Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2018, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, Survey Team Composition, and Proposal To Correct the Performance Period for the NHSN HCP Influenza Vaccination Immunization Reporting Measure in the ESRD QIP for PY 2020, 21014-21100 [2017-08521]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 82, Number 85 (Thursday, May 4, 2017)]
[Proposed Rules]
[Pages 21014-21100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08521]



[[Page 21013]]

Vol. 82

Thursday,

No. 85

May 4, 2017

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 409, 411, 413 et al.





Medicare Program; Prospective Payment System and Consolidated Billing 
for Skilled Nursing Facilities for FY 2018, SNF Value-Based Purchasing 
Program, SNF Quality Reporting Program, Survey Team Composition, and 
Proposal To Correct the Performance Period for the NHSN HCP Influenza 
Vaccination Immunization Reporting Measure in the ESRD QIP for PY 2020; 
Proposed Rule

Federal Register / Vol. 82 , No. 85 / Thursday, May 4, 2017 / 
Proposed Rules

[[Page 21014]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 411, 413, 424, and 488

[CMS-1679-P]
RIN 0938-AS96


Medicare Program; Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities for FY 2018, SNF Value-Based 
Purchasing Program, SNF Quality Reporting Program, Survey Team 
Composition, and Proposal To Correct the Performance Period for the 
NHSN HCP Influenza Vaccination Immunization Reporting Measure in the 
ESRD QIP for PY 2020

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) 2018. It also proposes to revise and rebase 
the market basket index by updating the base year from 2010 to 2014, 
and by adding a new cost category for Installation, Maintenance, and 
Repair Services. The rule also includes proposed revisions to the SNF 
Quality Reporting Program (QRP), including measure and standardized 
patient assessment data proposals and proposals related to public 
display. In addition, it includes proposals for the Skilled Nursing 
Facility Value-Based Purchasing Program that will affect Medicare 
payment to SNFs beginning in FY 2019 and clarification on the 
requirements regarding the composition of professionals for the survey 
team. The proposed rule also seeks to clarify the regulatory 
requirements for team composition for surveys conducted for 
investigating a complaint and to align regulatory provisions for 
investigation of complaints with the statutory requirements. The 
proposed rule also includes one proposal related to the performance 
period for the National Healthcare Safety Network (NHSN) Healthcare 
Personnel (HCP) Influenza Vaccination Reporting Measure included in the 
End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP).

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, 2017.

ADDRESSES: In commenting, please refer to file code CMS-1679-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Within the search bar, enter 
the Regulation Identifier Number associated with this regulation, 0938-
AS96, and then click on the ``Comment Now'' box
    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-1679-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-1679-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. Centers for Medicare & Medicaid Services, Department of Health 
and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal Government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. Centers for Medicare & Medicaid Services, Department of Health 
and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    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.
    Charlayne Van, (410) 786-8659, for information related to skilled 
nursing facility quality reporting.
    James Poyer, (410) 786-2261 and Stephanie Frilling, (410) 786-4507, 
for information related to the skilled nursing facility value-based 
purchasing program.
    Delia Houseal, (410) 786-2724, for information related to the end-
stage renal disease quality incentive program.
    Rebecca Ward, (410) 786-1732 and Caecilia Blondiaux, (410) 786-
2190, for survey type definitions.

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 Web site as soon as possible after they have been 
received: https://www.regulations.gov. Follow the search instructions on 
that Web site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Availability of Certain Tables Exclusively Through the Internet on the 
CMS Web site

    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

[[Page 21015]]

longer published in the Federal Register. Instead, these tables are 
available exclusively through the Internet on the CMS Web site. The 
wage index tables for this proposed rule can be accessed on the SNF PPS 
Wage Index home page, at https://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
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 2018 Update
    A. Federal Base Rates
    B. SNF Market Basket Update
    C. Case-Mix Adjustment
    D. Wage Index Adjustment
    E. 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. Other Issues
    A. Revising and Rebasing the SNF Market Basket Index
    B. Skilled Nursing Facility (SNF) Quality Reporting Program 
(QRP)
    C. Skilled Nursing Facility Value-Based Purchasing Program (SNF 
VBP)
    D. Survey Team Composition
    E. Proposal to Correct the Performance Period for the National 
Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) 
Influenza Vaccination Immunization Reporting Measure in the End-
Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for 
Payment Year (PY) 2020
VI. Possible Burden Reduction in the Long-Term Care Requirements
VII. CMMI Solicitation
VIII. Request for Information on CMS Flexibilities and Efficiencies
IX. Collection of Information Requirements
X. Response to Comments
XI. Economic Analyses
Regulation Text

Acronyms

    In addition, because of the many terms to which we refer by acronym 
in this proposed rule, we are listing these abbreviations and their 
corresponding terms in alphabetical order below:

AIDS Acquired Immune Deficiency Syndrome
ALJ Administrative Law Judge
ARD Assessment reference date
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Public Law 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Public Law 106-554
CAH Critical access hospital
CARE Continuity Assessment Record and Evaluation
CASPER Certification and Survey Provider Enhanced Reporting
CBSA Core-based statistical area
CCN CMS Certification Number
CFR Code of Federal Regulations
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
DTI Deep tissue injuries
FFS Fee-for-service
FR Federal Register
FY Fiscal year
HCPCS Healthcare Common Procedure Coding System
HIQR Hospital Inpatient Quality Reporting
HOQR Hospital Outpatient Quality Reporting
HRRP Hospital Readmissions Reduction Program
HVBP Hospital Value-Based Purchasing
ICD-10-CM International Classification of Diseases, 10th Revision, 
Clinical Modification
IGI IHS (Information Handling Services) Global Insight, Inc.
IMPACT Improving Medicare Post-Acute Care Transformation Act of 
2014, Public Law 113-185
IPPS Inpatient prospective payment system
IRF Inpatient Rehabilitation Facility
IRF-PAI Inpatient Rehabilitation Facility Patient Assessment 
Instrument
LTC Long-term care
LTCH Long-term care hospital
MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public 
Law 114-10
MAP Measures Application Partnership
MDS Minimum data set
MFP Multifactor productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MSA Metropolitan statistical area
NF Nursing facility
NQF National Quality Forum
OASIS Outcome and Assessment Information Set
OBRA 87 Omnibus Budget Reconciliation Act of 1987, Public Law 100-
203
OMB Office of Management and Budget
PAC Post-acute care
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PPS Prospective Payment System
PQRS Physician Quality Reporting System
QIES Quality Improvement and Evaluation System
QIES ASAP Quality Improvement and Evaluation System Assessment 
Submission and Processing
QRP Quality Reporting Program
RAI Resident assessment instrument
RAVEN Resident assessment validation entry
RFA Regulatory Flexibility Act, Public Law 96-354
RIA Regulatory impact analysis
RUG-III Resource Utilization Groups, Version 3
RUG-IV Resource Utilization Groups, Version 4
RUG-53 Refined 53-Group RUG-III Case-Mix Classification System
SCHIP State Children's Health Insurance Program
SNF Skilled nursing facility
SNF PMR Skilled Nursing Facility Payment Models Research
SNF QRP Skilled Nursing Facility Quality Reporting Program
SNF VBP Skilled Nursing Facility Value-Based Purchasing Program
SNFPPR Skilled Nursing Facility Potentially Preventable Readmission 
Measure
SNFRM Skilled Nursing Facility 30-Day All-Cause Readmission Measure
STM Staff time measurement
STRIVE Staff time and resource intensity verification
TEP Technical expert panel
UMRA Unfunded Mandates Reform Act, Public Law 104-4
VBP Value-based purchasing

I. Executive Summary

A. Purpose

    This proposed rule would update the SNF prospective payment rates 
for FY 2018 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 includes proposals that would update the requirements for the 
Skilled Nursing Facility Quality Reporting Program (SNF QRP), 
additional proposals for the Skilled Nursing Facility Value-Based 
Purchasing Program (SNF VBP), and clarification of requirements related 
to survey team composition and investigation of complaints under 
Sec. Sec.  488.30, 488.301, 488.314, and 488.308. The proposed rule 
also includes one proposal related to the performance period for the 
National Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) 
Influenza Vaccination Reporting Measure included in the End-Stage Renal 
Disease (ESRD) Quality Incentive Program (QIP). Finally, in this 
proposed rule we will be soliciting comments regarding potential 
changes to the recently finalized Requirements for Long-Term Care 
Facilities that would result in a burden reduction if modified or 
eliminated, as well as potential CMMI models or other

[[Page 21016]]

demonstration projects that would reduce cost and increase quality of 
care for SNF, or more generally Post-Acute Care patients.

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 
2017 (81 FR 51970), which reflects the SNF market basket update, as 
required by section 1888(e)(5)(B)(iii) of the Act for FY 2018. 
Additionally, in section V.A. of this proposed rule, we propose to 
revise and rebase the market basket index for FY 2018 and subsequent 
FYs by updating the base year from 2010 to 2014, and by adding a new 
cost category for Installation, Maintenance, and Repair Services. We 
are also proposing additional polices, measures and data reporting 
requirements for the Skilled Nursing Facility Quality Reporting Program 
(SNF QRP) and requirements for the SNF VBP Program, including an 
exchange function to translate SNF performance scores calculated using 
the program's scoring methodology into value-based incentive payments.
    We also propose to clarify the regulatory requirements for team 
composition for surveys conducted for the purposes of investigating a 
complaint and on-site monitoring of compliance, and to align the 
regulatory provisions for special surveys and investigation of 
complaints with the statute. The proposed changes clarify that the 
requirement for an interdisciplinary team that must include registered 
nurse is applicable to surveys conducted under sections 1819(g)(2) and 
1919(g)(2) of the Act, and not to those surveys conducted to 
investigate complaints or to monitor compliance on-site under sections 
1819(g)(4) and 1919(g)(4) of the Act. Revising the regulatory language 
under Sec. Sec.  488.30, 488.301, 488.308, and 488.314 to correspond to 
the statutory requirements found in sections 1819(g) and 1919(g) of the 
Act will add clarity to these requirements by making them more 
explicit. We also propose to revise the performance period for the 
National Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) 
Influenza Vaccination Reporting Measure included in the End-Stage Renal 
Disease (ESRD) Quality Incentive Program (QIP).

C. Summary of Cost and Benefits

------------------------------------------------------------------------
         Provision description                   Total transfers
------------------------------------------------------------------------
Proposed FY 2018 SNF PPS payment rate    The overall economic impact of
 update.                                  this proposed rule would be an
                                          estimated increase of $390
                                          million in aggregate payments
                                          to SNFs during FY 2018.
Proposed FY 2018 Cost to Updating the    The overall cost for SNFs to
 Quality Reporting Program.               submit data for the Quality
                                          Reporting Program for the
                                          provisions in this proposed
                                          rule is $60 million.
------------------------------------------------------------------------

II. Background on SNF PPS

A. Statutory Basis and Scope

    As amended by section 4432 of the Balanced Budget Act of 1997 (BBA, 
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 https://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 measure and a resource use measure, 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(a) of the Improving Medicare 
Post-Acute Care Transformation Act of 2014 (Pub. L. 113-185, enacted 
October 6, 2014) (IMPACT Act) added section 1899B to the Act that, 
among other things, requires SNFs to report standardized assessment 
data including such data on quality measures in specified quality 
measure domains, as well as data on resource use and other domains. In 
addition, the IMPACT Act added section 1888(e)(6) to the Act, which 
requires the Secretary to implement a quality reporting program for 
SNFs, which includes a requirement that SNFs report certain data to 
receive their full payment under the SNF PPS.

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 
2017 (81 FR 51970, August 5, 2016).
    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

[[Page 21017]]

required annual updates to the per diem payment rates for SNFs for FY 
2018.

III. SNF PPS Rate Setting Methodology and FY 2018 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 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 2014 (78 FR 47939 through 47946), we revised and 
rebased the market basket index, which included updating the base year 
from FY 2004 to FY 2010. For FY 2018, as discussed in section V.A. of 
this proposed rule, we are proposing to rebase and revise the SNF 
market basket, 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 2018, the growth rate of the proposed 2014-based SNF market basket 
is estimated to be 2.7 percent, which is based on the IHS Global 
Insight, Inc. (IGI) first quarter 2017 forecast with historical data 
through fourth quarter 2016.
    However, we note that section 411(a) of the Medicare Access and 
CHIP Reauthorization Act of 2015 (Pub. L. 114-10, enacted on April 16, 
2015) (MACRA) amended section 1888(e) of the Act to add section 
1888(e)(5)(B)(iii) of the Act. Section 1888(e)(5)(B)(iii) of the Act 
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. In accordance with section 1888(e)(5)(B)(iii) of the Act, 
we will use a market basket percentage of 1.0 percent to update the 
federal rates set forth in this proposed rule. In section III.B.5. of 
this proposed rule, we discuss the specific application of the MACRA-
specified market basket adjustment to the forthcoming annual update of 
the SNF PPS payment rates. In addition, in section V.B.1. 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)(iii) of the Act, added by 
section 411(a) of MACRA, we would have used the percentage change in 
the SNF market basket index to compute the update factor for FY 2018. 
Based on the proposed revision and rebasing of the SNF market basket 
discussed in section V.A. of this proposed rule, this factor would be 
based on the IGI first quarter 2017 forecast (with historical data 
through the fourth quarter 2016) of the FY 2018 percentage increase in 
the proposed 2014-based SNF market basket index reflecting routine, 
ancillary, and capital-related expenses. 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)(iii) of the Act, added by 
section 411(a) of the MACRA, requires us to use a 1.0 percent market 
basket percentage instead of the estimated 2.7 percent market basket 
percentage, adjusted as described below, to adjust the SNF PPS federal 
rates for FY 2018. 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

[[Page 21018]]

upward and downward adjustments, as appropriate.
    For FY 2016 (the most recently available FY for which there is 
final data), the estimated increase in the market basket index was 2.3 
percentage points, while the actual increase for FY 2016 was 2.3 
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 2018 market 
basket percentage change of 2.7 percent would not have been adjusted to 
account for the forecast error correction. Table 1 shows the forecasted 
and actual market basket amounts for FY 2016.

            Table 1--Difference Between the Forecasted and Actual Market Basket Increases for FY 2016
----------------------------------------------------------------------------------------------------------------
                                                                Forecasted FY    Actual FY 2016      FY 2016
                            Index                              2016 increase *    increase **       difference
----------------------------------------------------------------------------------------------------------------
SNF..........................................................             2.3              2.3              0.0
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2015 IGI forecast (2010-based index).
** Based on the first quarter 2017 IGI forecast, with historical data through the fourth quarter 2016 (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 
Web site at https://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 complete description of the MFP 
projection methodology is available on our Web site at https://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.
    If not for the enactment of section 411(a) of the MACRA, the FY 
2018 update would include a calculation of the MFP adjustment as the 
10-year moving average of changes in MFP for the period ending 
September 30, 2018, which is estimated to be 0.4 percent. Also, if not 
for the enactment of section 411(a) of the MACRA, consistent with 
section 1888(e)(5)(B)(i) of the Act and Sec.  413.337(d)(2) of the 
regulations, the market basket percentage for FY 2018 for the SNF PPS 
would be based on IGI's first quarter 2017 forecast of the SNF market 
basket update, which is estimated to be 2.7 percent. In accordance with 
section 1888(e)(5)(B)(ii) of the Act (as added by section 3401(b) of 
the Affordable Care Act) and Sec.  413.337(d)(3), this market basket 
percentage would then be reduced by the MFP adjustment (the 10-year 
moving average of changes in MFP for the period ending September 30, 
2018) of 0.4 percent, which would be calculated as described above and 
based on IGI's first quarter 2017 forecast. Absent the enactment of 
section 411(a) of MACRA, the resulting MFP-adjusted SNF market basket 
update would have been equal to 2.3 percent, or 2.7 percent less 0.4 
percentage point. However, as discussed above, section 
1888(e)(5)(B)(iii) of the Act, added by section 411(a) of the MACRA, 
requires us to apply a 1.0 percent positive market basket adjustment in 
determining the FY 2018 SNF payment rates set forth in this proposed 
rule, without regard to the market basket update as adjusted by the MFP 
adjustment described above.
5. Market Basket Update Factor for FY 2018
    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 2018 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, 2016, through September 30, 
2017 to the average market basket level for the period of October 1, 
2017, through September 30, 2018. This process yields a percentage 
change in the proposed 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

[[Page 21019]]

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 2016 SNF market basket percentage change and 
the actual FY 2016 SNF market basket percentage change (FY 2016 is the 
most recently available FY for which there is historical data) did not 
exceed the 0.5 percentage point threshold, the FY 2018 market basket 
percentage change of 2.7 percent would not be adjusted by the forecast 
error correction.
    If not for the enactment of section 411(a) of the MACRA, the SNF 
market basket for FY 2018 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, 
2018) of 0.4 percent, as described in section III.B.4. of this proposed 
rule. Thus, absent the enactment of MACRA, the resulting net SNF market 
basket update would equal 2.3 percent, or 2.7 percent less the 0.4 
percentage point MFP adjustment. We note that our policy has been that, 
if more recent data becomes 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)(iii) of the Act, as added by 
section 411(a) of the MACRA, requires us to use a market basket 
percentage of 1.0 percent, after application of the MFP to adjust the 
federal rates for FY 2018. Under section 1888(e)(5)(B)(iii) of the Act, 
the market basket percentage increase used to determine the federal 
rates set forth in this proposed rule will be 1.0 percent for FY 2018. 
Tables 2 and 3 reflect the updated components of the unadjusted federal 
rates for FY 2018, prior to adjustment for case-mix.

                            Table 2--FY 2018 Unadjusted Federal Rate Per Diem--Urban
----------------------------------------------------------------------------------------------------------------
                                              Nursing-- case-  Therapy-- case-   Therapy-- non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $177.16          $133.44           $17.58           $90.42
----------------------------------------------------------------------------------------------------------------


                            Table 3--FY 2018 Unadjusted Federal Rate Per Diem--Rural
----------------------------------------------------------------------------------------------------------------
                                              Nursing-- case-  Therapy-- case-   Therapy-- non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount.............................         $169.24          $153.87           $18.78           $92.09
----------------------------------------------------------------------------------------------------------------

    In addition, we note that section 1888(e)(6)(A)(i) of the Act 
provides that, beginning in 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) (for additional information on the 
SNF QRP, including the statutory authority and the selected measures, 
we refer readers to section V.B of this proposed rule). 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 shall apply only for the fiscal 
year involved, and the Secretary shall not take into account such 
reduction in computing the payment amount for a subsequent fiscal year.
    Accordingly, we propose that beginning with FY 2018, for SNFs that 
do not satisfy the reporting requirements for the FY 2018 SNF QRP, we 
would apply a penalty of 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), MFP adjustment as specified in Sec.  413.337(d)(3), and 
the 1 percent SNF market basket percentage change for FY 2018 required 
by section 1888(e)(5)(B)(iii) of the Act. We note that in FY 2018, the 
application of this penalty to those SNFs that do not meet the 
requirements for the FY 2018 SNF QRP would produce a market basket 
index percentage change for that FY that is less than zero 
(specifically, a net update of negative 1.0 percentage point), and 
would also result in FY 2018 payment rates that are less than such 
payment rates for the preceding FY. We also propose to amend the 
regulations at Sec.  413.337 by adding a new paragraph (d)(4) that 
would implement this statutory 2 percent reduction. 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

[[Page 21020]]

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 2006-2007 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 Web site at https://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 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.
    For the limited number of SNF residents that qualify for this add-
on, there is a significant increase in payments. For example, using FY 
2015 data (which still used ICD-9-CM coding), we identified fewer than 
5085 SNF residents with a diagnosis code of 042 (Human Immunodeficiency 
Virus (HIV) Infection). 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 2018, an urban 
facility with a resident with AIDS in RUG-IV group ``HC2'' would have a 
case-mix adjusted per diem payment of $442.50 (see Table 4) before the 
application of the MMA adjustment. After an increase of 128 percent, 
this urban facility would receive a case-mix adjusted per diem payment 
of approximately $1,008.90.
    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 2018 payment rates set forth in this proposed rule 
reflect the use of the RUG-IV case-mix classification system from 
October 1, 2017, through September 30, 2018. We list the proposed case-
mix adjusted RUG-IV payment rates for FY 2018, provided separately for 
urban and rural SNFs, in Tables 4 and 5 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 4 and 5 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).

                                         Table 4--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         $473.02         $249.53  ..............          $90.42         $812.97
RUL.....................................            2.57            1.87          455.30          249.53  ..............           90.42          795.25
RVX.....................................            2.61            1.28          462.39          170.80  ..............           90.42          723.61
RVL.....................................            2.19            1.28          387.98          170.80  ..............           90.42          649.20
RHX.....................................            2.55            0.85          451.76          113.42  ..............           90.42          655.60
RHL.....................................            2.15            0.85          380.89          113.42  ..............           90.42          584.73
RMX.....................................            2.47            0.55          437.59           73.39  ..............           90.42          601.40
RML.....................................            2.19            0.55          387.98           73.39  ..............           90.42          551.79
RLX.....................................            2.26            0.28          400.38           37.36  ..............           90.42          528.16
RUC.....................................            1.56            1.87          276.37          249.53  ..............           90.42          616.32
RUB.....................................            1.56            1.87          276.37          249.53  ..............           90.42          616.32
RUA.....................................            0.99            1.87          175.39          249.53  ..............           90.42          515.34
RVC.....................................            1.51            1.28          267.51          170.80  ..............           90.42          528.73
RVB.....................................            1.11            1.28          196.65          170.80  ..............           90.42          457.87
RVA.....................................            1.10            1.28          194.88          170.80  ..............           90.42          456.10

[[Page 21021]]

 
RHC.....................................            1.45            0.85          256.88          113.42  ..............           90.42          460.72
RHB.....................................            1.19            0.85          210.82          113.42  ..............           90.42          414.66
RHA.....................................            0.91            0.85          161.22          113.42  ..............           90.42          365.06
RMC.....................................            1.36            0.55          240.94           73.39  ..............           90.42          404.75
RMB.....................................            1.22            0.55          216.14           73.39  ..............           90.42          379.95
RMA.....................................            0.84            0.55          148.81           73.39  ..............           90.42          312.62
RLB.....................................            1.50            0.28          265.74           37.36  ..............           90.42          393.52
RLA.....................................            0.71            0.28          125.78           37.36  ..............           90.42          253.56
ES3.....................................            3.58  ..............          634.23  ..............          $17.58           90.42          742.23
ES2.....................................            2.67  ..............          473.02  ..............           17.58           90.42          581.02
ES1.....................................            2.32  ..............          411.01  ..............           17.58           90.42          519.01
HE2.....................................            2.22  ..............          393.30  ..............           17.58           90.42          501.30
HE1.....................................            1.74  ..............          308.26  ..............           17.58           90.42          416.26
HD2.....................................            2.04  ..............          361.41  ..............           17.58           90.42          469.41
HD1.....................................            1.60  ..............          283.46  ..............           17.58           90.42          391.46
HC2.....................................            1.89  ..............          334.83  ..............           17.58           90.42          442.83
HC1.....................................            1.48  ..............          262.20  ..............           17.58           90.42          370.20
HB2.....................................            1.86  ..............          329.52  ..............           17.58           90.42          437.52
HB1.....................................            1.46  ..............          258.65  ..............           17.58           90.42          366.65
LE2.....................................            1.96  ..............          347.23  ..............           17.58           90.42          455.23
LE1.....................................            1.54  ..............          272.83  ..............           17.58           90.42          380.83
LD2.....................................            1.86  ..............          329.52  ..............           17.58           90.42          437.52
LD1.....................................            1.46  ..............          258.65  ..............           17.58           90.42          366.65
LC2.....................................            1.56  ..............          276.37  ..............           17.58           90.42          384.37
LC1.....................................            1.22  ..............          216.14  ..............           17.58           90.42          324.14
LB2.....................................            1.45  ..............          256.88  ..............           17.58           90.42          364.88
LB1.....................................            1.14  ..............          201.96  ..............           17.58           90.42          309.96
CE2.....................................            1.68  ..............          297.63  ..............           17.58           90.42          405.63
CE1.....................................            1.50  ..............          265.74  ..............           17.58           90.42          373.74
CD2.....................................            1.56  ..............          276.37  ..............           17.58           90.42          384.37
CD1.....................................            1.38  ..............          244.48  ..............           17.58           90.42          352.48
CC2.....................................            1.29  ..............          228.54  ..............           17.58           90.42          336.54
CC1.....................................            1.15  ..............          203.73  ..............           17.58           90.42          311.73
CB2.....................................            1.15  ..............          203.73  ..............           17.58           90.42          311.73
CB1.....................................            1.02  ..............          180.70  ..............           17.58           90.42          288.70
CA2.....................................            0.88  ..............          155.90  ..............           17.58           90.42          263.90
CA1.....................................            0.78  ..............          138.18  ..............           17.58           90.42          246.18
BB2.....................................            0.97  ..............          171.85  ..............           17.58           90.42          279.85
BB1.....................................            0.90  ..............          159.44  ..............           17.58           90.42          267.44
BA2.....................................            0.70  ..............          124.01  ..............           17.58           90.42          232.01
BA1.....................................            0.64  ..............          113.38  ..............           17.58           90.42          221.38
PE2.....................................            1.50  ..............          265.74  ..............           17.58           90.42          373.74
PE1.....................................            1.40  ..............          248.02  ..............           17.58           90.42          356.02
PD2.....................................            1.38  ..............          244.48  ..............           17.58           90.42          352.48
PD1.....................................            1.28  ..............          226.76  ..............           17.58           90.42          334.76
PC2.....................................            1.10  ..............          194.88  ..............           17.58           90.42          302.88
PC1.....................................            1.02  ..............          180.70  ..............           17.58           90.42          288.70
PB2.....................................            0.84  ..............          148.81  ..............           17.58           90.42          256.81
PB1.....................................            0.78  ..............          138.18  ..............           17.58           90.42          246.18
PA2.....................................            0.59  ..............          104.52  ..............           17.58           90.42          212.52
PA1.....................................            0.54  ..............           95.67  ..............           17.58           90.42          203.67
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                         Table 5--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         $451.87         $287.74  ..............          $92.09         $831.70
RUL.....................................            2.57            1.87          434.95          287.74  ..............           92.09          814.78
RVX.....................................            2.61            1.28          441.72          196.95  ..............           92.09          730.76
RVL.....................................            2.19            1.28          370.64          196.95  ..............           92.09          659.68
RHX.....................................            2.55            0.85          431.56          130.79  ..............           92.09          654.44
RHL.....................................            2.15            0.85          363.87          130.79  ..............           92.09          586.75
RMX.....................................            2.47            0.55          418.02           84.63  ..............           92.09          594.74
RML.....................................            2.19            0.55          370.64           84.63  ..............           92.09          547.36
RLX.....................................            2.26            0.28          382.48           43.08  ..............           92.09          517.65

[[Page 21022]]

 
RUC.....................................            1.56            1.87          264.01          287.74  ..............           92.09          643.84
RUB.....................................            1.56            1.87          264.01          287.74  ..............           92.09          643.84
RUA.....................................            0.99            1.87          167.55          287.74  ..............           92.09          547.38
RVC.....................................            1.51            1.28          255.55          196.95  ..............           92.09          544.59
RVB.....................................            1.11            1.28          187.86          196.95  ..............           92.09          476.90
RVA.....................................            1.10            1.28          186.16          196.95  ..............           92.09          475.20
RHC.....................................            1.45            0.85          245.40          130.79  ..............           92.09          468.28
RHB.....................................            1.19            0.85          201.40          130.79  ..............           92.09          424.28
RHA.....................................            0.91            0.85          154.01          130.79  ..............           92.09          376.89
RMC.....................................            1.36            0.55          230.17           84.63  ..............           92.09          406.89
RMB.....................................            1.22            0.55          206.47           84.63  ..............           92.09          383.19
RMA.....................................            0.84            0.55          142.16           84.63  ..............           92.09          318.88
RLB.....................................            1.50            0.28          253.86           43.08  ..............           92.09          389.03
RLA.....................................            0.71            0.28          120.16           43.08  ..............           92.09          255.33
ES3.....................................            3.58  ..............          605.88  ..............          $18.78           92.09          716.75
ES2.....................................            2.67  ..............          451.87  ..............           18.78           92.09          562.74
ES1.....................................            2.32  ..............          392.64  ..............           18.78           92.09          503.51
HE2.....................................            2.22  ..............          375.71  ..............           18.78           92.09          486.58
HE1.....................................            1.74  ..............          294.48  ..............           18.78           92.09          405.35
HD2.....................................            2.04  ..............          345.25  ..............           18.78           92.09          456.12
HD1.....................................            1.60  ..............          270.78  ..............           18.78           92.09          381.65
HC2.....................................            1.89  ..............          319.86  ..............           18.78           92.09          430.73
HC1.....................................            1.48  ..............          250.48  ..............           18.78           92.09          361.35
HB2.....................................            1.86  ..............          314.79  ..............           18.78           92.09          425.66
HB1.....................................            1.46  ..............          247.09  ..............           18.78           92.09          357.96
LE2.....................................            1.96  ..............          331.71  ..............           18.78           92.09          442.58
LE1.....................................            1.54  ..............          260.63  ..............           18.78           92.09          371.50
LD2.....................................            1.86  ..............          314.79  ..............           18.78           92.09          425.66
LD1.....................................            1.46  ..............          247.09  ..............           18.78           92.09          357.96
LC2.....................................            1.56  ..............          264.01  ..............           18.78           92.09          374.88
LC1.....................................            1.22  ..............          206.47  ..............           18.78           92.09          317.34
LB2.....................................            1.45  ..............          245.40  ..............           18.78           92.09          356.27
LB1.....................................            1.14  ..............          192.93  ..............           18.78           92.09          303.80
CE2.....................................            1.68  ..............          284.32  ..............           18.78           92.09          395.19
CE1.....................................            1.50  ..............          253.86  ..............           18.78           92.09          364.73
CD2.....................................            1.56  ..............          264.01  ..............           18.78           92.09          374.88
CD1.....................................            1.38  ..............          233.55  ..............           18.78           92.09          344.42
CC2.....................................            1.29  ..............          218.32  ..............           18.78           92.09          329.19
CC1.....................................            1.15  ..............          194.63  ..............           18.78           92.09          305.50
CB2.....................................            1.15  ..............          194.63  ..............           18.78           92.09          305.50
CB1.....................................            1.02  ..............          172.62  ..............           18.78           92.09          283.49
CA2.....................................            0.88  ..............          148.93  ..............           18.78           92.09          259.80
CA1.....................................            0.78  ..............          132.01  ..............           18.78           92.09          242.88
BB2.....................................            0.97  ..............          164.16  ..............           18.78           92.09          275.03
BB1.....................................            0.90  ..............          152.32  ..............           18.78           92.09          263.19
BA2.....................................            0.70  ..............          118.47  ..............           18.78           92.09          229.34
BA1.....................................            0.64  ..............          108.31  ..............           18.78           92.09          219.18
PE2.....................................            1.50  ..............          253.86  ..............           18.78           92.09          364.73
PE1.....................................            1.40  ..............          236.94  ..............           18.78           92.09          347.81
PD2.....................................            1.38  ..............          233.55  ..............           18.78           92.09          344.42
PD1.....................................            1.28  ..............          216.63  ..............           18.78           92.09          327.50
PC2.....................................            1.10  ..............          186.16  ..............           18.78           92.09          297.03
PC1.....................................            1.02  ..............          172.62  ..............           18.78           92.09          283.49
PB2.....................................            0.84  ..............          142.16  ..............           18.78           92.09          253.03
PB1.....................................            0.78  ..............          132.01  ..............           18.78           92.09          242.88
PA2.....................................            0.59  ..............           99.85  ..............           18.78           92.09          210.72
PA1.....................................            0.54  ..............           91.39  ..............           18.78           92.09          202.26
--------------------------------------------------------------------------------------------------------------------------------------------------------

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 2018, 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

[[Page 21023]]

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 2018, 
the updated wage data are for hospital cost reporting periods beginning 
on or after October 1, 2013 and before October 1, 2014 (FY 2014 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, we believe 
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. 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 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 2018 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 2018, 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 2018, the only urban area without wage 
index data available is CBSA 25980, Hinesville-Fort Stewart, GA. The 
proposed wage index applicable to FY 2018 is set forth in Tables A and 
B available on the CMS Web site at https://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 
one-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 one-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. 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 again wish to clarify 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. As noted above, the proposed wage index 
applicable to FY 2018 is set forth in Tables A and B available on the 
CMS Web site at https://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 2014 (78 FR 47944 through 
47946), we finalized a proposal to revise the labor-related share to 
reflect the relative importance of the FY 2010-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; All other--Labor-Related Services; and a 
proportion of Capital-Related expenses. Effective beginning FY 2018, as 
discussed in section V.A. of this proposed rule, we are proposing to 
revise the labor-related share to reflect the relative importance of 
the proposed 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

[[Page 21024]]

into account historical and projected price changes between the base 
year and FY 2018. 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 2018 than the base year weights from the SNF market 
basket. The proposed methodology for calculating the labor-related 
portion for FY 2018 is discussed in section V.A. of this proposed rule 
and the proposed labor-related share is provided in Table 15.
    Tables 6 and 7 show the proposed RUG-IV case-mix adjusted federal 
rates for FY 2018 by labor-related and non-labor-related components.

         Table 6--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.............................................................          812.97         $575.58         $237.39
RUL.............................................................          795.25          563.04          232.21
RVX.............................................................          723.61          512.32          211.29
RVL.............................................................          649.20          459.63          189.57
RHX.............................................................          655.60          464.16          191.44
RHL.............................................................          584.73          413.99          170.74
RMX.............................................................          601.40          425.79          175.61
RML.............................................................          551.79          390.67          161.12
RLX.............................................................          528.16          373.94          154.22
RUC.............................................................          616.32          436.35          179.97
RUB.............................................................          616.32          436.35          179.97
RUA.............................................................          515.34          364.86          150.48
RVC.............................................................          528.73          374.34          154.39
RVB.............................................................          457.87          324.17          133.70
RVA.............................................................          456.10          322.92          133.18
RHC.............................................................          460.72          326.19          134.53
RHB.............................................................          414.66          293.58          121.08
RHA.............................................................          365.06          258.46          106.60
RMC.............................................................          404.75          286.56          118.19
RMB.............................................................          379.95          269.00          110.95
RMA.............................................................          312.62          221.33           91.29
RLB.............................................................          393.52          278.61          114.91
RLA.............................................................          253.56          179.52           74.04
ES3.............................................................          742.23          525.50          216.73
ES2.............................................................          581.02          411.36          169.66
ES1.............................................................          519.01          367.46          151.55
HE2.............................................................          501.30          354.92          146.38
HE1.............................................................          416.26          294.71          121.55
HD2.............................................................          469.41          332.34          137.07
HD1.............................................................          391.46          277.15          114.31
HC2.............................................................          442.83          313.52          129.31
HC1.............................................................          370.20          262.10          108.10
HB2.............................................................          437.52          309.76          127.76
HB1.............................................................          366.65          259.59          107.06
LE2.............................................................          455.23          322.30          132.93
LE1.............................................................          380.83          269.63          111.20
LD2.............................................................          437.52          309.76          127.76
LD1.............................................................          366.65          259.59          107.06
LC2.............................................................          384.37          272.13          112.24
LC1.............................................................          324.14          229.49           94.65
LB2.............................................................          364.88          258.34          106.54
LB1.............................................................          309.96          219.45           90.51
CE2.............................................................          405.63          287.19          118.44
CE1.............................................................          373.74          264.61          109.13
CD2.............................................................          384.37          272.13          112.24
CD1.............................................................          352.48          249.56          102.92
CC2.............................................................          336.54          238.27           98.27
CC1.............................................................          311.73          220.70           91.03
CB2.............................................................          311.73          220.70           91.03
CB1.............................................................          288.70          204.40           84.30
CA2.............................................................          263.90          186.84           77.06
CA1.............................................................          246.18          174.30           71.88
BB2.............................................................          279.85          198.13           81.72
BB1.............................................................          267.44          189.35           78.09
BA2.............................................................          232.01          164.26           67.75
BA1.............................................................          221.38          156.74           64.64
PE2.............................................................          373.74          264.61          109.13
PE1.............................................................          356.02          252.06          103.96
PD2.............................................................          352.48          249.56          102.92
PD1.............................................................          334.76          237.01           97.75
PC2.............................................................          302.88          214.44           88.44
PC1.............................................................          288.70          204.40           84.30
PB2.............................................................          256.81          181.82           74.99

[[Page 21025]]

 
PB1.............................................................          246.18          174.30           71.88
PA2.............................................................          212.52          150.46           62.06
PA1.............................................................          203.67          144.20           59.47
----------------------------------------------------------------------------------------------------------------


         Table 7--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.............................................................          831.70         $588.84         $242.86
RUL.............................................................          814.78          576.86          237.92
RVX.............................................................          730.76          517.38          213.38
RVL.............................................................          659.68          467.05          192.63
RHX.............................................................          654.44          463.34          191.10
RHL.............................................................          586.75          415.42          171.33
RMX.............................................................          594.74          421.08          173.66
RML.............................................................          547.36          387.53          159.83
RLX.............................................................          517.65          366.50          151.15
RUC.............................................................          643.84          455.84          188.00
RUB.............................................................          643.84          455.84          188.00
RUA.............................................................          547.38          387.55          159.83
RVC.............................................................          544.59          385.57          159.02
RVB.............................................................          476.90          337.65          139.25
RVA.............................................................          475.20          336.44          138.76
RHC.............................................................          468.28          331.54          136.74
RHB.............................................................          424.28          300.39          123.89
RHA.............................................................          376.89          266.84          110.05
RMC.............................................................          406.89          288.08          118.81
RMB.............................................................          383.19          271.30          111.89
RMA.............................................................          318.88          225.77           93.11
RLB.............................................................          389.03          275.43          113.60
RLA.............................................................          255.33          180.77           74.56
ES3.............................................................          716.75          507.46          209.29
ES2.............................................................          562.74          398.42          164.32
ES1.............................................................          503.51          356.49          147.02
HE2.............................................................          486.58          344.50          142.08
HE1.............................................................          405.35          286.99          118.36
HD2.............................................................          456.12          322.93          133.19
HD1.............................................................          381.65          270.21          111.44
HC2.............................................................          430.73          304.96          125.77
HC1.............................................................          361.35          255.84          105.51
HB2.............................................................          425.66          301.37          124.29
HB1.............................................................          357.96          253.44          104.52
LE2.............................................................          442.58          313.35          129.23
LE1.............................................................          371.50          263.02          108.48
LD2.............................................................          425.66          301.37          124.29
LD1.............................................................          357.96          253.44          104.52
LC2.............................................................          374.88          265.42          109.46
LC1.............................................................          317.34          224.68           92.66
LB2.............................................................          356.27          252.24          104.03
LB1.............................................................          303.80          215.09           88.71
CE2.............................................................          395.19          279.79          115.40
CE1.............................................................          364.73          258.23          106.50
CD2.............................................................          374.88          265.42          109.46
CD1.............................................................          344.42          243.85          100.57
CC2.............................................................          329.19          233.07           96.12
CC1.............................................................          305.50          216.29           89.21
CB2.............................................................          305.50          216.29           89.21
CB1.............................................................          283.49          200.71           82.78
CA2.............................................................          259.80          183.94           75.86
CA1.............................................................          242.88          171.96           70.92
BB2.............................................................          275.03          194.72           80.31
BB1.............................................................          263.19          186.34           76.85
BA2.............................................................          229.34          162.37           66.97
BA1.............................................................          219.18          155.18           64.00
PE2.............................................................          364.73          258.23          106.50
PE1.............................................................          347.81          246.25          101.56
PD2.............................................................          344.42          243.85          100.57
PD1.............................................................          327.50          231.87           95.63

[[Page 21026]]

 
PC2.............................................................          297.03          210.30           86.73
PC1.............................................................          283.49          200.71           82.78
PB2.............................................................          253.03          179.15           73.88
PB1.............................................................          242.88          171.96           70.92
PA2.............................................................          210.72          149.19           61.53
PA1.............................................................          202.26          143.20           59.06
----------------------------------------------------------------------------------------------------------------

    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 2018 (federal rates 
effective October 1, 2017), 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 2017 to the weighted average wage 
adjustment factor for FY 2018. For this calculation, we would use the 
same FY 2016 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 2018 would be 1.0003.

E. Adjusted Rate Computation Example

    Using the hypothetical SNF XYZ, Table 8 shows the adjustments made 
to the federal per diem rates to compute the provider's actual per diem 
PPS payment for FY 2018. We derive the Labor and Non-labor columns from 
Table 6. 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 Web site 
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. As illustrated in Table 8, SNF XYZ's total PPS payment 
for FY 2018 would equal $47,647.74.

                   Table 8--Adjusted Rate Computation Example SNF XYZ: Located in Frederick, MD (Urban CBSA 43524) Wage Index: 0.9886
                                                        [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.............................................      $512.32       0.9886      $506.48      $211.29      $717.77      $717.77           14   $10,048.78
ES2.............................................       411.36       0.9886       406.67       169.66       576.33       576.33           30    17,289.90
RHA.............................................       258.46       0.9886       255.51       106.60       362.11       362.11           16     5,793.76
CC2 *...........................................       238.27       0.9886       235.55        98.27       333.82       761.11           10     7,611.10
BA2.............................................       164.26       0.9886       162.39        67.75       230.14       230.14           30     6,904.20
                                                                                                                               -------------------------
                                                  ...........  ...........  ...........  ...........  ...........  ...........          100    47,647.74
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects a 128 percent adjustment from section 511 of the MMA.
\1\ Available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.

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 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 the 
designation of those specific RUGs under the 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 five-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.

[[Page 21027]]

In this proposed rule, for FY 2018, we would continue to designate the 
upper 52 RUG-IV groups for purposes of this administrative presumption, 
consisting of all groups encompassed by the following RUG-IV 
categories:
     Rehabilitation plus Extensive Services.
     Ultra High Rehabilitation.
     Very High Rehabilitation.
     High Rehabilitation.
     Medium Rehabilitation.
     Low Rehabilitation.
     Extensive Services.
     Special Care High.
     Special Care Low.
     Clinically Complex.
    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 beneficiary's 
assignment to one of the upper 52 RUG-IV groups (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.
    In connection with the administrative level of care presumption, we 
now propose to amend the existing regulations text at Sec.  413.345 by 
removing the parenthetical phrase ``(including the designation of those 
specific Resource Utilization Groups under the resident classification 
system that represent the required SNF level of care, as provided in 
Sec.  409.30 of this chapter)'' that currently appears in the second 
sentence of Sec.  413.345. The proposed deletion of the current 
reference to publishing such material annually in the Federal Register, 
along with the specific reference to ``Resource Utilization Groups,'' 
would serve to conform the text of these regulations more closely to 
that of the corresponding statutory language at section 
1888(e)(4)(H)(ii) of the Act, which refers in more general terms to the 
applicable ``case mix classification system.'' Moreover, we note that 
the recurring announcements in the Federal Register of the 
administrative presumption's designated groups as part of each annual 
update of the SNF PPS rates has in actual practice proven to be largely 
a formality, resulting in exactly the same designated groups 
repetitively being promulgated routinely year after year. Accordingly, 
we now propose instead to disseminate this standard description of the 
administrative presumption's designated groups exclusively through the 
SNF PPS Web site, and to announce such designations in rulemaking only 
in the event that we are actually proposing to make changes in them.
    Along with this proposed revision, we also propose to make 
appropriate conforming revisions in other portions of the regulations 
text. Specifically, we propose to remove from the introductory text of 
Sec.  409.30, the parenthetical phrase ``(in the annual publication of 
Federal prospective payment rates described in Sec.  413.345 of this 
chapter)'' for the same reasons we propose to remove the parenthetical 
phrase from Sec.  413.345 as discussed in this proposed rule. In 
addition, we propose to replace the phrase to ``one of the Resource 
Utilization Groups that is designated'' in Sec.  409.30 introductory 
text with the phrase ``one of the case-mix classifiers CMS designates'' 
to conform more closely with the statutory language in section 
1888(e)(4)(G) and (H) of the Act, which refers in more general terms to 
the ``resident classification system'' or ``case mix classification 
system,'' and to clarify that ``CMS'' makes these designations. We 
additionally propose to revise Sec.  409.30 to reflect more clearly our 
longstanding policy that the assignment of a designated case-mix 
classifier would serve to trigger the administrative presumption only 
when that assignment is itself correct. As we noted in the FY 2000 SNF 
PPS final rule (64 FR 41667, July 30, 1999), ``. . . 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.'' We also propose to make similar conforming 
revisions in the ``resident classification system'' definition that 
currently appears in Sec.  413.333 to replace ``Resource Utilization 
Groups'' with ``resident classification system'', as well as in the 
material in Sec.  424.20(a)(1)(ii) on SNF level of care certifications 
to replace the phrase ``one of the Resource Utilization Groups 
designated'' with ``one of the case-mix classifiers that CMS 
designates,'' in both cases to conform more closely with the statutory 
language in section 1888(e)(4)(G) and (H) of the Act, as discussed in 
this proposed rule, which refers in more general terms to the 
``resident classification system'' or ``case mix classification 
system,'' and to clarify in Sec.  424.20(a)(1)(ii) that ``CMS'' 
designates these case-mix classifiers. Finally, regarding the Sec.  
424.20, we also propose to revise paragraph (e)(2)(ii)(B)(2) by 
updating its existing cross-reference to the provision at Sec.  
483.40(e) on delegating physician tasks in SNFs, which was recently 
redesignated as new Sec.  483.30(e) under the revised long-term care 
facility requirements for participation (81 FR 68861, October 4, 2016).

B. Consolidated Billing

    Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by 
section 4432(b) of the BBA) 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. 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 Web site at 
https://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

[[Page 21028]]

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, 2017). By 
making any new exclusions in this manner, we could similarly accomplish 
routine future updates of these additional codes through the issuance 
of program instructions.
    In addition, we note that one category of services which 
consolidated billing excludes under the regulations at Sec.  
411.15(p)(3) consists of certain exceptionally intensive types of 
outpatient hospital services. As we explained in the FY 2000 SNF PPS 
final rule, this exclusion applies to ``. . . those types of outpatient 
hospital services that we specifically identify as being beyond the 
scope of SNF care plans generally'' (64 FR 41676, July 30, 1999, 
emphasis added). To further clarify this longstanding policy noted 
above that the outpatient hospital exclusion applies solely to those 
services that we specifically designate for this purpose, we are 
proposing to revise Sec.  411.15(p)(3)(iii) to state this more 
explicitly. In addition, we note that recent revisions in the long-term 
care facility requirements for participation (81 FR 68858, October 4, 
2016) have moved the comprehensive care plan regulations from their 
previous location at Sec.  483.20(k) to a new, redesignated Sec.  
483.21(b); accordingly, we also propose to make a conforming revision 
in the existing cross-reference to that provision that appears in the 
regulations text at Sec.  411.15(p)(3)(iii).

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 Web site at

[[Page 21029]]

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/.

V. Other Issues

A. Revising and Rebasing the SNF Market Basket Index

    Section 1888(e)(5)(A) of the Act requires the Secretary to 
establish a market basket index that reflects the 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. We use the SNF market basket index, adjusted in the manner 
described in section III.B of this proposed rule, to update the SNF PPS 
per diem rates and to determine the labor-related share on an annual 
basis.
    The SNF market basket is a fixed-weight, Laspeyres-type price 
index. A Laspeyres price index measures the change in price, over time, 
of the same mix of goods and services purchased in the base period. Any 
changes in the quantity or mix of goods and services (that is, 
intensity) purchased over time relative to a base period are not 
measured.
    The index itself is constructed in three steps. First, a base 
period is selected (in this proposed rule, the base period is 2014) and 
total base period expenditures are estimated for a set of mutually 
exclusive and exhaustive spending categories with the proportion of 
total costs that each category represents being calculated. These 
proportions are called cost or expenditure weights. Second, each 
expenditure category is matched to an appropriate price or wage 
variable, referred to as a price proxy. In nearly every instance, these 
price proxies are derived from publicly available statistical series 
that are published on a consistent schedule (preferably at least on a 
quarterly basis). Finally, the expenditure weight for each cost 
category is multiplied by the level of its respective price proxy. The 
sum of these products (that is, the expenditure weights multiplied by 
their price levels) for all cost categories yields the composite index 
level of the market basket in a given period. Repeating this step for 
other periods produces a series of market basket levels over time. 
Dividing an index level for a given period by an index level for an 
earlier period produces a rate of growth in the input price index over 
that timeframe.
    Effective for cost reporting periods beginning on or after July 1, 
1998, we revised and rebased our 1977 routine costs input price index 
and adopted a total expenses SNF input price index using FY 1992 as the 
base year. In the FY 2002 SNF PPS final rule (66 FR 39582), we rebased 
and revised the market basket to a base year of FY 1997. In the FY 2008 
SNF PPS final rule (72 FR 43425), we rebased and revised the market 
basket to a base year of FY 2004. In the FY 2014 SNF PPS final rule (78 
FR 47939), we last revised and rebased the SNF market basket, which 
included updating the base year from FY 2004 to FY 2010. For FY 2018, 
we are proposing to rebase the market basket to reflect 2014 Medicare-
allowable total cost data (routine, ancillary, and capital-related) 
from freestanding SNFs and to revise applicable cost categories and 
price proxies used to determine the market basket. We propose to 
maintain our policy of using data from freestanding SNFs, which 
represent 93 percent of the total SNFs shown in Table 25. We believe 
using freestanding MCR data, as opposed to the hospital-based SNF MCR 
data, for the proposed cost weight calculation is most appropriate 
because of the complexity of hospital-based data and the 
representativeness of the freestanding data. Hospital-based SNF 
expenses, are embedded in the hospital cost report. Any attempt to 
incorporate data from hospital-based facilities requires more complex 
calculations and assumptions regarding the ancillary costs related to 
the hospital-based SNF unit. We believe the use of freestanding SNF 
cost report data is technically appropriate for reflecting the cost 
structures of SNFs serving Medicare beneficiaries.
    We are proposing to use 2014 as the base year. We believe that the 
2014 Medicare cost reports represent the most recent, complete set of 
Medicare cost report (MCR) data available to develop cost weights for 
SNFs at the time of rulemaking. The 2014 Medicare cost reports are for 
cost reporting periods beginning on and after October 1, 2013 and 
before October 1, 2014. While these dates appear to reflect fiscal year 
data, we note that a Medicare cost report that begins in this timeframe 
is generally classified as a ``2014 cost report.'' For example, we 
found that of the available 2014 Medicare cost reports for SNFs, 
approximately 7 percent had an October 1, 2013 begin date, 
approximately 70 percent of the reports had a January 1, 2014 begin 
date, and approximately 12 percent had a July 1, 2014 begin date. For 
this reason, and for the reasons explained below, we are defining the 
base year of the market basket as ``2014-based'' instead of ``FY 2014-
based''.
    Specifically, we are proposing to develop cost category weights for 
the 2014-based SNF market basket in two stages. First, we are proposing 
to derive eight major expenditures or cost weights from the 2014 MCR 
data (CMS Form 2540-10) for freestanding SNFs: Wages and Salaries; 
Employee Benefits; Contract Labor; Pharmaceuticals; Professional 
Liability Insurance; Home Office Contract Labor; Capital-related; and a 
residual ``All Other''. With the exception of the Home Office Contract 
Labor cost weight, these are the same cost categories calculated using 
the 2010 MCR data for the FY 2010-based SNF market basket. We provide a 
detailed discussion of our proposal to use the 2014 MCR data to 
determine the Home Office Contract Labor cost weight in section 
IV.A.1.a of this preamble. The residual ``All Other'' category would 
reflect all remaining costs that are not captured in the other seven 
cost categories. Second, we are proposing to divide the residual ``All 
Other'' cost category into subcategories, using U.S. Department of 
Commerce Bureau of Economic Analysis' (BEA) 2007 Benchmark Input-Output 
(I-O) ``use table before redefinitions, purchaser's value'' for the 
Nursing and Community Care Facilities industry (NAICS 623A00) aged 
forward to 2014 using price changes. Furthermore, we are proposing to 
continue to use the same overall methodology as was used for the FY 
2010-based SNF market basket to develop the capital related cost 
weights of the 2014-based SNF market basket. We note that we are no 
longer referring to the market basket as a ``FY based'' market basket 
and instead refer to the proposed market basket as simply ``2014-
based.'' We are proposing this change in naming convention for the 
market basket because the base year cost weight data for the proposed 
market basket does not reflect strictly fiscal year data. For example, 
the proposed 2014-based SNF market basket uses Medicare cost report 
data and other government data that reflects fiscal year 2014, calendar 
year 2014, and state fiscal year 2014 expenses to determine the base 
year cost weights. Given that it is based on a mix of classifications 
of 2014 data, we are proposing to refer to the market basket simply as 
``2014-based'' as opposed to a ``FY 2014-based'' or ``CY 2014-based''.

