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Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2017, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and SNF Payment Models Research

On August 6, 2016, CMS released a final rule, which will become effective October 1, 2016, that outlines fiscal year (FY) 2017 Medicare payment policies and rates for the Skilled Nursing Facility Prospective Payment System (SNF PPS), the SNF Quality Reporting Program (SNF QRP), and the SNF Value-Based Purchasing (SNF VBP) Program. The final rule updates FY2017 SNF PPS payment rates, specifies a potentially preventable readmission measure for the Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP), and includes additional polices and measures in the Skilled Nursing Facility Quality Reporting Program (SNF QRP).

The policies in the final rule continue to shift Medicare payments from volume to value. CMS has set goals and a timeline to move the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they provide to their patients. A summary of the upcoming changes from the Final Rule are highlighted below.

Updates to Payment Rates under the SNF Prospective Payment System (PPS)

CMS projects that aggregate payments to SNFs will increase in FY 2017 by $920 million, or 2.4 percent, from payments in FY 2016.

Changes to the SNF Quality Reporting Program (QRP)

The Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act) requires SNFs to report data on measures that satisfy measure domains specified in the Act, and requires that these measures be aligned with measures implemented for Long-Term Care Hospitals (LTCHs), Inpatient Rehabilitation Facilities, SNFs, and Home Health Agencies (HHAs). This final rule adopts three quality measures to meet the resource use and other measure domains, and one measure to satisfy the domain of medication reconciliation.

The new measures finalized for FY2018 and subsequent years payment determination are:

Medicare Spending Per Beneficiary – Post-Acute Care (PAC) SNF QRP
Discharge to Community – PAC SNF QRP
Potentially Preventable 30-Day Post-Discharge Readmission – SNF QRP The quality measure finalized for the FY 2020 payment determination and subsequent years to meet the medication reconciliation domain is:
Drug Regimen Review Conducted with Follow-Up for Identified Issues
SNFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to the annual market basket percentage update factor for fiscal years beginning with FY 2018.

Policies and procedures associated with public reporting are also being finalized, including the reporting timelines, preview period, review and correction of assessment-based and claims-based quality measure data, and the provision of confidential feedback reports to SNFs.

SNF Value-Based Purchasing (VBP) Program

The Protecting Access to Medicare Act of 2014 (PAMA) authorizes the establishment of a SNF VBP Program beginning with FY 2019 under which value-based incentive payments are made to SNFs based on performance.

This final rule specifies the SNF 30-Day Potentially Preventable Readmission Measure, (SNFPPR), as the all-cause, all-condition risk-adjusted potentially preventable hospital readmission measure as required by law. The SNFPPR assesses the facility-level risk-standardized rate of unplanned, potentially preventable hospital readmissions for SNF patients within 30 days of discharge from a prior admission to a hospital paid under the Inpatient Prospective Payment System, a critical access hospital, or a psychiatric hospital. The measure is claims-based, requiring no additional data collection or submission burden for SNFs.

The full methodology for the measure is detailed in the Measure Specifications available at

In this final rule, CMS has also finalized additional policies related to the SNF VBP Program including:

Establishing performance standards;
Establishing baseline and performance periods;
Adopting a performance scoring methodology; and
Providing confidential feedback reports to SNFs
The Final Rule published on August 5, 2016 is available at: