On April 8, 2021, CMS issued proposed rules for the Fiscal Year (FY 2022) Skilled Nursing Facility (SNF) Prospective Payment System (PPS) and FY 2022 hospice payments. CMS estimates that the aggregate impact of the payment policies in the SNF PPS proposed rule would result in an increase of approximately $444 million in Medicare Part A payments to SNFs in FY 2022, and CMS estimates the hospice proposed rule would result in a $530 million increase in payments for hospices for FY 2022. CMS is accepting comments on both proposed rules until June 7, 2021.

Proposals in the FY 2022 SNF PPS Proposed Rule

• Payment Increase. As noted, CMS estimates that the aggregate impact of the payment policies in the SNF PPS proposed rule would result in an increase of approximately $444 million in Medicare Part A payments to SNFs in FY 2022. However, CMS’s impact figures do not incorporate the SNF Value-Based Program reductions that are estimated to be $184.25 million in FY 2022.
• Methodology for Recalibrating the Patient Driven Payment Model Parity Adjustment. CMS is seeking comments on a potential methodology for recalibrating the Patient Driven Payment Model (PDPM) parity adjustment. CMS implemented the PDPM in 2019 and intended the PDPM to be implemented in a budget neutral manner. However, since PDPM’s implementation, CMS’s data suggests an unintended increase in payments of approximately 5%, or $1.7 billion in FY 2020. CMS notes that the COVID-19 Public Health Emergency may have affected the data. Accordingly, CMS is seeking comments on a potential method for recalibrating the PDPM parity adjustment.
• New Blood Clotting Factor Exclusion. The Consolidated Appropriations Act (Pub. L. 116-260, enacted December 27, 2020) requires that certain specified blood clotting factors used for the treatment of patients with hemophilia and other bleeding disorders and items and services related to the furnishing of such factors be excluded from the consolidated billing requirements under the SNF PPS for items and services furnished on or after October 1, 2021. As a result, CMS is proposing a proportional reduction in the Medicare Part A SNF rates to account for this new exclusion. CMS’s proposed methodology, if finalized, would result in an estimated decrease of approximately $1.2 million in aggregate Part A SNF spending but CMS intends that this proposed reduction would be offset by the increase in Part B spending that would occur due to these items being excluded from SNF consolidated billing.
• SNF Value-Based Purchasing Program. The proposed rule also includes proposals for the SNF Value-Based Purchasing Program. Specifically, CMS is proposing to suppress the SNF 30-Day All-Cause Readmission Measure for the FY 2022 program year because circumstances caused by the COVID-19 Public Health Emergency have affected the measure and the resulting performance scores significantly. CMS is also soliciting input from stakeholders on which quality measures should be considered under an expanded SNF Value-Based Purchasing Program.
• SNF Quality Reporting Program Update. CMS is proposing certain updates to the SNF Quality Reporting Program, which is a pay-for-reporting program where SNFs that do not meet reporting requirements may be subject to a 2% reduction in their annual update. CMS’s proposals regarding the SNF Quality Reporting Program include:
  • Closing the Health Equity Gap Request for Information– In accordance with other efforts to address the health equity gap, CMS is seeking feedback on ways to attain better health equity with respect to SNFs. The proposed rule includes a Request for Information for methods of expanding measure development and the collection of new standardized patient assessment data elements that would help address gaps in health equity in the SNF Quality Reporting Program.
  • Changing SNF Quality Measures –CMS is proposing certain new measures and updates to existing measures for the SNF Quality Reporting Program. Specifically, CMS is proposing:
    • A new claims-based measure beginning with the FY 2023 program to estimate the rate of healthcare-associated infections that are acquired during SNF care and result in hospitalization;
    • A new measure beginning with the FY 2023 program which would require SNFs to report on COVID-19 vaccination among healthcare personnel; and
    • An update to the denominator for the Transfer of Health Information to Patient-Post Acute Care quality measure to avoid double counting of patients discharged home under the care of an organized home health service organization or hospice.

Proposals in the FY 2022 Hospice Proposed Rule

• Payment Increase. CMS estimates the hospice proposed rule would result in a 2.3% increase (approximately $530 million) in payments for hospices for FY 2022.
• Hospice Conditions of Participation. The proposed rule includes changes to the hospice conditions of participation regarding hospice aide competency evaluation standards. Specifically, CMS proposes making the COVID-19 waiver that allows for the use of pseudo-patients for hospice aide competency training permanent. Pseudo-patients are people trained to participate in a role-play situation or a computer-based mannequin device. CMS is also proposing a complimentary change that would allow hospices to focus on a hospice aides’ specific deficient and related skill(s) instead of assessing multiple areas within a competency evaluation.
• Hospice Quality Reporting Program. CMS proposes certain changes to the Hospice Quality Reporting Program, including:
  • Adding new a measure called the Hospice Care Index, which would include 10 indicators of quality calculated from claims data;
  • Adding Consumer Assessment of Healthcare Providers and Systems (CAHPS®), Hospice Survey Star ratings on Care Compare;
  • Adding a claims-based measure for public reporting of hospice visits in the last days of life;
  • Removing the seven individual Hospice Item Set measures because a more broadly applicable measure, the Hospice Comprehensive Assessment Measure (NQF # 3235), is available and already publicly reported; and
  • Updating the Hospice Outcome and Patient Evaluation (HOPE) assessment instrument.
• Closing the Health Equity Gap Request for Information. Like with the SNF Quality Reporting Program, CMS is also issuing a request for information regarding closing the health equity gap for the Hospice Quality Reporting Program. Specifically, CMS is seeking feedback on ways to attain health equity for all patients through policy solutions that apply to the Hospice Quality Reporting Program and other quality reporting programs.
• Home Health Quality Reporting Program. CMS included changes to the Home Health Quality Reporting Program in the proposed rule because CMS indicated it needs to finalize certain changes by October 1, 2021 for public reporting to begin in January 2022. The proposed Home Health Quality Reporting Program changes include using three quarters rather than four quarters of data for refreshes of certain OASIS-based measures and claims-based measures.

CMS’s fact sheet for the SNF PPS proposed rule is available here, and the fact sheet for the hospice rule is available here. The SNF PPS proposed rule is available here and the hospice proposed rule is available here.