[Federal Register Volume 89, Number 65 (Wednesday, April 3, 2024)]
[Proposed Rules]
[Pages 23424-23495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06812]
[[Page 23423]]
Vol. 89
Wednesday,
No. 65
April 3, 2024
Part VII
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 413 and 488
Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities; Updates to the Quality Reporting
Program and Value-Based Purchasing Program for Federal Fiscal Year
2025; Proposed Rule
Federal Register / Vol. 89, No. 65 / Wednesday, April 3, 2024 /
Proposed Rules
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 413 and 488
[CMS-1802-P]
RIN 0938-AV30
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities; Updates to the Quality
Reporting Program and Value-Based Purchasing Program for Federal Fiscal
Year 2025
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This rule proposes changes and updates to the policies and
payment rates used under the Skilled Nursing Facility (SNF) Prospective
Payment System (PPS) for FY 2025. First, we are proposing to rebase and
revise the SNF market basket to reflect a 2022 base year. Next, we are
proposing to update the wage index used under the SNF PPS to reflect
data collected during the most recent decennial census. Additionally,
we are proposing several technical revisions to the code mappings used
to classify patients under the Patient Driven Payment Model (PDPM) to
improve payment and coding accuracy. Finally, this proposed rule
includes a Request for Information (RFI) on potential updates to the
Non-Therapy Ancillary (NTA) component of PDPM. This rulemaking also
proposes to update the requirements for the SNF Quality Reporting
Program and the SNF Value-Based Purchasing Program. We are also
proposing to expand CMS' enforcement authority for imposing civil money
penalties (CMPs). Finally, this proposed rule includes proposals to
strengthen nursing home enforcement requirements.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by May 28, 2024.
ADDRESSES: In commenting, please refer to file code CMS-1802-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1802-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1802-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: [email protected] for issues related to
the SNF PPS.
Heidi Magladry, (410) 786-6034, for information related to the
skilled nursing facility quality reporting program.
Christopher Palmer, (410) 786-8025, for information related to the
skilled nursing facility value-based purchasing program.
Celeste Saunders, (410) 786-5603, for information related to
Nursing Home.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
Availability of Certain Tables Exclusively Through the Internet on the
CMS Website
As discussed in the FY 2014 SNF PPS final rule (78 FR 47936),
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
website. The wage index tables for this proposed rule can be accessed
on the SNF PPS Wage Index home page, at https://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 Burwell 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
D. Advancing Health Information Exchange
II. Background on SNF PPS
A. Statutory Basis and Scope
B. Initial Transition for the SNF PPS
C. Required Annual Rate Updates
III. Proposed SNF PPS Rate Setting Methodology and FY 2025 Update
A. Federal Base Rates
B. SNF Market Basket Update
C. Case-Mix Adjustment
D. Wage Index Adjustment
E. SNF Value-Based Purchasing Program
F. Adjusted Rate Computation Example
IV. Additional Aspects of the SNF PPS
A. SNF Level of Care--Administrative Presumption
B. Consolidated Billing
C. Payment for SNF-Level Swing-Bed Services
V. Other SNF PPS Issues
A. Rebasing and Revising the SNF Market Basket
B. Proposed Changes to SNF PPS Wage Index
C. Technical Updates to PDPM ICD-10 Mappings
D. Request for Information: Update to PDPM Non-Therapy Ancillary
Component
VI. Skilled Nursing Facility Quality Reporting Program (SNF QRP)
A. Background and Statutory Authority
B. General Considerations Used for the Selection of Measures for
the SNF QRP
C. Proposal To Collect Four Additional Items as Standardized
Patient Assessment Data Elements and Modify One Item Collected as a
Standardized Patient Assessment Data Element Beginning With the FY
2027 SNF QRP
D. SNF QRP Quality Measure Concepts Under Consideration for
Future Years--Request for Information (RFI)
E. Form, Manner, and Timing of Data Submission Under the SNF QRP
F. Policies Regarding Public Display of Measure Data for the SNF
QRP
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VII. Skilled Nursing Facility Value-Based Purchasing (SNF VBP)
Program
A. Statutory Background
B. Proposed Regulation Text Technical Updates
C. SNF VBP Program Measures
D. SNF VBP Performance Standards
E. SNF VBP Performance Scoring Methodology
F. Proposed Updates to the SNF VBP Review and Correction Process
G. Proposed Updates to the SNF VBP Extraordinary Circumstances
Exception Policy
VIII. Nursing Home Enforcement
A. Background
B. Provisions of the Proposed Regulations
IX. Collection of Information Requirements
X. Response to Comments
XI. Economic Analyses
A. Regulatory Impact Analysis
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act Analysis
D. Federalism Analysis
E. Regulatory Review Costs
I. Executive Summary
A. Purpose
This proposed rule would update the SNF prospective payment rates
for fiscal year (FY) 2025, 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 of certain specified information relating to the payment
update (see section II.C. of this proposed rule) in the Federal
Register before the August 1 that precedes the start of each FY.
Additionally, in this proposed rule, we are proposing to rebase and
revise the SNF market basket to reflect a 2022 base year. Next, we are
proposing to update the wage index used under the SNF PPS to reflect
data collected during the most recent decennial census. We are also
proposing several technical revisions to the code mappings used to
classify patients under the PDPM to improve payment and coding
accuracy. This proposed rule includes an RFI on potential updates to
the non-therapy ancillary (NTA) component of PDPM. This proposed rule
proposes the collection of four new items as standardized patient
assessment data elements and the modification of one item collected and
submitted using the Minimum Data Set (MDS) beginning with the FY 2027
SNF QRP. This proposed rule also proposes that SNFs, which participate
in the SNF QRP, participate in a validation process beginning with the
FY 2027 SNF QRP, and also includes a request for information on quality
measure concepts under consideration for future SNF QRP program years.
Finally, this proposed rule proposes new requirements for the Skilled
Nursing Facility Value-Based Purchasing (SNF VBP) Program, including a
proposed measure selection, retention, and removal policy, a proposed
technical measure updates policy, a proposed measure minimum for FY
2028 and subsequent years, proposed updates to the review and
correction policy to include new measure data sources, proposed updates
to the Extraordinary Circumstances Exception policy, and proposed SNF
VBP regulation text updates. We are also proposing revisions to
existing long-term care (LTC) enforcement regulations that would enable
CMS and the States to impose civil money penalties to better reflect
amounts that are more consistent with the type of noncompliance that
occurred.
B. Summary of Major Provisions
In accordance with sections 1888(e)(4)(E)(ii)(IV) and (e)(5) of the
Act, the Federal rates in this proposed rule would update the annual
rates that we published in the SNF PPS final rule for FY 2024 (88 FR
53200, August 7, 2023). In addition, this proposed rule includes a
forecast error adjustment for FY 2025. Additionally, in this proposed
rule we are proposing to rebase and revise the SNF market basket to
reflect a 2022 base year. Next, we are proposing to update the wage
index used under the SNF PPS to reflect data collected during the most
recent decennial census. We are also proposing several technical
revisions to the code mappings used to classify patients under the PDPM
to improve payment and coding accuracy. Finally, this proposed rule
includes an RFI on potential updates to the NTA component of PDPM.
We propose revisions to CMS' existing enforcement authority to
expand the number of CMPs that can be imposed on LTC facilities. The
proposed revisions will allow for more per-instance (PI) CMPs to be
imposed in conjunction with per-day (PD) CMPs. This proposal will also
expand our authority to impose multiple PI CMPs when the same type of
noncompliance is identified on more than one day. CMS' current
enforcement regulation does not allow for PI and PD CMPs to be imposed
for the same survey and also makes it difficult for CMS to impose
multiple PI CMPs for the same type of noncompliance. Lastly, the
proposed revisions will enable CMS or the States to impose a CMP for
the number of days of past noncompliance since the last three standard
surveys to ensure that identified noncompliance that is subject to a
penalty may receive one, if that is the remedy that is imposed.
We are proposing several updates for the SNF VBP Program. We are
proposing to adopt a measure selection, retention, and removal policy
that aligns with policies we have adopted in other CMS quality
programs. We are proposing a technical measure updates policy to allow
us to update the numerical values of the performance standards for a
program year if necessary to account for the implementation of non-
substantive technical updates to the measure specifications between the
baseline period and the performance period. We are proposing to adopt
the same measure minimum we previously finalized for the FY 2027
program year for the FY 2028 program year and subsequent program years.
We are proposing modifications to Phase One of our review and
correction policy to account for measures that are calculated using
Payroll-Based Journal (PBJ) and MDS measure data beginning with the FY
2026 and FY 2027 program years, respectively. We are proposing to
update the instructions for requesting an extraordinary circumstance
exception (ECE) and to allow SNFs to request an ECE if the SNF can
demonstrate that, as a result of the extraordinary circumstance, it
cannot report SNF VBP data on one or more measures by the specified
deadline. Lastly, we are proposing several updates to the SNF VBP
regulation text to align with previously finalized definitions and
policies.
Beginning with the FY 2027 SNF QRP, we are proposing to require
SNFs to collect and submit through the MDS four new items as
standardized patient assessment data elements under the social
determinants of health (SDOH) category: one item for Living Situation,
two items for Food, and one item for Utilities. We are also proposing
to modify the current Transportation item. We are also proposing to
adopt a similar validation process for the SNF QRP that we adopted for
the SNF VBP beginning with the FY 2027 SNF QRP. We are also proposing
to amend regulation text at Sec. 413.360 to implement the validation
process we propose. Finally, this proposed rule also includes a Request
for Information (RFI) on quality measure concepts under consideration
for future SNF QRP years.
C. Summary of Cost and Benefits
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Table 1--Estimated Cost and Benefits
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Proposals Estimated total transfers/costs
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FY 2025 SNF PPS payment rate The overall economic impact of this
update. proposed rule is an estimated
increase of $1.3 billion in
aggregate payments to SNFs during
FY 2025.
FY 2027 SNF QRP changes........... The overall economic impact of this
proposed rule to SNFs is an
estimated cost of $2,322,541.48
annually to SNFs beginning with the
FY 2027 SNF QRP.
FY 2026 Changes Due to Removal of The overall economic impact of this
MDS Items No Longer Needed for proposed rule to SNFs is an
Case-Mix Determination. estimated savings of $14,128,696.47
annually to SNFs beginning with FY
2026.
FY 2027 Changes Due to Proposal The overall economic impact of this
for Participation in a Validation proposed rule to SNFs is an
Process. estimated cost of $813,067.95
annually to SNFs beginning with the
FY 2027 SNF QRP.
FY 2025 SNF VBP changes........... The overall economic impact of the
SNF VBP Program is an estimated
reduction of $187.69 million in
aggregate payments to SNFs during
FY 2025.
FY 2025 Nursing Home Enforcement The overall economic impact the
changes. proposed changes to CMS'
enforcement authority results in an
estimated additional penalty amount
totaling $25 million annually to
long term care facilities, and
$163,800 in annual administrative
costs to CMS and states.
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II. Background on SNF PPS
A. Statutory Basis and Scope
As amended by section 4432 of the Balanced Budget Act of 1997 (BBA
1997) (Pub. L. 105-33, enacted August 5, 1997), 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 virtually 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 physicians'
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 https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf.
Section 215(a) of the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93, enacted April 1, 2014) added section 1888(g) to
the Act, requiring the Secretary to specify an all-cause all-condition
hospital readmission measure and an all-condition risk-adjusted
potentially preventable hospital readmission measure 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. In
2014, section 2(c)(4) of the Improving Medicare Post-Acute Care
Transformation (IMPACT) Act of 2014 (Pub. L. 113-185, enacted October
6, 2014) amended section 1888(e)(6) of the Act, which requires the
Secretary to implement a QRP for SNFs under which SNFs report data on
measures and resident assessment data. Finally, section 111 of the
Consolidated Appropriations Act, 2021 (CAA, 2021) (Pub. L. 116-260,
enacted December 27, 2020) amended section 1888(h) of the Act,
authorizing the Secretary to apply up to nine additional measures to
the VBP program for SNFs.
B. Initial Transition for the SNF PPS
Under sections 1888(e)(1)(A) and (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 3 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
2024 (88 FR 53200, August 7, 2023), as amended by the subsequent
correction notice (88 FR 68486, October 4, 2023).
Section 1888(e)(4)(H) of the Act specifies that we provide for
publication annually in the Federal Register 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
proposed rule would set out the required annual updates to the per diem
payment rates for SNFs for FY 2025.
III. Proposed SNF PPS Rate Setting Methodology and FY 2025 Update
A. 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 be 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 the SNF market basket, and then standardized for
geographic variations
[[Page 23427]]
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
1997 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 costs by a wage index to reflect geographic variations in
wages.
B. SNF Market Basket Update
1. SNF Market Basket
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket 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 that encompasses the
most commonly used cost categories for SNF routine services, ancillary
services, and capital-related expenses. In the SNF PPS final rule for
FY 2022 (86 FR 42444 through 42463), we rebased and revised the SNF
market basket, which included updating the base year from 2014 to 2018.
In this proposed rule, we propose to update the base year from 2018 to
2022.
The SNF market basket is used to compute the market basket
percentage increase that is used to update the SNF Federal rates on an
annual basis, as required by section 1888(e)(4)(E)(ii)(IV) of the Act.
This market basket percentage increase is adjusted by a forecast error
adjustment, if applicable, and then further adjusted by the application
of a productivity adjustment as required by section 1888(e)(5)(B)(ii)
of the Act and described in section III.B.4. of this proposed rule.
As outlined in this proposed rule, we propose a FY 2025 SNF market
basket percentage increase of 2.8 percent based on IHS Global Inc.'s
(IGI's) fourth quarter 2023 forecast of the proposed 2022-based SNF
market basket (before application of the forecast error adjustment and
productivity adjustment). We also propose that if more recent data
subsequently become available (for example, a more recent estimate of
the market basket and/or the productivity adjustment), we would use
such data, if appropriate, to determine the FY 2025 SNF market basket
percentage increase, labor-related share relative importance, forecast
error adjustment, or productivity adjustment in the SNF PPS final rule.
2. Proposed Market Basket Update for FY 2025
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage increase as the percentage change in the SNF market basket
from the midpoint of the previous FY to the midpoint of the current FY.
For the Federal rates outlined in this proposed rule, we use the
percentage change in the SNF market basket to compute the update factor
for FY 2025. This factor is based on the FY 2025 percentage increase in
the proposed 2022-based SNF market basket reflecting routine,
ancillary, and capital-related expenses. Sections 1888(e)(4)(E)(ii)(IV)
and (e)(5)(B)(i) of the Act require that the update factor used to
establish the FY 2025 unadjusted Federal rates be at a level equal to
the SNF market basket percentage increase. Accordingly, we determined
the total growth from the average market basket level for the period of
October 1, 2023 through September 30, 2024 to the average market basket
level for the period of October 1, 2024 through September 30, 2025.
This process yields a percentage increase in the proposed 2022-based
SNF market basket of 2.8 percent.
As further explained in section III.B.3. of this proposed rule, as
applicable, we adjust the percentage increase by the forecast error
adjustment 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 increase in the market basket exceeds
a 0.5 percentage point threshold in absolute terms. Additionally,
section 1888(e)(5)(B)(ii) of the Act requires us to reduce the market
basket percentage increase by the productivity adjustment (the 10-year
moving average of changes in annual economy-wide private nonfarm
business total factor productivity (TFP) for the period ending
September 30, 2025) which is estimated to be 0.4 percentage point, as
described in section III.B.4. of this proposed rule.
We also note that section 1888(e)(6)(A)(i) of the Act provides
that, beginning with FY 2018, SNFs that fail to submit data, as
applicable, in accordance with sections 1888(e)(6)(B)(i)(II) and (III)
of the Act for a fiscal year will receive a 2.0 percentage point
reduction to their market basket update for the fiscal year involved,
after application of section 1888(e)(5)(B)(ii) of the Act (the
productivity adjustment) and section 1888(e)(5)(B)(iii) of the Act (the
market basket increase). In addition, section 1888(e)(6)(A)(ii) of the
Act states that application of the 2.0 percentage point reduction
(after application of section 1888(e)(5)(B)(ii) and (iii) of the Act)
may result in the market basket percentage change being less than zero
for a fiscal year and may result in payment rates for a fiscal year
being less than such payment rates for the preceding fiscal year.
Section 1888(e)(6)(A)(iii) of the Act further specifies that the 2.0
percentage point reduction is applied in a noncumulative manner, so
that any reduction made under section 1888(e)(6)(A)(i) of the Act
applies only to the fiscal year involved, and that the reduction cannot
be taken into account in computing the payment amount for a subsequent
fiscal year.
3. 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), Sec. 413.337(d)(2) provides 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), 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), the adjustment will
reflect both upward and downward adjustments, as appropriate.
For FY 2023 (the most recently available FY for which there is
final data), the forecasted or estimated increase in the SNF market
basket was 3.9 percent, and the actual increase for FY 2023 was 5.6
percent, resulting in the actual increase being 1.7 percentage points
higher than the estimated increase. Accordingly, as the difference
between the estimated and actual amount of change in the market basket
[[Page 23428]]
exceeds the 0.5 percentage point threshold, under the policy previously
described (comparing the forecasted and actual market basket percentage
increase), the FY 2025 market basket percentage increase of 2.8 percent
would be adjusted upward to account for the forecast error adjustment
of 1.7 percentage points, resulting in a SNF market basket percentage
increase of 4.5 percent, which is then reduced by the productivity
adjustment of 0.4 percentage point, discussed in section III.B.4. of
this proposed rule. This results in a proposed SNF market basket update
for FY 2025 of 4.1 percent.
Table 2 shows the forecasted and actual market basket increases for
FY 2023.
Table 2--Difference Between the Actual and Forecasted Market Basket Increases for FY 2023
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Forecasted FY 2023 Actual FY 2023
Index increase * increase ** FY 2023 difference
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SNF........................................ 3.9 5.6 1.7
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* Published in Federal Register; based on second quarter 2022 IGI forecast (2018-based SNF market basket).
** Based on the fourth quarter 2023 IGI forecast (2018-based SNF market basket), with historical data through
third quarter 2023.
4. Productivity Adjustment
Section 1888(e)(5)(B)(ii) of the Act, as added by section 3401(b)
of the Patient Protection and Affordable Care Act (Affordable Care Act)
(Pub. L. 111-148, enacted March 23, 2010) 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, in turn, defines the productivity adjustment to be equal to the
10-year moving average of changes in annual economy-wide, private
nonfarm business multifactor productivity (MFP) (as projected by the
Secretary for the 10-year period ending with the applicable FY, year,
cost-reporting period, or other annual period).
The U.S. Department of Labor's Bureau of Labor Statistics (BLS)
publishes the official measure of productivity for the U.S. We note
that previously the productivity measure referenced at section
1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private
nonfarm business multifactor productivity. Beginning with the November
18, 2021 release of productivity data, BLS replaced the term MFP with
TFP. BLS noted that this is a change in terminology only and will not
affect the data or methodology. As a result of the BLS name change, the
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the
Act is now published by BLS as private nonfarm business total factor
productivity. We refer readers to the BLS website at www.bls.gov for
the BLS historical published TFP data. A complete description of the
TFP projection methodology is available on our website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, in
the FY 2022 SNF final rule (86 FR 42429) we noted that, effective with
FY 2022 and forward, we changed the name of this adjustment to refer to
it as the ``productivity adjustment,'' rather than the ``MFP
adjustment.''
Per section 1888(e)(5)(A) of the Act, the Secretary shall establish
a SNF market basket 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) of the Act. Section 1888(e)(5)(B)(ii) of the Act
further states that the reduction of the market basket percentage by
the productivity 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 being less than such payment rates for the
preceding fiscal year. Thus, if the application of the productivity
adjustment to the market basket percentage calculated under section
1888(e)(5)(B)(i) of the Act results in a productivity-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.
Based on the data available for this FY 2025 SNF PPS proposed rule,
the proposed productivity adjustment (the 10-year moving average of
changes in annual economy-wide private nonfarm business TFP for the
period ending September 30, 2025) is projected to be 0.4 percentage
point.
Consistent with section 1888(e)(5)(B)(i) of the Act and Sec.
413.337(d)(2), and as discussed previously in section III.B.1. of this
proposed rule, the proposed market basket percentage increase for FY
2025 for the SNF PPS is based on IGI's fourth quarter 2023 forecast of
the SNF market basket percentage increase, which is estimated to be 2.8
percent. This market basket percentage increase is then increased by
1.7 percentage points, due to application of the forecast error
adjustment discussed earlier in section III.B.3. of this proposed rule.
Finally, as discussed earlier in section III.B.4. of this proposed
rule, we are applying a 0.4 percentage point productivity adjustment to
the FY 2025 SNF market basket percentage increase. Therefore, the
resulting proposed productivity-adjusted FY 2025 SNF market basket
update is equal to 4.1 percent, which reflects a market basket
percentage increase of 2.8 percent, plus the 1.7 percentage points
forecast error adjustment, and reduced by the 0.4 percentage point
productivity adjustment. Thus, we propose to apply a net SNF market
basket update factor of 4.1 percent in our determination of the FY 2025
SNF PPS unadjusted Federal per diem rates.
5. Unadjusted Federal Per Diem Rates for FY 2024
As discussed in the FY 2019 SNF PPS final rule (83 FR 39162), in FY
2020 we implemented a new case-mix classification system to classify
SNF patients under the SNF PPS, the PDPM. As discussed in section
V.B.1. of that final rule (83 FR 39189), under PDPM, the unadjusted
Federal per diem rates are divided into six components, five of which
are case-mix adjusted components (Physical Therapy (PT), Occupational
Therapy (OT), Speech-Language Pathology (SLP), Nursing, and Non-Therapy
Ancillaries (NTA)), and one of which is a non-case-mix
[[Page 23429]]
component, as existed under the previous RUG-IV model. We propose to
use the SNF market basket, adjusted as described previously in sections
III.B.1. through III.B.4. of this proposed rule, to adjust each per
diem component of the Federal rates forward to reflect the change in
the average prices for FY 2024 from the average prices for FY 2023. We
also propose to further adjust the rates by a wage index budget
neutrality factor, described in section III.D. of this proposed rule.
Further, in the past, we used the revised Office of Management and
Budget (OMB) delineations adopted in the FY 2015 SNF PPS final rule (79
FR 45632, 45634), with updates as reflected in OMB Bulletin Nos. 15-01
and 17-01, to identify a facility's urban or rural status for the
purpose of determining which set of rate tables would apply to the
facility. As discussed in the FY 2021 SNF PPS proposed and final rules,
we adopted the revised OMB delineations identified in OMB Bulletin No.
18-04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) to identify a facility's urban or rural status
effective beginning with FY 2021. However, as further described in
section V.A of this proposed rule, the current CBSAs are based on OMB
standards contained in Bulletin 20-01, which is based on data collected
during the 2010 Decennial Census. In this proposed rule, we are
proposing to update the SNF PPS wage index using the CBSAs defined
within Bulletin 23-01.
Tables 3 and 4 reflect the proposed unadjusted Federal rates for FY
2025, prior to adjustment for case-mix.
Table 3--Proposed FY 2025 Unadjusted Federal Rate Per Diem--URBAN
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component PT OT SLP Nursing NTA Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $73.16 $68.10 $27.31 $127.52 $96.21 $114.20
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 4--Proposed FY 2025 Unadjusted Federal Rate Per Diem--R
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component PT OT SLP Nursing NTA Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $83.39 $76.59 $34.41 $121.83 $91.92 $116.31
--------------------------------------------------------------------------------------------------------------------------------------------------------
C. 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 FY 2019 final
rule (83 FR 39162, August 8, 2018), we finalized a new case-mix
classification model, the PDPM, which took effect beginning October 1,
2019. The previous RUG-IV model classified most patients into a therapy
payment group and primarily used the volume of therapy services
provided to the patient as the basis for payment classification, thus
creating an incentive for SNFs to furnish therapy regardless of the
individual patient's unique characteristics, goals, or needs. PDPM
eliminates this incentive and improves the overall accuracy and
appropriateness of SNF payments by classifying patients into payment
groups based on specific, data-driven patient characteristics, while
simultaneously reducing the administrative burden on SNFs.
The PDPM uses clinical data from the MDS to assign case-mix
classifiers to each patient that are then used to calculate a per diem
payment under the SNF PPS, consistent with the provisions of section
1888(e)(4)(G)(i) of the Act. As discussed in section IV.A. of this
proposed 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 timeframes
for MDS completion in our Resident Assessment Instrument (RAI) Manual.
As we have stated in prior rules, for an MDS to be considered valid for
use in determining payment, the MDS assessment should 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 website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html.
Under section 1888(e)(4)(H) of the Act, each update of the payment
rates must include the case-mix classification methodology applicable
for the upcoming FY. The proposed FY 2025 payment rates set forth in
this proposed rule reflect the use of the PDPM case-mix classification
system from October 1, 2023, through September 30, 2024. The proposed
case-mix adjusted PDPM payment rates for FY 2025 are listed separately
for urban and rural SNFs, in Tables A5 and A6 with corresponding case-
mix values.
Given the differences between the previous RUG-IV model and PDPM in
terms of patient classification and billing, it was important that the
format of Tables A5 and A6 reflect these differences. More
specifically, under both RUG-IV and PDPM, providers use a Health
Insurance Prospective Payment System (HIPPS) code on a claim to bill
for covered SNF services. Under RUG-IV, the HIPPS code included the
three-character RUG-IV group into which the patient classified, as well
as a two-character assessment indicator code that represented the
assessment used to generate this code. Under PDPM, while providers
still use a HIPPS code, the characters in that code represent different
things. For example, the first character represents the PT and OT group
into which the patient classifies. If the patient is classified into
the PT and OT group ``TA'', then the first character in the patient's
HIPPS code would be an A. Similarly, if the patient is classified into
the SLP group ``SB'', then the second character in the patient's HIPPS
code would be a B. The third character represents the Nursing group
into which the patient classifies. The fourth character represents the
NTA group into which the patient classifies.
[[Page 23430]]
Finally, the fifth character represents the assessment used to generate
the HIPPS code.
Tables 5 and 6 reflect the PDPM's structure. Accordingly, Column 1
of Tables 5 and 6 represents the character in the HIPPS code associated
with a given PDPM component. Columns 2 and 3 provide the case-mix index
and associated case-mix adjusted component rate, respectively, for the
relevant PT group. Columns 4 and 5 provide the case-mix index and
associated case-mix adjusted component rate, respectively, for the
relevant OT group. Columns 6 and 7 provide the case-mix index and
associated case-mix adjusted component rate, respectively, for the
relevant SLP group. Column 8 provides the nursing case-mix group (CMG)
that is connected with a given PDPM HIPPS character. For example, if
the patient qualified for the nursing group CBC1, then the third
character in the patient's HIPPS code would be a ``P.'' Columns 9 and
10 provide the case-mix index and associated case-mix adjusted
component rate, respectively, for the relevant nursing group. Finally,
columns 11 and 12 provide the case-mix index and associated case-mix
adjusted component rate, respectively, for the relevant NTA group.
Tables 5 and 6 do not reflect adjustments which may be made to the
SNF PPS rates as a result of the SNF VBP Program, discussed in section
VI. of this proposed rule, or other adjustments, such as the variable
per diem adjustment.
Table 5--PDPM Case-Mix Adjusted Federal Rates and Associated Indexes--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Nursing Nursing
PDPM group PT CMI PT rate OT CMI OT rate SLP CMI SLP rate CMG CMI rate NTA CMI NTA rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
A............................. 1.45 $106.08 1.41 $96.02 0.64 $17.48 ES3 3.84 $489.68 3.06 $294.40
B............................. 1.61 117.79 1.54 104.87 1.72 46.97 ES2 2.90 369.81 2.39 229.94
C............................. 1.78 130.22 1.60 108.96 2.52 68.82 ES1 2.77 353.23 1.74 167.41
D............................. 1.81 132.42 1.45 98.75 1.38 37.69 HDE2 2.27 289.47 1.26 121.22
E............................. 1.34 98.03 1.33 90.57 2.21 60.36 HDE1 1.88 239.74 0.91 87.55
F............................. 1.52 111.20 1.51 102.83 2.82 77.01 HBC2 2.12 270.34 0.68 65.42
G............................. 1.58 115.59 1.55 105.56 1.93 52.71 HBC1 1.76 224.44 ......... .........
H............................. 1.10 80.48 1.09 74.23 2.7 73.74 LDE2 1.97 251.21 ......... .........
I............................. 1.07 78.28 1.12 76.27 3.34 91.22 LDE1 1.64 209.13 ......... .........
J............................. 1.34 98.03 1.37 93.30 2.83 77.29 LBC2 1.63 207.86 ......... .........
K............................. 1.44 105.35 1.46 99.43 3.50 95.59 LBC1 1.35 172.15 ......... .........
L............................. 1.03 75.35 1.05 71.51 3.98 108.69 CDE2 1.77 225.71 ......... .........
M............................. 1.20 87.79 1.23 83.76 ......... ......... CDE1 1.53 195.11 ......... .........
N............................. 1.40 102.42 1.42 96.70 ......... ......... CBC2 1.47 187.45 ......... .........
O............................. 1.47 107.55 1.47 100.11 ......... ......... CA2 1.03 131.35 ......... .........
P............................. 1.02 74.62 1.03 70.14 ......... ......... CBC1 1.27 161.95 ......... .........
Q............................. ......... ......... ......... ......... ......... ......... CA1 0.89 113.49 ......... .........
R............................. ......... ......... ......... ......... ......... ......... BAB2 0.98 124.97 ......... .........
S............................. ......... ......... ......... ......... ......... ......... BAB1 0.94 119.87 ......... .........
T............................. ......... ......... ......... ......... ......... ......... PDE2 1.48 188.73 ......... .........
U............................. ......... ......... ......... ......... ......... ......... PDE1 1.39 177.25 ......... .........
V............................. ......... ......... ......... ......... ......... ......... PBC2 1.15 146.65 ......... .........
W............................. ......... ......... ......... ......... ......... ......... PA2 0.67 85.44 ......... .........
X............................. ......... ......... ......... ......... ......... ......... PBC1 1.07 136.45 ......... .........
Y............................. ......... ......... ......... ......... ......... ......... PA1 0.62 79.06 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 6--PDPM Case-Mix Adjusted Federal Rates and Associated Indexes--RURAL
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Nursing Nursing
PDPM group PT CMI PT rate OT CMI OT rate SLP CMI SLP rate CMG CMI rate NTA CMI NTA rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
A............................. 1.45 $120.92 1.41 $107.99 0.64 $22.02 ES3 3.84 $467.83 3.06 281.28
B............................. 1.61 134.26 1.54 117.95 1.72 59.19 ES2 2.90 353.31 2.39 219.69
C............................. 1.78 148.43 1.60 122.54 2.52 86.71 ES1 2.77 337.47 1.74 159.94
D............................. 1.81 150.94 1.45 111.06 1.38 47.49 HDE2 2.27 276.55 1.26 115.82
E............................. 1.34 111.74 1.33 101.86 2.21 76.05 HDE1 1.88 229.04 0.91 83.65
F............................. 1.52 126.75 1.51 115.65 2.82 97.04 HBC2 2.12 258.28 0.68 62.51
G............................. 1.58 131.76 1.55 118.71 1.93 66.41 HBC1 1.76 214.42 ......... .........
H............................. 1.10 91.73 1.09 83.48 2.7 92.91 LDE2 1.97 240.01 ......... .........
I............................. 1.07 89.23 1.12 85.78 3.34 114.93 LDE1 1.64 199.80 ......... .........
J............................. 1.34 111.74 1.37 104.93 2.83 97.38 LBC2 1.63 198.58 ......... .........
K............................. 1.44 120.08 1.46 111.82 3.50 120.44 LBC1 1.35 164.47 ......... .........
L............................. 1.03 85.89 1.05 80.42 3.98 136.95 CDE2 1.77 215.64 ......... .........
M............................. 1.20 100.07 1.23 94.21 ......... ......... CDE1 1.53 186.40 ......... .........
N............................. 1.40 116.75 1.42 108.76 ......... ......... CBC2 1.47 179.09 ......... .........
O............................. 1.47 122.58 1.47 112.59 ......... ......... CA2 1.03 125.48 ......... .........
P............................. 1.02 85.06 1.03 78.89 ......... ......... CBC1 1.27 154.72 ......... .........
Q............................. ......... ......... ......... ......... ......... ......... CA1 0.89 108.43 ......... .........
R............................. ......... ......... ......... ......... ......... ......... BAB2 0.98 119.39 ......... .........
S............................. ......... ......... ......... ......... ......... ......... BAB1 0.94 114.52 ......... .........
T............................. ......... ......... ......... ......... ......... ......... PDE2 1.48 180.31 ......... .........
U............................. ......... ......... ......... ......... ......... ......... PDE1 1.39 169.34 ......... .........
V............................. ......... ......... ......... ......... ......... ......... PBC2 1.15 140.10 ......... .........
W............................. ......... ......... ......... ......... ......... ......... PA2 0.67 81.63 ......... .........
X............................. ......... ......... ......... ......... ......... ......... PBC1 1.07 130.36 ......... .........
Y............................. ......... ......... ......... ......... ......... ......... PA1 0.62 75.53 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 23431]]
D. 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 will continue this
practice for FY 2025, 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 under the inpatient prospective payment system (IPPS) 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. As in previous
years, we would continue to use the pre-reclassified IPPS hospital wage
data, without applying the occupational mix, rural floor, or
outmigration adjustment, as the basis for the SNF PPS wage index. For
FY 2025, the updated wage data are for hospital cost reporting periods
beginning on or after October 1, 2020 and before October 1, 2021 (FY
2021 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, enacted December 21, 2000) gave the Secretary the discretion to
establish a geographic reclassification procedure specific to SNFs, but
only after collecting the data necessary to establish a SNF PPS wage
index that is based on wage data from nursing homes. 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 the data. More specifically, auditing all SNF
cost reports, similar to the process used to audit inpatient hospital
cost reports for purposes of the IPPS wage index, would place a burden
on providers in terms of recordkeeping and completion of the cost
report worksheet. Adopting such an approach would require a significant
commitment of resources by CMS and the Medicare Administrative
Contractors (MACs), potentially far in excess of those required under
the IPPS, given that there are nearly five times as many SNFs as there
are inpatient hospitals. While we do not believe this undertaking is
feasible at this time, we will continue to explore implantation of a
spot audit process to improve SNF cost reports, which is determined to
be adequately accurate for cost development purposes, in such a manner
as to permit us to establish a SNF-specific wage index in the future.
In addition, we will 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 2025 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 will continue using the average wage index from all
contiguous Core-Based Statistical Areas (CBSAs) as a reasonable proxy.
For FY 2025, the only rural area without wage index data available is
North Dakota. We have determined that the borders of 18 rural counties
are local and contiguous with 8 urban counties. Therefore, under this
methodology, the wage indexes for the counties of Burleigh/Morton/
Oliver (CBSA 13900: 0.9020), Cass (CBSA 22020: 0.8763), Grand Forks
(CBSA 24220: 0.7865), and McHenry/Renville/Ward (CBSA 33500: 0.7686)
are averaged, resulting in an imputed rural wage index of 0.8334 for
rural North Dakota for FY 2025. In past years for rural Puerto Rico, we
did not apply this methodology due to the distinct economic
circumstances there; due to the close proximity of almost all of Puerto
Rico's various urban and non-urban areas, this methodology will produce
a wage index for rural Puerto Rico that is higher than that in half of
its urban areas. However, because rural Puerto Rico now has hospital
wage index data on which to base an area wage adjustment, we will not
apply this policy for FY 2025. For urban areas without specific
hospital wage index data, we will continue using the average wage
indexes of all urban areas within the State to serve as a reasonable
proxy for the wage index of that urban CBSA. For FY 2025, the only
urban area without wage index data available is CBSA 25980, Hinesville-
Fort Stewart, GA.
In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in OMB Bulletin No. 03-04 (June
6, 2003), 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), after the expiration of this 1-year transition on September 30,
2006, we used the full CBSA-based wage index values.
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. OMB Bulletin No. 13-01 established revised delineations for
Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas in the United States and Puerto Rico based
on the 2010 Census and provided guidance on the use of the delineations
of these statistical areas using standards published in the June 28,
2010 Federal Register (75 FR 37246 through 37252). Subsequently, on
July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provided minor
updates to and superseded OMB Bulletin No. 13-01 that was issued on
February 28, 2013. The attachment to OMB Bulletin No. 15-01 provided
detailed information on the update to statistical areas since February
28, 2013. The updates provided in OMB Bulletin No. 15-01 were based on
the application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012 and July 1, 2013 and were adopted under the SNF PPS in
the FY 2017 SNF PPS final rule (81 FR 51983, August 5, 2016). In
addition, on August 15, 2017, OMB issued Bulletin No. 17-01 which
announced a new urban CBSA, Twin Falls, Idaho (CBSA 46300) which was
adopted in the SNF PPS final rule for FY 2019 (83 FR 39173, August 8,
2018).
As discussed in the FY 2021 SNF PPS final rule (85 FR 47594), we
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) beginning October 1, 2020, including a 1-year
transition for FY 2021 under which we applied a 5
[[Page 23432]]
percent cap on any decrease in a hospital's wage index compared to its
wage index for the prior fiscal year (FY 2020). The updated OMB
delineations more accurately reflect the contemporary urban and rural
nature of areas across the country, and the use of such delineations
allows us to determine more accurately the appropriate wage index and
rate tables to apply under the SNF PPS.
In the FY 2023 SNF PPS final rule (87 FR 47521 through 47525), we
finalized a policy to apply a permanent 5 percent cap on any decreases
to a provider's wage index from its wage index in the prior year,
regardless of the circumstances causing the decline. We amended the SNF
PPS regulations at 42 CFR 413.337(b)(4)(ii) to reflect this permanent
cap on wage index decreases. Additionally, we finalized a policy that a
new SNF would be paid the wage index for the area in which it is
geographically located for its first full or partial FY with no cap
applied because a new SNF would not have a wage index in the prior FY.
A full discussion of the adoption of this policy is found in the FY
2023 SNF PPS final rule.
As we previously stated in the FY 2008 SNF PPS proposed and final
rules (72 FR 25538 through 25539, and 72 FR 43423), this and all
subsequent SNF PPS rules and notices are considered to incorporate any
updates and revisions set forth in the most recent OMB bulletin that
applies to the hospital wage data used to determine the current SNF PPS
wage index. OMB issued further revised CBSA delineations in OMB
Bulletin No. 20-01, on March 6, 2020 (available on the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf).
However, we determined that the changes in OMB Bulletin No. 20-01 do
not impact the CBSA-based labor market area delineations adopted in FY
2021. Therefore, we did not propose to adopt the revised OMB
delineations identified in OMB Bulletin No. 20-01 for FY 2022 through
FY 2024.
On July 21, 2023, OMB issued OMB Bulletin No. 23-01 which updates
and supersedes OMB Bulletin No. 20-01 based on the decennial census.
OMB Bulletin No. 23-01 revised delineations for CBSAs which are made up
of counties and equivalent entities (e.g., boroughs, a city and
borough, and a municipality in Alaska, planning regions in Connecticut,
parishes in Louisiana, municipios in Puerto Rico, and independent
cities in Maryland, Missouri, Nevada, and Virginia). For FY 2025, we
propose to adopt the revised OMB delineations identified in OMB
Bulletin No. 23-01 (available at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf). The wage index applicable to
FY 2025 is set forth in Table A available on the CMS website at http://www.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
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 2022 (86 FR 42437), we
finalized a proposal to revise the labor-related share to reflect the
relative importance of the 2018-based SNF market basket cost weights
for the following cost categories: Wages and Salaries; Employee
Benefits; Professional Fees: Labor-Related; Administrative and
Facilities Support Services; Installation, Maintenance, and Repair
Services; All Other: Labor-Related Services; and a proportion of
Capital-Related expenses. The methodology for calculating the labor-
related portion beginning in FY 2022 is discussed in detail in the FY
2022 SNF PPS final rule (86 FR 42461 through 42463). As described later
in section V.A. of this proposed rule, we are proposing to rebase and
revise the labor-related share to reflect the relative importance of
the proposed 2022-based SNF market basket cost weights for the
following categories: Wages and Salaries; Employee Benefits;
Professional Fees: Labor-Related; Administrative and Facilities Support
Services; Installation, Maintenance, and Repair Services; All Other:
Labor-Related Services; and a proportion of Capital-Related expenses.
We calculate the proposed 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 2025. 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 2025 than the base
year weights from the SNF market basket. We calculate the labor-related
relative importance for FY 2025 in four steps. First, we compute the FY
2025 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 2025 price index level for that cost
category by the total market basket price index level. Third, we
determine the FY 2025 relative importance for each cost category by
multiplying this ratio by the base year (2022) weight. Finally, we add
the FY 2025 relative importance for each of the labor-related cost
categories (Wages and Salaries; Employee Benefits; Professional Fees:
Labor-Related; Administrative and Facilities Support Services;
Installation, Maintenance, and Repair Services; All Other: Labor-
Related Services; and a portion of Capital-Related expenses) to produce
the proposed FY 2025 labor-related relative importance.
Table 7 summarizes the labor-related share for FY 2025, based on
IGI's fourth quarter 2023 forecast of the proposed 2022-based SNF
market basket, compared to the labor-related share that was used for
the FY 2024 SNF PPS final rule.
Table 7--Labor-Related Share, FY 2024 and FY 2025
----------------------------------------------------------------------------------------------------------------
Final FY 2024 labor- Proposed FY 2025 labor-
related share based on related share based on
2023q2 forecast of the 2023q4 forecast of the
2018-based SNF market proposed 2022-based SNF
basket \1\ market basket \2\
----------------------------------------------------------------------------------------------------------------
Wages and salaries............................................ 52.5 53.2
Employee benefits............................................. 9.3 9.1
Professional fees: Labor-related.............................. 3.4 3.5
Administrative & facilities support services.................. 0.6 0.4
Installation, maintenance & repair services................... 0.4 0.5
[[Page 23433]]
All other: Labor-related services............................. 2.0 2.0
Capital-related (.391)........................................ 2.9 3.2
-------------------------------------------------
Total..................................................... 71.1 71.9
----------------------------------------------------------------------------------------------------------------
\1\ Published in the Federal Register; Based on the second quarter 2023 IHS Global Inc. forecast of the 2018-
based SNF market basket.
\2\ Based on the fourth quarter 2023 IHS Global Inc. forecast of the proposed 2022-based SNF market basket.
To calculate the labor portion of the case-mix adjusted per diem
rate, we will multiply the total case-mix adjusted per diem rate, which
is the sum of all five case-mix adjusted components into which a
patient classifies, and the non-case-mix component rate, by the
proposed FY 2025 labor-related share percentage provided in Table 7.
The remaining portion of the rate would be the non-labor portion. Under
the previous RUG-IV model, we included tables which provided the case-
mix adjusted RUG-IV rates, by RUG-IV group, broken out by total rate,
labor portion and non-labor portion, such as Table 9 of the FY 2019 SNF
PPS final rule (83 FR 39175). However, as we discussed in the FY 2020
final rule (84 FR 38738), under PDPM, as the total rate is calculated
as a combination of six different component rates, five of which are
case-mix adjusted, and given the sheer volume of possible combinations
of these five case-mix adjusted components, it is not feasible to
provide tables similar to those that existed in the prior rulemaking.
Therefore, to aid interested parties in understanding the effect of
the wage index on the calculation of the SNF per diem rate, we have
included a hypothetical rate calculation in Table 9.
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 2025 (Federal rates
effective October 1, 2023), we 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 2025 to the weighted average wage adjustment
factor for FY 2025. For this calculation, we will use the same FY 2023
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 portion of the rate component multiplied by the wage index
plus the non-labor portion of the rate component. The proposed budget
neutrality factor for FY 2025 is 1.0002.
We note that if more recent data become available (for example,
revised wage data), we would use such data, if appropriate, to
determine the wage index budget neutrality factor in the SNF PPS final
rule.
E. SNF Value-Based Purchasing Program
Beginning with payment for services furnished on October 1, 2018,
section 1888(h) of the Act requires the Secretary to reduce the
adjusted Federal per diem rate determined under section 1888(e)(4)(G)
of the Act otherwise applicable to a SNF for services furnished during
a fiscal year by 2 percent, and to adjust the resulting rate for a SNF
by the value-based incentive payment amount earned by the SNF based on
the SNF's performance score for that fiscal year under the SNF VBP
Program. To implement these requirements, we finalized in the FY 2019
SNF PPS final rule the addition of Sec. 413.337(f) to our regulations
(83 FR 39178).
Please see section VII. of this proposed rule for further
discussion of the updates we are proposing for the SNF VBP Program.
F. Adjusted Rate Computation Example
Tables 8 through 10 provide examples generally illustrating payment
calculations during FY 2025 under PDPM for a hypothetical 30-day SNF
stay, involving the hypothetical SNF XYZ, located in Frederick, MD
(Urban CBSA 23224), for a hypothetical patient who is classified into
such groups that the patient's HIPPS code is NHNC1. Table 8 shows the
adjustments made to the Federal per diem rates (prior to application of
any adjustments under the SNF VBP Program as discussed) to compute the
provider's proposed case-mix adjusted per diem rate for FY 2025, based
on the patient's PDPM classification, as well as how the variable per
diem (VPD) adjustment factor affects calculation of the per diem rate
for a given day of the stay. Table 9 shows the adjustments made to the
case-mix adjusted per diem rate from Table 8 to account for the
provider's wage index. The wage index used in this example is based on
the FY 2025 SNF PPS wage index that appears in Table A available on the
CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Finally, Table 10 provides the case-mix
and wage index adjusted per-diem rate for this patient for each day of
the 30-day stay, as well as the total payment for this stay. Table 10
also includes the VPD adjustment factors for each day of the patient's
stay, to clarify why the patient's per diem rate changes for certain
days of the stay. As illustrated in Table 10, SNF XYZ's total PPS
payment for this particular patient's stay would equal $23,073.54.
