessment data will allow for the exchange of data among PAC providers 
in order to facilitate care coordination and improve patient outcomes.
    Comment: We received one comment requesting that, in the future, 
cross-setting measures and assessment data changes related to the 
IMPACT Act be addressed in one stand-alone notice and rule that applies 
to all four post-acute care settings.
    Response: We will take this suggestion under consideration.
    Comment: One commenter expressed support for the reduction of a 
SNF's annual update by 2 percentage points for failure to report the 
required quality data. Additionally, this commenter recommends that 
imposition of the financial penalty should be published on a public 
reporting Web site.
    Response: We thank the commenter for its support of the SNF QRP 
reduction as mandated by the IMPACT Act, and the suggestion to 
publicize payment consequences imposed upon SNFs for failure to 
satisfactorily report quality data. We will take this under 
consideration.
    Final Decision: After consideration of the public comments 
received, we are finalizing the adoption of general timeline and 
sequencing of measure implementation and that any payment reductions 
that are taken with respect to a FY would begin approximately 1 year 
after the end of the data submission period for that FY and 
approximately 2 years after we first adopt the measure as proposed for 
the SNF QRP.
    As provided at section 1888(e)(6)(A)(ii) of the Act, depending on 
the market basket percentage for a particular year, the 2 percentage 
point reduction under section 1888(e)(6)(A)(i) of the Act may result in 
this percentage, after application of the productivity adjustment under 
section 1888(e)(5)(B)(ii) of the Act, being less than 0.0 percent for a 
FY and may result in payment rates under the SNF PPS being less than 
payment rates for the preceding FY. In addition, as set forth at 
section 1888(e)(6)(A)(iii) of the Act, any reduction based on failure 
to comply with the SNF QRP reporting requirements applies only to the 
particular FY involved, and any such reduction must not be taken into 
account in computing the SNF PPS payment rates for subsequent FYs.
    For purposes of meeting the reporting requirements under the SNF 
QRP, section 1888(e)(6)(B)(ii) of the Act states that SNFs or other 
facilities described in section 1888(e)(7)(B) of the Act (other than a 
CAH) may submit the resident assessment data required under section 
1819(b)(3) of the Act using the standard instrument designated by the 
state under section 1819(e)(5) of the Act. Currently, the resident 
assessment instrument is titled the MDS 3.0. To the extent data 
required for submission under subclause (II) or (III) of section 
1888(e)(6)(B)(i) of the Act duplicates other data required to be 
submitted under clause (i)(I), section 1888(e)(6)(B)(iii) provides that 
the submission of data under subclause (II) or (III) is to be in lieu 
of the submission of such data under clause (I), unless the Secretary 
makes a determination that such duplication is necessary to avoid delay 
in the implementation of section 1899B of the Act taking into account 
the different specified application dates under section 1899B(a)(2)(E) 
of the Act.
    In addition to requiring a QRP for SNFs under new section 
1888(e)(6), the IMPACT Act requires feedback to SNFs and public 
reporting of their performance. More specifically, section 1899B(f)(1) 
of the Act requires the Secretary to provide confidential feedback 
reports to SNFs on their performance on the quality measures and 
resource use and other measures specified under that section. The 
Secretary must make such confidential feedback reports available to 
SNFs beginning 1 year after the specified application date that applies 
to the measures in that section and, to the extent feasible, no less 
frequently than on a quarterly basis, except in the case of measures 
reported on an annual basis, as to which the confidential feedback 
reports may be made available annually.
    Section 1899B(g)(1) of the Act requires the Secretary to provide 
for the public reporting of SNF performance on the quality measures 
specified under section 1899B(c)(1) of the Act and the resource use and 
other measures specified under section 1899B(d)(1) of the Act by 
establishing procedures for making the performance data available to 
the public. Such procedures must ensure, including through a process 
consistent with the process applied under section 
1886(b)(3)(B)(viii)(VII) of the Act, that SNFs have the opportunity to 
review and submit corrections to the data and other information before 
it is made public as required by section 1899B(g)(2) of the Act. 
Section 1899B(g)(3) of the Act requires that the data and information 
is made publicly available beginning no later than 2 years after the 
specified application date applicable to such a measure and SNFs. 
Finally, section 1899B(g)(4)(B) of the Act requires that such 
procedures must provide that the data and information described in 
section 1899B(g)(1) of the Act for quality and resource use measures be 
made publicly available consistent with sections 1819(i) and 1919(i) of 
the Act.
b. General Considerations Used for Selection of Quality Measures for 
the SNF QRP
    We strive to promote high quality and efficiency in the delivery of 
health care to the beneficiaries we serve. Performance improvement 
leading to the highest quality health care requires continuous 
evaluation to identify and address performance gaps and reduce the 
unintended consequences that may arise in treating a large, vulnerable, 
and aging population. QRPs, coupled with public reporting of quality 
information, are critical to the advancement of health care quality 
improvement efforts.
    Valid, reliable, relevant quality measures are fundamental to the 
effectiveness of our QRPs. Therefore, selection of quality measures is 
a priority for CMS in all of its QRPs.
    We proposed to adopt for the SNF QRP three measures that we are 
specifying under section 1899(B)(c)(1) of the Act for purposes of 
meeting the following three domains: (1) Functional status, cognitive 
function, and changes in function and cognitive function; (2) skin 
integrity and changes in skin integrity; and (3) incidence of major 
falls. These measures align with the CMS Quality Strategy,\16\ which

[[Page 46430]]

incorporates the three broad aims of the National Quality Strategy: 
\17\
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    \16\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html.
    \17\ http://www.ahrq.gov/workingforquality/nqs/nqs2011annlrpt.htm.
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     Better Care: Improve the overall quality of care by making 
healthcare more patient-centered, reliable, accessible, and safe.
     Healthy People, Healthy Communities: Improve the health of 
the U.S. population by supporting proven interventions to address 
behavioral, social, and environmental determinants of health in 
addition to delivering higher-quality care.
     Affordable Care: Reduce the cost of quality healthcare for 
individuals, families, employers, and government.
    In deciding to propose these measures, we also took into account 
national priorities, including those established by the National 
Priorities Partnership (http://www.qualityforum.org/Setting_Priorities/NPP/National_Priorities_Partnership.aspx), and the HHS Strategic Plan 
(http://www.hhs.gov/secretary/about/priorities/priorities.html).
    These measures also incorporate common standards and definitions 
that can be used across post-acute care settings to allow for the 
exchange of data among post-acute care providers, to provide access to 
longitudinal information for such providers to facilitate coordinated 
and improved outcomes, and to enable comparison of such assessment data 
across all such providers as required by section 1899B(a) of the Act.
    We received comments on the topic of the General Considerations 
Used for Selection of Quality Measures for the SNF QRP. The following 
is a summary of the comments received and our responses.
    Comment: One commenter expressed support for the goals and 
principles outlined to improve quality and help guide the selection and 
specification of measures in the SNF QRP.
    Response: We appreciate the support.
    Comment: While we received some comments expressing appreciation 
for opportunities for stakeholder feedback regarding implementation of 
the IMPACT Act, we also received several comments regarding the need 
for more opportunities for stakeholder input into various aspects of 
the measure development process. Commenters requested opportunities to 
provide early and ongoing input into measure development. One commenter 
requested opportunities for input prior to the development of proposed 
measure specifications. Commenters requested that CMS hold meetings 
with PAC providers on a frequent and regular basis to provide feedback 
on implementation and resolve any perceived inconsistencies in the 
proposed rule.
    Response: We appreciate the commenter's feedback. It is our intent 
to move forward with IMPACT Act implementation in a manner in which the 
measure development process continues to be transparent, and includes 
input and collaboration from experts, the PAC provider community, and 
the public at large. It is of the utmost importance to CMS to continue 
to engage stakeholders, including patients and their families, 
throughout the measure development lifecycle through their 
participation in our measure development public comment periods; the 
pre-rulemaking process; participation in the TEPs provided by our 
measure development contractors, as well as open door forums and other 
opportunities. We have already provided multiple opportunities for 
stakeholder input, which include the following activities: our measure 
development contractor(s) convened a TEP that included stakeholder 
experts on February 3, 2015; we convened two separate listening 
sessions on February 10th and March 24, 2015; we heard stakeholder 
input during the February 9th 2015 ad hoc MAP meeting provided for the 
sole purpose of reviewing the measures adopted in response to the 
IMPACT Act. Additionally, we implemented a public mail box for the 
submission of comments in January 2015, 
[email protected], which is listed on our post-acute 
care quality initiatives Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014-and-Cross-Setting-Measures.html, 
and we held a Special Open Door Forum to seek input on the measures on 
February 25, 2015. The slides from the Special Open Door Forum are 
available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014-and-Cross-Setting-Measures.html.
    Comment: One commenter expressed concern at the brief time between 
the passage of the IMPACT Act and the development of the proposed rule 
because it did not allow for extensive coordination with the 
professional community. While the commenter appreciated the opportunity 
to participate in the IMPACT Act listening session, the commenter 
viewed the proposed rule for the SNF QRP as hasty and reactive, 
contrary to the deliberate and measured process that was recommended by 
stakeholders and sought by CMS through the collaborative listening 
session.
    Response: We appreciate the public's interest in active 
participation in the measure development process. As noted in the 
proposed rule, the timeline and sequence of events proposed for the SNF 
QRP, which is generally followed in other quality reporting programs, 
requires that we give providers sufficient time after adoption of 
measures and before reporting obligations begin to enable them to 
prepare to report the data. We intend to propose measures consistent 
with the sequence we follow in other quality reporting programs. As 
noted above, we engaged in multiple activities to solicit stakeholder 
input including TEPs, listening sessions, ad hoc MAP meetings, Special 
Open Door Forums and a public email address. As described above, we 
also initiated an Ad Hoc MAP process to obtain input on the measures 
that we are finalizing in this final rule.
    On February 5th, 2015, we made publicly available a list of 
Measures Under Consideration (called the ``List of Ad Hoc Measures 
Under Consideration for the Improving Medicare Post-Acute Care 
Transformation (IMPACT) Act of 2014'') (MUC list) as part of an Ad Hoc 
MAP convened by the NQF. The MAP Post-Acute Care/Long-Term Care 
Workgroup convened on February 9, 2015 to ``review the measures 
technical properties as they are adapted for use in new settings and 
whether the new settings impact the measures' adherence to the NQF 
Scientific Acceptability criterion.'' \18\ The NQF published the MUC 
list on our behalf for public comment from February 11, 2015 through 
February 19, 2015 on its Web site. The MAP Coordinating Committee 
convened on February 27, 2015 to discuss the public comments received, 
and those public comments are listed here http://public.qualityforum.org/MAP/MAP%20Coordinating%20Committee/MAP_CC%20Feb%2027_Discussion_Guide.html#agenda.
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    \18\ . Ad-hoc Review: Expansion of Settings . (n.d.). Retrieved 
March 5, 2015, from http://www.qualityforum.org/Projects/a-b/Ad_Hoc_Reviews/CMS/Ad_Hoc_Reviews-CMS.aspx.
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    The MAP issued a pre-rulemaking report on March 6, 2015. This Pre-
Rulemaking Report is available for download at http://www.qualityforum.org/Project_Pages/MAP_Post-Acute_CareLong-Term_Care_Workgroup.aspx. The MAP's input for

[[Page 46431]]

each of the proposed measures is discussed in this section.
    Section 1899B(j) of the Act requires that we allow for stakeholder 
input as part of the pre-rulemaking process. Therefore, we sought 
stakeholder input on the measures we proposed to adopt in this final 
rule as follows: We implemented a public mail box for the submission of 
comments in January 2015, [email protected] which is 
located on our post-acute care quality initiatives Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014-and-Cross-Setting-Measures.html; we convened a TEP that included 
stakeholder experts and patient representatives on February 3, 2015; 
and we sought public input during the February 2015 ad hoc MAP process. 
In addition, we held a National Stakeholder Special Open Door Forum on 
February 25, 2015 for the purpose of seeking input on these measures. 
Lastly, we held two separate listening sessions on February 10 and 
March 24, 2015, respectively. These sessions sought feedback from 
providers regarding best practices for collecting quality data with 
respect to the IMPACT Act requirements.
    Comment: Multiple commenters expressed concern that the MAP process 
was not implemented properly and had concerns about when MAP Workgroup 
rosters are open for public comment, the inclusion of additional 
measures during the MAP, and other items such as MAP composition. 
Commenters also expressed concern that the open door forums and 
listening sessions designed to meet public input requirements did not 
include sufficient public discussion of the proposed quality measures. 
One commenter stated that there is confusion among NQF and MAP members 
over whether they can review all related NQF-endorsed measures or are 
restricted to reviewing only measures preferred by CMS and requested 
that CMS issue them written guidance. In addition, the commenter urged 
CMS to change the MAP public comment process.
    Response: With regard to the commenters' concerns pertaining to the 
processes associated with the MAP such as when MAP Workgroup rosters 
are open for public comment, the inclusion of additional measures 
during the MAP, and other items such as MAP composition, we note that 
the operations of the MAP are directed by the NQF, and not by CMS. 
Further, while the MAP provides input on measures selected by the 
Secretary, the pre rulemaking provisions of the Act do not restrict the 
MAP from reviewing or recommending alternative measures and 
methodologies to those proposed by the Secretary. Therefore, we refer 
readers to the MAP Web site at http://www.qualityforum.org/map/. 
Additionally, we intend to provide the commenters' input to the NQF.
    We also, as part of our measure development process for the 
proposed measures, sought public input at the February 2015 Special 
Open Door Forum, during which we provided information pertaining to the 
IMPACT Act and the measures that were listed as Measures Under 
Consideration for the IMPACT Act of 2014 for review by the MAP. We also 
advised that interested parties could submit feedback and questions on 
the measures and other topics, via our mailbox, 
[email protected]. We also sought feedback from subject 
matter experts who responded to an open call to participate in the 
numerous TEPs held by our measure development contractor for all 
measures considered for adoption into the SNF QRP prior to rulemaking.
c. Policy for Retaining SNF QRP Measures for Future Payment 
Determinations
    For the SNF QRP, for the purpose of streamlining the rulemaking 
process, we proposed that when we adopt a measure for the SNF QRP for a 
payment determination, this measure would be automatically retained in 
the SNF QRP for all subsequent payment determinations unless we propose 
to remove, suspend, or replace the measure.
    Section 1899B(h)(1) of the Act provides that the Secretary may 
remove, suspend or add a quality measure or resource use or other 
measure specified under section 1899B(c)(1) or (d)(1) of the Act so 
long as the Secretary publishes a justification for the action in the 
Federal Register with a notice and comment period. Consistent with the 
policies of other QRPs including the HIQR Program, the HOQR Program, 
LTCH QRP, and the IRF QRP, we proposed that quality measures would be 
considered for removal if: (1) Measure performance among SNFs is so 
high and unvarying that meaningful distinctions in improvements in 
performance can no longer be made in which case the measure may be 
removed or suspended; (2) performance or improvement on a measure does 
not result in better resident outcomes; (3) a measure does not align 
with current clinical guidelines or practice; (4) a more broadly 
applicable measure (across settings, populations, or conditions) for 
the particular topic is available; (5) a measure that is more proximal 
in time to desired resident outcomes for the particular topic is 
available; (6) a measure that is more strongly associated with desired 
resident outcomes for the particular topic is available; or (7) 
collection or public reporting of a measure leads to negative 
unintended consequences other than resident harm.
    We also noted that under section 1899B(h)(2) of the Act, in the 
case of a quality measure or resource use or other measure for which 
there is a reason to believe that the continued collection raises 
possible safety concerns or would cause other unintended consequences, 
the Secretary may promptly suspend or remove the measure and publish 
the justification for the suspension or removal in the Federal Register 
during the next rulemaking cycle.
    For any measure that meets this criterion (that is, a measure that 
raises safety concerns), we will take immediate action to remove the 
measure from SNF QRP, and, in addition to publishing a justification in 
the next rulemaking cycle, will immediately notify SNFs and the public 
through the usual communication channels, including listening session, 
memos, email notification, and web postings.
    We invited public comment on this proposed policy for Retaining SNF 
QRP Measures for Future Payment Determinations. The following is a 
summary of the comments received and our responses.
    Comment: One commenter supported several of the criteria for 
possible removal of a measure but opposed or recommended changes to 
other criteria. The commenter recommended changes to deleting criteria 
to remove measures that have high performance, remove or clarify 
phrases associated with the term ``clinical practice,'' and also 
incorporating language to clarify how to add measures rather than 
remove them.
    Response: We interpret the comment to mean that CMS should maintain 
measures that have high performance. We required reporting on measures 
with high performance rates in the past. We will continue to perform a 
case-by-case analysis through program monitoring to evaluate the 
importance of measure continuation vs. measure suppression or removal. 
Additionally, we will evaluate the application of language and phrases 
associated with the term clinical practice as necessary. We believe 
that we have addressed the approach we take in measure selection and 
proposal for adoption in our preamble, and when we present our measures 
under consideration. Generally, we apply an

[[Page 46432]]

approach that involves alignment with the National Quality Strategy, 
and the CMS Quality Strategy, with an effort to address gaps in quality 
and priority areas for achieving high quality care. We note that the 
proposed criteria for consideration for removal of measures in the SNF 
QRP are consistent with the policies of other QRPs in the Medicare 
Program, including the HIQR Program, the HOQR Program, LTCH QRP, and 
the IRF QRP.
    After consideration of the public comments received, we are 
finalizing the adoption of the policy for retaining SNF QRP Measures 
for Future Payment Determinations as proposed.
d. Process for Adoption of Changes to SNF QRP Program Measures
    Section 1899B(e)(2) required that quality measures under the IMPACT 
Act selected for the SNF QRP must be endorsed by the NQF unless they 
meet the criteria for exception in section 1899B(e)(2)(B) of the Act. 
The NQF is a voluntary consensus standard-setting organization with a 
diverse representation of consumer, purchaser, provider, academic, 
clinical, and other healthcare stakeholder organizations. The NQF was 
established to standardize healthcare quality measurement and reporting 
through its consensus development process (http://www.qualityforum.org/About_NQF/Mission_and_Vision.aspx). The NQF undertakes review of: (a) 
New quality measures and national consensus standards for measuring and 
publicly reporting on performance; (b) regular maintenance processes 
for endorsed quality measures; (c) measures with time-limited 
endorsement for consideration of full endorsement; and (d) ad hoc 
review of endorsed quality measures, practices, consensus standards, or 
events with adequate justification to substantiate the review (http://www.qualityforum.org/Measuring_Performance/Ad_Hoc_Reviews/Ad_Hoc_Review.aspx).
    The NQF solicits information from measure stewards for annual 
reviews and to review measures for continued endorsement in a specific 
3-year cycle. In this measure maintenance process, the measure steward 
is responsible for updating and maintaining the currency and relevance 
of the measure and for confirming existing specifications to the NQF on 
an annual basis. As part of the ad hoc review process, the ad hoc 
review requester and the measure steward are responsible for submitting 
evidence for review by a NQF TEP which, in turn, provides input to the 
Consensus Standards Approval Committee which then makes a decision on 
endorsement status and/or specification changes for the measure, 
practice, or event.
    The NQF regularly maintains its endorsed measures through annual 
and triennial reviews, which may result in the NQF making updates to 
the measures. We believe that it is important to have in place a 
subregulatory process to incorporate nonsubstantive updates made by the 
NQF into the measure specifications as we have adopted for the Hospital 
IQR Program so that these measures remain up-to-date. We also recognize 
that some changes the NQF might make to its endorsed measures are 
substantive in nature and might not be appropriate for adoption using a 
subregulatory process.
    Therefore, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53504 
through 53505), we finalized a policy under which we use a 
subregulatory process to make nonsubstantive updates to measures used 
for the Hospital IQR Program. For what constitutes substantive versus 
nonsubstantive changes, we expect to make this determination on a case-
by-case basis. Examples of nonsubstantive changes to measures might 
include updated diagnosis or procedure codes, medication updates for 
categories of medications, broadening of age ranges, and exclusions for 
a measure (such as the addition of a hospice exclusion to the 30-day 
mortality measures). We believe that nonsubstantive changes may include 
updates to NQF-endorsed measures based upon changes to guidelines upon 
which the measures are based.
    Therefore, we proposed to use rulemaking to adopt substantive 
updates made to measures as we have for the Hospital IQR Program. 
Examples of changes that we might consider to be substantive would be 
those in which the changes are so significant that the measure is no 
longer the same measure, or when a standard of performance assessed by 
a measure becomes more stringent (for example, changes in acceptable 
timing of medication, procedure/process, or test administration). 
Another example of a substantive change would be where the NQF has 
extended its endorsement of a previously endorsed measure to a new 
setting, such as extending a measure from the inpatient setting to 
hospice. These policies regarding what is considered substantive versus 
nonsubstantive would apply to all measures in the SNF QRP. We also note 
that the NQF process incorporates an opportunity for public comment and 
engagement in the measure maintenance process.
    We believe this policy adequately balances our need to incorporate 
updates to the SNF QRP measures in the most expeditious manner possible 
while preserving the public's ability to comment on updates that so 
fundamentally change an endorsed measure that it is no longer the same 
measure that we originally adopted.
    We invited public comment on our Proposed Process for the Adoption 
of Changes to SNF QRP Program Measures. The following is a summary of 
the comments received and our responses.
    Comment: One commenter suggested that CMS more clearly define the 
subregulatory process criteria for determining what constitutes a non-
substantive change and recommended that CMS not wait until rulemaking 
to make changes that are considered substantive and have progressed 
through the NQF process.
    Response: We believe that it is important to have in place a 
subregulatory process to incorporate nonsubstantive updates made by the 
NQF into the measure specifications so that the measures remain up-to-
date. For example, we could use the CMS Web site as a place to announce 
changes. As noted in the proposed rule, the subregulatory process 
proposed is the same process as we have adopted for the Hospital IQR 
Program and which has been used successfully in that program. We 
believe that the criteria for what constitutes a non-substantive change 
could vary widely and is best described by examples, as we have done in 
the proposed rule. As noted, what constitutes a substantive versus 
nonsubstantive changes is determined on a case-by-case basis.
    Final Decision: After consideration of the public comments, we are 
finalizing the adoption of the Process for Adoption of Changes to SNF 
QRP Program Measures.
New Quality Measures for FY 2018 and Subsequent Payment Determinations
    For the FY 2018 SNF QRP and subsequent years, we proposed to adopt 
three cross-setting quality measures to meet the requirements of the 
IMPACT Act. These measures address the following domains: (1) Skin 
integrity and changes in skin integrity; (2) incidence of major falls; 
and (3) functional status, cognitive function, and changes in function 
and cognitive function, which are all required measure domains under 
section 1899B(c)(1) of the Act. The proposed quality measure addressing 
skin integrity and changes in skin integrity is the NQF-endorsed 
measure, Percent of Residents or Patients with Pressure

[[Page 46433]]

Ulcers That Are New or Worsened (Short Stay) (NQF #0678) (http://www.qualityforum.org/QPS/0678). The proposed quality measure addressing 
the incidence of major falls is an application of the NQF-endorsed 
Percent of Residents Experiencing One or More Falls with Major Injury 
(Long Stay) (NQF #0674) (http://www.qualityforum.org/QPS/0674). 
Finally, the proposed quality measure addressing functional status, 
cognitive function, and changes in function and cognitive function is 
an application of the Percent of Long-Term Care Hospital Patients With 
an Admission and Discharge Functional Assessment and a Care Plan that 
Addresses Function (NQF #2631; endorsed on July 23, 2015) (http://www.qualityforum.org/QPS/2631).
    The proposed quality measures addressing the domains of incidence 
of major falls and functional status, cognitive function, and changes 
in function and cognitive function, are not currently NQF-endorsed for 
the SNF population. We reviewed the NQF's endorsed measures and were 
unable to identify any NQF-endorsed cross-setting quality measures that 
focused on these domains. We are also unaware of any other cross-
setting quality measures that have been endorsed or adopted by another 
consensus organization.
    Section 1899B(e)(2) of the Act requires we use a NQF-endorsed 
measure unless the measure meets the exception. In the case of a 
specified area or medical topic determined by the Secretary for which a 
feasible and practical measure has not been NQF endorsed, the Secretary 
may specify a measure that is not so endorsed as long as due 
consideration is given to a measure that has been endorsed or adopted 
by a consensus organization identified by the Secretary.
    We received several general comments pertaining to the topic of our 
use of measures that are not endorsed or are not endorsed for use in 
the SNF resident population, as well as processes related to our 
adoption of such measures, their reliability and processes pertaining 
to the NQF endorsement process as well as the MAP review process. The 
following is a summary of the comments received and our responses.
    Comment: We received several comments about the reliability and 
accuracy of the proposed measures. We also received several comments 
supporting and encouraging the use of NQF endorsed measures and 
commenters expressed concerns that not all of the measures proposed for 
the FY 2018 payment determination were NQF endorsed. One commenter 
expressed concern that the statute's exemption allowing the use of 
measures that are not NQF endorsed provided that ``due consideration'' 
is given to endorsed measures is not well defined. One commenter urged 
CMS to use only measures that have been NQF endorsed as cross-setting 
measures and another commenter expressed that all measures should be 
reviewed by the MAP and a technical expert panel (TEP). Additionally, 
one commenter believed that all measures should be NQF endorsed before 
they are specified and if the measure is not endorsed, CMS should 
specify the criteria justifying the exception to endorsement. In 
addition, one commenter suggested that the NQF endorsement process does 
not take into account the expertise necessary for rehabilitation 
services and post-acute care services.
    Response: We intend to consider and propose appropriate measures 
that meet the requirements of the IMPACT Act measure domains and that 
have been endorsed or adopted by a consensus organization, whenever 
possible. However, when this is not feasible because there is no NQF-
endorsed measure that meets all the requirements for a specified IMPACT 
Act measure domain, we intend to rely on the exception authority given 
to the Secretary in section 1899B(e)(2)(B) of the Act. This statutory 
exception, allows the Secretary to specify a measure for the SNF QRP 
setting that is not NQF-endorsed where, as here, we have not been able 
to identify other measures on the topic that are endorsed or adopted by 
a consensus organization. With respect to the proposed measures for the 
SNF QRP, we sought MAP review, as well as expert opinion, on the 
validity and reliability of those measures. We disagree with the 
commenter who expressed concerns pertaining to the expertise applied in 
the panels overseeing the NQF endorsement proceedings; however, we 
intend to provide this feedback to the NQF.
(1) Quality Measure Addressing the Domain of Skin Integrity and Changes 
in Skin Integrity: Percent of Residents or Patients With Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678)
    We proposed to adopt for the SNF QRP, beginning with the FY 2018 
payment determination, the Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678) 
measure as a cross-setting quality measure that satisfies the skin 
integrity and changes in skin integrity domain. This measure assesses 
the percentage of short-stay residents or patients in SNFs, IRFs, and 
LTCHs with Stage 2 through 4 pressure ulcers that are new or worsened 
since admission.
    Pressure ulcers are a serious medical condition that result in 
pain, decreased quality of life, and increased mortality in aging 
populations.19 20 21 22 Pressure ulcers typically are the 
result of prolonged periods of uninterrupted pressure on the skin, soft 
tissue, muscle, and bone.23 24 25 Older adults in SNFs are 
prone to a wide range of medical conditions that increase their risk of 
developing pressure ulcers. These medical conditions include impaired 
mobility or sensation, malnutrition or under-nutrition, obesity, 
stroke, diabetes, dementia, cognitive impairments, circulatory 
diseases, dehydration, the use of wheelchairs, medical devices, and a 
history of pressure ulcers or a pressure ulcer at 
admission.26 27 28 29 30 31 32 33 34 35 36
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    \19\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs N Z 19(10): 20-24.
    \20\ Gorzoni, M. L. and S. L. Pires (2011). ``Deaths in nursing 
homes.'' Rev Assoc Med Bras 57(3): 327-331.
    \21\ Thomas, J. M., et al. (2013). ``Systematic review: health-
related characteristics of elderly hospitalized adults and nursing 
home residents associated with short-term mortality.'' J Am Geriatr 
Soc 61(6): 902-911.
    \22\ White-Chu, E. F., et al. (2011). ``Pressure ulcers in long-
term care.'' Clin Geriatr Med 27(2): 241-258.
    \23\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \24\ Institute for Healthcare Improvement (IHI). Relieve the 
pressure and reduce harm. May 21, 2007. Available from http://www.ihi.org/IHI/Topics/PatientSafety/SafetyGeneral/ImprovementStories/FSRelievethePressureandReduceHarm.htm
    \25\ Russo CA, Steiner C, Spector W. Hospitalizations related to 
pressure ulcers among adults 18 years and older, 2006 (Healthcare 
Cost and Utilization Project Statistical Brief No. 64). December 
2008. Available from http://www.hcupus.ahrq.gov/reports/statbriefs/sb64.pdf.
    \26\ Agency for Healthcare Research and Quality (AHRQ). Agency 
news and notes: pressure ulcers are increasing among hospital 
patients. January 2009. Available from http://www.ahrq.gov/research/jan09/0109RA22.htm.=
    \27\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \28\ Cai, S., et al. (2013). ``Obesity and pressure ulcers among 
nursing home residents.'' Med Care 51(6): 478-486.
    \29\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs N Z 19(10): 20-24.
    \30\ Hurd D, Moore T, Radley D, Williams C. Pressure ulcer 
prevalence and incidence across post-acute care settings. Home 
Health Quality Measures & Data Analysis Project, Report of Findings, 
prepared for CMS/OCSQ, Baltimore, MD, under Contract No. 500-2005-
000181 TO 0002. 2010.
    \31\ MacLean DS. Preventing & managing pressure sores. Caring 
for the Ages. March 2003;4(3):34-7. Available from http://www.amda.com/publications/caring/march2003/policies.cfm.
    \32\ Michel, J. M., et al. (2012). ``As of 2012, what are the 
key predictive risk factors for pressure ulcers? Developing French 
guidelines for clinical practice.'' Ann Phys Rehabil Med 55(7): 454-
465.
    \33\ National Pressure Ulcer Advisory Panel (NPUAP) Board of 
Directors; Cuddigan J, Berlowitz DR, Ayello EA (Eds). Pressure 
ulcers in America: prevalence, incidence, and implications for the 
future. An executive summary of the National Pressure Ulcer Advisory 
Panel Monograph. Adv Skin Wound Care. 2001;14(4):208-15.
    \34\ Park-Lee E, Caffrey C. Pressure ulcers among nursing home 
residents: United States, 2004 (NCHS Data Brief No. 14). 
Hyattsville, MD: National Center for Health Statistics, 2009. 
Available from http://www.cdc.gov/nchs/data/databriefs/db14.htm.
    \35\ Reddy, M. (2011). ``Pressure ulcers.'' Clin Evid (Online) 
2011.
    \36\ Teno, J. M., et al. (2012). ``Feeding tubes and the 
prevention or healing of pressure ulcers.'' Arch Intern Med 172(9): 
697-701.

