[Federal Register Volume 90, Number 147 (Monday, August 4, 2025)]
[Rules and Regulations]
[Pages 37310-37367]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-14679]
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Vol. 90
Monday,
No. 147
August 4, 2025
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 413
Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities; Updates to the Quality Reporting
Program for Federal Fiscal Year 2026; Final Rule
Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules
and Regulations
[[Page 37310]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 413
[CMS-1827-F]
RIN 0938-AV47
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities; Updates to the Quality
Reporting Program for Federal Fiscal Year 2026
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule finalizes changes and updates to the policies
and payment rates used under the Skilled Nursing Facility (SNF)
Prospective Payment System (PPS) for fiscal year 2026. This final rule
also updates the requirements for the SNF Quality Reporting Program and
the SNF Value-Based Purchasing Program.
DATES: These regulations are effective on October 1, 2025.
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.
SUPPLEMENTARY INFORMATION:
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 final 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 Patricia Taft at (410) 786-
4561.
I. Executive Summary
A. Purpose
This final rule will update the Skilled Nursing Facility (SNF)
prospective payment rates for fiscal year (FY) 2026, as required under
section 1888(e)(4)(E) of the Social Security Act (the Act). It also
implements section 1888(e)(4)(H) of the Act, which requires the
Secretary to publish specified information relating to the payment
update (see section II.C. of this final rule) in the Federal Register
before the August 1 that precedes the start of each FY. In this final
rule, we finalize several technical revisions to the code mappings used
to classify patients under the Patient Driven Payment Model (PDPM) to
improve payment and coding accuracy. This final rule updates
requirements for the SNF Quality Reporting Program (QRP) including the
removal of four standardized patient assessment data elements under the
Social Determinants of Health (SDOH) category. We also amend and codify
our reconsideration policy and process related to non-compliance
determinations that a SNF has not met QRP reporting requirements. In
addition, we provide a summary of the comments received on three
Requests for Information (RFIs) for the SNF QRP, specifically on future
measure concepts for the SNF QRP, potential revisions to the data
submission deadlines for assessment data collected for the SNF QRP, and
advancing digital quality measurement in SNFs. Finally, this final rule
updates the Skilled Nursing Facility Value-Based Purchasing (SNF VBP)
Program, including providing final performance standards, removing the
Health Equity Adjustment from the Program's scoring methodology,
applying the Program's scoring methodology to the Skilled Nursing
Facility Within-Stay Potentially Preventable Readmission (SNF WS PPR)
measure, adopting a new reconsideration process that will allow SNFs to
appeal the Centers for Medicare & Medicaid Services (CMS) decisions on
review and correction requests, and finalizing technical updates to the
SNF VBP Program's regulations text. Also, for the SNF VBP Program, we
are finalizing our proposal to remove the Health Equity Adjustment in
the Program's scoring methodology.
B. Summary of Major Provisions
In accordance with sections 1888(e)(4)(E)(ii)(IV) and (e)(5) of the
Act, this final rule updates the annual rates that we published in the
SNF PPS final rule for FY 2025 (89 FR 64048). In addition, this final
rule includes a forecast error adjustment for FY 2026. We are also
finalizing several technical revisions to the code mappings used to
classify patients under the PDPM to improve payment and coding
accuracy.
For the SNF QRP, we are finalizing our proposal to remove four
standardized patient assessment data elements under the SDOH category
beginning with residents admitted on October 1, 2025, for the FY 2027
SNF QRP. Additionally, we are finalizing our proposals to amend and
codify our reconsideration request policy and process. Finally, we are
summarizing comments received in response to three Requests for
Information (RFIs) for the SNF QRP on future measure concepts for the
SNF QRP, potential revisions to the data submission deadlines for
assessment data collected for the SNF QRP from 4.5 months after the end
of each quarter to 45 days after the end of each quarter, and advancing
digital quality measurement in SNFs.
For the SNF VBP Program, we are finalizing several updates. First,
we are providing final performance standards for the FY 2028 and FY
2029 program years to comply with the Program's statutory notice
deadline. Second, we are applying the previously finalized scoring
methodology codified at 42 CFR 413.338(e)(1) and 413.338(e)(3) of our
regulations to the SNF WS PPR measure beginning with the FY 2028
program year, which is the first year that measure will be used in the
SNF VBP Program's measure set (88 FR 53280). Third, we are finalizing
our proposal to remove the Health Equity Adjustment to simplify the
scoring methodology and provide clearer incentives for SNFs as they
seek to improve their quality of care for all residents. Fourth, we are
finalizing our proposal to adopt a reconsideration process that will
allow SNFs to seek reconsideration of a review and correction request
if they are not satisfied with CMS's decision on that request,
beginning with the FY 2027 program year. Lastly, we are finalizing our
proposal to adopt several updates to the SNF VBP Program's regulations
text to align with finalized policies.
C. Summary of Cost and Benefits
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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 Medicare 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
Medicare Part B and which are furnished to Medicare beneficiaries who
are residents in a SNF during a covered Medicare 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 new 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)(2)(A) of the Act,
authorizing the Secretary to apply up to ten 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 prospective payment system (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
2025 (89 FR 64048), as amended by the subsequent correction notice (89
FR 80132).
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 in the proposed rule, this
final rule will set out the required annual updates to the per diem
payment rates for SNFs for FY 2026.
[[Page 37312]]
III. SNF PPS Rate Setting Methodology and FY 2026 Payment 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 Medicare Part B add-on, which is an estimate of the
amounts that, prior to the SNF PPS, would be payable under Medicare
Part B for covered SNF services furnished to individuals during the
course of a covered Medicare 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 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 2025 (89 FR 64065 through 64082), we rebased and revised the SNF
market basket, which included updating 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 final rule.
As outlined in the proposed rule, we proposed a FY 2026 SNF market
basket percentage increase of 3.0 percent based on IHS Global Inc.'s
(IGI's) fourth-quarter 2024 forecast of the 2022-based SNF market
basket (before application of the forecast error adjustment and
productivity adjustment). We also proposed that if more recent data
subsequently became available (for example, a more recent estimate of
the market basket, the productivity adjustment, and/or the forecast
error adjustment), we would use such data, if appropriate, to determine
the FY 2026 SNF market basket percentage increase, labor-related share
relative importance, forecast error adjustment, or productivity
adjustment in the SNF PPS final rule.
Since the proposed rule, we have updated the FY 2026 SNF market
basket percentage increase based on IGI's second quarter 2025 forecast
with historical data through the first quarter of 2025. The FY 2026
growth rate of the 2022-based SNF market basket is estimated to be 3.3
percent.
2. Market Basket Update Factor for FY 2026
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 final rule, we use the
percentage change in the SNF market basket to compute the update factor
for FY 2026. This factor is based on the FY 2026 percentage increase in
the 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 2026 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, 2024, through September 30, 2025, to the average market
basket level for the period of October 1, 2025, through September 30,
2026. As outlined in the proposed rule, we proposed a FY 2026 SNF
market basket percentage increase of 3.0 percent. For this final rule,
based on IGI's second quarter 2025 forecast with historical data
through the first quarter of 2025, the FY 2026 growth rate of the 2022-
based SNF market basket is estimated to be 3.3 percent.
As further explained in section IV.B.3. of this final rule, as
applicable, we adjusted 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, 2026), which is estimated to be 0.7 percentage point, as
described in section IV.B.4. of this final 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 FY will receive a 2.0 percentage point reduction to
their market basket update for the FY 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 FY and may result in
payment rates for a FY being less than such payment rates for the
preceding FY. 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 FY involved, and that the reduction cannot
be taken into account in computing the payment amount for a subsequent
FY.
The following is a summary of the public comments received on the
proposed FY 2026 SNF market basket percentage increase to the SNF PPS
rates, along with our responses.
Comment: The Medicare Payment Advisory Commission (MedPAC)
[[Page 37313]]
commented that while they understand that the law requires CMS to
update the SNF PPS rates by the market basket minus a productivity
adjustment, MedPAC recommended in its March 2025 Report to Congress
that the Congress should reduce the SNF base payment rates by 3 percent
for FY 2026. MedPAC's payment adequacy analyses indicated that not
including federal relief funds, the aggregate FFS Medicare margin for
freestanding SNFs in 2023 was 22 percent, the 24th consecutive year
that this margin has exceeded 10 percent. MedPAC stated that these high
margins indicate that a reduction is needed to more closely align
aggregate payments to aggregate costs, and that even though CMS is
required by law to update the payment rates each year by the estimated
change in the market basket reduced by the productivity adjustment, the
agency is not required to make automatic forecast-error corrections.
Response: We thank MedPAC for their recommendation and agree that
current law requires us to update SNF PPS payments by the market basket
percentage increase reduced by a productivity adjustment, as directed
by sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(B)(ii) of the Act. We
discuss our application of a forecast error correction in section
IV.B.3 of this final rule.
Comment: Many commenters stated that they appreciate the proposed
3.0 percent market basket percentage increase for FY 2026; however,
several commenters noted that they have reservations about the adequacy
of the increase. Multiple interested parties characterized the proposed
increase as insufficient to address the current economic pressures
confronting skilled nursing facilities nationwide.
Commenters cited persistent inflationary pressures, escalating
operational expenses, and ongoing workforce shortages that continue to
create financial strain across the post-acute care sector. They noted
cost pressures across all dimensions of SNF operations, encompassing
the cost of labor, drugs, medical and non-medical supplies, utilities,
food services, insurance, and other essential operational expenses.
Commenters also stated that these rising costs are anticipated to
continue with the implementation of various regulations and economic
policies, including tariff increases. Additionally, the requirement for
Enhanced Barrier Precautions, which require glove and gown use during
high contact resident care activities for residents that are known to
have history of multi-drug-resistant organisms, has driven up supply
costs, while the reporting of infections to the national health and
safety network is driving up administrative costs. Three commenters
supported and appreciated the proposed net payment update, which they
believed appropriately reflects changes over time in prices of mixed
goods and services.
Multiple commenters expressed concern that the current market
basket methodology consistently produces SNF PPS updates that are
inadequate because the methodology fails to fully account for cost
growth pressures during periods of elevated inflation. One commenter
stated that the Employment Cost Index (ECI) used to measure changes in
labor compensation in the SNF market basket might not fully capture
growth in employment and labor costs, as it does not account for
changes driven by shifts between different categories of labor.
Commenters recommended that CMS reevaluate its market basket
methodology to ensure more precise reflection of expected growth in
SNFs' costs for both labor and goods and services.
Response: We appreciate the comments regarding the proposed FY 2026
SNF PPS market basket update. The 2022-based SNF market basket is a
fixed-weight, Laspeyres-type price index that 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 proposed FY 2026 SNF market basket
percentage increase of 3.0 percent reflected the most-recent forecast
available at the time of rulemaking. As stated in the SNF PPS proposed
rule for FY 2026 (90 FR 18593), we proposed that if more recent data
subsequently became 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 2026 SNF market basket
percentage increase, labor-related share relative importance, forecast
error adjustment, or productivity adjustment in the SNF PPS final rule.
Since the SNF market basket update is required to be set
prospectively, it relies on a mix of historical data for part of the
period for which the update is calculated and forecasted data for the
remainder. As a result, the market basket percentage increase reflects
expectations of trends, which may periodically differ from actual
experience due to unforeseen events. The forecasted data are provided
by IHS Global Inc. (IGI),\1\ a nationally recognized economic and
financial forecasting firm with which CMS contracts to forecast the
components of the market baskets. For this final rule, we have
incorporated the most recent historical data and forecasts provided by
IGI to capture the expected price and wage pressures facing SNFs in FY
2026. The FY 2026 market basket update in this final rule reflects
historical data through the first quarter of 2025 and forecasted data
through the third quarter of 2026. The final FY 2026 market basket
update is higher than in the proposed rule due to economic uncertainty.
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\1\ www.spglobal.com.
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Concerning the use of the ECI to measure changes in labor
compensation in the market basket, we believe that the ECI for Wages
and Salaries for Private Industry Workers in Nursing Care Facilities is
accurately reflecting the price change associated with the labor used
to provide SNF care. The ECI appropriately does not reflect other
factors that might affect the rate of price changes associated with
labor costs, such as a shift in the occupations that may occur due to
increases in case-mix or shifts in purchasing decisions (for instance,
to hire or to use contract labor). We believe that the prices of
employed staff and contract labor are influenced by the same factors
and should generally grow at similar rates. For this final rule, based
on the more recent IGI second quarter 2025 forecast with historical
data through the first quarter of 2025, the projected 2022-based SNF
market basket increase factor for FY 2026 reflects a projected increase
in compensation prices of 3.3 percent.
Based on IGI's second quarter 2025 forecast with historical data
through first-quarter 2025, the FY 2026 growth rate of the 2022-based
SNF market basket is 3.3 percent. By incorporating the most recent
estimates available of the market basket percentage increase, we
believe these data reflect the best available projection of input price
inflation faced by SNFs in FY 2026.
After consideration of the comments received on the FY 2026 SNF
market basket proposals, we are finalizing a FY 2026 SNF market basket
percentage increase of 3.3 percent (prior to the application of the
forecast error adjustment and productivity adjustment, which are
discussed later in this section).
3. Forecast Error Adjustment
As discussed in the June 10, 2003, supplemental proposed rule (68
FR 34768) and finalized in the August 4,
[[Page 37314]]
2003, final rule (68 FR 46057 through 46059), Sec. 413.337(d)(2)
provides for an adjustment to account for SNF market basket forecast
error. The initial adjustment for SNF 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.
Table 2 provides the forecast error adjustments applicable to the
FY SNF PPS updates for FY 2016 through FY 2026. The forecast error
adjustments would be based on the SNF market basket percentage increase
for two years prior to the FY SNF PPS update (the most recently
available FY for which there is final data at the time of rate
setting).
[GRAPHIC] [TIFF OMITTED] TR04AU25.007
For FY 2024 (the most recently available FY for which there is
final data), the forecasted or estimated increase in the SNF market
basket was 3.0 percent, and the actual increase for FY 2024 was 3.6
percent, resulting in the actual increase being 0.6 percentage point
higher than the estimated increase. Accordingly, as the difference
between the estimated and actual percentage increase in the market
basket exceeds the 0.5 percentage point threshold, under the policy
previously described (comparing the forecasted and actual market basket
percentage increase), the FY 2026 market basket percentage increase of
3.3 percent is adjusted upward to account for the forecast error
adjustment of 0.6 percentage point, resulting in a FY 2026 SNF market
basket percentage increase of 3.9 percent, which is then reduced by the
productivity adjustment of 0.7 percentage point, discussed in section
III.B.4.A of this final rule. This results in a SNF market basket
update for FY 2026 of 3.2 percent.
Table 3 shows the forecasted and actual market basket percentage
increases for FY 2024.
[GRAPHIC] [TIFF OMITTED] TR04AU25.008
The following is a summary of the public comments received on the
forecast error adjustment, along with our responses.
Comment: Multiple commenters expressed concerns about both the
timing and adequacy of the forecast error correction mechanism as
currently implemented. Commenters noted that the forecast error
correction is applied with a 2-year delay, creating operational and
financial challenges for providers who must manage immediate cost
pressures without adequate compensation during the intervening period.
A few commenters noted that this lagged approach does not fully
compensate for the inaccurate projection because CMS does not apply
additional inflation adjustments to the error correction itself,
thereby compounding the negative financial impact on providers over
time. They indicated that, as a result, the current methodology may
create a systematic underpayment.
A few commenters recommended that CMS consider implementing more
responsive and dynamic mechanisms to address inflation in real-time or
near real-time, rather than relying exclusively on retrospective
adjustments that may inadequately compensate for the immediate and
ongoing financial pressures facing SNFs. Some commenters suggested that
CMS should consider implementing prospective percentage add-ons or
alternative adjustment mechanisms to more accurately reflect the impact
of wage and benefit cost increases, particularly given the ongoing
effects of workforce challenges and new
[[Page 37315]]
regulatory requirements that may further increase operational costs.
Several commenters recommended that CMS conduct a thorough
evaluation of whether the current 0.5 percentage point threshold for
triggering forecast error adjustments remains appropriate given the
increased volatility in healthcare costs and inflation rates
experienced in recent years.
One commenter questioned what assumptions underlie the proposed FY
2026 forecast error adjustment and whether those assumptions are
consistent with past model performance and inflation volatility.
MedPAC noted that not including federal relief funds, the aggregate
FFS Medicare margin for freestanding SNFs in 2023 was 22 percent, the
24th consecutive year that this margin has exceeded 10 percent. They
stated that the high margins indicate that a reduction is needed to
more closely align aggregate payments to aggregate costs, and that
while CMS is required by statute to update the payment rates each year
by the estimated change in the market basket reduced by the
productivity adjustment, the agency is not required to make automatic
forecast error corrections.
Response: We refer readers to the FY 2004 SNF PPS final rule (68 FR
46058) for a discussion of our rationale for applying a forecast error
correction. Regarding other comments, we understand that earlier
forecast error adjustments might be preferable, but a 2-year lag is
necessary because historical data for the current FY are not available
until after the following year's update is determined. Additionally,
while we recognize the appeal of alternative approaches such as
prospective adjustments during periods of economic volatility, this
would have the potential to introduce more variable and unstable
updates. As noted by commenters, the threshold at which forecast error
adjustments are triggered is 0.5 percentage point, which is intended to
distinguish typical statistical variances from more major unanticipated
impacts.
For the FY 2026 SNF PPS update, we proposed a forecast error
adjustment of 0.6 percentage point to account for the difference
between the FY 2024 forecasted increase in the 2018-based SNF market
basket (3.0 percent) and the actual increase in the 2018-based SNF
market basket (3.6 percent)--as the difference between the estimated
and actual percentage increase in the market basket exceeds the 0.5
percentage point threshold. The FY 2024 forecast error is mostly
attributable to compensation prices (as measured by the ECIs for
Private Industry Workers in Nursing Care Facilities), which account for
about 60 percent of the SNF market basket. IGI projected the FY 2024
compensation prices would increase 3.4 percent (notably slower than the
average price growth of 6.5 percent for 2022 and 2023) but slightly
higher than the average of 3.3 percent over the 2014 to 2023 time
period. Actual FY 2024 compensation prices increased 4.3 percent. The
compensation prices forecast error was partially offset by
pharmaceutical prices, which IGI had projected to increase 2.2
percentage points faster than the actual historical data.
When developing its forecast for the ECI for Private Industry
Workers in Nursing Care Facilities, IGI considers overall economic
factors (such as overall inflation and labor market conditions that
included a rise in contract labor employment due to tight labor market
conditions) as well as industry-specific factors (including the skill
mix of the staff and the impact of minimum wage laws). IGI noted that
overall inflation was higher than expectations in 2024 with growth of
3.0 percent compared to projected growth of 2.5 percent. Overall strong
economic growth and strong job creation kept labor markets tight. In
addition, in October 2023 (3 months after the publication of the SNF FY
2024 final rule), California passed S.B. 525 (October 13, 2023) that
lifted the minimum wage for healthcare workers.\2\
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\2\ https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB525.
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After consideration of the comments received, we are finalizing the
application of the proposed forecast error adjustment without
modification. As stated previously in this section, based on IGI's
second quarter 2025 forecast with historical data through the first
quarter of 2025, the FY 2026 growth rate of the 2022-based SNF market
basket is estimated to be 3.3 percent. Accordingly, as the difference
between the FY 2024 forecasted and actual percentage change in the
market basket exceeds the 0.5 percentage point threshold, under the
policy previously described (comparing the forecasted and actual market
basket percentage increase), the FY 2026 market basket percentage
increase of 3.3 percent is adjusted upward to account for the forecast
error adjustment of 0.6 percentage point.
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 of the Department of Health and Human Services (Secretary)
for the 10-year period ending with the applicable FY, year, cost-
reporting period, or other annual period).
The United States Department of Labor's Bureau of Labor Statistics
(BLS) publishes the official measure of productivity for the Unites
States. 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.''
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
increase by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II)
[[Page 37316]]
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 FY. 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 the FY 2026 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, 2026) was projected to be 0.8 percentage
point.
The following is a summary of the public comments received on the
productivity adjustment, along with our responses.
Comment: We received numerous comments regarding the proposed 0.8
percentage point productivity adjustment, with multiple interested
parties expressing concerns about both the magnitude of this reduction
and the underlying methodology used to calculate the adjustment. One
commenter noted that the proposed productivity adjustment represents a
significant increase compared to prior years, further reducing the SNF
PPS net payment update at a time when providers are confronting
unprecedented cost pressures and operational challenges across multiple
dimensions of their operations. One commenter stated that it is
puzzling how an indicator based on a 10-year moving average could yield
such an increase in the productivity adjustment from FY 2025 to FY
2026; however, the commenter stated they were unable to fully analyze
the projections due to a lack of transparency from CMS. In addition,
the commenter found it troubling that the productivity adjustment is
used only when it decreases Medicare payments.
Several commenters questioned the applicability of TFP to
healthcare settings. One commenter referenced a 2022 CMS memorandum
that outlined the CMS Office of the Actuary's analysis of the TFP
methodology, noting that for the most recent 10-year moving average
period, the growth of TFP for hospitals was below that observed in
other private nonfarm business industries. The commenter cited specific
findings indicating that hospitals' TFP ranged from 0.2 to 0.5 percent,
while private nonfarm business TFP measured 0.8 percent.
Commenters stated that by incorporating private nonfarm business
productivity measures in the current methodology, CMS effectively
accounts for innovation and productivity improvements from diverse
economic sectors that differ significantly from the productivity
capabilities and constraints inherent in healthcare delivery settings,
resulting in an overstated productivity adjustment that inappropriately
reduces Medicare payment rate updates.
Various interested parties emphasized that healthcare providers,
particularly SNFs, face unique operational constraints, regulatory
requirements, quality standards, and patient safety obligations that
limit their ability to achieve productivity gains comparable to other
industries. Several commenters recommended that CMS undertake a
comprehensive reevaluation of the productivity adjustment methodology
to better reflect the actual productivity capabilities and constraints
of healthcare providers, rather than applying economy-wide productivity
measures that may not be achievable or appropriate in clinical care
delivery settings where patient safety and quality of care must remain
paramount considerations.
Response: Section 1888(e)(5)(B)(ii) of the Act requires the
application of the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act to the SNF PPS market basket increase
factor. As required by statute, the FY 2026 productivity adjustment is
derived based on the 10-year moving average growth in economy-wide
nonfarm business TFP for the period ending in FY 2026. We recognize the
concerns of the commenters regarding the appropriateness of the
productivity adjustment; however, we are required under section
1888(e)(5)(B)(ii) of the Act to apply the specific productivity
adjustment described here.
We have always made available on the CMS website the general method
for calculating the productivity adjustment. This includes providing a
link to the most recent BLS historical TFP data, which allows
interested parties to obtain historical TFP annual index levels for
1987 through 2024. We also provided the IGI projection model (https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/medicareprogramratesstats/downloads/tfp_methodology.pdf), which
is used to derive annual TFP growth rates for 2025 and 2026. The annual
index level derived from this method is then interpolated to quarterly
levels, and the FY 2026 productivity adjustment is equal to the percent
change in the 40-quarter moving average projected level for the period
ending September 30, 2026, relative to the 40-quarter moving average
projected level for the period ending September 30, 2025. We believe
our methodology for the productivity adjustment is consistent with
section 1886(b)(3)(B)(xi)(II) of the Act, which states that the
productivity adjustment is equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multi-factor
productivity (as projected by the Secretary for the 10-year period
ending with the applicable FY, year, cost reporting period, or other
annual period).
