[Federal Register Volume 83, Number 89 (Tuesday, May 8, 2018)]
[Proposed Rules]
[Pages 21018-21101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09015]
[[Page 21017]]
Vol. 83
Tuesday,
No. 89
May 8, 2018
Part IV
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 411, 413 and 424
Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF
Value-Based Purchasing Program, and SNF Quality Reporting Program;
Proposed Rule
Federal Register / Vol. 83 , No. 89 / Tuesday, May 8, 2018 / Proposed
Rules
[[Page 21018]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 411, 413, and 424
[CMS-1696-P]
RIN 0938-AT24
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019,
SNF Value-Based Purchasing Program, and SNF Quality Reporting Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would update the payment rates used under
the prospective payment system (PPS) for skilled nursing facilities
(SNFs) for fiscal year (FY) 2019. This proposed rule also proposes to
replace the existing case-mix classification methodology, the Resource
Utilization Groups, Version IV (RUG-IV) model, with a revised case-mix
methodology called the Patient-Driven Payment Model (PDPM) effective
October 1, 2019. It also proposes revisions to the regulation text that
describes a beneficiary's SNF ``resident'' status under the
consolidated billing provision and the required content of the SNF
level of care certification. The proposed rule also includes proposals
for the SNF Quality Reporting Program (QRP) and the Skilled Nursing
Facility Value-Based Purchasing (VBP) Program that will affect Medicare
payment to SNFs.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on June 26, 2018.
ADDRESSES: In commenting, please refer to file code CMS-1696-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1696-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1696-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Penny Gershman, (410) 786-6643, for information related to SNF PPS
clinical issues.
John Kane, (410) 786-0557, for information related to the
development of the payment rates and case-mix indexes.
Kia Sidbury, (410) 786-7816, for information related to the wage
index.
Bill Ullman, (410) 786-5667, for information related to level of
care determinations, consolidated billing, and general information.
Mary Pratt, (410) 786-6867, for information related to skilled
nursing facility quality reporting program.
Celeste Bostic, (410) 786-5603, for information related to the
skilled nursing facility value-based purchasing program.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to
view public comments.
Availability of Certain Tables Exclusively Through the Internet on the
CMS Website
As discussed in the FY 2014 SNF PPS final rule (78 FR 47936),
tables setting forth the Wage Index for Urban Areas Based on CBSA Labor
Market Areas and the Wage Index Based on CBSA Labor Market Areas for
Rural Areas are no longer published in the Federal Register. Instead,
these tables are available exclusively through the internet on the CMS
website. The wage index tables for this proposed rule can be accessed
on the SNF PPS Wage Index home page, at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
Readers who experience any problems accessing any of these online
SNF PPS wage index tables should contact Kia Sidbury at (410) 786-7816.
To assist readers in referencing sections contained in this
document, we are providing the following Table of Contents.
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of Major Provisions
C. Summary of Cost and Benefits
D. Improving Patient Outcomes and Reducing Burden Through
Meaningful Measures
E. Advancing Health Information Exchange
II. Background on SNF PPS
A. Statutory Basis and Scope
B. Initial Transition for the SNF PPS
C. Required Annual Rate Updates
III. SNF PPS Rate Setting Methodology and FY 2019 Update
A. Federal Base Rates
B. SNF Market Basket Update
C. Case-Mix Adjustment
D. Wage Index Adjustment
E. SNF Value-Based Purchasing Program
F. Adjusted Rate Computation Example
IV. Additional Aspects of the SNF PPS
A. SNF Level of Care--Administrative Presumption
B. Consolidated Billing
C. Payment for SNF-Level Swing-Bed Services
V. Proposed Revisions to SNF PPS Case-Mix Classification Methodology
A. Issues Relating to the Current Case-Mix System for Payment of
Skilled Nursing Facility Services Under Part A of the Medicare
Program
B. Summary of the Skilled Nursing Facility Payment Models
Research Project
C. Revisions to SNF PPS Federal Base Payment Rate Components
D. Proposed Design and Methodology for Case-Mix Adjustment of
Federal Rates
E. Use of the Resident Assessment Instrument--Minimum Data Set,
Version 3
F. Proposed Revisions to Therapy Provision Policies Under the
SNF PPS
G. Proposed Interrupted Stay Policy
H. Proposed Relationship of PDPM to Existing Skilled Nursing
Facility Level of Care Criteria
I. Effect of Proposed PDPM on Temporary AIDS Add-On Payment
J. Potential Impacts of Implementing the Proposed PDPM and
Proposed Parity Adjustment
VI. Other Issues
A. Other Proposed Revisions to the Regulation Text
B. Skilled Nursing Facility (SNF) Quality Reporting Program
(QRP)
C. Skilled Nursing Facility Value-Based Purchasing Program (SNF
VBP)
VII. Request for Information on Promoting Interoperability and
Electronic Healthcare Information Exchange Through Possible
Revisions to the CMS Patient Health and Safety Requirements for
Hospitals and Other Medicare- and
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Medicaid-Participating Providers and Suppliers
VIII. Collection of Information Requirements
IX. Response to Comments
X. Economic Analyses
A. Regulatory Impact Analysis
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act Analysis
D. Federalism Analysis
E. Congressional Review Act
F. Regulatory Review Costs
I. Executive Summary
A. Purpose
This proposed rule would update the SNF prospective payment rates
for FY 2019 as required under section 1888(e)(4)(E) of the Social
Security Act (the Act). It would also respond to section 1888(e)(4)(H)
of the Act, which requires the Secretary to provide for publication in
the Federal Register, before the August 1 that precedes the start of
each fiscal year (FY), certain specified information relating to the
payment update (see section II.C. of this proposed rule). This proposed
rule also proposes to replace the existing case-mix classification
methodology, the Resource Utilization Groups, Version IV (RUG-IV)
model, with a revised case-mix methodology called the Patient-Driven
Payment Model (PDPM) effective October 1, 2019. This proposed rule also
proposes updates to the Skilled Nursing Facility Quality Reporting
Program (SNF QRP) and Skilled Nursing Facility Value-Based Purchasing
Program (SNF VBP).
B. Summary of Major Provisions
In accordance with sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of
the Act, the federal rates in this proposed rule would reflect an
update to the rates that we published in the SNF PPS final rule for FY
2018 (82 FR 36530), as corrected in the FY 2018 SNF PPS correction
notice (82 FR 46163), which reflects the SNF market basket update for
FY 2019, as required by section 1888(e)(5)(B)(iv) of the Act (as added
by section 53111 of the Bipartisan Budget Act of 2018) . This proposed
rule also proposes to replace the existing case-mix classification
methodology, the Resource Utilization Groups, Version IV (RUG-IV)
model, with a revised case-mix methodology called the Patient-Driven
Payment Model (PDPM). It also proposes revisions at 42 CFR
411.15(p)(3)(iv), which describes a beneficiary's SNF ``resident''
status under the consolidated billing provision, and 42 CFR
424.20(a)(1)(i), which describes the required content of the SNF level
of care certification. Furthermore, in accordance with section 1888(h)
of the Act, this proposed rule proposes, beginning October 1, 2018, to
reduce the adjusted federal per diem rate determined under section
1888(e)(4)(G) of the Act by 2 percent, and to adjust the resulting rate
by the value-based incentive payment amount earned by the SNF for that
fiscal year under the SNF VBP Program. Additionally, this proposed rule
proposes to update requirements for the SNF VBP, including requirements
that would apply to the FY 2021 SNF VBP program year, changes to the
SNF VBP scoring methodology, and an Extraordinary Circumstances
Exception policy for the SNF VBP Program. Finally, this rule proposes
to update requirements for the SNF QRP, including adopting a new
quality measure removal factor and codifying in our regulations a
number of requirements.
C. Summary of Cost and Benefits
Table 1--Cost and Benefits
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Provision description Total transfers
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Proposed FY 2019 SNF PPS payment rate The overall economic impact of
update. this proposed rule would be an
estimated increase of $850
million in aggregate payments
to SNFs during FY 2019.
Proposed FY 2019 SNF VBP changes....... The overall economic impact of
the SNF VBP Program is an
estimated reduction of $211
million in aggregate payments
to SNFs during FY 2019.
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D. Improving Patient Outcomes and Reducing Burden Through Meaningful
Measures
Regulatory reform and reducing regulatory burden are high
priorities for us. To reduce the regulatory burden on the healthcare
industry, lower health care costs, and enhance patient care, in October
2017, we launched the Meaningful Measures Initiative.\1\ This
initiative is one component of our agency-wide Patients Over Paperwork
Initiative,\2\ which is aimed at evaluating and streamlining
regulations with a goal to reduce unnecessary cost and burden, increase
efficiencies, and improve beneficiary experience. The Meaningful
Measures Initiative is aimed at identifying the highest priority areas
for quality measurement and quality improvement in order to assess the
core quality of care issues that are most vital to advancing our work
to improve patient outcomes. The Meaningful Measures Initiative
represents a new approach to quality measures that fosters operational
efficiencies, and will reduce costs including, the collection and
reporting burden while producing quality measurement that is more
focused on meaningful outcomes.
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\1\ Meaningful Measures web page: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
\2\ See Remarks by Administrator Seema Verma at the Health Care
Payment Learning and Action Network (LAN) Fall Summit, as prepared
for delivery on October 30, 2017 https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.
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The Meaningful Measures Framework has the following objectives:
Address high-impact measure areas that safeguard public
health;
Patient-centered and meaningful to patients;
Outcome-based where possible;
Fulfill each program's statutory requirements;
Minimize the level of burden for health care providers
(for example, through a preference for EHR-based measures where
possible, such as electronic clinical quality measures);
Significant opportunity for improvement;
Address measure needs for population based payment through
alternative payment models; and
Align across programs and/or with other payers.
In order to achieve these objectives, we have identified 19
Meaningful Measures areas and mapped them to six overarching quality
priorities as shown in Table 2:
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Table 2--Meaningful Measures Framework Domains and Measure Areas
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Quality priority Meaningful measure area
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Making Care Safer by Reducing Harm Healthcare-Associated
Caused in the Delivery of Care. Infections. Preventable
Healthcare Harm.
Strengthen Person and Family Engagement Care is Personalized and
as Partners in Their Care. Aligned with Patient's Goals.
End of Life Care according to
Preferences.
Patient's Experience of Care.
Patient Reported Functional
Outcomes.
Promote Effective Communication and Medication Management.
Coordination of Care. Admissions and Readmissions to
Hospitals.
Transfer of Health Information
and Interoperability.
Promote Effective Prevention and Preventive Care.
Treatment of Chronic Disease. Management of Chronic
Conditions.
Prevention, Treatment, and
Management of Mental Health.
Prevention and Treatment of
Opioid and Substance Use
Disorders.
Risk Adjusted Mortality.
Work with Communities to Promote Best Equity of Care.
Practices of Healthy Living. Community Engagement.
Make Care Affordable................... Appropriate Use of Healthcare.
Patient-focused Episode of
Care.
Risk Adjusted Total Cost of
Care.
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By including Meaningful Measures in our programs, we believe that
we can also address the following cross-cutting measure criteria:
Eliminating disparities;
Tracking measurable outcomes and impact;
Safeguarding public health;
Achieving cost savings;
Improving access for rural communities; and
Reducing burden.
We believe that the Meaningful Measures Initiative will improve
outcomes for patients, their families, and health care providers while
reducing burden and costs for clinicians and providers and promoting
operational efficiencies.
E. Advancing Health Information Exchange
The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care. The Office of the
National Coordinator for Health Information Technology (ONC) and CMS
work collaboratively to advance interoperability across settings of
care, including post-acute care.
The IMPACT Act requires assessment data to be standardized and
interoperable to allow for exchange of the data among post-acute
providers and other providers. To further interoperability in post-
acute care, CMS is developing a Data Element Library to serve as a
publicly available centralized, authoritative resource for standardized
data elements and their associated mappings to health IT standards.
These interoperable data elements can reduce provider burden by
allowing the use and reuse of healthcare data, support provider
exchange of electronic health information for care coordination,
person-centered care, and support real-time, data driven, clinical
decision making. Once available, standards in the Data Element Library
can be referenced on the CMS website and in the ONC Interoperability
Standards Advisory (ISA). The 2018 Interoperability Standards Advisory
(ISA) is available at https://www.healthit.gov/standards-advisory.
Most recently, the 21st Century Cures Act (Pub. L. 114-255),
enacted in late 2016, requires HHS to take new steps to enable the
electronic sharing of health information ensuring interoperability for
providers and settings across the care continuum. Specifically,
Congress directed ONC to ``develop or support a trusted exchange
framework, including a common agreement among health information
networks nationally.'' This framework (https://beta.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement)
outlines a common set of principles for trusted exchange and minimum
terms and conditions for trusted exchange in order to enable
interoperability across disparate health information networks. In
another important provision, Congress defined ``information blocking''
as practices likely to interfere with, prevent, or materially
discourage access, exchange, or use of electronic health information,
and established new authority for HHS to discourage these practices.
We invite providers to learn more about these important
developments and how they are likely to affect SNFs.
II. Background on SNF PPS
A. Statutory Basis and Scope
As amended by section 4432 of the Balanced Budget Act of 1997 (BBA
1997, Pub. L. 105-33, enacted on August 5, 1997), section 1888(e) of
the Act provides for the implementation of a PPS for SNFs. This
methodology uses prospective, case-mix adjusted per diem payment rates
applicable to all covered SNF services defined in section 1888(e)(2)(A)
of the Act. The SNF PPS is effective for cost reporting periods
beginning on or after July 1, 1998, and covers all costs of furnishing
covered SNF services (routine, ancillary, and capital-related costs)
other than costs associated with approved educational activities and
bad debts. Under section 1888(e)(2)(A)(i) of the Act, covered SNF
services include post-hospital extended care services for which
benefits are provided under Part A, as well as those items and services
(other than a small number of excluded services, such as physicians'
services) for which payment may otherwise be made under Part B and
which are furnished to Medicare beneficiaries who are residents in a
SNF during a covered Part A stay. A comprehensive discussion of these
provisions appears in the May 12, 1998 interim final rule (63 FR
26252). In addition, a detailed discussion of the legislative history
of the SNF PPS is available online at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_04152015.pdf.
Section 215(a) of Protecting Access to Medicare Act of 2014 (Pub.
L. 113-93, enacted on April 1, 2014) (PAMA) added section 1888(g) to
the Act requiring the Secretary to specify an all-cause all-condition
hospital readmission
[[Page 21021]]
measure and an all-condition risk-adjusted potentially preventable
hospital readmission measure for the SNF setting. Additionally, section
215(b) of PAMA added section 1888(h) to the Act requiring the Secretary
to implement a VBP program for SNFs. Finally, section 2(c)(4) of the
IMPACT Act added section 1888(e)(6) to the Act, which requires the
Secretary to implement a quality reporting program for SNFs under which
SNFs report data on measures and resident assessment data.
B. Initial Transition for the SNF PPS
Under sections 1888(e)(1)(A) and 1888(e)(11) of the Act, the SNF
PPS included an initial, three-phase transition that blended a
facility-specific rate (reflecting the individual facility's historical
cost experience) with the federal case-mix adjusted rate. The
transition extended through the facility's first 3 cost reporting
periods under the PPS, up to and including the one that began in FY
2001. Thus, the SNF PPS is no longer operating under the transition, as
all facilities have been paid at the full federal rate effective with
cost reporting periods beginning in FY 2002. As we now base payments
for SNFs entirely on the adjusted federal per diem rates, we no longer
include adjustment factors under the transition related to facility-
specific rates for the upcoming FY.
C. Required Annual Rate Updates
Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates
to be updated annually. The most recent annual update occurred in a
final rule that set forth updates to the SNF PPS payment rates for FY
2018 (82 FR 36530), as corrected in the FY 2018 SNF PPS correction
notice (82 FR 46163).
Section 1888(e)(4)(H) of the Act specifies that we provide for
publication annually in the Federal Register of the following:
The unadjusted federal per diem rates to be applied to
days of covered SNF services furnished during the upcoming FY.
The case-mix classification system to be applied for these
services during the upcoming FY.
The factors to be applied in making the area wage
adjustment for these services.
Along with other proposed revisions discussed later in this
preamble, this proposed rule would provide the required annual updates
to the per diem payment rates for SNFs for FY 2019.
III. SNF PPS Rate Setting Methodology and FY 2019 Update
A. Federal Base Rates
Under section 1888(e)(4) of the Act, the SNF PPS uses per diem
federal payment rates based on mean SNF costs in a base year (FY 1995)
updated for inflation to the first effective period of the PPS. We
developed the federal payment rates using allowable costs from
hospital-based and freestanding SNF cost reports for reporting periods
beginning in FY 1995. The data used in developing the federal rates
also incorporated a Part B add-on, which is an estimate of the amounts
that, prior to the SNF PPS, would have been payable under Part B for
covered SNF services furnished to individuals during the course of a
covered Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to
the first effective year of the PPS (the 15-month period beginning July
1, 1998) using a SNF market basket index, and then standardized for
geographic variations in wages and for the costs of facility
differences in case mix. In compiling the database used to compute the
federal payment rates, we excluded those providers that received new
provider exemptions from the routine cost limits, as well as costs
related to payments for exceptions to the routine cost limits. Using
the formula that the BBA 1997 prescribed, we set the federal rates at a
level equal to the weighted mean of freestanding costs plus 50 percent
of the difference between the freestanding mean and weighted mean of
all SNF costs (hospital-based and freestanding) combined. We computed
and applied separately the payment rates for facilities located in
urban and rural areas, and adjusted the portion of the federal rate
attributable to wage-related costs by a wage index to reflect
geographic variations in wages.
B. SNF Market Basket Update
1. SNF Market Basket Index
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket index that reflects changes over time in the prices of an
appropriate mix of goods and services included in covered SNF services.
Accordingly, we have developed a SNF market basket index that
encompasses the most commonly used cost categories for SNF routine
services, ancillary services, and capital-related expenses. In the SNF
PPS final rule for FY 2018 (82 FR 36548 through 36566), we revised and
rebased the market basket index, which included updating the base year
from FY 2010 to 2014.
The SNF market basket index is used to compute the market basket
percentage change that is used to update the SNF federal rates on an
annual basis, as required by section 1888(e)(4)(E)(ii)(IV) of the Act.
This market basket percentage update is adjusted by a forecast error
correction, if applicable, and then further adjusted by the application
of a productivity adjustment as required by section 1888(e)(5)(B)(ii)
of the Act and described in section III.B.4. of this proposed rule. For
FY 2019, the growth rate of the 2014-based SNF market basket is
estimated to be 2.7 percent, which is based on the IHS Global Insight,
Inc. (IGI) first quarter 2018 forecast with historical data through
fourth quarter 2017, before the multifactor productivity adjustment is
applied.
However, we note that section 53111 of the Bipartisan Budget Act of
2018 (Pub. L. 115-123, enacted on February 9, 2018) (BBA 2018) amended
section 1888(e) of the Act to add section 1888(e)(5)(B)(iv) of the Act.
Section 1888(e)(5)(B)(iv) of the Act establishes a special rule for FY
2019 that requires the market basket percentage, after the application
of the productivity adjustment, to be 2.4 percent. In accordance with
section 1888(e)(5)(B)(iv) of the Act, we will use a market basket
percentage of 2.4 percent to update the federal rates set forth in this
proposed rule. We propose to revise Sec. 413.337(d) to reflect this
statutorily required 2.4 percent market basket percentage for FY 2019.
In addition, to conform with section 1888(e)(5)(B)(iii) of the Act, we
propose to update the regulations to reflect the 1 percent market
basket percentage required for FY 2018 (as discussed in the FY 2018 SNF
PPS final rule, 82 FR 36533). Accordingly, we are proposing to revise
paragraph (d)(1) of Sec. 413.337, which sets forth the market basket
update formula, by revising paragraph (d)(1)(v), and by adding
paragraphs (d)(1)(vi) and (d)(1)(vii). The proposed revision to add
paragraph (d)(1)(vi) would reflect section 1888(e)(5)(B)(iii) of the
Act (as added by section 411(a) of the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10)), which
establishes a special rule for FY 2018 that requires the market basket
percentage, after the application of the productivity adjustment, to be
1.0 percent. The proposed revision to add paragraph (d)(1)(vii) would
reflect section 1888(e)(5)(B)(iv) of the Act (as added by section 53111
of BBA 2018), which establishes a special rule for FY 2019
[[Page 21022]]
that requires the market basket percentage, after the application of
the productivity adjustment, to be 2.4 percent. These statutory
provisions are self-implementing and do not require the exercise of
discretion by the Secretary. In section III.B.5. of this proposed rule,
we discuss the specific application of the BBA 2018-specified market
basket adjustment to the forthcoming annual update of the SNF PPS
payment rates. In addition, in section III.B.5 of this proposed rule,
we discuss the 2 percent reduction applied to the market basket update
for those SNFs that fail to submit measures data as required by section
1888(e)(6)(A) of the Act.
2. Use of the SNF Market Basket Percentage
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage as the percentage change in the SNF market basket index from
the midpoint of the previous FY to the midpoint of the current FY.
Absent the addition of section 1888(e)(5)(B)(iv) of the Act, added by
section 53111 of BBA 2018, we would have used the percentage change in
the SNF market basket index to compute the update factor for FY 2019.
This factor is based on the IGI first quarter 2018 forecast (with
historical data through the fourth quarter 2017) of the FY 2019
percentage increase in the 2014-based SNF market basket index
reflecting routine, ancillary, and capital-related expenses. The
estimated SNF market basket percentage is 2.7 percent for FY 2019. As
discussed in sections III.B.3. and III.B.4. of this proposed rule, this
market basket percentage change would be reduced by the applicable
forecast error correction (as described in Sec. 413.337(d)(2)) and by
the MFP adjustment as required by section 1888(e)(5)(B)(ii) of the Act.
As noted previously, section 1888(e)(5)(B)(iv) of the Act, added by
section 53111 of the BBA 2018, requires us to update the SNF PPS rates
for FY 2019 using a 2.4 percent market basket percentage change,
instead of the estimated 2.7 percent market basket percentage change
adjusted by the multifactor productivity adjustment as described below.
Additionally, as discussed in section II.B. of this proposed rule, we
no longer compute update factors to adjust a facility-specific portion
of the SNF PPS rates, because the initial three-phase transition period
from facility-specific to full federal rates that started with cost
reporting periods beginning in July 1998 has expired.
3. Forecast Error Adjustment
As discussed in the June 10, 2003 supplemental proposed rule (68 FR
34768) and finalized in the August 4, 2003 final rule (68 FR 46057
through 46059), Sec. 413.337(d)(2) provides for an adjustment to
account for market basket forecast error. The initial adjustment for
market basket forecast error applied to the update of the FY 2003 rate
for FY 2004, and took into account the cumulative forecast error for
the period from FY 2000 through FY 2002, resulting in an increase of
3.26 percent to the FY 2004 update. Subsequent adjustments in
succeeding FYs take into account the forecast error from the most
recently available FY for which there is final data, and apply the
difference between the forecasted and actual change in the market
basket when the difference exceeds a specified threshold. We originally
used a 0.25 percentage point threshold for this purpose; however, for
the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425,
August 3, 2007), we adopted a 0.5 percentage point threshold effective
for FY 2008 and subsequent FYs. As we stated in the final rule for FY
2004 that first issued the market basket forecast error adjustment (68
FR 46058, August 4, 2003), the adjustment will reflect both upward and
downward adjustments, as appropriate.
For FY 2017 (the most recently available FY for which there is
final data), the estimated increase in the market basket index was 2.7
percentage points, while the actual increase for FY 2017 was 2.7
percentage points, resulting in the actual increase being the same as
the estimated increase. Accordingly, as the difference between the
estimated and actual amount of change in the market basket index does
not exceed the 0.5 percentage point threshold, the FY 2019 market
basket percentage change of 2.7 percent would not have been adjusted to
account for the forecast error correction. Table 3 shows the forecasted
and actual market basket amounts for FY 2017.
Table 3--Difference Between the Forecasted and Actual Market Basket Increases for FY 2017
----------------------------------------------------------------------------------------------------------------
Forecasted FY Actual FY 2017 FY 2017
Index 2017 increase * increase ** difference
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SNF.......................................................... 2.7 2.7 0.0
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* Published in Federal Register; based on second quarter 2016 IGI forecast (2010-based index).
** Based on the first quarter 2018 IGI forecast, with historical data through the fourth quarter 2017 (2010-
based index).
4. Multifactor Productivity Adjustment
Section 1888(e)(5)(B)(ii) of the Act, as added by section 3401(b)
of the Patient Protection and Affordable Care Act (Pub. L. 111-148,
enacted on March 23, 2010) (Affordable Care Act) requires that, in FY
2012 and in subsequent FYs, the market basket percentage under the SNF
payment system (as described in section 1888(e)(5)(B)(i) of the Act) is
to be reduced annually by the multifactor productivity (MFP) adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act, in turn, defines the MFP adjustment
to be equal to the 10-year moving average of changes in annual economy-
wide private nonfarm business multi-factor productivity (as projected
by the Secretary for the 10-year period ending with the applicable FY,
year, cost-reporting period, or other annual period). The Bureau of
Labor Statistics (BLS) is the agency that publishes the official
measure of private nonfarm business MFP. We refer readers to the BLS
website at http://www.bls.gov/mfp for the BLS historical published MFP
data.
MFP is derived by subtracting the contribution of labor and capital
inputs growth from output growth. The projections of the components of
MFP are currently produced by IGI, a nationally recognized economic
forecasting firm with which CMS contracts to forecast the components of
the market baskets and MFP. To generate a forecast of MFP, IGI
replicates the MFP measure calculated by the BLS, using a series of
proxy variables derived from IGI's U.S. macroeconomic models. For a
discussion of the MFP projection methodology, we refer readers to the
FY 2012 SNF PPS final rule (76 FR 48527 through 48529) and the FY 2016
SNF PPS final rule (80 FR 46395). A
[[Page 21023]]
complete description of the MFP projection methodology is available on
our website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html.
a. Incorporating the MFP Adjustment Into the Market Basket Update
Per section 1888(e)(5)(A) of the Act, the Secretary shall establish
a SNF market basket index that reflects changes over time in the prices
of an appropriate mix of goods and services included in covered SNF
services. Section 1888(e)(5)(B)(ii) of the Act, added by section
3401(b) of the Affordable Care Act, requires that for FY 2012 and each
subsequent FY, after determining the market basket percentage described
in section 1888(e)(5)(B)(i) of the Act, the Secretary shall reduce such
percentage by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (which we refer to as the MFP
adjustment). Section 1888(e)(5)(B)(ii) of the Act further states that
the reduction of the market basket percentage by the MFP adjustment may
result in the market basket percentage being less than zero for a FY,
and may result in payment rates under section 1888(e) of the Act being
less than such payment rates for the preceding fiscal year.
The MFP adjustment, calculated as the 10-year moving average of
changes in MFP for the period ending September 30, 2019, is estimated
to be 0.8 percent. Also, consistent with section 1888(e)(5)(B)(i) of
the Act and Sec. 413.337(d)(2), the market basket percentage for FY
2019 for the SNF PPS would be based on IGI's first quarter 2018
forecast of the SNF market basket percentage, which is estimated to be
2.7 percent.
If not for the enactment of section 53111 of the BBA 2018, the FY
2019 update would be calculated in accordance with section
1888(e)(5)(B)(i) and (ii) of the Act, pursuant to which the market
basket percentage determined under section 1888(e)(5)(B)(i) of the Act
(that is, 2.7 percent) would be reduced by the MFP adjustment (the 10-
year moving average of changes in MFP for the period ending September
30, 2019) of 0.8 percent, which would be calculated as described above
and based on IGI's first quarter 2018 forecast. Absent the enactment of
section 53111 of the BBA 2018, the resulting MFP-adjusted SNF market
basket update would have been equal to 1.9 percent, or 2.7 percent less
0.8 percentage point. However, as discussed above, section
1888(e)(5)(B)(iv) of the Act, added by section 53111 of the BBA 2018,
requires us to apply a 2.4 percent market basket percentage increase in
determining the FY 2019 SNF payment rates set forth in this proposed
rule (without regard to the MFP adjustment described above).
5. Market Basket Update Factor for FY 2019
Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require
that the update factor used to establish the FY 2019 unadjusted federal
rates be at a level equal to the market basket index percentage change.
Accordingly, we determined the total growth from the average market
basket level for the period of October 1, 2017, through September 30,
2018 to the average market basket level for the period of October 1,
2018, through September 30, 2019. This process yields a percentage
change in the 2014-based SNF market basket of 2.7 percent.
As further explained in section III.B.3. of this proposed rule, as
applicable, we adjust the market basket percentage change by the
forecast error from the most recently available FY for which there is
final data and apply this adjustment whenever the difference between
the forecasted and actual percentage change in the market basket
exceeds a 0.5 percentage point threshold. Since the difference between
the forecasted FY 2017 SNF market basket percentage change and the
actual FY 2017 SNF market basket percentage change (FY 2017 is the most
recently available FY for which there is historical data) did not
exceed the 0.5 percentage point threshold, the FY 2019 market basket
percentage change of 2.7 percent would not be adjusted by the forecast
error correction.
If not for the enactment of section 53111 of the BBA 2018, the SNF
market basket for FY 2019 would be determined in accordance with
section 1888(e)(5)(B)(ii) of the Act, which requires us to reduce the
market basket percentage change by the MFP adjustment (the 10-year
moving average of changes in MFP for the period ending September 30,
2019) of 0.8 percent, as described in section III.B.4. of this proposed
rule. Thus, absent the enactment of the BBA 2018, the resulting net SNF
market basket update would equal 1.9 percent, or 2.7 percent less the
0.8 percentage point MFP adjustment. We note that our policy has been
that, if more recent data become available (for example, a more recent
estimate of the SNF market basket and/or MFP adjustment), we would use
such data, if appropriate, to determine the SNF market basket
percentage change, labor-related share relative importance, forecast
error adjustment, and MFP adjustment in the SNF PPS final rule.
Historically, we have used the SNF market basket, adjusted as
described above, to adjust each per diem component of the federal rates
forward to reflect the change in the average prices from one year to
the next. However, section 1888(e)(5)(B)(iv) of the Act, as added by
section 53111 of the BBA 2018, requires us to use a market basket
percentage of 2.4 percent, after application of the MFP to adjust the
federal rates for FY 2019. Under section 1888(e)(5)(B)(iv) of the Act,
the market basket percentage increase used to determine the federal
rates set forth in this proposed rule will be 2.4 percent for FY 2019.
Tables 4 and 5 reflect the updated components of the unadjusted federal
rates for FY 2019, prior to adjustment for case-mix.
Table 4--FY 2019 Unadjusted Federal Rate Per Diem--Urban
----------------------------------------------------------------------------------------------------------------
Nursing--case- Therapy--case- Therapy-- non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $181.50 $136.71 $18.01 $92.63
----------------------------------------------------------------------------------------------------------------
Table 5--FY 2019 Unadjusted Federal Rate Per Diem--Rural
----------------------------------------------------------------------------------------------------------------
Nursing--case- Therapy--case- Therapy-- non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $173.39 $157.65 $19.23 $94.34
----------------------------------------------------------------------------------------------------------------
[[Page 21024]]
In addition, we note that section 1888(e)(6)(A)(i) of the Act
provides that, beginning with FY 2018, SNFs that fail to submit data,
as applicable, in accordance with sections 1888(e)(6)(B)(i)(II) and
(III) of the Act for a fiscal year will receive a 2.0 percentage point
reduction to their market basket update for the fiscal year involved,
after application of section 1888(e)(5)(B)(ii) of the Act (the MFP
adjustment) and section 1888(e)(5)(B)(iii) of the Act (the 1 percent
market basket increase for FY 2018). In addition, section
1888(e)(6)(A)(ii) of the Act states that application of the 2.0
percentage point reduction (after application of section
1888(e)(5)(B)(ii) and (iii) of the Act) may result in the market basket
index percentage change being less than 0.0 for a fiscal year, and may
result in payment rates for a fiscal year being less than such payment
rates for the preceding fiscal year. Section 1888(e)(6)(A)(iii) of the
Act further specifies that the 2.0 percentage point reduction is
applied in a noncumulative manner, so that any reduction made under
section 1888(e)(6)(A)(i) of the Act applies only with respect to the
fiscal year involved, that the reduction cannot be taken into account
in computing the payment amount for a subsequent fiscal year.
Accordingly, we propose that for SNFs that do not satisfy the
reporting requirements for the FY 2019 SNF QRP, we would apply a 2.0
percentage point reduction to the SNF market basket percentage change
for that fiscal year, after application of any applicable forecast
error adjustment as specified in Sec. 413.337(d)(2) and the MFP
adjustment as specified in Sec. 413.337(d)(3). For FY 2019, the
application of this reduction to SNFs that have not met the
requirements for the FY 2019 SNF QRP would result in a market basket
index percentage change for FY 2019 that is less than zero
(specifically, a net update of negative 0.1 percentage point, derived
by subtracting 2 percent from the MFP-adjusted market basket update of
1.9 percent), and would also result in FY 2019 payment rates that are
less than such payment rates for the preceding FY. We invite comments
on these proposals.
C. Case-Mix Adjustment
Under section 1888(e)(4)(G)(i) of the Act, the federal rate also
incorporates an adjustment to account for facility case-mix, using a
classification system that accounts for the relative resource
utilization of different patient types. The statute specifies that the
adjustment is to reflect both a resident classification system that the
Secretary establishes to account for the relative resource use of
different patient types, as well as resident assessment data and other
data that the Secretary considers appropriate. In the interim final
rule with comment period that initially implemented the SNF PPS (63 FR
26252, May 12, 1998), we developed the RUG-III case-mix classification
system, which tied the amount of payment to resident resource use in
combination with resident characteristic information. Staff time
measurement (STM) studies conducted in 1990, 1995, and 1997 provided
information on resource use (time spent by staff members on residents)
and resident characteristics that enabled us not only to establish RUG-
III, but also to create case-mix indexes (CMIs). The original RUG-III
grouper logic was based on clinical data collected in 1990, 1995, and
1997. As discussed in the SNF PPS proposed rule for FY 2010 (74 FR
22208), we subsequently conducted a multi-year data collection and
analysis under the Staff Time and Resource Intensity Verification
(STRIVE) project to update the case-mix classification system for FY
2011. The resulting Resource Utilization Groups, Version 4 (RUG-IV)
case-mix classification system reflected the data collected in 2006
through 2007 during the STRIVE project, and was finalized in the FY
2010 SNF PPS final rule (74 FR 40288) to take effect in FY 2011
concurrently with an updated new resident assessment instrument,
version 3.0 of the Minimum Data Set (MDS 3.0), which collects the
clinical data used for case-mix classification under RUG-IV.
We note that case-mix classification is based, in part, on the
beneficiary's need for skilled nursing care and therapy services. The
case-mix classification system uses clinical data from the MDS to
assign a case-mix group to each patient that is then used to calculate
a per diem payment under the SNF PPS. As discussed in section IV.A. of
this proposed rule, the clinical orientation of the case-mix
classification system supports the SNF PPS's use of an administrative
presumption that considers a beneficiary's initial case-mix
classification to assist in making certain SNF level of care
determinations. Further, because the MDS is used as a basis for
payment, as well as a clinical assessment, we have provided extensive
training on proper coding and the time frames for MDS completion in our
Resident Assessment Instrument (RAI) Manual. For an MDS to be
considered valid for use in determining payment, the MDS assessment
must be completed in compliance with the instructions in the RAI Manual
in effect at the time the assessment is completed. For payment and
quality monitoring purposes, the RAI Manual consists of both the Manual
instructions and the interpretive guidance and policy clarifications
posted on the appropriate MDS website at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html.
In addition, we note that section 511 of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173,
enacted December 8, 2003) (MMA) amended section 1888(e)(12) of the Act
to provide for a temporary increase of 128 percent in the PPS per diem
payment for any SNF residents with Acquired Immune Deficiency Syndrome
(AIDS), effective with services furnished on or after October 1, 2004.
This special add-on for SNF residents with AIDS was to remain in effect
only until the Secretary certifies that there is an appropriate
adjustment in the case mix to compensate for the increased costs
associated with such residents. The MMA add-on for SNF residents with
AIDS is also discussed in Program Transmittal #160 (Change Request
#3291), issued on April 30, 2004, which is available online at
www.cms.gov/transmittals/downloads/r160cp.pdf. In the SNF PPS final
rule for FY 2010 (74 FR 40288), we did not address this certification
in that final rule's implementation of the case-mix refinements for
RUG-IV, thus allowing the add-on payment required by section 511 of the
MMA to remain in effect for the time being. (We discuss in section V.I.
of this proposed rule the specific payment adjustments that we are
proposing under the proposed PDPM to provide for an appropriate
adjustment in the case mix to compensate for the increased costs
associated with such residents.)
For the limited number of SNF residents that qualify for the MMA
add-on, there is a significant increase in payments. As explained in
the FY 2016 SNF PPS final rule (80 FR 46397 through 46398), on October
1, 2015 (consistent with section 212 of PAMA), we converted to using
ICD-10-CM code B20 to identify those residents for whom it is
appropriate to apply the AIDS add-on established by section 511 of the
MMA. For FY 2019, an urban facility with a resident with AIDS in RUG-IV
group ``HC2'' would have a case-mix adjusted per diem payment of 453.68
(see Table 6) before the application of the MMA adjustment. After an
increase of 128 percent, this urban facility would receive a case-mix
[[Page 21025]]
adjusted per diem payment of approximately 1,034.39.
Under section 1888(e)(4)(H), each update of the payment rates must
include the case-mix classification methodology applicable for the
upcoming FY. The FY 2019 payment rates set forth in this proposed rule
reflect the use of the RUG-IV case-mix classification system from
October 1, 2018, through September 30, 2019. We list the proposed case-
mix adjusted RUG-IV payment rates for FY 2019, provided separately for
urban and rural SNFs, in Tables 6 and 7 with corresponding case-mix
values. We use the revised OMB delineations adopted in the FY 2015 SNF
PPS final rule (79 FR 45632, 45634) to identify a facility's urban or
rural status for the purpose of determining which set of rate tables
would apply to the facility. Tables 6 and 7 do not reflect the add-on
for SNF residents with AIDS enacted by section 511 of the MMA, which we
apply only after making all other adjustments (such as wage index and
case-mix). Additionally, Tables 6 and 7 do not reflect adjustments
which may be made to the SNF PPS rates as a result of either the SNF
Quality Reporting Program (QRP), discussed in section VI.B. of this
proposed rule, or the SNF Value Based-Purchasing (VBP) program,
discussed in section VI.C. of this proposed rule.
Table 6--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-IV category Nursing index Therapy index component component therapy comp component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 2.67 1.87 $484.61 $255.65 .............. $92.63 $832.89
RUL..................................... 2.57 1.87 466.46 255.65 .............. 92.63 814.74
RVX..................................... 2.61 1.28 473.72 174.99 .............. 92.63 741.34
RVL..................................... 2.19 1.28 397.49 174.99 .............. 92.63 665.11
RHX..................................... 2.55 0.85 462.83 116.20 .............. 92.63 671.66
RHL..................................... 2.15 0.85 390.23 116.20 .............. 92.63 599.06
RMX..................................... 2.47 0.55 448.31 75.19 .............. 92.63 616.13
RML..................................... 2.19 0.55 397.49 75.19 .............. 92.63 565.31
RLX..................................... 2.26 0.28 410.19 38.28 .............. 92.63 541.10
RUC..................................... 1.56 1.87 283.14 255.65 .............. 92.63 631.42
RUB..................................... 1.56 1.87 283.14 255.65 .............. 92.63 631.42
RUA..................................... 0.99 1.87 179.69 255.65 .............. 92.63 527.97
RVC..................................... 1.51 1.28 274.07 174.99 .............. 92.63 541.69
RVB..................................... 1.11 1.28 201.47 174.99 .............. 92.63 469.09
RVA..................................... 1.10 1.28 199.65 174.99 .............. 92.63 467.27
RHC..................................... 1.45 0.85 263.18 116.20 .............. 92.63 472.01
RHB..................................... 1.19 0.85 215.99 116.20 .............. 92.63 424.82
RHA..................................... 0.91 0.85 165.17 116.20 .............. 92.63 374.00
RMC..................................... 1.36 0.55 246.84 75.19 .............. 92.63 414.66
RMB..................................... 1.22 0.55 221.43 75.19 .............. 92.63 389.25
RMA..................................... 0.84 0.55 152.46 75.19 .............. 92.63 320.28
RLB..................................... 1.50 0.28 272.25 38.28 .............. 92.63 403.16
RLA..................................... 0.71 0.28 128.87 38.28 .............. 92.63 259.78
ES3..................................... 3.58 .............. 649.77 .............. 18.01 92.63 760.41
ES2..................................... 2.67 .............. 484.61 .............. 18.01 92.63 595.25
ES1..................................... 2.32 .............. 421.08 .............. 18.01 92.63 531.72
HE2..................................... 2.22 .............. 402.93 .............. 18.01 92.63 513.57
HE1..................................... 1.74 .............. 315.81 .............. 18.01 92.63 426.45
HD2..................................... 2.04 .............. 370.26 .............. 18.01 92.63 480.90
HD1..................................... 1.60 .............. 290.40 .............. 18.01 92.63 401.04
HC2..................................... 1.89 .............. 343.04 .............. 18.01 92.63 453.68
HC1..................................... 1.48 .............. 268.62 .............. 18.01 92.63 379.26
HB2..................................... 1.86 .............. 337.59 .............. 18.01 92.63 448.23
HB1..................................... 1.46 .............. 264.99 .............. 18.01 92.63 375.63
LE2..................................... 1.96 .............. 355.74 .............. 18.01 92.63 466.38
LE1..................................... 1.54 .............. 279.51 .............. 18.01 92.63 390.15
LD2..................................... 1.86 .............. 337.59 .............. 18.01 92.63 448.23
LD1..................................... 1.46 .............. 264.99 .............. 18.01 92.63 375.63
LC2..................................... 1.56 .............. 283.14 .............. 18.01 92.63 393.78
LC1..................................... 1.22 .............. 221.43 .............. 18.01 92.63 332.07
LB2..................................... 1.45 .............. 263.18 .............. 18.01 92.63 373.82
LB1..................................... 1.14 .............. 206.91 .............. 18.01 92.63 317.55
CE2..................................... 1.68 .............. 304.92 .............. 18.01 92.63 415.56
CE1..................................... 1.50 .............. 272.25 .............. 18.01 92.63 382.89
CD2..................................... 1.56 .............. 283.14 .............. 18.01 92.63 393.78
CD1..................................... 1.38 .............. 250.47 .............. 18.01 92.63 361.11
CC2..................................... 1.29 .............. 234.14 .............. 18.01 92.63 344.78
CC1..................................... 1.15 .............. 208.73 .............. 18.01 92.63 319.37
CB2..................................... 1.15 .............. 208.73 .............. 18.01 92.63 319.37
CB1..................................... 1.02 .............. 185.13 .............. 18.01 92.63 295.77
CA2..................................... 0.88 .............. 159.72 .............. 18.01 92.63 270.36
CA1..................................... 0.78 .............. 141.57 .............. 18.01 92.63 252.21
BB2..................................... 0.97 .............. 176.06 .............. 18.01 92.63 286.70
BB1..................................... 0.90 .............. 163.35 .............. 18.01 92.63 273.99
BA2..................................... 0.70 .............. 127.05 .............. 18.01 92.63 237.69
BA1..................................... 0.64 .............. 116.16 .............. 18.01 92.63 226.80
PE2..................................... 1.50 .............. 272.25 .............. 18.01 92.63 382.89
[[Page 21026]]
PE1..................................... 1.40 .............. 254.10 .............. 18.01 92.63 364.74
PD2..................................... 1.38 .............. 250.47 .............. 18.01 92.63 361.11
PD1..................................... 1.28 .............. 232.32 .............. 18.01 92.63 342.96
PC2..................................... 1.10 .............. 199.65 .............. 18.01 92.63 310.29
PC1..................................... 1.02 .............. 185.13 .............. 18.01 92.63 295.77
PB2..................................... 0.84 .............. 152.46 .............. 18.01 92.63 263.10
PB1..................................... 0.78 .............. 141.57 .............. 18.01 92.63 252.21
PA2..................................... 0.59 .............. 107.09 .............. 18.01 92.63 217.73
PA1..................................... 0.54 .............. 98.01 .............. 18.01 92.63 208.65
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 7--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-IV category Nursing index Therapy index component component therapy comp component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 2.67 1.87 $462.95 $294.81 .............. $94.34 $852.10
RUL..................................... 2.57 1.87 445.61 294.81 .............. 94.34 834.76
RVX..................................... 2.61 1.28 452.55 201.79 .............. 94.34 748.68
RVL..................................... 2.19 1.28 379.72 201.79 .............. 94.34 675.85
RHX..................................... 2.55 0.85 442.14 134.00 .............. 94.34 670.48
RHL..................................... 2.15 0.85 372.79 134.00 .............. 94.34 601.13
RMX..................................... 2.47 0.55 428.27 86.71 .............. 94.34 609.32
RML..................................... 2.19 0.55 379.72 86.71 .............. 94.34 560.77
RLX..................................... 2.26 0.28 391.86 44.14 .............. 94.34 530.34
RUC..................................... 1.56 1.87 270.49 294.81 .............. 94.34 659.64
RUB..................................... 1.56 1.87 270.49 294.81 .............. 94.34 659.64
RUA..................................... 0.99 1.87 171.66 294.81 .............. 94.34 560.81
RVC..................................... 1.51 1.28 261.82 201.79 .............. 94.34 557.95
RVB..................................... 1.11 1.28 192.46 201.79 .............. 94.34 488.59
RVA..................................... 1.10 1.28 190.73 201.79 .............. 94.34 486.86
RHC..................................... 1.45 0.85 251.42 134.00 .............. 94.34 479.76
RHB..................................... 1.19 0.85 206.33 134.00 .............. 94.34 434.67
RHA..................................... 0.91 0.85 157.78 134.00 .............. 94.34 386.12
RMC..................................... 1.36 0.55 235.81 86.71 .............. 94.34 416.86
RMB..................................... 1.22 0.55 211.54 86.71 .............. 94.34 392.59
RMA..................................... 0.84 0.55 145.65 86.71 .............. 94.34 326.70
RLB..................................... 1.50 0.28 260.09 44.14 .............. 94.34 398.57
RLA..................................... 0.71 0.28 123.11 44.14 .............. 94.34 261.59
ES3..................................... 3.58 .............. 620.74 .............. 19.23 94.34 734.31
ES2..................................... 2.67 .............. 462.95 .............. 19.23 94.34 576.52
ES1..................................... 2.32 .............. 402.26 .............. 19.23 94.34 515.83
HE2..................................... 2.22 .............. 384.93 .............. 19.23 94.34 498.50
HE1..................................... 1.74 .............. 301.70 .............. 19.23 94.34 415.27
HD2..................................... 2.04 .............. 353.72 .............. 19.23 94.34 467.29
HD1..................................... 1.60 .............. 277.42 .............. 19.23 94.34 390.99
HC2..................................... 1.89 .............. 327.71 .............. 19.23 94.34 441.28
HC1..................................... 1.48 .............. 256.62 .............. 19.23 94.34 370.19
HB2..................................... 1.86 .............. 322.51 .............. 19.23 94.34 436.08
HB1..................................... 1.46 .............. 253.15 .............. 19.23 94.34 366.72
LE2..................................... 1.96 .............. 339.84 .............. 19.23 94.34 453.41
LE1..................................... 1.54 .............. 267.02 .............. 19.23 94.34 380.59
LD2..................................... 1.86 .............. 322.51 .............. 19.23 94.34 436.08
LD1..................................... 1.46 .............. 253.15 .............. 19.23 94.34 366.72
LC2..................................... 1.56 .............. 270.49 .............. 19.23 94.34 384.06
LC1..................................... 1.22 .............. 211.54 .............. 19.23 94.34 325.11
LB2..................................... 1.45 .............. 251.42 .............. 19.23 94.34 364.99
LB1..................................... 1.14 .............. 197.66 .............. 19.23 94.34 311.23
CE2..................................... 1.68 .............. 291.30 .............. 19.23 94.34 404.87
CE1..................................... 1.50 .............. 260.09 .............. 19.23 94.34 373.66
CD2..................................... 1.56 .............. 270.49 .............. 19.23 94.34 384.06
CD1..................................... 1.38 .............. 239.28 .............. 19.23 94.34 352.85
CC2..................................... 1.29 .............. 223.67 .............. 19.23 94.34 337.24
CC1..................................... 1.15 .............. 199.40 .............. 19.23 94.34 312.97
CB2..................................... 1.15 .............. 199.40 .............. 19.23 94.34 312.97
CB1..................................... 1.02 .............. 176.86 .............. 19.23 94.34 290.43
CA2..................................... 0.88 .............. 152.58 .............. 19.23 94.34 266.15
CA1..................................... 0.78 .............. 135.24 .............. 19.23 94.34 248.81
BB2..................................... 0.97 .............. 168.19 .............. 19.23 94.34 281.76
BB1..................................... 0.90 .............. 156.05 .............. 19.23 94.34 269.62
[[Page 21027]]
BA2..................................... 0.70 .............. 121.37 .............. 19.23 94.34 234.94
BA1..................................... 0.64 .............. 110.97 .............. 19.23 94.34 224.54
PE2..................................... 1.50 .............. 260.09 .............. 19.23 94.34 373.66
PE1..................................... 1.40 .............. 242.75 .............. 19.23 94.34 356.32
PD2..................................... 1.38 .............. 239.28 .............. 19.23 94.34 352.85
PD1..................................... 1.28 .............. 221.94 .............. 19.23 94.34 335.51
PC2..................................... 1.10 .............. 190.73 .............. 19.23 94.34 304.30
PC1..................................... 1.02 .............. 176.86 .............. 19.23 94.34 290.43
PB2..................................... 0.84 .............. 145.65 .............. 19.23 94.34 259.22
PB1..................................... 0.78 .............. 135.24 .............. 19.23 94.34 248.81
PA2..................................... 0.59 .............. 102.30 .............. 19.23 94.34 215.87
PA1..................................... 0.54 .............. 93.63 .............. 19.23 94.34 207.20
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Wage Index Adjustment
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
federal rates to account for differences in area wage levels, using a
wage index that the Secretary determines appropriate. Since the
inception of the SNF PPS, we have used hospital inpatient wage data in
developing a wage index to be applied to SNFs. We propose to continue
this practice for FY 2019, as we continue to believe that in the
absence of SNF-specific wage data, using the hospital inpatient wage
index data is appropriate and reasonable for the SNF PPS. As explained
in the update notice for FY 2005 (69 FR 45786), the SNF PPS does not
use the hospital area wage index's occupational mix adjustment, as this
adjustment serves specifically to define the occupational categories
more clearly in a hospital setting; moreover, the collection of the
occupational wage data also excludes any wage data related to SNFs.
Therefore, we believe that using the updated wage data exclusive of the
occupational mix adjustment continues to be appropriate for SNF
payments. For FY 2019, the updated wage data are for hospital cost
reporting periods beginning on or after October 1, 2014 and before
October 1, 2015 (FY 2015 cost report data).
We note that section 315 of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554,
enacted on December 21, 2000) (BIPA) authorized us to establish a
geographic reclassification procedure that is specific to SNFs, but
only after collecting the data necessary to establish a SNF wage index
that is based on wage data from nursing homes. However, to date, this
has proven to be unfeasible due to the volatility of existing SNF wage
data and the significant amount of resources that would be required to
improve the quality of that data. More specifically, auditing all SNF
cost reports, similar to the process used to audit inpatient hospital
cost reports for purposes of the Inpatient Prospective Payment System
(IPPS) wage index, would place a burden on providers in terms of
recordkeeping and completion of the cost report worksheet. Adopting
such an approach would require a significant commitment of resources by
CMS and the Medicare Administrative Contractors, potentially far in
excess of those required under the IPPS given that there are nearly
five times as many SNFs as there are inpatient hospitals. Therefore,
while we continue to believe that the development of such an audit
process could improve SNF cost reports in such a manner as to permit us
to establish a SNF-specific wage index, we do not regard an undertaking
of this magnitude as being feasible within the current level of
programmatic resources.
In addition, we propose to continue to use the same methodology
discussed in the SNF PPS final rule for FY 2008 (72 FR 43423) to
address those geographic areas in which there are no hospitals, and
thus, no hospital wage index data on which to base the calculation of
the FY 2019 SNF PPS wage index. For rural geographic areas that do not
have hospitals, and therefore, lack hospital wage data on which to base
an area wage adjustment, we would use the average wage index from all
contiguous Core-Based Statistical Areas (CBSAs) as a reasonable proxy.
For FY 2019, there are no rural geographic areas that do not have
hospitals, and thus, this methodology would not be applied. For rural
Puerto Rico, we would not apply this methodology due to the distinct
economic circumstances that exist there (for example, due to the close
proximity to one another of almost all of Puerto Rico's various urban
and non-urban areas, this methodology would produce a wage index for
rural Puerto Rico that is higher than that in half of its urban areas);
instead, we would continue to use the most recent wage index previously
available for that area. For urban areas without specific hospital wage
index data, we would use the average wage indexes of all of the urban
areas within the state to serve as a reasonable proxy for the wage
index of that urban CBSA. For FY 2019, the only urban area without wage
index data available is CBSA 25980, Hinesville-Fort Stewart, GA. The
proposed wage index applicable to FY 2019 is set forth in Tables A and
B available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in the OMB Bulletin No. 03-04
(June 6, 2003), which announced revised definitions for MSAs and the
creation of micropolitan statistical areas and combined statistical
areas. In adopting the CBSA geographic designations, we provided for a
1-year transition in FY 2006 with a blended wage index for all
providers. For FY 2006, the wage index for each provider consisted of a
blend of 50 percent of the FY 2006 MSA-based wage index and 50 percent
of the FY 2006 CBSA-based wage index (both using FY 2002 hospital
data). We referred to the blended wage index as the FY 2006 SNF PPS
transition wage index. As discussed in the SNF PPS final rule for FY
2006 (70 FR 45041), since the expiration of this 1-year transition on
September 30, 2006, we have used the full CBSA-based wage index values.