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[[Page 46434]]

    Section 1899B(a)(1)(B) of the IMPACT Act requires that the data 
submitted on quality measures under section 1899B(c)(1) of the Act be 
standardized and interoperable across PAC settings, and section 
1899B(c)(2)(A) of the Act requires that the measures be reported 
through the use of a PAC assessment instrument. These requirements are 
in line with the NQF Steering Committee report, which stated that ``to 
understand the impact of pressure ulcers across settings, quality 
measures addressing prevention, incidence, and prevalence of pressure 
ulcers must be harmonized and aligned.'' \37\ This measure has been 
implemented in nursing homes for resident population with stays of less 
than 100 days under CMS's Nursing Home Quality Initiative. We also 
adopted the measure for use in the LTCH QRP (76 FR 51753 through 51756) 
beginning with the FY 2014 payment determination, and for use in the 
IRF QRP (76 FR 47876 through 47878) beginning with the FY 2014 payment 
determination. We have not, to date, adopted the measure for the home 
health setting. More information on the NQF endorsed quality measure 
the Percent of Residents or Patients with Pressure Ulcers That Are New 
or Worsened (Short Stay) (NQF #0678), is available at http://www.qualityforum.org/QPS/0678.
---------------------------------------------------------------------------

    \37\ National Quality Forum. National voluntary consensus 
standards for developing a framework for measuring quality for 
prevention and management of pressure ulcers. April 2008. Available 
from http://www.qualityforum.org/Projects/Pressure_Ulcers.aspx
---------------------------------------------------------------------------

    A TEP convened by our measure development contractor provided input 
on the technical specifications of the quality measure, the Percent of 
Residents or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF #0678), including the feasibility of implementing the 
measure across PAC settings. The TEP supported the measure's 
implementation across PAC settings and was also supportive of our 
efforts to standardize the measure for cross-setting development. The 
MAP also supported the use of the quality measure the Percent of 
Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) (NQF #0678) in the SNF QRP as a cross-setting quality 
measure.
    We proposed that the data for this quality measure would be 
collected using the MDS 3.0, currently submitted by SNFs through the 
Quality Improvement and Evaluation System (QIES) Assessment Submission 
and Processing (ASAP) system. We believe that this data collection 
method will minimize the reporting burden on SNFs because SNFs are 
already required to submit MDS data for multiple purposes, such as for 
payment purposes. For more information on SNF submission using the QIES 
ASAP system, readers are referred to http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIMDS30TechnicalInformation.html.
    The data items that we proposed to calculate the quality measure, 
the Percent of Residents or Patients with Pressure Ulcers that are New 
or Worsened (Short Stay) (NQF #0678) include: M0800A (Worsening in 
Pressure Ulcer Status Since Prior Assessment (OBRA or scheduled PPS 
assessment) or Last Admission/Entry or Reentry, Stage 2), M0800B 
(Worsening in Pressure Ulcer Status Since Prior Assessment (OBRA or 
scheduled PPS assessment) or Last Admission/Entry or Reentry, Stage 3), 
and M0800C (Worsening in Pressure Ulcer Status Since Prior Assessment 
(OBRA or scheduled PPS assessment) or Last Admission/Entry or Reentry, 
Stage 4). This measure would be calculated at two points in time, at 
admission and discharge (see Form, Manner, and Timing of Quality Data 
Submission). The specifications and data items for the quality measure, 
the Percent of Residents or Patients with Pressure Ulcers that are New 
or Worsened (Short Stay) (NQF #0678) are available in the MDS 3.0 
Quality Measures User's Manual available on our Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIQualityMeasures.html.
    We invited public comments on our proposal to adopt the Percent of 
Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) (NQF #0678) for the SNF QRP for the FY 2018 payment 
determination and subsequent years. The following is a summary of the 
comments received and our responses.
    Comment: We received many comments in support of our proposal to 
implement the Percent of Residents or Patients with Pressure Ulcers 
that are New or Worsened quality measure (Short Stay) (NQF #0678) to 
fulfill the requirements of the IMPACT Act. Commenters believed that 
measuring skin integrity and changes in skin integrity is important in 
the post-acute care setting and appreciated that the pressure ulcer 
measure is NQF-endorsed and is already collected for the Nursing Home 
Quality Initiative using the MDS 3.0 data.
    Response: We thank the commenters for their support of the Percent 
of Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) (NQF #0678) to fulfill the requirements of the IMPACT Act. 
We agree that skin integrity and changes in skin integrity are high 
priority issues for PAC settings.
    Comment: One commenter supported our proposal to use the MDS 3.0 as 
the source of data collection for this measure and to have SNFs submit 
the data via the QIES ASAP system.
    Response: We thank the commenter for its support of the use of the 
MDS 3.0 and the QIES ASAP system for data collection and reporting of 
the pressure ulcer measure. The ongoing use of the MDS 3.0 and the QIES 
ASAP system will minimize burden for SNFs.
    Comment: Several commenters were supportive of the intent of this 
measure but provided recommendations regarding risk adjustment of the 
pressure ulcer measure. Commenters highlighted the importance of risk 
adjusting all quality measures and expressed concern that the measure 
may not be risk adjusted appropriately for the diverse populations 
across PAC settings. The commenters encouraged CMS to engage in ongoing 
evaluation of the risk adjustment methodology used for this measure to 
ensure that the methodology is appropriate for standard cross-setting 
risk adjustment, as the current risk adjustment methodology is based on 
data collection tools specific to each PAC setting. Commenters 
recommended that CMS add several different risk factors to the risk 
adjustment model including: primary diagnosis; impairments; 
demographics; co-existing conditions/comorbidities; decreased sensory 
awareness; and patients or residents at the end of life. Commenters 
also encouraged CMS to ensure that the measure is fully tested prior to 
implementation in the QRPs.
    One commenter was concerned that the measure is limited to only 
high risk

[[Page 46435]]

patients or residents, and that the denominator size is decreased by 
excluding individuals who are low risk. The commenter indicated that 
pressure ulcers do develop in low risk individuals and that this 
exclusion will impact each PAC setting differently because the 
prevalence of low risk individuals varies across settings. The 
commenter recommended that CMS use a logistic regression model for risk 
adjustment to allow for an increase in the measure sample size by 
including all admissions, take into consideration low volume providers, 
and capture the development of pressure ulcers in low risk individuals. 
The commenter suggested that a patient or resident's risk is not 
dichotomous (for example, high risk vs. low risk) and recommended that 
CMS grade risk using an ordinal scale related to an increasing number 
and severity of risk factors. The commenter also expressed that the 
populations and types of risk for pressure ulcers varies significantly 
across PAC settings, and that using a logistic regression model would 
be a more robust way to include a wide range of risk factors to better 
reflect the population across PAC settings. The commenter noted that 
the TEP that evaluated this cross-setting pressure ulcer measure also 
recommended that CMS consider expanding the risk adjustment model and 
discussed excluding or risk adjusting for hospice patients and those at 
the end of life.
    Response: We thank the commenters for their support of the intent 
of this measure and for their recommendations regarding risk adjustment 
for this measure. Section 1899B(c)(3)(B) of the Act states that quality 
measures shall be risk adjusted, as determined appropriate by the 
Secretary. In regards to the commenter who recommended we risk adjust 
using a logistic regression model and incorporate low risk patients 
into the measure, we believe that this commenter may have submitted 
comments regarding the wrong quality measure. Their comments apply to 
the quality measure Percent of High Risk Residents with Pressure Ulcers 
(Long Stay) (NQF #0679), which is not the measure that we proposed for 
the SNF QRP. The proposed measure is the Percent of Residents or 
Patients with Pressure Ulcers that are New or Worsened (NQF #0678). 
This measure is currently risk adjusted using a logistic regression 
model and includes low risk residents. In the model, patients or 
residents are categorized as either high or low risk based on four risk 
factors: (1) Functional limitation; (2) bowel incontinence; (3) 
diabetes or peripheral vascular disease/peripheral arterial disease; 
and (4) low body mass index (BMI). An expected score is calculated for 
each patient or resident using that patient or resident's risk level on 
the four risk factors described above. The patient/resident-level 
expected scores are then averaged to calculate the facility-level 
expected score, which is compared to the facility-level observed score 
to calculate the adjusted score for each facility. Additional detail 
regarding risk adjustment for this measure is available in the measure 
specifications, available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    When developing the risk adjustment model for this measure, we 
reviewed the literature, conducted analyses to test additional risk 
factors, convened TEPs to seek stakeholder input, and obtained clinical 
guidance from subject matter experts and other stakeholders to identify 
additional risk factors. We have determined that risk adjustment is 
appropriate for this measure. Therefore, we have developed and 
implemented the risk adjustment model using the risk factors described 
above. Nonetheless, we will continue to analyze this measure as more 
data is collected and will consider changing the risk adjustment model, 
expanding the risk stratifications, and testing the inclusion of other 
risk factors as additional risk adjustors for future iterations of the 
measure. We will also take into consideration the TEP discussion and 
the commenter's feedback regarding the exclusion or risk adjustment for 
hospice patients and those at the end of life. As we transition to 
standardized data collection across PAC settings to meet the mandate of 
the IMPACT Act, we intend to continue our ongoing measure development 
and refinement activities to inform the ongoing evaluation of risk 
adjustment models and methodology. This continued refinement of the 
risk adjustment models will ensure that the measure remains valid and 
reliable to inform quality improvement within and across each PAC 
setting, and to fulfill the public reporting goals of QRPs, including 
the SNF QRP.
    Comment: One commenter requested that CMS consider risk adjusting 
the quality measure for sociodemographic status, to better reflect the 
realities that affect the care of special populations and the need for 
coordination with hospitals within a geographic region. The commenter 
suggested that some beneficiaries in certain populations are more 
complex, and therefore, their skin integrity may be compromised.
    Response: While we appreciate these comments and the importance of 
the role that sociodemographic status plays in the care of patients, we 
continue to have concerns about holding providers to different 
standards for the outcomes of their patients of low sociodemographic 
status because we do not want to mask potential disparities or minimize 
incentives to improve the outcomes of disadvantaged populations. We 
routinely monitor the impact of sociodemographic status on facilities' 
results on our measures.
    NQF is currently undertaking a 2-year trial period in which new 
measures and measures undergoing maintenance review will be assessed to 
determine if risk-adjusting for sociodemographic factors is appropriate 
for each measure. For 2 years, NQF will conduct a trial of a temporary 
policy change that will allow inclusion of sociodemographic factors in 
the risk-adjustment approach for some performance measures. At the 
conclusion of the trial, NQF will determine whether to make this policy 
change permanent. Measure developers must submit information such as 
analyses and interpretations as well as performance scores with and 
without sociodemographic factors in the risk adjustment model.
    Furthermore, the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) is conducting research to examine the impact of 
socioeconomic status on quality measures, resource use, and other 
measures under the Medicare program as directed by the IMPACT Act. We 
will closely examine the findings of these reports and related 
Secretarial recommendations and consider how they apply to our quality 
programs at such time as they are available.
    Comment: One commenter expressed concerns that although the MAP 
supports the cross-setting use of this measure, it is only NQF endorsed 
for the SNF setting and suggested that CMS delay implementing the 
cross-setting measure until it is NQF endorsed across all PAC settings. 
The commenter also pointed out that the specifications available on the 
NQF Web site are dated October 2013.
    Response: Although the proposed pressure ulcer measure was 
originally developed for the SNF/nursing home resident population, it 
has been re-specified for the LTCH and IRF settings, underwent review 
for expansion to the LTCH and IRF settings by the NQF Consensus 
Standards Approval

[[Page 46436]]

Committee (CSAC) on July 11, 2012 \38\ and was subsequently ratified by 
the NQF Board of Directors for expansion to the LTCH and IRF settings 
on August 1, 2012.\39\ As reflected on the NQF Web site the endorsed 
settings for this measure include Post-Acute/Long Term Care Facility: 
Inpatient Rehabilitation Facility, Post Acute/Long Term Care Facility: 
Long Term Acute Care Hospital, Post Acute/Long Term Care Facility: 
Nursing Home/Skilled Nursing Facility.\40\ NQF endorsement of this 
measure indicates that NQF supports the use of this measure in the LTCH 
and IRF settings, as well as in the SNF setting. As one commenter 
indicated, this measure was fully supported by the MAP for cross-
setting use at its meeting of February 9, 2015. With regard to the 
measure specifications posted on the NQF Web site, the most up-to-date 
version of the measure specifications were posted for stakeholder 
review at the time of the proposed rule on the CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Downloads/Skilled-Nursing-Facility-Quality-Reporting-Program-Quality-Measure-Specifications-for-FY-2016-Notice-of-Proposed-Rule-Making-report.pdf. The specifications currently 
posted on the NQF Web site are computationally equivalent and have the 
same measure components as those posted on the CMS Web site at the time 
of the proposed rule. However, we provided more detail in the 
specifications posted with the proposed rule, in an effort to more 
clearly explain aspects of the measure that were not as clear in the 
NQF specifications. Additionally, we clarified language to make 
phrasing more parallel across settings, and updated item numbers and 
labels to match the 2016 data sets (MDS 3.0, LTCH CARE Data Sets, and 
IRF-PAI). We are working closely with NQF to make updates and ensure 
that the most current language and clearest version of the 
specifications are available on the NQF Web site.
---------------------------------------------------------------------------

    \38\ Nation Quality Forum, Consensus Standardbreds Approval 
Committee. Meeting Minutes, July 11, 2012. 479-489.
    \39\ National Quality Forum. NQF Removes Time-Limited 
Endorsement for 13 Measures; Measures Now Have Endorsed Status. 
August 1, 2012. Available; http://www.qualityforum.org/News_And_Resources/Press_Releases/2012/NQF_Removes_Time-Limited_Endorsement_for_13_Measures;_Measures_Now_Have_Endorsed_Statu
s.aspx.
    \40\ National Quality Forum. Percent of Residents or Patients 
with Pressure Ulcers that are New or Worsened (Short-Stay). 
Available: http://www.qualityforum.org/QPS/0678.
---------------------------------------------------------------------------

    Comment: A few commenters expressed concern regarding the 
reliability and validity of this measure across different PAC settings. 
The commenters were concerned that the reliability and validity testing 
for this measure was only conducted in the SNF setting.
    Response: Although this measure was originally developed for the 
SNF setting, the NQF expanded its endorsement of the measure to the IRF 
and LTCH settings as a cross setting quality measure in 2012, and the 
expanded measure was finalized in the FY 2014 IRF PPS final rule (78 FR 
47911 through 47912) and the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50861 through 50863). As part of quality measure maintenance for this 
quality measure, we and our measure contractor will continue to perform 
reliability and validity testing. Early data analyses have shown that 
data continues to be valid and reliable.
    We appreciate the commenters' concern that the SNF, LTCH, and IRF 
populations are not identical and that some differences may exist in 
the reliability and validity of the measure across settings. We are 
working towards standardizing data across PAC settings as mandated in 
the IMPACT Act. As such, we continue to conduct measure development and 
testing to explore the best way to standardize quality measures, while 
ensuring reliability and validity for the measures to appropriately 
account for the unique differences in populations across PAC settings.
    Comment: Several commenters were concerned that the pressure ulcer 
measure is not standardized across PAC settings. The commenters stated 
that although the measure appears meets the goals and the intent of the 
IMPACT Act, it does not use a single data assessment tool.
    One commenter specifically mentioned the frequency of assessments, 
highlighting the fact that the LTCH and IRF versions of the measure are 
calculated using two assessment time-points (admission and discharge), 
while the SNF version uses multiple assessment time-points. The 
commenter expressed concern that the higher frequency of assessments 
for the MDS could potentially result in higher rates of pressure ulcer 
counts for SNFs. Another commenter voiced particular concerns regarding 
differences in the look-back periods, for the items used on the IRF, 
SNF, and LTCH assessments (MDS=7-day assessment period, IRF=3-day 
assessment period, LTCH = 3-day assessment period) and suggested that 
this would result in different rates of detection of new or worsened 
ulcers. Commenters encouraged CMS to address all of these 
discrepancies, and suggested that we should switch to using only an 
admission and discharge assessment in the SNF version of the measure.
    Response: We appreciate the commenters' review of the measure 
specifications across the post-acute care settings. We wish to clarify 
that while the IMPACT Act requires the modification of PAC assessment 
instruments to revise or replace certain existing patient assessment 
data with standardized patient assessment data as soon as practicable, 
it does not require a single data collection tool. We intend to modify 
the existing PAC assessment instruments as soon as practicable to 
ensure the collection of standardized data. While we agree that it is 
possible that within the PAC assessment instruments certain sections 
could incorporate a standardized assessment data collection tool, for 
example, the Brief Interview for Mental Status (BIMS), we have not yet 
concluded that this kind of modification of the PAC assessment 
instruments is necessary.
    As to the concern that the pressure ulcer measure calculation is 
based on more frequent assessments in the SNF setting than in the LTCH 
and IRF settings, we wish to clarify that result of the measure 
calculation for all three PAC providers is the same. For all three PAC 
providers, the measure calculation ultimately shows the difference 
between the number of pressure ulcers present on admission and the 
number of new or worsened pressure ulcers present on discharge. While 
SNF measure calculation arrives at that number differently than does 
the measure calculation in the IRF and LTCH settings, ultimately all 
three settings report the same result--as noted, the difference between 
the number of pressure ulcers present on admission and the new or 
worsened pressure ulcers at discharge. To explain, in IRFs and LTCHs, 
pressure ulcer assessment data is obtained only at two points in time--
on admission and on discharge. Therefore, the calculation of the 
measure includes all new or worsened pressure ulcers since admission. 
In contrast, in SNFs pressure ulcer assessment data is obtained on 
admission, at intervals during the stay (referred to as ``interim 
assessments''), and at discharge. Each interim assessment and the 
discharge assessment only look back to whether there were new or 
worsened pressure ulcers since the last interim assessment. The sum of 
number of new or worsened pressure ulcers identified at each interim 
assessment and at the time of discharge yields the total number of new 
or worsened pressure ulcers that

[[Page 46437]]

occurred during the stay and that were present on discharge. In other 
words, the collection of pressure ulcer data in LTCHs and IRFs is 
cumulative, whereas in SNFs, data collection is sequential. In both 
cases the calculation reaches the same result--the total number of new 
or worsened pressured ulcers between admission and discharge. Thus, 
this is the same result of the measure calculation for SNFs as is 
obtained for IRFs and LTCHs. With respect to the commenter's concern 
that the use of interim assessment periods on the MDS will result in a 
higher frequency of pressure ulcers for SNF residents, we clarify that 
pressure ulcers found during interim assessments that heal before 
discharge are not included in the measure calculation.
    In regards to the commenter's concern about different look-back 
periods, we acknowledge that although the LTCH CARE Data Set and IRF-
PAI allow up to the third day starting on the day of admission as the 
assessment period and the MDS allows for an assessment period of 
admission up to day 7, we note that the training manuals for SNFs, 
LTCHs and IRFs provide specific and equivalent-coding instructions 
related to the items used to calculate this measure (found in Section 
M--skin conditions for all three assessments). These instructions 
ensure that the assessment of skin integrity occurs at the initiation 
of patients' or residents' PAC stays regardless of setting. All three 
manuals direct providers to complete the skin assessment for pressure 
ulcers present on admission as close to admission as possible, ensuring 
a harmonized approach to the timing of the initial skin assessment. 
Regardless of differences in the allowed assessment periods, providers 
across PAC settings should adhere to best clinical practices, 
established standards of care, and the instructions in their respective 
training manuals, to ensure that skin integrity information is 
collected as close to admission as possible. Although the manual 
instructions are harmonized to ensure assessment at the beginning of 
the stay, based on the commenter's feedback, we will take into 
consideration the incorporation of uniform assessment periods for this 
section of the assessments.
    Comment: Commenters expressed concerns about the pressure ulcer 
measure not being standardized across PAC settings, specifically noting 
differences in the payers that are required to report patient or 
resident data for this measure resulting in differences in the 
denominators for each setting. Commenters also expressed concern with 
the exclusion of Medicare Advantage beneficiaries from the numerator 
and denominator for this measure. One commenter noted that measures 
based on only Medicare FFS beneficiaries may be incomplete, because 
according to some estimates, only about half of SNF residents are 
covered by Medicare FFS.
    In a related comment, a commenter expressed concern regarding 
differences in the populations across quality measures in the SNF QRP. 
The commenters stated that the falls measure (NQF #0674) and function 
measure (NQF #2631) include only Medicare FFS residents, while the 
pressure ulcer measure (NQF #0678) includes all short-stay NH 
residents. The commenter mentioned that this inconsistency could result 
in confusion for providers because of the varying denominators across 
measures.
    Response: We appreciate the commenters' comments pertaining to the 
differences in the pressure ulcer quality measure denominators by payer 
type across the IRF, SNF and LTCH settings. Additionally, we appreciate 
the commenters' suggested expansion of the population used to calculate 
all measures to include payer sources beyond Medicare PPS Part A and 
agree that quality measures that include all persons treated in a 
facility are better able to capture the health outcomes of that 
facility's patients or residents, and that quality reporting on all 
patients or residents is a worthy goal. Although we currently collect 
data only on the SNF and the IRF Medicare populations, we believe that 
quality care is best assessed through the collection of patient data 
regardless of payer source and we agree that consistency in the data 
would reduce confusion in data interpretation and enable a more 
comprehensive evaluation of quality. We appreciate the commenter's 
concerns and although we had not proposed all payer data collection 
through this current rulemaking, we will take into consideration the 
expansion of the SNF QRP to include all payer sources through future 
rulemaking.
    Comment: One commenter asked CMS to clarify how the addition of the 
proposed SNF PPS Part A Discharge Assessment will impact the measure 
specifications for the numerator and denominator of the pressure ulcer 
measure. The commenter noted that CMS proposed modifying the MDS 
discharge assessment to collect information for Part A FFS Medicare 
beneficiaries who continue in the SNF after ending their Part A stay, 
but did not clarify how this change will be implemented in the proposed 
pressure ulcer measure. The commenter is concerned that if the new MDS 
discharge assessment is not modified to add the pressure ulcer measure 
assessment items, the measure will exclude individuals who are admitted 
but not discharged from the SNF during their PAC stay, which will limit 
CMS's ability to provide meaningful information to provider and 
consumers. Finally the commenter expressed concern regarding the 
increase in burden that will be required to complete this assessment, 
and encouraged CMS to only include the minimum information necessary to 
calculate the quality measures.
    Response: We proposed that the SNF PPS Part A Discharge Assessment 
would include the pressure ulcer data elements for the quality measure, 
the Percent of Residents or Patients with Pressure Ulcers that are New 
or Worsened (Short stay) (NQF #0678), in order to capture complete 
pressure ulcer information for Medicare beneficiaries who continue in 
the SNF after the end of a Part A stay (-all information between 
admission and discharge or end of a Part A stay). For more information 
on the Part A PPS Discharge assessment, we direct readers to the 
specifications posted on the SNF QRP Measures and Technical Information 
Web site, at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Comment: Many commenters expressed concern with the accuracy of 
data used to calculate the pressure ulcer measure. One commenter was 
specifically concerned that CMS excludes residents or patients for whom 
missing data precludes calculation of the measure from the measure 
calculations. The commenter expressed that this exclusion may lead to 
miscoding because if a facility recognizes that a resident is 
declining, it can simply omit some data for that resident, ensuring 
that the resident is excluded from the measure. The commenter 
referenced several different media reports that highlight the 
seriousness of gaming of MDS 3.0 data. One commenter noted a recent 
survey that identified deficiencies in reporting by a small sample of 
SNFs.
    Response: As discussed below, we are finalizing our proposal that 
beginning with the FY 2018 payment determination, any SNF that does not 
meet the requirement that 80 percent of all MDS assessments submitted 
contain 100 percent of all data items necessary to calculate the SNF 
QRP measures would be subject to a reduction of 2

[[Page 46438]]

percentage points to its FY 2018 market basket percentage. This 
requirement will provide an incentive to SNFs to submit complete MDS 
3.0 assessments. Analysis of 2014 MDS 3.0 data submitted for the NHQI 
indicates that for each of the three items used to calculate the 
pressure ulcer measure (M0800A, M0800B, and M0800C), missing data for 
calculating measures were approximately 0.1 percent across all target 
assessments in a given quarter. Less than 0.1 percent of residents were 
excluded due to missing all three items needed to calculate the 
measure, suggesting that missing data is not a serious concern. 
Further, we intend to align with other QRPs and propose through future 
rulemaking a data validation process that will further ensure that data 
reported for the SNF QRP is accurate and complete.
    Comment: One commenter asked CMS to clarify whether the pressure 
ulcer measure proposed for the SNF QRP can be reported using the 
current MDS 3.0 pressure ulcer items, or if new items would be required 
for this measure. The commenter asked if SNFs would be required to 
submit different data for the SNF QRP and the Nursing Home Quality 
Initiative.
    Response: The proposed pressure ulcer measure is the same measure 
that nursing homes have been reporting for short stay residents through 
CMS's Nursing Home Quality Initiative since 2010. The items used to 
calculate the measure are the same in the SNF QRP and the Nursing Home 
Quality Initiative. SNFs will only be required to submit data for this 
measure once to fulfill the requirements of both programs.
    Comment: One commenter was concerned that the MDS 3.0 data does not 
adequately capture multiple pressure ulcers and presence at admission 
for each wound. The commenter was concerned that this could result in 
confusion for SNFs as they may lose track of which ulcers were present 
on admission and which are new or worsened, resulting in inaccurate 
counts in the quality measure.
    Response: The MDS 3.0 does not require SNF providers to provide 
individual tracking information for each pressure ulcer. However, we 
note that the MDS does not replace standard clinical practice. We 
expect that all SNFs are conducting comprehensive skin assessments 
throughout the stay and documenting all of the necessary information to 
fully prevent and manage pressure ulcers for all residents. As such 
SNFs are able to utilize the data they collect as part of standard 
clinical practice to track and manage pressure ulcers, in order to 
complete the MDS 3.0 items related to the improvement and worsening of 
pressure ulcers during the resident's Part A covered stay in the 
facility.
    Comment: One commenter did not support the proposed measure, the 
Percent of Residents or Patients with Pressure Ulcers that are New or 
Worsened (Short Stay) (NQF #0678). The commenter was concerned that the 
measure timeframe is too short to properly capture pressure ulcer 
improvement, disadvantaging facilities that serve more frail 
populations. The commenter indicated that capturing a healed pressure 
ulcer is particularly difficult as SNFs have a very limited amount of 
time from admission to the end of a short-stay episode to heal a 
pressure ulcer.
    Response: We would like to clarify that the proposed quality 
measure assesses the percent of residents or patients with Stage 2-4 
pressure ulcers that are new or worsened since the prior assessment, 
and does not focus on capturing the improvement of pressure ulcers. 
This measure specifies that if a pressure ulcer is present on admission 
and worsened during the stay, it would be included in the numerator. 
Further, if the pressure ulcer is present on admission, and did not 
worsen during the stay, it would not be included in the numerator. We 
agree with the commenter that the timeframe is often too short to heal 
pressure ulcers amongst the frail and elderly population; therefore the 
measure does not capture information about healed pressure ulcers. 
Rather, the intent of the measure is to hold providers accountable for 
preventing the worsening of or onset of new pressure ulcers.
    Comment: One commenter expressed concern that SNFs with a sub-acute 
unit will be at risk for reporting higher percentages of residents or 
patients with pressure ulcers than SNFs that do not have a designated 
sub-acute unit under the proposed measure.
    Response: We agree that some SNF residents are at higher risk for 
developing new or worsened pressure ulcers. However, pressure ulcers 
are severe, life threatening, and high-cost adverse events, and many 
SNF residents may have medically complex conditions that put them at 
high risk for the development or worsening of pressure ulcers. Given 
their impact on mortality, morbidity, and quality of life, we believe 
that SNFs should be responsible for preventing and managing pressure 
ulcers among both high and low risk residents or patients and that 
facilities with certain types of patients should not be exempt from 
reporting new or worsened pressure ulcers. In effort to account for the 
added challenges that facilities with more high risk residents may 
face, the proposed quality measure is risk adjusted for four risk 
factors: (1) Functional limitation, (2) bowel incontinence, (3) 
diabetes or peripheral vascular disease/peripheral arterial disease, 
and (4) low body mass index (BMI).
    Comment: Many commenters encouraged CMS to align measures where 
possible with existing CMS initiatives, across settings, and payments 
types.
    Response: We strive to harmonize and align quality measures across 
initiatives, settings, and payment types whenever possible and will 
continue to do so as we develop and implement quality measures under 
the IMPACT Act.
    Final Decision: Having carefully considered the comments we 
received on the quality measure, the Percent of Residents or Patients 
with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), 
we are finalizing the adoption of this measure for use in the SNF QRP.
    As part of our ongoing measure development efforts, we are 
considering a future update to the numerator of the quality measure, 
the Percent of Residents or Patients with Pressure Ulcers that are New 
or Worsened (Short Stay) (NQF #0678). This update would require PAC 
providers to report the development of unstageable pressure ulcers, 
including suspected deep tissue injuries (sDTIs). Under this potential 
change we are considering, the numerator of the quality measure would 
be updated to include unstageable pressure ulcers, including sDTIs that 
are new/developed in the facility, as well as Stage 1 or 2 pressure 
ulcers that become unstageable due to slough or eschar (indicating 
progression to a stage 3 or 4 pressure ulcer) after admission. SNFs are 
already required to complete the unstageable pressure ulcer items on 
the MDS 3.0. As such, this update would require a change in the way the 
measure is calculated but would not increase the data collection burden 
for SNFs.
    A TEP convened by our measure development contractor strongly 
recommended that CMS update the specifications for the measure to 
include these pressure ulcers in the numerator, although it 
acknowledged that unstageable pressure ulcers and sDTIs cannot and 
should not be assigned a numeric stage. The TEP also recommended that a 
Stage 1 or 2 pressure ulcer that becomes unstageable due to slough or 
eschar should be

[[Page 46439]]

considered worsened because the presence of slough or eschar indicates 
a full thickness (equivalent to Stage 3 or 4) wound.41 42 
These recommendations were supported by technical and clinical advisors 
and the National Pressure Ulcer Advisory Panel.\43\ Additionally, 
exploratory data analysis conducted by our measure development 
contractor suggests that the addition of unstageable pressure ulcers, 
including sDTIs, will increase the observed incidence of new or 
worsened pressure ulcers at the facility level and may improve the 
ability of the quality measure to discriminate between poor- and high-
performing facilities.
---------------------------------------------------------------------------

    \41\ Schwartz, M., Nguyen, K.H., Swinson Evans, T.M., Ignaczak, 
M.K., Thaker, S., and Bernard, S.L.: Development of a Cross-Setting 
Quality Measure for Pressure Ulcers: OY2 Information Gathering, 
Final Report. Centers for Medicare & Medicaid Services, November 
2013. Available: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Quality-Measure-for-Pressure-Ulcers-Information-Gathering-Final-Report.pdf.
    \42\ Schwartz, M., Ignaczak, M.K., Swinson Evans, T.M., Thaker, 
S., and Smith, L.: The Development of a Cross-Setting Pressure Ulcer 
Quality Measure: Summary Report on November 15, 2013, Technical 
Expert Panel Follow-Up Webinar. Centers for Medicare & Medicaid 
Services, January 2014. Available: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Pressure-Ulcer-Quality-Measure-Summary-Report-on-November-15-2013-Technical-Expert-Pa.pdf.
    \43\ Schwartz, M., Nguyen, K.H., Swinson Evans, T.M., Ignaczak, 
M.K., Thaker, S., and Bernard, S.L.: Development of a Cross-Setting 
Quality Measure for Pressure Ulcers: OY2 Information Gathering, 
Final Report. Centers for Medicare & Medicaid Services, November 
2013. Available: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Quality-Measure-for-Pressure-Ulcers-Information-Gathering-Final-Report.pdf.
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    We invited public comments to inform our consideration of the 
inclusion of unstageable pressure ulcers, including sDTIs in the 
numerator of the quality measure, the Percent of Residents or Patients 
with Pressure Ulcers that are New or Worsened (Short Stay) (NQF #0678) 
as part of our future measure development efforts. The following is a 
summary of the comments received and our responses.
    Comment: One commenter supported our proposal to include 
unstageable pressure ulcers and suspected deep tissue injuries in the 
numerator of the proposed quality measure as an area for future measure 
development. The commenter agreed that these cases should be included 
in the measure population.
    Response: As noted, the recommendation addresses an important 
clinical concern, and may improve the ability of the quality measure to 
discriminate between poor and high-performing facilities. As we 
consider the possibility of adding unstageable pressure ulcers and 
suspected deep tissue injuries to the numerator, we will carefully 
consider all comments received from stakeholders.
    Comment: Several commenters were supportive of our proposal to 
include unstageable pressure ulcers (we interpret their comment as 
referring to unstageable pressure ulcers due to slough or eschar and 
due to non-removable dressing/device) in the numerator of the quality 
measure as an area for future measure development, but expressed 
reservations about the possible future inclusion of suspected deep 
tissue injuries (sDTIs) in the numerator of the Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short Stay) 
(NQF #0678) quality measure. Commenters cited information from the 
National Pressure Ulcer Advisory Council suggesting that sDTIs can take 
between 72 hours and seven days to become visible, indicating that 
there is no reliable and consistent way to determine whether an sDTI at 
admission is facility acquired or not. Commenters also mentioned 
confusion surrounding pressure ulcers that are unavoidable or times 
when prevention is not possible. Finally, multiple commenters stated 
that the time frame during which sDTIs become visible varies and there 
is potential for miscoding, both of which may make this an unreliable 
quality measure.
    One commenter requested more information about how this change 
would be incorporated into the measure specifications. The commenter 
also requested more information regarding the impact this change would 
have on the reliability and validity of the measure, as well as how it 
may impact the risk adjustment methodology. Finally the commenter 
encouraged CMS to submit any proposed changes through NQF review and 
specify all details in future rule making. Commenters also encouraged 
CMS to update the coding instructions for the RAI manual if this change 
is made, apply this change across all PAC settings, and gather 
additional stakeholder and expert input on this change prior to 
implementation.
    Response: We appreciate the recommendations regarding the approach 
to future implementation. We will continue to conduct analyses and 
solicit input before making any final decisions regarding this possible 
change to the measure specifications. We intend to continue monitoring 
the literature, conduct reliability and validity testing, seek input 
from subject matter experts and stakeholders, and participate in 
ongoing refinement activities to inform this measure before proposing 
to adopt any changes. Should we move forward with the addition of 
unstageable and sDTIs to the measure numerator, we intend to submit any 
changes through NQF, provide information that will allow providers to 
accurately interpret and complete quality reporting items, ensure that 
the MDS 3.0 Resident Assessment Instrument Manual and training 
materials provide accurate and up-to-date coding instructions for all 
items, and seek public comment on future measure concepts or revisions.
    In regard to the commenters' concerns regarding sDTIs, we believe 
that it is important to do a thorough admission assessment on each 
resident or patient who is admitted to a SNF, including a thorough skin 
assessment documenting the presence of any pressure ulcers of any 
kind--including sDTIs. When considering the addition of sDTIs to the 
measure numerator, we convened cross-setting TEPs in June and November 
2013, and obtained input from clinicians, experts, and other 
stakeholders. While we agree that ongoing research is needed, sDTIs are 
a serious medical condition and given their potential impact on 
mortality, morbidity, and quality of life, it may be detrimental to the 
quality of care to exclude them from future quality measures. We thank 
the commenters for their feedback and we will take into account the 
recommendations regarding the challenges in determining whether an sDTI 
at admission is facility acquired or not, the difficulty in coding 
sDTIs, and the confusion surrounding pressure ulcers that are 
unavoidable or times when prevention is not possible.
    Comment: One commenter did not support the addition of unstageable 
pressure ulcers in the numerator of the Percent of Residents or 
Patients with Pressure Ulcers That Are New or Worsened (Short Stay) 
(NQF #0678) quality measure. The commenter was concerned that the 
measure timeframe is too short to properly capture pressure ulcer 
improvement, disadvantaging facilities that serve more frail 
populations. The commenter indicated that capturing a healed 
unstageable pressure ulcer is particularly difficult as SNFs have a 
very limited amount of time from admission to the end of a short-stay 
episode to heal a pressure ulcer.
    Response: We will take all stakeholder feedback into account as we 
consider the possibility of including unstageable pressure ulcers, 
including

[[Page 46440]]

sDTIs in the numerator of the quality measure in the future.
(2) Quality Measure Addressing the Domain of the Incidence of Major 
Falls: An Application of the Measure Percent of Residents Experiencing 
One or More Falls with Major Injury (Long Stay) (NQF #0674)
    We proposed to adopt beginning with the FY 2018 SNF QRP, an 
application to the SNF setting of the Percent of Residents Experiencing 
One or More Falls with Major Injury (Long Stay) (NQF #0674) measure 
that satisfies the incidence of major falls domain. This outcome 
measure reports the percentage of residents who have experienced falls 
with major injury during episodes ending in a 3-month period. This 
measure was developed by CMS and is NQF-endorsed for long-stay 
residents of NFs.
    Research indicates that fall-related injuries are the most common 
cause of accidental death in people aged 65 and older, responsible for 
approximately 41 percent of accidental deaths annually.\44\ Rates 
increase to 70 percent of accidental deaths among individuals aged 75 
and older.\45\ In addition to death, falls can lead to fracture, soft 
tissue or head injury, fear of falling, anxiety, and depression.\46\ 
Research also indicates that approximately 75 percent of nursing 
facility residents fall at least once a year. This is twice the rate of 
their counterparts in the community.\47\ Further, it is estimated that 
10 percent to 25 percent of nursing facility resident falls result in 
fractures and/or hospitalization.\48\
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    \44\ Currie LM. Fall and injury prevention. Annu Rev Nurs Res. 
2006;24:39-74.
    \45\ Fuller GF. Falls in the elderly. Am Fam Physician. Apr 1 
2000;61(7):2159-2168, 2173-2154.
    \46\ Love K, Allen J. Falls: why they matter and what you can 
do. Geriatr Nurs, 2011; 32(3): 206-208.
    \47\ Rubenstein LZ, Josephson KR, Robbins AS. Falls in the 
nursing home. Ann Intern Med. 1994 Sep 15; 121(6):442-51.
    \48\ Vu MQ, Weintraub N, Rubenstein LZ. Falls in the nursing 
home: are they preventable? J Am Med Dir Assoc. 2004 Nov-Dec; 
5(6):401-6. Review.
---------------------------------------------------------------------------