At the time of this final rule, the FY 2026 productivity adjustment
reflects BLS historical TFP data through 2024 (released on March 21,
2025) and IGI's forecasted TFP growth for 2025 and 2026. The average
annual growth rate of historical TFP published by BLS for 2017 through
2024 is currently 0.9 percent and IGI is projecting average TFP growth
of about 0.0 percent for 2025 and 2026 based on IGI's second quarter
2025 forecast. Combining the historical and projected TFP data over the
entire 10-year time period results in a compound annual growth rate of
TFP of 0.7 percent for 2026. The productivity adjustment (based on the
10-year period ending with FY 2026) for the FY 2026 final rule is 0.1
percentage point lower than in the FY 2026 proposed rule, and primarily
reflects the incorporation of a revised outlook from IGI that has lower
projected economic growth over 2025 and 2026. The 0.7-percent
productivity adjustment in the FY 2026 final rule is larger than the
productivity adjustment in the prior final rules for FY 2023 and FY
2024 mainly due to the incorporation of updated BLS historical data.
In response to commenters' concerns about the productivity
adjustment only being applied if it reduces the payment update, we note
that the productivity adjustment was established under the Affordable
Care Act with a specific policy intent to encourage efficiency
improvements in healthcare delivery by linking Medicare payment updates
to economy-wide productivity gains. Section 1888(e)(5)(B)(ii) of the
Act requires that the Secretary reduce (not increase) the market basket
percentage increase by changes in economy-wide
[[Page 37317]]
productivity, therefore, only positive productivity adjustments are
applied.
As stated previously, in the proposed rule the FY 2026 productivity
adjustment was estimated to be 0.8 percentage point based on IGI's
fourth quarter 2024 forecast. For this final rule, based on IGI's
second quarter 2025 forecast, the productivity adjustment (the 10-year
moving average of changes in annual economy-wide private nonfarm
business TFP for the period ending September 30, 2026) is 0.7
percentage points.
Consistent with section 1888(e)(5)(B)(i) of the Act and Sec.
413.337(d)(2), and as outlined previously in section III.B.2. of this
final rule, the market basket percentage increase for FY 2026 for the
SNF PPS is based on IHS Global Inc.'s second quarter 2025 forecast of
the SNF market basket percentage increase, which is estimated to be 3.3
percent. This market basket percentage increase is then increased by
0.6 percentage point, due to application of the forecast error
adjustment outlined earlier in section III.B.3. of this final rule.
Finally, as outlined earlier in this section, we are applying a 0.7
percentage point productivity adjustment to the FY 2026 SNF market
basket percentage increase. Therefore, the resulting FY 2026 SNF market
basket update is equal to 3.2 percent. Thus, we apply a net SNF market
basket update factor of 3.2 percent in our determination of the FY 2026
SNF PPS unadjusted Federal per diem rates.
5. Unadjusted Federal Per Diem Rates for FY 2026
As stated 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 stated 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 component, as
existed under the previous Resource Utilization Groups, Version IV
(RUG-IV) model. We proposed to use the SNF market basket update,
adjusted as outlined previously in sections III.B.1. through III.B.4.
of this final rule, to adjust each per diem component of the Federal
rates forward to reflect the change in the average prices for FY 2026
from the average prices for FY 2025. We also proposed to further adjust
the rates by a wage index budget neutrality factor, outlined in section
III.D. of this final 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 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. As discussed in the FY 2025 SNF PPS
proposed and final rules, we adopted 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)
to identify a facility's urban or rural status effective beginning with
FY 2025.
Tables 4 and 5 reflect the unadjusted Federal rates for FY 2026,
prior to adjustment for case-mix.
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[GRAPHIC] [TIFF OMITTED] TR04AU25.010
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 Minimum Data Set (MDS), a core
set of screening, clinical, and functional status data elements,
including common definitions and coding categories, which form the
foundation of a comprehensive assessment for all residents of nursing
homes certified to participate in Medicare or Medicaid, consistent with
the provisions of section 1888(e)(4)(G)(i) of the Act. As outlined in
section IV.A. of this final rule, the clinical orientation
[[Page 37318]]
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 previously stated, for
an MDS to be considered valid for use in determining payment, the MDS
assessment must be completed in compliance with the instructions in the
RAI Manual in effect at the time the assessment is completed. For
payment and quality monitoring purposes, the RAI Manual consists of
both the Manual instructions and the interpretive guidance and policy
clarifications posted on the appropriate MDS 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 FY 2026 payment rates set forth in this final
rule reflect the use of the PDPM case-mix classification system from
October 1, 2025, through September 30, 2026. The case-mix adjusted PDPM
payment rates for FY 2026 are listed separately for urban and rural
SNFs, in Tables 6 and 7 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 6 and 7 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. Finally, the fifth character
represents the assessment used to generate the HIPPS code.
Tables 6 and 7 reflect the PDPM's structure. Accordingly, Column 1
of Tables 6 and 7 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)
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 6 and 7 do not reflect adjustments which may be made to the
SNF PPS rates as a result of the SNF VBP Program, outlined in section
V.II. of this final rule, or other adjustments, such as the variable
per diem adjustment.
BILLING CODE 4120-01-P
[[Page 37319]]
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[[Page 37320]]
[GRAPHIC] [TIFF OMITTED] TR04AU25.012
BILLING CODE 4120-01-C
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 2026, 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 proposed to 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 2026, the updated wage data are for hospital cost reporting
periods beginning on or after October 1, 2021, and before October 1,
2022 (FY 2022 cost report data).
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 implementation of a spot audit
process to improve SNF cost reports to ensure they are adequately
accurate for cost development purposes, in such a manner as to permit
us to establish a SNF-specific wage index in the future. We will
continue to monitor the appropriateness of using the hospital data as a
proxy, and make adjustments in future rulemaking if we identify a
better approach to the wage index.
In addition, we 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
[[Page 37321]]
which there are no hospitals, and thus, no hospital wage index data on
which to base the calculation of the FY 2026 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 2026, the only
rural area without wage index data available is North Dakota. For urban
areas without specific hospital wage index data, we will continue using
the average wage indexes of all urban areas within the State of North
Dakota to serve as a reasonable proxy for the wage index of that urban
CBSA. For FY 2026, 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 stated 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 percent cap on any
decrease in a hospital's wage index compared to its wage index for the
prior 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 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 (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). As stated in the
FY 2025 SNF PPS final rule (89 FR 64059), we adopted 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).
OMB has not published further delineation revisions since OMB Bulletin
No. 23-01. Therefore, for FY 2026, we proposed to maintain the current
CBSA delineations. The wage index applicable to FY 2026 is set forth in
Table A and B, 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 share 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 FY 2025 SNF final rule (89 FR 64060), we finalized a
proposal to revise the labor-related share to reflect the relative
importance of the 2022-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 share beginning in FY
2025 is discussed in detail in the FY 2025 SNF
[[Page 37322]]
PPS final rule (89 FR 64080 through 64081).
We calculate the labor-related relative importance from the SNF
market basket, and it approximates the labor-related share of the total
costs after taking into account historical and projected price changes
between the base year and FY 2026. 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 2026 than the base year weights
from the SNF market basket. We calculate the labor-related relative
importance for FY 2026 in four steps. First, we compute the FY 2026
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 2026 price index level for that cost category by the
total market basket price index level. Third, we determine the FY 2026
relative importance for each cost category by multiplying this ratio by
the base year (2022) weight. Finally, we add the FY 2026 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
2026 labor-related relative importance.
For the proposed rule, the proposed labor-related share for FY 2026
was 71.9 percent and was based on IGI's fourth quarter 2024 forecast of
the 2022-based SNF market basket with historical data through third-
quarter 2024. We also proposed that if more recent data subsequently
became available (for example, a more recent estimate of the market
basket, the productivity adjustment, and/or the forecast error
adjustment), we would use such data, if appropriate, to determine the
FY 2026 SNF market basket percentage increase, labor-related share
relative importance, forecast error adjustment, or productivity
adjustment in the SNF PPS final rule (90 FR 18593). For this final
rule, as proposed, we estimate the labor-related share for FY 2026 to
be 71.9 percent based on IGI's more recent second quarter 2025
forecast, with historical data through the first quarter of 2025. Table
8 summarizes the labor-related share for FY 2026, based on IGI's second
quarter 2025 forecast of the 2022-based SNF market basket, compared to
the labor-related share that was used for the FY 2025 SNF PPS final
rule.
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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 FY 2026
labor-related share percentage provided in Table 8. The remaining
portion of the rate will 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 SNF PPS
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 10.
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
[[Page 37323]]
adjustment had not been made. For FY 2026 (Federal rates effective
October 1, 2025), 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 2026. For this calculation, we will use the same FY 2024 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 budget neutrality
factor for FY 2026 is 1.0018.
We also proposed that if more recent data become available (for
example, revised wage data and/or updated claims data), we would use
such data, if appropriate, to determine the wage index budget
neutrality factor in the SNF PPS final rule.
The following is a summary of the public comments received on the
wage index and labor-related share along with our responses.
Comment: One commenter supported CMS's proposal to decrease the
labor-related share of the standard rate from 72.0 percent for FY 2025
to 71.9 percent for FY 2026, while another commenter expressed concern
about the effect of the wage index and labor-related share on payment.
Response: We appreciate the commenters' support and concern
regarding the change in the labor-related share. We believe it
continues to be technically appropriate to use the 2022-based SNF
market basket labor-related relative importance to determine the labor-
related share for FY 2026 as it is based on more recent data regarding
price pressures and cost structure of SNFs. The labor-related relative
importance is calculated from the SNF market basket and approximates
the labor-related portion of the total costs after taking into account
historical and projected price changes between the base year and FY
2026. 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.
Comment: Commenters stated support of the permanent 5-percent cap
on wage index decreases. Although there were no OMB reclassifications
in the proposed rule for FY 2026, the FY 2025 updates created
substantial variability in the net reimbursement rates.
Response: We appreciate the commenters' support of the permanent
cap on wage index decreases.
Comment: While commenters support the current wage index
methodology for FY 2026, others encourage CMS to continue to reform the
wage index policies (for example, SNF-specific wage index utilizing SNF
audited cost report and nursing wage data or basing wage index updates
on more recent data). One commenter supported the continued use of
hospital inpatient wage data that provides a more stable and
comprehensive reflection of labor costs, particularly in areas where
wage data specific to SNFs may be limited or inconsistent.
Response: We appreciate the commenters' support of the proposed
wage index policies for FY 2026. In the absence of a SNF-specific wage
index, we believe the use of the pre-reclassified and pre-floor
hospital wage data (without the occupational mix adjustment) continue
to be an appropriate and reasonable proxy for the SNF PPS. For a
detailed discussion of the rationale for our current wage index
policies and for responses to these recurring comments, we refer
readers to the FY 2023 SNF PPS final rule (87 FR 47513 through 47516)
and the FY 2016 SNF PPS final rule (80 FR 46401 through 46402).
After consideration of public comments, we are finalizing our
proposal to continue to use the updated pre-reclassification and pre-
floor IPPS wage index data to develop the FY 2026 SNF PPS wage index.
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 FY 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 FY 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).
We refer readers to section VII. of this final rule for further
discussion of the updates we are finalizing for the SNF VBP Program.
F. Adjusted Rate Computation Example
Tables 9 through 11 provide examples generally illustrating payment
calculations during FY 2026 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 9 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 case-mix adjusted per diem rate for FY 2026, 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 10 shows the adjustments made to the case-
mix adjusted per diem rate from Table 9 to account for the provider's
wage index. The wage index used in this example is based on the FY 2026
SNF PPS wage index that appears in Table 9 available on the CMS website
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Finally, Table 11 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 11 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 11, SNF XYZ's total PPS payment for
this particular patient's stay would equal $23,570.65.
[[Page 37324]]
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[[Page 37325]]
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IV. 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 outlined in
section IV.C. of this final rule. This 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/
[[Page 37326]]
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
previously stated 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 Medicare Part A SNF benefits after the 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 Medicare 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 FY 2001 SNF PPS proposed and final rules (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 certain additional, individual services for
exclusion within each of these four specified service categories. In
the FY 2001 SNF PPS proposed rule, we stated 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, 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 stated in the FY 2001 SNF PPS final rule(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 within the defined categories 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 the FY 2001 SNF PPS proposed rule, we specifically solicited
public comments identifying HCPCS codes in
[[Page 37327]]
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 stated in the FY 2001 SNF PPS proposed rule
that we may consider excluding a particular service if it meets our
criteria for exclusion. We requested 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 also stated in the FY 2001 SNF PPS proposed rule 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 stated in the FY 2001 SNF PPS proposed rule, 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.
The following is a summary of the public comments received on the
consolidated billing, along with our responses.
Comment: Commenters submitted two specific HCPCS codes representing
services that the commenters suggested would qualify for exclusion from
SNF CB. One commenter requested that CMS exclude Vyvgart Hytrulo (HCPCS
code J9334), which was approved in 2023 for the treatment of adult
patients with generalized myasthenia gravis (gMG) who are anti-
acetylcholine receptor (AChR) antibody positive, as well as for adult
patients with chronic inflammatory demyelinating polyneuropathy (CIDP).
The commenter did not specify which of the five exclusion categories
under which this service could be excluded but cited that it meets the
criteria as a high-cost, low-probability event in a SNF. Another
commenter requested that CMS exclude Imdelltra (HCPCS code J9026, a new
anticancer drug approved in 2024) in the chemotherapy category. The
commenter stated that the drug is a high-cost, low-probability anti-
cancer treatment, and represents a new technology or change in medical
practice within the statutory chemotherapy category. The commenter also
stated that CMS has previously excluded codes the commenter believes
are similar to the requested new exclusion.
Response: With regard to Vyvgart Hytrulo, this product is used to
treat myasthenia gravis, not cancer, and does not fall into any
statutory drug categories for consolidated billing (CB) exclusion. The
``high-cost, low-probability'' criterion is necessary, but
insufficient, in and of itself, to qualify a service for exclusion; the
service must also fit one of the five service categories as previously
described in this section of the preamble. Accordingly, we are not
excluding Vyvgart Hytrulo from SNF consolidated billing.
Imdelltra is a targeted immunotherapy anticancer drug, approved for
treatment by infusion of extensive stage small cell lung cancer. It
represents a newer form of cancer treatment than traditional
chemotherapy, as it targets antigens on the cancer cells and
simultaneously engages a patient's own ``T ``cells via another antigen,
activating the immune system to destroy the cancer cells. As previously
stated in prior rulemaking cycles, most recently in the FY 2025 SNF PPS
final rule (89 FR 64048), ``chemotherapy is a specific subset of cancer
treatment characterized by its systemic attacking of cell growth.'' We
further stated in the FY 2024 SNF PPS final rule (88 FR 53200) that
services that ``. . . are not actually chemotherapy drugs, but rather
either immunotherapy or other non-chemotherapy treatments for cancer,
or non-chemotherapy services related to or used in conjunction with
chemotherapy or in treatment of chemotherapy symptoms . . . do not fit
the chemotherapy category or any existing exclusion categories.''
Accordingly, we are not excluding Imdelltra, from SNF consolidated
billing.
Comment: Commenters submitted several comments that are beyond the
agency's statutory authority and/or have already been addressed in
previous rulemaking cycles. One comment reiterated a previous
recommendation that CMS develop a policy to exclude high-cost items/
services from consolidated billing. Another commenter reiterated a
previous recommendation that CMS exclude Tumor Treating Fields
(``TTFields'') therapy, but this is not chemotherapy and does not fit
existing categories. Another commenter submitted a list of medications
that they acknowledged were outside the five service categories in
which CMS has statutory authority to add exclusions, but requested CMS
to consider for future exclusion, including: costs of treatment for
residents with multiple sclerosis (MS); GLP-1 medications; migraine
medications; Aimovig, Ajovy, Emgality, Vyepti, Reyvow, Ubrelvy, and
Nurtec; and continuous glucose monitoring devices.
Response: As previously specified in this section of the preamble,
the authority afforded to us under the law to modify the list of
services excluded from SNF consolidated billing is limited to adding or
removing HCPCS codes representing high-cost low-probability services
from the five specific service categories identified in the statute.
Any of the modifications to consolidated billing and/or the SNF program
suggested by the previously mentioned comments would require an act of
Congress to modify the law.
Comment: A commenter requested that CMS consider applying
consolidated billing rules to oral chemotherapy when administered in
the SNF setting.
Response: Consolidated billing rules apply to oral chemotherapy,
and oral chemotherapy may be excluded from consolidated billing rules
in certain scenarios. The drug must otherwise meet the ``high-cost, low
probability'' standard. Furthermore, coverage must be available under
the Medicare Part B oral chemotherapy drug benefit. As stated in the FY
2019 SNF PPS final (83 FR 39181, August 8, 2018), while Medicare Part B
does provide some
[[Page 37328]]
limited coverage for certain oral chemotherapy drugs under section
1861(s)(2)(Q) of the Act, that coverage `` . . . is restricted to those
with the same indication and active ingredient(s) as a covered non-oral
anti-cancer drug.'' On the other hand, we stated in the FY SNF 2020 PPS
final rule (84 FR 38744) that the law does not provide a basis for
excluding Medicare Part-D-only chemotherapy drugs, as the statutory CB
exclusion mechanism described at subclause (II) of Sec.
1888(e)(2)(A)(i) of the Act solely encompasses those services for which
payment otherwise ``may be made under Part B.''
Comment: Commenters expressed general appreciation for CMS
soliciting public comments to identify HCPCS codes that meet the
criteria for exclusion from consolidated billing within the five
specific service categories identified in the statute. Commenters
stated that they have heard of residents being denied admission or
having care restricted due to expensive chemotherapy and other
services. One commenter stated that chemotherapy services pose a
financial barrier for rural SNFs due to their high cost and
administrative complexity. Another commenter added that services in the
five specified categories are very costly and restrict access to SNF
care. Commenters stated they would continue to try to identify HCPCS
codes that meet the requirements for exclusion.
Response: We thank commenters for their review and support.
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), Medicare 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 stated in the FY SNF 2002 PPS final rule (66 FR
39562), this effective date is consistent with the statutory provision
to integrate swing-bed rural hospitals into the SNF PPS by the end of
the transition period, June 30, 2002.
Accordingly, all non-CAH swing-bed rural hospitals have now come
under the SNF PPS. Therefore, all rates and wage indexes outlined in
earlier sections of this final rule for the SNF PPS also apply to all
non-CAH swing-bed rural hospitals. 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 stated 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
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 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 non-substantive 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, are made via notice and comment
rulemaking, because they are changes that affect policy. We stated in
the proposed rule that in the case of any diagnoses that are either
currently mapped to ``Return to Provider'' clinical category or that we
proposed 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 Medicare Part-A covered SNF stay.
2. Clinical Category Changes for New ICD-10 Codes for FY 2026
Each year, we review the clinical categories assigned to new ICD-10
diagnosis codes and propose adding, removing, or changing the
assignment to another clinical category if warranted. We proposed to
change the clinical category assignment for the following 34 new ICD-10
codes that were effective October 1, 2024. We proposed that 33 ICD-10
codes would be changed to ``Return to Provider,'' and 1 ICD-10 code
would be changed from the ``Acute Neurologic'' category to the
``Medical Management'' category.
a. Type 1 Diabetes Mellitus
Type 1 diabetes mellitus is an autoimmune condition characterized
by insulin deficiency, leading to chronic hyperglycemia. Codes E10.A0
(Type 1 diabetes mellitus, presymptomatic, unspecified), E10.A1 (Type 1
diabetes mellitus, presymptomatic, Stage 1), E10.A2 (Type 1 diabetes
mellitus, presymptomatic, Stage 2), and E10.9 (Type 1 diabetes mellitus
without complications) were initially assigned to the ``Medical
Management'' clinical category. However, these codes refer to diagnoses
in which a patient's Type 1 diabetes is considered presymptomatic,
which means a patient has not developed symptoms, or a patient that is
not experiencing any complications associated with having diabetes. In
both cases, given the patient has not exhibited symptoms or experienced
complications from the condition,
[[Page 37329]]
testing and treatments for these diagnoses would typically occur on an
outpatient basis and not require an inpatient SNF stay in and of
themselves. Therefore, we do not believe these codes will serve
appropriately as the primary diagnoses for a Medicare Part A-covered
SNF stay. We are requiring claims reporting of primary diagnoses that
are the reason for SNF admission, to enable their mapping to clinical
categories that reflect the most accurate resource use for payment.
This does not preclude inclusion of type I diabetes mellitus diagnoses
or any related clinical needs in the beneficiary's plan of care. As a
result, we are changing the mapping of these codes from ``Medical
Management'' to the clinical category of ``Return to Provider''.
b. Hypoglycemia
Hypoglycemia, defined as blood glucose levels below 70 mg/dL, is a
common complication in individuals with diabetes mellitus or other
metabolic disorders. Codes E16.A1 (Hypoglycemia level 1), E16.A2
(Hypoglycemia level 2), E16.A3 (Hypoglycemia level 3), E16.0 (Drug-
induced hypoglycemia without coma), E16.1 (Other hypoglycemia), E16.2
(Hypoglycemia, unspecified), E16.3 (Increased secretion of glucagon),
E16.4 (Increased secretion of gastrin), E16.8 (Other specified
disorders of pancreatic internal secretion), and E16.9 (Disorder of
pancreatic internal secretion, unspecified) were initially assigned to
the ``Medical Management'' clinical category. These diagnoses are
typically treated using interventions such as, but not limited to,
blood sugar monitoring education, dietary counseling, physical exercise
education and training, and pharmacological interventions. Given these
interventions, treatment for these diagnoses would typically occur on
an outpatient basis and not require an inpatient SNF stay in and of
themselves. Therefore, we do not believe these codes will serve
appropriately as the primary diagnoses for a Medicare Part A-covered
SNF stay. We are requiring claims reporting of primary diagnoses that
are the reason for SNF admission, to enable their mapping to clinical
categories that reflect the most accurate resource use for payment.
This does not preclude inclusion of a hypoglycemia diagnoses or any
related clinical needs in the beneficiary's plan of care. As a result,
we are changing the mapping of these codes from ``Medical Management''
to the clinical category of ``Return to Provider''.
c. Obesity
Obesity is a chronic, relapsing, multifactorial disease
characterized by excessive adipose tissue accumulation that increases
the risk of metabolic, cardiovascular, and musculoskeletal disorders.
Codes E66.811 (Obesity, class 1), E66.812 (Obesity, class 2), E66.89
(Other obesity not elsewhere classified), E66.01 (Morbid (severe)
obesity due to excess calories), E66.09 (Other obesity due to excess
calories), E66.1 (Drug-induced obesity), E66.3 (Overweight), and E66.9
(Obesity, unspecified) were initially assigned to the ``Medical
Management'' clinical category. However, these diagnoses are typically
treated using interventions such as, but not limited to, lifestyle
interventions, psychosocial therapy and support, weight management
programs, and pharmacological interventions. Given these interventions,
treatment for these diagnoses would typically occur on an outpatient
basis and not require an inpatient SNF stay in and of themselves.
Therefore, we do not believe these codes will serve appropriately as
the primary diagnoses for a Medicare Part A-covered SNF stay. As a
result, we are changing the mapping of these codes from ``Medical
Management'' to the clinical category of ``Return to Provider''.
d. Anorexia Nervosa, Restricting Type
Anorexia Nervosa (AN) is a psychiatric disorder characterized by
severe food restriction, intense fear of weight gain, and distorted
body image. Patients with AN, restricting type may present with
significant weight loss, malnutrition, and/or medical complications
such as bradycardia, osteoporosis, electrolyte imbalances, and/or organ
dysfunction. Code F50.010 (Anorexia nervosa, restricting type, mild)
was initially assigned to the ``Medical Management'' clinical category.
However, this diagnosis is typically treated using interventions such
as, but not limited to, psychosocial therapy and support, nutritional
counseling, and pharmacological interventions. Given these
interventions, treatment for this diagnosis would typically occur on an
outpatient basis and not require an inpatient SNF stay in and of
itself. Therefore, we do not believe this code will serve appropriately
as the primary diagnosis for a Medicare Part A-covered SNF stay. As a
result, we are changing the mapping of this code from ``Medical
Management'' to the clinical category of ``Return to Provider''.
e. Anorexia Nervosa, Binge Eating/Purging Type
AN is a psychiatric disorder characterized by severe food
restriction, intense fear of weight gain, and distorted body image.