In the FY 2015 SNF PPS final rule (79 FR 45644 through 45646), we
finalized changes to the SNF PPS wage index based on the newest OMB
delineations, as described in OMB Bulletin No. 13-01, beginning in FY
2015, including a 1-year transition with a blended wage index for FY
2015. OMB Bulletin No.
[[Page 21028]]
13-01 established revised delineations for Metropolitan Statistical
Areas, Micropolitan Statistical Areas, and Combined Statistical Areas
in the United States and Puerto Rico based on the 2010 Census, and
provided guidance on the use of the delineations of these statistical
areas using standards published on June 28, 2010 in the Federal
Register (75 FR 37246 through 37252). Subsequently, on July 15, 2015,
OMB issued OMB Bulletin No. 15-01, which provides minor updates to and
supersedes OMB Bulletin No. 13-01 that was issued on February 28, 2013.
The attachment to OMB Bulletin No. 15-01 provides detailed information
on the update to statistical areas since February 28, 2013. The updates
provided in OMB Bulletin No. 15-01 are based on the application of the
2010 Standards for Delineating Metropolitan and Micropolitan
Statistical Areas to Census Bureau population estimates for July 1,
2012 and July 1, 2013. As we previously stated in the FY 2008 SNF PPS
proposed and final rules (72 FR 25538 through 25539, and 72 FR 43423),
we wish to note that this and all subsequent SNF PPS rules and notices
are considered to incorporate any updates and revisions set forth in
the most recent OMB bulletin that applies to the hospital wage data
used to determine the current SNF PPS wage index.
On August 15 2017, OMB announced that one Micropolitan Statistical
Area now qualifies as a Metropolitan Statistical Areas (OMB Bulletin
No. 17-01). The new urban CBSA is as follows:
Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of
the principal city of Twin Falls, Idaho in Jerome County, Idaho and
Twin Falls County, Idaho. The OMB bulletin is available on the OMB
website at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf. We note, we did not have sufficient time to
include this change in the computation of the proposed FY 2019 wage
index, rate setting, and tables. This new CBSA may affect the budget
neutrality factor and wage indexes, depending on the impact of the
overall payments of the hospital located in this new CBSA. In this
proposed rule, we are providing an estimate of this new area's wage
index based on the estimated average hourly wage, unadjusted for
occupational mix, for new CBSA 46300 and the national average hourly
wages from the wage data for the proposed FY 2019 wage index.
Currently, provider 130002 is the only hospital located in Twin Falls
County, Idaho, and there are no hospitals located in Jerome County,
Idaho. Thus, the proposed wage index for CBSA 46300 is calculated using
the average hourly wage data for one provider (provider 130002).
Taking the estimated unadjusted average hourly wage of 35.833564813
of new CBSA 46300 and dividing by the national average hourly wage of
42.990625267 results in the estimated wage index of 0.8335 for CBSA
46300.
In the final rule, we would incorporate this change into the final
FY 2019 wage index, rate setting and tables. Thus, for FY 2019, we
would use the OMB delineations that were adopted beginning with FY 2015
to calculate the area wage indexes, with updates as reflected in OMB
Bulletin Nos. 15-01 and 17-01. As noted above, the proposed wage index
applicable to FY 2019 (without the CBSA update from OMB Bulletin No.
17-01 specified above) is set forth in Tables A and B available on the
CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
Once calculated, we would apply the wage index adjustment to the
labor-related portion of the federal rate. Each year, we calculate a
revised labor-related share, based on the relative importance of labor-
related cost categories (that is, those cost categories that are labor-
intensive and vary with the local labor market) in the input price
index. In the SNF PPS final rule for FY 2018 (82 FR 36548 through
36566), we finalized a proposal to revise the labor-related share to
reflect the relative importance of the 2014-based SNF market basket
cost weights for the following cost categories: Wages and Salaries;
Employee Benefits; Professional Fees: Labor-Related; Administrative and
Facilities Support Services; Installation, Maintenance, and Repair
Services; All Other: Labor-Related Services; and a proportion of
Capital-Related expenses.
We calculate the labor-related relative importance from the SNF
market basket, and it approximates the labor-related portion of the
total costs after taking into account historical and projected price
changes between the base year and FY 2019. The price proxies that move
the different cost categories in the market basket do not necessarily
change at the same rate, and the relative importance captures these
changes. Accordingly, the relative importance figure more closely
reflects the cost share weights for FY 2019 than the base year weights
from the SNF market basket.
We calculate the labor-related relative importance for FY 2019 in
four steps. First, we compute the FY 2019 price index level for the
total market basket and each cost category of the market basket.
Second, we calculate a ratio for each cost category by dividing the FY
2019 price index level for that cost category by the total market
basket price index level. Third, we determine the FY 2019 relative
importance for each cost category by multiplying this ratio by the base
year (2014) weight. Finally, we add the FY 2019 relative importance for
each of the labor-related cost categories (Wages and Salaries, Employee
Benefits, Professional Fees: Labor-Related, Administrative and
Facilities Support Services, Installation, Maintenance, and Repair
Services, All Other: Labor-related services, and a portion of Capital-
Related expenses) to produce the FY 2019 labor-related relative
importance. Table 8 summarizes the proposed updated labor-related share
for FY 2019, compared to the labor-related share that was used for the
FY 2018 SNF PPS final rule.
Table 8--Labor-Related Relative Importance, FY 2018 and FY 2019
------------------------------------------------------------------------
Relative Relative
importance, importance,
labor-related, labor-related,
FY 2018 17:2 FY 2019 18:1
forecast \1\ forecast \2\
------------------------------------------------------------------------
Wages and salaries...................... 50.3 50.3
Employee benefits....................... 10.2 10.2
Professional Fees: Labor-Related........ 3.7 3.7
Administrative and facilities support 0.5 0.5
services...............................
Installation, Maintenance and Repair 0.6 0.6
Services...............................
All Other: Labor Related Services....... 2.5 2.5
[[Page 21029]]
Capital-related (.391).................. 3.0 2.9
-------------------------------
Total............................... 70.8 70.7
------------------------------------------------------------------------
\1\ Published in the Federal Register; based on second quarter 2017 IGI
forecast.
\2\ Based on first quarter 2018 IGI forecast, with historical data
through fourth quarter 2017.
Tables 9 and 10 show the proposed RUG-IV case-mix adjusted federal
rates for FY 2019 by labor-related and non-labor-related components.
Tables 9 and 10 do not reflect the add-on for SNF residents with AIDS
enacted by section 511 of the MMA, which we apply only after making all
other adjustments (such as wage index and case-mix). Additionally,
Tables 9 and 10 do not reflect adjustments which may be made to the SNF
PPS rates as a result of either the SNF Quality Reporting Program
(QRP), discussed in section VI.B. of this proposed rule, or the SNF
Value Based-Purchasing (VBP) program, discussed in section VI.C. of
this proposed rule.
Table 9--RUG-IV Case-Mix Adjusted Federal Rates for Urban SNFs by Labor and Non-Labor Component
----------------------------------------------------------------------------------------------------------------
Non-Labor
RUG-IV category Total rate Labor portion portion
----------------------------------------------------------------------------------------------------------------
RUX............................................................. $832.89 $588.85 $244.04
RUL............................................................. 814.74 576.02 238.72
RVX............................................................. 741.34 524.13 217.21
RVL............................................................. 665.11 470.23 194.88
RHX............................................................. 671.66 474.86 196.80
RHL............................................................. 599.06 423.54 175.52
RMX............................................................. 616.13 435.60 180.53
RML............................................................. 565.31 399.67 165.64
RLX............................................................. 541.10 382.56 158.54
RUC............................................................. 631.42 446.41 185.01
RUB............................................................. 631.42 446.41 185.01
RUA............................................................. 527.97 373.27 154.70
RVC............................................................. 541.69 382.97 158.72
RVB............................................................. 469.09 331.65 137.44
RVA............................................................. 467.27 330.36 136.91
RHC............................................................. 472.01 333.71 138.30
RHB............................................................. 424.82 300.35 124.47
RHA............................................................. 374.00 264.42 109.58
RMC............................................................. 414.66 293.16 121.50
RMB............................................................. 389.25 275.20 114.05
RMA............................................................. 320.28 226.44 93.84
RLB............................................................. 403.16 285.03 118.13
RLA............................................................. 259.78 183.66 76.12
ES3............................................................. 760.41 537.61 222.80
ES2............................................................. 595.25 420.84 174.41
ES1............................................................. 531.72 375.93 155.79
HE2............................................................. 513.57 363.09 150.48
HE1............................................................. 426.45 301.50 124.95
HD2............................................................. 480.90 340.00 140.90
HD1............................................................. 401.04 283.54 117.50
HC2............................................................. 453.68 320.75 132.93
HC1............................................................. 379.26 268.14 111.12
HB2............................................................. 448.23 316.90 131.33
HB1............................................................. 375.63 265.57 110.06
LE2............................................................. 466.38 329.73 136.65
LE1............................................................. 390.15 275.84 114.31
LD2............................................................. 448.23 316.90 131.33
LD1............................................................. 375.63 265.57 110.06
LC2............................................................. 393.78 278.40 115.38
LC1............................................................. 332.07 234.77 97.30
LB2............................................................. 373.82 264.29 109.53
LB1............................................................. 317.55 224.51 93.04
CE2............................................................. 415.56 293.80 121.76
CE1............................................................. 382.89 270.70 112.19
CD2............................................................. 393.78 278.40 115.38
CD1............................................................. 361.11 255.30 105.81
CC2............................................................. 344.78 243.76 101.02
CC1............................................................. 319.37 225.79 93.58
[[Page 21030]]
CB2............................................................. 319.37 225.79 93.58
CB1............................................................. 295.77 209.11 86.66
CA2............................................................. 270.36 191.14 79.22
CA1............................................................. 252.21 178.31 73.90
BB2............................................................. 286.70 202.70 84.00
BB1............................................................. 273.99 193.71 80.28
BA2............................................................. 237.69 168.05 69.64
BA1............................................................. 226.80 160.35 66.45
PE2............................................................. 382.89 270.70 112.19
PE1............................................................. 364.74 257.87 106.87
PD2............................................................. 361.11 255.30 105.81
PD1............................................................. 342.96 242.47 100.49
PC2............................................................. 310.29 219.38 90.91
PC1............................................................. 295.77 209.11 86.66
PB2............................................................. 263.10 186.01 77.09
PB1............................................................. 252.21 178.31 73.90
PA2............................................................. 217.73 153.94 63.79
PA1............................................................. 208.65 147.52 61.13
----------------------------------------------------------------------------------------------------------------
Table 10--RUG-IV Case-Mix Adjusted Federal Rates for Rural SNFs by Labor and Non-Labor Component
----------------------------------------------------------------------------------------------------------------
Non-Labor
RUG-IV category Total rate Labor portion portion
----------------------------------------------------------------------------------------------------------------
RUX............................................................. $852.10 $602.43 $249.67
RUL............................................................. 834.76 590.18 244.58
RVX............................................................. 748.68 529.32 219.36
RVL............................................................. 675.85 477.83 198.02
RHX............................................................. 670.48 474.03 196.45
RHL............................................................. 601.13 425.00 176.13
RMX............................................................. 609.32 430.79 178.53
RML............................................................. 560.77 396.46 164.31
RLX............................................................. 530.34 374.95 155.39
RUC............................................................. 659.64 466.37 193.27
RUB............................................................. 659.64 466.37 193.27
RUA............................................................. 560.81 396.49 164.32
RVC............................................................. 557.95 394.47 163.48
RVB............................................................. 488.59 345.43 143.16
RVA............................................................. 486.86 344.21 142.65
RHC............................................................. 479.76 339.19 140.57
RHB............................................................. 434.67 307.31 127.36
RHA............................................................. 386.12 272.99 113.13
RMC............................................................. 416.86 294.72 122.14
RMB............................................................. 392.59 277.56 115.03
RMA............................................................. 326.70 230.98 95.72
RLB............................................................. 398.57 281.79 116.78
RLA............................................................. 261.59 184.94 76.65
ES3............................................................. 734.31 519.16 215.15
ES2............................................................. 576.52 407.60 168.92
ES1............................................................. 515.83 364.69 151.14
HE2............................................................. 498.50 352.44 146.06
HE1............................................................. 415.27 293.60 121.67
HD2............................................................. 467.29 330.37 136.92
HD1............................................................. 390.99 276.43 114.56
HC2............................................................. 441.28 311.98 129.30
HC1............................................................. 370.19 261.72 108.47
HB2............................................................. 436.08 308.31 127.77
HB1............................................................. 366.72 259.27 107.45
LE2............................................................. 453.41 320.56 132.85
LE1............................................................. 380.59 269.08 111.51
LD2............................................................. 436.08 308.31 127.77
LD1............................................................. 366.72 259.27 107.45
LC2............................................................. 384.06 271.53 112.53
LC1............................................................. 325.11 229.85 95.26
LB2............................................................. 364.99 258.05 106.94
LB1............................................................. 311.23 220.04 91.19
CE2............................................................. 404.87 286.24 118.63
CE1............................................................. 373.66 264.18 109.48
CD2............................................................. 384.06 271.53 112.53
[[Page 21031]]
CD1............................................................. 352.85 249.46 103.39
CC2............................................................. 337.24 238.43 98.81
CC1............................................................. 312.97 221.27 91.70
CB2............................................................. 312.97 221.27 91.70
CB1............................................................. 290.43 205.33 85.10
CA2............................................................. 266.15 188.17 77.98
CA1............................................................. 248.81 175.91 72.90
BB2............................................................. 281.76 199.20 82.56
BB1............................................................. 269.62 190.62 79.00
BA2............................................................. 234.94 166.10 68.84
BA1............................................................. 224.54 158.75 65.79
PE2............................................................. 373.66 264.18 109.48
PE1............................................................. 356.32 251.92 104.40
PD2............................................................. 352.85 249.46 103.39
PD1............................................................. 335.51 237.21 98.30
PC2............................................................. 304.30 215.14 89.16
PC1............................................................. 290.43 205.33 85.10
PB2............................................................. 259.22 183.27 75.95
PB1............................................................. 248.81 175.91 72.90
PA2............................................................. 215.87 152.62 63.25
PA1............................................................. 207.20 146.49 60.71
----------------------------------------------------------------------------------------------------------------
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
under the SNF PPS that are greater or less than would otherwise be made
if the wage adjustment had not been made. For FY 2019 (federal rates
effective October 1, 2018), we would apply an adjustment to fulfill the
budget neutrality requirement. We would meet this requirement by
multiplying each of the components of the unadjusted federal rates by a
budget neutrality factor equal to the ratio of the weighted average
wage adjustment factor for FY 2018 to the weighted average wage
adjustment factor for FY 2019. For this calculation, we would use the
same FY 2017 claims utilization data for both the numerator and
denominator of this ratio. We define the wage adjustment factor used in
this calculation as the labor share of the rate component multiplied by
the wage index plus the non-labor share of the rate component. The
budget neutrality factor for FY 2019 would be 1.0002.
As discussed above, we have historically used, and propose to
continue using, pre-reclassified IPPS hospital wage data, unadjusted
for occupational mix and the rural and imputed floors, as the basis for
the SNF wage index. That being said, we note that we have received
recurring comments in prior rulemaking (most recently in the FY 2018
SNF PPS final rule (82 FR 36539 through 36541)) regarding the
development of a SNF-specific wage index. It has been suggested that we
develop a SNF-specific wage index utilizing SNF cost report wage data
instead of hospital wage data. We have noted, in response that
developing such a wage index would require a resource-intensive audit
process similar to that used for IPPS hospital data, to improve the
quality of the SNF cost report data in order for it to be used as part
of this analysis. This audit process is quite extensive in the case of
approximately 3,300 hospitals, and it would be significantly more so in
the case of approximately 15,000 SNFs. As discussed previously in this
rule, we believe auditing all SNF cost reports, similar to the process
used to audit inpatient hospital cost reports for purposes of the IPPS
wage index, would place a burden on providers in terms of recordkeeping
and completion of the cost report worksheet. We also believe that
adopting such an approach would require a significant commitment of
resources by CMS and the Medicare Administrative Contractors,
potentially far in excess of those required under the IPPS given that
there are nearly five times as many SNFs as there are hospitals.
Therefore, while we continue to review all available data and
contemplate the potential methodological approaches for a SNF-specific
wage index in the future, we continue to believe that in the absence of
the appropriate SNF-specific wage data, using the pre-reclassified,
pre-rural and imputed floor hospital inpatient wage data (without the
occupational mix adjustment) is appropriate and reasonable for the SNF
PPS.
As an alternative to a SNF-specific wage index, it has also been
suggested that we consider adopting certain wage index policies in use
under the IPPS, such as geographic reclassification or rural floor.
Although we have the authority under section 315 of BIPA to establish a
geographic reclassification procedure specific to SNFs under certain
conditions, as discussed previously, under BIPA, we cannot adopt a
reclassification policy until we have collected the data necessary to
establish a SNF-specific wage index. Thus, we cannot adopt a
reclassification procedure at this time. With regard to adopting a
rural floor policy, as we stated in the FY 2017 SNF PPS final rule (82
FR 36540), MedPAC has recommended eliminating the rural floor policy
(which actually sets a floor for urban hospitals) from the calculation
of the IPPS wage index (see, for example, Chapter 3 of MedPAC's March
2013 Report to Congress on Medicare Payment Policy, available at http://medpac.gov/docs/default-source/reports/mar13_ch03.pdf, which notes on
page 65 that in 2007, MedPAC had ``. . . recommended eliminating these
special wage index adjustments and adopting a new wage index system to
avoid geographic inequities that can occur due to current wage index
policies (Medicare Payment Advisory Commission 2007b.''). As we stated
in the FY 2017 SNF PPS final rule, if we were to adopt the rural floor
under the SNF PPS, we believe that the SNF PPS wage index could become
vulnerable to problems similar to those that MedPAC
[[Page 21032]]
identified in its March 2013 Report to Congress.
Given the perennial nature of these comments and responses on the
SNF PPS wage index policy, we are requesting further comments on the
issues discussed above. Specifically, we request comment on how a SNF-
specific wage index may be developed without creating significant
administrative burdens for providers, CMS, or its contractors. Further,
we request comments on specific alternatives we may consider in future
rulemaking which could be implemented in advance of, or in lieu of, a
SNF-specific wage index.
E. SNF Value-Based Purchasing Program
Beginning with payment for services furnished on October 1, 2018,
section 1888(h) of the Act requires the Secretary to reduce the
adjusted Federal per diem rate determined under section 1888(e)(4)(G)
of the Act otherwise applicable to a SNF for services furnished during
a fiscal year by 2 percent, and to adjust the resulting rate for a SNF
by the value-based incentive payment amount earned by the SNF based on
the SNF's performance score for that fiscal year under the SNF VBP
Program. To implement these requirements, we propose to add a new
paragraph (f) to Sec. 413.337. See section VI.C. of this proposed rule
for further information regarding the SNF VBP Program, including a
discussion of the methodology we would use to make the payment
adjustments.
F. Adjusted Rate Computation Example
Using the hypothetical SNF XYZ, Table 11 shows the adjustments made
to the federal per diem rates (prior to application of any adjustments
under the SNF QRP and SNF VBP programs as discussed above) to compute
the provider's actual per diem PPS payment for FY 2019. We derive the
Labor and Non-labor columns from Table 9. The wage index used in this
example is based on the proposed wage index, which may be found in
Table A available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. As illustrated
in Table 11, SNF XYZ's total PPS payment for FY 2019 would equal
$48,801.32.
Table 11--Adjusted Rate Computation Example SNF XYZ: Located in Frederick, MD (Urban CBSA 43524) Wage Index: 0.9882
[See Proposed Wage Index in Table A] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted Adjusted Percent Medicare
RUG-IV group Labor Wage index labor Non-labor rate adjustment days Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVX..................................................... $524.13 0.9882 $517.95 $217.21 $735.16 $735.16 14 $10,292.24
ES2..................................................... $420.84 0.9882 $415.87 $174.41 $590.28 $590.28 30 $17,708.40
RHA..................................................... $264.42 0.9882 $261.30 $109.58 $370.88 $370.88 16 $5,934.08
CC2\2\.................................................. $243.76 0.9882 $240.88 $101.02 $341.90 $779.53 10 $7,795.30
BA2..................................................... $168.05 0.9882 $166.07 $69.64 $235.71 $235.71 30 $7,071.30
-----------------------
.......... .......... .......... .......... .......... .......... 100 $48,801.32
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
\2\ Reflects a 128 percent adjustment from section 511 of the MMA.
IV. Additional Aspects of the SNF PPS
A. SNF Level of Care--Administrative Presumption
The establishment of the SNF PPS did not change Medicare's
fundamental requirements for SNF coverage. However, because the case-
mix classification is based, in part, on the beneficiary's need for
skilled nursing care and therapy, we have attempted, where possible, to
coordinate claims review procedures with the existing resident
assessment process and case-mix classification system discussed in
section III.C. of this proposed rule. This approach includes an
administrative presumption that utilizes a beneficiary's initial
classification in one of the upper 52 RUGs of the current 66-group RUG-
IV case-mix classification system to assist in making certain SNF level
of care determinations.
In accordance with the regulations at Sec. 413.345, we include in
each update of the federal payment rates in the Federal Register a
discussion of the resident classification system that provides the
basis for case-mix adjustment. Under that discussion, we designate
those specific classifiers under the case-mix classification system
that represent the required SNF level of care, as provided in Sec.
409.30. As set forth in the FY 2011 SNF PPS update notice (75 FR
42910), this designation reflects an administrative presumption under
the 66-group RUG-IV system that beneficiaries who are correctly
assigned to one of the upper 52 RUG-IV groups on the initial 5-day,
Medicare-required assessment are automatically classified as meeting
the SNF level of care definition up to and including the assessment
reference date (ARD) on the 5-day Medicare-required assessment.
A beneficiary assigned to any of the lower 14 RUG-IV groups is not
automatically classified as either meeting or not meeting the
definition, but instead receives an individual level of care
determination using the existing administrative criteria. This
presumption recognizes the strong likelihood that beneficiaries
assigned to one of the upper 52 RUG-IV groups during the immediate
post-hospital period require a covered level of care, which would be
less likely for those beneficiaries assigned to one of the lower 14
RUG-IV groups.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we
would announce any changes to the guidelines for Medicare level of care
determinations related to modifications in the case-mix classification
structure. The FY 2018 final rule (82 FR 36544) further specified that
we would henceforth disseminate the standard description of the
administrative presumption's designated groups via the SNF PPS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html (where such designations appear in the paragraph
entitled ``Case Mix Adjustment''), and would publish such designations
in rulemaking only to the extent that we actually intend to make
changes in them. (We discuss in section V.H. of this proposed rule the
modifications to the administrative level of care presumption that we
are proposing in order to accommodate the case-mix classification
system under the proposed PDPM.)
[[Page 21033]]
However, we note that this administrative presumption policy does
not supersede the SNF's responsibility to ensure that its decisions
relating to level of care are appropriate and timely, including a
review to confirm that the services prompting the assignment of one of
the designated case-mix classifiers (which, in turn, serves to trigger
the administrative presumption) are themselves medically necessary. As
we explained in the FY 2000 SNF PPS final rule (64 FR 41667), the
administrative presumption:
. . . is itself rebuttable in those individual cases in which the
services actually received by the resident do not meet the basic
statutory criterion of being reasonable and necessary to diagnose or
treat a beneficiary's condition (according to section 1862(a)(1) of
the Act). Accordingly, the presumption would not apply, for example,
in those situations in which a resident's assignment to one of the
upper . . . groups is itself based on the receipt of services that
are subsequently determined to be not reasonable and necessary.
Moreover, we want to stress the importance of careful monitoring for
changes in each patient's condition to determine the continuing need
for Part A SNF benefits after the ARD of the 5-day assessment.
B. Consolidated Billing
Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by
section 4432(b) of the BBA 1997) require a SNF to submit consolidated
Medicare bills to its Medicare Administrative Contractor (MAC) for
almost all of the services that its residents receive during the course
of a covered Part A stay. In addition, section 1862(a)(18) of the Act
places the responsibility with the SNF for billing Medicare for
physical therapy, occupational therapy, and speech-language pathology
services that the resident receives during a noncovered stay. (Please
refer to section VI.A. of this rule for a discussion of a proposed
revision to the regulation text that describes a beneficiary's status
as a SNF ``resident'' for consolidated billing purposes.) Section
1888(e)(2)(A) of the Act excludes a small list of services from the
consolidated billing provision (primarily those services furnished by
physicians and certain other types of practitioners), which remain
separately billable under Part B when furnished to a SNF's Part A
resident. These excluded service categories are discussed in greater
detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR
26295 through 26297).
A detailed discussion of the legislative history of the
consolidated billing provision is available on the SNF PPS website at
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_04152015.pdf. In particular, section 103
of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (Pub. L. 106-113, enacted on November 29, 1999) (BBRA) amended
section 1888(e)(2)(A) of the Act by further excluding a number of
individual high-cost, low probability services, identified by
Healthcare Common Procedure Coding System (HCPCS) codes, within several
broader categories (chemotherapy items, chemotherapy administration
services, radioisotope services, and customized prosthetic devices)
that otherwise remained subject to the provision. We discuss this BBRA
amendment in greater detail in the SNF PPS proposed and final rules for
FY 2001 (65 FR 19231 through 19232, April 10, 2000, and 65 FR 46790
through 46795, July 31, 2000), as well as in Program Memorandum AB-00-
18 (Change Request #1070), issued March 2000, which is available online
at www.cms.gov/transmittals/downloads/ab001860.pdf.
As explained in the FY 2001 proposed rule (65 FR 19232), the
amendments enacted in section 103 of the BBRA not only identified for
exclusion from this provision a number of particular service codes
within four specified categories (that is, chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices), but also gave the Secretary the
authority to designate additional, individual services for exclusion
within each of the specified service categories. In the proposed rule
for FY 2001, we also noted that the BBRA Conference report (H.R. Rep.
No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the individual
services that this legislation targets for exclusion as high-cost, low
probability events that could have devastating financial impacts
because their costs far exceed the payment SNFs receive under the PPS.
According to the conferees, section 103(a) of the BBRA is an attempt to
exclude from the PPS certain services and costly items that are
provided infrequently in SNFs. By contrast, the amendments enacted in
section 103 of the BBRA do not designate for exclusion any of the
remaining services within those four categories (thus, leaving all of
those services subject to SNF consolidated billing), because they are
relatively inexpensive and are furnished routinely in SNFs.
As we further explained in the final rule for FY 2001 (65 FR
46790), and as is consistent with our longstanding policy, any
additional service codes that we might designate for exclusion under
our discretionary authority must meet the same statutory criteria used
in identifying the original codes excluded from consolidated billing
under section 103(a) of the BBRA: They must fall within one of the four
service categories specified in the BBRA; and they also must meet the
same standards of high cost and low probability in the SNF setting, as
discussed in the BBRA Conference report. Accordingly, we characterized
this statutory authority to identify additional service codes for
exclusion as essentially affording the flexibility to revise the list
of excluded codes in response to changes of major significance that may
occur over time (for example, the development of new medical
technologies or other advances in the state of medical practice) (65 FR
46791). In this proposed rule, we specifically invite public comments
identifying HCPCS codes in any of these four service categories
(chemotherapy items, chemotherapy administration services, radioisotope
services, and customized prosthetic devices) representing recent
medical advances that might meet our criteria for exclusion from SNF
consolidated billing. We may consider excluding a particular service if
it meets our criteria for exclusion as specified above. Commenters
should identify in their comments the specific HCPCS code that is
associated with the service in question, as well as their rationale for
requesting that the identified HCPCS code(s) be excluded.
We note that the original BBRA amendment (as well as the
implementing regulations) identified a set of excluded services by
means of specifying HCPCS codes that were in effect as of a particular
date (in that case, as of July 1, 1999). Identifying the excluded
services in this manner made it possible for us to utilize program
issuances as the vehicle for accomplishing routine updates of the
excluded codes, to reflect any minor revisions that might subsequently
occur in the coding system itself (for example, the assignment of a
different code number to the same service). Accordingly, in the event
that we identify through the current rulemaking cycle any new services
that would actually represent a substantive change in the scope of the
exclusions from SNF consolidated billing, we would identify these
additional excluded services by means of the HCPCS codes that are in
effect as of a specific date (in this case, as of October 1, 2018). By
making any new exclusions in this manner, we could similarly accomplish
routine
[[Page 21034]]
future updates of these additional codes through the issuance of
program instructions.
C. Payment for SNF-Level Swing-Bed Services
Section 1883 of the Act permits certain small, rural hospitals to
enter into a Medicare swing-bed agreement, under which the hospital can
use its beds to provide either acute- or SNF-level care, as needed. For
critical access hospitals (CAHs), Part A pays on a reasonable cost
basis for SNF-level services furnished under a swing-bed agreement.
However, in accordance with section 1888(e)(7) of the Act, SNF-level
services furnished by non-CAH rural hospitals are paid under the SNF
PPS, effective with cost reporting periods beginning on or after July
1, 2002. As explained in the FY 2002 final rule (66 FR 39562), this
effective date is consistent with the statutory provision to integrate
swing-bed rural hospitals into the SNF PPS by the end of the transition
period, June 30, 2002.
Accordingly, all non-CAH swing-bed rural hospitals have now come
under the SNF PPS. Therefore, all rates and wage indexes outlined in
earlier sections of this proposed rule for the SNF PPS also apply to
all non-CAH swing-bed rural hospitals. A complete discussion of
assessment schedules, the MDS, and the transmission software (RAVEN-SB
for Swing Beds) appears in the FY 2002 final rule (66 FR 39562) and in
the FY 2010 final rule (74 FR 40288). As finalized in the FY 2010 SNF
PPS final rule (74 FR 40356 through 40357), effective October 1, 2010,
non-CAH swing-bed rural hospitals are required to complete an MDS 3.0
swing-bed assessment which is limited to the required demographic,
payment, and quality items. The latest changes in the MDS for swing-bed
rural hospitals appear on the SNF PPS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html. We refer
readers to section V.E.2. of this proposed rule for a discussion of the
revisions we are proposing to the MDS 3.0 swing-bed assessment
effective October 1, 2019.
V. Proposed Revisions to SNF PPS Case-Mix Classification Methodology
A. Issues Relating to the Current Case-Mix System for Payment of
Skilled Nursing Facility Services Under Part A of the Medicare Program
Section 1888(e)(4)(G)(i) of the Act requires the Secretary to make
an adjustment to the per diem rates to account for case-mix. The
statute specifies that the adjustment is to be based on both a resident
classification system that the Secretary establishes that accounts for
the relative resource use of different resident types, as well as
resident assessment and other data that the Secretary considers
appropriate.
In general, the case-mix classification system currently used under
the SNF PPS classifies residents into payment classification groups,
called RUGs, based on various resident characteristics and the type and
intensity of therapy services provided to the resident. Under the
existing SNF PPS methodology, there are two case-mix-adjusted
components of payment: Nursing and therapy. Each RUG is assigned a CMI
for each payment component to reflect relative differences in cost and
resource intensity. The higher the CMI, the higher the expected
resource utilization and cost associated with residents assigned to
that RUG. The case-mix-adjusted nursing component of payment reflects
relative differences in a resident's associated nursing and non-therapy
ancillary (NTA) costs, based on various resident characteristics, such
as resident comorbidities, and treatments. The case-mix-adjusted
therapy component of payment reflects relative differences in a
resident's associated therapy costs, which is based on a combination of
PT, OT, and SLP services. Resident classification under the existing
therapy component is based primarily on the amount of therapy the SNF
chooses to provide to a SNF resident. Under the RUG-IV model, residents
are classified into rehabilitation groups, where payment is determined
primarily based on the intensity of therapy services received by the
resident, and into nursing groups, based on the intensity of nursing
services received by the resident and other aspects of the resident's
care and condition. However, only the higher paying of these groups is
used for payment purposes. For example, if a resident is classified
into a both the RUA (Rehabilitation) and PA1 (Nursing) RUG-IV groups,
where RUA has a higher per-diem payment rate than PA1, the RUA group is
used for payment purposes. It should be noted that the vast majority of
Part A covered SNF days (over 90 percent) are paid using a
rehabilitation RUG. A variety of concerns have been raised with the
current SNF PPS, specifically the RUG-IV model, which we discuss below.
When the SNF PPS was first implemented in 1998 (63 FR 26252), we
developed the RUG-III case-mix classification model, which tied the
amount of payment to resident resource use in combination with resident
characteristic information. Staff time measurement (STM) studies
conducted in 1990, 1995, and 1997 provided information on resource use
(time spent by staff members on residents) and resident characteristics
that enabled us not only to establish RUG-III but also to create CMIs.
This initial RUG-III model was refined by changes finalized in the FY
2006 SNF PPS final rule (70 FR 45032), which included adding nine case-
mix groups to the top of the original 44-group RUG-III hierarchy, which
created the RUG-53 case-mix model.
In the FY 2010 SNF PPS proposed rule (74 FR 22208), we proposed the
RUG-IV model based on, among other reasons, concerns that incentives in
the SNF PPS had changed the relative amount of nursing resources
required to treat SNF residents (74 FR 22220). These concerns led us to
conduct a new Staff Time Measurement (STM) study, the Staff Time and
Resource Intensity Verification (STRIVE) project, which served as the
basis for developing the current SNF PPS case-mix classification model,
RUG-IV, which became effective in FY 2011. At that time, we considered
alternative case mix models, including predictive models of therapy
payment based on resident characteristics; however, we had a ``great
deal of concern that by separating payment from the actual provision of
services, the system, and more importantly, the beneficiaries would be
vulnerable to underutilization.'' (74 FR 22220) Other options
considered at the time included a non-therapy ancillary (NTA) payment
model based on resident characteristics (74 FR 22238) and a DRG-based
payment model that relied on information from the prior inpatient stay
(74 FR 22220); these and other options are discussed in detail in a CMS
Report to Congress issued in December 2006 (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/RC_2006_PC-PPSSNF.pdf).
In the years since we implemented the SNF PPS, finalized RUG-IV,
and made statements regarding our concerns about underutilization of
services in previously considered models, we have witnessed a
significant trend that has caused us to reconsider these concerns. More
specifically, as discussed in section V.E. of the FY 2015 SNF PPS
proposed rule (79 FR 25767), we documented and discussed trends
observed in therapy utilization in a memo entitled ``Observations on
Therapy Utilization Trends'' (which
[[Page 21035]]
may be accessed at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Therapy_Trends_Memo_04212014.pdf). The
two most notable trends discussed in that memo were that the percentage
of residents classifying into the Ultra-High therapy category has
increased steadily and, of greater concern, that the percentage of
residents receiving just enough therapy to surpass the Ultra-High and
Very-High therapy thresholds has also increased. In that memo, we state
``the percentage of claims-matched MDS assessments in the range of 720
minutes to 739 minutes, which is just enough to surpass the 720 minute
threshold for RU groups, has increased from 5 percent in FY 2005 to 33
percent in FY 2013'' and this trend has continued since that time.
While it might be possible to attribute the increasing share of
residents in the Ultra-High therapy category to increasing acuity
within the SNF population, we believe the increase in ``thresholding''
(that is, of providing just enough therapy for residents to surpass the
relevant therapy thresholds) is a strong indication of service
provision predicated on financial considerations rather than resident
need. We discussed this issue in response to comments in the FY 2015
SNF PPS final rule, where, in response to comments regarding the lack
of ``current medical evidence related to how much therapy a given
resident should receive,'' we stated the following:
With regard to the comments which highlight the lack of existing
medical evidence for how much therapy a given resident should
receive, we would note that . . . the number of therapy minutes
provided to SNF residents within certain therapy RUG categories is,
in fact, clustered around the minimum thresholds for a given therapy
RUG category. However, given the comments highlighting the lack of
medical evidence related to the appropriate amount of therapy in a
given situation, it is all the more concerning that practice
patterns would appear to be as homogenized as the data would
suggest. (79 FR 45651)
In response to comments related to factors which may explain the
observed trends, we stated the following:
With regard to the comment which highlighted potential
explanatory factors for the observed trends, such as internal
pressure within SNFs that would override clinical judgment, we find
these potential explanatory factors troubling and entirely
inconsistent with the intended use of the SNF benefit. Specifically,
the minimum therapy minute thresholds for each therapy RUG category
are certainly not intended as ceilings or targets for therapy
provision. As discussed in Chapter 8, Section 30 of the Medicare
Benefit Policy Manual (Pub. 100-02), to be covered, the services
provided to a SNF resident must be ``reasonable and necessary for
the treatment of a patient's illness or injury, that is, are
consistent with the nature and severity of the individual's illness
or injury, the individual's particular medical needs, and accepted
standards of medical practice.'' (emphasis added) Therefore,
services which are not specifically tailored to meet the
individualized needs and goals of the resident, based on the
resident's condition and the evaluation and judgment of the
resident's clinicians, may not meet this aspect of the definition
for covered SNF care, and we believe that internal provider rules
should not seek to circumvent the Medicare statute, regulations and
policies, or the professional judgment of clinicians. (79 FR 45651
through 45652)
In addition to this discussion of observed trends, others have also
identified potential areas of concern within the current SNF PPS. The
two most notable sources are the Office of the Inspector General (OIG)
and the Medicare Payment Advisory Commission (MedPAC).
For the OIG, three recent OIG reports describe the OIG's concerns
with the current SNF PPS. In December 2010, the OIG released a report
entitled ``Questionable Billing by Skilled Nursing Facilities'' (which
may be accessed at https://oig.hhs.gov/oei/reports/oei-02-09-00202.pdf). In this report, among its findings, the OIG found that
``from 2006 to 2008, SNFs increasingly billed for higher paying RUGs,
even though beneficiary characteristics remained largely unchanged''
(OEI-02-09-00202, ii), and among other things, recommended that we
should ``consider several options to ensure that the amount of therapy
paid for by Medicare accurately reflects beneficiaries' needs'' (OEI-
02-09-00202, iii). Further, in November 2012, the OIG released a report
entitled ``Inappropriate Payments to Skilled Nursing Facilities Cost
Medicare More Than a Billion Dollars in 2009'' (which may be accessed
at https://oig.hhs.gov/oei/reports/oei-02-09-00200.pdf). In this
report, the OIG found that ``SNFs billed one-quarter of all claims in
error in 2009'' and that the ``majority of the claims in error were
upcoded; many of these claims were for ultrahigh therapy.'' (OEI-02-09-
00200, Executive Summary). Among its recommendations, the OIG stated
that ``the findings of this report provide further evidence that CMS
needs to change how it pays for therapy'' (OEI-02-09-00200, 15).
Finally, in September 2015, the OIG released a report entitled ``The
Medicare Payment System for Skilled Nursing Facilities Needs to be
Reevaluated'' (which may be accessed at https://oig.hhs.gov/oei/reports/oei-02-13-00610.pdf). Among its findings, the OIG found that
``Medicare payments for therapy greatly exceed SNFs' costs for
therapy,'' further noting that ``the difference between Medicare
payments and SNFs' costs for therapy, combined with the current payment
method, creates an incentive for SNFs to bill for higher levels of
therapy than necessary'' (OEI-02-13-00610, 7). Among its
recommendations, the OIG stated that CMS should ``change the method of
paying for therapy``, further stating that ``CMS should accelerate its
efforts to develop and implement a new method of paying for therapy
that relies on beneficiary characteristics or care needs.'' (OEI-02-13-
00610, 12).
For MedPAC's recommendations in this area, Chapter 8 of MedPAC's
March 2017 Report to Congress (available at http://www.medpac.gov/docs/default-source/reports/mar17_medpac_ch8.pdf) includes the following
recommendation: ``The Congress should . . . direct the Secretary to
revise the prospective payment system (PPS) for skilled nursing
facilities'' and ``. . . make any additional adjustments to payments
needed to more closely align payment with costs.'' (March 2017 MedPAC
Report to Congress, 220). This recommendation is seemingly predicated
on MedPAC's own analysis of the current SNF PPS, where they state that
``almost since its inception the SNF PPS has been criticized for
encouraging the provision of excessive rehabilitation therapy services
and not accurately targeting payments for nontherapy ancillaries''
(March 2017 MedPAC Report to Congress, 202). Finally, with regard to
the possibility of changing the existing SNF payment system, MedPAC
stated that ``since 2015, [CMS] has gathered four expert panels to
receive input on aspects of possible design features before it proposes
a revised PPS'' and further that ``the designs under consideration are
consistent with those recommended by the Commission'' (March 2017
MedPAC Report to Congress, 203).
The combination of the observed trends in the current SNF PPS
discussed above (which strongly suggest that providers may be basing
service provision on financial reasons rather than resident need), the
issues raised in the OIG reports discussed above, and the issues raised
by MedPAC, has caused us to consider significant revisions to the
existing SNF PPS, in keeping with our overall responsibility to ensure
that payments under the SNF PPS accurately reflect both resident needs
and resource utilization.
Under the RUG-IV system, therapy service provision determines not
only
[[Page 21036]]
therapy payments but also nursing payments. This is because, as noted
above, payment is based on the highest RUG category that the resident
could be assigned to, so only one of a resident's assigned RUG groups,
rehabilitation or nursing, is used for payment purposes. Each
rehabilitation group is assigned a nursing CMI to reflect relative
differences in nursing costs for residents in those rehabilitation
groups, which is less specifically tailored to the individual nursing
costs for a given resident than the nursing CMIs assigned for the
nursing RUGs. Given that, as mentioned above, most resident days are
paid using a rehabilitation RUG, and since assignment into a
rehabilitation RUG is based on therapy service provision, this means
that therapy service provision effectively determines nursing payments
for those residents who are assigned to a rehabilitation RUG. Thus, we
believe any attempts to revise the SNF PPS payment methodology to
better account for therapy service provision under the SNF PPS would
need to be comprehensive and affect both the therapy and nursing case-
mix components. Moreover, in the FY 2015 SNF PPS final rule, in
response to comments regarding access for certain ``specialty''
populations (such as those with complex nursing needs), we stated the
following:
With regard to the comment on specialty populations, we agree
with the commenter that access must be preserved for all categories
of SNF residents, particularly those with complex medical and
nursing needs. As appropriate, we will examine our current
monitoring efforts to identify any revisions which may be necessary
to account appropriately for these populations. (79 FR 45651)
In addition, MedPAC, in its March 2017 Report to Congress, stated
that it has previously recommended that we revise the current SNF PPS
to ``base therapy payments on patient characteristics (not service
provision), remove payments for NTA services from the nursing
component, [and] establish a separate component within the PPS that
adjusts payments for NTA services'' (March 2017 MedPAC Report to
Congress, 202). Accordingly, we note that included among the proposed
revisions we discuss in this proposed rule, are revisions to the SNF
PPS to address longstanding concerns regarding the ability of the RUG-
IV system to account for variation in nursing and NTA services, as
described in sections V.D.3.e. of this proposed rule.
In May 2017, CMS released an Advance Notice of Proposed Rulemaking
with comment (82 FR 20980) (the ANPRM), in which we discussed the
history of and analyses conducted during the SNF Payment Models
Research (PMR) project, which sought to address these concerns with the
RUG-IV model, and sought comments on a possible replacement to the
current RUG-IV model, which we called the Resident Classification
System, Version I (RCS-I). This model was intended as an improvement
over the RUG-IV model because it would better account for resident
characteristics and care needs, thus better aligning SNF PPS payments
with resource use and eliminating therapy provision-related financial
incentives inherent in the current payment model used in the SNF PPS.
We received many comments from stakeholders on a wide variety of
aspects of the RCS-I model. After considering these comments, we made
significant revisions to the RCS-I model to account for the concerns or
questions raised by stakeholders, resulting in a revised case-mix
classification model which we are proposing in this rule. To make clear
the purpose and intent of replacing the existing RUG-IV system, the
model we are proposing in this rule is called the Patient-Driven
Payment Model (PDPM).
In the sections that follow, we describe the comprehensive proposed
revisions to the current SNF PPS case-mix classification system and its
replacement with PDPM, effective October 1, 2019. Specifically, we
discuss a proposed alternative to the existing RUG-IV, called the
Patient-Driven Payment Model (PDPM), effective for payments beginning
October 1, 2019. As further detailed below, we believe that the PDPM
represents an improvement over the RUG-IV model and the RCS-I model
because it would better account for resident characteristics and care
needs while reducing both systemic and administrative complexity. To
better ensure that resident care decisions appropriately reflect each
resident's actual care needs, we believe it is important to remove, to
the extent possible, service-based metrics from the SNF PPS and derive
payment from verifiable resident characteristics.
B. Summary of the Skilled Nursing Facility Payment Models Research
Project
As noted above, since 1998, Medicare Part A has paid for SNF
services on a per diem basis through the SNF PPS. Currently, therapy
payments under the SNF PPS are based primarily on the amount of therapy
furnished to a patient, regardless of that patient's specific
characteristics and care needs. Beginning in 2013, we contracted with
Acumen, LLC to identify potential alternatives to the existing
methodology used to pay for services under the SNF PPS. The
recommendations developed under this contract, entitled the SNF PMR
project, form the basis of the proposals contained in the sections
below.
The SNF PMR operated in four phases. In the first phase of the
project, which focused exclusively on therapy payment issues, Acumen
reviewed past research studies and policy issues related to SNF PPS
therapy payment and options for improving or replacing the current
therapy payment methodology. After consideration of multiple potential
alternatives, such as competitive bidding and a hybrid model combining
resource-based pricing (for example, how therapy payments are made
under the current SNF PPS) with resident characteristics, we identified
a model that relies on resident characteristics rather than the amount
of therapy received as the most appropriate replacement for the
existing therapy payment model. As stated above, we believe that
relying on resident characteristics would improve the resident-
centeredness of the model and discourage resident care decisions
predicated on service-based financial incentives. A report summarizing
Acumen's activities and recommendations during the first phase of the
SNF PMR contract, the SNF Therapy Payment Models Base Year Final
Summary Report, is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Summary_Report_20140501.pdf.
In the second phase of the project, Acumen used the findings from
the Base Year Final Summary Report as a guide to identify potential
models suitable for further analysis. During this phase of the project,
in an effort to establish a comprehensive approach to Medicare Part A
SNF payment reform, we expanded the scope of the SNF PMR to encompass
other aspects of the SNF PPS beyond therapy. Although we always
intended to ensure that any revisions specific to therapy payment would
be considered as part of an integrated approach with the remaining
payment methodology, we believed it was prudent to examine potential
improvements and refinements to the overall SNF PPS payment system as
well.
During this phase of the SNF PMR, Acumen hosted four Technical
Expert Panels (TEPs), which brought together industry experts,
stakeholders, and clinicians with the research team to
[[Page 21037]]
discuss different topics within the overall analytic framework. In
February 2015, Acumen hosted a TEP to discuss questions and issues
related to therapy case-mix classification. In November 2015, Acumen
hosted a second TEP focused on questions and issues related to nursing
case-mix classification, as well as to discuss issues related to
payment for NTAs. In June 2016, Acumen hosted a third TEP to provide
stakeholders with an outline of a potential revised SNF PPS payment
structure, including new case-mix adjusted components and potential
companion policies, such as variable per diem payment adjustments.
Finally, in October 2016, Acumen hosted a fourth TEP, during which
Acumen presented the case-mix components for a potential revised SNF
PPS, as well as an initial impact analysis associated with the
potential revised SNF PPS payment model. The presentation slides used
during each of the TEPs, as well as a summary report for each TEP, is
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
In the third phase of the contract, we tasked Acumen to assist in
developing supporting language and documentation, most notably a
technical report (the SNF PMR technical report), related to an earlier
version of the alternative SNF PPS case-mix classification model we
were considering, which we named the Resident Classification System,
Version I (RCS-I). The SNF PMR technical report associated with the
ANPRM is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
The final phase of the project, which began in October 2017, was
focused on refinements to the alternative model. We received a large
number of comments in response to the ANPRM introducing the RCS-I
model. During the revision phase, Acumen conducted additional analyses
based on the comments received and made a number of modifications to
the payment model. The resulting case-mix classification model is the
PDPM we are proposing. During the final phase of the project, Acumen
produced a second technical report that presents the analyses and
results that were used to develop the proposed revised payment model
described in this proposed rule (the SNF PDPM technical report,
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
In the sections below, we outline each aspect of the proposed PDPM,
as well as additional revisions to the SNF PPS which we are proposing
along with the proposed implementation of the PDPM. We invite comments
on any and all aspects of the proposed PDPM, including the research
analyses described in this proposed rule, the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) and the SNF PMR technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
C. Revisions to SNF PPS Federal Base Payment Rate Components
1. Background on SNF PPS Federal Base Payment Rates and Components
Section 1888(e)(4) of the Act requires that the SNF PPS per diem
federal payment rates be based on FY 1995 costs, updated for inflation
to the first effective period of the PPS. These base rates are then
required to be adjusted to reflect differences among facilities in
patient case-mix and in average wage levels by area. In keeping with
this statutory requirement, the base per diem payment rates were set in
1998 and reflect average SNF costs in a base year (FY 1995), updated
for inflation to the first period of the SNF PPS, which was the 15-
month period beginning on July 1, 1998. The federal base payment rates
were calculated separately for urban and rural facilities and based on
allowable costs from the FY 1995 cost reports of hospital-based and
freestanding SNFs, where allowable costs included all routine,
ancillary, and capital-related costs (excluding those related to
approved educational activities) associated with SNF services provided
under Part A, and all services and items for which payment could be
made under Part B prior to July 1, 1998.
In general, routine costs are those included by SNFs in a daily
service charge and include regular room, dietary, and nursing services,
medical social services and psychiatric social services, as well as the
use of certain facilities and equipment for which a separate charge is
not made. Ancillary costs are directly identifiable to residents and
cover specialized services, including therapy, drugs, and laboratory
services. Lastly, capital-related costs include the costs of land,
building, and equipment and the interest incurred in financing the
acquisition of such items. (63 FR 26253)
There are four federal base payment rate components which may
factor into SNF PPS payment. Two of these components, ``nursing case-
mix'' and ``therapy case-mix,'' are case-mix adjusted components, while
the remaining two components, ``therapy non-case-mix'' and ``non-case-
mix,'' are not case-mix adjusted. While we discuss the details of the
proposed PDPM and justifications for certain associated policies we are
proposing throughout section V of this proposed rule, we note that, as
part of the PDPM case-mix model, we propose to bifurcate the ``nursing
case-mix'' component of the federal base payment rate into two case-mix
adjusted components and separate the ``therapy case-mix'' component of
the federal base payment rate into three case-mix adjusted components,
thereby creating five case-mix adjusted components of the federal base
per diem rate. More specifically, we propose to separate the ``therapy
case-mix'' rate component into a ``Physical Therapy'' (PT) component,
``Occupational Therapy'' (OT) component, and a ``Speech-Language
Pathology'' (SLP) component. Our rationale for separating the therapy
case-mix component in this manner is presented in section V.D.3.b. of
this proposed rule. Based on the results of the SNF PMR, we also
propose to separate the ``nursing case-mix'' rate component into a
``Nursing'' component and a ``Non-Therapy Ancillary'' (NTA) component.
Our rationale for proposing to bifurcate the nursing case-mix component
in this manner is presented in section V.D.3.d. of this proposed rule.
Given that all SNF residents under PDPM would be assigned to a
classification group for each of the three proposed therapy-related
case-mix adjusted components as further discussed below, we propose
eliminating the ``therapy non-case-mix'' rate component under PDPM and
distributing the dollars associated with this current rate component
amongst the proposed PDPM therapy components. The existing non-case-mix
component would be maintained as it is currently constituted under the
existing SNF PPS. Although the case-mix components of the proposed PDPM
case-mix classification system would address costs associated with
individual resident care based on an individual's specific needs and
characteristics, the non-case-mix component addresses consistent costs
that are incurred for all residents, such as room and board and various
capital-related expenses. As these costs are not likely to change,
regardless of what changes we might make to the SNF PPS, we propose to
maintain the non-case-mix component as it is currently used.
[[Page 21038]]
In the next section, we discuss the methodology used to create the
proposed PDPM case-mix adjusted components, as well as the data sources
used in this calculation. The proposed methodology does not calculate
new federal base payment rates but simply proposes to modify the
existing base rate case-mix components for therapy and nursing. The
methodology and data used in this calculation are based on the data and
methodology used in the calculation of the original federal payment
rates in 1998, as further discussed below.
2. Data Sources Utilized for Proposed Revision of Federal Base Payment
Rate Components
Section II.A.2. of the interim final rule with comment period that
initially implemented the SNF PPS (63 FR 26256 through 26260) provides
a detailed discussion of the data sources used to calculate the
original federal base payment rates in 1998. Except as discussed below,
we propose to use the same data sources (that is, cost information from
FY 1995 cost reports) to determine the portion of the therapy case-mix
component base rate that would be assigned to each of the proposed
therapy component base rates (PT, OT, and SLP). We believe that using
the same data sources, to the extent possible, that were used to
calculate the original federal base payment rates in 1998 results in
base rates for the components that resemble as closely as possible what
they would have been had these components initially been established in
1998. The portion of the nursing component base rate that corresponds
to NTA costs was already calculated using the same data source used to
calculate the federal base payment rates in 1998. As explained below,
we used the previously calculated percentage of the nursing component
base rate corresponding to NTA costs to set the NTA base rate and
verified this calculation with the analysis described in section V.C.3.
of this proposed rule. Therefore, the steps described below address the
calculations performed to separate out the therapy base rates alone.