    Falls also represent a significant cost burden to the entire health 
care system, with injurious falls accounting for 6 percent of medical 
expenses among those age 65 and older.\49\ In one study, Sorensen et 
al. estimated the costs associated with falls of varying severity among 
nursing home residents.\50\ Their work suggests that acute care costs 
incurred for falls among nursing home residents range from $979 for a 
typical case with a simple fracture to $14,716 for a typical case with 
multiple injuries. A similar study of hospitalizations of nursing home 
residents due to serious fall-related injuries (intracranial bleed, hip 
fracture, other fracture) found an average cost of $23,723.\51\ Among 
the SNF population, the average 6-month cost of a resident with a hip 
fracture was estimated at $11,719 in 1996 U.S. dollars.\52\
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    \49\ Tinetti ME, Williams CS. The effect of falls and fall 
injuries on functioning in community-dwelling older persons. J 
Gerontol A Biol Sci Med Sci. 1998 Mar;53(2):M112-9.
    \50\ Sorensen SV, de Lissovoy G, Kunaprayoon D, Resnick B, 
Rupnow MF, Studenski S. A taxonomy and economic consequence of 
nursing home falls. Drugs Aging. 2006;23(3):251-62.
    \51\ Quigley PA, Campbell RR, Bulat T, Olney RL, Buerhaus P, 
Needleman J. Incidence and cost of serious fall-related injuries in 
nursing homes. Clin Nurs Res. Feb 2012;21(1):10-23.
    \52\ Kramer AM, Steiner JF, Schlenker RE, et al. Outcomes and 
costs after hip fracture and stroke: a comparison of rehabilitation 
settings. JAMA. 1997;277(5):396-404.
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    According to Morse, 78 percent of falls are anticipated physiologic 
falls, which are falls among individuals who scored high on a risk 
assessment scale, meaning their risk could have been identified in 
advance of the fall.\53\ To date, studies have identified a number of 
risk factors for falls.54 55 56 57 58 59 60 61 62 The 
identification of such risk factors suggests the potential for health 
care facilities to reduce and prevent the incidence of falls. The 
Percent of Residents Experiencing One or More Falls with Major Injury 
(Long Stay) (NQF #0674) quality measure is NQF-endorsed and has been 
successfully implemented in the Nursing Home Quality Initiative for 
nursing facility long-stay residents since 2011. In addition, the 
quality measure is currently publicly reported on CMS's Nursing Home 
Compare Web site at http://www.medicare.gov/nursinghomecompare/search.html. Further, an application of the quality measure was adopted 
for use in the LTCH QRP in the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50874 through 50877). In the FY 2015 IPPS/LTCH PPS final rule (79 FR 
50290), we revised the data collection period for this measure with 
data collection to begin starting April 1, 2016.
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    \53\ Morse, J. M. (2002) Enhancing the safety of hospitalization 
by reducing patient falls. Am J Infect Control 2002; 30(6): 376-80.
    \54\ Rothschild JM, Bates DW, Leape LL. Preventable medical 
injuries in older patients. Arch Intern Med. 2000 Oct 9; 
160(18):2717-28.
    \55\ Morris JN, Moore T, Jones R, et al. Validation of long-term 
and post-acute care quality indicators. CMS Contract No: 500-95-
0062/T.O. #4. Cambridge, MA: Abt Associates, Inc., June 2003.
    \56\ Avidan AY, Fries BE, James ML, Szafara KL, Wright GT, 
Chervin RD. Insomnia and hypnotic use, recorded in the minimum data 
set, as predictors of falls and hip fractures in Michigan nursing 
homes. J Am Geriatr Soc. 2005 Jun; 53(6):955-62.
    \57\ Fonad E, Wahlin TB, Winblad B, Emami A, Sandmark H. Falls 
and fall risk among nursing home residents. J Clin Nurs. 2008 Jan; 
17(1):126- 34.
    \58\ Currie LM. Fall and injury prevention. Annu Rev Nurs Res. 
2006; 24:39-74.
    \59\ Ellis AA, Trent RB. Do the risks and consequences of 
hospitalized fall injuries among older adults in California vary by 
type of fall? J Gerontol A Biol Sci Med Sci. Nov 2001; 56(11):M686-
692.
    \60\ Chen XL, Liu YH, Chan DK, Shen Q, Van Nguyen H. Chin Med J 
(Engl). Characteristics associated with falls among the elderly 
within aged care wards in a tertiary hospital: a retrospective. 2010 
Jul; 123(13):1668-72.
    \61\ Frisina PG, Guellnitz R, Alverzo J. A time series analysis 
of falls and injury in the inpatient rehabilitation setting. Rehabil 
Nurs. 2010 JulAug; 35(4):141-6, 166.
    \62\ Lee JE, Stokic DS. Risk factors for falls during inpatient 
rehabilitant Am J Phys Med Rehabil. 2008 May; 87(5):341-50; quiz 
351, 422.
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    Although the quality measure, the Percent of Residents Experiencing 
One or More Falls with Major Injury (Long Stay) (NQF #0674) is not 
currently endorsed for the SNF setting, we reviewed the NQF's consensus 
endorsed measures and were unable to identify any NQF-endorsed cross-
setting quality measures for that setting that are focused on falls 
with major injury. We are aware of one NQF-endorsed measure, Falls with 
Injury (NQF #0202), which is a measure designed for adult acute 
inpatient and rehabilitation patients capturing ``all documented 
patient falls with an injury level of minor or greater on eligible unit 
types in a calendar quarter, reported as injury falls per 100 days.'' 
\63\ NQF #0202 is not appropriate to meet the IMPACT Act domain as it 
includes minor injury in the numerator definition. Additionally, 
including all falls could result in providers limiting the freedom of 
activity for individuals at higher risk for falls. We are unaware of 
any other cross-setting quality measures for falls with major injury 
that have been endorsed or adopted by another consensus organization 
for the SNF setting. Therefore, we proposed to adopt this measure under 
the Secretary's authority to specify non-NQF-endorsed measures under 
section 1899B(e)(2)(B) of the Act.
---------------------------------------------------------------------------

    \63\ American Nurses Association (2014, April 9). Falls with 
injury. Retrieved from http://www.qualityforum.org/QPS/0202.
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    A TEP convened by our measure development contractor provided input 
on the technical specifications of an application of the quality 
measure, the Percent of Residents Experiencing One or More Falls with 
Major Injury (Long Stay) (NQF #0674), including the feasibility of 
implementing the measure across PAC settings. The TEP was supportive of 
the implementation of this measure across PAC settings and was also 
supportive of our efforts to standardize this measure for cross-

[[Page 46441]]

setting development. The MAP conditionally supported the use of an 
application of the quality measure, the Percent of Residents 
Experiencing One or More Falls with Major Injury (Long Stay) (NQF 
#0674) in the SNF QRP as a cross-setting quality measure. More 
information about the MAP's recommendations for this measure is 
available in the report entitled MAP Off-Cycle Deliberations 2015: 
Measures under Consideration to Implement Provisions of the IMPACT Act 
are available at http://www.qualityforum.org/Project_Pages/MAP_Post-Acute_CareLong-Term_Care_Workgroup.aspx.
    More information on the NQF-endorsed quality measure, the Percent 
of Residents Experiencing One or More Falls with Major Injury (Long 
Stay) (NQF #0674) is available at http://www.qualityforum.org/QPS/0674.
    We proposed that data for this quality measure would be collected 
using the MDS 3.0, currently submitted by SNFs through the QIES ASAP 
system for the reason noted previously.
    The data items that we will use to calculate this proposed quality 
measure include: J1800 (Any Falls Since Admission/Entry (OBRA or 
Scheduled PPS) or Reentry or Prior Assessment, whichever is more 
recent); and J1900 (Number of Falls Since Admission/Entry (OBRA or 
Scheduled PPS) or Reentry or Prior Assessment, whichever is more 
recent). This measure will be calculated at the time of discharge (see 
Proposed Form, Manner, and Timing of Quality Data Submission). The 
specifications for an application of the quality measure, the Percent 
of Residents Experiencing One or More Falls with Major Injury (Long 
Stay) (NQF #0674) for the SNF population are available on our SNF QRP 
measures and technical Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    We referred readers to the Form, Manner, and Timing of Quality Data 
Submission section of the FY 2016 SNF PPS proposed rule (79 FR 22076 
through 22077) for more information on the proposed data collection and 
submission timeline for this proposed quality measure.
    We invited public comments on our proposal to adopt an application 
of the quality measure, the Percent of Residents Experiencing One or 
More Falls with Major Injury (Long Stay) (NQF #0674) for the SNF QRP 
beginning with the FY 2018 payment determination. The comments we 
received on this topic, with their responses, appear below.
    Comment: Several commenters supported our proposal to implement an 
application of the quality measure, the Percent of Residents 
Experiencing One or More Falls with Major Injury (Long Stay) (NQF 
#0674) to fulfill the requirements of the IMPACT Act.
    Response: We thank the commenters for their support.
    Comment: One commenter supported measuring falls in SNFs, but 
stated a preference for measuring falls ``with or without injury'' and 
``assisted or non-assisted'' and tracking by preventable falls 
(resident-related or environment-and other-related) and non-preventable 
(resident conditions like fainting).
    Response: The proposed application of the quality measure, the 
Percent of Residents Experiencing One or More Falls with Major Injury 
(Long Stay) (NQF #0674) assesses falls with major injuries, satisfying 
the domain in section 1899B(c)(1)(D) of the Act, the Incidence of Major 
Falls. We believe this domain mandates a quality measure related to 
falls with major injury. We agree that a provider's tracking of falls 
is important for the purpose of ensuring resident safety. The 
information suggested by the commenter for collection is already 
included in the MDS 3.0 enabling SNFs to track all falls, regardless of 
injury by including items indicating the number of falls with and 
without injury. The data elements used to track all falls, including 
major injury, J1800, J1900 A, B and C, are collected to ensure the 
reliability of the data. We note that Measure #0674 has been NQF-
endorsed based on the manner in which it is calculated now, and its 
inter-rater reliability is based on the data collection of J1900 A, B 
and C. The measure has been tested, validated, and endorsed as it is 
currently collected, and to maintain our current accuracy, we have 
proposed to maintain those methods.
    Comment: Several comments supported the addition of the proposed 
quality measure to the SNF QRP, but urged that the measure be risk 
adjusted, expressing concerns that public reporting of falls with 
injury rates across settings would be inappropriate without taking into 
account differences in resident acuity and other characteristics, such 
as cognition and socioeconomic status. One commenter stated that falls 
occur for various reasons, some of them unavoidable, and therefore, 
fall rates may not be suitable for quality comparison suggesting that 
it would be improper to use the measure in pay-for performance models. 
Another commenter suggested that falls with major injuries ``are a 
never event'' (that is, events or medical errors that should never 
transpire, such as falls that happen in a health care setting that 
result in patient death or serious injury[).\64\ Another commenter 
cited American and British Geriatrics Society guidelines, which find no 
clear evidence on falls prevention. Some commenters pointed out that 
the TEP convened in 2015 recommended risk adjustment for cognitive 
impairment, which several commenters also supported, and one commenter 
asked whether the TEP was presented the current specifications of the 
cross-setting falls measure. One commenter provided support for risk 
adjustment by pointing out that the references cited in the proposed 
rule indicate that risks for falls vary by resident characteristics, 
that the State Operations Manual (SOM) for SNFs provides guidance for 
evaluating residents for risk for falls, and that documentation for not 
risk adjusting the measure was not provided in the proposed rule. The 
same commenter pointed to the PAC Payment Reform Demonstration (PAC 
PRD), in which the commenter stated that the research indicated that 
the risk of falls with injury differs across post-acute settings. 
Several commenters also stated that risk adjustment is required by the 
IMPACT Act, and that the MAP suggested that the measure should be risk 
adjusted.
---------------------------------------------------------------------------

    \64\ National Quality Forum (NQF), Serious Reportable Events In 
Healthcare--2011 Update: A Consensus Report, Washington, DC: NQF; 
2011.
---------------------------------------------------------------------------

    Response: We appreciate the commenters' suggestions that the 
proposed application of the quality measure, the Percent of Residents 
Experiencing One or More Falls with Major Injury (Long Stay) (NQF 
#0674) should be risk adjusted. The application of risk adjustment, as 
stated by the IMPACT Act, is ``as determined appropriate by the 
Secretary'' under section 1899B(c)(3)(B) of the Act.
    While we acknowledge that resident characteristics that elevate 
risk for falls with major injury vary across the SNF population, a TEP 
convened in 2009 by the measurement development contractor concluded 
that risk adjustment of this quality measure concept was inappropriate 
because it is each facility's responsibility to take steps to reduce 
the rate of injurious falls, especially since such events are 
considered to be ``never events.'' We note that the PAC PRD did not 
analyze falls with major injury, as falls with major injury was not an 
assessment item that was tested. However, as the commenter pointed out, 
the prevalence

[[Page 46442]]

of a history of falls prior to the PAC admission did vary across post-
acute settings (as assessed by Item B7 from the CARE tool: ``History of 
Falls. Has the patient had two or more falls in the past year or any 
fall with injury in the past year? ''). Nonetheless, we believe that as 
part of best clinical practice, SNFs should assess residents for falls 
risk and take steps to prevent future falls with major injury.
    The numerator, denominator, and exclusions definitions provided to 
the TEP in 2015 are virtually identical to the specifications we 
proposed to adopt for this measure, and did not include risk 
adjustment. Two out of 11 members of the 2015 TEP supported risk 
adjustment of the falls measure for cognitive impairment, but it was 
not the majority position. For more information on the 2015 TEP, please 
visit http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/SUMMARY-OF-FEEDBACK-FROM-THE-TECHNICAL-EXPERT-PANEL-TEP-REGARDING-CROSS-SETTING-MEASURES-ALIGNED-WITH-THE-IMPACT-ACT-OF-2014-Report.pdf.
    We believe factors that increase the risk of falling, such as 
cognitive impairment, should be included by facilities in their risk 
assessment to support proper care planning. As cited in the proposed 
rule, research suggests that 78 percent of falls are anticipated falls, 
occurring in individuals who could have been identified as at-risk for 
a fall using a risk-assessment scale. Risk adjusting for falls with 
major injury could unintentionally lead to insufficient risk prevention 
by the provider. As required by the Deficit Reduction Act of 2007, the 
Hospital Acquired Conditions-Present On Admission (HAC-POA) Indicator 
Reporting provision requires a quality adjustment in the Medicare 
Severity-Diagnosis Related Groups (MS-DRG) payments for certain HACs, 
which include falls and trauma, and these payment reductions are not 
risk adjusted. Furthermore, we note that the State Operations Manual 
(SOM) provides guidance for SNFs to assess resident risk for falls with 
the intent to aid providers in prevention of falls. The need for risk 
assessment, based on varying risk factors among residents, does not 
remove the obligation of providers to minimize that risk.
    With regard to the MAP recommendation to risk adjust this measure 
cited by the commenter, the MAP feedback regarding risk adjustment for 
this quality measure applied to the home health setting, not to the SNF 
setting. We also refer readers to a more recent Cochrane review of 60 
randomized controlled trials, which found that within care facilities, 
multifactorial interventions have the potential to reduce rates of 
falls and risk of falls.\65\
---------------------------------------------------------------------------

    \65\ Cameron ID, Gillespie LD, Robertson MC, Murray GR, Hill KD, 
Cumming RG, Kerse N. Interventions for preventing falls in older 
people in care facilities and hospitals. Cochrane Database of 
Systematic Reviews 2012, Issue 12. Art. No.: CD005465. DOI: 10.1002/
14651858.CD005465.pub3.
---------------------------------------------------------------------------

    Comment: One commenter requested that CMS consider risk adjusting 
the proposed application of the quality measure, the Percent of 
Residents Experiencing One or More Falls with Major Injury (Long Stay) 
(NQF #0674) for sociodemographic status, to better reflect the 
realities that affect the care of special populations and the need for 
coordination with hospitals within a geographic region. The commenter 
suggested that some beneficiaries in certain populations are more 
complex and therefore, their risk for falls resulting in major injuries 
may increase.
    Response: While we appreciate these comments and the importance of 
the role that sociodemographic status plays in the care of patients, we 
continue to have concerns about holding providers to different 
standards for the outcomes of their patients of low sociodemographic 
status because we do not want to mask potential disparities or minimize 
incentives to improve the outcomes of disadvantaged populations. We 
routinely monitor the impact of sociodemographic status on facilities' 
results on our measures.
    NQF is currently undertaking a two-year trial period in which new 
measures and measures undergoing maintenance review will be assessed to 
determine if risk-adjusting for sociodemographic factors is appropriate 
for each measure. For two-years, NQF will conduct a trial of a 
temporary policy change that will allow inclusion of sociodemographic 
factors in the risk-adjustment approach for some performance measures. 
At the conclusion of the trial, NQF will determine whether to make this 
policy change permanent. Measure developers must submit information 
such as analyses and interpretations as well as performance scores with 
and without sociodemographic factors in the risk adjustment model.
    Furthermore, the ASPE is conducting research to examine the impact 
of socioeconomic status on quality measures, resource use, and other 
measures under the Medicare program as directed by the IMPACT Act. We 
will closely examine the findings of these reports and related 
Secretarial recommendations and consider how they apply to our quality 
programs at such time as they are available.
    Comment: One commenter believed that collecting data on falls would 
be burdensome for residents who are on the unit for only part of a day. 
Another commenter recommended shortening the discharge assessment to 
only include necessary information to decrease the data collection 
burden.
    Response: We appreciate the commenter's position that tracking 
falls for residents who are on the unit for only part of a day could be 
burdensome. However, given that facilities are responsible for 
residents' safety regardless of location within the facility or 
duration of time spent in various units, if a resident experiences an 
injurious fall, no matter their location in the facility, that fall 
will need to be tracked and reported. Moreover, data on falls are 
already collected in the MDS, so the additional burden associated with 
this measure is minimal. We note that the SNF PPS Part A Discharge 
assessment is limited to just the items necessary to calculate the 
three SNF QRP measures proposed in this rule to minimize any additional 
burden.
    Comment: Several commenters supported the measure's addition to the 
SNF QRP, but expressed concerns about the measure not having been 
adequately tested in the short-stay or SNF population. Additionally, 
several commenters expressed concerns regarding the lack of NQF 
endorsement for an application of the quality measure, the Percent of 
Residents Experiencing One or More Falls with Major Injury (Long Stay) 
(NQF #0674) as a cross-setting measure for SNF, IRF and LTCH QRPs. 
Other commenters mentioned that the MAP conditionally supported this 
measure pending NQF endorsement.
    Response: We thank the commenters for their support of the measure 
and suggested changes to the measure. We also appreciate the 
commenters' concerns pertaining the adequacy of the measure's testing 
for use in the short-stay or SNF population, which we interpret to mean 
adequacy regarding the reliability and validity of the proposed 
application of the quality measure, the Percent of Residents 
Experiencing One or More Falls with Major Injury (Long Stay) (NQF 
#0674) and the items used to calculate the measure in the SNF setting.
    This proposed measure is a cross-setting measure that we believe 
satisfies the measure required under section 1899B(c)(1)(D) of the Act 
domain, Incidence of Major Falls. For the reasons

[[Page 46443]]

provided previously, we proposed this measure under the exception 
authority provided in section 1899B(e)(2)(B) of the Act, which allows 
CMS to apply a measure to the SNF setting that is not NQF-endorsed as 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization.
    With regard to the adequacy of the measure's testing for use in the 
short-stay or SNF population, the item-level testing during the 
development of the MDS 3.0 showed near-perfect inter-rater reliability 
for the MDS item (J1900C) used to identify falls with major injury; 
therefore, we disagree with the commenter's suggestion as to the 
strength of the item-level testing.\66\ The NQF measure evaluation 
criteria do not require measure level reliability if item reliability 
is high.\67\ However, we believe that, given the overlap in the 
populations and item-level testing results, the application of this 
measure for SNF residents will be reliable. That said, we intend to 
continue to test the measure once data collection begins as part of 
ongoing maintenance of the measure. We also note that a TEP convened in 
2009 supported measuring falls with major injury in PAC settings 
regardless of the length of stay of the resident. The TEP also 
concurred that facilities need to take responsibility to not only 
prevent falls but to ensure that if they do occur, protections are in 
place so that the fall does not result in injury.
---------------------------------------------------------------------------

    \66\ Saliba D. and Buchanan J. (2008). Development and 
Validation of a Revised Nursing Home Assessment Tool: MDS 3.0. 
Contract No. 500-00-0027/Task Order #2. Santa Monica, CA: Rand 
Corporation. Retrieved from http://www.cms.hhs.gov/NursingHomeQualityInits/Downloads/MDS30FinalReport.pdf; http://www.geronet.med.ucla.edu/centers/borun/Appendix_A-G.pdf.
    \67\ NQF. Measure Evaluation Criteria and Guidance for 
Evaluating Measures for Endorsement. April 2015. Available online 
at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=79434.
---------------------------------------------------------------------------

    Comment: One commenter urged CMS to provide clarification in the 
final rule about the use of current falls MDS 3.0 data items under the 
SNF QRP. Others requested clarification on the measure specifications, 
stating that the specifications for how this measure will be 
constructed using admission and discharge assessments are unclear. Two 
commenters requested clarification about whether the numerator includes 
falls with and without injury. Another commenter asked if OBRA 
assessments are considered in the look-back scan and whether both long-
stay and short-stay residents are included in the measure. One 
commenter requested that CMS clarify how the addition of the MDS 
discharge assessment will affect the measure specifications for the 
numerator and denominator of the falls measure. The commenter noted 
that CMS proposes modifying the MDS discharge assessment to collect 
information for Part A FFS Medicare beneficiaries who continue in the 
SNF after ending their SNF Part A covered stay, but does not clarify 
how this change will be implemented in the proposed falls measure. That 
commenter was concerned that if this new MDS discharge assessment is 
not included, the measure will exclude individuals who are admitted but 
not discharged from the SNF during their PAC stay and limit CMS' 
ability to provide meaningful information to both PAC providers and 
consumers.
    Response: To clarify, the proposed quality measure will be 
calculated for the purposes of the SNF QRP on residents receiving 
services under a SNF Part A covered stay. To further clarify, although 
this measure is based on the data collection of two items, the 
numerator and denominator only use one item: the number of falls with 
major injury. The assessment instrument includes an item about whether 
any fall took place (J1800) as a gateway item. If there were any falls, 
the assessor then completes the next set of items (J1900) indicating 
the number of falls by injury status. Facilities must report the data 
associated with all these items in order to avoid issues with missing 
data and as a way to ensure accurate data collection, but only the data 
on falls with major injury are used in calculating the measure.
    We also want to clarify that the items used to calculate the 
measure are already included on the existing MDS 3.0 item sets, for 
example, both OBRA and PPS assessments. The necessary falls items will 
also be added to the proposed SNF PPS Part A Discharge assessment to 
ensure the capture of falls with major injury at the end of the SNF 
Part A covered stay for residents who continue in the SNF after ending 
their SNF Part A covered stay.
    Other than the proposed SNF PPS Part A Discharge assessment, the 
implementation of the proposed application of the quality measure, the 
Percent of Residents Experiencing One or More Falls with Major Injury 
(Long Stay) (NQF #0674) does not represent new data collection for 
SNFs. SNFs have been submitting data for these items as part of the 
Nursing Home Quality Initiative since October 2010.
    We note that specifications for the application of the quality 
measure, the Percent of Residents Experiencing One or More Falls with 
Major Injury (Long Stay) (NQF #0674) for the SNF population are 
available on our SNF QRP measures and technical Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html. The specifications include 
information on how the SNF PPS Part A Discharge will be used in the 
measure, and specify that the measure will apply to both long- and 
short-stay Medicare FFS beneficiaries as long as they have had a SNF 
PPS Part A covered stay.
    Comment: Several commenters expressed concerns about the falls 
measure not being standardized across PAC settings. One commenter 
stated that the measure should have the same wording, timeframe, and 
item set across all PAC settings, and that the denominator and 
exclusions should be the same; they also specifically noted differences 
in the payers that are required to report data for this measure. Two 
commenters objected to the exclusion of Medicare Advantage 
beneficiaries from the numerator and denominator for this measure. One 
commenter noted that measures based on only Medicare FFS beneficiaries 
may be incomplete, since, according to some estimates, only about half 
of SNF residents are covered by Medicare FFS.
    Another commenter asked about the extent to which the time horizon 
(that is, the time period during which the measure will be calculated) 
will differ across settings, and another suggested that the exclusions 
listed in the specifications were different in different settings. One 
comment mistakenly asserted that the item used in the equivalent IRF 
specifications asks about the occurrence of two or more falls in the 
past year and whether a patient had major surgery, in contrast to the 
SNF specifications for the measure. Another commenter expressed concern 
regarding differences in the populations across quality measures in the 
SNF QRP. The commenters mentioned that the falls measure (NQF #0674) 
and function measure (NQF #2631) include only Medicare FFS residents, 
while the pressure ulcer measure (NQF #0678) includes all short-stay 
SNF residents. The commenter mentioned that this inconsistency could 
result in confusion for providers because of the varying denominators 
across measures.
    Response: CMS appreciates the commenters' comments pertaining to 
the differences in the quality measure denominators by payer type 
across the IRF, SNF and LTCH settings. As previously stated, we believe 
that

[[Page 46444]]

quality care is best represented through the inclusion of all patient 
data regardless of payer source. We agree that consistency in the data 
would reduce confusion in data interpretation and enable a more 
comprehensive evaluation of quality and although we had not proposed 
all payer data collection through this current rulemaking, we will take 
into consideration the expansion of the SNF QRP to include all payer 
sources through future rulemaking.
    We appreciate the comment pertaining to consistent data collection 
across the reporting programs. We believe that quality measures that 
include all residents in a facility are better able to capture the 
health outcomes of that facility's residents, and thus, including all 
residents in quality reporting is important. Regarding expansion of the 
population used to calculate this measure to include payer sources 
beyond Medicare Part A, we agree with the commenter's position and 
intend to take this under consideration through future measure 
development and rulemaking.
    We wish to clarify that this falls measure is not currently used 
for the short-stay nursing home population as part of Nursing Home 
Compare and that this measure will be calculated using only Medicare 
Part A data collected by the SNF.
    With regard to the use of standardized items for this measure, 
until now, the post-acute assessment instruments have not included 
standardized items for falls with major injury. Although the quality 
measure, an Application of Percent of Residents Experiencing One or 
More Falls with Major Injury (Long Stay) (NQF #0674), and the data 
collection items used to calculate this measure are harmonized across 
settings and assessment instruments, we believe that there are 
constraints in current data collection (that is, use of only admission 
and discharge assessments in IRFs and LTCHs vs. admission/re-entry, 
interim, and discharge assessments in SNFs.). For the purposes of 
measure calculation, we are able to compensate for this data collection 
approach to ensure a uniform application of the measure where currently 
practicable for providers and feasible for the measure so that we have 
harmonized the measure's calculation across all PAC settings. Although 
we believe that we have applied the measure consistently across the 
programs, to enable efficiencies in the measure's calculation, we 
intend to address any outstanding standardization issues through future 
rulemaking.
    We would like to clarify that the occurrence of two or more falls 
in the past year and major surgery prior to admission are risk-
adjusters for the function outcomes measures proposed in the FY 2016 
IRF PPS proposed rule and are not related to the cross-setting falls 
measure, and therefore, are not included in SNF QRP version of the 
falls measure. We also wish to clarify that as proposed, the 
application of this measure for the SNF QRP will include a look-back 
from the time of discharge from the SNF Part A covered stay to the time 
of admission, so that the measure's calculation and time frame used 
will be consistent with the other QRPs. We note that the assessment at 
discharge is an actual discharge from the facility or a discharge from 
the SNF Part A covered stay with a transition in place. We also 
disagree that the exclusions listed in the measure specification for 
each setting are not standardized. Specifically, all three settings 
only exclude cases due to missing data.
    Comment: One commenter supported this measure, but expressed 
concerns about the accuracy of the data on which the fall measure is 
calculated, noting that a recent survey identified deficiencies in 
reporting by a small sample of SNFs. One commenter expressed concerns 
regarding the fact that CMS excludes residents for whom missing data 
precludes calculation of the measure from the measure calculations. The 
commenter expressed concerns that this exclusion may encourage gaming, 
because if a facility recognizes that a resident is declining, it can 
simply omit some data for that resident, ensuring that the resident is 
excluded from the measure calculation. The commenter referenced several 
different media reports, which highlight the seriousness of gaming of 
MDS 3.0 data.
    Response: We have proposed and are finalizing a threshold for 
reporting of actual resident data for determinations. We also intend to 
carefully monitor rates of missing data across all facilities. 
Specifically, we have proposed and are now finalizing that for FY 2018 
SNF QRP, any SNF that does not meet the requirement that 80 percent of 
all MDS assessments submitted contain 100 percent of all data items 
necessary to calculate the SNF QRP measures would be subject to a 
reduction of 2 percentage points to its FY 2018 market basket 
percentage. We hope this requirement will provide incentives to 
providers to submit complete MDS 3.0 assessments. Further, we intend to 
align with other QRPs and propose through future rulemaking to 
implement a data validation program. Historically, rates of missing 
data for the items used to calculated for the NHQI falls measure in 
nursing homes have averaged less than 0.01 percent across all target 
assessments in a given quarter (for example, the rate of missing data 
in Q3 2014 was 0.004 percent), suggesting that missing data is minimal. 
Further, we intend to align with other QRPs and propose through future 
rulemaking a process and program surrounding data validation.
    Comment: One commenter expressed concerns about providers being 
penalized for resident-centered care practices, such as allowing frail 
residents to ambulate without help.
    Response: We fully support resident-centered care and enabling all 
residents to make informed decisions about their care. However, 
providers are responsible for resident safety, and falls with major 
injury are considered ``never events.'' Thus, providers must balance 
the desire to allow residents full autonomy with the need to care for 
their well-being, including appropriate care planning and taking steps 
to reduce injurious falls.
    Having carefully considered the comments we received on the 
application of the Percent of Residents Experiencing One or More Falls 
with Major Injury (Long Stay) (NQF #0674) measure, we are finalizing 
the adoption of this measure for use in the SNF QRP.
(3) Quality Measure Addressing the Domain of Functional Status, 
Cognitive Function, and Changes in Function and Cognitive Function: 
Application of Percent of Long-Term Care Hospital Patients With an 
Admission and Discharge Functional Assessment and a Care Plan That 
Addresses Function (NQF #2631; Endorsed on July 23, 2015)
    We proposed to adopt, beginning with the FY 2018 SNF QRP, an 
application of the quality measure Percent of Long-Term Care Hospital 
Patients with an Admission and Discharge Functional Assessment and a 
Care Plan that Addresses Function (NQF #2631; endorsed on July 23, 
2015) as a cross-setting quality measure that satisfies the functional 
status, cognitive function, and changes in functional status and 
cognitive function domain. This quality measure reports the percent of 
patients or residents with both an admission and a discharge functional 
assessment and an activity (self-care or mobility) goal that addresses 
function. The new self-care and mobility items are included in a new 
section of the MDS titled, Section GG.
    The National Committee on Vital and Health Statistics' Subcommittee 
on

[[Page 46445]]

Health,\68\ noted that ``[i]nformation on functional status is becoming 
increasingly essential for fostering healthy people and a healthy 
population. Achieving optimal health and well-being for Americans 
requires an understanding across the life span of the effects of 
people's health conditions on their ability to do basic activities and 
participate in life situations in other words, their functional 
status.'' This is supported by research showing that patient and 
resident functioning is associated with important outcomes such as 
discharge destination and length of stay in inpatient settings,\69\ as 
well as the risk of nursing home placement and hospitalization of older 
adults living in the community.\70\
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    \68\ Subcommittee on Health National Committee on Vital and 
Health Statistics, ``Classifying and Reporting Functional Status'' 
(2001).
    \69\ Reistetter TA, Graham JE, Granger CV, Deutsch A, 
Ottenbacher KJ. Utility of Functional Status for Classifying 
Community Versus Institutional Discharges after Inpatient 
Rehabilitation for Stroke. Archives of Physical Medicine and 
Rehabilitation, 2010; 91:345-350.
    \70\ Miller EA, Weissert WG. Predicting Elderly People's Risk 
for Nursing Home Placement, Hospitalization, Functional Impairment, 
and Mortality: A Synthesis. Medical Care Research and Review, 57; 3: 
259-297.
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    The majority of individuals who receive PAC services, including 
care provided by SNFs, HHAs, IRFs, and LTCHs, have functional 
limitations and many of these individuals are at risk for further 
decline in function due to limited mobility and ambulation.\71\ The 
patient and resident populations treated by SNFs, HHAs, IRFs, and LTCHs 
vary in terms of their functional abilities at the time of the PAC 
admission and their goals of care. For IRF patients and many SNF 
residents, treatment goals may include fostering the person's ability 
to manage his or her daily activities so that he or she can complete 
self-care and/or mobility activities as independently as possible, and 
if feasible, return to a safe, active, and productive life in a 
community-based setting. For home health patients, achieving 
independence within the home environment and promoting community 
mobility may be the goal of care. For other home care patients, the 
goal of care may be to slow the rate of functional decline in order to 
allow the person to remain at home and avoid institutionalization.\72\ 
Lastly, in addition to having complex medical care needs for an 
extended period of time, LTCH patients often have limitations in 
functioning because of the nature of their conditions, as well as 
deconditioning due to prolonged bed rest and treatment requirements 
(for example, ventilator use). The clinical practice guideline 
Assessment of Physical Function \73\ recommends that clinicians 
document functional status at baseline and over time to validate 
capacity, decline, or progress. Therefore, assessment of functional 
status at admission and discharge and establishing a functional goal 
for discharge as part of the care plan is an important aspect of 
patient or resident care in all of these PAC settings.
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    \71\ Kortebein P, Ferrando A, Lombebeida J, Wolfe R, Evans WJ. 
Effect of 10 days of bed rest on skeletal muscle in health adults. 
JAMA; 297(16):1772-4.
    \72\ Ellenbecker CH, Samia L, Cushman MJ, Alster K. Patient 
safety and quality in home health care. Patient Safety and Quality: 
An Evidence-Based Handbook for Nurses. Vol 1.
    \73\ Kresevic DM. Assessment of physical function. In: Boltz M, 
Capezuti E, Fulmer T, Zwicker D, editor(s). Evidence-based geriatric 
nursing protocols for best practice. 4th ed. New York (NY): Springer 
Publishing Company; 2012. p. 89-103.
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    Given the variation in patient or resident populations across the 
PAC settings, the functional activities that are typically assessed by 
clinicians for each type of PAC provider may vary. For example, rolling 
left and right in bed is an example of a functional activity that may 
be most relevant for low-functioning patients or residents who are 
chronically critically ill. However, certain functional activities such 
as eating, oral hygiene, lying to sitting on the side of the bed, 
toilet transfers, and walking or wheelchair mobility are important 
activities for patients or residents in each PAC setting.
    Although, functional assessment data are currently collected by all 
four PAC providers and in NFs, this data collection has employed 
different assessment instruments, scales, and item definitions. The 
data cover similar topics, but are not standardized across PAC 
settings. The different sets of functional assessment items coupled 
with different rating scales makes communication about patient and 
resident functioning challenging when patients and residents transition 
from one type of setting to another. Collection of standardized 
functional assessment data across SNFs, HHAs, IRFs, and LTCHs using 
common data items would establish a common language for patient and 
resident functioning, which may facilitate communication and care 
coordination as patients and residents transition from one type of 
provider to another. The collection of standardized functional status 
data may also help improve patient and resident functioning during an 
episode of care by ensuring that basic daily activities are assessed 
for all PAC residents at the start and end of care and that at least 
one functional goal is established.
    The functional assessment items included in the proposed functional 
status quality measure were originally developed and tested as part of 
the Post-Acute Care Payment Reform Demonstration version of the 
Continuity Assessment Record and Evaluation (CARE) Item Set, which was 
designed to standardize the assessment of a person's status, including 
functional status, across acute and post-acute settings (SNFs, HHAs, 
IRFs, and LTCHs). The functional status items on the CARE Item Set are 
daily activities that clinicians typically assess at the time of 
admission and/or discharge in order to determine patient's or 
resident's needs, evaluate patient or resident progress, and prepare 
patients, residents, and their families for a transition to home or to 
another setting.
    The development of the CARE Item Set and a description and 
rationale for each item is described in a report entitled ``The 
Development and Testing of the Continuity Assessment Record and 
Evaluation (CARE) Item Set: Final Report on the Development of the CARE 
Item Set: Volume 1 of 3.'' \74\ Reliability and validity testing were 
conducted as part of CMS's Post-Acute Care Payment Reform 
Demonstration, and we concluded that the functional status items have 
acceptable reliability and validity. A description of the testing 
methodology and results are available in several reports, including the 
report entitled ``The Development and Testing of the Continuity 
Assessment Record And Evaluation (CARE) Item Set: Final Report On 
Reliability Testing: Volume 2 of 3'' \75\ and the report entitled ``The 
Development and Testing of The Continuity Assessment Record And 
Evaluation (CARE) Item Set: Final Report on Care Item Set and Current 
Assessment Comparisons: Volume 3 of 3.'' \76\ These reports are 
available on our Post-Acute Care Quality Initiatives Web page at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html.
---------------------------------------------------------------------------

    \74\ Barbara Gage et al., ``The Development and Testing of the 
Continuity Assessment Record and Evaluation (CARE) Item Set: Final 
Report on the Development of the CARE Item Set'' (RTI International, 
2012).
    \75\ Ibid.
    \76\ Ibid.
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    The functional status quality measure we proposed to adopt 
beginning with the FY 2018 SNF QRP is a process quality measure that is 
an application of the quality measure, Percent of Long-Term Care 
Hospital Patients with an Admission and Discharge Functional Assessment 
and a Care Plan that Addresses Function (NQF #2631; endorsed on July 
23, 2015). This quality

[[Page 46446]]

measure reports the percent of patients or residents with both an 
admission and a discharge functional assessment and a treatment goal 
that addresses function.
    This process measure requires the collection of admission and 
discharge functional status data by clinicians using standardized 
clinical assessment items, or data elements, which assess specific 
functional activities, that is, self-care and mobility activities. The 
self-care and mobility function activities are coded using a 6-level 
rating scale that indicates the resident's level of independence with 
the activity at both admission and discharge. A higher score indicates 
more independence.
    For this quality measure, there must be documentation at the time 
of admission that at least one activity (function) goal is recorded for 
at least one of the standardized self-care or mobility function items 
using the 6-level rating scale. This indicates that an activity goal(s) 
has been established. Following an initial assessment, the clinical 
best practice would be to ensure that the resident's care plan 
reflected and included a plan to achieve such an activity goal(s). At 
the time of discharge, function is reassessed using the same 6-level 
rating scale, enabling the ability to evaluate success in achieving the 
resident's activity performance goals.
    To the extent that a resident has an unplanned discharge, for 
example, for the purpose of being admitted to an acute care facility, 
the collection of discharge functional status data might not be 
feasible. Therefore, for patients or residents with unplanned 
discharges, admission functional status data and at least one treatment 
goal must be reported, but discharge functional status data are not 
required to be reported.
    A TEP convened by the measure development contractor for CMS 
provided input on the technical specifications of this quality measure, 
including the feasibility of implementing the measure across PAC 
settings. The TEP was supportive of the implementation of this measure 
across PAC settings and was also supportive of our efforts to 
standardize this measure for cross-setting use. Additionally, the MAP 
conditionally supported the use of an application of the Percent of 
Long-Term Care Hospital Patients With an Admission and Discharge 
Functional Assessment and a Care Plan that Addresses Function (NQF 
#2631; endorsed on July 23, 2015) for use in the SNF QRP as a cross-
setting measure. The MAP noted that this functional status measure 
addresses an IMPACT Act domain and a MAP PAC/LTC core concept. The MAP 
conditionally supported this measure pending NQF-endorsement and 
resolution of concerns about the use of two different functional status 
scales for quality reporting and payment purposes. Finally, the MAP 
reiterated its support for adding measures addressing function, noting 
the group's special interest in this PAC/LTC core concept. More 
information about the MAP's recommendations for this measure is 
available in the report entitled MAP Off-Cycle Deliberations 2015: 
Measures under Considerations to Implement Provisions of the IMPACT 
Act, is available at http://www.qualityforum.org/Project_Pages/MAP_Post-Acute_CareLong-Term_Care_Workgroup.aspx.
    The proposed measure is derived from the Percent of Long-Term Care 
Hospital Patients With an Admission and Discharge Functional Assessment 
and a Care Plan that Addresses Function quality measure, and we 
submitted the proposed measure to NQF for endorsement. The 
specifications are available for review at the SNF QRP measures and 
technical Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    We reviewed the NQF's endorsed measures and were unable to identify 
any NQF-endorsed cross-setting quality measures focused on assessment 
of function for PAC patients and residents. We are also unaware of any 
other cross-setting quality measures for functional assessment that 
have been endorsed or adopted by another consensus organization. 
Therefore, we proposed to adopt this function measure for use in the 
SNF QRP for the FY 2018 payment determination and subsequent years 
under the Secretary's authority under section 1899B(e)(2)(B) of the Act 
to select non-NQF-endorsed measures as long as due consideration is 
given to measures that have been endorsed or adopted by a consensus 
organization.
    We proposed that data for the proposed quality measure would be 
collected through the MDS 3.0, which SNFs currently submit through the 
QIES ASAP system. We refer readers to section V.C.7 of this final rule 
for more information on the proposed data collection and submission 
timeline for this proposed quality measure. The calculation algorithm 
of the proposed measure is described in the FY 2016 SNF PPS proposed 
rule (80 FR 22075).
    For purposes of assessment data collection, we proposed to add new 
functional status items to the MDS 3.0. The items would assess specific 
self-care and mobility activities, and would be based on functional 
items included in the Post-Acute Care Payment Reform Demonstration 
version of the CARE Item Set. The items have been developed and tested 
for reliability and validity in SNFs, HHAs, IRFs, and LTCHs. More 
information pertaining to item testing is available on our Post-Acute 
Care Quality Initiatives Web page at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html.
    The proposed function items that we will add to the MDS for 
purposes of the calculation of this proposed quality measure do not 
duplicate existing items currently collected in that assessment 
instrument for other purposes. The currently used MDS function items 
evaluate a resident's most dependent episode that occurs three or more 
times, whereas the proposed functional items would evaluate an 
individual's usual performance at the time of admission and at the time 
of discharge. Additionally, there are several key differences between 
the existing and new proposed function items that may result in 
variation in the resident assessment results including: (1) The data 
collection and associated data collection instructions; (2) the rating 
scales used to score a resident's level of independence; and (3) the 
item definitions. A description of these differences is provided with 
the measure specifications on our SNF QRP measures and technical Web 
site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Because of the differences between the current function assessment 
items (Section G of the MDS 3.0) and the proposed function assessment 
items that we would collect for purposes of calculating the proposed 
measure, we would require that SNFs submit data on both sets of items. 
Data collection for the new proposed function items do not substitute 
for the data collection under the current Section G.
    We invited public comments on our proposal to adopt beginning with 
the FY 2018 SNF QRP an application of the quality measure Percent of 
Long-Term Care Hospital Patients with an Admission and Discharge 
Functional Assessment and a care Plan that Addresses Function (NQF 
#2631; endorsed on July 23, 2015). The following is a summary of the 
comments received and our responses.

