Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Final Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program, 39162-39290 [2018-16570]
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Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
Centers for Medicare & Medicaid
Services
42 CFR Parts 411, 413, and 424
[CMS–1696–F]
RIN 0938–AT24
Medicare Program; Prospective
Payment System and Consolidated
Billing for Skilled Nursing Facilities
(SNF) Final Rule for FY 2019, SNF
Value-Based Purchasing Program, and
SNF Quality Reporting Program
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
This final rule updates the
payment rates used under the
prospective payment system (PPS) for
skilled nursing facilities (SNFs) for
fiscal year (FY) 2019. This final rule also
replaces the existing case-mix
classification methodology, the
Resource Utilization Groups, Version IV
(RUG–IV) model, with a revised casemix methodology called the PatientDriven Payment Model (PDPM)
beginning on October 1, 2019. The rule
finalizes revisions to the regulation text
that describes a beneficiary’s SNF
‘‘resident’’ status under the consolidated
billing provision and the required
content of the SNF level of care
certification. The rule also finalizes
updates to the SNF Quality Reporting
Program (QRP) and the Skilled Nursing
Facility Value-Based Purchasing (VBP)
Program.
SUMMARY:
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DATES:
Effective Date: This final rule is
effective October 1, 2018.
Implementation Date: The
implementation date for revised casemix methodology, PDPM, and
associated policies discussed in section
V. is October 1, 2019.
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, and general information.
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, and consolidated
billing.
Mary Pratt, (410) 786–6867, for
information related to the skilled
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Availability of Certain Tables
Exclusively Through the Internet on the
CMS Website
As discussed in the FY 2014 SNF PPS
final rule (78 FR 47936), tables setting
forth the Wage Index for Urban Areas
Based on CBSA Labor Market Areas and
the Wage Index Based on CBSA Labor
Market Areas for Rural Areas are no
longer published in the Federal
Register. Instead, these tables are
available exclusively through the
internet on the CMS website. The wage
index tables for this final rule can be
accessed on the SNF PPS Wage Index
home page, at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/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.
C. Design and Methodology for Case-Mix
Adjustment of Federal Rates
D. Use of the Resident Assessment
Instrument—Minimum Data Set,
Version 3
E. Revisions to Therapy Provision Policies
Under the SNF PPS
F. Interrupted Stay Policy
G. Relationship of PDPM to Existing
Skilled Nursing Facility Level of Care
Criteria
H. Effect of PDPM on Temporary AIDS
Add-On Payment
I. Potential Impacts of Implementing the
PDPM and Parity Adjustment
VI. Other Issues
A. Other Revisions to the Regulation Text
B. Skilled Nursing Facility (SNF) Quality
Reporting Program (QRP)
C. Skilled Nursing Facility Value-Based
Purchasing Program (SNF VBP)
D. Request for Information on Promoting
Interoperability and Electronic
Healthcare Information Exchange
Through Possible Revisions to the CMS
Patient Health and Safety Requirements
for Hospitals and Other Medicare- and
Medicaid-Participating Providers and
Suppliers
VII. Collection of Information Requirements
VIII. Economic Analyses
A. Regulatory Impact Analysis
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act
Analysis
D. Federalism Analysis
E. Congressional Review Act
F. Regulatory Review Costs
Table of Contents
I. Executive Summary
I. Executive Summary
A. Purpose
B. Summary of Major Provisions
C. Summary of Cost and Benefits
D. Improving Patient Outcomes and
Reducing Burden Through Meaningful
Measures
E. Advancing Health Information Exchange
II. Background on SNF PPS
A. Statutory Basis and Scope
B. Initial Transition for the SNF PPS
C. Required Annual Rate Updates
III. Analysis and Responses to Public
Comments on the FY 2019 SNF PPS
Proposed Rule
A. General Comments on the FY 2019 SNF
PPS Proposed Rule
B. SNF PPS Rate Setting Methodology and
FY 2019 Update
1. Federal Base Rates
2. SNF Market Basket Update
3. Case-Mix Adjustment
4. Wage Index Adjustment
5. SNF Value-Based Purchasing Program
6. 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. Revisions to SNF PPS Case-Mix
Classification Methodology
A. Background and General Comments
B. Revisions to SNF PPS Federal Base
Payment Rate Components
A. Purpose
This final rule updates the SNF
prospective payment rates for FY 2019
as required under section 1888(e)(4)(E)
of the Social Security Act (the Act). It
will 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 final
rule). This final rule also replaces the
existing case-mix classification
methodology, the Resource Utilization
Groups, Version IV (RUG–IV) model,
with a revised case-mix methodology
called the Patient-Driven Payment
Model (PDPM) effective October 1,
2019. This rule also finalizes updates to
the Skilled Nursing Facility Quality
Reporting Program (SNF QRP) and
Skilled Nursing Facility Value-Based
Purchasing Program (SNF VBP).
nursing facility quality reporting
program.