[[Page 23434]]
Table 8--PDPM Case-Mix Adjusted Rate Computation Example
----------------------------------------------------------------------------------------------------------------
Per diem rate calculation
-----------------------------------------------------------------------------------------------------------------
Component VPD adjustment
Component group Component rate factor VPD adj. rate
----------------------------------------------------------------------------------------------------------------
PT.............................................. N $102.42 1.00 102.42
OT.............................................. N $96.70 1.00 96.70
SLP............................................. H $73.74 1.00 73.74
Nursing......................................... N $187.45 1.00 187.45
NTA............................................. C $167.41 3.00 502.23
Non-Case-Mix.................................... .............. $114.20 .............. 114.20
-----------------------------------------------
Total PDPM Case-Mix Adj. Per Diem........... .............. .............. .............. 1,076.74
----------------------------------------------------------------------------------------------------------------
Table 9--Wage Index Adjusted Rate Computation Example
--------------------------------------------------------------------------------------------------------------------------------------------------------
PDPM wage index adjustment calculation
---------------------------------------------------------------------------------------------------------------------------------------------------------
PDPM case-mix Total case mix
HIPPS code adjusted per Labor portion Wage index Wage index Non-labor and wage index
diem adjusted rate portion adj. rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
NHNC1............................................. $1,076.74 $774.18 0.9918 $767.83 $302.56 $1,070.39
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 10--Adjusted Rate Computation Example
----------------------------------------------------------------------------------------------------------------
Case mix and
NTA VPD PT/OT VPD wage index
Day of stay adjustment adjustment adjusted per
factor factor diem rate
----------------------------------------------------------------------------------------------------------------
1............................................................... 3.0 1.0 $1,070.39
2............................................................... 3.0 1.0 1,070.39
3............................................................... 3.0 1.0 1,070.39
4............................................................... 1.0 1.0 737.55
5............................................................... 1.0 1.0 737.55
6............................................................... 1.0 1.0 737.55
7............................................................... 1.0 1.0 737.55
8............................................................... 1.0 1.0 737.55
9............................................................... 1.0 1.0 737.55
10.............................................................. 1.0 1.0 737.55
11.............................................................. 1.0 1.0 737.55
12.............................................................. 1.0 1.0 737.55
13.............................................................. 1.0 1.0 737.55
14.............................................................. 1.0 1.0 737.55
15.............................................................. 1.0 1.0 737.55
16.............................................................. 1.0 1.0 737.55
17.............................................................. 1.0 1.0 737.55
18.............................................................. 1.0 1.0 737.55
19.............................................................. 1.0 1.0 737.55
20.............................................................. 1.0 1.0 737.55
21.............................................................. 1.0 0.98 733.59
22.............................................................. 1.0 0.98 733.59
23.............................................................. 1.0 0.98 733.59
24.............................................................. 1.0 0.98 733.59
25.............................................................. 1.0 0.98 733.59
26.............................................................. 1.0 0.98 733.59
27.............................................................. 1.0 0.98 733.59
28.............................................................. 1.0 0.96 729.63
29.............................................................. 1.0 0.96 729.63
30.............................................................. 1.0 0.96 729.63
-----------------------------------------------
Total Payment............................................... .............. .............. 23,073.54
----------------------------------------------------------------------------------------------------------------
V. Additional Aspects of the SNF PPS
A. 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.C. of this proposed rule. This
[[Page 23435]]
approach includes an administrative presumption that utilizes a
beneficiary's correct assignment, at the outset of the SNF stay, of one
of the case-mix classifiers designated for this purpose to assist in
making certain SNF level of care determinations.
In accordance with Sec. 413.345, we include in each update of the
Federal payment rates in the Federal Register a discussion of the
resident classification system that provides the basis for case-mix
adjustment. We also designate those specific classifiers under the
case-mix classification system that represent the required SNF level of
care, as provided in 42 CFR 409.30. This designation reflects an
administrative presumption that those beneficiaries who are correctly
assigned one of the designated case-mix classifiers on the initial
Medicare assessment are automatically classified as meeting the SNF
level of care definition up to and including the assessment reference
date (ARD) for that assessment.
A beneficiary who does not qualify for the presumption is not
automatically classified as either meeting or not meeting the level of
care definition, but instead receives an individual determination on
this point using the existing administrative criteria. This presumption
recognizes the strong likelihood that those beneficiaries who are
correctly assigned one of the designated case-mix classifiers during
the immediate post-hospital period would require a covered level of
care, which would be less likely for other beneficiaries.
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. The FY 2018 final rule (82 FR 36544) further specified that
we would henceforth disseminate the standard description of the
administrative presumption's designated groups via the SNF PPS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html (where such designations appear in the paragraph
entitled ``Case Mix Adjustment'') and would publish such designations
in rulemaking only to the extent that we actually intend to propose
changes in them. Under that approach, the set of case-mix classifiers
designated for this purpose under PDPM was finalized in the FY 2019 SNF
PPS final rule (83 FR 39253) and is posted on the SNF PPS website
(https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html), in the paragraph entitled ``Case Mix Adjustment.''
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 any services prompting the assignment of one of
the designated case-mix classifiers (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 the Act). Accordingly, the presumption would not apply,
for example, in those situations where the sole classifier that
triggers the presumption is itself assigned through 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 (ARD) of the initial Medicare assessment.
B. Consolidated Billing
Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by
section 4432(b) of the BBA 1997) require a SNF to submit consolidated
Medicare bills to its Medicare Administrative Contractor (MAC) 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). Effective with services furnished on or after
January 1, 2024, section 4121(a)(4) of the Consolidated Appropriations
Act, 2023 (CAA, 2023) (Pub. L. 117-328, enacted December 29, 2022)
added marriage and family therapists and mental health counselors to
the list of practitioners at section 1888(e)(2)(A)(ii) of the Act whose
services are excluded from the consolidated billing provision.
Section 103 of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (BBRA 1999) (Pub. L. 106-113, enacted November
29, 1999) amended section 1888(e)(2)(A)(iii) of the Act by further
excluding a number of individual high-cost, low probability services,
identified by 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 discuss this BBRA 1999 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 19232), the
amendments enacted in section 103 of the BBRA 1999 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 these four specified service categories. In the proposed
rule for FY 2001, we also noted that the BBRA 1999 Conference report
(H.R. Conf. Rep. No. 106-479 at 854 (1999)) 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 PPS. According to the conferees, section 103(a) of the BBRA 1999 is
an attempt to exclude from the PPS certain services and costly items
that are provided infrequently in SNFs. By contrast, the amendments
enacted in section 103 of the BBRA 1999 do not 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.
Effective with items and services furnished on or after October 1,
2021,
[[Page 23436]]
section 134 in Division CC of the CAA, 2021 established an additional
fifth category of excluded codes in section 1888(e)(2)(A)(iii)(VI) of
the Act, for certain blood clotting factors for the treatment of
patients with hemophilia and other bleeding disorders along with items
and services related to the furnishing of such factors under section
1842(o)(5)(C) of the Act. Like the provisions enacted in the BBRA 1999,
section 1888(e)(2)(A)(iii)(VI) of the Act gives the Secretary the
authority to designate additional items and services for exclusion
within the category of items and services related to blood clotting
factors, as described in that section.
A detailed discussion of the legislative history of the
consolidated billing provision is available on the SNF PPS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf.
As we further explained in the final rule for FY 2001 (65 FR
46790), and as is consistent with 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 1999: they must fall within one of the
five service categories specified in the BBRA 1999 and CAA, 2021; and
they also must meet the same standards of high cost and low probability
in the SNF setting, as discussed in the BBRA 1999 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).
In this proposed rule, we specifically solicit public comments
identifying HCPCS codes in any of these five service categories
(chemotherapy items, chemotherapy administration services, radioisotope
services, customized prosthetic devices, and blood clotting factors)
representing recent medical advances that might meet our criteria for
exclusion from SNF consolidated billing. We may consider excluding a
particular service if it meets our criteria for exclusion as specified
previously. We request that commenters 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.
We note that the original BBRA amendment and the CAA, 2021
identified a set of excluded items and services by means of specifying
individual HCPCS codes within the designated categories that were in
effect as of a particular date (in the case of the BBRA 1999, July 1,
1999, and in the case of the CAA, 2021, July 1, 2020), as subsequently
modified by the Secretary. In addition, as noted in this section of the
preamble, the statute (sections 1888(e)(2)(A)(iii)(II) through (VI) of
the Act) gives the Secretary authority to identify additional items and
services for exclusion within the five specified categories of items
and services described in the statute, which are also designated by
HCPCS code. Designating the excluded services in this manner makes it
possible for us to utilize program issuances as the vehicle for
accomplishing routine updates to the excluded codes to reflect any
minor revisions that might subsequently occur in the coding system
itself, such as the assignment of a different code number to a service
already designated as excluded, or the creation of a new code for a
type of service that falls within one of the established exclusion
categories and meets our criteria for exclusion.
Accordingly, if we identify through the current rulemaking cycle
any new services that meet the criteria for exclusion from SNF
consolidated billing, we will identify these additional excluded
services by means of the HCPCS codes that are in effect as of a
specific date (in this case, October 1, 2024). By making any new
exclusions in this manner, we can similarly accomplish routine future
updates of these additional codes through the issuance of program
instructions. The latest list of excluded codes can be found on the SNF
Consolidated Billing website at https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling.
C. 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, SNF-level
services furnished by non-CAH rural 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 proposed rule for the SNF PPS also apply to
all non-CAH swing-bed rural hospitals. 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. As discussed in the FY 2019 SNF PPS final
rule (83 FR 39235), revisions were made to the swing bed assessment to
support implementation of PDPM, effective October 1, 2019. A discussion
of the assessment schedule and the MDS effective beginning FY 2020
appears in the FY 2019 SNF PPS final rule (83 FR 39229 through 39237).
The latest changes in the MDS for swing-bed rural hospitals appear on
the SNF PPS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html.
V. Other SNF PPS Issues
A. Rebasing and Revising the SNF Market Basket
Section 1888(e)(5)(A) of the Act requires the Secretary to
establish a market basket that reflects the 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 that
encompasses the most commonly used cost categories for SNF routine
services, ancillary services, and capital-related expenses.
The SNF market basket is used to compute the market basket
percentage increase that is used to update the SNF Federal rates on an
annual basis, as required by section 1888(e)(4)(E)(ii)(IV) of the Act.
This market basket percentage increase is adjusted by a forecast error
adjustment, if applicable, and then further adjusted by the application
of a productivity adjustment as required by section 1888(e)(5)(B)(ii)
of the Act and described in section III.B.4. of this proposed rule. The
SNF market basket is also used to determine the labor-related share on
an annual basis.
The SNF market basket is a fixed-weight, Laspeyres-type price
index. A
[[Page 23437]]
Laspeyres price index measures the change in price, over time, of the
same mix of goods and services purchased in the base period. Any
changes in the quantity or mix of goods and services (that is,
intensity) purchased over time relative to a base period are not
measured.
The index itself is constructed in three steps. First, a base
period is selected (the proposed base period is 2022) and total base
period costs are estimated for a set of mutually exclusive and
exhaustive spending categories and the proportion of total costs that
each category represents is calculated. These proportions are called
cost weights. Second, each cost category is matched to an appropriate
price or wage variable, referred to as a price proxy. In nearly every
instance, these price proxies are derived from publicly available
statistical series that are published on a consistent schedule
(preferably at least on a quarterly basis). Finally, the cost weight
for each cost category is multiplied by the level of its respective
price proxy. The sum of these products (that is, the cost weights
multiplied by their price levels) for all cost categories yields the
composite index level of the market basket in a given period. Repeating
this step for other periods produces a series of market basket levels
over time. Dividing an index level for a given period by an index level
for an earlier period produces a rate of growth in the input price
index over that timeframe.
Since the inception of the SNF PPS, the market basket used to
update SNF PPS payments has been periodically rebased and revised. We
last rebased and revised the market basket applicable to the SNF PPS in
the FY 2022 SNF PPS final rule (86 FR 42444 through 42463) where we
adopted a 2018-based SNF market basket. References to the historical
market baskets used to update SNF PPS payments are listed in the FY
2022 SNF PPS final rule (86 FR 42445).
Effective for FY 2025 and subsequent fiscal years, we are proposing
to rebase and revise the market basket to reflect 2022 Medicare-
allowable total cost data (routine, ancillary, and capital-related)
from freestanding SNFs and to revise applicable cost categories and
price proxies used to determine the market basket. Medicare-allowable
costs are those costs that are eligible to be paid under the SNF PPS.
For example, the SNF market basket excludes home health agency (HHA)
costs as these costs would be paid under the HHA PPS, and therefore,
these costs are not SNF PPS Medicare-allowable costs. We propose to
maintain our policy of using data from freestanding SNFs, of which
about 91 percent of SNFs that submitted a Medicare cost report for 2022
are represented in our sample shown in Table 11. We believe using
freestanding Medicare cost report data, as opposed to the hospital-
based SNF Medicare cost report data, for the cost weight calculation is
most appropriate because of the complexity of hospital-based data and
the representativeness of the freestanding data. Because hospital-based
SNF expenses are embedded in the hospital cost report, any attempt to
incorporate data from hospital-based facilities requires more complex
calculations and assumptions regarding the ancillary costs related to
the hospital-based SNF unit. We believe the use of freestanding SNF
cost report data is technically appropriate for reflecting the cost
structures of SNFs serving Medicare beneficiaries.
We are proposing to use 2022 as the base year as we believe that
the 2022 Medicare cost reports represent the most recent, complete set
of Medicare cost report data available to develop cost weights for SNFs
at the time of rulemaking. We believe it is important to regularly
rebase and revise the SNF market basket to reflect more recent data.
Historically, the cost weights change minimally from year to year as
they represent percent of total costs rather than cost levels; however,
given the COVID-19 Public Health Emergency (PHE), we have been
monitoring the Medicare cost report data to see if a more frequent
rebasing schedule is necessary than our recent historical precedent of
about every 4 years. Accordingly, while it has been only three years
since the last SNF rebasing, we are proposing to incorporate data that
is more reflective of recent SNF expenses that have been impacted over
the COVID-19 PHE period. The 2022 Medicare cost reports are for cost
reporting periods beginning on and after October 1, 2021 and before
October 1, 2022. While these dates appear to reflect fiscal year data,
we note that a Medicare cost report that begins in this timeframe is
generally classified as a ``2022 cost report''. For example, we found
that of the available 2022 Medicare cost reports for SNFs,
approximately 7 percent had an October 1, 2021 begin date,
approximately 75 percent of the reports had a January 1, 2022 begin
date, and approximately 12 percent had a July 1, 2022 begin date. For
this reason, we are defining the base year of the market basket as
``2022-based'' instead of ``FY 2022-based''.
Specifically, we are proposing to develop cost category weights for
the proposed 2022-based SNF market basket in two stages. The major
types of costs underlying the proposed 2022-based SNF market basket are
derived from the 2022 Medicare cost report data (CMS Form 2540-10, OMB
NO. 0938-0463) for freestanding SNFs. Specifically, we use the Medicare
cost reports for seven specific costs: Wages and Salaries; Employee
Benefits; Contract Labor; Pharmaceuticals; Professional Liability
Insurance; Home Office/Related Organization Contract Labor; and
Capital-related. A residual ``All Other'' category is then estimated
and reflects all remaining costs that are not captured in the seven
types of costs identified above. The 2018-based SNF market basket
similarly used 2018 Medicare cost report data. Second, we are proposing
to divide the residual ``All Other'' cost category into more detailed
subcategories, using U.S. Department of Commerce Bureau of Economic
Analysis' (BEA) 2017 Benchmark Input-Output (I-O) ``The Use Table
(Supply-Use Framework)'' for the Nursing and Community Care Facilities
industry (NAICS 623A00) aged to 2022 using applicable price proxy
growth for each category of costs. Furthermore, we are proposing to
continue to use the same overall methodology as was used for the 2018-
based SNF market basket to develop the capital related cost weights of
the proposed 2022-based SNF market basket.
1. Development of Cost Categories and Weights
a. Use of Medicare Cost Report Data To Develop Major Cost Weights
In order to create a market basket that is representative of
freestanding SNF providers serving Medicare patients and to help ensure
accurate major cost weights (which is the percent of total Medicare-
allowable costs, as defined below), we propose to apply edits to remove
reporting errors and outliers. Specifically, the SNF Medicare cost
reports used to calculate the market basket cost weights exclude any
providers that reported costs less than or equal to zero for the
following categories: total facility costs (Worksheet B, part 1, column
18, line 100); total operating costs (Worksheet B, part 1, column 18,
line 100 less Worksheet B, part 2, column 18, line 100); Medicare
general inpatient routine service costs (Worksheet D, part 1, column 1,
line 1); and Medicare PPS payments (Worksheet E, part 3, column 1, line
1). We also limited our sample to providers that had a Medicare cost
report reporting period that was between 10 and 14 months. The final
sample used included roughly 13,100
[[Page 23438]]
Medicare cost reports (about 90 percent of the universe of SNF Medicare
cost reports for 2022). The sample of providers is representative of
the national universe of providers by region (each region is
represented within plus or minus 1 percentage point of universe
distribution), by ownership-type (proprietary, nonprofit, and
government) (within 0.8 percentage point of universe), and by urban/
rural status (within 0.1 percentage point of universe). Of the
providers that were excluded from our final sample, 86 percent were due
to having a cost reporting period less than 10 months or greater than
14 months, 10 percent were due to total facility costs or total
operating costs not being greater than zero, and 4 percent were due to
Medicare general inpatient routine service costs or Medicare PPS
payments not being greater than zero.
Additionally, for all of the major cost weights, except Home
Office/Related Organization Contract Labor costs, the data are trimmed
to remove outliers (a standard statistical process) by: (1) requiring
that major expenses (such as Wages and Salaries costs) and total
Medicare-allowable costs are greater than zero; and (2) excluding the
top and bottom 5 percent of the major cost weight (for example, Wages
and Salaries costs as a percent of total Medicare-allowable costs). We
note that missing values are assumed to be zero, consistent with the
methodology for how missing values are treated in the 2018-based market
basket methodology.
For the Home Office/Related Organization Contract Labor cost
weight, we propose to first exclude providers whose Home Office/Related
Organization Contract Labor costs are greater than Medicare-allowable
total costs and then apply a trim that excludes those reporters with a
Home Office/Related Organization Contract Labor cost weight above the
99th percentile. This allows providers with no Home Office/Related
Organization Contract Labor costs to be included in the Home Office/
Related Organization Contract Labor cost weight calculation. If we were
to trim the top and bottom Home Office/Related Organization Contract
Labor cost weight, we would exclude providers with a cost weight of
zero (84 percent of the sample) and the Medicare cost report data
(Worksheet S-2 line 45) indicate that not all SNF providers have a home
office. Providers without a home office would report administrative
costs that might typically be associated with a home office in the
Wages and Salaries and Employee Benefits cost weights, or in the
residual ``All-Other'' cost weight if they purchased these types of
services from external contractors. We believe the trimming methodology
that excludes those who report Home Office/Related Organization
Contract Labor costs above the 99th percentile is appropriate as it
removes extreme outliers while also allowing providers with zero Home
Office/Related Organization Contract Labor costs, which is the majority
of providers, to be included in the Home Office/Related Organization
Contract Labor cost weight calculation.
The trimming process is done individually for each cost category so
that providers excluded from one cost weight calculation are not
automatically excluded from another cost weight calculation. We note
that these trimming methods are the same types of edits performed for
the 2018-based SNF market basket, as well as other PPS market baskets
(including but not limited to the IPPS market basket and home health
market basket). We believe this trimming process improves the accuracy
of the data used to compute the major cost weights by removing possible
data misreporting.
The final weights of the proposed 2022-based SNF market basket are
based on weighted means. For example, the aggregate Wages and Salaries
cost weight, after trimming, is equal to the sum of total Medicare-
allowable wages and salaries (as defined in the ``Wages and Salaries''
section that follows) of all providers divided by the sum of total
Medicare-allowable costs (as defined in the next paragraph) for all
providers in the sample (as defined above in this section). This
methodology is consistent with the methodology used to calculate the
2018-based SNF market basket cost weights and other PPS market basket
cost weights. We note that for each of the cost weights, we evaluated
the distribution of providers and costs by region, by ownership-type,
and by urban/rural status. For all of the cost weights, with the
exception of the PLI (which is discussed in more detail later), the
trimmed sample was nationally representative.
For all of the cost weights, we use Medicare-allowable total costs
as the denominator (for example, Wages and Salaries cost weight = Wages
and Salaries costs divided by Medicare-allowable total costs).
Medicare-allowable total costs were equal to total costs (after
overhead allocation) from Worksheet B part I, column 18, for lines 30,
40 through 49, 51, 52, and 71 plus estimated Medicaid drug costs, as
defined below. We included estimated Medicaid drug costs in the
pharmacy cost weight, as well as the denominator for total Medicare-
allowable costs. This is the same methodology used for the 2018-based
SNF market basket. The inclusion of Medicaid drug costs was finalized
in the FY 2008 SNF PPS final rule (72 FR 43425 through 43430), and for
the same reasons set forth in that final rule, we are proposing to
continue to use this methodology in the proposed 2022-based SNF market
basket.
We describe the detailed methodology for obtaining costs for each
of the eight cost categories determined from the Medicare Cost Report
below. The methodology used in the 2018-based SNF market basket can be
found in the FY 2022 SNF PPS final rule (86 FR 42446 through 42452).
(1) Wages and Salaries
To derive Wages and Salaries costs for the Medicare-allowable cost
centers, we are proposing first to calculate total facility wages and
salaries costs as reported on Worksheet S-3, part II, column 3, line 1.
We then propose to remove the wages and salaries attributable to non-
Medicare-allowable cost centers (that is, excluded areas), as well as a
portion of overhead wages and salaries attributable to these excluded
areas. Excluded area wages and salaries are equal to wages and salaries
as reported on Worksheet S-3, part II, column 3, lines 3, 4, and 7
through 11 plus nursing facility and non-reimbursable salaries from
Worksheet A, column 1, lines 31, 32, 50, and 60 through 63.
Overhead wages and salaries are attributable to the entire SNF
facility; therefore, we are proposing to include only the proportion
attributable to the Medicare-allowable cost centers. We are proposing
to estimate the proportion of overhead wages and salaries attributable
to the non-Medicare-allowable costs centers in two steps. First, we
propose to estimate the ratio of excluded area wages and salaries (as
defined above) to non-overhead total facility wages and salaries (total
facility wages and salaries (Worksheet S-3, part II, column 3, line 1)
less total overhead wages and salaries (Worksheet S-3, Part III, column
3, line 14)). Next, we propose to multiply total overhead wages and
salaries by the ratio computed in step 1. We excluded providers whose
excluded areas wages and salaries were greater than total facility
wages and salaries and/or their excluded area overhead wages and
salaries were greater than total facility wages and salaries (about 50
providers). This is the same methodology used to derive Wages and
Salaries costs in the 2018-based SNF market basket.
[[Page 23439]]
(2) Employee Benefits
Medicare-allowable employee benefits are equal to total facility
benefits as reported on Worksheet S-3, part II, column 3, lines 17
through 19 minus non-Medicare-allowable (that is, excluded area)
employee benefits and minus a portion of overhead benefits attributable
to these excluded areas. Excluded area employee benefits are derived by
multiplying total excluded area wages and salaries (as defined above in
the `Wages and Salaries' section) times the ratio of total facility
benefits to total facility wages and salaries. This ratio of benefits
to wages and salaries is defined as total facility benefit costs to
total facility wages and salary costs (as reported on Worksheet S-3,
part II, column 3, line 1). Likewise, the portion of overhead benefits
attributable to the excluded areas is derived by multiplying overhead
wages and salaries attributable to the excluded areas (as defined in
the `Wages and Salaries' section) times the ratio of total facility
benefit costs to total facility wages and salary costs (as defined
above). Similar to the Wages and Salaries costs, we excluded providers
whose excluded areas benefits were greater than total facility benefits
and/or their excluded area overhead benefits were greater than total
facility benefits (zero providers were excluded because of this edit).
This is the same methodology used to derive Employee Benefits costs in
the 2018-based SNF market basket.
(3) Contract Labor
We are proposing to derive Medicare-allowable contract labor costs
from Worksheet S-3, part II, column 3, line 14, which reflects costs
for contracted direct patient care services (that is, nursing,
therapeutic, rehabilitative, or diagnostic services furnished under
contract rather than by employees and management contract services).
This is the same methodology used to derive the Contract Labor costs in
the 2018-based SNF market basket.
(4) Pharmaceuticals
We are proposing to calculate pharmaceuticals costs using the non-
salary costs from the Pharmacy cost center (Worksheet B, part I, column
0, line 11 less Worksheet A, column 1, line 11) and the Drugs Charged
to Patients' cost center (Worksheet B, part I, column 0, line 49 less
Worksheet A, column 1, line 49). Since these drug costs were
attributable to the entire SNF and not limited to Medicare-allowable
services, we propose to adjust the drug costs by the ratio of Medicare-
allowable pharmacy total costs (Worksheet B, part I, column 11, for
lines 30, 40 through 49, 51, 52, and 71) to total pharmacy costs from
Worksheet B, part I, column 11, line 11. Worksheet B, part I allocates
the general service cost centers, which are often referred to as
``overhead costs'' (in which pharmacy costs are included) to the
Medicare-allowable and non-Medicare-allowable cost centers. This
adjustment was made for those providers who reported Pharmacy cost
center expenses. Otherwise, we assumed the non-salary Drugs Charged to
Patients costs were Medicare-allowable. Since drug costs for Medicare
patients are included in the SNF PPS per diem rate, a provider with
Medicare days should have also reported costs in the Drugs Charged to
Patient cost center. We found a small number of providers (roughly 90)
did not report Drugs Charged to Patients' costs despite reporting
Medicare days (an average of about 2,000 Medicare days per provider),
and therefore, these providers were excluded from the Pharmaceuticals
cost weight calculations. This is the same methodology used for the
2018-based SNF market basket.
Second, as was done for the 2018-based SNF market basket, we
propose to continue to adjust the drug expenses reported on the
Medicare cost report to include an estimate of total Medicaid drug
costs, which are not represented in the Medicare-allowable drug cost
weight. As stated previously in this section, the proposed 2022-based
SNF market basket reflects total Medicare-allowable costs (that is,
total costs for all payers for those services reimbursable under the
SNF PPS). For the FY 2006-based SNF market basket (72 FR 43426),
commenters noted that the total pharmaceutical costs reported on the
Medicare cost report did not include pharmaceutical costs for dual-
eligible Medicaid patients as these were directly reimbursed by
Medicaid. Since all of the other cost category weights reflect expenses
associated with treating Medicaid patients (including the compensation
costs for dispensing these drugs), we made an adjustment to include
these Medicaid drug expenses so the market basket cost weights would be
calculated consistently.
Similar to the 2018-based SNF market basket, we propose to estimate
Medicaid drug costs based on data representing dual-eligible Medicaid
beneficiaries. Medicaid drug costs are estimated by multiplying
Medicaid dual-eligible drug costs per day times the number of Medicaid
days as reported in the Medicare-allowable skilled nursing cost center
(Worksheet S-3, part I, column 5, line 1) in the SNF Medicare cost
report. Medicaid dual-eligible drug costs per day (where the day
represents an unduplicated drug supply day) were estimated using 2022
Part D claims for those dual-eligible beneficiaries who had a Medicare
SNF stay during the year. The total drug costs per unduplicated day for
2022 of $27.43 represented all drug costs (including the drug
ingredient cost, the dispensing fee, vaccine administration fee and
sales tax) incurred during the 2022 calendar year (CY) for those dual-
eligible beneficiaries who had a SNF Medicare stay during CY 2022.
Therefore, they include drug costs incurred during a Medicaid SNF stay
occurring in CY 2022. By comparison, the 2018-based SNF market basket
also relied on data from the Part D claims, which yielded a dual-
eligible Medicaid drug cost per day of $24.48 for 2018.
We continue to believe that Medicaid dual-eligible beneficiaries
are a reasonable proxy for the estimated drug costs per day incurred by
Medicaid patients staying in a skilled nursing unit under a Medicaid
stay. The skilled nursing unit is the Medicare-allowable unit in a SNF,
which encompasses more skilled nursing and rehabilitative care compared
to a nursing facility or long-term care unit. We believe that Medicaid
patients receiving this skilled nursing care would on average have
similar drug costs per day to dual-eligible Medicare beneficiaries who
have received Medicare skilled nursing care in the skilled nursing care
unit during the year. We note that our previous analysis of the Part D
claims data showed that Medicare beneficiaries with a SNF stay during
the year have higher drug costs than Medicare patients without a SNF
stay during the year. Also, in 2022, dual-eligible beneficiaries with a
SNF stay during the year had drug costs per day of $27.43, which were
approximately two times higher than the drug costs per day of $15.83
for nondual-eligible beneficiaries with a SNF Part A stay during the
year.
The Pharmaceuticals cost weight using only 2022 Medicare cost
report data (without the inclusion of the Medicaid dual-eligible drug
costs) is 2.0 percent, compared to the proposed Pharmaceuticals cost
weight (including the adjustment for Medicaid dual-eligible drug costs)
of 6.4 percent. The 2018-based SNF market basket had a Pharmaceuticals
cost weight using only 2018 Medicare cost report data without the
inclusion of the Medicaid dual-eligible drug costs of 2.6 percent and a
total Pharmaceuticals cost weight of 7.5 percent. Therefore, the 1.1
percentage point decrease in the Pharmaceuticals
[[Page 23440]]
cost weight between 2018 and 2022 is a result of a 0.5-percentage point
decrease in the Medicaid dual-eligible drug cost weight (reflecting the
12 percent increase in the Medicaid dual-eligible drug costs per day,
and a 14 percent decrease in Medicaid inpatient days between 2018 and
2022) and a 0.6-percentage point decrease in the Medicare cost report
drug cost weight. The decrease in the Medicare cost report drug cost
weight was consistent, in aggregate, across urban and rural status
SNFs, as well as across for-profit, government, and nonprofit ownership
type SNFs.
(5) Professional Liability Insurance
We are proposing to calculate the professional liability insurance
(PLI) costs from Worksheet S-2 of the Medicare cost reports as the sum
of premiums; paid losses; and self-insurance (Worksheet S-2, Part I,
columns 1 through 3, line 41). This was the same methodology used to
derive the Professional Liability costs for the 2018-based SNF market
basket.
About 60 percent of SNFs (about 7,700) reported professional
liability costs. After trimming, about 6,900 (reflecting about 730,000
Skilled Nursing unit beds) were included in the calculation of the PLI
cost weight for the proposed 2022-based SNF market basket. These
providers treated roughly 750,000 Medicare beneficiaries and had a
Medicare length of stay (LOS) of 58 days, a skilled nursing unit
occupancy rate of 72 percent, and an average skilled nursing unit bed
size of 106 beds, which are all consistent with the national averages.
We also verified that this sample of providers are representative of
the national distribution of providers by ownership-type, urban/rural
status, and region.
We believe the Medicare cost report data continues to be the most
appropriate data source to calculate the PLI cost weight for the
proposed 2022-based SNF market basket as it is representative of SNFs
serving Medicare beneficiaries and reflects PLI costs (premiums, paid
losses, and self-insurance) incurred during the provider's cost
reporting year. A fuller discussion of the Medicare cost report data on
PLI costs compared to other sources is available in the FY 2022 SNF PPS
final rule (86 FR 42448).
(6) Capital-Related
We are proposing to derive the Medicare-allowable capital-related
costs from Worksheet B, part II, column 18 for lines 30, 40 through 49,
51, 52, and 71. This is the same methodology to derive capital-related
costs used in the 2018-based SNF market basket.
(7) Home Office/Related Organization Contract Labor Costs
We are proposing to calculate Medicare-allowable Home Office/
Related Organization Contract Labor costs to be equal to data reported
on Worksheet S-3, part II, column 3, line 16. About 7,100 providers
(about 54 percent) in 2022 reported having a home office (as reported
on Worksheet S-2, part I, line 45) about the same share of providers as
those in the 2018-based SNF market basket. As discussed in section
V.A.1. of this proposed rule, providers without a home office can incur
these expenses directly by having their own staff, for which the costs
would be included in the Wages and Salaries and Employee Benefits cost
weights. Alternatively, providers without a home office could also
purchase related services from external contractors for which these
expenses would be captured in the residual ``All-Other'' cost weight.
For this reason, unlike the other major cost weights described
previously, we did not exclude providers that did not report Home
Office/Related Organization Contract Labor costs. This is the same
methodology that was used in the 2018-based SNF market basket.
(8) All Other (Residual)
The ``All Other'' cost weight is a residual, calculated by
subtracting the major cost weights (Wages and Salaries, Employee
Benefits, Contract Labor, Pharmaceuticals, Professional Liability
Insurance, Capital-Related, and Home Office/Related Organization
Contract Labor) from 100.
Table 11 shows the major cost categories and their respective cost
weights as derived from the 2022 Medicare cost reports.
Table 11--Major Cost Categories Derived From the SNF Medicare Cost
Reports *
------------------------------------------------------------------------
Proposed 2022-
Major cost categories based 2018-Based
------------------------------------------------------------------------
Wages and Salaries...................... 43.3 44.1
Employee Benefits....................... 7.8 8.6
Contract Labor.......................... 10.1 7.5
Pharmaceuticals......................... 6.4 7.5
Professional Liability Insurance........ 1.3 1.1
Capital-Related......................... 8.3 8.2
Home Office/Related Organization 0.6 0.7
Contract Labor.........................
All other (residual).................... 22.2 22.3
------------------------------------------------------------------------
* Total may not sum to 100 due to rounding.
As we did for the 2018-based SNF market basket (86 FR 42449), we
are proposing to allocate contract labor costs to the Wages and
Salaries and Employee Benefits cost weights based on their relative
proportions under the assumption that contract labor costs are
comprised of both wages and salaries and employee benefits. The
contract labor allocation proportion for wages and salaries is equal to
the Wages and Salaries cost weight as a percent of the sum of the Wages
and Salaries cost weight and the Employee Benefits cost weight. Using
the 2022 Medicare cost report data, this percentage is 85 percent (1
percentage point higher than the percentage in the 2018-based SNF
market basket); therefore, we are proposing to allocate approximately
85 percent of the Contract Labor cost weight to the Wages and Salaries
cost weight and 15 percent to the Employee Benefits cost weight.
Table 12 shows the Wages and Salaries and Employee Benefits cost
weights after contract labor allocation for the proposed 2022-based SNF
market basket and the 2018-based SNF market basket.
[[Page 23441]]
Table 12--Wages and Salaries and Employee Benefits Cost Weights After
Contract Labor Allocation
------------------------------------------------------------------------
Proposed 2022-
Major cost categories based market 2018-Based
basket market basket
------------------------------------------------------------------------
Compensation............................ 61.2 60.2
Wages and Salaries.................. 51.8 50.4
Employee Benefits................... 9.3 9.9
------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For
presentational purposes, we are displaying one decimal; therefore, the
detailed compensation cost weights may not add to the total
compensation cost weight due to rounding.
Compared to the 2018-based SNF market basket, the Wages and
Salaries cost weight and the Employee Benefits cost weight as
calculated directly from the Medicare cost reports each decreased by
0.8 percentage point. The Contract Labor cost weight increased 2.6
percentage points and so in aggregate, the Compensation cost weight
increased 1.0 percentage point from 60.2 percent to 61.2 percent.
b. Derivation of the Detailed Operating Cost Weights
To further divide the ``All Other'' residual cost weight estimated
from the 2022 Medicare cost report data into more detailed cost
categories, we are proposing to use the 2017 Benchmark I-O ``The Use
Table (Supply-Use Framework)'' for Nursing and Community Care
Facilities industry (NAICS 623A00), published by the Census Bureau's,
Bureau of Economic Analysis (BEA). These data are publicly available at
https://www.bea.gov/industry/input-output-accounts-data. The BEA
Benchmark I-O data are generally scheduled for publication every 5
years with 2017 being the most recent year for which data are
available. The 2017 Benchmark I-O data are derived from the 2017
Economic Census and are the building blocks for BEA's economic
accounts; therefore, they represent the most comprehensive and complete
set of data on the economic processes or mechanisms by which output is
produced and distributed.\1\ BEA also produces Annual I-O estimates.
However, while based on a similar methodology, these estimates are less
comprehensive and provide less detail than benchmark data.
Additionally, the annual I-O data are subject to revision once
benchmark data become available. For these reasons, we propose to
inflate the 2017 Benchmark I-O data aged forward to 2022 by applying
the annual price changes from the respective price proxies to the
appropriate market basket cost categories that are obtained from the
2017 Benchmark I-O data. Next, the relative shares of the cost shares
that each cost category represents to the total residual I-O costs are
calculated. These resulting 2022 cost shares of the I-O data are
applied to the ``All Other'' residual cost weight to obtain detailed
cost weights for the residual costs for the proposed 2022-based SNF
market basket. For example, the cost for Food: Direct Purchases
represents 12.8 percent of the sum of the ``All Other'' 2017 Benchmark
I-O Expenditures inflated to 2022. Therefore, the Food: Direct
Purchases cost weight is 2.8 percent of the proposed 2022-based SNF
market basket (12.8 percent x 22.2 percent = 2.8 percent). For the
2018-based SNF market basket (86 FR 42449), we used a similar
methodology utilizing the 2012 Benchmark I-O data (aged to 2018).
---------------------------------------------------------------------------
\1\ https://www.bea.gov/resources/methodologies/concepts-methods-io-accounts.
---------------------------------------------------------------------------
Using this methodology, we are proposing to derive 19 detailed SNF
market basket cost category weights from the proposed 2022-based SNF
market basket ``All Other'' residual cost weight (22.2 percent). These
categories are: (1) Fuel: Oil and Gas; (2) Electricity and Other Non-
Fuel Utilities; (3) Food: Direct Purchases; (4) Food: Contract
Services; (5) Chemicals; (6) Medical Instruments and Supplies; (7)
Rubber and Plastics; (8) Paper and Printing Products; (9) Apparel; (10)
Machinery and Equipment; (11) Miscellaneous Products; (12) Professional
Fees: Labor-Related; (13) Administrative and Facilities Support
Services; (14) Installation, Maintenance, and Repair Services; (15) All
Other: Labor-Related Services; (16) Professional Fees: Nonlabor-
Related; (17) Financial Services; (18) Telephone Services; and (19) All
Other: Nonlabor-Related Services. These are the same detailed cost
categories as those that were used in the 2018-based SNF market basket.
We note that the machinery and equipment expenses are for equipment
that is paid for in a given year and not depreciated over the asset's
useful life. Depreciation expenses for movable equipment are accounted
for in the capital component of the proposed 2022-based SNF market
basket (described in section V.A.1.c. of this proposed rule).
c. Derivation of the Detailed Capital Cost Weights
Similar to the 2018-based SNF market basket, we further divided the
Capital-related cost weight into: Depreciation, Interest, Lease and
Other Capital-related cost weights.
We calculated the depreciation cost weight (that is, depreciation
costs excluding leasing costs) using depreciation costs from Worksheet
S-2, column 1, lines 20 and 21. Since the depreciation costs reflect
the entire SNF facility (Medicare and non-Medicare-allowable units), we
used total facility capital costs (Worksheet B, Part I, column 18, line
100) as the denominator. This methodology assumes that the depreciation
of an asset is the same regardless of whether the asset was used for
Medicare or non-Medicare patients. This methodology yielded
depreciation costs as a percent of capital costs of 22.6 percent for
2022. We then apply this percentage to the proposed 2022-based SNF
market basket Medicare-allowable Capital-related cost weight of 8.3
percent, yielding a proposed Medicare-allowable depreciation cost
weight (excluding leasing expenses, which is described in more detail
below) of 1.9 percent for 2022. To further disaggregate the Medicare-
allowable depreciation cost weight into fixed and movable depreciation,
we are proposing to use the 2022 SNF Medicare cost report data for end-
of-the-year capital asset balances as reported on Worksheet A-7. The
2022 SNF Medicare cost report data showed a fixed/movable split of 86/
14. The 2018-based SNF market basket, which utilized the same data from
the 2018 Medicare cost reports, also had a fixed/movable split of 86/
14.
We derived the interest expense share of capital-related expenses
from 2022 SNF Medicare cost report data, specifically from Worksheet A,
column 2, line 81. Similar to the depreciation cost weight, we
calculated the interest cost weight using total facility capital costs.
This methodology yielded interest costs as a percent of capital costs
of 17.7 percent for 2022. We then apply this percentage to the proposed
2022-based
[[Page 23442]]
SNF market basket Medicare-allowable Capital-related cost weight of 8.3
percent, yielding a Medicare-allowable interest cost weight (excluding
leasing expenses) of 1.5 percent. As done with the last rebasing (86 FR
42450), we are proposing to determine the split of interest expense
between for-profit and not-for-profit facilities based on the
distribution of long-term debt outstanding by type of SNF (for-profit
or not-for-profit/government) from the 2022 SNF Medicare cost report
data. We estimated the split between for-profit and not-for-profit
interest expense to be 30/70 percent compared to the 2018-based SNF
market basket with 25/75 percent.
Because the detailed data were not available in the Medicare cost
reports, we used the most recent 2021 Census Bureau Service Annual
Survey (SAS) data to derive the capital-related expenses attributable
to leasing and other capital-related expenses. The 2018-based SNF
market basket used the 2017 SAS data.
Based on the 2021 SAS data, we determined that leasing expenses are
65 percent of total leasing and capital-related expenses costs. In the
2018-based SNF market basket, leasing costs represent 62 percent of
total leasing and capital-related expenses costs. We then apply this
percentage to the proposed 2022-based SNF market basket residual
Medicare-allowable capital costs of 4.9 percent derived from
subtracting the Medicare-allowable depreciation cost weight and
Medicare-allowable interest cost weight from the proposed 2022-based
SNF market basket of total Medicare-allowable capital cost weight (8.3
percent-1.9 percent-1.5 percent = 4.9 percent). This produces the
proposed 2022-based SNF Medicare-allowable leasing cost weight of 3.2
percent and all-other capital-related cost weight of 1.7 percent.
Lease expenses are not broken out as a separate cost category in
the SNF market basket, but are distributed among the cost categories of
depreciation, interest, and other capital-related expenses, reflecting
the assumption that the underlying cost structure and price movement of
leasing expenses is similar to capital costs in general. As was done
with past SNF market baskets and other PPS market baskets, we assumed
10 percent of lease expenses are overhead and assigned them to the
other capital-related expenses cost category. This is based on the
assumption that leasing expenses include not only depreciation,
interest, and other capital-related costs but also additional costs
paid to the lessor. We distributed the remaining lease expenses to the
three cost categories based on the proportion of depreciation,
interest, and other capital-related expenses to total capital costs,
excluding lease expenses.
Table 13 shows the capital-related expense distribution (including
expenses from leases) in the proposed 2022-based SNF market basket and
the 2018-based SNF market basket.
Table 13--Comparison of the Capital-Related Expense Distribution of the
Proposed 2022-Based SNF Market Basket and the 2018-Based SNF Market
Basket
------------------------------------------------------------------------
Proposed 2022-
Cost category based SNF market 2018-Based SNF
basket market basket
------------------------------------------------------------------------
Capital-related Expenses........ 8.3 8.2
Total Depreciation.............. 3.0 3.0
Total Interest.................. 2.3 2.7
Other Capital-related Expenses.. 3.0 2.6
------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For
presentational purposes, we are displaying one decimal; therefore, the
detailed capital cost weights may not add to the total capital-related
expenses cost weight due to rounding.
Table 14 presents the proposed 2022-based SNF market basket and the
2018-based SNF market basket cost categories and cost weights.
Table 14--Proposed 2022-Based SNF Market Basket and 2018-Based SNF
Market Basket Cost Categories and Cost Weights
------------------------------------------------------------------------
Proposed 2022-
Cost category based SNF market 2018-Based SNF
basket market basket
------------------------------------------------------------------------
Total........................... 100.0 100.0
Compensation.................... 61.2 60.2
Wages and Salaries \1\...... 51.8 50.4
Employee Benefits \1\....... 9.3 9.9
Utilities....................... 2.7 1.5
Electricity and Other Non- 1.8 1.0
Fuel Utilities.............
Fuel: Oil and Gas....... 0.8 0.4
Professional Liability Insurance 1.3 1.1
All Other....................... 26.5 29.0
Other Products.............. 16.1 17.6
Pharmaceuticals......... 6.4 7.5
Food: Direct Purchases.. 2.9 2.5
Food: Contract Services. 3.4 4.3
Chemicals............... 0.2 0.2
Medical Instruments and 0.4 0.6
Supplies...............
Rubber and Plastics..... 1.0 0.7
Paper and Printing 0.5 0.5
Products...............
Apparel................. 0.4 0.5
Machinery and Equipment. 0.7 0.5
[[Page 23443]]
Miscellaneous Products.. 0.2 0.3
All Other Services.............. 10.5 11.5
Labor-Related Services...... 6.5 6.4
Professional Fees: Labor- 3.6 3.5
Related................
Installation, 0.4 0.6
Maintenance, and Repair
Services...............
Administrative and 0.5 0.4
Facilities Support.....
All Other: Labor-Related 2.0 1.9
Services...............
Non Labor-Related Services.. 4.0 5.1
Professional Fees: 1.8 2.0
Nonlabor-Related.......
Financial Services...... 0.5 1.3
Telephone Services...... 0.4 0.3
All Other: Nonlabor- 1.3 1.5
Related Services.......
Capital-Related Expenses........ 8.3 8.2
Total Depreciation.......... 3.0 3.0
Building and Fixed 2.5 2.5
Equipment..............
Movable Equipment....... 0.4 0.4
Total Interest.............. 2.3 2.7
For-Profit SNFs......... 0.7 0.7
Government and Nonprofit 1.6 2.0
SNFs...................
Other Capital-Related 3.0 2.6
Expenses...................
------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For
presentational purposes, we are displaying one decimal, and therefore,
the detailed cost weights may not add to the aggregate cost weights or
to 100.0 due to rounding.
