On April 15, 2015, Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to address Skilled Nursing Facility (SNF) Medicare rate increases for fiscal year (FY) 2016, as well as to propose a variety of measures that reflect a shift from volume-based to value-based payments.

Under the proposed rule, SNFs would receive a 1.4 percent Medicare rate increase for FY 2016, which CMS anticipates will represent approximately $500 million. The proposed increase is down from the 2 percent increase that SNFs received for FY 2015.

Following the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) and the Protecting Access to Medicare Act of 2014 (PAMA), new quality and reporting measures call for payment penalties for SNFs that fail to adhere to certain quality and reporting requirements. These requirements include measures designed to address the quality of care within SNFs, penalties for hospital readmissions for SNF beneficiaries within a designated time period, and reports regarding staffing data collection.  The proposed rule adopts the SNF All-Cause Readmission Measure as the all-cause, all-condition readmission measure.

The IMPACT Act requires implementation of a quality reporting program (QRP) for SNFs. Beginning with FY 2018, the Act requires SNFs that fail to submit required quality data to CMS under the QRP will have their annual updates reduced by two percentage points.

For the FY 2018 SNF QRP and subsequent years, CMS proposed three measures addressing quality domains identified in the IMPACT Act: (1) skin integrity and changes in skin integrity; (2) incidence of major falls; and (3) functional status, cognitive function, and changes in function and cognitive function. The proposed measures satisfy the IMPACT Act requirement of standardized data reporting across four post-acute care settings, including home health agencies, inpatient rehabilitation facilities, skilled nursing facilities and long-term care hospitals.

PAMA authorized the establishment of an SNF Value-Based Purchasing (SNF VBP) Program beginning with FY 2019, under which value-based incentive payments are made to SNFs in a fiscal year based on performance.

In the proposed rule, CMS seeks public comments on numerous issues related to the SNF VBP Program’s policies, including:

• Performance standards

• Measuring improvement

• Appropriate baseline and performance periods

• Performance scoring methodology

• Public reporting of performance information

• Feedback reports

Comments to the proposed rule are due June 15, 2015.