[[Page 46447]]

    Comment: MedPAC did not support the adoption of the function 
process measure in the SNF QRP, and urged CMS to adopt outcomes 
measures focused on changes in resident physical and cognitive 
functioning while under a provider's care.
    Response: We appreciate MedPAC's preference for moving toward the 
use of functional outcome measures in order to assess the resident's 
physical and cognitive functioning under a provider's care. We believe 
that the use of this process measure at this time will give us the data 
we need to develop a more robust outcome-based quality measure on this 
topic in the future. The proposed function quality measure, an 
Application of Percent of Long-Term Care Hospital Patients with an 
Admission and Discharge Functional Assessment and a Care Plan that 
Addresses Function (NQF #2631; endorsed on July 23, 2015), has 
attributes to enable outcomes-based evaluation by the provider. Such 
attributes include the assessment of functional status at two points in 
time, admission and discharge, enabling the provider to identify, in 
real time, changes, improvement or decline, as well as maintenance. 
Additionally, the proposed quality measure requires that the provider 
indicate at least one functional goal associated with a functional 
activity, and the provider can calculate the percent of patients who 
meet goals. Such real time use enables providers to engage in person-
centered goal setting and the ability to use the data for quality 
improvement efforts. In particular, we are currently developing 
functional outcome measures, including self-care and mobility quality 
measures, for use in the SNF setting. These outcome function quality 
measures are intentionally being designed to use the same standardized 
functional assessment items that are included in the proposed function 
process measure, which will result in a limited additional reporting 
burden for SNFs.
    Comment: One commenter supported the concept of measuring function 
and monitoring the percentage of residents with completed functional 
assessments. The commenter was pleased that the quality measure, an 
Application of Percent of Long-Term Care Hospital Patients with an 
Admission and Discharge Functional Assessment and a Care Plan That 
Addresses Function (NQF #2631, endorsed on July 23, 2015), was proposed 
for multiple PAC settings in accordance with the IMPACT Act. The 
commenter, as well as several other commenters, noted that the proposed 
quality measure is an application of the LTCH quality measure, and that 
fewer functional assessment items are in the proposed measure when 
compared to the LTCH process quality measure, the Percent of Long-Term 
Care Hospital Patients with an Admission and Discharge Functional 
Assessment and a Care Plan That Addresses Function (NQF #2631, endorsed 
on July 23, 2015. For example, one commenter noted that the Confusion 
Assessment Method (CAM(copyright)) items and the Bladder 
Continence items are not included in the proposed application of the 
quality measure.
    Response: The proposed functional status process quality measure is 
specified as a cross setting quality measure and is standardized across 
multiple settings. However, to clarify which specific function items 
are included in each function measure for each QRP, we added a table to 
the document entitled, SNF QRP: Specifications of Quality Measures 
Adopted in the FY 2016 Final Rule, which identifies which functional 
assessment items are used in the cross-setting process measure as well 
as the setting-specific IRF and LTCH outcome quality measures. The 
document is available athttp://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    We believe that standardization of assessment items across the 
spectrum of post-acute care is an important goal. In this cross-setting 
process quality measure, there is a common core subset of function 
items that will allow tracking of residents' functional status across 
settings. We recognize that there are some differences in residents' 
clinical characteristics, including medical acuity, across the LTCH, 
SNF and IRF settings, and that certain functional items may be more 
relevant for certain patients/residents. Decisions regarding item 
selection for each quality measure were based on our review of the 
literature, input from a TEP convened by our measure contractor, our 
experiences and review of data in each setting from the PAC PRD, and 
public comments.
    Comment: Several commenters questioned why CARE function items on 
the proposed IRF-PAI, MDS 3.0 and LTCH CARE Data Set are not the same 
set of items and believed the measure, an Application of The Percent of 
Long-Term Care Hospital Patients With an Admission and Discharge 
Functional Assessment and a Care Plan That Addresses Function (NQF 
#2631; endorsed on July 23, 2015), meant that the items should be the 
same set of items.
    Response: A core set of mobility and self-care items are proposed 
for IRFs, SNFs, and LTCHs, and are nested in the proposed section GG of 
the IRF-PAI, MDS 3.0 and LTCH CARE Data Set. Additional function items 
are included on the IRF-PAI and LTCH CARE Data Set due to the adoption 
of additional outcome-based quality measures in those specific 
settings. Therefore, a core set of items in the proposed section GG are 
standardized to one another by item and through the use of the 
standardized 6-level rating scale. We will work to harmonize the 
assessment instructions that better guide the coding of the 
assessment(s) as we believe that this will lead to accurate and 
reliable data, allowing us to compare the data within each setting.
    Comment: Several commenters noted that the proposed function 
measure is a process measure and does not capture functional outcomes. 
One commenter did not believe that the measure would provide incentives 
to improve quality of care given that CMS will not determine if goals 
are achieved. The commenters expressed their preference for outcome 
measures. One commenter preferred an outcome measure, because they 
noted concerns about residents at risk for decline in function. Two 
commenters noted that functional outcome measures were under review at 
NQF, and two of these quality measures were developed for the SNF 
setting. Some of these commenters added that function outcome measures 
were proposed for IRFs, but no functional outcomes measures were 
proposed for LTCHs or SNFs. One commenter believed that CMS had a 
``few'' years to implement the SNF QRP and, thus, has time to develop 
outcome measures. One commenter also noted that the name of the 
measure, which refers to Long-Term Care Hospital patients, is 
misleading. Several commenters expressed concern that the proposed 
function process measure does not meet the requirements of the IMPACT 
Act because measures must be outcome-based. One commenter stated that 
the proposed measure did not satisfy the specified IMPACT Act domain as 
the measure is not able to report on changes in function, and one other 
commenter claimed that the measure does not satisfy the reporting of 
data on functional status. Finally, a commenter stated that the measure 
does not have an appropriate numerator, denominator, or exclusions; 
lacks NQF endorsement; fails to be based on a common standardized 
assessment tool; and lacks evidence that associates the measure with 
improved outcomes. One

[[Page 46448]]

commenter claims that because the specifications for the proposed 
measure are inconsistent with the measure specifications posted by NQF 
for the measure that is under endorsement review, CMS failed to meet 
the requirements under the IMPACT Act to provide measure specifications 
to the public, and further asserted that one is not able to determine 
the specifications that are associated with the proposed measure, which 
is an application of the NQF version of the measure.
    Response: We agree that the use of outcome measures is important 
and, as discussed above, we are currently developing functional outcome 
measures for the SNF setting. We appreciate the commenters concern 
about monitoring for decline in function and will take that into 
consideration as we develop the SNF outcome measures. With regard to 
the LTCH QRP, we adopted the quality measure Long-Term Care Hospital 
Functional Outcome Measure: Change in Mobility Among Patients Requiring 
Ventilator Support (NQF #2632; endorsed on July 23, 2015) in the FY 
2015 Final Rule and data collection for this outcome measure begins in 
LTCHs on April 1, 2016.
    The words ``Long-Term Care Hospital Patients'' are included in the 
title of the quality measure because it is an application to the SNF 
setting of the existing quality measure, Percent of Long-Term Care 
Hospital Patients with an Admission and Discharge Functional Assessment 
and a Care Plan that Addresses Function (NQF 2631; endorsed on July 23, 
2015), which is a Long-Term Care Hospital quality measure.
    We believe that the proposed function measure meets the 
requirements of the IMPACT Act. The statute requires, among other 
things, the submission of data on the quality measures specified in at 
least the domains identified in the Act, but does not require a 
particular type of measure (for example, outcome or process) for each 
measure domain. Further, as discussed in this section, the measure has 
attributes within the assessment and data collection that enables 
outcomes-based evaluation by the provider.
    We also disagree with the comment that we failed to provide the 
specifications to the proposed measure. The proposed function process 
quality measure is an application of the measure, the Percent of LTCH 
Patients with an Admission and Discharge Functional Assessment and a 
Care Plan that Addresses Function (NQF #2631; endorsed on July 23, 
2015). The now NQF-endorsed quality measure was proposed and finalized 
in the IPPS/LTCH PPS final rule (FR 79 50291 through 50298) for 
adoption in the LTCH QRP. An application of this measure was proposed 
in the FY 2016 SNF QRP proposed rule, and similarly it was proposed in 
the FY 2016 IPPS/LTCH PPS proposed rule and the FY 2016 IRF PPS 
proposed rule. We proposed the cross-setting version, an application of 
the LTCH QRP quality measure, based on guidance from multiple TEPs 
convened by our measure contractor, RTI International. The 
specifications for this quality measure, as well as all other proposed 
measures for the SNF, LTCH, and IRF QRPs were posted on the CMS Web 
site with the posting of the proposed rules to enable public comment. 
For the SNF QRP, please see the specifications at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html. These specifications were posted at the 
time we issued the proposed rule.
    As discussed in the proposed rule under section V.C.5.c., prior to 
our consideration to propose this measure's use in the SNF QRP, we 
reviewed the NQF's endorsed measures and were unable to identify any 
NQF-endorsed, cross-setting or standardized quality measures focused on 
assessment of function for PAC patients/residents. We were also unaware 
of any other cross setting quality measures for functional assessment 
that have been endorsed or adopted by another consensus organization. 
Therefore, we proposed a modified version of the quality measure, the 
Percent of LTCH Patients with an Admission and Discharge Functional 
Assessment and a Care Plan that Addresses Function (NQF #2631; endorsed 
on July 23, 2015), with such modifications to allow for its cross-
setting application in the SNF QRP for the FY 2018 payment 
determination and subsequent years under the Secretary's authority to 
select a non-NQF-endorsed measure. Since the cross-setting measure is 
not identical to the measure recommended for NQF-endorsement, it is 
considered an application of the measure.
    Comment: One commenter suggested that CMS conduct additional 
testing of the CARE function items with specific patient/resident 
subpopulations. The commenter also suggested research studies that 
compare CARE items with other instruments across diverse PAC 
populations. They suggested this data be used to improve the CARE items 
or replace them with other items to address any potential floor or 
ceiling effects. This commenter also suggested studies that compare 
models of care for subpopulations so as to elicit best practices 
related to complex conditions.
    Response: We agree that adoption of the proposed quality measure, 
an application to of Percent of Long-Term Care Hospital Patients with 
an Admission and Discharge Functional Assessment and a Care Plan that 
Addresses Function (NQF 2631; endorsed on July 23, 2015), would offer 
many opportunities to examine best practices for caring for SNF 
residents. Examining the data for any floor and ceiling effects in 
special populations is also a very worthy research idea. With regard to 
examining the CARE data against other functional assessment instrument 
data, as part of the PAC PRD analyses, we compared data from the 
existing items (that is, MDS, OASIS, and the FIM[supreg] instrument) 
with data from the analogous CARE items. More specifically, we ran 
cross tabulations of MDS function scores and CARE scores for the 
patients/residents in the PAC PRD to compare scores. A full description 
of the analyses and the results are provided in the report, The 
Development and Testing of the Continuity Assessment Record and 
Evaluation (CARE) Item Set: Final Report on the Development of the CARE 
Item Set and Current Assessment Comparisons Volume 3 of 3, and the 
report is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html. Finally, we agree that ongoing 
reliability and validity testing is critical for all items used to 
calculate quality measures.
    Comment: One commenter recommended revising the definition of the 
item ``eating'' as it is a combination of multiple elements of self-
feeding, swallowing ability, and diet texture modification.
    Response: The item ``eating'' is classified as an activity, and is 
only scored when a resident eats by mouth. The ``eating'' score may 
reflect assistance needed due to various impairments such as hand/arm 
weakness or coordination issues or swallowing limitations. If a 
resident does not eat by mouth and relies on an alternative means of 
getting nutrition, ``eating'' is scored as ``activity not attempted.''
    Comment: One commenter noted that proposed quality measures, such 
as the proposed function quality measure, should reflect several 
attributes, including low reporting burden, comprehensibility for 
beneficiaries, a

[[Page 46449]]

high level of significance to patients/residents, and data that is 
routinely captured.
    Response: We believe that this proposed quality measure will have a 
high level of significance to residents and providers because it 
assesses resident functional status and goals, and that the measure 
will not impose a new, significant reporting burden on SNFs because 
many already assess these items as part of their standard care 
practices. Additionally, the NQF Person- and Family-Centered Care 
panel, which included several patient and patient advocates, indicated 
by preliminary vote that the measure meets the moderate level of 
evidence for ``Use and Usability.'' ``Use and Usability'' refers to 
whether the measure is meaningful, understandable, and useful for the 
intended audiences for public reporting and quality improvement. These 
preliminary results and the description of, ``Use and Usability'' are 
described in the report entitled, Phase 2 Draft Report for Voting, 
which is available on the Person-and Family-Centered Project Web site 
at http://www.qualityforum.org/projects/person_family_centered_care/. 
Among the panel, two members voted that the measure met the criteria at 
a high level, 12 indicated it met the moderate level of evidence, and 
three indicated it was low. With regard to the importance of the 
measure to residents, and their families, the measure reviewed by the 
Person-and Family-Centered Care panel did meet the importance criteria 
with the majority of panel members finding moderate level for evidence, 
performance gap and high-priority. These preliminary results and the 
description of ``Importance'' are described in the Report entitled, 
Phase 2 Draft Report for Voting, which is available on the Person-and 
Family-Centered Project Web site at http://www.qualityforum.org/projects/person_family_centered_care/.
    Comment: Several commenters indicated they support quality measures 
focused on function, but did not support the proposed cross-setting 
functional status measure for the SNF QRP. Several commenters noted 
their lack of support was due to burden related to reporting functional 
status information using two distinct but similar standards and scales, 
using different time frames. One commenter noted that section G and 
section GG have different measurement metrics, with section GG 
providing a more granular look at the components of section G. They 
noted that collection of function data using different and conflicting 
items presents significant operational challenges and would undermine 
the accuracy of data collection. The commenters suggested that the 
adoption of the measure would also increase provider confusion because 
SNFs would need to be familiar with and apply different rules, 
definitions, and metrics when completing resident assessments. 
Commenters also suggested that the functional status measure increases 
the reporting burden on SNFs but will also lead to inaccurate coding of 
resident function for both measurement and payment. In addition, they 
noted providers would be required to spend significant time and 
resources providing training and oversight to ensure that each data set 
is completed accurately and at the right time in the resident's stay. 
Commenters also suggested that record keeping and reporting will be 
complicated, as electronic medical records will need to be updated to 
accommodate dual processes for recording similar clinical information 
leading to greater cost to providers and a decrease in the quality and 
accuracy of the data collected. Several commenters noted the 
significance of adequate training stressing the importance of 
appropriate coding of the new items used to calculate the proposed 
measures and one commenter specifically asked for clarification on 
which health care professional would be responsible for performing the 
assessment while another asked that the Minimum Data Set (MDS) Resident 
Assessment Instrument (RAI) Manual be provided with the necessary 
coding and assessment instructions for the provider's reference in a 
timely manner. One commenter suggested transparency with regard to how 
CMS will implement the new quality measures and stated that training 
for all providers, including instructions for the revised MDS RAI 
Manual, would be needed. The commenter suggested open door forums and 
training webinars for providers. One commenter specifically asked for 
clarification on which health care professional would be responsible 
for performing the assessment.
    One commenter asked for clarification about the rationale for the 
short assessment period for section GG. In addition, a commenter noted 
that the coding of section GG, with the current look-back, will make 
coding of section G more complex and asked that a streamlined coding 
construct that is less complex be adopted. One commenter suggested that 
CMS develop a crosswalk to adapt the current items to create the 
standardization. One commenter suggested that CMS revise the MDS items 
to reduce burden and confusion from the duplication of data, variation 
in item definitions, and the variation in the rating scales. One 
commenter encouraged CMS to remove items from the existing data sets 
where possible. One commenter encouraged CMS to keep the transition 
period, during which both section G and section GG would be collected, 
short, which would allow for better cross-setting comparisons and 
better quality measures, and which is more in line with the intent of 
the IMPACT Act. Another commenter cautioned CMS about removing MDS 
items that are used for payment, particularly as section G has become a 
``payment tool for Medicaid.'' Finally, a commenter suggested that CMS 
reach out to vendors to assure validity, timeliness, and accuracy when 
MDS changes occur.
    Response: We appreciate the commenter's concerns related to the new 
requirements that SNFs will have to satisfy to report the proposed 
function measure. We agree with the importance of thorough and 
comprehensive training and we intend to provide such training in the 
near future for all updates to the MDS and assessment requirements. We 
also recognize that SNFs might need to conduct training to ensure that 
their staffs understand how to properly fill out both section G and 
section GG. We also intend to provide comprehensive training as we do 
each time the assessment items change.
    In addition to the manual and training sessions, we will provide 
training materials through the CMS webinars, open door forums, and help 
desk support. We welcome ongoing input from stakeholders on key 
implementation and training considerations, which can be submitted via 
email: [email protected].
    We believe that the 6-level scale and additional items in section 
GG will allow us to better distinguish change at the highest and lowest 
levels of functioning by documenting minimal change from no change at 
the low end of the scale.\77\ This is important for measuring progress 
in some of the most complex cases treated in PAC. The items in section 
GG were developed with input from the clinical therapy communities to 
better measure the change in function, regardless of the severity of 
the individual's functional limitations.
---------------------------------------------------------------------------

    \77\ Barbara Gage et al., ``The Development and Testing of the 
Continuity Assessment Record and Evaluation (CARE) Item Set: Final 
Report on the Development of the CARE Item Set'' (RTI International, 
2012).

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[[Page 46450]]

    To reduce the potential burden associated with collecting 
additional items, we have included several mechanisms in the section GG 
to reduce the number of items that apply to any one resident. First, in 
section GG, there are gateway questions pertaining to walking and 
wheelchair mobility that allow the clinician to skip items that ask if 
the resident does not walk or does not use a wheelchair, respectively. 
For example, in section GG, there is an item that asks whether or not 
the resident walks. If the resident does not walk, three items in 
section GG related to walking ability are skipped. Second, section GG 
items will only be collected at admission and discharge. The gateway 
questions and skip patterns mean that only a subset of section GG items 
are needed for most residents. However, by including all of them in the 
form, the standardized versions are available when appropriate for an 
individual resident. With regard to the assessment time frames, for the 
MDS items located in section G, the assessment time frames take into 
consideration all episodes of the activity that occur over a 24-hour 
period during each day of the 7-day assessment period, as a resident's 
ADL self-performance and the support required may vary from day to day, 
shift to shift, or within shifts. As stated in the CMS MDS 3.0 Resident 
Assessment Instrument manual, ``the responsibility of the person 
completing the assessment, therefore, is to capture the total picture 
of the resident's ADL self-performance over the 7-day period, 24 hours 
a day (that is, not only how the evaluating clinician sees the 
resident, but how the resident performs on other shifts as well)'' 
(CMS, 2014, ch. 3, p. G-4). The CARE function items in the proposed 
functional quality measures, to be nested in the proposed Section GG, 
have a shorter assessment time frame (3 calendar days), which is 
standardized across the PAC settings, based on the need for data 
reflecting the resident's status at the time of admission and 
discharge. For admission, the CARE function items are to reflect the 
status of the person as the person is admitted to the SNF; in other 
words, self-care and mobility limitations present at the time of 
admission. We recognize that when residents are first admitted to a 
SNF, clinicians often determine the resident's clinical status based on 
several observations and often after a period of time in which the 
resident adjusts to the new environment. We also recognize that several 
clinicians from different disciplines are observing the resident's 
status and this may not occur on the day of admission. Further, we are 
aware that residents who receive rehabilitation services may have 
improvement in function soon after admission to the SNF as therapy 
services may be provided on the day of admission or the next day. If 
the admission assessment is not completed early in the stay, the 
admission score may reflect improvement already achieved by the 
resident due to treatment provided. In other words, functional 
improvement would not be reflected in function scores if the admission 
assessment is conducted after therapy has started and impacted the 
resident's status or before therapy ends. Therefore, clinicians report 
resident's admission functional assessment for the CARE items based on 
3 calendar days. This assessment time frame has been used in IRFs 
successfully and balances the need for data reflecting the resident's 
status at the time of admission and the interest in documenting changes 
in function between admission and discharge.
    Finally, we thank the commenters for their comments pertaining to 
electronic medical records (EMRs). While we applaud the use of EMRs, 
CMS does not require that providers use EMRs to populate assessment 
data. It should be noted that with each assessment release, we provide 
free software to our providers that allows for the completion and 
submission of any required assessment data. The use of a vendor to 
design software that extracts data from a provider's EMR to populate 
CMS quality assessments, is a business decision that is made solely by 
the provider. We only require that assessment data be submitted via the 
QIES ASAP system in a specific compatible format. Providers can choose 
to use our free software, or the data submission specifications we 
provide that allow providers and their vendors to develop their own 
software, while ensuring compatibility with the QIES ASAP system.
    Comment: Several commenters noted that the items included in the 
Section GG of the MDS differ from those tested during the PAC PRD and 
represented a limited set of items from the original CARE Tool. One of 
these commenter suggested that the contributions of occupational 
therapy may not be measureable with the limited set of items. Another 
commenter suggested that the assessment time frame differed from that 
used in the PAC PRD.
    Response: The PAC PRD tested a range of items, some of which were 
duplicative, to identify the best performing items in each domain. 
Select items were removed from the item set where testing results and 
clinician feedback suggested the need for fewer items to be included in 
a particular scale. We also received feedback on the items tested in 
the PAC PRD from a cross-setting TEP convened by our measure 
development contractor, RTI International. Other changes from the 
original PAC-PRD items included incorporating instructional detail from 
the manual and training materials directly into the data collection 
form and updating skip patterns to minimize burden. We agree that the 
contribution of occupational therapy as well as other clinical 
disciplines, should be reflected in all item and measure development. 
During the PAC-PRD, clinicians from many different disciplines 
collected CARE data, including occupational therapists (OTs). In 
addition, the items in section GG were developed with the input from 
clinicians would be performing the assessments, including OTs.
    With regard to the assessment time frame for the CARE function 
items, we instructed clinicians to use a 2-day time frame if the 
patients/residents were admitted before 12 p.m. (noon) or 3 calendar 
days if the patients/residents were admitted after 12 p.m. Our exit 
interviews revealed that most patients/residents were admitted to the 
SNF after 12 p.m. and that clinicians used 3 calendar days. Therefore, 
we have used the assessment time frame that most clinicians used during 
the PAC-PRD.
    Comment: One commenter expressed concern about the reliability 
testing results for licensed nurses in the PAC PRD, given that licensed 
nurses play a large role in documenting function.
    Response: The reliability results mentioned by this commenter were 
only one of several reliability analyses conducted to support the 
development of this measure as part of the PAC PRD. The results of 
licensed nurses reflect the small sample. In addition to the inter-
rater reliability study mentioned by these commenters, we also 
examined: (1) Inter-rater reliability of the CARE items using 
videotaped case studies, which included 550 assessments from 28 
providers; and (2) internal consistency of the function data, which 
included more than 2,749 SNF residents. Overall, these results indicate 
moderate to substantial agreement on these items. The report describing 
these additional analyses and an interpretation of the Kappa statistics 
results is available at http://www.cms.gov/Medicare/Quality-
Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-
Initiatives/Downloads/The-Development-and-Testing-of-the-

[[Page 46451]]

Continuity-Assessment-Record-and-Evaluation-CARE-Item-Set-Final-
Reporton-Reliability-Testing-Volume-2-of-3.pdf.
    Therefore, given the overall findings of these reliability 
analyses, we believe that the proposed function measure is sufficiently 
reliable for the SNF QRP.
    Comment: One commenter was concerned that no data was provided 
clearly linking improved outcomes to this process measure.
    Response: We believe that there is evidence that this is a best 
practice based on several clinical practice guidelines. The NQF 
requirement for endorsing process measures is that the process should 
be evidence-based, such as processes that are recommended in clinical 
practice guidelines. As part of the NQF process, CMS submitted several 
such clinical practice guidelines 78 79 80 to support this 
measure, and referenced another cross-cutting clinical practice 
guideline in the proposed rule. The clinical practice guideline 
Assessment of Physical Function \81\ recommends that clinicians should 
document functional status at baseline and over time to validate 
capacity, decline, or progress. Therefore, assessment of functional 
status at admission and discharge and establishing a functional goal 
for discharge as part of the care plan (that is, treatment plan) is an 
important aspect of patient/resident care for all of these PAC 
providers.
---------------------------------------------------------------------------

    \78\ Kresevic DM. Assessment of physical function. In: Boltz M., 
Capezuti E., Fulmer T., Zwicker D., editor(s). Evidence-based 
geriatric nursing protocols for best practice. 4th ed. New York 
(NY): Springer Publishing Company; 2012. p. 89-103. Retrieved from 
http://www.guideline.gov/content.aspx?id=43918.
    \79\ Centre for Clinical Practice at NICE (UK). (2009). 
Rehabilitation after critical illness (NICE Clinical Guidelines No. 
83). Retrieved from http://www.nice.org.uk/guidance/CG83.
    \80\ Balas M.C., Casey C.M., Happ M.B. Comprehensive assessment 
and management of the critically ill. In: Boltz M., Capezuti E., 
Fulmer T., Zwicker D., editor(s). Evidence-based geriatric nursing 
protocols for best practice. 4th ed. New York (NY): Springer 
Publishing Company; 2012. p. 600-27. Retrieved from http://www.guideline.gov/content.aspx?id=43919.
    \81\ Kresevic DM. Assessment of physical function. In: Boltz M., 
Capezuti E., Fulmer T., Zwicker D., editor(s). Evidence-based 
geriatric nursing protocols for best practice. 4th ed. New York 
(NY): Springer Publishing Company; 2012. p. 89-103. Retrieved from 
http://www.guideline.gov/content.aspx?id=43918.
---------------------------------------------------------------------------

    Comment: Several commenters suggested that CMS develop a plan to 
revise the existing MDS function items to be more consistent with the 
data collected in the other PAC settings, noting this would lay the 
groundwork for a measure that is more ``standardized'' and 
``interoperable'' across post-acute care settings. Some commenters 
noted that this transition would require considerable analysis to 
ensure there are not negative unintended consequences for SNF 
reimbursement, and testing in SNF facilities to ensure the revised 
instrument collects accurate, reliable and meaningful data.
    Response: We have proposed to add a core set of CARE function items 
to the MDS for SNFs, the IRF-PAI for IRFs and the LTCH CARE Data Set. 
These standardized data will enable interoperability across these PAC 
settings. As noted above, the proposed IRF-PAI and proposed LTCH CARE 
Data Set include additional CARE function items, because those QRPs 
include additional functional outcome measures, and these measures 
require collection of more than just the core items included in the 
function process measure. The development of the entire original set of 
CARE function items, including the definitions for each activity, were 
selected based on a review of all existing items used by LTCHs, IRFs, 
SNFs and HHAs, a review of the literature, and input from stakeholders 
such as clinicians and researchers.
    Comment: One commenter noted that the proposed function measure 
includes reporting of a goal as a way to document that residents have a 
care plan that addresses function, and that this reporting of function 
goals was not part of the original PAC PRD. The commenter further noted 
that reporting of only one goal was not ideal, because many residents 
have goals for multiple functional activities and the number of 
standardized functional assessment items is limited compared to the 
full set of function items tested as part of the PAC PRD. Finally, the 
commenter indicated that treatment goals may be to improve function, 
and therefore, are restorative in nature, while therapy may be 
necessary so to ensure the maintenance of a PAC resident's function.
    Response: The proposed function measure requires a minimum of one 
(1) goal per resident stay; however, clinicians can report goals for 
each self-care and mobility item included in the proposed section GG of 
the MDS. We believe that assessing resident function goals should be 
part of clinical care and builds upon the conditions of participation 
(CoPs) for SNF providers. The IMPACT Act also specifically mentions 
goals of care as an important aspect of the use of standardized 
assessment data, quality measures, and resource use to inform discharge 
planning and incorporate resident preference. We agree that for many 
PAC patients/residents, the goal of therapy is to improve function and 
we also recognize that for some residents, delaying decline may be the 
goal. We believe that individual, person-centered goals exist in 
relation to individual preferences and needs. We will provide 
instructions pertaining to the reporting of goals in a training manual 
and in training sessions in order to better clarify that goals set at 
admission may be focused on improvement of function or maintenance of 
function.
    Comment: Several commenters were concerned that the measure, an 
Application of the Percent of Long-Term Care Hospital Patients with an 
Admission and Discharge Functional Assessment and a Care Plan That 
Addresses Function (NQF #2631;endorsed on July 23, 2015) was not NQF 
endorsed. Some of these commenters noted that it was under review at 
NQF for the LTCH setting and not for the SNF setting.
    Response: We agree that the NQF endorsement process is an important 
part of measure development. We have proposed an application of the 
quality measure, the Percent of Long-Term Care Hospital Patients with 
an Admission and Discharge Functional Assessment and a Care Plan That 
Addresses Function. This quality measure is now NQF endorsed. We have a 
rigorous process of construct testing and measure selection, guided by 
the TEPs, public comments from stakeholders, and recommendations by the 
PAC/LTC MAPs.
    Comment: One commenter recognized the burden of changing assessment 
items, but noted the utilization of standardized assessment items is 
expected to improve transitions. The commenter indicated that proposal 
was an action of good intent toward the statutory standardization of 
assessment.
    Response: We thank the commenter for their comment and support for 
the inclusion of the standardized (that is, CARE) functional assessment 
items. We agree that standardized assessment across PAC settings has 
the potential to improve care.
    Comment: One commenter noted that one reason for standardized 
assessment items ``would be to establish a common language for patient 
and resident functioning, which may facilitate communication and care 
coordination as patients and residents transition from one type of 
provider to another,'' and asked CMS to provide data on the number or 
percent of patients/residents that transition from one type of provider 
to another. The commenter further requested information about why the

[[Page 46452]]

current measures fail to provide clinicians with the information 
needed.
    Response: Several studies have documented patient/resident 
transition patterns following discharge from the hospital and 
continuing for 30, 60, or 90 days.82 83 84 While the exact 
proportions discharging to each type of care vary slightly across the 
years, the proportion of acute hospital admissions being discharged to 
PAC has grown from 35 percent in 2006 to 43 percent in more recent 
years (MedPAC, 2014). Among those discharged to PAC, the majority are 
discharged to SNF or HHA, and a much smaller proportion are discharged 
to IRFs and LTCHs. Further examination shows that among each of the 
four PAC admissions, many individuals continue to transition to 
subsequent sites of care. Common discharge patterns from the IRF, for 
example, include over 75 percent of cases continuing into HHA or 
outpatient therapy services. SNF cases are commonly discharged home 
with either outpatient therapy or home health services. One report 
outlining these issues is entitled, ``Examining Post Acute Care 
Relationships in an Integrated Hospital System'' (available at http://aspe.hhs.gov/health/reports/09/pacihs/report.pdf). This report includes 
a summary of the most common PAC transition patterns for Medicare FFS 
Beneficiaries in 2006.
---------------------------------------------------------------------------