[[Page 21030]]

1. Development of Cost Categories and Weights
a. Use of Medicare Cost Report Data To Develop Major Cost Weights
    In order to create a market basket that is representative of 
freestanding SNF providers serving Medicare patients and to help ensure 
accurate major cost weights (which is the percent of total Medicare 
allowable costs, as defined below), we propose to apply edits to remove 
reporting errors and outliers. Specifically, the SNF Medicare Cost 
Reports used to calculate the market basket cost weights excluded any 
providers that reported costs less than or equal to zero for the 
following categories: Total facility costs; total operating costs; 
Medicare general inpatient routine service costs; and Medicare PPS 
payments. The final sample used included roughly 96 percent of those 
providers who submitted a Medicare cost report for 2014.
    Additionally, for each of the major cost weights (Wages and 
Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, 
Professional Liability Insurance, Home Office Contract Labor, and 
Capital-related Expenses) the data are trimmed to remove outliers (a 
standard statistical process) by: (1) Requiring that major expenses 
(such as Wages and Salaries costs) and total Medicare-allowable costs 
are greater than zero; and (2) excluding the top and bottom five 
percent of the major cost weight (for example, Wages and Salaries costs 
as a percent of total Medicare-allowable costs). This trimming process 
is done for each cost weight individually and, therefore, providers 
excluded from one cost weight calculation are not automatically 
excluded from other cost weight calculations. These are the same types 
of edits utilized for the FY 2010-based SNF market basket, as well as 
other PPS market baskets (including but not limited to IPPS market 
basket and HHA market basket). We believe this trimming process 
improves the accuracy of the data used to compute the major cost 
weights by removing possible data misreporting.
    Finally, the final weights of the proposed 2014-based SNF market 
basket are based on weighted means. For example, the final Wages and 
Salaries cost weight after trimming is equal to the sum of total 
Medicare-allowable wages and salaries divided by the sum of total 
Medicare-allowable costs. This methodology is consistent with the 
methodology used to calculate the FY 2010-based SNF market basket cost 
weights and other PPS market basket cost weights.
    As stated above, the major cost weights of the proposed 2014-based 
SNF market basket are derived from 2014 MCR data that is reported on 
CMS Form 2540-10, effective for freestanding SNFs with a cost reporting 
period beginning on or after December 1, 2010. The major cost weights 
for the FY 2010-based SNF market basket were derived from the 2010 MCR 
data that is reported on CMS Form 2540-96. CMS Form 2540-96 was 
effective for freestanding SNFs with cost reporting periods beginning 
on and after October 1, 1997. The OMB control number for both Form 
2549-10 and Form 2540-96 is 0938-0463.
    For all of the cost weights, we use Medicare allowable-total costs 
as the denominator (that is, Wages and Salaries cost weight = Wages and 
Salaries costs divided by Medicare-allowable total costs). Medicare-
allowable total costs were equal to total costs (after overhead 
allocation) from Worksheet B part 1, column 18, for lines 30, 40 
through 49, 51, 52, and 71 plus Medicaid drug costs as defined below. 
We included estimated Medicaid drug costs in the pharmacy cost weight, 
as well as the denominator for total Medicare-allowable costs. This is 
the same methodology used for the FY 2010-based SNF market basket and 
the FY 2004-based SNF market basket. The inclusion of Medicaid drug 
costs was finalized in the FY 2008 SNF PPS final rule (72 FR 43425 
through 43430), and for the same reasons set forth in that final rule, 
we are proposing to continue to use this methodology in the proposed 
2014-based SNF market basket.
    We are proposing that for the 2014-based SNF market basket we 
obtain costs for one additional major cost category from the Medicare 
cost reports that was not used in the FY 2010-based SNF market basket--
Home Office Contract Labor Costs. We describe the detailed methodology 
for obtaining costs for each of these eight cost categories below. The 
methodology used is similar to the methodology used in the FY 2010-
based SNF market basket, as described in the FY 2014 SNF PPS final rule 
(78 FR 47940 through 47942).
    (1) Wages and Salaries: To derive Wages and Salaries costs for the 
Medicare-allowable cost centers, we are proposing first to calculate 
total unadjusted wages and salaries costs as reported on Worksheet S-3, 
part II, column 3, line 1. We are then proposing to remove the wages 
and salaries attributable to non-Medicare-allowable cost centers (that 
is, excluded areas), as well as a portion of overhead wages and 
salaries attributable to these excluded areas. Excluded area wages and 
salaries are equal to wages and salaries as reported on Worksheet S-3, 
part II, column 3, lines 3, 4, and 7 through 11 plus nursing facility 
and non-reimbursable salaries from Worksheet A, column 1, lines 31, 32, 
50, and 60 through 63.
    Overhead wages and salaries are attributable to the entire SNF 
facility; therefore, we are proposing to include only the proportion 
attributable to the Medicare-allowable cost centers. We are proposing 
to estimate the proportion of overhead wages and salaries that is 
attributable to the non-Medicare-allowable costs centers (that is, 
excluded areas) by multiplying the ratio of excluded area wages and 
salaries (as defined above) to total wages and salaries as reported on 
Worksheet S-3, part II, column 3, line 1 by total overhead wages and 
salaries as reported on Worksheet S3, Part III, column 3, line 14. We 
used a similar methodology to derive wages and salaries costs in the FY 
2010-based SNF market basket.
    (2) Employee Benefits: Medicare-allowable employee benefits are 
equal to total benefits as reported on Worksheet S-3, part II, column 
3, lines 17 through 19 minus non-Medicare-allowable (that is, excluded 
area) employee benefits and minus a portion of overhead benefits 
attributable to these excluded areas. Non-Medicare-allowable employee 
benefits are derived by multiplying total excluded wages and salaries 
(as defined above in the `Wages and Salaries' section) times the ratio 
of total benefit costs as reported on Worksheet S-3, part II, column 3, 
lines 17 through 19 to total wages and salary costs as reported on 
Worksheet S3, part II, column 3, line 1. Likewise, the portion of 
overhead benefits attributable to the excluded areas is derived by 
multiplying overhead wages and salaries attributable to the excluded 
areas (as defined in the `Wages and Salaries' section) times the ratio 
of total benefit costs to total wages and salary costs (as defined 
above). We used a similar methodology in the FY 2010-based SNF market 
basket.
    (3) Contract Labor: We are proposing to derive Medicare-allowable 
contract labor costs from Worksheet S-3, part II, column 3, line 17, 
which reflects costs for contracted direct patient care services, that 
is, nursing, therapeutic, rehabilitative, or diagnostic services 
furnished under contract rather than by employees and management 
contract services.
    (4) Pharmaceuticals: We are proposing to calculate pharmaceuticals 
costs using the non-salary costs from the Pharmacy cost center 
(Worksheet B, part

[[Page 21031]]

I, column 0, line 11 less Worksheet A, column 1, line 11) and the Drugs 
Charged to Patients' cost center (Worksheet B, part I, column 0, line 
49 less Worksheet A, column 1, line 49). Since these drug costs were 
attributable to the entire SNF and not limited to Medicare-allowable 
services, we adjusted the drug costs by the ratio of Medicare-allowable 
pharmacy total costs (Worksheet B, part I, column 11, for lines 30, 40 
through 49, 51, 52, and 71) to total pharmacy costs from Worksheet B, 
part I, column 11, line 11. Worksheet B, part I allocates the general 
service cost centers, which are often referred to as ``overhead costs'' 
(in which pharmacy costs are included) to the Medicare-allowable and 
non-Medicare-allowable cost centers.
    Second, similar to the FY 2010-based SNF market basket, we propose 
to continue to adjust the drug expenses reported on the MCR to include 
an estimate of total Medicaid drug costs, which are not represented in 
the Medicare-allowable drug cost weight. Similar to the FY 2010-based 
SNF market basket, we are estimating Medicaid drug costs based on data 
representing dual-eligible Medicaid beneficiaries. Medicaid drug costs 
are estimated by multiplying Medicaid dual-eligible drug costs per day 
times the number of Medicaid days as reported in the Medicare-allowable 
skilled nursing cost center (Worksheet S3, part I, column 5, line 1) in 
the SNF MCR. Medicaid dual-eligible drug costs per day (where the day 
represents an unduplicated drug supply day) were estimated using a 
sample of 2014 Part D claims for those dual-eligible beneficiaries who 
had a Medicare SNF stay during the year. Medicaid dual-eligible 
beneficiaries would receive their drugs through the Medicare Part D 
benefit, which would work directly with the pharmacy and, therefore, 
these costs would not be represented in the Medicare SNF MCRs. A random 
twenty percent sample of Medicare Part D claims data yielded a Medicaid 
drug cost per day of $19.62. We note that the FY 2010-based SNF market 
basket also relied on data from the Part D claims, which yielded a 
dual-eligible Medicaid drug cost per day of $17.39 for 2010.
    (5) Professional Liability Insurance: We are proposing to calculate 
the professional liability insurance costs from Worksheet S-2 of the 
MCRs as the sum of premiums; paid losses; and self-insurance (Worksheet 
S-2, column 1 through 3, line 41).
    (6) Capital-Related: We are proposing to derive the Medicare-
allowable capital-related costs from Worksheet B, part II, column 18 
for lines 30, 40 through 49, 51, 52, and 71.
    (7) Home Office Contract Labor Costs: We are proposing to calculate 
Medicare-allowable home office contract labor costs by multiplying 
total home office contract labor costs (as reported on Worksheet S3, 
part 2, column 3, line 16) times the ratio of Medicare-allowable 
operating costs (Medicare-allowable total costs less Medicare-allowable 
capital costs) to total operating costs (equal to Worksheet B, part I, 
column 18, line 100 less Worksheet B, part I, column 0, line 1 and 2).
    (8) All Other (residual): The ``All Other'' cost weight is a 
residual, calculated by subtracting the major cost weights (Wages and 
Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, 
Professional Liability Insurance, Home Office Contract Labor, and 
Capital-Related) from 100.
    Table 9 shows the major cost categories and their respective cost 
weights as derived from the Medicare cost reports for this proposed 
rule.

Table 9--Major Cost Categories as Derived From the Medicare Cost Reports
------------------------------------------------------------------------
                                          Proposed 2014-
          Major cost categories                based       FY 2010-based
------------------------------------------------------------------------
Wages and Salaries......................            44.3            46.1
Employee Benefits.......................             9.3            10.5
Contract Labor..........................             6.8             5.5
Pharmaceuticals.........................             7.3             7.9
Professional Liability Insurance........             1.1             1.1
Home Office Contract Labor *............             0.7             n/a
Capital-related.........................             7.9             7.4
All other (residual)....................            22.6            21.5
------------------------------------------------------------------------
* Home office contract labor costs were included in the residual ``All
  Other'' cost weight of the FY 2010-based SNF market basket.

    The Wages and Salaries and Employee Benefits cost weights as 
calculated directly from the Medicare cost reports decreased by 1.8 and 
1.2 percentage points, respectively, while the Contract Labor cost 
weight increased 1.3 percentage points between the FY 2010-based SNF 
market basket and 2014-based SNF market basket. The decrease in the 
Wages and Salaries occurred among most cost centers and in aggregate 
for the General Service (overhead) and Inpatient Routine Service cost 
centers, which together account for about 80 percent of total facility 
costs.
    As we did for the FY 2010-based SNF market basket (78 FR 26452), we 
are proposing to allocate contract labor costs to the Wages and 
Salaries and Employee Benefits cost weights based on their relative 
proportions under the assumption that contract labor costs are 
comprised of both wages and salaries and employee benefits. The 
contract labor allocation proportion for wages and salaries is equal to 
the Wages and Salaries cost weight as a percent of the sum of the Wages 
and Salaries cost weight and the Employee Benefits cost weight. Using 
the 2014 Medicare cost report data, this percentage is 83 percent; 
therefore, we are proposing to allocate approximately 83 percent of the 
Contract Labor cost weight to the Wages and Salaries cost weight and 17 
percent to the Employee Benefits cost weight. For the FY 2010-based SNF 
market basket, the wages and salaries to employee benefit ratio was 81/
19 percent.
    Table 10 shows the Wages and Salaries and Employee Benefits cost 
weights after contract labor allocation for the FY 2010-based SNF 
market basket and the proposed 2014-based SNF market basket.

[[Page 21032]]



  Table 10--Wages and Salaries and Employee Benefits Cost Weights After
                        Contract Labor Allocation
------------------------------------------------------------------------
                                          Proposed 2014-
          Major cost categories            based market    FY 2010-based
                                              basket       market basket
------------------------------------------------------------------------
Wages and Salaries......................            50.0            50.6
Employee Benefits.......................            10.5            11.5
------------------------------------------------------------------------

b. Derivation of the Detailed Operating Cost Weights
    To further divide the ``All Other'' residual cost weight estimated 
from the 2014 Medicare cost report data into more detailed cost 
categories, we are proposing to use the 2007 Benchmark I-O ``Use 
Tables/Before Redefinitions/Purchaser Value'' for Nursing and Community 
Care Facilities industry (NAICS 623A00), published by the Census 
Bureau's Bureau of Economic Analysis (BEA). These data are publicly 
available at the following Web site: https://www.bea.gov/industry/io_annual.htm. The BEA Benchmark I-O data are generally scheduled for 
publication every 5 years with the most recent data available for 2007. 
The 2007 Benchmark I-O data are derived from the 2007 Economic Census 
and are the building blocks for BEA's economic accounts. Therefore, 
they represent the most comprehensive and complete set of data on the 
economic processes or mechanisms by which output is produced and 
distributed.\1\ BEA also produces Annual I-O estimates. However, while 
based on a similar methodology, these estimates reflect less 
comprehensive and less detailed data sources and are subject to 
revision when benchmark data become available. Instead of using the 
less detailed Annual I-O data, we are proposing to inflate the 2007 
Benchmark I-O data aged forward to 2014 by applying the annual price 
changes from the respective price proxies to the appropriate market 
basket cost categories that are obtained from the 2007 Benchmark I-O 
data. We repeated this practice for each year. We then calculated the 
cost shares that each cost category represents of the 2007 data 
inflated to 2014. These resulting 2014 cost shares were applied to the 
``All Other'' residual cost weight to obtain the detailed cost weights 
for the proposed 2014-based SNF market basket. For example, the cost 
for Food: Direct Purchases represents 13.7 percent of the sum of the 
``All Other'' 2007 Benchmark I-O Expenditures inflated to 2014. 
Therefore, the Food: Direct Purchases cost weight represents 3.1 
percent of the proposed 2014-based SNF market basket's ``All Other'' 
cost category (0.137 x 22.6 percent = 3.1 percent). For the FY 2010-
based SNF market basket (78 FR 26456), we used the same methodology 
utilizing the 2002 Benchmark I-O data (aged to FY 2010).
---------------------------------------------------------------------------

    \1\ https://www.bea.gov/papers/pdf/IOmanual_092906.pdf.
---------------------------------------------------------------------------

    Using this methodology, we are proposing to derive 21 detailed SNF 
market basket operating cost category weights from the proposed 2014-
based SNF market basket ``All Other'' residual cost weight (22.6 
percent). These categories are: (1) Fuel: Oil and Gas; (2) Electricity; 
(3) Water and Sewerage; (4) Food: Direct Purchases; (5) Food: Contract 
Services; (6) Chemicals; (7) Medical Instruments and Supplies; (8) 
Rubber and Plastics; (9) Paper and Printing Products; (10) Apparel; 
(11) Machinery and Equipment; (12) Miscellaneous Products; (13) 
Professional Fees: Labor-Related; (14) Administrative and Facilities 
Support Services; (15) Installation, Maintenance, and Repair Services; 
(16) All Other: Labor-Related Services; (17) Professional Fees: 
Nonlabor-Related; (18) Financial Services; (19) Telephone Services; 
(20) Postage; and (21) All Other: Nonlabor-Related Services.
    We note that the machinery and equipment expenses are for equipment 
that is paid for in a given year and not depreciated over the asset's 
useful life. Depreciation expenses for movable equipment are reflected 
in the capital component of the proposed 2014-based SNF market basket 
(described in section IV.A.1.c. of this proposed rule).
    We would also note that for ease of reference we are renaming the 
Nonmedical Professional Fees: Labor-Related and Nonmedical Professional 
Fees: Nonlabor-related cost categories (as labeled in the FY 2010-based 
SNF market basket) to be Professional Fees: Labor-Related and 
Professional Fees: Nonlabor-Related in the proposed 2014-based SNF 
market basket. These cost categories still represent the same 
nonmedical professional fees that were included in the FY 2010-based 
SNF market basket, which we describe in section IV.A.4. of this 
proposed rule.
    For the proposed 2014-based SNF market basket, we also are 
proposing to include a separate cost category for Installation, 
Maintenance, and Repair Services in order to proxy these costs by a 
price index that better reflects the price changes of labor associated 
with maintenance-related services. Previously these costs were included 
in the All Other: Labor-Related Services category of the FY 2010-based 
SNF market basket.
c. Derivation of the Detailed Capital Cost Weights
    Similar to the FY 2010-based SNF market basket, we further divided 
the Capital-related cost weight into: Depreciation, Interest, Lease and 
Other Capital-related cost weights.
    We calculated the depreciation cost weight (that is, depreciation 
costs excluding leasing costs) using depreciation costs from Worksheet 
S-2, column 1, lines 20 and 21. Since the depreciation costs reflect 
the entire SNF facility (Medicare and non-Medicare-allowable units), we 
used total facility capital costs as the denominator. This methodology 
assumes that the depreciation of an asset is the same regardless of 
whether the asset was used for Medicare or non-Medicare patients. This 
methodology yielded depreciation as a percent of capital costs of 27.3 
percent for 2014. We then apply this percentage to the proposed 2014-
based SNF market basket Medicare-allowable Capital-related cost weight 
of 7.9 percent, yielding a Medicare-allowable depreciation cost weight 
(excluding leasing expenses, which is described in more detail below) 
of 2.2 percent. To further disaggregate the Medicare-allowable 
depreciation cost weight into fixed and moveable depreciation, we are 
proposing to use the 2014 SNF MCR data for end-of-the-year capital 
asset balances as reported on Worksheet A7. The 2014 SNF MCR data 
showed a fixed/moveable split of 83/17. The FY 2010-based SNF market 
basket, which utilized the same data from the FY 2010 MCRs, had a 
fixed/moveable split of 85/15.
    We also derived the interest expense share of capital-related 
expenses from 2014 SNF MCR data, specifically from Worksheet A, column 
2, line 81. Similar to the depreciation cost weight, we calculated the 
interest cost weight using total facility capital costs. This

[[Page 21033]]

methodology yielded interest as a percent of capital costs of 27.4 
percent for 2014. We then apply this percentage to the proposed 2014-
based SNF market basket Medicare-allowable Capital-related cost weight 
of 7.9 percent, yielding a Medicare-allowable interest cost weight 
(excluding leasing expenses) of 2.2 percent. As done with the last 
rebasing (78 FR 26454), we are proposing to determine the split of 
interest expense between for-profit and not-for-profit facilities based 
on the distribution of long-term debt outstanding by type of SNF (for-
profit or not-for-profit/government) from the 2014 SNF MCR data. We 
estimated the split between for-profit and not-for-profit interest 
expense to be 27/73 percent compared to the FY 2010-based SNF market 
basket with 41/59 percent.
    Because the detailed data were not available in the MCRs, we used 
the most recent 2014 Census Bureau Service Annual Survey (SAS) data to 
derive the capital-related expenses attributable to leasing and other 
capital-related expenses. The FY 2010-based SNF market basket used the 
2010 SAS data. Based on the 2014 SAS data, we determined that leasing 
expenses are 63 percent of total leasing and capital-related expenses 
costs. In the FY 2010-based SNF market basket, leasing costs represent 
62 percent of total leasing and capital-related expenses costs. We then 
apply this percentage to the proposed 2014-based SNF market basket 
residual Medicare-allowable capital costs of 3.6 percent derived from 
subtracting the Medicare-allowable depreciation cost weight and 
Medicare-allowable interest cost weight from the 2014-based SNF market 
basket of total Medicare-allowable capital cost weight (7.9 percent-2.2 
percent-2.2 percent = 3.6 percent). This produces the proposed 2014-
based SNF Medicare-allowable leasing cost weight of 2.3 percent and 
all-other capital-related cost weight of 1.3 percent.
    Lease expenses are not broken out as a separate cost category in 
the SNF market basket, but are distributed among the cost categories of 
depreciation, interest, and other capital-related expenses, reflecting 
the assumption that the underlying cost structure and price movement of 
leasing expenses is similar to capital costs in general. As was done 
with past SNF market baskets and other PPS market baskets, we assumed 
10 percent of lease expenses are overhead and assigned them to the 
other capital-related expenses cost category. This is based on the 
assumption that leasing expenses include not only depreciation, 
interest, and other capital-related costs but also additional costs 
paid to the lessor. We distributed the remaining lease expenses to the 
three cost categories based on the proportion of depreciation, 
interest, and other capital-related expenses to total capital costs, 
excluding lease expenses.
    Table 11 shows the capital-related expense distribution (including 
expenses from leases) in the proposed 2014-based SNF market basket and 
the FY 2010-based SNF market basket.

 Table 11--Comparison of the Capital-Related Expense Distribution of the
  2014-Based SNF Market Basket and the FY 2010-Based SNF Market Basket
------------------------------------------------------------------------
                                          Proposed 2014-   FY 2010-based
              Cost category                  based SNF      SNF market
                                           market basket      basket
------------------------------------------------------------------------
Capital-related Expenses................             7.9             7.4
    Total Depreciation..................             2.9             3.2
    Total Interest......................             3.0             2.1
    Other Capital-related Expenses......             2.0             2.1
------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For
  presentational purposes, we are displaying one decimal and therefore,
  the detail capital cost weights may not add to the total capital-
  related expenses cost weight due to rounding.

    Table 12 presents the proposed 2014-based SNF market basket and the 
FY 2010-based SNF market basket.

               Table 12--Proposed 2014-Based SNF Market Basket and FY 2010-Based SNF Market Basket
----------------------------------------------------------------------------------------------------------------
                                                                                  Proposed 2014-   FY 2010-based
                                  Cost category                                      based SNF      SNF market
                                                                                   market basket      basket
----------------------------------------------------------------------------------------------------------------
Total...........................................................................           100.0           100.0
Compensation....................................................................            60.4            62.1
    Wages and Salaries \1\......................................................            50.0            50.6
    Employee Benefits \1\.......................................................            10.5            11.5
Utilities.......................................................................             2.6             2.2
    Electricity.................................................................             1.2             1.4
    Fuel: Oil and Gas...........................................................             1.3             0.7
    Water and Sewerage..........................................................             0.2             0.1
Professional Liability Insurance................................................             1.1             1.1
All Other.......................................................................            27.9            27.2
  Other Products................................................................            14.3            16.1
    Pharmaceuticals.............................................................             7.3             7.9
    Food: Direct Purchase.......................................................             3.1             3.7
    Food: Contract Purchase.....................................................             0.7             1.2
    Chemicals...................................................................             0.2             0.2
    Medical Instruments and Supplies............................................             0.6             0.8
    Rubber and Plastics.........................................................             0.8             1.0

[[Page 21034]]

 
    Paper and Printing Products.................................................             0.8             0.8
    Apparel.....................................................................             0.3             0.2
    Machinery and Equipment.....................................................             0.3             0.2
    Miscellaneous Products......................................................             0.3             0.3
All Other Services..............................................................            13.6            11.0
  Labor-Related Services........................................................             7.4             6.2
    Professional Fees: Labor-related............................................             3.8             3.4
    Installation, Maintenance, and Repair Services..............................             0.6             n/a
    Administrative and Facilities Support.......................................             0.5             0.5
    All Other: Labor-Related Services...........................................             2.5             2.3
  Non Labor-Related Services....................................................             6.2             4.8
    Professional Fees: Nonlabor-Related.........................................             1.8             2.0
    Financial Services..........................................................             2.0             0.9
    Telephone Services..........................................................             0.5             0.6
    Postage.....................................................................             0.2             0.2
    All Other: Nonlabor-Related Services........................................             1.8             1.1
Capital-Related Expenses........................................................             7.9             7.4
  Total Depreciation............................................................             2.9             3.2
    Building and Fixed Equipment................................................             2.5             2.7
    Movable Equipment...........................................................             0.4             0.5
  Total Interest................................................................             3.0             2.1
    For-Profit SNFs.............................................................             0.8             0.9
    Government and Nonprofit SNFs...............................................             2.1             1.2
  Other Capital-Related Expenses................................................             2.0             2.1
----------------------------------------------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For presentational purposes, we are displaying
  one decimal and therefore, the detailed cost weights may not add to the aggregate cost weights or to 100.0 due
  to rounding.
\1\ Contract labor is distributed to wages and salaries and employee benefits based on the share of total
  compensation that each category represents.

2. Price Proxies Used To Measure Operating Cost Category Growth
    After developing the 30 cost weights for the proposed 2014-based 
SNF market basket, we selected the most appropriate wage and price 
proxies currently available to represent the rate of change for each 
expenditure category. With four exceptions (three for the capital-
related expenses cost categories and one for Professional Liability 
Insurance (PLI)), we base the wage and price proxies on Bureau of Labor 
Statistics (BLS) data, and group them into one of the following BLS 
categories:
     Employment Cost Indexes: Employment Cost Indexes (ECIs) 
measure the rate of change in employment wage rates and employer costs 
for employee benefits per hour worked. These indexes are fixed-weight 
indexes and strictly measure the change in wage rates and employee 
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE) 
as price proxies for input price indexes because they are not affected 
by shifts in occupation or industry mix, and because they measure pure 
price change and are available by both occupational group and by 
industry. The industry ECIs are based on the 2004 North American 
Classification System (NAICS).
     Producer Price Indexes: Producer Price Indexes (PPIs) 
measure price changes for goods sold in other than retail markets. PPIs 
are used when the purchases of goods or services are made at the 
wholesale level.
     Consumer Price Indexes: Consumer Price Indexes (CPIs) 
measure change in the prices of final goods and services bought by 
consumers. CPIs are only used when the purchases are similar to those 
of retail consumers rather than purchases at the wholesale level, or if 
no appropriate PPI were available.
    We evaluated the price proxies using the criteria of reliability, 
timeliness, availability, and relevance. Reliability indicates that the 
index is based on valid statistical methods and has low sampling 
variability. Widely accepted statistical methods ensure that the data 
were collected and aggregated in a way that can be replicated. Low 
sampling variability is desirable because it indicates that the sample 
reflects the typical members of the population. (Sampling variability 
is variation that occurs by chance because only a sample was surveyed 
rather than the entire population.) Timeliness implies that the proxy 
is published regularly, preferably at least once a quarter. The market 
baskets are updated quarterly, and therefore, it is important for the 
underlying price proxies to be up-to-date, reflecting the most recent 
data available. We believe that using proxies that are published 
regularly (at least quarterly, whenever possible) helps to ensure that 
we are using the most recent data available to update the market 
basket. We strive to use publications that are disseminated frequently, 
because we believe that this is an optimal way to stay abreast of the 
most current data available. Availability means that the proxy is 
publicly available. We prefer that our proxies are publicly available 
because this will help ensure that our market basket updates are as 
transparent to the public as possible. In addition, this enables the 
public to be able to obtain the price proxy data on a regular basis. 
Finally, relevance means that the proxy is applicable and 
representative of the cost category weight to which it is applied. The 
CPIs, PPIs, and ECIs that we have selected to propose in this 
regulation meet these criteria. Therefore, we believe that they 
continue to be the best measure of price changes for the cost 
categories to which they would be applied.
    Table 12 lists all price proxies for the proposed 2014-based SNF 
market basket. Below is a detailed explanation of the price proxies 
used for each operating cost category.

[[Page 21035]]

     Wages and Salaries: We are proposing to use the ECI for 
Wages and Salaries for Private Industry Workers in Nursing Care 
Facilities (NAICS 6231; BLS series code CIU2026231000000I) to measure 
price growth of this category. NAICS 623 includes facilities that 
provide a mix of health and social services, with many of the health 
services being largely some level of nursing services. Within NAICS 623 
is NAICS 6231, which includes nursing care facilities primarily engaged 
in providing inpatient nursing and rehabilitative services. These 
facilities, which are most comparable to Medicare-certified SNFs, 
provide skilled nursing and continuous personal care services for an 
extended period of time, and, therefore, have a permanent core staff of 
registered or licensed practical nurses. This is the same index used in 
the FY 2010-based SNF market basket.
     Employee Benefits: We are proposing to use the ECI for 
Benefits for Nursing Care Facilities (NAICS 6231) to measure price 
growth of this category. The ECI for Benefits for Nursing Care 
Facilities is calculated using BLS's total compensation (BLS series ID 
CIU2016231000000I) for nursing care facilities series and the relative 
importance of wages and salaries within total compensation. We believe 
this constructed ECI series is technically appropriate for the reason 
stated above in the Wages and Salaries price proxy section. This is the 
same index used in the FY 2010-based SNF market basket.
     Electricity: We are proposing to use the PPI Commodity for 
Commercial Electric Power (BLS series code WPU0542) to measure the 
price growth of this cost category. This is the same index used in the 
FY 2010-based SNF market basket.
     Fuel: Oil and Gas: We are proposing to change the proxy 
used for the Fuel: Oil and Gas cost category. The FY 2010-based SNF 
market basket uses the PPI Commodity for Commercial Natural Gas (BLS 
series code WPU0552) to proxy these expenses. For the proposed 2014-
based SNF market basket, we are proposing to use a blend of the PPI 
Industry for Petroleum Refineries (BLS series code PCU32411-32411) and 
the PPI Commodity for Natural Gas (BLS series code WPU0531). Our 
analysis of the Bureau of Economic Analysis' 2007 Benchmark I-O data 
for Nursing and Community Care Facilities shows that petroleum 
refineries expenses accounts for approximately 65 percent and natural 
gas accounts for approximately 35 percent of the fuel: Oil and gas 
expenses. Therefore, we are proposing a blended proxy of 65 percent of 
the PPI Industry for Petroleum Refineries (BLS series code PCU32411-
32411) and 35 percent of the PPI Commodity for Natural Gas (BLS series 
code WPU0531). We believe that these two price proxies are the most 
technically appropriate indices available to measure the price growth 
of the Fuel: Oil and Gas category in the proposed 2014-based SNF market 
basket.
     Water and Sewerage: We are proposing to use the CPI All 
Urban for Water and Sewerage Maintenance (BLS series code 
CUUR0000SEHG01) to measure the price growth of this cost category. This 
is the same index used in the FY 2010-based SNF market basket.
     Professional Liability Insurance: We are proposing to use 
the CMS Hospital Professional Liability Insurance Index to measure 
price growth of this category. We were unable to find a reliable data 
source that collects SNF-specific PLI data. Therefore, we are proposing 
to use the CMS Hospital Professional Liability Index, which tracks 
price changes for commercial insurance premiums for a fixed level of 
coverage, holding non-price factors constant (such as a change in the 
level of coverage). This is the same index used in the FY 2010-based 
SNF market basket. We believe this is an appropriate proxy to measure 
the price growth associated of SNF professional liability insurance as 
it captures the price inflation associated with other medical 
institutions that serve Medicare patients.
     Pharmaceuticals: We are proposing to use the PPI Commodity 
for Pharmaceuticals for Human Use, Prescription (BLS series code 
WPUSI07003) to measure the price growth of this cost category. This is 
the same index used in the FY 2010-based SNF market basket.
     Food: Wholesale Purchases: We are proposing to use the PPI 
Commodity for Processed Foods and Feeds (BLS series code WPU02) to 
measure the price growth of this cost category. This is the same index 
used in the FY 2010-based SNF market basket.
     Food: Retail Purchase: We are proposing to use the CPI All 
Urban for Food Away From Home (All Urban Consumers) (BLS series code 
CUUR0000SEFV) to measure the price growth of this cost category. This 
is the same index used in the FY 2010-based SNF market basket.
     Chemicals: For measuring price change in the Chemicals 
cost category, we are proposing to use a blended PPI composed of the 
Industry PPIs for Other Basic Organic Chemical Manufacturing (NAICS 
325190) (BLS series code PCU32519-32519), Soap and Cleaning Compound 
Manufacturing (NAICS 325610) (BLS series code PCU32561-32561), and 
Other Miscellaneous Chemical Product Manufacturing (NAICS 3259A0) (BLS 
series code PCU325998325998).
    Using the 2007 Benchmark I-O data, we found that these three NAICS 
industries accounted for approximately 96 percent of SNF chemical 
expenses. The remaining four percent of SNF chemical expenses are for 
three other incidental NAICS chemicals industries such as Paint and 
Coating Manufacturing. We are proposing to create a blended index based 
on those three NAICS chemical expenses listed above that account for 96 
percent of SNF chemical expenses. We are proposing to create this blend 
based on each NAICS' expenses as a share of their sum. These expenses 
as a share of their sum are listed in Table 13.
    The FY 2010-based SNF market basket also used a blended chemical 
proxy that was based on 2002 Benchmark I-O data. We believe our 
proposed chemical blended index for the 2014-based SNF market basket is 
technically appropriate as it reflects more recent data on SNFs 
purchasing patterns. Table 13 provides the weights for the proposed 
2014-based blended chemical index and the FY 2010-based blended 
chemical index.

                                Table 13--Proposed Chemical Blended Index Weights
----------------------------------------------------------------------------------------------------------------
                                                                                    2014-based      2010-based
                   NAICS                             Industry description              index           index
                                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
325190.....................................  Other basic organic chemical                     22               7
                                              manufacturing.
25510......................................  Paint and coating manufacturing....             n/a              12
325610.....................................  Soap and cleaning compound                       37              49
                                              manufacturing.
3259A0.....................................  Other miscellaneous chemical                     41              32
                                              product manufacturing.
                                                                                 -------------------------------

[[Page 21036]]

 
                                             Total..............................             100             100
----------------------------------------------------------------------------------------------------------------

     Medical Instruments and Supplies: We are proposing to use 
a blend for the Medical Instruments and Supplies cost category. The 
2007 Benchmark I-O data shows an approximate 60/40 split between 
`Medical and Surgical Appliances and Supplies' and `Surgical and 
Medical Instruments'. Therefore, we are proposing a blend composed of 
60 percent of the PPI Commodity for Medical and Surgical Appliances and 
Supplies (BLS series code WPU1563) and 40 percent of the PPI Commodity 
for Surgical and Medical Instruments (BLS series code WPU1562).
    The FY 2010-based SNF market basket used the single, higher level 
PPI Commodity for Medical, Surgical, and Personal Aid Devices (BLS 
series code WPU156). We believe that the proposed price proxy better 
reflects the mix of expenses for this cost category as obtained from 
the 2007 Benchmark I-O data.
     Rubber and Plastics: We are proposing to use the PPI 
Commodity for Rubber and Plastic Products (BLS series code WPU07) to 
measure price growth of this cost category. This is the same index used 
in the FY 2010-based SNF market basket.
     Paper and Printing Products: We are proposing to use the 
PPI Commodity for Converted Paper and Paperboard Products (BLS series 
code WPU0915) to measure the price growth of this cost category. This 
is the same index used in the FY 2010-based SNF market basket.
     Apparel: We are proposing to use the PPI Commodity for 
Apparel (BLS series code WPU0381) to measure the price growth of this 
cost category. This is the same index used in the FY 2010-based SNF 
market basket.
     Machinery and Equipment: We are proposing to use the PPI 
Commodity for Machinery and Equipment (BLS series code WPU11) to 
measure the price growth of this cost category. This is the same index 
used in the FY 2010-based SNF market basket.
     Miscellaneous Products: For measuring price change in the 
Miscellaneous Products cost category, we are proposing to use the PPI 
Commodity for Finished Goods less Food and Energy (BLS series code 
WPUFD4131). Both food and energy are already adequately represented in 
separate cost categories and should not also be reflected in this cost 
category. This is the same index used in the FY 2010-based SNF market 
basket.
     Professional Fees: Labor-Related: We are proposing to use 
the ECI for Total Compensation for Private Industry Workers in 
Professional and Related (BLS series code CIU2010000120000I) to measure 
the price growth of this category. This is the same index used in the 
FY 2010-based SNF market basket (which was called the Nonmedical 
Professional Fees: Labor-Related cost category).
     Administrative and Facilities Support Services: We are 
proposing to use the ECI for Total Compensation for Private Industry 
Workers in Office and Administrative Support (BLS series code 
CIU2010000220000I) to measure the price growth of this category. This 
is the same index used in the FY 2010-based SNF market basket.
     Installation, Maintenance and Repair Services: We are 
proposing to include a separate cost category for Installation, 
Maintenance, and Repair Services in order to proxy these costs by a 
price index that better reflects the price changes of labor associated 
with maintenance-related services. We are proposing to use the ECI for 
Total Compensation for All Civilian Workers in Installation, 
Maintenance, and Repair (BLS series code CIU1010000430000I) to measure 
the price growth of this new cost category. Previously these costs were 
included in the All Other: Labor-Related Services category and were 
proxied by the ECI for Total Compensation for Private Industry Workers 
in Service Occupations (BLS series code CIU2010000300000I).
     All Other: Labor-Related Services: We are proposing to use 
the ECI for Total Compensation for Private Industry Workers in Service 
Occupations (BLS series code CIU2010000300000I) to measure the price 
growth of this cost category. This is the same index used in the FY 
2010-based SNF market basket.
     Professional Fees: NonLabor-Related: We are 
proposing to use the ECI for Total Compensation for Private Industry 
Workers in Professional and Related (BLS series code CIU2010000120000I) 
to measure the price growth of this category. This is the same index 
used in the FY 2010-based SNF market basket (which was called the 
Nonmedical Professional Fees: Nonlabor-Related cost category).
     Financial Services: We are proposing to use the 
ECI for Total Compensation for Private Industry Workers in Financial 
Activities (BLS series code CIU201520A000000I) to measure the price 
growth of this cost category. This is the same index used in the FY 
2010-based SNF market basket.
     Telephone Services: We are proposing to use the 
CPI All Urban for Telephone Services (BLS series code CUUR0000SEED) to 
measure the price growth of this cost category. This is the same index 
used in the FY 2010-based SNF market basket.
     Postage: We are proposing to use the CPI All Urban for 
Postage (BLS series code CUUR0000SEEC) to measure the price growth of 
this cost category. This is the same index used in the FY 2010-based 
SNF market basket.
     All Other: NonLabor-Related Services: We are proposing to 
use the CPI All Urban for All Items Less Food and Energy (BLS series 
code CUUR0000SA0L1E) to measure the price growth of this cost category. 
This is the same index used in the FY 2010-based SNF market basket.
3. Price Proxies Used To Measure Capital Cost Category Growth
    We are proposing to apply the same price proxies as were used in 
the FY 2010-based SNF market basket, and below is a detailed 
explanation of the price proxies used for each capital cost category. 
We also are proposing to continue to vintage weight the capital price 
proxies for Depreciation and Interest to capture the long-term 
consumption of capital. This vintage weighting method is the same 
method that was used for the FY 2010-based SNF market basket and is 
described below.
     Depreciation--Building and Fixed Equipment: We are 
proposing to use the BEA Chained Price Index for Private Fixed 
Investment in Structures, Nonresidential, Hospitals and Special Care 
(BEA Table 5.4.4. Price Indexes for Private Fixed Investment in 
Structures by Type). This BEA index is intended to capture prices for 
construction of facilities such as hospitals, nursing homes, hospices, 
and rehabilitation centers.

[[Page 21037]]

     Depreciation--Movable Equipment: We are proposing to use 
the PPI Commodity for Machinery and Equipment (BLS series code WPU11). 
This price index reflects price inflation associated with a variety of 
machinery and equipment that would be utilized by SNFs including but 
not limited to medical equipment, communication equipment, and 
computers.
     Nonprofit Interest: We are proposing to use the average 
yield on Municipal Bonds (Bond Buyer 20-bond index).
     For-Profit Interest: We are proposing to use the average 
yield on Moody's AAA corporate bonds (Federal Reserve). We are 
proposing different proxies for the interest categories because we 
believe interest price pressures differ between nonprofit and for-
profit facilities.
     Other Capital: Since this category includes fees for 
insurances, taxes, and other capital-related costs, we are proposing to 
use the CPI All Urban for Owners' Equivalent Rent of Primary Residence 
(BLS series code CUUR0000SEHC01), which would reflect the price growth 
of these costs.
    We believe that these price proxies continue to be the most 
appropriate proxies for SNF capital costs that meet our selection 
criteria of relevance, timeliness, availability, and reliability.
    As stated above, we are proposing to continue to vintage weight the 
capital price proxies for Depreciation and Interest to capture the 
long-term consumption of capital. To capture the long-term nature, the 
price proxies are vintage-weighted; and the vintage weights are 
calculated using a two-step process. First, we determine the expected 
useful life of capital and debt instruments held by SNFs. Second, we 
identify the proportion of expenditures within a cost category that is 
attributable to each individual year over the useful life of the 
relevant capital assets, or the vintage weights.
    We rely on Bureau of Economic Analysis (BEA) fixed asset data to 
derive the useful lives of both fixed and movable capital, which is the 
same data source used to derive the useful lives for the FY 2010-based 
SNF market basket. The specifics of the data sources used are explained 
below.
a. Calculating Useful Lives for Moveable and Fixed Assets
    Estimates of useful lives for movable and fixed assets for the 
proposed 2014-based SNF market basket are 10 and 23 years, 
respectively. These estimates are based on three data sources from the 
BEA: (1) Current-cost average age; (2) historical-cost average age; and 
(3) industry-specific current cost net stocks of assets.
    BEA current-cost and historical-cost average age data by asset type 
are not available by industry but are published at the aggregate level 
for all industries. The BEA does publish current-cost net capital 
stocks at the detailed asset level for specific industries. There are 
61 detailed movable assets (including intellectual property) and there 
are 32 detailed fixed assets in the BEA estimates. Since we seek 
aggregate useful life estimates applicable to SNFs, we developed a 
methodology to approximate movable and fixed asset ages for nursing and 
residential care services (NAICS 623) using the published BEA data. For 
the proposed FY 2014 SNF market basket, we use the current-cost average 
age for each asset type from the BEA fixed assets Table 2.9 for all 
assets and weight them using current-cost net stock levels for each of 
these asset types in the nursing and residential care services 
industry, NAICS 6230. (For example, nonelectro medical equipment 
current-cost net stock (accounting for about 37 percent of total 
moveable equipment current-cost net stock in 2014) is multiplied by an 
average age of 4.7 years. Current-cost net stock levels are available 
for download from the BEA Web site at https://www.bea.gov/national/FA2004/Details/. We then aggregate the ``weighted'' current-
cost net stock levels (average age multiplied by current-cost net 
stock) into moveable and fixed assets for NAICS 6230. We then adjust 
the average ages for moveable and fixed assets by the ratio of 
historical-cost average age (Table 2.10) to current-cost average age 
(Table 2.9).
    This produces historical cost average age data for movable 
(equipment and intellectual property) and fixed (structures) assets 
specific to NAICS 6230 of 4.8 and 11.6 years, respectively. The average 
age reflects the average age of an asset at a given point in time, 
whereas we want to estimate a useful life of the asset, which would 
reflect the average over all periods an asset is used. To do this, we 
multiply each of the average age estimates by two to convert to average 
useful lives with the assumption that the average age is normally 
distributed (about half of the assets are below the average at a given 
point in time, and half above the average at a given point in time). 
This produces estimates of likely useful lives of 9.6 and 23.2 years 
for movable and fixed assets, which we round to 10 and 23 years, 
respectively. We are proposing an interest vintage weight time span of 
21 years, obtained by weighting the fixed and movable vintage weights 
(23 years and 10 years, respectively) by the fixed and movable split 
(87 percent and 13 percent, respectively). This is the same methodology 
used for the FY 2010-based SNF market basket which had useful lives of 
22 years and 6 years for fixed and moveable assets, respectively. The 
impact of revising the useful life for moveable assets from 6 years to 
10 years had little to no impact on the growth rate of the proposed 
2014-based SNF market basket capital cost weight. Over the 2014 to 2026 
time period, the impact on the growth rate of the capital cost weight 
was no larger than 0.01 percent in absolute terms.
b. Constructing Vintage Weights
    Given the expected useful life of capital (fixed and moveable 
assets) and debt instruments, we must determine the proportion of 
capital expenditures attributable to each year of the expected useful 
life for each of the three asset types: Building and fixed equipment, 
moveable equipment, and interest. These proportions represent the 
vintage weights. We were not able to find a historical time series of 
capital expenditures by SNFs. Therefore, we approximated the capital 
expenditure patterns of SNFs over time, using alternative SNF data 
sources. For building and fixed equipment, we used the stock of beds in 
nursing homes from the National Nursing Home Survey (NNHS) conducted by 
the National Center for Health Statistics (NCHS) for 1962 through 1999. 
For 2000 through 2010, we extrapolated the 1999 bed data forward using 
a 5-year moving average of growth in the number of beds from the SNF 
MCR data. For 2011 to 2014, we propose to extrapolate the 2010 bed data 
forward using the average growth in the number of beds over the 2011 to 
2014 time period. We then used the change in the stock of beds each 
year to approximate building and fixed equipment purchases for that 
year. This procedure assumes that bed growth reflects the growth in 
capital-related costs in SNFs for building and fixed equipment. We 
believe that this assumption is reasonable because the number of beds 
reflects the size of a SNF, and as a SNF adds beds, it also likely adds 
fixed capital.
    As was done for the FY 2010-based SNF market basket (as well as 
prior market baskets), we are proposing to estimate moveable equipment 
purchases based on the ratio of ancillary costs to routine costs. The 
time series of the ratio of ancillary costs to routine costs for SNFs 
measures changes in intensity in SNF services, which are assumed to be 
associated with movable equipment

[[Page 21038]]

purchase patterns. The assumption here is that as ancillary costs 
increase compared to routine costs, the SNF caseload becomes more 
complex and would require more movable equipment. The lack of movable 
equipment purchase data for SNFs over time required us to use 
alternative SNF data sources. A more detailed discussion of this 
methodology was published in the FY 2008 SNF final rule (72 FR 43428). 
We believe the resulting two time series, determined from beds and the 
ratio of ancillary to routine costs, reflect real capital purchases of 
building and fixed equipment and movable equipment over time.
    To obtain nominal purchases, which are used to determine the 
vintage weights for interest, we converted the two real capital 
purchase series from 1963 through 2014 determined above to nominal 
capital purchase series using their respective price proxies (the BEA 
Chained Price Index for Nonresidential Construction for Hospitals & 
Special Care Facilities and the PPI for Machinery and Equipment). We 
then combined the two nominal series into one nominal capital purchase 
series for 1963 through 2014. Nominal capital purchases are needed for 
interest vintage weights to capture the value of debt instruments.
    Once we created these capital purchase time series for 1963 through 
2014, we averaged different periods to obtain an average capital 
purchase pattern over time: (1) For building and fixed equipment, we 
averaged 30, 23-year periods; (2) for movable equipment, we averaged 
43, 10-year periods; and (3) for interest, we averaged 32, 21-year 
periods. We calculate the vintage weight for a given year by dividing 
the capital purchase amount in any given year by the total amount of 
purchases during the expected useful life of the equipment or debt 
instrument. To provide greater transparency, we posted on the CMS 
market basket Web site at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html, an illustrative spreadsheet that contains an 
example of how the vintage-weighted price indexes are calculated.
    The vintage weights for the proposed 2014-based SNF market basket 
and the FY 2010-based SNF market basket are presented in Table 14.

                                     Table 14--Proposed 2014-Based Vintage Weights and FY 2010-Based Vintage Weights
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Building and fixed equipment          Movable equipment                   Interest
                                                         -----------------------------------------------------------------------------------------------
                        Year \1\                          Proposed 2014-  FY 2010- based  Proposed 2014-  FY 2010- based  Proposed 2014-  FY 2010- based
                                                          based 23 years     25 years     based 10 years      6 years     based 21 years     22 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................            .056            .061            .085            .165            .032            .030
2.......................................................            .055            .059            .087            .160            .033            .030
3.......................................................            .054            .053            .091            .167            .034            .032
4.......................................................            .052            .050            .097            .167            .036            .033
5.......................................................            .049            .046            .099            .169            .037            .035
6.......................................................            .046            .043            .102            .171            .039            .037
7.......................................................            .044            .041            .108  ..............            .041            .039
8.......................................................            .043            .039            .109  ..............            .043            .040
9.......................................................            .040            .036            .110  ..............            .044            .041
10......................................................            .038            .034            .112  ..............            .045            .043
11......................................................            .038            .034  ..............  ..............            .048            .045
12......................................................            .039            .034  ..............  ..............            .052            .047
13......................................................            .039            .033  ..............  ..............            .056            .048
14......................................................            .039            .032  ..............  ..............            .058            .048
15......................................................            .039            .031  ..............  ..............            .060            .050
16......................................................            .039            .031  ..............  ..............            .059            .052
17......................................................            .040            .032  ..............  ..............            .057            .055
18......................................................            .041            .034  ..............  ..............            .057            .058
19......................................................            .043            .035  ..............  ..............            .056            .060
20......................................................            .042            .036  ..............  ..............            .056            .060
21......................................................            .042            .038  ..............  ..............            .057            .058
22......................................................            .042            .039  ..............  ..............  ..............            .058
23......................................................            .042            .042  ..............  ..............  ..............  ..............
24......................................................  ..............            .043  ..............  ..............  ..............  ..............
25......................................................  ..............            .044  ..............  ..............  ..............  ..............
26......................................................  ..............  ..............  ..............  ..............  ..............  ..............
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................           1.000           1.000           1.000           1.000           1.000           1.000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The vintage weights are calculated using thirteen decimals. For presentational purposes, we are displaying three decimals and therefore, the
  detail vintage weights may not add to 1.000 due to rounding.
\1\ Year 1 represents the vintage weight applied to the farthest year while the vintage weight for year 23, for example, would apply to the most recent
  year.

    Table 15 shows all the price proxies for the proposed 2014-based 
SNF market basket.

 Table 15--Proposed Price Proxies for the Proposed 2014-Based SNF Market
                                 Basket
------------------------------------------------------------------------
         Cost category               Weight        Proposed price proxy
------------------------------------------------------------------------
Total..........................           100.0

[[Page 21039]]

 
Compensation...................            60.4
    Wages and Salaries \1\.....            50.0  ECI for Wages and
                                                  Salaries for Private
                                                  Industry Workers in
                                                  Nursing Care
                                                  Facilities.
    Employee Benefits \1\......            10.5  ECI for Total Benefits
                                                  for Private Industry
                                                  Workers in Nursing
                                                  Care Facilities.
Utilities......................             2.6
    Electricity................             1.2  PPI Commodity for
                                                  Commercial Electric
                                                  Power.
    Fuel: Oil and Gas..........             1.3  Blend of Fuel PPIs.
    Water and Sewerage.........             0.2  CPI for Water and
                                                  Sewerage Maintenance
                                                  (All Urban Consumers).
Professional Liability                      1.1  CMS Professional
 Insurance.                                       Liability Insurance
                                                  Premium Index.
All Other......................            27.9
  Other Products...............            14.3
    Pharmaceuticals............             7.3  PPI Commodity for
                                                  Pharmaceuticals for
                                                  Human Use,
                                                  Prescription.
    Food: Direct Purchase......             3.1  PPI Commodity for
                                                  Processed Foods and
                                                  Feeds.
    Food: Contract Purchase....             0.7  CPI for Food Away From
                                                  Home (All Urban
                                                  Consumers).
    Chemicals..................             0.2  Blend of Chemical PPIs.
    Medical Instruments and                 0.6  Blend of Medical
     Supplies.                                    Instruments and
                                                  Supplies PPIs.
    Rubber and Plastics........             0.8  PPI Commodity for
                                                  Rubber and Plastic
                                                  Products.
    Paper and Printing Products             0.8  PPI Commodity for
                                                  Converted Paper and
                                                  Paperboard Products.
    Apparel....................             0.3  PPI Commodity for
                                                  Apparel.
    Machinery and Equipment....             0.3  PPI Commodity for
                                                  Machinery and
                                                  Equipment.
    Miscellaneous Products.....             0.3  PPI Commodity for
                                                  Finished Goods Less
                                                  Food and Energy.
All Other Services.............            13.6
  Labor-Related Services.......             7.4
    Professional Fees: Labor-               3.8  ECI for Total
     related.                                     Compensation for
                                                  Private Industry
                                                  Workers in
                                                  Professional and
                                                  Related.
    Installation, Maintenance,              0.6  ECI for Total
     and Repair Services.                         Compensation for All
                                                  Civilian workers in
                                                  Installation,
                                                  Maintenance, and
                                                  Repair.
    Administrative and                      0.5  ECI for Total
     Facilities Support.                          Compensation for
                                                  Private Industry
                                                  Workers in Office and
                                                  Administrative
                                                  Support.
    All Other: Labor-Related                2.5  ECI for Total
     Services.                                    Compensation for
                                                  Private Industry
                                                  Workers in Service
                                                  Occupations.
  Non Labor-Related Services...             6.2
    Professional Fees: Nonlabor-            1.8  ECI for Total
     related.                                     Compensation for
                                                  Private Industry
                                                  Workers in
                                                  Professional and
                                                  Related.
    Financial Services.........             2.0  ECI for Total
                                                  Compensation for
                                                  Private Industry
                                                  Workers in Financial
                                                  Activities.
    Telephone Services.........             0.5  CPI for Telephone
                                                  Services.
    Postage....................             0.2  CPI for Postage.
    All Other: Nonlabor-Related             1.8  CPI for All Items Less
     Services.                                    Food and Energy.
Capital-Related Expenses.......             7.9
  Total Depreciation...........             2.9
    Building and Fixed                      2.5  BEA's Chained Price
     Equipment.                                   Index for Private
                                                  Fixed Investment in
                                                  Structures,
                                                  Nonresidential,
                                                  Hospitals and Special
                                                  Care--vintage weighted
                                                  23 years.
    Movable Equipment..........             0.4  PPI Commodity for
                                                  Machinery and
                                                  Equipment--vintage
                                                  weighted 10 years.
  Total Interest...............             3.0
    For-Profit SNFs............             0.8  Moody's--Average yield
                                                  on Aaa bonds, vintage
                                                  weighted 21 years.
    Government and Nonprofit                2.1  Moody's--Average yield
     SNFs.                                        on Domestic Municipal
                                                  Bonds--vintage
                                                  weighted 21 years.
  Other Capital-Related                     2.0  CPI for Owners'
   Expenses.                                      Equivalent Rent of
                                                  Primary Residence.
------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For
  presentational purposes, we are displaying one decimal and, therefore,
  the detailed cost weights may not add to the aggregate cost weights or
  to 100.0 due to rounding.
\1\ Contract labor is distributed to wages and salaries and employee
  benefits based on the share of total compensation that each category
  represents.