Individuals with AN binge eating/purging type engage in recurrent binge
eating and/or purging behaviors. Codes F50.020 (Anorexia nervosa, binge
eating/purging type, mild) and F50.021 (Anorexia nervosa, binge eating/
purging type, moderate) were initially assigned to the ``Medical
Management'' clinical category. However, these diagnoses are typically
treated using interventions such as, but not limited to, psychosocial
therapy and support, nutritional counseling, and pharmacological
interventions. Given these interventions, treatment for these diagnoses
would typically occur on an outpatient basis and not require an
inpatient SNF stay in and of themselves. Therefore, we do not believe
these codes will serve appropriately as the primary diagnoses for a
Medicare Part A-covered SNF stay. As a result, we are changing the
mapping of these codes from ``Medical Management'' to the clinical
category of ``Return to Provider''.
f. Bulimia Nervosa
Bulimia nervosa is an eating disorder characterized by recurrent
episodes of binge eating, consuming large amounts of food within a
short period, followed by self-induced vomiting, laxative misuse,
fasting, or excessive exercise. Codes F50.21 (Bulimia nervosa, mild)
and F50.22 (Bulimia nervosa, moderate) were initially assigned to the
``Medical Management'' clinical category. However, these diagnoses are
typically treated using interventions such as, but not limited to,
Cognitive-Behavioral Therapy (CBT), psychotherapy, nutritional
counseling, and pharmacological interventions. Given these
interventions, treatment for these diagnoses would typically occur on
an outpatient basis and not require an inpatient SNF stay in and of
themselves. Therefore, we do not believe these codes will serve
appropriately as the primary diagnoses for a Medicare Part A-covered
SNF stay. As a result, we are changing the mapping of these codes from
``Medical Management'' to the clinical category of ``Return to
Provider''.
g. Binge Eating Disorder
Binge eating disorder is characterized by recurrent episodes of
binge eating without compensatory behaviors such as purging, fasting,
and excessive exercise. Codes F50.810 (Binge eating disorder, mild) and
F50.81(Binge eating disorder, moderate) were initially
[[Page 37330]]
assigned to the ``Medical Management'' clinical category. However,
these diagnoses are typically treated using interventions such as, but
not limited to, CBT, psychotherapy, nutritional counseling, and
pharmacological interventions. Given these interventions, treatment for
these diagnoses would typically occur on an outpatient basis and not
require an inpatient SNF stay in and of themselves. Therefore, we do
not believe these codes will serve appropriately as the primary
diagnoses for a Medicare Part A-covered SNF stay. As a result, we are
changing the mapping of these codes from ``Medical Management'' to the
clinical category of ``Return to Provider''.
h. Pica and Rumination Disorder
Pica is an eating disorder characterized by the persistent
consumption of non-nutritive, non-food substances for at least one
month. Rumination is an eating disorder where individuals repeatedly
regurgitate food, rechew, re-swallow, or spit out, for at least one
month. Codes F50.83 (Pica in adults), F50.84 (Rumination disorder in
adults), F98.21 (Rumination disorder of infancy and childhood), and
F98.3 (Pica of infancy and childhood) were initially assigned to the
``Medical Management'' clinical category. However, these diagnoses are
typically treated using interventions such as, but not limited to,
behavioral therapy, nutritional counseling, environmental
modifications, and pharmacological interventions. Given these
interventions, treatment for these diagnoses would typically occur on
an outpatient basis and not require an inpatient SNF stay in and of
themselves. Therefore, we do not believe these codes will serve
appropriately as the primary diagnoses for a Medicare Part A-covered
SNF stay. As a result, we are changing the mapping of these codes from
``Medical Management'' to the clinical category of ``Return to
Provider''.
i. Serotonin Syndrome
Serotonin syndrome is a potentially life-threatening condition
caused by excess serotonin in the central nervous system, typically
resulting from drug interactions or overdose of serotonergic
medications. Code G90.81 (Serotonin syndrome) was initially assigned to
the ``Acute Neurologic'' clinical category. However, this diagnosis
requires specific interventions including identifying and discontinuing
causative agents, symptom management and support, pharmacological
management, patient education, and potentially emergency care or ICU
admission depending on severity. Given these treatment requirements,
care for this diagnosis typically occurs on an outpatient basis or in
an acute care hospital setting rather than requiring an inpatient Part
A SNF stay. Therefore, this code does not serve appropriately as the
primary diagnosis for a Medicare Part A-covered SNF stay while assigned
to the ``Acute Neurologic'' clinical category. Consequently, we propose
remapping this code from ``Acute Neurologic'' to the ``Medical
Management'' clinical category.
We solicited comments on the proposed changes to the PDPM ICD-10
mappings discussed earlier in this section. We received public comments
on these proposals. The following is a summary of the comments we
received and our responses.
Comment: Several commenters supported the proposed reclassification
of the PDPM mappings changes for type 1 diabetes mellitus,
hypoglycemia, obesity, anorexia nervosa-restricting type, anorexia
nervosa-binge eating/purging type, bulimia nervosa, binge eating
disorder, pica and rumination disorder, and serotonin syndrome. These
commenters agreed these mapping changes would improve billing accuracy,
promote more appropriate diagnoses for Part A skilled nursing facility
(SNF) stays, and ultimately improve patient care.
Response: We appreciate the support for these proposed ICD-10
mapping changes.
Comment: A few commenters expressed concerns with the proposed
reclassification of certain conditions from a given clinical category
to a Return to Provider status, suggesting changing the clinical
categories could potentially lead to increased claims denials and
corrections, increased administrative burdens, delays in care, or
restrictions in patient access to skilled care by remapping codes from
the Medical Management clinical category to Return to Provider.
Response: We appreciate the comments and concerns raised by the
commenters. As part of our ongoing review and refinement of the PDPM
ICD-10 mappings, including clinical review, we determined that these
diagnoses would not serve as the basis for a Part A admission to a SNF.
Treatment for these diagnoses would not require, in and of themselves,
an inpatient Medicare Part A SNF stay. Therefore, we do not believe
these codes would serve appropriately as primary diagnoses for a
Medicare Part A-covered SNF stay. We require claims reporting of
primary diagnoses that are the reason for SNF admission, to enable
their mapping to clinical categories that reflect the most accurate
resource use for payment. This does not preclude inclusion of other,
co-occurring diagnoses and any related clinical needs in the
beneficiary's plan of care.
We believe that remapping the codes in question from the Medical
Management clinical category to Return to Provider will also help
reduce billing and administrative burdens by preventing unnecessary
claim denials. Specifically, improving billing accuracy with correct
primary diagnosis codes reduces administrative burden by preventing
claim rejections that require time-intensive corrections and
resubmissions. In the event a patient is admitted with codes mapped to
Return to Provider, these codes may still be used as secondary
diagnoses when appropriate.
Comment: One commenter stated CMS should reconsider mapping ICD-10
code M62.81, Muscle Weakness (Generalized) from Return to Provider to
an alternative category and be used as a primary diagnosis.
Response: We considered this request and, as stated in the FY 2023
SNF PPS final rule (87 FR 47524), we continue to believe that M62.81
Muscle Weakness (Generalized) is nonspecific. If the original condition
has resolved but the resulting muscle weakness persists due to the
known original diagnosis, more specific codes exist that would better
account for the ongoing muscle weakness. Many musculoskeletal
conditions result from previous injury or trauma to a site or are
recurrent conditions. This symptom, without specification of etiology
or severity, does not justify being designated as a primary diagnosis
for a Medicare Part A skilled stay in a SNF. Patients with Muscle
Weakness (Generalized) may obtain a more specific diagnosis that
identifies the cause of the generalized muscle weakness. The specific
diagnosis may then be used to develop an appropriate care plan for the
patient.
Comment: A couple of commenters recommended code G90.81 (Serotonin
Syndrome) remain mapped to the Acute Neurologic clinical category
instead of being remapped to Medical Management.
Response: We appreciate the comments and concerns raised regarding
our proposal to remap code G90.81 (Serotonin syndrome) from the Acute
Neurologic clinical category to the Medical Management clinical
category. We acknowledge that commenters have noted the variable
severity of serotonin syndrome and the potential need for intensive
monitoring and medication management. While we recognize that serotonin
syndrome can
[[Page 37331]]
present with varying degrees of severity, our proposal to remap this
code to Medical Management is based on several key considerations.
The primary interventions for serotonin syndrome, including
identification and discontinuation of causative agents, symptom
management, and pharmacological interventions, are typically managed in
outpatient settings or acute care hospitals rather than requiring SNF
care under a Medicare Part A stay. The condition's management focuses
on medication adjustments and monitoring rather than the intensive
neurological rehabilitation or skilled nursing services that
characterize appropriate Medicare Part A SNF admissions for conditions
classified under the Acute Neurologic clinical category.
For Medicare Part A SNF coverage, the primary diagnosis should
reflect conditions that necessitate skilled nursing care or
rehabilitation services for a Part A SNF admission. While serotonin
syndrome may require careful monitoring, it does not inherently require
the skilled nursing interventions that justify a Medicare Part A SNF
admission as a primary diagnosis when classified within the Acute
Neurologic category versus the proposed Medical Management clinical
category.
It is important to note that remapping this code to Medical
Management does not eliminate access to SNF care when medically
necessary. Patients with serotonin syndrome may still receive
appropriate treatment in the most suitable care setting, have G90.81
used as either a primary or secondary diagnosis when relevant to their
overall care plan, and access Medicare Part A SNF services when their
primary condition requires skilled nursing care.
This remapping will improve the accuracy of primary diagnosis
coding for Medicare Part A SNF stays, reducing administrative burdens
while ensuring that patients receive care in the most appropriate
setting for their specific needs.
Comment: One commenter reported concerns that remapping eating
disorder codes to the clinical category of Return to Provider would
create gaps in care and contrast with the ``Make America Healthy
Again'' initiative. At the same time, the commenter acknowledged eating
disorders can co-occur with other needs requiring skilled care.
Response: We appreciate the thoughtful comments regarding our
proposal to remap the codes for Anorexia Nervosa, Restricting Type;
Anorexia Nervosa, Binge Eating/Purging Type, Bulimia Nervosa, Binge
Eating Disorder, and Pica and Rumination Disorder, from Medical
Management to Return to Provider. We understand the commenter's
concerns about potential care gaps and alignment with health
initiatives, and we value their acknowledgment that eating disorders
may co-occur with other conditions requiring skilled care, however they
would not formulate the basis for needing SNF admission. The primary
interventions for eating disorders as primary diagnoses, including
behavioral therapy, nutritional counseling, environmental
modifications, and pharmacological interventions, are most effectively
delivered in specialized outpatient settings or dedicated eating
disorder treatment facilities. These interventions do not typically
require the skilled nursing services that characterize appropriate
Medicare Part A SNF admissions. By remapping these codes to Return to
Provider, patients can receive care in the most clinically appropriate
and therapeutically effective environment. Requiring claims reporting
of primary diagnoses that are the reason for SNF admission enables
their mapping to clinical categories that reflect the most accurate
resource use and does not preclude their inclusion in beneficiaries'
plan of care. These eating disorder codes may continue to be used as
secondary diagnoses when clinically relevant and medically necessary.
Comment: We received comments recommending out-of-scope mapping
changes for various diagnoses, including sepsis, oral and laryngeal
cancers, secondary cancers, orthopedic surgeries and conditions, brain
tumor, hepatic encephalopathy, and speech-language pathology (SLP)
comorbidities.
Response: We appreciate the thoughtful comments and recommendations
submitted regarding potential mapping changes for various diagnoses,
including sepsis, oral and laryngeal cancers, secondary cancers,
orthopedic surgeries and conditions, brain tumor, hepatic
encephalopathy, and SLP comorbidities. While these recommended changes
fall outside the scope of the current rulemaking cycle, we recognize
their potential significance for improving the accuracy and clinical
appropriateness of our coding system. To the extent that these changes
represent substantive modifications to the ICD-10 code mappings, we
will carefully consider these comments for future rulemaking processes.
After considering the public comments, we are finalizing our
proposed changes to the clinical category assignments for these 34 new
ICD-10 codes.
VI. Skilled Nursing Facility Quality Reporting Program (SNF QRP)
A. Background and Statutory Authority
The SNF QRP is authorized by section 1888(e)(6) of the Act. The SNF
QRP 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 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 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 at Sec. 413.360.
In section VI.C. of the proposed rule, we proposed to remove four
items previously adopted as standardized patient assessment data
elements under the social determinants of health (SDOH) category
beginning with the FY 2027 SNF QRP: one item for Living Situation, two
items for Food, and one item for Utilities. In section VI.D. of the
proposed rule, we proposed to amend our reconsideration policy and
process. We also solicited public comments on several Requests for
Information (RFIs), specifically on: (1) future measure concepts for
the SNF QRP; (2) potential revisions to the data submission deadlines
for assessment data collected for the SNF QRP; and (3) advancing
digital quality measurement in SNFs.
B. General Considerations Used for the Selection of Measures for the
SNF QRP
For a detailed discussion of the considerations that we
historically used for the selection of quality, resource use, or other
measures for the SNF QRP, we refer readers to the FY 2016 SNF PPS final
rule (80 FR 46429 through 46431).
1. Quality Measures Currently Adopted for the FY 2028 SNF QRP
The SNF QRP currently has 15 adopted measures, which are set forth
in Table 12. We did not propose to adopt any new measures for the SNF
QRP.
[[Page 37332]]
For a discussion of the factors we use to evaluate whether a
measure must be removed from the SNF QRP, we refer readers to our
regulations at Sec. 413.360(b)(2) and to the FY 2019 SNF PPS final
rule (83 FR 39267 through 39269). We did not propose to remove any
measures from the SNF QRP.
[GRAPHIC] [TIFF OMITTED] TR04AU25.017
C. Removal of Four Standardized Patient Assessment Data Elements
Beginning With the FY 2027 SNF QRP
We refer readers to the FY 2025 SNF PPS final rule (89 FR 64100
through 64111) where we finalized the adoption of four new items as
standardized patient assessment data elements under the SDOH category
for addition to the Minimum Data Set (MDS).\3\ Specifically, we
finalized the following items to be added to the MDS in the FY 2025 SNF
PPS final rule: one item for Living Situation (R0310); two items for
Food (R0320A and R0320B); and one item for Utilities (R0330). As
finalized in the FY 2025 SNF PPS final rule, SNFs would be required to
report these data elements using the MDS beginning with residents
admitted on October 1, 2025, through December 31, 2025, for purposes of
the FY 2027 SNF QRP and each program year after (89 FR 64115 through
64118).
---------------------------------------------------------------------------
\3\ The MDS 3.0 is CMS's required assessment instrument used by
SNFs to collect certain data from residents upon their admission and
discharge from the SNF. See section 1899B of the Act, which requires
SNFs to use of Post-Acute Care (PAC) assessment instruments for
collecting and submitting to CMS certain standardized patient
assessment data as part of PAC quality reporting programs, including
the SNF QRP.
---------------------------------------------------------------------------
In the proposed rule, we proposed to remove these four standardized
patient assessment data elements under the SDOH category from the MDS
as we acknowledge the burden associated with these items at this time.
We continuously look for ways to balance the need for data collections
regarding quality care and the burden that such data collections may
have on SNFs and their staff. One goal we have is to facilitate
improved health care delivery by requiring different systems and
software applications to communicate and exchange data. Therefore, we
would like to work towards the workflow for these items being part of a
low burden interoperable electronic system. The focus will turn towards
how the data and associated recommendations can improve care
coordination, efficiency, reduction in errors, and resident experience.
As health information technology (IT) advances and interoperability of
data becomes more standardized, the burden to collect and share
clinical data on these and other relevant resident information will
become less burdensome, allowing for better outcomes for SNF residents
and their families. The objectives of the SNF QRP continue to be the
improvement of care, quality, and health outcomes for all residents
through transparency and quality measurement, while not imposing undue
burden on essential health providers.
We proposed that SNFs would not be required to collect and submit
the Living Situation (R0310), Food (R0320A and R0320B), and Utilities
(R0330) items using the MDS beginning with residents admitted on or
after October 1, 2025, removing the required collection and reporting
of these items that we previously finalized. We also proposed
[[Page 37333]]
that collecting these items would not be required to meet the SNF QRP
requirements to avoid a 2 percent payment reduction beginning with the
FY 2027 SNF QRP.
In the proposed rule, we calculated that removing these items from
the data collection for the FY 2027 SNF QRP would keep the 15,253 SNFs
from incurring 31,791.20 hours of administrative burden at a cost of
$2,228,563.12 (or $146.11 per SNF) at this time (90 FR 18605). We refer
readers to section IX.A.6.a. of this final rule for details on this
estimated burden reduction.
The following is a summary of the public comments received on our
proposal to remove these four standardized patient assessment data
elements collected under the SDOH category from the SNF QRP beginning
with the FY 2027 SNF QRP, along with our responses.
Comment: Several commenters supported the proposed removal of the
four SDOH assessment items, stating that they would add complexity and
administrative burden to the resident assessment process. One commenter
stated that this proposed removal would be most beneficial for rural
SNFs, who may lack dedicated administrative personnel to manage new
data collection mandates. Many of these commenters expressed concerns
that these items can be time-consuming to collect and detract from
direct resident care. A few commenters acknowledged that CMS must work
towards a balance of SNF provider burden and data collection efforts
for quality, ensuring data adds value to its program and advances
health care.
Several commenters that supported the proposed removal stated that,
while the SDOH items are an important part of discharge planning, the
SDOH items were not relevant to the SNF QRP. Two other commenters
stated the information would already be in the resident's medical
record and would thus be duplicative of collection efforts across the
care continuum, such as data collected by the hospital. A few
commenters noted that, while the data elements may impact a resident's
overall well-being, the SDOH items are reflective of issues outside the
SNF and will not be resolved during the stay. Some commenters stated
that these items do not accurately reflect the facility's outcomes, and
that SDOH screening is better addressed through community-based care
settings or discharge planning rather than SNF quality reporting.
Response: We thank commenters for their support for our proposal to
remove these four SDOH items from the standardized patient assessment
data elements collected and submitted using the MDS. We continue to
monitor the SNF QRP data collection requirements to look for ways to
reduce administrative burden, where appropriate, while maintaining a
high standard of quality care. We agree that removing these items at
this time will alleviate some of the burden on SNF providers associated
with SNF QRP data collection and submission requirements. We intend to
align the SNF QRP more closely with our overarching goal for improved
health care delivery through health IT advances and low-burden
interoperable electronic systems. As we stated in the FY 2026 SNF PPS
proposed rule (90 FR 18605), we plan to refocus efforts on how data
elements can improve care coordination, efficiency, reduction in
errors, and resident experience.
We appreciate commenters' recognition of having an appropriate
balance of burden and value in quality measurement programs, such as
the SNF QRP. By streamlining the number of data elements required for
reporting, SNFs and their staff can focus efforts and resources to
address the quality issues that matter most to their residents. As
stated in section VI.E. of this rule, we are soliciting comment on
measurement concepts that address residents' well-being while more
appropriately reflecting factors that are within practitioners' and
facilities' scope of care or where practitioners can provide actionable
advice that will help reduce the prevalence of chronic diseases,
including nutrition, increased adherence to expected daily thresholds
for physical activity, minimization of chronic stressors, and
improvements in mental health.
We also acknowledge that many SNFs already collect the information
that would otherwise be required under these four SDOH items as part of
the discharge planning process. We note that SNFs may continue
collecting information that is beneficial regardless of the
requirements of the SNF QRP, particularly if it may facilitate
discharge planning and contribute to quality improvement efforts.
Comment: One commenter suggested making the four SDOH measures
optional in the SNF QRP.
Response: We wish to clarify that we did not adopt SDOH measures.
In the FY 2025 SNF PPS final rule (89 FR 64100 through 64111), we
finalized the adoption of four new standardized patient assessment data
elements under the SDOH category for inclusion in the SNF QRP. As
previously finalized, SNFs would have collected and submitted these
standardized patient assessment data using the MDS beginning with
residents admitted on or after October 1, 2025, in accordance with
sections 1888(e)(6)(B)(i)(III) and 1899B(a)(1)(A)(i) and (b)(1) of the
Act. In the FY 2025 SNF PPS final rule (89 FR 64100), we described
these statutory requirements regarding the collection and submission of
standardized patient assessment data under the SNF QRP. While SNFs
collect and submit standardized patient assessment data using the MDS
to fulfill SNF QRP requirements at section 1888(e)(6)(B)(i)(III) of the
Act, and these data may be used to calculate SNF QRP measures as
provided in section 1889B(b)(1)(B) of the Act, these data are not in
themselves quality, resource use, and other measures specified for the
SNF QRP.
In the proposed rule (90 FR 18605 and 18606), we proposed the
removal of these four standardized patient assessment data elements
from the SNF QRP. We did not propose to modify these four SDOH items to
be optional data elements on the MDS that SNFs could voluntarily
report. Because we are finalizing our proposal to remove these four
SDOH items as proposed, they will not be added to the MDS item set for
voluntary data collection efforts. If SNFs want to voluntarily collect
them, they can do so.
Comment: We received many comments that were opposed to our
proposal to remove the four SDOH items from the SNF QRP and recommended
that CMS reconsider the proposal. These commenters stated that this
information adds value to SNFs, citing certain literature on how
screening for SDOH improves health outcomes and how this information
facilitates discharge planning and coordination of care across settings
providing a proactive approach to risks. Many of these commenters
stated that collecting these data allows SNFs to identify barriers to
care access and adherence to medical plans. Some commenters further
stated that they are already collecting SDOH data on their residents to
support efforts of nurses, social workers, and care managers. One of
these commenters stated that these items are particularly useful in
rural SNFs to address deficits in rural residents' living situations. A
few commenters stated these SDOH items were particularly important in
caring for patients with complex or chronic conditions and geriatric
patients. These commenters noted that integration of SDOH into care
planning can result in cost savings by reducing readmissions and
emergency
[[Page 37334]]
department visits while improving patients' post-care outcomes.
Response: We appreciate the commenters' concerns and feedback
regarding the importance of collecting these SDOH items from SNF
residents and acknowledge the value that commenters ascribe to the
collection of this information for discharge planning and care
coordination. We recognize commenters' experiences using SDOH data to
improve outcomes and facilitate high quality care through improved
coordination between SNF providers. We also acknowledge feedback from
commenters that healthcare outcomes may be different for those
residents experiencing unstable housing, food insecurity, or challenges
paying utilities.
However, in reviewing the data collection and reporting
requirements for the FY 2027 SNF QRP, we determined that these SDOH
items should be removed from the MDS prior to the start of data
collection and submission. We have re-evaluated the value of adding
these SDOH items to the MDS for the purposes of the SNF QRP against
their burden at this time. We considered that SNFs have not yet begun
to report these data, we do not currently have a use for these items in
the SNF QRP, and these SDOH items are not clinical items related to
direct resident care. We also have refocused our efforts on
modernization of health care and health care systems, which may support
less burdensome ways of collecting SDOH data in the future. We
continuously review and reassess the balance of data collection and SNF
provider burden for the SNF QRP, and at this time, determined these
SDOH items should be removed prior to implementation.
The objectives of the SNF QRP continue to be the improvement of
care, quality, and health outcomes for all patients through
transparency and quality measurement, while balancing burden for SNFs
and their staff. As outlined in our request for information in the FY
2026 SNF PPS proposed rule (90 FR 18608 and 18609), we are refocusing
our efforts to advance the digital quality measurement transition to
include ways for data elements, such as those related to SDOH, to be
collected as part of a low-burden interoperable electronic system.
Given these administrative goals and efforts to reduce burden for SNFs,
we do not believe that the collection of SDOH items via the MDS
assessment outweighs the cost and burden of collecting them at this
time.
At this time, we believe that halting the implementation of the
four SDOH items prior to their being added to the MDS on October 1,
2025 removes the burden these data collection and submission
requirements would impose on SNFs before most training activities, data
collection, reviews of the guidance manuals, and other implementation
tasks have occurred. To the extent SNFs may find collecting this or
similar information from their residents helpful to inform clinical
decisions and discharge planning, the removal of collecting and
reporting this information to CMS to comply with SNF QRP requirements
should not, in any way, preclude SNFs from collecting and using this
information on their own.