The percentage of the current therapy case-mix component of the
federal base payment rates that would be assigned to the three proposed
therapy components (PT, OT, and SLP) of the federal base payment rates
was determined using cost information from FY 1995 cost reports, after
making the following exclusions and adjustments: First, only settled
and as-submitted cost reports for hospital-based and freestanding SNFs
for periods beginning in FY 1995 and spanning 10 to 13 months were
included. This set of restrictions replicates the restrictions used to
derive the original federal base payment rates as set forth in the 1998
interim final rule with comment period (63 FR 26256). Following the
methodology used to derive the SNF PPS base rates, routine and
ancillary costs from as-submitted cost reports were adjusted down by
1.31 and 3.26 percent, respectively. As discussed in the 1998 interim
final rule with comment period, the specific adjustment factors were
chosen to reflect average adjustments resulting from cost report
settlement and were based on a comparison of as-submitted and settled
reports from FY 1992 to FY 1994 (63 FR 26256); these adjustments are in
accordance with section 1888(e)(4)(A)(i) of the Act. We used similar
data, exclusions, and adjustments as in the original base rates
calculation so the resulting base rates for the components would
resemble as closely as possible what they would have been had they been
established in 1998. However, there were two ways in which the PT, OT,
and SLP percentage calculations deviate from the 1998 base rates
calculation. First, the 1998 calculation of the base rates excluded
reports for facilities exempted from cost limits in the base year. The
available data do not identify which facilities were exempted from cost
limits in the base year, so this restriction was not implemented. We do
not believe this had a notable impact on our estimate of the PT, OT,
and SLP percentages, because only a small fraction of facilities were
exempted from cost limits. Consistent with the 1998 base rates
calculation, we excluded facilities with per diem costs more than three
standard deviations higher than the geometric mean across facilities.
Therefore, facilities with unusually high costs did not influence our
estimate. Second, the 1998 calculation of the base rates excluded costs
related to exceptions payments and costs related to approved
educational activities. The available cost report data did not identify
costs related to exceptions payments nor indicate what percentage of
overall therapy costs or costs by therapy discipline were related to
approved educational activities, so these costs are not excluded from
the PT, OT, and SLP percentage calculations. Because exceptions were
only granted for routine costs, we believe the inability to exclude
these costs should not affect our estimate of the PT, OT, and SLP
percentages as exceptions would not apply to therapy costs.
Additionally, the data indicate that educational costs made up less
than one-hundredth of 1 percent of overall SNF costs. Therefore, we
believe that the inability to exclude educational costs should have a
negligible impact on our estimates.
In addition to Part A costs from the cost report data, the 1998
federal base rates calculation incorporated estimates of amounts
payable under Part B for covered SNF services provided to Part A SNF
residents, as required by section 1888(e)(4)(A)(ii) of the Act. In
calculating the PT, OT, and SLP percentages, we also estimated the
amounts payable under Part B for covered SNF services provided to Part
A residents. All Part B claims associated with Part A SNF claims
overlapping with FY 1995 cost reports were matched to the corresponding
facility's cost report. For each cost center (PT, OT, and SLP) in each
cost report, a ratio was calculated to determine the amount by which
Part A costs needed to be increased to account for the portion of costs
payable under Part B. This ratio for each cost center was determined by
dividing the total charges from the matched Part B claims by the total
charges from the Part A SNF claims overlapping with the cost report.
The 1998 interim final rule (63 FR 26256) states that to estimate the
amounts payable under Part B for covered SNF services provided to Part
A SNF residents, CMS (then known as HCFA) matched 100 percent of Part B
claims associated with Part A covered SNF stays to the corresponding
facility's cost report. Part B allowable charges were then incorporated
at the facility level by the appropriate cost report center. Although
the interim final rule does not provide further detail on how Part B
allowable charges were incorporated at the facility level, we believe
that our methodology reasonably approximates the methodology described
in the interim final rule, and provides a reasonable estimate of the
amounts payable under Part B for covered SNF services provided to Part
A residents for purposes of calculating the PT, OT, and SLP
percentages. Therefore, we believe it is reasonable to use this
methodology to calculate the PT, OT, and SLP percentages of the therapy
case-mix component.
Finally, the 1998 federal base rates calculation standardized the
cost data for each facility to control for the effects of case-mix and
geographic-related wage differences, as required by section
1888(e)(4)(C) of the Act. When calculating the PT, OT and SLP shares of
the current therapy base rate, we replicated the method used in 1998 to
standardize for wage differences, as
[[Page 21039]]
described in the 1998 interim final rule with comment period (63 FR
26259 through 26260). We applied a hospital wage index to the labor-
related share of costs, estimated at 75.888 percent, and used an index
composed of hospital wages from FY 1994. The PT, OT, and SLP percentage
calculations did not include the case-mix adjustment used in the 1998
calculation because the 1998 adjustment relied on the obsolete RUG-III
classification system. In the 1998 federal base rates calculation,
information from SNF and inpatient claims was mapped to RUG-III
clinical categories at the resident level to case-mix adjust facility
per diem costs. However, the 1998 interim final rule did not document
this mapping, and the data used as the basis for this adjustment are no
longer available, and therefore, this step could not be replicated. We
believe that the inability to apply the case-mix adjustment likely has
a small impact on our estimate of the PT, OT, and SLP percentages. The
1998 interim final rule indicates that the case-mix adjustment was
applied by dividing facility per diem costs for a given component by
average facility case mix for that component; in other words,
multiplying by the inverse of average facility case mix. As long as
average facility case-mix values are within a relatively narrow range,
adjustment for facility case mix should not have a large impact on the
estimated PT, OT, and SLP percentages. Because the RUG-III case-mix
indexes shown in the 1998 interim final rule are within a relatively
narrow range (for example, therapy indexes range from 0.43 to 2.25), we
do not expect the inability to apply the case-mix adjustment to
facility per diem costs to have a large influence on the estimated PT,
OT, and SLP percentages. These data sources are described in more
detail in section 3.10. of the SNF PDPM technical report, available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
We invite comments on the data sources used to determine the PT,
OT, and SLP rate components, as discussed above.
3. Methodology Used for the Calculation of Proposed Federal Base
Payment Rate Components
As discussed previously in this section, we are proposing to
separate the current therapy components into a PT component, an OT
component, and an SLP component. To do this, we calculated the
percentage of the current therapy component of the federal base rate
that corresponds to each of the three proposed PDPM therapy components
(PT, OT, and SLP) in accordance with the methodology set forth below.
The data described in section V.C.2. of this proposed rule
(primarily, cost information from FY 1995 cost reports) provides cost
estimates for the Medicare Part A SNF population for each cost report
that met the inclusion criteria. Cost reports stratify costs by a
number of cost centers that indicate different types of services. For
instance, costs are reported separately for each of the three therapy
disciplines (PT, OT, and SLP). Cost reports also include the number of
Medicare Part A utilization days during the cost reporting period. This
allows us to calculate both average total therapy costs per day and
average therapy costs by discipline in the facility during the cost
reporting period. Therapy costs are defined as the sum of costs for the
three therapy disciplines.
The goal of this methodology is to estimate the fraction of therapy
costs that corresponds to each of the three therapy disciplines. We use
the facility-level per-diem costs developed from 1995 cost reports to
derive average per diem amounts for both total therapy costs and for
PT, OT, and SLP costs separately. To do this, we followed the
methodology outlined in section II.A.3. of the 1998 interim final rule
with comment period (63 FR 26260), which was used by CMS (then known as
HCFA) to create the federal base payment rates:
(1) For each of the four measures of cost (PT, OT, SLP, and total
therapy costs per day), we computed the mean based on data from
freestanding SNFs only. This mean was weighted by the total number of
Medicare days of the facility.
(2) For each of the four measures of cost (PT, OT, SLP, and total
therapy costs per day), we computed the mean based on data from both
hospital-based and freestanding SNFs. This mean was weighted by the
total number of Medicare days of the facility.
(3) For each of the four measures of cost (PT, OT, SLP, and total
therapy costs per day), we calculated the arithmetic mean of the
amounts determined under steps (1) and (2) above.
In section 3.10.3. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), we show the results of these calculations.
The three steps outlined above produce a measure of costs per day
by therapy discipline and a measure of total therapy costs per day. We
divided the discipline-specific (PT, OT, SLP) cost measure by the total
therapy cost measure to obtain the percentage of the therapy component
that corresponds to each therapy discipline. We believe that following
a methodology to derive the discipline-specific therapy percentages
that is consistent with the methodology used to determine the base
rates in the 1998 interim final rule with comment period is appropriate
because a consistent methodology helps to ensure that the resulting
base rates for the components resemble what they would be had they been
established in 1998. We found that PT, OT, and SLP costs correspond to
43.4 percent, 40.4 percent, and 16.2 percent of the therapy component
of the federal per diem rate for urban SNFs, and 42.9 percent, 39.4
percent, and 17.7 percent of the therapy component of the federal per
diem rate for rural SNFs. Under the proposed PDPM, the current therapy
case-mix component would be separated into a Physical Therapy
component, an Occupational Therapy component, and a Speech-Language
Pathology component using the percentages derived above. This process
would be done separately for urban and for rural facilities. In the
appendix of the SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) we provide the specific cost centers used to
identify PT, OT, and SLP costs.
In addition, we propose to separate the current nursing case-mix
component into a nursing case-mix component and an NTA component.
Similar to the therapy component, we calculated the percentage of the
current nursing component of the federal base rates that corresponds to
each of the two proposed PDPM components (NTA and nursing). The 1998
reopening of the comment period for the interim final rule (63 FR
65561, November 27, 1998) states that NTA costs comprise 43.4 percent
of the current nursing component of the urban federal base rate, and
the remaining 56.6 percent accounts for nursing and social services
salary costs. These percentages for the nursing component of the
federal base rate for rural facilities are 42.7 percent and 57.3
percent, respectively (63 FR 65561). Therefore, we propose to assign 43
percent of the current nursing component of the federal base rates to
the proposed new NTA component of the federal base rates and assign the
remaining 57 percent to the new nursing component of the federal base
rates to reflect what the base rates would have been for these
components if they had been separately established in 1998.
[[Page 21040]]
We verified the 1998 calculation of the percentages of the nursing
component federal base rates that correspond to NTA costs by developing
a measure of NTA costs per day for urban and rural facilities. We used
the same data (that is, cost information from 1995 cost reports) and
followed the same methodology described above to develop measures of
PT, OT, and SLP costs per day and total therapy costs per day. The
measure of NTA costs per day produced by this analysis is $47.70 for
urban facilities and $47.30 for rural facilities. The original 1998
federal base rates for the nursing component, which relied on a similar
methodology, were $109.48 for urban facilities and $104.88 for rural
facilities. Therefore, our measure of NTA costs in urban facilities was
equivalent to 43.6 percent of the urban 1998 federal nursing base rate,
and our measure of NTA costs in rural facilities was equivalent to 45.1
percent of the rural 1998 federal nursing base rate. These results are
similar to the estimates published in the 1998 reopening of the comment
period for the interim final rule (63 FR 65561, November 27, 1998),
which we believe supports the validity of the 43 percent figure stated
above.
For illustration purposes, Tables 12 and 13 set forth what the
unadjusted federal per diem rates would be for each of the case-mix
adjusted components if we were to apply the proposed PDPM to the
proposed FY 2019 base rates given in Tables 4 and 5. These are derived
by dividing the proposed FY 2019 SNF PPS base rates according to the
percentages described above. Tables 12 and 13 also show what the
unadjusted federal per diem rates for the non-case-mix component would
be, which are not affected by the change in case-mix methodology from
RUG-IV to PDPM. We use these unadjusted federal per diem rates in
calculating the impact analysis discussed in section V.J. of this
proposed rule.
Table 12--FY 2019 PDPM Unadjusted Federal Rate Per Diem--Urban \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component Nursing NTA PT OT SLP Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $103.46 $78.05 $59.33 $55.23 $22.15 $92.63
--------------------------------------------------------------------------------------------------------------------------------------------------------
\3\ The rates shown in Tables 12 and 13 illustrate what the unadjusted federal per diem rates would be for each of the case-mix adjusted components if
we were to apply the proposed PDPM to the proposed FY 2019 base rates given in Tables 4 and 5.
Table 13--FY 2019 PDPM Unadjusted Federal Rate Per Diem--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component Nursing NTA PT OT SLP Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $98.83 $74.56 $67.63 $62.11 $27.90 $94.34
--------------------------------------------------------------------------------------------------------------------------------------------------------
We invite comments on the proposed data sources and proposed
methodology for calculating the unadjusted federal per diem rates that
would be used in conjunction with the proposed PDPM effective October
1, 2019.
4. Proposed Updates and Wage Adjustments of Revised Federal Base
Payment Rate Components
In section III.B. of this proposed rule, we describe the process
used to update the federal per diem rates each year. Additionally, as
discussed in section III.B.4 of this proposed rule, SNF PPS rates are
adjusted for geographic differences in wages using the most recent
hospital wage index data. Under PDPM, we propose to continue to update
the federal base payment rates and adjust for geographic differences in
wages following the current methodology used for such updates and wage
index adjustments under the SNF PPS. Specifically, we propose to
continue the practice of using the SNF market basket, adjusted as
described in section III.B. of this proposed rule to update the federal
base payment rates and to adjust for geographic differences in wages as
described in section III.B.4. of this proposed rule.
D. Proposed Design and Methodology for Case-Mix Adjustment of Federal
Rates
1. Background on Proposed PDPM
Section 1888(e)(4)(G)(i) of the Act requires that the Secretary
provide an appropriate adjustment to account for case mix and that such
an adjustment shall be based on a resident classification system that
accounts for the relative resource utilization of different patient
types. The current case-mix classification system uses a combination of
resident characteristics and service intensity metrics (for example,
therapy minutes) to assign residents to one of 66 RUGs, each of which
corresponds to a therapy CMI and a nursing CMI, which are indicative of
the relative cost to a SNF of treating residents within that
classification category. However, as noted in section V.A. of this
proposed rule, incorporating service-based metrics into the payment
system can incentivize the provision of services based on a facility's
financial considerations rather than resident needs. To better ensure
that resident care decisions appropriately reflect each resident's
actual care needs, we believe it is important to remove, to the extent
possible, service-based metrics from the SNF PPS and derive payment
from verifiable resident characteristics that are patient, and not
facility, centered. To that end, the proposed PDPM was developed to be
a payment model which derives payment classifications almost
exclusively from verifiable resident characteristics.
Additionally, the current RUG-IV case-mix classification system
reduces the varied needs and characteristics of a resident into a
single RUG-IV group that is used for payment. As of FY 2017, of the 66
possible RUG classifications, over 90 percent of covered SNF PPS days
are billed using one of the 23 Rehabilitation RUGs, with over 60
percent of covered SNF PPS days billed using one of the three Ultra-
High Rehabilitation RUGs. The implication of this pattern is that more
than half of the days billed under the SNF PPS effectively utilize only
a resident's therapy minutes and Activities of Daily Living (ADL) score
to determine the appropriate payment for all aspects of a resident's
care. Both of these metrics, more notably a resident's therapy minutes,
may not derive so much from the resident's own characteristics, but
rather, from the type and amount of care the SNF decides to provide to
the resident. Even assuming that the facility takes the resident's
needs and unique characteristics into account in making these service
decisions, the focus of payment remains centered, to a potentially
great extent, on the facility's
[[Page 21041]]
own decision making and not on the resident's needs.
While the RUG-IV model utilizes a host of service-based metrics
(type and amount of care the SNF decides to provide) to classify the
resident into a single RUG-IV group, the proposed PDPM would separately
identify and adjust for the varied needs and characteristics of a
resident's care and combine this information together to determine
payment. We believe that the proposed PDPM would improve the SNF PPS by
basing payments predominantly on clinical characteristics rather than
service provision, thereby enhancing payment accuracy and strengthening
incentives for appropriate care. For these reasons, we propose that,
effective October 1, 2019, SNF residents would be classified using the
PDPM, as further discussed below. As discussed in section V.J. below,
we propose to implement the PDPM on October 1, 2019 to allow all
stakeholders adequate time for systems updates and staff training
needed to assure smooth implementation.
2. Data Sources Utilized for Developing Proposed PDPM
To understand, research, and analyze the costs of providing Part A
services to SNF residents, we utilized a variety of data sources in the
course of research. In this section, we discuss these sources and how
they were used in the SNF PMR in developing the proposed PDPM. A more
thorough discussion of the data sources used during the SNF PMR is
available in section 3.1. of the SNF PDPM technical report (available
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
a. Medicare Enrollment Data
Beneficiary enrollment and demographic information was extracted
from the CMS enrollment database (EDB) and Common Medicare Environment
(CME). Beneficiaries' Medicare enrollment was used to apply
restrictions to create a study population for analysis. For example,
beneficiaries were required to have continuous Medicare Part A
enrollment during a SNF stay. Demographic characteristics (for example,
age) were incorporated as being predictive of resource use.
Furthermore, enrollment and demographic information from these data
sources were used to assess the impact of the proposed PDPM on
subpopulations of interest. In particular, the EDB and CME include
indicators for potentially vulnerable subpopulations, such as those
dually-enrolled in Medicaid and Medicare.
b. Medicare Claims Data
Medicare Parts A and B claims from the CMS Common Working File
(CWF) were used to conduct claims analyses as part of the SNF PMR. SNF
claims (CMS-1450 form, OMB control number 0938-0997), including type of
bill (TOB) 21x (SNF Inpatient Part A) and 18x (hospital swing bed),
were used to identify Medicare Part A stays paid under the SNF PPS.
Part A stays were constructed by linking claims that share the same
beneficiary, facility CMS Certification Number (CCN), and admission
date. Stays created from SNF claims were linked to other claims data
and assessment data via beneficiary identifiers.
Acute care hospital stays that qualified the beneficiary for the
SNF benefit were identified using Medicare inpatient hospital claims.
The dates of the qualifying hospital stay listed in the span codes of
the SNF claim were used to connect inpatient claims with those dates
listed as the admission and discharge dates. Although there are
exceptions, the claims from the preceding inpatient hospitalization
commonly contain clinical and service information relevant to the care
administered during a SNF stay. Components of this information were
used in the regression models predicting therapy and NTA costs and to
better understand patterns of post-acute care (PAC) referrals for
patients requiring SNF services. Additionally, the most recent hospital
stay was matched to the SNF stay, which often (though not always) was
the same as the preceding inpatient hospitalization, and used in the
regression models.
Other Medicare claims, including outpatient hospital, physician,
home health, hospice, durable medical equipment, and drug
prescriptions, were incorporated, as necessary, into the analysis in
one of three ways: (1) to verify information found on assessments or on
SNF or inpatient claims; (2) to provide additional resident
characteristics to test outside of those found in assessment and SNF
and inpatient claims data; and (3) to stratify modeling results to
identify effects of the system on beneficiary subpopulations. These
claims were linked to SNF claims using beneficiary identifiers.
c. Assessment Data
Minimum Data Set (MDS) assessments were the primary source of
resident characteristic information used to explain resource
utilization in the SNF setting. The data repositories include MDS
assessments submitted by SNFs and swing-bed hospitals. MDS version 2.0
assessments were submitted until October 2010, at which point MDS
version 3.0 assessments began. MDS data were extracted from the Quality
Improvement Evaluation System (QIES). MDS assessments were then matched
to SNF claims data using the beneficiary identifier, assessment
indicator, assessment date, and Resource Utilization Group (RUG).
d. Facility Data
Facility characteristics, while not considered as explanatory
variables when modeling service use, were used for impact analyses. By
incorporating this facility-level information, we could identify any
disproportionate effects of the proposed case-mix classification system
on different types of facilities.
Facility-level characteristics were taken from the Certification
and Survey Provider Enhanced Reports (CASPER). From CASPER, we draw
facility-level characteristics such as ownership, location, facility
size, and facility type. CASPER data were supplemented with information
from publicly available data sources. The principal data sources that
are publicly available include the Medicare Cost Reports (Form 2540-10,
2540-96, and 2540-92) extracted from the Healthcare Cost Report
Information System (HCRIS) files, Provider-Specific Files (PSF),
Provider of Service files (POS), and Nursing Home Compare (NHC). These
data sources have information on facility costs, payment, and
characteristics that directly affect PPS calculations.
3. Proposed Resident Classification Under PDPM
a. Background
As noted above, section 1888(e)(4)(G)(i) of the Act requires that
the Secretary provide for an appropriate adjustment to account for case
mix and that such an adjustment shall be based on a resident
classification system that accounts for the relative resource
utilization of different patient types. The proposed PDPM was developed
to be a payment model which derives almost exclusively from resident
characteristics. The proposed PDPM would separately identify and adjust
five different case-mix components for the varied needs and
characteristics of a resident's care and then combine these together
with the non-case-mix component to form the full SNF PPS per diem rate
for that resident.
As with any case-mix classification system based on resident
characteristics, the proposed predictors that would be part of case-mix
classification under
[[Page 21042]]
PDPM are those which our analysis identified as associated with
variation in costs for the given case-mix component. The proposed
federal per diem rates discussed above serve as ``base rates''
specifically because they set the basic average cost of treating a
typical SNF resident. Based on the presence of certain needs or
characteristics, caring for certain residents may cost more or less
than that average cost. A case-mix system identifies certain aspects of
a resident or of a resident's care which, when present, lead to average
costs for that group being higher or lower than the average cost of
treating a typical SNF resident. For example, if we found that therapy
costs were the same for two residents regardless of having a particular
condition, then that condition would not be relevant in predicting
increases in therapy costs. If, however, we found that, holding all
else constant, the presence of a given condition was correlated with an
increase in therapy costs for residents with that condition over those
without that condition, then this could mean that this condition is
indicative, or predictive, of increased costs relative to the average
cost of treating SNF residents generally.
In the subsections that follow, we describe each of the five
proposed case-mix adjusted components under the proposed PDPM and the
basis for each of the proposed predictors that would be used within the
proposed PDPM to classify residents for payment purposes.
b. Proposed Physical and Occupational Therapy Case-Mix Classification
A fundamental aspect of the proposed PDPM is to use resident
characteristics to predict the costs of furnishing similarly situated
residents with SNF care. Costs derived from the charges on claims and
cost-to-charge ratios (CCRs) on facility cost reports were used as the
measure of resource use to develop the proposed PDPM. Costs better
reflect differences in the relative resource use of residents as
opposed to charges, which partly reflect decisions made by providers
about how much to charge payers for certain services. Costs derived
from charges are reflective of therapy utilization as they are
correlated to the therapy minutes recorded for each therapy discipline.
Under the current RUG-IV case-mix model, therapy minutes for all three
therapy disciplines (PT, OT, SLP) are added together to determine the
appropriate case-mix classification for the resident. However, as shown
in section 3.3.1. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), when we began to investigate resident
characteristics predictive of therapy costs for each therapy
discipline, we found that PT and OT costs per day are only weakly
correlated with SLP costs per day (correlation coefficient of 0.04).
The set of resident characteristics from the MDS that predicted PT and
OT utilization was different than the set of characteristics predicting
SLP utilization. Additionally, many predictors of high PT and OT costs
per day predicted lower SLP costs per day, and vice versa. For example,
residents with cognitive impairments receive less physical and
occupational therapy but receive more speech-language pathology. As a
result of this analysis, we found that basing case-mix classification
on total therapy costs per day obscured differences in the determinants
of PT, OT, and SLP utilization.
In contrast, the correlation coefficient between PT and OT costs
per day was high (0.62). Additionally, regression analyses found that
predictors of high PT costs per day were also predictive of high OT
costs per day. For example, the analyses found that late-loss ADLs are
strong predictors of both PT and OT costs per day. We then used a range
of resident characteristics to predict PT and OT costs per day
separately and we found that the coefficients in both models followed
similar patterns. Finally, resident characteristics were found to be
better predictors of the sum of PT and OT costs per day than for either
PT or OT costs separately. These analyses used a variety of items from
the MDS as independent variables and used PT, OT, and SLP costs per day
as dependent variables. More information on these analyses can be found
in section 3.3.1. of the SNF PMR technical report that accompanied the
ANPRM available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Given the results of this analytic work as well as feedback from
multiple stakeholders, we propose three separate case-mix adjusted
components, one corresponding to each therapy discipline: PT, OT, and
SLP. In the original RCS-I model presented in the ANPRM, we stated that
we were considering addressing PT and OT services through a single
component, given the strong correlation between PT and OT costs and our
finding that very similar predictors explained variation in the
utilization of both therapy disciplines. However, commenters on the
ANPRM stated that having a single combined PT and OT component could
encourage providers to inappropriately substitute PT for OT and vice
versa. This belief comports with feedback received from professional
organizations and other stakeholders during technical expert panels
(TEPs). The TEP commenters stated that PT and OT services should be
addressed via separate components given the different aims of the two
therapy disciplines and differences in the clinical characteristics of
the resident subpopulations for which PT or OT services are warranted.
For example, clinicians consulted during development of PDPM advised
that personal hygiene, dressing, and upper extremity motion may bear a
closer clinical relationship to OT utilization, while lower extremity
motion may be more closely related to PT utilization. While we do not
believe that RCS-I, which included two separate components for PT/OT
and SLP, contained stronger incentives for substitution across therapy
disciplines compared to RUG-IV, which reimburses all three therapy
disciplines through a single therapy component, we concur with the TEP
commenters that PT and OT have different aims and that there are
clinically relevant differences between residents who could benefit
from PT, residents who could benefit from OT, and residents who could
benefit from both disciplines. For the foregoing reasons, we decided to
separate the combined PT/OT component presented in the ANPRM into two
separate case-mix adjusted components in the proposed PDPM. Because of
the strong correlation between the dependent variables used for both
components and the similarity in predictors, we decided to maintain the
same case-mix classification model for both components. In practice,
this means that the same resident characteristics will determine a
resident's classification for PT and OT payment. However, each resident
will be assigned separate case-mix groups for PT and OT payment, which
correspond to separate case-mix indexes and payment rates. We believe
that providing separate case-mix-adjusted payments for PT and OT may
allay concerns about inappropriate substitution across disciplines and
encourage provision of these services according to clinical need. As
clinical practices evolve independently of incentives created by the
current RUG-IV payment model, we would re-evaluate the different sets
of resident characteristics that are predictive of PT and OT
utilization after the proposed PDPM is implemented. If based on this
re-evaluation we determine that
[[Page 21043]]
different sets of characteristics are predictive of PT and OT resource
utilization, we can consider revising the payment model to better
reflect clinical differences between residents who receive PT services
and those who receive OT services.
After delineating the three separate case-mix adjusted therapy
components, we continued our analysis by identifying resident
characteristics that were best predictive of PT and OT costs per day.
To accomplish this, we conducted cost regressions with a host of
variables from the MDS assessment, the prior inpatient claims, and the
SNF claims that were believed to be potentially predictive of relative
increases in PT and OT costs. The variables were selected with the goal
of being as inclusive as possible with respect to characteristics
related to the SNF stay and the prior inpatient stay. The selection
also incorporated clinical input. These initial costs regressions were
exploratory and meant to identify a broad set of resident
characteristics that are predictive of PT and OT resource utilization.
The results were used to inform which variables should be investigated
further and ultimately included in the payment system. A table of all
of the variables considered as part of this analysis appears in the
appendix of the SNF PMR technical report that accompanied the ANPRM
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. Based on our regression analyses,
we found that the three most relevant categories of predictors of PT
and OT costs per day were the clinical reasons for the SNF stay, the
resident's functional status, and the presence of a cognitive
impairment. More information on this analysis can be found in section
3.4.1. of the SNF PDPM technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Under the RUG-IV case-mix model, residents are first categorized
based on being a rehabilitation resident or a non-rehabilitation
resident, then categorized further based on additional aspects of the
resident's care. Under the proposed PDPM, for the purposes of
determining the resident's PT and OT groups and, as will be discussed
below, the resident's SLP group, the resident would first be
categorized based on the clinical reasons for the resident's SNF stay.
Empirical analyses demonstrated that the clinical basis for the
resident's stay (that is, the primary reason the resident is in the
SNF) is a strong predictor of therapy costs. For example, all of the
clinical categories (described below) developed to characterize the
primary reason for a SNF stay (except the clinical category used as the
reference group) were found to be statistically significant predictors
of therapy costs per day. More detail on these analyses can be found in
section 3.4.1. of the SNF PMR technical report that accompanied the
ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). In consultation with
stakeholders (industry representatives, beneficiary representatives,
clinicians, and payment policy experts) at multiple technical expert
panels (TEPs), we created a set of ten inpatient clinical categories
that we believe capture the range of general resident types which may
be found in a SNF. These proposed clinical categories are provided in
Table 14.
Table 14--Proposed PDPM Clinical Categories
------------------------------------------------------------------------
------------------------------------------------------------------------
Major Joint Replacement or Spinal Surgery.. Cancer.
Non-Surgical Orthopedic/Musculoskeletal.... Pulmonary.
Orthopedic Surgery (Except Major Joint Cardiovascular and
Replacement or Spinal Surgery). Coagulations.
Acute Infections........................... Acute Neurologic.
Medical Management......................... Non-Orthopedic Surgery.
------------------------------------------------------------------------
We propose to categorize a resident into a PDPM clinical category
using item I8000 on the MDS 3.0. Providers would use the first line in
item I8000 to report the ICD-10-CM code that represents the primary
reason for the resident's Part A SNF stay. This code would be mapped to
one of the ten clinical categories provided in Table 14. The mapping
between ICD-10-CM codes and the ten clinical categories is available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. The mapping indicates that in some cases, a
single ICD-10-CM code maps to more than one clinical category because
the care plan for a resident with this diagnosis may differ depending
on the inpatient procedure history. In these cases, a resident may be
categorized into a surgical clinical category if the resident received
a surgical procedure during the immediately preceding inpatient stay
that relates to the primary reason for the Part A SNF stay and
typically requires extensive post-surgical rehabilitation or nursing
care. If the resident did not receive a related surgical procedure
during the prior inpatient stay that typically requires extensive post-
surgical rehabilitation or nursing care, the resident may be
categorized into a non-surgical clinical category. For example, certain
wedge compression fractures that were treated with an invasive surgical
procedure such as a fusion during the prior inpatient stay would be
categorized as Major Joint Replacement or Spinal Surgery, but if these
cases were not treated with a surgical procedure they would be
categorized as Non-Surgical Orthopedic/Musculoskeletal. For residents
who received a related surgical procedure during the prior inpatient
stay, a provider would need to indicate the type of surgical procedure
performed for the resident to be appropriately classified under PDPM.
Thus, in these cases we are proposing to require providers to record
the type of inpatient surgical procedure performed during the prior
inpatient stay so that residents can be appropriately classified into a
PDPM clinical category for purposes of PT, OT, and SLP classification.
We propose that providers record the type of surgical procedure
performed during the prior inpatient stay by coding an ICD-10-PCS code
that corresponds to the inpatient surgical procedure in the second line
of item I8000 in cases where inpatient surgical information is required
to appropriately categorize a resident under PDPM. If we were to use
the second line of item I8000 to record inpatient surgical information,
we would provide a list of ICD-10-PCS codes that map to the surgical
clinical categories. We believe this approach would allow for patients
to be appropriately classified under the PDPM because it would provide
sufficient information on the primary reason for SNF care and inpatient
surgical procedures to assign a resident to the appropriate surgical or
non-surgical clinical category. We invite comments on this proposal. In
addition, we solicit comments on alternative methods for recording the
type of inpatient surgical procedure to
[[Page 21044]]
appropriately classify a patient into a clinical category. The clinical
category into which the resident is classified would be used to
classify the resident into a PT and OT category as discussed below, as
well as an SLP category, as explained in section V.D.3.c. of this
proposed rule.
As discussed above, we propose to categorize a resident into a PDPM
clinical category for purposes of PT, OT, and SLP classification using
the ICD-10-CM code in the first line of item I8000, and if applicable,
the ICD-10 PCS code in the second line of item I8000. As an alternative
to using item I8000 to classify a resident into a clinical category, we
are considering using a resident's primary diagnosis as reflected in
MDS item I0020 as the basis for assigning the resident to a clinical
category, and are evaluating the categories provided in item I0020 to
determine if there is sufficient overlap between the categories used in
item I0020 and the proposed PDPM clinical categories provided in Table
14 above that this item could serve as the basis for a resident's
initial classification into a clinical category under PDPM. The MDS
item I0020 would require facilities to select a primary diagnosis from
a pre-populated list of primary diagnoses representing the most common
types of beneficiaries treated in a SNF, while item I8000, if used to
assign residents to clinical categories, would require facilities to
code a specific ICD-10-CM code that corresponds to the primary reason
for the resident's Part A SNF stay. As indicated above, we are also
proposing that providers would code a specific ICD-10-PCS code in the
second line of item I8000 when surgical information from the prior
inpatient stay is necessary to assign a resident to a clinical
category. If we were to use item I0020 to categorize residents under
PDPM, we would not require providers to record additional information
on inpatient surgical procedures as we expect the primary diagnosis
information provided through item I0020 to be adequate to appropriately
assign a resident to a clinical category. We invite comments on our
proposal to categorize a resident into a PDPM clinical category using
the ICD-10-CM code recorded in the first line of item I8000 on the MDS
3.0, and the ICD-10-PCS code recorded on the second line of item I8000
on the MDS 3.0. In addition, we solicit comments on the alternative of
using item I0020 on the MDS 3.0, as discussed above, as the basis for
resident classification into one of the ten clinical categories in
Table 14.
Once we identified these clinical categories as being generally
predictive of resource utilization in a SNF, we then undertook the
necessary work to identify those categories predictive of PT and OT
costs specifically. We conducted additional regression analyses to
determine if any of these categories predicted similar levels of PT and
OT as other categories, which may provide a basis for combining
categories. As a result of this analysis, for the RCS-I model presented
in the ANPRM, we found that the ten inpatient clinical categories could
be collapsed into five clinical categories, which predict varying
degrees of PT and OT costs. However, we received comments on the ANPRM
regarding the number of possible case-mix group combinations under RCS-
I, so we sought to try and reduce this number of possible case-mix
group combinations by further simplifying the model. As part of that
effort, we observed similar PT and OT resource utilization patterns in
the clinical categories of Non-Orthopedic Surgery and Acute Neurologic
and, therefore, propose to collapse these categories for the purpose of
PT and OT classification. Additionally, as reflected in the RCS-I model
presented in the ANPRM, we propose that under PDPM, the remaining
clinical categories would be collapsed as follows: Acute infections,
cancer, pulmonary, cardiovascular and coagulations, and medical
management would be collapsed into one clinical category entitled
``Medical Management'' because their residents had similar PT and OT
costs. Similarly, we propose that orthopedic surgery (except major
joint replacement or spinal surgery) and non-surgical orthopedic/
musculoskeletal would be collapsed into a new ``Other Orthopedic''
category for equivalent reasons. Finally, the remaining category, Major
Joint Replacement, showed a distinct PT and OT cost profile and, thus,
we propose to retain it as an independent category. More information on
this analysis can be found in section 3.4.2. of the SNF PMR technical
report that accompanied the ANPRM and in section 3.4.2. of the SNF PDPM
technical report, both available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. These
proposed collapsed categories, which would be used to categorize a
resident initially under the proposed PT and OT case-mix components,
are presented in Table 15.
Table 15--Proposed Collapsed Clinical Categories for PT and OT
Classification
------------------------------------------------------------------------
Collapsed PT and OT clinical
PDPM clinical category category
------------------------------------------------------------------------
Major Joint Replacement or Spinal Major Joint Replacement or
Surgery. Spinal Surgery.
Non-Orthopedic Surgery................. Non-Orthopedic Surgery and
Acute Neurologic.
Acute Neurologic
Non-Surgical Orthopedic/Musculoskeletal Other Orthopedic.
Orthopedic Surgery (Except Major Joint
Replacement or Spinal Surgery)
Medical Management..................... Medical Management.
Acute Infections
Cancer
Pulmonary
Cardiovascular and Coagulations
------------------------------------------------------------------------
As discussed previously in this section, regression analyses
demonstrated that the resident's functional status is also predictive
of PT and OT costs in addition to the resident's initial clinical
categorization. In the RCS-I model discussed in the ANPRM, we presented
a function score similar to the existing ADL score to measure
functional abilities for the purposes of PT and OT payment. In response
to the ANPRM, we received comments requesting that we consider
replacing the functional items used to build the RCS-I function score
with newer, IMPACT Act-compliant items from section GG. Therefore, we
constructed, and are proposing as discussed below, a new function score
for PT and OT payment based on section GG functional items.
[[Page 21045]]
Under the RUG-IV case-mix system, a resident's ADL or function
score is calculated based on a combination of self-performance and
support items coded by SNFs in section G of the MDS 3.0 for four ADL
areas: Transfers, eating, toileting, and bed mobility. These four areas
are referred to as late-loss ADLs because they are typically the last
functional abilities to be lost as a resident's function declines. Each
ADL is assigned a score of up to four points, with a potential total
score as high as 16 points. Under the proposed PDPM, we propose that
section G items would be replaced with functional items from section GG
of the MDS 3.0 (Functional Abilities and Goals) as the basis for
calculating the function score for resident classification used under
PDPM. Section GG offers standardized and more comprehensive measures of
functional status and therapy needs. Additionally, the use of section
GG items better aligns the payment model with other quality
initiatives. SNFs have been collecting section GG data since October
2016 as part of the requirements for the Improving Medicare Post-Acute
Care Transformation Act of 2014 (IMPACT Act). Given the advantages of
section GG and of using a more comprehensive measure of functional
abilities, we received numerous comments in response to ANPRM
requesting the incorporation of section GG items and of early ADLs
items into the function score.
Multiple stakeholders commented that late-loss items do not
adequately reflect functional abilities on their own. These commenters
stated that early-loss ADL items also capture essential clinical
information on functional status. Therefore, in building a new function
score based on section GG items, we also investigated the incorporation
of early-loss items. To explore the incorporation of section GG items,
we evaluated each item's relationship with PT and OT costs. We ran
individual regressions using each of the 12 section GG item assessed at
admission to separately predict PT and OT costs per day. The regression
results showed that early-loss items are indeed strong predictors of PT
and OT costs, with the exception of two wheeling items. Both wheeling
items were excluded from the functional measure due to their weak
predictive relationship with PT and OT costs. We observed high
predictive ability among the remaining items. In total, we selected ten
items for inclusion in the functional measure for the PT and OT
components based on the results of the analysis. Thus, under the
proposed functional measure for the PT and OT components, a resident's
function would be measured using four late-loss ADL activities (bed
mobility, transfer, eating, and toileting) and two early-loss ADL
activities (oral hygiene and walking). Specifically, the proposed
measure includes: Two bed mobility items, three transfer items, one
eating item, one toileting item, one oral hygiene item, and two walking
items that were all found to be highly predictive of PT and OT costs
per day. A list of proposed section GG items that would be included in
the functional measure for the PT and OT components is shown in Table
18. Section 3.4.1. in the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on these analyses.
Similar to the RUG-IV ADL score, each of these ADL areas would be
assigned a score of up to 4 points. However, in contrast to the RUG-IV
ADL score, points are assigned to each response level to track
functional independence rather than functional dependence. In other
words, higher points are assigned to higher levels of independence.
This approach is consistent with functional measures in other care
settings, such as the IRF PPS. Further, under the RUG-IV model, if the
SNF codes that the ``activity did not occur'' or ``occurred only
once,'' these items are assigned the same point value as
``independent.'' However, we observed that residents who were unable to
complete an activity had similar PT and OT costs as dependent
residents. Therefore, when the activity cannot be completed, the
equivalent section GG responses (``Resident refused,'' ``Not
applicable,'' ``Not attempted due to medical condition or safety
concerns'') are grouped with ``dependent'' for the purpose of point
assignment. For the two walking items, we propose an additional
response level to reflect residents who skip the walking assessment due
to their inability to walk. We believe this is appropriate because this
allows us to assess the functional abilities of residents who cannot
walk and assign them a function score. Without this modification, we
could not calculate a function score for residents who cannot walk
because they would not be assessed on the two walking items included in
the function score. Residents who are coded as unable to walk receive
the same score as dependent residents to match with clinical
expectations. In Tables 16 and 17, we provide the proposed scoring
algorithm for the PT and OT functional measure.
Table 16--Proposed PT and OT Function Score Construction (Except Walking
Items)
------------------------------------------------------------------------
Response Score
------------------------------------------------------------------------
05, 06 Set-up assistance, 4
Independent.
04 Supervision or touching 3
assistance.
03 Partial/moderate assistance 2
02 Substantial/maximal 1
assistance.
01, 07, 09, 88 Dependent, Refused, N/A, 0
Not Attempted.
------------------------------------------------------------------------
Table 17--Proposed PT and OT Function Score Construction for Walking
Items
------------------------------------------------------------------------
Response Score
------------------------------------------------------------------------
05, 06 Set-up assistance, 4
Independent.
04 Supervision or touching 3
assistance.
03 Partial/moderate assistance 2
02 Substantial/maximal 1
assistance.
01, 07, 09, 88 Dependent, Refused, N/A, 0
Not Attempted, Resident
Cannot Walk *.
------------------------------------------------------------------------
* Coded based on response to GG0170H1 (Does the resident walk?).
[[Page 21046]]
Unlike section G, section GG measures functional areas with more
than one item. This results in substantial overlap between the two bed
mobility items, the three transfer items, and the two walking items.
Because of this overlap, a simple sum of all scores for each item may
inappropriately overweight functional areas measured by multiple items.
Therefore, to adjust for this overlap, we propose to calculate an
average score for these related items. That is, we would average the
scores for the two bed mobility items, the three transfer items, and
the two walking items. The average bed mobility, transfer, and walking
scores would then be summed with the scores for eating, oral hygiene,
and toileting hygiene, resulting in equal weighting of the six
activities. This proposed scoring algorithm produces a function score
that ranges from 0 to 24. In section 3.4.1. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), we provide additional
information on the analyses that led to the construction of this
proposed function score.
Table 18--Proposed Section GG Items Included in PT and OT Functional
Measure
------------------------------------------------------------------------
Section GG item Score
------------------------------------------------------------------------
GG0130A1...................... Self-care: Eating..... 0-4
GG0130B1...................... Self-care: Oral 0-4
Hygiene.
GG0130C1...................... Self-care: Toileting 0-4
Hygiene.
GG0170B1...................... Mobility: Sit to lying 0-4 (average of
2 items).
GG0170C1...................... Mobility: Lying to
sitting on side of
bed
GG0170D1...................... Mobility: Sit to stand 0-4 (average of
3 items).
GG0170E1...................... Mobility: Chair/bed-to-
chair transfer
GG0170F1...................... Mobility: Toilet
transfer
GG0170J1...................... Mobility: Walk 50 feet 0-4 (average of
with 2 turns. 2 items).
GG0170K1...................... Mobility: Walk 150
feet
------------------------------------------------------------------------
Under the RCS-I case-mix model presented in the ANPRM, we used
cognitive status to classify residents under the PT and OT components
in addition to the primary reason for SNF care and functional ability.
As will be explained in greater detail below, after publication of the
ANPRM, we removed cognitive status as a determinant of resident
classification for the PT and OT components. Still, although cognitive
status was not ultimately selected as a determinant of PT and OT
classification, it was considered as a possible element in developing
the proposed resident groups for these components via the
Classification and Regression Trees (CART) algorithm described in
greater detail below. Because we included cognitive status as an
independent variable in the CART analysis used to develop case-mix
groups for PT and OT, we believe it is appropriate to discuss
construction of the proposed new cognitive measure here even though it
was not ultimately selected as a determinant of payment for PT and OT.
Thus, we will discuss construction of the instrument used to measure
cognitive status under the proposed PDPM here, rather than introducing
it when discussing SLP classification, in which we propose cognitive
status as a determinant of resident classification. Under the current
SNF PPS, cognitive status is used to classify a small portion of
residents that fall into the Behavioral Symptoms and Cognitive
Performance RUG-IV category. For all other residents, cognitive status
is not used in determining the appropriate payment for a resident's
care. However, industry representatives and clinicians at multiple TEPs
suggested that a resident's cognitive status can have a significant
impact on a resident's PT and OT costs. Based on this feedback, we
explored a resident's cognitive status as a predictor of PT and OT
costs.
Under the RUG-IV model, cognitive status is assessed using the
Brief Interview for Mental Status (BIMS) on the MDS 3.0. The BIMS is
based on three items: ``repetition of three words,'' ``temporal
orientation,'' and ``recall.'' These items are summed to produce the
BIMS summary score. The BIMS score ranges from 0 to 15, with 0 assigned
to residents with the worst cognitive performance and 15 assigned to
residents with the highest performance. Residents with a BIMS score
less than or equal to 9 classify for the Behavioral Symptoms and
Cognitive Performance category. Residents with a summary score greater
than 9 but not 99 (resident interview was not successful) are
considered cognitively intact for the purpose of classification under
RUG-IV.
In approximately 15 percent of 5-day MDS assessments, the BIMS is
not completed: In 12 percent of cases the interview is not attempted,
and for 3 percent of cases the interview is attempted but cannot be
completed. The MDS directs assessors to skip the BIMS if the resident
is rarely or never understood (this is scored as ``skipped''). In these
cases, the MDS requires assessors to complete the Staff Assessment for
Mental Status (items C0700 through C1000). The Cognitive Performance
Scale (CPS) is then used to assess cognitive function based on the
Staff Assessment for Mental Status and other MDS items (``Comatose''
(B0100), ``Makes Self Understood'' (B0700), and the self-performance
items of the four late-loss ADLs). The Staff Assessment for Mental
Status consists of four items: ``Short-term Memory OK,'' ``Long-term
Memory OK,'' ``Memory/Recall Ability,'' and ``Cognitive Skills for
Daily Decision Making.'' Only ``Short-term Memory OK'' and ``Cognitive
Skills for Daily Decision Making'' are currently used for payment. In
MDS 2.0, the CPS was used as the sole measure of cognitive status. A
resident was assigned a CPS score from 0 to 6 based on the Staff
Assessment for Mental Status and other MDS items, with 0 indicating the
resident was cognitively intact and 6 indicating the highest level of
cognitive impairment. In addition to the items on the Staff Assessment
for Mental Status, MDS items ``Comatose'' (B0100), ``Makes Self
Understood'' (B0700), and the self-performance items of the four late-
loss ADLs factored into the CPS score. Any score of 3 or above was
considered cognitively impaired. The CPS on the current version of the
MDS (3.0) functions very similarly. Instead of assigning a score to
each resident, a resident is determined to be cognitively impaired if
he or she meets the criteria to receive a score of 3 or above on the
CPS, based on the MDS items mentioned above. In other words, whereas
the MDS 2.0 assigned a CPS score to each resident, the MDS 3.0 only
determines whether a resident's score is greater than or equal to 3 and
does not
[[Page 21047]]
assign a specific score to each resident for whom the CPS is used to
assess cognitive status. Residents who are determined to be cognitively
impaired based on the CPS are classified in the Behavioral Symptoms and
Cognitive Performance category under RUG-IV, if they do not meet the
criteria for a higher-paying category.
Given that the 15 percent of residents who are not assessed on the
BIMS must be assessed using a different scale that relies on a
different set of MDS items, there is currently no single measure of
cognitive status that allows comparison across all residents. To
address this issue, Thomas et al., in a 2015 paper, proposed use of a
new cognitive measure, the Cognitive Function Scale (CFS), which
combines scores from the BIMS and CPS into one scale that can be used
to compare cognitive function across all residents (Thomas KS, Dosa D,
Wysocki A, Mor V; The Minimum Data Set 3.0 Cognitive Function Scale.
Med Care. https://www.ncbi.nlm.nih.gov/pubmed/?term=25763665).
Following a suggestion from the June 2016 TEP, we explored using the
CFS as a measure of cognition and found that there is a relationship
between the different levels of the cognitive scale and resident costs.
Specifically, we observed that as cognitive function declines, PT and
OT costs per day decrease, while SLP costs per day more than double.
More information on this analysis can be found in section 3.4.1. of the
SNF PMR technical report that accompanied the ANPRM available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. Based on these initial investigations, we used
the CFS as a cognitive measure in the RCS-I payment model described in
the ANPRM. As we noted above, the RUG-IV system incorporates both the
BIMS and CPS score separately, but the CFS blends them together into
one measure of cognitive status. Details on how the BIMS score and CPS
score are determined using the MDS assessment are described above. The
CFS uses these scores to place residents into one of four cognitive
performance categories, as shown in Table 19. After publication of the
ANPRM, we received stakeholder comments questioning this scoring
methodology, specifically the classification of a CPS score of 0 as
``mildly impaired.'' Based on a subsequent analysis showing that
residents with a CPS score of 0 were similar to residents classified as
``cognitively intact'' under the CFS methodology, as well as clinical
feedback, we determined that it was appropriate to reclassify residents
with a CPS score of 0 as cognitively intact, consistent with ANPRM
feedback. This analysis is described in more detail in section 3.4.1.
of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
The scoring methodology for the proposed PDPM cognitive measure is
shown in Table 20. We would note once again that while we discuss this
scoring methodology in this section because cognitive status was
considered in developing the PT and OT classification, the cognitive
score is not being proposed as a factor of classification for the PT
and OT components under PDPM, as further discussed below.
Table 19--Cognitive Function Scale (CFS) Scoring Methodology
------------------------------------------------------------------------
Cognitive level BIMS score CPS score
------------------------------------------------------------------------
Cognitively Intact...................... 13-15 --
Mildly Impaired......................... 8-12 0-2
Moderately Impaired..................... 0-7 3-4
Severely Impaired....................... -- 5-6
------------------------------------------------------------------------
Table 20--Proposed PDPM Cognitive Measure Classification Methodology
------------------------------------------------------------------------
Cognitive level BIMS score CPS score
------------------------------------------------------------------------
Cognitively Intact...................... 13-15 0
Mildly Impaired......................... 8-12 1-2
Moderately Impaired..................... 0-7 3-4
Severely Impaired....................... -- 5-6
------------------------------------------------------------------------
Once each of these variables--clinical reasons for the SNF stay,
the resident's functional status, and the presence of a cognitive
impairment--was identified, we then used a statistical regression
technique called Classification and Regression Trees (CART) to explore
the most appropriate splits in PT and OT case-mix groups using these
three variables. In other words, CART was used to investigate how many
PT and OT case-mix groups should exist under the proposed PDPM and what
types of residents or score ranges should be combined to form each of
those PT and OT case-mix groups. CART is a non-parametric decision tree
learning technique that produces either classification or regression
trees, depending on whether the dependent variable is categorical or
numeric, respectively. Using the CART technique to create payment
groups is advantageous because it is resistant to both outliers and
irrelevant parameters. The CART algorithm has been used to create
payment groups in other Medicare settings. For example, it was used to
determine Case Mix Groups (CMGs) splits within rehabilitation
impairment groups (RICs) when the inpatient rehabilitation facility
(IRF) PPS was developed. This methodology is more thoroughly explained
in section 3.4.2. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
We used CART to develop splits within the four collapsed clinical
categories shown in Table 15. Splits within each of these four
collapsed clinical categories were based on the two independent
variables included in the algorithm: Function score and cognitive
status. The CART algorithm split residents into 18 groups for the PT
component and 14 groups for the OT component. These splits are
primarily based on differences in resident function. In the CART-
generated groups, cognitive status plays a role in categorizing less
than half of the PT groups and only two of the 14 OT groups. In
addition, to create the
[[Page 21048]]
proposed resident classification for the PT and OT components, we made
certain administrative decisions that further refined the PT and OT
case-mix classification groups beyond those produced through use of the
CART algorithm. For example, while CART may have created slightly
different breakpoints for the function score in different clinical
categories, we believe that using a consistent split in scores across
clinical categories improves the simplicity of the case-mix model
without compromising its accuracy. Therefore, we used the splits
created by the CART algorithm as the basis for the consistent splits
selected for the case-mix groups, simplifying the CART output while
retaining important features of the CART-generated splits. In our
proposed classification for the PT and OT components, we retained
function as the sole determinant of resident categorization within each
of the four collapsed clinical categories. We created function score
bins based on breakpoints that recurred in the CART splits, such as 5,
9, and 23. As noted above, we dropped cognitive status as a determinant
of classification because of the reduced role it played in categorizing
residents within the CART-generated groups. Finally, we used the same
function score bins to categorize residents within each of the four
collapsed clinical categories for both the PT and OT components. As
shown in section 3.4.2. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), using the proposed case-mix groups for the PT
and OT components results in a reduction of 0.005 in the R-squared
values for both PT and OT classification models. This shows that
although the proposed case-mix groups improve simplicity by removing
one predictor revealed to be less important in categorizing residents
(cognitive status) and grouping residents similarly (using the same
function score bins) across clinical categories, these decisions have
only a minor negative impact on predictive accuracy. These analyses are
described in further detail in section 3.4.2. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Based on the CART results and the administrative decisions
described above, we propose 16 case-mix groups to classify residents
for PT and OT payment. We would note that this represents a marked
reduction in the number of case-mix groups for PT and OT classification
under the RCS-I model discussed in the ANPRM. As discussed throughout
the sections above, after publication of the ANPRM, we received
feedback from stakeholders that the RCS-I payment model was overly
complex. In particular, commenters expressed concern about the
relatively large number of possible combinations of case-mix groups.
Based on this feedback, we sought to reduce the number of resident
groups in the PT and OT components. First, because we observed similar
PT and OT resource utilization patterns in the clinical categories of
Non-Orthopedic Surgery and Acute Neurologic, we decided to collapse
these categories for the purpose of PT and OT classification. In
addition, as discussed in this section, we replaced the section G-based
functional measure from RCS-I with a new functional measure based on
section GG items. The inclusion of the section GG-based functional
measure in the CART algorithm resulted in case-mix groups in which
cognitive function played a less important role in classification.
Based on these results, we determined that we could remove cognitive
function as a determinant of PT and OT classification without a notable
loss in the predictive ability of the payment model, as discussed
above. We also consulted with clinicians who advised CMS during
development of PDPM, who confirmed the appropriateness of this
decision. The decisions to collapse Non-Orthopedic Surgery and Acute
Neurologic into one clinical category and remove cognitive status
resulted in a large reduction in the number of PT and OT case-mix
groups, from the 30 in RCS-I to the 16 in the proposed PDPM provided in
Table 21. We provide the criteria for each of these groups along with
its CMI for both the PT and OT components in Table 21. As shown in
Table 21, two factors would be used to classify each resident for PT
and OT payment: clinical category and function score. Each case-mix
group corresponds to one clinical category and one function score
range. We propose classifying each SNF resident into one of the 16
groups shown in Table 21 based on these two factors.