4. Labor-Related Share
    We define the labor-related share (LRS) as those expenses that are 
labor-intensive and vary with, or are influenced by, the local labor 
market. Each year, we calculate a revised labor-related share based on 
the relative importance of labor-related cost categories in the input 
price index. Effective for FY 2018, we are proposing to revise and 
update the labor-related share to reflect the relative importance of 
the proposed 2014-based SNF market basket cost categories that we 
believe are labor-intensive and vary with, or are influenced by, the 
local labor market. For the proposed 2014-based SNF market basket these 
are: (1) Wages and Salaries (including allocated contract labor costs 
as described above); (2) Employee Benefits (including allocated 
contract labor costs as described above); (3) Professional fees: Labor-
related; (4) Administrative and Facilities Support

[[Page 21040]]

Services; (5) Installation, Maintenance, and Repair services; (6) All 
Other: Labor-Related Services; and (7) a proportion of capital-related 
expenses. We propose to continue to include a proportion of capital-
related expenses because a portion of these expenses are deemed to be 
labor-intensive and vary with, or are influenced by, the local labor 
market. For example, a proportion of construction costs for a medical 
building would be attributable to local construction workers' 
compensation expenses.
    Consistent with previous SNF market basket revisions and rebasings, 
the All Other: Labor-related services cost category is mostly comprised 
of building maintenance and security services (including, but not 
limited to, landscaping services, janitorial services, waste management 
services, and investigation and security services). Because these 
services tend to be labor-intensive and are mostly performed at the SNF 
facility (and therefore, unlikely to be purchased in the national 
market), we believe that they meet our definition of labor-related 
services.
    The proposed inclusion of the Installation, Maintenance, and Repair 
Services cost category into the labor-related share remains consistent 
with the current labor-related share, since this cost category was 
previously included in the FY 2010-based SNF market basket All Other: 
Labor-related Services cost category. We proposed to establish a 
separate Installation, Maintenance, and Repair Services cost category 
so that we can use the ECI for Total Compensation for All Civilian 
Workers in Installation, Maintenance, and Repair to reflect the 
specific price changes associated with these services. We also use this 
cost category in the 2012-based IRF market basket (80 FR 47059), 2012-
based IPF market basket (80 FR 46667), and 2013-based LTCH market 
basket (81 FR 57091).
    As discussed in the FY 2014 SNF PPS proposed rule (78 FR 26462), in 
an effort to determine more accurately the share of nonmedical 
professional fees (included in the proposed 2014-based SNF market 
basket Professional Fees cost categories) that should be included in 
the labor-related share, we surveyed SNFs regarding the proportion of 
those fees that are attributable to local firms and the proportion that 
are purchased from national firms. Based on these weighted results, we 
determined that SNFs purchase, on average, the following portions of 
contracted professional services inside their local labor market:
     78 percent of legal services.
     86 percent of accounting and auditing services.
     89 percent of architectural, engineering services.
     87 percent of management consulting services.
    Together, these four categories represent 3.3 percentage points of 
the total costs for the proposed 2014-based SNF market basket. We 
applied the percentages from this special survey to their respective 
SNF market basket weights to separate them into labor-related and 
nonlabor-related costs. As a result, we are designating 2.8 of the 3.3 
total to the labor-related share, with the remaining 0.5 categorized as 
nonlabor-related.
    For the proposed 2014-based SNF market basket, we conducted a 
similar analysis of home office data. The Medicare cost report CMS Form 
2540-10 requires a SNF to report information regarding their home 
office provider. Approximately 57 percent of SNFs reported some type of 
home office information on their Medicare cost report for 2014 (for 
example, city, state, zip code). Using the data reported on the 
Medicare cost report, we compared the location of the SNF with the 
location of the SNF's home office. For the FY 2010-based SNF market 
basket, we used the Medicare HOMER database to determine the location 
of the provider's home office as this information was not available on 
the Medicare cost report CMS Form 2540-96. For the proposed 2014-based 
SNF market basket, we are proposing to determine the proportion of home 
office contract labor costs that should be allocated to the labor-
related share based on the percent of total SNF home office contract 
labor costs as reported in Worksheet S-3, Part II attributable to those 
SNFs that had home offices located in their respective local labor 
markets--defined as being in the same Metropolitan Statistical Area 
(MSA). We determined a SNF's and home office's MSAs using their zip 
code information from the Medicare cost reports.
    Using this methodology, we determined that 28 percent of SNFs' home 
office contract labor costs were for home offices located in their 
respective local labor markets. Therefore, we are proposing to allocate 
28 percent of home office expenses to the labor-related share. The FY 
2010-based SNF market basket allocated 32 percent of home office 
expenses to the labor-related share.
    In the proposed 2014-based SNF market basket, home office expenses 
that were subject to allocation based on the home office allocation 
methodology represent 0.7 percent of the proposed 2014-based SNF market 
basket. Based on the home office results, we are apportioning 0.2 
percentage point of the 0.7 percentage point figure into the labor-
related share (0.7 x 0.28 = 0.193, or 0.2) and designating the 
remaining 0.5 percentage point as nonlabor-related. In sum, based on 
the two allocations mentioned above, we apportioned 3.0 percentage 
points into the labor-related share. This amount is added to the 
portion of professional fees that we continue to identify as labor-
related using the I-O data such as contracted advertising and marketing 
costs (0.8 percentage point of total operating costs) resulting in a 
Professional Fees: Labor-Related cost weight of 3.8 percent.
    Table 16 compares the proposed 2014-based labor-related share and 
the FY 2010-based labor-related share based on the relative importance 
of IGI's first quarter 2017 forecast with historical data through the 
fourth quarter of 2016.

                              Table 16--FY 2018 and FY 2017 SNF Labor-Related Share
----------------------------------------------------------------------------------------------------------------
                                                                  Relative importance,     Relative importance,
                                                                 labor-related, FY 2018   labor-related, FY 2017
                                                                   (2014-based index)     (FY 2010-based index)
                                                                    2017:Q1 forecast         2016:Q2 forecast
----------------------------------------------------------------------------------------------------------------
Wages and Salaries \1\........................................                     50.3                     48.8
Employee Benefits \1\.........................................                     10.3                     11.3
Professional fees: Labor-related..............................                      3.7                      3.5
Administrative and Facilities Support Services................                      0.5                      0.5
Installation, Maintenance and Repair Services \2\.............                      0.6                      n/a
All Other: Labor-related Services.............................                      2.5                      2.3

[[Page 21041]]

 
Capital-related (.391)........................................                      2.9                      2.7
                                                               -------------------------------------------------
    Total.....................................................                     70.8                     69.1
----------------------------------------------------------------------------------------------------------------
\1\ The Wages and Salaries and Employee Benefits cost weight reflect contract labor costs as described above.
\2\ Previously classified in the All Other: Labor-related services cost category in the FY 2010-based SNF market
  basket.

    The FY 2018 SNF labor-related share (LRS) is 1.7 percentage points 
higher than the FY 2017 SNF LRS, which is based on the FY 2010-based 
SNF market basket relative importance. This implies an increase in the 
quantity of the labor-related services because rebasing the index 
contributed significantly to the increase. Also contributing to the 
higher labor-related share is a higher capital-related cost weight in 
the proposed 2014-based SNF market basket compared to the FY 2010-based 
SNF market basket. As stated above, we include a proportion of capital-
related expenses in the labor-related share as we believe a portion of 
these expenses (such as construction labor costs) are deemed to be 
labor-intensive and vary with, or are influenced by, the local labor 
market.
5. Proposed Market Basket Estimate for the FY 2018 SNF PPS Update
    As discussed previously in this proposed rule, beginning with the 
FY 2018 SNF PPS update, we are proposing to adopt the 2014-based SNF 
market basket as the appropriate market basket of goods and services 
for the SNF PPS. Based on IGI's first quarter 2017 forecast with 
historical data through the fourth quarter of 2016, the most recent 
estimate of the proposed 2014-based SNF market basket for FY 2018 is 
2.7 percent. IGI is a nationally recognized economic and financial 
forecasting firm that contracts with CMS to forecast the components of 
CMS' market baskets.
    Table 17 compares the proposed 2014-based SNF market basket and the 
FY 2010-based SNF market basket percent changes. For the historical 
period between FY 2013 and FY 2016, the average difference between the 
two market baskets is -0.3 percentage point. This is primarily the 
result of the lower pharmaceuticals cost category weight, increased 
Fuel: Oil and Gas cost category weight, and the change in the Fuels 
price proxy. For the forecasted period between FY 2017 and FY 2019, 
there is no difference in the average growth rate.

  Table 17--Proposed 2014-Based SNF Market Basket and FY 2010-Based SNF
                Market Basket, Percent Changes: 2013-2019
------------------------------------------------------------------------
                                          Proposed 2014-   FY 2010-based
            Fiscal year (FY)                 based SNF      SNF market
                                           market basket      basket
------------------------------------------------------------------------
Historical data:
    FY 2013.............................             1.6             1.8
    FY 2014.............................             1.6             1.7
    FY 2015.............................             1.8             2.3
    FY 2016.............................             1.9             2.3
    Average FY 2013-2016................             1.7             2.0
Forecast:
    FY 2017.............................             2.9             2.9
    FY 2018.............................             2.7             2.7
    FY 2019.............................             2.7             2.7
    Average FY 2017-2019................             2.8             2.8
------------------------------------------------------------------------
Source: IHS Global Insight, Inc. 1st quarter 2017 forecast with
  historical data through 4thd quarter 2016.

    While we ordinarily would propose to use this 2014-based SNF market 
basket percentage to update the SNF PPS per diem rates for FY 2018, we 
note that section 411(a) of the MACRA amended section 1888(e) of the 
Act to add section 1888(e)(5)(B)(iii) of the Act. Section 
1888(e)(5)(B)(iii) of the Act 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. In accordance with 
section 1888(e)(5)(B)(iii) of the Act, we will use a market basket 
percentage of 1.0 percent to update the federal rates set forth in this 
proposed rule. Effective for FY 2019, we are proposing to use the 
proposed 2014-based SNF market basket to determine the market basket 
percentage update for the SNF PPS per diem rates. As stated in section 
V.A.4. in this preamble, we are proposing to use the proposed 2014-
based SNF market basket to determine the labor-related share effective 
for FY 2018.

B. Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)

1. Background and Statutory Authority
    Section 1888(e)(6)(A)(i) of the Act, as added by section 2(c)(4) of 
the Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act), requires that for fiscal years beginning with FY 2018, in 
the case of a SNF that does not submit data as applicable in accordance 
with sections 1888(e)(6)(B)(i)(II)-(III) of the Act for a fiscal year, 
the Secretary reduce the market basket percentage described in

[[Page 21042]]

section 1888(e)(5)(B)(i) of the Act for payment rates during that 
fiscal year by two percentage points. In section III.B of this proposed 
rule, we discuss proposed revisions in the market basket update 
regulations at Sec.  413.337(d) that would implement this provision. In 
accordance with this statutory mandate, we have implemented a SNF 
Quality Reporting Program (QRP), which we believe promotes higher 
quality and more efficient health care for Medicare beneficiaries. The 
SNF QRP applies to freestanding SNFs, SNFs affiliated with acute care 
facilities, and all non-CAH swing-bed rural hospitals. We refer readers 
to the FY 2016 SNF PPS final rule (80 FR 46427 through 46429) for a 
full discussion of the statutory background and policy considerations 
that have shaped the SNF QRP.
    Please note, the term ``FY (year) SNF QRP'' means the fiscal year 
for which the SNF QRP requirements applicable to that fiscal year must 
be met in order for a SNF to receive the full market basket percentage 
when calculating the payment rates applicable to it for that fiscal 
year.
    The IMPACT Act (Pub. L. 113-185) amended Title XVIII of the Act, in 
part, by adding a new section 1899B, entitled ``Standardized Post-Acute 
Care Assessment Data for Quality, Payment and Discharge Planning,'' and 
by enacting new data reporting requirements for certain post-acute care 
(PAC) providers, including SNFs. Specifically, new sections 
1899B(a)(1)(A)(ii) and (iii) of the Act require SNFs, inpatient 
rehabilitation facilities (IRFs), Long Term Care Hospitals (LTCHs) and 
home health agencies (HHAs), under each of their respective quality 
reporting program (which, for SNFs, is found at section 1888(e)(6) of 
the Act), to report data on quality measures specified under section 
1899B(c)(1) of the Act for at least five domains, and data on resource 
use and other measures specified under section 1899B(d)(1) of the Act 
for at least three domains. Section 1899B(a)(1)(A)(i) of the Act 
further requires each of these PAC providers to report under their 
respective quality reporting program standardized patient assessment 
data in accordance with subsection (b) for at least the quality 
measures specified under subsection (c)(1) and that is for five 
specific categories: Functional status; cognitive function and mental 
status; special services, treatments, and interventions; medical 
conditions and co-morbidities; and impairments. All of the data that 
must be reported in accordance with section 1899B(a)(1)(A) of the Act 
must be standardized and interoperable so as to allow for the exchange 
of the information among PAC providers and other providers and the use 
of such data in order to enable access to longitudinal information and 
to facilitate coordinated care. We refer readers to the FY 2016 SNF PPS 
final rule (80 FR 46427 through 46429) for additional information on 
the IMPACT Act and its applicability to SNFs.
2. General Considerations Used for Selection of Quality Measures for 
the SNF QRP
    We refer readers to the FY 2016 SNF PPS final rule (80 FR 46429 
through 46431) for a detailed discussion of the considerations we apply 
in measure selection for the LTCH QRP, such as alignment with the CMS 
Quality Strategy,\2\ which incorporates the three broad aims of the 
National Quality Strategy.\3\
---------------------------------------------------------------------------

    \2\ https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html.
    \3\ https://www.ahrq.gov/workingforquality/nqs/nqs2011annlrpt.htm.
---------------------------------------------------------------------------

    As part of our consideration for measures for use in the SNF QRP, 
we review and evaluate measures that have been implemented in other 
programs and take into account measures that have been endorsed by NQF 
for provider settings other than the SNF setting. We have previously 
adopted measures that we referred to as ``applications'' of those 
measures. We have received questions pertaining to the term 
``application'' and want to clarify that when a proposed or implemented 
measure is referred to as an, ``application of'' the measure it means 
that the measure will be used in the SNF setting, rather than the 
setting for which it was endorsed by the NQF. For example, in the FY 
2016 SNF PPS final rule (80 FR 46440 through 46444) we adopted an 
Application of Percent of Residents Experiencing One or More Falls With 
Major Injury (Long Stay) (NQF #0674) which is endorsed for the nursing 
home setting but not the SNF setting. For such measures, we would then 
intend to seek NQF endorsement for the SNF setting, and the NQF 
endorses one or more of them, we will update the title of the measure 
to remove the reference to ``application''.
a. Measuring and Accounting for Social Risk Factors in the SNF QRP
    We consider related factors that may affect measures in the SNF 
QRP. We understand that social risk factors such as income, education, 
race and ethnicity, employment, disability, community resources, and 
social support (certain factors of which are also sometimes referred to 
as socioeconomic status (SES) factors or socio-demographic status (SDS) 
factors) play a major role in health. One of our core objectives is to 
improve beneficiary outcomes including reducing health disparities, and 
we want to ensure that all beneficiaries, including those with social 
risk factors, receive high quality care. In addition, we seek to ensure 
that the quality of care furnished by providers and suppliers is 
assessed as fairly as possible under our programs while ensuring that 
beneficiaries have adequate access to excellent care.
    We have been reviewing reports prepared by HHS' Office of the 
Assistant Secretary for Planning and Evaluation (ASPE) and the National 
Academies of Sciences, Engineering, and Medicine on the issue of 
measuring and accounting for social risk factors in CMS' value-based 
purchasing and quality reporting programs, and considering options on 
how to address the issue in these programs. On December 21, 2016, ASPE 
submitted a Report to Congress on a study it was required to conduct 
under section 2(d) of the Improving Medicare Post-Acute Care 
Transformation (IMPACT) Act of 2014. The study analyzed the effects of 
certain social risk factors of Medicare beneficiaries on quality 
measures and measures of resource use used in one or more of nine 
Medicare value-based purchasing programs.\4\ The report also included 
considerations for strategies to account for social risk factors in 
these programs. In a January 10, 2017 report released by The National 
Academies of Sciences, Engineering, and Medicine, that body provided 
various potential methods for measuring and accounting for social risk 
factors, including stratified public reporting.\5\
---------------------------------------------------------------------------

    \4\ Office of the Assistant Secretary for Planning and 
Evaluation. 2016. Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs. 
Available at https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \5\ National Academies of Sciences, Engineering, and Medicine. 
2017. Accounting for social risk factors in Medicare payment. 
Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

    As discussed in the FY 2017 SNF PPS final rule, the NQF has 
undertaken a 2-year trial period in which new measures, measures 
undergoing maintenance review, and measures endorsed with the condition 
that they enter the trial period can be assessed to determine whether 
risk adjustment for selected social risk factors is appropriate for 
these measures. This trial entails temporarily allowing inclusion of 
social risk factors in the risk-adjustment

[[Page 21043]]

approach for these measures. At the conclusion of the trial, NQF will 
issue recommendations on the future inclusion of social risk factors in 
risk adjustment for quality measures.
    As we continue to consider the analyses and recommendations from 
these reports and await the results of the NQF trial on risk adjustment 
for quality measures, we are continuing to work with stakeholders in 
this process. As we have previously communicated, we are concerned 
about holding providers to different standards for the outcomes of 
their patients with social risk factors because we do not want to mask 
potential disparities or minimize incentives to improve the outcomes 
for disadvantaged populations. Keeping this concern in mind, while we 
sought input on this topic previously, we continue to seek public 
comment on whether we should account for social risk factors in 
measures in the SNF QRP, and if so, what method or combination of 
methods would be most appropriate for accounting for social risk 
factors. Examples of methods include: Confidential reporting to 
providers of measure rates stratified by social risk factors; public 
reporting of stratified measure rates; and potential risk adjustment of 
a particular measure as appropriate based on data and evidence.
    In addition, we are also seeking public comment on which social 
risk factors might be most appropriate for reporting stratified measure 
scores and/or potential risk adjustment of a particular measure. 
Examples of social risk factors include, but are not limited to, dual 
eligibility/low-income subsidy, race and ethnicity, and geographic area 
of residence. We are seeking comments on which of these factors, 
including current data sources where this information would be 
available, could be used alone or in combination, and whether other 
data should be collected to better capture the effects of social risk. 
We will take commenters' input into consideration as we continue to 
assess the appropriateness and feasibility of accounting for social 
risk factors in the SNF QRP. We note that any such changes would be 
proposed through future notice and comment rulemaking.
    We look forward to working with stakeholders as we consider the 
issue of accounting for social risk factors and reducing health 
disparities in CMS programs. Of note, implementing any of the above 
methods would be taken into consideration in the context of how this 
and other CMS programs operate (for example, data submission methods, 
availability of data, statistical considerations relating to 
reliability of data calculations, among others), so we also welcome 
comment on operational considerations. CMS is committed to ensuring 
that its beneficiaries have access to and receive excellent care, and 
that the quality of care furnished by providers and suppliers is 
assessed fairly in CMS programs.
3. Proposed Collection of Standardized Resident Assessment Data Under 
the SNF QRP
a. Proposed Definition of Standardized Resident Assessment Data
    Section 1888(e)(6)(B)(i)(III) of the Act requires that for fiscal 
year 2019 and each subsequent year, SNFs report standardized patient 
assessment data required under section 1899B(b)(1) of the Act. For 
purposes of meeting this requirement, section 1888(e)(6)(B)(ii) of the 
Act requires a SNF to submit the standardized resident assessment data 
required under section 1819(b)(3) of the Act using the standard 
instrument designated by the state under section 1819(e)(5) of the Act.
    For purposes of the SNF QRP, we refer to beneficiaries who receive 
services from SNFs as ``residents,'' and we collect certain information 
about the SNF services they receive using the Resident Assessment 
Instrument Minimum Data Set (MDS).
    Section 1899B(b)(1)(B) of the Act describes standardized patient 
assessment data as data required for at least the quality measures 
described in sections 1899B(c)(1) of the Act and that is for the 
following categories:
     Functional status, such as mobility and self-care at 
admission to a PAC provider and before discharge from a PAC provider;
     Cognitive function, such as ability to express ideas and 
to understand and mental status, such as depression and dementia;
     Special services, treatments and interventions such as the 
need for ventilator use, dialysis, chemotherapy, central line placement 
and total parenteral nutrition;
     Medical conditions and comorbidities such as diabetes, 
congestive heart failure and pressure ulcers;
     Impairments, such as incontinence and an impaired ability 
to hear, see or swallow; and
     Other categories deemed necessary and appropriate.
    As required under section 1899B(b)(1)(A) of the Act, the 
standardized patient assessment data must be reported at least for SNF 
admissions and discharges, but the Secretary may require the data to be 
reported more frequently.
    In this rule, we are proposing to define the standardized patient 
assessment data that SNFs must report to comply with section 1888(e)(6) 
of the Act, as well as the requirements for the reporting of these 
data. The collection of standardized patient assessment data is 
critical to our efforts to drive improvement in health care quality 
across the four post-acute care (PAC) settings to which the IMPACT Act 
applies. We intend to use these data for a number of purposes, 
including facilitating their exchange and longitudinal use among health 
care providers to enable high quality care and outcomes through care 
coordination, as well as for quality measure calculation, and 
identifying comorbidities that might increase the medical complexity of 
a particular admission.
    SNFs are currently required to report resident assessment data 
through the MDS by responding to an identical set of assessment 
questions using an identical set of response options (we refer to each 
solitary question/response option as a data element and we refer to a 
group of questions/response options on a single topic as a data 
element), both of which incorporate an identical set of definitions and 
standards. The primary purpose of the identical questions and response 
options is to ensure that we collect a set of standardized data 
elements across SNFs which we can then use for a number of purposes, 
including SNF payment and measure calculation for the SNF QRP.
    LTCHs, IRFs, and HHAs are also required to report patient 
assessment data through their applicable PAC assessment instruments, 
and they do so by responding to identical assessment questions 
developed for their respective settings using an identical set of 
response options (which incorporate an identical set of definitions and 
standards). Like the MDS, the questions and response options for each 
of these other PAC assessment instruments are standardized across the 
PAC provider type to which the PAC assessment instrument applies. 
However, the assessment questions and response options in the four PAC 
assessment instruments are not currently standardized with each other. 
As a result, questions and response options that appear on the MDS 
cannot be readily compared with questions and response options that 
appear, for example, on the Inpatient Rehabilitation Facility-Patient 
Assessment Instrument (IRF-PAI) the PAC assessment instrument used by 
IRFs. This is true even when the questions and response options are 
similar. This lack of

[[Page 21044]]

standardization across the four PAC provider types has limited our 
ability to compare one PAC provider type with another for purposes such 
as care coordination and quality improvement.
    To achieve a level of standardization across SNFs, LTCHs, IRFs, and 
HHAs that enables us to make comparisons between them, we are proposing 
to define ``standardized patient assessment data'' as patient or 
resident assessment questions and response options that are identical 
in all four PAC assessment instruments, and to which identical 
standards and definitions apply. Standardizing the questions and 
response options across the four PAC assessment instruments will also 
enable the data to be interoperable allowing it to be shared 
electronically, or otherwise, between PAC provider types. It will 
enable the data to be comparable for various purposes, including the 
development of cross-setting quality measures and to inform payment 
models that take into account patient characteristics rather than 
setting, as described in the IMPACT Act.
    We are inviting public comment on this proposed definition.
b. General Considerations Used for the Selection of Proposed 
Standardized Resident Assessment Data
    As part of our effort to identify appropriate standardized patient 
assessment data for purposes of collecting under the SNF QRP, we sought 
input from the general public, stakeholder community, and subject 
matter experts on items that would enable person-centered, high quality 
health care, as well as access to longitudinal information to 
facilitate coordinated care and improved beneficiary outcomes.
    To identify optimal data elements for standardization, our data 
element contractor organized teams of researchers for each category, 
and each team worked with a group of advisors made up of clinicians and 
academic researchers with expertise in PAC. Information-gathering 
activities were used to identify data elements, as well as key themes 
related to the categories described in section 1899B(b)(1)(B) of the 
Act. In January and February 2016, our data element contractor also 
conducted provider focus groups for each of the four PAC provider 
types, and a focus group for consumers that included current or former 
PAC patients and residents, caregivers, ombudsmen, and patient advocacy 
group representatives. The Development and Maintenance of Post-Acute 
Care Cross-Setting Standardized Patient Assessment Data Focus Group 
Summary Report is available at 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.
    Our data element contractor also assembled a 16-member TEP that met 
on April 7 and 8, 2016, and January 5 and 6, 2017, in Baltimore, 
Maryland, to provide expert input on data elements that are currently 
in each PAC assessment instrument, as well as data elements that could 
be standardized. The Development and Maintenance of Post-Acute Care 
Cross-Setting Standardized Patient Assessment Data TEP Summary Reports 
are available at 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.
    As part of the environmental scan, data elements currently in the 
four existing PAC assessment instruments were examined to see if any 
could be considered for proposal as standardized patient assessment 
data. Specifically, this evaluation included consideration of data 
elements in OASIS-C2 (effective January 2017); IRF-PAI, v1.4 (effective 
October 2016); LCDS, v3.00 (effective April 2016); and MDS 3.0, v1.14 
(effective October 2016). Data elements in the standardized assessment 
instrument that we tested in the Post-Acute Care Payment Reform 
Demonstration (PAC PRD)--the Continuity Assessment Record and 
Evaluation (CARE) were also considered. A literature search was also 
conducted to determine whether additional data elements to propose as 
standardized patient assessment data could be identified.
    We additionally held four Special Open Door Forums (SODFs) on 
October 27, 2015; May 12, 2016; September 15, 2016; and December 8, 
2016, to present data elements we were considering and to solicit 
input. At each SODF, some stakeholders provided immediate input, and 
all were invited to submit additional comments via the CMS IMPACT 
Mailbox at PACQualityInitiative@cms.hhs.gov.
    We also convened a meeting with federal agency subject matter 
experts (SMEs) on May 13, 2016. In addition, a public comment period 
was open from August 12, to September 12, 2016, to solicit comments on 
detailed candidate data element descriptions, data collection methods, 
and coding methods. The IMPACT Act Public Comment Summary Report 
containing the public comments (summarized and verbatim) and our 
responses, is available at 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.
    We specifically sought to identify standardized patient assessment 
data that we could feasibly incorporate into the LTCH, IRF, SNF, and 
HHA assessment instruments and that have the following attributes: (1) 
Being supported by current science; (2) testing well in terms of their 
reliability and validity, consistent with findings from the Post-Acute 
Care Payment Reform Demonstration (PAC PRD); (3) the potential to be 
shared (for example, through interoperable means) among PAC and other 
provider types to facilitate efficient care coordination and improved 
beneficiary outcomes; (4) the potential to inform the development of 
quality, resource use and other measures, as well as future payment 
methodologies that could more directly take into account individual 
beneficiary health characteristics; and (5) the ability to be used by 
practitioners to inform their clinical decision and care planning 
activities. We also applied the same considerations that we apply with 
quality measures, including the CMS Quality Strategy which is framed 
using the three broad aims of the National Quality Strategy.
4. Policy for Retaining SNF QRP Measures and Proposal To Apply That 
Policy to Standardized Patient Assessment Data
    In the FY 2016 SNF PPS final rule (80 FR 46431 through 46432), we 
finalized our policy for measure removal and also finalized that when 
we initially adopt a measure for the SNF QRP, this measure will be 
automatically retained in the SNF QRP for all subsequent payment 
determinations unless we propose to remove, suspend, or replace the 
measure. We propose to apply this policy to the standardized patient 
assessment data that we adopt for the SNF QRP.
    We are inviting public comment on our proposal.
5. Policy for Adopting Changes to SNF QRP Measures and Proposal To 
Apply That Policy to Standardized Patient Assessment Data
    In the FY 2016 SNF PPS final rule (80 FR 46432), we finalized our 
policy pertaining to the process for adoption of non-substantive and 
substantive changes to SNF QRP measures. We did not propose to make any 
changes to this

[[Page 21045]]

policy. We propose to apply this policy to the standardized patient 
assessment data that we adopt for the SNF QRP.
    We are inviting public comment on our proposal.
6. Quality Measures Currently Adopted for the SNF QRP
    The SNF QRP currently has seven adopted measures as outlined in 
Table 18.

      Table 18--Quality Measures Currently Adopted for the SNF QRP
------------------------------------------------------------------------
               Short name                   Measure name & data source
------------------------------------------------------------------------
             Resident Assessment Instrument Minimum Data Set
------------------------------------------------------------------------
Pressure Ulcers........................  Percent of Residents or
                                          Patients with Pressure Ulcers
                                          that are New or Worsened
                                          (Short Stay) (NQF #0678)
Application of Falls...................  Application of the NQF-endorsed
                                          Percent of Residents
                                          Experiencing One or More Falls
                                          with Major Injury (Long Stay)
                                          (NQF #0674)
Application of Functional Assessment/    Application of Percent of LTCH
 Care Plan.                               Patients with an Admission and
                                          Discharge Functional
                                          Assessment and a Care Plan
                                          That Addresses Function (NQF
                                          #2631)
DRR....................................  Drug Regimen Review Conducted
                                          with Follow-Up for Identified
                                          Issues-Post Acute Care (PAC)
                                          Skilled Nursing Facility
                                          Quality Reporting Program *
------------------------------------------------------------------------
                              Claims-based
------------------------------------------------------------------------
MSPB...................................  Total Estimated Medicare
                                          Spending Per Beneficiary
                                          (MSPB)--Post Acute Care (PAC)
                                          Skilled 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 Quality Reporting
                                          Program *
------------------------------------------------------------------------
* Not currently NQF-endorsed for the SNF Setting.

7. SNF QRP Quality Measures Proposed Beginning With the FY 2020 SNF QRP
    Beginning with the FY 2020 SNF QRP, in addition to the quality 
measures we are retaining under our policy described in section V.B.6. 
of this proposed rule, we are proposing to remove the current pressure 
ulcer measure entitled Percent of Residents or Patients with Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678) and to replace 
it with a modified version of the measure entitled Changes in Skin 
Integrity Post-Acute Care: Pressure Ulcer/Injury and to adopt four 
function outcome measures on resident functional status. We are also 
proposing to characterize the data elements described below as 
standardized patient assessment data under section 1899B(b)(1)(B) of 
the Act that must be reported by SNFs under the SNF QRP through the MDS
    The proposed measures are as follows:
     Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury
     Application of IRF Functional Outcome Measure: Change in 
Self-Care Score for Medical Rehabilitation Patients (NQF #2633).
     Application of IRF Functional Outcome Measure: Change in 
Mobility Score for Medical Rehabilitation Patients (NQF #2634).
     Application of IRF Functional Outcome Measure: Discharge 
Self-Care Score for Medical Rehabilitation Patients (NQF #2635).
     Application of IRF Functional Outcome Measure: Discharge 
Mobility Score for Medical Rehabilitation Patients (NQF #2636).
    The measures are described in more detail below.
a. Proposal To Replace the Current Pressure Ulcer Quality Measure, 
Percent of Residents or Patients With Pressure Ulcers That Are New or 
Worsened (Short Stay) (NQF #0678), With a Modified Pressure Ulcer 
Measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury
(1) Measure Background
    In this proposed rule, we are proposing to remove the current 
pressure ulcer measure, Percent of Residents or Patients with Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678) from the SNF 
QRP measure set and to replace it with a modified version of that 
measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury, beginning with the FY 2020 SNF QRP. The change in the measure 
name is to reduce confusion about the new modified measure. The 
modified version differs from the current version of the measure 
because it includes new or worsened unstageable pressure ulcers, 
including deep tissue injuries (DTIs), in the measure numerator. The 
modified version of the measure would satisfy the IMPACT Act domain of 
skin integrity and changes in skin integrity.
    We note that the technical specifications for the pressure ulcer 
measure were updated in August 2016 through a subregulatory process to 
ensure technical alignment of the SNF measure specifications with the 
LTCH, IRF, and HH specifications. The technical updates were added to 
ensure clarity in how the measure is calculated, and to avoid possible 
over counting of pressure ulcers in the numerator. In summary, we 
corrected the technical specifications to mitigate the risk of over 
counting new or worsened pressure ulcers and to reflect the actual unit 
of analysis as finalized in the rule, which is a stay (Medicare Part A 
stay) for SNF QRP, consistent with the IRF, and LTCH QRPs, rather than 
an episode (which could include multiple stays) as is used in the case 
of Nursing Home Compare. Thus, we updated the SNF measure 
specifications to reflect all resident stays, rather than the most-
recent episode in a quarter, which is comprised of one or more stays in 
that measure calculation. Also to ensure alignment, we corrected our

[[Page 21046]]

specifications to ensure that healed wounds are not incorrectly 
captured in the measure. Further, we corrected the specifications to 
ensure the exclusion of residents who expire during their SNF stay. The 
SNF specifications can be reviewed on our Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
(2) Measure Importance
    As described in the FY 2016 SNF PPS final rule (80 FR 46433), 
pressure ulcers are high-cost adverse events and are an important 
measure of quality. For information on the history and rationale for 
the relevance, importance, and applicability of having a pressure ulcer 
measure in the SNF QRP, we refer readers to the FY 2016 SNF PPS final 
rule (80 FR 46433 through 46434).
    We are proposing to adopt a modified version of the current 
pressure ulcer measure because unstageable pressure ulcers, including 
DTIs, are similar to Stage 2, Stage 3, and Stage 4 pressure ulcers in 
that they represent poor outcomes, are a serious medical condition that 
can result in death and disability, are debilitating and painful, and 
are often an avoidable outcome of medical care.6 7 8 9 10 11 
Studies show that most pressure ulcers can be avoided and can also be 
healed in acute, post-acute, and long-term care settings with 
appropriate medical care.\12\ Furthermore, some studies indicate that 
DTIs, if managed using appropriate care, can be resolved without 
deteriorating into a worsened pressure ulcer.13 14 While 
DTIs are a subset of unstageable pressure ulcers, we collect DTI data 
elements separately and analyze them both separately and with other 
unstageable pressure ulcer item categories in our analysis below. We 
note that DTIs are categorized as a type of unstageable pressure ulcer 
on the MDS and other post-acute care item sets.
---------------------------------------------------------------------------

    \6\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs N Z 19(10): 20-24.
    \7\ Gorzoni, M.L. and S.L. Pires (2011). ``Deaths in nursing 
homes.'' Rev Assoc Med Bras 57(3): 327-331.
    \8\ Thomas, J.M., et al. (2013). ``Systematic review: Health-
related characteristics of elderly hospitalized adults and nursing 
home residents associated with short-term mortality.'' J Am Geriatr 
Soc 61(6): 902-911.
    \9\ White-Chu, E.F., et al. (2011). ``Pressure ulcers in long-
term care.'' Clin Geriatr Med 27(2): 241-258.
    \10\ Bates-Jensen B.M. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \11\ Bennet, G., Dealy, C. Posnett, J. (2004). The cost of 
pressure ulcers in the UK, Age and Aging, 33(3):230-235.
    \12\ Black, Joyce M., et al. ``Pressure ulcers: Avoidable or 
unavoidable? Results of the national pressure ulcer advisory panel 
consensus conference.'' Ostomy-Wound Management 57.2 (2011): 24.
    \13\ Sullivan, R. (2013). A Two-year Retrospective Review of 
Suspected Deep Tissue Injury Evolution in Adult Acute Care Patients. 
Ostomy Wound Management 59(9) https://www.o-wm.com/article/two-year-retrospective-review-suspected-deep-tissue-injury-evolution-adult-acute-care-patien
    \14\ Posthauer, M.E., Zulkowski, K. (2005). Special to OWM: The 
NPUAP Dual Mission Conference: Reaching Consensus on Staging and 
Deep Tissue Injury. Ostomy Wound Management 51(4) https://www.o-wm.com/content/the-npuap-dual-mission-conference-reaching-consensus-staging-and-deep-tissue-injury
---------------------------------------------------------------------------

    While there are few studies that provide information regarding the 
incidence of unstageable pressure ulcers in PAC settings, an analysis 
conducted by a contractor suggests the incidence of unstageable 
pressure ulcers varies according to the type of unstageable pressure 
ulcer and setting. This analysis examined the national incidence of new 
unstageable pressure ulcers in SNFs at discharge compared with 
admission using SNF discharges from January through December 2015. The 
contractor found a national incidence of 0.40 percent of new 
unstageable pressure ulcers due to slough and/or eschar, 0.02 percent 
of new unstageable pressure ulcers due to non-removable dressing/
device, and 0.57 percent of new DTIs. In addition, an international 
study spanning the time period 2006 to 2009, provides some evidence to 
suggest that the proportion of pressure ulcers identified as DTI has 
increased over time. The study found DTIs increased by three fold, to 
nine percent of all observed ulcers in 2009, and that DTIs were more 
prevalent than either Stage 3 or 4 ulcers. During the same time period, 
the proportion of Stage 1 and 2 ulcers decreased, and the proportion of 
Stage 3 and 4 ulcers remained constant.\15\
---------------------------------------------------------------------------

    \15\ VanGilder, C., MacFarlane, G.D., Harrison, P., Lachenbruch, 
C., Meyer, S. (2010). The Demographics of Suspected Deep Tissue 
Injury in the United States: An Analysis of the International 
Pressure Ulcer Prevalence Survey 2006-2009. Advances in Skin & Wound 
Care. 23(6): 254-261.
---------------------------------------------------------------------------

    The inclusion of unstageable pressure ulcers, including DTIs, in 
the numerator of this measure is expected to increase measure scores 
and variability in measure scores, thereby improving the ability to 
discriminate among poor- and high-performing SNFs. In the currently 
implemented pressure ulcer measure, Percent of Residents or Patients 
with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), 
analysis using data from Quarter 4 2015 through Quarter 3 2016 reveals 
that (the SNF mean score is 1.75 percent; the 25th and 75th percentiles 
are 0.0 percent and 2.53 percent, respectively; and 29.11 percent of 
facilities have perfect scores. In the proposed measure, Changes in 
Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, during the same 
timeframe, the SNF mean score is 2.58 percent; the 25th and 75th 
percentiles are 0.65 percent and 3.70 percent, respectively; and 20.32 
percent of facilities have perfect scores.
(3) Stakeholder Feedback
    Our measure development contractor sought input from subject matter 
experts, including Technical Expert Panels (TEPs), over the course of 
several years on various skin integrity topics and specifically those 
associated with the inclusion of unstageable pressure ulcers, including 
DTIs. Most recently, on July 18, 2016, a TEP convened by our measure 
development contractor provided input on the technical specifications 
of this proposed quality measure, including the feasibility of 
implementing the proposed measure's updates related to the inclusion of 
unstageable ulcers, including DTIs, across PAC settings. The TEP 
supported the updates to the measure across PAC settings, including the 
inclusion in the numerator of unstageable pressure ulcers due to slough 
and/or eschar that are new or worsened, new unstageable pressure ulcers 
due to a non-removable dressing or device, and new DTIs. The TEP 
recommended supplying additional guidance to providers regarding each 
type of unstageable pressure ulcer. This support was in agreement with 
earlier TEP meetings, held on June 13, and November 15, 2013, which had 
recommended that CMS update the specifications for the pressure ulcer 
measure to include unstageable pressure ulcers in the 
numerator.16 17 Exploratory

[[Page 21047]]

data analysis conducted by our measure development contractor suggests 
that the addition of unstageable pressure ulcers, including DTIs, will 
increase the observed incidence and variation in the rate of new or 
worsened pressure ulcers at the facility level, which may improve the 
ability of the proposed quality measure to discriminate between poor- 
and high-performing facilities.
---------------------------------------------------------------------------

    \16\ Schwartz, M., Nguyen, K.H., Swinson Evans, T.M., Ignaczak, 
M.K., Thaker, S., and Bernard, S.L.: Development of a Cross-Setting 
Quality Measure for Pressure Ulcers: OY2 Information Gathering, 
Final Report. Centers for Medicare & Medicaid Services, November 
2013. Available: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Quality-Measure-for-Pressure-Ulcers-Information-Gathering-Final-Report.pdf.
    \17\ Schwartz, M., Ignaczak, M.K., Swinson Evans, T.M., Thaker, 
S., and Smith, L.: The Development of a Cross-Setting Pressure Ulcer 
Quality Measure: Summary Report on November 15, 2013, Technical 
Expert Panel Follow-Up Webinar. Centers for Medicare & Medicaid 
Services, January 2014. Available: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Pressure-Ulcer-Quality-Measure-Summary-Report-on-November-15-2013-Technical-Expert-Pa.pdf.
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    We solicited stakeholder feedback on this proposed measure by means 
of a public comment period held from October 17 through November 17, 
2016. In general, we received considerable support for the proposed 
measure. A few commenters supported all of the changes to the current 
pressure ulcer measure that resulted in the proposed measure, with one 
commenter noting the significance of the work to align the pressure 
ulcer quality measure specifications across the PAC settings.
    Many commenters supported the inclusion of unstageable pressure 
ulcers due to slough/eschar, due to non-removable dressing/device, and 
DTIs in the proposed quality measure. Other commenters did not support 
the inclusion of DTIs in the proposed quality measure because they 
stated that there is no universally accepted definition for this type 
of skin injury.
    The public comment summary report for the proposed measure is 
available on the CMS Web site at 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. 
This summary includes further detail about our responses to various 
concerns and ideas stakeholders raised at that time.
    The NQF-convened Measures Application Partnership (MAP) Post-Acute 
Care/Long-Term Care (PAC/LTC) Workgroup met on December 14 and 15, 
2016, and provided input to us about this proposed measure. The 
workgroup provided a recommendation of ``support for rulemaking'' for 
use of the proposed measure in the SNF QRP. The MAP Coordinating 
Committee met on January 24 and 25, 2017, and provided a recommendation 
of ``conditional support for rulemaking'' for use of the proposed 
measure in the SNF QRP. The MAP's conditions of support include that, 
as a part of measure implementation, CMS provide guidance on the 
correct collection and calculation of the measure result, as well as 
guidance on public reporting Web sites explaining the impact of the 
specification changes on the measure result. The MAP's conditions also 
specify that CMS continue analyzing the proposed measure in order to 
investigate unexpected results reported in public comment. We intend to 
fulfill these conditions by offering additional training opportunities 
and educational materials in advance of public reporting, and by 
continuing to monitor and analyze the proposed measure. More 
information about the MAP's recommendations for this measure is 
available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=84452.
    We reviewed the NQF's consensus endorsed measures and were unable 
to identify any NQF-endorsed pressure ulcer quality measures for PAC 
settings that are inclusive of unstageable pressure ulcers. There are 
related measures, but after careful review, we determined these 
measures are not applicable for use in SNFs based on the populations 
addressed or other aspects of the specifications. We are unaware of any 
other such quality measures that have been endorsed or adopted by 
another consensus organization for the SNF setting. Therefore, based on 
the evidence discussed above, we are proposing to adopt the quality 
measure entitled, Changes in Skin Integrity Post-Acute Care: Pressure 
Ulcer/Injury, for the SNF QRP beginning with the FY 2020 SNF QRP. We 
plan to submit the proposed measure to the NQF for endorsement 
consideration as soon as feasible.
(4) Data Collection
    The data for this quality measure would be collected using the MDS, 
which is currently submitted by SNFs through the Quality Improvement 
and Evaluation System (QIES) Assessment Submission and Processing 
(ASAP) System. The proposed standardized resident assessment data 
applicable to this measure that must be reported by SNFs for 
admissions, as well as discharges occurring on or after October 1, 2018 
is described in section V.B.11.d. of this proposed rule. SNFs are 
already required to complete unstageable pressure ulcer data elements 
on the MDS. While the inclusion of unstageable wounds in the proposed 
measure results in a measure calculation methodology that is different 
from the methodology used to calculate the current pressure ulcer 
measure, the data elements needed to calculate the proposed measure are 
already included in the MDS. In addition, this proposed measure will 
further standardize the data elements used in risk adjustment of this 
measure. Our proposal to eliminate duplicative data elements will 
result in an overall reduced reporting burden for SNFs for the proposed 
measure. To view the updated MDS, with the proposed changes, we refer 
to the reader to https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/nursinghomequalityinits/mds30raimanual.html For more information on MDS submission using the 
QIES ASAP System, we refer readers to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/NHQIMDS30TechnicalInformation.html.
    For technical information about this proposed measure, including 
information about the measure calculation and the standardized patient 
assessment data elements used to calculate this measure, we refer 
readers to the document titled, Proposed Measure Specifications for SNF 
QRP Measures in the FY 2018 SNF PPS proposed rule, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    We are proposing that SNFs begin reporting the proposed pressure 
ulcer measure, Changes in Skin Integrity Post-Acute Care: Pressure 
Ulcer/Injury, which will replace the current pressure ulcer measure, 
with data collection beginning October 1, 2018 for admissions as well 
as discharges.
    We are inviting public comment on our proposal to replace the 
current pressure ulcer measure, Percent of Residents or Patients with 
Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678), with 
a modified version of that measure, entitled Changes in Skin Integrity 
Post-Acute Care: Pressure Ulcer/Injury, beginning with the FY 2020 SNF 
QRP.
b. Proposed Functional Outcome Measures
    In this proposed rule, we propose to adopt for the SNF QRP four 
measures that we are specifying under section 1899B(c)(1) of the Act 
for purposed of meeting the functional status, cognitive function, and 
changes in function and cognitive function domain: (1) Application of 
the IRF Functional Outcome Measure: Change in Self-Care Score for 
Medical Rehabilitation Patients (NQF #2633); (2) Application of the IRF 
Function Outcome Measure: Change in Mobility Score for Medical 
Rehabilitation Patients (NQF #2634); (3) Application of the IRF 
Function Outcome Measure: Discharge Self-Care Score for Medical 
Rehabilitation

[[Page 21048]]

Patients (NQF #2635); and (4) Application of the IRF Function Outcome 
Measure: Discharge Mobility Score for Medical Rehabilitation Patients 
(NQF #2636). We finalized the same functional outcome measures for the 
IRF QRP in the FY 2016 IRF PPS final rule (80 FR 47111 through 47117). 
These measures are: (1) IRF Functional Outcome Measure: Change in Self-
Care for Medical Rehabilitation Patients (NQF #2633); (2) IRF 
Functional outcome Measure: Change in Mobility Score for Medical 
Rehabilitation (NQF #2634); (3) IRF Functional Outcome Measure: 
Discharge Self-Care Score for Medical Rehabilitation Patients (NQF 
#2635); and (4) IRF Functional Outcome Measure: Discharge Mobility 
Score for Medical Rehabilitation Patients (NQF #2636). We believe these 
measures satisfy section 1899B(c)(1)(A) of the Act because they address 
functional status, cognitive function, and changes in function and 
cognitive function domain. We intend to propose functional outcome 
measures for the home health and long-term care hospital settings in 
the future.
    In developing these SNF functional outcome quality measures, we 
sought to build on our cross-setting function work by leveraging data 
elements currently collected in the MDS section GG, which would 
minimize additional data collection burden while increasing the 
feasibility of cross-setting item comparisons.
    SNFs provide skilled services, such as skilled nursing or therapy 
services. Residents receiving care in SNFs include those whose illness, 
injury, or condition has resulted in a loss of function, and for whom 
rehabilitative care is expected to help regain that function. Treatment 
goals may include fostering residents' ability to manage their daily 
activities so that they can complete self-care and mobility activities 
as independently as possible, and, if feasible, return to a safe, 
active, and productive life in a community-based setting. Given that 
the primary goal of many SNF residents is improvement in function, SNF 
clinicians assess and document residents' functional status at 
admission and at discharge to evaluate not only the effectiveness of 
the rehabilitation care provided to individual residents but also the 
effectiveness of the SNF.
    Examination of SNF data shows that SNF treatment practices directly 
influence resident outcomes. For example, therapy services provided to 
SNF residents have been found to be correlated with the functional 
improvement that SNF residents achieve (that is, functional 
outcomes).\18\ Several studies found patients' functional outcomes vary 
based on treatment by physical and occupational therapists. 
Specifically, therapy was associated with significantly greater odds of 
improving mobility and self-care functional independence,\19\ shorter 
length of stay,\20\ and a greater likelihood of discharge to 
community.\21\ Furthermore, Jung et al.\22\ found that an additional 
hour of therapy treatment per week was associated with approximately a 
3.1 percentage-point increase in the likelihood of returning to the 
community among residents with a hip fracture. Achieving these targeted 
resident outcomes, including improved self-care and mobility functional 
independence, reduced length of stay, and increased discharges to the 
community, is a core goal of SNFs.
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    \18\ Jette, D.U., R.L. Warren, & C. Wirtalla. (2005). The 
relation between therapy intensity and outcomes of rehabilitation in 
skilled nursing facilities. Archives of Physical Medicine and 
Rehabilitation, 86 (3), 373-9.
    \19\ Lenze, E.J., Host, H.H., Hildebrand, M.W., Morrow-Howell, 
N., Carpenter, B., Freedland, K.E., . . . & Binder, E.F. (2012). 
Enhanced medical rehabilitation increases therapy intensity and 
engagement and improves functional outcomes in post acute 
rehabilitation of older adults: A randomized-controlled trial. 
Journal of the American Medical Directors Association, 13(8), 708-
712.
    \20\ Medicare Payment Advisory Commission (US). (2016). Report 
to the Congress: Medicare payment policy. Medicare Payment Advisory 
Commission.
    \21\ Cary, M.P., Pan, W., Sloane, R., Bettger, J.P., Hoenig, H., 
Merwin, E.I., & Anderson, R.A. (2016). Self-Care and Mobility 
Following Postacute Rehabilitation for Older Adults With Hip 
Fracture: A Multilevel Analysis. Archives of Physical Medicine and 
Rehabilitation. https://doi.org/10.1016/j.apmr.2016.01.012.
    \22\ Jung, H.Y., Trivedi, A.N., Grabowski, D.C., & Mor, V. 
(2016). Does More Therapy in Skilled Nursing Facilities Lead to 
Better Outcomes in Patients With Hip Fracture? Physical therapy, 
96(1), 81-89.
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    Among SNF residents receiving rehabilitation services, the amount 
of treatment received can vary. For example, the amount of therapy 
treatment provided varies by type (that is, for-profit versus not-for-
profit) and location (that is, urban versus rural) of 
facility.23 24 Measuring residents' functional improvement 
across all SNFs on an ongoing basis would permit identification of SNF 
characteristics, such as ownership types or locations, associated with 
better or worse resident risk adjusted outcomes and thus help SNFs 
optimally target quality improvement efforts.
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    \23\ Grabowski, D.C., Feng, Z., Hirth, R., Rahman, M., & Mor, V. 
(2013). Effect of nursing home ownership on the quality of post-
acute care: An instrumental variables approach. Journal of Health 
Economics, 32(1), 12-21.
    \24\ Medicare Payment Advisory Commission (US). (2016). Report 
to the Congress: Medicare payment policy. Medicare Payment Advisory 
Commission.
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    MedPAC \25\ noted that while there was an overall increase in the 
share of intensive therapy days between 2002 and 2012, the for-profit 
and urban facilities had higher shares of intensive therapy than not-
for-profit facilities and those located in rural areas. Data from 2011 
to 2014 indicate that this variation is not explained by patient 
characteristics, such as activities of daily living, comorbidities and 
age, as SNF residents with stays in 2011 were more independent on 
average than the average SNF resident with stays in 2014. Because more 
intense therapy is associated with more functional improvement for 
certain beneficiaries, this variation in rehabilitation services 
supports the need to monitor SNF residents' functional outcomes. 
Therefore, we believe there is an opportunity for improvement in this 
area.
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    \25\ Medicare Payment Advisory Commission (US). (2016). Report 
to the Congress: Medicare payment policy. Medicare Payment Advisory 
Commission.
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    In addition, a recent analysis that examined the incidence, 
prevalence, and costs of common rehabilitation conditions found that 
back pain, osteoarthritis, and rheumatoid arthritis are the most common 
and costly conditions affecting more than 100 million individuals and 
costing more than $200 billion per year.\26\ Persons with these medical 
conditions are admitted to SNFs for rehabilitation treatment.
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    \26\ Ma V.Y., Chan L., Carruthers K.J. Incidence, Prevalence, 
Costs, and Impact on Disability of Common Conditions Requiring 
Rehabilitation in the United States: Stroke, Spinal Cord Injury, 
Traumatic Brain Injury, Multiple Sclerosis, Osteoarthritis, 
Rheumatoid Arthritis, Limb Loss, and Back Pain. Archives of Phys Med 
and Rehab 2014
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    The use of standardized mobility and self-care data elements would 
standardize the collection of functional status data, which could 
improve communication when residents are transferred between providers. 
Most SNF residents receive care in an acute care hospital prior to the 
SNF stay, and many SNF residents receive care from another provider 
after the SNF stay.
    Recent research provides empirical support for the risk adjustment 
variables for these quality measures. In a study of resident functional 
improvement in SNFs, Wysocki et al.\27\ found that several resident 
conditions were significantly related to resident

