Medicare payments for SNFs will be reduced by 1.2 percent from the FY 2009 levels. The payment reduction results from a 3.3 percent budget neutrality payment reduction to offset the effect the 2006 expansion of the case mix classification model (RUGs) had on provider behavior, which CMS had intended to be budget neutral, and the offsetting effect of the proposed 2.1 percent update to the Medicare “market basket” of SNF goods and services.

The SNF proposed rule also:

  • Proposes a revised case mix classification methodology (RUG-IV) and implementation schedule for FY 2011, reflecting updated medical practice and resource utilization in SNFs.

CMS was concerned that under the current RUGs methodology, concurrent therapy has become the standard of care. To reflect CMS’s preference for individual therapy, CMS is proposing in the RUG-IVs to allocate concurrent therapy minutes to individual patients to compute the payment rates.

CMS also proposes to significantly restrict the look-back period. Under the look-back period policy, a resident’s RUG classification is based, in part, upon service received prior to admission. Under the RUG-IV proposal, CMS proposes considering only those services that are provided after admission to the SNF.

  • Invites comment on a possible new rate component to account for the use of non-therapy ancillary services.
  • Includes information on the transition to the Minimum Data Set, Version 3.0 (MDS 3.0) nursing home resident assessment instrument.
  • Invites comment on a proposed requirement for quarterly reporting of nursing home staffing data.

The revised policies and payment rates contained in the SNF proposed rule generally become effective on October 1, 2009. Comments must be received by June 30, 2009. A final rulemaking from CMS on the SNF proposed rule is anticipated in early August.