2023 SNF PPS Final Rule: What it Means to Providers

On July 29, 2022, the Centers for Medicare and Medicaid Services (CMS) issued the fiscal year (FY) 2023 Skilled Nursing Facility Prospective Payment System Final Rule, which takes effect on October 1, 2022.

Although SNF providers were anticipating unpleasant changes, the news was more positive than CMS originally proposed.

Payment Rates

CMS’s proposed rule in April 2022 contained a parity adjustment to PDPM rates of -4.6% for FY 2023. This adjustment is due to PDPM implementation not being budget neutral as designed. Due to the advocacy efforts of Aegis Therapies and the therapy industry, CMS will phase in this parity adjustment over two years. CMS will apply a -2.3% adjustment for FY 2023 and a -2.3% adjustment for FY 2024. As proposed, CMS finalized that the parity adjustment will be applied equally across all case-mix adjusted PDPM components rather than using a targeted approach that would only have negatively impacted the components responsible for the “overspending” under PDPM.

What does this mean to skilled nursing providers?

SNF providers will see a 2.7% increase in payments for FY 2023 compared to FY 2022. This increase can be attributed to a PPS payment update of 5.1% for FY 2023 (comprised of a 3.9% market basket increase, a 1.5% forecast error correction and a -0.3% productivity adjustment). This 2.7% increase is equivalent to $904 million in additional Part A payments.

Positive News About SNF Value-Based Purchasing

CMS will not apply the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) for FY 2023. Although CMS will report performance on this measure publicly, it will not affect payment. Additionally, CMS is adding three new measures:

  • For FY 2026 – The SNF Healthcare Associated Infections Requiring Hospitalization (SNF HAI) outcome measure will be added. SNF HAI assesses SNF performance on infection prevention and management.
  • Also for FY 2026 – The Total Nursing Hours Per Day measure will be added. This is a structural measure that uses auditable electronic data to calculate total nursing hours per resident day.
  • For FY 2027 – The Discharge to Community – Post-Acute Care Measure (DTC) for SNFs will be added. The DTC measure is an outcome measure that assesses the rate of successful discharges to the community from a SNF setting.

CMS is also finalizing updates to its scoring methodology, including:

  • Updating the SNF VBP program measure-level scoring normalization policy beginning with FY 2026.
  • Adopting a case minimum policy beginning FY 2023 that replaces the Low-Volume Adjustment policy for the SNF VBP.
  • Updating the scoring policy for SNFs without sufficient baseline period date beginning with FY 2026.
  • Adopting a measure minimum policy beginning with FY 2026.
  • Removing the Low-Volume Adjustment policy from the SNF VBP beginning in FY 2023.

For more detailed information, you can find the CMS Fact Sheet here. Aegis Therapies is your partner in navigating industry changes like these. For more information on how we can help, contact us today.

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