[[Page 21049]]

functional improvement, including cognitive impairment, delirium, 
dementia, heart failure, and stroke. Also, Cary et al. found that 
several resident characteristics were significantly related to resident 
functional improvement, including age, cognitive function, self-care 
function at admission, and comorbidities.\28\
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    \27\ Wysocki, A., Thomas, K.S., & Mor, V. (2015). Functional 
Improvement Among Short-Stay Nursing Home Residents in the MDS 3.0. 
Journal of the American Medical Directors Association, 16(6), 470-
474. https://doi.org/10.1016/j.jamda.2014.11.018.
    \28\ Cary, M.P., Pan, W., Sloane, R., Bettger, J.P., Hoenig, H., 
Merwin, E.I., & Anderson, R.A. (2016). Self-Care and Mobility 
Following Postacute Rehabilitation for Older Adults With Hip 
Fracture: A Multilevel Analysis. Archives of Physical Medicine and 
Rehabilitation. https://doi.org/10.1016/j.apmr.2016.01.012.
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    These proposed outcome-based quality measures could inform SNF 
providers about opportunities to improve care in the area of function 
and strengthen incentives for quality improvement related to resident 
function.
    We describe each of the four proposed functional outcome quality 
measures below. We note that the outcome-based quality measures we are 
proposing in this proposed rule assess self-care and mobility 
activities. We recognize that SNFs can focus on recovery across many 
areas of resident functioning related to body structure and function, 
activities, and participation; however, additional research is 
warranted to develop quality measures for other areas of functioning.
(a) Application of IRF Functional Outcome Measure: Change in Self-Care 
Score for Medical Rehabilitation Patients (NQF #2633)
    The proposed outcome quality measure, Application of IRF Functional 
Outcome Measure: Change in Self-Care Score for Medical Rehabilitation 
Patients (NQF #2633), is an application of the outcome measure 
finalized in the IRF QRP entitled, IRF Functional Outcome Measure: 
Change in Self-Care Score for Medical Rehabilitation Patients (NQF 
#2633). The proposed quality measure estimates the mean risk-adjusted 
improvement in self-care score between admission and discharge among 
SNF residents. A summary of the NQF-endorsed quality measure 
specifications can be accessed on the NQF Web site: https://www.qualityforum.org/qps/2633. Detailed specifications for the NQF-
endorsed quality measure can be accessed at https://www.qualityforum.org/ProjectTemplateDownload.aspx?SubmissionID=2633.
    The proposed functional outcome measure, the Application of IRF 
Functional Outcome Measure: Change in Self-Care Score for Medical 
Rehabilitation Patients (NQF #2633), requires the collection of 
admission and discharge functional status data by trained clinicians 
using standardized patient data elements that assess specific 
functional self-care activities such as shower/bathe self, dressing 
upper body and dressing lower body. These self-care items are daily 
activities that clinicians typically assess at the time of admission 
and/or discharge to determine residents' needs, evaluate resident 
progress, and/or prepare residents and families for a transition to 
home or to another provider. The standardized self-care function data 
elements are coded using a 6-level rating scale that indicates the 
resident's level of independence with the activity; higher scores 
indicate more independence. The proposed outcome quality measure also 
requires the collection of risk factor data, such as resident 
functioning prior to the current reason for admission, bladder 
continence, communication ability and cognitive function, at the time 
of admission.
    The data elements included in the proposed quality measure were 
originally developed and tested as part of the PAC PRD version of the 
Continuity Assessment Record and Evaluation (CARE) Item Set,\29\ which 
was designed to standardize assessment of patients' and residents' 
status across acute and post-acute providers, including IRFs, SNFs, 
HHAs and LTCHs. The development of the CARE Item Set and a description 
and rationale for each item is described in a report entitled ``The 
Development and Testing of the Continuity Assessment Record and 
Evaluation (CARE) Item Set: Final Report on the Development of the CARE 
Item Set: Volume 1 of 3.'' \30\ Reliability and validity testing were 
conducted as part of CMS' Post-Acute Care Payment Reform Demonstration, 
and we concluded that the functional status items have acceptable 
reliability and validity. A description of the testing methodology and 
results are available in several reports, including the report entitled 
``The Development and Testing of the Continuity Assessment Record And 
Evaluation (CARE) Item Set: Final Report On Reliability Testing: Volume 
2 of 3 \31\ and the report entitled ``The Development and Testing of 
The Continuity Assessment Record And Evaluation (CARE) Item Set: Final 
Report on Care Item Set and Current Assessment Comparisons: Volume 3 of 
3.'' \32\ The reports are available on CMS' Post-Acute Care Quality 
Initiatives Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html.
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    \29\ Barbara Gage et al., ``The Development and Testing of the 
Continuity Assessment Record and Evaluation (CARE) Item Set: Final 
Report on the Development of the CARE Item Set'' (RTI International, 
2012).
    \30\ Barbara Gage et al., ``The Development and Testing of the 
Continuity Assessment Record and Evaluation (CARE) Item Set: Final 
Report on the Development of the CARE Item Set'' (RTI International, 
2012).
    \31\ Ibid.
    \32\ Ibid.
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(i) Stakeholder Input
    A cross-setting function TEP convened by our measure development 
contractor on September 9, 2013 provided input on the initial technical 
specifications of this proposed quality measure, Application of IRF 
Functional Outcome Measure: Change in Self-Care Score for Medical 
Rehabilitation Patients (NQF #2633). The TEP was supportive of the 
implementation of this measure and supported CMS's efforts to 
standardize patient/resident assessment data elements. The TEP summary 
report is available at 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.
    The MAP met on December 14 and 15, 2015, and provided input on the 
proposed measure, Application of IRF Functional Outcome Measure: Change 
in Self-Care Score for Medical Rehabilitation Patients (NQF #2633) for 
use in the SNF QRP. The MAP recognized that this proposed quality 
outcome measure is an adaptation of a currently endorsed measure for 
the IRF population, and encouraged continued development to ensure 
alignment of this measure across PAC settings. The MAP noted there 
should be some caution in the interpretation of measure results due to 
resident differentiation between facilities. The MAP also noted 
possible duplication as the MDS already includes function data 
elements. We note that the data elements for the proposed measure are 
similar, but not the same as the existing MDS Section G function data 
elements. The data elements for the proposed measure include those that 
are the proposed standardized patient assessment data for functional 
status under section 1899B(b)(1)(B)(i) of the Act. The MAP also 
stressed the importance of considering burden on providers when 
measures are considered for implementation. The MAP's overall 
recommendation was for ``encourage further development.'' More 
information about the MAP's recommendations for

[[Page 21050]]

this proposed measure is available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    Since the MAP's review and recommendation for further development, 
we have continued to develop this measure by soliciting input via a 
TEP, providing a public comment opportunity, and providing an update on 
measure development to the MAP via the feedback loop. More 
specifically, our measure development contractor convened a SNF-
specific function TEP on May 5, 2016, to provide further input on the 
technical specifications of this proposed quality measure by reviewing 
the IRF specifications and the specifications of competing and related 
function quality measures. Overall, the TEP was supportive of the 
measure and supported our efforts to standardize patient assessment 
data elements. The SNF-specific function TEP summary report is 
available at 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.
    We also solicited stakeholder feedback on the development of this 
measure by means of a public comment period that was open from October 
7, 2016, until November 4, 2016. There was general support of the 
measure concept and the importance of functional improvement. Comments 
on the measure varied, with some commenters supportive of the measure, 
while others were either not in favor of the measure, or in favor of 
suggested potential modifications to the measure specifications. The 
public comment summary report for the proposed measure is available on 
the CMS Web site at 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.
    Further, we engaged with stakeholders when we presented an update 
on the development of this quality measure to the MAP on October 19, 
2016, during a MAP feedback loop meeting. Slides from that meeting are 
available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=83640.
(ii) Competing and Related Measures and Measure Justification
    During the development of this proposed functional outcome measure, 
we have monitored and reviewed NQF-endorsed measures that are competing 
and/or related to the proposed quality measures. We identified six 
competing and related quality measures focused on self-care functional 
improvement for residents in the SNF setting entitled: (1) CARE: 
Improvement in Self Care (NQF #2613); (2) Functional Change: Change in 
Self-Care Score for Skilled Nursing Facilities (NQF #2769); (3) 
Functional Status Change for Patients with Shoulder Impairments (NQF 
#0426); (4) Functional Status Change for Patients with Elbow, Wrist and 
Hand Impairments (NQF #0427); (5) Functional Status Change for Patients 
with General Orthopedic Impairments (NQF #0428); and (6) Change in 
Daily Activity Function as Measures by the AM-PAC (NQF #0430). We 
reviewed the technical specifications for these six quality measures 
and compared these specifications to those of our proposed outcome-
based quality measure, the Application of IRF Functional Outcome 
Measure: Change in Self-Care Score for Medical Rehabilitation Patients 
(NQF #2633), and have noted the following differences in the technical 
specifications: (1) The number of risk adjustors and variance explained 
by these risk adjustors in the regression models; (2) the use of 
functional assessment items that were developed and tested for cross-
setting use; (3) the use of items that are already on the MDS 3.0 and 
what this means for burden; (4) the handling of missing functional 
status data; and (5) the use of exclusion criteria that are baseline 
clinical conditions. We describe these key specifications of the 
proposed outcome measure, Application of IRF Functional Outcome 
Measure: Change in Self-Care Score for Medical Rehabilitation Patients 
(NQF #2633), in detail below.
    Our literature review, input from technical expert panels, public 
comment feedback, and data analyses demonstrated the importance of 
adequate risk adjustment of admission case mix factors for functional 
outcome measures. Inadequate risk adjustment of admission case mix 
factors may lead to erroneous conclusions about the quality of care 
delivered within the facility, and thus is a potential threat to the 
validity of a quality measure that examines outcomes of care, such as 
functional outcomes. The proposed quality measure, the Application of 
IRF Functional Outcome Measure: Change in Self-Care Score for Medical 
Rehabilitation Patients (NQF #2633) risk adjusts for more than 60 risk 
factors, explaining approximately 25 percent of the variance in change 
in function, and includes all of the following risk factors: Prior 
functioning, prior device use, age, functional status at admission, 
primary diagnosis, and comorbidities. These risk factors are key 
predictors of functional performance and should be accounted for in any 
facility-level comparison of functional outcomes.
    Another key feature of the proposed measure, the Application of IRF 
Functional Outcome Measure: Change in Self-Care Score for Medical 
Rehabilitation Patients (NQF #2633), is that it uses the functional 
assessment data elements and the associated rating scale that were 
developed and tested for cross-setting use. The measure uses functional 
assessment items from the CARE Item Set, which were developed and 
tested as part of the PAC-PRD between 2006 and 2010. The items were 
designed to build on the existing science for functional assessment 
instruments, and included a review of the strengths and limitations of 
existing functional assessment instruments. An important strength of 
the standardized function items from the CARE instrument is that they 
allow comparison and tracking of patients' and residents' functional 
outcomes as they move across post-acute settings. Specifically, the 
CARE Item Set was designed to standardize assessment of patients' 
status across acute and post-acute settings, including SNFs, IRFs, 
LTCHs, and HHAs. The risk-adjustors for various setting-specific 
versions of this measure differ by the inclusion of adjustors such as 
comorbidities in the IRF measure. However, we believe that the 
differences in risk adjustment will not hinder future comparability 
across settings. Agencies such as MedPAC have supported a coordinated 
approach to measurement across settings using standardized patient data 
elements.
    A third important consideration is that some of the data elements 
associated with the proposed measure are already included on the MDS in 
Section GG, because we adopted a cross-setting function process measure 
in the SNF QRP FY 2016 Final Rule (FR 80 46444 through 46453). Three of 
the self-care data elements necessary to calculate that quality 
measure, an Application of the Percent of Long-Term Care Hospital 
Patient with a Functional Assessment and a Care Plan that Addresses 
Function (NQF #2631) are used to calculate the proposed quality 
measure. Provider burden of reporting on multiple items was a key 
consideration discussed by stakeholders in our recent TEP is available 
at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/

[[Page 21051]]

IMPACT-Act-Downloads-and-Videos.html.
    We believe it is important to include the records of residents with 
missing functional assessment data when calculating a facility-level 
functional outcome quality measure for SNFs. The proposed measure, the 
Application of IRF Functional Outcome Measure: Change in Self-Care 
Score for Medical Rehabilitation Patients (NQF #2633), incorporates a 
method to address missing functional assessment data.
    We believe certain clinically-defined exclusion criteria are 
important to specify in a functional outcome quality measure in order 
to maintain the validity of the quality measure. Exclusions for the 
proposed quality measure, Application of IRF Functional Outcome 
Measure: Change in Self-Care Score for Medical Rehabilitation Patients 
(NQF #2633), were selected through a review of the literature, input 
from Technical Expert Panels, and input from the public comment 
process. The quality measure, Application of IRF Functional Outcome 
Measure: Change in Self-Care Score for Medical Rehabilitation Patients 
(NQF #2633) is intended to capture improvement in self-care function 
from admission to discharge for residents who are admitted with an 
expectation of functional improvement. Therefore, we exclude residents 
with certain conditions, for example progressive neurologic conditions, 
because these residents are typically not expected to improve on self-
care skills for activities such as lower body dressing. Furthermore, we 
exclude residents who are independent on all self-care items at the 
time of admission, because no improvement in self-care can be measured 
with the selected set of items by discharge. Including residents with 
limited expectation for improvement could introduce incentives for SNF 
providers to restrict access to these residents.
    We would like to note that our measure developer presented and 
discussed these technical specification differentiations with TEP 
members during the May 6, 2016 TEP meeting in order to obtain TEP input 
on preferred specifications for valid functional outcome quality 
measures. The differences in measure specifications and the TEP 
feedback are presented in the TEP Summary Report, which is available at 
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. Overall, the TEP supported the 
use of a risk adjustment model that addressed all of the following risk 
factors: Prior functioning, admission functioning, prior diagnosis and 
comorbidities. In addition, they supported exclusion criteria that 
would address functional improvement expectations of residents.
    Therefore, based on the evidence provided above, we are proposing 
to adopt the quality measure entitled, Application of IRF Functional 
Outcome Measure: Change in Self-Care Score for Medical Rehabilitation 
Patients (NQF #2633), beginning with the FY 2020 SNF QRP.
(iii) Proposed Data Collection Mechanism
    Data for the proposed quality measure, the Application of IRF 
Functional Outcome Measure: Change in Self-Care Score for Medical 
Rehabilitation Patients (NQF #2633), would be collected using the MDS, 
with the submission through the QIES ASAP system. For more information 
on SNF QRP reporting through the QIES ASAP system, refer to CMS Web 
site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The calculation of the proposed quality measure would be based on 
the data collection of standardized items to be included in the MDS. 
The function items used to calculate this measure are the same set of 
functional status data items that have been added to the IRF-PAI 
version 1.4, for the purpose of providing standardized data elements 
under the domain of functional status, which is required by the IMPACT 
Act.
    If finalized for implementation into the SNF QRP, the MDS would be 
modified so as to enable us to calculate this proposed quality measure 
using additional data elements that are standardized with the IRF-PAI 
and such data would be obtained at the time of admission and discharge 
for all SNF residents covered under a Part A stay. The standardized 
items used to calculate this proposed quality measure do not duplicate 
existing Section G items currently used for data collection within the 
MDS. The quality measure and standardized data element specifications 
for the Application of IRF Functional Outcome Measure: Change in Self-
Care Score for Medical Rehabilitation Patients (NQF #2633) can be found 
on the SNF QRP Measures and Technical Information Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.htmll.
    We invite public comments on our proposal to adopt the quality 
measure entitled, the Application of IRF Functional Outcome Measure: 
Change in Self-Care Score for Medical Rehabilitation Patients (NQF 
#2633) for the SNF QRP, beginning with the FY 2020 SNF QRP, with data 
collection for residents admitted and discharged starting on October 1, 
2018.
(b) Application of IRF Functional Outcome Measure: Change in Mobility 
Score for Medical Rehabilitation Patients (NQF #2634)
    This quality measure is an application of the outcome measure 
finalized in the IRF QRP entitled, IRF Functional Outcome Measure: 
Change in Mobility Score for Medical Rehabilitation Patients (NQF 
#2634). This proposed quality measure estimates the risk-adjusted mean 
improvement in mobility score between admission and discharge among SNF 
residents. A summary of this quality measure can be accessed on the NQF 
Web site: https://www.qualityforum.org/qps/2634. Detailed specifications 
for this quality measure can be accessed at https://www.qualityforum.org/ProjectTemplateDownload.aspx?SubmissionID=2634.
    As previously noted, residents seeking care in SNFs include those 
whose illness, injury, or condition has resulted in a loss of function, 
and for whom rehabilitative care is expected to help regain that 
function. Several studies found patients' functional outcomes vary 
based on treatment. Physical and occupational therapy treatment was 
associated with greater functional gains, shorter stays, and a greater 
likelihood of a discharge to a community. Among SNF residents receiving 
rehabilitation services, the amount of therapy prescribed can vary 
widely, and this variation is not always associated with resident 
characteristics. This variation in rehabilitation services supports the 
need to monitor SNF resident's functional outcomes, as we believe there 
is an opportunity for improvement in this area.
    The proposed functional outcome measure, the Application of IRF 
Functional Outcome Measure: Change in Mobility Score for Medical 
Rehabilitation Patients (NQF #2634), requires the collection of 
admission and discharge functional status data by trained clinicians 
using standardized data elements that assess specific functional 
mobility activities such as

[[Page 21052]]

toilet transfer and walking. These mobility items are daily activities 
that clinicians typically assess at the time of admission and/or 
discharge to determine resident's needs, evaluate resident progress, 
and prepare residents and families for a transition to home or to 
another care provider. The standardized mobility function items are 
coded using a 6-level rating scale that indicates the resident's level 
of independence with the activity; higher scores indicate more 
independence.
    The functional assessment items included in the proposed outcome 
quality measures were originally developed and tested as part of the 
Post-Acute Care Payment Reform Demonstration version of the CARE Item 
Set, which was designed to standardize assessment of patients' status 
across acute and post-acute providers, including SNFs, HHAs, IRFs, and 
LTCHs.
    This proposed outcome quality measure also requires the collection 
of risk factors data, such as resident functioning prior to the current 
reason for admission, history of falls, bladder continence, 
communication ability and cognitive function, at the time of admission.
    A cross-setting function TEP convened by our measure development 
contractor on September 9, 2013, provided input on the initial 
technical specifications of this proposed quality measure, the 
Application of IRF Functional Outcome Measure: Change in Mobility Score 
for Medical Rehabilitation Patients (NQF #2634). The TEP was supportive 
of the implementation of this measure and supported our efforts to 
standardize patient/resident assessment data elements. The TEP summary 
report is available at 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.
    The list of measures under consideration for the SNF QRP, including 
this quality measure, was released to the public on November 27, 2015, 
and early comments were submitted between December 1 and December 7, 
2015. The MAP met on December 14 and 15, 2015, sought public comment on 
this measure from December 23, 2015, to January 13, 2015, and met on 
January 26 and 27, 2016. The NQF provided the MAP's input to us as 
required under section 1890A(a)(3) of the Act in the final report, MAP 
2016 Considerations for Selection of Measures for Federal Programs: 
Post-Acute/Long-Term Care, which is available at https://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx. The MAP recognized that this measure is an 
adaptation of currently endorsed measures for the IRF population, and 
encouraged continued development to ensure alignment across PAC 
settings. They also noted there should be some caution in the 
interpretation of measure results due to patient/resident 
differentiation between facilities. With regard to alignment across PAC 
settings, the self-care items included in the proposed quality measure 
are the same self-care items that are included in the IRF-PAI Version 
1.4. We agree with the MAP that patient/resident populations can vary 
across IRFs and SNFs, and we have taken this issue into consideration 
while selecting and testing the risk adjustors, which include medical 
conditions, admission function, prior functioning and comorbidities. 
The risk-adjustors for the IRF and the SNF versions of this measure 
differ by the inclusion of adjustors such as comorbidities in the IRF 
measure. As noted, though there are differences between the measures we 
believe that the differences in risk adjustment will not hinder future 
comparability across measures. The MAP also noted possible duplication 
as the MDS already includes function data elements. The data elements 
for the proposed measure are similar, but not the same as the existing 
MDS Section G function data elements. The data elements for the 
proposed measures include those that are the proposed standardized data 
elements for function. The MAP also stressed the importance of 
considering burden on providers when measures are considered for 
implementation. We appreciate the issue of burden and have taken that 
into consideration in developing the measure. Please refer to the FY 
2016 SNF PPS final rule (80 FR 46428) for more information on the MAP.
    The MAP's overall recommendation was for ``encourage further 
development.'' More information about the MAP's recommendations for 
this proposed measure is available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    Since the MAP's review and recommendation for further development, 
we have continued to develop this measure including soliciting input 
from a TEP, providing a public comment opportunity, and providing an 
update on measure development to the MAP via the feedback loop. More 
specifically, our measure development contractor convened a SNF-
specific TEP on May 5, 2016 to provide further input on the technical 
specifications of this proposed quality measure by reviewing the IRF 
specifications and the specifications of competing and related function 
quality measures. Overall, the TEP was supportive of the measure and 
supported our efforts to standardize patient/resident assessment data 
elements. The SNF-specific function TEP summary report is available at 
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.
    We also solicited stakeholder feedback on the development of this 
measure by means of a public comment period open from October 7, until 
November 4, 2016. There was general support of the measure concept and 
the importance of functional improvement. Comments on the measure 
varied, with some commenters supportive of the measure, while others 
were either not in favor of the measure, or in favor of suggested 
potential modifications to the measure specifications. The public 
comment summary report for the proposed measure is available on the CMS 
Web site at 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.
    We also engaged with the NQF convened MAP when we presented an 
update on the development of this quality measure on October 19, 2016, 
during a MAP feedback loop meeting. Slides from that meeting are 
available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=83640.
    During the development of this measure, we have monitored and 
reviewed NQF-endorsed measures that are competing and related. We 
identified seven competing and related quality measures focused on 
improvement in mobility for residents in the SNF setting entitled: (1) 
CARE: Improvement in Mobility (NQF #2612); (2) Functional Change: 
Change in Mobility Score (NQF 2774); (3) Functional Status Change for 
Patients with Knee Impairments (NQF #0422); (4) Functional Status 
Change for Patients with Hip Impairments (NQF #0423); (5) Functional 
Status Change for Patients with Foot and Ankle Impairments (NQF #0424); 
(6) Functional Status Change for Patients with Lumbar Impairments (NQF 
#0425); and (7) Change in Basic Mobility as

[[Page 21053]]

Measures by the AM-PAC (NQF #0429). We reviewed the technical 
specifications for these seven measures carefully and compared them 
with the specifications of the proposed quality measure, the 
Application of IRF Functional Outcome Measure: Change in Mobility Score 
for Medical Rehabilitation Patients (NQF #2634) and have noted the 
following differences in the technical specifications: (1) The number 
of risk adjustors and variance explained by these risk adjustors in the 
regression models; (2) the use of functional assessment items that were 
developed and tested for cross-setting use; (3) the use of items that 
are already on the MDS 3.0 and what this means for burden; (4) the 
handling of missing functional status data; and (5) the use of 
exclusion criteria that are baseline clinical conditions. We describe 
these key specifications of the proposed outcome measure, the 
Application of IRF Functional Outcome Measure: Change in Mobility Score 
for Medical Rehabilitation Patients (NQF #2634), below in more detail.
    Our literature review, input from technical expert panels, public 
comment feedback, and analyses demonstrated the importance of adequate 
risk adjustment of admission case mix factors for functional outcome 
measures. Inadequate risk adjustment of admission case mix factors may 
lead to erroneous conclusions about the quality of care delivered 
within the facility, and thus is a potential threat to the validity of 
a quality measure that examines outcomes of care, such as functional 
status. The proposed quality measure, the Application of IRF Functional 
Outcome Measure: Change in Mobility Score for Medical Rehabilitation 
Patients (NQF #2634) risk adjusts for more than 60 risk factors, 
explaining approximately 23 percent of the variance in change in 
function, and includes all of the following risk adjusters: Prior 
functioning, prior device use, age, functional status at admission, 
primary diagnosis and comorbidities. These are key predictors of 
functional performance and need to be accounted for in any facility-
level functional outcome quality measure.
    Another key feature of the proposed measure, Application of IRF 
Functional Outcome Measure: Change in Mobility Score for Medical 
Rehabilitation Patients (NQF #2634), is that it uses the functional 
assessment data elements and the associated rating scale that were 
developed and tested for cross-setting use. The measure uses functional 
assessment items from the CARE Item Set, which were developed and 
tested as part of the PAC PRD between 2006 and 2010. The items were 
designed to build on the existing science for functional assessment 
instruments, and included a review of the strengths and limitations of 
existing functional assessment instruments. An important strength of 
the cross-setting function items from the CARE instrument is that they 
allow tracking of patients' and residents' functional outcomes as they 
move across post-acute settings. Specifically, the CARE Item Set was 
designed to standardize assessment of patients' and residents' status 
across acute and post-acute settings, including SNFs, IRFs, LTCHs, and 
HHAs. The MedPAC has publicly supported a coordinated approach to 
measurement across settings using standardized data elements.
    A third important consideration is that some of the data elements 
associated with the proposed measure, Application of IRF Functional 
Outcome Measure: Change in Mobility Score for Medical Rehabilitation 
Patients (NQF #2634) are already included on the MDS in Section GG, 
because we adopted a cross-setting function process measure in the SNF 
QRP FY 2016 Final Rule (FR 80 46444 through 46453), and seven of the 
mobility data elements necessary to calculate that quality measure, an 
Application of the Percent of Long-Term Care Hospital Patient with a 
Functional Assessment and a Care Plan that Addresses Function (NQF 
#2631) are used to calculate the proposed quality measure. Provider 
burden of reporting on multiple measures was a key consideration 
discussed by stakeholders in our recent TEP: 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.
    We believe it is important to include the records of residents with 
missing functional assessment data in the calculating a facility-level 
functional outcome quality measure for SNFs. The proposed measure, 
Application of IRF Functional Outcome Measure: Change in Mobility Score 
for Medical Rehabilitation Patients (NQF #2634), incorporates a method 
to address missing functional assessment data.
    We believe certain clinically-defined exclusion criteria are 
important to specify in a functional outcome quality measure in order 
to maintain the validity of the quality measure. Exclusions for the 
proposed quality measure, Change in Mobility Score for Medical 
Rehabilitation Patients (NQF #2634), were selected through a literature 
review, input from TEPs, and input from the public comment process. The 
Application of IRF Functional Outcome Measure: Change in Mobility Score 
for Medical Rehabilitation Patients (NQF #2634) is intended to capture 
improvement in mobility from admission to discharge for residents who 
are admitted with an expectation of functional improvement. Therefore, 
we exclude patients with certain conditions, for example progressive 
neurologic conditions, because these residents are typically not 
expected to improve on mobility skills for activities such as walking. 
Furthermore, we exclude residents who are independent on all mobility 
items at the time of admission, because no improvement can be measured 
with the selected set of items by discharge. Inclusion of residents 
with limited expectation for improvement could introduce incentives for 
SNF providers to limited access to these residents.
    Our measure developer contractor presented and discussed these 
technical specification differentiations during the May 6, 2016 TEP 
meeting in order to obtain TEP input on preferred specifications for 
valid functional outcome quality measures. The differences in measure 
specifications and the TEP feedback are presented in the TEP Summary 
Report, which is available at 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.
    Therefore, based on the evidence provided above, we are proposing 
to adopt the quality measure entitled, Application of IRF Functional 
Outcome Measure: Change in Mobility Score for Medical Rehabilitation 
Patients (NQF #2634), for use beginning with the FY 2020 SNF QRP.
    Data for the proposed quality measure, the Application of IRF 
Functional Outcome Measure: Change in Mobility Score for Medical 
Rehabilitation Patients (NQF #2634), would be collected using the MDS, 
with the submission through the QIES ASAP system. For more information 
on SNF QRP reporting through the QIES ASAP system, refer to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The calculation of the proposed quality measure would be based on 
the data collection of standardized items to be included in the MDS. 
The function items used to calculate this measure are

[[Page 21054]]

the same set of functional status data items that have been added to 
the IRF-PAI version 1.4, for the purpose of providing standardized data 
elements under the domain of functional status. If this proposed 
quality measure is finalized for implementation in the SNF QRP, the MDS 
would be modified so as to enable the calculation of these standardized 
items that are used to calculate this proposed quality measure. The 
collection of data by means of the standardized items would be obtained 
at admission and discharge. The standardized items used to calculate 
this proposed quality measure do not duplicate existing items currently 
used for data collection within the MDS. The quality measure and 
standardized data element specifications for the Application of IRF 
Functional Outcome Measure: Change in Mobility Score for Medical 
Rehabilitation Patients (NQF #2634) is available on the SNF QRP 
Measures and Technical Information Web site at 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.
    We invite public comments on our proposal to adopt the quality 
measure, entitled Application of IRF Functional Outcome Measure: Change 
in Mobility Score for Medical Rehabilitation Patients (NQF #2634) 
beginning with the FY 2020 SNF QRP.
(c) Application of IRF Functional Outcome Measure: Discharge Self-Care 
Score for Medical Rehabilitation Patients (NQF #2635)
    This quality measure is an application of the outcome quality 
measure finalized in the IRF QRP entitled, IRF Functional Outcome 
Measure: Discharge Self-Care Score for Medical Rehabilitation Patients 
(NQF #2635). The proposed quality measure estimates the percentage of 
SNF residents who meet or exceed an expected discharge self-care score. 
A summary of this quality measure can be accessed on the NQF Web site 
at https://www.qualityforum.org/qps/2635. Detailed specifications for 
the quality measure can be accessed at https://www.qualityforum.org/ProjectTemplateDownload.aspx?SubmissionID=2635.
    As previously noted, residents seeking care in SNFs include 
individuals whose illness, injury, or condition has resulted in a loss 
of function, and for whom rehabilitative care is expected to help 
regain that function. Several studies found patients' functional 
outcomes vary based on treatment by physical and occupational 
therapists. Therapy was associated with greater functional gains, 
shorter stays, and a greater likelihood of discharge to community. 
Among SNF residents receiving rehabilitation services, the amount of 
treatment prescribed can vary widely, and this variation is not 
associated with resident characteristics. This variation in 
rehabilitation services supports the need to monitor SNF resident's 
functional outcomes, as we believe there is an opportunity for 
improvement in this area.
    The proposed outcome quality measure, Application of IRF Functional 
Outcome Measure: Discharge Self-Care Score or Medical Rehabilitation 
Patients (NQF #2635), requires the collection of functional status data 
at admission and discharge by trained clinicians using standardized 
patient assessment data elements such as eating, oral hygiene, and 
lower body dressing. These self-care items are daily activities that 
clinicians typically assess at the time of admission and discharge to 
determine residents' needs, evaluate resident progress, and prepare 
residents and families for a transition to home or to another provider. 
The self-care function data elements are coded using a 6-level rating 
scale that indicates the resident's level of independence with the 
activity; higher scores indicate more independence.
    The functional assessment items included in the proposed outcome 
quality measures were originally developed and tested as part of the 
Post-Acute Care Payment Reform Demonstration version of the CARE Item 
Set, which was designed to standardize assessment of patients' status 
across acute and post-acute providers, including SNFs, HHAs, IRFs, and 
LTCHs
    This proposed outcome quality measure also requires the collection 
of risk factors data, such as resident functioning prior to the current 
reason for admission, bladder continence, communication ability, and 
cognitive function at the time of admission.
    A cross-setting function TEP convened by our measure development 
contractor on September 9, 2013 provided input on the initial technical 
specifications of this proposed quality measure, the Application of IRF 
Functional Outcome Measure: Discharge Self-Care Score for Medical 
Rehabilitation Patients (NQF #2635). The TEP was supportive of the 
implementation of this measure and supported CMS's efforts to 
standardize patient/resident assessment data elements. The TEP summary 
report is available at 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.
    The MAP met on December 14 and 15, 2015, and provided input on the 
proposed measure, Application of IRF Functional Outcome Measure: 
Discharge Self-Care Score for Medical Rehabilitation Patients (NQF 
#2635) for use in the SNF QRP. The MAP recognized that this proposed 
quality measure is an adaptation of a currently endorsed measure for 
the IRF population, and encouraged continued development to ensure 
alignment of this measure across PAC settings. The MAP also noted there 
should be some caution in the interpretation of measure results due to 
patient/resident differentiation between facilities. The MAP also 
stressed the importance of considering burden on providers when 
measures are considered for implementation. The MAP also noted possible 
duplication as the MDS already includes function data elements. The 
data elements for the proposed measure are similar, but not the same as 
the existing MDS function data elements. The data elements for the 
proposed measures include those that are the proposed standardized 
patient data elements for function. The MAP's overall recommendation 
was to ``encourage further development.'' More information about the 
MAP's recommendations for this proposed measure is available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    Since the 2015 MAP's review and recommendation for further 
development, we have continued to develop this measure including 
soliciting input via a TEP, proving a public comment opportunity and 
providing an update on measure development to the MAP via the feedback 
loop. More specifically, our measure development contractor convened a 
SNF-specific TEP on May 5, 2016 to provide further input on the 
technical specifications of this proposed quality measure by reviewing 
the IRF specifications and the specifications of competing and related 
function quality measures. Overall, the TEP was supportive of the 
measure. Specifically, they supported the risk adjustors, suggested 
some additional risk adjustors, supported the exclusion criteria and 
supported CMS's efforts to standardize patient/resident assessment data 
elements. The SNF-specific function TEP summary report is available at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-

[[Page 21055]]

Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-
of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also solicited stakeholder feedback on the development of this 
measure by means of a public comment period open from October 7, 2016 
until November 4, 2016. There was general support of the measure 
concept and the importance of functional improvement. Comments on the 
measure varied, with some commenters supportive of the measure, while 
others were either not in favor of the measure, or in favor of 
suggested potential modifications to the measure specifications. Some 
comments focused on suggestions for additional risk adjustors, and the 
data elements. The public comment summary report for the proposed 
measure is available on the CMS Web site at 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.
    We also engaged with stakeholders when we presented an update on 
the development of this quality measure to the MAP on October 19, 2016, 
during a MAP feedback loop meeting. Slides from that meeting are 
available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=83640.
    During the development of this measure, we have monitored and 
reviewed NQF-endorsed measures that are competing and related. We 
identified six competing and related quality measures focused on self-
care functional improvement for residents in the SNF setting entitled: 
(1) CARE: Improvement in Self Care (NQF #2613); (2) Functional Change: 
Change in Self-Care Score (NQF #2286); (3) Functional Status Change for 
Patients with Shoulder Impairments (NQF #0426); (4) Functional Status 
Change for Patients with Elbow, Wrist and Hand Impairments (NQF #0427); 
(5) Functional Status Change for Patients with General Orthopedic 
Impairments (NQF #0428); and (6) Change in Daily Activity Function as 
Measures by the AM-PAC (NQF #0430).
    As described above, we reviewed the technical specifications for 
these six measures and compared them with the specifications for the 
proposed the quality measure, Application of IRF Functional Outcome 
Measure: Discharge Self-Care Score for Medical Rehabilitation Patients 
(NQF #2635) and, as described in detail above, we noted the following 
differences in the technical specifications: (1) The number of risk 
adjustors and variance explained by these risk adjustors in the 
regression models; (2) the use of functional assessment items that were 
developed and tested for cross-setting use; (3) the use of items that 
are already on the MDS 3.0 and what this means for burden; (4) the 
handling of missing functional status data; and (5) the use of 
exclusion criteria that are baseline clinical conditions.
    Consistent with the other functional outcome measures, the 
specifications for this proposed quality measure, Application of IRF 
Functional Outcome Measure: Discharge Self-Care Score for Medical 
Rehabilitation Patients (NQF #2635), were developed based on our 
literature review, input from technical expert panels, public comment 
feedback and data analyses. The details about the specifications for 
the measures described above also apply to this proposed quality 
measure. Overall, the TEP supported the use of a risk adjustment model 
that addressed prior functioning, admission functioning, prior 
diagnosis and comorbidities. In addition, they supported exclusion 
criteria that would address functional improvement expectations of 
residents.
    Our measure developer contractor presented and discussed these 
technical specification differentiations during the May 6, 2016 TEP 
meeting in order to obtain TEP input on preferred specifications for 
valid functional outcome quality measures. The differences in measure 
specifications and the TEP feedback are presented in the TEP Summary 
Report, which is available at 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.
    Therefore, based on the evidence provided above, we are proposing 
to adopt the quality measure entitled, the Application of IRF 
Functional Outcome Measure: Discharge Self-Care Score for Medical 
Rehabilitation Patients (NQF #2635), for use in the SNF QRP beginning 
with the FY 2020 program.
    Data for the proposed quality measure, the Application of IRF 
Functional Outcome Measure: Discharge Self-Care Score for Medical 
Rehabilitation Patients (NQF #2635), would be collected using the MDS, 
with the submission through the QIES ASAP system. For more information 
on SNF QRP reporting through the QIES ASAP system, refer to CMS Web 
site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The calculation of the proposed quality measure would be based on 
the data collection of standardized items to be included in the MDS. 
The function items used to calculate this measure are the same set of 
functional status data items that have been added to the IRF-PAI 
version 1.4, for the purpose of providing standardized data elements 
under the domain of functional status. The collection of data by means 
of the standardized items would be obtained at admission and discharge. 
The standardized items used to calculate this proposed quality measure 
do not duplicate existing items currently used for data collection 
within the MDS. The quality measure and standardized data element 
specifications for the Application of IRF Functional Outcome Measure: 
Discharge Self-Care Score for Medical Rehabilitation Patients (NQF 
#2635) can be found on the SNF QRP Measures and Technical Information 
Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    If finalized for implementation into the SNF QRP, the MDS would be 
modified so as to enable us to calculate the proposed measure using 
additional data elements that are standardized with the IRF-PAI and 
such data would be obtained at the time of admission and discharge for 
all SNF residents covered under a Part A stay.
    We invite public comments on our proposal to adopt the quality 
measure entitled, the Application of IRF Functional Outcome Measure: 
Discharge Self-Care Score for Medical Rehabilitation Patients (NQF 
#2635) beginning with the FY 2020 SNF QRP.
(d) Application of IRF Functional Outcome Measure: Discharge Mobility 
Score for Medical Rehabilitation Patients (NQF #2636)
    This proposed quality measure is an application of the outcome 
quality measure finalized in the IRF QRP entitled, IRF Functional 
Outcome Measure: Discharge Mobility Score for Medical Rehabilitation 
Patients (NQF #2636). This proposed quality measure estimates the 
percentage of SNF residents who meet or exceed an expected discharge 
mobility score. A summary of this quality measure can be accessed on 
the NQF Web site: https://www.qualityforum.org/qps/2636.

[[Page 21056]]

Detailed specifications for this quality measure can be accessed at 
https://www.qualityforum.org/ProjectTemplateDownload.aspx?SubmissionID=2636.
    As previously noted, residents seeking care in SNFs include 
individuals whose illness, injury, or condition has resulted in a loss 
of function, and for whom rehabilitative care is expected to help 
regain that function. Several studies found patients' functional 
outcomes vary based on treatment by physical and occupational 
therapists. Therapy was associated with greater functional gains, 
shorter stays, and a greater likelihood of discharge to community. 
Among SNF residents receiving rehabilitation services, the amount of 
treatment prescribed can vary widely, and this variation is not 
associated with resident characteristics. This variation in 
rehabilitation services supports the need to monitor SNF resident's 
functional outcomes, as we believe there is an opportunity for 
improvement in this area.
    The proposed functional outcome measure, Application of IRF 
Functional Outcome Measure: Discharge Mobility Score for Medical 
Rehabilitation Patients (NQF #2636), requires the collection of 
admission and discharge functional status data by trained clinicians 
using standardized data elements that assess specific functional 
mobility activities such as bed mobility and walking. These 
standardized mobility items are daily activities that clinicians 
typically assess at the time of admission and/or discharge to determine 
residents' needs, evaluate resident progress and prepare residents and 
families for a transition to home or to another care provider. The 
standardized mobility function items are coded using a 6-level rating 
scale that indicates the resident's level of independence with the 
activity; higher scores indicate more independence.
    The functional assessment items included in the proposed outcome 
quality measures were originally developed and tested as part of the 
Post-Acute Care Payment Reform Demonstration version of the CARE Item 
Set, which was designed to standardize assessment of patients' status 
across acute and post-acute providers, including SNFs, HHAs, IRFs, and 
LTCHs and Current Assessment Comparisons: Volume 3 of 3.'' \33\ The 
reports are available on CMS' Post-Acute Care Quality Initiatives Web 
page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html.
---------------------------------------------------------------------------

    \33\ Ibid.
---------------------------------------------------------------------------

    This proposed quality measure requires the collection of risk 
factors data, such as resident functioning prior to the current reason 
for admission, history of falls, bladder continence, communication 
ability and cognitive function, at the time of admission.
    A cross-setting function TEP convened by our measure development 
contractor on September 9, 2013 provided input on the initial technical 
specifications of this proposed quality measure, Application of IRF 
Functional Outcome Measure: Discharge Mobility Score for Medical 
Rehabilitation Patients (NQF #2636). The TEP was supportive of the 
implementation of this measure and supported our efforts to standardize 
patient assessment data elements. The TEP summary report is available 
at 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.
    The MAP met on December 14 and 15, 2015, and provided input on the 
proposed measure, Application of IRF Functional Outcome Measure: 
Discharge Mobility Score for Medical Rehabilitation Patients (NQF 
#2636), for use in the SNF QRP. The MAP recognized that this proposed 
quality measure is an adaptation of a currently endorsed measure for 
the IRF population, and encouraged continued development to ensure 
alignment of this measure across PAC settings. The MAP noted there 
should be some caution in the interpretation of measure results due to 
patient/resident differentiation between facilities. The MAP also 
stressed the importance of considering burden on providers when 
measures are considered for implementation. The MAP also noted possible 
duplication as the MDS already includes function data elements. The 
data elements for the proposed measure are similar, but not the same as 
the existing MDS function data elements. The data elements for the 
proposed measure include those that are the proposed standardized 
patient data elements for function. The MAP's overall recommendation 
was to ``encourage further development.'' More information about the 
MAP's recommendations for this proposed measure is available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
    Since the MAP's review and recommendation for further development, 
we have continued to develop this measure including soliciting input 
via a TEP, proving a public comment opportunity and providing an update 
on measure development to the MAP via the feedback loop. More 
specifically, our measure development contractor convened a SNF-
specific TEP on May 5, 2016, to provide further input on the technical 
specifications of this proposed quality measure by reviewing the IRF 
specifications and the specifications of competing and related function 
quality measures. Overall, the TEP was supportive of the measure and 
supported our efforts to standardize patient/resident assessment data 
elements. The SNF-specific function TEP summary report is available at 
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.
    We also solicited stakeholder feedback on the development of this 
measure by means of a public comment period open from October 7, 2016, 
until November 4, 2016. There was general support of the measure 
concept and the importance of functional improvement. Comments on the 
measure varied, with some commenters supportive of the measure, while 
others were either not in favor of the measure, or suggested potential 
modifications to the measure specifications.
    The public comment summary report for the proposed measure is 
available on the CMS Web site at 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.
    We also engaged with stakeholders when we presented an update on 
the development of this quality measure to the MAP on October 19, 2016, 
during a MAP feedback loop meeting. Slides from that meeting are 
available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=83640.
    During the development of this measure, we have monitored and 
reviewed the NQF-endorsed measures that are competing and related. We 
identified seven competing and related quality measures focused on 
mobility functional improvement for residents in the SNF setting 
entitled: (1) CARE: Improvement in Mobility (NQF #2612); (2) Functional 
Change: Change in Mobility Score (NQF #2774); (3) Functional Status 
Change for Patients with Knee Impairments (NQF #0422); (4) Functional 
Status Change for

[[Page 21057]]

Patients with Hip Impairments (NQF #0423); (5) Functional Status Change 
for Patients with Foot and Ankle Impairments (NQF #0424); (6) 
Functional Status Change for Patients with Lumbar Impairments (NQF 
#0425); and (7) Change in Basic Mobility as Measures by the AM-PAC (NQF 
#0429). As described above, we reviewed the technical specifications 
for these seven measures carefully and compared them with the 
specifications of the proposed quality measure, Application of IRF 
Functional Outcome Measure: Discharge Mobility Score for Medical 
Rehabilitation Patients (NQF #2636) and have noted the following 
differences in the technical specifications: (1) The number of risk 
adjustors and variance explained by these risk adjustors in the 
regression models; (2) the use of functional assessment items that were 
developed and tested for cross-setting use; (3) the use of items that 
are already on the MDS 3.0 and what this means for burden; (4) the 
handling of missing functional status data; and (5) the use of 
exclusion criteria that are baseline clinical conditions.
    Consistent with the other functional outcome measures, the 
specifications for this proposed quality measure, Application of IRF 
Functional Outcome Measure: Discharge Mobility Score for Medical 
Rehabilitation Patients (NQF #2636), were developed based on our 
literature review, input from technical expert panels, public comment 
feedback and data analyses. The details about how the specifications 
for the measures differ as described in the previous functional outcome 
measure sections, also apply to this proposed quality measure.
    Our measure developer contractor presented and discussed these 
technical specification differentiations during the May 6, 2016 TEP 
meeting in order to obtain TEP input on preferred specifications for 
valid functional outcome quality measures. The differences in measure 
specifications and the TEP feedback are presented in the TEP Summary 
Report, which is available at 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.
    Therefore, based on the evidence provided above, we are proposing 
to adopt the quality measure entitled, the Application of IRF 
Functional Outcome Measure: Discharge Mobility Score for Medical 
Rehabilitation Patients (NQF #2636), for use beginning with the FY 2020 
SNF QRP.
    Data for the proposed quality measure, the Application of IRF 
Functional Outcome Measure: Discharge Mobility Score for Medical 
Rehabilitation Patients (NQF #2636), would be collected using the MDS, 
with the submission through the QIES ASAP system. Additional 
information on SNF QRP reporting through the QIES ASAP system can be 
found on the CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The calculation of the proposed quality measure would be based on 
the data collection of standardized items to be included in the MDS. 
The function items used to calculate this measure are the same set of 
functional status data items that have been added to the IRF-PAI 
version 1.4, for the purpose of providing standardized data elements 
under the domain of functional status. The collection of data by means 
of the standardized items would be obtained at admission and discharge. 
The standardized items used to calculate this proposed quality measure 
do not duplicate existing items currently used for data collection 
within the MDS. The quality measure and standardized data element 
specifications for the Application of IRF Functional Outcome Measure: 
Discharge Change in Mobility Score for Medical Rehabilitation Patients 
(NQF #2636) can be found on the SNF QRP Measures and Technical 
Information Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    If finalized for implementation into the SNF QRP, the MDS would be 
modified so as to enable us to calculate the proposed measure using 
additional data elements that are standardized with the IRF-PAI and 
such data would be obtained at the time of admission and discharge for 
all SNF residents covered under a Part A stay.
    We invite public comments on our proposal to adopt the quality 
measure entitled, the Application of IRF Functional Outcome Measure: 
Discharge Mobility Score for Medical Rehabilitation Patients (NQF 
#2636) beginning with the FY 2020 SNF QRP.
8. Proposed Modifications to Potentially Preventable 30-Days Post-
Discharge Readmission Measure for Skilled Nursing Facility (SNF) 
Quality Reporting Program (QRP)
    In the FY 2017 SNF PPS final rule (81 FR 52030 through 52034), we 
adopted the Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for SNF QRP. This measure was developed to meet section 
1899B(d)(1)(C) of the Act, which calls for measures to reflect all-
condition risk-adjusted potentially preventable hospital readmission 
rates for PAC providers, including SNFs.
    This measure was specified to be calculated using 1 year of 
Medicare FFS claims data; however, we are proposing to increase the 
measurement period to 2 years of claims data. The rationale for this 
proposed change is to expand the number of SNFs with 25 stays or more, 
which is the minimum number of stays that we require for public 
reporting. Furthermore, this modification will align the SNF measure 
more closely with other potentially preventable hospital readmission 
measures developed to meet the IMPACT Act requirements and adopted for 
the IRF and LTCH QRPs, which are calculated using 2 consecutive years 
of data.
    We also propose to update the dates associated with public 
reporting of SNF performance on this measure. In the FY 2017 SNF PPS 
final rule (81 FR 52030 through 52034), we finalized initial 
confidential feedback reports by October 2017 for this measure based on 
1 calendar year of claims data from discharges during CY 2016 and 
public reporting by October 2018 based on data from CY 2017. However, 
to make these measure data publicly available by October 2018, we 
propose to shift this measure from calendar year to fiscal year, 
beginning with publicly reporting on claims data for discharges in 
fiscal years 2016 and 2017.
    Additional information regarding the Potentially Preventable 30-Day 
Post-Discharge Readmission Measure for SNF QRP can be found at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    We are inviting public comment on our proposal to increase the 
length of the measurement period and to update the public reporting 
dates for this measure.

[[Page 21058]]

9. SNF QRP Quality Measures Under Consideration for Future Years
    We are inviting comment on the importance, relevance, 
appropriateness, and applicability of each of the quality measures 
listed in Table 19 for future years in the SNF QRP.
    We are considering a measure focused on pain that relies on the 
collection of patient-reported pain data, and another measure regarding 
the Percent of Residents Who Were Assessed and Appropriately Given the 
Seasonal Influenza Vaccine. Finally, we are considering a measure 
related to patient safety, that is, Patients Who Received an 
Antipsychotic Medication.
a. IMPACT Act Measure--Possible Future Update to Measure Specifications
    In the FY 2017 SNF PPS final rule (81 FR 52021 through 52029), we 
finalized the Discharge to Community-Post Acute Care (PAC) Skilled 
Nursing Facility (SNF) Quality Reporting Program (QRP) measure, which 
assesses successful discharge to the community from a SNF setting, with 
successful discharge to the community including no unplanned 
rehospitalizations and no death in the 31 days following discharge from 
the SNF. We received public comments (see 81 FR 52025 through 52026) 
recommending exclusion of baseline nursing facility residents from the 
measure, as these residents did not live in the community prior to 
their SNF stay. At that time, we highlighted that using Medicare FFS 
claims alone, we were unable to accurately identify baseline nursing 
facility residents. We stated that potential future modifications of 
the measure could include assessment of the feasibility and impact of 
excluding baseline nursing facility residents from the measure through 
the addition of patient assessment-based data. In response to these 
public comments, we are considering a future modification of the 
Discharge to Community-PAC SNF QRP measure, which would exclude 
baseline nursing facility residents from the measure. Further, this 
measure is specified to be calculated using one year of Medicare FFS 
claims data. We are considering expanding the measurement period in the 
future to two consecutive years of data to increase SNF sample sizes 
and reduce the number of SNFs with fewer than 25 stays that would 
otherwise be excluded from public reporting. This modification would 
also align the measurement period with that of the discharge to 
community measures adopted for the IRF and LTCH Quality Reporting 
Programs to meet the IMPACT Act requirements; both the IRF and LTCH 
measures have measurement periods of two consecutive years.
    We are inviting public comment on these considerations for 
Discharge to Community-PAC SNF QRP measure in future years of the SNF 
QRP.
b. IMPACT Act Implementation Update
    As a result of the input and suggestions provided by technical 
experts at the TEPs held by our measure developer, and through public 
comment, we are engaging in additional development work for two 
measures that would satisfy 1899B(c)(1)(E) of the Act, including 
performing additional testing. We intend to specify these measures 
under section 1899B(c)(1)(E) of the Act no later than October 1, 2018 
and we intend to propose to adopt them for the FY 2021 SNF QRP, with 
data collection beginning on or about October 1, 2019.