Comment: One commenter stated that residents are often sent to SNFs
when they are unable to live at home for reasons related to the four
SDOH items. The commenter stated that retaining the SDOH items in the
MDS would help mitigate a gap in resources that limit SNFs from
effectively addressing SDOH issues (for example, staffing inadequacies,
managed care and commercial insurance restrictions, and insufficient
reimbursement rates). The commenter stated that these items would help
local and Federal agencies better understand where funds are allocated
and how they are utilized.
Response: We acknowledge that some SNF residents may face
challenges related to SDOH that affect the resident being safely
discharged home. We wish to clarify that SNFs have not collected these
four items for the purposes of the SNF QRP to date because data
collection and submission using the MDS was set to begin with residents
admitted on or after October 1, 2025. Additionally, we interpret the
comment regarding resource gaps to say that these SDOH items could be
utilized by local and Federal agencies to illuminate limits placed on
SNFs by managed care and commercial insurance companies or to highlight
areas for staffing improvements. We do not believe that the submission
of these items to us would achieve these goals, and we wish to clarify
that the SDOH items were never intended for the purpose of informing us
about staffing challenges or private payers' insurance practices or
reimbursement rates. The purpose of the SNF QRP is to require
collection and submission of data to CMS as we have specified. Even
though we will no longer require that SNFs collect and submit these
four items to CMS using the MDS, SNFs can still collect and use SDOH
information and share this with local agencies, in compliance with
applicable laws governing confidentiality and privacy of patient/
resident information, if they believe this would be beneficial.
Comment: Another commenter specifically opposed removing the
Utilities (R0330) item on the MDS from the SNF QRP. This commenter
stated that the availability of reliable electricity is necessary for
patients who need mechanical devices, such as ventilators, CPAP
machines, and oxygen equipment, after discharge. This commenter noted
that a patient without access to electricity could not be safely
discharged to home.
Response: We agree with the commenter about the importance of
reliable electricity being available for residents who need mechanical
devices, such as ventilators, CPAP machines, and oxygen equipment,
after discharge. We disagree, however, that if the Utilities (R0330)
item is removed from the MDS item set, then SNFs would not question the
resident about and consider this information in their discharge plan.
SNFs are already required by our regulation at Sec. 483.21(c)(1) to
develop and implement an effective discharge planning process,
including ensuring that the discharge needs of each resident are
identified and result in the development of a discharge plan for each
resident (Sec. 483.21(c)(1)(i)). On this basis, we believe that if it
were necessary for residents to have electricity to use mechanical
devices after discharge from the SNF, then the SNF would be required to
address and consider such need as part of their planning process for
safely discharging a resident to home.
Comment: One commenter recommended that, rather than removing these
four SDOH items, CMS should invest in reducing the manual burden
associated with collecting and submitting these items by using
automation via interoperable systems (for example, electronic health
record (EHR)-based application programming interfaces (APIs) as
suggested by the Fast Healthcare Interoperability Resources[supreg]
(FHIR[supreg]) Roadmap and Trusted Exchange Framework and Common
Agreement\TM\ (TEFCA\TM\)). The commenter stated that the SDOH items
support more equitable care coordination, and that facilitating the
analysis and collection of data via more interoperable means is a
critical step forward. One commenter disagreed that the burden of
reporting outweighed the benefit of these items, stating that
prospective losses in care efficiency and adverse outcomes may outweigh
such minimal savings.
Response: We agree with the commenters that the exchangeability of
information is important for a
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comprehensive plan of care. We intend to work towards the workflow and
data exchange for data elements being part of a less burdensome
interoperable electronic system. We appreciate the commenters'
suggestion to retain the items until a more efficient health IT
infrastructure and data collection framework is in place. However, all
data collection requirements have inherent burden associated with
collection and we strive to balance that burden with the value of
measuring the quality of care that residents receive. Data collection
for these four SDOH items would be burdensome on SNFs and there is no
current or planned use for the data in the SNF QRP at this time. As
previously stated, SNFs can continue to collect this information to
inform discharge planning but, for the purposes of the SNF QRP, we are
finalizing our proposal to remove these four SDOH items from the MDS
before implementation begins. This means that SNFs would not need to
collect and submit this information to meet the requirements of the SNF
QRP. With alleviation of this data collection requirement, SNFs could
redistribute their resources toward efforts to improve or enhance
clinical care, health IT, or other areas as determined by the SNF.
Comment: One commenter stated that CMS provided extensive support
and rationale for adopting these four items in the FY 2025 SNF PPS
final rule, developing a policy that was well-vetted and examined in
detail. This commenter stated that CMS has not provided any reasoning
or explanation in our proposal in the FY 2026 SNF PPS proposed rule as
to why these are no longer important or how circumstances have changed
to necessitate their removal. Other commenters stated that removal of
these items prior to implementation is premature and that keeping them
would support alignment of payment, data, and accountability mechanisms
to improve care.
Response: In the proposed rule, we explained that the removal of
these items is a result of our focus on balancing the need for data
collection regarding quality care and the burden of these data
collections on SNFs and their staff (90 FR 18605). We would like to
reiterate that SNFs and their staff independently may determine to
screen their residents for factors that may affect their clinical
decision-making, even in the absence of a reporting requirement. We did
not intend to suggest with our proposal to remove these items from SNF
QRP requirements that SNFs should cease collecting this or similar
information for other purposes, such as the SNF's resident-specific
assessment of needs in developing a discharge plan as required by Sec.
483.21(c)(1)(i). Rather, we are removing the four SDOH items from the
MDS to reduce the burden of data collection and submission for the SNF
QRP. Reducing the burden of SNF QRP requirements would enable SNFs and
their staff to focus their efforts on clinical decision making by
preserving clinicians' flexibility to address social risk factors in
other ways that are tailored to the needs of and make the most sense
for their resident populations.
We understand implementation efforts to collect and submit any data
elements for the purposes of meeting SNF QRP requirements is inherently
burdensome for SNFs and their staff, particularly adopting and
implementing new data elements since they involve adjustments to health
IT systems and EHRs, workflows, and staff trainings. We are always
reviewing and reassessing this balance of data collection and SNF
provider burden for the SNF QRP.
For the four SDOH items, we reconsidered the value of their
collection and submission to us for the purposes of the SNF QRP against
their burden at this time. We specifically considered that these items
are not clinical in nature. While they reflect certain aspects of a
resident's health that may inform clinical decisions, they are not
factors within the scope of care a SNF and its staff provides.
Furthermore, if maintained on the MDS, there is currently no use for
these items in risk adjustment models, reporting of SNF measure
results, or the development of new quality measures. We proposed
removal of the four SDOH items from the MDS because SNFs have not
started data collection for these items yet, we are not utilizing the
information for any purpose at this time, and there is an agency-wide
refocusing on modernization of health care and health care systems and
on engaging SNFs and their staff with these health IT efforts. We are
working towards developing less burdensome data collection methods as
we believe leveraging technological advances and data modernizations
can streamline standardization of the MDS in ways that support
interoperable patient data and reduce time spent collecting this data
by SNFs and their staff. We strive to collaborate with SNFs and their
staff in these efforts as exhibited in our request for information on
advancing digital quality measurement (dQM) in the FY 2026 SNF PPS
proposed rule (90 FR 18608 and 18609). This collaboration includes
reducing the burden of paperwork for participating in the SNF QRP,
where possible, to support SNFs in moving towards health data
technology and interoperability that promotes spending more time with
residents. SNFs are welcome to continue collecting this information to
inform care coordination and discharge planning.
Comment: A few commenters opposed our proposal to remove the SDOH
items. They noted that these items are critical for risk adjustment and
evaluating SNF performance across demographic groups.
Response: We wish to clarify that these four SDOH items are not
currently being used for risk adjustment for any SNF QRP measures, and
we do not currently utilize them for evaluating SNF performance across
demographic groups. Furthermore, as we stated earlier, there are no
current plans for utilizing the four SDOH items in risk adjustment
models or to report SNF performance stratified by these elements,
either publicly or in confidential feedback reports. While we finalized
the adoption of the four SDOH items in the FY 2025 SNF PPS final rule
(89 FR 64100 through 64111), SNFs have not begun to report these data.
Because data collection has not begun and we do not have an active use
for these items, we have re-evaluated the value of adding them to the
MDS at this time.
Comment: A few commenters stated that the SDOH items provide
important insights into housing, food, and utility insecurity, which
affect patient outcomes and that removing these SDOH items is counter
to national efforts aimed at improving health outcomes, including the
agency's current goals related to the development of patient nutrition,
physical activity, and well-being measures. The commenters noted that
the SDOH items could be utilized to support the Make America Healthy
Again initiative's core mission of a more efficient, prevention-focused
health care system through the treatment of expensive complications
that could be prevented through early identification of risks.
Response: We disagree but understand why SNF providers believe that
removal of these items is counter to our national efforts aimed at
improving health outcomes. In response to comments about the agency's
goals related to nutrition and well-being, we do not believe these four
SDOH items are the only foundational items needed for future measure
development related to nutrition. As we finalized in the FY 2025 SNF
PPS final rule (89 FR 64103), the two Food items (R0320A and R0320B)
each assess one particular
[[Page 37336]]
aspect of nutrition: food availability and food security. These items
do not encompass other relevant, meaningful information to improve
residents' health outcomes, including healthy nutrition, sleep, and
physical activity levels. In addition, we believe there are other
existing items on the MDS that could support the development of measure
concepts we are considering in the future. For example, the MDS
includes nutrition items in Section K and Section I. To reiterate, at
this time, we are removing these SDOH items to refocus efforts and
resources towards a less burdensome interoperable system for SNFs
participating in the SNF QRP and existing MDS items, such as the
standardized patient assessment data elements in Section K that were
finalized in the FY 2020 SNF PPS final rule (84 FR 38791 through
38795), provide a foundation for building out nutrition measures.
We are soliciting comment on ways to improve patient well-being
across the Medicare programs and we remain committed to identifying the
needs of residents and supporting SNFs in addressing those risks in a
way that best accounts for residents' clinical circumstances with
minimal burden. We also remain committed to supporting SNFs and their
staff in addressing health risks and needs of at-risk populations such
as those experiencing challenges with maintaining healthy nutrition and
physical activity levels and managing or improving chronic stressors,
mental health concerns, and chronic diseases.
Comment: A few commenters opposed to the removal of the four SDOH
items from the SNF QRP were concerned that many healthcare facilities
across the country have already made substantial investments to
incorporate the screening of these SDOH items, including setting up
systems, EHRs, and workflows. These commenters stated that this would
amount to more than ongoing implementation costs, and that hospitals
and other settings expecting to report these items have already
expended the necessary resources to set up their systems and referral
programs. These commenters stated that removing these measures does not
negate their prior investments and may result in additional resources
to rework their systems.
Similarly, a few commenters who supported the removal had concerns
about the proposed effective date for removal, stating that there may
be challenges for health IT companies to revise and deploy system
updates to the MDS in time to meet potential compliance requirements,
particularly if CMS does not finalize the proposal to remove. One of
these commenters noted that this results in a significant risk of
wasted resources, including design, coding, testing, and integration,
that could be spent elsewhere to serve SNF providers and patients.
These commenters encouraged CMS to consider mechanisms to provide
earlier clarity in future rulemaking to prevent similar inefficiencies.
Response: We acknowledge the commenters' concerns and understand
the time and resources that SNFs may have spent anticipating the
requirement to collect these items as part of the SNF QRP. Since the
inception and initial development of the SNF QRP, interested parties
have requested we provide draft specifications for the upcoming release
of the revised MDS as early as possible. We have been responsive to
this request and aim to provide as much information as possible when
that information is available. For our proposal to remove the four SDOH
items, we posted two sets of draft MDS data specifications so SNFs and
their staff could understand what would need to be done if the proposal
was finalized. However, we would like to emphasize that the information
released consists of draft MDS data specifications, not final
specifications, and that the MDS data specifications cannot be
finalized until CMS policies are finalized after the final rule is
released.
We also note that the time and resources spent to build technical
infrastructure accounts for only a portion of the overall cost we
considered, which also includes training activities, continuous data
collection, reviews of the guidance manuals, and other implementation
tasks. Collecting these SDOH items is not a one-time task but an
ongoing requirement for every SNF resident admitted to the facility. As
a result, we believe removing these items before data collection begins
will still save SNFs and their staff time, money, and resources.
After consideration of the public comments, we are finalizing our
proposal to remove four standardized patient assessment data elements
(one item for Living Situation (R0310); two items for Food (R0320A and
R0320B); and one item for Utilities (R0330)) collected under the SDOH
category from the SNF QRP beginning with the FY 2027 SNF QRP without
modification.
D. Reconsideration Request Policy and Process
1. Background
In the FY 2016 SNF PPS final rule (80 FR 46460 and 46461), we
finalized the SNF QRP Reconsideration policy and process whereby a SNF
may request reconsideration of an initial determination that the SNF
did not comply with the SNF QRP reporting requirements, warranting the
reduction of the SNF's annual market basket percentage by 2 percent for
the applicable FY as required by section 1888(e)(6)(A) of the Act. In
that rule, we stated that the SNF may file a request for
reconsideration if they believe that the finding of noncompliance is
erroneous, have submitted a request for extension or exception that has
not yet been decided, or have been granted an extension or exception
(80 FR 46460). We further finalized that, as part of the SNF's request
for reconsideration, the SNF must submit all supporting documentation
and evidence demonstrating full compliance with all SNF QRP reporting
requirements for the applicable FY, that the SNF requested an extension
or exception for which a decision has not yet been made, that the SNF
has been granted an extension or exception, or the SNF has experienced
an extenuating circumstance as defined in the FY 2016 SNF PPS final
rule for the ECE policy (80 FR 46459) but failed to file a timely
request of exception (80 FR 46460). We finalized that we would not
review any reconsideration request that fails to provide the necessary
documentation and evidence along with the request (80 FR 46460).
In the FY 2016 SNF PPS final rule, we provided that a SNF generally
must submit its request for reconsideration within 30 days from the
date of initial notification of noncompliance (80 FR 46460). However,
we finalized that, in very limited circumstances, we may grant a
request by a SNF to extend the 30-day deadline for their
reconsideration requests (80 FR 46460). We stated that, to extend the
deadline, SNFs would have to request an extension and demonstrate that
``extenuating circumstances'' prevented the filing of the
reconsideration request by the 30-day deadline (80 FR 46460).
We finalized other procedural requirements for SNFs to request a
reconsideration in the FY 2016 SNF PPS final rule, including submission
of their request via electronic mail to CMS (80 FR 46460 and 46461). We
also provided that, if a SNF is dissatisfied with our decision
regarding their reconsideration request, the SNF may file an appeal
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with the Provider Reimbursement Review Board (80 FR 46461).
In the FY 2018 SNF PPS final rule (82 FR 36606; 82 FR 36634 and
36635), we codified the SNF QRP's reconsideration policy, as previously
finalized, at Sec. 413.360(d). Subsequently, we have finalized minor
amendments to Sec. 413.360(d)(1) and (d)(4) to reflect updates to our
methods for communicating our notifications of noncompliance and
reconsideration request decisions (83 FR 39270 and 39271; 83 FR 39290;
84 FR 38817; 84 FR 38832 and 38833).
Section 413.360(d) addresses how we send our written notification
of noncompliance to a SNF, the process for a SNF to request
reconsideration, what information a SNF must include with its
reconsideration request (for example, reason(s) for requesting
reconsideration, including all supporting documentation), that we will
not consider a reconsideration request unless the SNF has complied
fully with the procedural requirements, and how we notify the SNF of
our final decision regarding its reconsideration request.
In the proposed rule, we sought to clarify the inconsistencies in
our preamble and regulation text regarding SNF requests for
reconsideration.
2. Allow SNFs To Request an Extension To File a Request for
Reconsideration
As previously stated, in the FY 2016 SNF PPS final rule, in limited
circumstances, we may grant a request by a SNF to extend the deadline
to submit its reconsideration request, so long as the SNF requested the
extension and demonstrated that extenuating circumstances existed that
prevented it filing a reconsideration request by the 30-day deadline
(80 FR 46460). We did not codify this policy, permitting SNFs to
request an extension to file their reconsideration request, at Sec.
413.360(d). In implementing this finalized policy, we have recognized
two areas where further clarity would be beneficial to SNFs.
First, we have not clearly defined or explained the term
``extenuating circumstances'' as used in our reconsideration policy. In
contrast, we use the term ``extraordinary circumstances'' in our
Extraordinary Circumstances Exception and Extension (ECE) policy, at
Sec. 413.360(c). We did explain ``extraordinary circumstances'' in
detail when we originally finalized this ECE policy in the FY 2016 SNF
PPS final rule (80 FR 46459).
On this basis, we proposed to remove the term ``extenuating
circumstances'' as used currently in our reconsideration policy and
replace it with ``extraordinary circumstances.'' Specifically, we
proposed that a SNF may request, and CMS may grant, an extension to
file a reconsideration request if the SNF was affected by an
extraordinary circumstance beyond the control of the SNF (for example,
a natural or man-made disaster). By modifying the basis by which a SNF
may request an extension to file a reconsideration request in this
manner, we also proposed to incorporate our prior explanation regarding
the meaning of extraordinary circumstances, as set forth in the FY 2016
SNF PPS final rule (80 FR 46459) as part of our Extraordinary
Circumstance Exception and Extension (ECE) policy.
Second, we recognized areas in our policy where SNFs may benefit
from clearly demarcated deadlines. Although we believe a SNF would have
an interest in requesting for an extension to file a reconsideration
request prior to the deadline, our policy currently does not specify a
deadline for a SNF to submit its request for such an extension (80 FR
46460). Our policy also provides that, to support such request, the SNF
must demonstrate that extenuating circumstances existed that prevented
filing the reconsideration request by the 30-day deadline (80 FR
46460). However, we have not specified a temporal relationship between
when the extenuating circumstances occurred and the reconsideration
request deadline. We believe SNFs may benefit from further specificity
regarding these requirements for submitting a request to extend the
deadline to file a reconsideration request.
On this basis, we proposed to amend our reconsideration policy at
Sec. 413.360(d) to permit a SNF to request, and CMS to grant, an
extension to file a request for reconsideration of a noncompliance
determination if, during the period to request a reconsideration as set
forth in Sec. 413.360(d)(1), the SNF was affected by an extraordinary
circumstance beyond the control of the SNF (for example, a natural or
man-made disaster). We proposed that the SNF must submit its request
for an extension to file a reconsideration request to CMS via email to
[email protected] no later than 30 calendar days from
the date of the written notification of noncompliance. We proposed that
the SNF's extension request, submitted to CMS, must contain all of the
following information: (1) the SNF's CCN; (2) the SNF's business name;
(3) the SNF's business address; (4) certain contact information for the
SNF's chief executive officer or designated personnel; (5) a statement
of the reason for the request for the extension; and (6) evidence of
the impact of the extraordinary circumstances, including, for example,
photographs, newspaper articles, and other media. We proposed this
process at Sec. 413.360(d)(5).
We further proposed that we will notify the SNF in writing of its
final decision regarding its request for an extension to file a
reconsideration of noncompliance request via an email from us. We
proposed to notify the SNF in writing via email because this will allow
for more expedient correspondence with the SNF, given the 30-day
reconsideration timeframe. We proposed this process at Sec.
413.360(d)(6).
We are considering similar proposals across all post-acute care
setting quality reporting programs to more closely align the
reconsideration processes. On average, over the last 3 years, we have
received 202 reconsideration requests annually from SNFs. If all these
SNFs submitted an extension to file a reconsideration request to us, we
estimated 51 hours total of administrative burden at an increased cost
of $2,391.90 for these SNFs in the proposed rule (90 FR 18606). We
refer readers to section IX.A.6.b. of this final rule for details on
this estimated increase in burden.
The following is a summary of the public comments received on the
proposals to amend the SNF QRP reconsideration policy to permit SNFs to
request an extension to file a reconsideration request at Sec. Sec.
413.360(d)(5) and (d)(6), along with our responses.
Comment: Several commenters expressed their support for this
proposal. A few commenters noted their support and appreciation for CMS
increasing clarity and consistency among program policies. One
commenter agreed that flexibility with requesting reconsideration,
including filing extensions, will help SNFs better manage disasters.
Response: We thank commenters for their support.
Comment: A few commenters were supportive of our efforts to clarify
the reconsideration request process but expressed some concerns.
Several of these commenters had concerns regarding shortening the
request timeframe to 30 days. Two of these commenters stated that
during an emergency, facility leadership must focus on patient safety.
They stated that CMS should allow for flexible, case-by-case deadline
extensions. One of these commenters suggested that the extensions be
case-by-case but not exceed 4.5 months. Another commenter suggested the
reduction to 30 days may
[[Page 37338]]
be insufficient as a hospital may still be dealing with a disaster
during that time frame and suggested that CMS should set the minimum
timeframe at no less than 60 days.
Response: We appreciate the commenters' concerns and
recommendations, though we find aspects of the comments to be unclear.
We interpret the commenters to mean that they believed our proposed 30-
day deadline would apply to the exception and extension (ECE) process
for data submission, rather than the reconsideration process following
a determination of noncompliance. To clarify, the ECE policy--which
applies during the reporting period--allows SNFs 90 days from the date
of an event occurring due to extraordinary circumstances to request an
exception or extension for data submission (Sec. 413.360(c)(2)). We
did not propose to modify that 90-day timeframe under this proposal or
otherwise in the FY 2026 SNF PPS proposed rule.
We wish to clarify that this proposal does not reduce the window
for a SNF to request an exception or extension for data submission
during the reporting year. Rather, this proposal only speaks to the
annual Reconsideration request process. Because our policy did not
specify a deadline for a SNF to submit its request for such an
extension (80 FR 46460), we are providing a clear timeframe of 30 days
for this process.
We proposed to establish and codify that SNFs impacted by an
extraordinary circumstance beyond the control of the SNF have 30
calendar days from the date of the written notification of
noncompliance to submit a request for an extension to file a
reconsideration request; this would be separate from the ECE policy
that applies to SNFs. SNFs would still have 90 days to submit an
exception and extension request from the time of an event occurring due
to extraordinary circumstances (Sec. 413.360(c)(2)), and 30 days from
the initial notification of noncompliance to submit a request for
reconsideration (Sec. 413.360(d)(1)).
This proposal introduces a new, clearly defined process for
requesting an extension to file a reconsideration request--something
not previously codified. We interpret the commenters' concern as
reflecting the absence of a clear process in the past, and we believe
formalizing a 30-day timeframe will help ensure transparency and
consistency across SNFs.
We further believe that this process helps reduce administrative
burden in the context of extraordinary circumstances. By enabling SNFs
to request more time to prepare a reconsideration submission when
needed, this proposal is designed to offer flexibility--not restrict
it.
Regarding commenters' requests to extend the timeframe, we believe
that the 30-day timeframe for requesting an extension to file a
reconsideration request is appropriate for the SNF QRP. This 30-day
timeframe allows for the opportunity to resolve issues early in the
process when we have dedicated resources to considering all
reconsideration requests before payment changes are applied to SNFs
annual payment. It also aligns with the reconsideration extension
request deadlines being proposed for the IRF QRP (90 FR 18551 through
18553) and LTCH QRP (90 FR 18350 through 18352).
Comment: A couple commenters were supportive of the proposed
changes but expressed concerns about the overall reconsideration
process. One of these commenters expressed concerns over the estimated
increase in burden for SNFs that request an extension to file a
reconsideration request. This commenter suggested that CMS streamline
the process through simplifying the application process, providing
clearer guidance on documentation types, or offering technical
assistance to SNFs unfamiliar with the process. Another of these
commenters agreed with clarifying the process and recommended that CMS
issue subregulatory guidance on expectations and documentation
requirements.