\1\ Contract labor is distributed to wages and salaries and employee
benefits based on the share of total compensation that each category
represents.
2. Price Proxies Used To Measure Operating Cost Category Growth
After developing the 27 cost weights for the proposed 2022-based
SNF market basket, we selected the most appropriate wage and price
proxies currently available to represent the rate of change for each
cost category. With four exceptions (three for the capital-related
expenses cost categories and one for PLI), we base the wage and price
proxies on Bureau of Labor Statistics (BLS) data, and group them into
one of the following BLS categories:
Employment Cost Indexes. Employment Cost Indexes (ECIs)
measure the rate of change in employment wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE)
as price proxies for input price indexes because they are not affected
by shifts in occupation or industry mix, and because they measure pure
price change and are available by both occupational group and by
industry. The industry ECIs are based on the NAICS and the occupational
ECIs are based on the Standard Occupational Classification System
(SOC).
Producer Price Indexes. Producer Price Indexes (PPIs)
measure the average change over time in the selling prices received by
domestic producers for their output. The prices included in the PPI are
from the first commercial transaction for many products and some
services (https://www.bls.gov/ppi/).
Consumer Price Indexes. Consumer Price Indexes (CPIs)
measure the average change over time in the prices paid by urban
consumers for a market basket of consumer goods and services (https://www.bls.gov/cpi/). CPIs are only used when the purchases are similar to
those of retail consumers rather than purchases at the producer level,
or if no appropriate PPIs are available.
We evaluate the price proxies using the criteria of reliability,
timeliness, availability, and relevance:
Reliability. Reliability indicates that the index is based
on valid statistical methods and has low sampling variability. Widely
accepted statistical methods ensure that the data were collected and
aggregated in a way that can be replicated. Low sampling variability is
desirable because it indicates that the sample reflects the typical
members of the population. (Sampling variability is variation that
occurs by chance because only a sample was surveyed rather than the
entire population.)
Timeliness. Timeliness implies that the proxy is published
regularly, preferably at least once a quarter. The market baskets are
updated quarterly, and therefore, it is important for the underlying
price proxies to be up-to-date, reflecting the most recent data
available. We believe that using proxies that are published regularly
(at least quarterly, whenever possible) helps to ensure that we are
using the most recent data available to update the market basket. We
strive to use publications that are disseminated frequently, because we
believe that this is an optimal way to stay abreast of the most current
data available.
Availability. Availability means that the proxy is
publicly available. We prefer that our proxies are publicly available
because this will help ensure that our market basket updates are as
transparent to the public as possible. In addition, this enables the
public to be able to obtain the price proxy data on a regular basis.
Relevance. Relevance means that the proxy is applicable
and representative of the cost category weight to which it is applied.
We believe that the CPIs, PPIs, and ECIs that we have selected meet
these criteria. Therefore, we believe that they continue to be the best
measure of price changes for the cost categories to which they would be
applied.
Table 19 lists all price proxies for the proposed 2022-based SNF
market basket. Below is a detailed explanation of the price proxies we
are proposing to use for each operating cost category.
a. Wages and Salaries
We are proposing to use the ECI for Wages and Salaries for Private
Industry Workers in Nursing Care Facilities
[[Page 23444]]
(NAICS 6231; BLS series code CIU2026231000000I) to measure price growth
of this category. NAICS 623 includes facilities that provide a mix of
health and social services, with many of the health services requiring
some level of nursing services. Within NAICS 623 is NAICS 6231, which
includes nursing care facilities primarily engaged in providing
inpatient nursing and rehabilitative services. These facilities, which
are most comparable to Medicare-certified SNFs, provide skilled nursing
and continuous personal care services for an extended period of time,
and, therefore, have a permanent core staff of registered or licensed
practical nurses. This is the same index used in the 2018-based SNF
market basket.
b. Employee Benefits
We are proposing to use the ECI for Benefits for Nursing Care
Facilities (NAICS 6231) to measure price growth of this category. The
ECI for Benefits for Nursing Care Facilities is calculated using BLS's
total compensation (BLS series ID CIU2016231000000I) for nursing care
facilities series and the relative importance of wages and salaries
within total compensation. We believe this constructed ECI series is
technically appropriate for the reason stated above in the Wages and
Salaries price proxy section. This is the same index used in the 2018-
based SNF market basket.
c. Electricity and Other Non-Fuel Utilities
We are proposing to use the PPI Commodity for Commercial Electric
Power (BLS series code WPU0542) to measure the price growth of this
cost category as Electricity costs account for 93 percent of these
expenses. This is the same index used for the Electricity cost category
in the 2018-based SNF market basket.
d. Fuel: Oil and Gas
We are proposing to use a blended proxy composed of the PPI
Industry for Petroleum Refineries (NAICS 324110) (BLS series code
PCU32411-32411), the PPI Commodity for Natural Gas (NAICS 221200)(BLS
series code WPU0531), and the PPI for Other Petroleum and Coal Products
manufacturing (NAICS 324190)(BLS series code PCU32419-32419).
Our analysis of 2017 Benchmark I-O data for Nursing and Community
Care Facilities found that these three NAICS industries account for
approximately 93 percent of SNF Fuel: Oil and Gas expenses. The
remaining 7 percent of SNF Fuel: Oil and Gas expenses are for two other
incidental NAICS industries including Coal Mining and Petrochemical
Manufacturing. We are proposing to create a blended index based on the
three NAICS Fuel: Oil and Gas expenses listed above that account for 93
percent of SNF Fuel: Oil and Gas expenses. We propose to create this
blend based on each NAICS' expenses as a share of their sum. These
expenses as a share of their sum are listed in Table 15.
The 2018-based SNF market basket used a blended Fuel: Oil and Gas
proxy that was based on 2012 Benchmark I-O data. We believe our
proposed Fuel: Oil and Gas blended index for the proposed 2022-based
SNF market basket is technically appropriate as it reflects more recent
data on SNFs purchasing patterns. Table 16 provides the weights for the
2022- and 2018-based blended Fuel: Oil and Gas index.
Table 15--Fuel: Oil and Gas Blended Index Weights
----------------------------------------------------------------------------------------------------------------
Proposed 2022-
NAICS Price proxy based index 2018-Based
(%) index (%)
----------------------------------------------------------------------------------------------------------------
221200..................................... PPI Commodity for Natural Gas...... 7 7
324110..................................... PPI Industry for Petroleum 72 61
Refineries.
324190..................................... PPI for Other Petroleum and Coal 21 32
Products manufacturing.
-------------------------------
Total.................................. ................................... 100 100
----------------------------------------------------------------------------------------------------------------
e. Professional Liability Insurance
We are proposing to use the CMS Hospital Professional Liability
Insurance Index to measure price growth of this category. We were
unable to find a reliable data source that collects SNF-specific PLI
data. Therefore, we propose to use the CMS Hospital Professional
Liability Index, which tracks price changes for commercial insurance
premiums for a fixed level of coverage, holding non-price factors
constant (such as a change in the level of coverage). This is the same
index used in the 2018-based SNF market basket. We believe this is an
appropriate proxy to measure the price growth associated of SNF PLI as
it captures the price inflation associated with other medical
institutions that serve Medicare patients.
f. Pharmaceuticals
We are proposing to use the PPI Commodity for Pharmaceuticals for
Human Use, Prescription (BLS series code WPUSI07003) to measure the
price growth of this cost category. This is the same index used in the
2018-based SNF market basket.
g. Food: Direct Purchases
We are proposing to use the PPI Commodity for Processed Foods and
Feeds (BLS series code WPU02) to measure the price growth of this cost
category. This is the same index used in the 2018-based SNF market
basket.
h. Food: Contract Services
We are proposing to use the CPI All Urban for Food Away From Home
(All Urban Consumers) (BLS series code CUUR0000SEFV) to measure the
price growth of this cost category. This is the same index used in the
2018-based SNF market basket.
i. Chemicals
For measuring price change in the Chemicals cost category, we are
proposing to use a blended PPI composed of the Industry PPIs for Other
Basic Organic Chemical Manufacturing (NAICS 325190) (BLS series code
PCU32519-32519), Soap and Cleaning Compound Manufacturing (NAICS
325610) (BLS series code PCU32561-32561), and All Other Chemical
Product and Preparation Manufacturing (NAICS 3259A0) (BLS series code
PCU325998325998).
Using the 2017 Benchmark I-O data, we found that these three NAICS
industries accounted for approximately 95 percent of SNF chemical
expenses. The remaining 5 percent of SNF chemical expenses are for
three other incidental NAICS chemicals industries
[[Page 23445]]
such as Paint and Coating Manufacturing. We are proposing to create a
blended index based on the three NAICS chemical expenses listed above
that account for 95 percent of SNF chemical expenses. We propose to
create this blend based on each NAICS' expenses as a share of their
sum. These expenses as a share of their sum are listed in Table 16.
The 2018-based SNF market basket used a blended chemical proxy that
was based on 2012 Benchmark I-O data. We believe our proposed chemical
blended index for the proposed 2022-based SNF market basket is
technically appropriate as it reflects more recent data on SNFs
purchasing patterns. Table 16 provides the weights for the proposed
2022-based blended chemical index and the 2018-based blended chemical
index.
Table 16--Chemical Blended Index Weights
----------------------------------------------------------------------------------------------------------------
Proposed 2022-
NAICS Price proxy based index 2018-Based
(%) index (%)
----------------------------------------------------------------------------------------------------------------
325190..................................... PPI for Other Basic Organic 49 34
Chemical Manufacturing.
325610..................................... PPI for Soap and Cleaning Compound 9 21
Manufacturing.
325998..................................... PPI for Other Miscellaneous 42 45
Chemical Product Manufacturing.
-------------------------------
Total.................................. ................................... 100 100
----------------------------------------------------------------------------------------------------------------
j. Medical Instruments and Supplies
For measuring price change in the Medical Instruments and Supplies
cost category, we are proposing to use a blended proxy. The 2017
Benchmark I-O data shows 62 percent of medical instruments and supply
costs are for Surgical and medical instrument manufacturing costs
(NAICS 339112) and 38 percent are for Surgical appliance and supplies
manufacturing costs (NAICS 339113). To proxy the price changes
associated with NAICS 339112, we propose using the PPI--Commodity--
Surgical and medical instruments (BLS series code WPU1562). To proxy
the price changes associated with NAICS 339113, we propose to use 50
percent for the PPI--Commodity--Medical and surgical appliances and
supplies (BLS series code WPU1563) and 50 percent for the PPI Commodity
data for Miscellaneous products-Personal safety equipment and clothing
(BLS series code WPU1571). The latter price proxy would reflect
personal protective equipment including but not limited to face shields
and protective clothing. The 2017 Benchmark I-O data does not provide
specific expenses for personal protective equipment (which would be
reflected in the NAICS 339113 expenses); however, we recognize that
this category reflects costs faced by SNFs. In absence of any specific
cost data on personal protective equipment, we propose to include the
PPI Commodity data for Miscellaneous products-Personal safety equipment
and clothing (BLS series code WPU1571) in the blended proxy for Medical
Instruments and Supplies cost category with a weight of 19 percent
(that is, 50 percent of the NAICS 339113 expenses as a percent of the
sum of NAICS 339113 and NAICS 339112 expenses from the I-O).
The 2018-based SNF market basket used a blended Medical Instruments
and Supplies proxy that was based on 2012 Benchmark I-O data. We
believe our proposed blended index for the proposed 2022-based SNF
market basket is technically appropriate as it reflects more recent
data on SNFs purchasing patterns. Table 17 provides the proposed
Medical Instruments and Supplies cost weight blended price proxy.
Table 17--Medical Instruments and Supplies Blended Index Weights
----------------------------------------------------------------------------------------------------------------
Proposed 2022-
NAICS Price proxy based index 2018-Based
(%) index (%)
----------------------------------------------------------------------------------------------------------------
339112........................................ PPI--Commodity--Surgical and 62 46
medical instruments (WUI1562).
339113........................................ PPI--Commodity--Medical and 19 27
surgical appliances and
supplies (WPU1563).
PPI Commodity data for 19 27
Miscellaneous products-Personal
safety equipment and clothing
(WPU1571).
-------------------------------
Total..................................... ................................ 100 100
----------------------------------------------------------------------------------------------------------------
k. Rubber and Plastics
We are proposing to use the PPI Commodity for Rubber and Plastic
Products (BLS series code WPU07) to measure price growth of this cost
category. This is the same index used in the 2018-based SNF market
basket.
l. Paper and Printing Products
We are proposing to use a 86/14 blend of the PPI Commodity for
Converted Paper and Paperboard Products (BLS series code WPU0915) and
the PPI Commodity for Publications Printed Matter and Printing Material
(BLS Series Code WPU094) to measure the price growth of this cost
category. The 2017 Benchmark I-O data shows that 86 percent of paper
and printing expenses are for paper manufacturing (NAICS 322) and the
remaining expenses are for Printing (NAICS 323110). The 2018-based SNF
market basket used the PPI Commodity for Converted Paper and Paperboard
Products (BLS series code WPU0915) to measure the price growth of this
cost category.
m. Apparel
We are proposing to use the PPI Commodity for Apparel (BLS series
code WPU0381) to measure the price growth of this cost category. This
is the same index used in the 2018-based SNF market basket.
[[Page 23446]]
n. Machinery and Equipment
We are proposing to use the PPI Commodity for Machinery and
Equipment (BLS series code WPU11) to measure the price growth of this
cost category. This is the same index used in the 2018-based SNF market
basket.
o. Miscellaneous Products
For measuring price change in the Miscellaneous Products cost
category, we are proposing to use the PPI Commodity for Finished Goods
less Food and Energy (BLS series code WPUFD4131). Both food and energy
are already adequately represented in separate cost categories and
should not also be reflected in this cost category. This is the same
index used in the 2018-based SNF market basket.
p. Professional Fees: Labor-Related
We are proposing to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. This
is the same index used in the 2018-based SNF market basket.
q. Administrative and Facilities Support Services
We are proposing to use the ECI for Total Compensation for Private
Industry Workers in Office and Administrative Support (BLS series code
CIU2010000220000I) to measure the price growth of this category. This
is the same index used in the 2018-based SNF market basket.
r. Installation, Maintenance and Repair Services
We are proposing to use the ECI for Total Compensation for All
Civilian Workers in Installation, Maintenance, and Repair (BLS series
code CIU1010000430000I) to measure the price growth of this new cost
category. This is the same index used in the 2018-based SNF market
basket.
s. All Other: Labor-Related Services
We are proposing to use the ECI for Total Compensation for Private
Industry Workers in Service Occupations (BLS series code
CIU2010000300000I) to measure the price growth of this cost category.
This is the same index used in the 2018-based SNF market basket.
t. Professional Fees: Non-Labor-Related
We are proposing to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. This
is the same index used in the 2018-based SNF market basket.
u. Financial Services
We are proposing to use the ECI for Total Compensation for Private
Industry Workers in Financial Activities (BLS series code
CIU201520A000000I) to measure the price growth of this cost category.
This is the same index used in the 2018-based SNF market basket.
v. Telephone Services
We are proposing to use the CPI All Urban for Telephone Services
(BLS series code CUUR0000SEED) to measure the price growth of this cost
category. This is the same index used in the 2018-based SNF market
basket.
w. All Other: Non-Labor-Related Services
We are proposing to use the CPI All Urban for All Items Less Food
and Energy (BLS series code CUUR0000SA0L1E) to measure the price growth
of this cost category. This is the same index used in the 2018-based
SNF market basket.
3. Price Proxies Used To Measure Capital Cost Category Growth
We are proposing to apply the same capital price proxies as were
used in the 2018-based SNF market basket, and below is a detailed
explanation of the price proxies used for each capital cost category.
We are also proposing to continue to vintage weight the capital price
proxies for Depreciation and Interest to capture the long-term
consumption of capital. This vintage weighting method is the same
method that was used for the 2018-based SNF market basket and is
described below.
Depreciation--Building and Fixed Equipment: We are
proposing to use the BEA Chained Price Index for Private Fixed
Investment in Structures, Nonresidential, Hospitals and Special Care
(BEA Table 5.4.4. Price Indexes for Private Fixed Investment in
Structures by Type). This BEA index is intended to capture prices for
construction of facilities such as hospitals, nursing homes, hospices,
and rehabilitation centers. This is the same index used in the 2018-
based SNF market basket.
Depreciation--Movable Equipment: We are proposing to use
the PPI Commodity for Machinery and Equipment (BLS series code WPU11).
This price index reflects price inflation associated with a variety of
machinery and equipment that would be utilized by SNFs, including but
not limited to medical equipment, communication equipment, and
computers. This is the same index used in the 2018-based SNF market
basket.
Nonprofit Interest: We are proposing to use the average
yield on Municipal Bonds (Bond Buyer 20-bond index). This is the same
index used in the 2018-based SNF market basket.
For-Profit Interest: For the For-Profit Interest cost
category, we are proposing to use the iBoxx AAA Corporate Bond Yield
index. This is the same index used in the 2018-based SNF market basket.
Other Capital: Since this category includes fees for
insurances, taxes, and other capital-related costs, we are proposing to
use the CPI for Rent of Primary Residence (BLS series code
CUUS0000SEHA), which would reflect the price growth of these costs.
This is the same index used in the 2018-based SNF market basket.
We believe that these price proxies are the most appropriate
proxies for SNF capital costs that meet our selection criteria of
relevance, timeliness, availability, and reliability.
As stated above, we are proposing to continue to vintage weight the
capital price proxies for Depreciation and Interest to capture the
long-term consumption of capital. To capture the long-term nature, the
price proxies are vintage-weighted and the vintage weights are
calculated using a two-step process. First, we determine the expected
useful life of capital and debt instruments held by SNFs. Second, we
identify the proportion of expenditures within a cost category that is
attributable to each individual year over the useful life of the
relevant capital assets, or the vintage weights.
We rely on Bureau of Economic Analysis (BEA) fixed asset data to
derive the useful lives of both fixed and movable capital, which is the
same data source used to derive the useful lives for the 2018-based SNF
market basket. The specifics of the data sources used are explained
below.
a. Calculating Useful Lives for Movable and Fixed Assets
Estimates of useful lives for movable and fixed assets for the
proposed 2022-based SNF market basket are 9 and 27 years, respectively.
These estimates are based on three data sources from the BEA: (1)
current-cost average age; (2) historical-cost average age; and (3)
industry-specific current cost net stocks of assets.
BEA current-cost and historical-cost average age data by asset type
are not available by industry but are published at the aggregate level
for all industries. The BEA does publish current-cost net capital
stocks at the detailed asset level for specific industries. There are
64 detailed movable assets (including intellectual property) and there
are 32 detailed fixed assets in the BEA
[[Page 23447]]
estimates. Since we seek aggregate useful life estimates applicable to
SNFs, we developed a methodology to approximate movable and fixed asset
ages for nursing and residential care services (NAICS 623) using the
published BEA data. For the proposed 2022-based SNF market basket, we
use the current-cost average age for each asset type from the BEA fixed
assets Table 2.9 for all assets and weight them using current-cost net
stock levels for each of these asset types in the nursing and
residential care services industry, NAICS 6230. For example, nonelectro
medical equipment current-cost net stock (accounting for about 29
percent of total movable equipment current-cost net stock in 2022 is
multiplied by an average age of 4.8 years for nonelectro medical
equipment for all industries. Current-cost net stock levels are
available for download from the BEA website at https://apps.bea.gov/iTable/index_FA.cfm. We then aggregate the ``weighted'' current-cost
net stock levels (average age multiplied by current-cost net stock)
into movable and fixed assets for NAICS 6230. We then adjust the
average ages for movable and fixed assets by the ratio of historical-
cost average age (Table 2.10) to current-cost average age (Table 2.9).
This produces historical cost average age data for fixed
(structures) and movable (equipment and intellectual property) assets
specific to NAICS 6230 of 13.6 and 4.4 years for 2022, respectively.
This reflects the average age of an asset at a given point in time,
whereas we want to estimate a useful life of the asset. To do this, we
multiply each of the average age estimates by two to convert to average
useful lives with the assumption that the average age reflects the
midpoint of useful life and is normally distributed (about half of the
assets are below the average at a given point in time, and half above
the average at a given point in time). This produces estimates of
likely useful lives of 27.2 and 8.8 years for fixed and movable assets,
which we round to 27 and 9 years, respectively. We are proposing an
interest vintage weight time span of 25 years, obtained by weighting
the fixed and movable vintage weights (27 years and 9 years,
respectively) by the fixed and movable split (86 percent and 14
percent, respectively). This is the same methodology used for the 2018-
based SNF market basket, which had useful lives of 26 years and 9 years
for fixed and movable assets, respectively.
b. Constructing Vintage Weights
Given the expected useful life of capital (fixed and movable
assets) and debt instruments, we must determine the proportion of
capital expenditures attributable to each year of the expected useful
life for each of the three asset types: building and fixed equipment,
movable equipment, and interest. These proportions represent the
vintage weights. We were not able to find a historical time series of
capital expenditures by SNFs. Therefore, we approximated the capital
expenditure patterns of SNFs over time using alternative SNF data
sources. For building and fixed equipment, we used the stock of beds in
nursing homes from the National Nursing Home Survey (NNHS) conducted by
the National Center for Health Statistics (NCHS) for 1962 through 1999.
For 2000 through 2018, we extrapolated the 1999 bed data forward using
measurements of the moving average rate of growth in the number of beds
as reported in SNF Medicare cost report data on Worksheet S-3, part I,
column 1, line 8. A more detailed discussion of this methodology was
published in the FY 2022 SNF final rule (86 FR 42457). We are proposing
to continue this methodology for the proposed 2022-based SNF market
basket by extrapolating the 2018 bed data forward using the average
growth in the number of beds over the 2019 to 2022 time period. We then
propose to use the change in the stock of beds each year to approximate
building and fixed equipment purchases for that year. This procedure
assumes that bed growth reflects the growth in capital-related costs in
SNFs for building and fixed equipment. We believe that this assumption
is reasonable because the number of beds reflects the size of a SNF,
and as a SNF adds beds, it also likely adds fixed capital.
As was done for the 2018-based SNF market basket (as well as prior
market baskets), we are proposing to estimate movable equipment
purchases based on the ratio of ancillary costs to routine costs. The
time series of the ratio of ancillary costs to routine costs for SNFs
measures changes in intensity in SNF services, which are assumed to be
associated with movable equipment purchase patterns. The assumption
here is that as ancillary costs increase compared to routine costs, the
SNF caseload becomes more complex and would require more movable
equipment. The lack of movable equipment purchase data for SNFs over
time required us to use alternative SNF data sources. A more detailed
discussion of this methodology was published in the FY 2008 SNF final
rule (72 FR 43428). We believe the resulting two time series,
determined from beds and the ratio of ancillary to routine costs,
reflect real capital purchases of building and fixed equipment and
movable equipment over time.
To obtain nominal purchases, which are used to determine the
vintage weights for interest, we converted the two real capital
purchase series from 1963 through 2022 determined above to nominal
capital purchase series using their respective price proxies (the BEA
Chained Price Index for Nonresidential Construction for Hospitals &
Special Care Facilities and the PPI for Machinery and Equipment). We
then combined the two nominal series into one nominal capital purchase
series for 1963 through 2022. Nominal capital purchases are needed for
interest vintage weights to capture the value of debt instruments.
Once we created these capital purchase time series for 1963 through
2022, we averaged different periods to obtain an average capital
purchase pattern over time: (1) for building and fixed equipment, we
averaged 34, 27-year periods; (2) for movable equipment, we averaged
52, 9-year periods; and (3) for interest, we averaged 36, 25-year
periods. We calculate the vintage weight for a given year by dividing
the capital purchase amount in any given year by the total amount of
purchases during the expected useful life of the equipment or debt
instrument.
The vintage weights for the proposed 2022-based SNF market basket
and the 2018-based SNF market basket are presented in Table 18.
[[Page 23448]]
Table 18--Proposed 2022-Based Vintage Weights and 2018-Based Vintage Weights
----------------------------------------------------------------------------------------------------------------
Building and fixed Movable equipment Interest
equipment ---------------------------------------------------
--------------------------
Year \1\ Proposed Proposed 2018-based Proposed 2018-based
2022-based 2018-based 2022-based 9 years 2022-based 24 years
27 years 26 years 9 years 25 years
----------------------------------------------------------------------------------------------------------------
1................................. 0.049 0.049 0.106 0.135 0.026 0.027
2................................. 0.048 0.050 0.121 0.140 0.027 0.028
3................................. 0.048 0.049 0.119 0.128 0.028 0.029
4................................. 0.046 0.047 0.103 0.112 0.030 0.031
5................................. 0.045 0.045 0.117 0.119 0.031 0.032
6................................. 0.043 0.043 0.124 0.111 0.033 0.034
7................................. 0.042 0.041 0.101 0.084 0.035 0.036
8................................. 0.042 0.040 0.093 0.080 0.038 0.037
9................................. 0.039 0.037 0.115 0.091 0.041 0.038
10................................ 0.037 0.035 ........... ........... 0.043 0.040
11................................ 0.038 0.036 ........... ........... 0.045 0.043
12................................ 0.039 0.036 ........... ........... 0.045 0.047
13................................ 0.038 0.036 ........... ........... 0.044 0.049
14................................ 0.038 0.036 ........... ........... 0.044 0.051
15................................ 0.038 0.035 ........... ........... 0.045 0.050
16................................ 0.036 0.036 ........... ........... 0.045 0.048
17................................ 0.034 0.036 ........... ........... 0.045 0.048
18................................ 0.033 0.038 ........... ........... 0.045 0.048
19................................ 0.033 0.037 ........... ........... 0.043 0.048
20................................ 0.032 0.036 ........... ........... 0.042 0.048
21................................ 0.031 0.035 ........... ........... 0.042 0.047
22................................ 0.030 0.035 ........... ........... 0.043 0.047
23................................ 0.030 0.035 ........... ........... 0.044 0.047
24................................ 0.028 0.033 ........... ........... 0.045 0.049
25................................ 0.027 0.032 ........... ........... 0.051 ...........
26................................ 0.027 0.032 ........... ........... ........... ...........
27................................ 0.027 ........... ........... ........... ........... ...........
-----------------------------------------------------------------------------
Total......................... 1.000 1.000 1.000 1.000 1.000 1.000
----------------------------------------------------------------------------------------------------------------
Note: The vintage weights are calculated using thirteen decimals. For presentation purposes, we are displaying
three decimals and therefore, the detail vintage weights may not add to 1.000 due to rounding.
\1\ Year 1 represents the vintage weight applied to the farthest year while the vintage weight for year 27, for
example, would apply to the most recent year.
The process of creating vintage-weighted price proxies requires
applying the vintage weights to the price proxy index where the last
applied vintage weight in Table 18 is applied to the most recent data
point. We have provided on the CMS website an example of how the
vintage weighting price proxies are calculated, using example vintage
weights and example price indices. The example can be found at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html in the zip
file titled ``Weight Calculations as described in the IPPS FY 2010
Proposed Rule.''
Table 19 shows all the price proxies for the proposed 2022-based
SNF market basket.
Table 19--Price Proxies for the Proposed 2022-Based SNF Market Basket
------------------------------------------------------------------------
Cost category Weight Price proxy
------------------------------------------------------------------------
Total.......................... 100.0
Compensation................... 61.2
Wages and Salaries \1\..... 51.8 ECI for Wages and
Salaries for Private
Industry Workers in
Nursing Care
Facilities.
Employee Benefits \1\...... 9.3 ECI for Total Benefits
for Private Industry
Workers in Nursing
Care Facilities.
Utilities...................... 2.7
Electricity and Other Non- 1.8 PPI Commodity for
Fuel Utilities. Commercial Electric
Power.
Fuel: Oil and Gas...... 0.8 Blend of PPIs.
Professional Liability 1.3 CMS Professional
Insurance. Liability Insurance
Premium Index.
All Other...................... 26.5
Other Products................. 16.1
Pharmaceuticals........ 6.4 PPI Commodity for
Pharmaceuticals for
Human Use,
Prescription.
Food: Direct Purchase.. 2.9 PPI Commodity for
Processed Foods and
Feeds.
Food: Contract Purchase 3.4 CPI for Food Away From
Home (All Urban
Consumers).
Chemicals.............. 0.2 Blend of PPIs.
Medical Instruments and 0.4 Blend of PPIs.
Supplies.
[[Page 23449]]
Rubber and Plastics.... 1.0 PPI Commodity for
Rubber and Plastic
Products.
Paper and Printing 0.5 Blend of PPIs.
Products.
Apparel................ 0.4 PPI Commodity for
Apparel.
Machinery and Equipment 0.7 PPI Commodity for
Machinery and
Equipment.
Miscellaneous Products. 0.2 PPI Commodity for
Finished Goods Less
Food and Energy.
All Other Services............. 10.5
Labor-Related Services..... 6.5
Professional Fees: 3.6 ECI for Total
Labor-Related. Compensation for
Private Industry
Workers in
Professional and
Related.
Installation, 0.4 ECI for Total
Maintenance, and Compensation for All
Repair Services. Civilian workers in
Installation,
Maintenance, and
Repair.
Administrative and 0.5 ECI for Total
Facilities Support. Compensation for
Private Industry
Workers in Office and
Administrative
Support.
All Other: Labor- 2.0 ECI for Total
Related Services. Compensation for
Private Industry
Workers in Service
Occupations.
Non Labor-Related Services. 4.0
Professional Fees: 1.8 ECI for Total
Nonlabor-Related. Compensation for
Private Industry
Workers in
Professional and
Related.
Financial Services..... 0.5 ECI for Total
Compensation for
Private Industry
Workers in Financial
Activities.
Telephone Services..... 0.4 CPI for Telephone
Services.
All Other: Nonlabor- 1.3 CPI for All Items Less
Related Services. Food and Energy.
Capital-Related Expenses....... 8.3
Total Depreciation......... 3.0
Building and Fixed 2.5 BEA's Chained Price
Equipment. Index for Private
Fixed Investment in
Structures,
Nonresidential,
Hospitals and Special
Care--vintage weighted
27 years.
Movable Equipment...... 0.4 PPI Commodity for
Machinery and
Equipment--vintage
weighted 9 years.
Total Interest............. 2.3
For-Profit SNFs........ 0.7 iBoxx--Average yield on
Aaa bond--vintage
weighted 25 years.
Government and Nonprofit SNFs.. 1.6 Bond Buyer--Average
yield on Domestic
Municipal Bonds--
vintage weighted 25
years.
Other Capital-Related Expenses. 3.0 CPI for Rent of Primary
Residence.
------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For
presentation purposes, we are displaying one decimal, and therefore,
the detailed cost weights may not add to the aggregate cost weights or
to 100.0 due to rounding.
\1\ Contract labor is distributed to wages and salaries and employee
benefits based on the share of total compensation that each category
represents.
4. Labor-Related Share
We define the labor-related share (LRS) as those expenses that are
labor-intensive and vary with, or are influenced by, the local labor
market. Each year, we calculate a revised labor-related share based on
the relative importance of labor-related cost categories in the input
price index. Effective for FY 2025, we are proposing to revise and
update the labor-related share to reflect the relative importance of
the proposed 2022-based SNF market basket cost categories that we
believe are labor-intensive and vary with, or are influenced by, the
local labor market. For the proposed 2022-based SNF market basket these
are: (1) Wages and Salaries (including allocated contract labor costs
as described above); (2) Employee Benefits (including allocated
contract labor costs as described above); (3) Professional Fees: Labor-
Related; (4) Administrative and Facilities Support Services; (5)
Installation, Maintenance, and Repair Services; (6) All Other: Labor-
Related Services; and (7) a proportion of capital-related expenses. We
propose to continue to include a proportion of capital-related expenses
because a portion of these expenses are deemed to be labor-intensive
and vary with, or are influenced by, the local labor market. For
example, a proportion of construction costs for a medical building
would be attributable to local construction workers' compensation
expenses.
Consistent with previous SNF market basket revisions and rebasings,
the All Other: Labor-related services cost category is mostly comprised
of building maintenance and security services (including, but not
limited to, landscaping services, janitorial services, waste management
services services) and dry cleaning and laundry services. Because these
services tend to be labor-intensive and are mostly performed at the SNF
facility or in the local area (and therefore, unlikely to be purchased
in the national market), we believe that they meet our definition of
labor-related services.
These are the same cost categories we have included in the LRS for
the 2018-based SNF market basket rebasing (86 FR 42461), as well as the
same categories included in the LRS for the 2021-based IRF market
basket (88 FR 50984), and 2021-based IPF market basket (88 FR 51078).
As discussed in the FY 2022 SNF PPS final rule (86 FR 42462), in an
effort to determine more accurately the share of nonmedical
professional fees (included in the proposed 2022-based SNF market
basket Professional Fees cost categories) that should be included in
the labor-related share, we surveyed SNFs regarding the proportion of
those fees that are attributable to local firms and the proportion that
are purchased from national firms. Based on these weighted results, we
determined that SNFs purchase, on average, the following portions of
contracted professional services inside their local labor market:
78 percent of legal services.
86 percent of accounting and auditing services.
[[Page 23450]]
89 percent of architectural, engineering services.
87 percent of management consulting services.
Together, these four categories represent 3.6 percentage points of
the total costs for the proposed 2022-based SNF market basket. We
applied the percentages from this special survey to their respective
SNF market basket weights to separate them into labor-related and
nonlabor-related costs. As a result, we are designating 2.8 of the 3.6
percentage points total to the labor-related share, with the remaining
0.8 percentage point categorized as nonlabor-related.
In addition to the professional services as previously listed, for
the proposed 2022-based SNF market basket, we propose to allocate a
proportion of the Home Office/Related Organization Contract Labor cost
weight, calculated using the Medicare cost reports as previously
stated, into the Professional Fees: Labor-Related and Professional
Fees: Nonlabor-Related cost categories. We propose to classify these
expenses as labor-related and nonlabor-related as many facilities are
not located in the same geographic area as their home office, and,
therefore, do not meet our definition for the labor-related share that
requires the services to be purchased in the local labor market.
Similar to the 2018-based SNF market basket, we propose for the
proposed 2022-based SNF market basket to use the Medicare cost reports
for SNFs to determine the home office labor-related percentages. The
Medicare cost report requires a SNF to report information regarding its
home office provider. Using information on the Medicare cost report, we
compared the location of the SNF with the location of the SNF's home
office. We propose to classify a SNF with a home office located in
their respective labor market if the SNF and its home office are
located in the same Metropolitan Statistical Area (MSA). Then we
determine the proportion of the Home Office/Related Organization
Contract Labor cost weight that should be allocated to the labor-
related share based on the percent of total Home Office/Related
Organization Contract Labor costs for those SNFs that had home offices
located in their respective local labor markets of total Home Office/
Related Organization Contract Labor costs for SNFs with a home office.
We determined a SNF's and its home office's MSA using their zip code
information from the Medicare cost report.
Using this methodology, we determined that 25 percent of SNFs' Home
Office/Related Organization Contract Labor costs were for home offices
located in their respective local labor markets. Therefore, we propose
to allocate 25 percent of the Home Office/Related Organization Contract
Labor cost weight (0.1 percentage point = 0.6 percent x 25 percent) to
the Professional Fees: Labor-Related cost weight and 75 percent of the
Home Office/Related Organization Contract Labor cost weight to the
Professional Fees: Nonlabor-Related cost weight (0.4 percentage point =
0.6 percent x 75 percent). The 2018-based SNF market basket used a
similar methodology for allocating the Home Office/Related Organization
Contract Labor cost weight to the labor-related share.
In summary, based on the two allocations mentioned earlier, we
propose to apportion 2.9 percentage points into the Professional Fees:
Labor-Related cost category consisting of the Professional Fees (2.8
percentage points) and Home Office/Related Organization Contract Labor
(0.1 percentage point) cost weights. This amount was added to the
portion of professional fees that we already identified as labor-
related using the I-O data such as contracted advertising and marketing
costs (approximately 0.6 percentage point of total costs) resulting in
a Professional Fees: Labor-Related cost weight of 3.6 percent.
Table 20 compares the FY 2025 labor-related share based on the
proposed 2022-based SNF market basket relative importance and the FY
2024 labor-related share based on the 2018-based SNF market basket
relative importance as finalized in the FY 2024 SNF final rule (88 FR
53213).
Table 20--FY 2024 and FY 2025 SNF Labor-Related Share
------------------------------------------------------------------------
Relative Relative
importance, importance,
labor-related labor-related
share, FY 2024 share, FY 2025
23:2 forecast 23:4 forecast
\1\ \2\
------------------------------------------------------------------------
Wages and Salaries \3\.............. 52.5 53.2
Employee Benefits \3\............... 9.3 9.1
Professional Fees: Labor-Related.... 3.4 3.5
Administrative & Facilities Support 0.6 0.4
Services...........................
Installation, Maintenance & Repair 0.4 0.5
Services...........................
All other: Labor-Related services... 2.0 2.0
Capital-Related (.391).............. 2.9 3.2
-----------------------------------
Total............................... 71.1 71.9
------------------------------------------------------------------------
\1\ Published in the Federal Register (88 FR 53213); based on the second
quarter 2023 IHS Global Inc. forecast of the 2018-based SNF market
basket, with historical data through first quarter 2023.
\2\ Based on the fourth quarter 2023 IHS Global Inc. forecast of the
proposed 2022-based SNF market basket, with historical data through
third quarter 2023.
\3\ The Wages and Salaries and Employee Benefits cost weight reflect
contract labor costs as described above.
The proposed FY 2025 SNF labor-related share is 0.8 percentage
point higher than the FY 2024 SNF labor-related share (based on the
2018-based SNF market basket). The higher labor-related share is
primarily due to incorporating the 2022 Medicare cost report data,
which resulted in a higher Compensation cost weight, as well as higher
relative importance of the Capital cost category.
5. Market Basket Estimate for the FY 2025 SNF PPS Update
As discussed previously in this proposed rule, beginning with the
FY 2025 SNF PPS update, we are proposing to adopt the proposed 2022-
based SNF market basket as the appropriate market basket of goods and
services for the SNF PPS. Consistent with historical practice, we
estimate the market basket update for the SNF PPS based on IHS Global
Inc.'s (IGI) forecast. IGI is a nationally
[[Page 23451]]
recognized economic and financial forecasting firm with which CMS
contracts to forecast the components of the market baskets and total
factor productivity (TFP).
Based on IGI's fourth quarter 2023 forecast with historical data
through the third quarter of 2023, the most recent estimate of the
proposed 2022-based SNF market basket update for FY 2025 is 2.8
percent--which is 0.1 percentage point lower than the FY 2025 percent
change of the 2018-based SNF market basket. We are also proposing that
if more recent data subsequently become available (for example, a more
recent estimate of the market basket and/or the TFP), we would use such
data, if appropriate, to determine the FY 2025 SNF market basket
percentage change, labor-related share relative importance, forecast
error adjustment, or productivity adjustment in the SNF PPS final rule.
Table 21 compares the proposed 2022-based SNF market basket and the
2018-based SNF market basket percent changes. While there are slight
differences of up to 0.2 percentage point in certain years, there is no
difference in the average growth rates between the two market baskets
in either the historical (FY 2020-FY 2023) or forecast period (FY 2024-
FY 2026) when rounded to one decimal place.
Table 21--Proposed 2022-Based SNF Market Basket and 2018-Based SNF
Market Basket, Percent Changes: 2020-2026
------------------------------------------------------------------------
Proposed 2022-
Fiscal Year (FY) based SNF 2018-Based SNF
market basket market basket
------------------------------------------------------------------------
Historical data:
FY 2020............................. 2.0 2.1
FY 2021............................. 3.6 3.6
FY 2022............................. 6.5 6.3
FY 2023............................. 5.6 5.6
Average FY 2020-2023.................... 4.4 4.4
Forecast:
FY 2024............................. 3.7 3.7
FY 2025............................. 2.8 2.9
FY 2026............................. 2.7 2.7
Average FY 2024-2026.................... 3.1 3.1
------------------------------------------------------------------------
Source: IHS Global, Inc. 4th quarter 2023 forecast with historical data
through 3rd quarter 2023.
B. Proposed Changes to SNF PPS Wage Index
1. Core-Based Statistical Areas (CBSAs) for the FY 2025 SNF PPS Wage
Index
a. Background
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 2025, 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 under the IPPS 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. As in previous years, we would continue
to use, as the basis for the SNF PPS wage index, the IPPS hospital wage
data, unadjusted for occupational mix, without taking into account
geographic reclassifications under section 1886(d)(8) and (d)(10) of
the Act, and without applying the rural floor under section 4410 of the
BBA 1997 and the outmigration adjustment under section 1886(d)(13) of
the Act. For FY 2025, the updated wage data are for hospital cost
reporting periods beginning on or after October 1, 2020 and before
October 1, 2021 (FY 2021 cost report data).
The applicable SNF PPS wage index value is assigned to a SNF on the
basis of the labor market area in which the SNF is geographically
located. In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in OMB Bulletin No. 03-04 (June
6, 2003), which announced revised definitions for Metropolitan
Statistical Area (MSA) and the creation of micropolitan statistical
areas and combined statistical areas. In adopting the Core-Based
Statistical Areas (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.
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. OMB Bulletin No. 13-01 established revised delineations for MSAs,
Micropolitan Statistical Areas, and Combined Statistical Areas in the
United States and Puerto Rico based on the 2010 Census, and provided
guidance on the use of the delineations of these statistical areas
using standards published in the June 28, 2010 Federal Register (75 FR
37246 through 37252). Subsequently, on July 15, 2015, OMB issued OMB
Bulletin No. 15-01, which provided minor updates to and superseded OMB
Bulletin No. 13-01 that was issued on February 28, 2013. The attachment
to OMB Bulletin No. 15-01 provided detailed information on the update
to statistical areas since February 28, 2013. The updates provided in
OMB Bulletin No. 15-01
[[Page 23452]]
were based on the application of the 2010 Standards for Delineating
Metropolitan and Micropolitan Statistical Areas to Census Bureau
population estimates for July 1, 2012 and July 1, 2013. In addition, on
August 15, 2017, OMB issued Bulletin No. 17-01 which announced a new
urban CBSA, Twin Falls, Idaho (CBSA 46300). As we previously stated in
the FY 2008 SNF PPS proposed and final rules (72 FR 25538 through
25539, and 72 FR 43423), and as we note in this proposed rule, this and
all subsequent SNF PPS rules and notices are considered to incorporate
any updates and revisions set forth in the most recent OMB bulletin
that applies to the hospital wage data used to determine the current
SNF PPS wage index.
On April 10, 2018, OMB issued OMB Bulletin No. 18-03 which
superseded the August 15, 2017 OMB Bulletin No. 17-01. Subsequently, on
September 14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded
the April 10, 2018 OMB Bulletin No. 18-03. These bulletins established
revised delineations for MSAs, Micropolitan Statistical Areas, and
Combined Statistical Areas, and provided guidance on the use of the
delineations of these statistical areas. A copy of bulletin No. 18-04,
may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf. While OMB Bulletin No. 18-04 is not based on new
census data, it includes some material changes to the OMB statistical
area delineations, including some new CBSAs, urban counties that would
become rural, rural counties that would become urban, and existing
CBSAs that would be split apart. OMB issued further revised CBSA
delineations in OMB Bulletin No. 20-01, on March 6, 2020 (available on
the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf). However, we determined that the changes in OMB
Bulletin No. 20-01 do not impact the CBSA-based labor market area
delineations adopted in FY 2021. Therefore, CMS did not propose to
adopt the revised OMB delineations identified in OMB Bulletin No. 20 01
for FY 2022 through FY 2024.
On July 21, 2023, OMB issued OMB Bulletin No. 23-01 (available at
https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf) which updates and supersedes OMB Bulletin No. 20-01 based upon
the 2020 Standards for Delineating Core Based Statistical Areas (``the
2020 Standards'') published by the Office of Management and Budget
(OMB) on July 16, 2021 (86 FR 37770). OMB Bulletin No. 23-01 revised
CBSA delineations which are comprised of counties and equivalent
entities (for example, boroughs, a city and borough, and a municipality
in Alaska, planning regions in Connecticut, parishes in Louisiana,
municipios in Puerto Rico, and independent cities in Maryland,
Missouri, Nevada, and Virginia). For FY 2025, we propose to adopt the
revised OMB delineations identified in OMB Bulletin No. 23-01.
To implement these changes for the SNF PPS beginning in FY 2025, it
is necessary to identify the revised labor market area delineation for
each affected county and provider in the country. The revisions OMB
published on July 21, 2023 contain a number of significant changes. For
example, under the proposed revised OMB delineations, there would be
new CBSAs, urban counties that would become rural, rural counties that
would become urban, and existing CBSAs that would split apart. We
discuss these changes in more detail later in this proposed rule.
b. Proposed Implementation of Revised Labor Market Area Delineations
We typically delay implementing revised OMB labor market area
delineations to allow for sufficient time to assess the new changes.
For example, as discussed in the FY 2014 SNF PPS proposed rule (78 FR
26448) and final rule (78 FR 47952), we delayed implementing the
revised OMB statistical area delineations described in OMB Bulletin No.
13-01 to allow for sufficient time to assess the new changes. We
believe it is important for the SNF PPS to use the latest labor market
area delineations available as soon as is reasonably possible to
maintain a more accurate and up-to-date payment system that reflects
the reality of population shifts and labor market conditions. We
further believe that using the delineations reflected in OMB Bulletin
No. 23-01 would increase the integrity of the SNF PPS wage index system
by creating a more accurate representation of geographic variations in
wage levels. We have reviewed our findings and impacts relating to the
revised OMB delineations set forth in OMB Bulletin No. 23-01 and find
no compelling reason to further delay implementation. Because we
believe we have broad authority under section 1888(e)(4)(G)(ii) of the
Act to determine the labor market areas used for the SNF PPS wage
index, and because we believe the delineations reflected in OMB
Bulletin No. 23-01 better reflect the local economies and wage levels
of the areas in which hospitals are currently located, we are proposing
to implement the revised OMB delineations as described in the July 21,
2023 OMB Bulletin No. 23-01, for the SNF PPS wage index effective
beginning in FY 2025. In addition, we will apply the permanent 5
percent cap policy in FY 2025 on decreases in a hospital's wage index
compared to its wage index for the prior fiscal year (FY 2024) to
assist providers in adapting to the revised OMB delineations (if we
finalize the implementation of such delineations for the SNF PPS wage
index beginning in FY 2025). This policy is discussed in more detail
later in this proposed rule. We invite comments on these proposals.