 Table 19--SNF QRP Quality Measures Under Consideration for Future Years
------------------------------------------------------------------------
                                                        Patient- and
                   NQS priority                      Caregiver-Centered
                                                            Care
------------------------------------------------------------------------
Measure...........................................   Application
                                                     of Percent of
                                                     Residents Who Self-
                                                     Report Moderate to
                                                     Severe Pain.
------------------------------------------------------------------------
                   NQS Priority                       Health and Well-
                                                            Being
------------------------------------------------------------------------
Measure...........................................   Application
                                                     of Percent of
                                                     Residents or
                                                     Patients Who Were
                                                     Assessed and
                                                     Appropriately Given
                                                     the Seasonal
                                                     Influenza Vaccine.
------------------------------------------------------------------------
                   NQS Priority                        Patient Safety
------------------------------------------------------------------------
Measure...........................................   Percent of
                                                     SNF Residents Who
                                                     Newly Received an
                                                     Antipsychotic
                                                     Medication.
------------------------------------------------------------------------
                   NQS Priority                       Communication and
                                                      Care Coordination
------------------------------------------------------------------------
Measure...........................................  
                                                     Modification of the
                                                     Discharge to
                                                     Community-Post
                                                     Acute Care (PAC)
                                                     Skilled Nursing
                                                     Facility (SNF)
                                                     Quality Reporting
                                                     Program (QRP)
                                                     measure.
------------------------------------------------------------------------

10. Proposed Standardized Resident Assessment Data Reporting for the 
SNF QRP
a. Proposed Standardized Resident Assessment Data Reporting for the FY 
2019 SNF QRP
    Section 1888(e)(6)(B)(i)(III) of the Act requires that for fiscal 
year 2019 and each subsequent year, SNFs report standardized patient 
assessment data required under section 1899B(b)(1) of the Act. As we 
describe in more detail above, we are proposing that the current 
pressure ulcer measure, Percent of Residents or Patients with Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678), be replaced 
with the proposed pressure ulcer measure, Changes in Skin Integrity 
Post-Acute Care: Pressure Ulcer/Injury, beginning with the FY 2020 SNF 
QRP. The current pressure ulcer measure will remain in the SNF QRP 
until that time. Accordingly, for the requirement that SNFs report 
standardized patient assessment data for the FY 2019 SNF QRP, we are 
proposing that the data elements used to calculate that measure meet 
the definition of standardized patient assessment data for medical 
conditions and co-morbidities under section 1899B(b)(1)(B)(iv) and that 
the successful reporting of that data under section 
1888(e)(6)(B)(i)(II) for admissions as well as discharges occurring 
during fourth quarter CY 2017 would also satisfy the requirement to 
report standardized patient assessment data for the FY 2019 SNF QRP.
    The collection of assessment data pertaining to skin integrity, 
specifically pressure related wounds, is important for multiple 
reasons. Clinical decision support, care planning, and quality 
improvement all depend on reliable assessment data collection. Pressure 
related wounds represent poor outcomes, are a serious medical condition 
that can result in death and disability, are debilitating, painful and

[[Page 21059]]

are often an avoidable outcome of medical 
care.34 35 36 37 38 39 Pressure related wounds are 
considered health care acquired conditions.
---------------------------------------------------------------------------

    \34\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs N Z 19(10): 20-24.
    \35\ Gorzoni, M.L. and S.L. Pires (2011). ``Deaths in nursing 
homes.'' Rev Assoc Med Bras 57(3): 327-331.
    \36\ Thomas, J.M., et al. (2013). ``Systematic review: health-
related characteristics of elderly hospitalized adults and nursing 
home residents associated with short-term mortality.'' J Am Geriatr 
Soc 61(6): 902-911.
    \37\ White-Chu, E.F., et al. (2011). ``Pressure ulcers in long-
term care.'' Clin Geriatr Med 27(2): 241-258.
    \38\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \39\ Bennet, G., Dealy, C., Posnett, J. (2004). The cost of 
pressure ulcers in the UK, Age and Aging, 33(3):230-235.
---------------------------------------------------------------------------

    As we note above, the data elements needed to calculate the current 
pressure ulcer measure are already included on the MDS and reported for 
SNFs, and exhibit validity and reliability for use across PAC 
providers. Item reliability for these data elements was also tested for 
the nursing home setting during implementation of MDS 3.0. Testing 
results are from the RAND Development and Validation of MDS 3.0 
project.\40\ The RAND pilot test of the MDS 3.0 data elements showed 
good reliability and is also applicable to both the IRF-PAI and the 
LTCH CARE Data Set because the data elements tested are the same. 
Across the pressure ulcer data elements, the average gold-standard 
nurse to gold-standard nurse kappa statistic was 0.905. The average 
gold-standard nurse to facility-nurse kappa statistic was 0.937. Data 
elements used to risk adjust this quality measure were also tested 
under this same pilot test, and the gold-standard to gold-standard 
kappa statistic, or percent agreement (where kappa statistic not 
available), ranged from 0.91 to 0.99 for these data elements. These 
kappa scores indicate ``almost perfect'' agreement using the Landis and 
Koch standard for strength of agreement.\41\
---------------------------------------------------------------------------

    \40\ Saliba, D., & Buchanan, J. (2008, April). Development and 
validation of a revised nursing home assessment tool: MDS 3.0. 
Contract No. 500-00-0027/Task Order #2. Santa Monica, CA: Rand 
Corporation. Retrieved from https://www.cms.hhs.gov/NursingHomeQualityInits/Downloads/MDS30FinalReport.pdf.
    \41\ Landis, R., & Koch, G. (1977, March). The measurement of 
observer agreement for categorical data. Biometrics 33(1), 159-174.
---------------------------------------------------------------------------

    The data elements used to calculate the current pressure ulcer 
measure received public comment on several occasions, including when 
that measure was proposed in the FY 2012 IRF PPS (76 FR 47876) and 
IPPS/LTCH PPS proposed rules (76 FR 51754). Further, they were 
discussed in the past by TEPs held by our measure development 
contractor on June 13 and November 15, 2013, and recently by a TEP on 
July 18, 2016. TEP members supported the measure and its cross-setting 
use in PAC. The report, Technical Expert Panel Summary Report: 
Refinement of the Percent of Patients or Residents with Pressure Ulcers 
that are New or Worsened (Short-Stay) (NQF #0678) Quality Measure for 
Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation Facilities 
(IRFs), Long-Term Care Hospitals (LTCHs), and Home Health Agencies 
(HHAs), is available at 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.
    We are inviting public comment on this proposal.
b. Proposed Standardized Resident Assessment Data Reporting Beginning 
With the FY 2020 SNF QRP
    We describe below our proposals for the reporting of standardized 
patient assessment data by SNFs beginning with the FY 2020 SNF QRP. 
SNFs would be required to report these data forSNF admissions at the 
start of the Medicare Part A stay and SNF discharges at the end of the 
Medicare Part A stay that occur between October 1, 2018 and December 
31, 2018, with the exception of two data elements (Hearing and Vision) 
that would be required for SNF admissions at the start of the Medicare 
Part A stay only that occur between October 1, 2018, and December 31, 
2018. The Hearing and Vision data elements would be assessed at 
admission only due to the relatively stable nature of hearing 
impairment and vision impairment, making it unlikely that these 
assessments would change between the start and end of the SNF stay. 
Assessment of the Hearing and Vision data elements at discharge would 
introduce additional burden without improving the quality or usefulness 
of the data, and is unnecessary. Following the initial reporting year 
for the FY 2020 SNF QRP, subsequent years for the SNF QRP would be 
based on a full calendar year of such data reporting. In selecting the 
data elements described below, we carefully weighed the balance of 
burden in assessment-based data collection and aimed to minimize 
additional burden through the utilization of existing data in the 
assessment instruments. We also note that the patient and resident 
assessment instruments are considered part of the medical record, and 
sought the inclusion of data elements relevant to patient care.
    We also took into consideration the following factors for each data 
element: Overall clinical relevance; ability to support clinical 
decisions, care planning and interoperable exchange to facilitate care 
coordination during transitions in care; and the ability to capture 
medical complexity and risk factors that can inform both payment and 
quality. Additionally the data elements had to have strong scientific 
reliability and validity; be meaningful enough to inform longitudinal 
analysis by providers; had to have received general consensus agreement 
for its usability; and had to have the ability to collect such data 
once but support multiple uses. Further, to inform the final set of 
data elements for proposal, we took into account technical and clinical 
subject matter expert review, public comment and consensus input in 
which such principles were applied. We also took into account the 
consensus work and empirical findings from the PAC-PRD. We acknowledge 
that during the development process that led to these proposals, some 
providers expressed concern that changes to the MDS to accommodate 
standardized patient assessment data reporting would lead to an overall 
increased reporting burden. However, we note that there is no 
additional data collection burden for standardized data already 
collected and submitted on the quality measures.
c. Proposed Standardized Resident Assessment Data by Category
(1) Functional Status Data
    We are proposing that the data elements currently reported by SNFs 
to calculate the measure, Application of Percent of Long-Term Care 
Hospital Patients with an Admission and Discharge Functional Assessment 
and a Care Plan That Addresses Function (NQF #2631), would also meet 
the definition of standardized patient assessment data for functional 
status under section 1899B(b)(1)(B)(i) of the Act, and that the 
successful reporting of that data under section 1886(m)(5)(F)(i) of the 
Act would also satisfy the requirement to report standardized patient 
assessment data under section 1886(m)(5)(F)(ii) of the Act.
    These patient assessment data for functional status are from the 
CARE Item Set. The development of the CARE Item Set and a description 
and rationale for each item is described in a report entitled ``The 
Development and Testing of the Continuity Assessment Record and 
Evaluation (CARE) Item Set: Final Report on the Development of the CARE

[[Page 21060]]

Item Set: Volume 1 of 3.'' \42\ Reliability and validity testing were 
conducted as part of CMS' Post-Acute Care Payment Reform Demonstration, 
and we concluded that the functional status items have acceptable 
reliability and validity. A description of the testing methodology and 
results are available in several reports, including the report entitled 
``The Development and Testing of the Continuity Assessment Record And 
Evaluation (CARE) Item Set: Final Report On Reliability Testing: Volume 
2 of 3'' \43\ and the report entitled ``The Development and Testing of 
The Continuity Assessment Record And Evaluation (CARE) Item Set: Final 
Report on Care Item Set and Current Assessment Comparisons: Volume 3 of 
3.'' \44\ The reports are available on CMS' Post-Acute Care Quality 
Initiatives Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/CARE-Item-Set-and-B-CARE.html. For more information about 
this quality measure, we refer readers to the FY 2016 SNF PPS final 
rule (80 FR 46444 through 46453).
---------------------------------------------------------------------------

    \42\ Barbara Gage et al., ``The Development and Testing of the 
Continuity Assessment Record and Evaluation (CARE) Item Set: Final 
Report on the Development of the CARE Item Set'' (RTI International, 
2012).
    \43\ Ibid.
    \44\ Ibid.
---------------------------------------------------------------------------

    We are inviting public comment on this proposal.
(2) Cognitive Function and Mental Status Data
    Cognitive function and mental status in PAC patient and resident 
populations can be affected by a number of underlying conditions, 
including dementia, stroke, traumatic brain injury, side effects of 
medication, metabolic and/or endocrine imbalances, delirium, and 
depression.\45\ The assessment of cognitive function and mental status 
by PAC providers is important because of the high percentage of 
patients and residents with these conditions,\46\ and the opportunity 
for improving the quality of care. Symptoms of dementia may improve 
with pharmacotherapy, occupational therapy, or physical 
activity,47 48 49 and promising treatments for severe 
traumatic brain injury are currently being tested.\50\ For older 
patients and residents diagnosed with depression, treatment options to 
reduce symptoms and improve quality of life include antidepressant 
medication and psychotherapy,51 52 53 54 and targeted 
services, such as therapeutic recreation, exercise, and restorative 
nursing, to increase opportunities for psychosocial interaction.\55\
---------------------------------------------------------------------------

    \45\ National Institute on Aging. (2014). Assessing Cognitive 
Impairment in Older Patients. A Quick Guide for Primary Care 
Physicians. Retrieved from https://www.nia.nih.gov/alzheimers/publication/assessing-cognitive-impairment-older-patients.
    \46\ Gage B., Morley M., Smith L., et al. (2012). Post-Acute 
Care Payment Reform Demonstration (Final report, Volume 4 of 4). 
Research Triangle Park, NC: RTI International.
    \47\ Casey D.A., Antimisiaris D., O'Brien J. (2010). Drugs for 
Alzheimer's Disease: Are They Effective? Pharmacology & 
Therapeutics, 35, 208-11.
    \48\ Graff M.J., Vernooij-Dassen M.J., Thijssen M., Dekker J., 
Hoefnagels W.H., Rikkert M.G.O. (2006). Community Based Occupational 
Therapy for Patients with Dementia and their Care Givers: Randomised 
Controlled Trial. BMJ, 333(7580): 1196.
    \49\ Bherer L., Erickson K.I., Liu-Ambrose T. (2013). A Review 
of the Effects of Physical Activity and Exercise on Cognitive and 
Brain Functions in Older Adults. Journal of Aging Research, 657508.
    \50\ Giacino J.T., Whyte J., Bagiella E., et al. (2012). 
Placebo-controlled trial of amantadine for severe traumatic brain 
injury. New England Journal of Medicine, 366(9), 819-826.
    \51\ Alexopoulos G.S., Katz I.R., Reynolds C.F. 3rd, Carpenter 
D., Docherty J.P., Ross R.W. (2001). Pharmacotherapy of depression 
in older patients: A summary of the expert consensus guidelines. 
Journal of Psychiatric Practice, 7(6), 361-376.
    \52\ Arean P.A., Cook B.L. (2002). Psychotherapy and combined 
psychotherapy/pharmacotherapy for late life depression. Biological 
Psychiatry, 52(3), 293-303.
    \53\ Hollon S.D., Jarrett R.B., Nierenberg A.A., Thase M.E., 
Trivedi M., Rush A.J. (2005). Psychotherapy and medication in the 
treatment of adult and geriatric depression: which monotherapy or 
combined treatment? Journal of Clinical Psychiatry, 66(4), 455-468.
    \54\ Wagenaar D, Colenda CC, Kreft M, Sawade J, Gardiner J, 
Poverejan E. (2003). Treating depression in nursing homes: practice 
guidelines in the real world. J Am Osteopath Assoc. 103(10), 465-
469.
    \55\ Crespy SD, Van Haitsma K, Kleban M, Hann CJ. Reducing 
Depressive Symptoms in Nursing Home Residents: Evaluation of the 
Pennsylvania Depression Collaborative Quality Improvement Program. J 
Healthc Qual. 2016. Vol. 38, No. 6, pp. e76-e88.
---------------------------------------------------------------------------

    Accurate assessment of cognitive function and mental status of 
patients and residents in PAC would be expected to have a positive 
impact on the National Quality Strategy's domains of patient and family 
engagement, patient safety, care coordination, clinical process/
effectiveness, and efficient use of health care resources. For example, 
standardized assessment of cognitive function and mental status of 
patients and residents in PAC will support establishing a baseline for 
identifying changes in cognitive function and mental status (for 
example, delirium), anticipating the patient or resident's ability to 
understand and participate in treatments during a PAC stay, ensuring 
patient and resident safety (for example, risk of falls), and 
identifying appropriate support needs at the time of discharge or 
transfer. Standardized assessment data elements will enable or support 
clinical decision-making and early clinical intervention; person-
centered, high quality care through: Facilitating better care 
continuity and coordination; better data exchange and interoperability 
between settings; and longitudinal outcome analysis. Hence, reliable 
data elements assessing cognitive impairment and mental status are 
needed in order to initiate a management program that can optimize a 
patient or resident's prognosis and reduce the possibility of adverse 
events.
(a) Brief Interview for Mental Status (BIMS)
    We are proposing that the data elements that comprise the Brief 
Interview for Mental Status meet the definition of standardized patient 
assessment data for cognitive function and mental status under section 
1899B(b)(1)(B)(ii) of the Act. The proposed data elements consist of 
seven BIMS questions that result in a cognitive function score. For 
more information on the BIMS, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Dementia and cognitive impairment are associated with long-term 
functional dependence and, consequently, poor quality of life and 
increased health care costs and mortality.\56\ This makes assessment of 
mental status and early detection of cognitive decline or impairment 
critical in the PAC setting. The burden of cognitive impairment in PAC 
is high. The intensity of routine nursing care is higher for patients 
and residents with cognitive impairment than those without, and 
dementia is a significant variable in predicting readmission after 
discharge to the community from PAC providers.\57\ The BIMS data 
elements are currently in use in two of the PAC assessments: The MDS 
3.0 in SNFs and the IRF-PAI in IRFs. The BIMS was tested in the PAC PRD 
where it was found to have substantial to almost perfect agreement for 
inter-rater reliability (kappa range of 0.71 to 0.91) when tested in 
all four PAC

[[Page 21061]]

settings.\58\ Clinical and subject matter expert advisors working with 
our data element contractor agreed that the BIMS is a feasible data 
element for use by PAC providers. Additionally, discussions during a 
TEP convened on April 6 and 7, 2016, demonstrated support for the 
BIMS.. The Development and Maintenance of Post-Acute Care Cross-Setting 
Standardized Patient Assessment Data Technical Expert Panel Summary 
Report is available at 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.
---------------------------------------------------------------------------

    \56\ Ag[uuml]ero-Torres, H., Fratiglioni, L., Guo, Z., Viitanen, 
M., von Strauss, E., & Winblad, B. (1998). ``Dementia is the major 
cause of functional dependence in the elderly: 3-year follow-up data 
from a population-based study.'' Am J of Public Health 88(10): 1452-
1456.
    \57\ RTI International. Proposed Measure Specifications for 
Measures Proposed in the FY 2017 LTCH QRP NPRM. Research Triangle 
Park, NC. 2016.
---------------------------------------------------------------------------

    To solicit additional feedback on the BIMS, we requested public 
comment from August 12 to September 12, 2016. Many commenters expressed 
support for use of the BIMS, noting that it is reliable, feasible to 
use across settings, and will provide useful information about patients 
and residents. These comments noted that the data collected through the 
BIMS will provide a clearer picture of patient or resident complexity, 
help with the care planning process, and be useful during care 
transitions and when coordinating across providers. A full report of 
the comments is available at 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.
    Therefore, we are proposing to adopt the BIMS for use in the SNF 
QRP. As noted above in this section, the BIMS is already included on 
the MDS. For purposes of reporting for the FY 2020 SNF QRP, SNFs would 
be required to report these data for SNF admissions at the start of the 
Medicare Part A stay that occur between October 1, 2018 and December 
31, 2018. Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.
(b) Confusion Assessment Method (CAM)
    We are proposing that the data elements that comprise the Confusion 
Assessment Method (CAM) meet the definition of standardized patient 
assessment data for cognitive function and mental status under section 
1899B(b)(1)(B)(ii) of the Act. The CAM is a six-question instrument 
that screens for overall cognitive impairment, as well as distinguishes 
delirium or reversible confusion from other types of cognitive 
impairment. For more information on the CAM, we refer readers to the 
document titled, Proposed Specifications for SNF QRP Quality Measures 
and Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The CAM was developed to identify the signs and symptoms of 
delirium. It results in a score that suggests whether the patient or 
resident should be assigned a diagnosis of delirium. Because patients 
and residents with multiple comorbidities receive services from PAC 
providers, it is important to assess delirium, which is associated with 
a high mortality rate and prolonged duration of stay in hospitalized 
older adults.\59\ Assessing these signs and symptoms of delirium is 
clinically relevant for care planning by PAC providers.
---------------------------------------------------------------------------

    \59\ Fick, D.M., Steis, M.R., Waller, J.L., & Inouye, S.K. 
(2013). ``Delirium superimposed on dementia is associated with 
prolonged length of stay and poor outcomes in hospitalized older 
adults.'' J of Hospital Med 8(9): 500-505.
---------------------------------------------------------------------------

    The CAM is currently in use in two of the PAC assessments: The MDS 
3.0 in SNFs and the LCDS in LTCHs. The CAM was tested in the PAC PRD 
where it was found to have substantial agreement for inter-rater 
reliability for the ``Inattention and Disorganized Thinking'' questions 
(kappa range of 0.70 to 0.73); and moderate agreement for the ``Altered 
Level of Consciousness'' question (kappa of 0.58).\60\
---------------------------------------------------------------------------

    \60\ Gage B., Morley M., Smith L., et al. (2012). Post-Acute 
Care Payment Reform Demonstration (Final report, Volume 2 of 4). 
Research Triangle Park, NC: RTI International.
---------------------------------------------------------------------------

    Clinical and subject matter expert advisors working with our data 
element contractor agreed that the CAM is feasible for use by PAC 
providers, that it assesses key aspects of cognition, and that this 
information about patient or resident cognition would be clinically 
useful both within and across PAC provider types. The CAM was also 
supported by a TEP that discussed and rated candidate data elements 
during a meeting on April 6 and 7, 2016. The Development and 
Maintenance of Post-Acute Care Cross-Setting Standardized Patient 
Assessment Data Technical Expert Panel Summary Report is available at 
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. We requested public comment on 
the CAM from August 12 to September 12, 2016. Many commenters expressed 
support for use of the CAM, noting that it would provide important 
information for care planning and care coordination, and therefore, 
contribute to quality improvement. The commenters noted it is 
particularly helpful in distinguishing delirium and reversible 
confusion from other types of cognitive impairment. A full report of 
the comments is available at 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.
    Therefore, we are proposing to adopt the CAM for use in the SNF 
QRP. As noted above, the CAM is already included on the MDS. For 
purposes of reporting for the FY 2020 SNF QRP, SNFs would be required 
to report these data for SNF admissions at the start of the Medicare 
Part A stay and SNF discharges at the end of the Medicare Part A stay 
that occur between October 1, 2018 and December 31, 2018. Following the 
initial reporting year for the FY 2020 SNF QRP, subsequent years for 
the SNF QRP would be based on a full calendar year of such data 
reporting.
    We are inviting public comment on these proposals.
(c) Behavioral Signs and Symptoms
    We are proposing that the Behavioral Signs and Symptoms data 
elements meet the definition of standardized patient assessment data 
for cognitive function and mental status under section 
1899B(b)(1)(B)(ii) of the Act. The proposed data elements consist of 
three Behavioral Signs and Symptoms questions and result in three 
scores that categorize respondents as having or not having certain 
types of behavioral signs and symptoms. For more information on the 
Behavioral Signs and Symptoms data elements, we refer readers to the 
document titled, Proposed Specifications for SNF QRP Quality Measures 
and Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The questions included in the Behavioral Signs and Symptoms group 
assess whether the patient or resident has exhibited any behavioral 
symptoms

[[Page 21062]]

that may indicate cognitive impairment or other mental health issues 
during the assessment period, including physical, verbal, and other 
disruptive or dangerous behavioral symptoms, but excluding patient 
wandering. Such behavioral disturbances can indicate unrecognized needs 
and care preferences and are associated most commonly with dementia and 
other cognitive impairment, and less commonly with adverse drug events, 
mood disorders, and other conditions. Assessing behavioral disturbances 
can lead to early intervention, patient- and resident-centered care 
planning, clinical decision support, and improved staff and patient or 
resident safety through early detection. Assessment and documentation 
of these disturbances can help inform care planning and patient 
transitions and provide important information about resource use.
    Data elements that capture behavioral symptoms are currently 
included in two of the PAC assessments: The MDS 3.0 in SNFs and the 
OASIS-C2 in HHAs. In the MDS, each question includes four response 
options ranging from ``behavior not exhibited'' (0) to behavior 
``occurred daily'' (3). The OASIS-C2 includes some similar data 
elements which record the frequency of disruptive behaviors on a 6-
point scale ranging from ``never'' (0) to ``at least daily'' (5). Data 
elements that mirror those used in the MDS and serve the same 
assessment purpose were tested in post-acute providers in the PAC PRD 
and found to be clinically relevant, meaningful for care planning, and 
feasible for use in each of the four PAC settings.\61\
---------------------------------------------------------------------------

    \61\ Gage B., Morley M., Smith L., et al. (2012). Post-Acute 
Care Payment Reform Demonstration (Final report, Volume 2 of 4). 
Research Triangle Park, NC: RTI International.
---------------------------------------------------------------------------

    The proposed data elements were supported by comments from the 
Standardized Patient Assessment Data TEP held by our data element 
contractor. The TEP identified patient and resident behaviors as an 
important consideration for resource intensity and care planning, and 
affirmed the importance of the standardized assessment of patient 
behaviors through data elements such as those in use in the MDS. The 
Development and Maintenance of Post-Acute Care Cross-Setting 
Standardized Patient Assessment Data Technical Expert Panel Summary 
Report is available at 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.
    Because the PAC PRD version of the Behavioral Signs and Symptoms 
data elements were previously tested across PAC providers, we solicited 
additional feedback on this version of the data elements by including 
these data elements in a call for public comment that was open from 
August 12 to September 12, 2016. Consistent with the TEP discussion on 
the importance of patient and resident behaviors, many commenters 
expressed support for use of the Behavioral Signs and Symptoms data 
elements, noting that they would provide useful information about 
patient and resident behavior at both admission and discharge and 
contribute to care planning related to what treatment is appropriate 
for the patient or resident and what resources are needed. Public 
comment also supported the use of highly similar MDS version of the 
data element in order to provide continuity with existing assessment 
processes in SNFs. A full report of the comments is available at 
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.
    Therefore, we are proposing the MDS version of the Behavioral Signs 
and Symptoms data elements because they focus more closely on 
behavioral symptoms than the OASIS data elements, and include more 
detailed response categories than those used in the PAC PRD version, 
capturing more information about the frequency of behaviors. As noted 
above, the Behavioral Signs and Symptoms data elements are already 
included on the MDS. For purposes of reporting for the FY 2020 SNF QRP, 
SNFs would be required to report these data for SNF admissions at the 
start of the Medicare Part A stay and SNF discharges at the end of the 
Medicare Part A stay that occur between October 1, 2018 and December 
31, 2018. Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.
(d) Patient Health Questionnaire-2 (PHQ-2)
    We are proposing that the PHQ-2 data elements meet the definition 
of standardized patient assessment data for cognitive function and 
mental status under section 1899B(b)(1)(B)(ii) of the Act. The proposed 
data elements consist of the PHQ-2 two-item questionnaire that assesses 
the cardinal criteria for depression: Depressed mood and anhedonia 
(inability to feel pleasure). For more information on the PHQ-2, we 
refer readers to the document titled, Proposed Specifications for SNF 
QRP Quality Measures and Standardized Data Elements, available at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Depression is a common mental health condition often missed and 
under-recognized. Assessments of depression help PAC providers better 
understand the needs of their patients and residents by: Prompting 
further evaluation (that is, to establish a diagnosis of depression); 
elucidating the patient's or resident's ability to participate in 
therapies for conditions other than depression during their stay; and 
identifying appropriate ongoing treatment and support needs at the time 
of discharge. A PHQ-2 score beyond a predetermined threshold signals 
the need for additional clinical assessment in order to determine a 
depression diagnosis.
    The proposed data elements that comprise the PHQ-2 are currently 
used in the OASIS-C2 for HHAs and the MDS 3.0 for SNFs (as part of the 
PHQ-9). The PHQ-2 data elements were tested in the PAC PRD, where they 
were found to have almost perfect agreement for inter-rater reliability 
(kappa range of 0.84 to 0.91) when tested by all four PAC 
providers.\62\
---------------------------------------------------------------------------

    \62\ Gage B., Smith L., Ross J. et al. (2012). The Development 
and Testing of the Continuity Assessment Record and Evaluation 
(CARE) Item Set (Final Report on Reliability Testing, Volume 2 of 
3). Research Triangle Park, NC: RTI International.
---------------------------------------------------------------------------

    Clinical and subject matter expert advisors working with our data 
element contractor agreed that the PHQ-2 is feasible for use in PAC, 
that it assesses key aspects of mental status, and that this 
information about patient or resident mood would be clinically useful 
both within and across PAC provider types. We note that both the PHQ-9 
and the PHQ-2 were supported by TEP members who discussed and rated 
candidate data elements during a meeting on April 6 and 7, 2016. They 
particularly noted that the brevity of the PHQ-2 made it feasible with 
low burden for both assessors and PAC patients or residents. The 
Development and Maintenance of Post-Acute Care Cross-Setting 
Standardized Patient Assessment Data Technical Expert Panel

[[Page 21063]]

Summary Report is available at 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.
    To solicit additional feedback on the PHQ-2, we requested public 
comment from August 12 to September 12, 2016. Many commenters provided 
feedback on using the PHQ-2 for the assessment of mood. Overall, 
commenters believed that collecting these data elements across PAC 
provider types was appropriate, given the role that depression plays in 
well-being. Several commenters expressed support for an approach that 
would use PHQ-2 as a gateway to the longer PHQ-9 and would maintain the 
reduced burden on most patients and residents, as well as test 
administrators, which is a benefit of the PHQ-2, while ensuring that 
the PHQ-9, which exhibits higher specificity,\63\ would be administered 
for patients and residents who showed signs and symptoms of depression 
on the PHQ-2. Specific comments are described in a full report 
available at 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.
---------------------------------------------------------------------------

    \63\ Arroll B, Goodyear-Smith F, Crengle S, Gunn J, Kerse N, 
Fishman T, et al. Validation of PHQ-2 and PHQ-9 to screen for major 
depression in the primary care population. Annals of family 
medicine. 2010;8(4):348-53. doi: 10.1370/afm.1139 pmid:20644190; 
PubMed Central PMCID: PMC2906530.
---------------------------------------------------------------------------

    Therefore, we are proposing to adopt the PHQ-2 data elements for 
use in the SNF QRP. As noted above, the PHQ-2 data elements are already 
included on the MDS. For purposes of reporting for the FY 2020 SNF QRP, 
SNFs would be required to report these data for SNF admissions at the 
start of the Medicare Part A stay and SNF discharges at the end of the 
Medicare Part A stay that occur between October 1, 2018 and December 
31, 2018. Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.
(3) Special Services, Treatments, and Interventions Data
    Special services, treatments, and interventions performed in PAC 
can have a major effect on an individual's health status, self-image, 
and quality of life. The assessment of these special services, 
treatments, and interventions in PAC is important to ensure the 
continuing appropriateness of care for the patients and residents 
receiving them, and to support care transitions from one PAC provider 
to another, an acute care hospital, or discharge. Accurate assessment 
of special services, treatments, and interventions of patients and 
residents served by PAC providers are expected to have a positive 
impact on the National Quality Strategy's domains of patient and family 
engagement, patient safety, care coordination, clinical process/
effectiveness, and efficient use of health care resources.
    For example, standardized assessment of special services, 
treatments, and interventions used in PAC can promote patient and 
resident safety through appropriate care planning (for example, 
mitigating risks such as infection or pulmonary embolism associated 
with central intravenous access), and identifying life-sustaining 
treatments that must be continued, such as mechanical ventilation, 
dialysis, suctioning, and chemotherapy, at the time of discharge or 
transfer. Standardized assessment of these data elements will enable or 
support: Clinical decision-making and early clinical intervention; 
person-centered, high quality care through, for example, facilitating 
better care continuity and coordination; better data exchange and 
interoperability between settings; and longitudinal outcome analysis. 
Hence, reliable data elements assessing special services, treatments, 
and interventions are needed to initiate a management program that can 
optimize a patient or resident's prognosis and reduce the possibility 
of adverse events.
    For payment and care planning purposes in SNFs, the MDS already 
collects information on many special services, treatments, and 
interventions that residents have received over the prior 14 days, and 
distinguishes whether the treatments were received in or outside of the 
facility. In order to standardize across PAC provider types, data 
elements on the proposed special services, treatments and interventions 
adopted for cross-setting use to fulfill the requirements of the IMPACT 
Act also assess treatments and interventions during the first 3 days of 
a resident's stay, and during the last 7 days of the stay (for 
Nutritional Therapies) and as currently collected, at the last 14 days 
of the stay (for all other treatments and therapies). The look-back 
time frames of the standardized items were designed to collect timely 
and accurate information to inform care planning at the current site of 
care and to support continuity of care and transfer of key health 
information at the time of discharge or transfer to another PAC 
setting. The new response options will be embedded in the MDS, and all 
existing items will be retained for their current uses of payment and 
care planning.
    We are proposing 15 special services, treatments, and interventions 
as presented below grouped by cancer treatments, respiratory 
treatments, other treatments, and nutritional approaches. A TEP 
convened by our data element contractor provided input on the 15 data 
elements for Special Services, Treatments, and Interventions. This TEP, 
held on January 5 and 6, 2017, opined that these data elements are 
appropriate for standardization because they would provide useful 
clinical information to inform care planning and care coordination. The 
TEP affirmed that assessment of these services and interventions is 
standard clinical practice, and that the collection of these data by 
means of a list and checkbox format would conform with common workflow 
for PAC providers. A full report of the TEP discussion is available at 
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.
(a) Cancer Treatment: Chemotherapy (IV, Oral, Other)
    We are proposing that the Chemotherapy (IV, Oral, Other) data 
elements meet the definition of standardized patient assessment data 
for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data elements consist of 
the principal Chemotherapy data element and three sub-elements: IV 
Chemotherapy, Oral Chemotherapy, and Other. For more information on the 
Chemotherapy data element, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Chemotherapy is a type of cancer treatment that uses drugs to 
destroy cancer cells. It is sometimes used when a patient has a 
malignancy (cancer), which is a serious, often life-threatening or 
life-limiting condition. Both intravenous (IV) and oral chemotherapy

[[Page 21064]]

have serious side effects, including nausea/vomiting, extreme fatigue, 
risk of infection due to a suppressed immune system, anemia, and an 
increased risk of bleeding due to low platelet counts. Oral 
chemotherapy can be as potent as chemotherapy given by IV, but can be 
significantly more convenient and less resource-intensive to 
administer. Because of the toxicity of these agents, special care must 
be exercised in handling and transporting chemotherapy drugs. IV 
chemotherapy may be given by peripheral IV, but is more commonly given 
via an indwelling central line, which raises the risk of bloodstream 
infections. Given the significant burden of malignancy, the resource 
intensity of administering chemotherapy, and the side effects and 
potential complications of these highly-toxic medications, assessing 
the receipt of chemotherapy is important in the PAC setting for care 
planning and determining resource use.
    The need for chemotherapy predicts resource intensity, both because 
of the complexity of administering these potent, toxic drug 
combinations under specific protocols, and because of what the need for 
chemotherapy signals about the patient's underlying medical condition. 
Furthermore, the resource intensity of IV chemotherapy is higher than 
for oral chemotherapy, as the protocols for administration and the care 
of the central line (if present) require significant resources.
    The Chemotherapy (IV, Oral, Other) data elements consist of a 
principal data element and three sub-elements: IV chemotherapy, which 
is generally resource-intensive; oral chemotherapy, which is less 
invasive and generally less intensive with regard to administration 
protocols; and a third category provided to enable the capture of other 
less common chemotherapeutic approaches. This third category is 
potentially associated with higher risks and is more resource intensive 
due to delivery by other routes (for example, intraventricular or 
intrathecal).
    The principal Chemotherapy data element is currently in use in the 
MDS 3.0. One proposed sub-element, IV Chemotherapy, was tested in the 
PAC PRD and found feasible for use in each of the four PAC settings. We 
solicited public comment on IV Chemotherapy from August 12 to September 
12, 2016. Several commenters provided support for the data element and 
suggested it be included as standardized patient assessment data. 
Commenters stated that assessing the use of chemotherapy services is 
relevant to share across the care continuum to facilitate care 
coordination and care transitions and noted the validity of the data 
element. Commenters also noted the importance of capturing all types of 
chemotherapy, regardless of route, and stated that collecting data only 
on patients and residents who received chemotherapy by IV would limit 
the usefulness of this standardized data element. A full report of the 
comments is available at 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.
    As a result of the comments and input received from clinical and 
subject matter experts, we are proposing a principal Chemotherapy data 
element with three sub-elements, including Oral and Other for 
standardization. Our data element contractor then presented the 
proposed data elements to the Standardized Patient Assessment Data TEP 
on January 5 and 6, 2017, who supported these data elements for 
standardization. A full report of the TEP discussion is available at 
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. Therefore, we are proposing that 
the Chemotherapy (IV, Oral, Other) data elements with a principal data 
element and three sub-elements meet the definition of standardized 
patient assessment data for special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act. We are 
proposing to expand the existing Chemotherapy data element in the MDS 
to include sub-elements for IV, Oral, and Other, and that SNFs would be 
required to report these data for the FY 2020 SNF QRP for SNF 
admissions at the start of the Medicare Part A stay and SNF discharges 
at the end of the Medicare Part A stay that occur between October 1, 
2018 and December 31, 2018. Following the initial reporting year for 
the FY 2020 SNF QRP, subsequent years for the SNF QRP would be based on 
a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(b) Cancer Treatment: Radiation
    We are proposing that the Radiation data element meets the 
definition of standardized patient assessment data for special 
services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of 
the single Radiation data element. For more information on the 
Radiation data element, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Radiation is a type of cancer treatment that uses high-energy 
radioactivity to stop cancer by damaging cancer cell DNA, but it can 
also damage normal cells. Radiation is an important therapy for 
particular types of cancer, and the resource utilization is high, with 
frequent radiation sessions required, often daily for a period of 
several weeks. Assessing whether a patient or resident is receiving 
radiation therapy is important to determine resource utilization 
because PAC patients and residents will need to be transported to and 
from radiation treatments, and monitored and treated for side effects 
after receiving this intervention. Therefore, assessing the receipt of 
radiation therapy, which would compete with other care processes given 
the time burden, would be important for care planning and care 
coordination by PAC providers.
    The Radiation data element is currently in use in the MDS 3.0. This 
data element was not tested in the PAC PRD. However, public comment and 
other expert input on the Radiation data element supported its 
importance and clinical usefulness for patients in PAC settings, due to 
the side effects and consequences of radiation treatment on patients 
that need to be considered in care planning and care transitions. To 
solicit additional feedback on the Radiation data element we are 
proposing, we requested public comment from August 12 to September 12, 
2016. Several commenters provided support for the data element, noting 
the relevance of this data element to facilitating care coordination 
and supporting care transitions, the feasibility of the item, and the 
potential for it to improve quality. A full report of the comments is 
available at 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.
    The proposed data element was presented to and supported by the TEP 
held by our data element contractor on January 5-6, 2017, which opined 
that Radiation was important corollary

[[Page 21065]]

information about cancer treatment to collect alongside Chemotherapy 
(IV, Oral, Other), and that, because capturing this information is a 
customary part of clinical practice, the proposed data element would be 
feasible, reliable, and easily incorporated into existing workflow.
    Therefore, we are proposing that the Radiation data element meets 
the definition of standardized patient assessment data for special 
services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. As noted above, the Radiation data 
element is already included on the MDS. For purposes of reporting for 
the FY 2020 SNF QRP, SNFs would be required to report these data for 
SNF admissions at the start of the Medicare Part A stay and SNF 
discharges at the end of the Medicare Part A stay that occur between 
October 1, 2018 and December 31, 2018. Following the initial reporting 
year for the FY 2020 SNF QRP, subsequent years for the SNF QRP would be 
based on a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(c) Respiratory Treatment: Oxygen Therapy (Continuous, Intermittent)
    We are proposing that the Oxygen Therapy (Continuous, Intermittent) 
data elements meet the definition of standardized patient assessment 
data for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data elements consist of 
the principal Oxygen data element and two sub-elements, ``Continuous'' 
(whether the oxygen was delivered continuously, typically defined as > 
= 14 hours per day), or ``Intermittent.'' For more information on the 
Oxygen Therapy (Continuous, Intermittent) data elements, we refer 
readers to the document titled, Proposed Specifications for SNF QRP 
Quality Measures and Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Oxygen therapy provides a patient or resident with extra oxygen 
when medical conditions such as chronic obstructive pulmonary disease, 
pneumonia, or severe asthma prevent the patient or resident from 
getting enough oxygen from breathing. Oxygen administration is a 
resource-intensive intervention, as it requires specialized equipment 
such as a source of oxygen, delivery systems (for example, oxygen 
concentrator, liquid oxygen containers, and high-pressure systems), the 
patient interface (for example, nasal cannula or mask), and other 
accessories (for example, regulators, filters, tubing). These data 
elements capture patient or resident use of two types of oxygen therapy 
(continuous and intermittent) which are reflective of intensity of care 
needs, including the level of monitoring and bedside care required. 
Assessing the receipt of this service is important for care planning 
and resource use for PAC providers.
    The proposed data elements were developed based on similar data 
elements that assess oxygen therapy, currently in use in the MDS 3.0 
(``Oxygen Therapy'') and OASIS-C2 (``Oxygen (intermittent or 
continuous)''), and a data element tested in the PAC PRD that focused 
on intensive oxygen therapy (``High O2 Concentration Delivery System 
with FiO2 > 40%'').
    As a result of input from expert advisors, we solicited public 
comment on the single data element, Oxygen (inclusive of intermittent 
and continuous oxygen use), from August 12 to September 12, 2016. 
Several commenters supported the importance of the Oxygen data element, 
noting feasibility of this item in PAC, and the relevance of it to 
facilitating care coordination and supporting care transitions, but 
suggesting that the extent of oxygen use be documented. A full report 
of the comments is available at 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.
    As a result of public comment and input from expert advisors about 
the importance and clinical usefulness of documenting the extent of 
oxygen use, we expanded the single data element to include two sub-
elements, intermittent and continuous.
    Therefore, we are proposing that the Oxygen Therapy (Continuous, 
Intermittent) data elements with a principal data element and two sub-
elements meet the definition of standardized patient assessment data 
for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. We are proposing to expand the existing 
Oxygen Therapy data element in the MDS to include sub-elements for 
Continuous and Intermittent, and that SNFs would be required to report 
these data for the FY 2020 SNF QRP for SNF admissions at the start of 
the Medicare Part A stay and SNF discharges at the end of the Medicare 
Part A stay that occur between October 1, 2018 and December 31, 2018. 
Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.
(d) Respiratory Treatment: Suctioning (Scheduled, as Needed)
    We are proposing that the Suctioning (Scheduled, As needed) data 
elements meet the definition of standardized patient assessment data 
element for special services, treatments, and interventions under 
section 1899B(b)(1)(B)(iii) of the Act. The proposed data elements 
consist of the principal Suctioning data element, and two sub-elements, 
``Scheduled'' and ``As needed.'' These sub-elements capture two types 
of suctioning. ``Scheduled'' indicates suctioning based on a specific 
frequency, such as every hour; ``As needed'' means suctioning only when 
indicated. For more information on the Suctioning (Scheduled, As 
needed) data elements, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Suctioning is a process used to clear secretions from the airway 
when a person cannot clear those secretions on his or her own. It is 
done by aspirating secretions through a catheter connected to a suction 
source. Types of suctioning include oropharyngeal and nasopharyngeal 
suctioning, nasotracheal suctioning, and suctioning through an 
artificial airway such as a tracheostomy tube. Oropharyngeal and 
nasopharyngeal suctioning are a key part of many patients' care plans, 
both to prevent the accumulation of secretions than can lead to 
aspiration pneumonias (a common condition in patients with inadequate 
gag reflexes), and to relieve obstructions from mucus plugging during 
an acute or chronic respiratory infection, which often lead to 
desaturations and increased respiratory effort. Suctioning can be done 
on a scheduled basis if the patient is judged to clinically benefit 
from regular interventions; or can be done as needed, such as when 
secretions become so prominent that gurgling or choking is noted, or a 
sudden

[[Page 21066]]

desaturation occurs from a mucus plug. As suctioning is generally 
performed by a care provider rather than independently, this 
intervention can be quite resource-intensive if it occurs every hour, 
for example, rather than once a shift. It also signifies an underlying 
medical condition that prevents the patient from clearing his/her 
secretions effectively (such as after a stroke, or during an acute 
respiratory infection). Generally, suctioning is necessary to ensure 
that the airway is clear of secretions which can inhibit successful 
oxygenation of the individual. The intent of suctioning is to maintain 
a patent airway, the loss of which can lead to death, or complications 
associated with hypoxia.
    The proposed data elements are based on an item currently in use in 
the MDS 3.0 (``Suctioning'' without the two sub-elements), and data 
elements tested in the PAC PRD that focused on the frequency of 
suctioning required for patients with tracheostomies (``Trach Tube with 
Suctioning: Specify most intensive frequency of suctioning during stay 
[Every __hours]'').
    Clinical and subject matter expert advisors working with our data 
element contractor agreed that the proposed Suctioning (Scheduled, As 
needed) data elements are feasible for use in PAC, and that they 
indicate important treatment that would be clinically useful to capture 
both within and across PAC providers. We solicited public comment on 
the suctioning data element currently included in the MDS 3.0 between 
August 12, to September 12, 2016. Several commenters wrote in support 
of this data element, noting feasibility of this item in PAC, and the 
relevance of this data element to facilitating care coordination and 
supporting care transitions. We also received comments suggesting that 
we examine the frequency of suctioning in order to better understand 
the use of staff time, the impact on a patient or resident's capacity 
to speak and swallow, and intensity of care required. Based on these 
comments, we decided to add two sub-elements (scheduled and as needed) 
to the suctioning element. The proposed data elements, Suctioning 
(Scheduled, As needed) includes both the principal suctioning data 
element that is included on the MDS 3.0 and two sub-elements, 
``scheduled'' and ``as needed.'' A full report of the comments is 
available at 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.
    A TEP convened by the data element contractor provided input on the 
proposed data elements. This TEP, held on January 5 and 6, 2017, opined 
that these data elements are appropriate for standardization because 
they would provide useful clinical information to inform care planning 
and care coordination. The TEP affirmed that assessment of these 
services and interventions is standard clinical practice. A full report 
of the TEP discussion is available at 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.
    Therefore, we are proposing that the Suctioning (Scheduled, As 
needed) data elements with a principal data element and two sub-
elements meet the definition of standardized patient assessment data 
for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. We are proposing to expand the existing 
Suctioning data element in the MDS to include sub-elements for 
Scheduled and As needed, and that SNFs would be required to report 
these data for the FY 2020 SNF QRP for SNF admissions at the start of 
the Medicare Part A stay and SNF discharges at the end of the Medicare 
Part A stay that occur between October 1, 2018 and December 31, 2018. 
Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.
(e) Respiratory Treatment: Tracheostomy Care
    We are proposing that the Tracheostomy Care data element meets the 
definition of standardized patient assessment data for special 
services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of 
the single Tracheostomy Care data element. For more information on the 
Tracheostomy Care data element, we refer readers to the document 
titled, Proposed Specifications for SNF QRP Quality Measures and 
Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    A tracheostomy provides an air passage to help a patient or 
resident breathe when the usual route for breathing is obstructed or 
impaired. Generally, in all of these cases, suctioning is necessary to 
ensure that the tracheostomy is clear of secretions which can inhibit 
successful oxygenation of the individual. Often, individuals with 
tracheostomies are also receiving supplemental oxygenation. The 
presence of a tracheostomy, albeit permanent or temporary, warrants 
careful monitoring and immediate intervention if the tracheostomy 
becomes occluded or in the case of a temporary tracheostomy, the device 
used becomes dislodged. While in rare cases the presence of a 
tracheostomy is not associated with increased care demands (and in some 
of those instances, the care of the ostomy is performed by the patient) 
in general the presence of such as device is associated with increased 
patient risk, and clinical care services will necessarily include close 
monitoring to ensure that no life-threatening events occur as a result 
of the tracheostomy, often considered part of the patient's life line. 
In addition, tracheostomy care, which primarily consists of cleansing, 
dressing changes, and replacement of the tracheostomy cannula (tube), 
is also a critical part of the care plan. Regular cleansing is 
important to prevent infection such as pneumonia and to prevent any 
occlusions with which there are risks for inadequate oxygenation.
    The proposed data element is currently in use in the MDS 3.0 
(``Tracheostomy care''). Data elements (``Trach Tube with Suctioning'') 
that were tested in the PAC PRD included an equivalent principal data 
element on the presence of a tracheostomy. This data element was found 
feasible for use in each of the four PAC settings as the data 
collection aligned with usual work flow.
    Clinical and subject matter expert advisors working with our data 
element contractor agreed that the Tracheostomy Care data element is 
feasible for use in PAC and that it assesses an important treatment 
that would be clinically useful both within and across PAC provider 
types.
    We solicited public comment on this data element from August 12 to 
September 12, 2016. Several commenters wrote in support of this data 
element, noting the feasibility of this item in PAC, and the relevance 
of this data element to facilitating care coordination and supporting 
care transitions. A full report of the comments is available at https:/
/www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/

[[Page 21067]]

IMPACT-Act-Downloads-and-Videos.html.
    A TEP convened by the data element contractor provided input on the 
proposed data elements. This TEP, held on January 5 and 6, 2017, opined 
that these data elements are appropriate for standardization because 
they would provide useful clinical information to inform care planning 
and care coordination. The TEP affirmed that assessment of these 
services and interventions is standard clinical practice. A full report 
of the TEP discussion is available at 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.
    Therefore, we are proposing that the Tracheostomy Care data element 
meets the definition of standardized patient assessment data for 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. As noted above, the Tracheotomy Care 
data element is already included on the MDS. For purposes of reporting 
for the FY 2020 SNF QRP, SNFs would be required to report these data 
for SNF admissions at the start of the Medicare Part A stay and SNF 
discharges at the end of the Medicare Part A stay that occur between 
October 1, 2018 and December 31, 2018. Following the initial reporting 
year for the FY 2020 SNF QRP, subsequent years for the SNF QRP would be 
based on a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(f) Respiratory Treatment: Non-invasive Mechanical Ventilator (BiPAP, 
CPAP)
    We are proposing that the Non-invasive Mechanical Ventilator 
(Bilevel Positive Airway Pressure [BiPAP], Continuous Positive Airway 
Pressure [CPAP]) data elements meet the definition of standardized 
patient assessment data for special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act. The 
proposed data elements consist of the principal Non-invasive Mechanical 
Ventilator data element and two sub-elements, BiPAP and CPAP. For more 
information on the Non-invasive Mechanical Ventilator (BiPAP, CPAP) 
data element, we refer readers to the document titled, Proposed 
Specifications for SNF QRP Quality Measures and Standardized Data 
Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    BiPAP and CPAP are respiratory support devices that prevent the 
airways from closing by delivering slightly pressurized air via 
electronic cycling throughout the breathing cycle (Bilevel PAP, 
referred to as BiPAP) or through a mask continuously (Continuous PAP, 
referred to as CPAP). Assessment of non-invasive mechanical ventilation 
is important in care planning, as both CPAP and BiPAP are resource-
intensive (although less so than invasive mechanical ventilation) and 
signify underlying medical conditions about the patient or resident who 
requires the use of this intervention. Particularly when used in 
settings of acute illness or progressive respiratory decline, 
additional staff (for example, respiratory therapists) are required to 
monitor and adjust the CPAP and BiPAP settings and the patient or 
resident may require more nursing resources.
    Data elements that assess BiPAP and CPAP are currently included on 
the OASIS-C2 for HHAs (``Continuous/Bi-level positive airway 
pressure''), LCDS for the LTCH setting (``Non-invasive Ventilator 
(BIPAP, CPAP)''), and the MDS 3.0 for the SNF setting (``BiPAP/CPAP''). 
A data element that focused on CPAP was tested across the four PAC 
providers in the PAC-PRD study and found to be feasible for 
standardization. All of these data elements assess BiPAP or CPAP with a 
single check box, not separately.
    Clinical and subject matter expert advisors working with our data 
element contractor agreed that the standardized assessment of Non-
invasive Mechanical Ventilator (BiPAP, CPAP) data elements would be 
feasible for use in PAC, and assess an important treatment that would 
be clinically useful both within and across PAC provider types.
    To solicit additional feedback on the form of the Non-invasive 
Mechanical Ventilator (BiPAP, CPAP) data elements best suited for 
standardization, we requested public comment on a single data element, 
BiPAP/CPAP, equivalent (but for labeling) to what is currently in use 
on the MDS, OASIS, and LCDS, from August 12 to September 12, 2016. 
Several commenters wrote in support of this data element, noting the 
feasibility of these items in PAC, and the relevance of these data 
elements for facilitating care coordination and supporting care 
transitions. In addition, there was support in the public comment 
responses for separating out BiPAP and CPAP as distinct sub-elements, 
as they are therapies used for different types of patients and 
residents. A full report of the comments is available at 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.
    A TEP convened by the data element contractor provided input on the 
proposed data elements. This TEP, held on January 5 and 6, 2017, opined 
that these data elements are appropriate for standardization because 
they would provide useful clinical information to inform care planning 
and care coordination. The TEP affirmed that assessment of these 
services and interventions is standard clinical practice. A full report 
of the TEP discussion is available at 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.
    Therefore, we are proposing that the Non-invasive Mechanical 
Ventilator (BiPAP, CPAP) data elements with a principal data element 
and two sub-elements meet the definition of standardized patient 
assessment data for special services, treatments, and interventions 
under section 1899B(b)(1)(B)(iii) of the Act. We are proposing to 
expand the existing BiPAP/CPAP data element on the MDS, retaining and 
relabeling the BiPAP/CPAP data element to be Non-invasive Mechanical 
Ventilator (BiPAP, CPAP), and adding two sub-elements for BiPAP and 
CPAP. For the purposes of reporting for the FY 2020 SNF QRP, SNFs would 
be required to report these data for SNF admissions at the start of the 
Medicare Part A stay and SNF discharges at the end of the Medicare Part 
A stay that occur between October 1, 2018 and December 31, 2018. 
Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.
(g) Respiratory Treatment: Invasive Mechanical Ventilator
    We are proposing that the Invasive Mechanical Ventilator data 
element meets the definition of standardized patient assessment data 
for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of a 
single Invasive Mechanical Ventilator data element. For more 
information on the Invasive Mechanical

[[Page 21068]]

Ventilator data element, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Invasive mechanical ventilation includes ventilators and 
respirators that ventilate the patient through a tube that extends via 
the oral airway into the pulmonary region or through a surgical opening 
directly into the trachea. Thus, assessment of invasive mechanical 
ventilation is important in care planning and risk mitigation. 
Ventilation in this manner is a resource-intensive therapy associated 
with life-threatening conditions without which the patient or resident 
would not survive. However, ventilator use has inherent risks requiring 
close monitoring. Failure to adequately care for the patient or 
resident who is ventilator dependent can lead to iatrogenic events such 
as death, pneumonia and sepsis. Mechanical ventilation further 
signifies the complexity of the patient's underlying medical and or 
surgical condition. Of note, invasive mechanical ventilation is 
associated with high daily and aggregate costs.\64\
---------------------------------------------------------------------------

    \64\ Wunsch, H., Linde-Zwirble, W.T., Angus, D.C., Hartman, 
M.E., Milbrandt, E.B., & Kahn, J.M. (2010). ``The epidemiology of 
mechanical ventilation use in the United States.'' Critical Care Med 
38(10): 1947-1953.
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    Data elements that capture invasive mechanical ventilation, but 
vary in their level of specificity, are currently in use in the MDS 3.0 
(``Ventilator or respirator'') and LCDS (``Invasive Mechanical 
Ventilator: Weaning'' and ``Invasive Mechanical Ventilator: Non-
weaning''), and related data elements that assess invasive ventilator 
use and weaning status were tested in the PAC PRD (``Ventilator--
Weaning'' and ``Ventilator--Non-Weaning'') and found feasible for use 
in each of the four PAC settings.
    Clinical and subject matter expert advisors working with our data 
element contractor agreed that assessing Invasive Mechanical Ventilator 
use is feasible in PAC, and would be clinically useful both within and 
across PAC providers.
    To solicit additional feedback on the form of a data element on 
this topic that would be appropriate for standardization, data element 
that assess invasive ventilator use and weaning status that were tested 
in the PAC PRD (``Ventilator--Weaning'' and ``Ventilator--Non-
Weaning'') were included in a call for public comment that was open 
from August 12 to September 12, 2016 because they were being considered 
for standardization. Several commenters wrote in support of these data 
elements, highlighting the importance of this information in supporting 
care coordination and care transitions. Some commenters expressed 
concern about the appropriateness for standardization, given the 
prevalence of ventilator weaning across PAC providers; the timing of 
administration; how weaning is defined; and how weaning status in 
particular relates to quality of care. These comments guided the 
decision to propose a single data element focused on current use of 
invasive mechanical ventilation only, and does not attempt to capture 
weaning status. A full report of the comments is available at 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.
    A TEP convened by the data element contractor provided input on the 
proposed data elements. This TEP, held on January 5 and 6, 2017, opined 
that these data elements are appropriate for standardization because 
they would provide useful clinical information to inform care planning 
and care coordination. The TEP affirmed that assessment of these 
services and interventions is standard clinical practice. A full report 
of the TEP discussion is available at 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.
    Therefore, we are proposing that the Invasive Mechanical Ventilator 
data element that assesses the use of an invasive mechanical 
ventilator, but does not assess weaning status, meets the definition of 
standardized patient assessment data for special services, treatments, 
and interventions under section 1899B(b)(1)(B)(iii) of the Act. As 
noted above, the Ventilator or Respirator data element, with the same 
definition as the Invasive Mechanical Ventilator data element, is 
already included on the MDS. For purposes of reporting for the FY 2020 
SNF QRP, SNFs would be required to report these data for SNF admissions 
at the start of the Medicare Part A stay and SNF discharges at the end 
of the Medicare Part A stay that occur between October 1, 2018 and 
December 31, 2018. Following the initial reporting year for the FY 2020 
SNF QRP, subsequent years for the SNF QRP would be based on a full 
calendar year of such data reporting.
    We are inviting public comment on these proposals.
(h) Other Treatment: Intravenous (IV) Medications (Antibiotics, 
Anticoagulation, Other)
    We are proposing that the IV Medications (Antibiotics, 
Anticoagulation, Other) data elements meet the definition of 
standardized patient assessment data for special services, treatments, 
and interventions under section 1899B(b)(1)(B)(iii) of the Act. The 
proposed data elements consist of the principal IV Medications data 
element and three sub-elements, Antibiotics, Anticoagulation, and 
Other. For more information on the IV Medications (Antibiotics, 
Anticoagulation, Other) data element, we refer readers to the document 
titled, Proposed Specifications for SNF QRP Quality Measures and 
Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    IV medications are solutions of a specific medication (for example, 
antibiotics, anticoagulants) administered directly into the venous 
circulation via a syringe or intravenous catheter (tube). IV 
medications are administered via intravenous push (bolus), single, 
intermittent, or continuous infusion through a tube placed into the 
vein (for example, commonly referred to as central, midline, or 
peripheral ports). Further, IV medications are more resource intensive 
to administer than oral medications, and signify a higher patient 
complexity (and often higher severity of illness).
    The clinical indications for each of the sub-elements of the IV 
Medication data element (Antibiotics, Anticoagulants, and Other) are 
very different. IV antibiotics are used for severe infections when: (1) 
The bioavailability of the oral form of the medication would be 
inadequate to kill the pathogen; (2) an oral form of the medication 
does not exist; or (3) the patient is unable to take the medication by 
mouth. IV anticoagulants refer to anti-clotting medications (that is, 
``blood thinners''), often used for the prevention and treatment of 
deep vein thrombosis and other thromboembolic complications. IV 
anticoagulants are

[[Page 21069]]

commonly used in patients with limited mobility (either chronically or 
acutely, in the post-operative setting), who are at risk of deep vein 
thrombosis, or patients with certain cardiac arrhythmias such as atrial 
fibrillation. The indications, risks, and benefits of each of these 
classes of IV medications are distinct, making it important to assess 
each separately in PAC. Knowing whether or not patients are receiving 
IV medication and the type of medication provided by each PAC provider 
will improve quality of care.
    The principal IV Medication data element is currently in use on the 
MDS 3.0 and there is a related data element in OASIS-C2 that collects 
information on Intravenous and Infusion Therapies. One sub-element of 
the proposed data elements, IV Anti-coagulants, and two other data 
elements related to IV therapy (IV Vasoactive Medications and IV 
Chemotherapy), were tested in the PAC PRD and found feasible for use in 
that the data collection aligned with usual work flow in each of the 
four PAC settings, demonstrating the feasibility of collecting IV 
medication information, including type of IV medication, through 
similar data elements in these settings.
    Clinical and subject matter expert advisors working with our data 
element contractor agreed that standardized collection of information 
on medications, including IV medications, would be feasible in PAC, and 
assess an important treatment that would be clinically useful both 
within and across PAC provider types.
    We solicited public comment on a related data element, Vasoactive 
Medications, from August 12 to September 12, 2016. While commenters 
supported this data element with one noting the importance of this data 
element in supporting care transitions, others criticized the need for 
collecting specifically on Vasoactive Medications, giving feedback that 
the data element was too narrowly focused. Additionally, comment 
received indicated that the clinical significance of vasoactive 
medications administration alone was not high enough in PAC to merit 
mandated assessment, noting that related and more useful information 
could be captured in an item that assessed all IV medication use.
    Overall, public comment indicated the importance of including the 
additional check box data elements to distinguish particular classes of 
medications. A full report of the comments is available at 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.
    A TEP convened by the data element contractor provided input on the 
proposed data elements. This TEP, held on January 5 and 6, 2017, opined 
that these data elements are appropriate for standardization because 
they would provide useful clinical information to inform care planning 
and care coordination. The TEP affirmed that assessment of these 
services and interventions is standard clinical practice. A full report 
of the TEP discussion is available at 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.
    Therefore, we are proposing that the IV Medications (Antibiotics, 
Anticoagulation, Other) data elements with a principal data element and 
three sub-elements meet the definition of standardized patient 
assessment data for special services, treatments, and interventions 
under section 1899B(b)(1)(B)(iii) of the Act. We are proposing to 
expand the existing IV Medications data element in the MDS to include 
sub-elements for Antibiotics, Anticoagulation, and Other. For the 
purposes of the FY 2020 SNF QRP, SNFs would be required to report these 
data for SNF admissions at the start of the Medicare Part A stay and 
SNF discharges at the end of the Medicare Part A stay that occur 
between October 1, 2018 and December 31, 2018. Following the initial 
reporting year for the FY 2020 SNF QRP, subsequent years for the SNF 
QRP would be based on a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(i) Other Treatment: Transfusions
    We are proposing that the Transfusions data element meets the 
definition of standardized patient assessment data element for special 
services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of 
the single Transfusions data element. For more information on the 
Transfusions data element, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Transfusion refers to introducing blood, blood products, or other 
fluid into the circulatory system of a person. Blood transfusions are 
based on specific protocols, with multiple safety checks and monitoring 
required during and after the infusion in case of adverse events. 
Coordination with the provider's blood bank is necessary, as well as 
documentation by clinical staff to ensure compliance with regulatory 
requirements. In addition, the need for transfusions signifies 
underlying patient complexity that is likely to require care 
coordination and patient monitoring, and impacts planning for 
transitions of care, as transfusions are not performed by all PAC 
providers.
    The proposed data element was selected from three existing 
assessment items on transfusions and related services, currently in use 
in the MDS 3.0 (``Transfusions'') and OASIS-C2 (``Intravenous or 
Infusion Therapy''), and a data element tested in the PAC PRD (``Blood 
Transfusions''), that was found feasible for use in each of the four 
PAC settings. We chose to propose the MDS version because of its 
greater level of specificity over the OASIS-C2 data element. This 
selection was informed by expert advisors and reviewed and supported in 
the proposed form by the Standardized Patient Assessment Data TEP held 
by our data element contractor on January 5 and 6, 2017. A full report 
of the TEP discussion is available at 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.
    Therefore, we are proposing that the Transfusions data element that 
is currently in use in the MDS meets the definition of standardized 
patient assessment data for special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act. As noted 
above, the Transfusions data element is already included on the MDS. 
For purposes of reporting for the FY 2020 SNF QRP, SNFs would be 
required to report these data for SNF admissions at the start of the 
Medicare Part A stay and SNF discharges at the end of the Medicare Part 
A stay that occur between October 1, 2018 and December 31, 2018. 
Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.