    \82\ Gage, B., Morley, M., Ingber, M., & Smith, L. (2011). Post-
Acute Care Episodes Expanded Analytic File: RTI International. 
Prepared for the Assistant Secretary for Planning and Evaluation. 
Retrieved from http://aspe.hhs.gov/health/reports/09/pacihs/report.pdf.
    \83\ Gage, B., Morley, M., Constantine, R., Spain, P., Allpress, 
J., Garrity, M., & Ingber, M. (2008). Examining Relationships in an 
Integrated Hospital System: RTI International. Prepared for the 
Assistant Secretary for Planning and Evaluation. Retrieved from 
http://aspe.hhs.gov/health/reports/08/examine/report.html.
    \84\ Gage, B., Pilkauskas, N., Dalton, K., Constantine, R., 
Leung, M., Hoover, S., & Green, J. (2007). Long-Term Care Hospital 
(LTCH) Payment System Monitoring and Evaluation Phase II Report RTI 
International. Prepared for the Centers for Medicare & Medicaid 
Services. Retrieved from http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/downloads/rti_ltchpps_final_rpt.pdf.
---------------------------------------------------------------------------

    Comment: One commenter encouraged CMS to risk adjust all outcome 
measures.
    Response: The proposed function quality measure, an Application of 
the Percent of Long-Term Care Hospital Patients with an Admission and 
Discharge Functional Assessment and a Care Plan that Addresses Function 
(NQF #2631, endorsed on July 23, 2015), is a process measure that 
focuses on the clinical process of completion of functional assessments 
and a care plan addressing function. Although the IMPACT Act requires 
that the cross-setting quality measures be risk-adjusted as determined 
appropriate by the Secretary, it does not limit the Secretary to 
adopting outcome measures. Some process measures are risk 
adjusted,85 86 However, in the development of an application 
of the measure, the Percent of LTCH Patients with an Admission and 
Discharge Functional Assessment and a Care Plan that Addresses Function 
(NQF #2631; endorsed on July 23, 2015), the Technical Expert Panel 
considered, but did not recommend, the application of a risk adjustment 
model. We agree with that conclusion because the completion of a 
functional assessment, which includes the use of ``activity not 
attempted'' codes, is not affected by the medical and functional 
complexity of the resident. Therefore, we believe that risk adjustment 
of this quality measure is not warranted.
---------------------------------------------------------------------------

    \85\ For example, in the NQF-endorsed process measure Percent of 
Residents Who Have/Had a Catheter Inserted and Left in Their Bladder 
(long stay) (NQF#0686) for which we are the steward, resident-level 
limited covariates (Frequent bowel incontinence, or always 
incontinent on prior assessment; and Pressure ulcers at stages II, 
III, or IV on prior assessment) are used in a logistic regression 
model to calculate a resident-level expected quality measure score.
    \86\Peter C. Smith, Elias Mossialos, Irene Papanicolas and 
Sheila Leatherman. Performance Measurement for Health.
---------------------------------------------------------------------------

    Comment: Several commenters noted additional areas of function that 
are key to residents, including cognition, communication, and 
swallowing. One commenter encouraged CMS to consider cognition and 
expressive and receptive language and swallowing as items of function 
and not exclusively as risk adjustors, and offered their expertise to 
CMS for discussions and to develop goals. Another commenter examined 
the SNF, IRF, HHA and LTCH assessment instruments and noted that 
cognitive function is measured differently across the settings in terms 
of content, scoring process, and intended calibration of each tool, and 
encouraged CMS to align items and quality measurement of cognition.
    Response: We are working toward developing quality measures that 
assess areas of cognition and expression, recognizing that these 
quality topic domains are intrinsically linked or associated to the 
domain of function and cognitive function. We appreciate the 
commenter's offer for assistance and encourage the submission of 
comments and measure specification details to our comment email: 
[email protected].
    Comment: One commenter suggested that CMS remove some items from 
section G if section GG items are adopted. One commenter noted that the 
four late-loss activities of daily living (ADL) items from Section G 
should be retained and this commenter recognized that some items were 
needed for payment. The commenter noted differences in the rating 
scales for the items in section G and the items in section GG.
    Response: We recognize that the items in section G serve many 
purposes such as those items that are used for payment, and will 
continue to take into consideration all factors pertaining to payment 
and quality.
    Comment: One commenter was concerned that residents with missing 
data in their assessment records would be excluded from this measure. 
This commenter was concerned that this could present SNFs with an 
opportunity to purposefully exclude data.
    Response: We thank the commenter for their comments and appreciate 
the concerns pertaining to intentionally excluded data. We would like 
to clarify that there are no resident exclusions criteria for this 
measure. Therefore, this potential for ``gaming'' does not exist for 
this measure. Nonetheless, as part of our compliance analysis we intend 
to carefully monitor rates of missing data across all facilities. 
Specifically, we are finalizing that for FY 2018, any SNF that does not 
meet the proposed requirement that 80 percent of all MDS assessments 
submitted contain 100 percent of all data items necessary to calculate 
the SNF QRP measures would be subject to a reduction of two percentage 
points to its FY 2018 market basket percentage. We hope this 
requirement will incentivize providers to submit complete MDS 3.0 
assessments.
    Comment: A commenter was concerned about the use of a consistent 
definition of the short-stay population, the denominator, in this 
function measure, as well as the other proposed measures for use in the 
SNF QRP. The commenter was also concerned about the alignment of 
measures with major CMS initiatives.
    Response: We appreciate the commenters' comments pertaining to the 
differences in the function quality measure denominators by payer type 
across the IRF, SNF and LTCH settings and we have addressed this 
comment previously. We believe that quality care is best represented 
through the inclusion of all patient data regardless of payer source. 
We agree that consistency in the data would reduce confusion in data 
interpretation and enable a more comprehensive evaluation of quality 
and although we had not proposed all payer data collection through this 
current rulemaking, we will take into

[[Page 46453]]

consideration the expansion of the SNF QRP to include all payer sources 
through future rulemaking.
    Comment: Two commenters requested that CMS continue in its public 
engagement with stakeholders, and one requested increased engagement 
with regard to the IMPACT Act and measures it considers. Other 
commenters stated their appreciation for inclusion and opportunity to 
work with CMS during the implementation phases of the IMPACT Act. One 
commenter also recommended that CMS establish a more formal stakeholder 
group to include rehabilitation professionals who can provide expertise 
on the provision of rehabilitation therapy in NFs. This commenter noted 
that the more opportunities stakeholders have to engage in dialogue 
with and advise CMS on the quality measures, the greater the 
possibility that the measures will be accurate and helpful to 
determining care quality.
    Response: We appreciate the continued involvement of stakeholders 
in all phases of measure development and implementation, as we see the 
value in strong public-private partnerships. We also believe that 
ongoing stakeholder input is important to the success of the IMPACT Act 
and look forward to continued and regular input from the provider 
communities as we continue to implement the IMPACT Act.
    Comment: One commenter suggested that the PAC PRD data was 
collected only by therapists, and expressed concern that the items had 
not been tested using other care providers. In addition, this commenter 
had specific questions about scoring different assessments during the 
time window proposed. This commenter also had specific questions about 
which SNF clinicians will complete the functional assessment items for 
this measure.
    Response: We wish to clarify that during the PAC PRD, data were 
collected by clinicians from many different disciplines, including OTs, 
PTs, SLPs and RNs. Reliability testing included testing by discipline 
as well as by setting. However, the items were developed with the input 
of various personnel who would be performing the assessments, which 
included OTs, PTs, SLPs, and RNs. Regarding the questions about scoring 
assessments and staff that will be trained to complete functional 
assessments, we have historically provided training for providers. As 
we prepare for this type of training, we will make sure to have this 
type of information available to the public to increase transparency 
and readiness.
    Comment: A commenter urged CMS to develop function measures that 
take resident quality of life into account. The commenter noted that 
function measures are not ``one size fits all.'' Another commenter 
suggested CMS focus on key concerns of beneficiaries with disabilities 
and chronic conditions, including, where appropriate: The ability to 
live as independently as possible, to function at the maximum extent 
possible, to return to employment where appropriate, to engage in 
recreational and athletic pursuits, to engage in community activities, 
and to maintain the highest quality of life possible.
    Response: We believe that this proposed quality measure will have a 
high level of significance to residents and providers. The proposed 
function quality measure is a person and family-centered process 
measure that reports standardized functional assessment data at 
admission and discharge, as well as at least one functional status 
discharge goal, demonstrating person and family-centered care. The 
IMPACT Act specifically mentions goals of care as an important aspect 
of the use of standardized assessment data, quality measures, and 
resource use to inform discharge planning and incorporate resident 
preference. However, we are always open to stakeholder feedback on 
measure development and encourage everyone to submit comments to our 
comment email: [email protected].
    Comment: One commenter recommended that CMS exclude section GG data 
from all medical review organizations or processes for the first three 
years.
    Response: The item sets included in section GG are being proposed 
to satisfy measure domains under the IMPACT Act and are not being 
proposed for use in making payment determinations. The primary purpose 
of medical review is to validate medical necessity and to identify 
coding discrepancies to determine whether payment is appropriate. The 
item sets in Section GG are not being used for this purpose and are 
therefore not subject to medical review. A provider's failure to submit 
the data to complete section GG could result in a determination of 
noncompliance with the SNF QRP, resulting in a 2 percent reduction to 
the SNF's market basked percentage for the applicable fiscal year.
    Final Decision: Having carefully considered the comments we 
received on the application of the Percent of LTCH Patients with an 
Admission and Discharge Functional Assessment and a Care Plan that 
Addresses Function (NQF #2631; endorsed on July 23, 2015), we are 
finalizing the adoption of this measure for use in the SNF QRP.
f. SNF QRP Quality Measures Under Consideration for Future Years

 Table 10--SNF QRP Quality Measures and Concepts Under Consideration for
                              Future Years
------------------------------------------------------------------------
 
------------------------------------------------------------------------
IMPACT Act Domain.................  Measures to reflect all-condition
                                     risk-adjusted potentially
                                     preventable hospital readmission
                                     rates.
Measures..........................  (NQF #2510): Skilled Nursing
                                     Facility 30-Day All-Cause
                                     Readmission Measure (SNFRM).
                                    (NQF #2512; NQF #2502): Application
                                     of the LTCH/IRF All-Cause Unplanned
                                     Readmission Measure for 30 Days
                                     Post Discharge from LTCHs/IRFs.
IMPACT Act Domain.................  Resource Use, including total
                                     estimated Medicare spending per
                                     beneficiary.
Measure...........................  (NQF #2158): Application of the
                                     Payment Standardized Medicare
                                     Spending Per Beneficiary (MSPB).
IMPACT Act Domain.................  Discharge to community.
Measure...........................  Percentage residents/patients at
                                     discharge assessment, who are
                                     discharged to a higher level of
                                     care or to the community. Measure
                                     assesses if the patient/resident
                                     went to the community and whether
                                     they stayed there. Ideally, this
                                     measure would be paired with the 30-
                                     day all-cause readmission measure.
------------------------------------------------------------------------

    We invited comments on the measure domains and associated measures 
and measure concepts listed in Table 10. In addition, consistent with 
the requirements of the IMPACT Act to develop quality measures and 
standardize data for comparative purposes, we believe that evaluating 
outcomes across the post-acute care settings using standardized data is 
an important priority. Therefore, in addition to adopting a process-
based measure for the IMPACT Act domain of ``Functional status, 
cognitive function, and changes in function and cognitive function'', 
which is included in this year's final rule, we also intend to develop 
outcomes-based quality

[[Page 46454]]

measures, including functional status and other quality outcome 
measures to further satisfy this domain. These measures will be 
proposed in future rulemaking in order to assess functional change for 
each care setting as well as across care settings. The comments we 
received on this topic, with their responses, appear below.
    Comment: Several commenters urged CMS to consider future quality 
measures for the SNF QRP related to various topics including: Patient 
and family engagement; nutrition; key concerns related to a patient's 
quality of life following discharge from post-acute care; and 
workforce. One commenter requested that quality measures currently 
reported through Nursing Home Compare also be considered for future use 
in the SNF QRP.
    Response: We agree that the suggested measure areas are important 
for quality of care in SNFs, and we would like to highlight that 
measures pertaining to nutrition, quality of life, patient and family 
engagement and person-centered care are known gaps in quality, and 
therefore, are among our priorities to address. Such measures align 
with our CMS Quality Strategy. We also agree with the importance of 
workforce related measures as we understand that quality outcomes are 
often directly linked with staffing and workforce. We agree that 
measures currently reported through Nursing Home Compare should also be 
considered for future use in the SNF QRP, and we are finalizing two 
measures currently reported through Nursing Home Compare (Percent of 
Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) (NQF #0678) and an application of the measure Percent of 
Residents Experiencing One or More Falls with Major Injury (Long Stay) 
(NQF #0674)) for the FY 2018 SNF QRP. We will consider the commenters' 
recommendations in our measure development and testing efforts, as well 
as in our ongoing efforts to identify and propose appropriate measures 
for the SNF QRP in the future.
    Comment: One commenter supported the IMPACT Act requirement to 
measure and report on rehospitalization and discharge to community 
measures. However, the commenter expressed several concerns regarding 
the potential future measures identified by CMS and recommended several 
considerations for future measure development. The commenter did not 
believe that three potential future rehospitalization measures (Skilled 
Nursing Facility 30-Day All-Cause Readmission Measure (NQF #2510), 
Application of the LTCH/IRF All-Cause Unplanned Readmission Measure for 
30 Days Post Discharge from LTCHs/IRFs (NQF #2512; NQF #2502)) comply 
with IMPACT Act requirements because the measures have different 
numerator and denominator definitions and exclusions. The commenter is 
also concerned that while the three measures are NQF-endorsed in each 
of their respective settings, they are not yet endorsed as cross-
setting measures. Finally, the commenter states that these measures 
should not be restricted to Medicare FFS beneficiaries as this is 
inconsistent with the IMPACT Act. To comply with the IMPACT Act 
requirements, this commenter recommended that CMS develop an all-cause 
all payer rehospitalization measure that (a) is not restricted to 
Medicare FFS beneficiaries, and (b) has the same numerator and 
denominator definitions, but may use different risk adjustment 
variables, in each PAC setting. The commenter further suggests that 
pairing the proposed rehospitalization measure with the discharge to 
community measure would not be appropriate.
    When developing the Discharge to Community measure, the commenter 
recommends that CMS consider differences across PAC providers, and the 
implications of those differences on measure specification. An 
additional commenter also supported the Discharge to Community measure, 
which is under consideration for future years.
    The commenter also recommended that when developing a resource 
measure, CMS should collect information from NQF on prior work done to 
address challenges related to developing a reliable and valid resource 
measure that measures total Medicare spending per beneficiary. Finally, 
the commenter stated that CMS needs to begin working on a medication 
reconciliation measure as listed in the IMPACT Act.
    Response: We believe that we have the discretion to implement 
either a within stay readmission measure, or a post-PAC discharge 
readmission measure in satisfaction of the IMPACT Act. Therefore, both 
measure concepts listed could be applicable. We appreciate the 
suggestion that such a measure not be paired with the discharge to 
community measure and will take this under consideration. With regard 
to the suggested development of an all-cause all payer 
rehospitalization measure that is not restricted to Medicare FFS 
beneficiaries, has uniform numerators and denominators and is 
appropriately risk adjusted in each PAC setting, we appreciate the 
commenter's suggestions and generally agree to the importance of all 
payer data. That said, consistent with the other PAC settings' post-
discharge hospital readmission measures, such a cross-setting measure 
for this setting is currently under development as a claims based 
measure thereby limiting its denominator to Medicare claims data and we 
intend to standardize denominator and numerator definitions. With 
regard to NQF endorsement as a cross-setting measure, as mentioned 
previously, when possible we will propose and adopt a measure that has 
been endorsed by the NQF. However, when this is not feasible, the 
IMPACT Act in section 1899B(e)(2)(B), permits the Secretary to adopt a 
measure for the QRPs that is not NQF-endorsed. We want to clarify that 
the IMPACT Act does allow for program-related risk adjustment, as 
appropriate, and we intend to risk adjust the readmission measure 
intended to satisfy the IMPACT Act domain, which is an all-condition 
risk-adjusted potentially preventable hospital readmission rate. We 
appreciate the commenter's concern that CMS ensure the development of a 
medication reconciliation measure and although the Medication 
Reconciliation domain of the IMPACT Act was not addressed in this 
year's SNF proposed rule, we are currently in the process of developing 
a cross-setting measure to address this domain of care.
    Comment: One commenter made several suggestions regarding the 
process CMS should use when developing future measures. The commenter 
recommended that CMS seek additional stakeholder input as it develops 
more detailed specifications for the measures under consideration for 
future years and that CMS seek NQF endorsement for future measures 
prior to including them in rulemaking.
    Response: We will take the recommendations into consideration in 
our measure development and testing efforts, as well as in our ongoing 
efforts to identify and propose appropriate measures for the SNF QRP in 
the future. We recognize the need for transparency as we move forward 
to implement the provisions of the IMPACT Act and plan to continue to 
engage stakeholders to ensure that our approach to implementation is 
communicated in an open and informative manner.
    Comment: Two commenters requested that CMS consider the CARE-C and 
CARE-F items based on the National Outcomes Measurement System (NOMS) 
to capture communication, cognition, and swallowing as additional 
measures to be adopted in post-acute care settings for future measures. 
One commenter encourages CMS and other measure developers to consider

[[Page 46455]]

functional items such as velocity or gait speed which may provide a 
more meaningful picture of the quality of mobility performance versus 
ambulation distance.
    Response: We note that comments on the addition of areas of 
function, including cognition, communication, and swallowing are 
addressed further in section III.D.3.e. iii., Quality Measure 
Addressing the Domain of Functional Status, Cognitive Function, and 
Changes in Function and Cognitive Function: Application of Percent of 
Long-Term Care Hospital Patients With an Admission and Discharge 
Functional Assessment and a Care Plan that Addresses Function (NQF 
#2631; endorsed on July 23, 2015). We appreciate the suggestion that we 
consider functional items such as velocity or gait speed which may 
provide a more meaningful picture of the quality of mobility 
performance versus ambulation distance. We will consider these 
recommendations in our item and measure development and testing efforts 
for both measure development as well as standardized assessment domain 
development.
g. Form, Manner, and Timing of Quality Data Submission
(1) Participation/Timing for New SNFs
    Beginning with the submission of data required for the FY 2018 
payment determination, we proposed that a new SNF would be required to 
begin reporting data on any quality measures finalized for that program 
year by no later than the first day of the calendar quarter subsequent 
to 30 days after the date on its CMS Certification Number (CCN) 
notification letter. For example, for FY 2018 payment determinations, 
if a SNF received its CCN on August 28, 2016, and 30 days are added 
(for example, August 28 + 30 days = September 27), the SNF would be 
required to submit data for residents who are admitted beginning on 
October 1, 2016.
    We invited public comments on this proposed timing for new SNFs to 
begin reporting quality data under the SNF QRP. However we received no 
comments on this proposal.
    Final Decision: We are finalizing our proposal pertaining to the 
Participation/Timing for New SNFs as proposed.
(2) Data Collection Timelines and Requirements for the FY 2018 Payment 
Determination and Subsequent Years
    As discussed previously, we proposed that SNFs would submit data on 
the proposed functional status, skin integrity, and incidence of major 
falls measures by completing items on the MDS and then submitting the 
MDS to CMS through the Quality Improvement and Evaluation System 
(QIES), Assessment Submission and Processing System (ASAP) system. We 
sought comment on the proposed method of data collection.
    We received no comments on the use of the MDS as the proposed 
method for data collection and the QIES ASAP system for data 
submission. Therefore, we are finalizing this approach as proposed.
    Currently, there is no discharge assessment required when a 
resident is discharged from the SNF Medicare Part A covered stay but 
does not leave the facility, and we are aware that this affects nearly 
30 percent of all SNF residents. To collect the data at the time these 
beneficiaries are discharged from the SNF Part A covered stay, we 
proposed to add an item set in addition to the 5-Day PPS Assessment. 
Further, to collect the data elements required to calculate the 
function quality measure (an application of Percent of Long-Term Care 
Hospital Patients With an Admission and Discharge Functional Assessment 
and a Care Plan that Addresses Function [NQF #2631; endorsed on July 
23, 2015]) at the time of a residents admission, we also proposed to 
add the necessary items to the 5-day PPS Assessment.
    A list of the data items that we are proposed to add to the SNF PPS 
Part A Discharge and the 5-Day PPS Assessments is available on our Web 
site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html. We recognize that 
there may be instances where SNFs want to combine the SNF PPS Part A 
Discharge Assessment with other required assessments, as happens with 
other PPS and OBRA assessments, or scenarios in which the end of the 
Part A covered stay occurs at the same time as a scheduled PPS 
assessment. Therefore, we invited public comment on any situations 
where assessments may be combined or interact, which should be 
considered in implementing the SNF PPS Part A Discharge Assessment with 
a view toward addressing any issues that we may identify through the 
public comment process as requiring additional clarification.
    We invited public comments on our proposed SNF QRP Data Collection 
Requirements for the FY 2018 Payment Determination and Subsequent 
Years.
    Comment: One commenter recommended that CMS shorten the MDS 
discharge assessment to only information needed to construct the 
measures since the information will not be used in patient care, 
suggesting that its use pertained to the IMPACT Act requirements for 
collecting information at admission and discharge for measurement 
purposes. The commenter also recommended that the OBRA Admission 
assessment should be completed as a dually coded assessment with the 
PPS 5-day assessments in order that admission assessments for measures 
are aligned for all Medicare and Non-Medicare beneficiaries, such as 
Medicare Advantage beneficiaries.
    Response: The discharge assessment is intended to collect the 
standardized data used to calculate the measures. Therefore, the SNF 
PPS Part A Discharge includes only the discharge assessment data needed 
to inform current and future SNF QRP measures and the calculation of 
those measures. With regard to the commenter's recommendation that the 
OBRA Admission assessment be dually coded with the 5-day assessment, we 
note that this type of combination is possible under the current 
system, though not required.
    Comment: Several commenters suggested that the MDS was designed as 
an assessment for adults and does not address the needs of individuals 
under 21 years of age, specifically children with complex medical needs 
like an intellectual or developmental disability. Though NFs that treat 
pediatric residents complete the MDS for those residents, it is not an 
appropriate tool to measure resident needs or to use as the basis of a 
comprehensive care plan for pediatric residents. Thus, the commenter 
requested that pediatric NFs be exempted from completing the MDS for 
their residents, and that data from the MDS not be utilized for the 
quality measures of pediatric NFs, or that CMS adopt an assessment 
instrument for pediatric SNFs that reflect the unique areas of focus.
    In addition, one commenter suggests that residents of a sub-acute 
SNF unit are at elevated risk for medical complications due to their 
chronic, long-term, acute illnesses, when compared to residents of 
other SNF units. Due to the differences between residents of sub-acute 
SNF units and ``regular'' SNFs, the commenter requests that an 
additional field be added to the MDS to identify sub-acute SNF 
residents.
    Response: The MDS was designed with numerous groups in mind, 
including pediatric nursing home

[[Page 46456]]

residents and their caregivers. In addition, data submission to CMS for 
the purposes of the SNF QRP requires the submission of such data while 
the resident is under a Part A covered stay. Regarding the comment on 
sub-acute units, we will take the recommendation into consideration.
    Comment: One commenter expressed concerns about the accuracy of the 
MDS data that will be used to calculate the new quality measures. The 
commenter noted that the MDS 3.0 Focused Survey Pilot conducted by CMS 
found ``room for improvement in MDS 3.0 assessment agreement with a 
resident's medical record, especially in the reporting of the severity 
and frequency of falls, late loss ADL status, pressure ulcer status, 
restraint use, and coding of certain diagnoses including UTI.'' The 
commenter suggested that additional steps are necessary to improve data 
accuracy, such as revising and testing revisions to the survey 
protocol, drafting additional guidance and requiring additional 
training for surveyors, conducting special surveys of resident 
assessments, reporting on Nursing Home Compare when data are invalid, 
and promulgating regulations to require penalties for violations of 
assessment requirements.
    Response: We agree that training is critical to assure both 
provider accuracy and understanding of the assessment and data 
collection requirements. We appreciate the commenter's suggestions 
pertaining to use of various means to ensure accuracy, such as 
surveyor-related protocols and activities as well as the use of Nursing 
Home Compare for the reporting of data and will take these into 
consideration. We discuss below our intention to develop a data 
validation program to ensure that SNF QRP data is accurately reported.
    Comment: One commenter expressed that it is unclear about the 
timeframe in which additional items will be added to the MDS item sets. 
The commenter recommended that CMS standardize and align the PAC 
assessments (MDS, OASIS, IRF-PAI, and LTCH-CARE) prior to finalizing 
the proposed quality measures. The commenter suggested that after the 
PAC assessments are aligned, CMS should utilize a period of testing for 
the proposed measures. The commenter also suggested that the quarterly 
reporting of claims data requires that hospital claims and PAC provider 
claims be tracked simultaneously and will likely delay the production 
of data which can be reported to providers if provider claims are not 
submitted in a timely manner.
    Response: We appreciate the commenter's interest in clarification 
on the timelines related to implementation of the assessment changes 
required for the submission of the standardized data for measures 
finalized in this rule. The implementation of the revised assessment 
instruments for data collection of the finalized measures is October 1, 
2016. We appreciate the suggestion to standardize the post-acute 
assessment instruments prior to finalizing the measures; however, such 
an approach may not be feasible when, for example, the modification of 
the instruments is a result of a new measure using new items. In that 
instance, rulemaking is necessary to finalize such measures before 
subsequent assessment changes can be determined. That said, we will 
attempt to develop measures where appropriate from existing items. We 
agree that testing is imperative and through ongoing measure 
development and maintenance we apply such testing and intend to 
continue to do so. Additionally, we attempt to use endorsed measures 
where able, however, under certain circumstances, for reasons discussed 
earlier and under our authority to do so, we may elect to propose 
measures that are not endorsed. We appreciate the commenter's concern 
regarding the quarterly reporting of claims data and potential delays, 
although we do not foresee such an issue. Nonetheless, we will monitor 
for this possibility.
    Comment: Several commenters suggested that we had inaccurately 
estimated the economic impact associated with the burden of collection 
of the new assessment items used to calculate the proposed quality 
measures. Commenters suggested that the assessment of 0.5 minutes of 
nursing staff time per each new item was too low because it didn't take 
into account the time for a beneficiary to complete tasks associated 
with self-care or mobility, or the time necessary to navigate through a 
data entry system. One commenter also noted that the function items 
take into account a person's usual function, over the course of days 1 
to 3 days, which they feel implies that activities need to be assessed 
multiple times, adding burden. Another commenter stated that the 
economic impact analysis did not account for staff training. Similarly, 
commenters stated that the economic analysis did not factor in the 
providers' software and hardware costs. We also received a comment 
pertaining to changes in payer source during a resident's stay, noting 
a concern that adding additional payer sources could also add 
additional burden. We also received a comment requesting that CMS 
provide additional payment to the providers during the time that they 
implement the new assessment items.
    Response: We appreciate the concerns related to the assessment of 
costs associated with the data collection for the SNF QRP. In response 
to commenters' concerns regarding our estimate of nursing facility 
staff time per item, we would like to clarify that this is an estimate 
only of the time spent determining and documenting the score following 
the observation of the patient. The burden-related estimates used to 
evaluate the economic impact are based on assessment data coding and 
would not take into account computer system delays or other such 
features. In response to the comment regarding multiple assessments 
required to assess usual function by the new section GG function items, 
we would like to clarify that only one score is reported for each item 
in section GG, the resident's usual performance. Clinicians assess the 
resident's functional abilities once or several times during an 
assessment period as part of routine practice. Consistent with the 
current function items in the MDS (section G), section GG considers the 
resident's ability to perform an activity across the entire assessment 
period. Such clinical assessment and data collection is based upon 
customary and best practices that we believe would be occurring. We 
also note that, to minimize burden on providers, these items are only 
required for data collection at the time of admission and discharge. 
Further, to ensure minimal burden the new items found in section GG, we 
include several gateway questions that allow the clinician to skip 
questions in the data set that are not appropriate for an individual 
patient in order to reduce burden. We have instituted skip options so 
that the final number of items assessed per patient is limited 
depending on their complexity and capabilities. Therefore, although all 
of the items are available for assessment, we have built in mechanism 
that enables the assessor to include assessment information as, and 
when, appropriate.
    With regard to the commenter's concerns surrounding training and 
software/hardware costs, we recognize that with item set changes, there 
are necessary training and software updates that may be needed. 
Although the burden estimate would not be a reflection of individual 
provider training needs, or those related to software and hardware, we 
do include in the cost estimates cost pertaining to overhead. That 
said, CMS provides free of charge the submission specifications,

[[Page 46457]]

as well as free, downloadable software to providers and we intend to 
provide provider based training that would be free of charge, as we 
have done in the past. With regard to increased costs associated with 
all payer data capture, there already exists administrative-related 
data capture in the MDS 3.0, and therefore, such data capture, should 
we require all payer data in the future, would not come with additional 
burden.
    We believe that we have accounted for the costs of reporting data 
in our burden estimates, as they are doubled to provide for overhead 
and fringe benefits, which should include costs associated with any 
required staff training related to the collection of new items. 
However, additionally, we do not include in our burden estimates the 
time that it takes providers to enter the data into their systems, as 
this is a part of routine clinical care and medical charting, and the 
data we require providers to report is routine in this respect as well.
    Having carefully considered the comments we received on our 
proposal pertaining to the Data Collection Requirements for the FY 2018 
Payment Determination and Subsequent Years, we are finalizing the 
policy as proposed.
    For the FY 2018 payment determination, we proposed that SNFs submit 
data on the three proposed quality measures for residents who are 
admitted to the SNF on and after October 1, 2016, and discharged from 
the SNF up to and including December 31, 2016, using the data 
submission schedule that we proposed in this section.
    We proposed to collect a single quarter of data for FY 2018 to 
remain consistent with the usual October release schedule for the MDS, 
to give SNFs a sufficient amount of time to update their systems so 
that they can comply with the new data reporting requirements, and to 
give CMS a sufficient amount of time to determine compliance for the FY 
2018 program. The proposed use of one quarter of data for the initial 
year of quality reporting is consistent with the approach we used to 
implement a number of other QRPs, including the LTCH, IRF, and Hospice 
QRPs.
    We also proposed that following the close of the reporting quarter, 
October 1, 2016, through December 31, 2016, for the FY 2018 payment 
determination, SNFs would have an additional 5\1/2\ months to correct 
and/or submit their quality data. Consistent with the IRF QRP, we 
proposed that the final deadline for submitting data for the FY 2018 
payment determination would be May 15, 2017. We further proposed that 
for the FY 2019 payment determination, we would collect data from the 
2nd through 4th quarters of FY 2017 (that is, data for residents who 
are admitted from January 1st and discharged up to and including 
September 30th) to determine whether a SNF has met its quality 
reporting requirements for that FY. Beginning with the FY 2020 payment 
determination, we proposed to move to a full year of FY data 
collection. We intended to propose the FY 2019 payment determination 
quality reporting data submission deadlines in future rulemaking.

    Table 11--Proposed Measures, Data Collection Source, Data Collection Period and Data Submission Deadlines
                                   Affecting the FY 2018 Payment Determination
----------------------------------------------------------------------------------------------------------------
                                   Data collection         Proposed data       Proposed data submission deadline
        Quality measure                 source           collection period     for FY 2018 payment determination
----------------------------------------------------------------------------------------------------------------
NQF #0678: Percent of Patients   MDS                        10/01/16-12/31/16  May 15, 2017.
 or Residents with Pressure
 Ulcers that are New or
 Worsened.
NQF #0674: Application of        MDS                        10/01/16-12/31/16  May 15, 2017.
 Percent of Residents
 Experiencing One or More Falls
 with Major Injury (Long Stay).
NQF #2631:* Application of       MDS                        10/01/16-12/31/16  May 15, 2017.
 Percent of Long-Term Care
 Hospital Patients with an
 Admission and Discharge
 Functional Assessment and a
 Care Plan that Addresses
 Function.
----------------------------------------------------------------------------------------------------------------
* Status: NQF-endorsed on July 23, 2015, please see: http://www.qualityforum.org/ProjectMeasures.aspx?projectID=73867, see NQF #2631.

    We invited public comment on Proposed Measures, Data Collection 
Source, Data Collection Period and Data Submission Deadlines Affecting 
the FY 2018 Payment Determination. The comments we received on this 
topic, with their responses, appear below.
    Comment: One commenter expressed support for CMS's proposed timing 
for new SNFs to begin reporting quality data. One commenter requested 
that data from the MDS be made publicly available sooner than 2 years 
after the specified application date for the measure. The commenter 
suggested that collecting only one quarter of data between October 1 
and December 31, 2016 is not sufficient to establish data trending. The 
commenter requested that at least 2 quarters be used for FY 2018 
payment determination, and by FY 2019 a full year's worth of data 
should be used. Another commenter expressed that facilities should not 
be given 5\1/2\ months to submit or correct their quarterly data.
    Response: We appreciate the suggestion regarding extending the 
timing of data collection to establish sufficient data trending. We 
proposed to collect a single quarter of data for FY 2018 to remain 
consistent with the usual October release for the MDS, to give SNFs a 
sufficient amount of time to update their systems so that they can 
comply with the new data reporting requirements, and to give CMS a 
sufficient amount of time to determine compliance for the FY 2018 
program. The proposed use of one quarter of data for the initial year 
of quality reporting is consistent with the approach we used to 
implement a number of other QRPs, including LTCH, IRF, and Hospice 
QRPs. With regard to the 5\1/2\ month post-data collection period, this 
Proposed Data Submission timeframe and final deadline for FY 2018 
Payment Determination is to allow providers an opportunity to ensure 
that the data from the collection period has been submitted and is 
accurate and corrections, where necessary, have been made. We have 
aligned these timeframes with the LTCH, and IRF and other QRPs. We 
appreciate and will take into consideration the commenter's suggestion 
to implement public reporting sooner.
    Final Decision: Having carefully considered the comments we 
received on Proposed Measures, Data Collection Source, Data Collection 
Period and Data Submission Deadlines Affecting the FY 2018 Payment 
Determination we are finalizing the policy as proposed.