(1) Micropolitan Statistical Areas
As discussed in the FY 2006 SNF PPS proposed rule (70 FR 29093
through 29094) and final rule (70 FR 45041), we considered how to use
the Micropolitan Statistical Area definitions in the calculation of the
wage index. OMB defines a ``Micropolitan Statistical Area'' as a CBSA
``associated with at least one urban cluster that has a population of
at least 10,000, but less than 50,000'' (75 FR 37252). We refer to
these as Micropolitan Areas. After extensive impact analysis,
consistent with the treatment of these areas under the IPPS as
discussed in the FY 2005 IPPS final rule (69 FR 49029 through 49032),
we determined the best course of action would be to treat Micropolitan
Areas as ``rural'' and include them in the calculation of each state's
SNF PPS rural wage index (see 70 FR 29094 and 70 FR 45040 through
45041)).
Thus, the SNF PPS statewide rural wage index is determined using
IPPS hospital data from hospitals located in non-MSA areas, and the
statewide rural wage index is assigned to SNFs located in those areas.
Because Micropolitan Areas tend to encompass smaller population centers
and contain fewer hospitals than MSAs, we determined that if
Micropolitan Areas were to be treated as separate labor market areas,
the SNF PPS wage index would have included significantly more single-
provider labor market areas. As we explained in the FY 2006 SNF PPS
proposed rule (70 FR 29094), recognizing Micropolitan Areas as
independent labor markets would generally increase the potential for
dramatic shifts in year-to-year wage index values because a single
hospital (or group of hospitals) could have a disproportionate effect
on the wage index of an area. Dramatic shifts in an area's wage index
from year-to-year are problematic and create instability in the payment
levels from year-to-year, which could make fiscal planning for SNFs
difficult if we adopted this approach. For these reasons, we adopted a
policy
[[Page 23453]]
to include Micropolitan Areas in the state's rural wage area for
purposes of the SNF PPS wage index and have continued this policy
through the present.
We believe that the best course of action would be to continue the
policy established in the FY 2006 SNF PPS final rule and include
Micropolitan Areas in each state's rural wage index. These areas
continue to be defined as having relatively small urban cores
(populations of 10,000 to 49,999). We do not believe it would be
appropriate to calculate a separate wage index for areas that typically
may include only a few hospitals for the reasons discussed in the FY
2006 SNF PPS proposed rule, and as discussed earlier. Therefore, in
conjunction with our proposal to implement the revised OMB labor market
delineations beginning in FY 2025 and consistent with the treatment of
Micropolitan Areas under the IPPS, we are proposing to continue to
treat Micropolitan Areas as ``rural'' and to include Micropolitan Areas
in the calculation of the state's rural wage index.
(2) Urban Counties That Would Become Rural Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the new OMB
statistical area delineations (based upon the 2020 decennial Census
data) beginning in FY 2025 for the SNF PPS wage index. Our analysis
shows that a total of 54 counties (and county equivalents) that are
currently considered part of an urban CBSA would be considered located
in a rural area, for SNF PPS payment beginning in FY 2025, if we adopt
the new OMB delineations. Table 22 lists the 54 urban counties that
would be rural if we finalize our proposal to implement the new OMB
delineations.
Table 22--Counties That Would Transition From Urban to Rural Status
----------------------------------------------------------------------------------------------------------------
FIPS county code County name State Current CBSA Current CBSA name
----------------------------------------------------------------------------------------------------------------
01129...................... Washington........... AL 33660 Mobile, AL.
05025...................... Cleveland............ AR 38220 Pine Bluff, AR.
05047...................... Franklin............. AR 22900 Fort Smith, AR-OK.
05069...................... Jefferson............ AR 38220 Pine Bluff, AR.
05079...................... Lincoln.............. AR 38220 Pine Bluff, AR.
09015...................... Windham.............. CT 49340 Worcester, MA-CT.
10005...................... Sussex............... DE 41540 Salisbury, MD-DE.
13171...................... Lamar................ GA 12060 Atlanta-Sandy Springs-
Alpharetta, GA.
16077...................... Power................ ID 38540 Pocatello, ID.
17057...................... Fulton............... IL 37900 Peoria, IL.
17077...................... Jackson.............. IL 16060 Carbondale-Marion, IL.
17087...................... Johnson.............. IL 16060 Carbondale-Marion, IL.
17183...................... Vermilion............ IL 19180 Danville, IL.
17199...................... Williamson........... IL 16060 Carbondale-Marion, IL.
18121...................... Parke................ IN 45460 Terre Haute, IN.
18133...................... Putnam............... IN 26900 Indianapolis-Carmel-
Anderson, IN.
18161...................... Union................ IN 17140 Cincinnati, OH-KY-IN.
21091...................... Hancock.............. KY 36980 Owensboro, KY.
21101...................... Henderson............ KY 21780 Evansville, IN-KY.
22045...................... Iberia............... LA 29180 Lafayette, LA.
24001...................... Allegany............. MD 19060 Cumberland, MD-WV.
24047...................... Worcester............ MD 41540 Salisbury, MD-DE.
25011...................... Franklin............. MA 44140 Springfield, MA.
26155...................... Shiawassee........... MI 29620 Lansing-East Lansing, MI.
27075...................... Lake................. MN 20260 Duluth, MN-WI.
28031...................... Covington............ MS 25620 Hattiesburg, MS.
31051...................... Dixon................ NE 43580 Sioux City, IA-NE-SD.
36123...................... Yates................ NY 40380 Rochester, NY.
37049...................... Craven............... NC 35100 New Bern, NC.
37077...................... Granville............ NC 20500 Durham-Chapel Hill, NC.
37085...................... Harnett.............. NC 22180 Fayetteville, NC.
37087...................... Haywood.............. NC 11700 Asheville, NC.
37103...................... Jones................ NC 35100 New Bern, NC.
37137...................... Pamlico.............. NC 35100 New Bern, NC.
42037...................... Columbia............. PA 14100 Bloomsburg-Berwick, PA.
42085...................... Mercer............... PA 49660 Youngstown-Warren-
Boardman, OH-PA.
42089...................... Monroe............... PA 20700 East Stroudsburg, PA.
42093...................... Montour.............. PA 14100 Bloomsburg-Berwick, PA.
42103...................... Pike................. PA 35084 Newark, NJ-PA.
45027...................... Clarendon............ SC 44940 Sumter, SC.
48431...................... Sterling............. TX 41660 San Angelo, TX.
49003...................... Box Elder............ UT 36260 Ogden-Clearfield, UT.
51113...................... Madison.............. VA 47894 Washington-Arlington-
Alexandria, DC-VA-MD-WV.
51175...................... Southampton.......... VA 47260 Virginia Beach-Norfolk-
Newport News, VA-NC.
51620...................... Franklin City........ VA 47260 Virginia Beach-Norfolk-
Newport News, VA-NC.
54035...................... Jackson.............. WV 16620 Charleston, WV.
54043...................... Lincoln.............. WV 16620 Charleston, WV.
54057...................... Mineral.............. WV 19060 Cumberland, MD-WV.
55069...................... Lincoln.............. WI 48140 Wausau-Weston, WI.
72001...................... Adjuntas............. PR 38660 Ponce, PR.
72055...................... Guanica.............. PR 49500 Yauco, PR.
[[Page 23454]]
72081...................... Lares................ PR 10380 Aguadilla-Isabela, PR.
72083...................... Las Marias........... PR 32420 Mayag[uuml]ez, PR.
72141...................... Utuado............... PR 10380 Aguadilla-Isabela, PR.
----------------------------------------------------------------------------------------------------------------
We are proposing that, for purposes of determining the wage index
under the SNF PPS, the wage data for all hospitals located in the
counties listed in Table 22 would be considered rural when calculating
their respective state's rural wage index under the SNF PPS. We
recognize that rural areas typically have lower area wage index values
than urban areas, and SNFs located in these counties may experience a
negative impact in their SNF PPS payment due to the proposed adoption
of the revised OMB delineations. Furthermore, for SNF providers
currently located in an urban county that would be considered rural
should this proposal be finalized, we would utilize the rural
unadjusted per diem rates, found in Table 4, as the basis for
determining payment rates for these facilities beginning on October 1,
2024.
(3) Rural Counties That Would Become Urban Under the Revised OMB
Delineations
As previously discussed, we are proposing to implement the revised
OMB statistical area delineations based upon OMB Bulletin No. 18-04
beginning in FY 2025. Analysis of these OMB statistical area
delineations shows that a total of 54 counties (and county equivalents)
that are currently located in rural areas would be located in urban
areas if we finalize our proposal to implement the revised OMB
delineations.
Table 23 lists the 54 rural counties that would be urban if we
finalize this proposal.
Table 23--Counties That Would Transition From Rural to Urban Status
----------------------------------------------------------------------------------------------------------------
FIPS county code County State Proposed CBSA Proposed CBSA name
----------------------------------------------------------------------------------------------------------------
01087...................... Macon................ AL 12220 Auburn-Opelika, AL.
01127...................... Walker............... AL 13820 Birmingham, AL.
12133...................... Washington........... FL 37460 Panama City-Panama City
Beach, FL.
13187...................... Lumpkin.............. GA 12054 Atlanta-Sandy Springs-
Roswell, GA.
15005...................... Kalawao.............. HI 27980 Kahului-Wailuku, HI.
17053...................... Ford................. IL 16580 Champaign-Urbana, IL.
17127...................... Massac............... IL 37140 Paducah, KY-IL.
18159...................... Tipton............... IN 26900 Indianapolis-Carmel-
Greenwood, IN.
18179...................... Wells................ IN 23060 Fort Wayne, IN.
20021...................... Cherokee............. KS 27900 Joplin, MO-KS.
21007...................... Ballard.............. KY 37140 Paducah, KY-IL.
21039...................... Carlisle............. KY 37140 Paducah, KY-IL.
21127...................... Lawrence............. KY 26580 Huntington-Ashland, WV-KY-
OH.
21139...................... Livingston........... KY 37140 Paducah, KY-IL.
21145...................... Mc Cracken........... KY 37140 Paducah, KY-IL.
21179...................... Nelson............... KY 31140 Louisville/Jefferson
County, KY-IN.
22053...................... Jeffrson Davis....... LA 29340 Lake Charles, LA.
22083...................... Richland............. LA 33740 Monroe, LA.
26015...................... Barry................ MI 24340 Grand Rapids-Wyoming-
Kentwood, MI.
26019...................... Benzie............... MI 45900 Traverse City, MI.
26055...................... Grand Traverse....... MI 45900 Traverse City, MI.
26079...................... Kalkaska............. MI 45900 Traverse City, MI.
26089...................... Leelanau............. MI 45900 Traverse City, MI.
27133...................... Rock................. MN 43620 Sioux Falls, SD-MN.
28009...................... Benton............... MS 32820 Memphis, TN-MS-AR.
28123...................... Scott................ MS 27140 Jackson, MS.
30007...................... Broadwater........... MT 25740 Helena, MT.
30031...................... Gallatin............. MT 14580 Bozeman, MT.
30043...................... Jefferson............ MT 25740 Helena, MT.
30049...................... Lewis And Clark...... MT 25740 Helena, MT.
30061...................... Mineral.............. MT 33540 Missoula, MT.
32019...................... Lyon................. NV 39900 Reno, NV.
37125...................... Moore................ NC 38240 Pinehurst-Southern Pines,
NC.
38049...................... Mchenry.............. ND 33500 Minot, ND.
38075...................... Renville............. ND 33500 Minot, ND.
38101...................... Ward................. ND 33500 Minot, ND.
39007...................... Ashtabula............ OH 17410 Cleveland, OH.
39043...................... Erie................. OH 41780 Sandusky, OH.
41013...................... Crook................ OR 13460 Bend, OR.
41031...................... Jefferson............ OR 13460 Bend, OR.
42073...................... Lawrence............. PA 38300 Pittsburgh, PA.
45087...................... Union................ SC 43900 Spartanburg, SC.
46033...................... Custer............... SD 39660 Rapid City, SD.
47081...................... Hickman.............. TN 34980 Nashville-Davidson-
Murfreesboro-Franklin,
TN.
[[Page 23455]]
48007...................... Aransas.............. TX 18580 Corpus Christi, TX.
48035...................... Bosque............... TX 47380 Waco, TX.
48079...................... Cochran.............. TX 31180 Lubbock, TX.
48169...................... Garza................ TX 31180 Lubbock, TX.
48219...................... Hockley.............. TX 31180 Lubbock, TX.
48323...................... Maverick............. TX 20580 Eagle Pass, TX.
48407...................... San Jacinto.......... TX 26420 Houston-Pasadena-The
Woodlands, TX.
51063...................... Floyd................ VA 13980 Blacksburg-Christiansburg-
Radford, VA.
51181...................... Surry................ VA 47260 Virginia Beach-Chesapeake-
Norfolk, VA-NC.
55123...................... Vernon............... WI 29100 La Crosse-Onalaska, WI-MN.
----------------------------------------------------------------------------------------------------------------
We are proposing that, for purposes of calculating the area wage
index under the SNF PPS, the wage data for hospitals located in the
counties listed in Table 23 would be included in their new respective
urban CBSAs. Typically, SNFs located in an urban area would receive a
wage index value higher than or equal to SNFs located in their state's
rural area. Furthermore, for SNFs currently located in a rural county
that would be considered urban should this proposal be finalized, we
would utilize the urban unadjusted per diem rates found in Table 3, as
the basis for determining the payment rates for these facilities
beginning October 1, 2024.
(4) Urban Counties That Would Move to a Different Urban CBSA Under the
Revised OMB Delineations
In addition to rural counties becoming urban and urban counties
becoming rural, several urban counties would shift from one urban CBSA
to another urban CBSA under our proposal to adopt the new OMB
delineations. In other cases, if we adopt the new OMB delineations,
counties would shift between existing and new CBSAs, changing the
constituent makeup of the CBSAs.
In one type of change, an entire CBSA would be subsumed by another
CBSA. For example, CBSA 31460 (Madera, CA) currently is a single county
(Madera, CA) CBSA. Madera County would be a part of CBSA 23420 (Fresno,
CA) under the new OMB delineations.
In another type of change, some CBSAs have counties that would
split off to become part of, or to form, entirely new labor market
areas. For example, CBSA 29404 (Lake County-Kenosha County, IL-WI)
currently is comprised of two counties (Lake County, IL and Kenosha
County, WI). Under the new OMB delineations, Kenosha county would split
off and form the new CBSA 28450 (Kenosha, WI), while Lake county would
remain in CBSA 29404.
Finally, in some cases, a CBSA would lose counties to another
existing CBSA if we adopt the new OMB delineations. For example, Meade
County, KY, would move from CBSA 21060 (Elizabethtown-Fort Knox, KY) to
CBSA 31140 (Louisville/Jefferson County, KY-IN). CBSA 21060 would still
exist in the new labor market delineations with fewer constituent
counties. Table 24 lists the urban counties that would move from one
urban CBSA to another urban CBSA under the new OMB delineations.
Table 24--Counties That Would Change to a Different CBSA
----------------------------------------------------------------------------------------------------------------
FIPS county code County name State Current CBSA Proposed CBSA
----------------------------------------------------------------------------------------------------------------
06039............................ Madera.................. CA 31460 23420
11001............................ The District............ DC 47894 47764
12053............................ Hernando................ FL 45300 45294
12057............................ Hillsborough............ FL 45300 45294
12101............................ Pasco................... FL 45300 45294
12103............................ Pinellas................ FL 45300 41304
12119............................ Sumter.................. FL 45540 48680
13013............................ Barrow.................. GA 12060 12054
13015............................ Bartow.................. GA 12060 31924
13035............................ Butts................... GA 12060 12054
13045............................ Carroll................. GA 12060 12054
13057............................ Cherokee................ GA 12060 31924
13063............................ Clayton................. GA 12060 12054
13067............................ Cobb.................... GA 12060 31924
13077............................ Coweta.................. GA 12060 12054
13085............................ Dawson.................. GA 12060 12054
13089............................ De Kalb................. GA 12060 12054
13097............................ Douglas................. GA 12060 12054
13113............................ Fayette................. GA 12060 12054
13117............................ Forsyth................. GA 12060 12054
13121............................ Fulton.................. GA 12060 12054
13135............................ Gwinnett................ GA 12060 12054
13143............................ Haralson................ GA 12060 31924
13149............................ Heard................... GA 12060 12054
13151............................ Henry................... GA 12060 12054
13159............................ Jasper.................. GA 12060 12054
13199............................ Meriwether.............. GA 12060 12054
[[Page 23456]]
13211............................ Morgan.................. GA 12060 12054
13217............................ Newton.................. GA 12060 12054
13223............................ Paulding................ GA 12060 31924
13227............................ Pickens................. GA 12060 12054
13231............................ Pike.................... GA 12060 12054
13247............................ Rockdale................ GA 12060 12054
13255............................ Spalding................ GA 12060 12054
13297............................ Walton.................. GA 12060 12054
18073............................ Jasper.................. IN 23844 29414
18089............................ Lake.................... IN 23844 29414
18111............................ Newton.................. IN 23844 29414
18127............................ Porter.................. IN 23844 29414
21163............................ Meade................... KY 21060 31140
22103............................ St. Tammany............. LA 35380 43640
24009............................ Calvert................. MD 47894 30500
24017............................ Charles................. MD 47894 47764
24033............................ Prince Georges.......... MD 47894 47764
24037............................ St. Marys............... MD 15680 30500
25015............................ Hampshire............... MA 44140 11200
34009............................ Cape May................ NJ 36140 12100
34023............................ Middlesex............... NJ 35154 29484
34025............................ Monmouth................ NJ 35154 29484
34029............................ Ocean................... NJ 35154 29484
34035............................ Somerset................ NJ 35154 29484
36027............................ Dutchess................ NY 39100 28880
36071............................ Orange.................. NY 39100 28880
37019............................ Brunswick............... NC 34820 48900
39035............................ Cuyahoga................ OH 17460 17410
39055............................ Geauga.................. OH 17460 17410
39085............................ Lake.................... OH 17460 17410
39093............................ Lorain.................. OH 17460 17410
39103............................ Medina.................. OH 17460 17410
39123............................ Ottawa.................. OH 45780 41780
47057............................ Grainger................ TN 34100 28940
51013............................ Arlington............... VA 47894 11694
51043............................ Clarke.................. VA 47894 11694
51047............................ Culpeper................ VA 47894 11694
51059............................ Fairfax................. VA 47894 11694
51061............................ Fauquier................ VA 47894 11694
51107............................ Loudoun................. VA 47894 11694
51153............................ Prince William.......... VA 47894 11694
51157............................ Rappahannock............ VA 47894 11694
51177............................ Spotsylvania............ VA 47894 11694
51179............................ Stafford................ VA 47894 11694
51187............................ Warren.................. VA 47894 11694
51510............................ Alexandria City......... VA 47894 11694
51600............................ Fairfax City............ VA 47894 11694
51610............................ Falls Church City....... VA 47894 11694
51630............................ Fredericksburg City..... VA 47894 11694
51683............................ Manassas City........... VA 47894 11694
51685............................ Manassas Park City...... VA 47894 11694
53061............................ Snohomish............... WA 42644 21794
54037............................ Jefferson............... WV 47894 11694
55059............................ Kenosha................. WI 29404 28450
72023............................ Cabo Rojo............... PR 41900 32420
72059............................ Guayanilla.............. PR 49500 38660
72079............................ Lajas................... PR 41900 32420
72111............................ Penuelas................ PR 49500 38660
72121............................ Sabana Grande........... PR 41900 32420
72125............................ San German.............. PR 41900 32420
72153............................ Yauco................... PR 49500 38660
----------------------------------------------------------------------------------------------------------------
If providers located in these counties move from one CBSA to
another under the new OMB delineations, there may be impacts, both
negative and positive, upon their specific wage index values.
In other cases, adopting the revised OMB delineations would involve
a change only in CBSA name and/or number, while the CBSA continues to
encompass the same constituent counties. For example, CBSA 19430
(Dayton-Kettering, OH) would experience a change to its name and become
CBSA 19430 (Dayton-Kettering-Beavercreek, OH), while all of its three
constituent counties would remain the same. We consider these proposed
[[Page 23457]]
changes (where only the CBSA name and/or number would change) to be
inconsequential changes with respect to the SNF PPS wage index. Table
25 sets forth a list of such CBSAs where there would be a change in
CBSA name and/or number only if we adopt the revised OMB delineations.
Table 25--Urban CBSAs With Change to Name and/or Number
----------------------------------------------------------------------------------------------------------------
Current CBSA Current CBSA name Proposed CBSA Proposed CBSA name
----------------------------------------------------------------------------------------------------------------
10380.......................... Aguadilla-Isabela, PR.......... 10380 Aguadilla, PR.
10540.......................... Albany-Lebanon, OR............. 10540 Albany, OR.
12060.......................... Atlanta-Sandy Springs- 12054 Atlanta-Sandy Springs-Roswell,
Alpharetta, GA. GA.
12060.......................... Atlanta-Sandy Springs- 31924 Marietta, GA.
Alpharetta, GA.
12420.......................... Austin-Round Rock-Georgetown, 12420 Austin-Round Rock-San Marcos,
TX. TX.
12540.......................... Bakersfield, CA................ 12540 Bakersfield-Delano, CA.
13820.......................... Birmingham-Hoover, AL.......... 13820 Birmingham, AL.
13980.......................... Blacksburg-Christiansburg, VA.. 13980 Blacksburg-Christiansburg-
Radford, VA.
14860.......................... Bridgeport-Stamford-Norwalk, CT 14860 Bridgeport-Stamford-Danbury,
CT.
15260.......................... Brunswick, GA.................. 15260 Brunswick-St. Simons, GA.
15680.......................... California-Lexington Park, MD.. 30500 Lexington Park, MD.
16540.......................... Chambersburg-Waynesboro, PA.... 16540 Chambersburg, PA.
16984.......................... Chicago-Naperville-Evanston, IL 16984 Chicago-Naperville-Schaumburg,
IL.
17460.......................... Cleveland-Elyria, OH........... 17410 Cleveland, OH.
19430.......................... Dayton-Kettering, OH........... 19430 Dayton-Kettering-Beavercreek,
OH.
19740.......................... Denver-Aurora-Lakewood, CO..... 19740 Denver-Aurora-Centennial, CO.
21060.......................... Elizabethtown-Fort Knox, KY.... 21060 Elizabethtown, KY.
21060.......................... Elizabethtown-Fort Knox, KY.... 31140 Louisville/Jefferson County,
KY-IN.
21780.......................... Evansville, IN-KY.............. 21780 Evansville, IN.
21820.......................... Fairbanks, AK.................. 21820 Fairbanks-College, AK.
22660.......................... Fort Collins, CO............... 22660 Fort Collins-Loveland, CO.
23224.......................... Frederick-Gaithersburg- 23224 Frederick-Gaithersburg-
Rockville, MD. Bethesda, MD.
23844.......................... Gary, IN....................... 29414 Lake County-Porter County-
Jasper County, IN.
24340.......................... Grand Rapids-Kentwood, MI...... 24340 Grand Rapids-Wyoming-Kentwood,
MI.
24860.......................... Greenville-Anderson, SC........ 24860 Greenville-Anderson-Greer, SC.
25540.......................... Hartford-East Hartford- 25540 Hartford-West Hartford-East
Middletown, CT. Hartford, CT.
25940.......................... Hilton Head Island-Bluffton, SC 25940 Hilton Head Island-Bluffton-
Port Royal, SC.
26380.......................... Houma-Thibodaux, LA............ 26380 Houma-Bayou Cane-Thibodaux,
LA.
26420.......................... Houston-The Woodlands-Sugar 26420 Houston-Pasadena-The
Land, TX. Woodlands, TX.
26900.......................... Indianapolis-Carmel-Anderson, 26900 Indianapolis-Carmel-Greenwood,
IN. IN.
27900.......................... Joplin, MO..................... 27900 Joplin, MO-KS.
27980.......................... Kahului-Wailuku-Lahaina, HI.... 27980 Kahului-Wailuku, HI.
29404.......................... Lake County-Kenosha County, IL- 28450 Kenosha, WI.
WI.
29404.......................... Lake County-Kenosha County, IL- 29404 Lake County, IL.
WI.
29820.......................... Las Vegas-Henderson-Paradise, 29820 Las Vegas-Henderson-North Las
NV. Vegas, NV.
31020.......................... Longview, WA................... 31020 Longview-Kelso, WA.
31460.......................... Madera, CA..................... 23420 Fresno, CA.
34100.......................... Morristown, TN................. 28940 Knoxville, TN.
34740.......................... Muskegon, MI................... 34740 Muskegon-Norton Shores, MI.
34820.......................... Myrtle Beach-Conway-North 34820 Myrtle Beach-Conway-North
Myrtle Beach, SC-NC. Myrtle Beach, SC.
34820.......................... Myrtle Beach-Conway-North 48900 Wilmington, NC.
Myrtle Beach, SC-NC.
35084.......................... Newark, NJ-PA.................. 35084 Newark, NJ.
35154.......................... New Brunswick-Lakewood, NJ..... 29484 Lakewood-New Brunswick, NJ.
35300.......................... New Haven-Milford, CT.......... 35300 New Haven, CT.
35380.......................... New Orleans-Metairie, LA....... 43640 Slidell-Mandeville-Covington,
LA.
35840.......................... North Port-Sarasota-Bradenton, 35840 North Port-Bradenton-Sarasota,
FL. FL.
35980.......................... Norwich-New London, CT......... 35980 Norwich-New London-
Willimantic, CT.
36084.......................... Oakland-Berkeley-Livermore, CA. 36084 Oakland-Fremont-Berkeley, CA.
36140.......................... Ocean City, NJ................. 12100 Atlantic City-Hammonton, NJ.
36260.......................... Ogden-Clearfield, UT........... 36260 Ogden, UT.
36540.......................... Omaha-Council Bluffs, NE-IA.... 36540 Omaha, NE-IA.
37460.......................... Panama City, FL................ 37460 Panama City-Panama City Beach,
FL.
39100.......................... Poughkeepsie-Newburgh- 28880 Kiryas Joel-Poughkeepsie-
Middletown, NY. Newburgh, NY.
39340.......................... Provo-Orem, UT................. 39340 Provo-Orem-Lehi, UT.
39540.......................... Racine, WI..................... 39540 Racine-Mount Pleasant, WI.
41540.......................... Salisbury, MD-DE............... 41540 Salisbury, MD.
41620.......................... Salt Lake City, UT............. 41620 Salt Lake City-Murray, UT.
41900.......................... San Germ[aacute]n, PR.......... 32420 Mayag[uuml]ez, PR.
42644.......................... Seattle-Bellevue-Kent, WA...... 21794 Everett, WA.
42680.......................... Sebastian-Vero Beach, FL....... 42680 Sebastian-Vero Beach-West Vero
Corridor, FL.
42700.......................... Sebring-Avon Park, FL.......... 42700 Sebring, FL.
43620.......................... Sioux Falls, SD................ 43620 Sioux Falls, SD-MN.
44140.......................... Springfield, MA................ 11200 Amherst Town-Northampton, MA.
44420.......................... Staunton, VA................... 44420 Staunton-Stuarts Draft, VA.
44700.......................... Stockton, CA................... 44700 Stockton-Lodi, CA.
45300.......................... Tampa-St. Petersburg- 41304 St. Petersburg-Clearwater-
Clearwater, FL. Largo, FL.
45300.......................... Tampa-St. Petersburg- 45294 Tampa, FL.
Clearwater, FL.
[[Page 23458]]
45540.......................... The Villages, FL............... 48680 Wildwood-The Villages, FL.
45780.......................... Toledo, OH..................... 41780 Sandusky, OH.
47220.......................... Vineland-Bridgeton, NJ......... 47220 Vineland, NJ.
47260.......................... Virginia Beach-Norfolk-Newport 47260 Virginia Beach-Chesapeake-
News, VA-NC. Norfolk, VA-NC.
47894.......................... Washington-Arlington- 11694 Arlington-Alexandria-Reston,
Alexandria, DC-VA-MD-WV. VA-WV.
47894.......................... Washington-Arlington- 30500 Lexington Park, MD.
Alexandria, DC-VA-MD-WV.
47894.......................... Washington-Arlington- 47764 Washington, DC-MD.
Alexandria, DC-VA-MD-WV.
48140.......................... Wausau-Weston, WI.............. 48140 Wausau, WI.
48300.......................... Wenatchee, WA.................. 48300 Wenatchee-East Wenatchee, WA.
48424.......................... West Palm Beach-Boca Raton- 48424 West Palm Beach-Boca Raton-
Boynton Beach, FL. Delray Beach, FL.
49340.......................... Worcester, MA-CT............... 49340 Worcester, MA.
49500.......................... Yauco, PR...................... 38660 Ponce, PR.
49660.......................... Youngstown-Warren-Boardman, OH- 49660 Youngstown-Warren, OH.
PA.
----------------------------------------------------------------------------------------------------------------
5. Change to County-Equivalents in the State of Connecticut
The June 6, 2022 Census Bureau Notice (87 FR 34235-34240), OMB
Bulletin No. 23-01 replaced the 8 counties in Connecticut with 9 new
``Planning Regions.'' Planning regions now serve as county-equivalents
within the CBSA system. We are proposing to adopt the planning regions
as county equivalents for wage index purposes. We believe it is
necessary to adopt this migration from counties to planning region
county-equivalents in order to maintain consistency with OMB updates.
We are providing the following crosswalk with the current and proposed
FIPS county and county-equivalent codes and CBSA assignments.
Table 26--Connecticut Counties to Planning Regions
----------------------------------------------------------------------------------------------------------------
Proposed planning
region area
FIPS Current county Current CBSA Proposed FIPS (county Proposed CBSA
equivalent)
----------------------------------------------------------------------------------------------------------------
9001.................... Fairfield......... 14860 9190 Western 14860
Connecticut.
9001.................... Fairfield......... 14860 9120 Greater Bridgeport 14860
9003.................... Hartford.......... 25540 9110 Capitol........... 25540
9005.................... Litchfield........ 7 9160 Northwest Hills... 7
9007.................... Middlesex......... 25540 9130 Lower Connecticut 25540
River Valley.
9009.................... New Haven......... 35300 9170 South Central 35300
Connecticut.
9009.................... New Haven......... 35300 9140 Naugatuck Valley.. 47930
9011.................... New London........ 35980 9180 Southeastern 35980
Connecticut.
9013.................... Tolland........... 25540 9110 Capitol........... 25540
9015.................... Windham........... 49340 9150 Northeastern 7
Connecticut.
----------------------------------------------------------------------------------------------------------------
2. Transition Policy for FY 2025 Wage Index Changes
Overall, we believe that implementing the new OMB delineations
would result in wage index values being more representative of the
actual costs of labor in a given area. We recognize that some SNFs (43
percent) would experience decreases in their area wage index values as
a result of this proposal, though less than 1 percent of providers
would experience a significant decrease (that is, greater than 5
percent) in their area wage index value. We also realize that many SNFs
(57 percent) would have higher area wage index values after adopting
the revised OMB delineations.
CMS recognizes that SNFs in certain areas may experience reduced
payment due to the proposed adoption of the revised OMB delineations
and has finalized transition policies to mitigate negative financial
impacts and provide stability to year-to-year wage index variations. In
FY 2023, the 5 percent cap policy was made permanent for all SNFs. This
5 percent cap on reductions policy is discussed in further detail in FY
2023 final rule at 87 FR 47521 through 47523. It is CMS's long held
opinion that revised labor market delineations should be adopted as
soon as is possible to maintain the integrity the wage index system. We
believe the 5 percent cap policy will sufficiently mitigate significant
disruptive financial impacts on SNFs negatively affected by the
proposed adoption of the revised OMB delineations. We do not believe
any additional transition is necessary considering that the current cap
on wage index decreases, which was not in place when implementing prior
decennial census updates in FY 2006 and FY 2015, ensures that a SNF's
wage index would not be less than 95 percent of its final wage index
for the prior year.
Furthermore, consistent with the requirement at section
1888(e)(4)(G)(ii) of the Act that wage index adjustments must be made
in a budget neutral manner, the applied 5 percent cap on the decrease
in an SNF's wage index would not result in any change in estimated
aggregate SNF PPS payments by applying a budget neutrality factor to
the unadjusted Federal per diem rates. The methodology for calculating
this budget neutrality factor is discussed below in section III.D of
this proposed rule.
We invite comments on our proposed implementation of revised labor
market area delineations. The proposed wage index applicable to FY 2025
is set forth in Table A available on the CMS website at http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Table
A provides a crosswalk between the FY 2024 wage index for a provider
using the current OMB delineations in effect in FY 2024 and the FY 2025
wage index using the proposed revised OMB delineations.
[[Page 23459]]
C. Technical Updates to the PDPM ICD-10 Mappings
1. Background
In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the
implementation of the Patient Driven Payment Model (PDPM), effective
October 1, 2019. The PDPM utilizes the International Classification of
Diseases, 10th Revision, Clinical Modification (ICD-10-CM, hereafter
referred to as ICD-10) codes in several ways, including using the
patient's primary diagnosis to assign patients to clinical categories
under several PDPM components, specifically the PT, OT, SLP, and NTA
components. While other ICD-10 codes may be reported as secondary
diagnoses and designated as additional comorbidities, the PDPM does not
use secondary diagnoses to assign patients to clinical categories. The
PDPM ICD-10 code to clinical category mapping, ICD-10 code to SLP
comorbidity mapping, and ICD-10 code to NTA comorbidity mapping
(hereafter collectively referred to as the PDPM ICD-10 code mappings)
are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM.
In the FY 2020 SNF PPS final rule (84 FR 38750), we outlined the
process by which we maintain and update the PDPM ICD-10 code mappings,
as well as the SNF Grouper software and other such products related to
patient classification and billing, to ensure that they reflect the
most up to date codes. Beginning with the updates for FY 2020, we apply
non-substantive changes to the PDPM ICD-10 code mappings through a sub-
regulatory process consisting of posting the updated PDPM ICD-10 code
mappings on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM. Such nonsubstantive changes are
limited to those specific changes that are necessary to maintain
consistency with the most current PDPM ICD-10 code mappings.
On the other hand, substantive changes that go beyond the intention
of maintaining consistency with the most current PDPM ICD-10 code
mappings, such as changes to the assignment of a code to a clinical
category or comorbidity list, would be through notice and comment
rulemaking because they are changes that affect policy. We note that,
in the case of any diagnoses that are either currently mapped to Return
to Provider or that we are finalizing to classify into this category,
this is not intended to reflect any judgment on the importance of
recognizing and treating these conditions. Rather, we believe that
there are more specific or appropriate diagnoses that would better
serve as the primary diagnosis for a Part-A covered SNF stay.
2. Clinical Category Changes for New ICD-10 Codes for FY 2025
Each year, we review the clinical category assigned to new ICD-10
diagnosis codes and propose changing the assignment to another clinical
category if warranted. This year, we are proposing changing the
clinical category assignment for the following four new codes that were
effective on October 1, 2023.
E88.10 Metabolic Syndrome was initially mapped to the
clinical category of Medical Management. The National Institutes of
Health (NIH) as the presence of at least three of the following traits:
Large waist, elevated triglyceride levels, reduced high-density
lipoprotein (HDL) cholesterol, increased blood pressure, and/or
elevated fasting blood glucose. Metabolic syndrome is a cluster of
metabolic risk factors for cardiovascular diseases and type 2 diabetes
mellitus. The root causes of metabolic syndrome are overweight/obesity,
physical inactivity, and genetic factors. Given this, treatment for
Metabolic Syndrome typically occurs outside of a Part A SNF stay and we
do not believe it would serve appropriately as the primary diagnosis
for a Part A-covered SNF stay. For this reason, we propose to change
the mapping of this code from Medical Management to the clinical
category of Return to Provider.
E88.811 Insulin Resistance Syndrome, Type A was initially
mapped to the clinical category of Medical Management. Type A insulin
resistance syndrome (TAIRS) is a rare disorder characterized by severe
insulin resistance due to defects in insulin receptor signaling and
treatment typically occurs outside of a Part A SNF stay. For this
reason, we propose to change the mapping of this code from Medical
Management to the clinical category of Return to Provider.
E88.818 Other Insulin Resistance was initially mapped to
the clinical category of Medical Management. Other Insulin Resistance
is used to specify a medical diagnosis of other insulin resistance such
as Insulin resistance, Type B. Treatment typically occurs outside of a
Part A SNF stay. For this reason, we propose to change the mapping of
this code from Medical Management to the clinical category of Return to
Provider.
E88.819 Insulin Resistance, Unspecified was initially
mapped to the clinical category of Medical Management and is utilized
to indicate when a specific type of insulin resistance has not been
specifically identified. Treatment typically occurs outside of a Part A
SNF stay. For this reason, we propose to change the mapping of this
code from Medical Management to the clinical category of Return to
Provider.
We solicit comments on the proposed substantive changes to the PDPM
ICD-10 code mappings discussed in this section, as well as comments on
additional substantive and non-substantive changes that commenters
believe are necessary.
D. Request for Information: Update to PDPM Non-Therapy Ancillary
Component
1. Background
In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the
implementation of the PDPM, effective October 1, 2019. Under the PDPM,
payment is determined through the combination of six payment
components. Five of the components (PT, OT, SLP, NTA, and nursing) are
case-mix adjusted. Additionally, there is a non-case-mix adjusted
component to cover utilization of SNF resources that do not vary
according to patient characteristics.
The NTA component utilizes a comorbidity score to assign the
patient to an NTA component case-mix group, which is determined by the
presence of conditions or the use of extensive services (henceforth
also referred to as comorbidities) that were found to be correlated
with increases in NTA costs for SNF patients. The presence of these
conditions and extensive services is reported by providers on certain
items of the Minimum Data Set (MDS) resident assessment, with some
conditions and extensive services being identified by ICD-10-CM codes
(hereafter referred to as ICD-10 codes) that are coded in Item I8000 of
the MDS. MDS Item I8000 is an open-ended item on the MDS assessment
where the provider can fill in additional active diagnoses for the
patient that are either not explicitly on the MDS, or are more severe
or specific diagnoses, in the form of ICD-10 codes. For conditions and
extensive services where the source is indicated as MDS item I8000, CMS
posts an NTA Comorbidity to ICD-10 Mapping, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/patient-driven-model, that provides a crosswalk
between the listed condition and the ICD-10 codes that may be coded to
[[Page 23460]]
qualify that condition to serve as part of the patient's NTA
classification.
During the development of PDPM, CMS identified a list of 50
conditions and extensive services that were associated with increases
in NTA costs. Each of the 50 comorbidities used under PDPM for NTA
classification is assigned a certain number of points based on its
relative costliness. To determine the patient's NTA comorbidity score,
a provider would identify all the comorbidities for which a patient
would qualify and then add the points for each comorbidity together.
The resulting sum represents the patient's NTA comorbidity score, which
is then used to classify the patient into an NTA component
classification group. More information about the creation of the NTA
component scoring method can be found in Section 3.7 of the SNF PDPM
Technical Report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research.
In response to stakeholder comments, CMS stated in the FY 2019 SNF
PPS final rule that we would consider revisiting both the list of
included NTA comorbidities and the points assigned to each condition or
extensive service based on changes in the patient population and care
practices over time (83 FR 39224). This request for information (RFI)
solicits comment on the methodology CMS is currently considering for
updating the NTA component.
2. Updates to the Study Population and Methodology
We are considering several changes to the NTA study population as a
foundation upon which to update the NTA component. First, we are
considering updating the years used for data corresponding to Medicare
Part A SNF stays, including claims, assessments, and cost reports. To
develop PDPM, CMS used a study population of Medicare Part A SNF stays
with admissions from FY 2014 through FY 2017 (see FY 2019 SNF PPS final
rule, 83 FR 39220). This methodology is described in more detail in
Section 3.2.1 of the SNF PDPM technical report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research. The updated study population
will instead use Medicare Part A SNF stays with admissions from FY 2019
through FY 2022. However, as discussed in the FY 2023 SNF PPS final
rule (87 FR 47526 through 47528), data from much of this time period
was affected by the national COVID-19 PHE with significant impacts on
nursing homes. We are therefore considering using the same subset
population used for the PDPM parity adjustment recalibration by
excluding stays with either a COVID-19 diagnosis or stays using a
COVID-19 PHE-related modification under section 1812(f) of the Act.
Next, we are considering making certain methodological changes to
reflect more accurate and reliable coding of NTA conditions and
extensive services on SNF Part A claims and the MDS after PDPM
implementation. We had taken a broad approach when creating the initial
PDPM NTA list to predict what NTA coding practices would be after PDPM
implementation, given the absence of analogous data in the previous
Resource Utilization Groups, Version IV (RUG-IV) payment model. The NTA
list was therefore created using data from a variety of different
sources, including using Medicare inpatient, outpatient, and Part B
claims to identify the presence of condition categories from the
Medicare Parts C and D risk adjustment models (hereafter referred to as
CCs and RxCCs, respectively). More information about this methodology
can be found in Section 3.7 of the SNF PDPM Technical Report, available
at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research. Given that we now have
several years of post-PDPM implementation data, we believe it would
more accurately reflect the coding of conditions and extensive services
under PDPM to rely exclusively upon SNF PPS Part A claims and the MDS.
We are therefore considering updating the methodology to only utilize
SNF Part A claims and the MDS, and not claim types from other Medicare
settings.
Additionally, we are considering modifying the overlap methodology
to rely more upon the MDS items that use a checkbox to record the
presence of conditions and extensive services whenever possible, while
allowing for potentially more severe or specific diagnoses to be
indicated on MDS item I8000 when it would be useful for more accurate
patient classification under PDPM. During the development of the NTA
component, CMS included both MDS items and ICD-10 diagnoses from the
Medicare Part C CCs and Part D RxCCs. Because the CCs were developed to
predict utilization of Medicare Part C services, while the RxCCs were
developed to predict Medicare Part D drug costs, the largest component
of NTA costs, we stated in the FY 2019 SNF PPS final rule that we
believed using both sources allowed us to define the conditions and
extensive services potentially associated with NTA utilization more
comprehensively (83 FR 39220). In cases where there was considerable
overlap between an MDS item and its CC or RxCC definition, to ensure
accurate estimation of statistically significant regression results, we
chose the CC or RxCC definition if it had higher average NTA cost per
day than the MDS item before running the final regression analysis.
More information about this methodology can be found in Section 3.7 of
the SNF PDPM Technical Report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research.
Since the implementation of PDPM, we believe patient conditions and
extensive services are now more accurately and reliably reported by
providers using MDS items. We are therefore considering prioritizing
the reporting of conditions on the MDS by raising the cost threshold
for selecting the overlapping CC or RxCC definitions from any
additional cost to 5 dollars in average NTA cost per day, which is the
amount that we observe to be generally associated with a 1-point NTA
increase. Specifically, since any dollar amount less than 5 dollars
would render the two options indistinguishable from each other in the
point assignment when comparing relative costliness, choosing MDS items
over CC/RxCCs will not lead to any loss of the most expensive
representations of the conditions and services in the regression model.
3. Updates to Conditions and Extensive Services Used for NTA
Classification
Table 27 provides the list of conditions and extensive services
that would be used for NTA classification following the various changes
we are considering to the methodology outlined above. For each
condition or extensive service, we have also included the frequency of
stays, the average NTA cost per day, the ordinary least squares (OLS)
estimate of its impact on NTA costs per day, and the assigned number of
points based on its relative impact on a patient's NTA costs.
Conditions and extensive services with a greater impact on NTA costs
were assigned more points, while those with less of an impact were
assigned fewer points. More information about this methodology can be
found in Section 3.7 of the SNF PDPM Technical Report, available at
https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research.
[[Page 23461]]
Table 27--Conditions and Extensive Services Used for NTA Classification
----------------------------------------------------------------------------------------------------------------
NTA comorbidity % of stays Avg NTA costs OLS estimate PDPM points
----------------------------------------------------------------------------------------------------------------
DGN: HIV/AIDS................................... 0.3 $128 $71.01 7
RxCC: Lung Transplant Status.................... 0.0 117 49.29 5
O0100H2: Special Treatments/Programs: 8.6 105 46.99 5
Intravenous Medication Post-admit Code.........
MDS: Parenteral IV feeding: Level high.......... 0.3 120 46.27 5
RxCC: Cystic Fibrosis........................... 0.0 99 31.10 3
RxCC: Major Organ Transplant Status, Except Lung 0.5 85 21.66 2
CC: Cirrhosis of Liver.......................... 2.0 77 18.92 2
RxCC: Chronic Myeloid Leukemia.................. 0.1 75 17.81 2
DGN: Endocarditis............................... 0.5 97 17.46 2
RxCC: Opportunistic Infections.................. 0.3 85 16.91 2
I2900: Active Diagnoses: Diabetes Mellitus (DM) 38.2 66 15.67 2
Code...........................................
O0100I2: Special Treatments/Programs: 0.2 80 14.65 1
Transfusion Post-admit Code....................
MDS: Parenteral IV feeding: Level Low........... 0.0 82 14.26 1
CC: Bone/Joint/Muscle Infections/Necrosis-- 2.9 97 14.23 1
Except: RxCC: Aseptic Necrosis of Bone.........
I6200: Active Diagnoses: Asthma COPD Chronic 29.2 66 13.72 1
Lung Disease Code..............................
O0100D2: Special Treatments/Programs: Suctioning 0.8 86 13.11 1
Post-admit Code................................
RxCC: Psoriatic Arthropathy and Systemic 0.2 72 12.87 1
Sclerosis......................................
RxCC: Chronic Pancreatitis...................... 0.3 75 12.64 1
RxCC: Specified Hereditary Metabolic/Immune 0.0 74 10.36 1
Disorders......................................
