FY 2023 final rule for skilled nursing facilities cuts payments to offset new payment model

The Centers for Medicare & Medicaid Services today issued its final rule for fiscal year 2023 for the skilled nursing facility prospective payment system, which is estimated to increase FY 2023 payments by 2.7%, or $904 million, relative to FY 2022. This includes a 3.9% market basket update, a 1.5-percentage-point market basket forecast error adjustment, and a 0.3-percentage-point productivity cut. This figure also includes a 2.3% parity adjustment offset; the agency finalized its proposed 4.6% parity adjustment offset, which it states is necessary to achieve a budget-neutral implementation of the new SNF case-mix system (the Patient-Driven Payment Model), but will phase in implementation over two years. These impact figures do not incorporate the SNF Value-based Purchasing reductions for certain SNFs. In addition, to mitigate year-to-year instability in SNF PPS payments, CMS also finalized a permanent 5% cap on annual wage index decreases. 
 
CMS will adopt one new quality measure for the SNF Quality Reporting Program that assesses the rate of influenza vaccination coverage among health care personnel beginning with the FY 2024 SNF QRP, as opposed to the FY 2025 program as originally proposed. CMS will also require SNFs, beginning on Oct. 1, 2023, to report on certain measures and patient data that were delayed due to the COVID-19 public health emergency.

In addition, the SNF VBP program will adopt two new quality measures starting with the FY 2026 program year, with one additional measure in the FY 2027 program year; update the scoring methodology used to determine payment adjustments; and continue last year’s measure suppression policy.