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Volume XI, Number 135

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CMS Announces Proposed Rate Increases and Other Changes for Skilled Nursing Providers and Hospice Providers in Fiscal Year 2022

On April 8, 2021, the Center for Medicare & Medicaid Services (“CMS”) announced a proposed rate increase of 1.3 percent for skilled nursing providers in fiscal year 2022. It is estimated this will result in approximately $444 million increase in payments to skilled nursing facilities (SNF) under Medicare Part A for the fiscal year.  This increased payment rate does not incorporate the SNF Value-Based Program (VBP) reductions that CMS estimates to be $184.25 million for FY 2022.

CMS is also looking at three additional fiscal areas.  First, it is looking at whether it should recalibrate the Patient Driven Payment Model (PDPM) Parity Adjustment.  A parity multiplier is applied for PDPM components to maintain the relative value of each case mix index (CMI) while achieving congruence on overall SNF payments under both the PDPM system and existing RUG-4 systems.

In introducing and implementing PDPM initially, “CMS stated this new payment model would be implemented in a budget neutral manner, meaning the transition to this new payment model would not result in an increase or decrease in aggregate SNF spending.”[1]  However, since the introduction of PDPM in October 2019, CMS data is projecting “[a]n unintended increase in payments of approximately five percent, or $1.7 billion in FY 2020.”[2]  As a result, CMS is seeking comments from the public about a method for recalibrating the PDPM parity adjustment.  CMS is also seeking comments as to whether any potential adjustment should, “[b]e delayed or phased in over time to provide payment stability.”[3]

Second, CMS is proposing to “rebase and revise”[4] the SNF market basket.  The SNF market basket index is used to adjust the SNF cost data to reflect cost increases occurring between cost reporting periods represented in the data and the initial period to which the payment rates apply. CMS is proposing to use the 2018-based SNF market basket to update the PPS payment rates, rather than the 2014-based SNF market basket. 

Finally, CMS is proposing a reduction in Part A payments due to a change in consolidated billing related to blood clotting.  CMS stated that “[t]his proposed reduction in Part A SNF spending is intended to offset the increase in Part B spending that will occur due to these items and services being excluded from SNF consolidated billing.”[5]

CMS is also exploring the possibility of implementing other changes related to quality reporting requirements.  The proposed change that has generated the most interest is CMS’s proposal to adopt COVID-19 vaccination coverage among healthcare personal (HCP) as a quality measure.  This measure would begin in fiscal year 2023 and would “[r]equire SNFs to report on COVID-19 HCP vaccination in order to assess whether SNFs are taking steps to limit the spread of COVID-19 among their HCP, reduce the risk of transmission within their facilities and help sustain the ability of SNFs to continue serving their communities throughout the COVID-19 PHE and beyond.”[6]  As proposed, skilled nursing facilities would begin reporting data October 1, 2021, through the Centers for Disease Control and Prevention National Healthcare Safety Network.

CMS is also proposing a payment rate increase of 2.3 percent for hospice providers in FY 2022. It is estimated this will result in approximately $530 million in increased payments to hospice providers. Hospice providers that fail to meet the quality reporting requirement will receive a two percentage point reduction to the payment update for FY 2022.  The proposed language also adjusted the statutory aggregate cap that limits the overall payments per patient that are made to a hospice provider annually. The proposed cap for fiscal year 2022 is $31,389.66 as compared to the fiscal year 2021 cap amount of $30,683.93.

CMS is also looking at: (1) Hospice Labor Shares; (2) Hospice Conditions of Participation; and (3) Hospice Quality Reporting Program.  In regards to Hospice Labor Shares, CMS is proposing to recalculate and revise, “[t]he labor shares for continuous home care, routine home care, inpatient respite care, and general inpatient care based on the compensation cost weights for each level of care from the 2018 MCR data for freestanding hospices.”[7] Next, CMS is proposing a change to the hospice conditions of participation.  The proposed change is in regards to the hospice aide competency evaluation standards.  Finally, CMS is proposing a new measure for the Hospice Quality Reporting Program.  It is calling the new measure the “Hospice Care Index” and says, “This single measure includes 10 indicators of quality that are calculated from claims data.”[8] If approved this measure would be reported no earlier than May 2022.

CMS will be taking comments on the above proposals for skilled nursing facilities and hospices until June 7, 2021.


[1] CMS Newsroom, (2021, April 9) Fiscal Year (FY) 2022 Skilled Nursing Facility Prospective Payment System Proposed Rule (CMS 1746-P) 

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] CMS Newsroom, (2021, April 9) Fiscal Year 2022 Hospice Payment Rate Update Proposed Rule CMS-1754-P https://www.cms.gov/newsroom/fact-sheets/fiscal-year-2022-hospice-payment-rate-update-proposed-rule-cms-1754-p

[8] Id.

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© 2021 Dinsmore & Shohl LLP. All rights reserved.National Law Review, Volume XI, Number 103
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Timothy Cahill Health Care Attorney Dinsmore Law Firm
Partner Of Counsel

Tim is an attorney with more than two decades of experience in health care-related fields. He has worked as in-house counsel and external counsel for non-profit and commercial health care organizations, health systems, hospitals, physicians and physician groups, joint ventures, and other corporate clients. Most recently, Tim served in the role of general counsel of a regional health system, working closely with the executive team and board to further the organization’s strategic mission and significantly improve operating revenues.

In his practice, Tim has addressed a wide range...

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Joseph F. Zielinski Health Care Attorney Dinsmore & Shohl Indianapolis, IN
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Joseph advises a variety of health care providers, with a focus on skilled nursing facilities. He counsels his clients on the Anti-Kickback statute, fraud and abuse, HIPAA, facility acquisitions, physician contracting, managed care contracting, internal investigation, statutory and regulatory requirements for skilled nursing facilities, operational compliance, and compliance programs. Joseph has an extensive background creating and managing compliance programs for skilled nursing facilities. He has experience with health care FHA-insured guaranteed programs. Additionally, he has negotiated...

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