Celeste Bostic, (410) 786–5603, for
information related to the skilled
nursing facility value-based purchasing
program.
SUPPLEMENTARY INFORMATION:
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
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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 final
rule will reflect an update to the rates
that we published in the SNF PPS final
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rule for FY 2018 (82 FR 36530), as
corrected in the FY 2018 SNF PPS
correction notice (82 FR 46163), which
reflects the SNF market basket update
for FY 2019, as required by section
1888(e)(5)(B)(iv) of the Act (as added by
section 53111 of the Bipartisan Budget
Act of 2018). This final rule also
replaces the existing case-mix
classification methodology, the
Resource Utilization Groups, Version IV
(RUG–IV) model, with a revised casemix methodology called the PatientDriven Payment Model (PDPM). It also
finalizes revisions at 42 CFR
411.15(p)(3)(iv), which describes a
beneficiary’s SNF ‘‘resident’’ status
under the consolidated billing
provision, and 42 CFR 424.20(a)(1)(i),
which describes the required content of
the SNF level of care certification.
Furthermore, in accordance with section
1888(h) of the Act, this final rule,
beginning October 1, 2018, will reduce
the adjusted federal per diem rate
determined under section 1888(e)(4)(G)
of the Act by 2 percent, and adjust the
resulting rate by the value-based
incentive payment amount earned by
the SNF for that fiscal year under the
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SNF VBP Program. Additionally, this
final rule updates policies for the SNF
VBP, including requirements that apply
beginning with the FY 2021 SNF VBP
program year, changes to the SNF VBP
scoring methodology, and the adoption
of an Extraordinary Circumstances
Exception policy. Finally, this rule
updates requirements for the SNF QRP,
including adopting a new quality
measure removal factor and codifying in
our regulations a number of
requirements.
C. Summary of Cost and Benefits
TABLE 1—COST AND BENEFITS
Provision description
Total transfers
FY 2019 SNF PPS payment rate update\ ...............................
The overall economic impact of this final rule is an estimated increase of $820
million in aggregate payments to SNFs during FY 2019.
The overall economic impact of the SNF VBP Program is an estimated reduction
of $211 million in aggregate payments to SNFs during FY 2019.
FY 2019 SNF VBP changes ....................................................
D. Improving Patient Outcomes and
Reducing Burden Through Meaningful
Measures
Regulatory reform and reducing
regulatory burden are high priorities for
us. To reduce the regulatory burden on
the healthcare industry, lower health
care costs, and enhance patient care, in
October 2017, we launched the
Meaningful Measures Initiative.1 This
initiative is one component of our
agency-wide Patients Over Paperwork
Initiative,2 which is aimed at evaluating
and streamlining regulations with a goal
to reduce unnecessary cost and burden,
increase efficiencies, and improve
beneficiary experience. The Meaningful
Measures Initiative is aimed at
identifying the highest priority areas for
quality measurement and quality
improvement in order to assess the core
quality of care issues that are most vital
to advancing our work to improve
patient outcomes. The Meaningful
Measures Initiative represents a new
approach to quality measures that
fosters operational efficiencies, and will
reduce costs including the collection
and reporting burden while producing
quality measurement that is more
focused on meaningful outcomes.
The Meaningful Measures Framework
has the following objectives:
• Address high-impact measure areas
that safeguard public health;
• Patient-centered and meaningful to
patients;
• Outcome-based where possible;
• Fulfill each program’s statutory
requirements;
• Minimize the level of burden for
health care providers (for example,
through a preference for EHR-based
measures where possible, such as
electronic clinical quality measures);
• Significant opportunity for
improvement;
• Address measure needs for
population based payment through
alternative payment models; and
• Align across programs and/or with
other payers.