To help ensure that payment reflects the average relative resource
use at the per diem level, CMIs would be set to reflect relative case-
mix related differences in costs across groups. This method helps
ensure that the share of payment for each case-mix group would be equal
to its share of total costs of the component. CMIs for the PT and OT
components are calculated based on two factors. One factor is the
average per diem costs of a case-mix group relative to the population
average. The other factor is the average variable per diem adjustment
factor of the group relative to the population average. In this
calculation, average per diem costs equal total PT or OT costs in the
group divided by number of utilization days in the group. Similarly,
the average variable per diem adjustment factor equals the sum of
variable per diem adjustment factors corresponding to a given component
(PT or OT) for all utilization days in the group divided by the number
of utilization days in the group. We calculate CMIs such that they
equal the ratio of relative average per diem costs for a group to the
relative average variable per diem adjustment factor for the group. In
this calculation, relative average per diem costs and the relative
average variable per diem adjustment factor are weighted by length of
stay to account for the different length of stay distributions across
case-mix groups (as further discussed in section 3.11.1. of the SNF
PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). The
relative average variable per diem adjustment factors for a given PT
group and the corresponding OT group are the same because residents are
classified into the same case-mix group under both components. However,
relative average per diem costs are different across the two
corresponding PT and OT groups, therefore the resulting CMIs calculated
for each group are different, as shown in Table 21. After calculating
CMIs as described above, we then apply adjustments to help ensure that
the distribution of resources across payment components is aligned with
the statutory base rates. The base rates implicitly allocate resources
to case-mix components in proportion to the relative magnitude of the
respective component base rates. For example, if the base rate for one
component were twice as large as the base rate for another component,
this would imply that the component with the larger base rate should
receive double the resources of the other component. To ensure that the
distribution of resources across payment components is aligned with the
statutory base rates, we set CMIs such that the average product of the
CMI and the variable per diem adjustment factor for a day of care
equals 1.0 for each of the five case-mix-adjusted components in PDPM.
If the average product of the CMI and the variable per diem adjustment
factor for a day of care were
[[Page 21049]]
different across case-mix components, this would result in allocating
resources in a manner inconsistent with the distribution of resources
implied by the statutory base rates.
After adjusting the CMIs to align the distribution of resources
across payment components with the statutory base rates, a parity
adjustment is then applied by multiplying the CMIs by the ratio of
case-mix-related payments in RUG-IV over estimated case-mix-related
payments in PDPM, as further discussed in section V.J. of this proposed
rule. More information on the variable per diem adjustment factors is
discussed in section V.D.4. of this proposed rule. The full methodology
used to develop CMIs is presented in section 3.11. of the SNF PDPM
technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 21--Proposed PT and OT Case-Mix Classification Groups
----------------------------------------------------------------------------------------------------------------
Section GG PT OT case-mix PT case-mix OT case-mix
Clinical category function score group index index
----------------------------------------------------------------------------------------------------------------
Major Joint Replacement or Spinal Surgery....... 0-5 TA 1.53 1.49
Major Joint Replacement or Spinal Surgery....... 6-9 TB 1.69 1.63
Major Joint Replacement or Spinal Surgery....... 10-23 TC 1.88 1.68
Major Joint Replacement or Spinal Surgery....... 24 TD 1.92 1.53
Other Orthopedic................................ 0-5 TE 1.42 1.41
Other Orthopedic................................ 6-9 TF 1.61 1.59
Other Orthopedic................................ 10-23 TG 1.67 1.64
Other Orthopedic................................ 24 TH 1.16 1.15
Medical Management.............................. 0-5 TI 1.13 1.17
Medical Management.............................. 6-9 TJ 1.42 1.44
Medical Management.............................. 10-23 TK 1.52 1.54
Medical Management.............................. 24 TL 1.09 1.11
Non-Orthopedic Surgery and Acute Neurologic..... 0-5 TM 1.27 1.30
Non-Orthopedic Surgery and Acute Neurologic..... 6-9 TN 1.48 1.49
Non-Orthopedic Surgery and Acute Neurologic..... 10-23 TO 1.55 1.55
Non-Orthopedic Surgery and Acute Neurologic..... 24 TP 1.08 1.09
----------------------------------------------------------------------------------------------------------------
Under the proposed PDPM, all residents would be classified into one
and only one of these 16 PT and OT case-mix groups for each of the two
components. As opposed to the RUG-IV system that determines therapy
payments based only on the amount of therapy provided, these groups
classify residents based on the two resident characteristics shown to
be most predictive of PT and OT utilization: Clinical category and
function score. Thus, we believe that the PT and OT case-mix groups
better reflect relative resource use of clinically relevant resident
subpopulations and therefore provide for more appropriate payment under
the SNF PPS. We invite comments on the approach we are proposing above
to classify residents for PT and OT payment.
c. Proposed Speech-Language Pathology Case-Mix Classification
As discussed above, many of the resident characteristics that we
found to be predictive of increased PT and OT costs were predictive of
lower SLP costs. As a result of this inverse relationship, using the
same set of predictors to case-mix adjust all three therapy components
would obscure important differences in variables predicting variation
in costs across therapy disciplines and make any model that attempts to
predict total therapy costs inherently less accurate. Therefore, we
believe it is appropriate to have a separately adjusted case-mix SLP
component that is specifically designed to predict relative differences
in SLP costs. As discussed in the prior section, costs derived from the
charges on claims and CCRs on facility cost reports were used as the
measure of resource use to develop an alternative payment model. Costs
are reflective of therapy utilization as they are correlated to therapy
minutes recorded for each therapy discipline.
Following the same methodology we used to identify predictors of PT
and OT costs, our project team conducted cost regressions with a host
of variables from the MDS assessment, prior inpatient claims, and SNF
claims that were identified as likely to be predictive of relative
increases in SLP costs. The variables were selected with the goal of
being as inclusive of the measures recorded on the MDS assessment as
possible and also included diagnostic information from the prior
inpatient stay. The selection process also incorporated clinical input
from TEP panelists, the contractor's clinical staff, and CMS clinical
staff. These initial costs regressions were exploratory and meant to
identify a broad set of resident characteristics that are predictive of
SLP resource utilization. The results were used to inform which
variables should be investigated further and ultimately included in the
payment system. A table of all of the variables considered in this
analysis appears in the appendix of the SNF PMR technical report that
accompanied the ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Based on these cost regressions, we identified a set of three
categories of predictors relevant in predicting relative differences in
SLP costs: Clinical reasons for the SNF stay, presence of a swallowing
disorder or mechanically-altered diet, and the presence of an SLP-
related comorbidity or cognitive impairment. A model using these
predictors to predict SLP costs per day accounted for 14.5 percent of
the variation in SLP costs per day, while a very extensive model using
1,016 resident characteristics only predicted 19.3 percent of the
variation. This shows that these predictors alone explain a large share
of the variation in SLP costs per day that can be explained with
resident characteristics.
As with the proposed PT and OT components, we began with the set of
clinical categories identified in Table 14 meant to capture general
differences in resident resource utilization and ran cost regressions
to determine which categories may be predictive of generally higher
relative SLP costs. Through this analysis, we found that one clinical
category, the Acute Neurologic group, was particularly predictive of
increased SLP costs. More detail on this investigation can be found in
section 3.5.2. of the SNF PMR
[[Page 21050]]
technical report that accompanied the ANPRM, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. Therefore, to determine the initial resident
classification into an SLP group under the proposed PDPM, residents
would first be categorized into one of two groups using the clinical
reasons for the resident's SNF stay recorded on the first line of Item
I8000 on the MDS assessment: Either the ``Acute Neurologic'' clinical
category or a ``Non-Neurologic'' group that includes the remaining
clinical categories in Table 14 (Major Joint Replacement or Spinal
Surgery; Non-Surgical Orthopedic/Musculoskeletal; Orthopedic Surgery
(Except Major Joint Replacement or Spinal Surgery); Acute Infections;
Cancer; Pulmonary; Non-Orthopedic Surgery; Cardiovascular and
Coagulations; and Medical Management).
In addition to the clinical reason for the SNF stay, based on cost
regressions and feedback from TEP panelists, we also identified the
presence of a swallowing disorder or a mechanically-altered diet (which
refers to food that has been altered to make it easier for the resident
to chew and swallow to address a specific resident need) as a predictor
of relative increases in SLP costs. First, residents who exhibited the
signs and symptoms of a swallowing disorder, as identified using K0100Z
on the MDS 3.0, demonstrated significantly higher SLP costs than those
who did not exhibit such signs and symptoms. Therefore, we considered
including the presence of a swallowing disorder as a component in
predicting SLP costs. However, when this information was presented
during the October 2016 TEP, stakeholders indicated that the signs and
symptoms of a swallowing disorder may not be as readily observed when a
resident is on a mechanically-altered diet and requested that we also
consider evaluating the presence of a mechanically-altered diet, as
determined by item K0510C2 on the MDS 3.0, as an additional predictor
of increased SLP costs. Our project team conducted this analysis and
found that there was an associated increase in SLP costs when a
mechanically-altered diet was present. Moreover, this analysis revealed
that while SLP costs may increase when either a swallowing disorder or
mechanically-altered diet is present, resident SLP costs increased even
more when both of these items were present. More detail on this
investigation and these analyses can be found in section 3.5.3. of the
SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. As a
result, we agree with the stakeholders that both swallowing disorder
and mechanically-altered diet are important components of predicting
relative increases in resident SLP costs, and thus, in addition to the
clinical categorization, we propose classifying residents as having
either a swallowing disorder, being on a mechanically altered diet,
both, or neither for the purpose of classifying the resident under the
SLP component. We note that we do plan to monitor specifically for any
increases in the use of mechanically altered diet among the SNF
population that may suggest that beneficiaries are being prescribed
such a diet based on facility financial considerations, rather than for
clinical need.
As a final aspect of the proposed SLP component case-mix
adjustment, we explored how SLP costs vary according to cognitive
status and the presence of an SLP-related comorbidity. We observed that
SLP costs were notably higher for residents who had a mild to severe
cognitive impairment (as defined by the PDPM cognitive measure
methodology described in Table 20) or who had an SLP-related
comorbidity present. For each condition or service included as an SLP-
related comorbidity, the presence of the condition or service was
associated with at least a 43 percent increase in average SLP costs per
day. The presence of a mild to severe cognitive impairment was
associated with at least a 100 percent increase in average SLP costs
per day. Similar to the analysis conducted in relation to the PT and OT
components, the project team ran cost regressions on a broad list of
possible conditions. Based on that analysis, and in consultation with
stakeholders during our TEPs and clinicians, we identified the
conditions listed in Table 22 as SLP-related comorbidities which we
believe best predict relative differences in SLP costs. We used
diagnosis codes on the most recent inpatient claim and the first SNF
claim as well as MDS items on the 5-day assessment for each SNF stay to
identify these diagnoses and found that residents with these conditions
had much higher SLP costs per day. Rather than accounting for each SLP-
related comorbidity separately, all conditions were combined into a
single flag. If the resident has at least one SLP-related comorbidity,
the combined flag is turned on. We combined all SLP-related
comorbidities into a single flag because we found that the predictive
ability of including a combined SLP comorbidity flag is comparable to
the predictive ability of including each SLP-related comorbidity as an
individual predictor. Additionally, using a combined SLP-related
comorbidity flag greatly improves the simplicity of the payment model.
More detail on these analyses can be found in section 3.5.1. of the SNF
PMR technical report that accompanied the ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 22--Proposed SLP-Related Comorbidities
------------------------------------------------------------------------
Aphasia Laryngeal cancer
------------------------------------------------------------------------
CVA, TIA, or Stroke.......... Apraxia.
Hemiplegia or Hemiparesis.... Dysphagia.
Traumatic Brain Injury....... ALS.
Tracheostomy Care (While a Oral Cancers.
Resident).
Ventilator or Respirator Speech and Language Deficits.
(While a Resident).
------------------------------------------------------------------------
Once each of these variables--clinical reasons for the SNF stay,
presence of a swallowing disorder or mechanically-altered diet, and the
presence of an SLP-related comorbidity or cognitive impairment--found
to be useful in predicting resident SLP costs was identified, we used
the CART algorithm, as we discussed above in relation to the PT and OT
components, to determine appropriate splits in SLP case-mix groups
based on CART output breakpoints using these three variables. We then
further refined the SLP case-mix classification groups beyond those
produced by the CART algorithm. We used consistent criteria to group
residents into 18 payment groups across
[[Page 21051]]
the two clinical categories determined to be relevant to SLP
utilization (Acute Neurologic and Non-Neurologic). These groups
simplified the SLP case-mix classification by reducing the number of
groups while maintaining the CART predictive power in terms of R-
squared. This methodology and the results of our analysis are more
thoroughly explained in sections 3.4.2. and 3.5.2. of the SNF PMR
technical report that accompanied the ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Under the original RCS-I SLP component, a resident could be
classified into one of 18 possible case-mix groups. Comments received
in response to the ANPRM expressed concern over the complexity of the
payment model due to the high number of possible combinations of case-
mix groups. To reduce the number of possible SLP case-mix groups, we
simplified the consistent splits model selected for RCS-I. To
accomplish this, we combined clinical category (Acute Neurologic or
Non-Neurologic), cognitive impairment, and the presence of an SLP-
related comorbidity into a single predictor due to the clinical
relationship between acute neurologic conditions, cognition, and SLP
comorbidities. These three predictors are highly interrelated as acute
neurologic conditions may often result in cognitive impairment or SLP-
related comorbidities such as speech and language deficits. Using this
combined variable along with presence of a swallowing disorder or
mechanically-altered diet results in 12 groups. We compared the
predictive ability of the simplified model with more complex
classification options, including the original RCS-I SLP model.
Regression results showed that the reduction in case-mix groups by
collapsing independent variables had little to no effect on payment
accuracy. Specifically, the proposed PDPM SLP model has an R-squared
value almost identical to that of the original RCS-I SLP model, while
reducing the number of resident groups from 18 to 12. Therefore, we
determined that 12 case-mix groups would be necessary to classify
residents adequately in terms of their SLP costs in a manner that
captures sufficient variation in SLP costs without creating
unnecessarily granular separations. More information on this analysis
can be found in section 3.5.2. of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). We provide the criteria for each
of these groups along with its CMI in Table 23.
To help ensure that payment reflects the average relative resource
use at the per diem level, CMIs would be set to reflect relative case-
mix related differences in costs across groups. This method helps
ensure that the share of payment for each case-mix group would be equal
to its share of total costs of the component. CMIs for the SLP
component are calculated based on the average per diem costs of a case-
mix group relative to the population average. Relative average
differences in costs are weighted by length of stay to account for the
different length of stay distributions across case-mix groups (as
further discussed in section 3.11.1. of the SNF PDPM technical report,
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). In this calculation, average per
diem costs equal total SLP costs in the group divided by number of
utilization days in the group. Because the SLP component does not have
a variable per diem schedule (as further discussed in section 3.9.1. of
the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html),
variable per diem adjustment factors are not involved in SLP CMI
calculation. A parity adjustment is then applied by multiplying the CMI
by the ratio of case-mix-related payments in RUG-IV over estimated
case-mix-related payments in PDPM, as further discussed in section V.J.
of this proposed rule. This method helps ensure that the share of
payment for each case-mix group is equal to its share of total costs of
the component and that PDPM is budget neutral relative to RUG-IV. The
full methodology used to develop CMIs is presented in section 3.11. of
the SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 23--Proposed SLP Case-Mix Classification Groups
----------------------------------------------------------------------------------------------------------------
Presence of acute neurologic condition, SLP-
related comorbidity, or cognitive Mechanically altered diet or SLP case-mix SLP case-mix
impairment swallowing disorder group index
----------------------------------------------------------------------------------------------------------------
None....................................... Neither............................ SA 0.68
None....................................... Either............................. SB 1.82
None....................................... Both............................... SC 2.66
Any one.................................... Neither............................ SD 1.46
Any one.................................... Either............................. SE 2.33
Any one.................................... Both............................... SF 2.97
Any two.................................... Neither............................ SG 2.04
Any two.................................... Either............................. SH 2.85
Any two.................................... Both............................... SI 3.51
All three.................................. Neither............................ SJ 2.98
All three.................................. Either............................. SK 3.69
All three.................................. Both............................... SL 4.19
----------------------------------------------------------------------------------------------------------------
As with the proposed PT and OT components, all residents would be
classified into one and only one of these 12 SLP case-mix groups under
the proposed PDPM. As opposed to the RUG-IV system that determines
therapy payments based only on the amount of therapy provided, under
the proposed PDPM, residents would be classified into SLP case-mix
groups based on resident characteristics shown to be predictive of SLP
utilization. Thus, we believe that the proposed SLP case-mix groups
would provide a better measure of resource use and would provide for
more appropriate payment under the SNF PPS. We invite comments on the
approach we are proposing above to classify residents for SLP payment
under the proposed PDPM.
d. Proposed Nursing Case-Mix Classification
The RUG-IV classification system first divides residents into
``rehabilitation residents'' and ``non-rehabilitation residents'' based
on the
[[Page 21052]]
amount of therapy a resident receives. Differences in nursing needs can
be obscured for rehabilitation residents, where the primary driver of
payment classification is the intensity of therapy services that a
resident receives. For example, for two residents classified into the
RUB RUG-IV category, which would occur on the basis of therapy
intensity and ADL score alone, the nursing component for each of these
residents would be multiplied by a CMI of 1.56. This reflects that
residents in that group were found, during our previous Staff time
measurement (STM) work, to have nursing costs 56 percent higher than
residents with a 1.00 index. We would note that while this CMI also
includes adjustments made in FY 2010 and FY 2012 for budget-neutrality
purposes, what is clear is that two residents, who may have
significantly different nursing needs, are nevertheless deemed to have
the very same nursing costs, and SNFs would receive the same nursing
payment for each. Given the discussion above, which noted that
approximately 60 percent of resident days are billed using one of three
Ultra-High Rehabilitation RUGs (two of which have the same nursing
index), the current case-mix model effectively classifies a significant
portion of SNF therapy residents as having exactly the same degree of
nursing needs and requiring exactly the same amount of nursing
resources. As such, we believe that further refinement of the case-mix
model would be appropriate to better differentiate among patients,
particularly those who receive therapy services with different nursing
needs.
An additional concern in the RUG-IV system is the use of therapy
minutes to determine not only therapy payments but also nursing
payments. For example, residents classified into the RUB RUG fall in
the same ADL score range as residents classified into the RVB RUG. The
only difference between those residents is the number of therapy
minutes that they received. However, the difference in payment that
results from this difference in therapy minutes impacts not only the
RUG-IV therapy component but also the nursing component: Nursing
payments for RUB residents are 40 percent higher than nursing payments
for RVB residents. As a result of this feature of the RUG-IV system,
the amount of therapy minutes provided to a resident is one of the main
sources of variation in nursing payments, while other resident
characteristics that may better reflect nursing needs play a more
limited role in determining payment.
The more nuanced and resident-centered classifications in current
RUG-IV non-rehabilitation categories are obscured under the current
payment model, which utilizes only a single RUG-IV category for payment
purposes and has over 90 percent of resident days billed using a
rehabilitation RUG. The RUG-IV non-rehabilitation groups classify
residents based on their ADL score, the use of extensive services, the
presence of specific clinical conditions such as depression, pneumonia,
or septicemia, and the use of restorative nursing services, among other
characteristics. These characteristics are associated with nursing
utilization, and the STRIVE study accounted for relative differences in
nursing staff time across groups. Therefore, we propose to use the
existing RUG-IV methodology for classifying residents into non-
rehabilitation RUGs to develop a proposed nursing classification that
helps ensure nursing payment reflects expected nursing utilization
rather than therapy utilization.
For example, consider two residents. The first patient classifies
into the RUB rehabilitation RUG (on the basis of the resident's therapy
minutes) and into the CC1 non-rehabilitation RUG (on the basis of
having pneumonia), while the second classifies into the RUB
rehabilitation RUG (on the basis of the resident's therapy minutes) and
the HC1 non-rehabilitation RUG (on the basis of the resident having
quadriplegia and a high ADL score). Under the current RUG-IV based
payment model, the billing for both residents would utilize only the
RUB rehabilitation RUG, despite clear differences in their associated
nursing needs and resident characteristics. We propose an approach
where, for the purpose of determining payment under the nursing
component, the first resident would be classified into CC1, while the
second would be classified into HC1 under the PDPM. We believe that
classifying the residents in this manner for payment purposes would
capture variation in nursing costs in a more accurate and granular way
than relying on the rehabilitation RUG's nursing CMI.
While resident classification in the proposed PDPM nursing
component is guided by RUG-IV methodology, we propose to make several
modifications to the RUG-IV nursing RUGs and classification methodology
under the proposed PDPM. First, the proposed PDPM would reduce the
number of nursing RUGs by decreasing distinctions based on function.
Under RUG-IV, residents with a serious medical condition/service such
as septicemia or respiratory therapy are classified into one of eight
nursing RUGs in the Special Care High category. The specific RUG into
which a resident is placed depends on the resident's ADL score and
whether the resident is depressed. RUG-IV groups ADL score into bins
for simplicity (for example, 2-5 and 6-10). For example, under RUG-IV,
a resident in the Special Care High category who has depression and an
ADL score of 3 would fall into the 2-5 ADL score bin and therefore be
classified into the HB2 RUG, which corresponds to Special Care High
residents with depression and an ADL score between 2 and 5 (a mapping
of clinical traits and ADL score to RUG-IV nursing groups is shown in
the appendix of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). To explore options to reduce the number of
nursing RUGs, we compared average nursing utilization across all 43
RUG-IV nursing RUGs. The dependent variable used in this investigation
was the average wage-weighted staff time (WWST) for each nursing RUG
from the STRIVE study. WWST is a measure of nursing resource
utilization used in the STRIVE study. As discussed in more detail in
section 3.2.1. of the PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), we were unable to construct a measure of nursing
utilization based on current data because facilities do not report
resident-specific nursing costs. We observed that nursing resource use
as measured by WWST does not vary markedly between nursing case-mix
groups defined by contiguous ADL score bins (for example, 11-14 and 15-
16) but otherwise sharing the same clinical traits (for example,
classified into Special Care High and depressed). This suggests that
collapsing contiguous ADL score bins for RUGs that are otherwise
defined by the same set of clinical traits is unlikely to notably
affect payment accuracy. Section 3.6.1. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on
this analysis.
In the Special Care High, Special Care Low, Clinically Complex, and
Reduced Physical Function classification groups (RUGs beginning with H,
L, C, or P), for nursing groups that were otherwise defined with the
same clinical traits (for example, extensive services, medical
conditions, depression, restorative nursing services received), we
propose to combine the following pairs of second characters due to
their
[[Page 21053]]
contiguous ADL score bins: (E, D) and (C, B). These characters
correspond to ADL score bins (15 to 16, 11 to 14) and (6 to 10, 2 to
5), respectively. We observed that nursing utilization did not vary
notably across these contiguous ADL score bins, therefore we believe it
is appropriate to collapse pairs of RUGs in these classification groups
that correspond to contiguous ADL score bins but are otherwise defined
by the same clinical traits. For example, HE2 and HD2, which are both
in the Special Care High group and both indicate the presence of
depression, would be collapsed into a single nursing case-mix group.
Similarly, PC1 and PB1 (Reduced Physical Function and 0 to 1
restorative nursing services) also would be combined into a single
nursing case-mix group. Section 3.6.1. of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on this
analysis. In the Behavioral and Cognitive Performance classification
group (RUGs beginning with B), for RUGs that are otherwise defined by
the same number of restorative nursing services (0 to1 or 2 or more),
we propose to combine RUGs with the second character B and A, which
correspond to contiguous ADL score bins 2 to 5 and 0 to 1,
respectively. We observed that nursing utilization did not vary notably
across these contiguous ADL score bins, therefore we believe it is
appropriate to collapse pairs of RUGs in this classification group that
correspond to contiguous ADL score bins but are otherwise defined by
the same clinical traits. In other words, BB2 and BA2 would be combined
into a single nursing group, and BB1 and BA1 would also be combined
into a single nursing group. Section 3.6.1. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on
this analysis. The proposed PDPM would maintain CA1, CA2, PA1, and PA2
as separate case-mix groups. We observed that these RUGs do not share
similar levels of nursing resource use with RUGs in adjacent ADL score
bins that are otherwise defined by the same clinical traits (for
example, medical conditions, depression, restorative nursing services
received). Rather, CA1, CA2, PA1, and PA2 are associated with
distinctly lower nursing utilization compared to RUGs that otherwise
have the same clinical traits (for example, medical conditions,
depression, restorative nursing services received) but higher ADL score
bins. Section 3.6.1. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on this analysis. ES3, ES2,
and ES1 also would be maintained as separate case-mix groups under the
nursing component of the proposed PDPM because, although they are
defined by the same ADL score bin, they are defined by different
clinical traits unlike the pairs of RUGs that were combined.
Specifically, ES3, ES2, and ES1 are defined by different combinations
of extensive services. We believe that collapsing case-mix groups based
on ADL score for the RUGs specified above would reduce model complexity
by decreasing the number of nursing case-mix groups from 43 to 25,
which thereby decreases the total number of possible combinations of
case-mix groups under the proposed PDPM. Table 26 shows the proposed 25
case-mix groups for nursing payment. Section 3.6.1. of the SNF PDPM
technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more
detail on the analyses and data supporting these proposals.
The second modification to the RUG-IV nursing classification
methodology would update the nursing ADL score to incorporate section
GG items. Currently, the RUG-IV ADL score is based on four late-loss
items from section G of MDS 3.0: Eating, toileting, transfer, and bed
mobility. Under the proposed PDPM, these section G items would be
replaced with an eating item, a toileting item, three transfer items,
and two bed mobility items from the admission performance assessment of
section GG. In contrast to the RUG-IV ADL score, the proposed PDPM
score assigns higher points to higher levels of independence.
Therefore, an ADL score of 0 (independent) corresponds to a section GG-
based function score of 16, while an ADL score of 16 (dependent)
corresponds to a section GG-based function score of 0. This scoring
methodology is consistent with the proposed PDPM PT and OT function
score as well as functional scores in other care settings, such as the
IRF PPS. The proposed nursing scoring methodology also assigns 0 points
when an activity cannot be completed (``Resident refused,'' ``Not
applicable,'' ``Not attempted due to medical condition or safety
concerns''). As described in section V.D.3.c. (PT and OT Case-Mix
Classification) of this proposed rule, grouping these responses with
``dependent'' aligns with clinical expectations of resource utilization
for residents who cannot complete an ADL activity. The proposed scoring
methodology is shown in Table 24. As discussed in section V.D.3.c.,
section GG measures functional areas with more than one item, which
results in substantial overlap between the two bed mobility items and
the three transfer items. To address overlap, we propose to calculate
an average score for each of these related items. That is, we would
average the scores for the two bed mobility items and for the three
transfer items. This averaging approach is also used in the proposed PT
and OT function scores and is illustrated in Table 25. The final score
sums the average bed mobility and transfer scores with eating and
toileting scores, resulting in a nursing function score that ranges
from 0 to 16.
Table 24--Proposed Nursing Function Score Construction
----------------------------------------------------------------------------------------------------------------
Response ADL Score
----------------------------------------------------------------------------------------------------------------
05, 06........................................................ Set-up assistance, Independent.. 4
04............................................................ Supervision or touching 3
assistance.
03............................................................ Partial/moderate assistance..... 2
02............................................................ Substantial/maximal assistance.. 1
01, 07, 09, 88................................................ Dependent, Refused, N/A, Not 0
Attempted.
----------------------------------------------------------------------------------------------------------------
Table 25--Section GG Items Included in Proposed Nursing Functional
Measure
------------------------------------------------------------------------
Section GG Item ADL Score
------------------------------------------------------------------------
GG0130A1...................... Self-care: Eating..... 0-4
[[Page 21054]]
GG0130C1...................... Self-care: Toileting 0-4
Hygiene.
GG0170B1...................... Mobility: Sit to lying 0-4 (average of
2 items).
GG0170C1...................... Mobility: Lying to
sitting on side of
bed.
GG0170D1...................... Mobility: Sit to stand 0-4 (average of
3 items).
GG0170E1...................... Mobility: Chair/bed-to-
chair transfer.
GG0170F1...................... Mobility: Toilet
transfer.
------------------------------------------------------------------------
In addition to proposing to replace the nursing ADL score with a
function score based on section GG items and to collapse certain
nursing RUGs, we also propose to update the existing nursing CMIs using
the STRIVE staff time measurement data that were originally used to
create these indexes. Under the current payment system, non-
rehabilitation nursing indexes were calculated to capture variation in
nursing utilization by using only the staff time collected for the non-
rehabilitation population. We believe that, to provide a more accurate
reflection of the relative nursing resource needs of the SNF
population, the nursing indexes should reflect nursing utilization for
all residents. To accomplish this, we replicated the methodology
described in the FY 2010 SNF PPS rule (74 FR 22236 through 22238) but
classified the full STRIVE study population under non-rehabilitation
RUGs using the RUG-IV classification rules. The methodology for
updating resource use estimates for each nursing RUG proceeded
according to the following steps:
(1) Calculate average wage-weighted staff time (WWST) for each
STRIVE study resident using FY 2015 SNF wages.
(2) Assign the full STRIVE population to the appropriate non-
rehabilitation RUG.
(3) Apply sample weights to WWST estimates to allow for unbiased
population estimates. The reason for this weighting is that the STRIVE
study was not a random sample of residents. Certain key subpopulations,
such as residents with HIV/AIDS, were over-sampled to ensure that there
were enough residents to draw conclusions on the subpopulations'
resource use. As a result, STRIVE researchers also developed sample
weights, equal to the inverse of each resident's probability of
selection, to permit calculation of unbiased population estimates.
Applying the sample weights to a summary statistic results in an
estimate that is representative of the actual population. The sample
weight method is explained in Phase I of the STRIVE study. A link to
the STRIVE study is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/TimeStudy.html.
(4) Smooth WWST estimates that do not match RUG hierarchy in the
same manner as the STRIVE study. RUG-IV, from which the nursing RUGs
are derived, is a hierarchical classification in which payment should
track clinical acuity. It is intended that residents who are more
clinically complex or who have other indicators of acuity, including a
higher ADL score, depression, or restorative nursing services, would
receive higher payment. When STRIVE researchers estimated WWST for each
RUG, several inversions occurred because of imprecision in the means.
These are defined as WWST estimates that are not in line with clinical
expectations. The methodology used to smooth WWST estimates is
explained in Phase II of the STRIVE study. A link to the STRIVE study
is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/TimeStudy.html.
(5) Calculate nursing indexes, which reflect the average WWST for
each of the 25 nursing case-mix groups divided by the average WWST for
the study population used throughout our research. To impute WWST for
each stay in the population, we assigned each resident the average WWST
of the collapsed nursing RUG into which they are categorized. To derive
the average WWST of each collapsed RUG, we first estimate the average
WWST of the original 43 nursing RUGs based on steps 1 through 4 above,
then calculate a weighted mean of the average WWST of the two RUGs that
form the collapsed RUG. More details on this analysis can be found in
section 3.6.3. of the SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Through this refinement, we believe the nursing indexes under the
proposed PDPM better reflect the varied nursing resource needs of the
full SNF population. In Table 26, we provide the nursing indexes under
the proposed PDPM.
To help ensure that payment reflects the average relative resource
use at the per diem level, nursing CMIs would be set to reflect case-
mix related relative differences in WWST across groups. Nursing CMIs
would be calculated based on the average per diem nursing WWST of a
case-mix group relative to the population average. In this calculation,
average per diem WWST equals total WWST in the group divided by number
of utilization days in the group. Because the nursing component does
not have a variable per diem schedule (as further discussed in section
3.9.1. of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), variable per diem adjustment factors are not
involved in nursing CMI calculation. We then apply a parity adjustment
by multiplying the CMI by the ratio of case-mix-related payments in
RUG-IV over estimated case-mix-related payments in PDPM, as discussed
further in section V.J. of this proposed rule. The full methodology
used to develop CMIs is presented in section 3.11. of the SNF PDPM
technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 26--Proposed Nursing Indexes Under Proposed PDPM Classification Model
--------------------------------------------------------------------------------------------------------------------------------------------------------
PDPM
Number of GG-based nursing Nursing
RUG-IV nursing RUG Extensive services Clinical conditions Depression restorative function case-mix case-mix
nursing services score group index
--------------------------------------------------------------------------------------------------------------------------------------------------------
ES3................ Tracheostomy & Ventilator........... .................... .................. .................. 0-14 ES3 4.04
[[Page 21055]]
ES2................ Tracheostomy or Ventilator.......... .................... .................. .................. 0-14 ES2 3.06
ES1................ Infection........................... .................... .................. .................. 0-14 ES1 2.91
HE2/HD2............ .................................... Serious medical Yes............... .................. 0-5 HDE2 2.39
conditions e.g.
comatose,
septicemia,
respiratory therapy.
HE1/HD1............ .................................... Serious medical No................ .................. 0-5 HDE1 1.99
conditions e.g.
comatose,
septicemia,
respiratory therapy.
HC2/HB2............ .................................... Serious medical Yes............... .................. 6-14 HBC2 2.23
conditions e.g.
comatose,
septicemia,
respiratory therapy.
HC1/HB1............ .................................... Serious medical No................ .................. 6-14 HBC1 1.85
conditions e.g.
comatose,
septicemia,
respiratory therapy.
LE2/LD2............ .................................... Serious medical Yes............... .................. 0-5 LDE2 2.07
conditions e.g.
radiation therapy
or dialysis.
LE1/LD1............ .................................... Serious medical No................ .................. 0-5 LDE1 1.72
conditions e.g.
radiation therapy
or dialysis.
LC2/LB2............ .................................... Serious medical Yes............... .................. 6-14 LBC2 1.71
conditions e.g.
radiation therapy
or dialysis.
LC1/LB1............ .................................... Serious medical No................ .................. 6-14 LBC1 1.43
conditions e.g.
radiation therapy
or dialysis.
CE2/CD2............ .................................... Conditions requiring Yes............... .................. 0-5 CDE2 1.86
complex medical
care e.g.
pneumonia, surgical
wounds, burns.
CE1/CD1............ .................................... Conditions requiring No................ .................. 0-5 CDE1 1.62
complex medical
care e.g.
pneumonia, surgical
wounds, burns.
CC2/CB2............ .................................... Conditions requiring Yes............... .................. 6-14 CBC2 1.54
complex medical
care e.g.
pneumonia, surgical
wounds, burns.
CA2................ .................................... Conditions requiring Yes............... .................. 15-16 CA2 1.08
complex medical
care e.g.
pneumonia, surgical
wounds, burns.
CC1/CB1............ .................................... Conditions requiring No................ .................. 6-14 CBC1 1.34
complex medical
care e.g.
pneumonia, surgical
wounds, burns.
CA1................ .................................... Conditions requiring No................ .................. 15-16 CA1 0.94
complex medical
care e.g.
pneumonia, surgical
wounds, burns.
BB2/BA2............ .................................... Behavioral or .................. 2 or more......... 11-16 BAB2 1.04
cognitive symptoms.
BB1/BA1............ .................................... Behavioral or .................. 0-1............... 11-16 BAB1 0.99
cognitive symptoms.
PE2/PD2............ .................................... Assistance with .................. 2 or more......... 0-5 PDE2 1.57
daily living and
general supervision.
PE1/PD1............ .................................... Assistance with .................. 0-1............... 0-5 PDE1 1.47
daily living and
general supervision.
PC2/PB2............ .................................... Assistance with .................. 2 or more......... 6-14 PBC2 1.21
daily living and
general supervision.
PA2................ .................................... Assistance with .................. 2 or more......... 15-16 PA2 0.70
daily living and
general supervision.
PC1/PB1............ .................................... Assistance with .................. 0-1............... 6-14 PBC1 1.13
daily living and
general supervision.
PA1................ .................................... Assistance with .................. 0-1............... 15-16 PA1 0.66
daily living and
general supervision.
--------------------------------------------------------------------------------------------------------------------------------------------------------
As with the previously discussed components, all residents would be
classified into one and only one of these 25 nursing case-mix groups
under the proposed PDPM.
We also used the STRIVE data to quantify the effects of an HIV/AIDS
diagnosis on nursing resource use. We controlled for case mix by
including the proposed PDPM resident groups (in this case, the nursing
RUGs) as independent variables. The results show that even after
controlling for nursing RUG, HIV/AIDS status is associated with a
positive and significant increase in nursing utilization. Based on the
results of regression analyses, we found that wage-weighted nursing
staff time is 18 percent higher for residents with HIV/AIDS. (The
estimate of average wage-weighted nursing staff time for the SNF
population is adjusted to account for the deliberate over-sampling of
certain sub-populations in the STRIVE study. Specifically, we apply
sample weights from the STRIVE dataset equal to the inverse of each
resident's probability of selection to permit calculation of an
unbiased estimate.) Based on these findings, we concluded that the
proposed PDPM nursing groups may not fully capture the additional
nursing costs associated with HIV/AIDS residents. More information on
this analysis can be found in section 3.8.2. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Thus, as part of the
case-mix adjustment of the nursing component, we are proposing an 18
percent increase in payment for the nursing component for residents
with HIV/AIDS. This adjustment would be applied based on the presence
of ICD-10-CM code B20 on the SNF claim. In cases where a resident is
coded as having this diagnosis, the nursing component per diem rate for
this resident would be multiplied by 1.18, to account for the 18
percent increase in nursing costs for residents with this diagnosis. We
discuss this proposal, as well as its relation to the existing AIDS
add-on payment under RUG-IV, in section V.I. of this proposed rule.
We invite comments on the approach we are proposing above to
classify residents for nursing payment under the proposed PDPM.
e. Proposed Non-Therapy Ancillary Case-Mix Classification
Under the current SNF PPS, payments for NTA costs incurred by SNFs
are incorporated into the nursing component. This means that the CMIs
used to adjust the nursing component of the SNF PPS are intended to
reflect not only differences in nursing resource use but also NTA
costs. However, there have been concerns that the current nursing CMIs
do not accurately reflect the basis for or the magnitude of relative
differences in resident NTA costs. In its March 2016 Report to
Congress, MedPAC wrote: ``Almost since its inception, the SNF PPS has
been criticized for encouraging the provision of unnecessary
rehabilitation therapy services and not accurately targeting payments
for nontherapy ancillary (NTA) services such as drugs (Government
Accountability Office 2002, Government Accountability Office 1999,
White et al. 2002)'' (available at http://medpac.gov/docs/default-
source/reports/chapter-7-skilled-nursing-
[[Page 21056]]
facility-services-march-2016-report-.pdf). While the proposed PT, OT,
and SLP components were designed to address the issue related to
provision of therapy services raised by MedPAC above, the proposed NTA
component discussed in this section was designed to address the issue
related to accurately targeting payments for NTA services--
specifically, that the current manner of using the RUG-IV case-mix
system to determine NTA payment levels inadequately adjusts for
relative differences in resident NTA costs.
As noted in the quotation from MedPAC above, MedPAC is not the only
group to offer this critique of the SNF PPS. Just as the aforementioned
criticisms that MedPAC cited have existed almost since the inception of
the SNF PPS itself, ideas for addressing this concern have a similarly
long history. In response to comments on the 1998 interim final rule
which served to establish the SNF PPS, we published a final rule on
July 30, 1999 (64 FR 41644). In this final rule, we acknowledged the
commenters' concerns about the new system's ability to account
accurately for NTA costs, such as the following:
There were a number of comments expressing concern with the
adequacy of the PPS rates to cover the costs of ancillary services
other than occupational, physical, and speech therapy (non-therapy
ancillaries), including such things as drugs, laboratory services,
respiratory therapy, and medical supplies. Prescription drugs or
medication therapy were frequently noted areas of concern due to
their potentially high cost for particular residents. Some
commenters suggested that the RUG-III case-mix classification
methodology does not adequately provide for payments that account
for the variation in, or the real costs of, these services provided
to their residents. (64 FR 41647)
In response to those comments, we stated that ``we are funding
substantial research to examine the potential for refinements to the
case-mix methodology, including an examination of medication therapy,
medically complex patients, and other nontherapy ancillary services''
(64 FR 41648). In this proposed rule, we are proposing a methodology
that we believe would case-mix adjust SNF PPS payments more
appropriately to reflect differences in NTA costs.
Following the same methodology we used for the proposed PT, OT, and
SLP components, the project team ran cost regression models to
determine which resident characteristics may be predictive of relative
increases in NTA costs. The three categories of cost-related resident
characteristics identified through this analysis were resident
comorbidities, the use of extensive services (services provided to
residents that are particularly expensive and/or invasive), and
resident age. However, we removed age from further consideration as
part of the NTA component based on concerns shared by TEP panelists
during the June 2016 TEP. Particularly, some panelists expressed
concern that including age as a determinant of NTA payment could create
access issues for older populations. Additionally, the CART algorithm
used to explore potential resident groups for the NTA component only
selected age as a determinant of classification for 2 of the 7 groups
created. We also tested a classification option that used age as a
determinant of classification for every NTA group. This only led to a 5
percent increase in the R-squared value of the NTA classification. More
information on these analyses can be found in section 3.7.1. of the SNF
PMR technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
With regard to capturing comorbidities and extensive services
associated with high NTA utilization, we used multiple years of data
(FY 2014 to FY 2017) to estimate the impact of comorbidities and
extensive services on NTA costs. This is in response to comments on the
ANPRM that the design of the NTA component should be more robust and
remain applicable in light of potential changes in the SNF population
and care practices over time. Conditions and services were defined in
three ways. First, clinicians identified MDS items that correspond to
conditions/extensive services likely related to NTA utilization.
However, since many conditions/extensive services related to NTA
utilization are not included on the MDS assessment, we then mapped ICD-
10 diagnosis codes from the prior inpatient claim, the first SNF claim,
and section I8000 of the 5-day MDS assessment to condition categories
from the Part C risk adjustment model (CCs) and the Part D risk
adjustment model (RxCCs). The CCs and RxCCs define conditions by
aggregating related diagnosis codes into a single condition flag. We
use the condition flags defined by the CCs and RxCCs to predict Part A
and B expenditures or Part D expenditures, respectively for Medicare
beneficiaries. The predicted relationship between the conditions
defined in the respective models and Medicare expenditures is then used
to risk-adjust capitated payments to Part C and Part D sponsors.
Similarly, our comorbidities investigation aimed to use a comprehensive
list of conditions and services to predict resource utilization for
beneficiaries in Part A-covered SNF stays. Ultimately, the predicted
relationship between these conditions/services and utilization of NTA
services would be used to case-mix adjust payments to SNF providers, in
a process similar to risk adjustment of capitated payments. Given these
similarities, we decided to use the diagnosis-defined conditions from
the Part C and Part D risk adjustment models to define conditions and
services that were not defined on the MDS. Because the CCs were
developed to predict utilization of Part A and B services, while the
RxCCs were developed to predict Part D drug costs, the largest
component of NTA costs, we believe that using both sources allows us to
define the conditions and services potentially associated with NTA
utilization more comprehensively. Lastly, we used ICD-10 diagnosis
codes to define additional conditions that clinicians who advised CMS
during PDPM development identified as being potentially associated with
increased NTA service utilization but are not fully reflected in either
the MDS or the CCs/RxCCs. The resulting list was meant to encompass as
many diverse and expensive conditions and extensive services as
possible from the MDS assessment, the CCs, the RxCCs, and diagnoses.
Using cost regressions, we found that certain comorbidity conditions
and extensive services were highly predictive of relative differences
in resident NTA costs. These conditions and services are identified in
Table 27. More information on this analysis can be found in section
3.7.1. of the SNF PDPM technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. We would note that certain conditions that were
associated with higher NTA utilization were nevertheless excluded from
the list because of clinical concerns. Esophageal reflux was excluded
because it is a very common condition in the SNF population and
clinicians noted that coding can be discretionary. Migraine headache
was also excluded due to clinicians' concerns about coding reliability.
Additionally, clinicians stated that in many cases migraine headache is
not treated by medication, the largest component of NTA costs.
Having identified the list of relevant conditions and services for
adjusting NTA payments, we considered different options for how to
capture the variation
[[Page 21057]]
in NTA costs explained by these identified conditions and services. One
such method would be merely to count the number of comorbidities and
services a resident receives and assign a score to that resident based
on this count. We found that this option accounts for the additive
effect of having multiple comorbidities and extensive services but did
not adequately reflect the relative differences in the impact of
certain higher-cost conditions and services. We also considered a tier
system similar to the one used in the IRF PPS, where SNF residents
would be placed into payment tiers based on the costliest comorbidity
or extensive service. However, we found that this option did not
account for the additive effect noted above. To address both of these
issues, we propose basing a resident's NTA score, which would be used
to classify the resident into an NTA case-mix classification group, on
a weighted-count methodology. Specifically, as shown in Table 27, each
of the comorbidities and services that factor into a resident's NTA
classification is assigned a certain number of points based on its
relative impact on a resident's NTA costs. Those conditions and
services with a greater impact on NTA costs are assigned more points,
while those with less of an impact are assigned fewer points. The
relative impacts are estimated based the coefficients of an ordinary
least squares (OLS) regression that used the selected conditions and
extensive services to predict NTA costs per day. Points are assigned by
grouping together conditions and extensive services with similar OLS
regression estimates. More information on this methodology and analysis
can be found in section 3.7.1. of the SNF PDPM technical report
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. The effect of this methodology is
that the NTA component would adequately reflect relative differences in
the NTA costs for each condition or service as well as the additive
effect of having multiple comorbidities.
A resident's total comorbidity score, which would be the sum of the
points associated with all of a resident's comorbidities and services,
would be used to classify the resident into an NTA case-mix group. For
conditions and services where the source is indicated as MDS item
I8000, section 3.7.1. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides a crosswalk between the listed condition
and the ICD-10-CM codes which may be coded to qualify that condition to
serve as part of the resident's NTA classification. MDS item I8000 is
an open-ended item in the MDS assessment where the assessment provider
can fill in additional active diagnoses that are not explicitly on the
MDS for the resident in the form of ICD-10 codes . In the case of
Parenteral/IV Feeding, we observed that NTA costs per day increase as
the amount of intake through parenteral or tube feeding increases. For
this reason, we propose to separate this item into a high intensity
item and a low intensity item, similar to how it is defined in the RUG-
IV system. In order for a resident to qualify for the high intensity
category, the percent of calories taken in by the resident by
parenteral or tube feeding, as reported in item K0710A2 on the MDS 3.0,
must be greater than 50 percent. In order to qualify for the low
intensity category, the percent of calories taken in by the resident by
parenteral or tube feeding, as reported in item K0710A2 on the MDS 3.0,
must be greater than 25 percent but less than or equal to 50 percent,
and the resident must receive an average fluid intake by IV or tube
feeding of at least 501cc per day, as reported in item K0710B2 of the
MDS 3.0.
We also want to note that the source of the HIV/AIDS diagnosis is
listed as the SNF claim. This is because 16 states have state laws that
prevent the reporting of HIV/AIDS diagnosis information to CMS through
the current assessment system and/or prevent CMS from seeing such
diagnosis information within that system, should that information be
mistakenly reported. The states are Alabama, Alaska, California,
Colorado, Connecticut, Idaho, Illinois, Massachusetts, Nevada, New
Hampshire, New Jersey, New Mexico, South Carolina, Texas, Washington,
and West Virginia. Given this restriction, it would not be possible to
have SNFs utilize the MDS 3.0 as the vehicle to report HIV/AIDS
diagnosis information for purposes of determining a resident's NTA
classification. We note that the current SNF PPS uses a claims
reporting mechanism as the basis for the temporary AIDS add-on payment
which exists under RUG-IV. To address the issue discussed above with
respect to reporting of HIV/AIDS diagnosis information under the
proposed PDPM, we propose to utilize this existing claims reporting
mechanism to determine a resident's HIV/AIDS status for the purpose of
NTA classification. More specifically, HIV/AIDS diagnosis information
reported on the MDS would be ignored by the GROUPER software used to
classify a resident into an NTA case-mix group. Instead, providers
would be instructed to locate the HIPPS code provided to the SNF on the
validation report associated with that assessment and report it to CMS
on the associated SNF claim. Following current protocol, the provider
would then enter ICD-10-CM code B20 on the associated SNF claim as if
it were being coded to receive payment through the current AIDS add-on
payment. The PRICER software, which we use to determine the appropriate
per diem payment for a provider based on their wage index and other
factors, would make the adjustment to the resident's NTA case-mix group
based on the presence of the B20 code on the claim as well as adjust
the associated per diem payment based on the adjusted resident HIPPS
code. Again, we note that this methodology follows the same logic that
the SNF PPS currently uses to pay the temporary AIDS add-on adjustment
but merely changes the target and type of adjustment from the SNF PPS
per diem to the NTA component of the proposed PDPM. The difference is
that while under the current system, the presence of the B20 code would
lead to a 128 percent increase in the per diem rate, under the proposed
PDPM, the presence of the B20 code would mean the addition of 8 points
(as determined by the OLS regression described above) to the resident's
NTA score, the categorization of the resident into the appropriate NTA
group, and an adjustment to the nursing component, as described in
section V.D.3.d. of this proposed rule. Section 1888(e)(12) of the
Social Security Act enacted a temporary 128 percent increase in the PPS
per diem payment for SNF residents with HIV/AIDS and stipulated that
the temporary adjustment was to be applied only until the Secretary
certifies that there is an appropriate case-mix adjustment to
compensate for the increased costs associated with this population.
Based on this language, we conducted an analysis similar to that used
to determine the HIV/AIDS add-on for the nursing component to examine
the adequacy of payment for ancillary services (all non-nursing
services: PT, OT, SLP, and NTA) for residents with HIV/AIDS under the
proposed PDPM. This analysis determined that after accounting for the 8
points assigned for HIV/AIDS in the NTA component and controlling for
case-mix classification across the three therapy components and NTA
component, HIV/AIDS was
[[Page 21058]]
not associated with an increase in ancillary costs. Nursing costs were
not included in this regression because we separately investigated the
increased nursing utilization associated with HIV/AIDS, as described in
section V.D.3.d. of this proposed rule. Based on the results of this
investigation, we concluded that the four ancillary case-mix components
(PT, OT, SLP, and NTA) adequately reimburse costs associated with
residents with HIV/AIDS. Therefore, we do not believe an HIV/AIDS add-
on is warranted for the ancillary cost components. More information on
this analysis can be found in section 3.8.2. of the PDPM technical
report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Table 27 provides the proposed list of conditions and extensive
services that would be used for NTA classification, the source of that
information, and the associated number of points for that condition.
Table 27--Proposed Conditions and Extensive Services Used for NTA
Classification
------------------------------------------------------------------------
Condition/extensive service Source Points
------------------------------------------------------------------------
HIV/AIDS.......................... SNF Claim........... 8
Parenteral IV Feeding: Level High. MDS Item K0510A2, 7
K0710A2.
Special Treatments/Programs: MDS Item O0100H2.... 5
Intravenous Medication Post-admit
Code.
Special Treatments/Programs: MDS Item O0100F2.... 4
Ventilator or Respirator Post-
admit Code.
Parenteral IV feeding: Level Low.. MDS Item K0510A2, 3
K0710A2, K0710B2.
Lung Transplant Status............ MDS Item I8000...... 3
Special Treatments/Programs: MDS Item O0100I2.... 2
Transfusion Post-admit Code.
Major Organ Transplant Status, MDS Item I8000...... 2
Except Lung.
Active Diagnoses: Multiple MDS Item I5200...... 2
Sclerosis Code.
Opportunistic Infections.......... MDS Item I8000...... 2
Active Diagnoses: Asthma COPD MDS Item I6200...... 2
Chronic Lung Disease Code.
Bone/Joint/Muscle Infections/ MDS Item I8000...... 2
Necrosis--Except Aseptic Necrosis
of Bone.
Chronic Myeloid Leukemia.......... MDS Item I8000...... 2
Wound Infection Code.............. MDS Item I2500...... 2
Active Diagnoses: Diabetes MDS Item I2900...... 2
Mellitus (DM) Code.
Endocarditis...................... MDS Item I8000...... 1
Immune Disorders.................. MDS Item I8000...... 1
End-Stage Liver Disease........... MDS Item I8000...... 1
Other Foot Skin Problems: Diabetic MDS Item M1040B..... 1
Foot Ulcer Code.
Narcolepsy and Cataplexy.......... MDS Item I8000...... 1
Cystic Fibrosis................... MDS Item I8000...... 1
Special Treatments/Programs: MDS Item O0100E2.... 1
Tracheostomy Care Post-admit Code.
Active Diagnoses: Multi-Drug MDS Item I1700...... 1
Resistant Organism (MDRO) Code.
Special Treatments/Programs: MDS Item O0100M2.... 1
Isolation Post-admit Code.
Specified Hereditary Metabolic/ MDS Item I8000...... 1
Immune Disorders.
Morbid Obesity.................... MDS Item I8000...... 1
Special Treatments/Programs: MDS Item O0100B2.... 1
Radiation Post-admit Code.
Highest Stage of Unhealed Pressure MDS Item M0300X1.... 1
Ulcer--Stage 4.
Psoriatic Arthropathy and Systemic MDS Item I8000...... 1
Sclerosis.
Chronic Pancreatitis.............. MDS Item I8000...... 1
Proliferative Diabetic Retinopathy MDS Item I8000...... 1
and Vitreous Hemorrhage.
Other Foot Skin Problems: Foot MDS Item M1040A, 1
Infection Code, Other Open Lesion M1040B, M1040C.
on Foot Code, Except Diabetic
Foot Ulcer Code.
Complications of Specified MDS Item I8000...... 1
Implanted Device or Graft.
Bladder and Bowel Appliances: MDS Item H0100D..... 1
Intermittent Catheterization.
Inflammatory Bowel Disease........ MDS Item I8000...... 1
Aseptic Necrosis of Bone.......... MDS Item I8000...... 1
Special Treatments/Programs: MDS Item O0100D2.... 1
Suctioning Post-admit Code.
Cardio-Respiratory Failure and MDS Item I8000...... 1
Shock.
Myelodysplastic Syndromes and MDS Item I8000...... 1
Myelofibrosis.
Systemic Lupus Erythematosus, MDS Item I8000...... 1
Other Connective Tissue
Disorders, and Inflammatory
Spondylopathies.
