CMS has published its proposed rule to update Medicare skilled nursing facility (SNF) PPS rates and policies for FY 2017. CMS projects that the proposed rule would increase overall payments to SNFs by $800 million, or 2.1%, compared to FY 2016 levels. This projected update is based on a proposed 2.6% market basket increase that would be reduced by a 0.5 percentage multifactor productivity adjustment. CMS does not propose making a forecast error correction for FY 2017, since the difference between its FY 2015 estimated market basket index increase (2.5 percentage points) and the actual change in the market basket (2.3 percentage points) did not exceed the 0.5 percentage point threshold to trigger an adjustment.

As mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act), the annual update is reduced by 2 percentage points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program (QRP), beginning with FY 2018. CMS is proposing to adopt one new assessment measure for the FY 2020 and subsequent year payment determination: Drug Regimen Review Conducted with Follow-Up for Identified Issues. CMS also proposes three claims-based measures for the 2018 SNF QRP payment determination: Discharge to Community – Post Acute Care (PAC) SNF QRP; Medicare Spending Per Beneficiary (MSPB) – PAC SNF QRP; and Potentially Preventable 30 Day Post-Discharge Readmission Measure for SNFs. In addition, CMS lists other SNF QRP quality measures under consideration for future years, and it modifies other SNF QRP requirements. The proposed rule also addresses procedures related to public reporting of SNF QRP quality measure data, including review, correction, and preview periods.

Additionally, the proposed rule addresses continued implementation of the upcoming SNF Value-Based Purchasing (VBP) Program, which was authorized by the Protecting Access to Medicare Act of 2014 (PAMA) and goes into effect in FY 2019. Under this policy, SNF per diem rates will be reduced by 2% to fund value-based incentive payments, which will be based on achievement and improvement on performance standards (note that the total amount of value-based incentive payments will not exceed 70% of the withhold amount). CMS proposes to specify the SNF 30-Day Potentially Preventable Readmission Measure (SNFPPR) as the all-cause, all-condition risk-adjusted potentially preventable hospital readmission measure under the VBP. CMS also proposes to adopt CY 2017 (January 1, 2017 through December 31, 2017) as the performance period for the FY 2019 SNF VBP Program. CMS seeks comments on other aspects of the VBP program, including performance standards, scoring methodology, and confidential feedback reports.

Comments on the proposed rule will be accepted until June 20, 2016.