The Centers for Medicare & Medicaid Services (CMS) has issued its annual Skilled Nursing Facility Prospective Payment System (SNF PPS) Fiscal Year (FY) 2021 proposed rule, calling for a 2.3 percent market basket increase, a proposal that drew praise from long term and post-acute care advocates.

CMS estimates that the net market basket update would increase Medicare SNF payments by approximately $784 million in FY 2021.

Mark Parkinson, president and chief executive officer of the American Health Care Association (AHCA), said, “We applaud CMS for issuing this SNF PPS proposed rule. Skilled nursing facilities across the country are working around the clock to protect the people who are most vulnerable to COVID-19. That work makes this 2.3 percent market basket increase more important than ever.”

He added that “our long term care staff are heroically going above and beyond to care for millions of residents amid the COVID-19 pandemic.”

The proposed rule, combined with the Patient-Driven Payment Model (PDPM) implemented last year, “helps us continue our work to provide the highest quality care possible,” Parkinson said. “With an all-in margin of -0.3 percent, there are still real challenges for skilled nursing providers. However, this increase gets us headed in the right direction.”

On PDPM monitoring, AHCA said in the proposal CMS indicates the agency will continue to monitor the impact of PDPM implementation on patient outcomes and program outlays. CMS notes that it would be premature to release any information related to these issues based on the amount of data currently available.

Also of note, as part of updating Core-Based Statistical Areas (CBSAs), CMS is capping decreases in wage indices at 5 percent to prevent precipitous drops.

In its summary, CMS said in the FY 2021 SNF PPS proposed rule the agency is proposing to align the SNF Value-Based Purchasing (VBP) Program regulation text with previously finalized policies, to apply the 30-day Phase One Review and Correction deadline to the baseline period quality measure quarterly report, and to establish performance periods and performance standards for upcoming program years.

CMS said it is not proposing to make any changes to the measures, SNF VBP scoring policies, or payment policies.
Highlights include:
■ The proposed rule provides for a net market basket increase for SNFs of 2.3 percent beginning Oct. 1, 2021. Note: This may change slightly in the final rule based on updated data since proposed rule was developed.
■ The 2.3 percent market basket update reflects an unadjusted market basket increase of 2.7 percent reduced by 0.4 percentage points, in accordance with the multifactor productivity adjustment required by Section 3401(b) of the Affordable Care Act. No forecast error was incurred.
■ The unadjusted market basket percentage of 2.7 percent for FY 2018 for the SNF PPS is based on the IHS Global Insight (IGI) first quarter 2020 forecast with historical data through fourth quarter 2019. This figure could change when CMS issues the final rule in July 2020 using more recent IGI data.
■ CMS estimates that the net market basket update would increase Medicare SNF payments by approximately $784 million in FY 2021.
■ A forecast error correction was not needed. Since the difference between the estimated and actual amount of change in the market basket index was below the 0.5 percentage point threshold in FY 2015, the payment rates for FY 2019 are not impacted by the current IGI data.  
■ In regard to the SNF PPS Wage Index, as revised Office of Management and Budget delineations are adopted, CMS proposes to use a 5 percent cap on significant wage index decreases in CBSAs with notable declines. CMS proposes to use a budget neutrality factor to account for the 5 percent cap on significant decreases and ensure the overall transition is budget neutral.
■ Regarding PDPM monitoring, CMS indicates that they “continue to monitor the impact of PDPM implementation on patient outcomes and program outlays, though we believe it would be premature to release any information related to these issues based on the amount of data currently available.”
■ In addition, the agency says that they “continue to monitor the impact of PDPM implementation as it relates to our intention to ensure that PDPM is implemented in a budget-neutral manner,” and that, “in future rulemaking, we may reconsider the adjustments made in the FY 2020 SNF PPS final rule to the case-mix weights used under PDPM to ensure budget neutrality and recalibrate these adjustments as appropriate, as we did after the implementation of RUG-IV in FY 2011.”
■  With regard to PDPM ICD-10 Mappings, CMS proposes several substantive changes to the ICD-10-CM code mappings to reflect the primary reason for SNF stays that require public comment. The changes were based on recommendations from stakeholders and address codes that could be eligible for reassignment into a surgical category, based on Minimum Data Set Section J2100-J5000 major procedure items, codes that were incorrectly identified as “return to provider,” as well as other existing codes that were listed in an inappropriate default clinical category.
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