[[Page 46458]]

h. SNF QRP Data Completion Thresholds for the FY 2018 Payment 
Determination and Subsequent Years
    We proposed that, beginning with the FY 2018 payment determination, 
SNFs must report all of the data necessary to calculate the proposed 
quality measures on at least 80 percent of the MDS assessments that 
they submit. We proposed that a SNF has reported all of the data 
necessary to calculate the measures if the data actually can be used 
for purposes of calculating the quality measures, as opposed to, for 
example, the use of a dash [-], to indicate that the SNF was unable to 
perform a pressure ulcer assessment.
    We believe that because SNFs have long been required to submit MDS 
assessments for other purposes, SNFs should easily be able to meet this 
proposed requirement for the SNF QRP. Our proposal to set reporting 
thresholds is consistent with policies we have adopted for the Long-
Term Care Hospital (79 FR 50314), Inpatient-Rehabilitation Hospital (79 
FR 45923) and Home Health (79 FR 66079) QRPs.
    Although we proposed to adopt an 80 percent threshold initially, we 
stated our intention to propose to raise the threshold level for 
subsequent program years through future rulemaking.
    We also proposed that for the FY 2018 SNF QRP, any SNF that does 
not meet the proposed requirement that 80 percent of all MDS 
assessments submitted contain 100 percent of all data items necessary 
to calculate the SNF QRP measures would be subject to a reduction of 2 
percentage points to its FY 2018 market basket percentage.
    We invited comment on the proposed SNF QRP data completion 
requirements. The comments we received on this topic, with their 
responses, appear below.
    Comment: One commenter expressed support for the application of a 2 
percent penalty for incomplete reporting of the quality data necessary 
to calculate NQF endorsed measures. This commenter states that this 
support extends only to those measures with NQF endorsement as they 
believe that the 2 percent incentive would ensure that providers are 
collecting data necessary to implement the IMPACT Act.
    Response: Section 1888(e)(6)(A)(i) of the Act requires that, for 
FYs beginning with FY 2018, if a SNF does not submit data, as 
applicable, on quality and resource use and other measures in 
accordance with section 1888(e)(6)(B)(i)(II) of the Act and 
standardized patient assessment in accordance with section 
1888(e)(6)(B)(i)(III) of the Act for such FY, the Secretary must reduce 
the SNF's market basket percentage described in section 
1888(e)(5)(B)(ii) of the Act by 2 percentage points. As we have 
discussed above, we are not limited to adopting for the SNF QRP only 
measures that have been endorsed by the NQF, and to the extent that a 
SNF fails to satisfactorily report one or more SNF QRP measures that 
are not NQF-endorsed, we would be statutorily obligated to reduce the 
SNF's market basket percentage for the applicable fiscal year by 2 
percentage points.
    Comment: One commenter does not support the proposed 80 percent 
threshold for completion of all of the data necessary to calculate the 
quality measure. This commenter expressed concern that data could be 
omitted resulting in negative quality measure results. Their 
recommendation is to increase the threshold to 90 percent. Another 
commenter recommended lowering the threshold from 80 percent to 40 
percent during the first 2 years of data collection.
    Response: Our proposal to set reporting thresholds is consistent 
with policies we have adopted for the Long-Term Care Hospital (79 FR 
50314), Inpatient-Rehabilitation Hospital (79 FR 45923) and Home Health 
(79 FR 66079) QRPs. SNF providers have been submitting the MDS for many 
years and we disagree that we should lower the submission threshold as 
suggested. However, we intend to reevaluate our threshold over time and 
will propose to modify it, if warranted, based on our analysis.
    Comment: One commenter requested clarification on what constitutes 
data that is ``satisfactorily'' submitted.
    Response: We are finalizing that data will have been satisfactorily 
submitted for the FY 2018 SNF QRP if the SNF has reported all of the 
data necessary to calculate the finalized measures and that the data 
can actually be used for purposes of calculating the quality measures, 
as opposed to, for example, the use of a dash [-], to indicate that the 
SNF was unable to perform a pressure ulcer assessment.
    After consideration of the public comments received, we are 
finalizing the adoption of the policy for SNF QRP Data Completion 
Thresholds for the FY 2018 Payment Determination and Subsequent Years 
as proposed.
i. SNF QRP Data Validation Requirements for the FY 2018 Payment 
Determination and Subsequent Years
    To ensure the reliability and accuracy of the data submitted under 
the SNF QRP, we proposed to adopt policies and processes for validating 
the data submitted under the SNF QRP in future rulemaking. We received 
the following comments on elements we should consider including in such 
a process:
    Comment: One commenter expressed concern that CMS is not ensuring 
that the data submitted by SNFs is accurate. Specifically, the 
commenter suggested that self-reported MDS data are unreliable and are 
subject to gaming and that a variety of media outlets and CMS itself 
have reported on data accuracy concerns. The commenter suggested that 
facilities may electively omit data for residents whose health is 
deteriorating. The commenter supported CMS asking for the 
identification of elements to validate the data that SNFs submit and 
suggested several ways that CMS may validate the data. Another 
commenter recommended that CMS revisit the 2014 MDS-focused survey 
process assessing MDS Version 3.0 coding practices to help inform SNF 
QRP validation requirements.
    Response: We appreciate the concerns pertaining to gaming and note 
that we will apply a threshold for reporting of complete resident data 
for the FY 2018 SNF QRP. As part of our compliance analysis, we intend 
to carefully monitor rates of missing data across all facilities. 
Further, we intend to align with other QRPs and propose through future 
rulemaking data validation policies.
    Comment: One commenter suggested several recommendations for 
elements CMS should include to ensure the reliability and accuracy of 
data submitted for the SNF QRP. CMS should explore a combination of 
pure data checks to identify inconsistencies that exist between items 
relevant to the SNF QRP and other items reported in the MDS and audit 
suspicious data patterns. Another commenter suggested providing a list 
of validation checks that could be used by both providers and vendors 
to help improve the accuracy of data. Another commenter recommended 
public reporting on Nursing Home Compare when facilities submit invalid 
data and stricter regulations that require specific penalties for 
violations of resident assessment requirements.
    Response: We appreciate the commenters' suggestions to ensure data 
accuracy such as a combination of pure data checks to identify 
inconsistencies. We agree with this approach and intend to perform such 
monitoring as part of overall programmatic monitoring and evaluation. 
We encourage providers to engage in available opportunities to improve 
the accuracy of their data. We appreciate the suggestion that we make 
public on Nursing Home Compare when facilities submit to CMS invalid 
data,

[[Page 46459]]

and will also take under consideration the suggestion that we implement 
additional regulatory requirements on this issue.
    We thank the commenters for their input on policies that we should 
consider pertaining to data validation and accuracy analysis.
j. SNF QRP Submission Exception and Extension Requirements for the FY 
2018 Payment Determination and Subsequent Years
    Our experience with other QRPs has shown that there are times when 
providers are unable to submit quality data due to extraordinary 
circumstances beyond their control (for example, natural, or man-made 
disasters). Other extenuating circumstances are reviewed on a case-by-
case basis. We have defined a ``disaster'' as any natural or man-made 
catastrophe which causes damages of sufficient severity and magnitude 
to partially or completely destroy or delay access to medical records 
and associated documentation. Natural disasters could include events 
such as hurricanes, tornadoes, earthquakes, volcanic eruptions, fires, 
mudslides, snowstorms, and tsunamis. Man-made disasters could include 
such events as terrorist attacks, bombings, floods caused by man-made 
actions, civil disorders, and explosions. A disaster may be widespread 
and impact multiple structures or be isolated and impact a single site 
only.
    In certain instances of either natural or man-made disasters, a SNF 
may have the ability to conduct a full resident assessment, and record 
and save the associated data either during or before the occurrence of 
the extraordinary event. In this case, the extraordinary event has not 
caused the facility's data files to be destroyed, but it could hinder 
the SNF's ability to meet the QRP's data submission deadlines. In this 
scenario, the SNF would potentially have the ability to report the data 
at a later date, after the emergency has passed. In such cases, a 
temporary extension of the deadlines for reporting might be 
appropriate.
    In other circumstances of natural or man-made disaster, a SNF may 
not have had the ability to conduct a full resident assessment, or to 
record and save the associated data before the occurrence of the 
extraordinary event. In such a scenario, the facility may not have 
complete data to submit to CMS. We believe that it may be appropriate, 
in these situations, to grant a full exception to the reporting 
requirements for a specific period of time.
    We do not wish to penalize SNFs in these circumstances or to unduly 
increase their burden during these times. Therefore, we proposed a 
process for SNFs to request and for us to grant exceptions and 
extensions with respect to the quality data reporting requirements of 
the SNF QRP for one or more quarters, beginning with the FY 2018 
payment determination, when there are certain extraordinary 
circumstances beyond the control of the SNF. When an exception or 
extension is granted, we would not reduce the SNF's PPS payment for 
failure to comply with the requirements of the SNF QRP.
    We proposed that if a SNF seeks to request an exception or 
extension for the SNF QRP, the SNF should request an exception or 
extension within 90 days of the date that the extraordinary 
circumstances occurred. The SNF may request an exception or extension 
for one or more quarters by submitting a written request to CMS that 
contains the information noted below, via email to the SNF Exception 
and Extension mailbox at [email protected]. Requests 
sent to CMS through any other channel will not be considered as valid 
requests for an exception or extension from the SNF QRP's reporting 
requirements for any payment determination.
    We note that the subject of the email must read ``SNF QRP Exception 
or Extension Request'' and the email must contain the following 
information:
     SNF CCN;
     SNF name;
     CEO or CEO-designated personnel contact information 
including name, telephone number, email address, and mailing address 
(the address must be a physical address, not a post office box);
     SNF's reason for requesting an exception or extension;
     Evidence of the impact of extraordinary circumstances, 
including but not limited to photographs, newspaper and other media 
articles; and
     A date when the SNF believes it will be able to again 
submit SNF QRP data and a justification for the proposed date.
    We proposed that exception and extension requests be signed by the 
SNF's CEO or CEO-designated personnel, and that if the CEO designates 
an individual to sign the request, the CEO-designated individual has 
the appropriate authority to submit such a request on behalf of the 
SNF. Following receipt of the email, we will: (1) Provide a written 
acknowledgement, using the contact information provided in the email, 
to the CEO or CEO-designated contact notifying them that the request 
has been received; and (2) provide a formal response to the CEO or any 
CEO-designated SNF personnel, using the contact information provided in 
the email, indicating our decision.
    This proposal does not preclude us from granting exceptions or 
extensions to SNFs that have not requested them when we determine that 
an extraordinary circumstance, such as an act of nature, affects an 
entire region or locale. If we make the determination to grant an 
exception or extension to all SNFs in a region or locale, we proposed 
to communicate this decision through routine communication channels to 
SNF s and vendors, including, but not limited to, issuing memos, 
emails, and notices on our SNF QRP Web site once it is available at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-QR-Reconsideration-and-ExceptionExtension.html.
    We also proposed that we may grant an exception or extension to 
SNFs if we determine that a systemic problem with one of our data 
collection systems directly affected the ability of the SNF to submit 
data. Because we do not anticipate that these types of systemic errors 
will happen often, we do not anticipate granting an exception or 
extension on this basis frequently.
    If a SNF is granted an exception, we will not require that the SNF 
submit any measure data for the period of time specified in the 
exception request decision. If we grant an extension to a SNF, the SNF 
will still remain responsible for submitting quality data collected 
during the timeframe in question, although we will specify a revised 
deadline by which the SNF must submit this quality data.
    We also proposed that any exception or extension requests submitted 
for purposes of the SNF QRP will apply to that program only, and not to 
any other program we administer for SNFs such as survey and 
certification. MDS requirements, including electronic submission, 
during Declared Public Health Emergencies can be found at FAQs K-5, K-
6, and K-9 on the following link: http://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertEmergPrep/downloads/AllHazardsFAQs.pdf.
    We intend to provide additional information pertaining to 
exceptions and extensions for the SNF QRP, including any additional 
guidance, on the SNFQRP Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-QR-Reconsideration-and-ExceptionExtension.html. We invited public comment on these proposals 
for seeking and being granted exceptions

[[Page 46460]]

and extensions to the quality reporting requirements. The following is 
a summary of the comments received and our responses.
    Comment: Many commenters expressed strong support for the creation 
of an exception and extension request process for SNFs that experience 
disasters or other extraordinary circumstances.
    Response: We thank the commenters for their comments and support.
    After consideration of the public comments received, we are 
finalizing the adoption of the policy for SNF QRP Submission Exception 
and Extension Requirements for the FY 2018 Payment Determination and 
Subsequent Years.
k. SNF QRP Reconsideration and Appeals Procedures for the FY 2018 
Payment Determination and Subsequent Years
    At the conclusion of the required quality data reporting and 
submission period, we will review the data received from each SNF 
during that reporting period to determine if the SNF met the quality 
data reporting requirements. SNFs that are found to be noncompliant 
with the reporting requirements for the applicable FY will receive a 2 
percentage point reduction to their market basket percentage update for 
that FY.
    We are aware that some of our other QRPs, such as the HIQR Program, 
the LTCHQR Program, and the IRF QRP include an opportunity for the 
providers to request a reconsideration of our initial non-compliance 
determination. Therefore, to be consistent with other established QRPs 
and to provide an opportunity for SNFs to seek reconsideration of our 
initial non-compliance decision, we proposed a process that will enable 
a SNF to request reconsideration of our initial non-compliance decision 
in the event that it believes that it was incorrectly identified as 
being non-compliant with the SNF QRP reporting requirements for a 
particular FY.
    For the FY 2018 payment determination, and that of subsequent 
years, we proposed that a SNF would receive a notification of 
noncompliance if we determine that the SNF did not submit data in 
accordance with the data reporting requirements with respect to the 
applicable FY. The purpose of this notification is to put the SNF on 
notice of the following: (1) That the SNF has been identified as being 
non-compliant with the SNF QRP's reporting requirements for the 
applicable FY; (2) that the SNF will be scheduled to receive a 
reduction in the amount of two percentage points to its market basket 
percentage update for the applicable FY; (3) that the SNF may file a 
request for reconsideration if it believes that the finding of 
noncompliance is erroneous, has submitted a request for an extension or 
exception that has not yet been decided, or has been granted an 
extension or exception; and (4) that the SNF must follow a defined 
process on how to file a request for reconsideration, which will be 
described in the notification. We would only consider requests for 
reconsideration after an SNF has been found to be noncompliant.
    Notifications of noncompliance and any subsequent notifications 
from CMS would be sent via a traceable delivery method, such as 
certified U.S. mail or registered U.S. mail, or through other 
practicable notification processes, such as a report from CMS to the 
provider as a Certification and Survey Provider Enhanced Reports 
(CASPER) report, that will provide information pertaining to their 
compliance with the reporting requirements for the given reporting 
cycle. To obtain the CASPER report, providers should access the CASPER 
Reporting Application. Information on how to access the CASPER 
Reporting Application is available on the Quality Improvement 
Evaluation System (QIES) Technical Support Office Web site (direct 
link), https://web.qiesnet.org/qiestosuccess/. Once access is 
established providers can select ``CASPER Reports'' link. The ``CASPER 
Reports'' link will connect a SNF to the QIES National System Login 
page for CASPER Reporting.
    We invited comments on the most preferable delivery method for the 
notice of non-compliance, such as U.S. Mail, email, CASPER, etc. The 
comments we received on this topic, with their responses, appear below.
    Comment: One commenter suggested the use of QIES to communicate 
notices of non-compliance. Another commenter suggested that non-
compliance notifications be sent via multiple mechanisms to ensure 
delivery, including CASPER reports and a traceable delivery method.
    Response: We intend to provide further guidance regarding the 
delivery method for the notices of non-compliance in future rulemaking.
    We proposed to disseminate communications regarding the 
availability of compliance reports in the CASPER reports through 
routine channels to SNFs and vendors, including, but not limited to 
issuing memos, emails, Medicare Learning Network (MLN) announcements, 
and notices on our SNF QRP Web site once it is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-QR-Reconsideration-and-ExceptionExtension.html.
    A SNF would have 30 days from the date of the initial notification 
of noncompliance to submit to us a request for reconsideration. This 
proposed time frame allows us to balance our desire to ensure that SNFs 
have the opportunity to request reconsideration with our need to 
complete the process and provide SNFs with our reconsideration decision 
in a timely manner. We proposed that a SNF may withdraw its request at 
any time and may file an updated request within the proposed 30-day 
deadline. We also proposed that, in very limited circumstances, we may 
grant a request by a SNF to extend the proposed deadline for 
reconsideration requests. It would be the responsibility of a SNF to 
request an extension and demonstrate that extenuating circumstances 
existed that prevented the filing of the reconsideration request by the 
proposed deadline.
    We also proposed that as part of the SNF's request for 
reconsideration, the SNF would be required to submit all supporting 
documentation and evidence demonstrating full compliance with all SNF 
QRP reporting requirements for the applicable FY, that the SNF has 
requested an extension or exception for which a decision has not yet 
been made, that the SNF has been granted an extension or exception, or 
has experienced an extenuating circumstance as defined in section 
III.D.3.j. of this rule but failed to file a timely request of 
exception. We proposed that we would not review any reconsideration 
request that fails to provide the necessary documentation and evidence 
along with the request.
    The documentation and evidence may include copies of any 
communications that demonstrate the SNF's compliance with the SNF QRP, 
as well as any other records that support the SNF's rationale for 
seeking reconsideration, but should not include any protected health 
information (PHI). We intended to provide a sample list of acceptable 
supporting documentation and evidence, as well as instructions for SNFs 
on how to retrieve copies of the data submitted to CMS for the 
appropriate program year in the future on our SNF QRP Web site at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-QR-Reconsideration-and-ExceptionExtension.html.
    We proposed that a SNF wishing to request a reconsideration of our 
initial

[[Page 46461]]

noncompliance determination would be required to do so by submitting an 
email to the following email address: 
[email protected]. Any request for reconsideration 
submitted to us by a SNF would be required to follow the guidelines 
outlined on our SNF QRP Web site once it is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-QR-Reconsideration-and-ExceptionExtension.html.
    All emails must contain a subject line that reads ``SNF QRP 
Reconsideration Request.'' Electronic email submission is the only form 
of reconsideration request submission that will be accepted by us. Any 
reconsideration requests communicated through another channel 
including, but not limited to, U.S. Postal Service or phone, will not 
be considered as a valid reconsideration request.
    We proposed that a reconsideration request include the following 
information:
     SNF CMS Certification Number (CCN);
     SNF Business Name;
     SNF Business Address;
     The CEO contact information including name, email address, 
telephone number and physical mailing address; or
    The CEO-designated representative contact information including 
name, title, email address, telephone number and physical mailing 
address; and
     CMS identified reason(s) for non-compliance from the non-
compliance notification; and
     The reason(s) for requesting reconsideration
    The request for reconsideration must be accompanied by supporting 
documentation demonstrating compliance.
    Following receipt of a request for reconsideration, we will provide 
an email acknowledgment, using the contact information provided in the 
reconsideration request, to the CEO or CEO-designated representative 
that the request has been received. Once we have reached a decision 
regarding the reconsideration request, an email will be sent to the SNF 
CEO or CEO-designated representative, using the contact information 
provided in the reconsideration request, notifying the SNF of our 
decision.
    We also proposed that the notifications of our decision regarding 
reconsideration requests may be made available through the use of 
CASPER reports or through a traceable delivery method, such as 
certified U.S. mail or registered U.S. mail. If the SNF is dissatisfied 
with the decision rendered at the reconsideration level, the SNF may 
appeal the decision to the PRRB under 42 CFR 405.1835. We believe this 
proposed process is more efficient and less costly for CMS and for SNFs 
because it decreases the number of PRRB appeals by resolving issues 
earlier in the process. Additional information about the 
reconsideration process including details for submitting a 
reconsideration request will be posted in the future to our SNF QRP Web 
site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-QR-Reconsideration-and-ExceptionExtension.html. We invited public comment on the proposed 
procedures for reconsideration and appeals. The following is a summary 
of the comments received and our responses.
    Comment: Many commenters supported the policy to allow SNFs an 
opportunity to submit reconsideration requests. One commenter 
recommended extending the appeal timeline from 30 to 45 days if CMS 
does not provide for a timely notification method.
    Response: To remain consistent with our other QRPs which have 
successfully implemented a reconsideration process, we believe that 30 
days is sufficient.
    Final Decision: After consideration of the public comments 
received, we are finalizing the adoption of the policy for SNF QRP 
Reconsideration and Appeals Procedure for the FY 2018 Payment 
Determination and Subsequent Years.
l. Public Display of Quality Measure Data for the SNF QRP
    Section 1899B(g)(1) of the Act requires the Secretary to provide 
for the public reporting of SNF provider performance on the quality 
measures specified under subsection (c)(1) and the resource use and 
other measures specified under subsection (d)(1) by establishing 
procedures for making available to the public data and information on 
the performance of individual SNFs with respect to the measures. Under 
section 1899B(g)(2) of the Act, such procedures must be consistent with 
those under section 1886(b)(3)(B)(viii)(VII) of the Act and also allow 
SNFs the opportunity to review and submit corrections to the data and 
other information before it is made public. Section 1899B(g)(3) of the 
Act requires that the data and information be made publicly available 
not later than 2 years after the specified application date applicable 
to such a measure and provider. Finally, section 1899B(g)(4)(B) of the 
Act requires such procedures be consistent with sections 1819(i) and 
1919(i) of the Act. We stated our intention to propose details related 
to the public display of quality measures in the future. The following 
is a summary of the comments received and our responses.
    Comment: One commenter suggested that CMS replace or add to the 
existing measures on Nursing Home Compare when measures that meet the 
IMPACT Act requirements are adopted. This commenter further suggested 
adjustment to the thresholds used in assigning Star Ratings to the 
quality measures, and cautioned CMS to compare SNFs against performance 
of meaningful scores on the quality measures rather than against their 
respective rankings. The commenter also suggested the formation of a 
TEP to develop a method on how to publicly report in a single cross-
setting report that compares PAC performance across PAC providers, as 
well as assist in the development of meaningful targets on quality 
measures. One commenter stated that the imposition of a financial 
penalty should be publicly reported.
    Response: We will take these recommendations into consideration as 
we develop the process for the public display of data and information 
on the performance of individual SNFs with respect to the measures.
m. Mechanism for Providing Feedback Reports to SNFs
    Section 1899B(f) of the Act requires the Secretary to provide 
confidential feedback reports to post-acute care providers on their 
performance with respect to the measures specified under subsections 
(c)(1) and (d)(1), beginning 1 year after the specified application 
date that applies to such measures and PAC providers. We intended to 
provide detailed procedures to SNFs on how to obtain their confidential 
feedback reports on the SNF QRP Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting.html. The following is a 
summary of the comments received and our responses.
    Comment: One commenter recommended that CMS use the same mechanism 
currently used by SNFs for previewing Five Star data and allow SNFs to 
preview all of the quality measures on Nursing Home Compare. The 
commenter also suggested that CMS use the QIES system so that all SNFs 
can preview their individual reports on a weekly basis.
    Response: We will take the suggestion into consideration as we 
develop the mechanism for providing feedback reports to SNFs.

[[Page 46462]]

4. Staffing Data Collection
a. Background and Statutory Authority
    Section 1819(d)(1)(A) of the Act for SNFs and section 1919(d)(1)(A) 
of the Act for NFs each state that, in general, a facility must be 
administered in a manner that enables it to use its resources 
effectively and efficiently to attain or maintain the highest 
practicable physical, mental, and psychosocial well-being of each 
resident. Sections 1819(d)(4)(B) and 1919(d)(4)(B) of the Act give the 
Secretary authority to issue rules, for SNFs and NFs respectively, 
relating to the health, safety and well-being of residents and relating 
to the physical facilities thereof.
    The Affordable Care Act of 2010 (Pub. L. 111-148, March 23, 2010) 
added a new section 1128I to the Act to promote greater accountability 
for LTC facilities (defined under section 1128I(a) of the Act as SNFs 
and nursing facilities). As added by the Affordable Care Act, section 
1128I(g) pertains to the submission of staffing data by LTC facilities, 
and specifies that the Secretary, after consulting with state long-term 
care ombudsman programs, consumer advocacy groups, provider stakeholder 
groups, employees and their representatives and other parties the 
Secretary deems appropriate, shall require a facility to electronically 
submit to the Secretary direct care staffing information, including 
information for agency and contract staff, based on payroll and other 
verifiable and auditable data in a uniform format according to 
specifications established by the Secretary in consultation with such 
programs, groups, and parties. The statute further requires that the 
specifications established by the Secretary specify the category of 
work a certified employee performs (such as whether the employee is a 
registered nurse, licensed practical nurse, licensed vocational nurse, 
certified nursing assistant, therapist, or other medical personnel), 
include resident census data and information on resident case mix, be 
reported on a regular schedule, and include information on employee 
turnover and tenure and on the hours of care provided by each category 
of certified employees per resident per day. Section 1128I(g) of the 
Act establishes that the Secretary may require submission of 
information for specific categories, such as nursing staff, before 
other categories of certified employees, and requires that information 
for agency and contract staff be kept separate from information on 
employee staffing.
b. Provisions of the Proposed Rule and Response to Comments
    As part of the FY 2016 SNF PPS proposed rule, we proposed to 
implement the new statutory requirement in section 1128I(g) of the Act. 
Specifically, we proposed to modify current regulations applicable to 
LTC facilities that participate in Medicare and Medicaid by amending 
the requirements for the administration of a LTC facility at Sec.  
483.75 to add a new paragraph (u), Mandatory submission of staffing 
information based on payroll data in a uniform format.
    During the 60-day comment period on the proposed rule, we received 
approximately 22 timely comments on the staffing data collection 
proposal from individuals, providers, national and regional health care 
professional associations and advocacy groups. Summaries of the 
proposed provisions, as well as the public comments and our responses, 
are set forth below.
(1) Consultation on Specifications
    As discussed in the FY 2016 SNF PPS proposed rule, we adopted a 
multi-pronged strategy to comply with section 1128I(g) of the Act's 
consultation requirement that includes both soliciting input from all 
interested parties through the rulemaking process and ongoing 
consultation with the statutorily identified entities regarding the 
sub-regulatory reporting specifications that we will establish. We 
invited public comment on our proposed methods for consultation on the 
submission specifications. The comments we received on this topic, with 
their responses, appear below.
    Comment: One commenter suggested that CMS convene a TEP to design a 
structure and to clearly articulate the goals and purpose of the 
collected information prior to mandated reporting. Another commenter 
asked where it indicated in the rule that the specifications of 
staffing data would be based upon ``. . . consultation with long-term 
care ombudsman programs, consumer advocacy groups, provider stakeholder 
groups, employees and their representatives.'' This commenter proposed 
that CMS provide the result of those consultations with the 
aforementioned groups. Commenters further stated that it would seem 
such information could be valuable in the formation of a rational 
implementation of this particular provision of the Affordable Care Act. 
Other commenters stated that the designing of the reporting process 
should take into account differences among LTC providers, such as 
variations in size, location, management and operations, including 
differences among payroll and time and attendance systems. Those 
commenters urged CMS, when implementing this new requirement, to assure 
opportunity for feedback and provider representation and participation 
across the full spectrum of nursing home structures and organization 
types, such as large, small, urban, rural, freestanding and multiple-
site facilities, as well as regional companies and large companies.
    Response: We are committed to consulting with stakeholders, 
including LTC facilities, consumer advocates, and other related groups. 
Through this rulemaking, we solicited input from all of the statutorily 
identified entities and this final rule reflects the outcome of that 
consultation. We are continuing our consultation on the sub-regulatory 
specifications through a variety of mechanisms. We have a regular 
dialogue with stakeholders through individual and national calls. These 
stakeholders represent a wide range of facilities throughout the 
country, including large and small, rural and urban, independently-
owned facilities and national chains, and we have consulted with 
facilities with varying types of payroll and time keeping systems. In 
addition, we published a Draft Policy Manual (``1.0'') for the 
electronic staffing data submission payroll-based journal (``Draft PBJ 
Policy Manual'') that offers more details of planned technical 
specifications and invited comments that we continue to take into 
account as we develop and refine the specifications to implement this 
final rule. This manual is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Staffing-Data-Submission-PBJ.html. We encourage 
stakeholders to email comments and requests to [email protected] 
as another opportunity for consultation. We appreciate the suggestions 
from commenters on other mechanisms for consultation with stakeholders 
on our subregulatory specifications and we will consider these options 
as we continue our dialogue and engagement efforts throughout 
implementation.
(2) Scope of Submission Requirements
    As noted above, section 1128(g) of the Act mandates that the 
Secretary require LTC facilities ``to ``to electronically submit to the 
Secretary direct care staffing information, including information for 
agency and contract staff, based on payroll and other verifiable and 
auditable data in a uniform format.'' The proposed rule

[[Page 46463]]

used the statutory term ``direct care staffing information'' without 
elaboration. We received a number of comments regarding the scope of 
this term. Those comments and our responses are set forth below.
    Comment: Several commenters asked that CMS define ``direct care 
staff'' and clarify the types of staff in the nursing facilities that 
are included in this reporting. Several commenters recommended we use 
the following definition; ``Direct care staff means those individuals 
who provide care and services enabling the resident to receive the 
necessary care and services to attain or maintain the highest 
practicable physical, mental, and psychosocial well-being, in 
accordance with the comprehensive assessment and plan of care, as 
specified in Sec.  483.25.'' A few commenters recommended using the 
definition from the preamble of the October 2005 Final Rule on Posting 
of Nurse Staffing Information (70 FR 62065 available at http://www.gpo.gov/fdsys/pkg/FR-2005-10-28/pdf/05-21278.pdf), which states 
that direct care means that an individual is directly responsible for 
resident care, which includes, but is not limited to, such activities 
as assisting with activities of daily living (ADLs), performing gastro-
intestinal feeds, giving medications, supervising the care given by 
CNAs, and performing nursing assessments to admit residents or notify 
physicians about a change in condition. Another commenter recommended 
defining direct care staff as staff having ``hands on'' care of a 
patient.
    Several commenters expressed concern that the Draft PBJ Policy 
Manual suggested CMS planned to interpret the proposed regulation to 
require reporting of information on non-direct care employees and 
opined that this interpretation would go beyond what Congress intended. 
One commenter stated that nowhere in the Affordable Care Act, or the 
proposed rule, is there mention of the non-direct patient care services 
as direct care staff. They opined that some of the employee categories 
listed in the Draft PBJ Policy Manual, such as housekeeping and 
dietary, are generally not considered to be individuals that perform 
direct care. Commenters stated that it was not the intent of Congress 
to require reporting for individuals providing non-direct care services 
and that CMS's interpretation would increase the burden beyond what is 
necessary, while at the same time not adding information that is 
helpful to the overall goal of the program. They stated that the 
interpretation by CMS of definitions of direct care staff in the Draft 
PBJ Policy Manual broadens the scope and breadth of data required, and 
does so to an unnecessary extent that exhibits overreach of the 
legislative directive. They urged CMS to maintain internal consistency 
with the definitions in section 6106 of the Affordable Care Act, the 
proposed rule, the Draft PBJ Policy Manual and ultimately the final 
rule, and limit this data collection to direct patient care staff 
information. Commenters stated that the final rule should clarify that 
direct care staffing excludes non-direct care services. In addition, 
they recommended that references to non-direct care services be removed 
from the Draft PBJ Policy Manual to avoid confusion and unnecessary 
administrative costs for providers. Some examples the commenters 
provided as extraneous to the direct care staff normally employed by 
nursing homes (and that they advise should be reevaluated with 
stakeholder consultation and input) are blood service workers and 
vocational service workers.
    Another commenter urged that CMS only collect staffing data about 
direct care staff that are typically employed (or contracted by) in 
nursing centers, including trained medication aides (where permitted by 
state law), and not all types of staff that are currently reflected in 
the CMS Form 671 (for example, housekeeping staff, administration and 
storage of blood, vocational services). They also recommended that CMS 
collect staffing data about additional direct care staff such as 
Certified Respiratory Therapists, all therapy staff (Speech and 
Language Pathologists, Physical Therapists, Occupational Therapists, 
PT/OT Assistants and Aides) therapeutic recreation staff, medical 
social workers, physicians and non-physician practitioners (NPPs). 
Another commenter asked that CMS clearly delineate all staff 
categories, including physical therapist and physical therapist 
assistants. Additional comments request that CMS clarify what 
categories of employees are included in ``therapist and other type of 
medical personnel''.
    Response: We believe that the statutory term ``direct care staffing 
information'' as used in the proposed rule is self-explanatory. As 
noted in the preamble to the proposed rule, facilities have a statutory 
obligation to be administered in a manner that enables it to use its 
resources efficiently and effectively to attain or maintain the highest 
practicable physical, mental and psychosocial well-being of each 
resident. We also noted that the statutory requirement to report direct 
care staffing information was added to promote greater accountability 
for LTC facilities in meeting this obligation. In addition, the 
Congress gave context for the term ``direct care staffing information'' 
by including a non-exclusive list of the categories of work that may be 
performed by individuals whose information would be reported. We 
incorporated this non-exclusive list into the proposed rule. 
Accordingly, we believe that it was clear from the proposed rule that 
the reporting requirement would apply to the subset of staff at a LTC 
facility whose work directly advances resident well-being. However, we 
appreciate commenters desire to have specificity in the regulation. 
Based on the comments received, in this final rule we add a definition 
of ``Direct Care Staff'' at Sec.  483.75(u)(1). This definition is 
grounded in the statutory text cited in the proposed rule and 
incorporates specific text offered by commenters. ``Direct Care Staff'' 
is defined as those individuals who, through interpersonal contact with 
residents or resident care management, provide care and services to 
residents to allow them to attain or maintain the highest practicable 
physical, mental, and psychosocial well-being. Direct care staff does 
not include individuals whose primary duty is maintaining the physical 
environment of the long term care facility (for example, housekeeping). 
In this definition, we do not exclude individuals who spend time on 
duties that are not always ``hands on,'' such as supervising nurses or 
medication management, as these types of duties directly impact a 
resident's care. Therefore, the definition focuses primarily on whether 
the staff person in question provides care or services either through 
``hands on'' care or through resident care management, with the 
intention of benefiting the resident's well-being. We further note that 
there can be significant variation in the level and type of direct care 
that many staff provide. For example, a certified nurse assistant may 
spend the bulk of their time delivering hands-on care directly at the 
bedside, while an activities director may spend less time delivering 
hands-on bedside care. As such, we intend to collect staffing data on 
any staff that provides any amount of direct care.
    Although comments on the Draft PBJ Policy Manual are beyond the 
scope of this rulemaking, we appreciate commenters' feedback on how 
this draft guidance would implement the regulatory obligations 
established under this rule. We agree with commenters who stated that 
the reporting obligation under this regulation should not extend

[[Page 46464]]

to non-direct care staff, as well as their assertion that individuals 
who provide housekeeping are not direct care staff. As explained above, 
we are following commenters' recommendation to add a definition of 
direct care staff. As commenters requested, the definition of direct 
care staff expressly excludes housekeeping staff as well as any other 
individuals whose services are primarily related to maintaining the 
physical environment of the long term care facility. We believe this 
definition clarifies how CMS intends to interpret the scope of the 
reporting requirement. We agree with commenters who observed the 
reporting requirement should be consistently interpreted from the 
statute to the regulation to the implementing guidance. We believe the 
regulation is fully consistent with the statute and we will revise our 
subregulatory guidance to align with provisions of this final 
regulation. Finally, we note that we will take into account commenters' 
feedback on the categories of direct care staff as we refine the Draft 
PBJ Policy Manual.
(3) Hours Worked and Hours of Care
    We proposed language for the new Sec.  483.75(u)(1)(iii) that would 
require facilities to submit information on staff turnover and tenure 
and on the hours of care provided by each category of staff per 
resident per day (including, but limited to start date, end date (as 
applicable) and hours worked for each individual.
    We noted that section 1128I(g)(4) of the Act requires LTC 
facilities to report on the hours of care provided by each category of 
certified employees per resident per day. We expressed our belief that 
the obligation to submit information on ``hours of care'' is satisfied 
by requiring facilities to submit hours worked by staff. In addition, 
we noted that although section 1128I(g)(2) of the Act requires the 
submission of resident case mix information, the proposed rule did not 
include a provision to implement this requirement because existing 
regulations at Sec.  483.20 require LTC facilities to meet this 
statutory requirement through the required submission of the Minimum 
Data Set (MDS). Details of the comments we received on submission 
requirements, with our responses, appear below.
    Comment: One commenter urged CMS to be consistent with language in 
the preamble and in the federal law related to ``hours worked'' and to 
eliminate language requiring the reporting of hours of care provided. 
Another commenter stated that they believe that CMS must find a way to 
better capture hours provided than to equate it to hours worked. This 
commenter suggested one approach might be to conduct time studies to 
estimate the average amount of time CNAs, LPNs and RNs spend on non-
direct care tasks and subtract that time from their total hours worked. 
Two commenters stated that CMS should require submission of time 
employees are taking personal leave during the work day (for example, 
for meals, breaks), and stated that these should not be recorded as 
hours worked as they are not hours of care. They further stated that 
although the language of CMS's proposed rule either quotes or 
paraphrases the statutory language, proposed at Sec.  483.75(u), the 
preamble suggests that ``the obligation to submit information on `hours 
of care' is satisfied by requiring facilities to submit hours worked by 
staff.'' (80 FR 22081). Those commenters strongly disagree with the 
approach to collect hours of care worked as equivalent to hours of 
care. They observed that there could be a considerable difference 
between hours of care actually provided and hours of care worked. They 
stated that all staff, as a matter of practice and by law, have time 
when they are paid but are not working--meal and other mandated breaks, 
mandatory in-service training, etc. They observed that in an eight-hour 
workday, some time is devoted to meal and other mandated breaks and 
although staff may be paid for this time, but they are not providing 
care to residents. The commenters opined that if CMS is unwilling to 
require facilities to submit hours of direct care actually provided, 
then it must delete at least one hour from total hours worked in order 
to reflect the time at work that is not dedicated to resident care. 
Another commenter stated that CMS should require submission of time 
employees are absent from the facility on work-related leave if they 
are unavailable to fulfill direct care responsibilities. The commenter 
stated that this should include time nurse aides spend transporting 
individual residents to medical appointments since they are unavailable 
to provide services to other residents during that time. Other 
commenters expressed support for the proposed reporting of hours 
worked, but questioned how the reporting will distinguish between 
direct care hours worked and hours worked on management and other 
responsibilities by a salaried employee, as might be the case for nurse 
managers who split their time between direct care and management 
functions. One commenter remarked that they support the many job 
classifications for which the Draft PBJ Policy Manual proposes to 
collect staffing information, but for both nursing and non-nursing job 
classifications there needs to be more specification on how to 
distinguish hours of care versus mandatory breaks or other non-direct 
care duties.
    Other commenters supported the reporting of hours worked, but 
stated that submission specifications should account for actual hours 
worked by salaried/exempt staff. They observed that exempt direct care 
employees can frequently work more than the salaried time period (for 
example, 40-hour basis) for which they are paid. While alternate 
compensation for any additional hours will not be evident in a payroll-
based system, they suggested that the CMS staffing data collection 
process should account for this additional time to accurately reflect 
direct care staffing and coverage. Similarly, another commenter 
observed that there are data elements that are not captured in payroll 
data alone, such as time worked off of the clock for contract 
employees, or the actual hours worked by the salaried employee. The 
commenter stated that capturing data that includes productivity 
standards and time allocated for indirect patient care would further 
illuminate quality patient care that is not intuitive to payroll data 
alone. The commenter suggested that this can be calculated by 
collecting data for direct patient contact time, which is captured in 
the MDS and/or medical record. The commenter recommended the inclusion 
of direct patient contact time, as reported by speech language 
pathologists or derived from the billable minutes provided on the date 
of service.
    Response: In our proposed approach, and in this final regulation, 
we give deference to the statutory requirement that the staffing data 
be reported ``based on payroll and other verifiable and auditable data 
in a uniform format (according to specifications established by the 
Secretary . . .).'' Payrolls represent the primary source of verifiable 
and auditable information, and are explicitly referenced in the statute 
as such. Payroll systems contain the key information organized as 
``hours worked,'' and provide the most effective foundation for 
electronic reporting. We have therefore maintained ``hours worked''.
    We appreciate commenters' observation that payroll systems record 
vacation, sick time, and certain other absences that are time other 
than ``hours worked.'' Therefore, when LTC facilities report total 
hours worked by direct care staff (based on payroll and other 
verifiable and auditable data as