[[Page 21070]]

(j) Other Treatment: Dialysis (Hemodialysis, Peritoneal dialysis)
    We are proposing that the Dialysis (Hemodialysis, Peritoneal 
dialysis) data elements meet the definition of standardized patient 
assessment data for special services, treatments, and interventions 
under section 1899B(b)(1)(B)(iii) of the Act. The proposed data 
elements consist of the principal Dialysis data element and two sub-
elements, Hemodialysis and Peritoneal dialysis. For more information on 
the Dialysis (Hemodialysis, Peritoneal dialysis) data elements, we 
refer readers to the document titled, Proposed Specifications for SNF 
QRP Quality Measures and Standardized Data Elements, available at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Dialysis is a treatment primarily used to provide replacement for 
lost kidney function. Both forms of dialysis (hemodialysis and 
peritoneal dialysis) are resource intensive, not only during the actual 
dialysis process but before, during and following. Patients and 
residents who need and undergo dialysis procedures are at high risk for 
physiologic and hemodynamic instability from fluid shifts and 
electrolyte disturbances as well as infections that can lead to sepsis. 
Further, patients or residents receiving hemodialysis are often 
transported to a different facility, or at a minimum, to a different 
location in the same facility. Close monitoring for fluid shifts, blood 
pressure abnormalities, and other adverse effects is required prior to, 
during and following each dialysis session. Nursing staff typically 
perform peritoneal dialysis at the bedside, and as with hemodialysis, 
close monitoring is required.
    The principal Dialysis data element is currently included on the 
MDS 3.0 and the LCDS v3.0 and assesses the overall use of dialysis. The 
sub-elements for Hemodialysis and Peritoneal dialysis were tested 
across the four PAC providers in the PAC PRD study, and found to be 
feasible for standardization. Clinical and subject matter expert 
advisors working with our data element contractor opined that the 
standardized assessment of dialysis is feasible in PAC, and that it 
assesses an important treatment that would be clinically useful both 
within and across PAC providers. As the results of expert and public 
feedback, described below, we decided to propose a data element that 
includes both the principal Dialysis data element and the two sub-
elements (hemodialysis and peritoneal dialysis).
    The Hemodialysis data element, which was tested in the PAC PRD, was 
included in a call for public comment that was open from August 12 to 
September 12, 2016. Commenters supported the assessment of hemodialysis 
and recommended that the data element be expanded to include peritoneal 
dialysis. Several commenters supported the Hemodialysis data element, 
noting the relevance of this information for sharing across the care 
continuum to facilitate care coordination and care transitions, the 
potential for this data element to be used to improve quality, and the 
feasibility for use in PAC. In addition, we received comment that the 
item would be useful in improving patient and resident transitions of 
care. Several commenters also stated that peritoneal dialysis should be 
included in a standardized data element on dialysis and recommended 
collecting information on peritoneal dialysis in addition to 
hemodialysis. The rationale for including peritoneal dialysis from 
commenters included the fact that patients and residents receiving 
peritoneal dialysis will have different needs at post-acute discharge 
compared to those receiving hemodialysis or not having any dialysis. 
Based on these comments, the Hemodialysis data element was expanded to 
include a principal Dialysis data element and two sub-elements, 
hemodialysis and peritoneal dialysis; these are the same two data 
elements that were tested in the PAC PRD. This expanded version, 
Dialysis (Hemodialysis, Peritoneal dialysis), are the data elements 
being proposed. A full report of the comments is available at 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.
    We note that the Dialysis (Hemodialysis, Peritoneal dialysis) data 
elements were also supported by the TEP that discussed candidate data 
elements for Special Services, Treatments, and Interventions during a 
meeting on January 5 and 6, 2017. A full report of the TEP discussion 
is available at 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.
    Therefore, we are proposing that the Dialysis (Hemodialysis, 
Peritoneal dialysis) data elements with a principal data element and 
two sub-elements meet the definition of standardized patient assessment 
data for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. We are proposing to expand the existing 
Dialysis data element in the MDS to include sub-elements for 
Hemodialysis and Peritoneal dialysis. For the purposes of the FY 2020 
SNF QRP, SNFs would be required to report these data for SNF admissions 
at the start of the Medicare Part A stay and SNF discharges at the end 
of the Medicare Part A stay that occur between October 1, 2018 and 
December 31, 2018. Following the initial reporting year for the FY 2020 
SNF QRP, subsequent years for the SNF QRP would be based on a full 
calendar year of such data reporting.
    We are inviting public comment on these proposals.
(k) Other Treatment: Intravenous (IV) Access (Peripheral IV, Midline, 
Central line, Other)
    We are proposing that the IV Access (Peripheral IV, Midline, 
Central line, Other) data elements meet the definition of standardized 
patient assessment data element for special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act. The 
proposed data elements consist of the principal IV Access data element 
and four sub-elements, Peripheral IV, Midline, Central line, and Other. 
For more information on the IV Access data element, we refer readers to 
the document titled, Proposed Specifications for SNF QRP Quality 
Measures and Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Patients or residents with central lines, including those 
peripherally inserted or who have subcutaneous central line ``port'' 
access, always require vigilant nursing care to keep patency of the 
lines and ensure that such invasive lines remain free from any 
potentially life-threatening events such as infection, air embolism, or 
bleeding from an open lumen. Clinically complex patients and residents 
are likely to be receiving medications or nutrition intravenously. The 
sub-elements included in the IV Access data elements distinguish 
between peripheral access and different types of central access.

[[Page 21071]]

The rationale for distinguishing between a peripheral IV and central IV 
access is that central lines confer higher risks associated with life-
threatening events such as pulmonary embolism, infection, and bleeding.
    The proposed IV Access (Peripheral IV, Midline, Central line, 
Other) data elements are not currently included on any of the mandated 
PAC assessment instruments. However, related data elements (for 
example, IV Medication in MDS 3.0 for SNF, Intravenous or infusion 
therapy in OASIS-C2 for HHAs) currently assess types of IV access. 
Several related data elements that describe types of IV access (for 
example, Central Line Management, IV Vasoactive Medications) were 
tested across the four PAC providers in the PAC PRD study, and found to 
be feasible for standardization.
    Clinical and subject matter expert advisors working with our data 
element contractor agreed that assessing type of IV access would be 
feasible for use in PAC and that it assesses an important treatment 
that would be clinically useful both within and across PAC provider 
types.
    We requested public comment on one of the PAC PRD data elements, 
Central Line Management, from August 12 to September 12, 2016. A 
central line is one type of IV access. Commenters supported the 
assessment of central line management and recommended that the data 
element be broadened to also include other types of IV access. Several 
commenters supported the data element, noting feasibility and 
importance for facilitating care coordination and care transitions. 
However, a few commenters recommended that the definition of this data 
element be broadened to include peripherally inserted central catheters 
(``PICC lines'') and midline IVs. Based on public comment feedback and 
in consultation with clinical and subject matters experts, we expanded 
the Central Line Management data element to include more types of IV 
access (Peripheral IV, Midline, Central line, Other). This expanded 
version, IV Access (Peripheral IV, Midline, Central line, Other), are 
the data elements being proposed. A full report of the comments is 
available at 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.
    We note that the IV Access (Peripheral IV, Midline, Central line, 
Other) data elements were supported by the TEP that discussed candidate 
data elements for Special Services, Treatments, and Interventions 
during a meeting on January 5 and 6, 2017. A full report of the TEP 
discussion is available at 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.
    Therefore, we are proposing that the IV access (Peripheral IV, 
Midline, Central line, Other) data elements with a principal data 
element and four sub-elements meet the definition of standardized 
patient assessment data for special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act. We are 
proposing to add the IV Access (Peripheral IV, Midline, Central line, 
Other) data elements to the MDS, and that, for the purposes of the FY 
2020 SNF QRP, SNFs would be required to report these data for SNF 
admissions at the start of the Medicare Part A stay and SNF discharges 
at the end of the Medicare Part A stay that occur between October 1, 
2018 and December 31, 2018. Following the initial reporting year for 
the FY 2020 SNF QRP, subsequent years for the SNF QRP would be based on 
a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(l) Nutritional Approach: Parenteral/IV Feeding
    We are proposing that the Parenteral/IV Feeding data element meets 
the definition of standardized patient assessment data for special 
services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of 
the single Parenteral/IV Feeding data element. For more information on 
the Parenteral/IV Feeding data element, we refer readers to the 
document titled, Proposed Specifications for SNF QRP Quality Measures 
and Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Parenteral/IV Feeding refers to a patient or resident being fed 
intravenously using an infusion pump, bypassing the usual process of 
eating and digestion. The need for IV/parenteral feeding indicates a 
clinical complexity that prevents the patient or resident from meeting 
his/her nutritional needs enterally, and is more resource intensive 
than other forms of nutrition, as it often requires monitoring of blood 
chemistries, and maintenance of a central line. Therefore, assessing a 
patient or resident's need for parenteral feeding is important for care 
planning and resource use. In addition to the risks associated with 
central and peripheral intravenous access, total parenteral nutrition 
is associated with significant risks such as embolism and sepsis.
    The Parenteral/IV Feeding data element is currently in use in the 
MDS 3.0, and equivalent or related data elements are in use in the 
LCDS, IRF-PAI, and the OASIS-C2. An equivalent data element was tested 
in the PAC PRD (``Total Parenteral Nutrition'') and found feasible for 
use in each of the four PAC settings, demonstrating the feasibility of 
collecting information about this nutritional service in these 
settings.
    Total Parenteral Nutrition (an item with the same meaning as the 
proposed data element, but with the label used in the PAC PRD) was 
included in a call for public comment that was open from August 12 to 
September 12, 2016. Several commenters supported this data element, 
noting its relevance to facilitating care coordination and supporting 
care transitions. After the public comment period, the Total Parenteral 
Nutrition data element was re-named Parenteral/IV Feeding, to be 
consistent with how this data element is referred to in the MDS. A full 
report of the comments is available at 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.
    A TEP convened by the data element contractor provided input on the 
proposed data elements. This TEP, held on January 5 and 6, 2017, opined 
that these data elements are appropriate for standardization because 
they would provide useful clinical information to inform care planning 
and care coordination. The TEP affirmed that assessment of these 
services and interventions is standard clinical practice. A full report 
of the TEP discussion is available at 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. Therefore, we are proposing that the Parenteral/IV Feeding 
data element meets the definition of standardized patient assessment 
data for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. As noted above, the Parenteral/IV 
Feeding

[[Page 21072]]

data element is already included on the MDS. For purposes of reporting 
for the FY 2020 SNF QRP, SNFs would be required to report these data 
for SNF admissions at the start of the Medicare Part A stay and SNF 
discharges at the end of the Medicare Part A stay that occur between 
October 1, 2018 and December 31, 2018. Following the initial reporting 
year for the FY 2020 SNF QRP, subsequent years for the SNF QRP would be 
based on a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(m) Nutritional Approach: Feeding Tube
    We are proposing that the Feeding Tube data element meets the 
definition of standardized patient assessment data for special 
services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of 
the single Feeding Tube data element. For more information on the 
Feeding Tube data element, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The majority of patients admitted to acute care hospitals 
experience deterioration of their nutritional status during their 
hospital stay, making assessment of nutritional status and method of 
feeding if unable to eat orally very important in PAC. A feeding tube 
can be inserted through the nose or the skin on the abdomen to deliver 
liquid nutrition into the stomach or small intestine. Feeding tubes are 
resource intensive and are therefore important to assess for care 
planning and resource use. Patients with severe malnutrition are at 
higher risk for a variety of complications.\65\ In PAC settings, there 
are a variety of reasons that patients and residents may not be able to 
eat orally (including clinical or cognitive status).
---------------------------------------------------------------------------

    \65\ Dempsey, D.T., Mullen, J.L., & Buzby, G.P. (1988). ``The 
link between nutritional status and clinical outcome: can 
nutritional intervention modify it?'' Am J of Clinical Nutrition 
47(2): 352-356.
---------------------------------------------------------------------------

    The Feeding Tube data element is currently included in the MDS 3.0 
for SNFs, and in the OASIS-C2 for HHAs, where it is labeled Enteral 
Nutrition. A related data element, collected in the IRF-PAI for IRFs 
(Tube/Parenteral Feeding), assesses use of both feeding tubes and 
parenteral nutrition. The testing of similar nutrition-focused data 
elements in the PAC PRD, and the current assessment of feeding tubes 
and related nutritional services and devices, demonstrates the 
feasibility of collecting information about this nutritional service in 
these settings.
    Clinical and subject matter expert advisors working with our data 
element contractor opined that the Feeding Tube data element is 
feasible for use in PAC, and supported its importance and clinical 
usefulness for patients in PAC settings, due to the increased level of 
nursing care and patient monitoring required for patients who received 
enteral nutrition with this device.
    We solicited additional feedback on an Enteral Nutrition data 
element (an item with the same meaning as the proposed data element, 
but with the label used in the OASIS) in a call for public comment that 
was open from August 12 to September 12, 2016. Several commenters 
supported the data element, noting the importance of assessing enteral 
nutrition status for facilitating care coordination and care 
transitions. After the public comment period, the Enteral Nutrition 
data element used in public comment was re-named Feeding Tube, 
indicating the presence of an assistive device. A full report of the 
comments is available at 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.
    We note that the Feeding Tube data element was also supported by 
the TEP that discussed candidate data elements for Special Services, 
Treatments, and Interventions during a meeting on January 5 and 6, 
2017. A full report of the TEP discussion is available at 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. Therefore, we are proposing that 
the Feeding Tube data element meets the definition of standardized 
patient assessment data for special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act. As noted 
above, the Feeding Tube data element is already included on the MDS. 
For purposes of reporting for the FY 2020 SNF QRP, SNFs would be 
required to report these data for SNF admissions at the start of the 
Medicare Part A stay and SNF discharges at the end of the Medicare Part 
A stay that occur between October 1, 2018 and December 31, 2018. 
Following the initial reporting year for the FY 2020 SNF QRP, 
subsequent years for the SNF QRP would be based on a full calendar year 
of such data reporting.
    We are inviting public comment on these proposals.
(n) Nutritional Approach: Mechanically Altered Diet
    We are proposing that the Mechanically Altered Diet data element 
meets the definition of standardized patient assessment data for 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of 
the single Mechanically Altered Diet data element. For more information 
on the Mechanically Altered Diet data element, we refer readers to the 
document titled, Proposed Specifications for SNF QRP Quality Measures 
and Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    The Mechanically Altered Diet data element refers to food that has 
been altered to make it easier for the patient or resident to chew and 
swallow, and this type of diet is used for patients and residents who 
have difficulty performing these functions. Patients with severe 
malnutrition are at higher risk for a variety of complications.\66\ In 
PAC settings, there are a variety of reasons that patients and 
residents may have impairments related to oral feedings, including 
clinical or cognitive status. The provision of a mechanically altered 
diet may be resource intensive, and can signal difficulties associated 
with swallowing/eating safety, including dysphagia. In other cases, it 
signifies the type of altered food source, such as ground or puree, 
that will enable the safe and thorough ingestion of nutritional 
substances and ensure safe and adequate delivery of nourishment to the 
patient. Often, patients on mechanically altered diets also require 
additional nursing supports such as individual feeding, or direct 
observation, to ensure the safe consumption of the food product. 
Assessing whether a patient or resident requires a mechanically altered 
diet is

[[Page 21073]]

therefore important for care planning and resource identification.
---------------------------------------------------------------------------

    \66\ Dempsey, D.T., Mullen, J.L., & Buzby, G.P. (1988). ``The 
link between nutritional status and clinical outcome: can 
nutritional intervention modify it?'' Am J of Clinical Nutrition 
47(2): 352-356.
---------------------------------------------------------------------------

    The proposed data element for a mechanically altered diet is 
currently included on the MDS 3.0 for SNFs. A related data element for 
modified food consistency/supervision is currently included on the IRF-
PAI for IRFs. A related data element is included in the OASIS-C2 for 
HHAs that collects information about independent eating that requires 
``a liquid, pureed or ground meat diet.'' The testing of similar 
nutrition-focused data elements in the PAC PRD, and the current 
assessment of various nutritional services across the four PAC 
settings, demonstrates the feasibility of collecting information about 
this nutritional service in these settings.
    Clinical and subject matter expert advisors working with our data 
element contractor agreed that the proposed Mechanically Altered Diet 
data element is feasible for use in PAC, and it assesses an important 
treatment that would be clinically useful both within and across PAC 
settings. Expert input on the Mechanically Altered Diet data element 
highlighted its importance and clinical usefulness for patients in PAC 
settings, due to the increased monitoring and resource use required for 
patients on special diets. We note that the Mechanically Altered Diet 
data element was also supported by the TEP that discussed candidate 
data elements for Special Services, Treatments, and Interventions 
during a meeting on January 5 and 6, 2017. A full report of the TEP 
discussion is available at 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.
    Therefore, we are proposing that the Mechanically Altered Diet data 
element meets the definition of standardized patient assessment data 
for special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. As noted above, the Mechanically 
Altered Diet data element is already included on the MDS. For purposes 
of reporting for the FY 2020 SNF QRP, SNFs would be required to report 
these data for SNF admissions at the start of the Medicare Part A stay 
and SNF discharges at the end of the Medicare Part A stay that occur 
between October 1, 2018 and December 31, 2018. Following the initial 
reporting year for the FY 2020 SNF QRP, subsequent years for the SNF 
QRP would be based on a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(o) Nutritional Approach: Therapeutic Diet
    We are proposing that the Therapeutic Diet data element meets the 
definition of standardized patient assessment data for special 
services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. The proposed data element consists of 
the single Therapeutic Diet data element. For more information on the 
Therapeutic Diet data element, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html. Therapeutic 
Diet refers to meals planned to increase, decrease, or eliminate 
specific foods or nutrients in a patient or resident's diet, such as a 
low-salt diet, for the purpose of treating a medical condition. The use 
of therapeutic diets among patients in PAC provides insight on the 
clinical complexity of these patients and their multiple comorbidities. 
Therapeutic diets are less resource intensive from the bedside nursing 
perspective, but do signify one or more underlying clinical conditions 
that preclude the patient from eating a regular diet. The communication 
among PAC providers about whether a patient is receiving a particular 
therapeutic diet is critical to ensure safe transitions of care.
    The Therapeutic Diet data element is currently in use in the MDS 
3.0. The testing of similar nutrition-focused data elements in the PAC 
PRD, and the current assessment of various nutritional services across 
the four PAC settings, demonstrates the feasibility of collecting 
information about this nutritional service in these settings.
    Clinical and subject matter expert advisors working with our data 
element contractor supported the importance and clinical usefulness of 
the proposed Therapeutic Diet data element for patients in PAC 
settings, due to the increased monitoring and resource use required for 
patients on special diets, and agreed that it is feasible for use in 
PAC and that it assesses an important treatment that would be 
clinically useful both within and across PAC settings, We note that the 
Therapeutic Diet data element was also supported by the TEP that 
discussed candidate data elements for Special Services, Treatments, and 
Interventions during a meeting on January 5 and 6, 2017.
    Therefore, we are proposing that the Therapeutic Diet data element 
meets the definition of standardized patient assessment data for 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act. As noted above, the Therapeutic Diet 
data element is already included on the MDS. For purposes of reporting 
for the FY 2020 SNF QRP, SNFs would be required to report these data 
for SNF admissions at the start of the Medicare Part A stay and SNF 
discharges at the end of the Medicare Part A stay that occur between 
October 1, 2018 and December 31, 2018. Following the initial reporting 
year for the FY 2020 SNF QRP, subsequent years for the SNF QRP would be 
based on a full calendar year of such data reporting.
    We are inviting public comment on these proposals.
(4) Medical Condition and Comorbidity Data
    We are proposing that the data elements needed to calculate the 
current measure, Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (Short Stay) (NQF #0678), and the proposed 
measure, Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury, meet the definition of standardized patient assessment data for 
medical conditions and co-morbidities under section 1899B(b)(1)(B)(iv) 
of the Act, and that the successful reporting of that data under 
section 1888(e)(6)(B)(i)(II) of the Act would also satisfy the 
requirement to report standardized patient assessment data under 
section 1888(e)(6)(B)(i)(III) of the Act.
    ``Medical conditions and comorbidities'' and the conditions 
addressed in the standardized data elements used in the calculation and 
risk adjustment of these measures, that is, the presence of pressure 
ulcers, diabetes, incontinence, peripheral vascular disease or 
peripheral arterial disease, mobility, as well as low body mass index, 
are all health-related conditions that indicate medical complexity that 
can be indicative of underlying disease severity and other 
comorbidities.
    Specifically, the data elements used in the measure are important 
for care planning and provide information pertaining to medical 
complexity. Pressure ulcers are serious wounds representing poor 
outcomes, and can result in sepsis and death. Assessing skin condition, 
care planning for pressure ulcer prevention and healing, and informing 
providers about their

[[Page 21074]]

presence in patient transitions of care is a customary and best 
practice. Venous and arterial disease and diabetes are associated with 
low blood flow which may increase the risk of tissue damage. These 
diseases are indicators of factors that may place individuals at risk 
for pressure ulcer development and are therefore important for care 
planning. Low BMI, which may be an indicator of underlying disease 
severity, may be associated with loss of fat and muscle, resulting in 
potential risk for pressure ulcers. Bowel incontinence and the possible 
maceration to the skin associated, can lead to higher risk for pressure 
ulcers. In addition, the bacteria associated with bowel incontinence 
can complicate current wounds and cause local infection. Mobility is an 
indicator of impairment or reduction in mobility and movement which is 
a major risk factor for the development of pressure ulcers. Taken 
separately and together, these data elements are important for care 
planning, transitions in services and identifying medical complexities.
    In sections VI.B.7.a and VI.B.10.a, we discuss our rationale for 
proposing that the data elements used in the measures meet the 
definition of standardized patient assessment data. In summary, we 
believe that the collection of such assessment data is important for 
multiple reasons, including clinical decision support, care planning, 
and quality improvement, and that the data elements assessing pressure 
ulcers and the data elements used to risk adjust showed good 
reliability. We solicited stakeholder feedback on the quality measure, 
and the data elements from which it is derived, by means of a public 
comment period and TEPs, as described in section V.B.7.a of this 
proposed rule. We are inviting public comment on this proposal.
(5) Impairment Data
    Hearing and vision impairments are conditions that, if unaddressed, 
affect activities of daily living, communication, physical functioning, 
rehabilitation outcomes, and overall quality of life. Sensory 
limitations can lead to confusion in new settings, increase isolation, 
contribute to mood disorders, and impede accurate assessment of other 
medical conditions. Failure to appropriately assess, accommodate, and 
treat these conditions increases the likelihood that patients and 
residents will require more intensive and prolonged treatment. Onset of 
these conditions can be gradual, so individualized assessment with 
accurate screening tools and follow-up evaluations are essential to 
determining which patients and residents need hearing- or vision-
specific medical attention or assistive devices, and accommodations, 
including auxiliary aids and/or services, in order to effectively 
participate in the rehabilitation environment and treatment, and to 
ensure that person-directed care plans are developed to accommodate a 
patient's needs. Accurate diagnosis and management of hearing or vision 
impairment would likely improve rehabilitation outcomes and care 
transitions, including transition from institutional-based care to the 
community. Accurate assessment of hearing and vision impairment would 
be expected to lead to appropriate treatment, accommodations, including 
the provision of auxiliary aids and services during the stay, and 
ensure that patients and residents continue to have their vision and 
hearing needs met when they leave the facility.
    Accurate individualized assessment, treatment, and accommodation of 
hearing and vision impairments of patients and residents in PAC would 
be expected to have a positive impact on the National Quality 
Strategy's domains of patient and family engagement, patient safety, 
care coordination, clinical process/effectiveness, and efficient use of 
health care resources. For example, standardized assessment of hearing 
and vision impairments used in PAC will support ensuring patient and 
resident safety (for example, risk of falls), identifying 
accommodations needed during the stay, and appropriate support needs at 
the time of discharge or transfer. Standardized assessment of these 
data elements will enable or support clinical decision-making and early 
clinical intervention; person-centered, high quality care (for example, 
facilitating better care continuity and coordination); better data 
exchange and interoperability between settings; and longitudinal 
outcome analysis. Hence, reliable data elements assessing hearing and 
vision impairments are needed to initiate a management program that can 
optimize a patient or resident's prognosis and reduce the possibility 
of adverse events.
(a) Hearing
    We are proposing that the Hearing data element meets the definition 
of standardized patient assessment data for impairments under section 
1899B(b)(1)(B)(v) of the Act. The proposed data element consists of the 
single Hearing data element. This data element assesses level of 
hearing impairment, and consists of one question. For more information 
on the Hearing data element, we refer readers to the document titled, 
Proposed Specifications for SNF QRP Quality Measures and Standardized 
Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Accurate assessment of hearing impairment is important in the PAC 
setting for care planning and resource use. Hearing impairment has been 
associated with lower quality of life, including poorer physical, 
mental, and social functioning, and emotional health.67 68 
Treatment and accommodation of hearing impairment led to improved 
health outcomes, including but not limited to quality of life.\69\ For 
example, hearing loss in elderly individuals has been associated with 
depression and cognitive impairment,70 71 72 higher rates of 
incident cognitive impairment and cognitive decline,\73\ and less time 
in occupational therapy.\74\ Accurate assessment of hearing impairment 
is important in the PAC setting for care planning and defining resource 
use.
---------------------------------------------------------------------------

    \67\ Dalton DS, Cruickshanks KJ, Klein BE, Klein R, Wiley TL, 
Nondahl DM. The impact of hearing loss on quality of life in older 
adults. Gerontologist. 2003;43(5):661-668.
    \68\ Hawkins K, Bottone FG, Jr., Ozminkowski RJ, et al. The 
prevalence of hearing impairment and its burden on the quality of 
life among adults with Medicare Supplement Insurance. Qual Life Res. 
2012;21(7):1135-1147.
    \69\ Horn KL, McMahon NB, McMahon DC, Lewis JS, Barker M, 
Gherini S. Functional use of the Nucleus 22-channel cochlear implant 
in the elderly. The Laryngoscope. 1991;101(3):284-288.
    \70\ Sprinzl GM, Riechelmann H. Current trends in treating 
hearing loss in elderly people: A review of the technology and 
treatment options--a mini-review. Gerontology. 2010;56(3):351-358.
    \71\ Lin FR, Thorpe R, Gordon-Salant S, Ferrucci L. Hearing Loss 
Prevalence and Risk Factors Among Older Adults in the United States. 
The Journals of Gerontology Series A: Biological Sciences and 
Medical Sciences. 2011;66A(5):582-590.
    \72\ Hawkins K, Bottone FG, Jr., Ozminkowski RJ, et al. The 
prevalence of hearing impairment and its burden on the quality of 
life among adults with Medicare Supplement Insurance. Qual Life Res. 
2012;21(7):1135-1147.
    \73\ Lin FR, Metter EJ, O'Brien RJ, Resnick SM, Zonderman AB, 
Ferrucci L. Hearing Loss and Incident Dementia. Arch Neurol. 
2011;68(2):214-220.
    \74\ Cimarolli VR, Jung S. Intensity of Occupational Therapy 
Utilization in Nursing Home Residents: The Role of Sensory 
Impairments. J Am Med Dir Assoc. 2016;17(10):939-942.
---------------------------------------------------------------------------

    The proposed data element was selected from two forms of the 
Hearing data element based on expert and stakeholder feedback. We 
considered the two forms of the Hearing data element, one of which is 
currently in use in the MDS 3.0 (Hearing) and another data element with 
different

[[Page 21075]]

wording and fewer response option categories that is currently in use 
in the OASIS-C2 (Ability to Hear). Ability to Hear was also tested in 
the PAC PRD and found to have substantial agreement for inter-rater 
reliability across PAC settings (kappa of 0.78).\75\ It was also found 
to be clinically relevant, meaningful for care planning, and feasible 
for use in each of the four PAC settings.
---------------------------------------------------------------------------

    \75\ Gage B., Smith L., Ross J. et al. (2012). The Development 
and Testing of the Continuity Assessment Record and Evaluation 
(CARE) Item Set (Final Report on Reliability Testing, Volume 2 of 
3). Research Triangle Park, NC: RTI International.
---------------------------------------------------------------------------

    Several data elements that assess hearing impairment were presented 
to the Standardized Patient Assessment Data TEP held by our data 
element contractor. The TEP did not reach consensus on the ideal number 
of response categories or phrasing of response options, which are the 
primary differences between the current MDS (Hearing) and OASIS 
(Ability to Hear) items. The Development and Maintenance of Post-Acute 
Care Cross-Setting Standardized Patient Assessment Data Technical 
Expert Panel Summary Report is available at 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.
    The PAC PRD form of the data element (Ability to Hear) was included 
in a call for public comment that was open from August 12 to September 
12, 2016. This data element includes three response choices, in 
contrast to the Hearing data element (in use in the MDS 3.0 and being 
proposed for standardization), which includes four response choices. 
Several commenters supported the use of the Ability to Hear data 
element, although some commenters raised concerns that the three-level 
response choice was not compatible with the current, four-level 
response used in the MDS, and favored the use of the MDS version of the 
Hearing data element. In addition, we received comments stating that 
standardized assessment related to hearing impairment has the ability 
to improve quality of care if information on hearing is included in 
medical records of patients and residents, which would improve care 
coordination and facilitate the development of patient- and resident-
centered treatment plans. Based on comments that the three-level 
response choice (Ability to Hear) was not congruent with the current, 
four-level response used in the MDS (Hearing), and support for the use 
of the MDS version of the Hearing data element received in the public 
comment, we are proposing the Hearing data element. A full report of 
the comments is available at 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.
    Therefore, we are proposing the Hearing data element currently in 
use on the MDS. For purposes of reporting for the FY 2020 SNF QRP, SNFs 
would be required to report these data for SNF admissions at the start 
of the Medicare Part A stay that occur between October 1, 2018 and 
December 31, 2018. Following the initial reporting year for the FY 2020 
SNF QRP, subsequent years for the SNF QRP would be based on a full 
calendar year of such data reporting. The Hearing data element would be 
assessed at admission at the start of the Medicare Part A stay only due 
to the relatively stable nature of hearing impairment, making it 
unlikely that a patient's score on this assessment would change between 
the start and end of the PAC stay. Assessment at discharge at the end 
of the Medicare Part A stay would introduce additional burden without 
improving the quality or usefulness of the data, and is deemed 
unnecessary.
    We are inviting public comment on these proposals.
(b) Vision
    We are proposing that the Vision data element meets the definition 
of standardized patient assessment data element for impairments under 
section 1899B(b)(1)(B)(v) of the Act. The proposed data element 
consists of the single Vision (Ability To See in Adequate Light) data 
element that consists of one question with five response categories. 
For more information on the Vision data element, we refer readers to 
the document titled, Proposed Specifications for SNF QRP Quality 
Measures and Standardized Data Elements, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    Evaluation of an individual's ability to see is important for 
assessing for risks such as falls and provides opportunities for 
improvement through treatment and the provision of accommodations, 
including auxiliary aids and services, which can safeguard patients and 
improve their overall quality of life. Further, vision impairment is 
often a treatable risk factor associated with adverse events and poor 
quality of life. For example, individuals with visual impairment are 
more likely to experience falls and hip fracture, have less mobility, 
and report depressive symptoms.76 77 78 79 80 81 82
---------------------------------------------------------------------------

    \76\ Colon-Emeric CS, Biggs DP, Schenck AP, Lyles KW. Risk 
factors for hip fracture in skilled nursing facilities: who should 
be evaluated? Osteoporos Int. 2003;14(6):484-489.
    \77\ Freeman EE, Munoz B, Rubin G, West SK. Visual field loss 
increases the risk of falls in older adults: the Salisbury eye 
evaluation. Invest Ophthalmol Vis Sci. 2007;48(10):4445-4450.
    \78\ Keepnews D, Capitman JA, Rosati RJ. Measuring patient-level 
clinical outcomes of home health care. J Nurs Scholarsh. 
2004;36(1):79-85.
    \79\ Nguyen HT, Black SA, Ray LA, Espino DV, Markides KS. 
Predictors of decline in MMSE scores among older Mexican Americans. 
J Gerontol A Biol Sci Med Sci. 2002;57(3):M181-185.
    \80\ Prager AJ, Liebmann JM, Cioffi GA, Blumberg DM. Self-
reported Function, Health Resource Use, and Total Health Care Costs 
Among Medicare Beneficiaries With Glaucoma. JAMA ophthalmology. 
2016;134(4):357-365.
    \81\ Rovner BW, Ganguli M. Depression and disability associated 
with impaired vision: the MoVies Project. J Am Geriatr Soc. 
1998;46(5):617-619.
    \82\ Tinetti ME, Ginter SF. The nursing home life-space 
diameter. A measure of extent and frequency of mobility among 
nursing home residents. J Am Geriatr Soc. 1990;38(12):1311-1315.
---------------------------------------------------------------------------

    Individualized initial screening can lead to life-improving 
interventions such as accommodations, including the provision of 
auxiliary aids and services, during the stay and/or treatments that can 
improve vision and prevent or slow further vision loss. For patients 
with some types of visual impairment, use of glasses and contact lenses 
can be effective in restoring vision.\83\ Other conditions, including 
glaucoma \84\ and age-related macular degeneration,85 86 
have responded well to treatment. In addition, vision impairment is 
often a treatable risk factor associated with adverse events which can 
be prevented and accommodated during the stay. Accurate assessment of 
vision

[[Page 21076]]

impairment is important in the PAC setting for care planning and 
defining resource use.
---------------------------------------------------------------------------

    \83\ Rein DB, Wittenborn JS, Zhang X, et al. The Cost-
effectiveness of Welcome to Medicare Visual Acuity Screening and a 
Possible Alternative Welcome to Medicare Eye Evaluation Among 
Persons Without Diagnosed Diabetes Mellitus. Archives of 
ophthalmology. 2012;130(5):607-614.
    \84\ Leske M, Heijl A, Hussein M, et al. Factors for glaucoma 
progression and the effect of treatment: The early manifest glaucoma 
trial. Archives of Ophthalmology. 2003;121(1):48-56.
    \85\ Age-Related Eye Disease Study Research G. A randomized, 
placebo-controlled, clinical trial of high-dose supplementation with 
vitamins c and e, beta carotene, and zinc for age-related macular 
degeneration and vision loss: AREDS report no. 8. Archives of 
Ophthalmology. 2001;119(10):1417-1436.
    \86\ Takeda AL, Colquitt J, Clegg AJ, Jones J. Pegaptanib and 
ranibizumab for neovascular age[hyphen]related macular degeneration: 
a systematic review. The British Journal of Ophthalmology. 
2007;91(9):1177-1182.
---------------------------------------------------------------------------

    The Vision data element that we are proposing for standardization 
was tested as part of the development of the MDS 3.0 and is currently 
in use in that assessment. Similar data elements, but with different 
wording and fewer response option categories, are in use in the OASIS-
C2 and were tested in post-acute providers in the PAC PRD and found to 
be clinically relevant, meaningful for care planning, reliable (kappa 
of 0.74),\87\ and feasible for use in each of the four PAC settings.
---------------------------------------------------------------------------

    \87\ Gage B., Smith L., Ross J. et al. (2012). The Development 
and Testing of the Continuity Assessment Record and Evaluation 
(CARE) Item Set (Final Report on Reliability Testing, Volume 2 of 
3). Research Triangle Park, NC: RTI International.
---------------------------------------------------------------------------

    Several data elements that assess vision were presented to the TEP 
held by our data element contractor. The TEP did not reach consensus on 
the ideal number of response categories or phrasing of response 
options, which are the primary differences between the current MDS and 
OASIS items; some members preferring more granular response options 
(for example, mild impairment and moderate impairment) while others 
were comfortable with collapsed response options (that is, mild/
moderate impairment). The Development and Maintenance of Post-Acute 
Care Cross-Setting Standardized Patient Assessment Data Technical 
Expert Panel Summary Report is available at 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.
    We solicited public comment from August 12 to September 12, 2016, 
on the Ability to See in Adequate Light data element (version tested in 
the PAC PRD with three response categories). The data element in public 
comment differed from the proposed data element, but the comments 
supported the assessment of vision in PAC settings and the useful 
information a vision data element would provide. The commenters stated 
that the Ability to See item would provide important information that 
would facilitate care coordination and care planning, and consequently 
improve the quality of care. Other commenters suggested it would be 
helpful as an indicator of resource use and noted that the item would 
provide useful information about the abilities of patients and 
residents to care for themselves. Additional commenters noted that the 
item could feasibly be implemented across PAC providers and that its 
kappa scores from the PAC PRD support its validity. Some commenters 
noted a preference for MDS version of the Vision data element over the 
form put forward in public comment, citing the widespread use of this 
data element. A full report of the comments is available at 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.
    Therefore, we are proposing the Vision data element currently in 
use on the MDS. For purposes of reporting for the FY 2020 SNF QRP, SNFs 
would be required to report these data for SNF admissions at the start 
of the Medicare Part A stay that occur between October 1, 2018 and 
December 31, 2018. Following the initial reporting year for the FY 2020 
SNF QRP, subsequent years for the SNF QRP would be based on a full 
calendar year of such data reporting. The Vision data element would be 
assessed at admission at the start of the Medicare Part A stay only due 
to the relatively stable nature of vision impairment, making it 
unlikely that a patient or resident's score on this assessment would 
change between the start and end of the PAC stay. Assessment at 
discharge at the end of the Medicare Part A stay would introduce 
additional burden without improving the quality or usefulness of the 
data, and is deemed unnecessary.
    We are inviting public comment on these proposals.
11. Proposals Relating to the Form, Manner, and Timing of Data 
Submission Under the SNF QRP
a. Proposed Start Date for Standardized Resident Assessment Data 
Reporting by New SNFs
    In the FY 2016 SNF PPS final rule (80 FR 46455), we adopted timing 
for new SNFs to begin reporting quality data under the SNF QRP 
beginning with the FY 2018 SNF QRP. We are proposing in this proposed 
rule that new SNFs will be required to begin reporting standardized 
patient assessment data on the same schedule.
    We are inviting public comment on this proposal.
b. Proposed Mechanism for Reporting Standardized Resident Assessment 
Data Beginning With the FY 2019 SNF QRP
    Under our current policy, SNFs report data by completing applicable 
sections of the MDS, and submitting the MDS-RAI to CMS through the 
Quality Improvement and Evaluation System (QIES), Assessment Submission 
and Processing System (ASAP) system. For more information on SNF QRP 
reporting through the QIES ASAP system, refer to the ``Related Links'' 
section at the bottom of https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/?redirect=/NursingHomeQualityInits/30_NHQIMDS30TechnicalInformation.asp#TopOfPage. In addition to the data 
currently submitted on quality measures as previously finalized and 
discussed in section VI.B.6. of this proposed rule, we are proposing 
that SNFs would be required to begin submitting the proposed 
standardized resident assessment data for SNF Medicare resident 
admissions and discharges that occur on or after October 1, 2018 using 
the MDS, as described here. Details on the modifications and assessment 
collection for the MDS for the proposed standardized assessment data 
are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Measures-and-Technical-Information.html.
    We are inviting public comments on this proposal.
c. Proposed Schedule for Reporting Standardized Resident Assessment 
Data Beginning With the FY 2019 SNF QRP
    Starting with the FY 2019 SNF QRP, we are proposing to apply our 
current schedule for the reporting of measure data to the reporting of 
standardized resident assessment data. Under that policy, except for 
the first program year for which a measure is adopted, SNFs must report 
data on measures for SNF Medicare admissions that occur during the 12-
month calendar year (CY) period that apply to the program year. For the 
first program year for which a measure is adopted, SNFs are only 
required to report data on SNF Medicare admissions that occur on or 
after October 1 and discharged from the SNF up to and including 
December 31 of the calendar year that applies to that program year. For 
example, for the FY 2018 SNF QRP, data on measures adopted for earlier 
program years must be reported for all CY 2016 SNF Medicare admissions 
that occur on or after October 1, 2016 and discharges that occur on or 
before December 31, 2016. However, data on new measures adopted for the 
first time for the FY 2018 SNF QRP program year must only be reported 
for SNF Medicare

[[Page 21077]]

admissions and discharges that occur during the last calendar quarter 
of 2016.
    Tables 20 and 21 illustrate this policy using the FY 2019 and FY 
2020 SNF QRP as examples.

   Table 20--Summary Illustration of Initial Reporting Cycle for Newly
Adopted Measure and Standardized Patient Assessment Data Reporting Using
                              CY Q4 Data *
------------------------------------------------------------------------
                                             Proposed data submission
  Proposed data collection/submission     quarterly deadlines beginning
      quarterly reporting period *            with FY 2019 SNF QRP *
                                                    [supcaret]
------------------------------------------------------------------------
Q4: CY 2017 10/1/2017-12/31/2017.......  CY 2017 Q4 Deadline: May 15,
                                          2018.
------------------------------------------------------------------------
* We note that submission of the MDS must also adhere to the SNF PPS
  deadlines.
[supcaret] The term ``FY 2019 SNF QRP'' means the fiscal year for which
  the SNF QRP requirements applicable to that fiscal year must be met in
  order for a SNF to receive the full market basket percentage when
  calculating the payment rates applicable to it for that fiscal year.


   Table 21--Summary Illustration of Calendar Year Quarterly Reporting
 Cycles for Measure and Standardized Patient Assessment Data Reporting *
------------------------------------------------------------------------
                                             Proposed data submission
  Proposed data collection/submission     quarterly deadlines beginning
      quarterly reporting period *            with FY 2020 SNF QRP *
                                                    [supcaret]
------------------------------------------------------------------------
Q1: CY 2018 1/1/2018-3/31/2018.........  CY 2018 Q1 Deadline: August 15,
                                          2018.
Q2: CY 2018 4/1/2018-6/30/2018.........  CY 2018 Q2 Deadline: November
                                          15, 2018.
Q3: CY 2018 7/1/2018-9/30/2018.........  CY 2018 Q3 Deadline: February
                                          15, 2019.
Q4: CY 2018 10/1/2018-12/31/2018.......  CY 2018 Q4 Deadline: May 15,
                                          2019.
------------------------------------------------------------------------
* We note that submission of the MDS must also adhere to the SNF PPS
  deadlines.
[supcaret] The term ``FY 2020 SNF QRP'' means the fiscal year for which
  the SNF QRP requirements applicable to that fiscal year must be met in
  order for a SNF to receive the full market basket percentage when
  calculating the payment rates applicable to it for that fiscal year.

