Fiscal Year 2025 Skilled Nursing Facility Prospective Payment System Final Rule (CMS 1802-F)

On July 31, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the final rule updating Medicare payment policies and rates for skilled nursing facilities (SNFs) under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for fiscal year (FY) 2025. This annual update is required by law and includes significant changes aimed at enhancing payment accuracy and quality of care in SNFs.

Key Highlights:

Payment Rate Updates:

• Increase in Payments: CMS will increase Medicare Part A payments to SNFs by a net 4.2%, approximately $1.4 billion. This includes a 3.0% market basket increase, a 1.7 percentage point forecast error adjustment, and a 0.5 percentage point productivity adjustment.
• Market Basket Rebase: The SNF market basket will be rebased to reflect a 2022 base year, with wage index updates based on new Cre-Based Statistical Areas (CBSAs). Under these new CBSAs a number of counties currently part of an Urban CBSA will be rural under the revised delegations.
• These figures do not incorporate the SNF Value-Based Purchasing (VBP) reductions for certain SNFs subject to the net reduction in payments under the SNF VBP, which are estimated to total $196.5 million in FY 2025.

PDPM ICD-10 Code Mappings:

• Code Updates: Changes to the Patient-Driven Payment Model (PDPM) ICD-10 code mappings will allow for more accurate primary diagnoses that meet skilled intervention criteria during a Part A SNF stay. As a result of these changes,  a few codes which currently map to the medical management clinical category will be return to provider codes effective October 1, 2024. Details are available on the PDPM Website

Nursing Home Enforcement:

• CMP Policy Changes: CMS will expand its ability to impose civil monetary penalties (CMPs) for health and safety violations for sustained correction of deficiencies. The revisions will expand the number and types of CMPs that can be imposed on LTC facilities, allowing for more per-instance (PI) CMPs to be imposed in conjunction with per-day (PD) CMPs. In addition, the authority to impose multiple PI CMPs is granted when the same type of noncompliance is identified on more than one day. The revisions will enable CMS or the States to impose a CMP for the number of days of previously cited noncompliance since the last three standard surveys for which a CMP has not yet been imposed to ensure that identified noncompliance may be subject to a penalty.
• CMS estimates the overall economic impact of these changes will result in an additional $25 million in penalties to LTC facilities annually.

Quality Reporting Program (QRP):

• • • SDOH Items: Four new Social Determinants of Health (SDOH) items and one modified item will be added to the SNF QRP starting FY 2027. This includes items on living situation, food, and utilities to better understand and address residents’ needs. The changes will require updates to the MDS 3.0 effective 10/1/2025. The new items to be added to the MDS  include the following:
      •  What is your living situation today?
      •  Within the past 12 months you worried that your food would run out before you got money to buy more
      •  Within the past 12 months the food you bought did not last and you didn’t have money to buy more
      • In the past 12 months the electric, gas, oil or water company threatened to shut off services to your home
    • Data Validation: SNFs will participate in a validation process for data submitted under the SNF QRP, beginning FY 2027. Approximately 1,500 randomly selected SNFs will undergo this validation process through the submission of medical records.

Value-Based Purchasing (VBP) Program:

• • • Measure Policies: CMS is adopting a measure selection, retention, and removal policy, along with technical measure update policies, to ensure the VBP program measures are the most appropriate for assessing care quality.
    • Incentive Payments: CMS will withhold 2% of SNFs’ Medicare Part A payments to fund the VBP Program, redistributing 50-70% of this withhold as incentive payments based on performance.

Economic Impact:

• • • Aggregate Payments: The final rule is estimated to increase aggregate payments to SNFs by $1.4 billion in FY 2025.
    • Costs and Savings: Estimated annual costs for FY 2027 SNF QRP changes are $1.99 million, while savings due to removal of MDS items are $14.13 million annually starting FY 2026.

For further details, view the final rule on the Federal Register.

Proactive can support your facility in preparing for these changes.

• • • Contact us to schedule a mock survey
    • Register to attend virtual 10-CM training on September 9, 2024
    • Learn more about Proactive’ s MDS support and PDPM safeguard audit services