CMS Issues FY09 SNF Payment Rule

VHCA (5/2/2008)

Late Thursday the Centers for Medicare & Medicaid Services (CMS) issued its Notice of Proposed Rule Making (NPRM) for FY 2009 payment updates for skilled nursing facilities (SNFs). Initial analysis of this rule by the American Health Care Association (AHCA) indicates there are two critically important components for our profession - a full market basket update for FY 2009, and a cut in the form of an adjustment of Resource Utilization Group payment rates. The proposed rule does not address expected case-mix index changes resulting from the Staff Time and Resource Intensity Verification (STRIVE) Project.  The proposed rule does include a full market basket update of 3.1 percent, or approximately $710 million in additional Medicare funds for FY 2009.

The Administration's FY 2009 budget included a regulatory proposal to cut Medicare SNF payments to account for a budget neutrality "forecasting error" made by CMS in 2005. This rule seeks to correct for the error and includes a proposed recalibration of case mix weights and non-therapy ancillary services that results in a decrease in SNF payments for FY 2009 of approximately $770 million or $5 billion over five years. The net result of the two proposals is a decrease of SNF Medicare payments from FY 2008 to FY 2009 of approximately $60 million.

AHCA’s preliminary analysis indicates that CMS has failed to take into account the expanding role SNFs play in treating medically complex post-acute patients, the higher costs associated with caring for those patients and, importantly, the desired impact that re-implementation of the 75 percent rule has had on SNF patient mix and overall Medicare expenditures.  AHCA continues to aggressively advocate to CMS and Congress the critical need for stable funding in order to sustain the profession's quality improvements and to provide the post-acute care and services relied upon annually by millions of Americans.  

AHCA is reviewing the proposed rule and will provide a more detailed summary next week. AHCA plans to submit comprehensive comments based on a more thorough analysis. Members are encouraged to review the proposed rule and submit comments.  The rule may be downloaded here.  Comments are due June 30, 2008.  VHCA will keep members informed of additional analysis related to the proposed rule.