On August 4, 2015, CMS published its final rule updating Medicare skilled nursing facility (SNF) PPS rates and policies for FY 2016.  CMS projects that the final rule will increase overall payments to SNFs by $430 million, or 1.2%, as compared to FY 2015 levels.  This update reflects a 2.3% market basket increase that is reduced by a 0.6 percentage point market basket forecast error adjustment and a 0.5 percentage point multifactor productivity adjustment.

The final rule also implements a provision of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) that reduces, by two percentage points, the annual update to SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program (QRP), beginning with FY 2018.  CMS is adopting three measures that SNFs will be required to report for the FY 2018 SNF QRP and subsequent years in three quality domains identified in the IMPACT Act:  (1) skin integrity and changes in skin integrity; (2) incidence of major falls; and (3) functional status, cognitive function, and changes in function and cognitive function.  These measures are intended to address the IMPACT Act requirement that CMS standardize post-acute care data reporting across home health agencies, inpatient rehabilitation facilities, long term care hospitals, and SNFs.  CMS states its intention to propose additional quality measures and resource use measures in future rulemaking.

Furthermore, the final rule adopts a 30-day all-cause, all-condition hospital readmission quality measure that will be used in a new SNF Value-Based Purchasing (VBP) Program beginning with FY 2019, as required by the Protecting Access to Medicare Act of 2014 (PAMA).  CMS notes that it plans to address in future rulemaking a separate PAMA requirement that the agency specify an all-condition, risk-adjusted potentially preventable hospital readmission rate.

In addition, the final rule establishes new regulatory reporting requirements for SNFs and nursing facilities to electronically submit staffing information based on payroll data, as mandated by the Affordable Care Act (ACA).  Beginning July 1, 2016, both SNFs and nursing facilities participating in the Medicaid program will be required to electronically submit certain direct care staffing data.