I5200: Active Diagnoses: Multiple Sclerosis Code 0.9 63 9.84 1
O0100F2: Special Treatments/Programs: Ventilator 0.3 99 9.79 1
Post-admit Code................................
RxCC: Pancreatic Disorders and Intestinal 0.6 65 9.16 1
Malabsorption, Except Pancreatitis.............
M1040B: Other Foot Skin Problems: Diabetic Foot 1.6 87 9.07 1
Ulcer Code.....................................
RxCC: Narcolepsy and Cataplexy.................. 0.1 68 9.01 1
RxCC: Venous Thromboembolism.................... 4.4 64 8.86 1
B0100: Comatose................................. 0.0 87 8.64 1
M0300X1: Highest Stage of Unhealed Pressure 1.6 80 8.48 1
Ulcer--Stage 4.................................
I1300: Active Diagnoses: Ulcerative Colitis, 2.3 63 7.77 1
Crohn's Disease, or Inflammatory Bowel Disease.
RxCC: Atrial Arrhythmias........................ 26.4 60 7.35 1
RxCC: Sickle Cell Anemia........................ 0.0 65 7.27 1
RxCC: Myelodysplastic Syndromes and 0.4 65 7.11 1
Myelofibrosis..................................
I2500: Wound Infection Code..................... 2.1 84 6.96 1
RxCC: Rheumatoid Arthritis and Other 2.5 62 6.94 1
Inflammatory Polyarthropathy...................
RxCC: Myasthenia Gravis, Amyotrophic Lateral 0.3 64 6.60 1
Sclerosis and Other Motor Neuron Disease--
Except: CC: Amyotrophic Lateral Sclerosis and
Other Motor Neuron Disease.....................
CC: Complications of Specified Implanted Device 0.3 75 6.39 1
or Graft.......................................
I6100: Active Diagnoses: Post Traumatic Stress 0.6 67 5.94 1
Disorder.......................................
RxCC: Aplastic Anemia and Other Significant 0.4 64 5.90 1
Blood Disorders................................
O0100M2: Special Treatments/Programs: Isolation 2.0 68 5.77 1
Post-admit Code................................
I0600: Active Diagnoses: Heart Failure.......... 29.5 63 5.72 1
H0100D: Bladder and Bowel Appliances: 0.8 59 5.39 1
Intermittent catheterization...................
I6300: Active Diagnoses: Respiratory Failure.... 12.5 67 5.10 1
RxCC: Morbid Obesity............................ 6.7 69 5.02 1
I5700: Active Diagnoses: Anxiety Disorder....... 22.4 59 4.89 1
CC: Disorders of Immunity--Except: RxCC: Immune 0.9 65 4.76 1
Disorders......................................
G0600D: Mobility Devices: Limb prosthesis....... 0.4 68 4.65 1
RxCC: Pituitary, Adrenal Gland, and Other 2.4 61 4.62 1
Endocrine and Metabolic Disorders..............
I1700: Active Diagnoses: Multi-Drug Resistant 2.7 84 4.57 1
Organism (MDRO) Code...........................
M1040E: Other Skin Problems: Surgical Wound(s) 25.7 57 4.05 1
Code...........................................
I5900: Active Diagnoses: Bipolar Disorder....... 3.5 61 4.02 1
RxCC: Chronic Viral Hepatitis, Except Hepatitis 0.1 71 3.90 1
C..............................................
----------------------------------------------------------------------------------------------------------------
We invite comments on the updates that we are considering for the
NTA component of PDPM.
VI. Skilled Nursing Facility Quality Reporting Program (SNF QRP)
A. Background and Statutory Authority
The Skilled Nursing Facility Quality Reporting Program (SNF QRP) is
authorized by section 1888(e)(6) of the Act, and it applies to
freestanding SNFs, SNFs affiliated with acute care facilities, and all
non-critical access hospital (CAH) swing-bed rural hospitals. Section
1888(e)(6)(A)(i) of the Act requires the Secretary to reduce by 2
percentage points the annual market basket percentage increase
described in section 1888(e)(5)(B)(i) of the Act applicable to a SNF
for a fiscal year (FY), after application of section 1888(e)(5)(B)(ii)
of the Act (the productivity adjustment) and section 1888(e)(5)(B)(iii)
of the Act, in the case of a SNF that does not submit data in
accordance with sections 1888(e)(6)(B)(i)(II) and (III) of the Act for
that FY. Section 1890A of the Act requires that the Secretary establish
and
[[Page 23462]]
follow a pre-rulemaking process, in coordination with the consensus-
based entity (CBE) with a contract under section 1890(a) of the Act, to
solicit input from certain groups regarding the selection of quality
and efficiency measures for the SNF QRP. We have codified our program
requirements in our regulations at Sec. 413.360.
We are proposing to require SNFs to collect and submit through the
Minimum Data Set (MDS) four new items and modify one item on the MDS as
described in section VI.C. of this proposed rule. In section VI.E.3. of
this proposed rule, we are proposing to adopt a similar validation
process for the SNF QRP that we adopted for the SNF VBP, and to amend
regulation text at Sec. 413.360 to implement the validation process we
propose. We are also seeking information on future measure concepts for
the SNF QRP in section VI.D. of this proposed rule.
B. General Considerations Used for the Selection of Measures for the
SNF QRP
For a detailed discussion of the considerations we use for the
selection of SNF QRP quality, resource use, or other measures, we refer
readers to the FY 2016 SNF PPS final rule (80 FR 46429 through 46431).
1. Quality Measures Currently Adopted for the SNF QRP
The SNF QRP currently has 15 adopted measures, which are listed in
Table 28. For a discussion of the factors used to evaluate whether a
measure should be removed from the SNF QRP, we refer readers to Sec.
413.360(b)(2).
Table 28--Quality Measures Currently Adopted for the SNF QRP
------------------------------------------------------------------------
Short name Measure name & data source
------------------------------------------------------------------------
Resident Assessment Instrument Minimum Data Set (Assessment-Based)
------------------------------------------------------------------------
Pressure Ulcer/Injury.................. Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/
Injury.
Application of Falls................... Application of Percent of
Residents Experiencing One or
More Falls with Major Injury
(Long Stay).
Discharge Mobility Score............... Application of IRF Functional
Outcome Measure: Discharge
Mobility Score for Medical
Rehabilitation Patients.
Discharge Self[dash]Care Score......... Application of IRF Functional
Outcome Measure: Discharge
Self-Care Score for Medical
Rehabilitation Patients.
DRR.................................... Drug Regimen Review Conducted
With Follow-Up for Identified
Issues-Post Acute Care (PAC)
Skilled Nursing Facility (SNF)
Quality Reporting Program
(QRP).
TOH[dash]Provider...................... Transfer of Health (TOH)
Information to the Provider
Post[dash]Acute Care (PAC).
TOH[dash]Patient....................... Transfer of Health (TOH)
Information to the Patient
Post[dash]Acute Care (PAC).
DC Function............................ Discharge Function Score.
Patient/Resident COVID-19 Vaccine...... COVID-19 Vaccine: Percent of
Patients/Residents Who Are Up
to Date.
------------------------------------------------------------------------
Claims-Based
------------------------------------------------------------------------
MSPB SNF............................... Medicare Spending Per
Beneficiary (MSPB)-Post Acute
Care (PAC) Skilled Nursing
Facility (SNF) Quality
Reporting Program (QRP).
DTC.................................... Discharge to Community (DTC)-
Post Acute Care (PAC) Skilled
Nursing Facility (SNF) Quality
Reporting Program (QRP).
PPR.................................... Potentially Preventable 30-Day
Post-Discharge Readmission
Measure for Skilled Nursing
Facility (SNF) Quality
Reporting Program (QRP).
SNF HAI................................ SNF Healthcare-Associated
Infections (HAI) Requiring
Hospitalization.
------------------------------------------------------------------------
National Healthcare Safety Network
------------------------------------------------------------------------
HCP COVID-19 Vaccine................... COVID[dash]19 Vaccination
Coverage among Healthcare
Personnel (HCP).
HCP Influenza Vaccine.................. Influenza Vaccination Coverage
among Healthcare Personnel
(HCP).
------------------------------------------------------------------------
We are not proposing to adopt any new measures for the SNF QRP.
C. Proposal To Collect Four New Items as Standardized Patient
Assessment Data Elements and To Modify One Item Collected as a
Standardized Patient Assessment Data Element Beginning With the FY 2027
SNF QRP
In this proposed rule, we are proposing to require SNFs to report
the following four new items \2\ as standardized patient assessment
data elements under the social determinants of health (SDOH) category:
one item for Living Situation; two items for Food; and one item for
Utilities. We are also proposing to modify one of the current items
collected as a standardized patient assessment data element under the
SDOH category (the Transportation item), as described in section
VI.C.5. of this proposed rule.\3\
---------------------------------------------------------------------------
\2\ Items may also be referred to as ``data elements.''
\3\ As noted in section VI.C.3, hospitals are required to report
whether they have screened patients for five standardized SDOH
categories: housing instability, food insecurity, utility
difficulties, transportation needs, and interpersonal safety.
---------------------------------------------------------------------------
1. Definition of Standardized Patient Assessment Data
Section 1888(e)(6)(B)(i)(III) of the Act requires SNFs to submit
standardized patient assessment data required under section 1899B(b)(1)
of the Act. Section 1899B(b)(1)(A) of the Act requires post-acute care
(PAC) providers to submit standardized patient assessment data under
applicable reporting provisions (which, for SNFs, is the SNF QRP) with
respect to the admission and discharge of an individual (and more
frequently as the Secretary deems appropriate) using a standardized
patient assessment instrument. Section 1899B(a)(1)(C) of the Act
requires, in part, the Secretary to modify the PAC assessment
instruments in order for PAC providers, including SNFs, to submit
standardized patient assessment data under the Medicare program. SNFs
are currently required to report standardized patient assessment data
through the patient
[[Page 23463]]
assessment instrument, referred to as the MDS. Section 1899B(b)(1)(B)
of the Act describes standardized patient assessment data as data
required for at least the quality measures described in section
1899B(c)(1) of the Act and that is with respect to the following
categories: (1) functional status, such as mobility and self-care at
admission to a PAC provider and before discharge from a PAC provider;
(2) cognitive function, such as ability to express ideas and to
understand, and mental status, such as depression and dementia; (3)
special services, treatments, and interventions, such as need for
ventilator use, dialysis, chemotherapy, central line placement, and
total parenteral nutrition; (4) medical conditions and comorbidities,
such as diabetes, congestive heart failure, and pressure ulcers; (5)
impairments, such as incontinence and an impaired ability to hear, see,
or swallow, and (6) other categories deemed necessary and appropriate
by the Secretary.
2. Social Determinants of Health Collected as Standardized Patient
Assessment Data Elements
Section 1899B(b)(1)(B)(vi) of the Act authorizes the Secretary to
collect standardized patient assessment data elements with respect to
other categories deemed necessary and appropriate. Accordingly, we
finalized the creation of the SDOH category of standardized patient
assessment data elements in the FY 2020 SNF PPS final rule (84 FR 38805
through 38817), and defined SDOH as the socioeconomic, cultural, and
environmental circumstances in which individuals live that impact their
health.\4\ According to the World Health Organization, research shows
that the SDOH can be more important than health care or lifestyle
choices in influencing health, accounting for between 30 to 55 percent
of health outcomes.\5\ This is part of a growing body of research that
highlights the importance of SDOH on health outcomes. Subsequent to the
FY 2020 SNF PPS final rule, we expanded our definition of SDOH: SDOH
are the conditions in the environments where people are born, live,
learn, work, play, worship, and age that affect a wide range of health,
functioning, and quality-of-life outcomes and risks.6 7 8
This expanded definition aligns our definition of SDOH with the
definition used by HHS agencies, including OASH, the Centers for
Disease Control and Prevention (CDC) and the White House Office of
Science and Technology Policy.9 10 We currently collect
seven items in this SDOH category of standardized patient assessment
data elements: ethnicity, race, preferred language, interpreter
services, health literacy, transportation, and social isolation (84 FR
38805 through 38817).\11\
---------------------------------------------------------------------------
\4\ FY 2020 SNF PPS final rule (84 FR 38805).
\5\ World Health Organization. Social determinants of health.
Available at https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
\6\ Using Z Codes: The Social Determinants of Health (SDOH).
Data Journey to Better Outcomes.
\7\ Improving the Collection of Social Determinants of Health
(SDOH) Data with ICD-10-CM Z Codes. https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf.
\8\ CMS.gov. Measures Management System (MMS). CMS Focus on
Health Equity. Health Equity Terminology and Quality Measures.
https://mmshub.cms.gov/about-quality/quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology.
\9\ Centers for Disease Control and Prevention. Social
Determinants of Health (SDOH) and PLACES Data.
\10\ ``U.S. Playbook To Address Social Determinants Of Health''
from the White House Office Of Science And Technology Policy
(November 2023).
\11\ These SDOH data are also collected for purposes outlined in
section 2(d)(2)(B) of the Improving Medicare Post-Acute Care
Transitions Act (IMPACT Act). For a detailed discussion on SDOH data
collection under section 2(d)(2)(B) of the IMPACT Act, see the FY
2020 SNF PPS final rule (84 FR 38805 through 38817).
---------------------------------------------------------------------------
In accordance with our authority under section 1899B(b)(1)(B)(vi)
of the Act, we similarly finalized the creation of the SDOH category of
standardized patient assessment data elements for Inpatient
Rehabilitation Facilities (IRFs) in the FY 2020 IRF PPS final rule (84
FR 39149 through 39161), for Long-Term Care Hospitals (LTCHs) in the FY
2020 Inpatient Prospective Payment System (IPPS)/LTCH PPS final rule
(84 FR 42577 through 84 FR 42588), and for Home Health Agencies (HHAs)
in the Calendar Year (CY) 2020 HH PPS final rule (84 60597 through
60608). We also collect the same seven SDOH items in these PAC
providers' respective patient assessment instruments (84 FR 39161, 84
FR 42590, and 84 FR 60610, respectively).
Access to standardized data relating to SDOH on a national level
permits us to conduct periodic analyses, and to assess their
appropriateness as risk adjustors or in future quality measures. Our
ability to perform these analyses relies on existing data collection of
SDOH items from PAC settings. We adopted these SDOH items using common
standards and definitions across the four PAC providers to promote
interoperable exchange of longitudinal information among these PAC
providers, including SNFs, and other providers. We believe this
information may facilitate coordinated care, continuity in care
planning, and the discharge planning process from PAC settings.
We noted in our FY 2020 SNF PPS final rule that each of the items
we were adopting at that time was identified in the 2016 National
Academies of Sciences, Engineering, and Medicine (NASEM) report as
impacting care use, cost and outcomes for Medicare beneficiaries (84 FR
38806). At that time, we acknowledged that other items may also be
useful to understand. The SDOH items we are now proposing to adopt as
standardized patient assessment data elements under the SDOH category
in this proposed rule were also identified in the 2016 NASEM report
\12\ or the 2020 NASEM report \13\ as impacting care use, cost and
outcomes for Medicare beneficiaries. The items have the capacity to
take into account treatment preferences and care goals of residents and
their caregivers, to inform our understanding of resident complexity
and SDOH that may affect care outcomes, and ensure that SNFs are in a
position to impact them through the provision of services and supports,
such as connecting residents and their caregivers with identified needs
with social support programs.
---------------------------------------------------------------------------
\12\ National Academies of Sciences, Engineering, and Medicine.
2016. Accounting for Social Risk Factors in Medicare Payment:
Identifying Social Risk Factors. Washington, DC: The National
Academies Press. https://doi.org/10.17226/21858.
\13\ National Academies of Sciences, Engineering, and Medicine.
2020. Leading Health Indicators 2030: Advancing Health, Equity, and
Well-Being. Washington, DC: The National Academies Press. https://doi.org/10.17226/25682.
---------------------------------------------------------------------------
Health-related social needs (HRSNs) are individual-level, adverse
social conditions that negatively impact a person's health or health
care,\14\ and are the resulting effects of SDOH. Examples of HRSNs
include lack of access to food, housing, or transportation, and have
been associated with poorer health outcomes, greater use of emergency
departments and hospitals, and higher health care costs.\15\ Certain
HRSNs can directly influence an individual's physical, psychosocial,
and functional status. This is particularly true for food
[[Page 23464]]
security, housing stability, utilities security, and access to
transportation.\16\
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\14\ Centers for Medicare & Medicaid Services. ``A Guide to
Using the Accountable Health Communities Health-Related Social Needs
Screening Tool: Promising Practices and Key Insights.'' August 2022.
Available at https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
\15\ Berkowitz, S.A., T.P. Baggett, and S.T. Edwards,
``Addressing Health-Related Social Needs: Value-Based Care or
Values-Based Care?'' Journal of General Internal Medicine, vol. 34,
no. 9, 2019, pp. 1916-1918, https://doi.org/10.1007/s11606-019-05087-3.
\16\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and
Misunderstandings: A Social Determinants of Health Lexicon for
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund,
November 18, 2019, https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/.
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We are proposing to require SNFs to collect and submit four new
items in the MDS as standardized patient assessment data elements under
the SDOH category because these items would collect information not
already captured by the current SDOH items. Specifically, we believe
the ongoing identification of SDOH would have three significant
benefits. First, promoting screening for these SDOH could serve as
evidence-based building blocks for supporting healthcare providers in
actualizing their commitment to address disparities that
disproportionately impact underserved communities. Second, screening
for SDOH improves health equity through identifying potential social
needs so the SNF may address those with the resident, their caregivers,
and community partners during the discharge planning process, if
indicated.\17\ Third, these SDOH items could support our ongoing SNF
QRP initiatives by providing data with which to stratify SNF's
performance on measures and or in future quality measures.
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\17\ American Hospital Association. (2020). Health Equity,
Diversity & Inclusion Measures for Hospitals and Health System
Dashboards. December 2020. Accessed: January 18, 2022. Available at
https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
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Additional collection of SDOH items would permit us to continue
developing the statistical tools necessary to maximize the value of
Medicare data and improve the quality of care for all beneficiaries.
For example, we recently developed and released the Health Equity
Confidential Feedback Reports, which provided data to SNFs on whether
differences in quality measure outcomes are present for their residents
by dual-enrollment status and race and ethnicity.\18\ We note that
advancing health equity by addressing the health disparities that
underlie the country's health system is one of our strategic pillars
\19\ and a Biden-Harris Administration priority.\20\
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\18\ In October 2023, we released two new annual Health Equity
Confidential Feedback Reports to SNFs: The Discharge to Community
(DTC) Health Equity Confidential Feedback Report and the Medicare
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback
Report. The PAC Health Equity Confidential Feedback Reports
stratified the DTC and MSPB measures by dual-enrollment status and
race/ethnicity. For more information on the Health Equity
Confidential Feedback Reports, please refer to the Education and
Outreach materials available on the SNF QRP Training web page at
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Training.
\19\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go
from Here: A Strategic Vision for CMS. Centers for Medicare &
Medicaid. Available at https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
\20\ The Biden-Harris Administration's strategic approach to
addressing health related social needs can be found in The U.S.
Playbook to Address Social Determinants of Health (SDOH) (2023):
https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf.
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3. Proposal To Collect Four New Items as Standardized Patient
Assessment Data Elements Beginning With the FY 2027 SNF QRP
We are proposing to require SNFs to collect and submit four new
items as standardized patient assessment data elements under the SDOH
category using the MDS: one item for Living Situation, as described in
section VI.C.3.(a) of this proposed rule; two items for Food, as
described in section VI.C.3.(b) of this proposed rule; and one item for
Utilities, as described in section VI.C.3.(c) of this proposed rule.
We selected the proposed SDOH items from the Accountable Health
Communities (AHC) HRSN Screening Tool developed for the AHC Model. The
AHC HRSN Screening Tool is a universal, comprehensive screening for
HRSNs that addresses five core domains as follows: (1) housing
instability (for example, homelessness, poor housing quality); (2) food
insecurity; (3) transportation difficulties; (4) utility assistance
needs; and (5) interpersonal safety concerns (for example, intimate-
partner violence, elder abuse, child maltreatment).\21\
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\21\ More information about the AHC HRSN Screening Tool is
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
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We believe that requiring SNFs to report the Living Situation,
Food, Utilities, and Transportation items that are currently included
in the AHC HRSN Screening Tool would further standardize the screening
of SDOH across quality programs. For example, our proposal would align,
in part, with the requirements of the Hospital Inpatient Quality
Reporting (IQR) Program and the Inpatient Psychiatric Facility Quality
Reporting (IPFQR) Program. As of January 2024, hospitals are required
to report whether they have screened patients for the standardized SDOH
categories of housing instability, food insecurity, utility
difficulties, transportation needs, and interpersonal safety to meet
the Hospital IQR Program requirements.\22\ Additionally, beginning
January 2025, IPFs will also be required to report whether they have
screened patients for the same set of SDOH categories.\23\ As we
continue to standardize data collection across PAC settings, we believe
using common standards and definitions for new items is important to
promote interoperable exchange of longitudinal information between SNFs
and other providers to facilitate coordinated care, continuity in care
planning, and the discharge planning process.
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\22\ Centers for Medicare & Medicaid Services, FY2023 IPPS/LTCH
PPS final rule (87 FR 49202 through 49215).
\23\ Centers for Medicare & Medicaid Services, FY2024 Inpatient
Psychiatric Prospective Payment System--Rate Update (88 FR 51107
through 51121).
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Below we describe each of the four proposed items in more detail.
(a) Living Situation
Healthy People 2030 prioritizes economic stability as a key SDOH,
of which housing stability is a component.24 25 Lack of
housing stability encompasses several challenges, such as having
trouble paying rent, overcrowding, moving frequently, or spending the
bulk of household income on housing.\26\ These experiences may
negatively affect one's physical health and access to health care.
Housing instability can also lead to homelessness, which is housing
deprivation in its most severe form.\27\ On a single night in 2023,
roughly 653,100 people, or 20 out of every 10,000 people in the United
States, were experiencing homelessness.\28\ Studies also found that
people who are homeless have an increased risk of
[[Page 23465]]
premature death and experience chronic disease more often than among
the general population.\29\ We believe that SNFs can use information
obtained from the Living Situation item during a resident's discharge
planning. For example, SNFs could work in partnership with community
care hubs and community-based organizations to establish new care
transition workflows, including referral pathways, contracting
mechanisms, data sharing strategies, and implementation training that
can track HRSNs to ensure unmet needs, such as housing, are
successfully addressed through closed loop referrals and follow-up.\30\
SNFs could also take action to help alleviate a resident's other
related costs of living, like food, by referring the resident to
community-based organizations that would allow the resident's
additional resources to be allocated towards housing without
sacrificing other needs.\31\ Finally, SNFs could use the information
obtained from the Living Situation item to better coordinate with other
healthcare providers, facilities, and agencies during transitions of
care, so that referrals to address a resident's housing stability are
not lost during vulnerable transition periods.
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\24\ Office of Disease Prevention and Health Promotion. (n.d.).
Healthy People 2030 [verbar] Priority Areas: Social Determinants of
Health. Retrieved from U.S. Department of Health and Human Services:
https://health.gov/healthypeople/priority-areas/social-determinants-health.
\25\ Healthy People 2030 is a long-term, evidence-based effort
led by the U.S. Department of Health and Human Services (HHS) that
aims to identify nationwide health improvement priorities and
improve the health of all Americans.
\26\ Kushel, M.B., Gupta, R., Gee, L., & Haas, J.S. (2006).
Housing instability and food insecurity as barriers to health care
among low-income Americans. Journal of General Internal Medicine,
21(1), 71-77. doi: 10.1111/j.1525-1497.2005.00278.x.
\27\ Homelessness is defined as ``lacking a regular nighttime
residence or having a primary nighttime residence that is a
temporary shelter or other place not designed for sleeping.''
Crowley, S. (2003). The affordable housing crisis: Residential
mobility of poor families and school mobility of poor children.
Journal of Negro Education, 72(1), 22-38. https://doi.org/10.2307/3211288.
\28\ The 2023 Annual Homeless Assessment Report (AHAR) to
Congress. The U.S. Department of Housing and Urban Development 2023.
https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf.
\29\ Baggett, T.P., Hwang, S.W., O'Connell, J.J., Porneala,
B.C., Stringfellow, E.J., Orav, E.J., Singer, D.E., & Rigotti, N.A.
(2013). Mortality among homeless adults in Boston: Shifts in causes
of death over a 15-year period. JAMA Internal Medicine, 173(3), 189-
195. https://doi.org/10.1001/jamainternmed.2013.1604. Schanzer, B.,
Dominguez, B., Shrout, P.E., & Caton, C.L. (2007). Homelessness,
health status, and health care use. American Journal of Public
Health, 97(3), 464-469. doi: https://doi.org/10.2105/ajph.2005.076190.
\30\ U.S. Department of Health & Human Services (HHS), Call to
Action, ``Addressing Health Related Social Needs in Communities
Across the Nation.'' November 2023. https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.
\31\ Henderson, K.A., Manian, N., Rog, D.J., Robison, E., Jorge,
E., AlAbdulmunem, M. ``Addressing Homelessness Among Older Adults''
(Final Report). Washington, DC: Office of the Assistant Secretary
for Planning and Evaluation, U.S. Department of Health and Human
Services. October 26, 2023.
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Due to the potential negative impacts housing instability can have
on a resident's health, we are proposing to adopt the Living Situation
item as a new standardized patient assessment data element under the
SDOH category. The proposed Living Situation item is based on the
Living Situation item currently collected in the AHC HRSN Screening
Tool,32 33 and was adapted from the Protocol for Responding
to and Assessing Patients' Assets, Risks, and Experiences (PRAPARE)
tool.\34\ The proposed Living Situation item asks, ``What is your
living situation today?'' The proposed response options are: (0) I have
a steady place to live; (1) I have a place to live today, but I am
worried about losing it in the future; (2) I do not have a steady place
to live; (7) Resident declines to respond; and (8) Resident unable to
respond. A draft of the Living Situation item proposed as a
standardized patient assessment data element under the SDOH category
can be found in the Downloads section of the SNF QRP Measures and
Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
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\32\ More information about the AHC HRSN Screening Tool is
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
\33\ The AHC HRSN Screening Tool Living Situation item includes
two questions. In an effort to limit SNF burden, we are only
proposing the first question.
\34\ National Association of Community Health Centers and
Partners, National Association of Community Health Centers,
Association of Asian Pacific Community Health Organizations,
Association OPC, Institute for Alternative Futures. ``PRAPARE.''
2017. https://prapare.org/the-prapare-screening-tool/.
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(b) Food
The U.S. Department of Agriculture, Economic Research Service
defines a lack of food security as a household-level economic and
social condition of limited or uncertain access to adequate food.\35\
Adults who are food insecure may be at an increased risk for a variety
of negative health outcomes and health disparities. For example, a
study found that food-insecure adults may be at an increased risk for
obesity.\36\ Another study found that food-insecure adults have a
significantly higher probability of death from any cause or
cardiovascular disease in long-term follow-up care, in comparison to
adults that are food secure.\37\
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\35\ U.S. Department of Agriculture, Economic Research Service.
(n.d.). Definitions of food security. Retrieved March 10, 2022, from
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/definitions-of-food-security/.
\36\ Hernandez, D.C., Reesor, L.M., & Murillo, R. (2017). Food
insecurity and adult overweight/obesity: Gender and race/ethnic
disparities. Appetite, 117, 373-378.
\37\ Banerjee, S., Radak, T., Khubchandani, J., & Dunn, P.
(2021). Food Insecurity and Mortality in American Adults: Results
From the NHANES-Linked Mortality Study. Health promotion practice,
22(2), 204-214. https://doi.org/10.1177/1524839920945927.
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While having enough food is one of many predictors for health
outcomes, a diet low in nutritious foods is also a factor.\38\ The
United States Department of Agriculture (USDA) defines nutrition
security as ``consistent and equitable access to healthy, safe,
affordable foods essential to optimal health and well-being.'' \36\
Nutrition security builds on and complements long standing efforts to
advance food security. Studies have shown that older adults struggling
with food insecurity consume fewer calories and nutrients and have
lower overall dietary quality than those who are food secure, which can
put them at nutritional risk.\39\ Older adults are also at a higher
risk of developing malnutrition, which is considered a state of
deficit, excess, or imbalance in protein, energy, or other nutrients
that adversely impacts an individual's own body form, function, and
clinical outcomes.\40\ About 50 percent of older adults are affected by
malnutrition, which is further aggravated by a lack of food security
and poverty.\41\ These facts highlight why the Biden-Harris
Administration launched the White House Challenge to End Hunger and
Build Health Communities.\42\
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\38\ National Center for Health Statistics. (2022, September 6).
Exercise or Physical Activity. Retrieved from Centers for Disease
Control and Prevention: https://www.cdc.gov/nchs/fastats/exercise.htm.
\39\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior
Hunger in America 2017: An Annual Report. Prepared for Feeding
America. Available at https://www.feedingamerica.org/research/senior-hunger-research/senior.
\40\ The Malnutrition Quality Collaborative. (2020). National
Blueprint: Achieving Quality Malnutrition Care for Older Adults,
2020 Update. Washington, DC: Avalere Health and Defeat Malnutrition
Today. Available at https://defeatmalnutrition.today/advocacy/blueprint/.
\41\ Food Research & Action Center (FRAC). ``Hunger is a Health
Issue for Older Adults: Food Security, Health, and the Federal
Nutrition Programs.'' December 2019. https://frac.org/wp-content/uploads/hunger-is-a-health-issue-for-older-adults-1.pdf.
\42\ The White House Challenge to End Hunger and Build Health
Communities (Challenge) was a nationwide call-to-action released on
March 24, 2023 to stakeholders across all of society to make
commitments to advance President Biden's goal to end hunger and
reduce diet-related diseases by 2030--all while reducing
disparities. More information on the White House Challenge to End
Hunger and Build Health Communities can be found: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/fact-sheet-biden-harris-administration-launches-the-white-house-challenge-to-end-hunger-and-build-healthy-communities-announces-new-public-private-sector-actions-to-continue-momentum-from-hist/.
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We believe that adopting items to collect and analyze information
about a resident's food security at home could provide additional
insight to their health complexity and help facilitate coordination
with other healthcare providers, facilities, and agencies during
transitions of care, so that referrals to address a resident's food
security are not lost during vulnerable transition periods. For
example, a SNF's dietitian or other clinically qualified nutrition
professional could work with the
[[Page 23466]]
resident and their caregiver to plan healthy, affordable food choices
prior to discharge.\43\ SNFs could also refer a resident that indicates
lack of food security to government initiatives such as the
Supplemental Nutrition Assistance Program (SNAP) and food pharmacies
(programs to increase access to healthful foods by making them
affordable), two initiatives that have been associated with lower
health care costs and reduced hospitalization and emergency department
visits.\44\
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\43\ Schroeder K., Smaldone A. Food Insecurity: A Concept
Analysis. Nurse Forum. 2015 Oct-Dec;50(4):274-84. doi: 10.1111/
nuf.12118. Epub 2015 Jan 21. PMID: 25612146; PMCID: PMC4510041.
\44\ Tsega M., Lewis C., McCarthy D., Shah T., Coutts K. Review
of Evidence for Health-Related Social Needs Interventions. July
2019. The Commonwealth Fund. https://www.commwealthfund.org/sites/default/files/2019-07/ROI-evidence-review-final-version.pdf.
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We are proposing to adopt two Food items as new standardized
patient assessment data elements under the SDOH category. These
proposed items are based on the Food items currently collected in the
AHC HRSN Screening Tool and were adapted from the USDA 18-item
Household Food Security Survey (HFSS).\45\ The first proposed Food item
states, ``Within the past 12 months, you worried that your food would
run out before you got money to buy more.'' The second proposed Food
item States, ``Within the past 12 months, the food you bought just
didn't last and you didn't have money to get more.'' We propose the
same response options for both items: (0) Often true; (1) Sometimes
true; (2) Never True; (7) Resident to declines to respond; and (8)
Resident unable to respond. A draft of the Food items proposed to be
adopted as standardized patient assessment data elements under the SDOH
category can be found in the Downloads section of the SNF QRP Measures
and Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
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\45\ More information about the HFSS tool can be found at
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/survey-tools/.
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(c) Utilities
A lack of energy (utility) security can be defined as an inability
to adequately meet basic household energy needs.\46\ According to the
United States Department of Energy, one in three households in the U.S.
are unable to adequately meet basic household energy needs.\47\ The
consequences associated with a lack of utility security are represented
by three primary dimensions: economic; physical; and behavioral.
Residents with low incomes are disproportionately affected by high
energy costs, and they may be forced to prioritize paying for housing
and food over utilities.\48\ Some residents may face limited housing
options, and therefore, are at increased risk of living in lower-
quality physical conditions with malfunctioning heating and cooling
systems, poor lighting, and outdated plumbing and electrical
systems.\49\ Residents with a lack of utility security may use negative
behavioral approaches to cope, such as using stoves and space heaters
for heat.\50\ In addition, data from the Department of Energy's U.S.
Energy Information Administration confirm that a lack of energy
security disproportionately affects certain populations, such as low-
income and African American households.\51\ The effects of a lack of
utility security include vulnerability to environmental exposures such
as dampness, mold, and thermal discomfort in the home, which have a
direct impact on a person's health.\52\ For example, research has shown
associations between a lack of energy security and respiratory
conditions as well as mental health-related disparities and poor sleep
quality in vulnerable populations such as the elderly, children, the
socioeconomically disadvantaged, and the medically vulnerable.\53\
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\46\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\47\ US Energy Information Administration. ``One in Three U.S.
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
\48\ Hern[aacute]ndez D. ``Understanding `energy insecurity' and
why it matters to health.'' Soc Sci Med. 2016; 167:1-10.
\49\ Hern[aacute]ndez D. Understanding 'energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct;167:1-10. doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\50\ Hern[aacute]ndez D. ``What `Merle' Taught Me About Energy
Insecurity and Health.'' Health Affairs, VOL.37, NO.3: Advancing
Health Equity Narrative Matters. March 2018. https://doi.org/10.1377/hlthaff.2017.1413.
\51\ US Energy Information Administration. ``One in Three U.S.
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
\52\ Hern[aacute]ndez D. Understanding `energy insecurity' and
why it matters to health. Soc Sci Med. 2016 Oct;167:1-10. doi:
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003;
PMCID: PMC5114037.
\53\ Hern[aacute]ndez D, Siegel E. Energy insecurity and its ill
health effects: A community perspective on the energy-health nexus
in New York City. Energy Res Soc Sci. 2019 Jan;47:78-83. doi:
10.1016/j.erss.2018.08.011. Epub 2018 Sep 8. PMID: 32280598; PMCID:
PMC7147484.
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We believe adopting an item to collect information about a
resident's utility security would facilitate the identification of
residents who may not have utility security and who may benefit from
engagement efforts. For example, SNFs may be able to use the
information on utility security to help connect some residents in need
to programs that can help older adults pay for their home energy
(heating/cooling) costs, like the Low-Income Home Energy Assistance
Program (LIHEAP).\54\ SNFs may also be able to partner with community
care hubs and community-based organizations to assist the resident in
applying for these and other local utility assistance programs, as well
as helping them navigate the enrollment process.\55\
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\54\ U.S. Department of Health & Human Services. Office of
Community Services. Low Income Home Energy Assistance Program
(LIHEAP). https://www.acf.hhs.gov/ocs/programs/liheap.
\55\ National Council on Aging (NCOA). ``How to Make It Easier
for Older Adults to Get Energy and Utility Assistance.'' Promising
Practices Clearinghouse for Professionals. Jan 13, 2022. https://www.ncoa.org/article/how-to-make-it-easier-for-older-adults-to-get-energy-and-utility-assistance.
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We are proposing to adopt a new item, Utilities, as a new
standardized patient assessment data element under the SDOH category.
This proposed item is based on the Utilities item currently collected
in the AHC HRSN Screening Tool, and was adapted from the Children's
Sentinel Nutrition Assessment Program (C-SNAP) survey.\56\ The proposed
Utilities item asks, ``In the past 12 months, has the electric, gas,
oil, or water company threatened to shut off services in your home?''
The proposed response options are: (0) Yes; (1) No; (2) Already shut
off; (7) Resident declines to respond; and (8) Resident unable to
respond. A draft of the Utilities item proposed as a standardized
patient assessment data element under the SDOH category can be found in
the Downloads section of the SNF QRP Measures and Technical Information
web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
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\56\ This validated survey was developed as a clinical indicator
of household energy security among pediatric caregivers. Cook, J.T.,
D.A. Frank., P.H. Casey, R. Rose-Jacobs, M.M. Black, M. Chilton, S.
Ettinger de Cuba, et al. ``A Brief Indicator of Household Energy
Security: Associations with Food Security, Child Health, and Child
Development in US Infants and Toddlers.'' Pediatrics, vol. 122, no.
4, 2008, pp. e874-e875. https://doi.org/10.1542/peds.2008-0286.
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4. Interested Parties Input
We developed our proposal to add these items after considering
feedback we received in response to our request
[[Page 23467]]
for information (RFI) on Principles for Selecting and Prioritizing SNF
QRP Quality Measures and Concepts Under Consideration for Future Years
in the FY 2024 SNF PPS final rule (88 FR 53265 through 53267). This RFI
sought to obtain input on a set of principles to identify SNF QRP
measures, as well as additional thoughts about measurement gaps, and
suitable measures for filling these gaps. In response to this
solicitation, commenters stated that the inclusion of a malnutrition
screening and intervention measures would promote both quality and
health equity. Other measures and measurement concepts included health
equity, psychosocial issues, and caregiver status. The FY 2024 SNF PPS
final rule includes a summary of the public comments that we received
in response to the RFI and our responses to those comments (88 FR 53265
through 53267).
We also considered comments received in response to our Health
Equity Update in the FY 2024 SNF PPS final rule. Comments were
generally supportive of CMS' efforts to develop ways to measure and
mitigate health inequities. One commenter referenced their belief that
collection of SDOH would enhance holistic care, call attention to
impairments that might be mitigated or resolved, and facilitate clear
communication between residents and SNFs. While there were commenters
who urged CMS to balance reporting requirements so as not to create
undue administrative burden, another commenter suggested CMS
incentivize collection of data on SDOH such as housing stability and
food security. The FY 2024 SNF PPS final rule (88 FR 53268 through
53269) includes a summary of the public comments that we received in
response to the Health Equity Update and our responses to those
comments.
Additionally, we considered feedback we received when we proposed
the creation of the SDOH category of standardized patient assessment
data elements in the FY 2020 SNF PPS proposed rule (84 FR 17671 through
17679). Commenters were generally in favor of the concept of collecting
SDOH items and stated that, if implemented appropriately, the data
could be useful in identifying and addressing health care disparities,
as well as refining the risk adjustment of outcome measures. The FY
2020 SNF PPS final rule (84 FR 38805 through 38818) includes a summary
of the public comments that we received and our responses to those
comments. We incorporated this input into the development of this
proposal.
We invite comment on the proposal to adopt four new items as
standardized patient assessment data elements under the SDOH category
beginning with the FY 2027 SNF QRP: one Living Situation item; two Food
items; and one Utilities item.
5. Proposal To Modify the Transportation Item Beginning With the FY
2027 SNF QRP
Beginning October 1, 2023, SNFs began collecting seven items
adopted as standardized patient assessment data elements under the SDOH
category on the MDS.\57\ One of these items, A1250. Transportation,
collects data on whether a lack of transportation has kept a resident
from getting to and from medical appointments, meetings, work, or from
getting things they need for daily living. This item was adopted as a
standardized patient assessment data element under the SDOH category in
the FY 2020 SNF PPS final rule (84 FR 38805 through 38809). As we
discussed in the FY 2020 SNF PPS final rule (84 FR 38814 through
42588), we continue to believe that access to transportation for
ongoing health care and medication access needs, particularly for those
with chronic diseases, is essential to successful chronic disease
management and that the collection of a Transportation item would
facilitate the connection to programs that can address identified needs
(84 FR 38815 through 42588).
---------------------------------------------------------------------------
\57\ The seven SDOH items are ethnicity, race, preferred
language, interpreter services, health literacy, transportation, and
social isolation (84 FR 38805 through 38818).
---------------------------------------------------------------------------
As part of our routine item and measure monitoring work, we
continually assess the implementation of the new SDOH items. We have
identified an opportunity to improve the data collection for A1250.
Transportation in the MDS by aligning it with the Transportation
category collected in our other programs.\58\ Specifically, we are
proposing to modify the current Transportation item in the MDS so that
it aligns with a Transportation item collected on the AHC HRSN
Screening Tool, one of the potential tools the IPFQR and Hospital IQR
Programs may select for data collection.
---------------------------------------------------------------------------
\58\ Centers for Medicare & Medicaid Services, FY2024 Inpatient
Psychiatric Prospective Payment System--Rate Update (88 FR 51107
through 51121).
\54\ Centers for Medicare & Medicaid Services, FY2023 IPPS/LTCH
PPS final rule (87 FR 49202 through 49215).
---------------------------------------------------------------------------
A1250. Transportation currently collected in the MDS asks: ``Has
lack of transportation kept you from medical appointments, meetings,
work, or from getting things needed for daily living?'' The response
options are: (A) Yes, it has kept me from medical appointments or from
getting my medications; (B) Yes, it has kept me from non-medical
meetings, appointments, work, or from getting things that I need; (C)
No; (X) Resident unable to respond; and (Y) Resident declines to
respond. The Transportation item collected in the AHC HRSN Screening
Tool asks, ``In the past 12 months, has lack of reliable transportation
kept you from medical appointments, meetings, work or from getting
things needed for daily living?'' The two response options are: Yes;
and No. Consistent with the AHC HRSN Screening Tool and adapted from
the PRAPARE tool, we are proposing to modify the A1250. Transportation
item currently collected in the SNF MDS in two ways: (1) revise the
look-back period for when the resident experienced lack of reliable
transportation; and (2) simplify the response options.
First, the proposed modification of the Transportation item would
use a defined 12-month look back period, while the current
Transportation item uses a look back period of six to 12 months. We
believe the distinction of a 12-month look back period would reduce
ambiguity for both residents and clinicians, and therefore, improve the
validity of the data collected. Second, we are proposing to simplify
the response options. Currently, SNFs separately collect information on
whether a lack of transportation has kept the patient from medical
appointments or from getting medications, and whether a lack of
transportation has kept the resident from non-medical meetings,
appointments, work, or from getting things they need. Although
transportation barriers can directly affect a person's ability to
attend medical appointments and obtain medications, a lack of
transportation can also affect a person's health in other ways,
including accessing goods and services, obtaining adequate food and
clothing, and social activities.\59\ The proposed modified
Transportation item would collect information on whether a lack of
reliable transportation has kept the resident from medical
appointments, meetings, work or from getting things needed for daily
living, rather than collecting the information separately. As discussed
previously, we believe reliable transportation services are fundamental
to a person's overall
[[Page 23468]]
health, and as a result, the burden of collecting this information
separately outweighs its potential benefit.
---------------------------------------------------------------------------
\59\ Victoria Transport Policy Institute. (2016, August 25).
Basic access and basic mobility: Meeting society's most important
transportation needs. Retrieved from http://www.vtpi.org/tdm/tdm103.htm.
---------------------------------------------------------------------------
For the reasons stated previously, we are proposing to modify
A1250. Transportation based on the Transportation item adopted for use
in the AHC HRSN Screening Tool and adapted from the PRAPARE tool. The
proposed Transportation item asks, ``In the past 12 months, has a lack
of reliable transportation kept you from medical appointments,
meetings, work or from getting things needed for daily living?'' The
proposed response options are: (0) Yes; (1) No; (7) Resident declines
to respond; and (8) Resident unable to respond. A draft of the proposed
modified Transportation item can be found in the Downloads section of
the SNF QRP Measures and Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
We invite comment on the proposal to modify the current
Transportation item previously adopted as a standardized patient
assessment data element under the SDOH category beginning with the FY
2027 SNF QRP.
D. SNF QRP Quality Measure Concepts Under Consideration for Future
Years--Request for Information (RFI)
We are seeking input on the importance, relevance, appropriateness,
and applicability of each of the concepts under consideration listed in
Table 29 for future years in the SNF QRP. In the FY 2024 SNF PPS
proposed rule (88 FR 21353 through 21355), we published a request for
information (RFI) on a set of principles for selecting and prioritizing
SNF QRP measures, identifying measurement gaps, and suitable measures
for filling these gaps. Within this proposed rule, we also sought input
on data available to develop measures, approaches for data collection,
perceived challenges or barriers, and approaches for addressing
identified challenges. We refer readers to the FY 2024 SNF PPS final
rule (88 FR 53265 through 53267) for a summary of the public comments
we received in response to the RFI.
Subsequently, our measure development contractor convened a
Technical Expert Panel (TEP) on December 15, 2023 to obtain expert
input on the future measure concepts that could fill the measurement
gaps identified in our FY 2024 RFI.\60\ The TEP also discussed the
alignment of PAC and Hospice measures with CMS' ``Universal
Foundation'' of quality measures.\61\ The Universal Foundation aims to
focus provider attention, reduce burden, identify disparities in care,
prioritize development of interoperable, digital quality measures,
allow for comparisons across programs, and help identify measurement
gaps.
---------------------------------------------------------------------------
\60\ The Post-Acute Care (PAC) and Hospice Quality Reporting
Program Cross-Setting TEP summary report will be published in early
summer or as soon as technically feasible. SNFs can monitor the
Partnership for Quality Measurement website at https://mmshub.cms.gov/get-involved/technical-expert-panel/updates for
updates.
\61\ Centers for Medicare & Medicaid Services. Aligning Quality
Measures Across CMS--the Universal Foundation. November 17, 2023.
https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
---------------------------------------------------------------------------
In consideration of the feedback we have received through these
activities, we are seeking input on four concepts for the SNF QRP. One
is a composite of vaccinations,\62\ which could represent overall
immunization status of residents such as the Adult Immunization Status
measure \63\ in the Universal Foundation. A second concept on which we
are seeking feedback is the concept of depression for the SNF QRP,
which may be similar to the Clinical Screening for Depression and
Follow-up measure \64\ in the Universal Foundation. Finally, we are
seeking feedback on the concepts of pain management and patient
experience of care/patient satisfaction for the SNF QRP.