Diabetic Retinopathy--Except MDS Item I8000...... 1
Proliferative Diabetic
Retinopathy and Vitreous
Hemorrhage.
Nutritional Approaches While a MDS Item K0510B2.... 1
Resident: Feeding Tube.
Severe Skin Burn or Condition..... MDS Item I8000...... 1
Intractable Epilepsy.............. MDS Item I8000...... 1
Active Diagnoses: Malnutrition MDS Item I5600...... 1
Code.
Disorders of Immunity--Except: MDS Item I8000...... 1
RxCC97: Immune Disorders.
Cirrhosis of Liver................ MDS Item I8000...... 1
Bladder and Bowel Appliances: MDS Item H0100C..... 1
Ostomy.
Respiratory Arrest................ MDS Item I8000...... 1
Pulmonary Fibrosis and Other MDS Item I8000...... 1
Chronic Lung Disorders.
------------------------------------------------------------------------
Given the NTA scoring methodology described above and following the
same methodology used for the PT, OT, and SLP components, we used the
CART algorithm to determine the most appropriate splits in resident NTA
case-mix groups. This methodology is more thoroughly explained in
sections 3.4.2. and 3.7.2. of the SNF PDPM technical
[[Page 21059]]
report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. Based on the breakpoints
generated by the CART algorithm, we determined that 6 case-mix groups
would be necessary to classify residents adequately in terms of their
NTA costs in a manner that captures sufficient variation in NTA costs
without creating unnecessarily granular separations. We made certain
administrative decisions that further refined the NTA case-mix
classification groups beyond those produced through use of the CART
algorithm but maintained the CART output predictive accuracy. The
proposed NTA case-mix classification departs from the CART comorbidity
score bins in grouping residents with a comorbidity score of 1 with
residents with scores of 2 instead of with residents with scores of 0.
This is to maintain the distinction between residents with no
comorbidities and the rest of the population. In addition, we grouped
residents with score of 5 together with residents with scores of 3 to 4
based on their similarity in average NTA costs per day. More
information on this analysis can be found in section 3.7.2. of the SNF
PDPM technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. We
provide the criteria for each of these groups along with its CMI in
Table 28.
To help ensure that payment reflects the average relative resource
use at the per diem level, CMIs would be set to reflect relative case-
mix related differences in costs across groups. This method helps
ensure that the share of payment for each case-mix group would be equal
to its share of total costs of the component. CMIs for the NTA
component are calculated based on two factors. One factor is the
average per diem costs of a case-mix group relative to the population
average. The other factor is the average variable per diem adjustment
factor of the group relative to the population average. In this
calculation, average per diem costs equal total NTA costs in the group
divided by number of utilization days in the group. Similarly, the
average variable per diem adjustment factor equals the sum of NTA
variable per diem adjustment factors for all utilization days in the
group divided by the number of utilization days in the group. We
calculate CMIs such that they equal the ratio of relative average per
diem costs for a group to the relative average variable per diem
adjustment factor for the group. In this calculation, relative average
per diem costs and the relative average variable per diem adjustment
factor are weighted by length of stay to account for the different
length of stay distributions across case-mix groups (as further
discussed in section 3.11.1. of the SNF PDPM technical report,
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). After calculating CMIs as
described above, we then apply adjustments to ensure that the
distribution of resources across payment components is aligned with the
statutory base rates as discussed in section V.D.3.b. of this proposed
rule. We also apply a parity adjustment by multiplying the CMIs by the
ratio of case-mix-related payments in RUG-IV over estimated case-mix-
related payments in PDPM, as further discussed in section V.J. of this
proposed rule. More information on the variable per diem adjustment
factor is discussed in section V.D.4. of this proposed rule. The full
methodology used to develop CMIs is presented in section 3.11. of the
SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 28--Proposed NTA Case-Mix Classification Groups
------------------------------------------------------------------------
NTA case- NTA case-
NTA score range mix group mix index
------------------------------------------------------------------------
12+........................................... NA 3.25
9-11.......................................... NB 2.53
6-8........................................... NC 1.85
3-5........................................... ND 1.34
1-2........................................... NE 0.96
0............................................. NF 0.72
------------------------------------------------------------------------
As with the previously discussed components, all residents would be
classified into one and only one of these 6 NTA case-mix groups under
the proposed PDPM. The proposed PDPM would create a separate payment
component for NTA services, as opposed to combining NTA and nursing
into one component as in the RUG-IV system. This separation would allow
payment for NTA services to be based on resident characteristics that
predict NTA resource utilization rather than nursing staff time. Thus,
we believe that the proposed NTA case-mix groups would provide a better
measure of resource utilization and lead to more accurate payments
under the SNF PPS.
We invite comments on the approach proposed above to classify
residents for NTA payment under the proposed PDPM.
f. Payment Classifications Under Proposed PDPM
RUG-IV classifies each resident into a single RUG, with a single
payment for all services. By contrast, the proposed PDPM would classify
each resident into five components (PT, OT, SLP, NTA, and nursing) and
provide a single payment based on the sum of these individual
classifications. The payment for each component would be calculated by
multiplying the CMI for the resident's group first by the component
federal base payment rate, then by the specific day in the variable per
diem adjustment schedule (as discussed in section V.D.4 of this
proposed rule). Additionally, for residents with HIV/AIDS indicated on
their claim, the nursing portion of payment would be multiplied by 1.18
(as discussed in section V.D.3.d. of this proposed rule). These
payments would then be added together along with the non-case-mix
component payment rate to create a resident's total SNF PPS per diem
rate under the proposed PDPM. This section describes how two
hypothetical residents would be classified into payment groups under
the current RUG-IV model and proposed PDPM. To begin, consider two
residents, Resident A and Resident B, with the resident characteristics
identified in Table 29.
Table 29--Hypothetical Resident Characteristics
------------------------------------------------------------------------
Resident characteristics Resident A Resident B
------------------------------------------------------------------------
Rehabilitation Received?........ Yes............... Yes.
Therapy Minutes................. 730............... 730.
Extensive Services.............. No................ No.
ADL Score....................... 9................. 9.
Clinical Category............... Acute Neurologic.. Major Joint
Replacement.
PT and OT Function Score........ 10................ 10.
Nursing Function Score.......... 7................. 7.
[[Page 21060]]
Cognitive Impairment............ Moderate.......... Intact.
Swallowing Disorder?............ No................ No
Mechanically Altered Diet?...... Yes............... No.
SLP Comorbidity?................ No................ No.
Comorbidity Score............... 7 (IV Medication 1 (Chronic
and DM). Pancreatitis).
Other Conditions................ Dialysis.......... Septicemia.
Depression?..................... No................ Yes.
------------------------------------------------------------------------
Currently under the SNF PPS, Resident A and Resident B would be
classified into the same RUG-IV group. They both received
rehabilitation, did not receive extensive services, received 730
minutes of therapy, and have an ADL score of 9. This places the two
residents into the ``RUB'' RUG-IV group and SNFs would be paid at the
same rate, despite the many differences between these two residents in
terms of their characteristics, expected care needs, and predicted
costs of care.
Under the proposed PDPM, however, these two residents would be
classified very differently. With regard to the PT and OT components,
Resident A would fall into group TO, as a result of his categorization
in the Acute Neurologic group and a function score within the 10 to 23
range. Resident B, however, would fall into group TC for the PT and OT
components, as a result of his categorization in the Major Joint
Replacement group and a function score within the 10 to 23 range. For
the SLP component, Resident A would be classified into group SH, based
on his categorization in the Acute Neurologic group, the presence of
moderate cognitive impairment, and the presence of Mechanically-Altered
Diet, while Resident B would be classified into group SA, based on his
categorization in the Non-Neurologic group, the absence of cognitive
impairment or any SLP-related comorbidity, and the lack of any
swallowing disorder or mechanically-altered diet. For the Nursing
component, following the existing nursing case-mix methodology,
Resident A would fall into group LBC1, based on his use of dialysis
services and a nursing function score of 7, while Resident B would fall
into group HBC2, due to the diagnosis of septicemia, presence of
depression, and a nursing function score of 7. Finally, with regard to
NTA classification, Resident A would be classified in group NC, with an
NTA score of 7, while Resident B would be classified in group NE, with
an NTA score of 1. This demonstrates that, under the proposed PDPM,
more aspects of a resident's unique characteristics and needs factor
into determining the resident's payment classification, which makes for
a more resident-centered case-mix model while also eliminating, or
greatly reducing, the number of service-based factors which are used to
determine the resident's payment classification. Because this system is
based on specific resident characteristics predictive of resource
utilization for each component, we expect that payments will be better
aligned with resident need.
4. Proposed Variable Per Diem Adjustment Factors and Payment Schedule
Section 1888(e)(4)(G)(i) of the Act provides that payments must be
adjusted for case mix, based on a resident classification system which
accounts for the relative resource utilization of different types of
residents. Additionally, section 1888(e)(1)(B) of the Act specifies
that payments to SNFs through the SNF PPS must be made on a per-diem
basis. Currently under the SNF PPS, each RUG is paid at a constant per
diem rate, regardless of how many days a resident is classified in that
particular RUG. However, during the course of the SNF PMR project,
analyses on cost over the stay for each of the case-mix adjusted
components revealed different trends in resource utilization over the
course of the SNF stay. These analyses utilized costs derived from
claim charges as a measure of resource utilization. Costs were derived
by multiplying charges from claims by the CCRs on facility-level costs
reports. As described in section V.B.3.b. of this proposed rule, costs
better reflect differences in the relative resource use of residents as
opposed to charges, which partly reflect decisions made by providers
about how much to charge payers for certain services. In examining
costs over a stay, we found that for certain categories of SNF
services, notably PT, OT and NTA services, costs declined over the
course of a stay. Based on the claim submission schedule and variation
in the point during the month when a stay began, we were able to
estimate resource use for a specific day in a stay. Facilities are
required to submit monthly claims. Each claim covers the period from
the first day during the month a resident is in the facility to the end
of the month. If a resident was admitted on the first day of the month,
remains in the facility, and continues to have Part A SNF coverage
until the end of the month, the claim for that month will include all
days in the month. However, if a resident is admitted after the first
day of the month, the first claim associated with the resident's stay
will be shorter than a month. To estimate resource utilization for each
day in the stay, we used the marginal estimated cost from claims of
varying length based on random variation in the day of a month when a
stay began. Using this methodology, we observed a decline in the
marginal estimated cost of each additional day of SNF care over the
course of the stay. To supplement this analysis, we also looked at
changes in the number of therapy minutes reported in different
assessments throughout the stay. Because therapy minutes are recorded
on the MDS, the presence of multiple assessments throughout the stay
provided information on changes in resource use. For example, it was
clear whether the number of therapy minutes a resident received changed
from the 5-day assessment to the 14-day assessment. The results from
this analysis were consistent with the cost from claims analysis and
showed that, on average, the number of therapy minutes is lower for
assessments conducted later in the stay. This finding is consistent
across different lengths of stay. More information on these analyses
can be found in section 3.9. of the SNF PDPM technical report and
section 3.9. of the SNF PMR technical report that accompanied the
ANPRM, both available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Analyses of the SLP component revealed that the per diem costs
remain relatively constant over time, while the PT, OT, and NTA
component cost analyses indicate that the per diem cost for these three
components decline over
[[Page 21061]]
the course of the stay. In the case of the PT and OT components, costs
start higher at the beginning of the stay and decline slowly over the
course of the stay. The NTA component cost analyses indicate
significantly increased NTA costs at the beginning of a stay that then
drop to a much lower level that holds relatively constant over the
remainder of the SNF stay. This is consistent with how most SNF drug
costs are typically incurred at the outset of a SNF stay. These results
indicate that resource utilization for PT, OT, and NTA services changes
over the course of the stay. More information on these analyses can be
found in section 3.9.1. of the SNF PMR technical report that
accompanied the ANPRM available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. We were
unable to assess potential changes in the level of nursing costs over a
resident's stay, in particular because nursing charges are not
separately identifiable in SNF claims, and nursing minutes are not
reported on the MDS assessments. However, stakeholders (industry
representatives and clinicians) at multiple TEPs indicated that nursing
costs tend to remain relatively constant over the course of a
resident's stay.
Constant per diem rates, by definition, do not track variations in
resource use throughout a SNF stay. We believe this may lead to too few
resources being allocated for SNF providers at the beginning of a stay.
Given the trends in resource utilization over the course of a SNF stay
discussed above, and that section 1888(e)(4)(G)(i) of the Act requires
the case-mix classification system to account for relative resource
use, we are proposing adjustments to the PT, OT, and NTA components in
the proposed PDPM to account for changes in resource utilization over a
stay. These adjustments are referred to as the variable per diem
adjustments. We are not proposing such adjustments to the SLP and
nursing components based on findings and stakeholder feedback, as
discussed above, that resource use tends to remain relatively constant
over the course of a SNF stay.
As noted above and discussed more thoroughly in section 3.9. of the
SNF PMR technical report that accompanied the ANPRM (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), PT and OT costs decline at a slower rate than
the decline in NTA costs. Therefore, in addition to proposing a
variable per diem adjustment, we further are proposing separate
adjustment schedules and indexes for the PT and OT components and the
NTA component to more closely reflect the rate of decline in resource
utilization for each component. Table 30 provides the adjustment
factors and schedule we are proposing for the PT and OT components,
while Table 31 provides the adjustment factors and schedule we are
proposing for the NTA component.
In Table 30, the adjustment factor for the PT and OT components is
1.00 for days 1 to 20. This is because the analyses described above
indicated that PT and OT costs remain relatively high for the first 20
days and then decline. The estimated daily rates of decline for PT and
OT costs relative to the initial 20 days are both 0.3 percent. A
convenient and appropriate way to reflect this is to bin days in the PT
and OT variable per diem adjustment schedules such that payment
declines at less frequent intervals, while still reflecting a 0.3
percent daily rate of decline in PT and OT costs. Therefore, we propose
to set the adjustment factors such that payment would decline 2 percent
every 7 days after day 20 (0.3 * 7 = 2.1). The 0.3 percent rate of
decline is derived from a regression model that estimates the level of
resource use for each day in the stay relative to the beginning of the
stay. The regression methodology and results are presented in section
3.9. of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
As described previously in this section, NTA resource utilization
exhibits a somewhat different pattern. The analyses described above
indicate that NTA costs are very high at the beginning of the stay,
drop rapidly after the first three days, and remain relatively stable
from the fourth day of the stay. Starting on day 4 of a stay, the per
diem costs drop to roughly one-third of the per diem costs in the
initial 3 days. This suggests that many NTA services are provided in
the first few days of a SNF stay. Therefore, we propose setting the NTA
adjustment factor to 3.00 for days 1 to 3 to reflect the extremely high
initial costs, then setting it at 1.00 (two-thirds lower than the
initial level) for subsequent days. The value of the adjustment factor
was set at 3.00 for the first 3 days and 1.00 after (rather than, for
example, 1.00 and 0.33, respectively) for simplicity. The results are
presented in section 3.9. of the SNF PDPM technical report, available
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Case-mix adjusted federal per diem payment for a given component
and a given day would be equal to the base rate for the relevant
component (either urban or rural), multiplied by the CMI for that
resident, multiplied by the variable per diem adjustment factor for
that specific day, as applicable. Additionally, as described in further
detail in section V.D.3.d. of this proposed rule, an additional 18
percent would be added to the nursing per-diem payment to account for
the additional nursing costs associated with residents who have HIV/
AIDS. These payments would then be added together along with the non-
case-mix component payment rate to create a resident's total SNF PPS
per diem rate under the proposed PDPM.
We invite comments on the proposed variable per diem adjustment
factors and payment schedules discussed in this section.
Table 30--Proposed Variable Per-Diem Adjustment Factors and Schedule--PT
and OT
------------------------------------------------------------------------
Medicare payment days Adjustment factor
------------------------------------------------------------------------
1-20 1.00
21-27 0.98
28-34 0.96
35-41 0.94
42-48 0.92
49-55 0.90
56-62 0.88
63-69 0.86
70-76 0.84
77-83 0.82
84-90 0.80
91-97 0.78
98-100 0.76
------------------------------------------------------------------------
Table 31--Proposed Variable Per-Diem Adjustment Factors and Schedule--
NTA
------------------------------------------------------------------------
Medicare payment days Adjustment factor
------------------------------------------------------------------------
1-3 3.0
4-100 1.0
------------------------------------------------------------------------
E. Use of the Resident Assessment Instrument--Minimum Data Set, Version
3
1. Proposed Revisions to Minimum Data Set (MDS) Completion Schedule
Consistent with section 1888(e)(6)(B) of the Act, to classify
residents under the SNF PPS, we use the MDS 3.0 Resident Assessment
Instrument. Within the SNF PPS, there are two categories of
assessments, scheduled and unscheduled. In terms of scheduled
assessments, SNFs are currently
[[Page 21062]]
required to complete assessments on or around days 5, 14, 30, 60, and
90 of a resident's Part A SNF stay, including certain grace days.
Payments based on these assessments depend upon standard Medicare
payment windows associated with each scheduled assessment. More
specifically, each of the Medicare-required scheduled assessments has
defined days within which the Assessment Reference Date (ARD) must be
set. The ARD is the last day of the observation (or ``look-back'')
period that the assessment covers for the resident. The facility is
required to set the ARD on the MDS form itself or in the facility
software within the appropriate timeframe of the assessment type being
completed. The clinical data collected from the look-back period is
used to determine the payment associated with each assessment. For
example, the ARD for the 5-day PPS Assessment is any day between days 1
to 8 (including Grace Days). The clinical data collected during the
look-back period for that assessment is used to determine the SNF
payment for days 1 to 14. Unscheduled assessments, such as the Start of
Therapy (SOT) Other Medicare Required Assessment (OMRA), the End of
Therapy OMRA (EOT OMRA), the Change of Therapy (COT) OMRA, and the
Significant Change in Status Assessment (SCSA or Significant Change),
may be required during the resident's Part A SNF stay when triggered by
certain defined events.
For example, if a resident is being discharged from therapy
services, but remaining within the facility to continue the Part A
stay, then the facility may be required to complete an EOT OMRA. Each
of the unscheduled assessments affects payment in different and defined
manners. A description of the SNF PPS scheduled and unscheduled
assessments, including the criteria for using each assessment, the
assessment schedule, payment days covered by each assessment, and other
related policies, are set forth in the MDS 3.0 RAI manual on the CMS
website (available at https://downloads.cms.gov/files/MDS-30-RAI-Manual-v115-October-2017.pdf).
Table 32 outlines when each SNF PPS assessment is required to be
completed and its effect on SNF PPS payment.
Table 32--Current PPS Assessment Schedule
----------------------------------------------------------------------------------------------------------------
Assessment
Medicare MDS assessment schedule type Assessment reference date reference date Applicable standard
grace days Medicare payment days
----------------------------------------------------------------------------------------------------------------
Scheduled PPS assessments
----------------------------------------------------------------------------------------------------------------
5-day................................... Days 1-5.................. 6-8 1 through 14.
14-day.................................. Days 13-14................ 15-18 15 through 30.
30-day.................................. Days 27-29................ 30-33 31 through 60.
60-day.................................. Days 57-59................ 60-63 61 through 90.
90-day.................................. Days 87-89................ 90-93 91 through 100.
----------------------------------------------------------------------------------------------------------------
Unscheduled PPS assessments
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
Start of Therapy OMRA....... 5-7 days after the Date of the first
start of therapy. day of therapy
through the end of
the standard
payment period.
End of Therapy OMRA......... 1-3 days after all First non-therapy
therapy has ended. day through the end
of the standard
payment period.
Change of Therapy OMRA...... Day 7 (last day) of The first day of the
the COT observation COT observation
period. period until end of
standard payment
period, or until
interrupted by the
next COT-OMRA
assessment or
scheduled or
unscheduled PPS
Assessment.
Significant Change in Status No later than 14 ARD of Assessment
Assessment. days after through the end of
significant change the standard
identified. payment period.
An issue which has been raised in the past with regard to the
existing SNF PPS assessment schedule is that the sheer number of
assessments, as well as the complex interplay of the assessment rules,
significantly increases the administrative burden associated with the
SNF PPS. Case-mix classification under the proposed SNF PDPM that we
are proposing relies to a much lesser extent on characteristics that
may change very frequently over the course of a resident's stay (for
example, therapy minutes may change due to resident refusal or
unexpected changes in resident status), but instead relies on more
stable predictors of resource utilization by tying case-mix
classification, to a much greater extent, to resident characteristics
such as diagnosis information. In view of the greater reliance of the
proposed SNF PDPM (as compared to the RUG-IV model) on resident
characteristics that are relatively stable over a stay and our general
focus on reducing administrative burden for providers across the
Medicare program, we are making an effort to reduce the administrative
burden on providers by concurrently proposing to revise the assessments
that would be required under the proposed SNF PDPM. Specifically, we
are proposing to use the 5-day SNF PPS scheduled assessment to classify
a resident under the proposed SNF PDPM for the entirety of his or her
Part A SNF stay effective beginning FY 2020 in conjunction with the
implementation of the proposed PDPM, except as described below. If we
were to finalize this proposal, we would propose revisions to the
regulations at Sec. 413.343(b) during the FY 2020 rulemaking cycle so
that such regulations would no longer reflect the RUG-IV SNF PPS
assessment schedule as of the proposed conversion to the PDPM on
October 1, 2019.
We also understand that Medicare beneficiaries are each unique and
can experience clinical changes which may require a SNF to reassess the
resident to capture changes in the resident's condition. Therefore, to
allow SNFs to capture these types of changes, effective October 1, 2019
in conjunction with the proposed implementation of the PDPM, we propose
to require providers to reclassify residents as appropriate from
[[Page 21063]]
the initial 5-day classification using a new assessment called an
Interim Payment Assessment (IPA), which would be comprised of the 5-day
SNF PPS MDS Item Set (Item Set NP). Providers would be required to
complete an IPA in cases where the following two criteria are met:
(1) There is a change in the resident's classification in at least
one of the first tier classification criteria for any of the components
under the proposed PDPM (which are those clinical or nursing payment
criteria identified in the first column in Tables 21, 23, 26, and 27),
such that the resident would be classified into a classification group
for that component that differs from that provided by the 5-day
scheduled PPS assessment, and the change in classification group
results in a change in payment either in one particular payment
component or in the overall payment for the resident; and
(2) The change(s) are such that the resident would not be expected
to return to his or her original clinical status within a 14-day
period.
In addition, we propose that the Assessment Reference Date (ARD)
for the IPA would be no later than 14 days after a change in a
resident's first tier classification criteria is identified. The IPA is
meant to capture substantial changes to a resident's clinical condition
and not every day, frequent changes. We believe 14 days gives the
facility an adequate amount of time to determine whether the changes
identified are in fact routine or substantial. To clarify, the change
in classification group described above refers to not only a change in
one of the first tier classification criteria in any of the proposed
payment components, but also to one that would be sufficient to change
payment in either one component or in the overall payment for the
resident. For example, given the collapsed categories under the PT and
OT components, this would mean that a change from the medical
management group to the cancer group would not necessitate an IPA, as
they are both collapsed under the medical management group for purposes
of the PT and OT components. However, a change from the major joint
replacement group to the medical management group would necessitate an
IPA, as this would change the resident's clinical category group for
purposes of categorization under the PT and OT components and would
result in a change in payment.
We believe that the proposed requirement to complete an IPA
balances the need to ensure accurate payment and monitor for changes in
the resident's condition with the importance of ensuring a more
streamlined assessment approach under the proposed PDPM.
In cases where the IPA is required and a facility fails to complete
one, we propose that the facility would follow the guidelines for late
and missed unscheduled MDS assessments which are explained in Chapters
2.13 and 6.8 of the MDS RAI Manual (https://downloads.cms.gov/files/MDS-30-RAI-Manual-v115-October-2017.pdf). Specifically, if the SNF
fails to set the ARD within the defined ARD window for an IPA, and the
resident is still in a Part A stay, the SNF would be required to
complete a late assessment. The ARD can be no earlier than the day the
error was identified. If the ARD on the late assessment is set for a
date that is prior to the end of the time period during which the
assessment would have controlled the payment, had the ARD been set
timely, the SNF would bill the default rate for the number of days that
the assessment is out of compliance. This is equal to the number of
days between the day following the last day of the available ARD window
and the late ARD (including the late ARD). For example, a SNF Part A
resident who is in the major joint replacement payment category for the
PT and OT components develops a skin ulcer that is of such a quality
that, in terms of developing a care and treatment plan for this
resident, the skin ulcer takes precedence as the resident's primary
diagnosis. As a result, the resident's primary diagnosis, as coded in
item I8000, is for this skin ulcer, which would cause him to be
classified into the medical management category for these components.
The facility notes this clinical change on November 10, 2018. However,
they do not complete the IPA until November 26, 2018 which is 16 days
after the change in criteria was identified and two days after the ARD
window. The facility would bill the default rate for the two days that
it was out of compliance. If the SNF fails to set the ARD for an IPA
within the defined ARD window for that assessment, and the resident has
been discharged from Part A, the assessment is missed and cannot be
completed. All days that would have been paid by the missed assessment
(had it been completed timely) are considered provider-liable. Taking
the example above, if the facility recognized the IPA needed to be
completed after the resident has left the building, the facility would
be liable for all days from November 10, 2018 until the date of the
resident's Part A Discharge. We invite comments on these proposals.
In addition to requiring the completion of the IPA as described
above, we have also considered the implications of a SNF completing an
IPA on the variable per diem adjustment schedule described in section
V.D.4. this proposed rule. More specifically, we have considered
whether an SNF completing an IPA should cause a reset in the variable
per diem adjustment schedule for the associated resident. In examining
costs over a stay, we found that for certain categories of SNF
services, notably PT, OT and NTA services, costs declined over the
course of a stay. Our analyses showed that, on average, the number of
therapy minutes is lower for assessments conducted later in the stay.
Additionally, we are concerned that by providing for the variable per
diem adjustment schedule to be reset after an IPA is completed,
providers may be incentivized to conduct multiple IPAs during the
course of a resident's stay to reset the variable per diem adjustment
schedule each time the adjustment is reduced. Therefore, in cases where
an IPA is completed, we are proposing that this assessment would
reclassify the resident for payment purposes as outlined in Table 33,
but the resident's variable per diem adjustment schedule would continue
rather than being reset on the basis of completing the IPA.
Finally, we believe that, regardless of the payment system or case-
mix classification model used, residents should continue to receive
therapy that is appropriate to their care needs, and this includes both
the intensity and modes of therapy utilized. However, we recognize that
because the initial 5-day PPS assessment would classify a resident for
the entirety of his or her Part A SNF stay (except in cases where a IPA
is completed) as outlined above, there is no mechanism by which SNFs
are required to report the amount of therapy provided to a resident
over the course of the stay or by which we may monitor that they are in
compliance with the proposed 25 percent group and concurrent therapy
limit as described in section V.F. of this proposed rule. Therefore,
for these reasons, under the proposed PDPM, we propose to require that
SNFs continue to complete the PPS Discharge Assessment, as appropriate
(including the proposed therapy items discussed in section V.E.3. of
this proposed rule), for each SNF Part A resident at the time of Part A
or facility discharge (see section V.E. of this proposed rule for a
discussion of our proposed revisions to this assessment to include
therapy items). Under the current instructions in the MDS 3.0 RAI
[[Page 21064]]
manual, the Part A PPS Discharge assessment is completed when a
resident's Medicare Part A stay ends, but the resident remains in the
facility (MDS 3.0 RAI Manual Chapter 2.7). However, we are proposing to
require this assessment to be completed at the time of facility
discharge for Part A residents as well. Thus, we would continue to
collect data on therapy provision as proposed in section V.F. of this
proposed rule, to assure that residents are receiving therapy that is
reasonable, necessary, and specifically tailored to meet their unique
needs. We believe that the combination of the 5-day Scheduled PPS
Assessment, the IPA Assessment, and PPS Discharge Assessment would
provide flexibility for providers to capture and report accurately the
resident's condition, as well as accurately reflect resource
utilization associated with that resident, while minimizing the
administrative burden on providers under the proposed SNF PDPM.
In addition to the proposed changes above, we also examined the
current use of grace days in the MDS assessment schedule. Grace days
have been a longstanding part of the SNF PPS. They were created in
order to allow clinical flexibility when setting ARD dates of scheduled
PPS assessments. In the FY 2012 final rule (76 FR 48519), we discussed
that in practice, there is no difference between regular ARD windows
and grace days and we encouraged the use of grace days if their use
would allow a facility more clinical flexibility or would more
accurately capture therapy and other treatments:
Thus, we do not intend to penalize any facility that chooses to
use the grace days for assessment scheduling or to audit facilities
based solely on their regular use of grace days. We may explore the
option of incorporating the grace days into the regular ARD window
in the future; nevertheless, we will retain them as part of the
assessment schedule at the present time consistent with the current
policy and the new assessment schedule proposed in the proposed
rule.
We propose, effective beginning October 1, 2019, in conjunction
with the proposed implementation of the PDPM, to incorporate the grace
days into the existing assessment window. This proposal would eliminate
grace days from the SNF PPS assessment calendar and provide for only a
standard assessment window. As discussed, there is no practical
difference between the regular assessment window and grace days and
there is no penalty for using grace days. As such, we believe it would
be appropriate to eliminate the use of grace days in PPS assessments.
Table 33 sets forth the proposed SNF PPS assessment schedule,
incorporating our proposed revisions above, which would be effective
October 1, 2019 concurrently with the proposed PDPM.
Table 33--Proposed PPS Assessment Schedule Under PDPM
------------------------------------------------------------------------
Applicable
Medicare MDS assessment schedule Assessment standard Medicare
type reference date payment days
------------------------------------------------------------------------
5-day Scheduled PPS Assessment.. Days 1-8.......... All covered Part A
days until Part A
discharge (unless
an IPA is
completed).
Interim Payment Assessment (IPA) No later than 14 ARD of the
days after change assessment
in resident's through Part A
first tier discharge (unless
classification another IPA
criteria is assessment is
identified. completed).
PPS Discharge Assessment........ PPS Discharge: N/A.
Equal to the End
Date of the Most
Recent Medicare
Stay (A2400C) or
End Date.
------------------------------------------------------------------------
We would note that, as in previous years, we intend to continue to
work with providers and software developers to assist them in
understanding changes we are proposing to the MDS. Further, we would
note that none of the proposals related to changes to the MDS
assessment schedule should be understood to change any assessment
requirements which derive from the Omnibus Budget Reconciliation Act of
1987 (OBRA 87), which establishes assessment requirements for all
nursing home residents, regardless of payer. We invite comments on our
proposals to revise the SNF PPS assessment schedule and related
policies as discussed above. We also solicit comment on the extent to
which implementing these proposals would reduce provider burden.
2. Proposed Item Additions to the Swing Bed PPS Assessment
Section 1883 of the Act permits certain small, rural hospitals to
enter into a Medicare swing-bed agreement, under which the hospital can
use its beds to provide either acute or SNF care, as needed. For
critical access hospitals (CAHs), Part A pays on a reasonable cost
basis for SNF services furnished under a swing-bed agreement. However,
in accordance with section 1888(e)(7) of the Act, these services
furnished by non-CAH rural hospitals are paid under the SNF PPS,
effective with cost reporting periods beginning on or after July 1,
2002. A more detailed discussion of this provision appears in section
III.B.4. of this proposed rule.
For purposes of the proposed PDPM, we propose to add three items to
the Swing Bed PPS Assessment. Until now, these additional items have
not been part of the Swing Bed PPS Assessment form because they have
not been used for payment. However, the presence of each of these items
would be used to classify swing bed residents under the proposed SNF
PDPM as explained in section V.D. of this proposed rule. Thus, we
believe it is necessary and appropriate to include these items in the
Swing Bed PPS Assessment beginning October 1, 2019, in conjunction with
the proposed implementation of the PDPM. The items we propose to add to
the Swing Bed PPS assessment are provided in Table 34. We invite
comments on this proposal.
Table 34--Proposed Items To Add to Swing Bed PPS Assessment
------------------------------------------------------------------------
Related PDPM
MDS item No. Item name payment
component
------------------------------------------------------------------------
K0100 Swallowing Disorder......... SLP
I4300 Active Diagnoses: Aphasia... SLP
O0100D2 Special Treatments, NTA
Procedures and Programs:
Suctioning, While a
Resident.
------------------------------------------------------------------------
[[Page 21065]]
3. Proposed Items to be Added to the PPS Discharge Assessment
As noted above, under the MDS 3.0, the Part A PPS Discharge
assessment is completed when a resident's Medicare Part A stay ends,
but the resident remains in the facility (MDS 3.0 RAI Manual Chapter
2.7). The PPS Discharge Assessment uses the Item Set NPE and does not
currently contain section O of the MDS 3.0. The therapy items in
section O of the MDS allow CMS to collect data from providers on the
volume, type (physical therapy, occupational therapy and speech-
language pathology), and mode (individual, concurrent, or group
therapy) of the therapy provided to SNF residents. As noted in comments
received on the ANPRM in relation to therapy provision, this data would
be particularly important to monitor. Specifically, a significant
number of commenters expressed concerns that the amount of therapy
provided to SNF residents, were RCS-I to have been implemented, would
drop considerably as compared to the amount currently delivered under
RUG-IV. Commenters noted that this is because the incentive to provide
a high volume of therapy services to SNF residents to achieve the
highest resident therapy group classification, would no longer exist
under RCS-I, leading providers to potentially significantly reduce the
amount of therapy provided to SNF residents.
Given that the RCS-I model and PDPM both present the potential for
providers to significantly reduce the amount of therapy provided to SNF
residents, as compared to RUG-IV, we believe that the same potential
result may occur under the proposed PDPM as commenters identified with
RCS-I. To better track therapy utilization under PDPM, and to better
ensure that residents continue to receive an appropriate amount of
therapy commensurate with their needs, given the reduction in the
frequency of resident assessments required under the proposed PDPM, we
propose to add therapy collection items to PPS Discharge assessment and
to require providers to complete these items beginning October 1, 2019,
in conjunction with the proposed implementation of the PDPM.
Specifically, we propose to add the items listed in Table 35 to the
PPS Discharge Assessment.
Table 35--Proposed Items To Add to SNF PPS Discharge Assessment
------------------------------------------------------------------------
MDS item No. Item name
------------------------------------------------------------------------
O0400A5 Special Treatments, Procedures and
Programs: Speech-Language Pathology and
Audiology Services: Therapy Start Date.
O0400A6 Special Treatments, Procedures and
Programs: Speech-Language Pathology and
Audiology Services: Therapy End Date.
O0400A7 Special Treatments, Procedures and
Programs: Speech-Language Pathology and
Audiology Services: Total Individual
Minutes.
O0400A8 Special Treatments, Procedures and
Programs: Speech-Language Pathology and
Audiology Services: Total Concurrent
Minutes.
O0400A9 Special Treatments, Procedures and
Programs: Speech-Language Pathology and
Audiology Services: Total Group Minutes.
O0400A10 Special Treatments, Procedures and
Programs: Speech-Language Pathology and
Audiology Services: Total Days.
O0400B5 Special Treatments, Procedures and
Programs: Occupational Therapy: Therapy
Start Date.
O0400B6 Special Treatments, Procedures and
Programs: Occupational Therapy: Therapy
End Date.
O0400B7 Special Treatments, Procedures and
Programs: Occupational Therapy: Total
Individual Minutes.
O0400B8 Special Treatments, Procedures and
Programs: Occupational Therapy: Total
Concurrent Minutes.
O0400B9 Special Treatments, Procedures and
Programs: Occupational Therapy: Total
Group Minutes.
O0400B10 Special Treatments, Procedures and
Programs: Occupational Therapy: Total
Days.
O0400C5 Special Treatments, Procedures and
Programs: Physical Therapy: Therapy Start
Date.
O0400C6 Special Treatments, Procedures and
Programs: Physical Therapy: Therapy End
Date.
O0400C7 Special Treatments, Procedures and
Programs: Physical Therapy: Total
Individual Minutes.
O0400C8 Special Treatments, Procedures and
Programs: Physical Therapy: Total
Concurrent Minutes.
O0400C9 Special Treatments, Procedures and
Programs: Physical Therapy: Total Group
Minutes.
O0400C10 Special Treatments, Procedures and
Programs: Physical Therapy: Total Days.
------------------------------------------------------------------------
For the proposed items which refer to the total number of minutes
for each therapy discipline and each therapy mode, this would allow CMS
to both conduct reviews of changes in the volume and intensity of
therapy services provided to SNF residents under the proposed PDPM,
compared to that provided under RUG-IV, as well as to assess compliance
with the proposed group and concurrent therapy limit discussed in
section V.F of this proposed rule. The proposed ``total days'' items
for each discipline and mode of therapy would further support our
monitoring efforts for therapy, as requested by commenters on the
ANPRM, by allowing us to monitor not just the total minutes of therapy
provided to SNF residents under the proposed PDPM, but also assess the
daily intensity of therapy provided to SNF residents under the proposed
PDPM, as compared to that provided under RUG-IV. Ultimately, these
proposed items would allow facilities to easily report therapy minutes
provided to SNF residents and allow us to monitor the volume and
intensity of therapy services provided to SNF residents under the
proposed PDPM, as suggested by commenters on the ANPRM. If we discover
that the amount of therapy provided to SNF residents does change
significantly under the proposed PDPM, if implemented, then we will
assess the need for additional policies to ensure that SNF residents
continue to receive sufficient and appropriate therapy services
consistent with their unique needs and goals. We invite comments on our
proposals above to add items to the SNF PPS Assessment.
F. Proposed Revisions to Therapy Provision Policies Under the SNF PPS
Currently, almost 90 percent of residents in a Medicare Part A SNF
stay receive therapy services. Under the current RUG-IV model, therapy
services are case mix-adjusted primarily based on the therapy minutes
reported on the MDS. When the original SNF PPS model was developed,
most therapy services were furnished on an individual basis, and the
minutes reported on the MDS served as a proxy for the staff resource
time needed to provide the therapy care. Over the years, we have
monitored provider behavior and have made policy changes as it became
apparent that, absent safeguards like quality measurement to ensure
that the amount of therapy provided did not exceed the resident's
actual needs, there were certain inherent incentives for providers to
furnish as much therapy as possible.
[[Page 21066]]
Thus, for example, in the SNF PPS FY 2010 final rule (74 FR 40315
through 40319), we decided to allocate concurrent therapy minutes for
purposes of establishing the RUG-IV group to which the patient belongs,
and to limit concurrent therapy to two patients at a time who were
performing different activities.
Following the decision to allocate concurrent therapy, using STRIVE
data as a baseline, we found two significant provider behavior changes
with regard to therapy provision under the RUG-IV payment system.
First, there was a significant decrease in the amount of concurrent
therapy that was provided in SNFs. Simultaneously, we observed a
significant increase in the provision of group therapy, which was not
subject to allocation at that time. We concluded that the manner in
which group therapy minutes were counted in determining a patient's
RUG-IV group created a payment incentive to provide group therapy
rather than individual therapy or concurrent therapy, even in cases
where individual therapy (or concurrent therapy) was more appropriate
for the resident. Thus, we made two policy changes regarding group
therapy in the FY 2012 SNF PPS final rule (76 FR 48511 through 48517).
We defined group therapy as exactly four residents who are performing
the same or similar therapy activities. Additionally, we allocated
group therapy among the four patients participating in group therapy--
meaning that the total amount of time that a therapist spent with a
group would be divided by 4 (the number of patients that comprise a
group) to establish the RUG-IV group to which the patient belongs.
Since we began allocating group therapy and concurrent therapy,
these modes of therapy (group and concurrent) represent less than one
percent of total therapy provided to SNF residents. Table 36, which
appeared in the FY 2014 SNF PPS Proposed Rule (78 FR 26464) and sets
forth our findings with respect to the effect of policies finalized in
the FY 2012 SNF PPS Final Rule, demonstrates the change in therapy
provision between the STRIVE study and the implementation of the
therapy policy changes in FY 2012. We would note that the distribution
of therapy modes presented in Table 36 reflecting therapy provision in
FY 2012 is also an accurate reflection of current therapy provision
based on resident data collected in the QIES Database and continued
monitoring of therapy utilization.
Table 36--Mode of Therapy Provision
----------------------------------------------------------------------------------------------------------------
Strive FY 2011 FY 2012
----------------------------------------------------------------------------------------------------------------
Individual...................................................... 74% 91.8% 99.5%
Concurrent...................................................... 25 0.8 0.4
Group........................................................... <1 7.4 0.1
----------------------------------------------------------------------------------------------------------------
Based on our prior experience with the provision of concurrent and
group therapy in SNFs, we again are concerned that if we were to
implement the proposed SNF PDPM, providers may base decisions regarding
the particular mode of therapy to use for a given resident on financial
considerations rather than on the clinical needs of SNF residents.
Because the proposed SNF PDPM would not use the minutes of therapy
provided to a resident to classify the resident for payment purposes,
we are concerned that SNFs may once again become incentivized to
emphasize group and concurrent therapy, over the kind of individualized
therapy which is tailored to address each beneficiary's specific care
needs which we believe is generally the most appropriate mode of
therapy for SNF residents. As we stated in the FY 2012 proposed rule
(76 CFR 26387):
While . . . group therapy can play an important role in SNF
patient care, we note that group therapy is not appropriate for
either all patients or for all conditions, and is primarily
effective as a supplement to individual therapy, which we maintain
should be considered the primary therapy mode and standard of care
in therapy services provided to SNF residents. As evidenced by the
application of a cap on the amount of group therapy services that
may be provided to SNF residents, we do not believe that a SNF
providing the preponderance of therapy in the form of group therapy
would be demonstrating the intensity of therapy appropriate to this
most frail and vulnerable nursing home population.
Since the inception of the SNF PPS, we have limited the amount of
group therapy provided to each SNF Part A resident to 25 percent of the
therapy provided to them by discipline. As stated in the FY 2000 final
rule (64 FR 41662):
Although we recognize that receiving PT, OT, or ST as part of a
group has clinical merit in select situations, we do not believe
that services received within a group setting should account for
more than 25 percent of the Medicare resident's therapy regimen
during the SNF stay. For this reason, no more than 25 percent of the
minutes reported in the MDS may be provided within a group setting.
This limit is to be applied for each therapy discipline; that is,
only 25 percent of the PT minutes reported in the MDS may be minutes
received in a group setting and, similarly, only 25 percent of the
OT, or the ST minutes reported may be minutes received in a group
setting.
Although we recognize that group and concurrent therapy may have
clinical merit in specific situations, we also continue to believe that
individual therapy is generally the best way of providing therapy to a
resident because it is most tailored to that specific resident's care
needs.
As such, individual therapy should represent the majority of the
therapy services received by SNF residents both from a clinical and
payment perspective. As stated in the FY 2012 proposed rule (76 CFR
26372):
Moreover, even under the previous RUG-53 model, it is clear that
the predominant mode of therapy that the payment rates were designed
to address was individual therapy rather than concurrent or group
therapy.
To help ensure that SNF residents would receive the majority of
therapy services on an individual basis, if we were to implement the
proposed PDPM, we believe concurrent and group therapy combined should
be limited to no more than 25 percent of a SNF resident's therapy
minutes by discipline. In combination, this limit would ensure that at
least 75 percent of a resident's therapy minutes are provided on an
individual basis. Because the change in how therapy services would be
used to classify residents under the proposed PDPM gives rise to the
concern that providers may begin to utilize more group and concurrent
therapy due to financial considerations, we are proposing to set a
combined 25 percent limit on concurrent therapy and group therapy for
each discipline of therapy provided. For example, if a resident
received 800 minutes of physical therapy, no more than 200 minutes of
this therapy could be provided on a concurrent or group basis. Finally,
we note that under RUG-IV, we currently allocate minutes of therapy
because we pay for therapy
[[Page 21067]]
based on therapy minutes and not resident characteristics. Given that
therapy minutes would no longer be a factor in determining payment
classifications for residents under the proposed PDPM, we would utilize
the total, unallocated number of minutes by therapy mode reported on
the MDS, to determine compliance with the proposed limit. Utilizing
unallocated therapy minutes also serves to underscore the patient-
driven nature of the PDPM, as it focuses the proposed limit on
concurrent and group therapy on the way in which the therapy is
received by the beneficiary, rather than furnished by the therapist,
and would better ensure that individual therapy represents at least a
vast majority of the therapy services received by a resident.
We considered other possible limits, and even no limit, on group
and concurrent therapy. For example, we considered placing no limit on
group or concurrent therapy, in order to afford providers the greatest
degree of flexibility in designing a therapy program for each SNF
resident. However, even in response to this option to have no limit on
concurrent and group therapy, many commenters on the ANPRM expressed
concerns regarding the lack of appropriate safeguards for ensuring that
SNF residents continue to receive an appropriate level of therapy under
the revised case-mix model. We agree with these commenters and believe
that there should be some limit on the amount of group and concurrent
therapy that is provided to residents in order to ensure that residents
receive an appropriate amount of individual therapy that is tailored to
their specific needs. Also, in the ANPRM, we discussed the possibility
of proposing a 25 percent limit on each of concurrent and group
therapy, allowing for up to 50 percent of therapy services provided in
the SNF to be provided in a non-individual modality. This option sought
to balance the flexibility afforded to therapists in designing an
appropriate therapy plan that meets the needs and goals of the specific
resident with the importance of ensuring that SNF residents receive an
appropriate level of individual therapy. However, we are concerned that
a separate 25 percent limit for group and concurrent therapy would not
provide sufficient assurance that at least a majority of a resident's
therapy would be provided on an individual basis. Therefore, we believe
that the separate 25 percent limits on concurrent and group therapy
discussed in the ANPRM, or any option which would impose a higher limit
on group and concurrent therapy, would not provide the necessary
protection for SNF residents. By contrast, we believe that a combined
25 percent limit on group and concurrent therapy would provide
sufficient assurance that at least a majority of each resident's
therapy would be provided on an individual basis, consistent with our
position that individual therapy is generally the best way of providing
therapy to SNF residents because it is most tailored to their care
needs. We would also note that, assuming that existing therapy delivery
patterns (as set forth in Table 36) are accurate and they reflect the
individually-tailored needs of SNF residents currently being treated
under the SNF benefit, the number of group and concurrent minutes that
have been reported by SNFs thus far are significantly lower than the
limit described in this proposal. In other words, based on the data
presented in Table 36, the proposed limit on group and concurrent
therapy affords a significantly greater degree of flexibility on
therapy modality than appears to be required to meet the needs of SNF
residents, given that less than one percent of therapy currently being
delivered is either group or concurrent therapy. Therefore, a combined
limit of 25 percent for group and concurrent therapy should provide
SNFs with more than enough flexibility with respect to therapy mode to
meet the care needs of their residents.
We believe that individual therapy is usually the best mode of
therapy provision as it permits the greatest degree of interaction
between the resident and therapist, and should therefore represent, at
a minimum, the majority of therapy provided to an SNF resident.
However, we recognize that, in very specific clinical situations, group
or concurrent therapy may be the more appropriate mode of therapy
provision, and therefore, we would want to allow providers the
flexibility to be able to utilize these modes. We continue to stress
that group and concurrent therapy should not be utilized to satisfy
therapist or resident schedules, and that all group and concurrent
therapy should be well documented in a specific way to demonstrate why
they are the most appropriate mode for the resident and reasonable and
necessary for his or her individual condition. We invite comments on
the proposal discussed above. In addition, we solicit comments on other
ways in which therapy limits may be applied to appropriately meet the
care needs of SNF residents.
Currently the RUG-IV grouper calculates the percentage of group
therapy each resident receives in the SNF based on the algorithms
described in section 6.6 of the MDS RAI Manual (found at https://downloads.cms.gov/files/MDS-30-RAI-Manual-v115-October-2017.pdf). When
a resident is found to have exceeded the 25 percent group therapy
limit, the minutes of therapy received in excess are not counted
towards the calculation of the RUG-IV therapy classification. Because
the proposed PDPM would not use the minutes of therapy provided to a
resident to classify the resident for payment purposes, we would need
to determine a way under the proposed PDPM to address situations in
which facilities exceed the combined 25 percent group and concurrent
therapy limit.
Therefore, we are proposing that at a component level (PT, OT,
SLP), when the amount of group and concurrent therapy exceeds 25
percent within a given therapy discipline, that providers would receive
a non-fatal warning edit on the validation report that the provider
receives when submitting an assessment which would alert the provider
to the fact that the therapy provided to that resident exceeded the
threshold. To explain, a fatal error in the QIES ASAP system occurs
when one or more items in the submitted record fail to pass the
requirements identified in the MDS data submission specifications. A
warning error occurs when an item or combination of items in the
submitted record trigger a non-fatal edit in the QIES ASAP system. The
non-fatal warning would serve as a reminder to the facility that they
are out of compliance with the proposed limit for group and concurrent
therapy. As part of our regular monitoring efforts on SNF Part A
services, we would monitor group and concurrent therapy utilization
under the proposed PDPM and consider making future proposals to address
abuses of this proposed policy or flag providers for additional review
should an individual provider be found to consistently exceed the
proposed threshold after the implementation of the proposed PDPM. We
would note that as the proportion of group and/or concurrent therapy
(which are, by definition, non-individual modes of therapy provision)
increases, the chances that the provider is still meeting the
individualized needs of each resident would diminish. Given that
meeting the individualized needs of the resident is a component of
meeting the coverage requirements for SNF Part A services, as described
in section 1814(a)(2)(B) of the Act and further described in Section 30
of Chapter 8 of the Medicare Benefit Policy Manual
[[Page 21068]]
(accessible at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c08.pdf) where it states that services furnished
to SNF residents may be considered reasonable and necessary insomuch as
the services are consistent with ``the individual's particular medical
needs'', excessive levels of group and/or concurrent therapy could
constitute a reason to deny SNF coverage for such stays. We invite
comments on this proposed compliance mechanism.
G. Proposed Interrupted Stay Policy
Under section 1812(a)(2)(A) of the Act, Medicare Part A covers a
maximum of 100 days of SNF services per spell of illness, or ``benefit
period''. A benefit period starts on the day the beneficiary begins
receiving inpatient hospital or SNF benefits under Medicare Part A.
(See section 1861(a) of the Act; Sec. 409.60). SNF coverage also
requires a prior qualifying, inpatient hospital stay of at least 3
consecutive days' duration (counting the day of inpatient admission but
not the day of discharge). (See section 1861(i) of the Act; Sec.
409.30(a)(1)). Once the 100 available days of SNF benefits are used,
the current benefit period must end before a beneficiary can renew SNF
benefits under a new benefit period. For the current benefit period to
end so a new benefit period can begin, a period of 60 consecutive days
must elapse throughout which the beneficiary is neither an inpatient of
a hospital nor receiving skilled care in a SNF. (See section 1861(a) of
the Act; Sec. 409.60). Once a benefit period ends, the beneficiary
must have another qualifying 3-day inpatient hospital stay and meet the
other applicable requirements before Medicare Part A coverage of SNF
care can resume. (See section 1861(i); Sec. 409.30) While the majority
of SNF benefit periods, approximately 77 percent, involve a single SNF
stay, it is possible for a beneficiary to be readmitted multiple times
to a SNF within a single benefit period, and such cases represent the
remaining 23 percent of SNF benefit periods. For instance, a resident
can be readmitted to a SNF within 30 days after a SNF discharge without
requiring a new qualifying 3-day inpatient hospital stay or beginning a
new benefit period. SNF admissions that occur between 31 and 60 days
after a SNF discharge require a new qualifying 3-day inpatient hospital
stay, but fall within the same benefit period. (See sections 1861(a)
and (i) of the Act; Sec. Sec. 409.30, 409.60)
Other Medicare post-acute care (PAC) benefits have ``interrupted
stay'' policies that provide for a payment adjustment when the
beneficiary temporarily goes to another setting, such as an acute care
hospital, and then returns within a specific timeframe. In the
inpatient rehabilitation facility (IRF) and inpatient psychiatric
facility (IPF) settings, for instance, an interrupted stay occurs when
a patient returns to the same facility (or in the case of an IPF, the
same or another IPF) within 3 days of discharge. The interrupted stay
policy for long-term care hospitals (LTCHs) is more complex, consisting
of several policies depending on the length of the interruption and, at
times, the discharge destination: An interruption of 3 or fewer days is
always treated as an interrupted stay, which is similar to the IRF PPS
and IPF PPS policies; if there is an interruption of more than 3 days,
the length of the gap required to trigger a new stay varies depending
on the discharge setting. In these three settings, when a beneficiary
is discharged and returns to the facility within the interrupted stay
window, Medicare treats the two segments as a single stay.
While other Medicare PAC benefit categories have interrupted stay
policies, the SNF benefit under the RUG-IV case-mix model has had no
need for such a policy because given a resident's case-mix group,
payment does not change over the course of a stay. In other words,
assuming no change in a patient's condition or treatment, the payment
rate is the same on Day 1 of a covered SNF stay as it is at Day 7.
Accordingly, a beneficiary's readmission to the SNF--even if only a few
days may have elapsed since a previous discharge--could essentially be
treated as a new and different stay without affecting the payment
rates.
However, as described in section V.D. of this proposed rule, the
proposed PDPM would adjust the per diem rate across the length of a
stay (the variable per diem adjustment) to better reflect how and when
costs are incurred and resources used over the course of the stay, such
that earlier days in a given stay receive higher payments, with
payments trending lower as the stay continues. In other words, the
adjusted payment rate on Day 1 and Day 7 of a SNF stay may not be the
same. Although we believe this variable per diem adjustment schedule
more accurately reflects the increased resource utilization in the
early portion of a stay for single-stay benefit periods (which
represent the majority of cases), we considered whether and how such an
adjustment should be applied to payment rates for cases involving
multiple stays per benefit period. In other words, we considered
instances in which a resident has a Part A stay in a SNF, leaves the
facility for some reason, and then is readmitted to the same SNF or a
different SNF; and how this readmission should be viewed in terms of
both resident classification and the variable per diem adjustment
schedule under the proposed PDPM. Application of the variable per diem
adjustment is of particular concern because providers may consider
discharging a resident and then readmitting the resident shortly
thereafter to reset the resident's variable per diem adjustment
schedule and maximize the payment rates for that resident.