Response: We appreciate the commenters' concerns and
recommendations. This proposed policy update does not add any
additional burden to the majority of SNFs; only those who request an
extension to file a reconsideration request. Permitting a SNF to
request an extension to file a reconsideration may ultimately relieve
burden for the SNF faced with extraordinary circumstances by giving
them more time to put together their reconsideration application if
such an event were to occur. Regarding the comments recommending that
we issue subregulatory guidance to clarify expectations and
documentation requirements, we are committed to ensuring transparency
and will consider whether additional guidance is needed to support SNF
providers in understanding and meeting these requirements. We will
continue to engage with interested parties and evaluate the need for
subregulatory materials to facilitate consistent application and
compliance across SNFs.
Comment: One commenter opposed the proposal to replace
``extenuating circumstances'' with ``extraordinary circumstances'' as
they noted ``extenuating'' provides a flexible standard that matches
the variability of SNF environments. This commenter stated it was
unlikely that SNFs are taking advantage of the standard outside of when
it is necessary. They recommended that CMS keep the reconsideration
process fair, accessible, and grounded in a standard that allows good
faith challenges to succeed.
Response: As stated in the proposed rule, we have not clearly
defined or explained the term ``extenuating circumstances'' as used in
our reconsideration policy (90 FR 18606). Conversely, we use the term
``extraordinary circumstances'' in our Extraordinary Circumstances
Exception and Extension (ECE) policy, at Sec. 413.360(c). We did
explain ``extraordinary circumstances'' in detail when we originally
finalized this ECE policy in the FY 2016 SNF PPS final rule (80 FR
46459). We believe aligning this language across the two processes
provides increased clarity for SNFs regarding the requirements for
submitting a reconsideration request and allows for acceptable
flexibility.
Additionally, we want to align with other post-acute quality
reporting programs' policies and processes regarding
reconsideration.4 5 Our intent is to allow for the SNF QRP,
as well as the IRF QRP and LTCH QRPs, to file a reconsideration request
in the event of extraordinary circumstances beyond the control of the
facility (for example, a natural or man-made disaster).
---------------------------------------------------------------------------
\4\ Medicare Program; Inpatient Rehabilitation Facility
Prospective Payment System for Federal Fiscal Year 2026 and Updates
to the IRF Quality Reporting Program: https://www.federalregister.gov/documents/2025/04/30/2025-06336/medicare-program-inpatient-rehabilitation-facility-prospective-payment-system-for-federal-fiscal#h-35.
\5\ Medicare Program; Hospital Inpatient Prospective Payment
Systems for Acute Care Hospitals and the Long-Term Care Hospital
Prospective Payment System and Policy Changes and Fiscal Year 2026
Rates; Requirements for Quality Programs; and Other Policy Changes:
https://www.federalregister.gov/documents/2025/04/30/2025-06271/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-and-the.
---------------------------------------------------------------------------
After consideration of the public comments, we are finalizing our
proposal to amend the SNF QRP reconsideration policy to permit SNFs to
request an extension to file a reconsideration request, and to codify
this proposed policy and process at Sec. Sec. 413.360(d)(5) and
(d)(6), without modification.
[[Page 37339]]
3. Update the Bases on Which CMS Can Grant a Reconsideration Request
As previously stated, in FY 2016 SNF PPS final rule (80 FR 46460),
the SNF may file a request for reconsideration if they believe that the
finding of noncompliance is erroneous, have submitted a request for
extension or exception that has not yet been decided, or have been
granted an extension or exception (80 FR 46460). We further finalized
that, as part of the SNF's request for reconsideration, the SNF must
submit all supporting documentation and evidence demonstrating full
compliance with all SNF QRP reporting requirements for the applicable
FY, that the SNF requested an extension or exception for which a
decision has not yet been made, that the SNF has been granted an
extension or exception, or the SNF has experienced an extenuating
circumstance as defined in the FY 2016 SNF PPS final rule for the ECE
policy (80 FR 46459) but failed to file a timely request of exception
(80 FR 46460). We also finalized in the FY 2016 SNF PPS final rule that
we would not review any reconsideration request that fails to provide
the necessary documentation and evidence along with the request (80 FR
46460).
As previously stated, we codified our reconsideration policy at
Sec. 413.360(d) in the FY 2018 SNF PPS final rule (82 FR 36606; 82 FR
36634 and 36635). Section 413.360(d)(2)(vi) requires that a SNF's
request for reconsideration include the reason(s) for requesting
reconsideration including all supporting documentation. Section
413.360(d)(3) provides that we will not consider a reconsideration
request unless the SNF has complied fully with the requirements of
Sec. 413.360(d)(2), governing submission of its reconsideration
request. We will notify the SNF in writing regarding our final decision
on its reconsideration request in accordance with Sec. 413.360(d)(4).
We believe it would be beneficial for SNFs if we codify our specific
bases for granting a reconsideration request in our regulation at Sec.
413.360(d).
We proposed to modify our reconsideration policy to provide that we
will grant a timely request for reconsideration, and reverse an initial
finding of non-compliance, only if CMS determines that the SNF was in
full compliance with the SNF QRP requirements for the applicable
program year. We stated that we would consider full compliance with the
SNF QRP requirements to include us granting an exception or extension
to SNF QRP reporting requirements under our ECE policy at Sec.
413.360(c) (90 FR 18607). However, to demonstrate full compliance with
our ECE policy, we stated that the SNF would need to comply with our
ECE policy's requirements, including the specific scope of the
exception or extension as granted by us (90 FR 18607).
We proposed to revise Sec. 413.360(d)(4) to modified policy in our
regulation. We proposed that the remainder of the text at Sec.
413.360(d)(4) would remain the same. We noted that we are considering
similar proposals across all post-acute care quality reporting programs
to more closely align the reconsideration policies and processes.
We solicited comments on our proposals to amend, and codify at
Sec. 413.360(d)(4), the bases by which we grant a reconsideration
request under the SNF QRP Reconsideration policy.
The following is a summary of the public comments received on the
proposal to amend, and codify at Sec. 413.360(d)(4), the bases by
which we grant a reconsideration request under the SNF QRP
Reconsideration policy, along with our responses.
Comment: One commenter requested that CMS account for technical
errors made while fulfilling compliance requirements and consider a
materiality threshold for technical errors that do not impact care
quality.
Response: We appreciate the suggestion to account for technical
errors made in good faith when fulfilling compliance requirements and
to consider a materiality threshold for errors that do not impact care
quality. While we recognize that some facilities may experience
unintended technical issues during data submission, we believe it is
critical to maintain consistent standards to ensure the accuracy and
completeness of quality data across SNFs. We will consider whether
there are opportunities to clarify how technical errors are evaluated
within the reconsideration process, while continuing to prioritize data
integrity and fair application of reporting requirements.
We are finalizing our proposals to amend the bases by which we
grant a reconsideration request under the SNF QRP Reconsideration
policy and codify this policy at Sec. 413.360(d)(4), with a minor
technical modification to refer to the regulated entity in the singular
instead of plural form (that is, the SNF instead of SNFs).
E. SNF QRP Measure Concepts Under Consideration for Future Years--
Request for Information (RFI): Interoperability, Well-Being, Nutrition
& Delirium
In the FY 2026 proposed rule, we solicited comments on the
importance, relevance, appropriateness, and applicability of each of
the quality measure concepts under consideration listed in Table C13
for future years in the SNF QRP. As we review new measure concepts, CMS
will prioritize outcome measures that are evidence-based. In the FY
2025 SNF PPS proposed rule (89 FR 23468 through 23469), we included an
RFI on a set of principles for selecting and prioritizing SNF QRP
measures, identifying measurement gaps, and suitable measures for
filling these gaps. We refer readers to the FY 2025 SNF PPS final rule
(89 FR 64112 through 64114) for a summary of the public comments
received in response to the RFI.
We refer readers to the FY 2026 SNF PPS proposed rule (90 FR 18607
through 18608) for a description of each of the quality measure
concepts under consideration for this RFI. The following is a summary
of the comments received on the RFI regarding four concepts for future
measures for the SNF QRP, along with our response received public
comments on this RFI.
[GRAPHIC] [TIFF OMITTED] TR04AU25.018
[[Page 37340]]
1. Interoperability
Comments: Several commenters supported a measure of
interoperability, saying that seamless exchange of information across
case settings is critical for timely care and safety and improves care
coordination and communication. These commenters noted the effort to
capture the extent of adoption of these systems is a step towards
encouraging interoperability. Commenters noted the importance of
interoperability between communicating parties, across care settings,
and its importance for data collection and use.
Several commenters stressed the importance of understanding the
current state of data interoperability among SNFs. Two commenters
stated that SNFs may have trouble with interoperable data exchange
because of their reliance on certified EHR technology (CEHRT) and
uneven adoption across PAC settings. A couple of these commenters noted
the broad range of capabilities across SNFs, stating that some use
advanced EHRs while others rely on paper records. These commenters also
stated that the scale and complexity required for true interoperability
is a barrier as crucial details, such as maintaining an up-to-date SNF
provider directory, need to be addressed first. Another commenter
stated that some licensed healthcare professionals have limited data
capture in EHR systems, and that limitation can cause their
contributions to care quality and outcomes to be overlooked. Two more
commenters emphasized that adoption of EHR in residential settings is
limited, modernization remains slow, and that CMS may be overestimating
the readiness and abilities of SNFs related to interoperability.
Additional commenters stated CMS needs to consider the lack of uniform
standards in EHR systems and the inconsistent data formatting before
they implement an interoperability measure. A sixth commenter shared
that a limited number of hospitals are able to send interoperable
health information to SNFs and work arounds using not standardized or
interoperable approaches are commonplace when sharing between care
partners. Finally, one commenter stated that workforce readiness
impacts achieving interoperability, as frontline staff often default to
manual processes over electronic ones.
A few commenters were concerned that SNFs do not currently have the
financial or technical infrastructure to support robust
interoperability. A few commenters noted that SNFs were not eligible
for incentives under the Health Information Technology for Economic and
Clinical Health (HITECH) Act (Pub. Law 111-5) and without those
incentives there are significant financial barriers to health IT
adoption. Commenters recommended that CMS should provide financial/
technical support, identify sustainable funding mechanisms, or develop
incentives and grant opportunities specifically targeting rural and
nonprofit SNFs to accelerate interoperability while avoiding unfunded
mandates. One commenter recommended providing additional funding
through the New Technology Add-on Payments Program or through the Civil
Money Penalty Reinvestment Program. Other commenters suggested CMS
build upon the HITECH model to provide support for those previously
excluded from the model.
Several commenters wrote in opposition to an interoperability
measure at this time. One commenter suggested that CMS should focus
initial interoperability efforts on upstream partners, like hospitals
and state health departments, before implementing measures for SNFs.
Another commenter opposed a future interoperability measure stating
that the measure would increase administrative burden in a way that
nursing homes are not equipped to undertake at this time. A second
commenter opposed adding new measures that increase burden without
demonstrated improvement in outcomes. A third commenter opposed the
creation of the measure, as interoperability requirements are already
governed by the Information Blocking regulations. This commenter
recommended CMS focus on quality-of-care measures and stated that a
measure of interoperability would not necessarily help clinicians
improve their care quality. A fourth commenter expressed that the
variation in technology use at SNFs does not inherently reflect
variation in the quality of care being provided.
Commenters recommended that the developed measure focus on
measuring implementation of interoperability. One commenter recommended
that CMS consider existing interoperability measures of successful
implementation of interoperability. A second commenter stated that CMS
might consider measuring participation in the federal health IT
initiative. Another commenter recommended that CMS should utilize
existing items already collected in the MDS when developing the new
measure. A couple of commenters recommended CMS examine the
effectiveness of previous policies and encouraged alignment with other
interoperability programs in different QRPs. Two commenters mentioned
an instrument they had developed that could assess adoption of EHRs and
suggested the instrument could be helpful to CMS in understanding where
SNFs are with EHR adoption. A few commenters provided support for the
Post-Acute Care InterOperability (PACIO) project,\6\ noting its promise
in advancing interoperable health data exchange in post-acute care, and
recommended CMS continue their support of the project. A few of these
commenters suggested CMS consider a phased approach and pair the
measure with resources, support, and financial incentives. Another
commenter recommended that Automated Dispensing Cabinets be added
within the scope of the measure as optimizing medication management in
a vulnerable population is important. Lastly, a commenter recommended
that an interoperability measure should be informed by the use of
automated exchange metrics to support validation and reporting of the
measure, instead of manual attestation of interoperability by
facilities. This commenter also recommended an interoperability measure
that captures workflow transformations in a facility, such as the
number of paper or manual processes that have been converted to
interoperable exchanges. This commenter recommended the measure use a
stepwise approach that measures performance based on the SNFs level of
interoperability maturity.
---------------------------------------------------------------------------
\6\ For more information on the Post-Acute Care InterOperability
(PACIO) project, see: https://pacioproject.org/.
---------------------------------------------------------------------------
Several commenters stated that CMS should not penalize SNFs based
on the measure of interoperability and that the goal of the measure
should be to collect information and identify gaps and challenges. One
commenter recommended that the developed measure should only be used
for public reporting or quality improvement organizations support
purposes, stating there is value in being able to compare
interoperability capabilities and value in quality improvement
organizations having the necessary information to identify and support
SNFs in their digital development. Other commenters believe that public
reporting should include context about the facility's infrastructure,
progress toward interoperability, and commitment to quality. A third
commenter believes CMS should not publicly report data for individual
SNFs but instead suggest state or regional aggregated reporting.
[[Page 37341]]
One commenter recommended several steps they believe are necessary
to facilitate interoperability growth before holding SNFs accountable
through public reporting and penalties associated with an
interoperability measure. These steps included collaborating with
interested parties to establish how CMS will determine a SNF's digital
capabilities, focusing on intentional and incremental approaches to
adopting policy and health IT specifications, considering the
complexities of relationships with other healthcare partners, and
recognizing the differences in patient populations and care needs
2. Well-Being
Comments: Several commenters supported well-being as a future
concept under the SNF QRP and expressed the value in having a measure
that captures patient states holistically and informs patient's needs
and goals. A few commenters cautioned CMS that well-being will be
difficult to define and encouraged the assessment of well-being through
validated measures. One commenter emphasized that a measure on well-
being should exist alongside SDOH measures and not supplant them.
Another commenter supported the measure but cautioned that it seemed
more subjective and therefore difficult to standardize, and that CMS
should utilize existing well-being related data and existing measures.
One commenter stated that the use of existing tools should be
standardized. Another commenter voiced similar concerns, citing the
possibility for redundancy and expanding beyond the scope of the IMPACT
Act. One commenter stated that a clarified goal is required to
determine the best tool to capture data for a well-being measure.
A few commenters provided recommendations for CMS to include
palliative care for SNF patients within a well-being measure, and to
tailor the measure to be modifiable based on the patient's clinical
situation and their goals, preferences, and living situation after
leaving SNF care. Other commenters recommended roles and staff members
that may be best suited to implement and track factors related to well-
being (for example, recreational therapists, occupational therapists,
registered dietician nutritionists, social workers, and activity
planning staff).
A few commenters questioned whether a single, standardized item
could meaningfully capture a resident's emotional or psychosocial
status and recommended that CMS consider reinstating the full Patient
Health Questionnaire-9 (PHQ-9) interview, which was recently scaled
back. One commenter recommended setting it up as a patient-reported
outcome. Other commenters recommended other measures and tools, for
example, PROMIS[supreg] (Patient-Reported Outcomes Measurement
Information System) measures and the Ambulatory Palliative Care
Patients' Experience of Feeling Heard and Understood (``Feeling Heard
and Understood'') quality measure within the Merit-based Incentive
Payment System (MIPS) or pointed to using data already collected by
SNFs (for example, items in Section GG in the MDS). One commenter
recommended CMS consider the impact of pain on patient well-being.
Some commenters cautioned against implementing new measures without
demonstrated improvement in outcomes. One commenter emphasized that
this puts smaller and more rural SNFs at risk of penalties for
community-level factors they cannot influence, and another commenter
stated that factors related to SDOH and well-being are not reflective
of the quality of care delivered in the facility and are out of the
SNF's control. Other commenters stated potential increases in burden on
SNF and their staff.
3. Nutrition
Comment: A few commenters voiced their support of the nutrition
measure. One commenter stated the importance of nutrition screenings
and individualized input. Another commenter emphasized the role of
nutrition in protecting independence, functional ability, and quality-
of-life through proper preventative care and therapy. Other commenters
stated that it is important to address nutrition but encouraged CMS to
use data elements already in place to assess nutrition thereby reducing
SNF provider burden.
A couple of commenters recommended staff that would be best suited
to implement the measure (for example, registered dieticians,
nutritionists, speech language pathologists for the treatment of
swallowing and feeding disorders). Another commenter supported
measuring nutrition, citing that malnutrition can worsen health
conditions and lead to higher rates of hospital readmissions, and
encouraged CMS to prioritize measures that link nutrition status to
care plans, leverage interdisciplinary workflows, and minimize
redundancy. Some commenters recommended tools for CMS's consideration.
Another commenter recommended that a nutrition measure should consider
the amount of money facilities spend on food per resident, the
nutritional content of food in nursing homes, food safety, resident
satisfaction, and job satisfaction of support staff. Another commenter
supported the measure if it utilizes existing nutrition-related data
and existing measures.
Some commenters had concerns about the measure concept. One
commenter cautioned CMS that nutrition measures will require additional
considerations that vary by patient, including quantity of sleep and
type of physical activity. A few commenters had concerns about cultural
preferences, dietary restrictions, and lifelong eating patterns that
are outside the SNFs control. One commenter stated that SNFs should not
be penalized based on nutritional outcomes.
Other commenters opposed the nutrition measure as it may not be a
meaningful reflection of the SNF care given to residents. A few
commenters opposed nutrition, stating that it is not aligned with the
purpose and scope of a SNF stay. Another commenter stated that the
concept is vague, and it does not clearly differentiate between the
needs of beneficiaries requiring short-term or long-term care, or the
needs of the beneficiary after they have returned to the community.
They recommended several SNF 5-Star quality measures that address the
concept of nutritional status for use in the SNF QRP. Another commenter
stated that this overlaps with existing measures and would increase
burden.
4. Delirium
Comment: Several commenters supported a delirium measure in the SNF
QRP, stating it offered clinical value, and that delirium is alarmingly
common in SNFs. One commenter recommended using Digital Quality
Measures (dQMs) to help track the symptoms.
A few commenters stated that the adoption of a delirium measure in
the SNF QRP could leverage existing items on the MDS, such as the
validated Confusion Assessment Method (CAM). One commenter voiced
limitations on how the CAM will cover fewer symptom domains than
specialized tools and that there could be reliability concerns with
untrained staff administering the assessments. Another commenter voiced
similar concerns, stating restrictive reporting requirements of the MDS
mean the CAM is completed too infrequently to capture or monitor for
delirium in real-time. A few commenters suggested assessment tools for
CMS to consider including the Delirium-O-Meter, CAM-S Confusional State
Examination, Delirium
[[Page 37342]]
Observation Scale, Delirium Rating Scale, Memorial Delirium Assessment
Scale and INTERACT (Interventions to Reduce Acute Care Transfers).
A few commenters cautioned that delirium frequently arises from
factors outside the direct control of the SNF (for example, resulting
from infection, illness, medication changes, or even a change in the
environment) and may not accurately reflect SNF performance. While SNF
staff need to closely monitor and address symptoms of delirium, it
should not be a condition for which quality is measured. Though
supportive of a delirium measure, one commenter cautioned that
detection is often underreported, and they recommended that delirium
incidence alone should not be the quality metric as this would be
inaccurate. Another commenter noted that a delirium measure should
promote the SNF working with the hospitals prior to discharge to the
SNF, since patients often have delirium upon SNF admission.
Several commenters opposed including delirium in future concepts
under the SNF QRP. Some commenters stated that reporting the measure
may add reporting burden and that delirium is difficult to monitor and
quantify, which would impact the feasibility of this concept as a
standardized quality measure. One commenter noted the impact that
additional QRP measures generally could have on small, rural SNFs.
Response: We thank all the commenters for responding to this RFI.
While we are not responding to specific comments in response to the RFI
in this final rule, we will take this feedback into consideration for
our future measure development efforts for the SNF QRP.
F. Final Data Submission Deadline From 4.5 Months to 45 Days--Request
for Information (RFI)
Sections 1899B(f) and (g) of the Act require CMS to provide
feedback to SNFs and to publicly report their performance on SNF
quality measures specified under section 1899B(c)(1) of the Act and
resource use and other measures specified under 1899B(d)(1) of the Act.
More specifically, section 1899B(f)(1) of the Act requires the
Secretary to provide confidential feedback reports to SNFs on their
performance on the quality, resource use, and other measures specified
under section 1899B(c)(1) and (d)(1) of the Act. Section 1899B(f)(2) of
the Act provides that, to the extent feasible, the Secretary must make
these confidential feedback reports available, no less than on a
quarterly basis except in the case of measures reported on an annual
basis, in which case confidential feedback reports may be made
available annually. Additionally, section 1899B(g)(1) of the Act
requires the Secretary to provide for the public reporting of each
SNFs' performance on the quality measures, resource use, and other
measures specified under sections 1899B(c)(1) and (d)(1) of the Act by
establishing procedures for making the performance data available to
the public. Section 1899B(g)(2) of the Act specifically requires that
such procedures must ensure, including through a process consistent
with the process applied under section 1886(b)(3)(B)(viii)(VII) of the
Act, that SNFs can review and submit corrections to the data and other
information before it is made public.
Although sections 1899B(f) and (g) of the Act require the provision
of confidential feedback reports and public reporting of SNF
performance on measures, section 1888(e)(6)(B)(i) of the Act provides
the Secretary with discretion to prescribe the manner and the
timeframes for SNFs to submit data as specified for reporting for the
SNF QRP. In the FY 2017 SNF PPS final rule (81 FR 52042 and 52043), we
finalized that SNFs will have approximately 4.5 months after each
quarterly data collection period to complete their data submissions and
make corrections to such data where necessary. At that time, we
received several comments supporting the alignment of the data
submission and correction timeframes with other quality reporting
programs, but we did not receive any comments on the 4.5-month data
submission timeframe. We refer readers to the FY 2017 SNF PPS final
rule (81 FR 52041 through 52043) for a detailed discussion of our
proposal and summary of comments received and responses thereto.
Public reporting of data collected under quality programs, such as
the SNF QRP, is designed to provide consumers and their families with
the most current information so they can make quality-informed
decisions about where to receive their care. In the process of
implementing the public reporting for the quality reporting programs,
we have identified that the time between when data on measures is
collected and submitted to us and when that data are publicly reported
(that is, approximately 9 months) may be too long to provide the most
accurate and up to date information for the public. For example,
through technical expert panels, we have received feedback from patient
caregiver advocates that the aged data used in publicly reported
quality measures diminishes their value to consumers. Furthermore, we
have heard from SNFs that the SNF QRP measure results they receive
prior to public reporting are not useful for their quality improvement
efforts due to the aged data and the delay in when they receive these
reports.\7\
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\7\ SNF QRP Listening Session Summary: Possible Expansion of MDS
Data Submission to All SNF Residents Regardless of Payer. Available
in the Downloads section of the SNF QRP Measures and Technical
Information web page: https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
---------------------------------------------------------------------------
Currently, the largest contributing factor to the 9-month lag
between the end of the data collection period and when measures are
publicly reported is the 4.5-month timeframe for data submission. If
the data submission timeframe was reduced from 4.5 months to 45 days,
then the lag time between the end of the data collection period and
public reporting of that data could be reduced by up to 3 months. This
revised timeframe would result in more timely public reporting of data
that may provide more value for consumers and families as they make
decisions about where they may want to receive their care.
Additionally, this timeframe provides SNFs with more recent data to use
in their quality improvement activities.
An important consideration in reducing the data submission
timeframe is the potential burden it may place on SNFs, which could
lead to fewer assessments submitted within the shorter 45-day data
submission timeframe. We conducted an analysis to evaluate the
potential impact of reducing the timeframe by determining how many
assessments are currently being submitted within 45 days. Using 2023
data, we identified that only 4.2 percent of all MDS assessments were
submitted after the 45-day timeframe. Of those submissions, about two-
thirds (or 2.8 percent of the total MDS assessments submitted) were
submitted between 45 days and 4.5 months and hence have potential to be
impacted.\8\ On these bases, we believe reducing the SNF QRP data
submission deadline from 4.5 months to 45 days will improve the
timeliness of public reporting by one quarter, which could be
beneficial to both consumers and SNFs, with limited change in burden to
SNFs.