In order to achieve these objectives,
we have identified 19 Meaningful
Measures areas and mapped them to six
overarching quality priorities as shown
in Table 2.
TABLE 2—MEANINGFUL MEASURES FRAMEWORK DOMAINS AND MEASURE AREAS
Quality priority
Meaningful measure area
Making Care Safer by Reducing Harm Caused in the Delivery of Care .......
Healthcare-Associated Infections.
Preventable Healthcare Harm.
Care is Personalized and Aligned with Patient’s Goals.
End of Life Care according to Preferences.
Patient’s Experience of Care
Patient Reported Functional Outcomes.
Medication Management.
Admissions and Readmissions to Hospitals.
Transfer of Health Information and Interoperability.
Preventive Care.
Management of Chronic Conditions.
Prevention, Treatment, and Management of Mental Health.
Prevention and Treatment of Opioid and Substance Use Disorders.
Risk Adjusted Mortality.
Equity of Care.
Community Engagement.
Strengthen Person and Family Engagement as Partners in Their Care .......
Promote Effective Communication and Coordination of Care .......................
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Promote Effective Prevention and Treatment of Chronic Disease ................
Work with Communities to Promote Best Practices of Healthy Living ..........
1 Meaningful Measures web page: https:/
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitativesGenIndo/
MMF/General-info-Sub-Page.html.
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2 See Remarks by Administrator Seema Verma at
the Health Care Payment Learning and Action
Network (LAN) Fall Summit, as prepared for
delivery on October 30, 2017 https://www.cms.gov/
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2017-Fact-Sheet-items/2017-10-30.html
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TABLE 2—MEANINGFUL MEASURES FRAMEWORK DOMAINS AND MEASURE AREAS—Continued
Quality priority
Meaningful measure area
Make Care Affordable ....................................................................................
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By including Meaningful Measures in
our programs, we believe that we can
also address the following cross-cutting
measure criteria:
• Eliminating disparities;
• Tracking measurable outcomes and
impact;
• Safeguarding public health;
• Achieving cost savings;
• Improving access for rural
communities; and
• Reducing burden.
We believe that the Meaningful
Measures Initiative will improve
outcomes for patients, their families,
and health care providers while
reducing burden and costs for clinicians
and providers and promoting
operational efficiencies.
Comment: We received numerous
comments from stakeholders regarding
the Meaningful Measures Initiative and
the impact of its implementation in
CMS’ quality programs. Many of these
comments pertained to specific program
proposals, and are discussed in the
appropriate program-specific sections of
this final rule. However, commenters
also provided insights and
recommendations for the ongoing
development of the Meaningful
Measures Initiative generally, including:
ensuring transparency in public
reporting and usability of publicly
reported data; evaluating the benefit of
individual measures to patients via use
in quality programs weighed against the
burden to providers of collecting and
reporting that measure data; and
identifying additional opportunities for
alignment across CMS quality programs.
Response: We will continue to work
with stakeholders to refine and further
implement the Meaningful Measures
Initiative, and will take commenters’
insights and recommendations into
account moving forward.
E. Advancing Health Information
Exchange
The Department of Health and Human
Services (HHS) has a number of
initiatives designed to encourage and
support the adoption of interoperable
health information technology and to
promote nationwide health information
exchange to improve health care. The
Office of the National Coordinator for
Health Information Technology (ONC)
and CMS work collaboratively to
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Appropriate Use of Healthcare.
Patient-focused Episode of Care.
Risk Adjusted Total Cost of Care.
advance interoperability across settings
of care, including post-acute care.
The Improving Medicare Post-Acute
Care Transformation Act of 2015
(IMPACT Act, Pub. L. 113–185) requires
assessment data to be standardized and
interoperable to allow for exchange of
the data among post-acute providers and
other providers. To further
interoperability in post-acute care, CMS
has developed a Data Element Library to
serve as a publicly available centralized,
authoritative resource for standardized
data elements and their associated
mappings to health IT standards. These
interoperable data elements can reduce
provider burden by allowing the use
and reuse of healthcare data, support
provider exchange of electronic health
information for care coordination,
person-centered care, and support realtime, data driven, clinical decision
making. Standards in the Data Element
Library (https://del.cms.gov/) can be
referenced on the CMS website and in
the ONC Interoperability Standards
Advisory (ISA). The 2018
Interoperability Standards Advisory
(ISA) is available at https://
www.healthit.gov/isa.