    We are inviting comment on our proposal to extend our current 
policy governing the schedule for reporting the quality measure data to 
the reporting of standardized resident assessment data beginning with 
the FY 2019 SNF QRP.
d. Proposed Schedule for Reporting the Proposed Quality Measures 
Beginning With the FY 2020 SNF QRP
    As discussed in section V.B.7. of this proposed rule, we are 
proposing to adopt five quality measures beginning with the FY 2020 SNF 
QRP: Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury, 
Application of IRF Functional Outcome Measure: Change in Self-Care for 
Medical Rehabilitation Patients (NQF #2633), Application of IRF 
Functional Outcome Measure: Change in Mobility Score for Medical 
Rehabilitation Patients (NQF #2634), Application of IRF Functional 
Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation 
Patients (NQF #2635), and Application of IRF Functional Outcome 
Measure: Discharge Mobility Score for Medical Rehabilitation Patients 
(NQF #2636). We are proposing that SNFs would report data on these 
measures using the MDS that is submitted through the QIES ASAP system. 
For the FY 2020 SNF QRP, SNFs would be required to report these data 
for admissions as well discharges that occur between October 1, 2018 
and December 31, 2018. More information on SNF reporting using the QIES 
ASAP system is located at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/?redirect=/NursingHomeQualityInits/30_NHQIMDS30TechnicalInformation.asp#TopOfPage.
    Starting in CY 2019, SNFs would be required to submit data for the 
entire calendar year beginning with the FY 2021 SNF QRP.
    We are inviting public comment on this proposal.
e. Input Sought on Data Reporting Related to Assessment Based Measures
    Through various means of public input, including that through 
previous rules, public comment on measures and the Measures Application 
Partnership, we received input suggesting that we expand the quality 
measures to include all residents and patients regardless of payer 
status so as to ensure representation of the quality of the services 
provided on the population as a whole, rather than a subset limited to 
Medicare. While we appreciate that many SNF residents are also Medicare 
beneficiaries, we agree that collecting quality data on all residents 
in the SNF setting supports our mission to ensure quality care for all 
individuals, including Medicare beneficiaries. We also agree that 
collecting data on all patients provides the most robust and accurate 
reflection of quality in the SNF setting. Accurate representation of 
quality provided in SNFs is best conveyed using data on all SNF 
residents, regardless of payer. We also appreciate that collecting 
quality data on all SNF residents regardless of payer source may create 
additional burden, however, we also note that the effort to separate 
out SNF residents covered by other non-FFS Medicare payers could have 
clinical and work flow implications with an associated burden, and we 
further appreciate that it is common practice for SNFs to collect MDS 
data on all residents regardless of payer source. Additionally, we note 
that data collected through MDS for Medicare beneficiaries should match 
that beneficiary's claims data in certain key respects (for example, 
diagnoses and procedures); this makes it easier for us to evaluate the 
accuracy of reporting in the MDS, such as by comparing diagnoses at 
hospital discharge to diagnoses at the follow-on SNF admission. 
However, we would not have access to such claims data for non-Medicare 
beneficiaries. Thus, we are seeking input on whether we should require 
quality data reporting on all SNF residents, regardless of payer, where 
feasible--noting that Part A claims data are limited to only Medicare 
beneficiaries.
    We are seeking comments on this topic.
12. Proposal To Apply the SNF QRP Data Completion Thresholds to the 
Submission of Standardized Resident Assessment Data Beginning With the 
FY 2019 SNF QRP
    We have gotten questions surrounding the data completion policy we 
adopted

[[Page 21078]]

beginning with the FY 2018 program year, in particular for how that 
policy applies to patients who reside in the SNF for part of an 
applicable period (for example, a patient who is admitted to a SNF 
during one reporting period but discharged in another, or a patient who 
is assessed upon admission using one version of the MDS but assessed at 
discharge using another version. We previously finalized that SNFs must 
report all of the data necessary to calculate the measures that apply 
to that program year on at least 80 percent of the MDS assessments that 
they submit (80 FR 46458). We also stated, in response to a comment, 
that we would consider data to have been satisfactorily submitted for a 
program year if the SNF reported all of the data necessary to calculate 
the measures if the data actually can be used for purposes of such 
calculations (as opposed to, for example, the use of a dash [-]).
    Some stakeholders have interpreted our requirement that data 
elements be necessary to calculate the measures to mean that if a 
patient is assessed, for example, using one version of the MDS at 
admission and another version of the MDS at discharge, the two 
assessments are included in the pool of assessments used to determine 
data completion only if the data elements at admission and discharge 
can be used to calculate the measures. Our intention, however, was not 
to exclude assessments on this basis. Rather, our intention was solely 
to clarify that for purposes of determining whether a SNF has met the 
data completion threshold, we would only look at the completeness of 
the data elements in the MDS for which reporting is required under the 
SNF QRP.
    To clarify our intended policy, we are proposing that the for 
purposes of determining whether a SNF has met the data completion 
threshold, we will consider all whether the SNF has reported all of the 
required data elements applicable to the program year on at least 80 
percent of the MDS assessments that they submit for that program year. 
For example, if a resident is admitted on December 20, 2017 but 
discharged on January 10, 2018, (1) the resident's 5-Day PPS assessment 
would be used to determine whether the SNF met the data completion 
threshold for the 2017 reporting period (and associated program year), 
and (2) the discharge assessment would be used to determine whether the 
SNF met the data completion threshold for the 2018 reporting period 
(and associated program year) We also wish to clarify in this proposed 
rule that some assessment data will not invoke a response and in those 
circumstances, data are not ``missing'' or incomplete. For example, in 
the case of a patient who does not have any of the medical conditions 
in a check all that apply listing, the absence of a response indicates 
that the condition is not present, and it would be incorrect to 
consider the absence of such data as missing in a threshold 
determination.
    We are also proposing to apply this policy to the submission of 
standardized resident assessment data, and to codify it at Sec.  
413.360 of our regulations. We welcome comment on these proposals.
13. SNF QRP Data Validation Requirements
    We refer readers to the FY 2016 SNF PPS final rule (80 FR 46458 
through 46459) for a summary of our approach to the development of data 
validation process for the SNF QRP. At this time, we are continuing to 
explore data validation methodology that will limit the amount of 
burden and cost to SNFs, while allowing us to establish estimations of 
the accuracy of SNF QRP data.
14. SNF QRP Submission Exception and Extension Requirements
    We refer readers to the FY 2016 SNF PPS final rule (80 FR 46459 
through 46460) for our finalized policies regarding submission 
exception and extension requirements for the FY 2018 SNF QRP. At this 
time, we are not proposing any changes to the SNF QRP requirements that 
we adopted in these final rules. However, we are proposing to codify 
the SNF QRP Submission Exception and Extension Requirements at new 
Sec.  413.360. We remind readers that, in the FY 2016 SNF PPS final 
rule (80 FR 46459 through 46460) we stated that SNF's must request an 
exception or extension by submitting a written request along with all 
supporting documentation to CMS via email to the SNF Exception and 
Extension mailbox at SNFQRPReconsiderations@cms.hhs.gov. We further 
stated that exception or extension requests sent to CMS through any 
other channel would not be considered as a valid request for an 
exception or extension from the SNF QRP's reporting requirements for 
any payment determination. In order to be considered, a request for an 
exception or extension must contain all of the requirements as outlined 
on our Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-QR-Reconsideration-and-Exception-and-Extension.html. We are inviting public comments on our 
proposal to codify the SNF QRP submission exception and extension 
requirements.
15. SNF QRP Submission Reconsideration and Appeals Procedures
    We refer the reader to the FY 2016 SNF PPS final rule (80 FR 46460 
through 46461) for a summary of our finalized reconsideration and 
appeals procedures for the SNF QRP beginning with the FY 2018 SNF QRP. 
We are not proposing any changes to these procedures. However, we are 
proposing to codify the SNF QRP Reconsideration and Appeals procedures 
at new Sec.  413.360. Under these procedures, a SNF must follow a 
defined process to file a request for reconsideration if it believes 
that the finding of noncompliance with the reporting requirements for 
the applicable fiscal year is erroneous, and the SNF can file a request 
for reconsideration only after it has been found to be noncompliant. In 
order to be considered, a request for a reconsideration must contain 
all of the elements outlined on our Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-QR-Reconsideration-and-Exception-and-Extension.html. We 
stated that we would not review any reconsideration request that is not 
accompanied by the necessary documentation and evidence, and that the 
request should be emailed to CMS at the following email address: 
SNFQRPReconsiderations@cms.hhs.gov. We further stated that 
reconsideration requests sent to CMS through any other channel would 
not be considered. We are inviting public comments on our proposal to 
codify the SNF QRP reconsideration and appeals procedures.
16. Proposals and Policies Regarding Public Display of Measure Data for 
the SNF QRP
    Section 1899B(g) of the Act requires the Secretary to establish 
procedures for the public reporting of SNFs' performance, including the 
performance of individual SNFs, on the measures specified under section 
(c)(1) and resource use and other measures specified under section 
(d)(1) of the Act (collectively, IMPACT Act measures) beginning not 
later than 2 years after the specified application date under section 
1899B(a)(2)(E) of the Act. This is consistent with the process applied 
under section 1886(b)(3)(B)(viii)(VII) of the Act, which refers to the 
public display and review requirements for the Hospital Inpatient 
Quality Reporting

[[Page 21079]]

(IQR) Program. In addition, for a more detailed discussion about the 
provider's confidential review process prior to public display of 
measures, we refer readers to the FY 2017 SNF PPS final rule (81 FR 
52045 through 52048).
    In this FY 2018 SNF PPS proposed rule, pending the availability of 
data, we are proposing to publicly report data in CY 2018 for the 
following 3 assessment-based measures: (1) Application of Percent of 
Long-Term Care Hospital (LTCH) Patients With an Admission and Discharge 
Functional Assessment and a Care Plan That Addresses Function (NQF 
#2631); (2) Percent of Residents or Patients with Pressure Ulcers That 
Are New or Worsened (NQF #0678); and (3) Application of Percent of 
Residents Experiencing One or More Falls with Major Injury (NQF # 
0674). Data collection for these 3 assessment-based measures began on 
October 1, 2016. We are proposing to display data for the assessment-
based measures based on rolling quarters of data, and we would 
initially use discharges from January 1, 2016 through December 31, 
2016.
    In addition, we are proposing to publicly report 3 claims-based 
measures for: (1) Medicare Spending Per Beneficiary-PAC SNF QRP; (2) 
Discharge to Community-PAC SNF QRP; and (3) Potentially Preventable 30-
Day Post-Discharge Readmission Measure for SNF QRP.
    These measures were adopted for the SNF QRP in the FY 2017 SNF PPS 
rule to be based on data from one calendar year. As previously adopted 
in the FY 2017 SNF PPS final rule (81 FR 52045 through 52047), 
confidential feedback reports for these 3 claims-based measures will be 
based on data collected for discharges beginning January 1, 2016 
through December 31, 2016. However, our current proposal revises the 
dates for public reporting and we are proposing to transition from 
calendar year to fiscal year to make these measure data publicly 
available by October 2018.
    For the Medicare Spending Per Beneficiary--PAC SNF QRP and 
Discharge to Community--PAC SNF QRP measures, we propose public 
reporting beginning in calendar year 2018 based on data collected from 
discharges beginning October 1, 2016, through September 30, 2017 and 
rates will be displayed based on one fiscal year of data. For the 
Potentially Preventable 30-day Post-Discharge Readmission Measure for 
SNF QRP, we are also proposing in this rule to increase the years of 
data used to calculate this measure from one year to two years and to 
update the associated reporting dates. If the proposed revisions to the 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
SNF QRP are finalized as proposed, data will be publicly reported for 
this measure beginning with discharges beginning October 1, 2015, 
through September 30, 2017 and rates will be displayed based on two 
consecutive fiscal years of data.
    Also, we propose to replace the assessment-based measure ``Percent 
of Residents or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay) (NQF #0678) with a modified version of the measure 
entitled ``Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury'' for the SNF QRP for future public reporting, if finalized. We 
refer readers to section V.B.7.a of this proposed rule for additional 
information regarding the proposed modification of the measure for 
quality reporting and public display.
    For the assessment-based measures, Application of Percent of Long-
Term Care Hospital (LTCH) Patients With an Admission and Discharge 
Functional Assessment and a Care Plan That Addresses Function (NQF 
#2631); Percent of Residents or Patients with Pressure Ulcers That Are 
New or Worsened (NQF #0678); and Application of Percent of Residents 
Experiencing One or More Falls with Major Injury (NQF #0674), to ensure 
the statistical reliability of the measures, we are proposing to assign 
SNFs with fewer than 20 eligible cases during a performance period to a 
separate category: ``The number of cases/resident stays is too small to 
report''. If a SNF had fewer than 20 eligible cases, the SNF's 
performance would not be publicly reported for the measure for that 
performance period.
    For the claims-based measures, Medicare Spending Per Beneficiary--
PAC SNF QRP; Discharge to Community--PAC SNF QRP; and Potentially 
Preventable 30-Day Post-Discharge Readmission Measure for SNF QRP, to 
ensure the statistical reliability of the measures, we are proposing to 
assign SNFs with fewer than 25 eligible cases during a performance 
period to a separate category: ``The number of cases/resident stays is 
too small to report.'' If a SNF had fewer than 25 eligible cases, the 
SNF's performance would not be publicly reported for the measure for 
that performance period. For Medicare Spending Per Beneficiary--PAC SNF 
QRP, to ensure the statistical reliability of the measure, we are 
proposing to assign SNFs with fewer than 20 eligible cases during a 
performance period to a separate category: ``The number of cases/
resident stays is too small to report.'' If a SNF has fewer than 20 
eligible cases, the SNF's performance would not be publicly reported 
for the measure for that performance period.

    Table 22--Summary of Proposed Measures for CY 2018 Public Display
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Proposed Measures:
    Percent of Residents or Patients with Pressure Ulcers that Are New
     or Worsened (Short Stay) (NQF #0678).
    Application of Percent of Residents Experiencing One or More Falls
     with Major Injury (Long Stay) (NQF #0674).
    Application of Percent of Long-Term Care Hospital (LTCH) Patients
     With an Admission and Discharge Functional Assessment and a Care
     Plan That Addresses Function (NQF #2631).
    Potentially Preventable 30-Day Post-Discharge Readmission Measure
     for SNF QRP.
    Discharge to Community--(PAC) SNF QRP.
    Medicare Spending Per Beneficiary (PAC) SNF QRP.
------------------------------------------------------------------------

    We invite public comment on the proposal for the public display of 
these 3 assessment-based measures and 3 claims-based measures, and the 
replacement of ``Percent of Residents or Patients with Pressure Ulcers 
That Are New or Worsened (NQF #0678) with a modified version of the 
measure, ``Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury'' described above.
17. Mechanism for Providing Confidential Feedback Reports to SNFs
    Section 1899B(f) of the Act requires the Secretary to provide 
confidential feedback reports to PAC providers on their performance on 
the measures specified under subsections (c)(1) and (d)(1) of section 
1899B of the Act, beginning one year after the specified application 
date that applies to such measures and PAC providers. In the FY 2017 
SNF PPS final rule (81 FR 52046

[[Page 21080]]

through 52048), we finalized processes to provide SNF providers the 
opportunity to review their data and information using confidential 
feedback reports that will enable SNFs to review their performance on 
the measures required under the SNF QRP. Information on how to obtain 
these and other reports available to the SNF QRP can be found at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Spotlights-and-Announcements.html. We are not proposing any changes to this policy.

C. Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP)

1. Background
    Section 215 of the Protecting Access to Medicare Act of 2014 (PAMA) 
(Pub. L. 113-93) authorized the SNF VBP Program (the ``Program'') by 
adding sections 1888(g) and (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 this proposed rule, we are making proposals related to the 
implementation of the Program.
    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 
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.
    In this rule, we are proposing to implement requirements for the 
SNF VBP Program, as well as codify some of those requirements at Sec.  
413.338, including certain definitions, the process for making value-
based incentive payments, limitations on review, and other 
requirements.
2. Measures
a. Background
    For background on the measures in 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 will use 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.
b. Request for Comment on Measure Transition
    Section 1886(h)(2)(B) of the Act requires us to apply the SNFPPR to 
the SNF VBP Program instead of the SNFRM ``as soon as practicable.'' We 
intend to propose a timeline for replacing the SNFRM with the SNFPPR in 
future rulemaking, after we have had a sufficient opportunity to 
analyze the potential effects of this replacement on SNFs' measured 
performance. We believe we must approach the decision about when it is 
practicable to replace the SNFRM thoughtfully, and we continue to 
welcome public feedback on when it is practicable to replace the SNFRM 
with the SNFPPR.
    In the FY 2017 SNF PPS final rule (81 FR 51995), we summarized the 
public comments we received in response to our request for when we 
should begin to measure SNFs on their performance on the SNFPPR instead 
of the SNFRM. Commenters' views were mixed; one suggested that we 
replace the SNFRM immediately, while others requested that we wait 
until the SNFPPR receives NQF endorsement, or that we allow SNFs to 
receive and understand their SNFPPR data for at least 1 year prior to 
beginning to use it. Another commenter suggested that we decline to use 
the SNFPPR until the measure receives additional support from the 
Measure Application Partnership and is the subject of additional public 
comment.
    We would like to thank stakeholders for their input on this issue. 
We believe the first opportunity to replace the SNFRM with the SNFPPR 
would be the FY 2021 program year, which would give SNFs experience 
with the SNFRM and other measures of readmissions such as those adopted 
under the SNF QRP. However, we have not yet determined if it would be 
practicable to replace the SNFRM at that time. We intend to continue to 
analyze SNF performance on the SNFPPR in comparison to the SNFRM and 
assess how the replacement of the SNFRM with the SNFPPR will affect the 
quality of care provided to Medicare beneficiaries.
    We again request public comments on when we should replace the 
SNFRM with the SNFPPR, particularly in light of our proposal (discussed 
further in this section) to adopt performance and baseline periods 
based on the federal FY rather than on the calendar year.
c. Updates to the Skilled Nursing Facility 30-Day All-Cause Readmission 
Measure (NQF #2510)
    Since finalizing the SNFRM for use in the SNF VBP Program, we have 
continued to conduct analyses using more recent data, as well as to 
make some necessary non-substantive measure refinements. Results of 
this work and all refinements are detailed in a Technical Report 
Supplement that is available on the following CMS Web site: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-VBPs/SNF-VBP.html.
d. Accounting for Social Risk Factors in the SNF VBP Program
    We understand that social risk factors such as income, education, 
race and ethnicity, employment, disability, community resources, and 
social support (certain factors of which are also sometimes referred to 
as socioeconomic status (SES) factors or socio-demographic status (SDS) 
factors) play a major role in health. One of our core objectives is to 
improve beneficiary outcomes including reducing health disparities, and 
we want to ensure that all beneficiaries, including those with social 
risk factors, receive high quality care. In addition, we seek to ensure 
that the quality of care furnished by providers and suppliers is 
assessed as fairly as possible under our programs while ensuring that 
beneficiaries have adequate access to excellent care.
    We have been reviewing reports prepared by the Office of the 
Assistant Secretary for Planning and Evaluation

[[Page 21081]]

(ASPE) \88\ and the National Academies of Sciences, Engineering, and 
Medicine on the issue of accounting for social risk factors in CMS' 
value-based purchasing and quality reporting programs, and considering 
options on how to address the issue in these programs. On December 21, 
2016, ASPE submitted a Report to Congress on a study it was required to 
conduct under section 2(d) of the Improving Medicare Post-Acute Care 
Transformation (IMPACT) Act of 2014. The study analyzed the effects of 
certain social risk factors in Medicare beneficiaries on quality 
measures and measures of resource use used in one or more of nine 
Medicare value-based purchasing programs, including the SNF VBP 
Program.\89\ The report also included considerations for strategies to 
account for social risk factors in these programs. In a January 10, 
2017 report released by The National Academies of Sciences, 
Engineering, and Medicine, that body provided various potential methods 
for measuring and accounting for social risk factors, including 
stratified public reporting.\90\
---------------------------------------------------------------------------

    \88\ Office of the Assistant Secretary for Planning and 
Evaluation. 2016. Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs. 
Available at https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \89\ Office of the Assistant Secretary for Planning and 
Evaluation. 2016. Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs. 
Available at https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \90\ National Academies of Sciences, Engineering, and Medicine. 
2017. Accounting for social risk factors in Medicare payment. 
Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

    As noted in the FY 2017 IPPS/LTCH PPS final rule, the NQF has 
undertaken a 2-year trial period in which certain new measures, 
measures undergoing maintenance review, and measures endorsed with the 
condition that they enter the trial period can be assessed to determine 
whether risk adjustment for selected social risk factors is appropriate 
for these measures. This trial entails temporarily allowing inclusion 
of social risk factors in the risk-adjustment approach for these 
measures. At the conclusion of the trial, NQF will issue 
recommendations on the future inclusion of social risk factors in risk 
adjustment for these quality measures, and we will closely review its 
findings.
    The SNF VBP section of ASPE's report examined the relationship 
between social risk factors and performance on the 30-day SNF 
readmission measure for beneficiaries in SNFs. Findings indicated that 
beneficiaries with social risk factors were more likely to be re-
hospitalized but that this effect was significantly smaller when the 
measure's risk adjustment variables were applied (including adjustment 
for age, gender, and comorbitities), and that the effect of dual 
enrollment disappeared. In addition, being at a SNF with a high 
proportion of beneficiaries with social risk factors was associated 
with an increased likelihood of readmissions, regardless of a 
beneficiary's social risk factors. We encourage readers to examine this 
chapter of ASPE's report, and we seek any comments on the report's 
analysis and findings.
    As we continue to consider the analyses and recommendations from 
these reports and await the results of the NQF trial on risk adjustment 
for quality measures, we are continuing to work with stakeholders in 
this process. As we have previously communicated, we are concerned 
about holding providers to different standards for the outcomes of 
their patients with social risk factors because we do not want to mask 
potential disparities or minimize incentives to improve the outcomes 
for disadvantaged populations. Keeping this concern in mind, while we 
sought input on this topic previously, we continue to seek public 
comment on whether we should account for social risk factors in the SNF 
VBP Program, and if so, what method or combination of methods would be 
most appropriate for accounting for social risk factors. Examples of 
methods include: Adjustment of the payment adjustment methodology under 
the SNF VBP Program; adjustment of provider performance scores (for 
instance, stratifying providers based on the proportion of their 
patients who are dual eligible); confidential reporting of stratified 
measure rates to providers; public reporting of stratified measure 
rates; risk adjustment of measures as appropriate based on data and 
evidence; and redesigning payment incentives (for instance, rewarding 
improvement for providers caring for patients with social risk factors 
or incentivizing providers to achieve health equity). While we consider 
whether and to what extent we currently have statutory authority to 
implement one or more of the above-described methods, we are seeking 
comments on whether any of these methods should be considered, and if 
so, which of these methods or combination of methods would best account 
for social risk factors in the SNF VBP Program.
    In addition, we are seeking public comment on which social risk 
factors might be most appropriate for stratifying measure scores and/or 
potential risk adjustment of a particular measure. Examples of social 
risk factors include, but are not limited to, dual eligibility/low-
income subsidy, race and ethnicity, and geographic area of residence. 
We are seeking comments on which of these factors, including current 
data sources where this information would be available, could be used 
alone or in combination, and whether other data should be collected to 
better capture the effects of social risk. We will take commenters' 
input into consideration as we continue to assess the appropriateness 
and feasibility of accounting for social risk factors in the SNF VBP 
Program. We note that any such changes would be proposed through future 
notice-and-comment rulemaking.
    We look forward to working with stakeholders as we consider the 
issue of accounting for social risk factors and reducing health 
disparities in CMS programs. Of note, implementing any of the above 
methods would be taken into consideration in the context of how this 
and other CMS programs operate (for example, data submission methods, 
availability of data, statistical considerations relating to 
reliability of data calculations, among others), and we also welcome 
comment on operational considerations. CMS is committed to ensuring 
that its beneficiaries have access to and receive excellent care, and 
that the quality of care furnished by providers and suppliers is 
assessed fairly in CMS programs.
3. Proposed FY 2020 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.
    In this proposed rule, we are providing estimates of the numerical 
values of the achievement threshold and the benchmark for the FY 2020 
program year. We have based these values on the FY 2016 MedPAR files 
including a 3-month run-out period. We intend to include the final 
numerical values in the FY 2018 SNF PPS final rule. However, as 
finalized in the FY 2017 SNF PPS final rule (81 FR 51998), if we are 
unable to complete the necessary calculations in time to include the 
final numerical values in the FY 2018 SNF

[[Page 21082]]

PPS final rule, we will publish the numerical values not later than 60 
days prior to the beginning of the performance period that applies to 
the FY 2020 program year, and we will notify SNFs and the public of 
those final numerical values through a listserv email and a posting on 
the QualityNet News portion of the Web site.
    Additionally, as discussed further below, we are proposing to adopt 
baseline and performance periods for the FY 2020 program year based on 
the federal fiscal year rather than the calendar year as we had 
finalized for the FY 2019 program year. The estimated numerical values 
for the achievement threshold and benchmark in Table 23 reflect this 
proposal by using FY 2016 claims data. As we have done in prior 
rulemaking, we have inverted the SNFRM rates in Table 23 so that higher 
values represent better performance.

                        Table 23--Estimated FY 2020 SNF VBP Program Performance Standards
----------------------------------------------------------------------------------------------------------------
                                                                                    Achievement
                  Measure ID                           Measure description           threshold       Benchmark
----------------------------------------------------------------------------------------------------------------
SNFRM.........................................  SNF 30-Day All-Cause Readmission         0.80218         0.83721
                                                 Measure (NQF #2510).
----------------------------------------------------------------------------------------------------------------

    We welcome public comments on these estimated achievement threshold 
and benchmark values.
4. Proposed FY 2020 Performance Period and Baseline Period
a. Background
    We refer readers to the FY 2016 SNF PPS final rule (80 FR 46422) 
for a discussion of the considerations that we took into account when 
specifying 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.
b. FY 2020 Proposals
    Although we continue to believe that a 12-month performance and 
baseline period are appropriate for the Program, we are concerned about 
the operational challenges of linking the 12-month periods to the 
calendar year. Specifically, the allowance of an approximately 90-day 
claims run out period following the last date of discharge, coupled 
with the length of time needed to calculate the measure rates using 
multiple sources of claims needed for statistical modeling, determine 
achievement and improvement scores, allow SNFs to review their measure 
rates, and determine the amount of payment adjustments could risk delay 
in meeting requirement at section 1888(h)(7) of the Act to notify SNFs 
of their value-based incentive payment percentages not later than 60 
days prior to the fiscal year involved.
    We therefore considered what policy options we had to mitigate this 
risk and ensure that we comply with the statutory deadline to notify 
SNFs of their payment adjustments under the Program.
    We continue to believe that a 12-month performance and baseline 
period provide a sufficiently reliable and valid data set for the SNF 
VBP Program. We also continue to believe that, where possible and 
practicable, the baseline and performance period should be aligned in 
length and in months included in the selections. Taking those 
considerations and beliefs into account, we propose to adopt FY 2018 
(October 1, 2017, through September 30, 2018) as the performance period 
for the FY 2020 SNF VBP Program, with FY 2016 (October 1, 2015, through 
September 30, 2016) as the baseline period for purposes of calculating 
performance standards and measuring improvement. This proposed policy, 
will, if finalized, give us an additional 3 months between the 
conclusion of the performance period and the 60-day notification 
deadline prescribed by section 1888(h)(7) of the Act to complete the 
activities described above.
    We are aware that making this transition from the calendar year to 
the federal FY will result in our measuring SNFs on their performance 
during Q4 of 2017 (October 1, 2017, through December 31, 2017) for both 
the FY 2019 program year and the FY 2020 program year. During the FY 
2019 program year, that quarter will fall at the end of the finalized 
performance period (January 1, 2017, through December 31, 2017), while 
during the FY 2020 program year, that quarter will fall at the 
beginning of the proposed performance period (October 1, 2017, through 
September 30, 2018). We believe that, on balance, this overlap in data 
is more beneficial than the alternative. We considered proposing not to 
use that quarter of measured performance during the FY 2020 program 
year, but, as a result, we would be left with fewer than 12 months of 
data with which to score SNFs under the program. As we have stated, we 
believe it is important to use 12 months of data to avoid seasonality 
issues and to assess SNFs fairly. We therefore believe that meeting 
these operational challenges, in total, outweighs any cost to SNFs 
associated with including a single quarter's SNFRM data in their SNF 
performance scores twice.
    However, as an alternative, we request comments on whether or not 
we should instead consider adopting for the FY 2020 Program a one-time, 
three-quarter performance period of January 1, 2018, through September 
30, 2018, and a one-time, three-quarter baseline period of January 1, 
2016 through September 30, 2016 in order to avoid the overlap in 
performance period quarters that we describe above. We believe this 
option could provide us with sufficiently reliable SNFRM data for 
purposes of the Program's scoring while ensuring that SNFs are not 
scored on the same quality measure data in successive Program years. 
However, we note that the shorter measurement period could result in 
lower denominator counts and seasonal variations in care, as well as 
disparate effects of cold weather months on SNFs' care could also 
create variations in quality measurement, and could potentially 
disproportionately affect SNFs in different areas of the country. Under 
this alternative, we would resume a 12-month performance and baseline 
period beginning with the FY 2021 program year
    We welcome public comments on our proposal and alternative. In 
addition, as we continue considering potential policy changes once we 
replace the SNFRM with the SNFPPR, we also seek comment on whether or 
not we should consider other potential performance and baseline periods 
for that measure. We specifically request comments on whether or not we 
should attempt to align the SNF VBP Program's performance and baseline 
periods with other CMS value-based purchasing programs, such as the 
Hospital VBP Program or Hospital Readmissions Reduction Program, which 
could mean proposing to adopt performance and baseline periods that run 
from July 1st to June 30th.

[[Page 21083]]

5. SNF VBP Performance Scoring
    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.
a. Proposed Rounding Clarification for SNF VBP Scoring
    In the FY 2017 SNF PPS final rule (81 FR 52001), we adopted 
formulas for scoring SNFs on achievement and improvement. The final 
step in these calculations is rounding the scores to the nearest whole 
number.
    As we have continued examining SNFRM data, we have identified a 
concern related to that rounding step. Specifically, we are concerned 
that rounding SNF performance scores to the nearest whole number is 
insufficiently precise for purposes of establishing value-based 
incentive payments under the Program. Rounding scores in this manner 
has the effect of producing significant numbers of tie scores, since 
SNFs have between 0 and 100 points available under the Program, and we 
estimate that more than 16,000 SNFs will participate in the Program. As 
discussed further in this section, the exchange function methodology 
that we are proposing to adopt is most easily implemented when we are 
able to differentiate precisely among SNF performance scores in order 
to provide each SNF with a unique value-based incentive payment 
percentage.
    We therefore propose to change the rounding policy from that 
previously finalized for SNF VBP Program scoring methodology, and 
instead to award points to SNFs using the formulas that we adopted in 
last year's rule by rounding the results to the nearest ten-thousandth 
of a point. Using significant digits terminology, we propose to use no 
more than five significant digits to the right of the decimal point 
when calculating SNF performance scores and subsequently calculating 
value-based incentive payments. We view this policy change as necessary 
to ensure that the Program scores SNFs as precisely as possible and to 
ensure that value-based incentive payments reflect SNF performance 
scores as accurately as possible.
    We welcome public comments on this proposal.
b. Request for Comments on Policies for Facilities With Zero 
Readmissions During the Performance Period
    In our analyses of historical SNFRM data, we identified a unit 
imputation issue associated with certain SNFs' measured performance. 
Specifically, we found that a small number of facilities had zero 
readmissions during the applicable performance period. An observed 
readmission rate of zero is a desirable outcome; however, due to risk-
adjustment and the statistical approach used to calculate the measure, 
outlier values are shifted towards the mean, particularly for smaller 
SNFs. As a result, observed readmission rates of zero result in risk-
standardized readmission rates that are greater than zero. Analysis 
conducted by our measure development contractor revealed that it may be 
possible--although rare--for SNFs with zero readmissions to receive a 
negative value-based incentive payment adjustment. We are concerned 
that assigning a net negative value-based incentive payment to a SNF 
that achieved zero readmissions during the applicable performance 
period would not support the Program's goals.
    We considered our policy options for SNFs that could be affected by 
this issue, including excluding SNFs with zero readmissions from the 
Program entirely in order to ensure that they are not unduly harmed by 
being assigned a non-zero RSRR by the measure's finalized methodology. 
However, because the Program's statute requires us to include all SNFs 
in the Program, we do not believe we have the authority to exclude any 
SNFs from the payment withhold and from value-based incentive payments. 
We also considered proposing to replace SNF performance scores for 
those SNFs in this situation with the median SNF performance score. But 
because we must pay SNFs ranked in the lowest 40 percent less than the 
amount they would otherwise be paid in the absence of the SNF VBP, we 
do not believe that assigning these SNFs the median performance rate on 
the applicable measure would necessarily protect them from receiving 
net negative value-based incentive payments, even though they had 
accomplished a clinical goal set out specifically by the Program.
    We are considering different policy options to ensure that SNFs 
achieving zero readmissions among their patient populations during the 
performance period do not receive a negative payment adjustment. We 
intend to address this topic in future rulemaking, and we request 
public comments on what accommodations, if any, we should employ to 
ensure that SNFs meeting our quality goals are not penalized under the 
Program. We specifically request comments on the form this potential 
accommodation should take.
c. Request for Comments on Extraordinary Circumstances Exception Policy
    In other value-based purchasing programs, such as the Hospital VBP 
Program (see 78 FR 50704 through 50706), as well as several of our 
quality reporting programs, we have adopted Extraordinary Circumstances 
Exceptions policies intended to allow participating facilities to 
receive administrative 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.
    We are considering whether or not this type of policy would be 
appropriate for the SNF VBP Program. We intend to address this topic in 
future rulemaking. We therefore request public comments on whether or 
not we should implement such a policy, and if so, the form the policy 
should take and the authority we should employ. If we propose such a 
policy in the future, our preference would be to align it with the 
Extraordinary Circumstances Exception policy adopted under our other 
quality programs.
6. SNF Value-Based Incentive Payments
a. Proposed Exchange Function
    We refer readers to the FY 2017 SNF PPS final rule (81 FR 52005 
through 52006) for discussion of four possible exchange functions that 
we considered adopting in order to translate SNFs' performance scores 
into value-based incentive payments. We have created new graphical 
representations of the four functions that we have considered in the 
past--linear, cube, cube root, and logistic--and present those updated 
representations here. We note that the actual exchange functions' forms 
and slopes will vary depending on the distributions of SNFs' 
performance scores from the FY 2019 performance period, and wish to 
emphasize that these representations are presented solely for the 
reader's clarity as we discuss our proposed exchange function policy.

[[Page 21084]]

[GRAPHIC] [TIFF OMITTED] TP04MY17.001

    We have continued examining historical SNFRM data while considering 
our policy options for this program. We have attempted to assess how 
each of the four possible exchange functions that we set out in the FY 
2017 SNF PPS final rule, as well as potential variations, would affect 
SNFs' incentive payments under the Program. We specifically considered 
the effects of the statutory constraints on the Program's value-based 
incentive payments and our belief that in order to create an effective 
incentive payment program, SNFs' value-based incentive payments must be 
widely distributed to reward higher performing SNFs through increased 
payment and to make reduced payments to lower performing SNFs. We also 
considered our desire to avoid unintended consequences of the Program's 
incentive payments, particularly since the Program is limited by 
statute to using a single measure at a time, and our view that an 
equitable distribution of value-based incentive payments would be most 
appropriate to ensure that all SNFs, including SNFs serving at-risk 
populations, could potentially qualify for incentive payments.
    In our view, important factors when adopting an exchange function 
include the number of SNFs that receive more in value-based incentive 
payments than the number of SNFs for which a reduction is applied to 
their Medicare payments, as well as the incentive for SNFs to reduce 
hospital readmissions. We hold this view because we believe that the 
Program will be most effective at encouraging SNFs to improve the 
quality of care that they provide to Medicare beneficiaries if SNFs 
have the opportunity to earn incentives, rather than simply avoid 
penalties, through high performance on the applicable quality measure. 
We also believe that SNFs must have incentives to reduce hospital 
readmissions for their patients

[[Page 21085]]

no matter where their performance lies in comparison to their peers.
    Taking those considerations into account, we analyzed the four 
exchange functions on which we have previously sought comment--linear, 
cube, cube root, and logistic--as well as variations of those exchange 
functions. We scored SNFs using historical SNFRM data and modeled SNFs' 
value-based incentive payments using each of the functions in turn. We 
evaluated the distribution of value-based incentive payments that 
resulted from each function, as well as the number of SNFs with 
positive payment adjustments and the value-based incentive payment 
percentages that resulted from each function. We also evaluated the 
functions' results for the statutory requirements in section 
1888(h)(5)(C)(ii) of the Act, including the requirements in subclause 
(I) that the percentage be based on the SNF performance score for each 
SNF, in subclause (II) that the application of all such percentages 
results in an appropriate distribution, and in items (aa), (bb), and 
(cc) of subclause (II), specifying that SNFs with the highest rankings 
receive the highest value-based incentive payment amounts, that SNFs 
with the lowest rankings receive the lowest value-based incentive 
payment amounts, and that the SNFs in the lowest 40 percent of the 
ranking receive a lower payment rate than would otherwise apply.
    In our analyses, of the four baseline functions, we found that the 
logistic function maximized the number of SNFs with positive payment 
adjustments among SNFs measured using the SNFRM. We also found that the 
logistic function best fulfills the requirement that the SNFs in the 
lowest 40 percent of the ranking receive a lower payment rate than 
would otherwise apply, resulted in an appropriate distribution of 
value-based incentive payment percentages, and fulfilled the other 
statutory requirements described in this proposed rule. Specifically, 
we noted that the logistic function provided a broad range of SNFs with 
net-positive value-based incentive payments, and while it did not 
provide the highest value-based incentive payment percentage to the top 
performers of all of the functions, we viewed the number of SNFs with 
positive payment adjustments as a more important consideration than the 
highest value-based incentive payment percentages being awarded.
    We also considered alignment of VBP payment methodologies across 
fee-for-service Medicare VBP programs, including the Hospital VBP 
program and Quality Payment Program (QPP). We recognize that aligning 
payment methodologies would help stakeholders that use VBP payment 
information across care settings better understand the SNF VBP payment 
methodology. Both the Hospital VBP program and QPP use some form of a 
linear exchange function for payment. Three key program aspects that 
facilitate the use of a linear exchange function are the programs' 
number of measures, measure weights, and correlation across program 
measures. These three aspects in tandem contribute to the approximately 
normal distribution of scores expected in the Hospital VBP program and 
QPP. No single measure is the key driver that might ``tilt'' scores to 
a non-normal distribution. Since both programs are required to be 
budget neutral, our modeling estimates that scores translate into an 
approximately equal number of providers with positive payment 
adjustments and providers receiving a net payment reduction.
    In contrast, the SNF VBP payment adjustment is driven, in part, by 
two specific SNF VBP statutory requirements: The program use of a 
single measure; and the requirement that the total amount of value-
based incentive payments for all SNFs in a fiscal year be between 50 
and 70 percent of the total amount of reductions to payments for that 
fiscal year, as estimated by the Secretary. Our analysis of the linear 
exchange function showed that more SNFs would receive a net payment 
reduction than a payment incentive because the total amount available 
for incentive payments in a fiscal year is limited to between 50 and 70 
percent of the total amount of the reduction to SNF payments for that 
fiscal year. The linear exchange function also results in the provision 
of a net payment reduction to a higher percentage of SNFs that exceeded 
the 50th percentile of national performance, relative to the logistic 
payment function. We believe that these finding are unique to the SNF 
VBP program, relative to other fee-for-service Medicare programs, 
because of the limitation on the total amount that we can use for 
incentive payments, coupled with the use of a single measure and the 
corresponding scoring distribution.
    In addition to the four baseline functions described further above, 
we considered adjusting the linear function in order to be able to make 
positive payment adjustments to a greater number of SNFs. Specifically, 
we tested an alternative where we reduced the baseline linear function 
by 20 percent, then redistributed the resulting funds to the middle 40 
percent of SNFs. We found that the use of this linear function with 
adjustment would enable us to make a positive payment adjustment to a 
slightly greater number of SNFs than we would be able to make using the 
logistic function. However, we were concerned with the additional 
complexity involved in implementing this type of two-step adjustment to 
the linear exchange function.
    Taking all of these considerations into account, we propose to 
adopt a logistic function for the FY 2019 SNF VBP Program and 
subsequent years. Under this policy, we will:
    1. Estimate Medicare spending on SNF services for the FY 2019 
payment year;
    2. Estimate the total amount of reductions to SNFs' adjusted 
Federal per diem rates for that year, as required by statute;
    3. Calculate the amount realized under the payback percentage 
proposal (discussed further below);
    4. Order SNFs by their SNF performance scores; and
    5. Assign a value-based incentive payment multiplier to each SNF 
that corresponds to a point on the logistic exchange function that 
corresponds to its SNF performance score.
    As proposed and discussed further in this proposed rule, we will 
model the logistic exchange function in such a form that the estimated 
total amount of value-based incentive payments equals not more than 60 
percent of the amounts withheld from SNFs' claims. While the function's 
specific form will also depend on the distribution of SNF performance 
scores during the performance period, the formula that we have used to 
construct the logistic exchange function and that we intend to use for 
FY 2019 program calculations is:
[GRAPHIC] [TIFF OMITTED] TP04MY17.000

where xi is the SNF's performance score.

    We welcome public comments on this proposal, and in particular, on 
whether a linear function with adjustment would alternatively be 
feasible for the SNF VBP Program, potentially beginning with FY 2019.
b. Payback Percentage Proposal
    Section 1888(h)(6)(A) 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 by that SNF during a fiscal year by the applicable percent 
(which, under section 1888(h)(6)(B) of the Act is 2 percent for FY 2019 
and succeeding fiscal years) to fund the value-based incentive

[[Page 21086]]

payments for that fiscal year. Section 1888(h)(5)(C)(ii)(III) of the 
Act further specifies that the total amount of value-based incentive 
payments under the Program for all SNFs in a fiscal year must be 
greater than or equal to 50 percent, but not greater than 70 percent, 
of the total amount of the reductions to payments for that fiscal year 
under the Program, as estimated by the Secretary. Thus, we must decide 
what percentage of the total amount of the reductions to payments for a 
fiscal year we will pay as value-based incentive payments to SNFs based 
on their performance under the Program for that fiscal year.
    As with our exchange function proposal described in this proposed 
rule, we view the important factors when specifying a payback 
percentage as the number of SNFs that receive a positive payment 
adjustment and the marginal incentives for all SNFs to reduce hospital 
readmissions and make broad-based care quality improvements, as well as 
the Medicare Program's long-term sustainability through the additional 
estimated Medicare trust fund savings. We intend for the proposed 
payback percentage to appropriately balance these factors. We analyzed 
the distribution of value-based incentive payments using historical 
data, focusing on the full range of available payback percentages.
    Taking these considerations into account, we propose that the total 
amount of funds that would be available to pay as value-based incentive 
payments in a fiscal year would be 60 percent of the reductions to 
payments otherwise applicable to SNF Medicare payments for that fiscal 
year, as estimated by the Secretary. We believe that 60 percent is the 
most appropriate payback percentage to balance the considerations 
described in this proposed rule.
    We note that we intend to monitor the effects of the payback 
percentage policy on Medicare beneficiaries, on participating SNFs, and 
on their measured performance closely. We intend to consider proposing 
to adjust the payback percentage in future rulemaking. In our 
consideration, we would include the program's effects on readmission 
rates, potential unintended consequences of SNF care to beneficiaries 
included in the measure, and SNF profit margins. Since the SNF VBP 
Program is a new, single measure value-based purchasing program and 
will continue to evolve as we implement it--including, for example, 
changing from the SNF Readmission Measure to the SNFPPR as required by 
statute--we intend to evaluate its effects carefully.
    We note also that the Medicare Payment Advisory Commission's 
research has shown that for-profit SNFs' average Medicare margins are 
significantly positive,\91\ though not-for-profit SNFs' average 
Medicare margins are substantially lower, and we request comment on the 
extent to which that should be considered in our policy. We also 
recognize that there is some evidence that not-for-profit SNFs tend to 
perform better on measures of hospital readmissions than for-profit 
SNFs,\92\ and we request comment on whether our proposed payback 
percentage appropriately balances Medicare's long-term sustainability 
with the need to provide strong incentives for quality improvement to 
top-performing but lower-margin SNFs.
---------------------------------------------------------------------------

    \91\ Medicare Payment Advisory Commission, March 2017 Report to 
the Congress, ch. 8: Skilled nursing facility services, Table 8-6. 
https://medpac.gov/docs/default-source/reports/mar17_entirereport.pdf.
    \92\ Neuman, M.D., Wirtalla, C., Werner, R.M. Association 
Between Skilled Nursing Facility Quality Indicators and Hospital 
Readmissions. JAMA. 2014;312(15):1542-1551. doi:10.1001/
jama.2014.13513. Retrieved from https://jamanetwork.com/journals/jama/fullarticle/1915609.
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    We welcome public comments on this proposal.
7. SNF VBP Reporting
a. Confidential Feedback Reports
    We refer readers to the FY 2017 SNF PPS final rule (81 FR 52006 
through 52007) for discussion of our intention to use the QIES system 
CASPER files to fulfill the requirement in section 1888(g)(5) of the 
Act that we provide quarterly confidential feedback reports to SNFs on 
their performance on the Program's measures. We also responded in that 
final rule to public comments on the appropriateness of the QIES 
system.
    We provided SNFs with a test report in September 2016, followed by 
data on SNFs' CY 2013 performance on the SNFRM in December 2016 and 
SNFs' CY 2014 performance on the SNFRM in March 2017. We intend to 
continue providing SNFs with their performance data each quarter as 
required by the statute.
    We welcome feedback from SNFs on the contents of the quarterly 
reports and what additional elements, if any, we should consider 
including that would be useful for quality improvement efforts. We 
specifically seek comment on what patient-level data would be most 
helpful to SNFs if they were to request such data from us as part of 
their quality improvement efforts.
b. Review and Corrections Process: Phase Two
    In the FY 2017 SNF PPS final rule (81 FR 52007 through 52009), we 
adopted a two-phase review and corrections process for SNFs' quality 
measure data that will be made public under section 1888(g)(6) of the 
Act and SNF performance information that will be made public under 
section 1888(h)(9) of the Act. We explained that we would accept 
corrections to the quality measure data used to calculate the measure 
rates that is included in any SNF's quarterly confidential feedback 
report, and also that we would provide SNFs with an annual confidential 
feedback report containing the performance information that will be 
made public. We detailed the process for requesting Phase One 
corrections and finalized a policy whereby we would accept Phase One 
corrections to SNFs' quarterly reports through March 31 following the 
report's issuance via the CASPER system.
    In this proposed rule, we are proposing to adopt additional 
specific requirements for the Phase Two review and correction process. 
Specifically, we are proposing to limit Phase Two correction requests 
to the SNF's performance score and ranking because all SNFs would have 
already had the opportunity to correct their quality measure data 
through the Phase One corrections process.
    We are proposing to provide these reports to SNFs at least 60 days 
prior to the FY involved. SNFs will not be allowed to request 
corrections to their value-based incentive payment adjustments. 
However, we will make confirming corrections to a SNF's value-based 
incentive payment adjustment if a SNF successfully requests a 
correction to its SNF performance score.
    As with Phase One, we propose that Phase Two correction requests 
must be submitted to the SNFVBPinquiries@cms.hhs.gov mailbox, and must 
contain the following information:
     SNF's CMS Certification Number (CCN);
     SNF Name;
     The correction requested and the SNF's basis for 
requesting the correction.
    Specifically, the SNF must identify the error for which it is 
requesting correction, and explain the reason for requesting the 
correction. The SNF must also submit documentation or other evidence, 
if available, supporting the request. As noted above, corrections 
requested during Phase Two will be limited to SNFs' performance score 
and ranking. However, we note that the

[[Page 21087]]

SNFVBPinquiries@cms.hhs.gov mailbox cannot receive secured email 
messages. If any SNF believes it needs to submit patient-sensitive 
information as part of a correction request, we request that the SNF 
contact us at the mailbox to arrange a secured transfer.
    We further propose that SNFs must make any correction requests no 
later than 30 days following the date of our posting of their annual 
SNF performance score report via the QIES system CASPER files. For 
example, if we post the reports on August 1, 2017, SNFs must review 
these reports and submit any correction requests by 11:59 p.m. Eastern 
Standard Time on August 31, 2017 (or the next business day, if the 30th 
day following the date of the posting is a weekend or federal holiday). 
We will not consider any requests for corrections to SNF performance 
scores or rankings that are received after this deadline.
    We will review all timely Phase Two correction requests that we 
receive and will provide responses to SNFs that have requested 
corrections as soon as practicable. We will re-issue an updated SNF 
performance score report to any SNF that requests a correction with 
which we agree, and if necessary, will update any public postings on 
Nursing Home Compare and value-based incentive payment percentages, as 
applicable.
    We welcome public comments on this proposed Phase Two corrections 
process.
c. SNF VBP Program Public Reporting Proposal
    We refer readers to the FY 2017 SNF PPS final rule (81 FR 52009) 
for discussion of the statutory requirements governing the public 
reporting of SNFs' performance information under the SNF VBP Program. 
We also sought and responded to public comments on issues that we 
should take into account when posting performance information on 
Nursing Home Compare or a successor Web site.
    We propose to begin publishing SNF performance information under 
the SNF VBP Program on Nursing Home Compare not later than October 1, 
2017. We will only publish performance information for which SNFs have 
had the opportunity to review and submit corrections. We welcome 
comments on this proposal.
d. Proposed Ranking of SNFs' Performance
    We refer readers to the FY 2017 SNF PPS final rule (81 FR 52009) 
for discussion of the statutory requirement that we rank SNFs based on 
their performance on the Program. In that rule, we discussed the 
statutory requirements to order SNF performance scores from low to high 
and publish those rankings on both the Nursing Home Compare and 
QualityNet Web sites, and to publish the ranking after August 1, 2018, 
when performance scores and value-based incentive payment adjustments 
will be made available to SNFs. We intend to publish the ranking for 
each program year once performance scores and value-based incentive 
payment adjustments are made available to SNFs.
    Having considered those statutory requirements, we propose to rank 
SNFs for the FY 2019 program year and to publish the ranking after 
August 1, 2018. We further propose that the ranking include the 
following data elements:
     Rank,
     Provider ID,
     Facility name,
     Address,
     Baseline period (CY 2015) risk-standardized readmission 
rate,
     Performance period (CY 2017) risk-standardized readmission 
rate,
     Achievement score,
     Improvement score, and
     SNF performance score.
    We believe that these data elements will provide consumers and 
other stakeholders with the necessary information to evaluate SNFs' 
performance under the program, including each component of the SNF 
performance score, including both achievement and improvement. We 
welcome public comments on these proposals. We will address rankings 
for future program years in subsequent rulemaking.

D. Survey Team Composition

1. Background
    To participate in the Medicare and Medicaid programs, long term 
care facilities, including skilled nursing facilities (SNFs) in 
Medicare and nursing facilities (NFs) in Medicaid, must be certified as 
meeting Federal participation requirements, which are specified in 42 
CFR part 483. Section 1864(a) of the Act authorizes the Secretary to 
enter into agreements with state survey agencies to determine whether 
SNFs meet the federal participation requirements for Medicare and 
section 1902(a)(33)(B) of the Act provides for state survey agencies to 
perform the same survey tasks for NFs participating or seeking to 
participate in the Medicaid program. We also conduct surveys directly 
and also contract out for certain surveys. The results of these surveys 
are used by us and the Medicaid state agency as the basis for a 
determination to enter into, deny, or terminate a provider agreement 
with the facility, or to impose a remedy or remedies on a facility, as 
appropriate. To assess compliance with federal participation 
requirements, surveyors conduct onsite inspections (surveys) of 
facilities. In the survey process, surveyors gather evidence and 
directly observe the actual provision of care and services to residents 
and the effect or possible effects of that care to assess whether the 
care provided meets the assessed needs of individual residents.
    Sections 1819(g) and 1919(g) of the Act, and corresponding 
regulations at 42 CFR part 488, subpart E, specify the requirements for 
the types and periodicity of surveys that are to be performed for each 
facility. Specifically, sections 1819(g)(2) and 1919(g)(2) of the Act 
reference standard, special, and extended surveys. Sections 
1819(g)(2)(E) and 1919(g)(2)(E) of the Act specify that surveys under 
section 1819(g)(2) of the Act in general must consist of a 
multidisciplinary team of professionals, including a registered nurse. 
In addition, the statutory requirements governing the investigation of 
complaints and for monitoring on-site a SNF's or NF's compliance with 
participation requirements are found in sections 1819(g)(4) and 
1919(g)(4) of the Act and Sec.  488.332.
    These sections specify that a specialized team, including an 
attorney, an auditor, and appropriate health care professionals may be 
maintained and utilized in the investigation of complaints for the 
purpose of identifying, surveying, gathering and preserving evidence, 
and carrying out appropriate enforcement actions against SNFs and NFs, 
respectively.
    Consistent with the statutory provisions noted above, two separate 
regulations address survey team composition. The implementing 
regulation at Sec.  488.314, Survey Teams, reflects the statutory 
language under sections 1819(g)(2)(E)(i) and 1919(g)(2)(E)(i) of the 
Act, and states that ``[s]urvey teams must be conducted by an 
interdisciplinary team of professions, which must include a registered 
nurse.'' The implementing regulation at Sec.  488.332, investigation of 
complaints of violations and monitoring of compliance, reflects the 
statutory language under sections 1819(g)(4) and 1919(g)(4) of the Act, 
and states that the state survey agency may use a specialized team, 
which may include an attorney, auditor, and appropriate health 
professionals, but not necessarily a registered nurse, to investigate

[[Page 21088]]

complaints and conduct on-site monitoring. A survey conducted to 
monitor on-site a SNF's or NF's compliance with participation 
requirements, such as an on-site revisit survey to determine whether a 
noncompliant facility has achieved substantial compliance, is also 
subject to the provisions of Sec.  488.332, and not Sec.  488.314.
    The regulation under Sec.  488.308(e) also addresses complaint 
investigations, but as currently written, it combines special surveys, 
which are authorized under sections 1819(g)(2)(A)(iii)(II) and 
1919(g)(2)(A)(iii)(II) of the Act, with the requirements associated 
with the investigations of complaints, which are governed by sections 
1819(g)(4) and 1919(g)(4) of the Act. In the statute, ``special 
surveys'' are referenced at sections 1819(g)(2)(A)(iii)(II) and 
1919(g)(2)(A)(iii)(II) of the Act, while the investigation of 
complaints is referenced at sections 1819(g)(4) and 1919(g)(4) of the 
Act.
    The regulations as currently written do not clearly indicate which 
survey team requirement applies to complaint surveys. The language at 
Sec.  488.314 could be broadly interpreted to cover the survey team 
composition for all surveys, including those used to investigate a 
complaint. Such an interpretation, however, would ignore the provisions 
of Sec.  488.332, which allow a state survey agency to utilize a 
specialized investigative team that does not necessarily include a 
registered nurse to survey a facility in connection with a complaint 
investigation. The placement of surveys to investigate a complaint 
together with special surveys under Sec.  488.308(e) further places 
into question which survey team requirement applies to complaint 
surveys. However, CMS' State Operations Manual (SOM) (Internet Only 
Manual Pub. 100-07) notes that ``Section 488.332 provides the Federal 
regulatory basis for the investigation of complaints about nursing 
homes,'' thus indicating CMS' view that provisions related to survey 
team composition in Sec.  488.332 apply to complaint surveys. See SOM, 
Ch. 5, Section 5300; see also SOM, Ch. 7, Sections 7203.5 and 
7205.2(3).
    The lack of clarity as to which regulatory provision, that is, 
Sec.  488.314 or Sec.  488.332, applies to the survey team composition 
related to the investigation of complaints has been the cause of recent 
administrative litigation. We thus believe that regulatory changes are 
needed to clarify that only surveys conducted under sections 1819(g)(2) 
and 1919(g)(2) of the Act are subject to the requirement at Sec.  
488.314 that a survey team consist of an interdisciplinary team that 
must include a registered nurse. Complaint surveys and surveys related 
to on-site monitoring, including revisit surveys, are subject to the 
requirements of sections 1819(g)(4) and 1919(g)(4) of the Act and Sec.  
488.332, which allow the state survey agency to use a specialized 
investigative team that may include appropriate health care 
professionals but need not include a registered nurse.
2. Major Provisions
    We propose to make changes to Sec. Sec.  488.30, 488.301, 488.308, 
and 488.314 to clarify the regulatory requirements for team composition 
for surveys conducted for investigating a complaint and to align 
regulatory provisions for investigation of complaints with the 
statutory requirements found in sections 1819 and 1919 of the Act.
    (1) Proposed revision of the definition of ``complaint survey'' 
under Sec.  488.30 to add a provision stating that the requirements of 
sections 1819(g)(4) and 1919(g)(4) of the Act and Sec.  488.332 apply 
to complaint surveys.
    (2) Proposed revision of the definition of ``abbreviated standard 
survey'' under Sec.  488.301 to clarify that abbreviated standard 
surveys conducted to investigate a complaint or to conduct on-site 
monitoring to verify compliance with participation requirements are 
subject to the requirements of Sec.  488.332.
    (3) Proposed relocation of the requirements included in Sec.  
488.308(e)(2) and (3) related to surveys conducted to investigate a 
complaint from under the heading ``Special Surveys'' to a new 
subsection, titled ``Investigations of Complaints.''
    (4) Proposed revision of the language at Sec.  488.314(a)(1) to 
specify that the team composition requirements at Sec.  488.314(a)(1) 
apply only to surveys under sections 1819(g)(2) and 1919(g)(2) of the 
Act.