---------------------------------------------------------------------------
\62\ A composite measure can summarize multiple measures through
the use of one value or piece of information. More information can
be found at https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/mms/downloads/composite-measures.pdf.
\63\ CMS Measures Inventory Tool. Adult immunization status
measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=26.
\64\ CMS Measures Inventory Tool. Clinical Depression Screening
and Follow-Up measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=672.
Table 29--Future Measure Concepts Under Consideration for the SNF QRP
------------------------------------------------------------------------
Quality measure concepts
-------------------------------------------------------------------------
Vaccination Composite.
Pain Management.
Depression.
Patient Experience of Care/Patient Satisfaction.
------------------------------------------------------------------------
While we will not be responding to specific comments in response to
this RFI in the FY 2025 SNF PPS final rule, we intend to use this input
to inform our future measure development efforts.
E. Form, Manner, and Timing of Data Submission Under the SNF QRP
1. Background
We refer readers to the current regulatory text at Sec. 413.360(b)
for information regarding the policies for reporting specified data for
the SNF QRP.
2. Proposed Reporting Schedule for the Proposed New Standardized
Patient Assessment Data Elements, and the Modified Transportation Data
Element, Beginning October 1, 2025 for the FY 2027 SNF QRP
As discussed in section VI.C.3. and VI.C.5. of this proposed rule,
we are proposing to adopt four new items as standardized patient
assessment data elements under the SDOH category (one Living Situation
item, two Food items, and one Utilities item) and to modify the
Transportation standardized patient assessment data element previously
adopted under the SDOH category beginning with the FY 2027 SNF QRP.
We are proposing that SNFs would be required to report these new
items and the modified Transportation item using the MDS beginning with
residents admitted on October 1, 2025 through December 31, 2025 for
purposes of the FY 2027 SNF QRP. Starting in CY 2026, SNFs would be
required to submit data for the entire calendar year for each program
year.
We are also proposing that SNFs that submit the Living Situation,
Food, and Utilities items proposed for adoption as standardized patient
assessment data elements under the SDOH category with respect to
admission only would be deemed to have submitted those items with
respect to both admission and discharge. We propose that SNFs would be
required to submit these items at admission only (and not at discharge)
because it is unlikely that the assessment of those items at admission
would differ from the assessment of the same item at discharge. This
would align the data collection for these proposed items with other
SDOH items (that is, Race, Ethnicity, Preferred Language, and
Interpreter Services) which are only collected at admission.\65\ A
draft of the proposed items is available in the Downloads section of
the SNF QRP Measures and Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
---------------------------------------------------------------------------
\65\ FY 2020 SNF PPS final rule (84 FR 38817 through 38818).
---------------------------------------------------------------------------
As we noted in section VI.C.5 of this proposed rule, we continually
assess the
[[Page 23469]]
implementation of the new SDOH items, including A1250. Transportation,
as part of our routine item and measure monitoring work. We received
feedback from interested parties in response to the FY 2020 SNF PPS
proposed rule (84 FR 17676 through 17678) noting their concern with the
burden of collecting the Transportation item at admission and
discharge. Specifically, commenters stated that a resident's access to
transportation is unlikely to change between admission and discharge.
We analyzed the data SNFs reported from October 1, 2023 through
December 31, 2023 (Quarter 4 of CY 2023) and found that residents'
responses do not significantly change from admission to discharge.\66\
Specifically, the proportion of residents \67\ who responded ``Yes'' to
the Transportation item at admission versus at discharge differed by
only 0.60 percentage points during this period. We find these results
convincing, and therefore are proposing to require SNFs to collect and
submit the proposed modified standardized patient assessment data
element, Transportation, at admission only.
---------------------------------------------------------------------------
\66\ Due to data availability of SNF SDOH standardized patient
assessment data elements, this is based on one quarter of
Transportation data.
\67\ The analysis is limited to residents who responded to the
Transportation item at both admission and discharge.
---------------------------------------------------------------------------
We invite public comment on our proposal to collect data on the
following items proposed as standardized patient assessment data
elements under the SDOH category at admission only beginning with
October 1, 2025 SNF admissions: (1) Living Situation as described in
section VI.C.3(a) of this proposed rule; (2) Food as described in
section VI.C.3(b) of this proposed rule; and (3) Utilities as described
in section VI.C.3(c) of this proposed rule. We also invite comment on
our proposal to collect the proposed modified standardized patient
assessment data element, Transportation, at admission only beginning
with October 1, 2025 SNF admissions as described in section VI.C.5 of
this proposed rule.
3. Proposal To Participate in a Validation Process Beginning With the
FY 2027 SNF QRP
Section 1888(h)(12)(A) of the Act (as added by section 111(a)(4) of
Division CC of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260)) requires the Secretary to apply a process to validate data
submitted under the SNF QRP. Accordingly, we are proposing to require
SNFs to participate in a validation process that would apply to data
submitted using the MDS and SNF Medicare fee-for-service claims as a
SNF QRP requirement beginning with the FY 2027 SNF QRP. We are also
proposing to amend the regulation text at Sec. 413.360.
We are also considering additional validation methods that may be
appropriate to include in the future for the current measures submitted
through the National Healthcare Safety Network (NHSN), as well as for
other new measures we may consider for the program. Any updates to
specific program requirements related to the validation process would
be addressed through separate and future notice-and-comment rulemaking,
as necessary.
(a) Proposal To Participate in a Validation Process for Assessment-
Based Measures
The MDS is a resident assessment instrument that SNFs must complete
for all residents in a Medicare or Medicaid certified nursing facility,
and for residents whose stay is covered under SNF PPS in a non-critical
access hospital swing bed facility. The MDS includes the resident in
the assessment process, and uses standard protocols used in other
settings to improve clinical assessment and support the credibility of
programs that rely on MDS, like the SNF QRP.\68\
---------------------------------------------------------------------------
\68\ Centers for Medicare and Medicaid Services (CMS). (2023,
March 29). Minimum Data Set (MDS) 3.0 for Nursing Homes and Swing
Bed Providers. https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/nursinghomequalityinits/nhqimds30.
---------------------------------------------------------------------------
We are proposing to adopt a similar validation process for the SNF
QRP that we have adopted for the SNF Value-Based Purchasing (VBP)
program in the FY 2024 SNF PPS final rule (88 FR 53323 through 53325)
beginning with the FY 2027 SNF QRP. This method would closely align
with the validation process we have adopted for the SNF VBP program and
would have the following elements:
We propose that our validation contractor would select, on
an annual basis, up to 1,500 SNFs that submit at least one MDS record
in the calendar year (CY) 3 years prior to the applicable FY SNF QRP.
For example, for the FY 2027 SNF QRP, we would choose up to 1,500 SNFs
that submitted at least one MDS record in CY 2024. We are also
proposing that the SNFs that are selected to participate in the SNF QRP
validation for a program year would be the same SNFs that are randomly
selected to participate in the SNF VBP validation process for the
corresponding SNF VBP program year.
We propose that our validation contractor would request up
to 10 medical records from each of the selected SNFs. Each SNF selected
would only be required to submit records once in a fiscal year, for a
maximum of 10 records for each SNF selected. To decrease the burden for
the selected SNF, we are proposing that the validation contractor would
request that the SNFs submit the same medical records, at the same
time, that are required from the same SNFs for purposes of the SNF VBP
validation.
We propose that the selected SNFs would have the option to
submit digital or paper copies of the requested medical records to the
validation contractor and would be required to submit the medical
records within 45 days of the date of the request (as documented on the
request). If the validation contractor has not received the medical
records within 30 days of the date of the request, the validation
contractor would send the SNF a reminder in writing to inform the SNF
that it must submit the requested medical records within 45 days of the
date of the initial request.
We propose that if a SNF does not submit the requested number of
medical records within 45 days of the initial request, we would, under
section 1888(e)(6)(A) of the Act, reduce the SNF's otherwise applicable
annual market basket percentage update by 2 percent. The reduction
would be applied to the payment update 2 fiscal years after the fiscal
year for which the validation contractor requested records. For
example, if the validation contractor requested records for FY 2027,
and the SNF did not send them, we would reduce the SNF's otherwise
applicable annual market basket percentage update by 2 percent for the
FY 2029 SNF QRP.
We also intend to propose in future rulemaking the process by which
we would evaluate the submitted medical records against the MDS to
determine the accuracy of the MDS data that the SNF reported and that
CMS used to calculate the measure results. We invite public comment on
what that process could include.
We solicit public comments on our proposal to require SNFs who
participate in the SNF QRP to participate in a validation process for
assessment-based measures beginning with the FY 2027 SNF QRP.
(b) Proposal To Apply the Existing Validation Process for Claims-Based
Measures Reported in the SNF QRP
Beginning with the FY 2027 SNF QRP, we are proposing to apply the
process we currently use to ensure the accuracy of the Medicare fee-
for-service claims to validate claims-based measures under the SNF QRP.
Specifically, information reported
[[Page 23470]]
through Medicare Part A fee-for-service claims are validated for
accuracy by Medicare Administrative Contractors (MACs) to ensure
accurate Medicare payments. MACs use software to determine whether
billed services are medically necessary and should be covered by
Medicare, review claims to identify any ambiguities or irregularities,
and use a quality assurance process to help ensure quality and
consistency in claim review and processing. They conduct prepayment and
post-payment audits of Medicare claims, using both random selection and
targeted reviews based on analyses of claims data.
We use data to calculate claims-based measures for the SNF QRP. We
believe that adopting the MAC's existing process of validating claims
for medical necessity through targeted and random audits would satisfy
the statutory requirement to adopt a validation process for data
submitted under the SNF QRP for claims-based measures at section
1888(h)(12)(A) of the Act (as added by section 111(a)(4) of Division CC
of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260)).
We solicit public comment on our proposal to apply the MAC's
existing validation process for the SNF QRP claims-based measures
beginning with the FY 2027 program year.
(c) Proposal To Amend the Regulation Text at Sec. 413.360
We propose to amend our regulation at Sec. 413.360 to reflect
these proposed policies. Specifically, we propose to add (g) to our
regulation at Sec. 413.360, which will incorporate the procedural
requirements we are proposing for these validation processes for SNF
QRP under these sections VI.E.3(a) and VI.E.3(b). We also propose to
add paragraph (f)(1)(iv) to our regulation at Sec. 413.360 to
establish that, if the SNF is selected for the validation process, the
SNF must submit up to 10 medical records requested, in their entirety.
Finally, we propose minor technical amendments for our regulation at
Sec. 413.360(f)(3) to apply to all data completion thresholds
implemented in Sec. 413.360(f)(1).
We solicit public comments on our proposal to amend our regulation
at Sec. 413.360.
F. Policies Regarding Public Display of Measure Data for the SNF QRP
We are not proposing any new policies regarding the public display
of measure data at this time. For a discussion about our policies
regarding public display of SNF QRP measure data and procedures for the
SNF's opportunity to review and correct data and information, we refer
readers to the FY 2017 SNF PPS final rule (81 FR 52045 through 52048).
VII. Proposed Updates to the Skilled Nursing Facility Value-Based
Purchasing (SNF VBP) Program
A. Statutory Background
Through the Skilled Nursing Facility Value-Based Purchasing (SNF
VBP) Program, we award incentive payments to SNFs to encourage
improvements in the quality of care provided to Medicare beneficiaries.
The SNF VBP Program is authorized by section 1888(h) of the Act, and it
applies to freestanding SNFs, SNFs affiliated with acute care
facilities, and all non-CAH swing bed rural hospitals. We believe the
SNF VBP Program has helped to transform how Medicare payment is made
for SNF care, moving increasingly towards rewarding better value and
outcomes instead of merely rewarding volume. Our codified policies for
the SNF VBP Program can be found in our regulations at 42 CFR
413.337(f) and 413.338.
1. Spotlight on the CMS National Quality Strategy
As part of the CMS National Quality Strategy,\69\ we are committed
to aligning measures across our quality programs and ensuring we
measure quality across the entire care continuum in a way that promotes
the best, safest, and most equitable care for all individuals.
---------------------------------------------------------------------------
\69\ https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.
---------------------------------------------------------------------------
We believe that improving alignment of measures across the CMS
quality programs will reduce provider burden while also improving the
effectiveness of quality programs. However, we also recognize that a
one-size-fits-all approach would fail to capture important aspects of
quality in our healthcare system across populations and care settings.
To move towards a more streamlined approach that does not lose
sight of important aspects of quality, we are implementing a building-
block approach: a ``Universal Foundation'' of quality measures across
as many of our quality reporting and value-based care programs as
possible, with additional measures added on depending on the population
or setting (``add-on sets'').\70\
---------------------------------------------------------------------------
\70\ https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
---------------------------------------------------------------------------
Our goal with the Universal Foundation is to focus provider
attention on measures that are the most meaningful for patients and
patient outcomes, reduce provider burden by streamlining and aligning
measures, allow for consistent stratification of measures to identify
disparities in care between and among populations, accelerate the
transition to interoperable, digital quality measures, and allow for
comparisons across quality and value-based care programs to better
understand what drives quality improvement and what does not.
We select measures for the Universal Foundation that are of high
national impact, can be benchmarked nationally and globally, are
applicable to multiple populations and settings, are appropriate for
stratification to identify disparity gaps, have scientific
acceptability, support the transition to digital measurement, and have
no anticipated unintended consequences with widespread measure
implementation.
We believe that the creation of this Universal Foundation will
result in higher quality care for the more than 150 million Americans
covered by our programs and will serve as an alignment standard for the
rest of the healthcare system. We continue to collect feedback from
interested parties through listening sessions, requests for information
and proposed rulemaking, and other interactions to refine our approach
as we work to implement the Universal Foundation across our quality
programs. As we continue building the SNF VBP measure set, we intend to
align with the measures in the Universal Foundation, as well as the
post-acute care add-on measure set, to the extent feasible.
B. Proposed Regulation Text Technical Updates
We are proposing to make several technical updates to our
regulation text. First, we are proposing to update Sec. 413.337(f) to
correct the cross-references in that section to Sec. 413.338(a).
Second, we are proposing to update the definition of ``SNF readmission
measure'' in Sec. 413.338(a) by replacing the references to the
Skilled Nursing Facility Potentially Preventable Readmissions (SNFPPR)
measure with a reference to the Skilled Nursing Facility Within-Stay
Potentially Preventable Readmission (SNF WS PPR) measure, by clarifying
that we specified both measures under section 1888(g) of the Act, and
by clarifying that the SNF readmission measure will be the SNF WS PPR
beginning October 1, 2027.
This change would align the definition of ``SNF readmission
measure'' with policies we have previously finalized for SNF VBP,
including that we will not use the SNFPPR and that we will replace the
SNFRM with the SNF WS PPR beginning October 1, 2027. In addition,
[[Page 23471]]
we are proposing to redesignate the term ``performance score'' at Sec.
413.338(a) with the term ``SNF performance score'' for consistency with
the terminology we are now using in the Program, and to make conforming
edits to the last sentence of Sec. 413.337(f). We are also proposing
to replace the references to ``program year'' with ``fiscal year'' in
the definitions of ``health equity adjustment (HEA) bonus points,''
``measure performance scaler'', ``top tier performing SNF'', and
``underserved multiplier'' to align the terminology with that used in
the remainder of that section.
We are also proposing to update Sec. 413.338(f) to redesignate
paragraphs (f)(1) through (4) as paragraphs (f)(2) through (5),
respectively. We are also proposing to add a new paragraph (f)(1) and
to revise the newly redesignated paragraphs (f)(2) and (3).
In addition, we are proposing to update Sec. 413.338(j)(3) to
include additional components of the MDS validation process that we
finalized in the FY 2024 SNF PPS final rule (88 FR 53324). In
particular, we are proposing to include the SNF selection, medical
record request, and medical record submission processes for MDS
validation.
Further, we are proposing to remove Sec. 413.338(d)(5) from the
regulation text because the only measure that will be in the SNF VBP
Program until the FY 2026 program year is the SNFRM, and to add new
paragraph (l)(1) which would state that the SNF VBP measure set for
each year includes the statutorily-required SNF readmission measure,
and beginning with the FY 2026 program year, up to nine additional
measures specified by CMS.
We welcome public comment on these proposed technical updates to
our regulation text.
C. SNF VBP Program Measures
1. Background
We refer readers to the FY 2024 SNF PPS final rule for background
on the measures we have adopted for the SNF VBP Program (88 FR 53276
through 53297).
Table 30 lists the measures that have been adopted for the SNF VBP
Program, along with their timeline for inclusion.
Table 30--SNF VBP Program Measures and Timeline for Inclusion in the Program
----------------------------------------------------------------------------------------------------------------
FY 2025 program FY 2026 program FY 2027 program FY 2028 program
Measure year year year year
----------------------------------------------------------------------------------------------------------------
Skilled Nursing Facility 30-Day Included........... Included.......... Included..........
All-Cause Readmission Measure
(SNFRM).
Skilled Nursing Facility ................... Included.......... Included.......... Included.
Healthcare Associated
Infections Requiring
Hospitalization (SNF HAI)
measure.
Total Nursing Hours per ................... Included.......... Included.......... Included.
Resident Day (Total Nurse
Staffing) measure.
Total Nursing Staff Turnover ................... Included.......... Included.......... Included.
(Nursing Staff Turnover)
measure.
Discharge to Community--Post- ................... .................. Included.......... Included.
Acute Care Measure for Skilled
Nursing Facilities (DTC PAC
SNF measure).
Percent of Residents ................... .................. Included.......... Included.
Experiencing One or More Falls
with Major Injury (Long-Stay)
(Falls with Major Injury (Long-
Stay)) measure.
Discharge Function Score for ................... .................. Included.......... Included.
SNFs (DC Function Measure).
Number of Hospitalizations per ................... .................. Included.......... Included.
1,000 Long Stay Resident Days
(Long Stay Hospitalization)
measure.
Skilled Nursing Facility Within- ................... .................. .................. Included.
Stay Potentially Preventable
Readmissions (SNF WS PPR)
measure.
----------------------------------------------------------------------------------------------------------------
2. Proposal To Adopt a Measure Selection, Retention, and Removal Policy
Beginning With the FY 2026 SNF VBP Program Year
Section 1888(h)(2) of the Act requires the Secretary to apply the
measure specified under subsection (g)(1) (currently the SNFRM) and
replace that measure, as soon as practicable, with the measure
specified under subsection (g)(2) (currently the SNF WS PPR measure).
That section also allows the Secretary to apply, as appropriate, up to
nine additional measures to the SNF VBP Program, in addition to the
statutorily required SNF Readmission Measure. We have now adopted seven
additional measures for the Program (see the FY 2023 SNF PPS final rule
(87 FR 47564 through 47580) and the FY 2024 SNF PPS final rule (88 FR
53280 through 53296)).
Now that the SNF VBP Program includes measures in addition to the
SNFRM (which will be replaced with the SNF WS PPR measure beginning
with the FY 2028 program year), we believe it is appropriate to adopt a
policy that governs the retention of measures in the Program, as well
as criteria we would use to consider whether a measure should be
removed from the Program. These policies would help ensure that the
Program's measure set remains focused on the best and most appropriate
metrics for assessing care quality in the SNF setting. We also believe
that the measure removal policy, as described later in this section,
would streamline the rulemaking process by providing a sub-regulatory
process that we could utilize to remove measures from the Program that
raise safety concerns while also providing sufficient opportunities for
the public to consider, and provide input on, future proposals to
remove a measure.
Other CMS quality reporting programs, including the SNF QRP and
Hospital Inpatient Quality Reporting (IQR) Program, have adopted
similar policies. For example, in the FY 2016 SNF PPS final rule (80 FR
46431 through 46432), the SNF QRP adopted 7 removal factors and, in the
FY 2019 SNF PPS final rule (83 FR 39267 through 39269), the SNF QRP
adopted an additional measure removal factor, such that a total of
eight measure removal factors are now used to determine whether a
measure should be removed. The SNF QRP also codified those factors at
Sec. 413.360(b)(2).
For the purposes of the SNF VBP Program, we are proposing to adopt
the following measure selection, retention, and removal policy
beginning with the FY 2026 SNF VBP program year. This proposed policy
would apply to all SNF VBP measures except for the SNF readmission
measure because we are statutorily required to retain that measure in
the measure set.
First, we are proposing that when we adopt a measure for the SNF
VBP Program for a particular program year, that measure would be
automatically retained for all subsequent program years unless we
propose to remove or replace the measure. We believe that this policy
would make clear that when we adopt a measure for the SNF VBP Program,
we intend to include that measure in all subsequent program
[[Page 23472]]
years. This policy would also avoid the need to continuously propose a
measure for subsequent program years.
Second, we are proposing that we would use notice and comment
rulemaking to remove or replace a measure in the SNF VBP Program to
allow for public comment. We are also proposing that we would use the
following measure removal factors to determine whether a measure should
be considered for removal or replacement:
(1) SNF performance on the measure is so high and unvarying that
meaningful distinctions and improvements in performance can no longer
be made;
(2) Performance and improvement on a measure do not result in
better resident outcomes;
(3) A measure no longer aligns with current clinical guidelines or
practices;
(4) A more broadly applicable measure for the particular topic is
available;
(5) A measure that is more proximal in time to the desired resident
outcomes for the particular topic is available;
(6) A measure that is more strongly associated with the desired
resident outcomes for the particular topic is available;
(7) The collection or public reporting of a measure leads to
negative unintended consequences other than resident harm; and
(8) The costs associated with a measure outweigh the benefit of its
continued use in the Program.
Each of these measure removal factors represent instances where the
continued use of a measure in the Program would not support the
Program's objective, which is to incentivize improvements in quality of
care by linking SNF payments to performance on quality measures.
Therefore, we believe that these are appropriate criteria for
determining whether a measure should be removed or replaced.
Third, upon a determination by CMS that the continued requirement
for SNFs to submit data on a measure raises specific resident safety
concerns, we are proposing that we may elect to immediately remove the
measure from the SNF VBP measure set. Upon removal of the measure, we
would provide notice to SNFs and the public, along with a statement of
the specific patient safety concerns that would be raised if SNFs
continued to submit data on the measure. We would also provide notice
of the removal in the Federal Register.
We are proposing to codify this policy at Sec. 413.338(l)(2) and
(l)(3) of our regulations.
We invite public comment on the proposed measure selection,
retention, and removal policy. We also invite public comment on our
proposal to codify this policy at Sec. 413.338(l)(2) and (3).
3. Future Measure Considerations
Section 1888(h)(2) of the Act allows the Secretary to apply, as
appropriate, up to nine additional measures to the SNF VBP Program, in
addition to the statutorily required SNF Readmission Measure. These
measures may include measures of functional status, patient safety,
care coordination, or patient experience.
In the FY 2022 SNF PPS proposed rule (86 FR 20009 through 20011),
we requested public comment on potential future measures to include in
the expanded SNF VBP Program. After considering the public input we
received, we adopted three new measures in the FY 2023 SNF PPS final
rule (87 FR 47564 through 47580). Two of those measures will be scored
beginning with the FY 2026 program year: SNF HAI and Total Nurse
Staffing measures; and the third measure will be scored beginning with
the FY 2027 program year: DTC PAC SNF measure. In the FY 2024 SNF PPS
final rule (88 FR 53280 through 53296), we adopted four additional
measures. One of those measures, the Nursing Staff Turnover measure,
will be scored beginning with the FY 2026 program year, while the other
three measures will be scored beginning with the FY 2027 program year:
Falls with Major Injury (Long-Stay), DC Function, and Long Stay
Hospitalizations measures.
With the adoption of those seven measures, in addition to the
statutorily-required SNF Readmission Measure, the SNF VBP Program will
include eight measures that cover a range of quality measure topics
important for assessing the quality of care in the SNF setting.
Therefore, as permitted under section 1888(h)(2)(A)(ii) of the Act, we
can add up to two additional measures in the Program.
As part of our efforts to build a robust measure set for the SNF
VBP Program, we are considering several options related to new measures
and other measure set adjustments. First, we recognize that gaps remain
in the current measure set and therefore, we are considering which
measures are best suited to fill those gaps. Specifically, we are
assessing several resident experience measures to determine their
appropriateness and feasibility for inclusion in the Program. We are
also testing the appropriateness of measures that address other CMS
priorities, such as interoperability and health equity/social
determinants of health.
Beyond the adoption of new measures, we are also considering other
measure set adjustments. For example, we are assessing the feasibility
of a staffing composite measure that would combine the two previously
adopted staffing measures. We are also considering whether measure
domains and domain weighting are appropriate for the SNF VBP Program.
While we are not proposing any new measures or measure set
adjustments in this proposed rule, we will continue to assess and
determine which, if any, of these options would help us maximize the
impact of the SNF VBP Program measure set and further incentivize
quality of care improvements in the SNF setting. We welcome commenters'
continuing feedback on potential new measure topics and other measure
set adjustments.
D. SNF VBP Performance Standards
1. Background
We refer readers to the FY 2024 SNF PPS final rule (88 FR 53299
through 53300) for a detailed history of our performance standards
policies.
In the FY 2024 SNF PPS final rule (88 FR 53300), we adopted the
final numerical values for the FY 2026 performance standards and the
final numerical values for the FY 2027 performance standards for the
DTC PAC SNF measure.
2. Estimated Performance Standards for the FY 2027 Program Year
In the FY 2024 SNF PPS final rule (88 FR 53300), we adopted the
final numerical values for the FY 2027 performance standards for the
DTC PAC SNF measure.
To meet the requirements at section 1888(h)(3)(C) of the Act, we
are providing estimated numerical performance standards for the
remaining measures applicable for the FY 2027 program year: SNFRM, SNF
HAI, Total Nurse Staffing, Nursing Staff Turnover, Falls with Major
Injury (Long-Stay), Long Stay Hospitalization, and DC Function
measures. In accordance with our previously finalized methodology for
calculating performance standards (81 FR 51996 through 51998), the
estimated numerical values for the FY 2027 program year performance
standards are shown in Table 31.
[[Page 23473]]
Table 31--Estimated FY 2027 SNF VBP Program Performance Standards
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
SNFRM................................... 0.78800 0.82971
SNF HAI Measure......................... 0.92315 0.95004
Total Nurse Staffing Measure............ 3.18523 5.70680
Nursing Staff Turnover Measure.......... 0.35912 0.72343
Falls with Major Injury (Long-Stay) 0.95327 0.99956
Measure................................
Long Stay Hospitalization Measure....... 0.99777 0.99964
DC Function Measure..................... 0.40000 0.79764
------------------------------------------------------------------------
3. Estimated Performance Standards for the FY 2028 Program Year
In the FY 2024 SNF PPS final rule (88 FR 53280 through 53281), we
finalized that the SNF WS PPR measure will replace the SNFRM beginning
with the FY 2028 program year. In that final rule (88 FR 53299 through
53300), we also finalized that the baseline and performance periods for
the SNF WS PPR measure would each be 2 consecutive years, and that FY
2025 and FY 2026 would be the performance period for the SNF WS PPR
measure for the FY 2028 program year.
To meet the requirements at section 1888(h)(3)(C) of the Act, we
are providing estimated numerical performance standards for the FY 2028
program year for the SNF WS PPR measure as well as the DTC PAC SNF
measure. In accordance with our previously finalized methodology for
calculating performance standards (81 FR 51996 through 51998), the
estimated numerical values for the FY 2028 program year performance
standards for the DTC PAC SNF and SNF WS PPR measures are shown in
Table 32.
We note that we will provide the estimated numerical performance
standards values for the remaining measures applicable in the FY 2028
program year in the FY 2026 SNF PPS proposed rule.
Table 32--Estimated FY 2028 SNF VBP Program Performance Standards
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
DTC PAC SNF Measure..................... 0.42946 0.66370
SNF WS PPR Measure...................... 0.86756 0.92527
------------------------------------------------------------------------
4. Proposed Policy for Incorporating Technical Measure Updates Into
Measure Specifications and for Subsequent Updates to SNF VBP
Performance Standards Beginning With the FY 2025 Program Year
We are required under section 1888(h)(3) of the Act to establish
performance standards for SNF VBP measures for a performance period for
a fiscal year. Under that section, we are also required to establish
performance standards that include levels of achievement and
improvement, the higher of which is used to calculate the SNF
performance score, and to announce those performance standards no later
than 60 days prior to the beginning of the performance period for the
applicable fiscal year. We refer readers to the FY 2017 SNF PPS final
rule (81 FR 51995 through 51998) for details on our previously
finalized performance standards methodology.
In the FY 2019 SNF PPS final rule (83 FR 39276 through 39277), we
finalized a policy that allows us to update the numerical values of the
performance standards for a fiscal year if we discover an error in the
performance standards calculations. Under this policy, if we discover
additional errors with respect to that fiscal year, we will not further
update the numerical values for that fiscal year.
In this proposed rule, we are proposing to adopt a policy that
would allow us to update previously finalized SNF VBP measure
specifications using subregulatory processes to incorporate technical
measure updates. We are also proposing to use sub-regulatory processes
to update the numerical values of the performance standards for a
measure if that measure's specifications have been technically updated.
We currently calculate performance standards for SNF VBP measures
using baseline period data, which are then used, in conjunction with
performance period data, to calculate performance scores for SNFs on
each measure for the applicable program year. However, during the long
interval between the time we finalize the performance standards for the
measures and the time that we calculate the achievement and improvement
scores for those measures based on actual SNF performance, one or more
of the measures may have been technically updated in a way that
inhibits our ability to ensure that we are making appropriate
comparisons between the baseline and performance period. We believe
that to calculate the most accurate achievement and improvement scores
for a measure, we should calculate the performance standards, baseline
period measure results, and performance period measure results using
the same measure specifications.
Therefore, we are proposing to incorporate technical measure
updates into the measure specifications we have adopted for the SNF VBP
Program so that these measures remain up-to-date and ensure that we can
make fair comparisons between the baseline and performance periods that
we adopt under the Program. Further, we are proposing that we would
incorporate these technical measure updates in a sub-regulatory manner
and that we would inform SNFs of any technical measure updates for any
measure through postings on our SNF VBP website, listservs, and through
other educational outreach efforts to SNFs. These types of technical
measure updates do not substantively affect the measure rate
calculation methodology. We also recognize that some updates to
measures are substantive in nature and may not be appropriate to adopt
without further rulemaking. In those instances, we would continue to
use rulemaking to adopt substantive updates to SNF VBP measures.
[[Page 23474]]
With respect to what constitutes substantive versus non-substantive
(technical) measure changes, we would make this determination on a
case-by-case basis. Examples of technical measure changes may include,
but are not limited to, updates to the case-mix or risk adjustment
methodology, changes in exclusion criteria, or updates required to
accommodate changes in the content and availability of assessment data.
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.
We are also proposing to expand our performance standards
correction policy beginning with the FY 2025 program year such that we
would be able to update the numerical values for the performance
standards for a measure for a program year if a measure's
specifications were technically updated between the time that we
published the performance standards for a measure and the time that we
calculate SNF performance on that measure at the conclusion of the
applicable performance period. Any update we would make to the
numerical values would be announced via the SNF VBP website, listservs,
and through other educational outreach efforts to SNFs. In addition,
this proposal would have the effect of superseding the performance
standards that we establish prior to the start of the performance
period for the affected measures, but we believe them to be necessary
to ensure that the performance standards in the SNF VBP Program's
scoring calculations enable the fairest comparison of measure
performance between the baseline and performance period.
We note that these proposals align with the Technical Updates
Policy for Performance Standards that we adopted for the Hospital VBP
Program in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50077 through
50079).
Further, we are proposing to codify these proposals in our
regulations. Specifically, we are proposing to codify our proposed
policy to incorporate technical measure updates into previously
finalized SNF VBP measure specifications in a subregulatory manner by
adding a new paragraph (l)(4) to our regulations at Sec. 413.338. Our
current performance standards policies are codified at Sec.
413.338(d)(6) of our regulations. However, we are proposing to
redesignate that paragraph as new Sec. 413.338(n) of our regulations
and to include in paragraph (n) both the existing performance standards
policies and this newly proposed expansion of our performance standards
correction policy.
We invite public comment on these proposals.
E. SNF VBP Performance Scoring Methodology
1. Background
We refer readers to the FY 2024 SNF PPS final rule (88 FR 53300
through 53304) for a detailed history of our performance scoring
methodology. Our performance scoring methodology is codified at
Sec. Sec. 413.338(d) and (e) of our regulations. We have also codified
the Health Equity Adjustment (HEA) at Sec. 413.338(k) of our
regulations.
2. Proposed Measure Minimum Policies
a. Background
We refer readers to the FY 2024 SNF PPS final rule (88 FR 53301
through 53303) for details on our previously adopted case minimums and
measure minimums. Our case minimum and measure minimum policies are
also codified at Sec. 413.338(b) of our regulations. In this proposed
rule, we are proposing to apply the previously finalized FY 2027
measure minimum to the FY 2028 program year and subsequent years. We
are not proposing any changes to our previously finalized case
minimums.
b. Proposal To Apply the FY 2027 Measure Minimum to the FY 2028 SNF VBP
Program Year and Subsequent Years
In the FY 2024 SNF PPS final rule (88 FR 53301 through 53303), we
adopted an updated measure minimum for the FY 2027 program year.
Specifically, we finalized that for a SNF to receive a SNF performance
score and value-based incentive payment for the FY 2027 program year,
SNFs must report the minimum number of cases for four of the eight
measures during the applicable performance period. As discussed below,
we are proposing to apply this measure minimum to the FY 2028 program
year and subsequent years, such that SNFs must report the minimum
number of cases for at least four measures during the applicable
performance period. SNFs that do not meet this measure minimum
requirement would be excluded from the applicable program year and
would receive their adjusted Federal per diem rate for that fiscal
year.
Based on our analyses for the FY 2028 program year, which are also
applicable to subsequent program years for which we use the same
measure set, we estimate that, under the proposed measure minimum,
approximately 6 percent of SNFs would be excluded from the Program
compared to the approximately 8 percent of SNFs that we estimate would
be excluded from the Program in FY 2027. This represents fewer SNFs
being excluded from the FY 2028 program year than our estimated number
of SNFs that would be excluded from the FY 2027 program year, due to
the SNF WS PPR measure replacing the SNFRM beginning in FY 2028. We
also assessed the consistency of incentive payment multipliers (IPMs),
or value-based incentive payment adjustment factors, between FY 2027
and FY 2028 as a proxy for SNF performance score reliability. We found
that applying the FY 2027 measure minimum to the FY 2028 program year
would have minimal impact on the percentage of SNFs that would receive
a net-positive IPM between those two fiscal years, which indicates that
the reliability of the SNF performance score would be minimally
impacted if we applied the FY 2027 measure minimum to the FY 2028
program year. Based on these testing results for FY 2028, we believe
that applying the FY 2027 measure minimum to the FY 2028 program year
and subsequent years best balances SNF performance score reliability
with our desire to ensure that as many SNFs as possible can receive a
SNF performance score. We note that if we propose in future years to
revise the total number of measures in the Program, we would reassess
this measure minimum policy to ensure it continues to meet our
previously stated goals. If needed, we would propose updates in future
rulemaking.
We invite public comment on our proposal to apply the FY 2027
measure minimum in which SNFs must report the minimum number of cases
for at least four measures during the performance period to the FY 2028
SNF VBP program year and subsequent years.
3. Potential Next Steps for Health Equity in the SNF VBP Program
In the FY 2024 SNF PPS final rule (88 FR 53304 through 53318), we
adopted a Health Equity Adjustment (HEA) that allows SNFs that provide
high quality care and care for high proportions of SNF residents who
are underserved to earn bonus points. We refer readers to that final
rule for an overview of our definition of health equity, current
disparities in quality of care in the SNF setting, our commitment to
advancing health equity, and the details of the HEA.
In the FY 2024 SNF PPS proposed rule (88 FR 21393 through 21396),
we also included a request for information
[[Page 23475]]
(RFI) entitled ``Health Equity Approaches Under Consideration for
Future Program Years,'' where we noted that significant disparities in
quality of care persist in the SNF setting. We stated that the goal of
explicitly incorporating health equity-focused components into the
Program was to both measure and incentivize equitable care in SNFs.
Although the HEA rewards high performing SNFs that care for high
proportions of SNF residents with underserved populations, it does not
explicitly measure or reward high provider performance among the
disadvantaged or underserved population. We remain committed to
achieving equity in health outcomes for residents by promoting SNF
accountability for addressing health disparities, supporting SNFs'
quality improvement activities to reduce these disparities, and
incentivizing better care for all residents. Through the RFI, we
solicited public comment on possible health equity advancement
approaches to incorporate into the Program in future program years that
could supplement or replace the HEA. We refer readers to the FY 2024
SNF PPS final rule (88 FR 53322) for a summary of the public comments
we received in response to the health equity RFI. We are considering
these comments as we continue to develop policies, quality measures,
and measurement strategies on this important topic.
We are currently exploring the feasibility of proposing future
health equity-focused metrics for the Program. Specifically, we are
considering different ways of measuring health equity that could be
incorporated into the program as either a new measure, combined to form
a composite measure, or as an opportunity for SNFs to earn bonus points
on their SNF performance score. These performance metrics described in
more detail later in this section of the proposed rule would utilize
the existing SNF HAI, DC Function, DTC PAC SNF, and SNF WS PPR measures
that we adopted in the Program. We are considering the development of
health-equity-focused versions of these measures because they are
either cross-setting or could be implemented in multiple programs. The
health-equity focused measures or metrics for bonus points include:
A high-social risk factor (SRF) measure that utilizes an
existing Program measure where the denominator of the measure only
includes residents with a given SRF, which would allow for comparisons
of care for underserved populations across SNFs;
A worst-performing group measure that utilizes an existing
Program measure and compares the quality of care among residents with
and without a given SRF on that measure and places greater weight on
the performance of the worst-performing group with the goal of raising
the quality floor at every facility; and
A within-provider difference measure that assesses
performance differences between residents (those with and without a
given SRF) within a SNF on an existing Program measure, creating a new
measure of disparities within SNFs.
We are testing these various measure concepts to determine where
current across- and within-provider disparities exist in performance,
how we can best incentivize SNFs to improve their quality of care for
all residents, including those who may be underserved, and the
feasibility of incorporating a health equity-focused measure into the
Program.
As we explore these and other options, we are focusing on
approaches that:
Include as many SNFs as possible and are feasible to
implement;
Integrate feedback from interested parties;
Encourage high quality performance for all SNFs among all
residents and discourage low quality performance;
Are simple enough for SNFs to understand and can be used
to guide SNFs in improvement; and
Meet the goal of incentivizing equitable care to ensure
all residents in all SNFs receive high quality care.
We are also exploring how constraints, such as sample size
limitations, may impact our ability to effectively incorporate certain
approaches into the Program. Lastly, we continue to explore
opportunities to align with other CMS programs to minimize provider
burden.
F. Proposed Updates to the SNF VBP Review and Correction Process
1. Background
We refer readers to the FY 2024 SNF PPS final rule (88 FR 53325
through 53326) and to Sec. 413.338(f) of our regulations for details
on the SNF VBP Program's public reporting requirements and the two-
phase review and correction process that we have adopted for the
Program. We also refer readers to the SNF VBP website (https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing/confidential-feedback-reporting-review-and-corrections) for
additional details on our review and correction process. In Phase One
of the review and correction process, we accept corrections for 30 days
after distributing the following quarterly confidential feedback
reports to SNFs: the two Full-Year Workbooks (one each for the baseline
period and performance period), generally released in December and
June, respectively. Corrections are limited to errors made by CMS or
its contractors when calculating a measure rate. In the FY 2022 SNF PPS
final rule (86 FR 42516 through 42517), we finalized that SNFs are not
able to correct any of the underlying administrative claims data used
to calculate a SNF's readmission measure rate during Phase One of the
review and correction process. For corrections to the underlying
administrative claims data to be reflected in the SNF VBP Program's
quarterly confidential feedback reports, the SNF must submit the claims
correction request to their MAC and the MAC must process the correction
before the ``snapshot date.'' For the SNFRM, the quarterly confidential
feedback reports will not reflect any claims corrections processed
after the date of the claims snapshot, which is 3 months following the
last index SNF admission in the applicable baseline period or
performance period.
In Phase Two of the review and correction process, SNFs may submit
corrections to SNF performance scores and rankings only. We accept
Phase Two corrections for 30 days after distributing the Performance
Score Report that we generally release in August of each year.
Under our current review and correction policy, the SNF must
identify the error for which it is requesting correction, explain its
reason for requesting the correction, and submit documentation or other
evidence, if available, supporting the request. SNFs must submit
correction requests to the SNF VBP Program Help Desk, which is
currently available at [email protected], and the requests must contain:
The SNF's CMS Certification Number (CCN),
The SNF's name,
The correction requested, and
The reason for requesting the correction, including any
available evidence to support the request.
For all review and correction requests, we will review the requests
and notify the requesting SNF of the final decision. We will also
implement any approved corrections before the affected data becomes
publicly available.
We are proposing to apply our existing Phase One of the review and
correction process to all measures
[[Page 23476]]
adopted in the Program regardless of the data source for a particular
measure. We are also proposing ``snapshot dates'' for the new SNF VBP
measures and to codify those snapshot dates in revised Sec.
413.338(f)(1). We are also proposing to redesignate current Sec.
413.338(f)(1) as 413.338(f)(2) and to revise that paragraph to state
that the underlying data used to calculate measure rates cannot be
corrected by SNFs during the SNF VBP review and correction process.
2. Proposal To Apply the Existing Phase One Review and Correction
Policy to All Claims-based Measures Beginning With the FY 2026 Program
Year and Proposed ``Snapshot Dates'' for Recently Adopted SNF VBP
Claims-based Measures
In the FY 2023 SNF PPS final rule, we adopted the SNF HAI measure
beginning with the FY 2026 SNF VBP program year (87 FR 47564 through
47570), and the DTC PAC SNF measure beginning with the FY 2027 SNF VBP
program year (87 FR 47576 through 47580). In the FY 2024 SNF PPS final
rule, we adopted the Long-Stay Hospitalization measure beginning with
the FY 2027 SNF VBP program year (88 FR 53293 through 53296), as well
as the SNF WS PPR measure beginning with the FY 2028 SNF VBP program
year (88 FR 53277 through 53280). Each of these measures is calculated
using claims data.
We are proposing to apply our existing Phase One review and
correction process to all SNF VBP Program measures calculated using
claims data. That is, Phase One corrections for claims-based measures
would be limited to errors made by CMS or its contractors when
calculating the measure rates. For corrections to the underlying
administrative claims data to be reflected in the SNF VBP Program's
quarterly confidential feedback reports, the SNF must submit any claims
correction requests to their MAC before the ``snapshot date'' to ensure
that those corrections are reflected fully in measure calculations.
For the SNF HAI, DTC PAC SNF, and SNF WS PPR measures, we propose
to define the ``snapshot date'' as 3 months following the last SNF
discharge in the applicable baseline period or performance period to
align with the ``snapshot date'' we previously adopted for the
Program's Phase One review and correction process. We refer readers to
the FY 2022 SNF PPS final rule (86 FR 42516 through 42517) where we
explain our rationale for selecting 3 months as the ``snapshot date.''
Any corrections made to claims following the ``snapshot date'' would
not be reflected in our subsequent scoring calculations.
For the Long Stay Hospitalization measure, we propose to define the
``snapshot date'' as 3 months following the final quarter of the
applicable baseline period or performance period. For example, for the
FY 2027 SNF VBP program year, the performance period is FY 2025. The
final quarter of the performance period is July 1 through September 30,
2025. The ``snapshot date'' for this performance period would be
December 31, 2025. Any corrections made to claims following the
``snapshot date'' would not be reflected in our subsequent scoring
calculations.
We welcome public comment on this proposal.
3. Proposal To Apply the Existing Phase One Review and Correction
Policy to PBJ-based Measures Beginning With the FY 2026 Program Year
and Proposed ``Snapshot Dates'' for PBJ-Based Measures
In the FY 2023 SNF PPS final rule (87 FR 47570 through 47576), we
adopted the Total Nurse Staffing measure beginning with the FY 2026 SNF
VBP program year. Additionally, in the FY 2024 SNF PPS final rule (88
FR 53281 through 53286), we adopted the Nursing Staff Turnover measure
beginning with the FY 2026 SNF VBP program year. Each of these measures
is calculated using electronic staffing data submitted by each SNF for
each quarter through the PBJ system, along with daily resident census
information derived from MDS 3.0 standardized patient assessments in
the case of the Total Nurse Staffing measure.
We are proposing to apply our existing Phase One review and
correction process to SNF VBP Program measures calculated using PBJ
data. That is, Phase One corrections would be limited to errors made by
CMS or its contractors when calculating the measure rates for the PBJ-
based measures applicable in the SNF VBP Program. For corrections to
the underlying PBJ data to be reflected in the SNF VBP Program's
quarterly confidential feedback reports, the SNF must make any
corrections to the underlying data within the PBJ system before the
``snapshot date.'' Any corrections made to PBJ data following the
``snapshot date'' would not be reflected in our subsequent scoring
calculations.
For measures calculated using PBJ data, we propose to define the
``snapshot date'' as 45 calendar days after the last day in each fiscal
quarter. This deadline is consistent with the CMS Nursing Home Quality
Improvement deadline, which requires that PBJ data submissions must be
received by the end of the 45th calendar day (11:59 p.m. Eastern Time)
after the last day in each fiscal quarter to be considered timely. We
aim to align quality programs to the extent possible to reduce
confusion and burden on providers. For more information about
submitting PBJ data, we refer readers to the CMS Staffing Data
Submission web page at https://www.cms.gov/medicare/quality/nursing-home-improvement/staffing-data-submission.
We welcome public comment on this proposal.