Most recently, the 21st Century Cures
Act (Pub. L. 114–255), enacted in late
2016, requires HHS to take new steps to
enable the electronic sharing of health
information ensuring interoperability
for providers and settings across the
care continuum. Specifically, Congress
directed ONC to ‘‘develop or support a
trusted exchange framework, including
a common agreement among health
information networks nationally.’’ This
framework (https://beta.healthit.gov/
topic/interoperability/trusted-exchangeframework-and-common-agreement)
outlines a common set of principles for
trusted exchange and minimum terms
and conditions for trusted exchange in
order to enable interoperability across
disparate health information networks.
In another important provision,
Congress defined ‘‘information
blocking’’ as practices likely to interfere
with, prevent, or materially discourage
access, exchange, or use of electronic
health information, and established new
authority for HHS to discourage these
practices.
We invite providers to learn more
about these important developments
and how they are likely to affect SNFs.
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II. Background on SNF PPS
A. Statutory Basis and Scope
As amended by section 4432 of the
Balanced Budget Act of 1997 (BBA
1997, Pub. L. 105–33, enacted on
August 5, 1997), section 1888(e) of the
Act provides for the implementation of
a PPS for SNFs. This methodology uses
prospective, case-mix adjusted per diem
payment rates applicable to all covered
SNF services defined in section
1888(e)(2)(A) of the Act. The SNF PPS
is effective for cost reporting periods
beginning on or after July 1, 1998, and
covers all costs of furnishing covered
SNF services (routine, ancillary, and
capital-related costs) other than costs
associated with approved educational
activities and bad debts. Under section
1888(e)(2)(A)(i) of the Act, covered SNF
services include post-hospital extended
care services for which benefits are
provided under Part A, as well as those
items and services (other than a small
number of excluded services, such as
physicians’ services) for which payment
may otherwise be made under Part B
and which are furnished to Medicare
beneficiaries who are residents in a SNF
during a covered Part A stay. A
comprehensive discussion of these
provisions appears in the May 12, 1998
interim final rule (63 FR 26252). In
addition, a detailed discussion of the
legislative history of the SNF PPS is
available online at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/
Legislative_History_04152015.pdf.
Section 215(a) of the Protecting
Access to Medicare Act of 2014 (PAMA)
(Pub. L. 113–93, enacted on April 1,
2014) added section 1888(g) to the Act
requiring the Secretary to specify an allcause all-condition hospital readmission
measure and an all-condition riskadjusted potentially preventable
hospital readmission measure for the
SNF setting. Additionally, section
215(b) of PAMA added section 1888(h)
to the Act requiring the Secretary to
implement a VBP program for SNFs.
Finally, section 2(c)(4) of the IMPACT
Act added section 1888(e)(6) to the Act,
which requires the Secretary to
implement a quality reporting program
for SNFs under which SNFs report data
on measures and resident assessment
data.
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B. Initial Transition for the SNF PPS
Under sections 1888(e)(1)(A) and
1888(e)(11) of the Act, the SNF PPS
included an initial, three-phase
transition that blended a facility-specific
rate (reflecting the individual facility’s
historical cost experience) with the
federal case-mix adjusted rate. The
transition extended through the
facility’s first 3 cost reporting periods
under the PPS, up to and including the
one that began in FY 2001. Thus, the
SNF PPS is no longer operating under
the transition, as all facilities have been
paid at the full federal rate effective
with cost reporting periods beginning in
FY 2002. As we now base payments for
SNFs entirely on the adjusted federal
per diem rates, we no longer include
adjustment factors under the transition
related to facility-specific rates for the
upcoming FY.
C. Required Annual Rate Updates
Section 1888(e)(4)(E) of the Act
requires the SNF PPS payment rates to
be updated annually. The most recent
annual update occurred in a final rule
that set forth updates to the SNF PPS
payment rates for FY 2018 (82 FR
36530), as corrected in the FY 2018 SNF
PPS correction notice (82 FR 46163).
Section 1888(e)(4)(H) of the Act
specifies that we provide for publication
annually in the Federal Register of the
following:
• The unadjusted federal per diem
rates to be applied to days of covered
SNF services furnished during the
upcoming FY.
• The case-mix classification system
to be applied for these services during
the upcoming FY.
