Prospective payment system and consolidated billing for skilled nursing facilities for FY 2018

Authored by Louis Shiber

Scheduled to be Published, August 4, 2017
Unpublished Version – Final Rule

The Centers for Medicare and Medicaid Services (CMS) has drafted the Final Rule, scheduled to be published on August 4, 2017 that addresses the Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2018, SNF Quality Reporting Program, SNF Value-Based Purchasing Program and Survey Team Composition.

SNF Prospective Payment System and Consolidated Billing

In this Final Rule, CMS has revised and rebased  the SNF Market Basket Index for FY 2018 (October 1, 2017 thru September 30, 2018) and subsequent fiscal years by updating the base year from 2010 to 2014. An additional cost category has been added for Installation, Maintenance and Repair Services. The projected Market Basket Forecast is set at 2.6 percent for FY 2018 before the Multifactor Productivity Adjustment (MFP). The final Market Basket Adjustment is required due to section 411(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which requires the SNF Market Basket to be adjusted by the MFP resulting in a two percent calculated Market Basket Forecast Adjustment in FY 2018. In addition to the MFP adjustment, MACRA requires CMS to adjust the federal rates for FY 2018 by only one percent.

The unadjusted federal rates per diem urban are as follows:

Rate ComponentNursing –
Therapy –
Therapy –
Per Diem Amount$177.26$133.52$17.59$90.47

The unadjusted federal rates per diem rural are as follows:

Rate Component

Nursing –

Therapy –

Therapy –


Per Diem Amount





The overall economic impact of the final rule is estimated to be an increase of $370 million in aggregate. The Wage Index adjustment factor can impact rates for providers. Due to the Wage Index revisions, certain core based statistical areas could experience reductions in adjusted facility rates of up to four percent in some cases.

SNF Quality Reporting Program (SNF QRP)

CMS has finalized the definition of Standardized Resident Assessment Data across the continuum of post-acute care (PAC) providers: skilled nursing facilities (SNF), long term care hospitals (LTCH), home health agencies (HHA) and inpatient rehabilitation facilities (IRF). CMS believes that the four PAC settings are relevant to each other and maintain synergies for care; providing longitudinal information to facilitate coordinated care and improved beneficiary outcomes. CMS continues to state that SNFs that fail to submit the required quality data to CMS will be subject to a two percent point reduction to the otherwise applicable annual market basket percentage update with respect to that fiscal year.

SNF Value-Based Purchasing Program (SNF VBP)

In FY 2016, CMS adopted an all-cause, all-condition hospital readmission measure and in FY 2017, CMS adopted an all-condition, risk-adjusted potentially preventable readmission measure. In FY 2018, CMS is finalizing requirements for the SNF VBP Program, the process for making value-based incentive payments and limitations on review. CMS is proposing a linear function with adjustment, which, at the end of the day, actually assigns a value-based incentive payment multiplier to each SNF that corresponds to their performance score (i.e., how did you rate as it relates to the above measures).

The two percent reduction of the federal rates remains intact for the funding mechanism for SNF VBP. The reduction is intended to incentivize SNFs to perform well under the measures outlined above.

However, the value-based incentive payments for all SNFs in a fiscal year are scheduled to be between 50 and 70 percent of the total amount of reductions to payments for that fiscal year.

SNF VBP is scheduled to be implemented in FY 2019.

Survey Team Composition

CMS addressed the Survey Team Composition as it relates to “complaint surveys.” CMS recognizes that there is a lack of clarity in the regulatory provision related to complaint surveys and that there has been recent administrative litigation; thus the need for additional clarification. Complaint surveys and surveys related to onsite monitoring, inclusive of revisit surveys, allows state survey agencies to determine which specialized investigative team will be utilized, which may or may not include a registered nurse. CMS believes that the requirement to have a registered nurse on all “surveys” would place an undue burden on the resources of state survey agencies. CMS did finalize the regulatory changes as proposed to clarify that only surveys conducted under sections 1819(g)(2) and 1919(g)(2) of the Act are subject to the requirement at §488.314 that a survey team consist of an interdisciplinary team that must include a registered nurse.

The proposed Final Rule is voluminous. Please do not hesitate to contact a Baker Tilly Healthcare professional for assistance.