On July 31, 2024, CMS issued a final rule (the Final Rule) for fiscal year (FY) 2025 updating Medicare payment policies and rates for skilled nursing facilities (SNFs) under the SNF Prospective Payment System (PPS). Under the Final Rule, CMS presented several updates, revisions, and changes to Medicare payment policies. Key changes are highlighted below.
SNF Payment Rates
In the Final Rule, CMS is increasing the SNF PPS rate by 4.2% based on the SNF market basket increase of 3.0% plus a 1.7% market basket forecast error adjustment, and a negative 0.5% productivity adjustment. This increase is 0.1% higher than the proposed increase in the proposed rule. SNF Value-Based Purchasing Program reductions, estimated to total $196.5 million in FY 2025, are not included in these figures. CMS is updating the SNF market basket base year from the current base year 2018 to a new base year of 2022. The SNF wage index is updated using the new Office of Management and Budget (OMB) Bulletin 23-01 Core-Based Statistical Areas (CBSAs) to improve wage accuracy.
Patient-Driven Payment Model (PDPM) ICD-10 Code Mappings
CMS is continuing to work to finalize the PDPM ICD-10 Code Mapping. These new code mappings are intended to improve the accuracy and consistency of skilled intervention primary diagnosis made during a Part A stay.
Nursing Home Enforcement
The Final Rule permits CMS to impose multiple per instance CMPs for the same type of noncompliance and both per instance and per day CMPs for the same deficiency during the same survey. The Final Rule also decouples the amount of the CMP from the date that the survey started or the beginning date of noncompliance, meaning that CMS now has the flexibility to impose a per instance CMP to address the facility’s noncompliance prior to the survey and a per day CMP starting on the survey start date. Even though more CMPs can be imposed, the CMPs are still subject to statutory daily limits. In addition, CMS can continue to consider the SNF’s financial condition in determining the appropriate CMP.
SNF Quality Reporting Program (QRP)
CMS is continuing to finalize updates to the SNF QRP, including adding four Social Determinants of Health (SDOH) items and revising one SDOH item. The four new items: Living situation (1 item), Food (2 items) and Utilities (1 item) will be implemented starting with the FY 2027 QRP (residents admitted on October 1, 2025). CMS is also revising the Transportation item that will also be implemented starting with the FY 2027 QRP. CMS is also working on a SNF QRP validation process where approximately 1,500 SNFs will be randomly selected to share medical records for validation.
SNF Value-Based Purchasing (VBP) Program
CMS is adopting two policies related to the VBP program: (1) a measure selection, retention, and removal policy similar to policies CMS has adopted for other quality programs; and (2) a technical measure update policy to finalize VBP measure specifications. CMS is also finalizing an administrative policy to make sure SNFs are using the right data to calculate their measurements.
The Final Rule is scheduled to be published in the Federal Register on August 6, 2024. A display copy of the Final Rule is available here.