• The factors to be applied in making
the area wage adjustment for these
services.
Along with other revisions discussed
later in this preamble, this final rule
will provide the required annual
updates to the per diem payment rates
for SNFs for FY 2019.
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III. Analysis and Responses to Public
Comments on the FY 2019 SNF PPS
Proposed Rule
In response to the publication of the
FY 2019 SNF PPS proposed rule, we
received 290 public comments from
individuals, providers, corporations,
government agencies, private citizens,
trade associations, and major
organizations. The following are brief
summaries of each proposed provision,
a summary of the public comments that
we received related to that proposal,
and our responses to the comments.
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A. General Comments on the FY 2019
SNF PPS Proposed Rule
ARNPs from participating in
rehabilitation team activities.
In addition to the comments we
received on specific proposals
contained within the proposed rule
(which we address later in this final
rule), commenters also submitted the
following, more general, observations on
the SNF PPS and SNF care generally. A
discussion of these comments, along
with our responses, appears below.
Comment: A few commenters
requested clarification of how a SNF
may comply with the coverage
requirement to provide skilled services
on a daily basis and communicate
intended compliance with such policy
when skilled rehabilitative services are
halted temporarily due to a holiday or
patient illness, and the only skilled
service required is rehabilitation
services.
Response: As stated in the FY 2000
SNF PPS final rule (64 FR 41670), the
requirement for daily skilled services
should not be applied so strictly that it
would not be met merely because there
is a brief, isolated absence from the
facility in a situation where discharge
from the facility would not be practical.
With regard to the ‘‘daily basis’’
requirement, the Medicare program does
not specify in regulations or guidelines
an official list of holidays of other
specific occasions that a facility may
observe as breaks in rehabilitation
services, but recognizes that the
resident’s own condition dictates the
amount of service that is appropriate.
Accordingly, the facility itself must
judge whether a brief, temporary pause
in the delivery of therapy services
would adversely affect the resident’s
condition.
This policy is also discussed at
§ 409.34(b), where the paragraph states
that a break of 1 or 2 days in the
furnishing of rehabilitation services will
not preclude coverage if discharge
would not be practical for the 1 or 2
days during which, for instance, the
physician has suspended the therapy
sessions because the patient exhibited
extreme fatigue.
Comment: One commenter requested
that CMS allow the addition of
advanced registered nurse practitioners
(ARNPs) to the rehabilitation team to
meet regulatory requirements and deal
with a shortage of rehabilitation
physicians.
Response: We appreciate the
comment. While ARNPs are eligible to
enroll and participate in Medicare, it is
unclear what federal regulatory
requirements the commenter is
concerned about that would prevent
B. SNF PPS Rate Setting Methodology
and FY 2019 Update
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1. 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 be payable under
Part B for covered SNF services
furnished to individuals during the
course of a covered Part A stay in a SNF.
In developing the rates for the initial
period, we updated costs to the first
effective year of the PPS (the 15-month
period beginning July 1, 1998) using a
SNF market basket index, and then
standardized for geographic variations
in wages and for the costs of facility
differences in case mix. In compiling
the database used to compute the
federal payment rates, we excluded
those providers that received new
provider exemptions from the routine
cost limits, as well as costs related to
payments for exceptions to the routine
cost limits. Using the formula that the
BBA 1997 prescribed, we set the federal
rates at a level equal to the weighted
mean of freestanding costs plus 50
percent of the difference between the
freestanding mean and weighted mean
of all SNF costs (hospital-based and
freestanding) combined. We computed
and applied separately the payment
rates for facilities located in urban and
rural areas, and adjusted the portion of
the federal rate attributable to wagerelated costs by a wage index to reflect
geographic variations in wages.
2. SNF Market Basket Update
a. SNF Market Basket Index
Section 1888(e)(5)(A) of the Act
requires us to establish a SNF market
basket index that reflects changes over
time in the prices of an appropriate mix
of goods and services included in
covered SNF services. Accordingly, we
have developed a SNF market basket
index that encompasses the most
commonly used cost categories for SNF
routine services, ancillary services, and
capital-related expenses. In the SNF PPS
final rule for FY 2018 (82 FR 36548
through 36566), we revised and rebased
the market basket index, which
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included updating the base year from
FY 2010 to 2014.