4. Proposal To Apply the Existing Phase One Review and Correction
Policy to MDS-Based Measures Beginning With the FY 2027 Program Year
and Proposed ``Snapshot Dates'' for the Recently Adopted SNF VBP MDS-
Based Measures
In the FY 2024 SNF PPS final rule (88 FR 53286 through 53293), we
adopted the Falls with Major Injury (Long-Stay) and DC Function
measures, both beginning with the FY 2027 SNF VBP program year. These
two measures are calculated using data reported by SNFs on the MDS 3.0.
We are proposing to apply our existing Phase One review and
correction process to SNF VBP Program measures calculated using MDS
data. That is, Phase One corrections would be limited to errors made by
CMS or its contractors when calculating the measure rates for the MDS-
based measures applicable in the SNF VBP Program. For corrections to
the underlying MDS data to be reflected in the SNF VBP Program's
quarterly confidential feedback reports, the SNF must make any
corrections to the underlying data via the internet Quality Improvement
Evaluation System (iQIES) before the ``snapshot date.''
For the DC Function and Falls with Major Injury (Long-Stay)
measures, we propose that the ``snapshot date'' is the February 15th
that is 4.5 months after the last day of the applicable baseline or
performance period. However, if February 15th falls on a Friday,
weekend, or Federal holiday, the data submission deadline is delayed
until 11:59 p.m. ET on the next business day. For example, for the FY
2027 SNF VBP program year, the performance period is FY 2025 (October
1, 2024 through September 30, 2025). The ``snapshot date'' for this
performance period would normally be February 15, 2026. However, since
February 15, 2026 falls on a Sunday, the snapshot date would be
extended until the next business day, which is Tuesday, February 17,
2026,
[[Page 23477]]
due to Monday, February 16, 2026 being a Federal holiday. This is
consistent with the SNF QRP QM User's Manual available at https://www.cms.gov/files/document/snf-qm-calculations-and-reporting-users-manual-v50.pdf-0. Any corrections made to the MDS data following the
``snapshot date'' would not be reflected in our subsequent scoring
calculations.
We welcome public comment on this proposal.
G. Proposed Updates to the SNF VBP Extraordinary Circumstances
Exception Policy
1. Background
Our Extraordinary Circumstances Exception (ECE) policy, which
allows SNFs to request an exception to the SNF VBP requirements for one
or more calendar months when there are certain extraordinary
circumstances beyond the control of the SNF, is currently codified at
Sec. 413.338(d)(4) of our regulations. We are proposing to redesignate
that paragraph as new Sec. 413.338(m) of our regulations to ensure the
policy remains effective beyond FY 2025. We are also proposing to amend
our existing ECE policy to include the proposed changes discussed later
in this section, as well as to make other technical updates to enhance
the clarity of the ECE policy in our regulations.
2. Proposal To Expand the Reasons a SNF May Submit an Extraordinary
Circumstance Exception Request Beginning With the FY 2025 Program Year
Paragraph (d)(4)(ii) of our regulations currently states that a SNF
may request an ECE if the SNF is able to demonstrate that an
extraordinary circumstance affected the care provided to its residents
and subsequent measure performance. We are proposing to expand this
policy to also allow a SNF to request an ECE if the SNF can demonstrate
that, as a result of the extraordinary circumstance, it cannot report
SNF VBP data on one or more measures by the specified deadline. This
expanded policy would avoid penalizing SNFs due to circumstances out of
their control, and would also align the SNF VBP ECE policy with the ECE
policies we have adopted for the SNF QRP and Home Health QRP.
If we grant an ECE to a SNF under the SNF VBP, we would, as
previously finalized, calculate a SNF performance score that does not
include the SNF's performance on the measure or measures during the
months the SNF was affected by the extraordinary circumstance.
We welcome public comment on this proposal.
3. Proposed Updates to the Instructions for Requesting an Extraordinary
Circumstance Exception Beginning With the FY 2025 Program Year
Under our current ECE policy, when a SNF requests an ECE, the SNF
must complete an Extraordinary Circumstances Request form (available on
https://qualitynet.cms.gov) and send the form, along with supporting
documentation, to the SNF VBP Program Help Desk within 90 days of the
date that the extraordinary circumstance occurred.
The most recent version of the ECE Request Form no longer includes
information related to the SNF VBP Program. Although the previous form
is still available, once it is no longer available, SNFs will no longer
able to use this new version of the form when submitting an ECE request
for the SNF VBP Program. Accordingly, we are proposing to update our
policy to align with the current SNF QRP ECE request submission
process, which does not require the completion of a form and instead
requires SNFs to submit specific information via email to a Help Desk.
Under our proposal, beginning with the FY 2025 program year, a SNF may
request an ECE by sending an email with the subject line ``SNF VBP
Extraordinary Circumstances Exception Request'' to the SNF VBP Program
Help Desk with the following information:
The SNF's CMS Certification Number (CCN);
The SNF's business name and business address;
Contact information for the SNF's CEO or CEO-designated
personnel, including all applicable names, email addresses, telephone
numbers, and the SNF's physical mailing address (not a PO Box);
A description of the event, including the dates and
duration of the extraordinary circumstance;
Available evidence of the impact of the extraordinary
circumstance on the care the SNF provided to its residents or the SNF's
ability to report SNF VBP measure data, including, but not limited to,
photographs, media articles, and any other materials that would aid CMS
in determining whether to grant the ECE;
A date when the SNF believes it will again be able to
fully comply with the SNF VBP Program's requirements and a
justification for the proposed date.
We welcome public comment on these proposed updates to the SNF VBP
ECE policy.
VIII. Nursing Home Enforcement
A. Background
The Biden-Harris Administration is committed to ensuring that all
residents living in nursing homes receive safe, high-quality care. This
includes making certain that all Americans, including older Americans
and people with disabilities, live in a society that is accessible,
inclusive, and equitable. To ensure that residents are receiving high
quality, and safe care, long-term care facilities that participate in
the Medicare or Medicaid program, or both must be certified as meeting
Federal participation requirements. Long-term care facilities are
certified as a skilled nursing facility in Medicare and nursing
facility in Medicaid, or dually-certified in both programs, as
specified in sections 1819 and 1919 of the Act, respectively, and in
regulations at 42 CFR part 483, subpart B.
Section 1864(a) of the Act authorizes the Secretary to enter into
agreements with State survey agencies to conduct surveys (that is,
inspections) to determine whether skilled nursing facilities meet the
Federal participation requirements for Medicare. Section 1902(a)(33)(B)
of the Act provides for state survey agencies to perform the same
survey tasks for facilities participating or seeking to participate in
the Medicaid program. The results of these surveys are used by CMS and
the State Medicaid agency, respectively, as the basis for a decision to
enter into, deny, or terminate a provider agreement with the facility.
They are also used to determine whether one or more enforcement
remedies should be imposed when noncompliance with requirements is
identified. Surveyors observe the provision of care and services to
residents, conduct interviews, and review facility and residents'
documentation to determine compliance with federal requirements and
ensure the residents' health and safety are adequately protected.
Under sections 1819(f)(1) and 1919(f)(1) of the Act, the Secretary
must ensure that the enforcement of compliance with the participation
requirements is adequate to protect the health, safety, welfare, and
rights of the residents and to promote the effective use of public
money. Additionally, criteria must be specified as to when and how
enforcement remedies are applied, the amounts of any fines, and the
severity of each remedy imposed. Criteria must also be designed to
minimize the time between the identification of violations and the
final imposition of the remedies. Sections 1819(h)(2)(B) and
1919(h)(3)(C) of the
[[Page 23478]]
Act. One of the Federal statutory enforcement remedies available to the
Secretary and the States to address facility noncompliance with the
requirements is a civil money penalty (CMP). Under sections
1819(h)(2)(B)(ii)(I) and 1919(h)(3)(C)(ii)(I) of the Act, CMPs may be
imposed to remedy noncompliance at amounts not to exceed $10,000 for
each day of noncompliance (as annually adjusted by inflation by the
Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015). The statute additionally permits the Secretary and the States to
impose a CMP for each day of noncompliance, even if a facility has
since returned to substantial compliance as documented by an
intervening standard survey (sections 1819(h)(2)(A) and 1919(h)(1) and
(3) of the Act providing that if a facility is found to be in
compliance with the requirements, ``. . . but, as of a previous period,
did not meet such requirements, [the Secretary provide for] a civil
money penalty . . . for the days in which he finds that the facility
was not in compliance with such requirements''). The Secretary must
follow the procedures set out in section 1128A of the Act in processing
these CMP remedies.
The regulations that govern the imposition of CMPs and other
remedies authorized by the statute were published on November 10, 1994
(59 FR 56116) and subsequently revised on September 28, 1995 (60 FR
50118), March 18, 1999 (64 FR 13354 through 13360), March 18, 2011 (76
FR 15106), and September 6, 2016 (81 FR 61538). The nursing home
enforcement rules are set forth in 42 CFR part 488, subpart F, and the
provisions directly affecting CMPs imposed for noncompliance with the
requirements are set forth in Sec. Sec. 488.430 to 488.444. In
general, the severity of an enforcement action is based on the extent
and/or severity of harm or potential for more than minimal harm to
residents that results from the cited noncompliance. This is intended
to ensure prompt compliance, incentivizing the facility to take
appropriate actions to permanently correct their noncompliance and
protect residents' health and safety in the future. For example, if
residents experienced serious harm due to noncompliance (including
death), a less impactful enforcement remedy may not compel the facility
to take the appropriate actions to prevent a similar event from
occurring in the future, leaving residents at risk for serious harm,
injury, or death.
Under 42 CFR 488.438, the amount of CMPs increases based on the
severity and/or extent of the harm, or potential for more than minimal
harm that might result from noncompliance. Current regulations at Sec.
488.408 allow for penalties to be assessed in the upper range for
$3,050 to $10,000 per day (PD) or $1,000 to $10,000 per instance (PI),
as annually adjusted for inflation, for noncompliance that constitutes
immediate jeopardy (IJ) to resident health and safety, while penalties
in the lower range of $50 to $3,000 PD or $1,000 to $10,000 PI of
noncompliance, as annually adjusted for inflation, may be imposed where
immediate jeopardy does not exist.
Under the current regulations, the State and/or CMS must decide
whether to select either a PD or PI CMP when considering whether a CMP
will be used as a remedy. A PD CMP is an amount that may be imposed for
each day a facility is not in compliance until the facility corrects
the noncompliance and achieves substantial compliance. A PI CMP is an
amount that is imposed for each instance that a facility is not in
substantial compliance. The current enforcement regulations at 42 CFR
part 488, subpart F do not authorize the use of both types of CMPs
during the same survey, nor do they allow for multiple PI CMPs to be
imposed for multiple instances within the same noncompliance deficiency
that occurred on different days during a survey.
While there is no statutory limitation of both a PI and PD being
imposed on the same survey, we specified in the rulemaking that revised
Sec. 488.430(a) (published on March 18, 1999 (64 FR 13360)), that we
would not impose both PD and PI CMPs during a survey. Instead, the 1999
rule required that, ``a concomitant decision must be made whether the
civil money penalty will be based on a determination of per instance or
per day'' (64 FR at 13356). Additionally, we noted that an ``instance''
means a singular event of noncompliance or single deficiency under a
distinct regulatory area identified by an administrative ``F tag''
number used as reference on the CMS-2567, Statement of Deficiencies.
(Id.) We are proposing revisions to this limitation to enable more
types of CMPs to be imposed during a survey once a CMP remedy is
selected, allowing for penalties to be better aligned with the
noncompliance identified during the survey and for more consistency of
CMP amount across the nation. PI CMPs are often imposed in certain
circumstances, such as when noncompliance existed but was corrected
prior to the survey, and for isolated instances of noncompliance
unrelated to resident abuse. PI CMPs may also be imposed in cases where
a deficiency is found, but the facility has not had any citations of
actual or serious harm on any survey in the past three years. A PI CMP
has typically not been imposed for findings of abuse or neglect, when
there is continued noncompliance, or when the facility has a past
history of the same type of noncompliance causing actual harm to
residents. PD CMPs, however, are generally imposed when these scenarios
do not exist and the facility has a history of similar noncompliance.
For example, if a facility was found to be out of compliance with the
requirements to prevent accidents where a resident was injured during a
transfer from a wheelchair to the bed, and this was cited as an
isolated instance of noncompliance that caused actual harm to a
resident, a PI CMP may be imposed. We developed a Civil Money Penalty
Analytic Tool to help determine CMP amounts when a CMP is one of the
selected remedies, per section 1819(h)(2)(B)(ii) of the Act; 42 CFR
488.404 and 488.438.
The Biden-Harris Administration is committed to ensuring that all
residents living in Medicare and Medicaid nursing homes receive safe,
high-quality care. Specifically, In February 2022, alongside a suite of
other reforms, CMS committed to expanding financial penalties and other
enforcement sanctions to improve the safety and quality of care in the
Nation's nursing homes.\68\ As part of this effort, CMS examined the
use of PD and PI CMPs and CMP impositions across states from January 1,
2022, to December 31, 2022. We found national variations in the length
of time PD CMPs are imposed based on when the noncompliance occurred,
when the survey was performed, and when the facility was found to have
corrected the noncompliance. For example, from January 1, 2022-December
31, 2022, the State with the shortest average number of average days
for PD CMP imposition was 1 day, and the longest average number of days
in a State was 43 days. This results in vastly differing PD CMP amounts
across the States based on the number of days of noncompliance, as well
as the date the survey was conducted, rather than being more focused on
the potential or actual harm that a deficiency may cause to residents.
In other words, the same type of noncompliance may exist in two
facilities, yet the PD CMP amounts would be different simply due to the
number of days between the identification of noncompliance by the
Surveyor and the date of correction by the facility. We believe that
this results
[[Page 23479]]
in at least two problems. First, it could create a perception of
inequity in the total amount calculated for a CMP. Second, it prevents
us from holding some facilities responsible for failing to adequately
protect the health, safety, and well-being of residents. Take, for
example, a survey that finds noncompliance with the requirements of
participation that increases the likelihood of serious injury, harm,
impairment, or death to residents--such as when residents are
susceptible to falls while not being monitored (even when no resident
actually fell as a result of the failure to monitor). If this is
identified to have started 100 days prior to the survey, a PD CMP would
accrue for each of the 100 days and each additional day until the
facility corrected its noncompliance, resulting in a very high CMP.
Conversely, another facility's similar noncompliance might result in
serious harm to a resident, when two residents fall due to failures to
monitor, resulting in serious injury. But, If these falls are
identified to have occurred one and two days prior to the survey, a PD
CMP would only accrue for 2 days and each additional day until the
noncompliance was corrected, resulting in a relatively low CMP that may
not encourage prompt or lasting compliance.
These scenarios show how the timing of a survey can potentially
result in a higher CMP for similar noncompliance that resulted in less
harm to residents. As such, we want to ensure that CMS retains the
authority to impose CMPs related to the nature of the harm that is
caused by--or could be caused by--a facility's noncompliance and the
length of such noncompliance, rather than the date that a standard
survey was conducted or a finding of noncompliance was identified, even
if the administration of imposing the CMP occurs after another survey
has been conducted.
Therefore, as discussed later in this section, we propose to expand
and strengthen our enforcement process by revising the regulations to
increase CMS's flexibility when a CMP is the selected remedy and allow
for multiple PI CMPs to be imposed for the same type of noncompliance,
allow for both PD and PI CMPs to be imposed for noncompliance findings
in the same survey, as well as ensure that the amount of a CMP does not
depend solely on the date that the most recent standard survey is
conducted or the date that a finding of noncompliance was identified by
surveyors. With these proposed revisions, in certain circumstances, CMS
or the State may use the survey start date when imposing a PD CMP
instead of the beginning date of the noncompliance, which maintains the
benefit of fines accruing to incentivize swift correction to protect
existing residents' safety, and as a deterrent for future noncompliance
to protect future residents' safety. In other words, by creating the
ability to impose a PI CMP and PD CMP on the same survey, CMS or the
State could impose a PI CMP to address the noncompliance that occurred
in the past or prior to the survey, and a PD CMP beginning at the start
of the survey and continuing until the facility has corrected its
noncompliance. Additionally, if multiple instances of noncompliance
occurred prior to the survey, CMS or the State could impose multiple PI
CMPs, as well as a PD CMP. This helps ensure that similar types of
noncompliance receive similar CMPs regardless of how many days prior to
the survey it occurred, and ensures facilities are motivated to correct
their noncompliance as soon as possible after the surveyors identify
it.
These proposed revisions are not intended to expand the type of
deficiencies that are subject to PD and PI CMPs. The States and CMS
would continue to follow the existing criteria for imposing a PD CMP or
PI CMP, including imposing a PD or PI CMP for noncompliance that
occurred prior to the start of a survey. Rather, these proposed
revisions would allow for more consistent CMP amounts imposed across
the nation and expand the current enforcement to allow for additional
CMPs that more closely align with the noncompliance that occurred.
These actions will help to better ensure that compliance is quickly
achieved and is lasting.
B. Provisions of the Proposed Regulations
1. Imposing Multiple per Instance Civil Money Penalties for the Same
Type of Noncompliance
Sections 1819(h)(2)(B)(ii) and 1919 (h)(3)(C)(ii) of the Act
authorize the Secretary to impose a CMP for each day of noncompliance.
Section 1128A(d) of the Act further states that the Secretary shall
consider (1) the nature of claims and the circumstances under which
they were presented, (2) the degree of culpability, history of prior
offenses and financial condition of the person presenting the claims,
and (3) such other matters as justice may require when determining the
amount or scope of any penalty. The regulations at Sec. 488.454(d)
state that, in the case of a CMP imposed for an instance of
noncompliance, the remedy is the specific amount of the CMP imposed for
the particular noncompliance deficiency. The meaning of an
``instance,'' therefore, focuses on a single deficiency citation of the
applicable requirements of part 483, subpart B referenced on the
facility's statement of deficiencies (Form CMS-2567)) and, under the
current regulations, only one type of CMP can be imposed per F tag
deficiency.
The statute grants the Secretary broad discretion to determine how
appropriate CMPs should be enforced and only limits the imposition to a
maximum daily amount. We propose to expand the circumstances in which a
PI CMP can be imposed to allow for more than one PI CMP to be imposed
when multiple occurrences, or ``instances'' of a specific noncompliance
are identified during a survey, regardless of whether they are cited at
the same regulatory deficiency tag number in the statement of
deficiencies. For example, if a surveyor identifies during a survey
several instances of noncompliance within a particular regulatory
requirement (such as Sec. 483.25, identified as tag F684--quality of
care,) that occurred on different days, CMS or the State survey agency
would be able to impose a PI CMP for each occurrence of that
noncompliance for those days, as long as the total facility CMP
liability did not exceed the statutory and regulatory maximum amount on
any given day.
As previously mentioned, CMS imposes CMPs based on sections
1819(h)(2)(B)(ii) and 1919 (h)(3)(C)(ii) of the Act, Sec. Sec.
488.404, and 488.438 which provides the amount of penalty, the ranges,
basis for penalty amount, increase/decrease of penalty amounts, and
factors affecting the amount. While we may impose various enforcement
remedies, CMPs are frequently imposed for deficiencies that result in
serious injury, harm, impairment, or death to nursing home residents.
Currently, we can only impose PI CMPs for different types of
noncompliance identified on a survey, while other instances of the same
noncompliance would not receive a CMP due to current regulatory
limitations. Since the PI CMP is limited to one broad regulatory
occurrence, the amount of the PI CMP often is not sufficient to
encourage sustained compliance and deter future noncompliance with the
requirements of participation.
To strengthen our enforcement policies, we propose to revise Sec.
488.401 to define ``instance'' or ``instance of noncompliance'' as a
separate factual and temporal occurrence when a facility fails to meet
a participation requirement. We further propose that
[[Page 23480]]
each instance of noncompliance would be sufficient to constitute a
deficiency and that a deficiency may be comprised of multiple instances
of noncompliance. This proposed revision will allow us and the States
to impose multiple PI CMPs for the same type of noncompliance in a
survey, thereby incentivizing facilities to take meaningful steps to
permanently resolve their deficiencies. This proposed regulatory change
would also provide more opportunities to impose CMPs in a manner that
is consistent with the Congressional mandate to ensure that residents
are protected from harm that often result in facilities with multiple
occurrences of noncompliance. Because these changes focus more directly
on the severity of noncompliance itself, we anticipate that, not only
will they better protect nursing home residents and encourage lasting
compliance, they will also create more consistency in the amount of
imposed CMPs.
2. Imposing per Instance and per Day Civil Money Penalties on the Same
Survey
As we noted earlier, the Act does not limit the imposition of both
a PD and a PI on the same survey but only limits the total amount a
penalty may be imposed for any individual day. Section
488.408(d)(2)(iii)-(iv) and Sec. 488.408(e)(1)(iii)-(iv) outline the
type of remedies that may be imposed based on the severity of the
noncompliance, however these regulations do not state the manner in
which the remedies may be imposed.
Because CMPs are designed to spur permanent resolution of
deficiencies, We believe CMS and the States need flexibility to
determine the range of CMPs that can be imposed on facilities that fail
to meet the conditions of participation. For example, if a survey
identifies isolated noncompliance that occurred prior to the start of
the survey and also identifies separate noncompliance that began and
continued to occur during the survey, we are currently unable to impose
both a PI CMP and a PD CMP to address these two separate occurrences of
noncompliance identified during the same survey. In other words, if a
survey identified numerous instances of medication administration
errors as well as systemic noncompliance with infection control
policies, we believe imposing a PI CMP for the medication errors and a
PD CMP for the infection control deficiencies, in this general example,
could be a more effective enforcement response. Due to the additional
instances of noncompliance identified, a PD CMP that covers the
noncompliance with infection control requirements alone may not
encourage the facility to sustain compliance. Without this type of
flexibility, CMS cannot impose penalties that are sufficient to ensure
that any systemic issues that caused the noncompliance are permanently
corrected. Moreover, we have found that the failure of nursing homes to
take the necessary steps to permanently resolve systemic problems
increases the probability that deficiencies will continue, progressing
to a higher scope and severity that ultimately results in harm or
increased harm to residents.
For the previously stated reasons, we propose to revise Sec. Sec.
488.408(e)(2)(ii) and 488.430(a) to expand our authority to impose both
a PI CMP and a PD CMP, not to exceed the statutory and regulatory
maximum amount on any given day even when combined, when surveyors
identify noncompliance. Specifically, in Sec. 488.408(e)(2)(ii), we
propose that for each instance of noncompliance, CMS and the State may
impose a PD CMP of $3,050 to $10,000 (as adjusted under 45 CFR part
102), a PI CMP of $1,000 to $10,000 (as adjusted under 45 CFR part
102), or both, in addition to the remedies specified in Sec.
488.408(e)(2)(i). Additionally, we propose that when a survey contains
multiple instances of noncompliance, CMS and the State may impose any
combination of per instance or per day CMP for each instance of
noncompliance within the same survey. Additionally, we propose to
revise Sec. 488.430(a) to allow for each instance of noncompliance, a
PD CMP, PI CMP, ``or both'' may be imposed, regardless of whether or
not the deficiencies constitute immediate jeopardy. We also propose to
add that when a survey contains multiple instances of noncompliance, a
combination of per instance and per day CMPs for each instance of
noncompliance may be imposed within the same survey. These proposed
revisions will enable PI CMPs to be imposed for noncompliance that was
previously not able to be addressed once a PD CMP was selected. This
would also allow CMS or a State survey agency to impose multiple PI
CMPs for noncompliance that occurred prior to the start of a survey and
use the survey start date to begin the PD CMP, thereby enabling more
consistent CMP amounts to be imposed while still incentivizing a swift
return to compliance.
Additionally, we propose to make conforming changes by revising
Sec. 488.434(a)(2)(iii) to clarify that both PD and PI CMPs can be
imposed on the same survey and thus is included in the penalty notice
to the facility. Furthermore, we propose to revise Sec.
488.434(a)(2)(v) to indicate that the date and instance of
noncompliance is not a singular event, but rather can be multiple
``date(s) of the instance(s) of noncompliance.'' Lastly, we propose to
revise Sec. 488.440(a)(2) to remove the phrase, ``for that particular
deficiency,'' and replace with, ``per instance,'' which will allow for
more than one PI CMP to be imposed on the same type of noncompliance or
``F tag'' citation. We seek public comment on these proposed revisions.
3. Timing of Enforcement
Sections 1819(h)(2)(A) and 1919(h)(1) and (3) of the Act state that
when a facility is found to be in compliance with the requirements but
``. . . as of a previous period, did not meet such requirements,'' the
Secretary and the State may impose a CMP for the days that the facility
is found out of compliance with the requirements. The regulation at
Sec. 488.430(b) states that ``CMS or the State may impose a civil
money penalty for the number of days of past noncompliance since the
last standard survey, including the number of days of immediate
jeopardy.''
Due to an increase in the number of complaint surveys being
conducted, the current regulation may result in an unanticipated limit
on CMS's authority to impose remedies to the noncompliance deficiencies
identified when the last standard survey was performed. For example,
since 2015, the percent of complaint surveys increased from 80 to 87
percent of the total number of surveys conducted, resulting in more
than 10,000 additional surveys. This increase in complaint survey
activity has resulted in an increase in enforcement actions taken by
the States and CMS. The increase in complaint surveys has resulted in
more surveys being conducted within short timeframes of each other,
which can create administrative difficulties. For example, one survey
may be conducted shortly after another, not leaving enough time to
impose a CMP for the first survey before the second survey is
concluded. But, despite the fact that there are more surveys that
identify additional deficiencies, the current regulations limit how far
back CMS or the State may go when calculating a CMP amount: to the last
standard survey.
We propose to revise Sec. 488.430(b) by changing ``since the last
standard survey'' to ``since the last three standard surveys.'' We
believe this proposed revision aligns with the statutory mandate that
the Secretary ensure that enforcement remedies adequately
[[Page 23481]]
protect the health and safety of nursing home residents in facilities
where the Medicare and/or Medicaid programs pay for services. These
proposed revisions are designed to enable CMS or State survey agencies
to impose a variety of CMPs for noncompliance, particularly when
surveyors have identified deficiencies that cannot be addressed
because, for example, a subsequent survey has taken place. In these
situations, it is important for CMS and the State to be able to impose
a CMP (per day, per instance, or both), as warranted, to help ensure
that the facility's compliance is permanent. Additionally, limiting
review of past noncompliance to the last three standard surveys is more
reflective of a facility's current compliance performance.
A proposed three-standard survey lookback period is also consistent
with current agency practices. For example, CMS posts the survey
results for each facility for the last three standard surveys and last
3 years of complaint surveys on the Medicare.gov Care Compare website
to provide the public with information on the facility's compliance
performance. This same timeframe is also used to calculate each
facility's health inspection rating for the Five-Star Quality Rating
System. We seek public comments on this proposal and also seek comments
on an alternative look-back period that would also ensure CMPs are
imposed in a manner that is not dependent on when the next standard
survey is conducted.
IX. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
Using the following format describe the information collection
requirements that are in each section].
A. Proposed Information Collection Requirements (ICRs)
1. ICRs Regarding the Skilled Nursing Facility Value-Based Purchasing
Program
We are not removing or adding any new or revised SNF VBP measure-
related requirements or burden in this rule. Consequently, this final
rule does not set out any new SNF VBP-related collections of
information that would be subject to OMB approval under the authority
of the PRA.
2. ICRs Regarding the Skilled Nursing Facility Quality Reporting
Program (SNF QRP)
In accordance with section 1888(e)(6)(A)(i) of the Act, the
Secretary must reduce by 2-percentage points the otherwise applicable
annual payment update to a SNF for a fiscal year if the SNF does not
comply with the requirements of the SNF QRP for that fiscal year.
In section VI.C.3. of this proposed rule, we are proposing to adopt
four new items as standardized patient assessment data elements under
the SDOH category and modify one item collected as a standardized
patient assessment data element under the SDOH category beginning with
the FY 2027 SNF QRP. In section VI.E.3. of this proposed rule, we are
also proposing that SNFs participating in the SNF QRP, be required to
participate in a validation process. Specifically, we are proposing to
adopt a similar validation process for the SNF QRP that we have adopted
for the SNF VBP beginning with the FY 2027 SNF QRP.
As stated in section VII.C.3. of this proposed rule, we are
proposing to adopt four new items as standardized patient assessment
data elements under the SDOH category and modify one item collected as
a standardized patient assessment data element under the SDOH category
beginning with the FY 2027 SNF QRP. The proposed new and modified items
would be collected using the MDS. The MDS, in its current form, has
been approved under OMB control number 0938-1140. Four items would need
to be added to the MDS at admission to allow for collection of these
data, and one would be modified. Additionally, as stated in section
VI.E.2. of this proposed rule, we are proposing SNFs would submit the
four proposed new items and one modified item at admission only. The
net result of collecting four new items at admission, modifying one
item currently collected at admission, and removing the collection of
one item at discharge is an increase of 0.9 minutes or 0.015 hour of
clinical staff time at admission [(4 items x 0.005 hour) minus (1 item
x 0.005 hour)]. We identified the staff type based on past SNF burden
calculations, and our assumptions are based on the categories generally
necessary to perform an assessment. We believe that the proposed new
and modified items would be completed equally by a Registered Nurse
(RN) and Licensed Practical and Licensed Vocational Nurse (LPN/LVN).
However, individual SNFs determine the staffing resources necessary.
For the purposes of calculating the costs associated with the
collection of information requirements, we obtained median hourly wages
for these staff from the U.S. Bureau of Labor Statistics' (BLS) May
2022 National Occupational Employment and Wage Estimates.\71\ To
account for other indirect costs and fringe benefits, we doubled the
hourly wage. These amounts are detailed in Table 33. We established a
composite cost estimate using our adjusted wage estimates. The
composite estimate of $65.31/hr was calculated by weighting each hourly
wage equally [($78.10/hr x 0.5) plus ($52.52/hr x 0.5) = $65.31].
---------------------------------------------------------------------------
\71\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
[[Page 23482]]
Table 33--U.S. Bureau of Labor and Statistics' May 2022 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Other indirect Adjusted
Occupation title Occupation Median hourly costs and fringe hourly wage ($/
code wage ($/hr) benefit ($/hr) hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse (RN)........................ 29-1141 39.05 39.05 78.10
Licensed Practical and Licensed Vocational 29-2061 26.26 26.26 52.52
Nurse (LPN/LVN).............................
----------------------------------------------------------------------------------------------------------------
We estimate that the burden and cost for SNFs for complying with
requirements of the FY 2027 SNF QRP would increase under this proposal.
Using FY 2023 data, we estimate a total of 1,966,662 admissions to and
754,287 planned discharges from 15,393 SNFs annually for an increase of
35,561.81 hours in burden for all SNFs [(1,966,662 admissions x 0.02
hour) minus (754,287 planned discharges x 0.005 hour)]. Given 0.02 hour
at $65.31 per hour to complete an average of 128 5-day PPS assessments
per provider per year minus 0.005 at $65.31 per hour to complete an
average of 49 Planned Discharge assessments, we estimate the total cost
would be increased by $150.88 per SNF annually, or $2,322,541.48 for
all SNFs annually. The proposed increase in burden would be accounted
for in a revised information collection request under OMB control
number (0938-1140). The required 60-day and 30-day notices would
publish in the Federal Register and the comment periods would be
separate from those associated with this rulemaking.
In summary, under OMB control number (0938-1140), if the proposed
policies in this proposed rule are finalized, we estimate the SNF QRP
would result in an overall increase of 35,561.81 hours annually for
15,393 SNFs. The total cost increase related to this information
collection is approximately $2,322,541.48 and is summarized in Table
34.
Table 34--Proposed Estimated Burden Associated With OMB Control Number 0938-1140 (CMS-10387) Related to the SNF
QRP
----------------------------------------------------------------------------------------------------------------
Per SNF All SNFs
---------------------------------------------------------------------
Proposal Change in Change in
annual burden Change in annual burden Change in annual
hours annual cost hours cost
----------------------------------------------------------------------------------------------------------------
Estimated Change in Burden associated with +2.31 +$150.88 +35,561.81 +$2,322,541.48
Proposal to Collect Four New Items as
Standardized Patient Assessment Data
Elements and Modify One Item Collected as
a Standardized Patient Assessment Data
Element beginning with the FY 2027 SNF
QRP......................................
----------------------------------------------------------------------------------------------------------------
3. ICRs Regarding the Minimum Data Set (MDS) Beginning October 1, 2025
The MDS is used for meeting the SNF Requirements of Participation,
requirements under the SNF QRP, and for payment purposes under the SNF
PPS. As outlined in the FY 2019 SNF PPS final rule (83 FR 39165 through
39265), several MDS items are not needed in case-mix adjusting the per
diem payment for PDPM. However, they were not accounted for in the FY
2019 SNF PPS final rule. Therefore, we are removing these items from
the 5-day Medicare-required assessment beginning October 1, 2025. We
have provided an estimate of the reduction in burden here and in Table
35. The items to be removed are:
O0400.A.1. Speech-Language Pathology and Audiology
Services; Individual minutes.
O0400.A.2. Speech-Language Pathology and Audiology
Services; Concurrent minutes.
O0400.A.3. Speech-Language Pathology and Audiology
Services; Group minutes.
O0400.A.3A. Speech-Language Pathology and Audiology
Services; Co-treatment minutes.
O0400.A.4. Speech-Language Pathology and Audiology
Services; Days.
O0400.A.5. Speech-Language Pathology and Audiology
Services; Therapy start date.
O0400.A.6. Speech-Language Pathology and Audiology
Services; Therapy end date.
O0400.B.1. Occupational Therapy; Individual minutes.
O0400.B.2. Occupational Therapy; Concurrent minutes.
O0400.B.3. Occupational Therapy; Group minutes.
O0400.B.3A. Occupational Therapy; Co-treatment minutes.
O0400.B.4. Occupational Therapy; Days.
O0400.B.5. Occupational Therapy; Therapy start date.
O0400.B.6. Occupational Therapy; Therapy end date.
O0400.C.1. Physical Therapy; Individual minutes.
O0400.C.2. Physical Therapy; Concurrent minutes.
O0400.C.3. Physical Therapy; Group minutes.
O0400.C.3A. Physical Therapy; Co-treatment minutes.
O0400.C.4. Physical Therapy; Days.
O0400.C.5. Physical Therapy; Therapy start date.
O0400.C.6. Physical Therapy; Therapy end date.
O0400.E.2. Psychological Therapy; Days.
The net result of removing the collection of these items is a
decrease of 6.6 minutes of clinical staff time at admission. We believe
that these items are completed equally by a RN and LPN/LVN. Individual
SNFs determine the staffing resources necessary.
For the purposes of calculating the costs associated with the
collection of information requirements, we obtained median hourly wages
for these staff from the BLS May 2022 National Occupational Employment
and Wage Estimates.\72\ To account for other
[[Page 23483]]
indirect costs and fringe benefits, we have doubled the hourly wage.
These amounts are detailed in Table 35. We established a composite cost
estimate using our adjusted wage estimates. The composite estimate of
$65.31/hr was calculated by weighting each hourly wage equally
[($78.10/hr x 0.5) plus ($52.52/hr x 0.5) = $65.31].
---------------------------------------------------------------------------
\72\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------
Using FY 2023 data, we estimate a total of 1,966,662 admissions to
15,393 SNFs annually. This equates to a decrease of 216,332.82 hours in
burden for all SNFs. Given 0.11 hour at $65.31 per hour to complete an
average of 128 5-day PPS assessments per provider per year, we estimate
the total cost would be decreased by $917.87 per SNF annually, or
$14,128,696.47 for all SNFs annually.
Table 35--Proposed Estimated SNF Reduction in Burden Associated With Associated With OMB Control Number 0938-
1140 (CMS-10387) Related to the Minimum Data Set Collection and Submission
----------------------------------------------------------------------------------------------------------------
Per SNF All SNFs
-------------------------------------------------------------------------
Estimated Estimated
change in Estimated change in Estimated change in
annual burden change in annual burden annual cost
hours annual cost hours
----------------------------------------------------------------------------------------------------------------
Estimated Change in Burden associated -14.05 -$917.87 -216,332.82 -$14,128,696.47
with Removal of MDS items O0400.A,
O0400.B, O0400.C, and O0400.E
effective October 1, 2025............
----------------------------------------------------------------------------------------------------------------
4. ICRs Regarding the Proposal for SNFs To Participate in a Validation
Process
In section VI.E.3 of this proposed rule, we are proposing to
require SNFs to participate in a validation process beginning with the
FY 2027 SNF QRP. We have provided an estimate of burden here, and in
Table 36, and note that the increase in burden would be accounted for
in a new information collection request.
In section VI.E.3(a). of this proposed rule, we propose to require
SNFs to participate in a validation process for assessment-based
measures beginning with the FY 2027 SNF QRP. We identified the staff
type based on past SNF burden calculations, and our assumptions are
based on the categories generally necessary to perform an assessment.
We believe that the medical records would be collected and submitted by
a Medical Records and Health Information Technologist and Medical
Registrar (HIT/MR). However, individual SNFs determine the staffing
resources necessary. For the purposes of calculating the costs
associated with the collection of information requirements, we obtained
median hourly wages for these staff from the BLS May 2022 National
Occupational Employment and Wage Estimates.\73\ To account for other
indirect costs and fringe benefits, we have doubled the hourly wage to
establish an adjusted wage estimate of $56.02/hr. These amounts are
detailed in Table 36.
---------------------------------------------------------------------------
\73\ https://www.bls.gov/oes/current/oes_nat.htm.
Table 36--U.S. Bureau of Labor and Statistics' May 2022 National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Other indirect
Median hourly costs and Adjusted hourly
Occupation title Occupation code wage ($/hr) fringe benefit wage ($/hr)
($/hr)
----------------------------------------------------------------------------------------------------------------
Medical Records and Health Information 29-9021 28.01 28.01 56.02
Technologists and Medical Registrars (HIT/
MR)........................................
----------------------------------------------------------------------------------------------------------------
We are proposing that our validation contractor would select, on an
annual basis, up to 1,500 SNFs and up to 10 medical records from each
of the selected SNFs. We are proposing that the selected SNFs would
have the option to submit digital or paper copies of the requested
medical records to the validation contractor.
For the purposes of burden estimation, we assume all of the
activities associated with the validation process would be completed by
a HIT/MR. For selected SNFs utilizing electronic health records (EHR),
we anticipate an increase of 3 hours up to 7.5 hours of HIT/MR time per
SNF to submit a sample of up to 10 records. For selected SNFs who do
not utilize EHRs, we anticipate an increase of 5 hours up to 12.5 hours
of HIT/MR time per SNF to submit a sample of up to 10 records.
Additionally, SNFs who do not utilize EHRs may incur printing and
shipping costs if they are unable to submit the records via an
electronic portal, and for these SNFs, we estimate the cost to print
and ship a sample of up to 10 records would range from $842.67 up to
$4,114.35.
We also anticipate that a sample of up to 10 medical records would
consist of SNF stays that vary in length of stay. We estimate the
length of stay for each of the selected medical records could range
from 20 days (or less) up to or exceeding 366 days. For purposes of our
burden estimate, we anticipate the average sample of up to 10 medical
records would be distributed among the possible lengths of stay (that
is, approximately 40 percent of stays or 4 stays would be 1 to 30 days,
40 percent of stays or 4 stays would be 31 to 100 days, and 20 percent
of stays or 2 stays would last 101 to 366 or more consecutive days). We
also estimate that approximately 85 percent of nursing homes utilize
some form of EHRs.\74\ Therefore, we estimate the total cost to submit
up to 10 medical records would range between $335,699.85 and
$477,368.10 for all 1,500 SNFs selected, depending on the length of
stay of the
[[Page 23484]]
sample medical records and whether the SNFs use an EHR. We also
estimate that total cost to submit up to 10 medical records would range
between $263.29 [$335,699.85/(1,500 x 0.85 SNFs)] and $2,121.64
[$477,368.10/(1,500 x 0.15 SNFs)] per SNF selected depending on the
length of stay of the sample of medical records and whether the SNF
uses an EHR. On average we estimate the total cost would be increased
by $813,067.95 for all 1,500 selected SNFs [[($263.29 x (1,500 x 0.85)]
plus [$2,121.64 x (1,500 x 0.15)]] and $542.05 per selected SNF
($813,067.95/1,500 SNFs) annually.
---------------------------------------------------------------------------
\74\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6591108/
#:~:text=In%20a%20nationwide%20sample%2C%20we,EHR%20adoption%20by%20n
ursing%20facilities.
---------------------------------------------------------------------------
In section VI.E.3(b). of this proposed rule, we propose to require
SNFs to participate in a validation process for Medicare fee-for-
service claims-based measures beginning with the FY 2027 SNF QRP. All
Medicare fee-for-service claims-based measures are already reported to
the Medicare program for payment purposes, and therefore there is no
additional burden for providers.
Table 37--Proposed SNF Burden for a Validation Process
[OMB 0938-TBD, CMS-#####]
----------------------------------------------------------------------------------------------------------------
Per selected SNF All selected SNFs
-------------------------------------------------------------------
Estimated Estimated
Proposal change in Estimated change in Estimated
annual burden change in annual burden change in
hours annual cost hours annual cost
----------------------------------------------------------------------------------------------------------------
Estimated Change in Burden associated with +5.12 +$542.05 +7,680 +$813,067.95
Proposed Participation in a Validation
Process....................................
----------------------------------------------------------------------------------------------------------------
Comments must be received on/by June 3, 2024.
If you comment on these information collection, that is, reporting,
recordkeeping or third-party disclosure requirements, please submit
your comments electronically as specified in the ADDRESSES section of
this proposed rule.
Comments must be received on/by June 3, 2024.
X. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
XI. Economic Analyses
A. Regulatory Impact Analysis
1. Statement of Need
a. Statutory Provisions
This rule updates the FY 2025 SNF prospective payment rates 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. These are statutory
provisions that prescribe a detailed methodology for calculating and
disseminating payment rates under the SNF PPS, and we do not have the
discretion to adopt an alternative approach on these issues.
With respect to the SNF QRP, this proposed rule proposes updates
beginning with the FY 2027 SNF QRP. Specifically, we propose to collect
four new items as standardized patient assessment data elements under
the SDOH category and modify one item collected as a standardized
patient assessment data element under the SDOH category in the MDS
beginning with the FY 2027 SNF QRP. We believe these proposals would
advance the CMS National Quality Strategy Goals of equity and
engagement by encouraging meaningful collaboration between healthcare
providers, caregivers, and community-based organizations to address
SDOH prior to discharge from the SNF. We propose to adopt a validation
process for the SNF QRP beginning with the FY 2027 SNF QRP to satisfy
section 111(a)(4) of Division CC of the Consolidated Appropriations
Act, 2021 (Pub. L. 116-260) which requires that the measures and data
submitted under the SNF QRP Program (section 1888(e)(6) of the Act) be
subject to a validation process. To implement this proposed validation
process for SNF QRP, we are also proposing conforming amendments to our
regulation at Sec. 413.360.
With respect to the SNF VBP Program, this rule proposes updates to
the SNF VBP Program requirements for FY 2025 and subsequent years.
Section 1888(h)(3) of the Act requires the Secretary to establish and
announce performance standards for SNF VBP Program measures no later
than 60 days before the performance period, and this proposed rule
estimates numerical values of the performance standards for the FY 2027
program year for the SNFRM, SNF HAI, Total Nurse Staffing, Nursing
Staff Turnover, Falls with Major Injury (Long-Stay), DC Function, and
Long Stay Hospitalization measures; and numerical values of the
performance standards for the FY 2028 program year for the DTC PAC SNF
and SNF WS PPR measures. We are also required under section
1888(h)(1)(C) of the Act to establish a minimum number of measures that
apply to a facility for the applicable performance period. Therefore,
we are proposing to apply the same measure minimum we previously
finalized for the FY 2027 program year (88 FR 53303) to the FY 2028
program year and subsequent program years.
b. Discretionary Provisions
In addition, this proposed rule includes the following
discretionary provisions:
(1) SNF Market Basket Adjustment
We are proposing to rebase and revise the SNF market basket to
reflect a 2022 base year. Since the inception of the SNF PPS, the
market basket used to update SNF PPS payments has been periodically
rebased and revised to reflect more recent data. We last rebased and
revised the market basket applicable to the SNF PPS in the FY 2022 SNF
PPS final rule (86 FR 42444 through 42463) where we adopted a 2018-
based SNF market basket.
Given changes to the industry in recent years and public comments
about the timeliness of the weights, we have been monitoring the
Medicare cost report data to determine if a more frequent rebasing
schedule than our standard schedule (which has generally been about
every 4 years). In light of this analysis, we are proposing to
[[Page 23485]]
incorporate data that is more reflective of recent SNF expenses.
(2) SNF Forecast Error Adjustment
Each year, we evaluate the SNF market basket forecast error for the
most recent year for which historical data is available. The forecast
error is determined by comparing the projected SNF market basket
increase each year with the actual SNF market basket increase in that
year. In evaluating the data for FY 2023, we found that the forecast
error for that year was 1.7 percentage points, exceeding the 0.5
percentage point threshold we established in regulation for proposing
adjustments to correct for forecast error. Given that the forecast
error exceeds the 0.5 percentage point threshold, current regulations
require that the SNF market basket percentage increase for FY 2025 be
adjusted upward by 1.7 percentage points to account for forecasting
error in the FY 2023 SNF market basket update.
(3) Technical Updates to ICD-10 Mappings
In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the
implementation of the PDPM, effective October 1, 2019. The PDPM
utilizes ICD-10 codes in several ways, including using the patient's
primary diagnosis to assign patients to clinical categories under
several PDPM components, specifically the PT, OT, SLP and NTA
components. In this rule, we finalize several substantive changes to
the PDPM ICD-10 code mapping.
