SNF Final Rule Summary

VHCA (8//7/2008

On July 31, 2008, the Centers for Medicare & Medicaid Services (CMS) issued its final rule for the skilled nursing facility (SNF) prospective payment system (PPS) fiscal year 2009 update: Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2009, Final Rule.  The final rule is expected to be published in the Federal Register on August 8, 2008 and goes into effect on October 1, 2008.

Click here for the summary and a copy of the final rule itself.  Additional information on the SNF PPS and the final rule are available on the CMS website. 

The FY 2009 SNF PPS final rule marks the conclusion of an intensive effort by the American Health Care Association (AHCA) to maintain financial stability for the SNF profession and advance the profession’s aggressive quality improvement efforts.  The final rule not only provides for a full market basket update of 3.4% (estimated at about $780 million overall or about $11 per patient day), but also rescinds a 3.3% reduction in SNF payments (estimated at about $770 million overall or about $11 per patient day) in the proposed rule. 

With the successful conclusion of this battle, AHCA now brings renewed focus and vigor to other important areas of SNF payment policy as the profession faces new battles that are appearing on the long term care horizon, including the CMS Staff Time Resource Intensity Verification (STRIVE) project, implementation of MDS 3.0, maintenance of the exceptions process for Part B therapy services while a new payment system is developed, and many other issues.

In addition to the key elements mentioned above, AHCA’s analysis of the final rule highlights the following provisions:

• The labor-related weight for FY 2009 is 69.783%, down from 70.249% for FY 2008.  
• For FY 2009, CMS will continue to employ inpatient hospital wage data in the computation of the Core-Based Statistical Area (CBSA) SNF PPS wage index that is used to adjust the labor-related portion of the federal rate. 
• In geographic areas where there are no hospitals and, thus, no hospital wage index data on which to base the calculation of the SNF PPS wage index, CMS will update the wage index using the agency’s alternative urban and rural methodologies.  CMS will also make two conforming regulation text definition changes that will affect urban/rural designations in several counties/CBSAs. 
• CMS has postponed the application of the results from its STRIVE (the Staff Time and Resource Intensity Verification) project that began in the fall of 2005.  CMS intends to introduce new case-mix weights in FY 2010 that will reflect STRIVE analysis and findings and any changes to the RUG classification structure.
• CMS continues to refine the next version of the Minimum Data Set (MDS) which should more accurately reflect each resident’s clinical, cognitive, and functional status as well as the care provided.  CMS anticipates that this next version -- MDS 3.0 -- will replace the current MDS, on a national level by FY 2010.  
• CMS does not provide an update on the SNF PPS proposed value-based purchasing demonstration (also referred to as pay-for-performance).  Rather, CMS focuses on its preventable hospital-acquired conditions (HAC) payment initiative in Inpatient Prospective Payment System (IPPS) hospitals.  CMS emphasizes that the broad principle articulated in the HAC payment provision for IPPS hospitals -- of Medicare not paying for these types of preventable conditions -- could potentially be applied to other Medicare payment systems for similar conditions that occur in other care settings that could include SNFs.  CMS does not propose such a change at this time, and indicates that the agency may need additional statutory authority to do so. 

AHCA’s complete analysis of the final rule is available on the VHCA website.