---------------------------------------------------------------------------
\8\ Internal CMS analysis of FY 2023 MDS assessment data.
---------------------------------------------------------------------------
We requested feedback on the potential future reduction of the SNF
QRP data submission deadline from 4.5 months to 45 days that is under
consideration. Specifically, we requested comments on:
[[Page 37343]]
How this potential change could improve the timeliness and
actionability of SNF QRP quality measures;
How this potential change could improve public display of
quality information; and
How this potential change could impact SNF workflows or
require updates to systems.
We stated in the proposed rule that we intend to use this input to
inform our program improvement efforts.
The following is a summary of the public comments received on the
RFI regarding the submission deadline along with our responses.
Comments: A few commenters supported the reduction of the data
submission timeframe, stating that timelier submission will improve the
accuracy of the assessments and facilitate the communication of
clinical feedback to SNFs more quickly. A few commenters stated that
most facilities already comply with this timeframe and believed this
change would have minimal impact on SNF provider burden.
Several commenters supported a change in the timeframe because it
would result in more timely public reporting. A few commenters shared
that SNFs, and other interested parties have complained that the
publicly reported measures are outdated and less meaningful or useful
for quality improvement, and that they provide inaccurate information
to the public about the quality of care in a given nursing home. These
commenters agreed that a shortened time frame will prove more valuable
for consumers, professionals, and facilities.
One commenter stated that this change aligns with CMS's digital
quality measurement (dQM) goals by reducing reliance on retrospective
data and bolstering public trust through timely updates to Care
Compare. They believe that FHIR[supreg]-enabled APIs can streamline
data flows to the internet Quality Improvement and Evaluation System
(iQIES), ensuring rapid validation and public posting.
Several commenters had concerns about a reduction in the data
submission timeframe, citing increased SNF burden as a key concern. A
few of these commenters believed that a 66.67 percent reduction in
reporting time is drastic and unrealistic. Several commenters were
concerned that this could make it difficult to meet data completion and
accuracy thresholds and lead to a decrease in the number of assessments
submitted. These commenters cited current SNF staffing challenges and
overwhelmed MDS coordinators, believing that the stress on SNF
providers outweighs the value of timelier data. A few commenters stated
that the reduced submission window is likely to result in higher error
rates since it reduces the time available for internal data validation
and review. One commenter stated that the change to 45 days will only
hasten the rate of data collection and not the use of data in SNF QRP.
A few commenters cited specific circumstances or events that could
affect facility compliance. One commenter stated that staff turnover
and unforeseen events that do not qualify as Public Health Emergencies
(PHEs) may hinder compliance and should be accounted for. Other
commenters voiced concerns that SNFs in rural areas and/or with limited
resources, size, or technical infrastructure may be disproportionately
impacted by the restricted timeframe. These commenters believe that
these facilities would be more at risk of penalties and reduced
payments if they could not maintain compliance. One commenter
emphasized that CMS should allow flexibility for hardship or rural
status or provide technical assistance to vulnerable facilities to
ensure accuracy and quality.
Several commenters had recommendations for alternate changes to the
timeframe. One commenter recommended CMS consider aligning the revised
timeline to be consistent with other administrative deadlines (for
example, payroll-based journal data for staffing measures). A few
commenters recommended CMS consider aligning with the existing Five-
Star data pull window of approximately 80 to 90 days post-quarter to
reduce confusion, alleviate administrative burdens, and streamline
overall work efforts. A few commenters recommended 60 days as an
alternative, while others suggested a phased implementation approach,
recommending that the reporting deadline should never be fewer than 60
days after the quarter. One commenter suggested that CMS conduct
additional analyses and solicit further input from facilities on what
timeframe would strike the best balance of feasibility and timeliness.
Some commenters addressed logistical implementation challenges. One
commenter, though supportive of efforts to streamline regulations and
increase timeliness of data submissions, expressed concern that
workflow impacts will require adjustments within a much smaller window,
and technological/IT systems will need to be invested in or updated to
accommodate new deadlines. Another commenter supported the change if
CMS implemented communication and reminders to assist facilities. One
commenter recommended that all quality programs align with the revised
timeframe.
Response: We appreciate the input provided by commenters. While we
are not responding to specific comments submitted in response to this
RFI in this final rule, we intend to use this input to inform our
program improvement efforts.
G. Advancing Digital Quality Measurement in the SNF QRP--Request for
Information (RFI)
As part of our effort to advance the digital quality measurement
(dQM) transition, the proposed rule included an RFI to gather broad
public input on the dQM transition in SNFs.
1. Background
We are committed to improving healthcare quality through
measurement, transparency, and public reporting of quality data, and to
enhancing healthcare data exchange by promoting the adoption of
interoperable health IT that enables information exchange using Fast
Healthcare Interoperability Resources[supreg] (FHIR[supreg]) standards.
We proposed to require the use of such technology within the SNF QRP in
the future could potentially enable greater care coordination and
information sharing, which is essential for delivering high-quality,
efficient care and better outcomes at a lower cost. In the FYs 2021,
2022, 2023, and 2024 SNF PPS proposed rules,\9\ we outlined several
Department of Health and Human Services (HHS) initiatives aimed at
promoting the adoption of interoperable health IT and facilitating
nationwide health information exchange. Further, to inform our digital
strategy, in the FY 2022 SNF PPS proposed rule (86 FR 19998) we shared
and sought feedback on the following:
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\9\ ``Advancing Health Information Exchange'' in: FY 2021 SNF
PPS proposed rule (85 FR 20915) https://www.federalregister.gov/documents/2020/04/15/2020-07875/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities#p-60, FY 2022 SNF PPS proposed rule (86 FR 19956) https://www.federalregister.gov/d/2021-07556/p-64, FY 2023 SNF PPS proposed
rule (87 FR 22721) https://www.federalregister.gov/d/2022-07906/p-78, and FY 2024 SNF PPS proposed rule (88 FR 21318) https://www.federalregister.gov/d/2023-07137/p-76.
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Our intent to explore the use of FHIR[supreg]-based
standards to exchange clinical information through application
programming interfaces (APIs).
Enabling quality data submission to CMS through our
internet Quality Improvement and Evaluation System (iQIES).
[[Page 37344]]
To work with healthcare standards organizations to ensure
their standards support our assessment tools.
We considered opportunities to advance FHIR[supreg]-based reporting
of resident assessment data for the submission of the MDS and other
existing systems such as CDC's National Healthcare Safety Network
(NHSN) for which SNFs have current CMS reporting requirements. Our
objective is to explore how SNFs typically integrate technologies with
varying complexity into existing systems and how this affects SNF
workflows. In the proposed rule, we issued this RFI and sought input to
identify the challenges and/or opportunities that may arise during this
integration, and determine the support needed to complete and submit
quality data in ways that protect and enhance care delivery.
We also solicited input on future measures under consideration
including applicability of interoperability as a future measure concept
in post-acute care settings, including the SNF QRP. We refer readers to
the proposed rule (90 FR 18607) for more information.
Any updates specific to the SNF QRP program requirements related to
quality measurement and reporting provisions will be addressed through
separate and future notice-and-comment rulemaking, as necessary.
2. Solicitation for Comment
We solicited comments on the current state of health IT use,
including electronic health records (EHRs), in SNF facilities:
To what extent does your SNF use health IT systems to
maintain and exchange resident records? If your facility has
transitioned to using electronic records in part or in whole, what
types of health IT does your SNF use to maintain resident records? Are
these health IT systems certified under the Office of the National
Coordinator for Health Information Technology (ONC Health IT)
Certification Program? If your facility uses health IT products or
systems that are not certified under the ONC Health IT Certification
Program, please specify. Does your facility use EHRs or other health IT
products or systems that are not certified under the ONC Health IT
Certification Program? If no, what is the reason for not doing so? Do
these other systems exchange data using standards and implementation
specifications adopted by HHS? Does your facility maintain any resident
records outside of these electronic systems? If so, are the data
organized in a structured format, using codes and recognized standards,
that can be exchanged with other systems and providers?
Does your SNF submit resident assessment data to CMS
directly from your health IT system without the assistance of a third-
party intermediary? If a third-party intermediary is used to report
data, what type of intermediary service is used? How does your facility
currently exchange health information with other healthcare providers
or systems, specifically between SNFs and other provider types? What
about health information exchange with other entities, such as public
health agencies? What challenges do you face with electronic exchange
of health information?
Are there any challenges with your current electronic
devices (for example, tablets, smartphones, computers) that hinder your
ability to easily exchange information across systems? Please describe
any specific issues you encounter. Does limited internet or lack of
internet connectivity impact your ability to exchange data with other
healthcare providers, including community-based care services, or your
ability to submit resident assessment data to CMS? Please specify.
What steps does your SNF take with respect to the
implementation of health IT systems to ensure compliance with security
and patient privacy requirements such as the Health Insurance
Portability and Accountability Act (HIPAA)?
Does your SNF refer to the Safety Assurance Factors for
EHR Resilience (SAFER) Guides (see newly revised versions published in
January 2025 at https://www.healthit.gov/topic/safety/safer-guides) to
self-assess EHR safety practices?
What challenges or barriers does your facility encounter
when submitting quality measure data to CMS as part of the SNF QRP?
What opportunities or factors could improve your facility's successful
data submission to CMS?
What types of technical assistance guidance, workforce
trainings, and/or other resources would be most beneficial for the
implementation of FHIR[supreg]-based technology in your facility for
the submission of the MDS to CMS and other existing systems such as
CDC's National Healthcare Safety Network (NHSN) for which SNFs have
current CMS reporting requirements? What strategies can CMS, HHS, or
other federal partners take to ensure that technical assistance is both
comprehensive and user-friendly? How could Quality Improvement
Organizations (QIOs) or other entities enhance this support?
Is your facility using technology that utilizes APIs based
on the FHIR[supreg] standard to enable electronic data sharing? If so,
with whom are you sharing data using the FHIR[supreg] standard and for
what purpose(s)? For example, have you used FHIR[supreg] APIs to share
data with public health agencies? Does your facility use any
Substitutable Medical Applications and Reusable Technologies (SMART) on
FHIR[supreg] applications? If so, are the SMART on FHIR[supreg]
applications integrated with your EHR or other health IT?
How do you anticipate the adoption of technology using
FHIR[supreg]-based APIs to facilitate the reporting of resident
assessment data could impact provider workflows? What impact, if any,
do you anticipate it will have on quality of care?
What benefits or challenges have you experienced with
implementing technology that uses FHIR[supreg]-based APIs? How can
adopting technology that uses FHIR[supreg]-based APIs to facilitate the
reporting of resident assessment data impact provider workflows? What
impact, if any, does adopting this technology have on quality of care?
Does your facility have any experience using technology
that shares electronic health information using one or more versions of
the United States Core Data for Interoperability (USCDI) standard? \10\
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\10\ For more information about USCDI see https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi.
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Would your SNF and/or vendors be interested in
participating in testing to explore options for transmission of
assessments, for example testing the transmission of a FHIR[supreg]-
based assessment to CMS?
How could the Trusted Exchange Framework and Common
AgreementTM (TEFCATM) support CMS quality
programs' adoption of FHIR[supreg]-based assessment submissions
consistent with the FHIR[supreg] Roadmap (available at https://rce.sequoiaproject.org/three-year-fhir-roadmap-for-tefca/)? How might
resident assessment data hold secondary uses for treatment or other
TEFCATM exchange purposes?
What other information should we consider to facilitate
successful adoption and integration of FHIR[supreg]-based technologies
and standardized data for patient/resident assessment instruments like
the MDS? We invite any feedback, suggestions, best practices, or
success stories related to the implementation of these technologies.
We solicited feedback, suggestions, best practices, or success
stories related
[[Page 37345]]
to the implementation of the technologies. We stated in the proposed
rule that we will use this input to inform our future dQM transition
efforts.
The following is a summary of the public comments received on the
RFI along with our responses.
Comments: Many commenters supported the dQM transition and provided
recommendations. Several of these commenters recommended a phased or
``glide path'' approach to implementation. Other commenters recommended
that CMS adopt a timeline that allows for adequate testing, stakeholder
engagement, and resource development. One commenter recommended a
minimum of 12 months and a 3-year voluntary phase.
A few commenters recommended that any changes in regulation related
to technology should include clear technical specifications and
technical assistance. Several commenters recommended that CMS move
submission of the MDS to a FHIR[supreg]-based API via the iQIES portal
to support this transition. One commenter suggested that CMS fund pilot
programs for SNFs to test FHIR[supreg]-based quality reporting. Another
commenter supported moving toward a consistent, single national
standard for transmitting quality data and recommended robust testing
and pilot deployment. One commenter recommended focusing on efforts to
advance interoperability across the care continuum, including SNFs, via
electronic data exchange. Another commenter suggested that CMS work
with vendors to ensure that their systems are compatible with CMS's
requirements.
Several commenters suggested that CMS provide grants or incentives
for the adoption of interoperable health IT. A few commenters suggested
that CMS account for the varying technical capacity among SNFs, citing
their inability to receive funding from programs like Meaningful Use
(previously referred to as the Medicare and Medicaid EHR Incentive
Programs) and Promoting Interoperability programs (currently referred
to as the Medicare Promoting Interoperability Program for eligible
hospitals & critical access hospitals). A few commenters had concerns
about barriers to health IT, with one of the commenters stating that
rural facilities may face significant barriers to internet access and
technical infrastructure. Another stated that siloed data
infrastructure, training, and workforce development could be financial
barriers.
A few commenters had concerns about varying levels of IT and EHR
resources among SNFs. One commenter suggested that CMS monitor and
account for the varying technical capacity among SNFs. Another
commenter requested CMS to clarify how dQM implementation will maintain
equity safeguards to avoid favoring SNFs with more resources and better
digital infrastructure.
Several commenters provided detailed responses to the RFI's
questions about their facility's current state of health IT use,
challenges and/or opportunities that may arise during integration of
technologies with varying complexity into existing SNF systems, how it
affects workflow, and what support may be needed to complete and submit
quality data in ways that protect and enhance care delivery.
Response: We thank commenters for their feedback and will use this
information to inform the transition to dQM in the SNF QRP.
H. Form, Manner, and Timing of Data Submission Under the SNF QRP
We did not propose any new policies regarding the form, manner, and
timing of data submitted under the SNF QRP. We refer readers to the
current regulations text at Sec. 413.360(b) for information regarding
the policies for reporting specified data for the SNF QRP.
I. Policies Regarding Public Display of Measure Data for the SNF QRP
We did not propose any new policies regarding the public display of
measure data. We refer readers to the FY 2017 SNF PPS final rule (81 FR
52045 through 52048) for a discussion of our policies regarding public
display of SNF QRP measure data and procedures for the SNFs to review
and correct data and information prior to their publication.
VII. Updates to the Skilled Nursing Facility Value-Based Purchasing
(SNF VBP) Program
A. Statutory Background
Through the 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-Critical Access Hospitals (CAH)
swing-bed rural hospitals. The SNF VBP Program has helped to transform
how Medicare payment is made for SNF care, moving toward 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.
We received one general comment regarding the SNF VBP Program. The
following is a summary of the comment and our response.
Comment: One commenter recommended consolidating the SNF QRP and
SNF VBP Program into a single, integrated framework to reduce confusion
and ease administrative burden and staffing constraints. For example,
the commenter suggested CMS explore the alignment of data submission
timelines and review and correction periods.
Response: We acknowledge the commenter's concern and thank the
commenter for their feedback. We intend to take this feedback into
consideration as part of our SNF VBP Program monitoring and evaluation
efforts.
B. Removal of the Health Equity Adjustment From the SNF VBP Program
Scoring Methodology
1. Background
In the FY 2024 SNF PPS final rule (88 FR 53304 through 53318), we
adopted a Health Equity Adjustment (HEA) that, beginning with the FY
2027 program year, would reward top tier performing SNFs that serve
higher proportions of SNF residents with dual eligibility status. We
codified the HEA at Sec. 413.338(k) of our regulations. Section
1888(h)(4)(A) of the Act requires the Secretary to develop a
methodology for assessing the total performance of each SNF based on
performance standards established under section 1888(h)(3) of the Act
with respect to the measures applied under section 1888(h)(2) of the
Act.
As previously stated in the FY 2024 SNF PPS final rule, by
providing the HEA to SNFs that serve higher proportions of SNF
residents with dual eligibility status and that perform well on quality
measures, we believed the HEA would appropriately recognize the
resource intensity expended to achieve high performance on quality
measures by SNFs that serve a high proportion of SNF residents with
dual eligibility status, while also mitigating the worse health
outcomes experienced by dually eligible residents through incentivizing
better care across all SNFs.
In the FY 2024 SNF PPS final rule (88 FR 53304 through 53318), we
also finalized a variable payback percentage, increasing the total
amount available for value-based incentive payments for a FY, beginning
with the FY 2027 program year. We codified the increase in the total
amount available for value-
[[Page 37346]]
based incentive payments as appropriate for each FY to account for the
application of the HEA at Sec. 413.338(c)(2)(i). The variable payback
percentage would vary by program year to account for the application of
the HEA such that SNFs that receive the HEA would receive increased
value-based incentive payment amounts, and SNFs that do not receive the
HEA would not experience a decrease in their value-based incentive
payment amount, to the greatest extent possible, relative to no HEA in
the SNF VBP Program and maintaining a payback percentage of 60 percent.
That is, the variable payback percentage confirms that a very limited
number of SNFs (if any) that do not receive HEA bonus points will
experience a downward payment adjustment.
2. Removal of the Health Equity Adjustment Beginning With the FY 2027
Program Year
In the FY 2026 SNF PPS proposed rule (90 FR 18610), we proposed to
remove the HEA because we believed simplifying the SNF VBP Program's
scoring methodology by removing the HEA would improve SNFs'
understanding of the Program and provide clearer incentives for SNFs as
they seek to improve their quality of care for all residents. In
addition, we estimated that the impact of removing the HEA on overall
incentive payment adjustments is small. We conducted an analysis
utilizing FY 2018 through FY 2021 measure data for all 8 measures in
the FY 2028 program year's measure set, estimating that the average
incentive payment multiplier with the HEA would be 0.9924613988 and
without the HEA would be 0.9915553875. Given this relatively small,
estimated impact, and in light of the Administration's priority to
streamline regulations and reduce burdens on those participating in the
Medicare program, we proposed to remove the HEA. We refer readers to
the Supplementary Information, Unleashing Prosperity Through
Deregulation of the Medicare Program--Request for Information section
of the FY 2026 SNF PPS proposed rule (90 FR 18590) for more
information.
We considered altering the structure of the adjustment methodology
to simplify it, but that process will require time to develop and test
a new adjustment and, if pursued, would be addressed in future
rulemaking.
As stated in the FY 2026 SNF PPS proposed rule (90 FR 18610), we
also did not anticipate that any serious reliance interests would be
impacted by our proposal to remove the HEA.
We proposed to codify this removal of the HEA by removing
Sec. Sec. 413.338(k) and (e)(3)(iii) from our regulations, removing
terms related to the HEA in Sec. 413.338(a) of our regulations, and
revising Sec. 413.338(c)(2)(i) of our regulations to remove the
variable payback percentage adopted beginning in the FY 2027 program
year and instead maintain the 60 percent payback percentage adopted
beginning in the FY 2023 program year.
We invited and received public comments on these proposals. The
following is a summary of the comments we received and our responses.
Comment: A few commenters supported or had no objection to CMS'
proposal to remove the HEA. Two commenters supported the removal of the
HEA because of CMS' analysis showing a very small reduction in average
incentive payment multiplier and their belief that this reduction did
not outweigh the likely confusion and administrative burden created by
the HEA. One commenter stated that the HEA resulted in unintended
consequences, such as rewarding SNFs with higher proportions of
residents with dual eligibility status rather than SNFs that care for
higher proportions of residents enrolled only in Medicaid, and
supported the removal of the HEA to reduce administrative burden.
Response: We thank the commenters for their support. We agree that
the removal of the HEA will have a minor impact on the average
incentive payment multiplier and will result in a more efficient and
streamlined scoring methodology.
Comment: Many commenters supported or had no objection to CMS'
proposal to remove the HEA, but also provided recommendations. Many
commenters encouraged CMS to develop an alternative, more comprehensive
methodology to support SNFs caring for vulnerable populations,
incentivize better access to quality care, and incorporate data beyond
dual Medicare and Medicaid eligibility status to address disparities
and account for the relationship between provider performance and
community-level factors. These commenters also recommended reviewing
the approaches of other CMS programs for potential adaptation in the
SNF VBP Program, such as the proposed Transforming Episode
Accountability Model's (TEAM) new beneficiary-economic risk adjustment
factor included in the FY 2026 Hospital Inpatient Prospective Payment
Systems for Acute Care Hospitals and the Long-Term Care Hospital
Prospective Payment System proposed rule (90 FR 18393). One commenter
specifically encouraged the SNF VBP Program to account for differences
in the providers' patient populations by considering an alternative
scoring methodology with a peer-grouping-based design. A few commenters
also recommended CMS advance a methodology that will result in a 70
percent payback percentage if the HEA is removed.
One commenter recommended that CMS provide guidance and training to
SNFs on how to use SDOH information to improve care and outcomes before
connecting health equity outcomes to reimbursement, such as providing
reports with SDOH information through iQIES, CMS's designated system
for distributing the SNF VBP Program's confidential feedback reports to
SNFs, alongside targeting training.
One commenter suggested providing financial support through
increased Medicaid payments to nursing homes would be more effective
than the HEA.
Response: We thank the commenters for their support and
recommendations. As we stated in the FY 2026 SNF PPS proposed rule (90
FR 18610), it will require time to develop and test an alternative,
simplified structure for the HEA's bonus methodology. If pursued, we
will review and consider adjustments adopted in other CMS quality
programs to enhance cross-program alignment whenever feasible and
effective. In addition, if pursued, any new adjustment for the SNF VBP
Program would be addressed in future rulemaking.
With respect to commenters' other recommendations for improving
outcomes, we thank the commenters for their recommendations and will
take them into consideration as part of our monitoring and evaluation
efforts for the SNF VBP Program.
Comment: Many commenters did not support CMS' proposal to remove
the HEA. These commenters noted that caring for vulnerable populations
with more complex social and medical needs, such as dual eligible
residents, often requires additional resources. These commenters stated
their concerns that removal of the HEA could potentially disincentivize
providers from serving those vulnerable and costly residents. These
commenters also referenced various findings that show vulnerable
populations, such as dual eligible residents, are more likely to face
disparities in quality of care and worse outcomes across care settings,
indicating there are opportunities for quality-of-care improvements
which the HEA could help address. A few of these commenters also
recommended that, if the HEA is removed, CMS consider alternative
approaches to account for
[[Page 37347]]
the complex needs of vulnerable populations and to incentivize SNFs
that care for these vulnerable populations, such as by implementing
targeted quality measures to reduce disparities or increasing the
payback percentage. One commenter recommended delaying the removal of
the HEA until a revised methodology is shared for public comment and
recommended also conducting a distributional analysis on the effects of
the HEA removal on diverse populations. One commenter recommended
keeping the HEA but renaming it to the ``Dual Eligible Adjustment'' so
the intent of the adjustment is more accurately reflected.
One commenter noted that the HEA helps create a fairer system for
safety net hospitals serving high numbers of vulnerable patients, and
noted the HEA is aligned with the Hospital Readmission Reduction
Program (HRRP).
A few commenters also stated the need to capture equity information
to improve the quality of care and support the nursing population.
