On May 6, 2014, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule in the Federal Register updating the payment policies for skilled nursing facilities (SNFs) for fiscal year (FY) 2015. Stakeholders have until June 30 to submit comments on the rule to CMS.

Proposed Payments to SNFs 

CMS estimates that the overall market basket update for the SNF prospective payment system (PPS) for FY 2015 will be 2.0 percent, which reflects a 2.4 percent update to the SNF market basket reduced by a 0.4 percent productivity adjustment that is mandated by statute. The payment update would result in an estimated increase of $750 million in aggregate payments to SNFs during FY 2015.

CMS proposes to change the SNF PPS wage index to include changes to Core-Based Statistical Areas (CBSA) and Office of Management and Budget delineations. CMS proposes a one-year transition blended wage index for all SNFs to assist providers in adapting to the new OMB delineations.

Observations on Therapy Utilization Trends

For the past several years, CMS has been monitoring the impact of the following policy changes: (1) recalibration of the FY 2011 SNF parity adjustment to align overall payments under RUG-IV with those under RUG-III; (2) allocation of group therapy time; and (3) implementation of changes to the MDS 3.0 patient assessment instrument, including the introduction of the Change-of-Therapy (COT) Other Medicare Required Assessment (OMRA). CMS initially posted memoranda to its website on a quarterly basis on various trends in these areas. In the FY 2014 SNF PPS final rule, CMS announced that it would no longer post quarterly memos, but instead would post memos to its website as appropriate.

In the FY 2015 proposed rule, CMS referred to a memo on its website that describes trends related to resident classification and therapy utilization by SNF providers for Medicare Part A residents. The memo is not dated, but analyzes data from FY 2005 and FY 2011 – 2013. It shows that the percentage of billed service days in the Ultra-High Rehabilitation (RU) RUG groups is over 50 percent. It also discusses a trend that “most notably in the cases of the RU and [Very-High Rehabilitation (RV)] groups, which taken together comprise more than 75 percent of the total billed days in FY 2013, the amount of therapy reported on the MDS is just enough to surpass the relevant therapy minute threshold for a given therapy RUG category.” The memo is available here. CMS is soliciting comments on the observed data trends described in the memo.

SNF Therapy Research Project 

CMS is soliciting comments on the status of the SNF Therapy Research Project. CMS contracted with Acumen, LLC and the Brookings Institution to explore potential alternative payment methods for therapy services received under the SNF PPS. The contractor completed the first phase of the project, including a literature review, stakeholder outreach, supplementary analyses, and a review of options for changing the current therapy payment model, which are included in a report posted on CMS’ website. CMS is in the process of conducting the second phase of the project; the contractor is using the findings included in the report to further develop and analyze the alternative payment models. The report is available here.

Policies Related to the Change of Therapy (COT) Other Medicare Required Assessment (OMRA)

SNFs are required to complete a COT OMRA for a resident classified in a RUG-IV therapy category whenever the intensity of the therapy changes to such a degree that it would no longer reflect the RUG-IV classification and payment assigned to the resident on the most recent assessment used for Medicare payment. The evaluation of the necessity for a COT OMRA must be completed every 7 days starting from the day following the Assessment Reference Date set for the most recent scheduled or unscheduled PPS assessment. CMS proposes a technical change that would permit providers to complete a COT OMRA to reclassify a resident from a non-therapy RUG into a therapy RUG in specific circumstances.

Civil Monetary Penalties

CMS proposes to clarify the statutory requirements under section 6111 of the Affordable Care Act related to the approval and use of civil monetary penalties (CMPs) imposed by CMS. CMS proposes to:

  • Specify that CMP funds may not be used for state management operations except for the reasonable costs that are consistent with managing projects utilizing CMP funds;
  • Clarify CMS’ expectations that states must obtain prior approval for use of the CMP funds;
  • Outline requirements that must be included in proposals submitted for CMS approval;
  • Specify that CMP funds may not be used for projects that have been disapproved by CMS;
  • Specify that states are responsible for having an acceptable plan to solicit, accept, monitor and track projects utilizing CMP funds and to make the results of all approved projects publicly available;
  • Specify that state plans must ensure that a core amount of CMP funds will be held in reserve for emergencies, such as relocation of residents in the event of involuntary termination from Medicare and Medicaid; and
  • Specify that if a state is not spending collected CMPs in accordance with the law or not at all, CMS has the authority to take steps to ensure that the funds are used for their intended purpose.