Given the potential harm which may be caused to the resident if
discharged inappropriately, and other concerns outlined previously in
this section, we discussed in the ANPRM the possibility of adopting an
interrupted stay policy under the SNF PPS in conjunction with the
implementation of the RCS-I case-mix model. Several commenters
expressed support for this interrupted stay policy in responding to the
ANPRM, saying that the interrupted stay policy is in alignment with
similar policies in other post-acute settings, and that a similar
policy would likely be implemented under any cross-setting PAC payment
system.
Thus, we are proposing to implement an interrupted stay policy as
part of the SNF PPS, effective beginning FY 2020 in conjunction with
the proposed implementation of the SNF PDPM. Specifically, in cases
where a resident is discharged from a SNF and returns to the same SNF
by 12:00 a.m. at the end of the third day of the interruption window
(as defined below), we propose treating the resident's stay as a
continuation of the previous stay for purposes of both resident
classification and the variable per diem adjustment schedule. In cases
where the resident's absence from the SNF exceeds this 3-day
interruption window (as defined below), or in any case where the
resident is readmitted to a different SNF, we propose treating the
readmission as a new stay, in which the resident would receive a new 5-
day assessment upon admission and the variable per diem adjustment
schedule for that resident would reset to Day 1. Consistent with the
existing interrupted stay policies for the IRF and IPF settings, we
would define the interruption window as the 3-day period starting with
the calendar day of discharge and additionally including the 2
immediately following calendar days. For the purposes of the
interrupted stay policy, the source of the readmission would not be
relevant. That is, the beneficiary may be readmitted from the
community, from an
[[Page 21069]]
intervening hospital stay, or from a different kind of facility, and
the interrupted stay policy would operate in the same manner. The only
relevant factors in determining if the interrupted stay policy would
apply are the number of days between the resident's discharge from a
SNF and subsequent readmission to a SNF, and whether the resident is
readmitted to the same or a different SNF.
Consider the following examples, which we believe aid in clarifying
how this policy would be implemented:
Example A: A beneficiary is discharged from a SNF on Day 3 of
the stay. Four days after the date of discharge, the beneficiary is
then readmitted (as explained above, this readmission would be in
the same benefit period) to the same SNF. The SNF would conduct a
new 5-day assessment at the start of the second admission and
reclassify the beneficiary accordingly. In addition, for purposes of
the variable per diem adjustment schedule, the payment schedule for
the second admission would reset to Day 1 payment rates for the
beneficiary's new case-mix classification.
Example B: A beneficiary is discharged from a SNF stay on Day 7
and is readmitted to the same SNF within the 3-day interruption
window. For the purposes of classification and payment, this would
be considered a continuation of the previous stay (an interrupted
stay). The SNF would not conduct a new 5-day assessment to
reclassify the patient and for purposes of the variable per diem
adjustment schedule, the payment schedule would continue where it
left off; in this case, the first day of the second stay would be
paid at the Day 8 per diem rates under that schedule.
Example C: A beneficiary is discharged from a SNF stay on Day 7
and is readmitted to a different SNF within the 3-day interruption
window. The SNF would conduct a new 5-day assessment at the start of
the second admission and classify the beneficiary accordingly. In
addition, for purposes of the variable per diem adjustment schedule,
the payment schedule for the second admission would reset to Day 1
payment rates for the beneficiary's new case-mix classification.
We also considered alternative ways of structuring the interrupted
stay policy. For example, we considered possible ranges for the
interrupted stay window other than the three calendar day window
proposed in this rule. For example, we considered windows of fewer than
3 days (for example, 1 or 2 day windows for readmission) as well as
windows of more than 3 days (for example, 4 or 5 day windows for
readmission). However, we believe that 3 days represents a reasonable
window after which it is more likely that a resident's condition and
resource needs will have changed. We also believe that consistency with
other payment systems, like that of IRF and IPF, is helpful in
providing clarity and consistency to providers in understanding
Medicare payment systems, as well as making progress toward
standardization among PAC payment systems.
In addition, to determine how best to operationalize an interrupted
stay policy within the SNF setting, we considered three broad
categories of benefit periods consisting of multiple stays. The first
type of scenario, SNF-to-SNF transfers, is one in which a resident is
transferred directly from one SNF to a different SNF. The second case
we considered, and the most common of all three multiple-stay benefit
period scenarios, is a benefit period that includes a readmission
following a new hospitalization between the two stays--for instance, a
resident who was discharged from a SNF back to the community, re-
hospitalized at a later date, and readmitted to a SNF (the same SNF or
a different SNF) following the new hospital stay. The last case we
considered was a readmission to the same SNF or a different SNF
following a discharge to the community, with no intervening re-
hospitalization.
To simplify the analysis, we primarily examined benefit periods
with two stays. Benefit periods with exactly two stays account for a
large majority (70 percent) of all benefit periods with multiple stays,
and benefit periods with more than two stays represent a very small
portion (less than 7 percent) of all benefit periods overall. We
therefore assume the data for cases where there are exactly two stays
in a benefit period are representative of all benefit periods with
multiple stays. Of cases where there are exactly two stays in a benefit
period, over three quarters (76.4 percent) consist of re-
hospitalization and readmission (to the same SNF or a different SNF).
Discharge to the community and readmission without re-hospitalization
cases represent approximately 14 percent of cases, while direct SNF-to-
SNF transfers represent approximately 10 percent.
For each of these case types, in which a resident was readmitted to
a SNF after discharge, we examined whether (1) the variable per diem
adjustment schedule should be ``reset'' back to the Day 1 rates at the
outset of the second stay versus ``continuing'' the variable per diem
adjustment schedule at the point at which the previous stay ended, and
(2) a new 5-day assessment and resident classification should be
required at the start of the subsequent SNF stay.
With regard to the first question above, specifically whether or
not a readmission to a SNF within the proposed 3-day interruption
window would reset the resident's variable per diem adjustment
schedule, in each of the cases described above, we were concerned
generally that an interrupted stay policy that ``restarts'' the
variable per diem adjustment schedule to Day 1 after readmissions could
incentivize unnecessary discharges with quick readmissions. This
concern is particularly notable in the second and third cases described
above, as the beneficiary may return to the same facility. To
investigate this question, we conducted linear regression analyses to
examine changes in costs in terms of both PT/OT and NTA costs per day
from the first to second admission for the three scenarios described
above (SNF-to-SNF direct transfers, readmissions following re-
hospitalization, and readmissions following community discharge). As
discussed in section V.D.4. of this proposed rule, investigations
revealed that utilization of PT, OT, and NTA services changes over the
course of a stay. Based on both empirical analysis and feedback from
multiple technical expert panels, we determined that SLP and nursing
utilization remained fairly constant over a stay. Therefore, we are
proposing variable per diem adjustment schedules for the PT, OT, and
NTA components but not for the SLP or nursing components. Because the
analysis of changes in costs across two stays in a single benefit
period is relevant to determining how the variable per diem payment
adjustments should apply to benefit periods with multiple stays, we
restricted our analysis to the three payment components for which we
are proposing variable per diem adjustments (PT, OT, and NTA). For this
analysis, both the re-hospitalization and community discharge cases
were separated into two sub-cases: When the resident returns to the
same SNF, and when the resident is admitted to a different SNF. By
definition, SNF-to-SNF transfer cases always have different providers
for the first and second stays. The regression results showed that PT/
OT costs from the first to second admission were very similar for SNF-
to-SNF transfers and for readmissions to a different provider following
re-hospitalization or discharge to community, suggesting that the
second admission is comparable to a new stay. NTA costs from the first
to second admission also were very similar for SNF-to-SNF transfers.
For readmissions following re-hospitalization or discharge to
community, NTA costs for readmissions to the same provider were notably
less than NTA costs for readmissions to a different provider.
[[Page 21070]]
Overall, these results suggest that a readmission to a different SNF,
regardless of whether it was a direct SNF-to-SNF transfer, or whether
the beneficiary was re-hospitalized or discharged to the community
before the second admission, are more comparable to a new stay than an
interrupted stay. Thus, we are proposing to always reset the variable
per diem adjustment schedule to Day 1 whenever residents are discharged
and readmitted to a different SNF. We acknowledge that this could lead
to patterns of inappropriate discharges and readmissions that could be
inconsistent with the intent of this policy; for example, we would be
concerned about patients in SNF A consistently being admitted to SNF B
to the exclusion of other SNFs in the area. Should we discover such
behavior, we will flag these facilities for additional scrutiny and
review and consider potential policy changes in future rulemaking.
However, based on the results of our regression analyses, and because
of the concern that a SNF provider could discharge and promptly readmit
a resident to reset the variable per diem adjustment schedule to Day 1,
in cases where a resident returns to the same provider we are proposing
to allow the payment schedule to reset only when the resident has been
out of the facility for at least 3 days. As previously mentioned, we
believe that 3 days represents a reasonable window after which it is
more likely that a resident's condition and resource needs will have
changed, and this 3-day requirement is also consistent with the
interrupted stay policies of similar Medicare PAC benefits. Moreover,
while we found that PT and OT costs for cases where the gap is longer
than 3 days are similar to PT and OT costs for cases where the gap is
shorter than 3 days, NTA costs are notably higher for cases where the
gap is longer than 3 days. This provides further support for resetting
the variable per diem schedule for cases where the gap is longer than 3
days (as costs tend to be higher, similar to a new stay). More
information on these analyses can be found in section 3.10.3. of the
SNF PMR technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
With regard to the question of whether or not SNFs would be
required to complete a new 5-day assessment and reclassify the resident
after returning to the SNF within the proposed 3-day interruption
window, we investigated changes in resident characteristics from the
first to the second stay within a benefit period. First, we looked at
changes in clinical categories from the first to second stay for
residents with an intervening re-hospitalization. This analysis could
only be conducted for residents with a re-hospitalization because, as
described in section 3.10.2. of the SNF PMR technical report, for
research purposes, classification into clinical categories was based on
the diagnosis from the prior inpatient stay. For those residents who
had a re-hospitalization and were readmitted to a SNF (either the same
or a different SNF), and therefore could be reclassified into a new
clinical category (because of new diagnostic information as a result of
the intervening re-hospitalization), we found that a majority had the
same clinical category for both the first and second admission. Because
we could not conduct this investigation for SNF-to-SNF transfers or
community discharge cases (as they lack a new hospitalization), we
separately investigated changes in function from the first to second
stay for SNF-to-SNF transfers and for readmissions following community
discharge. We found that in a large majority of cases, there was no
change in function from the first to second stay, regardless of whether
the second provider was the same or different as the first provider.
Thus, we believe it would be appropriate to maintain the classification
from the first stay for those residents returning to the same SNF no
more than 3 calendar days after discharge from the same facility.
However, because we are proposing to exclude from the interrupted stay
policy readmissions to a different SNF (regardless of the number of
days between admissions) and readmissions to the same SNF when the gap
between admissions is longer than 3 days, and to treat these
readmissions as new stays for purpose of the variable per diem
adjustment schedule, we believe it would be appropriate and consistent
to treat these cases as new stays for purposes of clinical
classification and to require a new 5-day PPS assessment. More
information on these analyses can be found in section 3.10.2. of the
SNF PMR technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Additionally, we note that under the approach discussed in section
V.E.1. of this proposed rule, providers would be afforded the
flexibility to use the IPA, which would allow for resident
reclassification under certain circumstances.
We invite comments on the proposals outlined above. We would also
note that we believe that frequent SNF readmissions may be indicative
of poor quality care being provided by the SNF. Given this belief, we
plan to monitor the use of this policy closely to identify those
facilities whose beneficiaries experience frequent readmission,
particularly facilities where the readmissions occur just outside the
three-day window used as part of the proposed interrupted stay policy.
Should we discover such behavior, we will flag these facilities for
additional scrutiny and review and consider potential policy changes in
future rulemaking.
H. Proposed Relationship of the PDPM to Existing Skilled Nursing
Facility Level of Care Criteria
As discussed previously in section IV.A. of this proposed rule, the
establishment of the SNF PPS did not change Medicare's fundamental
requirements for SNF coverage. However, because the case-mix adjustment
aspect of the SNF PPS has been based, in part, on the beneficiary's
need for skilled nursing care and therapy, we have coordinated claims
review procedures with the existing resident assessment process and
case-mix classification system. This approach includes an
administrative presumption that utilizes a beneficiary's initial
classification in one of the upper 52 RUGs of the 66-group RUG-IV
system to assist in making certain SNF level of care determinations.
As further discussed below, we propose to adopt a similar approach
under the PDPM effective October 1, 2019, by retaining an
administrative presumption mechanism that would utilize the initial
assignment of one of the case-mix classifiers that we designate for
this purpose to assist in making certain SNF level of care
determinations. This designation would reflect an administrative
presumption under the PDPM that beneficiaries who are correctly
assigned one of the designated case-mix classifiers on the initial 5-
day, Medicare-required assessment are automatically classified as
meeting the SNF level of care definition up to and including the
assessment reference date on the 5-day Medicare required assessment.
As under the existing RUG-IV administrative presumption, a
beneficiary who is not assigned one of the designated classifiers would
not automatically be classified as either meeting or not meeting the
level of care definition, but instead would receive an individual level
of care determination
[[Page 21071]]
using the existing administrative criteria. The use of the
administrative presumption reflects the strong likelihood that those
beneficiaries who are assigned one of the designated classifiers during
the immediate post-hospital period require a covered level of care,
which would be less likely for other beneficiaries.
In the ANPRM (82 FR 21007), we discussed some potential adaptations
of the RUG-IV model's administrative presumption to accommodate
specific features of the RCS-I model, including the possible
designation of the following case-mix classifiers for purposes of the
administrative presumption:
Continued designation of the same nursing (non-
rehabilitation) groups that currently comprise the Extensive Services,
Special Care High, Special Care Low, and Clinically Complex categories
under RUG-IV, as those groups would crosswalk directly from RUG-IV to
the RCS-I model we were considering;
In addition, designation of the most intensive functional
score (14 to 18) under the RCS-I model's combined PT/OT component, as
well as the uppermost comorbidity score (11+) under its NTA component.
In response, a number of comments expressed concern that the
possible adaptations of the presumption could adversely affect access
to care for some beneficiaries. Others asked whether using the PT/OT
component's highest functional score bin (14 to 18) as a trigger for
the presumption would be appropriate, inasmuch as the residents that
typically require the most therapy are those with only moderate
functional impairments. In addition, commenters questioned the
discussion's inclusion of the RCS-I model's NTA component as a possible
classifier under the presumption, as well as its omission of RCS-I's
SLP component.
Regarding the commenters' concerns about access to care, we note
that we have indicated in the ANPRM and in previous rulemaking that the
actual purpose of the level of care presumption has always been to
afford a streamlined and simplified administrative procedure for
readily identifying those beneficiaries with the greatest likelihood of
meeting the level of care criteria; however, we have also emphasized
that in focusing on such beneficiaries, this approach in no way serves
to disadvantage other beneficiaries who may also meet the level of care
criteria. As we noted in the ANPRM,
. . . an individual beneficiary's inability to qualify for the
administrative presumption would not in itself serve to disqualify
that resident from receiving SNF coverage . . . while such residents
are not automatically presumed to require a skilled level of care,
neither are they automatically classified as requiring nonskilled
care. Rather, any resident who does not qualify for the presumption
would instead receive an individual level of care determination
using the existing administrative criteria (82 FR 21007).
As we further explained in the FY 2016 SNF PPS final rule,
structuring the presumption in this manner serves ``. . . specifically
to ensure that the presumption does not disadvantage such residents, by
providing them with an individualized level of care determination that
fully considers all pertinent factors'' (80 FR 46406, August 4, 2015).
As for concerns about the appropriateness of certain classifiers,
including the possible use of the PT/OT component's highest functional
score bin (14 to 18) for this purpose under RCS-I, we note that the
case-mix classification model for PT and OT that we are now proposing
in connection with the PDPM would essentially reconfigure the PT/OT
component from the RCS-I model. As discussed in section V.D.3.b. of
this proposed rule, the proposed PDPM would divide the RCS-I model's
combined PT/OT component into two separate case-mix adjusted
components, under which each resident would be assigned separate case-
mix groups for PT and OT payment. Those groups would classify residents
based on clinical category and function score, the two resident
characteristics shown to be most predictive of PT and OT utilization.
Further, as we noted in section III.B.4. of the ANPRM (``Variable
Per Diem Adjustment Factors and Payment Schedule'') and section V.D.4.
of this proposed rule, our initial analyses revealed that in contrast
to the SLP component--where per diem costs remain relatively constant
over time--costs for the PT, OT, and NTA components typically are
highest at the outset and then decline over the course of the stay. Our
research to date continues to show a strong correlation between the
dependent variables used for the proposed separate PT and OT components
and a similarity in predictors, in that the associated costs for both
therapy disciplines remain highest in the initial (and typically most
intensive) portion of the SNF stay. This heightened resource intensity
during the initial part of the SNF stay under the PT, OT, and NTA
components, in turn, more closely reflects the distinctive utilization
patterns that served as the original foundation for the level of care
presumption itself--that is, the tendency as noted in the FY 2000 SNF
PPS final rule for ``. . . SNF stays to be at their most intensive and
unstable immediately following admission as justifying a presumption of
coverage at the very outset of the SNF stay'' (64 FR 41667, July 30,
1999). We believe this would make the most intensive classifiers within
each of these three proposed components well-suited to serve as
clinical proxies for identifying those beneficiaries with the most
intensive care needs and greatest likelihood of requiring an SNF level
of care.
Accordingly, for purposes of the administrative presumption under
the proposed PDPM, we propose to continue utilizing the same designated
nursing (non-rehabilitation) categories under the PDPM as have been
used to date under RUG-IV. We note that the most direct crosswalk
between the existing RUG-IV model and the proposed PDPM would involve
nursing services, for which, under the proposed PDPM, each resident
would continue to be classified into one of the groups that fall within
the existing non-rehabilitation RUG-IV categories. (As explained in
section V.D.3.d. of this proposed rule, while the total number of
nursing case-mix groups would be streamlined from the current 43 under
RUG-IV down to 25 under PDPM through the consolidation of similar
groups within individual categories, the overall number and structure
of the nursing categories themselves would remain the same.) Under our
proposal, effective in conjunction with the proposed implementation of
the PDPM (that is, as of October 1, 2019), the administrative
presumption would apply to those groups encompassed by the same nursing
categories as are currently designated for this purpose under the
existing RUG-IV model:
Extensive Services;
Special Care High;
Special Care Low; and,
Clinically Complex.
In addition, along with the continued use of the RUG-IV nursing
categories above, we also propose to apply the administrative
presumption using those other classifiers under the proposed PDPM that
we believe would relate the most directly to identifying a patient's
need for skilled care at the outset of the SNF stay. As explained
below, we would designate such classifiers for this purpose based on
their ability to fulfill the administrative presumption's role as
described in the FY 2000 SNF PPS final rule--that is, to identify those
``. . . situations that involve a high
[[Page 21072]]
probability of the need for skilled care . . . when taken in
combination with the characteristic tendency . . . for an SNF
resident's condition to be at its most unstable and intensive state at
the outset of the SNF stay'' (64 FR 41668 through 41669, July 30,
1999).
Specifically, we additionally propose to designate for this purpose
proposed PT and OT case-mix groups TB, TC, TD, TF, and TG, the groups
displayed in Table 21 that collectively account for the five highest
case-mix indexes for PT as well as for OT and, thus, would consistently
be associated with the most resource-intensive care across both of
these therapy disciplines. We also propose to designate the uppermost
comorbidity group (11+) under the NTA component, as we believe this
particular classifier would serve to identify those cases that are the
most likely to involve the kind of complex medication regimen (for
example, a highly intensive drug requiring specialized expertise to
administer, or an exceptionally large and diverse assortment of
medications posing an increased risk of adverse drug interactions) that
would require skilled oversight to manage safely and effectively.
Under this proposed approach, those residents not classifying into
a case-mix group in one of the designated nursing RUG categories under
the proposed PDPM on the initial, 5-day Medicare-required assessment
could nonetheless still qualify for the administrative presumption on
that assessment by being placed in one of the designated case-mix
groups for either the PT or OT components, or by receiving the
uppermost comorbidity score (11+) under the NTA component. We believe
that these particular clinical indicators would appropriately serve to
fulfill the administrative presumption's role of identifying those
cases with the highest probability of requiring an SNF level of care
throughout the initial portion of the SNF stay. We note that in order
to help improve the accuracy of these newly-designated groups in
serving this function, we would continue to review the new designations
going forward and may make further adjustments to the proposed
designations over time as we gain actual operating experience under the
new classification model. As discussed above, this administrative
presumption mechanism would take effect October 1, 2019 in conjunction
with the proposed PDPM. We invite comments on our proposed
administrative presumption mechanism under the proposed PDPM.
I. Effect of Proposed PDPM on Temporary AIDS Add-on Payment
As discussed in section III.C. of this proposed rule and also in
section III.E. of the ANPRM, section 511(a) of the MMA amended section
1888(e)(12) of the Act to provide for a temporary increase of 128
percent in the PPS per diem payment for any SNF residents with Acquired
Immune Deficiency Syndrome (AIDS), effective with services furnished on
or after October 1, 2004. This special add-on for SNF residents with
AIDS was intended to be of limited duration, as the MMA legislation
specified that it was to remain in effect only until the Secretary
certifies that there is an appropriate adjustment in the case mix to
compensate for the increased costs associated with such residents.
The temporary add-on for SNF residents with AIDS is also discussed
in Program Transmittal #160 (Change Request #3291), issued on April 30,
2004, which is available online at www.cms.gov/transmittals/downloads/r160cp.pdf. In the SNF PPS final rule for FY 2010 (74 FR 40288, August
11, 2009), we did not address this certification in that final rule's
implementation of the case-mix refinements for RUG-IV, thus allowing
the add-on payment required by section 511 of the MMA to remain in
effect for the time being.
In the House Ways and Means Committee Report that accompanied the
MMA, the explanation of the MMA's temporary AIDS adjustment notes the
following under Reason for Change: ``According to prior work by the
Urban Institute, AIDS patients have much higher costs than other
patients in the same resource utilization groups in skilled nursing
facilities. The adjustment is based on that data analysis'' (H. Rep.
No. 108-178, Part 2 at 221). The data analysis from that February 2001
Urban Institute study (entitled ``Medicare Payments for Patients with
HIV/AIDS in Skilled Nursing Facilities''), in turn, had been conducted
under a Report to Congress mandated under a predecessor provision,
section 105 of the BBRA. This earlier BBRA provision, which ultimately
was superseded by the temporary AIDS add-on provision required by the
MMA, had amended section 1888(e)(12) of the Act to provide for special
consideration for facilities serving specialized patient populations
(that is, those who are ``immuno-compromised secondary to an infectious
disease, with specific diagnoses as specified by the Secretary'').
As we noted in the ANPRM, at this point over a decade and a half
has elapsed since the Urban Institute conducted its study on AIDS
patients in SNFs, a period that has seen major advances in the state of
medical practice in treating this condition. These advances have
notably included the introduction of powerful new drugs and innovative
prescription regimens that have dramatically improved the ability to
manage the viral load (the amount of human immunodeficiency virus (HIV)
in the blood). The decrease in viral load secondary to medications has
contributed to a shift from intensive nursing services for AIDS-related
illnesses to an increase in antiretroviral therapy. This phenomenon, in
turn, is reflected in our recent analysis of differences in SNF
resource utilization, which indicates that while the overall historical
disparity in costs between AIDS and non-AIDS patients has not entirely
disappeared, that disparity is now far greater with regard to drugs
than it is for nursing. Specifically, NTA costs per day for residents
with AIDS were 151 percent higher than those for other residents while
the difference in wage-weighted nursing staff time between the two
groups was only 19 percent, as discussed in section 3.8.3. of the SNF
PRM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), which
the ANPRM referenced for further information on the underlying data
analysis (82 FR 21007 through 21008). In the ANPRM, we also described
how the RCS-I model would account for those NTA costs, including drugs,
which specifically relate to residents with AIDS (82 FR 20997 through
20999). We additionally discussed the possibility of making a specific
19 percent AIDS adjustment as part of the case-mix adjustment of the
nursing component (82 FR 20995 through 20997). We further expressed our
belief that,
. . . when taken collectively, these adjustments . . . would
appropriately serve to justify issuing the certification prescribed
under section 511(a) of the MMA . . . which would permit the MMA's
existing, temporary AIDS add-on to be replaced by a permanent
adjustment in the case mix . . . that appropriately compensates for
the increased costs associated with these residents (82 FR 21008).
In response, we received comments expressing concerns that a
projected 40 percent drop in overall payments for SNF residents with
AIDS under the RCS-I model could adversely affect access to care for
this patient population. Regarding those concerns,
[[Page 21073]]
we note that the special add-on for SNF residents with AIDS itself was
never meant to be permanent, and does not serve as a specific benchmark
for use in establishing either the appropriate methodology or level of
payment for this patient population. Rather, as discussed in the ANPRM,
it was designed to be only a temporary measure, representing a general
approximation that reflected the current state of research and clinical
practice at the time (82 FR 21007 through 21008). As such, the special
add-on would not account for the significant changes in the care and
treatment of this condition that have occurred over the intervening
years. Moreover, as a simple across-the-board multiplier, the MMA
adjustment by its very nature is not accurately targeted at those
particular rate components that actually account for the disparity in
cost between AIDS patients and others.
As discussed previously in section V.D.3.e. of this proposed rule,
based on our updated investigations into the adequacy of payments under
the proposed PDPM for residents with HIV/AIDS, we believe that the four
proposed ancillary payment components (PT, OT, SLP, and NTA) adequately
reimburse ancillary costs associated with HIV/AIDS residents (see
section 3.8.2. of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Therefore, we believe it would be appropriate to
issue the prescribed certification under section 511(a) of the MMA on
the basis of the proposed PDPM's ancillary case-mix adjustment alone,
as effectively providing the required appropriate adjustment in the
case mix to compensate for the increased costs associated with such
residents. However, to further ensure that the proposed PDPM would
account as fully as possible for any remaining disparity with regard to
nursing costs, as discussed in section V.D.3.d., we are additionally
proposing to include a specific AIDS adjustment as part of the case-mix
adjustment of the nursing component. As discussed in section V.D.3.d.
of this proposed rule, we used the STRIVE data to quantify the effects
of HIV/AIDS diagnosis on nursing resource use. Regression analyses
found that wage-weighted nursing staff time is 18 percent higher for
residents with HIV/AIDS, controlling for the non-rehabilitation RUG of
the resident. We note that this figure is slightly lower than the 19
percent increase in wage-weighted nursing staff time reported in the
ANPRM and the SNF PRM technical report because the updated
investigation uses a FY 2017 study population and is based on the PDPM
case-mix groups, while the earlier analysis was based on a FY 2014
study population and the RCS-I case-mix groups. More information on
this analysis can be found in section 3.8.2. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Thus, we are proposing an
18 percent increase in payment for the nursing component for residents
with HIV/AIDS under the proposed PDPM to account for the increased
nursing costs for such residents. Similar to the NTA adjustment for
residents with HIV/AIDS discussed in section V.D.3.e. of this proposed
rule, this adjustment would be identified by ICD-10-CM code B20 on the
SNF claim and would be processed through the PRICER software used by
CMS to set the appropriate payment rate for a resident's SNF stay. The
18 percent adjustment would be applied to the unadjusted base rate for
the nursing component, and then this amount would be further case-mix
adjusted per the resident's PDPM classification.
We believe that when taken collectively, these adjustments under
the proposed PDPM would appropriately serve to justify issuing the
certification prescribed under section 511(a) of the MMA effective with
the proposed conversion to the PDPM on October 1, 2019, thus permitting
the MMA's existing, temporary AIDS add-on to be replaced by a permanent
adjustment in the case mix (as proposed under the PDPM) that
appropriately compensates for the increased costs associated with these
residents. We invite comments on this proposal.
At the same time, we acknowledge that even with an accurately
targeted model that compensates for the increased costs of SNF
residents with AIDS, an abrupt conversion to an altogether different
payment methodology might nevertheless be potentially disruptive for
facilities, particularly those that serve a significant number of
patients with AIDS and may have become accustomed to operating under
the existing payment methodology for those patients. Accordingly, we
specifically invite comments on possible ways to help mitigate any
potential disruption stemming from the proposed replacement of the
special add-on payment with the permanent case-mix adjustments for SNF
residents with AIDS under the proposed PDPM.
J. Potential Impacts of Implementing the Proposed PDPM and Proposed
Parity Adjustment
This section outlines the projected impacts of implementing the
proposed PDPM effective October 1, 2019 under the SNF PPS and the
related policy proposals in sections V.A. through V.I of this proposed
rule that would be effective in conjunction with the proposed PDPM.
This impact analysis makes a series of assumptions, as described
below. First, the impacts presented here assume consistent provider
behavior in terms of how care is provided under RUG-IV and how care
might be provided under the proposed PDPM, as we do not make any
attempt to anticipate or predict provider reactions to the
implementation of the proposed PDPM. That being said, we acknowledge
the possibility that implementing the proposed PDPM could substantially
affect resident care and coding behaviors. Most notably, based on the
concerns raised during a number of TEPs, we acknowledge the possibility
that, as therapy payments under the proposed PDPM would not have the
same connection to service provision as they do under RUG-IV, it is
possible that some providers may choose to reduce their provision of
therapy services to increase margins under the proposed PDPM. However,
we do not have any basis on which to assume the approximate nature or
magnitude of these behavioral responses, nor have we received any
sufficiently specific guidance on the likely nature or magnitude of
behavioral responses from ANPRM commenters, TEP panelists, or other
sources of feedback. As a result, lacking an appropriate basis to
forecast behavioral responses, we do not adjust our analyses of
resident and provider impacts discussed in this section for projected
changes in provider behavior. However, we do intend to monitor behavior
which may occur in response to the implementation of PDPM, if
finalized, and may consider proposing policies to address such
behaviors to the extent determined appropriate. Additionally, we
acknowledge that a number of states utilize some form of the RUG-IV
case-mix classification system as part of their Medicaid programs and
that any change in Medicare policy can have an impact on state
programs. Again, we do not have any basis on which to assume the
approximate nature or magnitude of these responses, for the same
reasons cited above. Additionally, we do not expect impacts on state
Medicaid programs resulting from PDPM
[[Page 21074]]
implementation to have a notable impact on payments for Medicare-
covered SNF stays, which are the basis for the impact analyses
discussed in this section. Therefore, we do not consider possible
changes to state Medicaid programs when conducting these analyses. We
invite comments on our assumptions that behavior would remain unchanged
under the proposed PDPM and that changes in state Medicaid programs
resulting from PDPM implementation would not have a notable impact on
payments for Medicare-covered SNF stays. We also invite comment on the
impact of these policy proposals on state Medicaid programs.
As with prior system transitions, we propose to implement the
proposed PDPM case-mix system, along with the other policy changes
discussed in section V of this proposed rule, in a budget neutral
manner through application of a parity adjustment to the case-mix
weights under the proposed PDPM, as further discussed below. We are
proposing to implement the PDPM in a budget neutral manner because, as
with prior system transitions, in proposing changes to the case-mix
methodology, we do not intend to change the aggregate amount of
Medicare payments to SNFs. Rather, we aim to utilize a case-mix
methodology to classify residents in such a manner as to best ensure
that payments made for specific residents are an accurate reflection of
resource utilization without introducing potential incentives which
could encourage inappropriate care delivery, as we believe may exist
under the current case-mix methodology. Therefore, the impact analysis
presented here assumes implementation of these proposed changes in a
budget neutral manner. We invite comments on the proposal, as further
discussed below, to implement the PDPM in a budget neutral manner. In
addition, we solicit comment on whether it would be appropriate to
implement the proposed PDPM in a manner that is not budget neutral.
As discussed above, the impact analysis presented here assumes
implementation of these changes in a budget neutral manner without a
behavioral change. The prior sections describe how case-mix weights are
set to reflect relative resource use for each case-mix group. The
proposed PDPM payment before application of a parity adjustment would
be calculated using the unadjusted CMI for each component, the variable
per diem payment adjustment schedule, the unadjusted urban and rural
federal per diem rates shown in Tables 12 and 13, the labor-related
share, and the geographic wage indexes. In applying a parity adjustment
to the case-mix weights, we would maintain the relative value of each
CMI but would multiply every CMI by a ratio to achieve parity in
overall SNF PPS payments under the proposed PDPM and under the RUG-IV
case-mix model. The parity adjustment multiplier is calculated through
the following steps. First, we calculate RUG-IV total payment. Total
RUG-IV payments are calculated by adding total allowed amounts across
all FY 2017 SNF claims. The total allowed amount in the study
population is the summation of Medicare and non-Medicare payments for
Medicare-covered days. More specifically, it is the sum of Medicare
claim payment amount, National Claim History (NCH) primary payer claim
paid amount, NCH beneficiary inpatient deductible amount, NCH
beneficiary Part A coinsurance liability amount, and NCH beneficiary
blood deductible liability amount. Second, we calculate what total
payment would have been under the proposed PDPM in FY 2017 before
application of the parity adjustment. Total estimated payments under
PDPM are calculated by summing the predicted payment for each case-mix
component together for all FY 2017 SNF stays. This represents the total
allowed amount if PDPM had been in place in FY 2017. Total estimated FY
2017 payments under the proposed PDPM are calculated using resident
information from FY 2017 SNF claims, the MDS assessment, and other
Medicare claims, as well as the unadjusted CMI for each component, the
variable per diem payment adjustment schedule, the unadjusted urban and
rural federal per diem rates shown in Tables 12 and 13, the labor-
related share, and the geographic wage indexes. After calculating total
actual RUG-IV payments and total estimated case-mix-related PDPM
payments, we subtract non-case-mix component payments from total RUG-IV
payments, as this component does not change across systems. This
subtraction does not include the temporary add-on for residents with
HIV/AIDS in the RUG-IV system, which PDPM replaces with additional
payments for residents with HIV/AIDS through the NTA and nursing
components (as discussed in sections V.I. of this proposed rule). By
retaining the portion of non-case-mix component payments associated
with the temporary HIV/AIDS add-on in total RUG-IV payments, all
payments associated with the add-on under RUG-IV are re-allocated to
the case-mix-adjusted components in PDPM. This is appropriate because,
as discussed, under the proposed PDPM, additional payments for
residents with HIV/AIDS are made exclusively through the case-mix-
adjusted components (that is, the nursing and NTA components). Lastly,
in calculating budget neutrality, we must set total estimated case-mix-
related payment under PDPM such that it equals total allowable Medicare
payments under RUG-IV. To do this, we divide the remaining total RUG-IV
payments over the remaining total estimated PDPM payments prior to the
parity adjustment. This division yields a ratio (parity adjustment) of
1.46 by which the proposed PDPM CMIs are multiplied so that total
estimated payments under the proposed PDPM would be equal to total
actual payments under RUG-IV, assuming no changes in the population,
provider behavior, and coding. If this parity adjustment had not been
applied, total estimated payments under the proposed PDPM would be 46
percent lower than total actual payments under RUG-IV, therefore the
implementation of the proposed PDPM would not be budget neutral. We
invite comments on our proposal discussed above to apply a parity
adjustment to the CMIs under the proposed PDPM and to implement the
proposed PDPM in a budget neutral manner. More details regarding this
calculation and analysis are described in section 3.11.2. of the SNF
PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). The
impact analysis presented in this section focuses on how payments under
the proposed PDPM would be re-allocated across different resident
groups and among different facility types, assuming implementation in a
budget neutral manner.
The projected resident-level impacts are presented in Table 37. The
first column identifies different resident subpopulations and the
second column shows what percent of SNF stays in FY 2017 are
represented by the given subpopulation. The third column shows the
projected change in total payments for residents in a given
subpopulation, represented as a percentage change in actual FY 2017
payments made for that subpopulation under RUG-IV versus estimated
payments which would have been made to that subpopulation in FY 2017
had the proposed PDPM been in place. Total RUG-IV payments are
calculated by adding total allowed amounts across all FY 2017 SNF
claims associated with a resident subpopulation. The total allowed
[[Page 21075]]
amount in the study population is the summation of Medicare and non-
Medicare payments for Medicare-covered days. More specifically, it is
the summation of Medicare claim payment amount, NCH primary payer claim
paid amount, NCH beneficiary inpatient deductible amount, NCH
beneficiary Part A coinsurance liability amount, and NCH beneficiary
blood deductible liability amount. Payments corresponding to the non-
case-mix component are subtracted from the RUG-IV total payments, not
including the portion of non-case-mix payments corresponding to the
temporary add-on for residents with HIV/AIDS. Total estimated payments
under PDPM are calculated by summing the predicted payment for each
case-mix component together for all FY 2017 SNF stays associated with a
resident subpopulation. Positive changes in this column represent a
projected positive shift in payments for that subpopulation under the
proposed PDPM, while negative changes in this column represent
projected negative shifts in payment for that subpopulation. More
information on the construction of current payments under RUG-IV and
payments under the proposed PDPM for purposes of this impact analysis
can be found in section 3.12. of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Based on the data presented in
Table 37, we observe that the most significant shift in payments
created by implementation of the proposed PDPM would be to redirect
payments away from residents who are receiving very high amounts of
therapy under the current SNF PPS, which strongly incentivizes the
provision of therapy, to residents with more complex clinical needs.
For example, we project that for residents whose most common therapy
level is RU (ultra-high therapy)--the highest therapy level, there
would be a reduction in associated payments of 8.4 percent, while
payments for residents currently classified as non-rehabilitation would
increase by 50.5 percent. Other resident types for which there may be
higher relative payments under the proposed PDPM are: Residents who
have high NTA costs, receive extensive services, are dually enrolled in
Medicare and Medicaid, use IV medication, have ESRD, diabetes, or a
wound infection, receive amputation/prosthesis care, and/or have longer
prior inpatient stays.
In response to comments received on the ANPRM, we investigated a
few additional subpopulations that commenters believed were not
adequately accounted for under the RCS-I model, including residents
with addictions, bleeding disorders, behavioral issues, chronic
neurological conditions, and bariatric care. Table 37 shows that the
proposed PDPM is projected to increase the proportion of total payment
associated with each of those subpopulations.
Table 37--Proposed PDPM Impact Analysis, Resident-Level
------------------------------------------------------------------------
Resident characteristics % of stays Percent change
------------------------------------------------------------------------
All Stays............................... 100.0 0.0
Sex:
Female.............................. 60.3 -0.8
Male................................ 39.7 1.2
Age:
Below 65 years...................... 10.3 7.2
65-74 years......................... 24.1 3.1
75-84 years......................... 32.5 -0.4
85-89 years......................... 17.6 -3.1
Over 90 years....................... 15.6 -4.3
Race/Ethnicity:
White............................... 83.8 -0.2
Black............................... 11.2 0.8
Hispanic............................ 1.7 0.9
Asian............................... 1.3 -0.6
Native American..................... 0.5 7.1
Other or Unknown.................... 1.5 0.8
Medicare/Medicaid Dual Status:
Dually Enrolled..................... 34.7 3.3
Not Dually Enrolled................. 65.3 -2.1
Original Reason for Medicare Enrollment:
Aged................................ 74.6 -1.7
Disabled............................ 24.5 4.8
ESRD................................ 0.9 10.5
Utilization Days:
1-15 days........................... 35.4 13.7
16-30 days.......................... 33.8 0.0
31+ days............................ 30.9 -2.5
Utilization Days = 100:
No.................................. 98.4 0.1
Yes................................. 1.6 -1.9
Length of Prior Inpatient Stay:
0-2 days............................ 2.2 1.3
3 days.............................. 22.5 -3.3
4-30 days........................... 73.6 0.7
31+ days............................ 1.7 6.7
Most Common Therapy Level:
RU.................................. 58.4 -8.4
RV.................................. 22.4 11.4
RH.................................. 6.8 27.4
RM.................................. 3.3 41.1
[[Page 21076]]
RL.................................. 0.1 67.5
Non-Rehab........................... 9.1 50.5
Number of Therapy Disciplines Used:
0................................... 2.3 63.1
1................................... 2.4 44.2
2................................... 51.6 1.6
3................................... 43.7 -3.1
Physical Therapy Utilization:
No.................................. 3.7 50.9
Yes................................. 96.3 -0.7
Occupational Therapy Utilization:
No.................................. 4.5 47.7
Yes................................. 95.5 -0.8
Speech Language Pathology Utilization:
No.................................. 55.0 2.8
Yes................................. 45.0 -2.5
Therapy Utilization:
PT+OT+SLP........................... 43.7 -3.1
PT+OT Only.......................... 50.8 1.3
PT+SLP Only......................... 0.4 27.3
OT+SLP Only......................... 0.4 30.1
PT Only............................. 1.3 41.3
OT Only............................. 0.6 47.9
SLP Only............................ 0.5 46.8
Non-Therapy......................... 2.3 63.1
NTA Costs ($):
0-10................................ 13.7 -3.5
10-50............................... 44.5 -3.2
50-150.............................. 32.2 4.2
150+................................ 9.6 18.7
NTA Comorbidity Score:
0................................... 23.5 -10.4
1-2................................. 30.5 -4.7
3-5................................. 31.0 4.0
6-8................................. 9.9 15.0
9-11................................ 3.6 24.4
12+................................. 1.4 27.2
Extensive Services Level:
Tracheostomy and Ventilator/ 0.3 22.2
Respirator.........................
Tracheostomy or Ventilator/ 0.6 7.3
Respirator.........................
Infection Isolation................. 1.1 9.1
Neither............................. 98.0 -0.3
CFS Level:
Cognitively Intact.................. 58.5 -0.3
Mildly Impaired..................... 20.7 -0.2
Moderately Impaired................. 16.8 -0.7
Severely Impaired................... 3.9 8.8
Clinical Category:
Acute Infections.................... 6.5 3.4
Acute Neurologic.................... 6.4 -3.7
Cancer.............................. 4.6 -3.2
Cardiovascular and Coagulations..... 9.8 0.5
Major Joint Replacement or Spinal 8.6 -2.1
Surgery............................
Medical Management.................. 30.4 0.0
Non-Orthopedic Surgery.............. 10.8 5.7
Non-Surgical Orthopedic/ 5.9 -6.1
Musculoskeletal....................
Orthopedic Surgery (Except Major 8.9 -2.4
Joint Replacement or Spinal
Surgery)...........................
Pulmonary........................... 8.1 5.4
Level of Complications in MS-DRG of
Prior Inpatient Stay:
No Complication..................... 35.8 -3.1
CC/MCC.............................. 64.2 1.7
Stroke:
No.................................. 90.9 0.0
Yes................................. 9.1 0.3
HIV/AIDS:
No.................................. 99.7 0.3
Yes................................. 0.3 -40.5
IV Medication:
No.................................. 91.7 -2.1
Yes................................. 8.3 23.5
Diabetes:
[[Page 21077]]
No.................................. 64.0 -3.0
Yes................................. 36.0 5.4
Wound Infection:
No.................................. 98.9 -0.3
Yes................................. 1.1 22.2
Amputation/Prosthesis Care:
No.................................. 100.0 0.0
Yes................................. 0.0 6.4
Presence of Dementia:
No.................................. 70.9 0.5
Yes................................. 29.1 -1.2
MDS Alzheimer's:
No.................................. 95.2 0.0
Yes................................. 4.8 -0.3
Unknown............................. 0.0 5.0
Presence of Addictions:
No.................................. 94.6 -0.1
Yes................................. 5.4 1.8
Presence of Bleeding Disorders:
No.................................. 90.9 -0.1
Yes................................. 9.1 1.5
Presence of Behavioral Issues:
No.................................. 53.1 -0.9
Yes................................. 46.9 1.0
Presence of Chronic Neurological
Conditions:
No.................................. 74.4 -0.2
Yes................................. 25.6 0.6
Presence of Bariatric Care:
No.................................. 91.3 -0.6
Yes................................. 8.7 6.5
------------------------------------------------------------------------
The projected provider-level impacts are presented in Table 38. The
first column identifies different facility subpopulations and the
second column shows what percentage of SNFs in FY 2017 are represented
by the given subpopulation. The third column shows the projected change
in total payments for facilities in a given subpopulation, represented
as a percentage change in actual FY 2017 payments made for that
subpopulation under RUG-IV versus estimated payments which would have
been made to that subpopulation in FY 2017 had the proposed PDPM been
in place. Total RUG-IV payments are calculated by adding total allowed
amounts across all FY 2017 SNF claims associated with a facility
subpopulation. The total allowed amount in the study population is the
summation of Medicare and non-Medicare payments for Medicare-covered
days. More specifically, it is the summation of Medicare claim payment
amount, NCH primary payer claim paid amount, NCH beneficiary inpatient
deductible amount, NCH beneficiary Part A coinsurance liability amount,
and NCH beneficiary blood deductible liability amount. Payments
corresponding to the non-case-mix component are subtracted from the
RUG-IV total payments, not including the portion of non-case-mix
payments corresponding to the temporary add-on for residents with HIV/
AIDS. Total estimated payments under PDPM are calculated by summing the
predicted payment for each case-mix component together for all FY 2017
SNF stays associated with a facility subpopulation. Positive changes in
this column represent a projected positive shift in payments for that
subpopulation under the proposed PDPM, while negative changes in this
column represent projected negative shifts in payment for that
subpopulation. More information on the construction of current payments
under RUG-IV and payments under the proposed PDPM for purposes of this
impact analysis can be found in section 3.12. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Based on the data
presented in Table 38, we observe that the most significant shift in
Medicare payments created by implementation of the proposed PDPM would
be from facilities with a high proportion of rehabilitation residents
(particularly facilities with high proportions of Ultra-High
Rehabilitation residents) to facilities with high proportions of non-
rehabilitation residents. We project that payments to facilities that
bill 0 to 10 percent of utilization days as RU (ultra-high
rehabilitation) would increase an estimated 27.6 percent under the
proposed PDPM while facilities that bill 90 to 100 percent of
utilization days as RU would see an estimated decrease in payments of
9.8 percent. Other facility types that may see higher relative payments
under the proposed PDPM are small facilities, non-profit facilities,
government-owned facilities, and hospital-based and swing-bed
facilities.
Table 38--Proposed PDPM Impact Analysis, Facility-Level
------------------------------------------------------------------------
Provider characteristics % of providers Percent change
------------------------------------------------------------------------
All Stays............................... 100.0 0.0
Ownership:
[[Page 21078]]
For profit.......................... 72.0 -0.7
Non-profit.......................... 22.6 1.9
Government.......................... 5.4 4.2
Number of Certified SNF Beds:
0-49................................ 10.0 3.5
50-99............................... 38.2 0.6
100-149............................. 34.7 -0.2
150-199............................. 11.1 -0.3
200+................................ 5.9 -1.8
Location:
Urban............................... 72.7 -0.7
Rural............................... 27.3 3.8
Facility Type:
Freestanding........................ 96.2 -0.3
Hospital-Based/Swing Bed............ 3.8 16.7
Location by Facility Type:
Urban [verbar] Freestanding......... 70.6 -1.0
Urban [verbar] Hospital-Based/Swing 2.2 15.3
Bed................................
Rural [verbar] Freestanding......... 25.6 3.2
Rural [verbar] Hospital-Based/Swing 1.6 21.1
Bed................................
Census Division:
New England......................... 5.9 2.0
Middle Atlantic..................... 10.8 -2.6
East North Central.................. 20.6 0.7
West North Central.................. 12.5 6.7
South Atlantic...................... 15.7 -0.4
East South Central.................. 6.6 1.0
West South Central.................. 13.1 -1.0
Mountain............................ 4.7 1.1
Pacific............................. 10.1 -0.8
Location by Region:
Urban [verbar] New England.......... 5.1 1.8
Urban [verbar] Middle Atlantic...... 9.5 -2.9
Urban [verbar] East North Central... 14.4 -0.1
Urban [verbar] West North Central... 6.0 4.6
Urban [verbar] South Atlantic....... 12.6 -1.1
Urban [verbar] East South Central... 3.6 0.3
Urban [verbar] West South Central... 8.7 -1.2
Urban [verbar] Mountain............. 3.4 0.1
Urban [verbar] Pacific.............. 9.5 -0.9
Rural [verbar] New England.......... 0.8 4.0
Rural [verbar] Middle Atlantic...... 1.3 2.7
Rural [verbar] East North Central... 6.2 3.6
Rural [verbar] West North Central... 6.5 10.5
Rural [verbar] South Atlantic....... 3.1 4.2
Rural [verbar] East South Central... 3.0 2.1
Rural [verbar] West South Central... 4.4 -0.1
Rural [verbar] Mountain............. 1.3 6.2
Rural [verbar] Pacific.............. 0.6 2.2
% Stays with Maximum Utilization Days =
100:
0-10%............................... 94.4 0.1
10-25%.............................. 5.1 -2.8
25-100%............................. 0.4 -3.6
% Medicare/Medicaid Dual Enrollment:
0-10%............................... 8.6 -1.3
10-25%.............................. 17.5 -1.3
25-50%.............................. 36.0 0.3
50-75%.............................. 26.5 1.3
75-90%.............................. 8.2 0.4
90-100%............................. 3.1 1.6
% Utilization Days Billed as RU:
0-10%............................... 8.9 27.6
10-25%.............................. 8.0 15.5
25-50%.............................. 24.1 7.0
50-75%.............................. 39.2 -0.4
75-90%.............................. 17.2 -6.0
90-100%............................. 2.6 -9.8
% Utilization Days Billed as Non-Rehab:
0-10%............................... 79.8 -1.5
10-25%.............................. 16.6 8.6
25-50%.............................. 2.7 23.1
[[Page 21079]]
50-75%.............................. 0.4 35.8
75-90%.............................. 0.2 41.8
90-100%............................. 0.4 33.6
------------------------------------------------------------------------
In addition to the impacts discussed throughout this section, we
also note that we expect a significant reduction in regulatory burden
under the SNF PPS, due to the changes we are proposing in the MDS
assessment schedule, as discussed above in section V.E.1. of this
proposed rule. Based on the calculations outlined in section VII.B.1.
of this proposed rule, we anticipate that the proposed assessment
schedule changes discussed in this rule would reduce administrative
costs for each provider by approximately $12,000 and reduce the time
for administrative issues by approximately 183 hours for each provider.
We anticipate that this proposed reduction in administrative burden
would permit providers greater flexibility in interacting with their
patients and focusing on their patient's individual care needs.
With regard to the proposed changes to the SNF PPS discussed in
section V of this proposed rule, we provide an accounting of our
reasons for each of the proposed policies throughout the subsections in
section V and invite comments on any of those proposed changes. In this
section, we discuss alternatives considered which relate generally to
implementation of the proposed changes discussed in section V, most
notably the implementation of the proposed PDPM.
We are proposing to implement the PDPM effective beginning in FY
2020 (that is, October 1, 2019). This proposed effective date
incorporates a one year period to allow time for provider education and
training, internal system transitions, and to allow states to make any
Medicaid program changes which may be necessary based on the proposed
changes related to PDPM.
When making major system changes, CMS often considers possible
transition options for providers and other stakeholders between the
former system and the new system. For example, when we updated OMB
delineations used to establish a provider's wage index under the SNF
PPS in FY 2015, we utilized a blended rate in the first year of
implementation, whereby 50 percent of the provider's payment was
derived from their former OMB delineation and 50 percent from their new
OMB delineation (79 FR 45644-45646).
However, due to the fundamental nature of the change from the
current RUG-IV case-mix model to the proposed PDPM, which includes
differences in resident assessment, payment algorithms, and other
policies, we believe that proposing a blended rate for the whole system
(that would require two full case-mix systems (RUG-IV and the proposed
PDPM) to run concurrently) is not advisable as part of any transition
strategy for implementing the proposed PDPM, due to the significant
administrative and logistical issues that would be associated with such
a transition strategy. Specifically, CMS and providers would be
required to manage both the RUG-IV payment model and proposed PDPM
simultaneously, creating significant burden and undue complexity for
all involved parties. Furthermore, providers would be required to
follow both sets of MDS assessment rules, each of which carries with it
its own level of complexity. CMS would also be required to process
assessments and claims under each system, which would entail a
significant amount of resources and burden for CMS, MACs, and
providers. Finally, a blended rate option would also mitigate some of
the burden reduction associated with implementing PDPM, estimated to
save SNFs close to $200 million per year as compared to estimated
burden under RUG-IV, given that the current assessment schedule would
need to continue until full implementation of PDPM was achieved. We
believe these issues also would be implicated in any alternative
transition strategy which would require both case-mix systems to exist
concurrently, such as giving providers a choice in the first year of
implementation of operating under either the RUG-IV or PDPM. Therefore,
we did not pursue any alternatives which required concurrent operation
of both the RUG-IV and PDPM.
We then considered alternative effective dates for implementing the
proposed PDPM, and other policy changes proposed in section V of this
rule. We considered implementing the new case-mix model effective
beginning in FY 2019, but we believe that this would not permit
sufficient time for providers and other stakeholders, including CMS, to
make the necessary preparations for this magnitude of a change in the
SNF PPS. We also believe that such a quick transition would not be in
keeping with how similar types of SNF PPS changes have been implemented
in the past. We also considered implementing PDPM more than one year
after being finalized, such as implementing the proposed PDPM effective
beginning October 1, 2020 (FY 2021). However, we believe that setting
the effective date of PDPM this far out is not necessary, based on our
prior experience with similar SNF PPS changes. As is customary, we plan
to continue to provide free software to providers which can be used to
group residents under the proposed PDPM, as well as providing data
specifications for this grouper software as soon as is practicable,
should the proposed PDPM be finalized, thereby mitigating potential
concerns around software vendors having sufficient time to develop
products for PDPM. Moreover, given the issues identified throughout
this proposed rule with the current RUG-IV model, notably the issues
surrounding the burdensome and complex PPS assessment schedule under
the SNF PPS currently and concerns around the incentives for therapy
provision under the RUG-IV system, we believe it appropriate to
implement the proposed PDPM as soon as is practicable. Therefore, we
propose to implement the PDPM, as well as the other proposed changes
discussed in section V of this proposed rule, effective beginning
October 1, 2019.