[[Page 46465]]

specified by CMS), these data should not include paid time off (for 
example, vacation, sick leave, etc.).
    At the same time, we recognize that nursing home staff engage in 
other non-care and direct care activities throughout their day, such as 
breaks. Although outside the scope of this rulemaking, we appreciate 
that in calculating quality measures we may need to adopt some 
statistical refinements that allow for reasonable estimates of such 
time in order to afford the public the information that will enable 
recognition of the time that staff are engaged in non-care or non-
direct care activities. Also, as required in the statute, we require 
that the primary care area of each staff person (as well as each 
individual's hours) be reported. Such categorization will allow the 
public to identify which care areas are most important to them, as well 
as to focus on the types of staff who provide most of the hands-on 
care. We thank the commenters for identifying these issues, and will 
take this feedback into account when assessing future uses of the data, 
such as quality measures.
    We further note that the regulation does not limit collection of 
information to payroll data exclusively. In fact, the regulation 
specifies that the information will be ``based on payroll and other 
verifiable and auditable data'' (emphasis added). Although beyond the 
scope of this rulemaking, we do not rule out the possibility that 
future implementation specifications could require submission of 
information from time studies or other methods, in addition to payroll 
data, if CMS determines that other data capture methods are auditable 
and verifiable. For example, if at a future date CMS concludes there 
are auditable and verifiable data regarding extra hours worked by 
salaried employees or hours worked that are extraneous to the care of 
residents, CMS may revise the implementation specifications to address 
the submission of these data that permit refinement of the payroll 
data. However, as indicated in the draft subregulatory guidance 
implementing this regulation, we anticipate that initial reporting will 
be limited to the payroll-reported data for each individual who meets 
the definition of direct care staff. We plan to continue to work with 
stakeholders to further develop the initial specifications to implement 
this final rule and to make any future refinements to this 
subregulatory guidance.
    Comment: A few commenters recognized the value of collecting and 
reporting staffing information but were concerned about the 
administrative burden resulting from this new reporting requirement, in 
particular for hospital-based skilled-nursing facilities, where many 
staff may work in both the SNF and other departments of the hospital 
and health system, and where payroll systems are integrated. They urged 
CMS to test the proposed data collection system specifically in SNFs 
operated as distinct parts of acute care hospitals to address any 
unique issues that might arise in that setting. Another commenter 
observed that in their facility, attached to a hospital, the 
housekeeping, laundry, maintenance, dietary, and administrative 
services are provided by staff that conduct hospital and nursing home 
services. The commenter explained that at their facility only the 
nursing time is directly allocated to the nursing home on a timesheet; 
the times worked in the other departments are allocated to their 
individual departments. The commenter observed that at the end of the 
year when the cost report is prepared, their time is separated out to 
the revenue producing departments (nursing home, medical/surgical, ER, 
lab, radiology, etc.) based on meals served, square footage, pounds of 
laundry, etc. The commenter stated that, currently, this information 
will not be able to be sent directly from their payroll system and that 
it will be extremely time consuming to figure out the percentage of 
time a support service department employee worked for the nursing home 
each day and manually enter it into the Payroll-Based Journal system. 
The commenter observed that the cost report already provides a summary 
of staffing salaries and hours, and suggested that the cost report 
could be modified to conform to all the Affordable Care Act 
requirements. Another commenter stated that to require distinct part 
SNFs to collect data on the services not related to direct patient 
care, duties which are shared with the institutions where they are 
housed, will create unnecessary administrative burden to separate data 
for services, which are by definition shared. This works against the 
entire principle behind distinct part SNFs, and is, in fact, impossible 
to accomplish without hours of manual labor. For example, the commenter 
observed that in their 125-bed facility they have a 38-bed ventilator 
assist unit, with approximately 140 direct care staff with a 10-hour 
per patient day ratio. They stated that the amount of time to submit 
staffing information on this unit alone would require an inordinate 
amount of resources. A hospital association stated they are concerned 
that the requirement will be administratively burdensome, particularly 
in light of the challenges of attributing hours worked to the distinct 
part unit as opposed to the hospital generally. They opined that 
therapy staff hours are now kept by department and allocated 
retrospectively as part of the facility's cost report. The association 
stated that the payroll system for these hospitals does not support the 
automated submission of data as envisioned in this regulatory proposal. 
For these types of facilities, they encouraged CMS to consider 
alternative mechanisms--such as adaptions of the current cost reporting 
system--to demonstrate compliance with the requirements of the statute. 
Finally, a commenter stated that one of the issues involved in 
reporting hours worked for non-direct care staff involves SNFs that are 
hospital or retirement community based. The commenter stated that non-
direct care staff provides services to the whole organization and there 
is no way to determine the number of hours specific to the SNF and 
indicated that Medicare cost report methodology allows reporting of 
these ``overhead'' areas based on various statistics that have no 
relationship to hours. The commenter opined that to attempt to 
determine the SNF related hours would result in inaccurate estimates 
that would not be meaningful and would be a cumbersome manual process.
    Response: We are aware that hospital-based facilities and other 
facilities such as nursing homes adjacent to assisted living facilities 
or part of retirement communities have staff that work in multiple 
areas of the broader entity. In response to these and other comments, 
in this final rule we have added a definition of ``direct care staff'' 
that excludes certain facility support staff. We believe that this 
adjustment will help address a large portion of the staff issues that 
distinct part and other conjoined entities would otherwise face with 
staff who have duties in multiple entities. For the staff who do meet 
the new definition of direct care staff, facilities will still need to 
report the hours that are allocated to the SNF/NF residents only, and 
not include hours for staff allocated for providing services to 
residents in non-certified SNF/NF beds. Data reported should be 
auditable and able to be verified through either payroll, invoices, 
and/or tied back to a contract. Facilities must use a reasonable 
methodology for calculating and reporting the number of hours allocated 
to providing services on site to the SNF/NF residents, and exclude 
hours allocated for providing services to other individuals in other 
settings. These types of facilities are encouraged

[[Page 46466]]

to participate in the voluntary program beginning on October 1, 2015. 
Voluntary submission will allow facilities to work through their 
processes to submit the data in advance of the mandatory submission 
period. We also note that Medicare cost reports are not an appropriate 
means to comply with this staffing reporting requirement because, among 
other concerns, they do not contain all of the data needed to comply 
with the Act, such as information on turnover and tenure.
    Comment: Several commenters opined on how the submission schedule 
should apply to resident census data. Several commenters recommended 
that CMS collect resident census data in a time frame consistent with 
collection of other staffing data under this requirement. That is, they 
recommended that if staffing data is collected quarterly, census data 
should be collected quarterly. Some commenters suggested that data 
regarding resident census should reflect shorter time periods than 
quarterly. For example, several commenters recommended that the 
resident census data submitted each quarter should include three data 
points that reflect each month's total patient days in order to 
accurately reflect the hours of direct care per patient per day. 
Another commenter urged CMS to require facilities to collect and submit 
daily resident census data to capture fluctuations around facilities' 
surveys when many facilities temporarily increase staff; to reflect 
reduced staffing hours caused by higher absenteeism during certain 
periods such as holidays; and to reflect periods when census 
unexpectedly increases, such as accommodation of residents displaced by 
a facility closure. Another commenter remarked that it is their 
understanding that based on the specifications contained in the Draft 
PBJ Policy Manual CMS intended to interpret the proposed regulation to 
require submission of census data based on the resident population as 
of the last date of each month of each quarter. The commenter expressed 
strong objection and concern with this approach as misrepresentative 
and unreliable in depicting the hours of direct care provided per 
resident per day. The commenter opined that that collection of census 
information must be compared to and consistent with the data collected 
for hours worked during the same submission period. The commenter 
expressed the view that calculation and use of the average daily census 
for each month in a quarterly submission period was strongly favored 
over the current CMS proposal. Another commenter recommended that 
resident census also be submitted on a daily basis to capture 
fluctuations in staff-to-resident ratios that may occur during a 30-day 
period that would not be recorded if data were reported only on the 
last day of the month; for example, the period around the annual survey 
or during a ban on admissions or closure. One commenter stated that it 
is unclear how the number of days will be gathered from the submitted 
data for purposes of determining hours of care per resident day. Given 
the desired level of accuracy in reporting of hours worked, they 
advocated for an accurate and unobtrusive method for collecting 
information on the number of resident days provided in each reporting 
period. Finally, a commenter stated that CMS proposes that resident 
census data should be collected on the last day of each of the 3 months 
within a quarter. The commenter recommended staffing data should be 
collected on a daily basis, because the lack of daily resident census 
data could lead to inaccurate calculation of staffing levels, and 
potential inflation of staffing level averages. The commenter observed 
that resident census fluctuates continually throughout the month, and 
it would not be a burden for facilities to report this information 
since this information is readily available at SNFs. They stated that 
primary purpose of payroll-based staffing data collection is to provide 
as accurate as possible staffing level information for consumers, 
rather than the current system which is fairly unreliable for several 
facilities as facilities ``staff-up'' near their expected inspection 
survey.
    Response: We recognize that a facility's census fluctuates 
throughout each month and appreciate suggestions intended to promote 
the utility of the census data submitted under this regulation. 
However, while the requirement to submit census information is within 
the scope of this rule, the specifications for this submission are not. 
Therefore, these comments will be taken into account as we revise the 
Draft PBJ Policy Manual and other subregulatory guidance. For example, 
we will analyze the average census of a facility based on the last day 
of each month as compared to the average census based on the daily 
census. We will ensure that any eventual quality measure will be 
statistically sound in representing a facility's census. This may 
involve altering the data we propose to collect (for example, from once 
a month, to daily) or collecting this information through other means. 
We note that the method to submit census data described in the current 
draft guidance was recommended by stakeholders who participated in the 
pilot in 2012 and was structured to reduce provider burden as much as 
possible.
    Comment: Two commenters strongly supported the submission of nurse 
staffing hours by shift to capture what they describe as the dangerous 
decline that occurs in many facilities on the afternoon and night 
shifts. They expressed that sufficient direct care nursing staff on one 
or two shifts averaged over three shifts may hide critically deficient 
nursing levels on the other(s), when residents are at increased risk of 
serious harm from missed care, falls, abuse, elopement, missed meals, 
and lack of assistance with toileting. They further commented that 
shift-level nurse staffing hours per resident day would yield far more 
important evidence of quality than minor variations in case mix in 
typical nursing homes. They also noted that the Staffing Quality 
Measure (SQM) project evaluated the feasibility of collecting shift 
level data, concluding that it could be done and would allow 
calculation of ``more detailed staffing measures, such as shift-level 
staffing ratios or the proportion of shifts for which at least one 
registered nurse was present.'' One commenter additionally remarked 
that CMS should collect nurse staffing data by unit. They concluded 
from the SQM Final Report that researchers gave only cursory attention 
to requiring facilities to submit data by units. They asserted that at 
a time when the industry is creating special subacute care or rehab 
units to maximize Medicare census and reduce rehospitalization rates, 
adequate or exceptional staffing in a subacute unit can create a false 
picture of levels in other units whose residents have similar needs. 
They stated that without such data, case mix adjustment would be more 
likely to obscure staffing hours than to clarify them. Another 
commenter recommended that staffing data be collected by shift and 
unit, especially as more facilities are developing Medicare/
rehabilitation units and subacute units.
    Response: We agree that data regarding staffing patterns at the 
shift and/or unit level would be valuable when assessing how LTC 
facilities are administered; however, these implementation 
specifications are beyond the scope of this rulemaking. We will 
continue to look at this as we develop subregulatory guidance and will 
evaluate the feasibility of collecting these data elements in the 
future.

[[Page 46467]]

    Comment: One commenter recommended that CMS reconsider case-mix 
adjustment of staffing hours. Another commenter expressed opposition to 
making any adjustment for case mix. The commenter suggested that, at a 
minimum, the non-adjusted staffing level data should be publicly 
available. The commenter stated that the case-mix of residents is 
changing constantly, and consumers want to know if facilities are truly 
staffing near the recommended level of 4.1 hours per resident day, or 
are they only near this standard due to the case-mix adjustment. One 
commenter strongly objected to any language in regulations that would 
require or imply that CMS will use MDS data to adjust staffing 
information that is reported on Nursing Home Compare. In passing 
legislation to replace inaccurate, self-reported staffing data with 
information from auditable payroll records, the commenter stated that 
Congress intended to ensure that the public has accurate information 
about staffing hours, and that the Congress did not intend to have 
information from the new system degraded by consolidation with data 
from another self-reported source that is frequently inaccurate and 
even fraudulent. The commenter acknowledged and welcomed the fact that 
CMS is implementing nationwide, focused MDS surveys in response to 
criticism of the use of MDS data to construct Quality Measures (that 
are displayed on the CMS Nursing Home Compare Web site), but noted that 
such focused surveys will not be conducted in all nursing homes, and 
that they will be subject to the same limitations as other surveys 
(such as surveyor turnover, pressure from supervisors not to cite 
deficiencies, and weak enforcement).
    Response: We thank commenters for their suggestions but note that 
the use of case-mix or MDS data is outside the scope of this rule. We 
will work with stakeholders prior to formulating publicly posted 
quality measures. We will consider making both adjusted and unadjusted 
data available. However, we believe that case mix adjustments are 
important for the very reasons the commenters observe--that the risk 
profile of a nursing home's resident population does change over time, 
and is also different from one facility to another. We would expect 
that a nursing home that has a population with a higher risk profile 
should generally have an overall higher staffing level, or a staffing 
complement that matches the risk profile (for example, higher RN levels 
for a nursing home with a population that has a higher acuity level 
compared to other nursing homes). We appreciate that the MDS data have 
limitations but at this time we believe MDS reporting does meet the 
statutory requirement for LTC facilities to submit information on 
resident case-mix that are auditable and verifiable. We will also 
continue to monitor the results of the new nationwide sample of 
targeted MDS surveys to determine if additional actions are advisable.
    Comment: One commenter stated that if the Congress' intent was to 
ensure that payroll data and staffing quality measures would conform 
with the minimum staffing requirements of the Nursing Home Reform Law, 
which require care to be provided by Licensed Health Professionals and 
nurse aides who meet the law's 75-hour training, competency evaluation, 
and registry requirements, then they recommend that CMS define 
``certified employees'' as staff who are licensed health professionals 
and/or who meet the requirements for nurse aides, as defined in section 
1819(b)(5) of the Act.
    Response: The requirement for reporting staffing data is not 
limited to licensed health care professionals and nurse aides. Direct 
care staff includes other staff that meet the definition of direct care 
staff. That said, we will provide definitions for certain categories of 
staff, such as nurse aides, through implementing guidance.
(4) Distinguishing Employees From Agency and Contract Staff
    Under section 1128I(g) of the Act's requirement that information 
for agency and contract staff be kept separate from information on 
employee staffing, we proposed to add a new Sec.  483.75(u)(2) to 
establish that, when reporting direct care staffing information for an 
individual, a facility must specify whether the individual is an 
employee of the facility or is engaged by the facility as contract or 
agency staff. We believe the statute's intent is to require LTC 
facilities to submit staffing information in a manner that can enable 
us to distinguish those staff that are employed by the facility from 
those that are engaged by the facility under a contract or through an 
agency. We do not believe the statute requires such data to be 
submitted at separate times or through separate systems, which would 
merely engender unnecessary costs and burden, so we intend to collect 
all facility staffing information at the same time and through the same 
system, employing a mechanism by which LTC facilities will clearly 
specify whether staff members are employees of the facility, or engaged 
under contract or through an agency.
    The comments we received on this topic, with their responses, 
appear below.
    Comment: One commenter requested that CMS further clarify in the 
Draft Payroll-Based Journal Policy Manual that ``floaters'' or other 
employees that work at multiple facilities for the same operator should 
be categorized as contract staff. Another commenter agreed that 
facilities must indicate whether an employee is a direct employee of 
the facility (exempt or non-exempt), or employed under contract paid by 
the facility or through an agency. The commenter stated that CMS should 
consider defining ``floaters''--individuals employed by the corporation 
who may work for the same employer but in different facilities at 
different times--as agency employees. Another commenter asked what the 
applicable start and end dates would be that a facility would report 
for contract and agency staff, since these workers can be used 
intermittently over indeterminate time periods.
    Response: We appreciate the commenter's insights into these 
implementation issues. Although these details are beyond the scope of 
this regulation; we believe they are appropriate for implementation 
specifications. We will take these comments into account when issuing 
the revised Draft PBJ Policy Manual and other subregulatory guidance.
(5) Data Format
    We proposed to add a new Sec.  483.75(u)(3) to establish that a 
facility must submit direct care staffing information in the format 
specified by CMS. This provision would implement the requirement in 
section 1128I(g) of the Act that facilities submit direct care staffing 
information in a uniform format. As noted, we are consulting with 
stakeholders on potential format specifications. The data that we 
proposed for submission are similar to those already submitted by LTC 
facilities to CMS on the forms CMS-671 and CMS-672 (we intended for 
this proposed new information collection to eventually supplant the 
data collections via the CMS-671 and CMS-672). In advance of the 
proposed July 1, 2016 implementation date, we will publicize the 
established format specifications and will offer training to help 
facilities and other interested parties (for example, payroll vendors) 
prepare to meet the requirement.
    The comments we received on this topic, with their responses, 
appear below.

[[Page 46468]]

    Comment: One commenter stated that there should not be an 
unreasonable financial burden placed on the providers to report the 
information that would be required, since providers are already being 
negatively affected by the sequestration and the managed care plans. 
The commenter stated that even though it is a good thing to keep costs 
down for the federal budget and the taxpayers, it is only the 
adjustment for cost increases that has helped to minimize the negative 
impact for the providers. The commenter observed that many providers 
have multiple types of staff, which includes different types of payment 
types from paychecks to payables. The commenter explained that this 
means that for many it is not one combined system for all of the 
detail, since not all of this information had been required, so it will 
require either a lot of hours to prepare or a lot of hours to program 
or possibly both in order to provide the information. The commenter 
further stated that not all providers benefited from the incentives for 
moving to an electronic record. Many were excluded from participation, 
but had to bear the costs anyway due to the sharing of patients (also 
called residents, clients, etc.) and the requirement to provide the 
information electronically. The commenter opined that this placed an 
undue hardship on them. Another commenter remarked that CMS has not 
adequately considered and accounted for the costs to SNFs to comply 
with the proposed data collection. Several commenters recommended that 
CMS complete a regulatory analysis addressing these costs. The 
commenters stated that the interpretation of the legislation by CMS 
through the proposed rule would be overly burdensome, redundant, and 
would create unnecessary and costly expense to distinct part SNFs. They 
asserted that the steps required to supply the data outlined in the 
proposal requires technical expertise, labor, and payroll system 
vendors in order to meet expectations. Another commenter expressed 
concern regarding the time to comply with this system proposed by CMS. 
The commenter strongly encouraged CMS to solicit input from a broad 
variety of providers to develop an approach that meets the requirements 
of the Affordable Care Act and also is more reasonable to providers in 
terms of labor and cost. The commenter expressed concern that cost of 
the requirements would be obtained from the cost of direct patient care 
given, as that reimbursement would not likely be increased. The 
commenter stated that, if high costs were incurred, then it would be 
highly unlikely that additional data requirements would have a positive 
effect on the quality of nursing home services but, instead, the 
potential to decrease quality is significant as more and more resources 
are directed to regulatory mandates that do not affect direct patient 
care. The commenter stated that they were unaware of any CMS research 
or data analysis that demonstrates a direct relationship between this 
level of data and quality outcomes. Finally, the commenter stated that 
required reporting of non-direct patient care staffing data reduces the 
ability to provide quality care, as resources are diverted to 
administrative reporting, away from direct patient care. Another 
commenter opined that the proposed rule and the inclusion of the 
additional staffing data required by the Draft PBJ Policy Manual extend 
beyond the intent and language of the Affordable Care Act and that this 
is an unreasonable and costly additional administrative burden which 
does not improve patient care at a time when delivering quality care at 
a reasonable cost is paramount public policy; adding undue hardship 
which does not improve quality will have a definite negative impact on 
care. One commenter recommended that CMS recognize that this new 
process is occurring at the same time as several other mandates that 
require significant resource investment, including the initiation of 
ICD-10 and the training and software preparation needed. The commenter 
identified other concurrent provider efforts including initiation of 
the collection of data for the Quality Reporting Program related to the 
IMPACT Act, the initiation of 30-day all-cause, all-condition 
rehospitalization reporting, ongoing transition to electronic health 
records at many facilities, and the initiation of computerized 
physician order entry (CPOE) at facilities and all while providers work 
to increased interoperability so that data can be exchanged. One 
commenter supported the electronic collection of staffing data by CMS 
but noted that the system for doing this should be reasonable and 
achievable and as simple as possible. Commenters were also concerned 
that payroll vendors were not yet prepared to accommodate the required 
reporting and that providers would incur compliance costs associated 
with modifying their own payroll systems or from vendors needing to 
make these modifications. One commenter stated that every employee will 
need to have a unique employee number assigned for tracking and 
reporting purposes that may require payroll and other systems 
modifications. Another commenter suggested CMS delay the mandatory 
electronic submission of staffing data until CMS has adequately tested 
the submission system and determined the cost and burden to providers 
to comply with this proposed regulation. The commenter observed that 
only the volunteer facilities will have had an opportunity to test the 
new system prior to the mandatory report date of July 1, 2016 that 
applies to all facilities.
    Response: We appreciate commenters concerns about the costs 
associated with submitting direct care staffing information but note 
that this reporting obligation mandated by section 1128I(g) of the Act. 
We believe this final rule is fully consistent with the intent and text 
of the statute and represents the best approach to minimize the burdens 
associated with implementing the statutory reporting requirement. Based 
on the comments received, we have included information on the estimated 
costs and burden of this regulation to facilities in section V. of this 
final rule. As noted above, we will continue our consultation with LTC 
facilities and other stakeholders as we revised the Draft PBJ Policy 
Manual and other implementation guidance to implement this regulation.
    Comment: Several commenters suggested that CMS modify already-
existing reports and/or reporting systems to develop the uniform format 
to be used for staff reporting submission under this new regulation. 
Many commenters suggested that their cost reports could be modified to 
conform to all the Affordable Care Act requirements. One commenter 
stated that CMS should consider using staffing data that is collected 
for other programs which could, with minor adjustments, be used to meet 
the requirements of the Affordable Care Act. The commenter suggested 
that Medicare Cost Reports collect similar data which is obtained on a 
regular basis and a modified format of this form would result in less 
burden for providers and fewer opportunities for discrepancies in 
information provided in multiple reporting forms. Two commenters stated 
that the requirements of section 6106 of the Affordable Care Act could 
be met, consistent with the intent of the Congress, through the 
existing resident case-mix report without creating an additional 
duplicative report. The commenters stated that the report could be 
expanded to include the other requirements of the Affordable Care Act: 
Aggregate nursing hours, number of patient days, and staff turnover to 
be reported quarterly. Another commenter

[[Page 46469]]

suggested CMS work with states already collecting this information to 
reduce the reporting burden for facilities.
    Response: In order to comply with section 1128I(g) of the Act, the 
final rule mandates that there be a uniform national method of 
electronically collecting specific staffing data that can be applied 
for both Medicare SNFs and Medicaid nursing facilities. When 
implementing this regulation we will adopt a system that will 
accommodate this requirement. We do not agree that the Medicare cost 
reports or existing state-based systems will satisfy the requirements 
of the law. For example, Medicare cost reports do not contain the data 
needed to comply with the Act, such as information on turnover and 
tenure.
    Comment: One commenter suggested in Sec.  483.75(u)(3) after the 
heading adding ``uniform'' before ``format'' for consistency between 
the statutory and regulatory text and for clarity in the requirement 
for submission of data in a uniform format.
    Response: We agree. For consistency purposes, we have added 
``uniform'' before ``format'' in the text of Sec.  483.75(u)(3)
(6) Effective Date for Submission Requirement
    In the proposed rule, we indicated that the regulation would take 
effect on July 1, 2016. We explained that prior to this effective data, 
we would establish a voluntary submission period whereby facilities can 
submit staffing information on a voluntary basis to become familiar 
with the system and to provide feedback to CMS on systems issues in 
advance of the mandatory submission date.
    Comment: We received several comments regarding a phase-in or 
postponement of the mandatory submission date. One commenter 
recommended calling for a wider-range testing and evaluation period 
and/or phase-in of the data collection system. The commenter stated 
that this testing period would not only allow a broader spectrum of 
providers to gain understanding and familiarity with the process prior 
to final implementation, but would add information regarding cost and 
burden associated with meeting the submission requirements. For 
example, information could be collected on the implementation of 
required, but unanticipated system modifications and the potential 
investment of additional staff and/or documentation time. Another 
commenter suggested CMS phase in the reporting process over time and to 
initially only require reporting of the nursing staff and to add other 
staff such as therapists at a later time. Another commenter suggested 
that as part of CMS's consultation on the submission specifications, 
they should include an informal period of ``testing'' that will allow 
all providers (not just those who may volunteer for a ``pilot'') the 
opportunity to work within the system to determine how it interfaces 
with their center's system or to learn how to confidently input the 
required data (for those centers unable to automatically upload their 
information). The commenter suggested this proposal to provide centers 
and CMS a clearer understanding of the burden associated with the 
submission requirements. Another commenter stated that contingent on 
the outcomes and/or results of the voluntary submission period, CMS 
should consider postponement or a phase-in of the intended July 1, 2016 
mandatory submission date pending resolution of identified problems or 
glitches. The commenter believes that all providers should have the 
opportunity to test their respective payroll and time and attendance 
processes and gain familiarity with the CMS submission requirements. 
The commenter further stated that CMS should again consider a phase-in 
or ``grace period'' approach within the planned mandatory reporting 
implementation that includes deferral of 5-Star calculation and scoring 
for initial submissions. The commenter concluded that, at a minimum, 
given the limits of the currently planned data collection system trial, 
the allowance for post-submission review and opportunity for correction 
should continue for at least the first year of mandatory 
implementation.
    Response: We are establishing a voluntary submission period 
beginning in October 2015. The voluntary submission period will include 
a phased approach to registration and training which will allow 
facilities to test their submission methods in advance of the July 1, 
2016 effective date of the regulation. In order to meet the 
requirements of section 6106 of the Affordable Care Act as soon as 
possible, we believe that July 1, 2016 is an appropriate start date. 
However, we appreciate that in any new, large system of this nature, 
implementation challenges may arise and adjustments likely will need to 
be made in both the receiving and sending systems. Therefore, we do not 
plan to use the results of the reported data in the CMS Five Star 
Quality Rating System in CY 2016. During the implementation we plan to 
maintain a feedback loop with nursing homes regarding the data 
submitted, issues identified, and adjustments made or needed to the 
implementation specifications. We also plan to maintain use of the 
existing CMS Form 671 annual paper-based form during the initial 
implementation so that the results of the traditional and the new 
system can inform the learning process.
(7) Submission Schedule
    Section 1128I(g)(3) of the Act requires that facilities submit 
direct care staffing information on a regular reporting schedule. At 
Sec.  483.75(u)(4) we proposed to establish that a facility must submit 
direct care staffing information on the schedule specified by CMS, but 
no less frequently than quarterly. Comments we received on this topic 
and our responses appear elsewhere in this preamble.
(8) Compliance and Enforcement
    In the proposed rule we noted that Sec.  483.75(u) would establish 
that these new reporting requirements would be conditions a LTC 
facility must meet to qualify to participate as a SNF in the Medicare 
program or a NF in the Medicaid program. As such, we explained that we 
planned to enforce the requirements under this new regulation through 
42 CFR part 488 and non-compliance with the proposed Sec.  483.75(u), 
could result in CMS or the state imposing one or more remedies 
available to address noncompliance with the requirements for LTC 
facilities.
    The comments we received on this topic, with our responses, appear 
below.
    Comments: One commenter proposed that if a SNF is found to be non-
compliant with the reporting requirements, there should be an expedited 
appeals process afforded to the SNF prior to imposition of a civil 
monetary fine or exclusion from a federal healthcare program. Other 
commenters stated that it would be more fruitful to lay out specific 
sanctions that CMS will impose if a facility fails to comply with the 
new reporting requirement. One commenter suggested, for example, that 
if a facility fails to provide required staffing data within 30 days of 
the deadline, CMS would send a warning letter; if the facility did not 
provide the data within 20 days of the warning letter, CMS would levy 
daily civil monetary penalties of $X,000 per day starting on the 21st 
day after the warning letter; if the facility continued to fail to 
provide staffing data at the 40th day following the warning letter, CMS 
would institute a hold on new admissions. The commenter stated that 
such a sanctioning approach would result in more immediate compliance 
and clearer

[[Page 46470]]

expectations for the providers. The commenter further noted that if CMS 
or the state determines that a facility has intentionally provided 
inaccurate staffing data, the non-compliance should considered a 
material false claim to the government for which payment is sought and 
damages should be available under the False Claims Act. The commenters 
recommended internal audits conducted by CMS, with non-compliance 
remedies of a significant downgrading of Five Star Quality Ratings 
while the facility is out of compliance, a significant per day Civil 
Monetary Penalty, and denial of payment for new admissions until 
compliance is achieved. Another commenter noted that, given the 
importance of this data, penalties should be imposed when a provider 
fails to submit staffing data as required or submits inaccurate or 
false data. The commenters recommended a per day Civil Monetary Penalty 
at a significant enough level to result in compliance. The commenters 
further suggested, a facility's penalty should be posted under 
``Staffing'' on Nursing Home Compare so it is easily visible to 
consumers and others researching the facility. Still another commenter 
stated that they were concerned about the lack of specificity with 
regard to remedies for noncompliance and the potential for flexibility, 
inconsistency, and lenience that are unfortunately common in 
enforcement of other requirements of participation. The commenter noted 
that the statement that CMS or the state may impose one or more 
remedies underscores our concern--sanctions should be certain. 
Moreover, the commenters believe the instructions are ambiguous about 
when a deficiency and remedy are triggered. Another commenter urged CMS 
to provide greater clarity about how compliance with the proposed 
regulation will be determined. One commenter suggested that CMS clarify 
the possible enforcement actions that may be considered for aberrant 
data.
    Response: We appreciate commenters' interest in additional 
information regarding how the agency will assess compliance with this 
regulation and what specific enforcement actions the agency will pursue 
when it identifies noncompliance. Discussion of implementation 
specifications and how the agency will apply its enforcement are beyond 
the scope of this rulemaking. We will take these comments into account 
as we develop guidance at a later date. We note, however, that nothing 
in section 1128I(g) of the Act or this final rule establishes that the 
staff reporting requirement is a condition of payment.
    Comment: One commenter opposed the data collection requirement's 
inclusion as a requirement for participation in Medicare, because the 
timeline for implementation does not afford all providers the 
opportunity to test the CMS system and identify problems that may occur 
when interfacing with the facility's software and systems. 
Additionally, the commenter noted that CMS has not clearly stated 
within the proposed rule how it will determine compliance with the 
proposed regulation. Another commenter urged CMS to eliminate the 
staffing data collection designation as a requirement of participation, 
since such a designation will make compliance subject to the full array 
of enforcement actions. The commenter stated that it is premature to 
make this collection a requirement of participation since the system 
for submission of the staffing data is new and not adequately tested.
    Response: As we stated in the proposed rule, we believe that the 
inclusion of the staffing data collection as a requirement of 
participation is appropriate and desirable, to meet the legislative 
goal of greater accountability for LTC facilities, given the importance 
of staffing to the quality of care and safety of the nursing home 
residents. We further believe that the full array of remedies available 
to enforce compliance with other conditions of participation should be 
available to enforce this regulation and ensure that the Act's 
requirements are met. This regulation is necessary to carry out CMS's 
and the state's obligation to ensure compliance with other conditions 
of participation (COPs) as specified in the Act. For example, section 
1819(b)(4) of the Act includes requirements for staff such as nursing 
services, pharmaceutical services, dietary services and other services 
facilities are required to provide, and collection of the staffing data 
helps verify compliance with these requirements. However, we appreciate 
there will be a learning curve as the new reporting system is 
implemented. We therefore plan to be careful when assessing compliance 
to distinguish between the effects of newness in the initial 
implementation and failure to implement the system and ensure accuracy 
and adequacy of reporting.
    Comment: One commenter remarked that the proposed rule did not 
include provisions for adjustment and/or correction to submitted data. 
The commenter noted that electronic staffing data submission will serve 
to eliminate current inconsistencies and mistakes common to manual 
completion of the 671 form, but cited examples of errors were still 
possible under an automated system. The commenter stated that automated 
payroll systems frequently ``lock down'' once a payroll period ends and 
have to be re-entered manually for changes or updates. The commenter 
further stated that there can also be occasional clock breakdowns or 
clocking oversights, for example, if an individual clocks out, is asked 
to stay, but fails to clock back in, all hours worked may not be 
captured in real time. The commenter explained that similarly, some 
providers have adopted universal worker practices, with those employees 
performing, for example, non-nursing or other functions at different 
points, again resulting in potential clocking oversights or omissions. 
The commenter stated that in any of these circumstances, hours worked 
would at least initially be documented somewhere other than the payroll 
system and, if identified after a payroll period has closed and/or data 
transmission to CMS, adjustment would be required to accurately reflect 
staffing and coverage. The commenter believes a defined process should 
be incorporated into the collection and reporting system to allow 
providers to make documented, verifiable, and auditable data-based 
adjustments/corrections to submitted staffing information. The 
commenter stated that these adjustments/corrections should be permitted 
within the respective quarter to assure accurate documentation and 
calculation of staff hours worked and direct care services provided.
    Response: We appreciate the commenter's observations about areas of 
ongoing data vulnerability and providers' interest in making 
corrections when they identify errors with previously submitted data. 
We anticipate that our reporting system when fully implemented will 
include functionality to submit data corrections. We will address this 
issue in further detail through guidance.
(9) Other Comments
    Comment: Several commenters requested that CMS provide a written 
report on the results of the 2012 Staffing Data Collection Pilot to 
providers in advance of finalizing this rule. The commenters stated 
that CMS references the 6-month staffing data collection pilot 
conducted in 2012 as a strategy component in engaging in ongoing 
consultation with all relevant parties and stakeholders; however, no 
report regarding the results and outcomes of this pilot has ever been 
released for review and feedback by these entities.

