Hospital advocates had urged CMS to incorporate sociodemographic risk adjustment for those outcome measures, but CMS rejected the request in the final rule.

Aug. 2—The Centers for Medicare & Medicaid Services (CMS) this week issued final rules for inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs) for Fiscal Year (FY)18. 

The final rule included 1 percent payment increases for both types of facilities—as required by the Medicare Access and CHIP Reauthorization Act of 2015—as well as changes to coming quality reporting programs.

Quality Reporting Programs

Among the highest-profile changes from the SNF proposed rule was CMS’s decision to delay standardized resident assessment data reporting requirements for three new categories after hospital advocates—and others—raised concerns about the “significant burden” those would impose.

Reporting was delayed for cognitive function and mental status; special services, treatments, and interventions; and impairments.

Specifically, providers worried that the volume of the proposed standardized resident assessment data elements would require hiring more staff, retraining staff on revised questions or coding guidance, and reconfiguring internal databases and electronic health records.  

“We understand the concerns raised by commenters that the finalization of our standardized resident assessment data proposals would require SNFs to spend a significant amount of resources preparing to report the data, including updating relevant protocols and systems and training appropriate staff,” CMS officials wrote in the rule.

The American Hospital Association (AHA) had urged at least a one-year delay to allow for more testing. CMS decided to conduct a “national field test” of reporting on the categories and issue a final decision within two years.

Socioeconomic Adjustment

CMS plans to publicly report data in 2018 for three SNF assessment-based measures and three claims-based measures. Hospital advocates had urged CMS to incorporate sociodemographic risk adjustment for those outcome measures, but CMS rejected the request in the final rule.

“The evidence continues to mount that sociodemographic factors beyond providers’ control–such as the availability of primary care, physical therapy, easy access to medications and appropriate food, and other supportive services–influence performance on outcome measures,” wrote Casey Dungan, senior vice president of the Tennessee Hospital Association. “As a southeastern state, many patients in Tennessee SNFs are subject to these factors in a disproportionately high manner compared to other parts of the country.”

CMS officials wrote that they understand that social risk factors such as income, education, race and ethnicity, employment, disability, community resources, and social factors “play a major role in health.”

“As we have previously stated, we are concerned about holding providers to different standards for the outcomes of their patients with social risk factors because we do not want to mask potential disparities,” CMS officials wrote.

They also noted that the issue continues to be examined by multiple governmental and non-governmental bodies and may be revisited.

The lack of socioeconomic adjustments was one reason why the California Hospital Association (CHA) urged CMS to delay replacing the SNF 30-Day All-Cause Readmission Measure (SNFRM) with the SNF 30-Day Potentially Preventable Readmission Measure (SNFPPR) for the SNF Value-Based Purchasing (VBP) Program.

“Many CHA member hospitals operate SNFs that provide care to the most vulnerable residents in their communities, particularly those with complex medical and behavioral health needs, and with limited family support and access to resources,” wrote Alyssa Keefe, vice president of federal regulatory affairs for CHA. “Such patients/residents have greater challenges in achieving and maintaining optimal medical and functional outcomes, and are at significantly greater risk for readmission.”

CHA, whose member hospitals operate about 100 hospital-based SNFs, urged CMS to submit the new measure to the National Quality Forum (NQF) for evaluation of the appropriate risk adjustment for socioeconomic factors.

CMS officials said the earliest they could replace SNFRM with SNFPPR is FY21, but added, “We have not yet determined if it would be practicable to replace the SNFRM at that time.”


CMS also rejected the request of some hospital advocates that it provide the maximum incentive payment to SNFs under their new VBP program. Federal law allowed CMS to use a 2 percent reduction in Medicare per diem payments to each SNF and provide up to 70 percent of that total back to SNFs as value-based incentive payments. But CMS has decided to limit payments to 60 percent of the pool and return the remainder to the Medicare Trust Fund.

“We believe that reductions in the proportions of the funds that are returned to SNFs through the VBP will turn the policy into a penalty program rather than a payment-for-value program,” wrote Vickie Kunz, senior director of health finance for the Michigan Health & Hospital Association.

But CMS officials worried that the bonus pay increase would undermine Medicare’s long-term stability “because it results in significantly higher Medicare spending under the program in a provider sector already experiencing significantly positive Medicare margins.” 

The SNF VBP program’s scoring and operational policies for its first year (FY19) included:

  • Requiring one readmission measure for each year;
  • Paying SNFs ranked in the lowest 40 percent less than the amount they would otherwise be paid in the absence of the SNF VBP; and
  • Conducting both public and confidential facility performance reporting.

IRF Changes

The Medicare payment policy changes for IRFs included: 

  • Finalization of some proposed changes to the IRF presumptive test for demonstrating 60 percent Rule compliance;
  • Modification of the original proposal for some codes (such as the traumatic brain injury and hip fracture codes);
  • Withdrawal of some proposed changes (such as for "unspecified codes"); and
  • Finalization of the proposal to eliminate the 25 percent penalty levied on late patient assessment reports

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, August 02, 2017