Finally, we considered alternatives related to the proposal
discussed in section V.I., specifically the proposed certification that
we have met the requirements set forth in section 511(a) of the MMA,
which would permit us to use the PDPM's proposed permanent case-mix
adjustments for SNF residents with AIDS to replace the temporary
special add-on in the PPS per diem payment for such residents. As noted
in section V.I. above, this special add-on for SNF residents with AIDS
was intended to be of limited duration, as the MMA legislation
specified that it was to remain in effect only until the Secretary
certifies that there is an appropriate adjustment in the case mix
[[Page 21080]]
to compensate for the increased costs associated with such residents.
We considered maintaining this adjustment under the proposed PDPM.
However, given the adjustment incorporated into the NTA and nursing
components under the proposed PDPM to account for the increased costs
of treating residents with AIDS, this would result in a substantial
increase in payment for such residents beyond even the current add-on
payment. Moreover, as discussed in section V.I., we believe that the
proposed PDPM provides a tailored case-mix adjustment that more
accurately accounts for the additional costs and resource use of
residents with AIDS, as compared to an undifferentiated add-on which
simply applies an across-the-board multiplier to the full SNF PPS per
diem. Finally, as stated in section 3.8.2. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), HIV/AIDS was associated
with a negative and statistically significant decrease in PT, OT and
SLP costs per day. This means inherently that, to the extent that the
existing add-on is applied against the full SNF PPS per diem payment,
the magnitude of the add-on payment increases with increases in therapy
payment, which conflicts with the data described above regarding the
relationship between therapy costs and the presence of an AIDS
diagnosis. As a result, maintaining the current add-on would create an
inconsistency between how SNF payments would be made and the data
regarding AIDS diagnoses and resident therapy costs. Therefore, we are
proposing to replace this add-on payment with appropriate case-mix
adjustments for the increased costs of care for this population of
residents through the proposed NTA and nursing components of the
proposed PDPM.
We invite comments on the projected impacts and on the proposals
and alternatives discussed throughout this section.
VI. Other Issues
A. Other Proposed Revisions to the Regulation Text
Along with our proposals to revise the regulations as discussed
elsewhere in this proposed rule, we are also proposing to make two
other revisions in the regulation text. The first involves Sec.
411.15(p)(3)(iv), which specifies that whenever a beneficiary is
formally discharged (or otherwise departs) from the SNF, this event
serves to end that beneficiary's status as a ``resident'' of the SNF
for purposes of consolidated billing (the SNF ``bundling''
requirement), unless he or she is readmitted (or returns) to that or
another SNF ``by midnight of the day of departure.'' In initially
establishing this so-called ``midnight rule,'' the FY 2001 SNF PPS
final rule (65 FR 46770, July 31, 2000) noted in this particular
context that:
As we explained in the proposed rule, a patient ``day'' begins
at 12:01 a.m. and ends the following midnight, so that the phrase
``midnight of the day of departure'' refers to the midnight that
immediately follows the actual moment of departure, rather than to
the midnight that immediately precedes it (65 FR 46792).
However, the Medicare program's standard practice for counting
inpatient days is actually one in which an inpatient day would begin at
midnight (see, for example, Sec. 20.1 in the Medicare Benefit Policy
Manual, Chapter 3, which specifies that in counting inpatient days, ``.
. . a day begins at midnight and ends 24 hours later'' (emphasis
added)). Accordingly, in order to ensure consistency with that
approach, we now propose to revise Sec. 411.15(p)(3)(iv) to specify
that for consolidated billing purposes, a beneficiary's ``resident''
status ends whenever he or she is formally discharged (or otherwise
departs) from the SNF, unless he or she is readmitted (or returns) to
that or another SNF ``before the following midnight.'' We note that
this revision would not alter the underlying principle that a
beneficiary's SNF ``resident'' status in this context ends upon
departure from the SNF unless he or she returns to that or another SNF
later on that same day; rather, it would simply serve to conform the
actual wording of the applicable regulations text with the Medicare
manual's standard definition of the starting point of a patient
``day.''
We are also proposing a technical correction to Sec.
424.20(a)(1)(i), which describes the required content of the SNF level
of care certification, in order to conform it more closely to that of
the corresponding statutory requirements at section 1814(a)(2)(B) of
the Act. This statutory provision defines the SNF level of care in
terms of skilled services furnished on a daily basis which, as a
practical matter, can only be provided on an inpatient basis in a SNF.
In addition, it provides that the SNF-level care must be for either:
An ongoing condition that was one of the conditions that
the beneficiary had during the qualifying hospital stay; or
A new condition that arose while the beneficiary was in
the SNF for treatment of that ongoing condition.
In setting forth the SNF level of care definition itself, the
implementing regulations at Sec. 409.31 reflect both of the above two
points (at paragraphs (b)(2)(i) and (b)(2)(ii), respectively); however,
the regulations describing the content of the initial level of care
certification at Sec. 424.20(a)(1)(i) have inadvertently omitted the
second point. Accordingly, we now propose to revise Sec.
424.20(a)(1)(i) to rectify this omission, so that it more accurately
tracks the language in the corresponding statutory authority at section
1814(a)(2)(B) of the Act.
We invite comments on our proposed revisions to Sec.
411.15(p)(3)(iv) and Sec. 424.20(a)(1)(i).
B. Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)
1. Background
The Skilled Nursing Facility Quality Reporting Program (SNF QRP) is
authorized by section 1888(e)(6) of the Act and it applies to
freestanding SNFs, SNFs affiliated with acute care facilities, and all
non-CAH swing-bed rural hospitals. Under the SNF QRP, the Secretary
reduces by 2 percentage points the annual market basket percentage
update described in section 1888(e)(5)(B)(i) of the Act applicable to a
SNF for a fiscal year, after application of section 1888(e)(5)(B)(ii)
of the Act (the MFP adjustment) and section 1888(e)(5)(B)(iii) of the
Act (the 1 percent market basket increase for FY 2018), in the case of
a SNF that does not submit data in accordance with sections
1888(e)(6)(B)(i) of the Act for that fiscal year. For more information
on the requirements we have adopted for the SNF QRP, we refer readers
to the FY 2016 SNF PPS final rule (80 FR 46427 through 46429), FY 2017
SNF PPS final rule (81 FR 52009 through 52010) and FY 2018 SNF PPS
final rule (82 FR 36566).
Although we have historically used the preamble to the SNF PPS
proposed and final rules each year to remind stakeholders of all
previously finalized program requirements, we have concluded that
repeating the same discussion each year is not necessary for every
requirement, especially if we have codified it in our regulations.
Accordingly, the following discussion is limited as much as possible to
a discussion of our proposals for future years of the SNF QRP, and it
represents the approach we intend to use in our rulemakings for this
program going forward.
[[Page 21081]]
2. General Considerations Used for the Selection of Measures for the
SNF QRP
a. Background
For a detailed discussion of the considerations we historically
used for the selection of SNF QRP quality, resource use, and other
measures, we refer readers to the FY 2016 SNF PPS final rule (80 FR
46429 through 46431).
b. Accounting for Social Risk Factors in the SNF QRP
In the FY 2018 SNF PPS final rule (82 FR 36567 through 36568), we
discussed the importance of improving beneficiary outcomes including
reducing health disparities. We also discussed our commitment to
ensuring that medically complex residents, as well as those with social
risk factors, receive excellent care. We discussed how studies show
that social risk factors, such as being near or below the poverty level
as determined by HHS, belonging to a racial or ethnic minority group,
or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\4\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex residents as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in our value-based purchasing programs.\5\ As we noted in the FY 2018
SNF PPS final rule (82 FR 36567 through 36568), ASPE's report to
Congress, which was required by the IMPACT Act, found that, in the
context of value-based purchasing programs, dual eligibility was the
most powerful predictor of poor health care outcomes among those social
risk factors that they examined and tested. ASPE is continuing to
examine this issue in its second report required by the IMPACT Act,
which is due to Congress in the fall of 2019. In addition, as we noted
in the FY 2018 SNF PPS final rule (82 FR 36357), the National Quality
Forum (NQF) undertook a 2-year trial period in which certain new
measures and measures undergoing maintenance review have been assessed
to determine if risk adjustment for social risk factors is appropriate
for these measures.\6\ The trial period ended in April 2017 and a final
report is available at http://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a
conceptual basis for adjustment generally did not demonstrate an
empirical relationship'' between social risk factors and the outcomes
measured. This discrepancy may be explained in part by the methods used
for adjustment and the limited availability of robust data on social
risk factors. NQF has extended the socioeconomic status (SES) trial,\7\
allowing further examination of social risk factors in outcome
measures.
---------------------------------------------------------------------------
\4\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at http://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\5\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\6\ Available at http://www.qualityforum.org/SES_Trial_Period.aspx.
\7\ Available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
---------------------------------------------------------------------------
In the FY 2018/CY 2018 proposed rules for our quality reporting and
value-based purchasing programs, we solicited feedback on which social
risk factors provide the most valuable information to stakeholders and
the methodology for illuminating differences in outcomes rates among
patient groups within a provider that would also allow for a comparison
of those differences, or disparities, across providers. Feedback we
received across our quality reporting programs included encouraging us
to explore whether factors that could be used to stratify or risk
adjust the measures (beyond dual eligibility); to consider the full
range of differences in resident backgrounds that might affect
outcomes; to explore risk adjustment approaches; and to offer careful
consideration of what type of information display would be most useful
to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by resident dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for SNFs to identify gaps in outcomes for
different groups of residents, improve the quality of health care for
all residents, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned CMS to balance fair and equitable payment while avoiding
payment penalties that mask health disparities or discouraging the
provision of care to more medically complex patients. Commenters also
noted that value-based payment program measure selection, domain
weighting, performance scoring, and payment methodology must account
for social risk.
As a next step, we are considering options to improve health
disparities among patient-groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital Inpatient
Quality Reporting (IQR) Program outcome measures. Furthermore, we
continue to consider options to address equity and disparities in our
value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
3. Proposed New Measure Removal Factor for Previously Adopted SNF QRP
Measures
As a part of our Meaningful Measures Initiative discussed in
section I.D. of this proposed rule, we strive to put patients first,
ensuring that they, along with their clinicians, are empowered to make
decisions about their own healthcare using data-driven information that
is increasingly aligned with a parsimonious set of meaningful quality
measures. We began reviewing the SNF QRP's measures in accordance with
the Meaningful Measures Initiative, and we are working to identify how
to move the SNF QRP forward in the least burdensome manner possible
while continuing to incentivize improvement in the quality of care
provided to patients.
Specifically, we believe the goals of the SNF QRP and the measures
used in the program cover most of the Meaningful Measures Initiative
priorities, including making care safer, strengthening person and
family engagement, promoting coordination of care, promoting effective
prevention and treatment, and making care affordable.
[[Page 21082]]
We also evaluated the appropriateness and completeness of the SNF
QRP's current measure removal factors. We have previously finalized
that we would use notice and comment rulemaking to remove measures from
the SNF QRP based on the following factors (80 FR 46431 through
46432):\8\
---------------------------------------------------------------------------
\8\ We refer readers to the FY 2016 SNF PPS final rule (80 FR
46431 through 46432) for more information on the factors we consider
for removing measures.
---------------------------------------------------------------------------
Factor 1. Measure performance among SNFs is so high and
unvarying that meaningful distinctions in improvements in performance
can no longer be made.
Factor 2. Performance or improvement on a measure does not
result in better resident outcomes.
Factor 3. A measure does not align with current clinical
guidelines or practice.
Factor 4. A more broadly applicable measure (across
settings, populations, or conditions) for the particular topic is
available.
Factor 5. A measure that is more proximal in time to
desired resident outcomes for the particular topic is available.
Factor 6. A measure that is more strongly associated with
desired resident outcomes for the particular topic is available.
Factor 7. Collection or public reporting of a measure
leads to negative unintended consequences other than resident harm.
We continue to believe that these measure removal factors are
appropriate for use in the SNF QRP. However, even if one or more of the
measure removal factors applies, we may nonetheless choose to retain
the measure for certain specified reasons. Examples of such instances
could include when a particular measure addresses a gap in quality that
is so significant that removing the measure could in turn result in
poor quality, or in the event that a given measure is statutorily
required. We note further that, consistent with other quality reporting
programs, we apply these factors on a case-by-case basis.
We are proposing to adopt an additional factor to consider when
evaluating potential measures for removal from the SNF QRP measure set:
Factor 8. The costs associated with a measure outweigh the
benefit of its continued use in the program.
As we discussed in section I.D. of this proposed rule, with respect
to our new Meaningful Measures Initiative, we are engaging in efforts
to ensure that the SNF QRP measure set continues to promote improved
health outcomes for beneficiaries while minimizing the overall costs
associated with the program. We believe these costs are multifaceted
and include not only the burden associated with reporting, but also the
costs associated with implementing and maintaining the program. We have
identified several different types of costs, including, but not limited
to: (1) The provider and clinician information collection burden and
burden associated with the submission/reporting of quality measures to
CMS; (2) the provider and clinician cost associated with complying with
other programmatic requirements; (3) the provider and clinician cost
associated with participating in multiple quality programs, and
tracking multiple similar or duplicative measures within or across
those programs; (4) the cost to CMS associated with the program
oversight of the measure including measure maintenance and public
display; and (5) the provider and clinician cost associated with
compliance with other federal and/or state regulations (if applicable).
For example, it may be needlessly costly and/or of limited benefit
to retain or maintain a measure which our analyses show no longer
meaningfully supports program objectives (for example, informing
beneficiary choice). It may also be costly for health care providers to
track the confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. CMS may also have to expend unnecessary resources to maintain
the specifications for the measure, as well as the tools we need to
collect, validate, analyze, and publicly report the measure data.
Furthermore, beneficiaries may find it confusing to see public
reporting on the same measure in different programs.
When these costs outweigh the evidence supporting the continued use
of a measure in the SNF QRP, we believe it may be appropriate to remove
the measure from the program. Although we recognize that one of the
main goals of the SNF QRP is to improve beneficiary outcomes by
incentivizing health care providers to focus on specific care issues
and making data public related to those issues, we also recognize that
those goals can have limited utility where, for example, the publicly
reported data is of limited use because it cannot be easily interpreted
by beneficiaries and used to influence their choice of providers. In
these cases, removing the measure from the SNF QRP may better
accommodate the costs of program administration and compliance without
sacrificing improved health outcomes and beneficiary choice.
We are proposing that we would remove measures based on this factor
on a case-by-case basis. We might, for example, decide to retain a
measure that is burdensome for health care providers to report if we
conclude that the benefit to beneficiaries justifies the reporting
burden. Our goal is to move the program forward in the least burdensome
manner possible, while maintaining a parsimonious set of meaningful
quality measures and continuing to incentivize improvement in the
quality of care provided to patients.
We are inviting public comment on our proposal to adopt an
additional measure removal Factor 8, the costs associated with a
measure outweigh the benefit of its continued use in the program.
We also are proposing to add a new Sec. 413.360(b)(3) to our
regulations that would codify the removal factors we have previously
finalized for the SNF QRP as well as the new measure removal factor
that we are proposing to adopt in this proposed rule.
We are inviting public comment on these proposals.
4. Quality Measures Currently Adopted for the FY 2020 SNF QRP
The SNF QRP currently has 12 measures for the FY 2020 program year,
which are outlined in Table 39.
[[Page 21083]]
Table 39--Quality Measures Currently Adopted for the FY 2020 SNF QRP
------------------------------------------------------------------------
Short name Measure name and data source
------------------------------------------------------------------------
Resident Assessment Instrument Minimum Data Set
------------------------------------------------------------------------
Pressure Ulcer.................... Percent of Residents or Patients
With Pressure Ulcers That Are New
or Worsened (Short Stay) (NQF
#0678). *
Pressure Ulcer/Injury............. Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury.
Application of Falls.............. Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay) (NQF
#0674).
Application of Functional Application of Percent of Long-Term
Assessment/Care Plan. Care Hospital (LTCH) Patients with
an Admission and Discharge
Functional Assessment and a Care
Plan That Addresses Function (NQF
#2631).
Change in Mobility Score.......... Application of IRF Functional
Outcome Measure: Change in Mobility
Score for Medical Rehabilitation
Patients (NQF #2634).
Discharge Mobility Score.......... Application of IRF Functional
Outcome Measure: Discharge Mobility
Score for Medical Rehabilitation
Patients (NQF #2636).
Change in Self-Care Score......... Application of the IRF Functional
Outcome Measure: Change in Self-
Care Score for Medical
Rehabilitation Patients (NQF
#2633).
Discharge Self-Care Score......... Application of IRF Functional
Outcome Measure: Discharge Self-
Care Score for Medical
Rehabilitation Patients (NQF
#2635).
DRR............................... Drug Regimen Review Conducted With
Follow-Up for Identified Issues-
Post Acute Care (PAC) Skilled
Nursing Facility (SNF) Quality
Reporting Program (QRP).
------------------------------------------------------------------------
Claims-Based
------------------------------------------------------------------------
MSPB SNF.......................... Medicare Spending Per Beneficiary
(MSPB)--Post Acute Care (PAC)
Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
DTC............................... Discharge to Community-Post Acute
Care (PAC) Skilled Nursing Facility
(SNF) Quality Reporting Program
(QRP).
PPR............................... Potentially Preventable 30-Day Post-
Discharge Readmission Measure for
Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
------------------------------------------------------------------------
* The measure will be replaced with the Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/Injury measure, effective October 1, 2018.
5. IMPACT Act Implementation Update
In the FY 2018 SNF PPS final rule (82 FR 36596 through 36597), we
stated that we intended to specify two measures that would satisfy the
domain of accurately communicating the existence and provision of the
transfer of health information and care preferences under section
1899B(c)(1)(E) of the Act no later than October 1, 2018, and intended
to propose to adopt them for the FY 2021 SNF QRP, with data collection
beginning on or about October 1, 2019.
As a result of the input provided during a public comment period
initiated by our contractor between November 10, 2016 and December 11,
2016, input provided by a technical expert panel (TEP) convened by our
contractor, and pilot measure testing conducted in 2017, we are
engaging in continued development work on these two measures, including
supplementary measure testing and providing the public with an
opportunity for comment in 2018. Further we expect to reconvene a TEP
for these measures in mid-2018. We now intend to specify the measures
under section 1899B(c)(1)(E) of the Act no later than October 1, 2019,
and intend to propose to adopt the measures for the FY 2022 SNF QRP,
with data collection beginning with residents admitted as well as
discharged on or after October 1, 2020. For more information on the
pilot testing, we refer readers to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
6. Form, Manner, and Timing of Data Submission Under the SNF QRP
Under our current policy, SNFs report data on SNF QRP assessment-
based measures and standardized resident assessment data by reporting
the designated data elements for each applicable resident on the
Minimum Data Set (MDS) resident assessment instrument and then
submitting completed instruments to CMS using the using the Quality
Improvement Evaluation System Assessment Submission and Processing
(QIES ASAP) system. We refer readers to the FY 2018 SNF PPS final rule
(82 FR 36601 through 36603) for the data collection and submission time
frames for assessment-based measures and standardized resident
assessment data that we finalized for the SNF QRP.
7. Proposed Changes to the SNF QRP Reconsideration Requirements
Section 413.360(d)(1) of our regulations states, in part, that SNFs
that do not meet the SNF QRP requirements for a program year will
receive a letter of non-compliance through the QIES ASAP system, as
well as through the United States Postal Service.
We are proposing to revise Sec. 413.360(d)(1) to expand the
methods by which we would notify a SNF of non-compliance with the SNF
QRP requirements for a program year. Revised Sec. 413.360(d)(1) would
state that we would notify SNFs of non-compliance with the SNF QRP
requirements via a letter sent through at least one of the following
notification methods: the QIES ASAP system; the United States Postal
Service; or via an email from the Medicare Administrative Contractor
(MAC). We believe that this change will address feedback from providers
requesting additional methods for notification.
In addition, Sec. 413.360(d)(4) currently states that we will make
a decision on the request for reconsideration and provide notice of the
decision to the SNF through the QIES ASAP system and via letter sent
through the United States Postal Service.
We are proposing to revise Sec. 413.360(d)(4) to state that we
will notify SNFs, in writing, of our final decision regarding any
reconsideration request via a letter sent through at least one of the
following notification methods: the QIES ASAP system, the United States
Postal Service, or via an email from the Medicare Administrative
Contractor (MAC).
[[Page 21084]]
We are inviting public comments on these proposals.
8. Proposed Policies Regarding Public Display for the SNF QRP
Section 1899B(g) of the Act requires the Secretary to establish
procedures for the public reporting of SNFs' performance on measures
under sections 1899B(c)(1) and 1899B(d)(1) of the Act. Measure data
will be displayed on the Nursing Home Compare website, an interactive
web tool that assists individuals by providing information on SNF
quality of care to those who need to select a SNF.
In the FY 2018 SNF PPS final rule (82 FR 36606 through 36607), we
finalized that we would publicly display the Medicare Spending Per
Beneficiary-PAC SNF QRP and Discharge to Community-PAC SNF QRP measures
in calendar year 2018 based on discharges from October 1, 2016 through
September 30, 2017. In this proposed rule, we are proposing to increase
the number of years of data used to calculate the Medicare Spending Per
Beneficiary-PAC SNF QRP and Discharge to Community-PAC SNF QRP measures
for purposes of display from 1 year to 2 years. Under this proposal,
data on these measures would be publicly reported in CY 2019, or as
soon thereafter as operationally feasible, based on discharges from
October 1, 2016 through September 30, 2018.
Increasing the measure calculation and public display periods from
1 to 2 years of data increases the number of SNFs with enough data
adequate for public reporting for the Medicare Spending Per
Beneficiary-PAC SNF QRP measure from 86 percent (based on 2016 Medicare
FFS claims data) to 95 percent (based on 2015 through 2016 Medicare FFS
claims data), and for the Discharge to Community-PAC SNF QRP measure
from 83 percent (based on 2016 Medicare FFS claims data) to 94 percent
(based on 2015 through 2016 Medicare FFS claims data). Increasing
measure public display periods to 2 years also aligns with the public
display periods of these measures in the IRF and LTCH QRPs.
We also propose to begin publicly displaying data in CY 2020, or as
soon thereafter as is operationally feasible, on the following four
assessment-based measures: (1) Change in Self-Care Score (NQF #2633);
(2) Change in Mobility Score (NQF #2634); (3) Discharge Self-Care Score
(NQF #2635); and (4) Discharge Mobility Score (NQF #2636). SNFs are
required to submit data on these four assessment-based measures with
respect to admissions as well as discharges occurring on or after
October 1, 2018. We are proposing to display data for these assessment-
based measures based on 4 rolling quarters of data, initially using 4
quarters of discharges from January 1, 2019 through December 31, 2019.
To ensure the statistical reliability of the measure rates for these
four assessment-based measures, we are also proposing that if a SNF has
fewer than 20 eligible cases during any 4 consecutive rolling quarters
of data that we are displaying for any of these measures, then we would
note in our public display of that measure that with respect to that
SNF, the number of cases/resident stays is too small to publicly
report.
We are inviting public comment on these proposals.
C. Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP)
1. Background
Section 215(b) of the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93) authorized the SNF VBP Program (the
``Program'') by adding section 1888(h) to the Act. As a prerequisite to
implementing the SNF VBP Program, in the FY 2016 SNF PPS final rule (80
FR 46409 through 46426), we adopted an all-cause, all-condition
hospital readmission measure, as required by section 1888(g)(1) of the
Act. In the FY 2017 SNF PPS final rule (81 FR 51986 through 52009), we
adopted an all-condition, risk-adjusted potentially preventable
hospital readmission measure for SNFs, as required by section
1888(g)(2) of the Act. In the FY 2018 SNF PPS final rule (82 FR 36608
through 36623), we adopted additional policies for the Program,
including an exchange function methodology for disbursing value-based
incentive payments.
Section 1888(h)(1)(B) of the Act requires that the SNF VBP Program
apply to payments for services furnished on or after October 1, 2018.
The SNF VBP Program applies to freestanding SNFs, SNFs affiliated with
acute care facilities, and all non-CAH swing-bed rural hospitals. We
believe the implementation of the SNF VBP Program is an important step
towards transforming how care is paid for, moving increasingly towards
rewarding better value, outcomes, and innovations instead of merely
rewarding volume.
For additional background information on the SNF VBP Program,
including an overview of the SNF VBP Report to Congress and a summary
of the Program's statutory requirements, we refer readers to the FY
2016 SNF PPS final rule (80 FR 46409 through 46410). We also refer
readers to the FY 2017 SNF PPS final rule (81 FR 51986 through 52009)
for discussion of the policies that we adopted related to the
potentially preventable hospital readmission measure, scoring, and
other topics. Finally, we refer readers to the FY 2018 SNF PPS final
rule (82 FR 36608 through 36623) for discussions of the policies that
we adopted related to value-based incentive payments, the exchange
function, and other topics.
In this proposed rule, we are proposing additional requirements for
the FY 2021 SNF VBP Program, as well as other program policies.
2. Measures
For background on the measures we have adopted for the SNF VBP
Program, we refer readers to the FY 2016 SNF PPS final rule (80 FR
46419), where we finalized the Skilled Nursing Facility 30-Day All-
Cause Readmission Measure (SNFRM) (NQF #2510) that we are currently
using for the SNF VBP Program. We also refer readers to the FY 2017 SNF
PPS final rule (81 FR 51987 through 51995), where we finalized the
Skilled Nursing Facility 30-Day Potentially Preventable Readmission
Measure (SNFPPR) that we will use for the SNF VBP Program instead of
the SNFRM as soon as practicable, as required by statute.
We are not proposing any changes to the Program's measures at this
time.
a. Accounting for Social Risk Factors in the SNF VBP Program
In the FY 2018 SNF PPS final rule (82 FR 36611 through 36613), we
discussed the importance of improving beneficiary outcomes including
reducing health disparities. We also discussed our commitment to
ensuring that medically complex patients, as well as those with social
risk factors, receive excellent care. We discussed how studies show
that social risk factors, such as being near or below the poverty level
as determined by HHS, belonging to a racial or ethnic minority group,
or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\9\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients, as well as those with social risk factors,
[[Page 21085]]
receive excellent care. Within this context, reports by the Office of
the Assistant Secretary for Planning and Evaluation (ASPE) and the
National Academy of Medicine have examined the influence of social risk
factors in our value-based purchasing programs.\10\ As we noted in the
FY 2018 SNF PPS final rule (82 FR 36611), ASPE's report to Congress
found that, in the context of value-based purchasing programs, dual
eligibility was the most powerful predictor of poor health care
outcomes among those social risk factors that they examined and tested.
In addition, as noted in the FY 2018 SNF PPS final rule, the National
Quality Forum (NQF) undertook a 2-year trial period in which certain
new measures and measures undergoing maintenance review have been
assessed to determine if risk adjustment for social risk factors is
appropriate for these measures.\11\ The trial period ended in April
2017 and a final report is available at http://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a
conceptual basis for adjustment generally did not demonstrate an
empirical relationship'' between social risk factors and the outcomes
measured. This discrepancy may be explained in part by the methods used
for adjustment and the limited availability of robust data on social
risk factors. NQF has extended the socioeconomic status (SES)
trial,\12\ allowing further examination of social risk factors in
outcome measures.
---------------------------------------------------------------------------
\9\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at http://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\10\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\11\ Available at http://www.qualityforum.org/SES_Trial_Period.aspx.
\12\ Available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
---------------------------------------------------------------------------
In the FY 2018/CY 2018 proposed rules for our quality reporting and
value-based purchasing programs, we solicited feedback on which social
risk factors provide the most valuable information to stakeholders and
the methodology for illuminating differences in outcomes rates among
patient groups within a provider that would also allow for a comparison
of those differences, or disparities, across providers. Feedback we
received across our quality reporting programs included encouraging CMS
to explore whether factors that could be used to stratify or risk
adjust the measures (beyond dual eligibility); to consider the full
range of differences in patient backgrounds that might affect outcomes;
to explore risk adjustment approaches; and to offer careful
consideration of what type of information display would be most useful
to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by patient dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for hospitals to identify gaps in outcomes for
different groups of patients, improve the quality of health care for
all patients, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned CMS to balance fair and equitable payment while avoiding
payment penalties that mask health disparities or discouraging the
provision of care to more medically complex patients. Commenters also
noted that value-based payment program measure selection, domain
weighting, performance scoring, and payment methodology must account
for social risk.
As a next step, we are considering options to improve health
disparities among patient groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital Inpatient
Quality Reporting Program outcome measures. Furthermore, we continue to
consider options to address equity and disparities in our value-based
purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences
3. Proposed Performance Standards
a. Proposed FY 2021 Performance Standards
We refer readers to the FY 2017 SNF PPS final rule (81 FR 51995
through 51998) for a summary of the statutory provisions governing
performance standards under the SNF VBP Program and our finalized
performance standards policy, as well as the numerical values for the
achievement threshold and benchmark for the FY 2019 program year. We
also responded to public comments on these policies in that final rule.
We published the final numerical values for the FY 2020 performance
standards in the FY 2018 SNF PPS final rule (82 FR 36613), and for
reference, we are displaying those values again here.
Table 40--Final FY 2020 SNF VBP Program Performance Standards
------------------------------------------------------------------------
Achievement
Measure ID Measure description threshold Benchmark
------------------------------------------------------------------------
SNFRM............. SNF 30-Day All-Cause 0.80218 0.83721
Readmission Measure
(NQF #2510).
------------------------------------------------------------------------
We will continue to adopt the achievement threshold and benchmark
as previously finalized in our rules. However, due to timing
constraints associated with the compilation of the FY 2017 MedPAR file
to include 3 months of data following the last discharge date, we are
unable to provide estimated numerical values for the FY 2021 Program
year's performance standards at this time. As discussed further below,
we are proposing to adopt FY 2017 as the baseline period for the FY
2021 program year. While we do not expect either the achievement
threshold or benchmark to change significantly from what was finalized
for the FY 2020 Program year, we intend to publish the final numerical
values for the performance standards based on the FY 2017 baseline
period in the FY 2019 SNF PPS final rule.
We welcome public comment on this approach.
[[Page 21086]]
b. Proposal To Correct Performance Standard Numerical Values in Cases
of Errors
As we described above, section 1888(h)(3)(C) of the Act requires
that we establish and announce the performance standards for a fiscal
year not later than 60 days prior to the performance period for the
fiscal year involved. However, we currently do not have a policy that
would address the situation where, subsequent to publishing the
numerical values for the finalized performance standards for a program
year, we discover an error that affects those numerical values.
Examples of the types of errors that we could subsequently discover are
inaccurate variables on Medicare claims, programming errors, excluding
data should have been included in the performance standards
calculations, and other technical errors that resulted in inaccurate
achievement threshold and benchmark calculations. While we do not have
reason to believe that the SNF VBP Program has previously published
inaccurate numerical values for performance standards, we are concerned
about the possibility that we would discover an error in the future and
have no ability to correct the numerical values.
We are aware that SNFs rely on the performance standards that we
publicly display in order to target quality improvement efforts, and we
do not believe that it would be fair to SNFs to repeatedly update our
finalized performance standards if we were to identify multiple errors.
In order to balance the need of SNFs to know what performance standards
they will be held accountable to for a SNF VBP program year with our
obligation to provide SNFs with the most accurate performance standards
that we can based on the data available at the time, we are proposing
that if we discover an error in the calculations subsequent to having
published the numerical values for the performance standards for a
program year, we would update the numerical values to correct the
error. We are also proposing that we would only update the numerical
values one time, even if we subsequently identified a second error,
because we believe that a one-time correction would allow us to
incorporate new information into the calcuations without subjecting
SNFs to multiple updates. Any update we would make to the numerical
values based on a calculation error would be announced via the CMS
website, listservs, and other available channels to ensure that SNFs
are made fully aware of the update.
We welcome public comments on this proposal.
4. Proposed FY 2021 Performance Period and Baseline Period and for
Subsequent Years
a. Background
We refer readers to the FY 2016 SNF PPS final rule (80 FR 46422)
for a discussion of our considerations for determining performance
periods under the SNF VBP Program. Based on those considerations, as
well as public comment, we adopted CY 2017 as the performance period
for the FY 2019 SNF VBP Program, with a corresponding baseline period
of CY 2015.
Additionally, in the FY 2018 SNF PPS final rule (82 FR 36613
through 36614), we adopted FY 2018 as the performance period for the FY
2020 SNF VBP Program, with a corresponding baseline period of FY 2016.
We refer readers to that rule for a discussion of the need to shift the
Program's measurement periods from the calendar year to the fiscal
year.
b. FY 2021 Proposals
As we discussed with respect to the FY 2019 and FY 2020 SNF VBP
Program years, we continue to believe that a 12-month duration for the
performance and baseline period is most appropriate for the SNF VBP
Program. Therefore, we propose to adopt FY 2019 (October 1, 2018
through September 30, 2019) as the performance period for the FY 2021
SNF VBP Program year. We also propose to adopt FY 2017 (October 1, 2016
through September 30, 2017) hospital discharges as the baseline period
for the FY 2021 SNF VBP Program year.
We welcome public comment on these proposals.
c. Proposed Performance Periods and Baseline Periods for Subsequent
Program Years
As we have described in previous rules (see, for example, the FY
2016 SNF PPS final rule, 80 FR 46422), we strive to link performance
furnished by SNFs as closely as possible to the program year to ensure
clear connections between quality measurement and value-based payment.
We also strive to measure performance using a sufficiently reliable
population of patients that broadly represent the total care provided
by SNFs.
Therefore, we propose that beginning with the FY 2022 program year
and for subsequent program years, we would adopt for each program year,
a performance period that is the 1 year period following the
performance period for the previous program year. We also propose that
beginning with the FY 2022 program year and for subsequent program
years, we would adopt for each program year a baseline period that is
the 1 year period following the baseline period for the previous year.
Under this policy, the performance period for the FY 2022 program year
would be FY 2020 (the 1 year period following the proposed FY 2021
performance period of FY 2019), and the baseline period for the FY 2022
program year would be FY 2018 (the 1 year period following the proposed
FY 2021 baseline period of FY 2017). We believe adopting this policy
will provide SNFs with certainty about the performance and basline
periods during which their performance will be assessed for future
program years.
We welcome public comments on this proposal.
5. SNF VBP Performance Scoring
a. Background
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52000
through 52005) for a detailed discussion of the scoring methodology
that we have finalized for the Program, along with responses to public
comments on our policies and examples of scoring calculations. We also
refer readers to the FY 2018 SNF PPS final rule (82 FR 36614 through
36616) for discussion of the rounding policy we adopted, our request
for comments on SNFs with zero readmissions, and our request for
comments on a potential extraordinary circumstances exception policy.
b. Proposed Scoring Policy for SNFs Without Sufficient Baseline Period
Data
In some cases, a SNF will not have sufficient baseline period data
available for scoring for a Program year, whether due to the SNF not
being open during the baseline period, only being open for a small
portion of the baseline period, or other reasons (such as receiving an
extraordinary circumstance exception, if that proposal described below
is finalized). The availability of baseline data for each SNF is an
integral component of our scoring methodology, and we are concerned
that the absence of sufficient baseline data for a SNF will preclude us
from being able to score that SNF on improvement for a program year. As
discussed further below, with respect to the proposed scoring
adjustment for a SNF without sufficient data in the performance period
to create a reliable SNF performance score, we are concerned that
measuring SNFs with fewer than 25 eligible stays (or index SNF stays
that would be included in the calculation of the SNF readmission
measure) during the baseline period
[[Page 21087]]
may result in unreliable improvement scores, and as a result,
unreliable SNF performance scores. We considered policy options to
address this issue.
We continue to believe it is important to compare SNF performance
during the same periods to control for factors that may not be
attributable to the SNF, such as increased patient case-mix acuity
during colder weather periods when influenza, pneumonia, and other
seasonal conditions and illnesses are historically more prevalent in
the beneficiary population. Using a 12-month performance and baseline
period for all SNFs ensures that, to the greatest extent possible,
differences in performance can be attributed to the SNF's care quality
rather than to exogenous factors.
Additionally, because we have proposed that for FY 2021 and future
Program years, the start of the performance period for a Program year
would begin exactly 12 months after the end of the baseline period for
that Program year and there would not be sufficient time to compute
risk-standardized readmission rates from another 12-month baseline
period before the performance period if a SNF had insufficient data
during the baseline period. For the FY 2021 Program, for example, the
proposed baseline period would conclude at the end of FY 2017
(September 30, 2017) and the proposed performance period would begin on
the first day of FY 2019 (October 1, 2018). We also do not believe it
would be equitable to score SNFs without sufficient baseline period
data using data from a different period. Doing so would, in our view,
impede our ability to compare SNFs' performance on the Program's
quality measure fairly, as additional factors that may affect SNFs'
care could arise when comparing performance during different time
periods. Therefore, we have concluded that it is not operationally
feasible or equitable to use different baseline periods for purposes of
awarding improvement scores to SNFs for a Program year.
We believe that SNFs without sufficient data from a single baseline
period, which we would define for this purpose as SNFs with fewer than
25 eligible stays during the baseline period for a fiscal year based on
an analysis of Pearson correlation coefficients at various denominator
counts, should not be measured on improvement for that Program year.
Accordingly, we are proposing to score these SNFs based only on their
achievement during the performance period for any Program year for
which they do not have sufficient baseline period data. The analysis of
Pearson correlation coefficients at various denominator counts used in
developing this proposal is available on our website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-VBPs/SNFRM-Reliability-Testing-Memo.docx.
We are proposing to codify this proposal by adding Sec.
413.338(d)(1)(iv) to our regulations. We welcome public comment on this
proposal.
c. Proposed SNF VBP Scoring Adjustment for Low-Volume SNFs
In previous rules, we have discussed and sought comment on policies
related to SNFs with zero readmissions during the performance period.
For example, in the FY 2018 SNF PPS rule (82 FR 36615 through 36616),
we sought comment on policies we should consider for SNFs with zero
readmissions during the performance period because under the risk
adjustment and the statistical approach used to calculate the SNFRM,
outlier values are shifted towards the mean, especially for smaller
SNFs. As a result, SNFs with observed readmission rates of zero may
receive risk-standardized readmission rates that are greater than zero.
We continue to be concerned about the effects of the SNFRM's risk
adjustment and statistical approach on the scores that we award to SNFs
under the Program. We are specifically concerned that as a result of
this approach, the SNFRM is not sufficiently reliable to generate
accurate performance scores for SNFs with a low number of eligible
stays during the performance period. We would like to ensure that the
Program's scoring methodology results in fair and reliable SNF
performance scores because those scores are linked to a SNF's ranking
and payment.
Therefore, we considered whether we should make changes to our
methodology for assessing the total performance of SNFs for a Program
year that better accounts for SNFs with zero or low numbers of eligible
stays during the performance period. Because the number of eligible SNF
stays makes up the denominator of the SNFRM, we have concluded that the
reliability of a SNF's measure rate and resulting performance score is
adversely impacted if the SNF has less than 25 eligible stays during
the performance period, as the Pearson correlation coefficient is lower
at denominator counts of 5, 10, 15, and 20 eligible stays in comparison
to 25 eligible stays. The analysis of Pearson correlation coefficients
at various denominator counts used in developing this proposal is
available on our website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-VBPs/SNFRM-Reliability-Testing-Memo.docx.
We believe that the most appropriate way to ensure that low-volume
SNFs (which we define for purposes of the SNF VBP Program as SNFs with
fewer than 25 eligible stays during the performance period) receive
sufficiently reliable SNF performance scores is to adopt an adjustment
to the scoring methodology we use for the SNF VBP Program. We are
proposing that if a SNF has less than 25 eligible stays during a
performance period for a Program year, we would assign a performance
score to the SNF for that Program year. That assigned performance score
would, when used to calculate the value-based incentive payment amount
for the SNF, result in a value-based incentive payment amount that is
equal to the adjusted Federal per diem rate that the SNF would have
received for the fiscal year in the absence of the Program. The actual
performance score that we would assign to an individual low-volume SNF
for a Program year would be identified based on the distribution of all
SNFs' performance scores for that Program year after calculating the
exchange function. We would then assign that score to an individual
low-volume SNF, and we would notify the low-volume SNF that it would be
receiving an assigned performance score for the Program year in the SNF
Performance Score Report that we provide not later than 60 days prior
to the fiscal year involved.
We believe this scoring adjustment policy would appropriately
ensure that our SNF performance score methodology is fair and reliable
for SNFs with fewer than 25 eligible stays during the performance
period for a Program year.
In section X.A.6. of this proposed rule, we estimate that $527.4
million will be withheld from SNFs' payments for the FY 2019 Program
year based on the most recently available data. Additionally, the 60
percent payback percentage will result in an estimated $316.4 million
being paid to SNFs in the form of value-based incentive payments with
respect to FY 2019 services. Of the $316.4 amount, we estimate that
$8.6 million will be paid to low-volume SNFs. However, if our proposal
to adopt a scoring adjustment for low-volume SNFs is finalized, we
estimate that we would redistribute an additional $6.7 million in
value-based incentive payments to low-volume SNFs with respect to FY
2019 services, for a total
[[Page 21088]]
of $15.3 million of the estimated $527.4 million available for value-
based incentive payments for that Program year. The additional $6.7
million in value-based incentive payments that would result from
finalizing this proposal would increase the 60 percent payback
percentage for FY 2019 by approximately 1.28 percent, which would
result in a payback percentage 61.28 percent of withheld funds. The
payback percentage would similarly increase for all other Program
years, however the actual amount of the increase for a particular
Program year would vary based on the number of low-volume SNFs that we
identify for that Program year and the distribution of all SNFs'
performance scores for that Program year.
As an alternative, we also considered assigning a performance score
to SNFs with fewer than 25 eligible stays during the performance period
that would result in a value-based incentive payment percentage of 1.2
percent, or 60 percent of the 2 percent withhold. This amount would
match low-volume SNFs' incentive payment percentages with the finalized
SNF VBP Program payback percentage of 60 percent, and would represent a
smaller adjustment to low-volume SNFs' incentive payment percentages
than the proposed policy described above. We estimate that this
alternative would redistribute an additional $1 million with respect to
FY 2019 services to low-volume SNFs. We also estimate that this
alternative would increase the 60 percent payback percentage for FY
2019 by approximately 0.18 percent of the approximately $527.4 million
of the total withheld from SNFs' payments, which would result in a
payback percentage of 60.18 percent of the estimated $527.4 million in
withheld funds for that Program year. However, as with the proposal
above, the specific amount by which the payback percentage would
increase for each Program year would vary based on the number of low-
volume SNFs that we identify for each Program year and the distribution
of all SNFs' performance scores for that Program year.
We welcome public comments on this proposal and on the alternative
that we considered. We are also proposing to codify the definition of
low-volume SNF at Sec. 413.338(a)(16) of our regulations, and the
definition of eligible stay at Sec. 413.338(a)(17) of our regulations.
We are proposing to codify the low-volume scoring adjustment proposal
at Sec. 413.338(d)(3) of our regulations. We are also proposing a
conforming edit to the payback percentage policy at Sec.
413.338(c)(2)(i).
d. Proposed Extraordinary Circumstances Exception Policy for the SNF
VBP Program
In the FY 2018 SNF PPS final rule (82 FR 36616), we summarized
public comments that we received on the topic of a possible
extraordinary circumstances exception policy for the SNF VBP Program.
As we stated in that rule, in other value-based purchasing and quality
reporting programs, we have adopted Extraordinary Circumstances
Exceptions (ECE) policies intended to allow facilities to receive
relief from program requirements due to natural disasters or other
circumstances beyond the facility's control that may affect the
facility's ability to provide high-quality health care.
In other programs, we have defined a ``disaster'' as any natural or
man-made catastrophe which causes damages of sufficient severity and
magnitude to partially or completely destroy or delay access to medical
records and associated documentation or otherwise affect the facility's
ability to continue normal operations. Natural disasters could include
events such as hurricanes, tornadoes, earthquakes, volcanic eruptions,
fires, mudslides, snowstorms, and tsunamis. Man-made disasters could
include such events as terrorist attacks, bombings, flood caused by
man-made actions, civil disorders, and explosions. A disaster may be
widespread and impact multiple structures or be isolated and affect a
single site only. As a result of either a natural or man-made disaster,
we are concerned that SNFs' care quality and subsequent impact on
measure performance in the SNF VBP Program may suffer, and as a result,
SNFs might be penalized under the Program's quality measurement and
scoring methodology. However, we do not wish to penalize SNFs in these
circumstances. For example, we recognize that SNFs might receive
patients involuntarily discharged from hospitals facing mandatory
evacuation due to probable flooding, and these patients might be
readmitted to inpatient acute care hospitals and result in poorer
readmission measure performance in the SNF VBP Program. We are
therefore proposing to adopt an ECE policy for the SNF VBP Program to
provide relief to SNFs affected by natural disasters or other
circumstances beyond the facility's control that affect the care
provided to the facility's patients. We propose that if a SNF can
demonstrate that an extraordinary circumstance affected the care that
it provided to its patients and subsequent measure performance, we
would exclude from the calculation of the measure rate for the
applicable baseline and performance periods the calendar months during
which the SNF was affected by the extraordinary circumstance. Under
this proposal, a SNF requesting an ECE would indicate the dates and
duration of the extraordinary circumstance in its request, along with
any available evidence of the extraordinary circumstance, and if
approved, we would exclude the corresponding calendar months from that
SNF's measure rate for the applicable measurement period and by
extension, its SNF performance score.
We further propose that SNFs must submit this ECE request to CMS by
filling out the ECE request form that we will place on the QualityNet
website to the [email protected] mailbox within 90 days
following the extraordinary circumstance.
To accompany an ECE request, SNFs must provide any available
evidence showing the effects of the extraordinary circumstance on the
care they provided to their patients, including, but not limited to,
photographs, newspaper and other media articles, and any other
materials that would aid CMS in making its decision. We will review
exception requests, and at our discretion based on our evaluation of
the impact of the extraordinary circumstances on the SNF's care,
provide a response to the SNF as quickly as feasible.
We intend for this policy to offer relief to SNFs whose care
provided to patients suffered as a result of the disaster or other
extraordinary circumstance, and we believe that excluding calendar
months affected by extraordinary circumstances from SNFs' measure
performance under the Program appropriately ensures that such
circumstances do not unduly affect SNFs' performance rates or
performance scores. We developed this process to align with the ECE
process adopted by the SNF Quality Reporting Program to the greatest
extent possible and to minimize burden on SNFs. This proposal is not
intended to preclude us from granting exceptions to SNFs that have not
requested them when we determine that an extraordinary circumstance,
such as an act of nature, affects an entire region or locale. If we
make the determination to grant an exception to all SNFs in a region or
locale, we propose to communicate this decision through routine
communication channels to SNFs and vendors, including but not limited
to, issuing memos, emails, and notices on our SNF VBP website at
https://www.cms.gov/Medicare/Quality-
[[Page 21089]]
Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-
VBPs/SNF-VBP.html.
We note that if we finalize this policy, we would score any SNFs
receiving ECEs on achievement and improvement for any remaining months
during the performance period, provided the SNF had at least 25
eligible stays during both of those periods as we have proposed above.
If a SNF should receive an approved ECE for 6 months of the performance
period, for example, we would score the SNF on its achievement during
the remaining 6 months on the Program's measure as long as the SNF met
the proposed 25 eligible stay threshold during the performance period.
We would also score the SNF on improvement as long as it met the
proposed 25 eligible stay threshold during the applicable baseline
period.
We welcome public comments on this proposal. We are also proposing
to codify this proposal at Sec. 413.338(d)(4) of our regulations.
6. SNF Value-Based Incentive Payments
We refer readers to the FY 2018 SNF PPS final rule (82 FR 36616
through 36621) for discussion of the exchange function methodology that
we have adopted for the Program, as well as the specific form of the
exchange function (logistic, or S-shaped curve) that we finalized, and
the payback percentage of 60 percent. We adopted these policies for FY
2019 and subsequent fiscal years.
As required by section 1888(h)(7) of the Act, we will inform each
SNF of the adjustments to its Medicare payments as a result of the SNF
VBP Program that we will make not later than 60 days prior to the
fiscal year involved. We will fulfill that requirement via SNF
Performance Score Reports that we will circulate to SNFs using the
QIES-CASPER system, which is also how we distribute the quarterly
confidential feedback reports that we are required to provide to SNFs
under section 1888(g)(5) of the Act. The SNF Performance Score Reports
will contain the SNF's performance score, ranking, and value-based
incentive payment adjustment factor that will be applied to claims
submitted for the applicable fiscal year. Additionally, as we finalized
in the FY 2018 SNF PPS final rule (82 FR 36622 through 36623), the
provision of the SNF Performance Score Report will trigger the Phase
Two Review and Corrections Process, and SNFs will have 30 days from the
date we post the report on the QIES-CASPER system to submit corrections
to their SNF performance score and ranking to the
[email protected] mailbox.
Finally, as we discussed in the FY 2018 SNF PPS final rule (82 FR
36618), beginning with FY 2019 (October 1, 2018) payments, we intend to
make the 2 percent reduction and the SNF-specific value-based incentive
payment adjustment to SNF claims simultaneously. Beginning with FY
2019, we will identify the adjusted federal per diem rate for each SNF
for claims under the SNF PPS. We will then reduce that amount by 2
percent by multiplying the per diem amount by 0.98, in accordance with
the requirements in section 1888(h)(6) of the Act. We will then
multiply the result of that calculation by each SNF's specific value-
based incentive payment adjustment factor, which will be based on each
SNF's performance score for the program year and will be calculated by
the exchange function, to generate the value-based incentive payment
amount that applies to the SNF for the fiscal year. Finally, we will
add the value-based incentive payment amount to the reduced rate,
resulting in a new adjusted federal per diem rate that applies to the
SNF for the fiscal year.
At the time of the publication of this proposed rule, we will not
have completed SNF performance score calculations for the FY 2019
program year. However, we intend to provide the range of value-based
incentive payment adjustment factors applicable to the FY 2019 program
year in the FY 2019 SNF PPS final rule.
We are proposing to codify the SNF VBP Program's payment
adjustments at Sec. 413.337(f) of our regulations.
VII. Request for Information on Promoting Interoperability and
Electronic Healthcare Information Exchange Through Possible Revisions
to the CMS Patient Health and Safety Requirements for Hospitals and
Other Medicare- and Medicaid-Participating Providers and Suppliers
Currently, Medicare- and Medicaid-participating providers and
suppliers are at varying stages of adoption of health information
technology (health IT). Many hospitals have adopted electronic health
records (EHRs), and CMS has provided incentive payments to eligible
hospitals, critical access hospitals (CAHs), and eligible professionals
who have demonstrated meaningful use of certified EHR technology
(CEHRT) under the Medicare EHR Incentive Program. As of 2015, 96
percent of Medicare- and Medicaid-participating non-Federal acute care
hospitals had adopted certified EHRs with the capability to
electronically export a summary of clinical care.\13\ While both
adoption of EHRs and electronic exchange of information have grown
substantially among hospitals, significant obstacles to exchanging
electronic health information across the continuum of care persist.
Routine electronic transfer of information post-discharge has not been
achieved by providers and suppliers in many localities and regions
throughout the nation.
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\13\ These statistics can be accessed at: https://dashboard.healthit.gov/quickstats/pages/FIG-Hospital-EHR-Adoption.php.
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CMS is firmly committed to the use of certified health IT and
interoperable EHR systems for electronic healthcare information
exchange to effectively help hospitals and other Medicare- and
Medicaid-participating providers and suppliers improve internal care
delivery practices, support the exchange of important information
across care team members during transitions of care, and enable
reporting of electronically specified clinical quality measures
(eCQMs). The Office of the National Coordinator for Health Information
Technology (ONC) acts as the principal federal entity charged with
coordination of nationwide efforts to implement and use health
information technology and the electronic exchange of health
information on behalf of the Department of Health and Human Services.
In 2015, ONC finalized the 2015 Edition health IT certification
criteria (2015 Edition), the most recent criteria for health IT to be
certified to under the ONC Health IT Certification Program. The 2015
Edition facilitates greater interoperability for several clinical
health information purposes and enables health information exchange
through new and enhanced certification criteria, standards, and
implementation specifications. CMS requires eligible hospitals and CAHs
in the Medicare and Medicaid EHR Incentive Programs and eligible
clinicians in the Quality Payment Program (QPP) to use EHR technology
certified to the 2015 Edition beginning in CY 2019.
In addition, several important initiatives will be implemented over
the next several years to provide hospitals and other participating
providers and suppliers with access to robust infrastructure that will
enable routine electronic exchange of health information. Section 4003
of the 21st Century Cures Act (Pub. L. 114-255), enacted in 2016, and
amending section 3000 of the Public Health Service Act (42 U.S.C.
300jj), requires HHS to take steps to advance the electronic exchange
of health information and
[[Page 21090]]
interoperability for participating providers and suppliers in various
settings across the care continuum. Specifically, Congress directed
that ONC ``. . . for the purpose of ensuring full network-to-network
exchange of health information, convene public-private and public-
public partnerships to build consensus and develop or support a trusted
exchange framework, including a common agreement among health
information networks nationally.'' In January 2018, ONC released a
draft version of its proposal for the Trusted Exchange Framework and
Common Agreement,\14\ which outlines principles and minimum terms and
conditions for trusted exchange to enable interoperability across
disparate health information networks (HINs). The Trusted Exchange
Framework (TEF) is focused on achieving the following four important
outcomes in the long-term:
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\14\ The draft version of the trusted Exchange Framework may be
accessed at https://beta.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement.
---------------------------------------------------------------------------
Professional care providers, who deliver care across the
continuum, can access health information about their patients,
regardless of where the patient received care.
Patients can find all of their health information from
across the care continuum, even if they do not remember the name of the
professional care provider they saw.
Professional care providers and health systems, as well as
public and private health care organizations and public and private
payer organizations accountable for managing benefits and the health of
populations, can receive necessary and appropriate information on
groups of individuals without having to access one record at a time,
allowing them to analyze population health trends, outcomes, and costs;
identify at-risk populations; and track progress on quality improvement
initiatives.
The health IT community has open and accessible
application programming interfaces (APIs) to encourage entrepreneurial,
user-focused innovation that will make health information more
accessible and improve EHR usability.