[[Page 46471]]

The commenters believe that knowledge of the challenges and successes 
that were determined based on this pilot would be very beneficial in 
terms of ``lessons learned'', enabling greater understanding of the 
requirements being proposed and final implementation of the currently 
drafted ``Electronic Staffing Data submission Payroll-based Journal'' 
(PBJ) system.
    Response: As part of our on-going consultation with stakeholders, 
we will make information from this project available on the CMS 
Staffing Data Submission Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Staffing-Data-Submission-PBJ.html. However, it 
is important to note that this information relates to the 
implementation specifications, not the regulatory requirement, and 
therefore CMS is proceeding with finalization of the rule at this time 
but hopes the data from the project will facilitate dialogue as the 
agency develops implementation guidance.
    Comment: One commenter stated that further clarification is needed 
regarding the voluntary submission process referenced in the preamble 
of the proposed rule to be conducted beginning in October 2015. The 
commenter stated that it is not clear whether these submissions will be 
instead of, or in addition to, the CMS 671 form, and or whether the 
information collected during this period will be data of record, 
thereby subject to 5-Star Nursing Home Rating System calculations and 
potential remedies if noncompliance is determined. The commenter stated 
that modifications will have to be made to virtually all homes' payroll 
and time and attendance processes to accommodate the provisions of this 
rule, and not all homes will be able to begin submission during the 
voluntary period to test their own systems against the CMS data 
collection process. The commenter noted that again, with the variation 
in current payroll and time and attendance systems in nursing homes, 
providers must have some margin and flexibility to allow for 
unanticipated interface-related problems and need for further 
modifications that may occur with the junction of the PBJ and their 
respective processes. The commenter stated that the voluntary period 
will be the first wide-range, and to their understanding, the only 
testing opportunity for the CMS staffing data collection process. The 
commenter stated that the goal should be true evaluation and 
assessment, with the participating nursing homes not subject to Five-
Star scoring or survey and enforcement actions based only on these 
initial preliminary submissions. The commenter stated that if voluntary 
submissions are to be considered data of record, at minimum there 
should be an accompanying allowance for post submission review as 
needed, with opportunity to rectify identified errors, 
misinterpretations, or omissions prior to final determinations.
    Response: As stated in the preamble of the proposed rule, we intend 
to eventually supplant the form CMS-671 and CMS-672, however, 
facilities will still be required to complete these until further 
notice. Data submitted through the PBJ system during the voluntary 
submission period will not have any impact on a facility's Five-Star 
rating, or result in any enforcement remedies. Facilities will be 
provided with information about their voluntary submissions so they can 
make adjustments and be better prepared for the mandatory submission 
period. We do not plan on using the results of the reported data in the 
Five-Star Quality Rating System calculations in either CY 2015 or CY 
2016 in order to accommodate both the voluntary phase and the initial 
months of mandatory reporting.
    Comment: Several commenters expressed that manually uploaded data 
should not be permitted on an ongoing basis. The commenters noted that 
CMS should require facilities that want to submit some or all data 
manually to request a waiver documenting that they do not have the 
capability to report using an automated payroll system. The commenter 
stated that CMS should establish a deadline for facilities to have 
fully automated data reporting ability to meet the requirements of the 
law, after which manual submission would be noncompliant. The commenter 
recommended that waiver requests should be time-limited and require an 
annual re-application process in which the provider must document the 
steps taken to automate its system. Another commenter stated that CMS 
must ensure that staffing data come from verifiable, auditable sources 
and not self-reporting by facilities.
    Response: The requirement in this regulation is for facilities to 
submit the data electronically, which facilities will do through the 
system we will provide. We note that regardless of whether a facility 
uploads their data from a payroll system, or enters it manually, all 
facilities are held to the same reporting requirements and standards.
    Comment: One commenter remarked that data should be collected in an 
all-inclusive and meticulous manner that represents the complete 
assessment of care furnished in the SNF setting. The commenter strongly 
urged CMS to adhere to the following: (1) Only count staffing data that 
represent a complete episode of care from admission to discharge; (2) 
CMS should distinguish those cases in which an unexpected readmission 
or inpatient hospital stay occurred; and (3) provide feedback reports 
to all applicable facilities prior to public reporting and provide an 
appropriate timeframe for facilities to dispute any information they 
believe is inaccurate. Another commenter requested that CMS clarify how 
the data will be analyzed, the benchmark that will be used to define 
quality, and the additional uses or actions CMS anticipates as a result 
of collecting this data.
    Response: We are not entirely clear on some of the commenter's 
suggestions and note that some issues raised by this commenter are 
outside of the scope of this rulemaking. The data collected under this 
regulation will not count episodes of care, but will reflect the staff 
in the facility and related average census. Although outside the scope 
of this rulemaking, we plan to provide feedback reports to providers 
and allow facilities to dispute information they believe to be 
inaccurate. In addition, we plan to discuss the uses of the data, 
including quality measures, with stakeholders prior to public posting.
    Comment: One commenter requested that we eliminate the part-time/
full-time distinction that appears in the Draft PBJ Policy Manual. The 
commenter stated that organizations vary in their definitions of part-
time and full- time. The commenter believes in collecting staff hours 
worked for the purpose of interpreting staffing levels based on payroll 
and related auditable and verifiable data, it is irrelevant whether 
coverage is being provided by full or part-time employees.
    Response: While this comment is directed at an issue outside the 
scope of this regulation, we agree. In response to feedback received, 
we have eliminated the part-time/full-time distinction described in the 
Draft PBJ Policy Manual.
    Comment: One commenter requests that base hourly wage information 
be collected as part of this process, which can used to develop a SNF-
specific wage index.
    Response: We believe this request is outside of the scope of the 
rulemaking. Further, we do not believe that section 1128I(g) of the Act 
authorizes us to require the reporting of base hourly wages.
    Comment: One commenter stated that in light of the importance of 
MDS

[[Page 46472]]

assessment accuracy for QM reporting, payment, and coordination of the 
resident care plan across the care continuum, we recommend that duties 
related to completion of the RAI be separated out in statistical 
reporting job category (RN, LPN, etc.). Licensed staff performing RAI 
work cannot be accurately identified in the current proposed structure. 
The commenter stated that it is very important that the nurse staffing 
data enable consumers and researchers to know who is actually 
conducting the RAI. The commenter noted that while the LVN/LPN is 
authorized to perform the RAI process and certify its accuracy, an RN 
is required to coordinate the RAI process and verify completion (F-278, 
Sec.  483.20(h), Coordination: A registered nurse must conduct or 
coordinate each assessment with the appropriate participation of health 
professionals).
    Response: This request relates to the implementation specifications 
and is beyond the scope of this rulemaking. As we develop subregulatory 
guidance, we will work with stakeholders to consider any additional 
types of staff that should be reported separately, including RAI or MDS 
Coordinators.
    Comment: One commenter strongly recommended against conducting 
audits for compliance with this staffing reporting requirement as part 
of the survey process, either as regular or focused surveys.
    Response: The operations of audits are outside the scope of this 
regulation. As a general matter, CMS seeks to ensure that the audits to 
assess compliance with reporting requirements are conducted in a manner 
that directly addresses the need to verify the data submitted by 
facilities. This includes having the audits conducted by individuals or 
entities who are subject matter experts in this area.
    Comment: One commenter remarked that it is not clear when the 
payroll submissions are due (for example, how much time providers will 
be given after the end of the quarter to make their submission).
    Response: We will communicate information on submission 
requirements through guidance. For example, the Draft PBJ Policy Manual 
states that providers have 45 days from the end of the quarter to 
submit their data. Please see the following Web site for more 
information: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Staffing-Data-Submission-PBJ.html.
    Comment: One commenter stated that reports must include the number 
and types of nursing staff on each shift, including mutually exclusive 
staff categories, in particular RNs versus LPNs. For example, in 
reporting staffing, LPNs with administrative duties are not to be 
combined with RNs with administrative duties.
    Response: The reporting of data is outside the scope of this 
regulation. We will work with stakeholders prior to posting information 
or formulating quality measures.
    Comment: One commenter cautioned that if a facility has low 
staffing levels, it would not necessarily equate to poor quality of 
care.
    Response: While this comment is discussing proposed uses of the 
collected data which is outside the scope of this regulation, we agree 
that there are many factors that contribute to good quality of care. 
Families and residents should not only use a variety of information in 
making judgments about a facility (such as the various types of 
information available on the CMS Nursing Home Compare Web site), but 
above all should visit facilities, talk to residents and staff, and 
consult with other knowledgeable parties in the community (such as the 
State Survey Agency and the local Nursing Home Ombudsman Program).
    Comment: Several commenters expressed support for the 
implementation of this rule and CMS' intent to ensure that accurate 
staffing data was being reported by LTC facilities.
    Response: We thank these commenters for their support.
c. Provisions of the Final Rule
    We are adopting the provisions of this final rule as proposed, with 
the following changes:
     In consideration of public comments, we added a definition 
of ``direct care staff'' at Sec.  483.75(u)(1). We renumbered the 
subsections within Sec.  483.75(u) accordingly. In addition, we made 
conforming changes to utilize the defined term in the provisions 
regarding the submission requirements at Sec.  483.75(u)(2)(i) and 
(iii) in the final rule and the provision regarding distinguishing 
employee from agency and contract staff at Sec.  483.75(u)(3) of this 
final rule.
     Finally, in consideration of public comment, we added the 
adjective ``uniform'' to describe the format requirement in the 
provision regarding data format in Sec.  483.75(u)(4) of the final 
rule.

IV. Collection of Information Requirements

    In the FY 2016 SNF PPS proposed rule (80 FR 22082), we solicited 
public comment on that rule's information collection requirements as 
they relate to the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 
3501 et seq.). However, of all of the comments received on the proposed 
rule, only one was related to our position that all of the proposed 
information collection requirements were exempt from the PRA. A summary 
of the comment and our response follows.
    Consistent with the proposed rule, this final rule maintains that 
the information collection requirements are exempt from the PRA. We 
refer readers to the FY 2016 SNF PPS proposed rule for details.
    Comment: One commenter disagreed with CMS's assertion that the PRA 
does not apply to the proposed staff reporting requirements. The 
commenter further stated that because the Affordable Care Act, not OBRA 
1987, was the statute that established the staff reporting 
requirements, the requirements would likely not fall within the scope 
of OBRA 1987's PRA waivers.
    Response: We respectfully disagree with the commenter's analysis. 
The staff reporting requirements are exempt from PRA because section 
6106 of the Affordable Care Act (which added 1128I(g) of the Act) is 
related to the information required for the purposes of carrying out 
relevant sections of OBRA 1987's nursing home reform requirements. For 
example, section 1819(b)(4) of the Act includes requirements for staff 
such as nursing services, pharmaceutical services, dietary services, 
and other services facilities are required to provide, and the 
collection of the staffing data helps verify compliance with these 
requirements.

V. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this final rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (RFA, 
September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March 
22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 
4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is

[[Page 46473]]

necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been designated an economically significant rule, under 
section 3(f)(1) of Executive Order 12866. Accordingly, we have prepared 
a regulatory impact analysis (RIA) as further discussed below. Also, 
the rule has been reviewed by OMB.
2. Statement of Need
    This final rule would update the SNF prospective payment rates for 
FY 2015 as required under section 1888(e)(4)(E) of the Act. It also 
responds to section 1888(e)(4)(H) of the Act, which requires the 
Secretary to provide for publication in the Federal Register before the 
August 1 that precedes the start of each FY, the unadjusted federal per 
diem rates, the case-mix classification system, and the factors to be 
applied in making the area wage adjustment. As these statutory 
provisions prescribe a detailed methodology for calculating and 
disseminating payment rates under the SNF PPS, we do not have the 
discretion to adopt an alternative approach. In addition, this final 
rule specifies a SNF all-cause all-condition hospital readmission 
measure, as well as adopts that measure for a new SNF VBP Program, and 
includes a discussion of SNF VBP Program policies we are considering 
for future rulemaking to promote higher quality and more efficient 
health care for Medicare beneficiaries. This final rule also implements 
a new quality reporting program for SNFs, as specified in the IMPACT 
Act. Finally, through this final rule, we are implementing section 
1128I(g) of the Act, which requires the electronic submission of 
staffing information based on payroll and other verifiable and 
auditable data.
3. Overall Impacts
    This final rule sets forth updates of the SNF PPS rates contained 
in the SNF PPS final rule for FY 2015 (79 FR 45628). Based on the 
above, we estimate that the aggregate impact would be an increase of 
$430 million in payments to SNFs, resulting from the SNF market basket 
update to the payment rates, as adjusted by the applicable forecast 
error adjustment and by the MFP adjustment. The impact analysis of this 
final rule represents the projected effects of the changes in the SNF 
PPS from FY 2015 to FY 2016. Although the best data available are 
utilized, there is no attempt to predict behavioral responses to these 
changes, or to make adjustments for future changes in such variables as 
days or case-mix.
    Certain events may occur to limit the scope or accuracy of our 
impact analysis, as this analysis is future-oriented and, thus, very 
susceptible to forecasting errors due to certain events that may occur 
within the assessed impact time period. Some examples of possible 
events may include newly-legislated general Medicare program funding 
changes by the Congress, or changes specifically related to SNFs. In 
addition, changes to the Medicare program may continue to be made as a 
result of previously-enacted legislation, or new statutory provisions. 
Although these changes may not be specific to the SNF PPS, the nature 
of the Medicare program is such that the changes may interact and, 
thus, the complexity of the interaction of these changes could make it 
difficult to predict accurately the full scope of the impact upon SNFs.
    In accordance with sections 1888(e)(4)(E) and 1888(e)(5) of the 
Act, we update the FY 2015 payment rates by a factor equal to the 
market basket index percentage change adjusted by the FY 2014 forecast 
error and the MFP adjustment to determine the payment rates for FY 
2016. As discussed previously, for FY 2012 and each subsequent FY, as 
required by section 1888(e)(5)(B) of the Act as amended by section 
3401(b) of the Affordable Care Act, the market basket percentage is 
reduced by the MFP adjustment. The special AIDS add-on established by 
section 511 of the MMA remains in effect until such date as the 
Secretary certifies that there is an appropriate adjustment in the case 
mix. We have not provided a separate impact analysis for the MMA 
provision. Our latest estimates indicate that there are fewer than 
4,800 beneficiaries who qualify for the add-on payment for residents 
with AIDS. The impact to Medicare is included in the total column of 
Table 12. In updating the SNF PPS rates for FY 2016, we made a number 
of standard annual revisions and clarifications mentioned elsewhere in 
this final rule (for example, the update to the wage and market basket 
indexes used for adjusting the federal rates).
    The annual update set forth in this final rule applies to SNF PPS 
payments in FY 2016. Accordingly, the analysis that follows only 
describes the impact of this single year. In accordance with the 
requirements of the Act, we will publish a notice or rule for each 
subsequent FY that will provide for an update to the SNF PPS payment 
rates and include an associated impact analysis.
    In accordance with sections 1888(g) and (h)(2)(A) of the Act, we 
are finalizing the adoption of a SNF 30-Day All-Cause Readmission 
Measure (SNFRM) for the SNF VBP Program. Because this measure is 
claims-based, its adoption under the SNF VBP Program would not result 
in any increased costs to SNFs.
    However, we do not yet have preliminary data with which we could 
project economic impacts associated with the measure. We intend to make 
additional proposals for the SNF VBP Program in future rulemaking, and 
we will assess the impacts of the SNFRM and any associated SNF VBP 
Program proposals at that time.
    The burden associated with the SNF QRP is the time and effort 
associated with data collection and reporting. In this final rule, we 
are finalizing three quality measures that meet the requirements of 
section 1888(e)(6)(B)(II) of the Act.
    Our burden calculations take into account all ``new'' items 
required on the MDS 3.0 to support data collection and reporting for 
these three finalized measures. New items will be included on the 
following assessments: SNF PPS 5-Day, Swing Bed PPS 5-Day, OMRA--Start 
of Therapy Discharge, OMRA--Other Discharge, OBRA Discharge, Swing Bed 
OMRA--Start of Therapy Discharge, Swing Bed OMRA--Other Discharge, and 
Swing Bed Discharge on the MDS 3.0. The SNF QRP also requires the 
addition of a SNF PPS Part A Discharge Assessment, which will also 
include new items. New items include data elements required to identify 
whether pressure ulcers were present on admission, to inform future 
development of the Percent of Residents or Patients with Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678), as well as 
changes in function and occurrence of falls with major injury. To the 
extent applicable, we will use standardized items to collect data for 
the three measures. For a copy of the data collection instrument, 
please visit: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    We estimate a total additional burden of $30.00 per Medicare-
covered SNF stay, based on the most recent data available, in this case 
FY 2014, that 15,421 SNFs had a total of 2,599,656 Medicare-covered 
stays for fee-for-service beneficiaries. This would equate

[[Page 46474]]

to 1,112,002.85 total added hours or 72.11 hours per SNF annually.
    We anticipate that the additional MDS items we finalized will be 
completed by Registered Nurses (RN), Occupational Therapists (OT), and/
or Physical Therapists (PT), depending on the item. We identified the 
staff type per item based on past LTCH and IRF burden calculations in 
conjunction with expert opinion. Our assumptions for staff type were 
based on the categories generally necessary to perform assessment: 
Registered Nurse (RN), Occupational Therapy (OT), and Physical Therapy 
(PT). Individual providers determine the staffing resources necessary, 
therefore, we averaged the national average for these labor types and 
established a composite cost estimate. We obtained mean hourly wages 
for these staff from the U.S. Bureau of Labor Statistics' May 2013 
National Occupational Employment and Wage Estimates (http://www.bls.gov/oes/current/oes_nat.htm), and to account for overhead and 
fringe benefits, we have doubled the mean hourly wage. The mean hourly 
wage for an RN is $33.13, doubled to $66.26 to account for overhead and 
fringe benefits. The mean hourly wage for an OT is $37.45, doubled to 
$74.90 to account for overhead and fringe benefits. The mean hourly 
wage for a PT is $39.51, doubled to $79.02 to account for overhead and 
fringe benefits.
    To calculate the added burden, we first identified the total number 
of new items to be added into assessment instruments. We assume that 
each new item accounts for 0.5 minutes of nursing facility staff time. 
This assumption is consistent with burden calculations in past IRF and 
LTCH federal regulations. For each staff type, we then multiply the 
added burden in minutes with the number of times we believe that each 
item will be completed annually. To identify the number of times an 
item would be completed annually, we noted the number of total SNF FFS 
Medicare-covered stays in FY 2014, the most recent data available to 
us. We assume that if an item were added to all discharge assessments, 
then that item would be completed at least one time per SNF FFS 
Medicare-covered stay. For example, the time it takes to complete an 
item added to all discharge assessments (0.5 minutes) would be 
multiplied by the number of SNF FFS Medicare-covered stays in FY 2014 
to identify the total added burden in minutes associated with that 
item. Items added only to the SNF PPS Part A Discharge were weighted to 
reflect the proportion of SNF stays for residents who switch payers, 
but are not physically discharged from the facility. Added burden in 
minutes per staff type was then converted to hours and multiplied by 
the doubled hourly wage to identify the annual cost per staff type. 
Given these wages and time estimates, the total cost related to the SNF 
PPS Part A Discharge Assessment and SNF QRP measures is estimated at 
$5,057.45 per SNF annually, or $78,011,166.25 for all SNFs annually. We 
received comments regarding the burden related to the SNF QRP, which we 
addressed in section III.D.3.g.(2). of this final rule.
    We have also conducted an impact analysis with regard to the 
electronic submission of staffing information, which will be required 
under 42 CFR 483.75(u). While facilities have been reporting their 
staffing data for many years via an annual, paper-based system, we 
appreciate that the electronic submission of staffing data is something 
that facilities have not been required to do and that this new 
requirement will have financial and/or staff time implications. Like 
the implementation of many new programs, the level of effort will be 
higher upfront, but decline throughout subsequent years.
4. Detailed Economic Analysis
    The FY 2016 SNF PPS payment impacts appear in Table 12. Using the 
most recently available data, in this case FY 2014, we apply the 
current FY 2015 wage index and labor-related share value to the number 
of payment days to simulate FY 2015 payments. Then, using the same FY 
2014 data, we apply the FY 2016 wage index and labor-related share 
value to simulate FY 2016 payments. We tabulate the resulting payments 
according to the classifications in Table 12 (for example, facility 
type, geographic region, facility ownership), and compare the simulated 
FY 2015 payments to the simulated FY 2016 payments to determine the 
overall impact. The breakdown of the various categories of data in the 
table follows.
    The first column shows the breakdown of all SNFs by urban or rural 
status, hospital-based or freestanding status, census region, and 
ownership.
    The first row of figures describes the estimated effects of the 
various changes on all facilities. The next six rows show the effects 
on facilities split by hospital-based, freestanding, urban, and rural 
categories. The next nineteen rows show the effects on facilities by 
urban versus rural status by census region. The last three rows show 
the effects on facilities by ownership (that is, government, profit, 
and non-profit status).
    The second column shows the number of facilities in the impact 
database.
    The third column shows the effect of the annual update to the wage 
index. This represents the effect of using the most recent wage data 
available. The total impact of this change is zero percent; however, 
there are distributional effects of the change.
    The fourth column shows the effect of all of the changes on the FY 
2016 payments. The update of 1.2 percent (consisting of the market 
basket increase of 2.3 percentage points, reduced by the 0.6 percentage 
point forecast error adjustment and further reduced by the 0.5 
percentage point MFP adjustment) is constant for all providers and, 
though not shown individually, is included in the total column. It is 
projected that aggregate payments will increase by 1.2 percent, 
assuming facilities do not change their care delivery and billing 
practices in response.
    As illustrated in Table 12, the combined effects of all of the 
changes vary by specific types of providers and by location. For 
example, due to changes finalized in this rule, providers in the rural 
Pacific region would experience a 1.4 percent increase in FY 2016 total 
payments.

                              Table 12--Projected Impact to the SNF PPS for FY 2016
----------------------------------------------------------------------------------------------------------------
                                                                     Number of
                                                                  facilities  FY    Update wage    Total change
                                                                       2016          data  (%)          (%)
----------------------------------------------------------------------------------------------------------------
Group:
    Total.......................................................          15,425             0.0             1.2
    Urban.......................................................          10,888             0.1             1.3
    Rural.......................................................           4,537            -0.6             0.6
    Hospital based urban........................................             546             0.2             1.4
    Freestanding urban..........................................          10,342             0.1             1.3

[[Page 46475]]

 
    Hospital based rural........................................             627            -0.6             0.6
    Freestanding rural..........................................           3,910            -0.6             0.6
Urban by region:
    New England.................................................             801             0.5             1.7
    Middle Atlantic.............................................           1,485             0.6             1.8
    South Atlantic..............................................           1,853            -0.2             1.0
    East North Central..........................................           2,068            -0.1             1.1
    East South Central..........................................             544             0.0             1.2
    West North Central..........................................             899            -0.5             0.6
    West South Central..........................................           1,310            -0.1             1.1
    Mountain....................................................             501            -0.4             0.8
    Pacific.....................................................           1,420             0.6             1.8
    Outlying....................................................               7            -1.1             0.1
Rural by region:
    New England.................................................             142            -0.9             0.3
    Middle Atlantic.............................................             222            -1.4            -0.3
    South Atlantic..............................................             511            -0.1             1.1
    East North Central..........................................             937            -0.1             1.1
    East South Central..........................................             535            -0.5             0.7
    West North Central..........................................           1,089            -0.9             0.3
    West South Central..........................................             765            -1.3            -0.1
    Mountain....................................................             233            -0.8             0.4
    Pacific.....................................................             103             0.2             1.4
Ownership:
    Government..................................................             882             0.0             1.2
    Profit......................................................          10,862             0.0             1.2
    Non-profit..................................................           3,681            -0.1             1.1
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 2.3 percent market basket increase, reduced by the 0.6 percentage point
  forecast error adjustment and further reduced by the 0.5 percentage point MFP adjustment. Additionally, we
  found no SNFs in rural outlying areas.

    We have also conducted an economic analysis with regard impact of 
the electronic submission of staffing information, which is required 
under 42 CFR 483.75(u). Factors affecting a facility's cost include the 
size of the facility, the number of employees of a facility, and the 
type of system a facility uses to report and submit data. To calculate 
the cost, we analyzed information from a staffing pilot conducted in 
2012, including evaluating the type (for example, hours per day) and 
frequency (for example, quarterly) of the information to be submitted. 
For example, we estimate that a facility using a complex, automated 
payroll or time-keeping system would require some upfront and ongoing 
costs to configure their system to provide the data. We estimate these 
costs to be approximately $500 to $1,500 upfront, with an additional 
$500 to $1,500 in maintenance costs each year. Additionally, we 
estimate this type of facility would require an estimated 1 hour of in-
house staff time per week, to oversee the process. Conversely, a 
facility without an automated time-keeping system would not have the 
upfront and ongoing costs associated with purchasing or configuring a 
system. However, this facility would require more time from in-house 
staff to enter and submit the data. We estimate this time to be 
approximately 4 hours per week. To help mitigate potential cost for 
facilities, we will be providing a system for facilities to enter and 
submit data manually and at no cost. Using the 2013 hourly wage 
estimate of $18.71 per hour for payroll and timekeeping employees in 
Skilled Nursing Facilities from the Bureau of Labor Statistics, we 
believe that the cost to facilities will range between $4,100 and 
$6,800 per facility for the first year of implementation. This includes 
one-time costs associated with configuring payroll or time-keeping 
systems to produce and submit the required data. Subsequent years would 
have lower costs ranging from $2,700 to $4,200 per facility per year. 
These estimates also include up to 16 hours per year for training staff 
on the submission of data.
5. Alternatives Considered
    As described in this section, we estimate that the aggregate impact 
for FY 2016 would be an increase of $430 million in payments to SNFs, 
resulting from the SNF market basket update to the payment rates, as 
adjusted by the applicable forecast error adjustment and by the MFP 
adjustment.
    Section 1888(e) of the Act establishes the SNF PPS for the payment 
of Medicare SNF services for cost reporting periods beginning on or 
after July 1, 1998. This section of the statute prescribes a detailed 
formula for calculating payment rates under the SNF PPS, and does not 
provide for the use of any alternative methodology. It specifies that 
the base year cost data to be used for computing the SNF PPS payment 
rates must be from FY 1995 (October 1, 1994, through September 30, 
1995). In accordance with the statute, we also incorporated a number of 
elements into the SNF PPS (for example, case-mix classification 
methodology, a market basket index, a wage index, and the urban and 
rural distinction used in the development or adjustment of the federal 
rates). Further, section 1888(e)(4)(H) of the Act specifically requires 
us to disseminate the payment rates for each new FY through the Federal 
Register, and to do so before the August 1 that precedes the start of 
the new FY. Accordingly, we are not pursuing alternatives for the 
payment methodology as discussed previously.
    Section 1128I(g) of the Act establishes requirement for LTC 
facilities to submit direct care staffing information. This section of 
the statute specifically prescribes the data to be submitted. 
Accordingly we are not pursuing alternatives to the reporting 
requirement as discussed previously.

[[Page 46476]]

6. Accounting Statement
    As required by OMB Circular A-4 (available online at 
www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), in Table 13, we have prepared an 
accounting statement showing the classification of the expenditures 
associated with the provisions of this final rule. Table 13 provides 
our best estimate of the possible changes in Medicare payments under 
the SNF PPS as a result of the policies in this final rule, based on 
the data for 15,425 SNFs in our database. All expenditures are 
classified as transfers to Medicare providers (that is, SNFs).

       Table 13--Accounting Statement: Classification of Estimated
      Expenditures, From the 2015 SNF PPS FY to the 2016 SNF PPS FY
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $430 million. *
From Whom To Whom?                          Federal Government to SNF
                                             Medicare Providers.
------------------------------------------------------------------------
* The net increase of $430 million in transfer payments is a result of
  the forecast error and MFP adjusted market basket increase of $430
  million.

7. Conclusion
    This final rule sets forth updates of the SNF PPS rates contained 
in the SNF PPS final rule for FY 2015 (79 FR 45628). Based on the 
above, we estimate the overall estimated payments for SNFs in FY 2016 
are projected to increase by $430 million, or 1.2 percent, compared 
with those in FY 2015. We estimate that in FY 2016 under RUG-IV, SNFs 
in urban and rural areas would experience, on average, a 1.3 and 0.6 
percent increase, respectively, in estimated payments compared with FY 
2015. Providers in the urban Pacific and Middle Atlantic regions would 
experience the largest estimated increase in payments of approximately 
1.8 percent. Providers in the rural Middle Atlantic region would 
experience a small decrease in payments of 0.3 percent.

B. Regulatory Flexibility Act Analysis

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, non-profit organizations, and small 
governmental jurisdictions. Most SNFs and most other providers and 
suppliers are small entities, either by reason of their non-profit 
status or by having revenues of $27.5 million or less in any 1 year. We 
utilized the revenues of individual SNF providers (from recent Medicare 
Cost Reports) to classify a small business, and not the revenue of a 
larger firm with which they may be affiliated. As a result, we estimate 
approximately 91 percent of SNFs are considered small businesses 
according to the Small Business Administration's latest size standards 
(NAICS 623110), with total revenues of $27.5 million or less in any 1 
year. (For details, see the Small Business Administration's Web site at 
http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards). In addition, 
approximately 25 percent of SNFs classified as small entities are non-
profit organizations. Finally, individuals and states are not included 
in the definition of a small entity.
    This final rule sets forth updates of the SNF PPS rates contained 
in the SNF PPS final rule for FY 2015 (79 FR 45628). Based on the 
above, we estimate that the aggregate impact would be an increase of 
$430 million in payments to SNFs, resulting from the SNF market basket 
update to the payment rates, as adjusted by the MFP adjustment and 
forecast error adjustment. While it is projected in Table 12 that most 
providers would experience a net increase in payments, we note that 
some individual providers within the same region or group may 
experience different impacts on payments than others due to the 
distributional impact of the FY 2016 wage indexes and the degree of 
Medicare utilization.
    Guidance issued by the Department of Health and Human Services on 
the proper assessment of the impact on small entities in rulemakings, 
utilizes a cost or revenue impact of 3 to 5 percent as a significance 
threshold under the RFA. According to MedPAC, Medicare covers 
approximately 12 percent of total patient days in freestanding 
facilities and 22 percent of facility revenue (Report to the Congress: 
Medicare Payment Policy, March 2015, available at http://medpac.gov/documents/reports/chapter-8-skilled-nursing-facility-services-(march-
2015-report).pdf). However, it is worth noting that the distribution of 
days and payments is highly variable. That is, the majority of SNFs 
have significantly lower Medicare utilization (Report to the Congress: 
Medicare Payment Policy, March 2015, available at http://medpac.gov/documents/reports/chapter-8-skilled-nursing-facility-services-(march-
2015-report).pdf). As a result, for most facilities, when all payers 
are included in the revenue stream, the overall impact on total 
revenues should be substantially less than those impacts presented in 
Table 12. As indicated in Table 12, the effect on facilities is 
projected to be an aggregate positive impact of 1.2 percent. As the 
overall impact on the industry as a whole, and thus on small entities 
specifically, is less than the 3 to 5 percent threshold discussed 
previously, the Secretary has determined that this final rule will not 
have a significant impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. This final rule will 
affect small rural hospitals that (1) furnish SNF services under a 
swing-bed agreement or (2) have a hospital-based SNF. We anticipate 
that the impact on small rural hospitals would be similar to the impact 
on SNF providers overall. Moreover, as noted in previous SNF PPS final 
rules (most recently the one for FY 2015 (79 FR 45658)), the category 
of small rural hospitals would be included within the analysis of the 
impact of this final rule on small entities in general. As indicated in 
Table 12, the effect on facilities is projected to be an aggregate 
positive impact of 1.2 percent. As the overall impact on the industry 
as a whole is less than the 3 to 5 percent threshold discussed above, 
the Secretary has determined that this final rule will not have a 
significant impact on a substantial number of small rural hospitals.

C. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2015, that 
threshold is approximately $144 million. This final rule would not 
impose spending costs on state, local, or tribal governments in the 
aggregate, or by the private sector, of $144 million.

[[Page 46477]]

D. Federalism Analysis

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a proposed rule (and subsequent final 
rule) that imposes substantial direct requirement costs on state and 
local governments, preempts state law, or otherwise has federalism 
implications. This final rule will have no substantial direct effect on 
state and local governments, preempt state law, or otherwise have 
federalism implications.

E. Congressional Review Act

    This final regulation is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress 
and the Comptroller General for review.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 483

    Grant programs-health, Health facilities, Health professions, 
Health records, Medicaid, Medicare, Nursing homes, Nutrition, Reporting 
and recordkeeping requirements, Safety.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 483--REQUIREMENTS FOR STATES AND LONG TERM CARE FACILITIES

0
1. The authority citation for part 483 is revised to read as follows:

    Authority: Secs. 1102, 1128I, 1819, 1871 and 1919 of the Social 
Security Act (42 U.S.C. 1302, 1320a-7, 1395i, 1395hh and 1396r).


0
2. Section 483.75 is amended by adding paragraph (u) to read as 
follows:


Sec.  483.75  Administration.

* * * * *
    (u) Mandatory submission of staffing information based on payroll 
data in a uniform format. Long-term care facilities must electronically 
submit to CMS complete and accurate direct care staffing information, 
including information for agency and contract staff, based on payroll 
and other verifiable and auditable data in a uniform format according 
to specifications established by CMS.
    (1) Direct Care Staff. Direct Care Staff are those individuals who, 
through interpersonal contact with residents or resident care 
management, provide care and services to allow residents to attain or 
maintain the highest practicable physical, mental, and psychosocial 
well-being. Direct care staff does not include individuals whose 
primary duty is maintaining the physical environment of the long term 
care facility (for example, housekeeping).
    (2) Submission requirements. The facility must electronically 
submit to CMS complete and accurate direct care staffing information, 
including the following:
    (i) The category of work for each person on direct care staff 
(including, but not limited to, whether the individual is a registered 
nurse, licensed practical nurse, licensed vocational nurse, certified 
nursing assistant, therapist, or other type of medical personnel as 
specified by CMS);
    (ii) Resident census data; and
    (iii) Information on direct care staff turnover and tenure, and on 
the hours of care provided by each category of staff per resident per 
day (including, but not limited to, start date, end date (as 
applicable), and hours worked for each individual).
    (3) Distinguishing employee from agency and contract staff. When 
reporting information about direct care staff, the facility must 
specify whether the individual is an employee of the facility, or is 
engaged by the facility under contract or through an agency.
    (4) Data format. The facility must submit direct care staffing 
information in the uniform format specified by CMS.
    (5) Submission schedule. The facility must submit direct care 
staffing information on the schedule specified by CMS, but no less 
frequently than quarterly.

    Dated: July 27, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: July 28, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-18950 Filed 7-30-15; 4:15 pm]
 BILLING CODE 4120-01-P