Using unusually blunt language, the Medicare Payment Advisory Commission (MedPAC) recently noted that it “is increasingly frustrated with the lack of statutory or regulatory action” to lower Medicare skilled nursing facility (SNF) payments and revise the payment system to link payments to patients’ characteristics and costs of care. It appears, however, that the Centers for Medicare & Medicaid Services (CMS) is finally preparing to start a rulemaking process to reform the Medicare SNF payment system – separate from the annual prospective payment system (PPS) update process.

Specifically, CMS has sent to the White House Office of Management and Budget (OMB) an advance notice of proposed rulemaking (ANPRM) to revise the SNF PPS case mix methodology, a regulatory step that enables CMS to formally obtain public input on specific aspects of policy prior to issuance of a proposed rule. CMS has not yet announced the scope of the ANPRM, but presumably it will seeks to translate its ongoing SNF Payment Models Research initiative into regulatory policy replacing the SNF PPS with a methodology that more closely ties reimbursement to resident characteristics (rather than the amount of therapy provided).

Both the ANPRM and the fiscal year 2018 SNF PPS proposed rule are now pending at OMB. The proposed 2018 SNF PPS update is likely to be released any day. The ANPRM timeline is less predictable, but the associated reforms ultimately could have a more significant impact on reimbursement to SNFs.