ONC will revise the draft TEF based on public comment and
ultimately release a final version of the TEF that will subsequently be
available for adoption by HINs and their participants seeking to
participate in nationwide health information exchange. The goal for
stakeholders that participate in, or serve as, a HIN is to ensure that
participants will have the ability to seamlessly share and receive a
core set of data from other network participants in accordance with a
set of permitted purposes and applicable privacy and security
requirements. Broad adoption of this framework and its associated
exchange standards is intended to both achieve the outcomes described
above while creating an environment more conducive to innovation.
In light of the widespread adoption of EHRs along with the
increasing availability of health information exchange infrastructure
predominantly among hospitals, we are interested in hearing from
stakeholders on how we could use the CMS health and safety standards
that are required for providers and suppliers participating in the
Medicare and Medicaid programs (that is, the Conditions of
Participation (CoPs), Conditions for Coverage (CfCs), and Requirements
for Participation (RfPs) for Long Term Care Facilities) to further
advance electronic exchange of information that supports safe,
effective transitions of care between hospitals and community
providers. Specifically, CMS might consider revisions to the current
CMS CoPs for hospitals such as: requiring that hospitals transferring
medically necessary information to another facility upon a patient
transfer or discharge do so electronically; requiring that hospitals
electronically send required discharge information to a community
provider via electronic means if possible and if a community provider
can be identified; and requiring that hospitals make certain
information available to patients or a specified third-party
application (for example, required discharge instructions) via
electronic means if requested.
On November 3, 2015, we published a proposed rule (80 FR 68126) to
implement the provisions of the IMPACT Act and to revise the discharge
planning CoP requirements that hospitals (including Short-Term Acute-
Care Hospitals, Long-Term Care Hospitals (LTCHs), Inpatient
Rehabilitation Hospitals (IRFs), Inpatient Psychiatric Hospitals
(IPFs), Children's Hospitals, and Cancer Hospitals), critical access
hospitals (CAHs), and home health agencies (HHAs) must meet in order to
participate in the Medicare and Medicaid programs. This proposed rule
has not been finalized yet. However, several of the proposed
requirements directly address the issue of communication between
providers and between providers and patients, as well as the issue of
interoperability:
Hospitals and CAHs would be required to transfer certain
necessary medical information and a copy of the discharge instructions
and discharge summary to the patient's practitioner, if the
practitioner is known and has been clearly identified;
Hospitals and CAHs would be required to send certain
necessary medical information to the receiving facility/post-acute care
providers, at the time of discharge; and
Hospitals, CAHs and HHAs, would need to comply with the
IMPACT Act requirements that would require hospitals, CAHs, and certain
post-acute care providers to use data on quality measures and data on
resource use measures to assist patients during the discharge planning
process, while taking into account the patient's goals of care and
treatment preferences.
We published another proposed rule (81 FR 39448), on June 16, 2016,
that updated a number of CoP requirements that hospitals and CAH must
meet in order to participate in the Medicare and Medicaid programs.
This proposed rule has not been finalized yet. One of the proposed
hospital CoP revisions in that rule directly addresses the issues of
communication between providers and patients, patient access to their
medical records, and interoperability. We proposed that patients have
the right to access their medical records, upon an oral or written
request, in the form and format requested by such patients, if it is
readily producible in such form and format (including in an electronic
form or format when such medical records are maintained
electronically); or, if not, in a readable hard copy form or such other
form and format as agreed to by the facility and the individual,
including current medical records, within a reasonable time frame. The
hospital must not frustrate the legitimate efforts of individuals to
gain access to their own medical records and must actively seek to meet
these requests as quickly as its record keeping system permits.
We also published a final rule (81 FR 68688), on October 4, 2016,
that revised the requirements that LTC facilities must meet to
participate in the Medicare and Medicaid programs, where we made a
number of revisions based on the importance of effective communication
between providers during transitions of care, such as transfers and
discharges of residents to other facilities or providers, or to home.
Among these revisions was a requirement that the transferring LTC
facility must provide all necessary information to the resident's
receiving provider, whether it is an acute care hospital, a LTC
hospital, a psychiatric facility, another LTC facility, a hospice, home
health agency, or another
[[Page 21091]]
community-based provider or practitioner. We specified that necessary
information must include the following:
Contact information of the practitioner responsible for
the care of the resident;
Resident representative information including contact
information;
Advance directive information;
Special instructions or precautions for ongoing care;
The resident's comprehensive care plan goals; and
All other necessary information, including a copy of the
resident's discharge or transfer summary and any other documentation to
ensure a safe and effective transition of care.
We note that the discharge summary mentioned above must include
reconciliation of the resident's medications, as well as a
recapitulation of the resident's stay, a final summary of the
resident's status, and the post-discharge plan of care. And in the
preamble to the rule, we encouraged LTC facilities to electronically
exchange this information if possible and to identify opportunities to
streamline the collection and exchange of resident information by using
information that the facility is already capturing electronically.
Additionally, we specifically invite stakeholder feedback on the
following questions regarding possible new or revised CoPs/CfCs/RfPs
for interoperability and electronic exchange of health information:
If CMS were to propose a new CoP/CfC/RfP standard to
require electronic exchange of medically necessary information, would
this help to reduce information blocking as defined in section 4004 of
the 21st Century Cures Act?
Should CMS propose new CoPs/CfCs/RfPs for hospitals and
other participating providers and suppliers to ensure a patient's or
resident's (or his or her caregiver's or representative's) right and
ability to electronically access his or her health information without
undue burden? Would existing portals or other electronic means
currently in use by many hospitals satisfy such a requirement regarding
patient/resident access as well as interoperability?
Are new or revised CMS CoPs/CfCs/RfPs for interoperability
and electronic exchange of health information necessary to ensure
patients/residents and their treating providers routinely receive
relevant electronic health information from hospitals on a timely basis
or will this be achieved in the next few years through existing
Medicare and Medicaid policies, HIPAA, and implementation of relevant
policies in the 21st Century Cures Act?
What would be a reasonable implementation timeframe for
compliance with new or revised CMS CoPs/CfCs/RfPs for interoperability
and electronic exchange of health information if CMS were to propose
and finalize such requirements? Should these requirements have delayed
implementation dates for specific participating providers and
suppliers, or types of participating providers and suppliers (for
example, participating providers and suppliers that are not eligible
for the Medicare and Medicaid EHR Incentive Programs)?
Do stakeholders believe that new or revised CMS CoPs/CfCs/
RfPs for interoperability and electronic exchange of health information
would help improve routine electronic transfer of health information as
well as overall patient/resident care and safety?
Under new or revised CoPs/CfCs/RfPs, should non-electronic
forms of sharing medically necessary information (for example, printed
copies of patient/resident discharge/transfer summaries shared directly
with the patient/resident or with the receiving provider or supplier,
either directly transferred with the patient/resident or by mail or fax
to the receiving provider or supplier) be permitted to continue if the
receiving provider, supplier, or patient/resident cannot receive the
information electronically?
Are there any other operational or legal considerations
(for example, HIPAA), obstacles, or barriers that hospitals and other
providers and suppliers would face in implementing changes to meet new
or revised interoperability and health information exchange
requirements under new or revised CMS CoPs/CfCs/RfPs if they are
proposed and finalized in the future?
What types of exceptions, if any, to meeting new or
revised interoperability and health information exchange requirements,
should be allowed under new or revised CMS CoPs/CfCs/RfPs if they are
proposed and finalized in the future? Should exceptions under the QPP
including CEHRT hardship or small practices be extended to new
requirements? Would extending such exceptions impact the effectiveness
of these requirements?
We would also like to directly address the issue of communication
between hospitals (as well as the other providers and suppliers across
the continuum of patient care) and their patients and caregivers.
MyHealthEData is a government-wide initiative aimed at breaking down
barriers that contribute to preventing patients from being able to
access and control their medical records. Privacy and security of
patient data will be at the center of all CMS efforts in this area. CMS
must protect the confidentiality of patient data, and CMS is completely
aligned with the Department of Veterans Affairs (VA), the National
Institutes of Health (NIH), ONC, and the rest of the federal
government, on this objective.
While some Medicare beneficiaries have had, for quite some time,
the ability to download their Medicare claims information, in pdf or
Excel formats, through the CMS Blue Button platform, the information
was provided without any context or other information that would help
beneficiaries understand what the data was really telling them. For
beneficiaries, their claims information is useless if it is either too
hard to obtain or, as was the case with the information provided
through previous versions of Blue Button, hard to understand. In an
effort to fully contribute to the federal government's MyHealthEData
initiative, CMS developed and launched the new Blue Button 2.0, which
represents a major step toward giving patients meaningful control of
their health information in an easy-to-access and understandable way.
Blue Button 2.0 is a developer-friendly, standards-based API that
enables Medicare beneficiaries to connect their claims data to secure
applications, services, and research programs they trust. The
possibilities for better care through Blue Button 2.0 data are
exciting, and might include enabling the creation of health dashboards
for Medicare beneficiaries to view their health information in a single
portal, or allowing beneficiaries to share complete medication lists
with their doctors to prevent dangerous drug interactions.
To fully understand all of these health IT interoperability issues,
initiatives, and innovations through the lens of its regulatory
authority, CMS invites members of the public to submit their ideas on
how best to accomplish the goal of fully interoperable health IT and
EHR systems for Medicare- and Medicaid-participating providers and
suppliers, as well as how best to further contribute to and advance the
MyHealthEData initiative for patients. We are particularly interested
in identifying fundamental barriers to interoperability and health
information exchange, including those specific barriers that prevent
patients from being able to access and control their medical records.
We also welcome the public's ideas and innovative thoughts on
addressing these barriers and ultimately removing or reducing them in
an effective way, specifically through
[[Page 21092]]
revisions to the current CMS CoPs, CfCs, and RfPs for hospitals and
other participating providers and suppliers. We have received
stakeholder input through recent CMS Listening Sessions on the need to
address health IT adoption and interoperability among providers that
were not eligible for the Medicare and Medicaid EHR Incentives program,
including long-term and post-acute care providers, behavioral health
providers, clinical laboratories and social service providers, and we
would also welcome specific input on how to encourage adoption of
certified health IT and interoperability among these types of providers
and suppliers as well.
We note that this is a Request for Information only. Respondents
are encouraged to provide complete but concise and organized responses,
including any relevant data and specific examples. However, respondents
are not required to address every issue or respond to every question
discussed in this Request for Information to have their responses
considered. In accordance with the implementing regulations of the
Paperwork Reduction Act at 5 CFR 1320.3(h)(4), all responses will be
considered provided they contain information CMS can use to identify
and contact the commenter, if needed.
This Request for Information is issued solely for information and
planning purposes; it does not constitute a Request for Proposal (RFP),
applications, proposal abstracts, or quotations. This Request for
Information does not commit the U.S. Government to contract for any
supplies or services or make a grant award. Further, CMS is not seeking
proposals through this Request for Information and will not accept
unsolicited proposals. Responders are advised that the U.S. Government
will not pay for any information or administrative costs incurred in
response to this Request for Information; all costs associated with
responding to this Request for Information will be solely at the
interested party's expense.
We note that not responding to this Request for Information does
not preclude participation in any future procurement, if conducted. It
is the responsibility of the potential responders to monitor this
Request for Information announcement for additional information
pertaining to this request. In addition, we note that CMS will not
respond to questions about the policy issues raised in this Request for
Information. CMS will not respond to comment submissions in response to
this Request for Information in the FY 2019 IPPS/LTCH PPS final rule.
Rather, CMS will actively consider all input as we develop future
regulatory proposals or future subregulatory policy guidance. CMS may
or may not choose to contact individual responders. Such communications
would be for the sole purpose of clarifying statements in the
responders' written responses. Contractor support personnel may be used
to review responses to this Request for Information. Responses to this
notice are not offers and cannot be accepted by the Government to form
a binding contract or issue a grant. Information obtained as a result
of this Request for Information may be used by the Government for
program planning on a nonattribution basis. Respondents should not
include any information that might be considered proprietary or
confidential.
This Request for Information should not be construed as a
commitment or authorization to incur cost for which reimbursement would
be required or sought. All submissions become U.S. Government property
and will not be returned. CMS may publically post the public comments
received, or a summary of those public comments.
VIII. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to publish a 60-day notice in the Federal
Register and solicit public comment before a collection of information
requirement is submitted to the Office of Management and Budget (OMB)
for review and approval.
To fairly evaluate whether an information collection should be
approved by OMB, PRA section 3506(c)(2)(A) requires that we solicit
comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our burden estimates.
The quality, utility, and clarity of the information to be
collected.
Our effort to minimize the information collection burden
on the affected public, including the use of automated collection
techniques.
We are soliciting public comment on each of the section
3506(c)(2)(A)-required issues for the following information collection
requirements (ICRs).
A. Wages
To derive average costs, we used data from the U.S. Bureau of Labor
Statistics' May 2016 National Occupational Employment and Wage
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 41 presents the mean hourly wage,
the cost of fringe benefits and overhead (calculated at 100 percent of
salary), and the adjusted hourly wage. The wage rates provided in Table
41 are used to calculate the wages to derive burden estimates in this
section.
Table 41--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe
Occupation Mean hourly benefits and Adjusted
Occupation title code wage ($/hr) overhead ($/ hourly wage ($/
hr) hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse................................ 29-1141 34.70 34.70 69.40
Health Information Technician................... 29-2071 19.93 19.93 39.86
----------------------------------------------------------------------------------------------------------------
As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent. This is necessarily a rough adjustment,
both because fringe benefits and overhead costs vary significantly from
employer to employer, and because methods of estimating these costs
vary widely from study to study. Nonetheless, there is no practical
alternative and we believe that doubling the hourly wage to estimate
total cost is a reasonably accurate estimation method.
B. Proposed Information Collection Requirements (ICRs)
1. ICRs Regarding the SNF PPS Assessment Schedule Under the Proposed
PDPM
The following sets out the proposed requirements and burden
associated
[[Page 21093]]
with the MDS assessment schedule that would be effective October 1,
2019 under the SNF PPS in conjunction with implementation of the
proposed PDPM. The proposed requirements and burden will be submitted
to OMB for approval under control number 0938-1140 (CMS-10387).
Section V.C of this preamble proposes, effective October 1, 2019,
to revise the current SNF PPS assessment schedule to require only two
scheduled assessments (as opposed to the current requirement for five
scheduled assessments) for each SNF stay: A 5-day scheduled PPS
assessment and a discharge assessment.
The current 5-day scheduled PPS assessment would be used as the
admission assessment under this rule's proposed PDPM and set the
resident's case-mix classification for the resident's SNF stay. The PPS
discharge assessment (which is already required for all SNF Part A
residents) would serve as the discharge assessment and be used for
monitoring purposes. This rule also proposes to require SNFs to
reclassify residents under the proposed PDPM using the Interim Payment
Assessment (IPA) if certain criteria are met, as discussed in section
V.D.1. of this preamble. Thus, the 5-day SNF PPS scheduled assessment
would be the only PPS assessment required to classify a resident under
the proposed PDPM for payment purposes, except when an IPA would be
required as provided in section V.E.1. This would eliminate the
requirement for the following assessments under the SNF PPS: 14-Day
scheduled PPS assessment, 30-day scheduled PPS assessment, 60-day
scheduled PPS assessment, 90-day scheduled PPS assessment, Start of
Therapy Other Medicare Required Assessment (OMRA), End of Therapy OMRA,
and Change of Therapy OMRA.
In estimating the amount of time to complete a PPS assessment, we
utilize the OMRA assessment, or the NO/SO item set (consistent with the
currently approved PRA Supporting Statement at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201703-0938-018- click on View Supporting
Statement and Other Documents and then click OMB 0938-1140 Supporting
Statement Revision_nonsub_V4-4-5-2017 (rev 04-07-2017 by OSORA
PRA).docx) as a proxy for all assessments. In section V.D.3. of this
preamble, we propose to add 18 items to the PPS discharge assessment in
order to calculate and monitor the total amount of therapy provided
during a SNF stay. The proposed items are listed in Table 35 under
section V.D.3 of this proposed rule. Given that the PPS OMRA assessment
has 272 items (as compared to 125 items currently on the PPS discharge
assessment) we believe that the items that we propose to add to the PPS
discharge assessment--while increasing burden for each of the
respective assessments--is accounted for by using the longer PPS OMRA
assessment as a proxy for the time required to complete all
assessments.
When calculating the burden for each assessment, we estimate that
it will take 40 minutes (0.6667 hours) for an RN to collect the
information necessary for preparing the assessment, 10 minutes (0.1667
hours) for staff to code the responses, and 1 minute (0.0167 hours) for
a health information technician to transmit the results. In total, we
estimate that it would take 51 minutes (0.85 hours) to complete a
single PPS assessment.
The ongoing burden associated with the proposed revisions to the
SNF PPS assessment schedule is the time and effort it would take each
of the 15,455 Medicare Part A SNFs to complete the 5-day PPS and
discharge assessments. Based on FY 2017 data, we estimate that
2,406,401 5-day PPS assessments would be completed and submitted by
Part A SNFs each year under the proposed PDPM. We are using the same
number of assessments (2,406,401) as a proxy for the number of PPS
discharge assessments that would be completed and submitted each year,
since all residents who require a 5-day PPS assessment will also
require a discharge assessment under the SNF PDPM.
We are using the Significant Change in Status Assessment (SCSA) as
a proxy to estimate the number of IPAs as the criteria for completing
an SCSA is similar to that for the proposed IPA. Based on FY 2017 data,
92,240 IPAs would be completed per year. We estimate that the total
number of 5-day scheduled PPS assessments, IPAs, and PPS discharge
assessments that would be completed across all facilities is 4,905,042
(2,406,401 + 92,240 + 2,406,401, respectively). For all assessments
under the proposed SNF PDPM, we estimate a burden of 4,169,286 hours
(4,905,042 assessments x 0.85 hr/assessment) at a cost of $274,878,554
(4,905,042 assessments x $56.04/assessment) (see calculation of the
cost estimate for each assessment below).
Based on the same FY 2017 data, there were 5,833,476 non-discharge
related assessments (scheduled and unscheduled PPS assessments)
completed under the RUG- IV payment system. To this number we add the
same proxy as above for the number of discharge assessments
(2,406,401), since every resident under RUG-IV who required a 5-day
scheduled PPS assessment would also require a discharge assessment.
This brings the total number of estimated assessments under RUG-IV to
8,239,877. Using the same wage and time estimates (per assessment), we
estimate a burden of 7,003,895 hours (8,239,877 assessments x 0.85 hr/
assessment) at a cost of $461,762,707 (8,239,877 assessments x $56.04/
assessment).
When comparing the currently approved RUG-IV burden with the
proposed PDPM burden, we estimate a savings of 2,834,609 administrative
hours (7,003,895 RUG-IV hours--4,169,286 proposed PDPM hours) or
approximately 183 hours per provider per year (2,834,609 hours/15,455
providers). As depicted in Table 42, we also estimate a cost savings of
$186,884,153 ($461,762,707 RUG-IV costs--$274,878,554 proposed PDPM
costs) or $12,092 per provider per year ($186,884,153/15,455
providers). This represents a significant decrease in administrative
burden for providers under the proposed PDPM.
Table 42--PDPM Savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Responses Total annual
Burden reconciliation Respondents (assessments) Burden per response (hours) burden (hours) Cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUG-IV.................................. 15,455........................ 8,239,877 0.85.......................... 7,003,895 461,762,707
Proposed PDPM........................... 15,455........................ 4,905,042 0.85.......................... 4,169,286 274,878,554
SAVINGS................................. No change..................... (3,334,835) No change..................... (2,834,609) (186,884,153)
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 21094]]
When calculating the burden for each assessment, we estimate that
it will take 40 minutes (0.6667 hours) at $69.40/hr for an RN to
collect the information necessary for preparing the assessment, 10
minutes (0.1667 hours) at $54.63/hr (the average hourly wage for RN
($69.40/hr) and health information technician ($39.86/hr) for staff to
code the responses, and 1 minute (0.0167 hours) at $39.86/hr for a
health information technician to transmit the results. In total, we
estimate that it would take 51 minutes (0.85 hours) to complete a
single PPS assessment. Based on the adjusted hourly wages for the noted
staff, we estimate that it would cost $56.04 to prepare, code, and
transmit each PPS assessment [($69.40/hr x 0.6667 hr) + ($54.63/hr x
0.1667 hr) + ($39.86/hr x 0.0167 hr)].
Finally, in section V.C.1.a of this preamble, we propose to add 3
items, as listed in Table 34 of this preamble, to the MDS 3.0 for
Nursing Homes and Swing Bed Providers. Based on the small number of
items being added and the small percentage of assessments that Swing
Bed providers make up, we do not believe this action will cause any
measurable adjustments to our currently approved burden estimates.
Consequently, we are not revising any of those estimates.
2. ICRs Regarding the SNF VBP Program
In section VI.C.5.d. of this rule, we propose to adopt an
Extraordinary Circumstances Exception (ECE) process for the SNF VBP.
Because the same CMS Extraordinary Circumstances Exceptions (ECE)
Request Form would be used across ten quality programs: Hospital IQR
Program, Hospital Outpatient Reporting Program, Inpatient Psychiatric
Facility Quality Reporting Program, PPS-Exempt Cancer Hospital Quality
Reporting Program, Ambulatory Surgical Center Quality Reporting
Program, Hospital VBP Program, Hospital-Acquired Condition Reduction
Program, Hospital Readmissions Reduction Program, End Stage Renal
Disease Quality Incentive Program, and Skilled Nursing Facility Value-
Based Purchasing Program--the form and its associated requirements/
burden will be submitted to OMB for approval under one information
collection request (CMS-10210, OMB control number: 0938-1022) and in
association with our IPPS proposed rule (CMS-1694-P; RIN 0938-AT27). To
avoid double counting we are not setting out the form's SNF-related
burden in this rulemaking.
Separately, we are not proposing any new or revised SNF VBP
measures in this proposed rule. Nor are we proposing any new or revised
collection burden. Consequently, this proposed rule does not set out
any new VBP-related collections of information that would be subject to
OMB approval under the authority of the PRA.
3. ICRs for the SNF Quality Reporting Program (QRP)
This rule does not propose to add, remove, or revise any measures
under the SNF QRP. Consequently, we are not revising the burden related
to the Program's measures.
C. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection and recordkeeping
requirements. The requirements are not effective until they have been
approved by OMB.
We invite public comments on these information collection
requirements. If you wish to comment, please identify the rule (CMS-
1696-P) and, where applicable, the preamble section, and the ICR
section. See this rule's DATES and ADDRESSES sections for the comment
due date and for additional instructions.
IX. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
X. Economic Analyses
A. Regulatory Impact Analysis
1. Statement of Need
This proposed rule would update the FY 2018 SNF prospective payment
rates as required under section 1888(e)(4)(E) of the Act. It also
responds to section 1888(e)(4)(H) of the Act, which requires the
Secretary to provide for publication in the Federal Register before the
August 1 that precedes the start of each FY, the unadjusted federal per
diem rates, the case-mix classification system, and the factors to be
applied in making the area wage adjustment. As these statutory
provisions prescribe a detailed methodology for calculating and
disseminating payment rates under the SNF PPS, we do not have the
discretion to adopt an alternative approach on these issues. We note
that we did not include the impacts of the proposed PDPM and related
policies in the sections that follow, as we have included this
discussion in section V.J. of this proposed rule.
2. Introduction
We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA,
September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March
22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August
4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive
Order 13771 on Reducing Regulation and Controlling Regulatory Costs
(January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated an economically significant
rule, under section 3(f)(1) of Executive Order 12866. Accordingly, we
have prepared a regulatory impact analysis (RIA) as further discussed
below. Also, the rule has been reviewed by OMB.
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017. OMB's implementation
guidance, issued on April 5, 2017, explains that ``Federal spending
regulatory actions that cause only income transfers between taxpayers
and program beneficiaries (for example, regulations associated with . .
. Medicare spending) are considered `transfer rules' and are not
covered by E.O. 13771. . . . However . . . such regulatory actions may
impose requirements apart from transfers . . . In those cases, the
actions would need to be offset to the extent they impose more than de
minimis costs. Examples of ancillary requirements that may require
offsets include new reporting or recordkeeping requirements.'' As
discussed in section VII of this proposed rule, we estimate that this
proposed rule would lead to paperwork cost savings of approximately
$187 million per year on
[[Page 21095]]
an ongoing basis. This proposed rule is expected to be an E.O. 13771
deregulatory action, if finalized.
3. Overall Impacts
This proposed rule sets forth proposed updates of the SNF PPS rates
contained in the SNF PPS final rule for FY 2018 (82 FR 36530). Based on
the above, we estimate that the aggregate impact would be an increase
of approximately $850 million in payments to SNFs in FY 2019, resulting
from the SNF market basket update to the payment rates, as required by
section 53111 of the BBA 2018. Absent the application of section 53111
of the BBA 2018, the aggregate impact from the 1.9 percentage point
market basket increase factor would have been approximately $670
million. We note that these impact numbers do not incorporate the SNF
VBP reductions mentioned in section IX.A.6. of this proposed rule.
We would note that events may occur to limit the scope or accuracy
of our impact analysis, as this analysis is future-oriented, and thus,
very susceptible to forecasting errors due to events that may occur
within the assessed impact time period.
In accordance with sections 1888(e)(4)(E) and 1888(e)(5) of the
Act, we update the FY 2018 payment rates by a factor equal to the
market basket index percentage change adjusted by the MFP adjustment to
determine the payment rates for FY 2019. As discussed previously,
section 53111 of the BBA 2018 stipulates a market basket increase
factor of 2.4 percent. The impact to Medicare is included in the total
column of Table 43. In updating the SNF PPS rates for FY 2019, we made
a number of standard annual revisions and clarifications mentioned
elsewhere in this proposed rule (for example, the update to the wage
and market basket indexes used for adjusting the federal rates).
The annual update set forth in this proposed rule applies to SNF
PPS payments in FY 2019. Accordingly, the analysis of the impact of the
annual update that follows only describes the impact of this single
year. Furthermore, in accordance with the requirements of the Act, we
will publish a rule or notice for each subsequent FY that will provide
for an update to the payment rates and include an associated impact
analysis.
4. Detailed Economic Analysis
The FY 2019 SNF PPS payment impacts appear in Table 43. Using the
most recently available data, in this case FY 2017, we apply the
current FY 2018 wage index and labor-related share value to the number
of payment days to simulate FY 2018 payments. Then, using the same FY
2017 data, we apply the proposed FY 2019 wage index and labor-related
share value to simulate FY 2019 payments. We tabulate the resulting
payments according to the classifications in Table 43 (for example,
facility type, geographic region, facility ownership), and compare the
simulated FY 2018 payments to the simulated FY 2019 payments to
determine the overall impact. The breakdown of the various categories
of data Table 43 follows:
The first column shows the breakdown of all SNFs by urban
or rural status, hospital-based or freestanding status, census region,
and ownership.
The first row of figures describes the estimated effects
of the various changes on all facilities. The next six rows show the
effects on facilities split by hospital-based, freestanding, urban, and
rural categories. The next nineteen rows show the effects on facilities
by urban versus rural status by census region. The last three rows show
the effects on facilities by ownership (that is, government, profit,
and non-profit status).
The second column shows the number of facilities in the
impact database.
The third column shows the effect of the annual update to
the wage index. This represents the effect of using the most recent
wage data available. The total impact of this change is 0 percent;
however, there are distributional effects of the change.
The fourth column shows the effect of all of the changes
on the FY 2019 payments. The update of 2.4 percent is constant for all
providers and, though not shown individually, is included in the total
column. It is projected that aggregate payments will increase by 2.4
percent, assuming facilities do not change their care delivery and
billing practices in response.
As illustrated in Table 43, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, due to changes proposed in this rule, providers in the urban
Pacific region would experience a 3.4 percent increase in FY 2019 total
payments.
Table 43--Projected Impact to the SNF PPS for FY 2019
----------------------------------------------------------------------------------------------------------------
Number of
facilities FY Update wage Total change
2019 data (%) (%)
----------------------------------------------------------------------------------------------------------------
Group:
Total....................................................... 15,455 0.0 2.4
Urban....................................................... 11,031 0.0 2.4
Rural....................................................... 4,424 0.1 2.5
Hospital-based urban........................................ 498 0.0 2.4
Freestanding urban.......................................... 10,533 0.0 2.4
Hospital-based rural........................................ 551 0.0 2.4
Freestanding rural.......................................... 3,873 0.1 2.5
Urban by region:
New England................................................. 789 -0.7 1.7
Middle Atlantic............................................. 1,479 0.0 2.4
South Atlantic.............................................. 1,869 -0.2 2.2
East North Central.......................................... 2,126 -0.4 2.0
East South Central.......................................... 555 -0.3 2.1
West North Central.......................................... 920 -0.4 2.0
West South Central.......................................... 1,344 0.2 2.6
Mountain.................................................... 525 -0.6 1.8
Pacific..................................................... 1,419 1.0 3.4
Outlying.................................................... 5 -0.7 1.7
Rural by region:
New England................................................. 135 -0.7 1.7
Middle Atlantic............................................. 215 0.2 2.6
[[Page 21096]]
South Atlantic.............................................. 494 0.0 2.4
East North Central.......................................... 930 0.2 2.6
East South Central.......................................... 523 -0.5 1.9
West North Central.......................................... 1,072 0.4 2.8
West South Central.......................................... 733 0.8 3.2
Mountain.................................................... 227 0.5 2.9
Pacific..................................................... 95 -0.8 1.5
Ownership:
Government.................................................. 1,011 -0.1 2.3
Profit...................................................... 10,872 0.0 2.4
Non-Profit.................................................. 3,572 -0.1 2.3
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 2.4 percent market basket increase required by section 53111 of the BBA
2018. Additionally, we found no SNFs in rural outlying areas.
5. Estimated Impacts for the SNF QRP
With no proposals to add or remove measures in the SNF QRP, there
are no impacts associated with the SNF QRP Program.
6. Estimated Impacts for the SNF VBP Program
Estimated impacts of the FY 2019 SNF VBP Program are based on
historical data that appear in Table 44. We modeled SNFs' performance
in the Program using SNFRM data from CY 2014 as the baseline period and
FY 2016 as the performance period. Additionally, we modeled a logistic
exchange function with a payback percentage of 60 percent, as we
finalized in the FY 2018 SNF PPS final rule (82 FR 36619 through
36621). As required by section 1888(h)(6)(A) of the Act, we will reduce
adjusted federal per diem rates determined under section 1888(e)(4)(G)
of the Act, otherwise applicable to a skilled nursing facility for
services furnished by such facility during FY 2019 by the applicable
percent, which is defined in section 1888(h)(6)(B) of the Act, as 2
percent. We estimate the total reductions to payments required by
section 1888(h)(6) of the Act, to be $527.4 million for FY 2019. Based
on the 60 percent payback percentage, we estimate that we will disburse
approximately $316.4 million in value-based incentive payments to SNFs
in FY 2019, which means that the SNF VBP Program is estimated to result
in approximately $211 million in savings to the Medicare program in FY
2019.
We also modeled the estimated impacts of the proposed scoring
adjustment for low-volume SNFs based on historical data in Table 45. We
estimate that the scoring adjustment policy proposal would redistribute
an additional $6.7 million to the group of low volume SNFs.
We estimate that this proposal would result in increasing low-
volume SNFs' value-based incentive payment percentages by approximately
0.99 percent, on average, from the value-based incentive payment
percentage that they would receive in the absence of the low-volume
adjustment. An increase in value-based incentive payment percentages by
0.99 percent is needed to bring low-volume SNFs back to the 2.0 percent
that was withheld from their payments. We also estimate that if this
proposal is finalized, we would pay an additional $6.7 million in
incentive payments to low-volume SNFs, which would increase the 60
percent payback percentage for FY 2019 by approximately 1.28 percent,
making the new payback percentage for FY 2019 equal to 61.28 percent of
the estimated $527.4 million in withheld funds for that fiscal year.
Table 44--Estimated FY 2019 SNF VBP Program Impacts Without a Low-Volume Scoring Adjustment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean incentive
Number of Mean SNF multiplier % of proposed
Category Criterion facilities RSRR (mean) performance (60% payback) payback
score (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Group..................................... Total....................... 15,460 0.18874 40.982 1.163 * 99.9
Urban....................... 10,995 0.18826 40.538 1.154 83.8
Rural....................... 4,465 0.18612 40.433 1.139 16.0
Urban by Region........................... Total....................... 10,995
01 = Boston................. 793 0.18941 37.53033 1.063 4.8
02 = New York............... 905 0.18929 40.50641 1.148 11.5
03 = Philadelphia........... 1,120 0.18586 44.99993 1.310 10.0
04 = Atlanta................ 1,878 0.19245 37.29765 1.050 13.1
05 = Chicago................ 2,325 0.18683 42.32786 1.213 16.1
06 = Dallas................. 1,363 0.19166 34.59615 0.939 6.3
07 = Kansas City............ 658 0.18916 39.14296 1.099 2.7
08 = Denver................. 319 0.17823 53.44707 1.618 2.9
09 = San Francisco.......... 1,296 0.18666 39.95157 1.132 12.4
10 = Seattle................ 338 0.17752 55.34239 1.664 4.1
Rural by Region........................... Total....................... 4,465
01 = Boston................. 135 0.18176 50.72243 1.510 0.9
02 = New York............... 87 0.18414 49.10573 1.494 0.5
03 = Philadelphia........... 274 0.18686 42.10613 1.216 1.3
[[Page 21097]]
04 = Atlanta................ 882 0.19040 36.35979 1.013 3.3
05 = Chicago................ 1,100 0.18350 45.84850 1.313 4.7
06 = Dallas................. 783 0.19100 34.12362 0.917 1.9
07 = Kansas City............ 789 0.18557 41.35057 1.136 1.4
08 = Denver................. 268 0.18049 46.96957 1.341 0.8
09 = San Francisco.......... 62 0.16434 54.12133 1.670 0.6
10 = Seattle................ 85 0.17587 56.60310 1.683 0.7
Ownership Type............................ Total....................... 15,462
Government.................. 1,017 0.18332 43.477 1.245 6.2
Profit...................... 10,867 0.18905 39.176 1.102 71.2
Non-Profit.................. 3,578 0.18458 45.067 1.307 22.6
Number of Beds............................ Total....................... 15,462
1st Quartile................ 3,898 0.18463 40.881 1.128 22.7
2nd Quartile................ 3,834 0.18715 40.891 1.167 23.5
3rd Quartile................ 3,945 0.18947 40.203 1.144 25.2
4th Quartile................ 3,785 0.18932 41.339 1.197 28.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This category does not add to 100 because a small number of SNFs did not have urban/rural designations in our data.
Table 45--Estimated SNF VBP Program Impacts Including Effects of the Proposed Low-Volume Scoring Adjustment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean incentive
Number of Mean SNF multiplier % of proposed
Category Criterion facilities RSRR (mean) performance (60% Payback) payback
score (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Group..................................... Total....................... 12,845 0.18912 41.371 1.192 * 99.9
Urban....................... 9,604 0.18957 40.956 1.177 84.4
Rural....................... 3,241 0.18779 41.011 1.181 15.4
Urban by Region........................... Total....................... 9,604
01 = Boston................. 713 0.19089 37.26777 1.059 4.9
02 = New York............... 836 0.19029 40.90383 1.165 11.8
03 = Philadelphia........... 1,040 0.18601 45.31896 1.325 10.1
04 = Atlanta................ 1,767 0.19332 37.28735 1.052 13.3
05 = Chicago................ 1,961 0.18784 43.06368 1.246 16.0
06 = Dallas................. 1,134 0.19416 34.53275 0.949 6.1
07 = Kansas City............ 510 0.19057 39.26278 1.132 2.6
08 = Denver................. 241 0.17832 57.62596 1.790 2.9
09 = San Francisco.......... 1,098 0.18908 40.80722 1.176 12.5
10 = Seattle................ 304 0.17808 56.67839 1.713 4.2
Rural by Region........................... Total....................... 3,241
01 = Boston................. 115 0.18133 51.89294 1.568 0.9
02 = New York............... 77 0.18366 50.48193 1.569 0.5
03 = Philadelphia........... 240 0.18789 42.12621 1.218 1.3
04 = Atlanta................ 764 0.19283 36.51452 1.032 3.3
05 = Chicago................ 818 0.18397 47.85089 1.399 4.5
06 = Dallas................. 557 0.19355 34.00868 0.952 1.7
07 = Kansas City............ 421 0.18634 42.64769 1.236 1.2
08 = Denver................. 132 0.18000 52.38900 1.544 0.7
09 = San Francisco.......... 48 0.17780 61.50419 1.931 0.6
10 = Seattle................ 69 0.17628 60.70084 1.836 0.7
Ownership Type............................ Total....................... 12,847
Government.................. 688 0.18529 46.450 1.380 5.2
Profit...................... 9,250 0.19039 39.526 1.127 72.0
Non-Profit.................. 2,909 0.18597 46.038 1.353 22.9
Number of Beds............................ Total....................... 12,847
1st Quartile................ 3,222 0.18760 42.466 1.226 24.6
2nd Quartile................ 3,221 0.18878 40.971 1.175 24.4
3rd Quartile................ 3,197 0.19048 40.242 1.153 23.3
4th Quartile................ 3,207 0.18963 41.800 1.212 27.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This category does not add to 100% because a small number of SNFs did not have urban/rural designations in our data.
[[Page 21098]]
7. Alternatives Considered
As described in this section, we estimate that the aggregate impact
for FY 2019 under the SNF PPS would be an increase of approximately
$850 million in payments to SNFs, resulting from the SNF market basket
update to the payment rates, as required by section 53111 of the BBA
2018. Absent application of section 53111 of the BBA 2018, the market
basket increase factor of 1.9 percent would have resulted in an
aggregate increase in payments to SNFs of approximately $670 million.
Section 1888(e) of the Act establishes the SNF PPS for the payment
of Medicare SNF services for cost reporting periods beginning on or
after July 1, 1998. This section of the statute prescribes a detailed
formula for calculating base payment rates under the SNF PPS, and does
not provide for the use of any alternative methodology. It specifies
that the base year cost data to be used for computing the SNF PPS
payment rates must be from FY 1995 (October 1, 1994, through September
30, 1995). In accordance with the statute, we also incorporated a
number of elements into the SNF PPS (for example, case-mix
classification methodology, a market basket index, a wage index, and
the urban and rural distinction used in the development or adjustment
of the federal rates). Further, section 1888(e)(4)(H) of the Act
specifically requires us to disseminate the payment rates for each new
FY through the Federal Register, and to do so before the August 1 that
precedes the start of the new FY; accordingly, we are not pursuing
alternatives for this process.
As discussed in Section VI.C.5.c., we also considered an
alternative SNF VBP low-volume scoring policy. This alternative scoring
assignment would result in a value-based incentive payment percentage
of 1.2 percent, or 60 percent of the 2 percent withhold. This amount
would match low-volume SNFs' incentive payment percentages with the
finalized SNF VBP Program payback percentage of 60 percent, and would
represent a smaller adjustment to low-volume SNFs' incentive payment
percentages than the proposed policy described above. We estimate that
this alternative would redistribute an additional $1 million with
respect to FY 2019 services to low-volume SNFs. We also estimate that
this alternative would increase the 60 percent payback percentage for
FY 2019 by approximately 0.18 percent of the approximately $527.4
million of the total withheld from SNFs' payments, which would result
in a payback percentage of 60.18 percent of the estimated $527.4
million in withheld funds for that Program year. We estimate that this
alternative would pay back SNFs about $5.7 million less than the
proposed low-volume scoring methodology adjustment in total estimated
payments on an annual basis. However, as with the proposal above, the
specific amount by which the payback percentage would increase for each
Program year would vary based on the number of low-volume SNFs that we
identify for each Program year and the distribution of all SNFs'
performance scores for that Program year.
8. Accounting Statement
As required by OMB Circular A-4 (available online at
www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), in Tables 46 and 47, we have prepared
an accounting statement showing the classification of the expenditures
associated with the provisions of this proposed rule for FY 2019. Table
46 provides our best estimate of the possible changes in Medicare
payments under the SNF PPS as a result of the policies in this proposed
rule, based on the data for 15,455 SNFs in our database. Tables 44, 45,
and 47 provide our best estimate of the possible changes in Medicare
payments under the SNF VBP as a result of the policies in this proposed
rule.
Table 46--Accounting Statement: Classification of Estimated Expenditures, From the 2018 SNF PPS Fiscal Year to
the 2019 SNF PPS Fiscal Year
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers...... $850 million.*
From Whom To Whom? Federal Government to SNF Medicare Providers.
----------------------------------------------------------------------------------------------------------------
* The net increase of $850 million in transfer payments is a result of the market basket increase of $850
million.
Table 47--Accounting Statement: Classification of Estimated Expenditures for the FY 2019 SNF VBP Program
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers...... $316.4 million.*
From Whom To Whom? Federal Government to SNF Medicare Providers.
----------------------------------------------------------------------------------------------------------------
* This estimate does not include the two percent reduction to SNFs' Medicare payments (estimated to be $527.4
million) required by statute.
9. Conclusion
This proposed rule sets forth updates of the SNF PPS rates
contained in the SNF PPS final rule for FY 2018 (82 FR 36530). Based on
the above, we estimate the overall estimated payments for SNFs in FY
2019 are projected to increase by approximately $850 million, or 2.4
percent, compared with those in FY 2018. We estimate that in FY 2019
under RUG-IV, SNFs in urban and rural areas would experience, on
average, a 2.4 percent increase and 2.5 percent increase, respectively,
in estimated payments compared with FY 2018. Providers in the urban
Pacific region would experience the largest estimated increase in
payments of approximately 3.4 percent. Providers in the rural Pacific
region would experience the smallest estimated increase in payments of
1.5 percent.
B. Regulatory Flexibility Act Analysis
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, non-profit organizations, and small
governmental jurisdictions. Most SNFs and most other providers and
suppliers are small entities, either by reason of their non-profit
status or by having revenues of $27.5 million or less in any 1 year. We
utilized the revenues of individual SNF providers (from recent Medicare
Cost Reports) to classify a
[[Page 21099]]
small business, and not the revenue of a larger firm with which they
may be affiliated. As a result, for the purposes of the RFA, we
estimate that almost all SNFs are small entities as that term is used
in the RFA, according to the Small Business Administration's latest
size standards (NAICS 623110), with total revenues of $27.5 million or
less in any 1 year. (For details, see the Small Business
Administration's website at http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards). In addition, approximately 20 percent of SNFs classified as
small entities are non-profit organizations. Finally, individuals and
states are not included in the definition of a small entity.
This proposed rule sets forth updates of the SNF PPS rates
contained in the SNF PPS final rule for FY 2018 (82 FR 36530). Based on
the above, we estimate that the aggregate impact for FY 2019 would be
an increase of $850 million in payments to SNFs, resulting from the SNF
market basket update to the payment rates. While it is projected in
Table 43 that providers would experience a net increase in payments, we
note that some individual providers within the same region or group may
experience different impacts on payments than others due to the
distributional impact of the FY 2019 wage indexes and the degree of
Medicare utilization.
Guidance issued by the Department of Health and Human Services on
the proper assessment of the impact on small entities in rulemakings,
utilizes a cost or revenue impact of 3 to 5 percent as a significance
threshold under the RFA. In their March 2017 Report to Congress
(available at http://medpac.gov/docs/default-source/reports/mar17_medpac_ch8.pdf), MedPAC states that Medicare covers approximately
11 percent of total patient days in freestanding facilities and 21
percent of facility revenue (March 2017 MedPAC Report to Congress,
202). As a result, for most facilities, when all payers are included in
the revenue stream, the overall impact on total revenues should be
substantially less than those impacts presented in Table 43. As
indicated in Table 43, the effect on facilities is projected to be an
aggregate positive impact of 2.4 percent for FY 2019. As the overall
impact on the industry as a whole, and thus on small entities
specifically, is less than the 3 to 5 percent threshold discussed
previously, the Secretary has determined that this proposed rule would
not have a significant impact on a substantial number of small entities
for FY 2019.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of an MSA and has fewer
than 100 beds. This proposed rule would affect small rural hospitals
that (1) furnish SNF services under a swing-bed agreement or (2) have a
hospital-based SNF. We anticipate that the impact on small rural
hospitals would be similar to the impact on SNF providers overall.
Moreover, as noted in previous SNF PPS final rules (most recently, the
one for FY 2018 (82 FR 36530)), the category of small rural hospitals
would be included within the analysis of the impact of this proposed
rule on small entities in general. As indicated in Table 43, the effect
on facilities for FY 2019 is projected to be an aggregate positive
impact of 2.4 percent. As the overall impact on the industry as a whole
is less than the 3 to 5 percent threshold discussed above, the
Secretary has determined that this proposed rule would not have a
significant impact on a substantial number of small rural hospitals for
FY 2019.
C. Unfunded Mandates Reform Act Analysis
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2018, that
threshold is approximately $150 million. This proposed rule will impose
no mandates on state, local, or tribal governments or on the private
sector.
D. Federalism Analysis
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule (and subsequent final
rule) that imposes substantial direct requirement costs on state and
local governments, preempts state law, or otherwise has federalism
implications. This proposed rule would have no substantial direct
effect on state and local governments, preempt state law, or otherwise
have federalism implications.
E. Congressional Review Act
This proposed regulation is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress
and the Comptroller General for review.
F. Regulatory Review Costs
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on last year's proposed rule will be the number of reviewers
of this proposed rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed last year's rule in detail,
and it is also possible that some reviewers chose not to comment on the
proposed rule. For these reasons we thought that the number of past
commenters would be a fair estimate of the number of reviewers of this
rule. We welcome any comments on the approach in estimating the number
of entities which will review this proposed rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule,
and therefore for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. We seek comments
on this assumption.
Using the wage information from the BLS for medical and health
service managers (Code 11-9111), we estimate that the cost of reviewing
this rule is $105.16 per hour, including overhead and fringe benefits
https://www.bls.gov/oes/current/oes_nat.htm . Assuming an average
reading speed, we estimate that it would take approximately 4 hours for
the staff to review half of this proposed rule. For each SNF that
reviews the rule, the estimated cost is $420.64 (4 hours x $105.16).
Therefore, we estimate that the total cost of reviewing this regulation
is $103,740 ($420.64 x 247 reviewers).
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.
[[Page 21100]]
List of Subjects
42 CFR Part 411
Diseases, Medicare, Reporting and recordkeeping requirements.
42 CFR Part 413
Health facilities, Diseases, Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 424
Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT
0
1. The authority citation for part 411 continues to read as follows:
Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh, and 1395nn).
Sec. 411.15 [Amended]
0
2. Section 411.15 is amended in paragraph (p)(3)(iv) by removing the
phrase ``by midnight of the day of departure'' and adding in its place
the phrase ``before the following midnight''.
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS
0
3. The authority citation for part 413 continues to read as follows:
Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883 and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Public Law 106-113, 113 Stat. 1501A-332; sec. 3201 of Public Law
112-96, 126 Stat. 156; sec. 632 of Public Law 112-240, 126 Stat.
2354; sec. 217 of Public Law 113-93, 129 Stat. 1040; and sec. 204 of
Public Law 113-295, 128 Stat. 4010; and sec. 808 of Public Law 114-
27, 129 Stat. 362.
0
4. Section 413.337 is amended by revising paragraph (d)(1)(v) and
adding paragraphs (d)(1)(vi) and (vii) and (f) to read as follows:
Sec. 413.337 Methodology for calculating the prospective payment
rates.
* * * * *
(d) * * *
(1) * * *
(v) For each subsequent fiscal year, the unadjusted Federal payment
rate is equal to the rate computed for the previous fiscal year
increased by a factor equal to the SNF market basket index percentage
change for the fiscal year involved, except as provided in paragraphs
(d)(1)(vi) and (vii) of this section.
(vi) For fiscal year 2018, the unadjusted Federal payment rate is
equal to the rate computed for the previous fiscal year increased by a
SNF market basket index percentage change of 1 percent (after
application of paragraphs (d)(2) and (3) of this section).
(vii) For fiscal year 2019, the unadjusted Federal payment rate is
equal to the rate computed for the previous fiscal year increased by a
SNF market basket index percentage change of 2.4 percent (after
application of paragraphs (d)(2) and (3) of this section).
* * * * *
(f) Adjustments to payment rates under the SNF Value-Based
Purchasing Program. Beginning with payment for services furnished on
October 1, 2018, the adjusted Federal per diem rate (as defined in
Sec. 413.338(a)(2)) otherwise applicable to a SNF for the fiscal year
is reduced by the applicable percent (as defined in Sec.
413.338(a)(3)). The resulting amount is then adjusted by the value-
based incentive payment amount (as defined in Sec. 413.338(a)(14))
based on the SNF's performance score for that fiscal year under the SNF
Value-Based Purchasing Program, as calculated under Sec. 413.338.
0
5. Section 413.338 is amended by--
0
a. Adding paragraphs (a)(16) and (17);
0
b. Revising paragraph (c)(2)(i); and
0
c. Adding paragraphs (d)(1)(iv) and (d)(3) and (4).
The additions and revision read as follows:
Sec. 413.338 Skilled Nursing Facility Value-Based Purchasing
(a) * * *
(16) Low-volume SNF means a SNF with fewer than 25 eligible stays
included in the SNF readmission measure denominator during the
performance period for a fiscal year.
(17) Eligible stay means, for purposes of the SNF readmission
measure, an index SNF admission that would be included in the
denominator of that measure.
* * * * *
(c) * * *
(2) * * *
(i) Total amount available for a fiscal year. The total amount
available for value-based incentive payments for a fiscal year is at
least 60 percent of the total amount of the reduction to the adjusted
SNF PPS payments for that fiscal year, as estimated by CMS, and will be
increased as appropriate for each fiscal year to account for the
assignment of a performance score to low-volume SNFs under paragraph
(d)(3) of this section.
(d) * * *
(1) * * *
(iv) CMS will not award points for improvement to a SNF that has
fewer than 25 eligible stays during the baseline period.
* * * * *
(3) If CMS determines that a SNF is a low-volume SNF with respect
to a fiscal year, CMS will assign a performance score to the SNF for
the fiscal year that, when used to calculate the value-based incentive
payment amount (as defined in paragraph (a)(14) of this section),
results in a value-based incentive payment amount that is equal to the
adjusted Federal per diem rate (as defined in paragraph (a)(2) of this
section) that would apply to the SNF for the fiscal year without
application of Sec. 413.337(f).
(4) Exception requests. (i) A SNF may request and CMS may grant
exceptions to the SNF Value-Based Purchasing Program's requirements
under this section for one or more calendar months when there are
certain extraordinary circumstances beyond the control of the SNF.
(ii) A SNF may request an exception within 90 days of the date that
the extraordinary circumstances occurred by sending an email to
[email protected] that includes a completed Extraordinary
Circumstances Request form (available on the SNF VBP section of
QualityNet at https://www.qualitynet.org/) and any available evidence
of the impact of the extraordinary circumstances on the care that the
SNF furnished to patients, including, but not limited to, photographs,
newspaper, and other media articles.
(iii) Except as provided in paragraph (d)(4)(iv) of this section,
CMS will not consider an exception request unless the SNF requesting
such exception has complied fully with the requirements in this
paragraph (d).
(iv) CMS may grant exceptions to SNFs without a request if it
determines that an extraordinary circumstance affects an entire region
or locale.
(v) CMS will calculate a SNF performance score for a fiscal year
for a SNF for which it has granted an exception request that does not
include its performance on the SNF readmission
[[Page 21101]]
measure during the calendar months affected by the extraordinary
circumstance.
* * * * *
0
6. Section 413.360 is amended by adding paragraph (b)(3) and revising
paragraphs (d)(1) and (4) to read as follows:
Sec. 413.360 Requirements under the Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
* * * * *
(b) * * *
(3) CMS may remove a quality measure from the SNF QRP based on one
or more of the following factors:
(i) Measure performance among SNFs is so high and unvarying that
meaningful distinctions in improvements in performance can no longer be
made.
(ii) Performance or improvement on a measure does not result in
better resident outcomes.
(iii) A measure does not align with current clinical guidelines or
practice.
(iv) A more broadly applicable measure (across settings,
populations, or conditions) for the particular topic is available.
(v) A measure that is more proximal in time to desired resident
outcomes for the particular topic is available.
(vi) A measure that is more strongly associated with desired
resident outcomes for the particular topic is available.
(vii) Collection or public reporting of a measure leads to negative
unintended consequences other than resident harm.
(viii) The costs associated with a measure outweigh the benefit of
its continued use in the program.
* * * * *
(d) * * *
(1) SNFs that do not meet the requirements in paragraph (b) of this
section for a program year will receive a written notification of non-
compliance through at least one of the following methods: Quality
Improvement Evaluation System (QIES) Assessment Submission and
Processing (ASAP) system, the United States Postal Service, or via an
email from the Medicare Administrative Contractor (MAC). A SNF may
request reconsideration no later than 30 calendar days after the date
identified on the letter of non-compliance.
* * * * *
(4) CMS will notify SNFs, in writing, of its final decision
regarding any reconsideration request through at least one of the
following notification methods: QIES ASAP system, the United States
Postal Service, or via email from the Medicare Administrative
Contractor (MAC).
* * * * *
PART 424--CONDITIONS FOR MEDICARE PAYMENT
0
6. The authority citation for part 424 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Sec. 424.20 [Amended]
0
7. Section 424.20 is amended in paragraph (a)(1)(i) by removing the
language ``a condition for which the individual received inpatient care
in a participating hospital or a qualified hospital, as defined in
Sec. 409.3 of this chapter; or'' and adding in its place the language
``a condition for which the individual received inpatient care in a
participating hospital or a qualified hospital, as defined in Sec.
409.3 of this chapter, or for a new condition that arose while the
individual was receiving care in the SNF or swing-bed hospital for a
condition for which he or she received inpatient care in a
participating or qualified hospital; or''.
Dated: April 17, 2018.
Seema Verma
Administrator, Centers for Medicare & Medicaid Services.
Dated: April 19, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-09015 Filed 4-27-18; 4:15 pm]
BILLING CODE 4120-01-P