Response: We acknowledge the commenters' concerns and thank the
commenters for their recommendations. With respect to the concerns that
caring for dual eligible residents with more complex social and medical
needs often requires additional resources and that removing the HEA
could potentially disincentivize providing care to those vulnerable and
costly residents, as we noted in the FY 2026 SNF PPS proposed rule (90
FR 18610), we intended for the HEA to appropriately recognize the
resource intensity expended to achieve high performance on quality
measures by SNFs that serve a high proportion of SNF residents with
dual eligibility status. We also intended for the HEA to mitigate the
worse health outcomes experienced by dually eligible residents through
incentivizing better care across all SNFs. However, our analysis, as
described previously and in the FY 2026 SNF PPS proposed rule (90 FR
18610), indicated the HEA did not meaningfully reward SNFs for
achieving high performance on quality measures. The HEA increased the
average incentive payment multiplier by an estimated 0.09 percent,
signaling the HEA would only minimally increase an individual SNF's
incentive payments, and thus we expect the HEA is not likely to
meaningfully incentivize SNFs to admit dual eligible residents with
more complex social and medical needs and achieve high performance on
the Program's quality measures. Although we recognize there are
opportunities for quality-of-care improvements for dually eligible
residents, we do not expect the HEA to capitalize on these
opportunities given its minimal estimated impact, and it will require
time to develop and test a new adjustment for the SNF VBP Program which
more fully addresses these concerns in a simplified approach. If
pursued, a new adjustment would be addressed in future rulemaking.
Also, with respect to commenters' concern about the importance of
data collection, as previously stated, the removal of the HEA would
only simplify the SNF VBP Program's scoring methodology and would have
no implications on CMS' data reporting requirements for SNFs.
Finally, with respect to the commenter's concern about misalignment
with the HRRP, we note that although both the SNF VBP Program's HEA and
the HRRP evaluate beneficiaries who are dually eligible for Medicare
and full Medicaid benefits, the SNF VBP Program and HRRP use different
methodologies. As directed by Section 15002 of the 21st Century Cures
Act, the HRRP uses a peer grouping methodology that assesses hospitals'
performance relative to that of other hospitals with a similar
proportion of stays for dually eligible beneficiaries, while the SNF
VBP Program's HEA does not use a peer grouping methodology.
After consideration of public comments, we are finalizing the
removal of the HEA, and codifying this removal by removing Sec. Sec.
413.338(k) and (e)(3)(iii) from our regulations, removing terms related
to the HEA in Sec. 413.338(a) of our regulations, and revising Sec.
413.338(c)(2)(i) of our regulations to remove the variable payback
percentage adopted beginning in the FY 2027 program year and instead
maintain the 60 percent payback percentage adopted beginning in the FY
2023 program year, as proposed without modification.
C. SNF VBP Program Measures
1. Background
Our current measure selection, retention, and removal policy is
codified at Sec. 413.338(l) of our regulations. We also 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
D14 lists the measures that have been adopted for the SNF VBP Program,
along with their status in the program for the FY 2026 program year
through the FY 2029 program year.
[[Page 37348]]
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While we did not propose any changes to the previously adopted SNF
VBP Program measure set, we received several comments on quality
measurement topics. The following is a summary of the comments and our
responses.
Comment: One commenter supported the current SNF VBP Program
measure set. One commenter supported the current SNF VBP Program
measure set, particularly the inclusion of the staffing-related
measures, but recommended that CMS add a workforce equity measure to
reward nursing homes for offering high quality jobs to historically
undervalued staff. This commenter recommended first building a measure
based on direct worker compensation, then in the future, building a
measure evaluating the quality of health insurance benefits.
One commenter supported the Nursing Staff Turnover measure. One
commenter recommended assessing the accuracy and effectiveness of the
Nursing Staff Turnover measure and considering whether alternative
measures may be more appropriate given the ongoing workforce challenges
in the SNF sector. One commenter recommended changes to the Nursing
Staff Turnover measure, specifically excluding nurses who were moved to
another SNF within the same health system from the measure numerator.
This commenter believed that flexible workforces allow for increased
efficiency and improved quality of care and as a result the measure
should not penalize the health systems that choose to implement this
staffing method.
One commenter did not support the current SNF VBP Program measure
set and recommended that CMS remove the SNF HAI, Total Nurse Staffing,
Nursing Staff Turnover, Falls with Major Injury (Long-Stay), and Long
Stay Hospitalizations measures from the current measure set to simplify
the Program and remove measures they consider duplicative and/or not
aligned with Medicare Part A reimbursement. However, this commenter did
support use of the SNF WS PPR measure rather than the SNFRM. One
commenter did not comment directly on the current SNF VBP Program
measure set but recommended CMS establish clearer expectations for
registered dietitian nutritionist (RDN) staffing, either through
facility assessment requirements, quality improvement programs, or
relevant payment and reporting mechanisms, to promote more consistent
access to medically necessary nutrition care.
Response: We thank the commenters for their support and
recommendations, as well as acknowledge their concerns. We intend to
take this feedback into consideration as part of our monitoring and
evaluation efforts related to the SNF VBP Program measure set.
D. SNF VBP Performance Standards
1. Background
Our current definitions for the performance standards are codified
at Sec. 413.338(a), and our current performance standards notification
and updates policies are codified at Sec. 413.338(n). We also 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
2025 SNF PPS final rule (89 FR 64128 through 64129), we adopted the
final numerical values for the FY 2027 performance standards and the
final numerical values for the FY 2028 performance standards for the
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) measures.
2. Performance Standards for the FY 2028 Program Year
To meet the requirements at section 1888(h)(3)(C) of the Act, we
are
[[Page 37349]]
providing the final numerical performance standards for the remaining
measures applicable for the FY 2028 program year: the SNF Healthcare-
Associated Infections Requiring Hospitalization (SNF HAI) measure,
Total Nurse Staffing Hours per Resident Day (Total Nurse Staffing)
measure, Total Nursing Staff Turnover (Nursing Staff Turnover) measure,
Percent of Residents Experiencing One or More Falls with Major Injury
(Long-Stay) (Falls with Major Injury (Long-Stay)) measure, Number of
Hospitalizations per 1,000 Long Stay Resident Days (Long Stay
Hospitalization) measure, and Discharge Function Score for SNFs (DC
Function) measure. In accordance with our methodology for calculating
performance standards previously finalized in the FY 2017 SNF PPS final
rule (81 FR 51996 through 51998), the final numerical values for the FY
2028 program year performance standards are shown in Table 15. These
final values are only minorly different from the estimated values
included in the FY 2026 SNF PPS proposed rule (90 FR 18611).
[GRAPHIC] [TIFF OMITTED] TR04AU25.020
3. Performance Standards for the FY 2029 Program Year
To meet the requirements at section 1888(h)(3)(C) of the Act, we
are providing the final numerical performance standards for the FY 2029
program year for the DTC PAC SNF and SNF WS PPR measures. In accordance
with our methodology for calculating performance standards previously
finalized in the FY 2017 SNF PPS final rule (81 FR 51996 through
51998), the final numerical values for the FY 2029 program year
performance standards for the DTC PAC SNF and SNF WS PPR measures are
shown in Table 16. These final values are only minorly different from
the estimated values included in the FY 2026 SNF PPS proposed rule (90
FR 18612).
We will provide the estimated numerical performance standards
values for the remaining measures applicable to the FY 2029 program
year in the FY 2027 SNF PPS proposed rule.
[GRAPHIC] [TIFF OMITTED] TR04AU25.021
E. SNF VBP Performance Scoring Methodology
1. Application of SNF VBP Scoring Methodology to the SNF WS PPR Measure
a. Background
Our scoring methodology beginning in the FY 2027 program year is
codified at Sec. Sec. 413.338(e)(1) and 413.338(e)(3), and our current
case minimum and measure minimum policies are at Sec. 413.338(b). We
also refer readers to the FY 2024 SNF PPS final rule (88 FR 53300
through 53304) for a detailed history of our performance scoring
methodology, the FY 2025 SNF PPS final rule (89 FR 64131 through 64132)
for an update to the measure minimum policy for the FY 2028 program
year and subsequent program years, and to section VII.B. of this final
rule where we are finalizing removal of the Health Equity Adjustment
(HEA) previously finalized in the FY 2024 SNF PPS final rule (88 FR
53304 through 53318). Under this methodology, we will calculate the SNF
performance score beginning with the FY 2027 program year as follows:
Award up to 10 points for each measure based on
improvement or achievement, so long as the SNF reports a measure's
applicable minimum number of cases during the performance period
applicable to that fiscal year; and
Sum all points awarded to a SNF based on their performance
on each measure; we will normalize the SNF's point total such that the
resulting point total is expressed as a number of points earned out of
a total of 100.
In the FY 2023 SNF PPS final rule (87 FR 47588 through 47590), we
finalized an application of the scoring methodology to the SNF HAI, DTC
PAC SNF, and Total Nurse Staffing measures. In the FY 2024 SNF PPS
final rule (88 FR 53303 through 53304), we finalized an application of
the scoring methodology to the Nursing Staff Turnover, Falls with Major
Injury (Long-Stay), Long Stay Hospitalization, and DC Function
measures. Lastly, in the FY 2024 SNF PPS final rule (88 FR 53303), we
stated that we intended to address the FY 2028 performance scoring
methodology in future rulemaking, as we had also finalized our proposal
to replace the SNFRM with the SNF WS PPR measure beginning with the FY
2028 program year.
b. Application of the SNF VBP Scoring Methodology to the SNF WS PPR
Measure Beginning With the FY 2028 Program Year
In the FY 2024 SNF PPS final rule (88 FR 53280), we finalized that
the SNF WS PPR measure will replace the SNFRM beginning with the FY
2028
[[Page 37350]]
SNF VBP program year. In the FY 2026 SNF PPS proposed rule (90 FR
18612), we proposed applying the previously finalized scoring
methodology codified at Sec. Sec. 413.338(e)(1) and 413.338(e)(3) to
the SNF WS PPR measure beginning with the FY 2028 program year to align
the scoring methodology applied to the SNF WS PPR measure with the
scoring methodology previously finalized and applied to all other
measures in the SNF VBP Program's measure set.
We invited and received public comments on our proposal to apply
the previously finalized scoring methodology to the SNF WS PPR measure
beginning with the FY 2028 SNF VBP program year. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported the application of the
previously finalized scoring methodology to the SNF WS PPR measure
beginning with the FY 2028 SNF VBP program year. Two commenters
confirmed their continued support for adopting and implementing the SNF
WS PPR measure. One of those two commenters also supported the current
scoring methodology's normalization policy, while the other commenter
supported the scoring methodology's consideration of both current
performance and improvement.
Response: We thank the commenters for their support. We agree that
the application of the previously finalized scoring methodology to the
SNF WS PPR measure will align all the measures within the SNF VBP
Program's measure set.
Comment: One commenter supported the application of the previously
finalized scoring methodology to the SNF WS PPR measure but encouraged
CMS to consider the effect of applying the existing SNF VBP Program
scoring methodology to the SNF WS PPR measure on low-volume rural SNFs.
The commenter highlighted evidence of measures without risk adjustment
disadvantaging rural SNFs.
Response: We thank the commenter for their support and acknowledge
their concern. However, the SNF WS PPR measure includes a hierarchical
logistic regression risk adjustment model, and historical results for
the SNF WS PPR measure indicate marginally better performance for rural
SNFs compared to urban SNFs. Additionally, the 2-year data period used
by the SNF WS PPR measure increases reportability for low-volume SNFs.
We intend to continue assessing these concerns as part of our
monitoring and evaluation efforts.
Comment: One commenter recommended that CMS not invert measure
scores for certain measures where a lower score is preferable, as it
causes confusion and complexity. One commenter recommended that CMS
consider developing more targeted incentives, such as bonus points
within the SNF VBP Program for SNFs operating within Tribally operated
long-term care facilities to recognize their vital role providing high
quality care within (frequently rural and remote) Tribal communities.
Response: We thank the commenters for their recommendations. With
respect to the commenter's recommendation not to invert measure scores
for certain measures where a lower score is preferable, we note that
measure results are not inverted within confidential feedback reports
or publicly reported datasets to support understanding by SNFs and
other interested parties. Measure results are only inverted for
purposes of achievement scoring and improvement scoring so that higher
scores indicate better performance for all measures.
After consideration of public comments, we are finalizing the
application of the previously finalized scoring methodology (codified
at Sec. 413.338(e)(1) and Sec. 413.338(e)(3)) to the SNF WS PPR
measure beginning with the FY 2028 SNF VBP program year as proposed
without modification.
F. Adopting a SNF VBP Program Reconsideration Request Process
1. Background
We refer readers to the FY 2025 SNF PPS final rule (89 FR 64133
through 64136) and to Sec. 413.338(f) for details on the SNF VBP
Program's confidential feedback reports policies, the two-phase review
and correction process, and public reporting policies that we have
adopted for the Program. We also refer readers to the SNF VBP Program
website (https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing/confidential-feedback-reporting-review-and-corrections) for technical details on our review and correction
process.
In Phase One of the review and correction process, codified at
Sec. 413.338(f)(2), we accept correction requests for 30 days after
distributing the baseline period and performance period quality measure
quarterly reports, which contain the baseline period and performance
period measure results, respectively. SNFs may submit corrections to
the measure results contained in those reports. The underlying data
used to calculate the measure results are not subject to review and
correction during this process. As provided in Sec. 413.338(f)(1),
measure results included in those reports are calculated using data
current as of specified dates for each measure.
In Phase Two of the review and correction process, codified at
Sec. 413.338(f)(3), we accept correction requests for 30 days after
distributing the Performance Score Report, which contains the SNF
performance score and ranking. SNFs may submit corrections to the SNF
performance score and ranking contained in this report.
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. As provided in
Sec. Sec. 413.338(f)(2) and (f)(3), correction requests must contain
all of the following:
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.
We review all review and correction requests and notify the
requesting SNF of our decision. We also implement any approved
corrections before the affected data becomes publicly available on the
website CMS uses to make quality data available to the public,
currently the Provider Data Catalog website (https://data.cms.gov/provider-data/).
In the FY 2026 SNF PPS proposed rule (90 FR 18612), we proposed
adopting a reconsideration request process that would allow SNFs to
seek reconsideration of a review and correction request if they are not
satisfied with our decision on a review and correction request
submitted under Sec. Sec. 413.338(f)(2) or (f)(3). We also proposed
related technical updates to our regulations to align the submission
requirements for the reconsideration request process with the
submission requirements under the review and correction process.
2. SNF VBP Program Reconsideration Request Process
Beginning with the FY 2027 SNF VBP program year, we proposed to
adopt and implement a reconsideration request process that would be an
additional appeal process available to SNFs beyond the existing Phase
One and Phase Two review and correction process. The reconsideration
request process would align the SNF VBP Program with other CMS quality
programs, including the Expanded Home Health Value-Based Purchasing
[[Page 37351]]
(HHVBP) Model (42 CFR 484.375(b)), to create a familiar policy
experience for providers across CMS quality programs.
As stated in FY 2026 SNF PPS proposed rule (90 FR 18612), SNFs
would be able to request this additional reconsideration only if they
first submitted a valid review and correction request described at
Sec. Sec. 413.338(f)(2) or (3) and are dissatisfied with the decision.
Under the proposed reconsideration request process, SNFs would have
15 calendar days to submit a reconsideration request, starting the day
after the date we issue a decision via email on a review and correction
request (as noted on that decision) submitted under section Sec. Sec.
413.338(f)(2) or (3). SNFs that seek reconsideration of a review and
correction request decision would have to submit their reconsideration
requests via email in the form and manner specified by CMS in the
review and correction decision. The reconsideration request would have
to contain all of the following:
The SNF's CMS Certification Number (CCN);
The SNF's name;
The issue for which the SNF submitted a review and
correction request, received a review and correction request decision,
and are requesting reconsideration of; and
The reason why the SNF is requesting reconsideration,
which can be supported by any applicable documentation or other
evidence.
We would review the reconsideration request and provide a written
decision to the SNF in a timely manner before any affected data becomes
publicly available on the website CMS uses to make quality data
available to the public, currently the Provider Data Catalog website
(https://data.cms.gov/provider-data/).
We also proposed to codify the proposed SNF VBP Program
reconsideration request process at Sec. 413.338(f)(6).
We invited and received public comment on our proposal to adopt and
implement a reconsideration request process that would be an additional
appeal process available to SNFs beyond the existing Phase One and
Phase Two review and correction process, and our proposal to codify
such process at Sec. 413.338(f)(6). The following is a summary of the
comments we received and our responses.
Comment: Many commenters supported CMS' proposal to adopt a
reconsideration request process for the SNF VBP Program. A few
commenters believed the adoption of the reconsideration request process
would result in more transparent and fair practices. A few commenters
appreciated CMS aligning processes in the SNF VBP Program with those
processes in other CMS quality programs. One commenter appreciated CMS'
utilization of electronic communications for facilitating the
reconsideration request process. One commenter believed that the
reconsideration request process would help resolve potential
misunderstandings between SNFs and CMS and result in more accurate
publicly available data.
Response: We thank the commenters for their support. We agree that
the adoption of the reconsideration request process will better align
the SNF VBP Program with other CMS quality programs and create a more
transparent and accurate reporting process.
Comment: A few commenters supported adopting the reconsideration
request process but provided additional recommendations. One commenter
recommended increasing the submission timeframe from 15 calendar days
to 30 or even 60 calendar days to allow a SNF adequate time to review,
gather, and submit any applicable documentation to support the
reconsideration request. One commenter supported the 15-day submission
timeframe but noted the ability to request reconsideration may
influence a SNF's approach to quality measurement and performance under
the SNF VBP Program. One commenter recommended informing SNFs of
reconsideration request decisions before data is publicly reported. One
commenter encouraged CMS to consider implementing similar appeal
processes in other programs.
Response: We thank the commenters for their recommendations. With
respect to the commenter's recommendation around increasing the
submission timeframe, we believe the current timeframe of 15 calendar
days is sufficient for SNFs to review CMS' decision and acquire and
submit any additional documentation necessary to the reconsideration
request, as any reconsideration request would pertain to the initial
review and correction request previously submitted under section Sec.
413.338(f)(2) or (3) by the SNF. We also believe an extension of the
reconsideration request timeframe would result in undesired delays in
publicly reporting SNF VBP Program data.
With respect to the commenter's suggestion that the reconsideration
request process could affect a SNF's approach to quality measurement
and performance under the SNF VBP Program, we note the existing review
and correction process at Sec. Sec. 413.338(f)(2) and (3) requires
SNFs to identify the error for which it is requesting correction and
explain its reason for requesting the correction. We will review all
review and correction requests, as well as all reconsideration
requests, and only accept the request if deemed valid, that is, if an
error in the calculations of the measures results, performance scores,
or rankings is correctly identified and should be corrected before any
affected data becomes publicly available.
With respect to the commenter's recommendation to inform SNFs of
the reconsideration request decisions before data is publicly reported,
the proposed reconsideration request process would provide a written
decision to the SNF in a timely manner before any affected data becomes
publicly available.
With respect to commenters' recommendation to consider implementing
similar appeal processes in other programs, we thank the commenters for
their recommendation and will take this into consideration as part of
our monitoring and evaluation efforts.
Comment: One commenter did not support the proposal to adopt the
reconsideration request process as they believed the SNF VBP Program
already provided an opportunity for SNFs to review data regarding their
performance and providing additional opportunities would weaken
enforcement of CMS standards.
Response: We acknowledge the commenter's concern, but we disagree
that this reconsideration request process would weaken the enforcement
of CMS standards. While the existing review and correction process does
provide SNFs an opportunity to review data regarding their performance,
we believe it is important to provide the proposed reconsideration
request process to align the SNF VBP Program with other CMS quality
programs to create a familiar policy experience for providers across
CMS quality programs. Also, all reconsideration requests would be
thoroughly and efficiently reviewed to confirm only valid requests are
accepted and to avoid undesired delays in publicly reporting SNF VBP
Program data.
After consideration of public comments, we are finalizing the
adoption and implementation of the reconsideration request process, and
codifying this process at Sec. 413.338(f)(6), as proposed without
modification.
3. Regulation Text Technical Updates
In the FY 2026 SNF PPS proposed rule (90 FR 18613), we proposed
[[Page 37352]]
codifying certain provisions of our existing review and correction
process that we finalized in the FY 2017 SNF PPS final rule (81 FR
52006 through 52009) and in the FY 2018 SNF PPS final rule (82 FR 36621
through 36623) but did not codify at that time. Specifically, we
proposed updating Sec. Sec. 413.338(f)(2) and (3) to specify that SNFs
must submit their review and correction requests by sending an email to
the SNF VBP Program Help Desk, which is currently available at
[email protected].
We invited public comment on these proposed technical updates to
our regulations text.
We did not receive public comments on these proposals.
We are finalizing these proposed updates to our regulation text at
Sec. Sec. 413.338(f)(2) and (3) as proposed without modification.
VIII. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), we are required to
provide notice in the Federal Register and solicit public comments
before a collection of information requirement is submitted to the
Office of Management and Budget (OMB) for review and approval. To
evaluate whether an information collection should be approved by OMB,
the PRA at 44 U.S.C. 3506(c)(2)(A) 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 solicited public comments on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
A. 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 FY if the SNF does not comply with
the requirements of the SNF QRP for that FY.
As stated in section VI.C. of this final rule, we are finalizing
our proposal to remove four standardized patient assessment data
elements under the SDOH category beginning with the FY 2027 SNF QRP. In
section VI.D. of this final rule, we are also finalizing our proposal
to amend our reconsideration policy and process. As we noted in the FY
2016 SNF PPS proposed rule (80 FR 22082), because the reconsideration
requirements are associated with an administrative action (5 CFR
1320.4(a)(2) and (c)), they are exempt from the requirements of the
PRA. We have, however, provided detailed burden estimates in sections
IX.A.6.a. and IX A.6.b. of this final rule.
1. ICRs Regarding the Removal of Four Standardized Patient Assessment
Data Elements Beginning With the FY 2027 SNF QRP
As stated in section VI.C. of the proposed rule, we proposed to
remove four standardized patient assessment data elements under the
SDOH category previously adopted for collection and submission on
admission using the MDS beginning October 1, 2025. The MDS, in its
current form, has been approved under OMB control number 0938-1140. On
November 25, 2024, under the PRA, we placed a notice in the Federal
Register (89 FR 92939, November 25, 2024) on the revised collection and
implementation of the MDS 3.0 v1.20.1 beginning October 1, 2025.
Although we did not receive any comments in response to this notice,
the revised collection and implementation package was not finalized. We
are now revising the package to support the removal of four
standardized patient assessment data elements under the SDOH category
previously adopted and seeking comment on the updated package.
The net result of removing four data elements at admission is an
estimated decrease of 1.2 minutes or 0.02 hour of clinical staff time
at admission (4 data elements x 0.005 hour). We identified the staff
type based on past SNF burden calculations, and our assumptions were
based on the categories generally necessary to perform an assessment.
We believe these 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 wage
estimates for these staff from the U.S. Bureau of Labor Statistics'
(BLS) May 2023 National Occupational Employment and Wage Estimates.\11\
To account for other indirect costs and fringe benefits, we doubled the
median hourly wage. These amounts are detailed in Table 17. We
established a composite cost estimate using our adjusted hourly wage
estimates. The composite estimate of $70.10/hr was calculated by
weighting the adjusted hourly wage of the RN and LPN/LVN equally
[($82.76/hr x 0.5) plus ($57.44/hr x 0.5) = $70.10].
---------------------------------------------------------------------------
\11\ U.S. Bureau of Labor Statistics. Occupational Employment
and Wage Statistics. May 2023. https://www.bls.gov/oes/current/oes_stru.htm.
[GRAPHIC] [TIFF OMITTED] TR04AU25.022
[[Page 37353]]
We estimate that the burden and cost for SNFs for complying with
the requirements of the FY 2027 SNF QRP would decrease under this
update. Using FY 2024 data, we estimate a total of 1,589,560 5-day PPS
assessments by 15,253 SNFs for an annual decrease of 31,791.20 hours in
burden for all SNFs at admission (1,589,560 5-day PPS assessments x
0.02 hour) and an annual decrease of 2.08 hours in burden per SNF at
admission (31,791.20 hours/15,253 SNFs). Given 0.02 hour at $70.10 per
hour to complete an average of 104 5-day PPS assessments per SNF per
year, we estimate the total annual cost at admission would be decreased
by $2,228,563.12 for all SNFs (31,791.20 hours x $70.10/hr) or $146.11
per SNF ($2,228,563.12/15,253 SNFs).