E. Proposal To Correct the Performance Period for the National 
Healthcare Safety Network (NHSN) Healthcare Personnel (HCP) Influenza 
Vaccination Immunization Reporting Measure in the End-Stage Renal 
Disease (ESRD) Quality Incentive Program (QIP) for Payment Year (PY) 
2020

    In the CY 2017 ESRD PPS final rule (81 FR 77834), we finalized that 
the performance period for the NHSN Healthcare Personnel Influenza 
Vaccination Reporting Measure for Payment Year (PY) 2020 would be from 
October 1, 2016, through March 31, 2017 (81 FR 77915). We are proposing 
to revise that performance period so that it aligns with the schedule 
we previously set for this measure. Specifically, we previously 
finalized that for the PY 2018 ESRD QIP, the performance period for 
this measure would be from October, 1, 2015 through March 31, 2016, 
which is consistent with the length of the 2015-2016 influenza season 
(79 FR 66209), and that for the PY 2019 ESRD QIP, the performance 
period for this measure would be from October, 1, 2016 through March 
31, 2017, which is consistent with the length of the 2016-2017 
influenza season (80 FR 69059-60). Maintaining the performance period 
we finalized in the CY 2017 ESRD PPS final rule would result in scoring 
facilities on the same data twice, and would not be consistent with our 
intended schedule to collect data on the measure in successive 
influenza seasons. Therefore, we are proposing to revise the 
performance period for the NHSN HCP Influenza Vaccination Reporting 
Measure for the PY 2020 ESRD QIP. Specifically, we are proposing that 
for the PY 2020 ESRD QIP, the performance period for this measure would 
be October 1, 2017, through March 31, 2018, which is consistent with 
the length of the 2017-2018 influenza season.
    We seek comments on this proposal.

VI. Possible Burden Reduction in the Long-Term Care Requirements

A. Background

    On October 4, 2016, we issued a final rule entitled, ``Medicare and 
Medicaid Programs; Reform of Requirements for Long-Term Care 
Facilities'' (81 FR 68688). This final rule significantly revised the 
requirements that Long-Term Care (LTC) facilities must meet to 
participate in the Medicare and Medicaid programs. Prior to the final 
rule, the LTC requirements had not been comprehensively reviewed and 
updated since 1991 (56 FR 48826, September 26, 1991), despite 
substantial changes in service delivery in this setting. The final rule 
included revisions that reflect advances in the theory and practice of 
service delivery and safety. In addition, the various revisions sought 
to achieve broad-based improvements in the quality of health care 
provided in LTC facilities and in patient safety.
    We received mixed reactions from stakeholders in response to our 
revision of the LTC requirements. Overall, stakeholders supported the 
regulation's focus towards person-centered care and agreed that reforms 
to the existing requirements were necessary to ensure high quality care 
and quality of life in LTC facilities. While supportive of the

[[Page 21089]]

goals of the regulation, stakeholders noted that the changes needed to 
comply with the revised requirements will be costly and burdensome. 
Given the scope of the revisions, stakeholder requests for more time to 
comply with the requirements, and the financial impact that the 
regulation will impose on LTC facilities, we finalized a phased-in 
implementation of the requirements over a 3 year time period in hopes 
of reducing some of the burden placed on LTC facilities. Readers may 
refer to the October 2016 final rule (81 FR 68696) for a detailed 
discussion regarding the implementation timeframes for the 
requirements.

B. Areas of Possible Burden Reduction

    In a continued effort to further respond to stakeholder concerns, 
we are currently reviewing the LTC requirements to balance the need to 
maintain quality of care while reducing procedural burdens on 
facilities. Specifically, we are reviewing the requirements for 
obsolete or redundant provisions, areas where processes can be 
streamlined to reduce burden and cost, or other areas of possible 
elimination.
    As a result of our review, we have identified the following areas 
of the LTC requirements that we are considering for modification or 
removal in an effort to reduce the burden and financial impact imposed 
on LTC facilities:
1. Grievance Process
    In the October 2016 final rule, we finalized a proposal at Sec.  
483.10(j) to extensively expand the grievance process in LTC facilities 
and require facilities to establish a grievance policy to ensure the 
prompt resolution of grievances, and identify a grievance officer to 
oversee the process. In public comments on the proposed rule, 
stakeholders supported the enhancement of residents' rights to voice 
grievances and emphasized the importance and seriousness of resident 
concerns. However, stakeholders also indicated that the expansion of 
the requirements for a grievance process will be overly burdensome and 
costly. Specifically, stakeholders indicated that maintaining evidence 
related to grievances for 3 years is burdensome and unnecessary. 
Stakeholders were also concerned regarding the additional costs 
associated with staffing a grievance official to oversee the grievance 
process.
    We are considering areas where we may reduce the burden of these 
requirements. For example, we may reduce the financial cost associated 
with maintaining records by reducing the amount of time that they must 
be retained. We may also consider removing prescriptive language in the 
requirements regarding the specific duties of the grievance official 
and allow facilities greater flexibility in how they ensure that 
grievances are fully addressed. We are reviewing these requirements to 
determine whether any of the abuse and neglect reporting requirements 
may be duplicative of state law. In instances where these requirements 
may potentially be duplicative we may be able to remove them entirely 
and defer to existing law.
2. Quality Assurance and Performance Improvement (QAPI)
    In the October 2016 final rule, we finalized a proposal at Sec.  
483.75 to require LTC facilities to develop, implement, and maintain an 
effective comprehensive, data-driven QAPI program that focuses on 
systems of care, outcomes of care and quality of life. Several 
stakeholders have indicated that our requirements are very detailed, 
too prescriptive, and significantly exceed the QAPI related 
requirements for other providers.
    We are reviewing these requirements to determine if we can be less 
prescriptive while achieving a balance between specificity and 
flexibility in recognition of the diversity throughout LTC facilities. 
For example, in the areas of program design and scope we could propose 
to eliminate the detailed requirements regarding how the program must 
be designed and simply require facilities to design a program that is 
ongoing, comprehensive, and addresses the full range of care and 
services provided by the facility. Likewise, in the areas of program 
feedback, monitoring, and analysis we could eliminate the specific 
requirements for policies regarding exactly how a facility will 
determine underlying problems impacting systems in the facility, 
develop corrective actions, and monitor the effectiveness of its 
performance. We believe that such revisions will allow facilities 
greater flexibility in tailoring their QAPI program to fit the needs of 
their individual facility, eliminating unnecessary burden on 
facilities, while maintaining consistency with the requirements under 
section 1128I of the Act.
3. Discharge Notices
    In the October 2016 final rule, we finalized a proposal at Sec.  
483.15(b)(3)(i) to require LTC facilities to send discharge notices to 
the state LTC Ombudsman. We are re-evaluating this requirement to 
determine if the process is achieving intended objectives to reduce 
inappropriate involuntary discharges. In addition, we are concerned as 
to whether LTC Ombudsman have the capacity to receive and review these 
notices. We are soliciting comment as to whether LTC Ombudsman can 
handle receiving this material and to what extend they will use 
information once received.

C. Stakeholder Feedback

    We are interested in receiving feedback regarding the realistic 
reduction in burden that these revisions may have on facilities and the 
possibility of unintended negative consequences that these potential 
revisions may impose on resident care and outcomes. We are also 
interested in receiving feedback regarding any additional areas of 
burden reduction and cost savings in LTC facilities. To the extent we 
proceed with rulemaking in this area, we will use this feedback and 
information to inform our policy decisions with regard to these issues. 
We invite general comment, but are particularly interested in data and 
analysis regarding associated costs and benefits.

VII. CMMI Solicitation

    As the Center for Medicare and Medicaid Innovation (CMMI) continues 
developing models to test innovation and improvements to the Medicare 
program, we regularly engage with stakeholders to solicit ideas for 
models and concepts to test that have potential to improve the quality 
of care and reduce overall costs. CMMI authority affords us flexibility 
to test new ways of managing, delivering and paying for care for 
Medicare services. This flexibility includes utilizing waivers of 
statutory and regulatory requirements, such as waiving the qualifying 
3-day inpatient hospital stay (QHS) requirement for skilled nursing 
facility (SNF) services, to allow the model participants to achieve the 
goals of the specific model. We are interested in receiving feedback on 
innovative concepts to potentially test in the post-acute care arena 
and key regulatory and statutory provisions that could be potentially 
waived if we were to implement any of these model tests. We encourage 
the submission of creative strategies that will accelerate changes to 
improve care and reduce costs for this important and often vulnerable 
population of beneficiaries who utilize post-acute services.

[[Page 21090]]

VIII. Request for Information on CMS Flexibilities and Efficiencies

    CMS is committed to transforming the health care delivery system--
and the Medicare program--by putting an additional focus on patient-
centered care and working with providers, physicians, and patients to 
improve outcomes. We seek to reduce burdens for hospitals, physicians, 
and patients, improve the quality of care, decrease costs, and ensure 
that patients and their providers and physicians are making the best 
health care choices possible. These are the reasons we are including 
this Request for Information in this proposed rule.
    As we work to maintain flexibility and efficiency throughout the 
Medicare program, we would like to start a national conversation about 
improvements that can be made to the health care delivery system that 
reduce unnecessary burdens for clinicians, other providers, and 
patients and their families. We aim to increase quality of care, lower 
costs, improve program integrity, and make the health care system more 
effective, simple and accessible.
    We would like to take this opportunity to invite the public to 
submit their ideas for regulatory, subregulatory, policy, practice, and 
procedural changes to better accomplish these goals. Ideas could 
include payment system redesign, changes to conditions of 
participation, elimination or streamlining of reporting, monitoring and 
documentation requirements, aligning Medicare requirements and 
processes with those from Medicaid and other payers, operational 
flexibility, feedback mechanisms and data sharing that would enhance 
patient care, support of the physician-patient relationship in care 
delivery, and facilitation of individual preferences. Responses to this 
Request for Information could also include recommendations regarding 
when and how CMS issues regulations and policies and how CMS can 
simplify rules and policies for beneficiaries, clinicians, physicians, 
providers, and suppliers. Where practicable, data and specific examples 
would be helpful. If the proposals involve novel legal questions, 
analysis regarding CMS' authority is welcome for CMS' consideration. We 
are particularly interested in ideas for incentivizing organizations 
and the full range of relevant professionals and paraprofessionals to 
provide screening, assessment and evidence-based treatment for 
individuals with opioid use disorder and other substance use disorders, 
including reimbursement methodologies, care coordination, systems and 
services integration, use of paraprofessionals including community 
paramedics and other strategies. We are requesting commenters to 
provide clear and concise proposals that include data and specific 
examples that could be implemented within the law.
    We note that this is a Request for Information only. Respondents 
are encouraged to provide complete but concise responses. 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 2018 SNF 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.

IX. 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. Proposed Information Collection Requirements (ICRs)

1. ICRs Regarding the SNF VBP Program
    As discussed in the FY 2016 SNF PPS final rule (80 FR 46473) and 
the FY 2017 SNF PPS final rule (81 FR 52049 through 52050), we have 
specified claims-based measures to fulfill the SNF VBP Program's 
requirements. Because claims-based measures are calculated based on 
claims figures that are already submitted to the Medicare program for 
payment purposes, there is no additional respondent burden associated 
with data collection or submission for either the SNFRM or SNFPPR 
measures. Thus, there is no additional reporting burden associated with 
the SNF VBP Program's measures.
2. ICRs Regarding the Potentially Preventable 30-Day Post-Discharge 
Readmission Measure
    We propose to modify the Potentially Preventable 30-Day Post-
Discharge Readmission Measure by increasing the

[[Page 21091]]

length of the measurement period and updating the confidential feedback 
and public reporting dates, as described in section V.B.8. Since this 
is a claims-based measure, no data collection beyond the bills 
submitted in the normal course of business are required from providers 
for the calculation of this measure. Therefore, we believe the SNF QRP 
burden estimate is unaffected by the proposed modifications of this 
measure. The burden is unaffected since the proposed measure 
modifications have no impact on any of the reported data fields.
3. ICRs Regarding the Survey Team Composition
    This regulation proposes to clarify the composition of a survey 
team. There is no new or additional burden associated with the proposed 
clarification.
4. ICRs Exempt From the PRA
    As discussed elsewhere in this preamble, this rule proposes to 
adopt five new measures beginning with the FY 2020 SNF QRP (see section 
V.B.7. of this proposed rule), which would be calculated using data 
elements that are currently included in the MDS. The data elements are 
discrete questions and response codes that collect information on an 
IRF patient's health status, preferences, goals and general 
administrative information.
    We are also proposing to require SNFs to report certain 
standardized patient assessment data beginning with the FY 2019 SNF QRP 
(see section V.B.10. of this proposed rule). We are proposing to define 
the term ``standardized patient assessment data'' as patient assessment 
questions and response options that are identical in all four PAC 
assessment instruments, and to which identical standards and 
definitions apply. The standardized patient assessment data is intended 
to be shared electronically among PAC providers and will otherwise 
enable the data to be comparable for various purposes, including the 
development of cross-setting quality measures and to inform payment 
models that take into account patient characteristics rather than 
setting.
    Under section 1899B(m) of the Act, the Paperwork Reduction Act does 
not apply to the specific changes in the collections of information 
described in this proposed rule.
    These changes to the collections of information arise from section 
2(a) of the IMPACT Act, which added new section 1899B to the Act. That 
section requires SNFs to report standardized patient assessment data, 
data on quality measures, and data on resource use and other measures. 
All of this data must, under section 1899B(a)(1)(B) of the Act, be 
standardized and interoperable to allow for its exchange among PAC 
providers and other providers and the use by such providers in order to 
provide access to longitudinal information to facilitate coordinated 
care and improved Medicare beneficiary outcomes. Section 1899B(a)(1)(C) 
of the Act requires us to modify the MDS to allow for the submission of 
quality measure data and standardized patient assessment data to enable 
its comparison across IRFs and other providers.
    The five new measures that we are proposing to adopt are as 
follows: (1) Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/
Injury; (2) Application of the IRF Function Outcome Measure: Change in 
Self-Care Score for Medical Rehabilitation Patients (NQF #2633); (3) 
Application of IRF Function Outcome Measure: Change in Mobility Score 
for Medical Rehabilitation Patients (NQF #2634); (4) Application of IRF 
Function Outcome Measure: Discharge Self-Care Score for Medical 
Rehabilitation Patients (NQF #2635); and (5) Application of IRF 
Function Outcome Measure: Discharge Mobility Score for Medical 
Rehabilitation Patients (NQF #2636). We are also proposing that data 
for these new measures will be collected by SNFs and reported to CMS 
using the Resident Assessment Instrument, Minimum Data Set (MDS).
    For the new measure ``Changes in Skin Integrity Post-Acute Care: 
Pressure Ulcer/Injury'' the items used to calculate the revised measure 
are already present on the MDS, so the adoption of this measure will 
not require SNFs to report new data elements. In addition, some data 
elements related to pressure ulcers have been identified as duplicative 
and we are proposing to remove them. Taking these proposals together, 
we estimate that there will be a 1.5 minute reduction in clinical staff 
time needed to report the pressure ulcer measure data. Based on the 
data provided in Table 24 of this proposed rule, and estimating 
2,886,336 discharges from 15,447 SNFs annually, we also estimate that 
the total cost of reporting these data would be reduced by $324 per SNF 
annually, or $5,007,793 for all SNFs annually. We believe that the MDS 
items we are proposing would be completed by registered nurses.
    For the four newly proposed functional outcome measures (NQF: 
#2633, #2634, #2635, and #2636), we note that although some of the data 
elements needed to calculate these measures are currently included on 
the MDS, other data elements would need to be added to the MDS. As a 
result, we estimate that reporting these measures would require an 
additional 9 minutes of nursing and therapy staff time to report data 
on admission and 5.5 minutes of nursing and therapy time to report data 
on discharge, for an additional total of 14.5 minutes per stay. We 
estimate that the additional MDS items we are proposing will be 
completed by Registered Nurses for approximately 7 percent of the time, 
Occupational Therapists for approximately 41 percent of the time, and 
Physical Therapists for approximately 52 percent of the time. 
Individual providers determine the staffing resources necessary. With 
2,886,336 discharges from 15,447 SNFs annually, we estimate that the 
reporting of the four functional outcome measures would impose on SNFs 
an additional burden of 697,531 total hours (2,886,336 discharges x 
14.5 min/60) or 45.16 hours per SNF (697,531 hr/15,447 SNFs). Of the 
14.5 minutes per stay, 1 minute of that time is for a Registered Nurse, 
3.5 minutes is for an Occupational Therapist, and 4.5 minutes is for a 
Physical Therapist for a total of 9 minutes are required for admission. 
For discharge, 2.5 minutes are for an Occupational Therapist, and 3 
minutes for a Physical Therapist for a total of 5.5 minutes. For one 
stay we estimate a cost of $19.69 or, in aggregate, an annual cost of 
$56,829,551. Per SNF, we estimate an annual cost of $3,679. A summary 
of these estimates is provided in Table 24.
    Section V.B.10 of this rule proposes to adopt 35 standardized 
patient assessment data elements beginning with the FY 2020 SNF QRP. 
Thirty-four of the proposed standardized data elements are already 
reported to CMS on the MDS for admissions, and one is newly proposed 
for the admission assessment. For the discharge assessment, there are 
13 standardized data elements that are already reported to CMS on the 
MDS for discharge, 11 that are not applicable to the discharge 
assessment and 11 standardized patient assessment data elements that 
would be added to the discharge assessment. For those data elements 
already reported to CMS on the MDS (34 on the admission assessment and 
13 on the discharge assessment), there will be no additional burden 
associated with these data elements. The data elements can be viewed on 
our Web site https://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-Instruments/Post-Acute-Care-Quality-

[[Page 21092]]

Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    For the remaining twelve new data elements (one on the admission 
assessment and eleven on the discharge assessment), we estimate that 
these data elements will take 0.3 minutes of nursing/clinical staff 
time to report data on admission and 3.3 minutes of nursing/clinical 
staff time to report data on discharge, for a total of 3.6 minutes. We 
estimate that the additional data elements we are proposing will be 
completed by Registered Nurses for approximately 25 percent of the time 
and Licensed Vocational Nurses for approximately 75 percent of the 
time. Individual providers determine the staffing resources necessary. 
Estimating 2,886,336 discharges from 15,447 SNFs annually, this would 
equate to 173,180 total hours (2,886,336 discharges x 3.6 min/60) or 
11.21 hours per SNF annually (173,180 hr/15,447 SNFs).
    Of the 3.6 minutes per stay, 0.9 minute is allocated to the 
Registered Nurse and 2.7 minutes is allocated to the Licensed 
Vocational Nurse. For one stay we estimate a cost of $2.98 or, in 
aggregate, an annual cost of $8,605,322. Per SNF we estimate an annual 
cost of $547.46. A summary of these estimates is provided in Table 24.
    In summary, given the 1.5 minute reduction in burden associated 
with the new pressure ulcer measure and removal of duplicative pressure 
ulcer data elements, the additional 14.5 additional minutes of burden 
for the functional outcome measures, and the 3.6 additional minutes of 
burden for the proposed standardized data elements, the overall cost 
associated with proposed changes to the SNF QRP is estimated at an 
additional $3,912 per SNF annually, or $60,427,080 for all SNFs 
annually. A summary of these estimates is provided in Table 24.
    Under section 1899B(m) of the Act, the Paperwork Reduction Act does 
not apply to the specific changes to the collections of information 
described in this proposed rule. We are, however, setting out the 
burden as a courtesy to advise interested parties of the proposed 
actions' time and costs and for reference refer to section XI.A of this 
proposed rule of the regulatory impact analysis (RIA). The requirement 
and burden will be submitted to OMB for review and approval when the 
modifications to the MDS have achieved standardization and are no 
longer exempt from the requirements under section 1899B(m) of the Act.

                                                              Table 24--Calculation of Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Aggregate                                       Aggregate
                      QRP QM                           Data     Minutes    annual hours   Hours per  SNF   Dollars  per     annual cost     Annual cost
                                                     elements                all SNFs         annually         stay          all SNFs         per SNF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Functional Outcome Measures.......................         18       14.5         697,531           45.16          $19.69     $56,829,551          $3,679
Standardized Data Elements........................         12        3.6         173,180           11.21            2.98       8,605,322             557
Changes in Skin Integrity.........................        (3)      (1.5)        (72,158)          (4.67)          (1.74)     (5,007,793)           (324)
                                                   -----------------------------------------------------------------------------------------------------
    Total.........................................         27         17         798,553              52              21      60,427,080           3,912
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Skilled Nursing Facilities = 15,447.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Discharges = 2,886,336.
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Submission of PRA-Related Comments

    We have submitted a copy of this NPRM 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-
1679-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.

X. 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.

XI. Economic Analyses

A. Regulatory Impact Analysis

1. 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. Section 2(a) of 
Executive Order 13771 requires an agency, unless prohibited by law, to 
identify at least two existing regulations to be repealed when the 
agency publicly proposes for notice and comment, or otherwise 
promulgates, a new regulation. In furtherance of this requirement, 
section 2(c) of Executive Order 13771 requires that the new incremental 
costs associated with new regulations shall, to the extent permitted by 
law, be offset by the elimination of existing costs

[[Page 21093]]

associated with at least two prior regulations. 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 EO 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.'' The 
implications of the rule's costs and cost savings will be further 
considered in the context of our compliance with Executive Order 13771.
2. Statement of Need
    This proposed rule would update the FY 2017 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.
3. Overall Impacts
    This proposed rule sets forth proposed updates of the SNF PPS rates 
contained in the SNF PPS final rule for FY 2017 (81 FR 51970). Based on 
the above, we estimate that the aggregate impact would be an increase 
of $390 million in payments to SNFs in FY 2018, resulting from the SNF 
market basket update to the payment rates, as required by section 
1888(e)(5)(B)(iii) of the Act. Although the best data available are 
utilized, there is no attempt to predict behavioral responses to these 
changes, or to make adjustments for future changes in such variables as 
days or case-mix.
    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, if not for the enactment of section 411(a) of MACRA (as discussed 
in section III.B of this proposed rule), we would update the FY 2017 
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 2018. As discussed previously, section 1888(e)(5)(B)(iii) of the 
Act establishes a special rule for FY 2018 requiring the market basket 
percentage used to update the federal SNF PPS rates to be equal to 1.0 
percent. The impact to Medicare is included in the total column of 
Table 25. In updating the SNF PPS rates for FY 2018, 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 2018. 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 2018 SNF PPS payment impacts appear in Table 25. Using the 
most recently available data, in this case FY 2016, we apply the 
current FY 2017 wage index and labor-related share value to the number 
of payment days to simulate FY 2017 payments. Then, using the same FY 
2016 data, we apply the proposed FY 2018 wage index and labor-related 
share value to simulate FY 2018 payments. We tabulate the resulting 
payments according to the classifications in Table 25 (for example, 
facility type, geographic region, facility ownership), and compare the 
simulated FY 2017 payments to the simulated FY 2018 payments to 
determine the overall impact. The breakdown of the various categories 
of data in the table 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 zero percent; 
however, there are distributional effects of the change.
     The fourth column shows the effect of all of the changes 
on the FY 2018 payments. The update of 1.0 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 1.0 
percent, assuming facilities do not change their care delivery and 
billing practices in response.
    As illustrated in Table 25, 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 1.5 percent increase in FY 2018 total 
payments.

                              Table 25--Projected Impact to the SNF PPS for FY 2018
----------------------------------------------------------------------------------------------------------------
                                                                     Number of
                                                                  facilities  FY   Update  wage    Total  change
                                                                       2018          data  (%)          (%)
----------------------------------------------------------------------------------------------------------------
Group:
    Total.......................................................          15,447             0.0             1.0
    Urban.......................................................          10,992             0.1             1.1
    Rural.......................................................           4,455            -0.6             0.4
    Hospital-based urban........................................             517             0.2             1.2
    Freestanding urban..........................................          10,475             0.1             1.1

[[Page 21094]]

 
    Hospital-based rural........................................             575            -0.7             0.3
    Freestanding rural..........................................           3,880            -0.6             0.4
Urban by region:
    New England.................................................             791             0.2             1.2
    Middle Atlantic.............................................           1,485             0.4             1.4
    South Atlantic..............................................           1,867            -0.2             0.8
    East North Central..........................................           2,117             0.0             1.0
    East South Central..........................................             551            -0.6             0.4
    West North Central..........................................             919             0.4             1.4
    West South Central..........................................           1,333             0.1             1.1
    Mountain....................................................             509            -0.2             0.8
    Pacific.....................................................           1,415             0.5             1.5
    Outlying....................................................               5            -1.9            -0.9
Rural by region:
    New England.................................................             137             1.5             2.6
    Middle Atlantic.............................................             215            -0.4             0.6
    South Atlantic..............................................             502            -0.7             0.3
    East North Central..........................................             934            -1.1            -0.2
    East South Central..........................................             527            -0.9             0.1
    West North Central..........................................           1,077            -0.3             0.7
    West South Central..........................................             737            -0.8             0.2
    Mountain....................................................             228            -0.4             0.6
    Pacific.....................................................              98             0.2             1.2
Ownership:
    Profit......................................................          10,805             0.0             1.0
    Non-profit..................................................           3,590             0.0             1.0
    Government..................................................           1,052            -0.3             0.7
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 1.0 percent market basket increase required by section 1888(e)(5)(B)(iii) of
  the Act. Additionally, we found no SNFs in rural outlying areas.

5. Estimated Impacts for the SNF QRP
    Estimated impacts for the SNF QRP are based on analysis discussed 
in section V.B. of this proposed rule. For the 1.5 minute reduction in 
burden associated with the new pressure ulcer measure and the removal 
of duplicative pressure ulcer data elements, the additional 14.5 
additional minutes of burden for the functional outcome measures, and 
the 3.6 additional minutes of burden for the proposed standardized data 
elements, the overall cost associated with proposed changes to the SNF 
QRP is estimated at an additional $3,912 per SNF annually, or 
$60,427,080 for all SNFs annually. A summary of these estimates is 
provided in Table 26.

                                                    Table 26--Calculation of Cost per Quality Measure
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Aggregate                                       Aggregate
                      QRP QM                           Data     Minutes    annual hours   Hours per  SNF   Dollars  per     annual cost     Annual cost
                                                     elements                all SNFs         annually         stay          all SNFs         per SNF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Functional Outcome Measures.......................         18       14.5         697,531           45.16          $19.69     $56,829,551          $3,679
Standardized Data Elements........................         12        3.6         173,180           11.21            2.98       8,605,322             557
Changes in Skin Integrity.........................        (3)      (1.5)        (72,158)          (4.67)          (1.74)     (5,007,793)           (324)
                                                   -----------------------------------------------------------------------------------------------------
    Total.........................................         27         17         798,553              52              21      60,427,080           3,912
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Skilled Nursing Facilities = 15,447.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Discharges = 2,886,336.
--------------------------------------------------------------------------------------------------------------------------------------------------------

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 27. We modeled SNFs' performance 
in the Program using SNFRM data from CY 2013 as the baseline period and 
CY 2015 as the performance period. Additionally, we modeled a logistic 
exchange function with a payback percentage of 60 percent, as discussed 
further in the preamble to this proposed rule.
    As illustrated in Table 27, the effects of the SNF VBP Program vary 
by specific types of providers and by location. For example, we 
estimate that rural SNFs perform better on the SNFRM, on average, 
compared to urban SNFs. Similarly, we estimate that non-profit SNFs 
perform better on the SNFRM compared to for-profit SNFs, and that 
government-owned SNFs perform better still. We also estimate that 
smaller SNFs (measured by bed size) tend to perform better, on average, 
compared to larger SNFs. (We note that the risk-standardized 
readmission rates presented below are not inverted; that is, lower 
rates represent better performance).

[[Page 21095]]

    These differences in performance on the SNFRM result in differences 
in value-based incentive payment percentages computed by the Program. 
For example, we estimate that, at the proposed 60 percent payback 
percentage, SNFs in urban areas would receive a 1.161 percent incentive 
multiplier, on average, in FY 2019, while SNFs in rural areas would 
receive a slightly higher incentive multiplier of 1.227 percent, on 
average. Additionally, SNFs in the smallest 25 percent as measured by 
bed size would receive an incentive multiplier of 1.203 percent, on 
average, while SNFs in the 2nd quartile as measured by bed size would 
receive an incentive multiplier of 1.166 percent, on average. We note 
that the multipliers that we have listed in Table 27 are applied to 
SNFs' adjusted Federal per diem rates after application of the 2 
percent reduction to those rates required by statute.

                               Table 27--Estimated FY 2019 SNF VBP Program Impacts
----------------------------------------------------------------------------------------------------------------
                                                                                             Mean        Percent
                                                          Number of                        incentive       of
            Category                   Criterion         facilities      RSRR  (mean)     multiplier    proposed
                                                                                         (60% payback)   payback
----------------------------------------------------------------------------------------------------------------
Group...........................  Total..............          15,746          0.19061           1.218  100.0
                                  Urban..............          11,116          0.18790           1.161  83.5
                                  Rural..............           4,630          0.18293           1.227  16.5
Urban by Region.................  Total..............          11,116  ...............  ..............  ........
                                  01=Boston..........             808          0.18734           1.165  5.978
                                  02=New York........             922          0.18848           1.116  10.590
                                  03=Philadelphia....           1,132          0.18611           1.307  10.295
                                  04=Atlanta.........           1,890          0.19291           1.025  12.443
                                  05=Chicago.........           2,330          0.18728           1.213  16.248
                                  06=Dallas..........           1,379          0.19131           0.920  6.126
                                  07=Kansas City.....             666          0.18764           1.109  2.815
                                  08=Denver..........             323          0.17831           1.644  2.879
                                  09=San Francisco...           1,325          0.18518           1.174  12.107
                                  10=Seattle.........             341          0.17634           1.765  3.983
Rural by Region.................  Total..............           4,630  ...............  ..............  ........
                                  01=Boston..........             145          0.17458           1.648  1.009
                                  02=New York........              94          0.17746           1.435  0.409
                                  03=Philadelphia....             287          0.18145           1.231  1.431
                                  04=Atlanta.........             918          0.18633           1.011  3.363
                                  05=Chicago.........           1,127          0.18156           1.361  4.662
                                  06=Dallas..........             814          0.18676           0.926  1.824
                                  07=Kansas City.....             801          0.18459           1.291  1.575
                                  08=Denver..........             284          0.17596           1.570  0.883
                                  09=San Francisco...              68          0.16620           1.650  0.706
                                  10=Seattle.........              92          0.17488           1.569  0.670
Ownership Type..................  Total..............          15,746  ...............  ..............  ........
                                  Government.........           1,096          0.17844           1.240  4.601
                                  Profit.............          10,973          0.18864           1.113  71.137
                                  Non-Profit.........           3,677          0.18225           1.364  24.260
No. of Beds:
                                  1st Quartile:......           3,986          0.17935           1.203  13.393
                                  2nd Quartile:......           3,937          0.18646           1.166  19.738
                                  3rd Quartile:......           3,887          0.19009           1.148  26.388
                                  4th Quartile:......           3,938          0.19000           1.204  40.481
----------------------------------------------------------------------------------------------------------------

7. Alternatives Considered
    As described in this section, we estimate that the aggregate impact 
for FY 2018 under the SNF PPS would be an increase of $390 million in 
payments to SNFs, resulting from the SNF market basket update to the 
payment rates, as required by section 1888(e)(5)(B)(iii) of the Act.
    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.
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 Table 28, we have prepared an 
accounting statement showing the classification of the expenditures 
associated with the provisions of this proposed rule for FY 2018. Table 
28 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 15,447 SNFs in our database and the cost 
for the SNF QRP of implementing the IMPACT Act.

[[Page 21096]]



       Table 28--Accounting Statement: Classification of Estimated
   Expenditures, From the 2017 SNF PPS Fiscal Year to the 2018 SNF PPS
                               Fiscal Year
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $390 million.*
From Whom To Whom?.....................  Federal Government to SNF
                                          Medicare Providers.
------------------------------------------------------------------------
         FY 2018 Cost to Updating the Quality Reporting Program
------------------------------------------------------------------------
                Category                              Costs
------------------------------------------------------------------------
Cost for SNFs to Submit Data for the     $60 million.
 Quality Reporting Program.
------------------------------------------------------------------------
* The net increase of $390 million in transfer payments is a result of
  the market basket increase of $390 million.

9. Conclusion
    This proposed rule sets forth updates of the SNF PPS rates 
contained in the SNF PPS final rule for FY 2017 (81 FR 51970). Based on 
the above, we estimate the overall estimated payments for SNFs in FY 
2018 are projected to increase by $390 million, or 1.0 percent, 
compared with those in FY 2017. We estimate that in FY 2018 under RUG-
IV, SNFs in urban and rural areas would experience, on average, a 1.1 
percent increase and 0.4 percent increase, respectively, in estimated 
payments compared with FY 2017. Providers in the rural New England 
region would experience the largest estimated increase in payments of 
approximately 2.6 percent. Providers in the urban Outlying region would 
experience the largest estimated decrease in payments of 0.9 percent.
    Additionally, Sec.  488.314 regarding survey team composition 
implements section 1819(g)(4) of the Act and provides that States may 
maintain and utilize a specialized team that need not include a 
registered nurse for the investigation of complaints. Section 1919 of 
the Act contains the same statutory language as applicable to Nursing 
Facilities (NFs). The regulations in part 488 were originally 
established under the authority of the sections 1819 and 1919 of the 
Act, which were added by the Omnibus Budget Reconciliation Act of 1987 
(OBRA 87) (Pub. L. 100-203, enacted on December 22, 1987) and further 
amendments to OBRA 87 by subsequent 1988, 1989, and 1990 legislation.
    Sections 4204(b) and 4214(d) of OBRA 87 pertain to skilled nursing 
facilities (SNFs) and nursing facilities (NFs), respectively, and 
provide for a waiver of PRA requirements for the regulations that 
implement the OBRA '87 requirements. The provisions of OBRA 87 that 
exempt agency actions to collect information from states or facilities 
relevant to survey and enforcement activities from the PRA are not 
time-limited.

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 small business, and not the revenue of a 
larger firm with which they may be affiliated. As a result, we estimate 
approximately 97 percent of SNFs are considered small businesses 
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 Web site at 
https://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards). In addition, 
approximately 23 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 2017 (81 FR 51970). Based on 
the above, we estimate that the aggregate impact for FY 2018 would be 
an increase of $390 million in payments to SNFs, resulting from the SNF 
market basket update to the payment rates. While it is projected in 
Table 25 that most 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 2018 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 https://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 25. As 
indicated in Table 25, the effect on facilities is projected to be an 
aggregate positive impact of 1.0 percent for FY 2018. 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 2018.
    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 2017 (81 FR 51970)), the category of small rural

[[Page 21097]]

hospitals would be included within the analysis of the impact of this 
proposed rule on small entities in general. As indicated in Table 25, 
the effect on facilities for FY 2018 is projected to be an aggregate 
positive impact of 1.0 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 2018.

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 2017, that 
threshold is approximately $148 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 $90.16 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/2015/may/naics4_621100.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 $361 (4 hours x $90.16). 
Therefore, we estimate that the total cost of reviewing this regulation 
is $34,295 ($361 x 95 reviewers).
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 409

    Health facilities, Medicare.

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.

42 CFR Part 488

    Administrative practice and procedure, Health facilities, 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 409--HOSPITAL INSURANCE BENEFITS

0
1. The authority citation for part 409 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

0
2. Section 409.30 is amended by revising the introductory text to read 
as follows:


Sec.  409.30  Basic requirements.

    Posthospital SNF care, including SNF-type care furnished in a 
hospital or CAH that has a swing-bed approval, is covered only if the 
beneficiary meets the requirements of this section and only for days 
when he or she needs and receives care of the level described in Sec.  
409.31. A beneficiary in an SNF is also considered to meet the level of 
care requirements of Sec.  409.31 up to and including the assessment 
reference date for the 5-day assessment prescribed in Sec.  413.343(b) 
of this chapter, when correctly assigned one of the case-mix 
classifiers that CMS designates for this purpose as representing the 
required level of care. For the purposes of this section, the 
assessment reference date is defined in accordance with Sec.  
483.315(d) of this chapter, and must occur no later than the eighth day 
of posthospital SNF care.
* * * * *

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE 
PAYMENT

0
3. 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).

0
4. Section 411.15 is amended by revising paragraph (p)(3)(iii) to read 
as follows:


Sec.  411.15  Particular services excluded from coverage.

* * * * *
    (p) * * *
    (3) * * *
    (iii) The beneficiary receives outpatient services from a Medicare-
participating hospital or CAH (but only for those services that CMS 
designates as being beyond the general scope of SNF comprehensive care 
plans, as required under Sec.  483.21(b) of this chapter); or
* * * * *

[[Page 21098]]

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
5. The authority citation for part 413 continues to read as follows:

    Authority: 42 U.S.C. 1302; 42 U.S.C. 1395d(d); 42 U.S.C. 
1395f(b); 42 U.S.C. 1395g; 42 U.S.C. 1395l(a), (i), and (n); 42 
U.S.C. 1395x(v); 42 U.S.C. 1395hh; 42 U.S.C. 1395rr; 42 U.S.C. 
1395tt; 42 U.S.C. 1395ww; 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; sec. 204 of Public Law 113-295, 128 Stat. 4010; 
and sec. 808 of Public Law 114-27, 129 Stat. 362.

0
6. The heading for part 413 is revised to read as set forth above.
0
7. Section 413.333 is amended by revising the definition of ``Resident 
classification system'' to read as follows:


Sec.  413.333  Definitions.

* * * * *
    Resident classification system means a system for classifying SNF 
residents into mutually exclusive groups based on clinical, functional, 
and resource-based criteria. For purposes of this subpart, this term 
refers to the current version of the resident classification system, as 
set forth in the annual publication of Federal prospective payment 
rates described in Sec.  413.345.
* * * * *
0
8. Section 413.337 is amended by adding paragraph (d)(4) to read as 
follows:


Sec.  413.337  Methodology for calculating the prospective payment 
rates.

* * * * *
    (d) * * *
    (4) Penalty for failure to report quality data. For fiscal year 
2018 and subsequent fiscal years--
    (i) In the case of a SNF that does not meet the requirements in 
Sec.  413.360, for a fiscal year, the SNF market basket index 
percentage change for the fiscal year (as specified in paragraph 
(d)(1)(v) of this section, as modified by any applicable forecast error 
adjustment under paragraph (d)(2) of this section, reduced by the MFP 
adjustment specified in paragraph (d)(3) of this section, and as 
specified for FY 2018 in section 1888(e)(5)(B)(iii) of the Act), is 
further reduced by 2.0 percentage points.
    (ii) The application of the 2.0 percentage point reduction 
specified in paragraph (d)(4)(i) of this section to the SNF market 
basket index percentage change may result in such percentage being less 
than zero for a fiscal year, and may result in payment rates for that 
fiscal year being less than such payment rates for the preceding fiscal 
year.
    (iii) Any 2.0 percentage point reduction applied pursuant to 
paragraph (d)(4)(i) of this section will apply only to the fiscal year 
involved and will not be taken into account in computing the payment 
amount for a subsequent fiscal year.
* * * * *
0
9. Section 413.338 is added to read as follows:


Sec.  413.338  Skilled Nursing Facility Value-Based Purchasing.

    (a) Definitions. (1) Achievement threshold (or achievement 
performance standard) means the 25th percentile of SNF performance on 
the SNF readmission measure during the baseline period for a fiscal 
year.
    (2) Adjusted Federal per diem rate means the payment made to SNFs 
under the skilled nursing facility prospective payment system (as 
described under section 1888(e)(4)(G) of the Act).
    (3) Applicable percent means for FY 2019 and subsequent fiscal 
years, 2.0 percent.
    (4) Baseline period means the time period used to calculate the 
achievement threshold, benchmark and improvement threshold that apply 
for a fiscal year.
    (5) Benchmark means, for a fiscal year, the arithmetic mean of the 
top decile of SNF performance on the SNF readmission measure during the 
baseline period for that fiscal year.
    (6) Logistic exchange function means the function used to translate 
a SNF's performance score on the SNF readmission measure into a value-
based incentive payment percentage.
    (7) Improvement threshold (or improvement performance standard) 
means an individual SNF's performance on the SNF readmission measure 
during the applicable baseline period.
    (8) Performance period means the time period during which 
performance on the SNF readmission measure is calculated for a fiscal 
year.
    (9) Performance standards are the levels of performance that SNFs 
must meet or exceed to earn points under the SNF VBP Program for a 
fiscal year, and are announced no later than 60 days prior to the start 
of the performance period that applies to the SNF readmission measure 
for that fiscal year.
    (10) Ranking means the ordering of SNFs based on each SNF's 
performance score under the SNF VBP Program for a fiscal year.
    (11) SNF readmission measure means, for a fiscal year, the all-
cause all-condition hospital readmission measure (SNFRM) or the all-
condition risk-adjusted potentially preventable hospital readmission 
rate (SNFPPR) specified by CMS for application in the SNF Value-Based 
Purchasing Program.
    (12) Performance score means the numeric score ranging from 0 to 
100 awarded to each SNF based on its performance under the SNF VBP 
Program for a fiscal year.
    (13) SNF Value-Based Purchasing (VBP) Program means the program 
required under section 1888(h) of the Social Security Act.
    (14) Value-based incentive payment amount is the portion of a SNF's 
adjusted Federal per diem rate that is attributable to the SNF VBP 
Program.
    (15) Value-based incentive payment adjustment factor is the number 
that will be multiplied by the adjusted Federal per diem rate for 
services furnished by a SNF during a fiscal year, based on its 
performance score for that fiscal year, and after such rate is reduced 
by the applicable percent.
    (b) Applicability of the SNF VBP Program. The SNF VBP Program 
applies to SNFs, including facilities described in section 
1888(e)(7)(B).
    (c) Process for reducing the adjusted Federal per diem rate and 
applying the value-based incentive payment adjustment factor under the 
SNF VBP Program--(1) General. CMS will make value-based incentive 
payments to each SNF based on its performance score for a fiscal year 
under the SNF VBP Program under the requirements and conditions 
specified in this paragraph.
    (2) Value-based incentive payment amount--(i) Available amount. The 
total amount available for value-based incentive payments for a fiscal 
year is equal to 60 percent of the total amount of the reduction to the 
adjusted SNF PPS payments for that fiscal year, as estimated by CMS.
    (ii) Calculation of the value-based incentive payment amount. The 
value-based incentive payment amount is calculated by multiplying the 
adjusted Federal per diem rate by the value-based incentive payment 
adjustment factor, after the adjusted Federal per diem rate has been 
reduced by the applicable percent.
    (iii) Calculation of the value-based incentive payment adjustment 
factor. The value-based incentive payment adjustment factor calculated 
by estimating Medicare spending under the skilled nursing facility 
prospective payment system to estimate the total

[[Page 21099]]

amount available for value-based incentive payments, ordering SNFs by 
their SNF performance scores, then assigning an adjustment factor value 
for each performance score subject to the limitations set by the 
exchange function.
    (iv) Reporting of adjustment to SNF payments. CMS will inform each 
SNF of the value-based incentive payment adjustment factor that will be 
applied to its adjusted Federal per diem rate for services furnished 
during a fiscal year at least 60 days prior to the start of that fiscal 
year.
    (d) Performance scoring under the SNF VBP Program. (1) CMS will 
award points to SNFs based on their performance on the SNF readmission 
measure applicable to a fiscal year during the performance period 
applicable to that fiscal year as follows:
    (i) CMS will award from 1 to 99 points for achievement to each SNF 
whose performance meets or exceeds the achievement threshold but is 
less than the benchmark.
    (ii) CMS will award from 0 to 90 points for improvement to each SNF 
whose performance exceeds the improvement threshold but is less than 
the benchmark.
    (iii) CMS will award 100 points to a SNF whose performance meets or 
exceeds the benchmark.
    (2) The highest of the SNF's achievement, improvement and benchmark 
score will be the SNF's performance score for the fiscal year.
    (e) Confidential feedback reports and public reporting. (1) 
Beginning October 1, 2016, CMS will provide quarterly confidential 
feedback reports to SNFs on their performance on the SNF readmission 
measure. SNFs will have the opportunity to review and submit 
corrections for this data by March 31st following the date that CMS 
provides the reports. Any such correction requests must be accompanied 
by appropriate evidence showing the basis for the correction.
    (2) Beginning not later than 60 days prior to each fiscal year, CMS 
will provide SNF performance score reports to SNFs on their performance 
under the SNF VBP Program for a fiscal year. SNFs will have the 
opportunity to review and submit corrections to their SNF performance 
scores and ranking contained in these reports for 30 days following the 
date that CMS provides the reports. Any such correction requests must 
be accompanied by appropriate evidence showing the basis for the 
correction.
    (3) CMS will publicly report the information described in 
paragraphs (e)(1) and (2) of this section on the Nursing Home Compare 
Web site.
    (f) Limitations on review. There is no administrative or judicial 
review of the following:
    (1) The methodology used to determine the value-based incentive 
payment percentage and the amount of the value-based incentive payment 
under section 1888(h)(5) of the Act.
    (2) The determination of the amount of funding available for value-
based incentive payments under section 1888(h)(5)(C)(ii)(III) of the 
Act and the payment reduction under section 1888(h)(6) of the Act.
    (3) The establishment of the performance standards under section 
1888(h)(3) of the Act and the performance period.
    (4) The methodology developed under section 1888(h)(4) of the Act 
that is used to calculate SNF performance scores and the calculation of 
such scores.
    (5) The ranking determinations under section 1888(h)(4)(B) of the 
Act.
0
10. Section 413.345 is revised to read as follows:


Sec.  413.345  Publication of Federal prospective payment rates.

    CMS publishes information pertaining to each update of the Federal 
payment rates in the Federal Register. This information includes the 
standardized Federal rates, the resident classification system that 
provides the basis for case-mix adjustment, and the factors to be 
applied in making the area wage adjustment. This information is 
published before May 1 for the fiscal year 1998 and before August 1 for 
the fiscal years 1999 and after.
0
11. Section 413.360 is added to subpart J to read as follows:


Sec.  413.360  Requirements under the Skilled Nursing Facility (SNF) 
Quality Reporting Program (QRP).

    (a) Participation start date. Beginning with the FY 2018 program 
year, a SNF must begin reporting data in accordance with paragraph (b) 
of this section no later than the first day of the calendar quarter 
subsequent to 30 days after the date on its CMS Certification Number 
(CCN) notification letter, which designates the SNF as operating in the 
Certification and Survey Provider Enhanced Reports (CASPER) system. For 
purposes of this section, a program year is the fiscal year in which 
the market basket percentage described in Sec.  413.337(d) is reduced 
by two percentage points if the SNF does not report data in accordance 
with paragraph (b) of this section.
    (b) Data submission requirement. (1) Except as provided in 
paragraph (c) of this section, and for a program year, SNFs must submit 
to CMS data on measures specified under sections 1899B(c)(1) and 
1899B(d)(1) of the Act and standardized resident assessment data in 
accordance with section 1899B(b)(1) of the Act, in the form and manner, 
and at a time, specified by CMS.
    (2) CMS will consider a SNF to have complied with paragraph (b)(1) 
of this section for a program year if the SNF reports: 100 percent of 
the required data elements on at least 80 percent of the MDS 
assessments submitted for that program year.
    (c) Exception and extension requests. (1) A SNF may request and CMS 
may grant exceptions or extensions to the reporting requirements under 
paragraph (b) of this section for one or more quarters, when there are 
certain extraordinary circumstances beyond the control of the SNF.
    (2) A SNF may request an exception or extension within 90 days of 
the date that the extraordinary circumstances occurred by sending an 
email to SNFQRPReconsiderations@cms.hhs.gov that contains all of the 
following information:
    (i) SNF CMS Certification Number (CCN).
    (ii) SNF Business Name.
    (iii) SNF Business Address.
    (iv) CEO or CEO-designated personnel contact information including 
name, telephone number, title, email address, and mailing address. (The 
address must be a physical address, not a post office box.)
    (v) SNF's reason for requesting the exception or extension.
    (vi) Evidence of the impact of extraordinary circumstances, 
including, but not limited to, photographs, newspaper, and other media 
articles.
    (vii) Date when the SNF believes it will be able to again submit 
SNF QRP data and a justification for the proposed date.
    (3) Except as provided in paragraph (c)(4) of this section, CMS 
will not consider an exception or extension request unless the SNF 
requesting such exception or extension has complied fully with the 
requirements in this paragraph (c).
    (4) CMS may grant exceptions or extensions to SNFs without a 
request if it determines that one or more of the following has 
occurred:
    (i) An extraordinary circumstance affects an entire region or 
locale.
    (ii) A systemic problem with one of CMS's data collection systems 
directly affected the ability of a SNF to submit data in accordance 
with paragraph (b) of this section.
    (d) Reconsideration. (1) SNFs that do not meet the requirement in 
paragraph

[[Page 21100]]

(b) of this section for a program year will receive a letter of non-
compliance through the Quality Improvement and Evaluation System 
Assessment Submission and Processing (QIES-ASAP) system, as well as 
through the United States Postal Service. A SNF may request 
reconsideration no later than 30 calendar days after the date 
identified on the letter of non-compliance.
    (2) Reconsideration requests must be submitted to CMS by sending an 
email to SNFQRPReconsiderations@cms.hhs.gov containing all of the 
following information:
    (i) SNF CCN.
    (ii) SNF Business Name.
    (iii) SNF Business Address.
    (iv) CEO or CEO-designated personnel contact information including 
name, telephone number, title, email address, and mailing address. (The 
address must be a physical address, not a post office box.)
    (v) CMS identified reason(s) for non-compliance stated in the non-
compliance letter.
    (vi) Reason(s) for requesting reconsideration, including all 
supporting documentation. CMS will not consider an exception or 
extension request unless the SNF has complied fully with the 
requirements in paragraph (d)(2) of this section.
    (3) CMS 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.
    (e) Appeals. (1) A SNF that is dissatisfied with CMS' decision on a 
request for reconsideration may file an appeal with the Provider 
Reimbursement Review Board (PRRB) under 42 CFR part 405, subpart R.
    (2) [Reserved]

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
12. 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
13. In Sec.  424.20--
0
a. Amend paragraph (a)(1)(ii) by removing the phrase ``to one of the 
Resource Utilization Groups designated'' and adding in its place the 
phrase ``one of the case-mix classifiers that CMS designates''; and
0
b. Amend paragraph (e)(2)(ii)(B)(2) by removing the reference ``Sec.  
483.40(e)'' and adding in its place the reference ``Sec.  483.30(e)''.

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
14. The authority citation for part 488 continues to read as follows:

    Authority: Secs. 1102, 1128l, 1864, 1865, 1871 and 1875 of the 
Social Security Act, unless otherwise noted (42 U.S.C. 1302, 1320a-
7j, 1395aa, 1395bb, 1395hh) and 1395ll.

0
15. Section 488.30(a) is amended by revising the definition of 
``Complaint surveys'' to read as follows:


Sec.  488.30  Revisit user fee for revisit surveys.

    (a) * * *
    Complaint surveys means those surveys conducted on the basis of a 
substantial allegation of noncompliance, as defined in Sec.  488.1. The 
requirements of sections 1819(g)(4) and 1919(g)(4) of the Social 
Security Act and Sec.  488.332 apply to complaint surveys.
* * * * *
0
16. Section 488.301 is amended by revising the definition of 
``Abbreviated standard survey'' to read as follows:


Sec.  488.301  Definitions.

* * * * *
    Abbreviated standard survey means a survey other than a standard 
survey that gathers information primarily through resident-centered 
techniques on facility compliance with the requirements for 
participation. An abbreviated standard survey may be premised on 
complaints received; a change of ownership, management, or director of 
nursing; or other indicators of specific concern. Abbreviated standard 
surveys conducted to investigate a complaint or to conduct on-site 
monitoring to verify compliance with participation requirements are 
subject to the requirements of Sec.  488.332. Other premises for 
abbreviated standard surveys would follow the requirements of Sec.  
488.314.
* * * * *
0
17. In Sec.  488.308--
0
a. Redesignate paragraphs (e)(2) and (3) as paragraphs (f)(1) and (2);
0
b. Reserve paragraph (e)(2);
0
b. Add a paragraph heading for paragraph (f); and
0
c. Revise newly redesignated paragraph (f)(1) introductory text.
    The addition and revision read as follows:


Sec.  488.308  Survey frequency.

* * * * *
    (f) Investigation of complaints. (1) The survey agency must review 
all complaint allegations and conduct a standard or an abbreviated 
survey to investigate complaints of violations of requirements by SNFs 
and NFs if its review of the allegation concludes that--
* * * * *
0
18. Section 488.314 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  488.314  Survey teams.

    (a) * * *
    (1) Surveys under sections 1819(g)(2) and 1919(g)(2) of the Social 
Security Act must be conducted by an interdisciplinary team of 
professionals, which must include a registered nurse.
* * * * *

    Dated: April 21, 2017.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: April 21, 2017.
Thomas E. Price,
Secretary, Department of Health and Human Services.
[FR Doc. 2017-08521 Filed 4-27-17; 4:15 pm]
BILLING CODE 4120-01-P