2. Introduction
We have examined the impacts of this proposed 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), Executive Order 14094 entitled ``Modernizing
Regulatory Review'' (April 6, 2023), 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).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). The
Executive Order 14094 entitled ``Modernizing Regulatory Review''
(hereinafter, the Modernizing E.O.) amends section 3(f)(1) of Executive
Order 12866 (Regulatory Planning and Review). The amended section 3(f)
of Executive Order 12866 defines a ``significant regulatory action'' as
an action that is likely to result in a rule: (1) having an annual
effect on the economy of $200 million or more in any 1 year (adjusted
every 3 years by the Administrator of OIRA for changes in gross
domestic product), or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, territorial, or
tribal governments or communities; (2) creating a serious inconsistency
or otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raise legal or policy issues for which
centralized review would meaningfully further the President's
priorities or the principles set forth in this Executive order, as
specifically authorized in a timely manner by the Administrator of OIRA
in each case.
A regulatory impact analysis (RIA) must be prepared for major rules
with significant regulatory action/s and/or with significant effects as
per section 3(f)(1) ($200 million or more in any 1 year). Based on our
estimates, OMB's Office of Information and Regulatory Affairs has
determined this rulemaking is significant per section 3(f)(1) as
measured by the $200 million or more in any 1 year, and hence also a
major rule under Subtitle E of the Small Business Regulatory
Enforcement Fairness Act of 1996 (also known as the Congressional
Review Act). Accordingly, we have prepared a Regulatory Impact Analysis
that to the best of our ability presents the costs and benefits of the
rulemaking. Therefore, OMB has reviewed these proposed regulations, and
the Departments have provided the following assessment of their impact.
3. Overall Impacts
This rule updates the SNF PPS rates contained in the SNF PPS final
rule for FY 2024 (88 FR 53200). We estimate that the aggregate impact
will be an increase of approximately $1.3 billion (4.1 percent) in Part
A payments to SNFs in FY 2025. This reflects a $1.3 billion (4.1
percent) increase from the update to the payment rates. We note in this
proposed rule that these impact numbers do not incorporate the SNF VBP
Program reductions that we estimate would total $187.69 million in FY
2025. We note that 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 events that may occur
within the assessed impact time period.
In accordance with sections 1888(e)(4)(E) and (e)(5) of the Act and
implementing regulations at Sec. 413.337(d), we are updating the FY
2024 payment rates by a factor equal to the market basket percentage
increase adjusted for the forecast error adjustment and reduced by the
productivity adjustment to determine the payment rates for FY 2025. The
impact to Medicare is included in the total column of Table 38. The
annual update in this rule applies to SNF PPS payments in FY 2025.
Accordingly, the analysis of the impact of the annual update that
follows only describes the impact of this single year. Furthermore, in
accordance with the requirements of the Act, we will publish a rule or
notice for each subsequent FY that will provide for an update to the
payment rates and include an associated impact analysis.
4. Detailed Economic Analysis
The FY 2025 SNF PPS payment impacts appear in Table 38. Using the
most recently available claims data, in this case FY 2022 we apply the
current FY 2024 CMIs, wage index and labor-related share value to the
number of payment days to simulate FY 2024 payments. Then, using the
same FY 2022 claims data, we apply the FY 2025 CMIs, wage index and
labor-related share value to simulate FY 2025 payments. We tabulate the
resulting payments according to the classifications in Table 38 (for
example, facility type, geographic region, facility ownership), and
compare the simulated FY 2024 payments to the simulated FY 2025
payments to determine the overall impact. The breakdown of the various
categories of data in Table 38 is as 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 contained in this proposed rule 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).
[[Page 23486]]
The second column shows the number of facilities in the
impact database.
The third column shows the effect of the proposed update
to the SNF PPS wage index due to adopting the updated census data and
revised CBSAs in OMB Bulletin 23-01. This represents the effect of only
the proposed adoption of the revised CBSAs, independent of the effect
of the annual update to the wage index.
The fourth column shows the effect of the annual update to
the wage index, including the proposed updates to the labor related-
share discussed in section V.A above. This represents the effect of
using the most recent wage data available as well as accounts for the 5
percent cap on wage index transitions. The total impact of this change
is 0.0 percent; however, there are distributional effects of the
change.
The fifth column shows the effect of all of the changes on
the FY 2025 payments. The update of 4.1 percent is constant for all
providers and, though not shown individually, is included in the total
column. It is projected that aggregate payments would increase by 4.1
percent, assuming facilities do not change their care delivery and
billing practices in response.
As illustrated in Table 38, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, due to changes in this proposed rule, rural providers would
experience a 4.9 percent increase in FY 2025 total payments.
Table 38--Impact to the SNF PPS for FY 2025
----------------------------------------------------------------------------------------------------------------
Number of Census data Update wage Total change
Impact categories facilities update (%) data (%) (%)
----------------------------------------------------------------------------------------------------------------
Group
----------------------------------------------------------------------------------------------------------------
Total........................................... 15,393 0.0 0.0 4.1
Urban........................................... 11,151 0.0 -0.1 4.0
Rural........................................... 4,242 -0.1 0.9 4.9
Hospital-based urban............................ 360 0.1 -1.0 3.2
Freestanding urban.............................. 10,791 0.0 -0.1 4.0
Hospital-based rural............................ 369 -0.1 0.8 4.8
Freestanding rural.............................. 3,873 -0.1 0.9 4.9
----------------------------------------------------------------------------------------------------------------
Urban by region
----------------------------------------------------------------------------------------------------------------
New England..................................... 715 -0.3 -0.9 2.8
Middle Atlantic................................. 1,467 -1.0 -0.8 2.3
South Atlantic.................................. 1,893 0.6 0.8 5.5
East North Central.............................. 2,166 1.0 -0.6 4.4
East South Central.............................. 566 0.4 2.1 6.7
West North Central.............................. 950 0.0 0.6 4.7
West South Central.............................. 1,454 0.2 1.0 5.3
Mountain........................................ 539 0.1 1.6 5.8
Pacific......................................... 1,396 -0.1 -1.4 2.6
Outlying........................................ 5 0.0 -2.3 1.7
----------------------------------------------------------------------------------------------------------------
Rural by region
----------------------------------------------------------------------------------------------------------------
New England..................................... 119 0.6 -1.3 3.4
Middle Atlantic................................. 226 -0.7 4.0 7.5
South Atlantic.................................. 527 -0.1 -0.3 3.7
East North Central.............................. 890 -0.1 0.2 4.2
East South Central.............................. 471 -0.1 1.5 5.6
West North Central.............................. 988 0.0 1.5 5.6
West South Central.............................. 740 -0.1 1.2 5.2
Mountain........................................ 193 0.0 2.1 6.2
Pacific......................................... 87 0.0 -0.6 3.4
Outlying........................................ 1 0.0 0.0 4.1
----------------------------------------------------------------------------------------------------------------
Ownership
----------------------------------------------------------------------------------------------------------------
For profit...................................... 10,893 0.0 0.0 4.0
Non-profit...................................... 3,492 0.1 0.1 4.3
Government...................................... 1,008 -0.1 0.6 4.7
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the FY 2025 4.1 percent market basket update. The values presented in Table 38
may not sum due to rounding.
5. Impacts for the Skilled Nursing Facility Quality Reporting Program
(SNF QRP) for FY 2027
Estimated impacts for the SNF QRP are based on analysis discussed
in section VI. of this proposed rule. In accordance with section
1888(e)(6)(A)(i) of the Act, the Secretary must reduce by 2 percentage
points the annual payment update applicable to a SNF for a fiscal year
if the SNF does not comply with the requirements of the SNF QRP for
that fiscal year.
[[Page 23487]]
As discussed in section VI.C.3. of this proposed rule, we are
proposing to adopt four new items as standardized patient assessment
data elements under the SDOH category and modify the Transportation
item collected as a standardized patient assessment data element under
the SDOH category beginning with admission assessments completed on
October 1, 2025. Although the proposed increase in burden will be
accounted for in a revised information collection request under OMB
control number (0938-1140), we are providing impact information. With
1,966,662 admissions to and 754,287 planned discharges from 15,393 SNFs
annually, we estimate an annual burden increase of 35,561.81 hours
[(1,966,662 admissions x 0.02 hour) minus (754,287 planned discharges x
0.005 hour)] and an increase of $2,322,541.48 (35,561.81 hours x
$65.31/hr). For each SNF, we estimate an annual burden increase of 2.31
hours (35,561.81 hours/15,393 SNFs) at an additional cost of $150.88
($2,322,541.48 total burden/15,393 SNFs).
As discussed in in section VI.E.3. of this proposed rule, we are
also proposing to require SNFs to participate in a validation process
that would apply to data submitted using the MDS and SNF Medicare fee-
for-service claims as a SNF QRP requirement. Specifically, we are
proposing to adopt a similar validation process for the SNF QRP that we
have adopted for the SNF VBP beginning with the FY 2027 SNF QRP. This
proposal is in accordance with section 111(a)(4) of Division CC of the
Consolidated Appropriations Act, 2021 (Pub. L. 116-260) which requires
that the measures and data submitted under the SNF QRP Program (section
1888(e)(6) of the Act) be subject to a validation process.
In section VI.E.3(a). of this proposed rule, we propose to require
SNFs to participate in a validation process for assessment-based
measures beginning with the FY 2027 SNF QRP. We are proposing that our
validation contractor would select, on an annual basis, up to 1,500
SNFs and request that each SNF selected for the validation process
submit up to 10 medical records. Although the proposed increase in
burden will be accounted for in a new information collection request,
we are providing impact information. We estimate the burden per
selected SNF could range from 3 hours up to 7.5 hours for SNFs
utilizing electronic health records and 5 hours up to 12.5 hours for
SNFs who do not utilize electronic health records.
We also anticipate that a sample of 10 medical records would
consist of SNF stays that vary in length of stay. We estimate the
length of stay for each of the selected medical records could range
from 1 day up to or exceeding 366 days. We also estimate that
approximately 85 percent of nursing homes utilize some form of
electronic health records (EHR),\75\ and would not incur the costs of
printing and shipping records. However, selected SNFs who do not
utilize EHRs may incur printing and shipping costs if they are unable
to submit the records via an electronic portal, and we estimate the
cost to print and ship a sample of up to 10 records would range between
$842.67 up to $4,114.35. Therefore, depending on the length of stay of
the sample and whether the selected SNF uses an EHR, we estimate the
total cost to submit medical records would range between $335,699.85
and $477,368.10 for all 1,500 selected SNFs and $263.29 [$335,699.85/
(1,500 x 0.85 SNFs)] and $2,121.64 [$477,368.10/(1,500 x 0.15 SNFs)]
per selected SNF. On average, we estimate the total cost would be
increased by $813,067.95 for all 1,500 selected SNFs [[($263.29 x
(1,500 x 0.85)] plus [$2,121.64 x (1,500 x 0.15)]] and $542.05 per
selected SNF ($813,067.95/1,500 SNFs) annually.
In section VI.E.3(b). of this proposed rule, we propose to require
SNFs to participate in a validation process for Medicare fee-for-
service claims-based measures beginning with the FY 2027 SNF QRP. All
Medicare fee-for-service claims-based measures are already reported to
the Medicare program for payment purposes, and therefore there is no
additional burden for providers.
We invite public comments on the overall impact of the SNF QRP
proposals for FY 2027 displayed in Table 39.
Table 39--Estimated Impacts for the FY 2027 SNF QRP
----------------------------------------------------------------------------------------------------------------
Per SNF All SNFs
---------------------------------------------------------------------
Estimated Estimated
Estimated burden for the FY2027 SNF QRP change in Estimated change in Estimated change in
annual burden change in annual burden annual cost
hours annual cost hours
----------------------------------------------------------------------------------------------------------------
Estimated Change in Burden associated with +2.31 +$150.88 +35,561.81 +$2,322,541.48
Proposal to Collect Four New SDOH
Assessment Items and Modify One SDOH
Assessment Item beginning with the FY
2027 SNF QRP.............................
----------------------------------------------------------------------------------------------------------------
Per Selected SNF
All Selected SNFs
----------------------------------------------------------------------------------------------------------------
Estimated Change in Burden associated with +5.12 +$542.05 +7,680 +$813,067.95
Proposal to Adopt a Validation Process
for SNFs Participating in the SNF QRP
beginning with the FY 2027 SNF QRP.......
----------------------------------------------------------------------------------------------------------------
6. Impacts for the Minimum Data Set Beginning October 1, 2025
As discussed in section IX.A.3. of this proposed rule, we are
removing MDS items that are not needed for case-mix adjusting the SNF
per diem payment for PDPM but were not accounted for in the FY 2019 SNF
PPS final rule (83 FR 39165 through 39265). We are providing impact
information here and in Table 40. With 1,966,662 admissions to 15,393
SNFs annually, we estimate an annual burden decrease of 216,332.82
hours (1,966,662 admissions x 0.11 hour) and a decrease of
$14,128,696.47 (216,332.82 hours x $65.31/hr). For each SNF, we
estimate an annual burden decrease of 14.05 hours (216,332.82 hours/
15,393 SNFs) for a reduction in cost of $917.87 ($14,128,696.47 total
burden/15,393 SNFs).
---------------------------------------------------------------------------
\75\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6591108/
#:~:text=In%20a%20nationwide%20sample%2C%20we,EHR%20adoption%20by%20n
ursing%20facilities.
[[Page 23488]]
Table 40--Estimated Impacts for the Proposed Changes to the MDS Data Set Collection and Submission Beginning
October 1, 2025
----------------------------------------------------------------------------------------------------------------
Per SNF All SNFs
-------------------------------------------------------------------------
Estimated change in burden for the MDS Estimated Estimated
removal of assessment items change in Estimated change in Estimated change in
annual burden change in annual burden annual cost
hours annual cost hours
----------------------------------------------------------------------------------------------------------------
Estimated Change in Burden associated -14.05 -$917.87 -216,332.82 -$14,128,696.47
with Removal of MDS items O0400A,
O0400B, O0400C, and O0400E effective
October 1, 2025......................
----------------------------------------------------------------------------------------------------------------
7. Impacts for the SNF VBP Program
The estimated impacts of the FY 2025 SNF VBP Program are based on
historical data and appear in Table 41. We modeled SNF performance in
the Program using SNFRM data from FY 2019 as the baseline period and FY
2023 as the performance period. Additionally, we modeled a logistic
exchange function with a payback percentage of 60 percent, as we
finalized in the FY 2018 SNF PPS final rule (82 FR 36619 through
36621).
For the FY 2025 program year, we will reduce each SNFs adjusted
Federal per diem rate by 2 percent. We will then redistribute 60
percent of that 2 percent withhold to SNFs based on their measure
performance. Additionally, in the FY 2023 SNF PPS final rule (87 FR
47585 through 47587), we finalized a case minimum requirement for the
SNFRM, as required by section 1888(h)(1)(C)(ii) of the Act. As a result
of these provisions, SNFs that do not meet the case minimum specified
for the SNFRM for the FY 2025 program year will be excluded from the
Program and will receive their full Federal per diem rate for that
fiscal year. As previously finalized, this policy will maintain the
overall payback percentage at 60 percent for the FY 2025 program year.
Based on the 60 percent payback percentage, we estimated that we would
redistribute approximately $281.53 million (of the estimated $469.22
million in withheld funds) in value-based incentive payments to SNFs in
FY 2025, which means that the SNF VBP Program is estimated to result in
approximately $187.69 million in savings to the Medicare Program in FY
2025.
Our detailed analysis of the impacts of the FY 2025 SNF VBP Program
is shown in Table 41.
Table 41--Estimated SNF VBP Program Impacts for FY 2025
----------------------------------------------------------------------------------------------------------------
Mean risk-
standardized Mean Mean incentive
Characteristic Number of readmission performance payment Percent of
facilities rate (SNFRM) score multiplier total payment
(%)
----------------------------------------------------------------------------------------------------------------
Group:
Total *..................... 10,858 20.21 31.8725 0.99154 100.00
Urban....................... 8,509 20.32 30.4525 0.99093 86.41
Rural....................... 2,349 19.81 37.0163 0.99375 13.59
Hospital-based urban **..... 181 19.64 41.4823 0.99545 1.51
Freestanding urban **....... 8,319 20.33 30.1971 0.99082 84.88
Hospital-based rural **..... 71 19.36 43.5091 0.99626 0.27
Freestanding rural **....... 2,223 19.81 36.9289 0.99374 13.19
Urban by region:
New England................. 610 20.31 30.3760 0.99108 5.59
Middle Atlantic............. 1,259 20.03 34.4195 0.99264 19.04
South Atlantic.............. 1,662 20.58 27.9590 0.99001 16.85
East North Central.......... 1,543 20.63 25.7922 0.98890 11.47
East South Central.......... 448 20.33 30.6263 0.99112 3.26
West North Central.......... 573 19.86 36.0210 0.99327 3.82
West South Central.......... 894 20.92 21.0260 0.98683 6.72
Mountain.................... 385 19.62 40.0497 0.99492 3.70
Pacific..................... 1,135 19.80 37.3699 0.99366 15.96
Outlying.................... 0 .............. .............. .............. ..............
Rural by region:
New England................. 69 18.64 56.1674 1.00285 0.52
Middle Atlantic............. 159 19.23 46.9484 0.99845 1.06
South Atlantic.............. 340 20.32 29.8026 0.99065 2.01
East North Central.......... 566 19.66 38.5666 0.99422 3.29
East South Central.......... 371 19.98 34.4449 0.99282 2.06
West North Central.......... 345 19.67 37.5009 0.99383 1.52
West South Central.......... 332 20.65 24.5102 0.98828 1.84
Mountain.................... 97 18.88 51.9212 1.00002 0.57
Pacific..................... 69 17.94 68.9668 1.00744 0.72
Outlying.................... 1 22.54 0.0000 0.98025 0.00
Ownership:
Government.................. 432 19.95 33.9489 0.99235 2.86
Profit...................... 8,065 20.31 30.2597 0.99085 78.39
[[Page 23489]]
Non-Profit.................. 2,361 19.88 37.0019 0.99376 18.74
----------------------------------------------------------------------------------------------------------------
* The total group category excludes 3,842 SNFs that did not meet the finalized measure minimum policy. The total
group category includes 19 SNFs that did not have historical payment data used for this analysis.
** The group category which includes hospital-based/freestanding by urban/rural excludes 64 swing bed SNFs that
satisfied the current measure minimum policy.
In the FY 2024 SNF PPS final rule (88 FR 53324 through 53325), we
adopted a validation process that applies to SNF VBP measures
calculated using MDS data beginning with the FY 2027 program year.
Specifically, we finalized that, on an annual basis, the validation
contractor will randomly select up to 1,500 SNFs for validation and
that for each SNF selected, the validation contractor will request up
to 10 medical records. This new medical record submission requirement
for the purposes of SNF VBP MDS validation would result in new burden
on SNFs for the FY 2027 program year. We refer readers to the SNF QRP
section at XI.A.5. of this proposed rule for details on the estimated
annual burden increase that would result from this new chart submission
requirement. We are not including additional details on burden in this
section, to avoid double counting burden with the SNF QRP since the
same charts will be utilized for both the SNF QRP and SNF VBP Program.
We also note that this burden would be accounted for in the information
collection request that is being developed and will be submitted to OMB
for approval.
8. Impacts for Nursing Home Enforcement Revisions
A nursing home certified to participate in the Medicare and
Medicaid programs as a SNF and NF is expected to be in compliance with
Federal requirements as a condition of receiving payment for services
provided to beneficiaries. If a facility is determined to be out of
compliance and an enforcement decision is reached to impose a CMP, the
proposed regulatory revisions would take effect.
We view the anticipated results of this rule as beneficial to
nursing home residents. Specifically, we believe that additional
flexibility to impose CMPs will allow us to better tailor the response
to facility noncompliance in a way that assures that appropriate
resident care occurs as well as lasting facility compliance is
achieved. We also recognize that not all of the potential effects of
this rule can be anticipated. It is difficult to quantify the full
future effect of this rule on facilities' compliance activities or
costs. If a facility is in substantial compliance, there is no basis to
use any enforcement remedy. However, should a remedy be indicated,
several alternative remedies may be considered in addition to a CMP.
Since CMP amounts, once selected as an appropriate enforcement
response, are based on when noncompliance occurred and the level of
noncompliance, we are unable to predict the number or amount of CMPs
that will be imposed. However, we do expect that the total amount of
CMPs imposed would increase as a result of these proposals.
In 2022, the number of facilities that had CMPs imposed was 6,113
(41 percent). The average total amount of the CMPs imposed for each
facility in 2022 was $17,775. The total dollar amount of PD CMPs
imposed on facilities in 2022 was $186.4 million and the total dollar
amount of PI CMPs was $40.6 million. Additionally, 45 percent of
surveys in 2022 that had multiple findings of harm and were imposed a
PI CMP as the remedy of choice only received one PI CMP. Under the
proposed revisions, we anticipate an increased workload to CMS and
States, and increased CMP amounts to providers when multiple instances
of noncompliance resulting in harm or immediate jeopardy (IJ) are
cited.
We calculated the additional costs for providers, CMS, and states
by analyzing the number of surveys in CY2022 that would have had
additional PI CMPs imposed by identifying surveys with multiple
citations of noncompliance resulting in harm or immediate jeopardy
(IJ), but only one PI CMP was imposed, or a PD CMP was imposed. We then
multiplied the number of these surveys by the average number of
citations resulting in harm or IJ, and by the average PI CMP amount.
This calculation resulted in a total of approximately $25 million for
all nursing homes for CY2022. We estimate this will result in a total
increased cost to CMS and the States of $163,800 per year.
9. Alternatives Considered
As described in this section, we estimate that the aggregate impact
of the provisions in this proposed rule will result in an increase of
approximately $1.3 billion (4.1 percent) in Part A payments to SNFs in
FY 2025. This reflects a $1.3 billion (4.1 percent) increase from the
update to the payment rates.
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 base 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 update, 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 this process.
With regard to the proposal to adopt four new items as standardized
patient assessment data elements under the SDOH category and modify the
Transportation standardized patient assessment data element in the SDOH
category beginning with the FY 2027 SNF QRP, we believe these proposals
advance the CMS National Quality Strategy Goals of equity and
engagement. We considered the alternative of delaying the proposal to
collect these items but given the fact they would encourage meaningful
[[Page 23490]]
collaboration between healthcare providers, residents, caregivers, and
community-based organizations to address SDOH prior to discharge from
the SNF, we believe further delay is unwarranted.
With regard to the proposal to remove 22 items from the MDS
beginning October 1, 2025, we routinely review the MDS for
opportunities to simplify data submission requirements. We have
identified that these items are no longer used in the calculation of
the SNF per diem payment for PDPM but were not accounted for in the FY
2019 SNF PPS final rule (83 FR 39165 through 39265), and therefore no
alternatives were considered.
With regard to the proposal to require SNFs participating in the
SNF QRP to participate in a validation process beginning with the FY
2027 SNF QRP, we are required to implement a process to satisfy Section
1888(h)(12) of the Act (as added by Division CC, section 111(a)(4) of
the Consolidated Appropriations Act, 2021 (Pub. L. 116-120)). Because
the validation process is statutorily required, no alternatives were
considered.
With regard to the proposals for the SNF VBP Program, we discussed
alternatives considered within those sections. In section VII.E.3. of
the proposed rule, we discussed other approaches to incorporating
health equity into the Program.
10. Accounting Statement
As required by OMB Circular A-4 (available online at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Tables 42
through 46, we have prepared an accounting statement showing the
classification of the expenditures associated with the provisions of
this proposed rule for FY 2025. Tables 38 and 42 provide our best
estimate of the possible changes in Medicare payments under the SNF PPS
as a result of the policies in this proposed rule, based on the data
for 15,503 SNFs in our database. Tables 39, 43, and 44 provide our best
estimate of the additional cost to SNFs to submit the data for the SNF
QRP as a result of the policies in this proposed rule. Table 45
provides our best estimate of the possible changes in Medicare payments
under the SNF VBP as a result of the policies for this program. Table
46 provides our best estimate of the Nursing Home Enforcement
provisions.
Table 42--Accounting Statement: Classification of Estimated
Expenditures, From the 2024 SNF PPS Fiscal Year to the 2025 SNF PPS
Fiscal Year
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $1.3 billion.
From Whom To Whom?..................... Federal Government to SNF
Medicare Providers.
------------------------------------------------------------------------
Table 43--Accounting Statement: Classification of Estimated Expenditures
for the Proposed Changes to the FY 2027 QRP Program
------------------------------------------------------------------------
Category Transfers/costs
------------------------------------------------------------------------
Estimated Costs to SNFs for Proposed Changes to the $3,135,609.43
FY 2027 QRP Program and to Selected SNFs for the
Validation Process *................................
Estimated Costs to SNFs for Proposed Changes to the 2,322,541.48
FY 2027 QRP Program Who Are Not Selected for the
Validation Process..................................
------------------------------------------------------------------------
* Up to 1,500 SNFs would be selected for the Validation Process.
Table 44--Accounting Statement: Classification of Estimated Savings for
the Removal of MDS Items No Longer Needed for Case-Mix Adjusting the Per
Diem SNF Payment Beginning October 1, 2025
------------------------------------------------------------------------
Category Transfers/costs
------------------------------------------------------------------------
Savings to SNFs for Removing MDS Items.............. ($14,128,696.47)
------------------------------------------------------------------------
Table 45--Accounting Statement: Classification of Estimated Expenditures
for the FY 2025 SNF VBP Program
------------------------------------------------------------------------
------------------------------------------------------------------------
Annualized Monetized Transfers......... $281.53 million.*
From Whom To Whom?..................... Federal Government to SNF
Medicare Providers.
------------------------------------------------------------------------
* This estimate does not include the 2 percent reduction to SNFs'
Medicare payments (estimated to be $469.22 million) required by
statute.
Table 46--Accounting Statement: Nursing Home Enforcement Proposals
------------------------------------------------------------------------
Category Transfers/penalties
------------------------------------------------------------------------
Estimated Increased Amount of Penalties $25 million.*
From Whom To Whom?..................... SNF Medicare Providers to
Federal Government.
Estimated additional cost to CMS and $163,800.
State Survey Agencies.
------------------------------------------------------------------------
* This estimate includes the estimated increase in the amount of PI CMPs
that may be imposed under these proposed revisions.
[[Page 23491]]
11. Conclusion
This rule updates the SNF PPS rates contained in the SNF PPS final
rule for FY 2024 (88 FR 53200). Based on the above, we estimate that
the overall payments for SNFs under the SNF PPS in FY 2025 are
projected to increase by approximately $1.3 billion, or 4.1 percent,
compared with those in FY 2024. We estimate that in FY 2025, SNFs in
urban and rural areas would experience, on average, a 4.0 percent
increase and 4.9 percent increase, respectively, in estimated payments
compared with FY 2024. Providers in the rural Middle Atlantic region
would experience the largest estimated increase in payments of
approximately 7.5 percent. Providers in the urban Outlying region would
experience the smallest estimated increase in payments of 1.7 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 $30 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, for the
purposes of the RFA, we estimate that almost all SNFs are small
entities as that term is used in the RFA, according to the Small
Business Administration's latest size standards (NAICS 623110), with
total revenues of $34 million or less in any 1 year. (For details, see
the Small Business Administration's website at https://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards). In addition, approximately 20 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 rule updates the SNF PPS rates contained in the SNF PPS final
rule for FY 2024 (88 FR 53200). Based on the above, we estimate that
the aggregate impact for FY 2025 will be an increase of $1.3 billion in
payments to SNFs, resulting from the SNF market basket update to the
payment rates. While it is projected in Table 38 that all 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 2025 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. In their March 2023 Report to Congress
(available at https://www.medpac.gov/wp-content/uploads/2023/03/Ch7_Mar23_MedPAC_Report_To_Congress_SEC.pdf), MedPAC states that
Medicare covers approximately 10 percent of total patient days in
freestanding facilities and 16 percent of facility revenue (March 2023
MedPAC Report to Congress, 207). As indicated in Table 38, the effect
on facilities is projected to be an aggregate positive impact of 4.1
percent for FY 2025. As the overall impact on the industry as a whole,
and thus on small entities specifically, meets the 3 to 5 percent
threshold discussed previously, the Secretary has determined that this
proposed rule will have a significant impact on a substantial number of
small entities for FY 2025.
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 603 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 an MSA and has fewer
than 100 beds. This proposed 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 2024 (88 FR 53200)), the category of small rural hospitals
is included within the analysis of the impact of this proposed rule on
small entities in general. As indicated in Table 38, the effect on
facilities for FY 2025 is projected to be an aggregate positive impact
of 4.1 percent. As the overall impact on the industry as a whole meets
the 3 to 5 percent threshold discussed above, the Secretary has
determined that this proposed rule will have a significant impact on a
substantial number of small rural hospitals for FY 2025.
C. Unfunded Mandates Reform Act Analysis
Section 202 of the Unfunded Mandates Reform Act of 1995 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 2024, that
threshold is approximately $183 million. This proposed rule will impose
no mandates on State, local, or Tribal governments or on the private
sector.
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 proposed rule will have no substantial direct effect
on State and local governments, preempt State law, or otherwise have
federalism implications.
E. Regulatory Review Costs
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on this year's proposed rule will be the number of reviewers
of last year's proposed rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed last year's proposed rule in
detail, and it is also possible that some reviewers chose not to
comment on that proposed rule. For these reasons, we believe that the
number of commenters on this year's proposed rule is a fair estimate of
the number of reviewers of last year's proposed rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule,
and therefore, for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule.
The mean wage rate for medical and health service manages (SOC 11-
9111) in BLS OEWS is $61.53, assuming benefits plus other overhead
costs equal 100 percent of wage rate, we estimate that the cost of
reviewing this rule is $123.06 per hour, including overhead
[[Page 23492]]
and fringe benefits https://www.bls.gov/oes/current/oes_nat.htm.
Assuming an average reading speed, we estimate that it would take
approximately 4 hours for the staff to review half of the proposed
rule. For each SNF that reviews the rule, the estimated cost is $492.24
(4 hours x $123.06). Therefore, we estimate that the total cost of
reviewing this regulation is $39,871.44 ($460.88 x 81 reviewers).
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on March 25, 2024.
List of Subjects
42 CFR Part 413
Diseases, Health facilities, Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
42 CFR Part 488
Administrative practice and procedure, Health facilities, Health
professions, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS
0
1. The authority citation for part 413 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a),
(i), and (n), 1395m, 1395x(v), 1395x(kkk), 1395hh, 1395rr, 1395tt,
and 1395ww.
0
2. Section 413.337 is amended by revising paragraph (f) to read as
follows:
Sec. 413.337 Methodology for calculating the prospective payment
rates.
* * * * *
(f) Adjustments to payment rates under the SNF Value-Based
Purchasing Program.
Beginning with payment for services furnished on October 1, 2018,
the adjusted Federal per diem rate (as defined in Sec. 413.338(a))
otherwise applicable to a SNF for the fiscal year is reduced by the
applicable percent (as defined in Sec. 413.338(a)). The resulting
amount is then adjusted by the value-based incentive payment amount (as
defined in Sec. 413.338(a)) based on the SNF performance score
calculated for the SNF for that fiscal year under Sec. 413.338 of this
part.
0
3. Section 413.338 is amended--
0
a. In paragraph (a) by--
0
i. Revising the definitions of ``Health equity adjustment (HEA) bonus
points'' and ``Measure performance scaler'';
0
ii. Removing the definition of ``Performance score'';
0
iii. Adding the definition of ``SNF performance score'';
0
iv. Revising the definitions of ``SNF readmission measure'', ``Top tier
performing SNF'', and ``Underserved multiplier'';
0
b. Removing paragraphs (d)(4) through (6);
0
c. Redesignating paragraphs (f)(1) through (4) as paragraphs (f)(2)
through (5);
0
d. Adding a new paragraph (f)(1) and revising paragraphs newly
redesignated paragraphs (f)(2) and (3);
0
e. Revising paragraph (j)(3);
0
f. By adding paragraphs (l), (m), and (n).
The revisions and additions read as follows:
Sec. 413.338 Skilled nursing facility value-based purchasing program.
(a) * * *
* * * * *
Health equity adjustment (HEA) bonus points means the points that a
SNF can earn for a fiscal year based on its performance and proportion
of SNF residents who are members of the underserved population.
* * * * *
Measure performance scaler means, for a fiscal year, the sum of the
points assigned to a SNF for each measure on which the SNF is a top
tier performing SNF.
* * * * *
SNF readmission measure means, prior to October 1, 2027, the SNF
30-Day All-Cause Readmission Measure (SNFRM) specified under section
1888(g)(1) of the Social Security Act. Beginning October 1, 2027, the
term SNF readmission measure means the SNF Within-Stay Potentially
Preventable Readmission (SNF WS PPR) Measure specified under section
1888(g)(2) of the Social Security Act.
* * * * *
Top tier performing SNF means a SNF whose performance on a measure
during the applicable fiscal year meets or exceeds the 66.67th
percentile of SNF performance on the measure during the same fiscal
year.
Underserved multiplier means the mathematical result of applying a
logistic function to the number of SNF residents who are members of the
underserved population out of the SNF's total Medicare population, as
identified from the SNF's Part A claims, during the performance period
that applies to the 1-year measures for the applicable fiscal year.
* * * * *
(f) * * *
(1) CMS will provide quarterly confidential feedback reports to
SNFs on their performance on each measure specified for the fiscal
year. Beginning with the baseline period and performance period quality
measure quarterly reports issued on or after October 1, 2021, CMS
calculates the measure rates included in those reports using data that
are current as of a specified date as follows:
(i) For the SNFRM, the specified date is 3 months after the last
index SNF admission in the applicable baseline period or performance
period.
(ii) For the Skilled Nursing Facility Healthcare Associated
Infections Requiring Hospitalization (``SNF HAI''), Discharge to
Community--Post-Acute Care Measure for Skilled Nursing Facilities
(``DTC PAC SNF''), and Skilled Nursing Facility Within-Stay Potentially
Preventable Readmissions (``SNF WS PPR'') measure, the specified date
is 3 months after the last SNF discharge in the applicable baseline
period or performance period.
(iii) For the Number of Hospitalizations per 1,000 Long Stay
Residents (``Long Stay Hospitalization'') measure, the specified date
is 3 months after the last day of the final quarter of the applicable
baseline period or performance period.
(iv) For the Total Nursing Hours per Resident Day Staffing (``Total
Nurse Staffing'') measure and the Total Nursing Staff Turnover
(``Nursing Staff Turnover'') measure, the specified date is 45 days
after the last day of each quarter of the applicable baseline period or
performance period.
(v) For the Discharge Function Score for SNFs (``DC Function
measure'') and Percent of Residents Experiencing One of More Falls with
Major Injury (Long Stay) (``Falls with Major Injury (Long Stay)'')
measure, the specified date is the February 15th that is approximately
4.5 months after the last day of the applicable baseline period or
performance period.
(2) Beginning with the baseline period and performance period
quality measure quarterly reports issued on or after October 1, 2021,
which contain the
[[Page 23493]]
baseline period and performance period measure rates, respectively,
SNFs will have 30 days following the date CMS provides each of these
reports to review and submit corrections to the calculation of the
measure rates contained in that report. The data used to calculate
measure rates are not subject to review and correction under this
paragraph. Any such correction requests must include:
(i) The SNF's CMS Certification Number (CCN),
(ii) The SNF's name,
(iii) The correction requested, and
(iv) The reason for requesting the correction, including any
available evidence to support the request.
(3) Beginning not later than 60 days prior to each fiscal year, CMS
will provide reports to SNFs on their performance under the SNF VBP
Program for a fiscal year. SNFs will have the opportunity to review and
submit corrections to their SNF performance scores and ranking
contained in these reports for 30 days following the date that CMS
provides the reports. Any such correction requests must include:
(i) The SNF's CMS Certification Number (CCN),
(ii) The SNF's name,
(iii) The correction requested, and
(iv) The reason for requesting the correction, including any
available evidence to support the request.
* * * * *
(j) * * *
(3) Beginning with the FY 2027 program year, for all measures that
are calculated using Minimum Data Set (MDS) information, CMS will
validate the accuracy of this information. CMS will request medical
records as follows:
(i) On an annual basis, a CMS contractor will randomly select up to
1,500 SNFs for validation. A SNF is eligible for selection for a year
if the SNF submitted at least one MDS record in the calendar year that
is 3 years prior to the applicable fiscal year or was included in the
SNF VBP Program in the year prior to the applicable fiscal year.
(ii) For each SNF selected under paragraph (j)(3)(i) of this
section, the CMS contractor will request in writing up to 10 medical
records.
(iii) A SNF that receives a request for medical records under
paragraph (j)(3)(ii) of this section must submit a digital or paper
copy of each of the requested medical records within 45 days of the
date of the request as documented on the request.
* * * * *
(l) Measure Selection, Retention, and Removal Policy. (1) The SNF
VBP measure set for each fiscal year includes the SNF readmission
measure CMS has specified under section 1888(g) of the Social Security
Act for application in the SNF VBP Program.
(2) Beginning with FY 2026, the SNF VBP measure set for each fiscal
year may include up to nine additional measures specified by CMS. Each
of these measures remains in the measure set unless CMS removes or
replaces it based on one or more of the following factors:
(i) SNF performance on the measure is so high and unvarying that
meaningful distinctions and improvements in performance can no longer
be made.
(ii) Performance or improvement on a measure do not result in
better resident outcomes.
(iii) A measure no longer aligns with current clinical guidelines
or practices.
(iv) A more broadly applicable measure for the particular topic is
available.
(v) A measure that is more proximal in time to the desired resident
outcomes for the particular topic is available.
(vi) A measure that is more strongly associated with the desired
resident outcomes for the particular topic is available.
(vii) The collection or public reporting of a measure leads to
negative unintended consequences other than resident harm.
(viii) The costs associated with a measure outweigh the benefit of
its continued use in the Program.
(3) Upon a determination by CMS that the continued requirement for
SNFs to submit data on a measure specified under paragraph (l)(2) of
this section raises specific resident safety concerns, CMS may elect to
immediately remove the measure from the SNF VBP Program. Upon removal
of the measure, CMS will provide notice to SNFs and the public, along
with a statement of the specific patient safety concern that would be
raised if SNFs continued to submit data on the measure. CMS will also
provide notice of the removal in the Federal Register.
(4) CMS uses rulemaking to make substantive updates to the
specifications of measures used in the SNF VBP Program. CMS makes
technical measure specification updates in a sub-regulatory manner and
informs SNFs of measure specification updates through postings on the
CMS website, listservs, and other educational outreach efforts to SNFs.
(m) Extraordinary Circumstances Exception Policy (1) A SNF may
request and CMS may grant exceptions to the SNF Value-Based Purchasing
Program's requirements under this section for one or more calendar
months when there are certain extraordinary circumstances beyond the
control of the SNF.
(2) A SNF may request an exception within 90 days of the date that
the extraordinary circumstances occurred. Prior to FY 2025, the request
must be submitted in the form and manner specified by CMS on the SNF
VBP website at https://www.cms.gov/Medicare/Quality/Nursing-Home-Improvement/Value-Based-Purchasing/Extraordinary-Circumstance-Exception
and include a completed Extraordinary Circumstances Request form
(available on https://qualitynet.cms.gov/) and any available evidence
of the impact of the extraordinary circumstances on the care that the
SNF furnished to patients including, but not limited to, photographs
and media articles. Beginning with FY 2025, a SNF may request an
extraordinary circumstances exception by sending an email with the
subject line ``SNF VBP Extraordinary Circumstances Exception Request''
to the SNF VBP Program Help Desk with the following information:
(i) The SNF's CMS Certification Number (CCN);
(ii) The SNF's business name and business address;
(iii) Contact information for the SNF's CEO or CEO-designated
personnel, including all applicable names, email addresses, telephone
numbers, and the SNF's physical mailing address (which cannot be a PO
Box);
(iv) A description of the event, including the dates and duration
of the extraordinary circumstance;
(v) Available evidence of the impact of the extraordinary
circumstance on the care the
SNF provided to its residents or the SNF's ability to report SNF
VBP data, including, but not limited to, photographs, media articles,
and any other materials that would aid CMS in determining whether to
grant the exception;
(vi) A date proposed by the SNF for when it will again be able to
fully comply with the SNF VBP Program's requirements and a
justification for the proposed date.
(3) Except as provided in paragraph (m)(4) of this section, CMS
will not consider an exception request unless the SNF requesting such
exception has complied fully with the requirements in paragraph (m)(2)
of this section.
(4) CMS may grant exceptions to SNFs without a request if it
determines that an extraordinary circumstance affected an entire region
or locale.
(5) CMS will calculate a SNF performance score for a fiscal year
for a SNF for which it has granted an exception request that does not
include
[[Page 23494]]
its performance on a quality measure during the calendar months
affected by the extraordinary circumstance.
(n) SNF VBP Performance Standards. (1) CMS announces the
performance standards for each measure no later than 60 days prior to
the start of the performance period that applies to the measure for the
fiscal year.
(2) Beginning with FY 2021, if CMS discovers an error in the
performance standard calculations subsequent to publishing their
numerical values for a fiscal year, CMS will update the numerical
values to correct the error. If CMS subsequently discovers one or more
other errors with respect to the fiscal year, CMS will not further
update the numerical values for that fiscal year.
(3) Beginning with FY 2025, CMS may update the numerical values of
the performance standards for a measure if CMS incorporates non-
substantive technical updates made to the measure between the time that
CMS first announces the performance standards for the measure for a
fiscal year and the time that CMS calculates SNF performance on the
measure at the conclusion of the performance period for that measure
for a fiscal year.
0
4. Section 413.360 is amend by--
0
a. Revising paragraph (f)(1) introductory text;
0
b. Adding paragraph (f)(1)(iv);
0
c. Revising paragraph (f)(3); and
0
d. Adding paragraph (g).
The additions and revision read as follows:
Sec. 413.360 Requirements under the Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
* * * * *
(f) * * *
(1) SNFs must meet or exceed the following data completeness
thresholds with respect to a program year:
* * * * *
(iv) If selected for the data validation process under paragraph
(g), the threshold set at 100 percent submission of medical charts.
* * * * *
(3) A SNF must meet or exceed each applicable threshold described
in paragraph (f)(1) of this section to avoid receiving the applicable
penalty for failure to report quality data set forth in Sec.
413.337(d)(4) of this Part.
(g) Data Validation Process. (1) Beginning with the FY 2027 payment
year: for all measures that are calculated using Minimum Data Set (MDS)
information, CMS will validate the accuracy of this information. The
process by which CMS will request medical records and by which SNFs
must submit the requested medical records is as follows:
(i) On an annual basis, a CMS contractor will select up to 1,500
SNFs for validation. A SNF is eligible for selection for a year if it
submitted at least one MDS record to CMS in the calendar year 3 years
prior to the applicable program year, and if the SNF has been randomly
selected for a periodic audit for the same year under Sec. 413.338 of
this part.
(ii) For each SNF selected under paragraph (g)(1) of this section,
the CMS contractor will request up to 10 medical records. Each SNF
selected will only be required to submit records once in a fiscal year,
for a maximum of 10 records for each SNF selected. Each requested
medical record must be the same medical record that has been requested
for submission by the SNF for the same year under Sec. 413.338 of this
part. CMS will submit its request in writing to the selected SNF.
(iii) A SNF that receives a request for medical records under
paragraph (g)(2) of this section must submit a digital or paper copy of
each of the requested medical records within 45 days of the date of the
request.
(2) Beginning with the FY 2027 payment year: the information
reported through claims for all claims-based measures are validated for
accuracy by Medicare Administrative Contractors (MACs).
PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES
0
5. The authority citation for part 488 continues to read as follows:
Authority: 42 U.S.C 1302 and 1395hh.
0
6. Section 488.401 is amended by adding the definition of ``Instance or
instances of noncompliance'' in alphabetical order to read as follows:
Sec. 488.401 Definitions.
* * * * *
Instance or instances of noncompliance means a factual and temporal
occurrence(s) when a facility is not in substantial compliance with the
requirements for participation. Each instance of noncompliance is
sufficient to constitute a deficiency and a deficiency may comprise of
multiple instances of noncompliance.
* * * * *
0
7. Section 488.408 is amended by revising paragraph (e)(2)(ii) to read
as follows:
Sec. 488.408 Selection of remedies.
* * * * *
(e) * * *
(2) * * *
(ii) For each instance of noncompliance, CMS and the State may
impose a civil money penalty of $3,050-$10,000 (as adjusted annually
under 45 CFR part 102) per day, $1,000-$10,000 (as adjusted annually
under 45 CFR part 102) per instance of noncompliance, or both, in
addition to imposing the remedies specified in paragraph (e)(2)(i) of
this section. For multiple instances of noncompliance, CMS may impose
any combination of per instance or per day civil money penalties for
each instance within the same survey. The aggregate civil money penalty
amount may not exceed $10,000 (as adjusted annually under 45 CFR part
102) for each day of noncompliance.
* * * * *
0
8. Revise Sec. 488.430 to read as follows:
Sec. 488.430 Civil money penalties: Basis for imposing penalty.
(a) CMS or the State may impose a civil money penalty for the
number of days a facility is not in substantial compliance with one or
more participation requirements or for each instance that a facility is
not in substantial compliance, or both, regardless of whether or not
the deficiencies constitute immediate jeopardy. When a survey contains
multiple instances of noncompliance, CMS or the State may impose any
combination of per instance or per day civil money penalties for each
instance of noncompliance within the same survey.
(b) CMS or the State may impose a civil money penalty for the
number of days of past noncompliance, including the number of days of
immediate jeopardy, since the last three standard surveys.
0
9. Section 488.434 is amended by revising paragraphs (a)(2)(iii) and
(v) to read as follows:
Sec. 488.434 Civil money penalties: Notice of penalty.
(a) * * *
(2) * * *
(iii) Either the amount of penalty per day of noncompliance or the
amount of the penalty per instance of noncompliance or both;
* * * * *
(v) The date(s) of the instance(s) of noncompliance or the date on
which the penalty begins to accrue;
* * * * *
[[Page 23495]]
0
10. Section 488.440 is amended by revising paragraph (a)(2) to read as
follows:
Sec. 488.440 Civil money penalties: Effective date and duration of
penalty.
(a) * * *
(2) A civil money penalty for each instance of noncompliance is
imposed in a specific amount per instance.
* * * * *
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-06812 Filed 3-28-24; 4:15 pm]
BILLING CODE 4120-01-P