The total estimated burden associated with the removal of four
standardized patient assessment data elements at admission (as
described in this section) is summarized in Table 18.
[GRAPHIC] [TIFF OMITTED] TR04AU25.023
We solicited public comments on the proposed information collection
requirements and whether our estimated burden reduction of 0.02 hours
per patient and an annual decrease of 2.08 hours in burden per SNF at
admission is an accurate estimate. We have summarized the comments we
received about burden in section VI.C. of this final rule and provided
responses. We did not receive any comments about whether our estimated
burden is an accurate estimate. After careful consideration of the
public comments we received, we are finalizing our proposal to remove
four standardized patient assessment data elements under the SDOH
category.
B. ICRs Regarding the Skilled Nursing Facility Value-Based Purchasing
Program
With regard to the SNF VBP Program, we are not adding, modifying,
or removing any collection of information requirements or burden
related to the SNF VBP Program in this final rule. Consequently, this
final rule does not set out any new SNF VBP Program-related collections
of information that would be subject to OMB approval under the
authority of the PRA. For the purpose of this section, collection of
information is defined under 5 CFR 1320.3(c) of the PRA's implementing
regulations.
We did not propose any new or modified information collection
requirements, thus we did not solicit any public comments. We also did
not receive any public comments on the existing information collection
requirements for the SNF VBP Program.
IX. Regulatory Impact Analysis
A. Statement of Need
1. Statutory Provisions
This rule updates the FY 2026 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, under the statutory discretion
afforded to the Secretary under section 1886(e)(6) of the Act, we are
updating requirements. As described in section VI.C. of the final rule,
we are removing four standardized patient assessment data elements
beginning with the FY 2027 SNF QRP. As described in VI.D. of this final
rule, we are also updating our reconsideration policy and process.
With respect to the SNF VBP Program, we are updating the SNF VBP
Program requirements for FY 2026 and subsequent years. As described in
section VII. of this final rule, we are removing the Health Equity
Adjustment from the Program's scoring methodology, applying the
Program's scoring methodology to the Skilled Nursing Facility Within-
Stay Potentially Preventable Readmission (SNF WS PPR) measure, and
adopting a new reconsideration process that will allow SNFs to appeal
CMS decisions on review and correction requests. In addition, 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 beginning of the performance period, and this final
rule provides final numerical values of the performance standards for
the FY 2028 program year for the SNF HAI, Total Nurse Staffing, Nursing
Staff Turnover, Falls with Major Injury (Long-Stay), DC Function, and
Long Stay Hospitalization measures; and final numerical values of the
performance standards for the FY 2029 program year for the DTC PAC SNF
and SNF WS PPR measures.
2. Discretionary Provisions
In addition, this final rule includes the following discretionary
provisions:
a. 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 2024, we found that the
[[Page 37354]]
forecast error for that year was 0.6 percentage point, exceeding the
0.5 percentage point threshold we established in regulation to trigger
a forecast error adjustment. Given that the forecast error exceeds the
0.5 percentage point threshold for FY 2024, current regulations require
that the SNF market basket percentage increase for FY 2026 be adjusted
upward by 0.6 percentage point to account for forecasting error in the
FY 2024 SNF market basket update.
b. 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 are making several substantive changes to
the PDPM ICD-10 code mapping.
3. Introduction
We have examined the impacts of this final rule as required by
Executive Order 12866, ``Regulatory Planning and Review''; Executive
Order 13132, ``Federalism''; Executive Order 13563, ``Improving
Regulation and Regulatory Review''; Executive Order 14192, ``Unleashing
Prosperity Through Deregulation''; the Regulatory Flexibility Act (RFA)
(Pub. L. 96-354); section 1102(b) of the Social Security Act; section
202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4); and
the Congressional Review Act (5 U.S.C. 801-808).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts).
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as any regulatory action that is likely to result
in a rule that may: (1) have an annual effect on the economy of $100
million or more 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, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, or the President's priorities. A regulatory impact analysis
(RIA) must be prepared for a regulatory action that is significant
under section 3(f)(1) of E.O. 12866. Based on our estimates, the Office
of Management and Budget's (OMB) Office of Information and Regulatory
Affairs (OIRA) has determined this rulemaking is significant per
section 3(f)(1). Accordingly, we have prepared an RIA that to the best
of our ability presents the costs and benefits of the rulemaking.
4. Overall Impacts
This rule updates the SNF PPS rates contained in the FY 2025 SNF
PPS final rule (89 FR 64048). We estimate that the aggregate impact
will be an increase of approximately $1.16 billion (3.2 percent) in
Part A payments to SNFs in FY 2026. As we noted in the proposed rule,
these impact numbers do not incorporate the SNF VBP Program reductions
that we estimate will total $208.36 million in FY 2026. 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
2025 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 2026. The
impact to Medicare is included in the total column of Table 19. The
annual update in this rule applies to SNF PPS payments in FY 2026.
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.
5. Detailed Economic Analysis
The FY 2026 SNF PPS payment impacts appear in Table 19. Using the
most recently available claims data, in this case FY 2024, we apply the
current FY 2025 case-mix indices (CMIs), wage index and labor-related
share value to the number of payment days to simulate FY 2025 payments.
Then, using the same FY 2024 claims data, we apply the FY 2026 CMIs,
wage index and labor-related share value to simulate FY 2026 payments.
We tabulate the resulting payments according to the classifications in
Table 19 (for example, facility type, geographic region, facility
ownership), and compare the simulated FY 2025 payments to the simulated
FY 2026 payments to determine the overall impact. The breakdown of the
various categories of data in Table 19 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 final 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).
The second column shows the number of facilities in the
impact database.
The third column shows the effect of the annual update to
the wage index, including the updates to the labor related-share
discussed in section III.D. of this final rule. This represents the
effect of using the most recent wage data available as well as accounts
for the 5 percent cap on wage index decreases. The total impact of this
change is 0.0 percent; however, there are distributional effects of the
change.
The fourth column shows the net (total) effect of all of
the changes on the FY 2026 payments. This column reflects the overall
3.2 percent update applicable to all providers plus or minus the wage
index adjustment in column 3. It is projected that aggregate payments
will increase by 3.2 percent, assuming facilities do not change their
care delivery and billing practices in response.
As illustrated in Table 19, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, due to changes in this rule, rural providers will experience a
3.7 percent increase in FY 2026 total payments.
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6. Impacts for the Skilled Nursing Facility Quality Reporting Program
(SNF QRP) for FY 2027 SNF QRP
Estimated impacts for the SNF QRP are based on analysis discussed
in section VIII.A. of this final 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 FY if the
SNF does not comply with the requirements of the SNF QRP for that FY.
a. Impacts for Removing the Collection and Submission Requirements of
Four Standardized Patient Assessment Data Elements Beginning With the
FY 2027 SNF QRP
As discussed in section VI.C. of this final rule, we are finalizing
our proposal to remove four standardized patient assessment data
elements under the SDOH category beginning with residents admitted on
October 1, 2025, for the FY 2027 SNF QRP. We are providing estimated
impact information as reflected in Table 20.
As discussed in section VIII.A.1. of this final rule, we estimated
the net result of removing four data elements at admission would
decrease burden. As finalized, SNFs will not be required to collect and
submit four standardized patient assessment data elements beginning
with residents admitted on or after October 1, 2025 as previously
finalized. Using FY 2024 data, we estimate an annual total of 1,589,560
5-day PPS assessments by 15,253 SNFs for an annual decrease of
31,791.20 hours (1,589,560 5-day PPS assessments x 0.02 hour) and an
annual decrease in cost of $2,228,563.12 (31,791.20 hours x $70.10/hr)
for all SNFs at admission. For each SNF, we estimate an annual burden
decrease of 2.08 hours (31,791.20 hours/15,253 SNFs) and an
[[Page 37356]]
annual decrease in cost of $146.11 ($2,228,563.12/15,253 SNFs) at
admission.
b. Impacts for Amending the Reconsiderations Request Policy and Process
As discussed in section VI.D. of this final rule, we are finalizing
our proposal to amend the SNF QRP reconsiderations request policy and
process. As we noted in the FY 2016 SNF PPS Proposed rule (80 FR 22082)
and in section VIII.A.1. of this final rule, because the
reconsideration requirements are associated with an administrative
action (5 CFR 1320.4(a)(2) and (c)), they are exempt from the
requirements of the PRA however, we are providing full estimated impact
information.
The updates to this policy and process will result in a collection
of information intended to be submitted only by SNFs if they seek to
file an extension to file a request for reconsideration of a
noncompliance determination. We estimate that this information will
take SNFs approximately 15 minutes to complete. We believe this data
will be entered by a Medical Records Specialist. 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
from the U.S. Bureau of Labor Statistics' (BLS) May 2023 National
Occupational Employment and Wage Estimates. To account for overhead and
fringe benefits, we have doubled the median hourly wage as detailed in
Table 20.
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Historically, less than 2 percent of SNFs submit a reconsideration
request annually. Based on the number of reconsiderations requests
received over the previous 3 years, we estimate an average of 202 SNFs
submit a reconsideration request annually. We estimate that, if all 202
SNFs sought to file an extension to file a request for reconsideration,
the burden and cost for these SNFs will increase under this update. We
estimate that it will take 15 minutes (0.25 hour) to complete and
submit the data for an annual increase of 51 hours in burden for all
202 estimated SNFs submitting these requests (15 minutes x 202 SNFs).
Given 51 hours at $46.90 per hour to complete an average of 202 entries
among these SNFs annually, we estimate the total annual cost will be an
increase by $2,391.90 for all SNFs (51 hours x $46.90/hr) and $11.84
per SNF (0.25 hours x $46.90/hr).
The total estimated burden associated with amending the
reconsiderations request policy and process (as described in this
section) is summarized in Table 21.
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We requested public comments on the overall impact of the SNF QRP
proposals for FY 2027 displayed in Table 22.
We did not receive any comments about the impact of the SNF QRP
proposals.
[[Page 37357]]
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7. Impacts for the SNF VBP Program
The estimated impacts of the FY 2026 SNF VBP Program are based on
historical data and appear in Table 23 and Table 24. We modeled SNF
performance in the Program using SNFRM, SNF HAI, Total Nurse Staffing,
and Nursing Staff Turnover measure results from FY 2022 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 2026 program year, we will reduce each SNF's 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, Total Nurse Staffing, and SNF HAI measures, and in the FY 2024
SNF PPS final rule (88 FR 53301 through 53302) we finalized a case
minimum requirement for the Nursing Staff Turnover measure, as required
by section 1888(h)(1)(C)(i) of the Act. Furthermore, in the FY 2023 SNF
PPS final rule (87 FR 47587), we finalized the measure minimum
requirement for the FY 2026 SNF VBP program year, as required by
section 1888(h)(1)(C)(ii) of the Act. As a result of these provisions,
SNFs must meet the case minimum for at least two of the four measures
during the applicable performance period to receive a SNF performance
score and value-based incentive payment for FY 2026; SNFs that do not
meet the measure minimum requirement finalized for the FY 2026 program
year will be excluded from the Program and will receive their adjusted
Federal per diem rate for that FY. As previously finalized, this policy
will maintain the overall payback percentage at 60 percent for the FY
2026 program year. Based on the 60 percent payback percentage, we
estimated that we will redistribute approximately $312.53 million (of
the estimated $520.89 million in withheld funds) in value-based
incentive payments to SNFs in FY 2026, which means that the SNF VBP
Program is estimated to result in approximately $208.36 million in
savings to the Medicare Program in FY 2026.
Our detailed analysis of the impacts of the FY 2026 SNF VBP Program
is shown in Table 23 and Table 24.
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In section VII.B. of this final rule, we are finalizing our
proposal to remove the Health Equity Adjustment (HEA) and the variable
payback percentage that would account for the application of the HEA.
Therefore, we are providing estimated impacts of the FY 2027 SNF VBP
Program, which are based on historical data and appear in Tables 25,
26, and 27. We modeled SNF performance in the Program using SNFRM, SNF
HAI, Total Nurse Staffing, Nursing Staff Turnover, and DC Function
measure results from FY 2022 as the baseline period and FY 2023 as the
performance period, using Falls with Major Injury (Long-Stay) and Long
Stay Hospitalization measure results from CY 2022 as the baseline
period and FY 2023 as the performance period, and using DTC PAC SNF
measure results from FY 2020 to 2021 as the baseline period and FY 2022
to 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 2027 program year, we will reduce each SNF's adjusted
Federal per diem rate by 2 percent. We will then
[[Page 37360]]
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, Total Nurse Staffing, SNF HAI, and DTC PAC
SNF measures, and in the FY 2024 SNF PPS final rule (88 FR 53301
through 53302) we finalized a case minimum requirement for the Nursing
Staff Turnover, Falls with Major Injury (Long-Stay), Long Stay
Hospitalization, and DC Function measures, as required by section
1888(h)(1)(C)(i) of the Act. Furthermore, in the FY 2024 SNF PPS final
rule (88 FR 53302 through 53303), we finalized the measure minimum
requirement for the FY 2027 SNF VBP program year, as required by
section 1888(h)(1)(C)(ii) of the Act. As a result of these provisions,
SNFs must meet the case minimum for at least four of the eight measures
during the applicable performance period to receive a SNF performance
score and value-based incentive payment for FY 2027; SNFs that do not
meet the measure minimum requirement finalized for the FY 2027 program
year will be excluded from the Program and will receive their adjusted
Federal per diem rate for that fiscal year. This policy will maintain
the overall payback percentage at 60 percent for the FY 2027 program
year. Based on the 60 percent payback percentage, we estimated that we
will redistribute approximately $311.98 million (of the estimated
$519.97 million in withheld funds) in value-based incentive payments to
SNFs in FY 2027, which means that the SNF VBP Program is estimated to
result in approximately $207.99 million in savings to the Medicare
Program in FY 2027.
Our detailed analysis of the impacts of the FY 2027 SNF VBP Program
is shown in Tables 25, 26, and 27.
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8. Alternatives Considered
As described in this section, we estimate that the aggregate impact
of the provisions in this final rule will result in an increase of
approximately $1.16 billion (3.2 percent) in Part A payments to SNFs in
FY 2026. This reflects a $1.16 billion (3.2 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
[[Page 37364]]
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 updates for the SNF QRP, we are removing four
standardized patient assessment data elements. We considered keeping
these items but believe that removing them will help reduce burden for
SNFs. With regard to the update to amend and codify our reconsideration
policy and process, we considered the alternative of leaving the
regulatory language unchanged. However, we believe it will be
beneficial for SNFs to codify our specific bases for granting a
reconsideration request and clarify the process for requesting an
extension to the reconsideration request deadline.
With regard to the updates for the SNF VBP Program, we discussed
alternatives considered within those sections.
9. Accounting Statement
Consistent with OMB Circular A-4 (available online at https://trumpwhitehouse.archives.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Tables 28, 29, and 30, we have prepared an accounting
statement showing the classification of the expenditures associated
with the provisions of this final rule for FY 2026. Tables 19 and 28
provide our best estimate of the possible changes in Medicare payments
under the SNF PPS as a result of the policies outlined in this final
rule, based on the data for 15,288 SNFs in our database.
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[[Page 37365]]
10. Conclusion
This rule updates the SNF PPS rates contained in the FY 2025 SNF
PPS final rule (89 FR 64048). As outlined in the final rule, we
estimate that the overall payments for SNFs under the SNF PPS in FY
2026 are projected to increase by approximately $1.16 billion, or 3.2
percent, compared with those in FY 2025. We estimate that in FY 2026,
SNFs in urban and rural areas will experience, on average, a 3.1
percent increase and 3.7 percent increase, respectively, in estimated
payments compared with FY 2025. Providers in the rural Mountain region
will experience the largest estimated increase in payments of
approximately 6.5 percent. Providers in the urban Pacific region will
experience the smallest estimated increase in payments of 2.0 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/document/support-table-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 2025 (89 FR 64048). As outlined in the final rule, we
estimate that the aggregate impact for FY 2026 will be an increase of
$1.16 billion in payments to SNFs, resulting from the SNF market basket
update to the payment rates. While it is projected in Table 19 that all
providers will 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 2026 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 2025 Report to Congress
(available at https://www.medpac.gov/wp-content/uploads/2025/03/Mar25),
MedPAC states that Fee-for-Service Medicare accounted for approximately
8 percent of total patient days in freestanding facilities and 14
percent of facility revenue in 2022. As indicated in Table 19, the
effect on facilities is projected to be an aggregate positive impact of
3.2 percent for FY 2026. As its measure of significant economic impact
on a substantial number of small entities, HHS uses a change in revenue
of more than 3 to 5 percent of the total revenue. Since Medicare
accounts for only 14 percent of SNF total revenue, the resulting impact
of the final rule is 0.45 percent (14 percent of 3.2 percent). As the
overall impact on small entities do not meet the 3 to 5 percent
threshold discussed previously, the Secretary has determined that this
final rule will not have a significant impact on a substantial number
of small entities for FY 2026.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of an MSA and has fewer
than 100 beds. This final rule will affect small rural hospitals that:
(1) furnish SNF services under a swing-bed agreement or (2) have a
hospital-based SNF. We anticipate that the impact on small rural
hospitals will be similar to the impact on SNF providers overall.
Moreover, as noted in previous SNF PPS final rules (most recently, the
one for FY 2025 (89 FR 64048)), the category of small rural hospitals
is included within the analysis of the impact of the final rule on
small entities in general. As indicated in Table 19, the effect on
facilities for FY 2026 is projected to be an aggregate positive impact
of 3.2 percent for Medicare payments only. As the overall impact on the
industry as a whole does not meet the 3 to 5 percent threshold
discussed previously, the Secretary has determined that this final rule
will not have a significant impact on a substantial number of small
rural hospitals for FY 2026.
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 2025, that
threshold is approximately $187 million. This final 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 final 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 final 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 this year's final rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed this year's proposed rule in
detail, and it is also possible that some reviewers chose not to
comment on the 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 this.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this final 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 managers (SOC 11-
9111) in BLS Occupational Employment Wage
[[Page 37366]]
Statistics is $64.64, assuming benefits plus other overhead costs equal
100 percent of wage rate, we estimate that the cost of reviewing this
rule is $129.28 per hour, including overhead and fringe benefits
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average
reading speed, we estimate that it will take approximately 4 hours for
the staff to review half of this final rule. For each SNF that reviews
the rule, the estimated cost is $517.12 (4 hours x $129.28). Therefore,
we estimate that the total cost of reviewing this regulation is
$38,266.88 ($517.12 x 74 reviewers).
F. E.O. 14192, ``Unleashing Prosperity Through Deregulation''
Executive Order 14192, entitled ``Unleashing Prosperity Through
Deregulation'' was issued on January 31, 2025, and requires that ``any
new incremental costs associated with new regulations shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least 10 prior regulations.'' This rule is expected
to be an E.O. 14192 deregulatory action. We estimated that this rule
will generate $1.97 million in annualized cost savings at a 7 percent
discount rate, discounted relative to year 2024, over a perpetual time
horizon.
In accordance with the provisions of Executive Order 12866, this
final rule has been reviewed by the Office of Management and Budget.
Mehmet Oz, Administrator of the Centers for Medicare & Medicaid
Services, approved this document on July 28, 2025.
List of Subjects in 42 CFR Part 413
Diseases, Health facilities, Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amend 42 CFR 413 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 413.338 is amended by--
0
a. In paragraph (a), removing the terms ``Health equity adjustment
(HEA) bonus points'', ``Measure performance scaler'', ``Top tier
performing SNF'', ``Underserved multiplier'', and ``Underserved
population'';
0
b. Revising paragraph (c)(2)(i);
0
c. Removing paragraph (e)(3)(iii);
0
d. Revising paragraphs (f)(2) and (3);
0
e. Adding paragraph (f)(6);
0
f. Removing paragraph (k); and
0
g. Redesignating paragraphs (l) through (n) as paragraphs (k) through
(m) respectively.
The revisions and addition read as follows:
Sec. 413.338 Skilled nursing facility value-based purchasing program.
* * * * *
(c) * * *
(2) * * *
(i) Total amount available for a fiscal year. The total amount
available for value-based incentive payments for a fiscal year is at
least 60 percent of the total amount of the reduction to the adjusted
SNF PPS payments for that fiscal year, as estimated by CMS, and will be
increased as appropriate for each fiscal year to account for the
assignment of a performance score to low-volume SNFs under paragraph
(d)(3) of this section. Beginning with the FY 2023 SNF VBP, the total
amount available for value-based incentive payments for a fiscal year
is 60 percent of the total amount of the reduction to the adjusted SNF
PPS payments for that fiscal year, as estimated by CMS.
* * * * *
(f) * * *
(2) Beginning with the baseline period and performance period
quality measure quarterly reports issued on or after October 1, 2021,
which contain the 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 measure
rate calculations contained in that report. The underlying data used to
calculate the measure rates are not subject to review and correction
under this paragraph (f)(2). Any correction requests submitted under
this paragraph (f)(2) must include all of the following and be
submitted by email to the SNF VBP Program Help Desk:
(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 correction requests submitted under this
paragraph (f)(3) must include all of the following and be submitted by
email to the SNF VBP Program Help Desk:
(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.
* * * * *
(6) Beginning with quarterly confidential feedback reports issued
on or after October 1, 2025, a SNF that is not satisfied with the
decision by CMS on a review and correction request submitted under
paragraph (f)(2) or (3) of this section may seek reconsideration of
that decision by submitting a reconsideration request no later than 15
calendar days from the day after the date noted in the decision. SNFs
must submit their reconsideration requests via email in the form and
manner specified by CMS in the review and correction decision. The
reconsideration request must contain all of the following:
(i) The SNF's CMS Certification Number (CCN);
(ii) The SNF's name;
(iii) The issue for which the SNF submitted a review and correction
request, received a review and correction decision, and are requesting
reconsideration; and
(iv) The reason why the SNF is requesting reconsideration, which
can be supported by any applicable documentation or other evidence.
* * * * *
0
3. Section 413.360 is amended by revising paragraph (d)(4) and adding
paragraphs (d)(5) and (6) to read as follows:--
Sec. 413.360 Requirements under the Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
* * * * *
(d) * * *
(4) CMS will notify the SNF, in writing, of its final decision
regarding any reconsideration request through at least one of the
following methods: CMS designated data submission system, the United
States Postal Service, or via email from the CMS Medicare
Administrative Contractor (MAC). CMS
[[Page 37367]]
will grant a timely request for reconsideration, and reverse an initial
finding of non-compliance, only if CMS determines that the SNF was in
full compliance with the SNF QRP requirements for the applicable
program year.
(5) A SNF may request, and CMS may grant, an extension to file a
reconsideration request if, during the period to request a
reconsideration as set forth in paragraph (d)(1) of this section, the
SNF was affected by an extraordinary circumstance beyond the control of
the SNF (for example, a natural or man-made disaster). A SNF must
submit its request for an extension to file a reconsideration request
no later than 30 calendar days from the date of the written
notification of noncompliance. The SNF must submit its request for an
extension to CMS via email to [email protected], and
must contain all of the following information:
(i) SNF CCN.
(ii) SNF Business Name.
(iii) SNF Business Address.
(iv) CEO or CEO-designated personnel contact information including
name, telephone number, title, email address, and mailing address. (The
address must be a physical address, not a post office box.)
(v) A statement of the reason for the request for the extension.
(vi) Evidence of the impact of the extraordinary circumstances,
including, for example, photographs, newspaper articles, and other
media.
(6) CMS will notify the SNF, in writing, of its final decision
regarding its request for an extension to file a reconsideration of
noncompliance request via an email from CMS.
* * * * *
Robert F. Kennedy Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2025-14679 Filed 7-31-25; 4:15 pm]
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