Healthcare Event

The fiscal year (FY) 2022 skilled nursing facility (SNF) prospective payment system final rule was released July 29, 2021, and is effective October 1, 2021. There were several updates including factors affecting payment rates, changes to diagnosis code mapping under the Patient-Driven Payment Model (PDPM), and updates to both the SNF Quality Reporting Program (QRP) and SNF Value-Based Purchasing (VBP) Program. In addition, there was discussion surrounding the much debated future PDPM parity adjustment. 

Key Takeaways

Delayed PDPM Parity Adjustment

The proposed rule left us with the potential of a 5 percent parity reduction as CMS data supported that PDPM was not budget neutral as it intended. The proposed rule outlined various examples of how this adjustment may be phased in. After reviewing feedback and a multitude of comments, CMS determined it did not have adequate information to measure the effect due to only having five months of PDPM data prior to the public health emergency (PHE). The potential for a parity adjustment will be re-examined in the FY 2023 proposed rule.

Effect to Medicare Part A Rates

The final rule included a net market basket increase of 1.2 percent. This is based on an unadjusted increase of 2.7 percent reduced by both a 0.08 percent forecast error and a 0.07 percent productivity adjustment. There were updates to the SNF market basket index including updating the base year from 2014 to 2018. CMS estimates the overall effect to be an increase of $411 million in payments for FY 2022.

The unadjusted per diem components of the rates for FY 2022 are listed below for both urban and rural providers. Of these rates, 70.4 percent of each component is adjusted by the wage index, which varies for each core-based statistical area. 


Urban Table


Rural Table

To access your rates, download BKD’s complimentary rate calculator.

PDPM ICD-10 Mapping

The final rule contained updates to the mapping of several diagnoses and where they are classified under the PDPM. Some of the conditions affected include acute neurologic conditions, sickle cell disease, esophageal conditions, anoxic brain damage, and vaping-related disorders. The CMS website contains an ICD-10 mapping tool, which will be updated for FY 2022. 

HIV Add-On

The add-on for HIV was renewed and remains unchanged from prior years, including a 12.8 percent increase to the nursing component and an additional add-on of eight points to the nontherapy ancillary component. This add-on is based on claims data containing a diagnosis code for HIV or AIDS (B20).

Consolidated Billing

The final rule updated exclusions to consolidated billing to exclude certain blood-clotting factors that are used to treat hemophilia and other bleeding disorders. These exclusions also include items and services related to furnishing these factors. To offset the increase in expected Part B expenditures, CMS was required to reduce the SNF base rates. The CMS website contains updated consolidated billing exclusions for each FY.

VBP Program

Due to the PHE’s effect on readmission rates, CMS did not feel it could make accurate or fair comparisons regarding performance. The SNF 30-Day All-Cause Readmission Measure (SNFRM) has been suppressed for FY 2022. The effects to payment are as follows:

  • Low-volume providers (fewer than 25 stays) will not be affected by VBP and will have no adjustment to their payment. 
  • Providers with more than 25 stays will receive back 60 percent of the 2 percent withheld regardless of previous performance measures. Therefore, essentially all providers not considered low-volume will have a reduction of 0.8 percent to their rates due to VBP.

CMS estimates the overall effect of changes related to the SNF VBP Program to be a reduction of $191.64 million in payments for FY 2022. Even though Congress enacted the 2021 Consolidated Appropriations Act on December 27, 2020, which allows for up to 10 measures to be included in the VBP Program, CMS has not yet determined if it will add any measures starting with the FY 2024 program. CMS is still planning on transitioning from the SNFRM to the SNF Potentially Preventable Readmissions After Hospital Discharge (SNFPPR) measure and will submit for National Quality Forum approval in the fall of 2021.

Quality Reporting Program

In the final rule, CMS adopted two new measures for quality reporting, described below, and updated another.

  • The SNF Healthcare-Associated Infections (HAI) Requiring Hospitalizations measure will be used beginning FY 2023 and will measure the rate of healthcare-associated infections acquired during SNF care that result in hospitalization using one year of Medicare claims data. Infections identified in this measure include conditions such as sepsis, urinary tract infection, and pneumonia. The data for this measure is claims-based, so there is no additional requirement for the SNF to report this information. This measure is risk adjusted including age, gender, primary diagnosis, and other healthcare comorbidities. The purpose of the measure is to identify SNFs with notably higher rates than their peers and the national average HAI rate in infection prevention and management. 
  • The COVID-19 Vaccination Coverage Among Healthcare Personnel measure requires SNFs to report vaccination data of employees through the Centers for Disease Control and Prevention National Healthcare Safety Network, beginning October 1, 2021. One week of data should be reported each month, which CMS will then average over a quarter, which eventually will expand to a 12-month average. Since providers are already reporting vaccination status through this system, CMS estimates the additional burden will be 12 hours over the course of a year. The purpose of this measure is to determine if SNFs are taking adequate steps to reduce the transmission of COVID-19 and serve their respective communities. 
  • CMS also updated specifications related to the Transfer of Health (TOH) Information to the Patient-PAC Quality measure. CMS will remove patients discharged home under home health or hospice from the measure. The intent is to remove redundant information, as it was being counted in both the TOH patient and TOH provider measures. Information for this measure cannot be collected until CMS is able to update the Minimum Data Set (MDS) to include item set A2105, Discharge Status; however, CMS implemented this revision for calendar-year 2023 so the measure would already be in place once the updated MDS item is added.
  • Under the PHE, CMS has granted exceptions to QRP reporting that limited the quarters CMS used to report QRP data. Under the final rule, CMS will resume public reporting of QRP information in January 2022, using fewer quarters of data. It was acknowledged that exceptions can be requested by providers who are facing challenges reporting data due to the PHE. 

CMS estimates the overall effect of QRP changes in the final rule to be an increased cost of $6.63 million to SNFs overall. CMS continues to monitor the relevance of the QRP and evaluate additional measures, which will be addressed in future proposed rules. 

How Can You Prepare?

  • Review the effect of Medicare Part A rate changes, including modifications to VBP adjustments, to determine the financial effect it will have on your organization. Then, incorporate this effect into financial budgets and forecasts appropriately. 
  • Ensure billing staff understand the difference in calculating the VBP adjustment for October 1, 2021, and that the billing software is updated for all components that affect rates, i.e., base rates, VBP, etc.
  • Verify that staff responsible for assigning primary diagnoses understand the updated ICD-10 mapping changes and have reviewed the updated mapping tool.
  • Discuss the updated consolidated billing exclusion for blood-clotting factors with admissions, clinical, billing, and accounts payable staff to make sure they are aware of this change.
  • Provide education to clinical staff on changes to VBP and QRP and verify you have processes in place to report all required information including accurate completion of the MDS. 
  • Ensure processes continue to be in place to monitor facility readmission rates and that processes are being developed to manage and monitor rates for HAIs that result in hospitalization. 
  • Verify you have a process in place for reporting required vaccine information to the Centers for Disease Control and Prevention National Healthcare Safety Network.

For more information, reach out to a BKD Trusted Advisor™ or submit the Contact Us form below.

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