CMS Issues PPS Final Rule for FY 2018

Carl J. Pucci in Finance & Reimbursement

CMS has issued the final rule for SNF PPS 2018 Medicare payments. Among the highlights of the final rule: 

  • A 1.0 percent net market basket increase (est. $370M nationwide), effective 10/1/17 through 9/30/18
  • Proposal to impose a 2% rate reduction penalty for providers who do not satisfy the FY 2018 Quality Reporting Program (QRP)
  • For the Value Based Program (VBP), establishes a 60% ceiling on payments that can be earned back from the 2% withhold that is imposed should a SNF not achieve the required re-hospitalization rate and level of improvement.

Links to a comprehensive summary of the rule, as well as the CMS fact sheet are contained in the AHCA notice below.

Dear AHCA Member:

Today, the Centers for Medicare & Medicaid Services (CMS) issued the final rule [CMS-1679-F] for Fiscal Year (FY) 2018 Medicare payment rates and quality program provisions for skilled nursing facilities (SNFs).

Of note, comments on the separately released Advanced Notice of Proposed Rulemaking (ANPRM) [CMS-1686-ANPRM], or "pre-rule," are due on August 25, 2017.  CMS may, or may not, act on the Resident Classification System proposal discussed in the pre-rule.  

The final rule for FY 2018 establishes a net market basket increase of 1.0 percent. CMS also revised and rebased the market basket index by updating the base year from FY 2010 to FY 2014 (see below).  Based on proposed changes contained within this proposed rule, CMS projects aggregate payments to SNFs will increase in FY 2018 by $370 million, or 1.0 percent, from payments in FY 2017.  The $370 million amount differs from the estimated $390 million in the proposed rule.  

In addition to the payment system updates, CMS also notes three sections in the Long Term Care Requirements of Participation which it believed caused undue provider burden and invites payment and regulatory ideas for submission to the Center for Medicare and Medicaid Innovation.  Finally, the proposed rule included two opportunities to innovate in SNF policy and broader Medicare policy.  

Specifically, for FY 2018, the update is a result of last year's "permanent doc fix", which required all post-acute care (PAC) providers to receive a maximum market basket update of 1.0 percent in FY 2018 to offset part of the cost of the bill. The FY 2018 update would have otherwise been a net increase of 2.3 percent, which reflects an increase of 2.6 percent minus a 0.4 percent multifactor productivity adjustment as required by Section 3401(b) of the Affordable Care Act (ACA). No forecast error was incurred.

CMS is also proposing that beginning in FY 2018, SNFs that do not satisfy the reporting requirements for the FY 2018 SNF Quality Reporting Program (QRP) would have a penalty of a 2.0 percent reduction to the SNF market basket percentage change for that fiscal year, after any applicable adjustments. With application of this penalty, those SNFs that do not meet the reporting requirements would receive a market basket update of negative 1.0 percent.

Additionally, CMS proposed to revise and rebase the market basket base year from federal fiscal year 2010 to 2014.  CMS updates the market basket base year every three to five years.  The last rebase year was 2014.  Of note, CMS finalized its proposal to transition from a federal fiscal base year to calendar base year 2014.  Additionally, CMS finalized its proposal to take a more granular approach to developing the cost category weights for the 2014-based SNF market basket.

CMS specified several elements of the SNF Value-based Purchasing (VBP) program, including a formula to translate SNF performance into incentive payments as well as how and when the Agency intends to publish SNF performance for the public.  The rule also includes updates to the Quality Reporting Program (QRP), including modifications to existing SNF QRP measures as well as adoption of additional measures.

Please find here a highlights section and preliminary overview of the payment updates, the SNF Value-Based Purchasing (VBP) program new components, and the IMPACT Act quality reporting additions.

To view the FY18 Final Rule click here, the fact sheet is available here, and the FY18 SNF PPS wage index will be posted here in the coming weeks.  

Please contact Mike Cheek if you have comments, suggestions and questions.

As is customary, NYSHFA will be calculating the upcoming regional SNF PPS rates for FY 2018 in the next week or so.


Carl J. Pucci
Chief Financial Officer
518-462-4800 x36