The SNF market basket index is used
to compute the market basket
percentage change that is used to update
the SNF federal rates on an annual
basis, as required by section
1888(e)(4)(E)(ii)(IV) of the Act. This
market basket percentage update is
adjusted by a forecast error correction,
if applicable, and then further adjusted
by the application of a productivity
adjustment as required by section
1888(e)(5)(B)(ii) of the Act and
described in section III.B.2.d of this
final rule. For FY 2019, the growth rate
of the 2014-based SNF market basket in
the proposed rule was estimated to be
2.7 percent, based on the IHS Global
Insight, Inc. (IGI) first quarter 2018
forecast with historical data through
fourth quarter 2017, before the
multifactor productivity adjustment is
applied. Using IGIs most recent forecast,
the second quarter 2018 forecast with
historical data through first quarter
2018, we calculate a growth rate of the
2014-based SNF market basket of 2.8
percent.
However, we note that section 53111
of the Bipartisan Budget Act of 2018
(BBA 2018) (Pub. L. 115–123, enacted
on February 9, 2018) amended section
1888(e) of the Act to add section
1888(e)(5)(B)(iv) of the Act. Section
1888(e)(5)(B)(iv) of the Act establishes a
special rule for FY 2019 that requires
the market basket percentage, after the
application of the productivity
adjustment, to be 2.4 percent. In
accordance with section
1888(e)(5)(B)(iv) of the Act, we will use
a market basket percentage of 2.4
percent to update the federal rates set
forth in this final rule. We proposed to
revise § 413.337(d) to reflect this
statutorily required 2.4 percent market
basket percentage for FY 2019. In
addition, to conform with section
1888(e)(5)(B)(iii) of the Act, we
proposed to update the regulations to
reflect the 1 percent market basket
percentage required for FY 2018 (as
discussed in the FY 2018 SNF PPS final
rule, 82 FR 36533). Accordingly, we
proposed to revise paragraph (d)(1) of
§ 413.337, which sets forth the market
basket update formula, by revising
paragraph (d)(1)(v), and by adding
paragraphs (d)(1)(vi) and (d)(1)(vii). The
revision to add paragraph (d)(1)(vi)
reflects section 1888(e)(5)(B)(iii) of the
Act (as added by section 411(a) of the
Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA)
(Pub. L. 114–10)), which, as discussed
above, establishes a special rule for FY
2018 that requires the market basket
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percentage, after the application of the
productivity adjustment, to be 1.0
percent. The revision to add paragraph
(d)(1)(vii) reflects section
1888(e)(5)(B)(iv) of the Act (as added by
section 53111 of BBA 2018), which
establishes a special rule for FY 2019
that requires the market basket
percentage, after the application of the
productivity adjustment, to be 2.4
percent. These statutory provisions are
self-implementing and do not require
the exercise of discretion by the
Secretary. In section III.B.2.e. of this
final rule, we discuss the specific
application of the BBA 2018-specified
market basket adjustment to the
forthcoming annual update of the SNF
PPS payment rates. In addition, we also
discuss in that section 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.
b. Use of the SNF Market Basket
Percentage
Section 1888(e)(5)(B) of the Act
defines the SNF market basket
percentage as the percentage change in
the SNF market basket index from the
midpoint of the previous FY to the
midpoint of the current FY. Absent the
addition of section 1888(e)(5)(B)(iv) of
the Act, added by section 53111 of BBA
2018, we would have used the
percentage change in the SNF market
basket index to compute the update
factor for FY 2019. This factor is based
on the FY 2019 percentage increase in
the 2014-based SNF market basket index
reflecting routine, ancillary, and capitalrelated expenses. In the proposed rule,
the SNF market basket percentage was
estimated to be 2.7 percent for FY 2019
based on IGI’s first quarter 2018 forecast
(with historical data through fourth
quarter 2017). In this final rule, we are
using IGI’s more recent second quarter
2018 forecast (with historical data
through first quarter 2018) and we
calculate a SNF market basket
percentage increase of 2.8 percent. As
discussed in sections III.B.2.c and
III.B.2.d of this final rule, this market
basket percentage change would have
been reduced by the applicable forecast
error correction (as described in
§ 413.337(d)(2)) and by the MFP
adjustment as required by section
1888(e)(5)(B)(ii) of the Act. As noted
previously, section 1888(e)(5)(B)(iv) of
the Act, added by section 53111 of the
BBA 2018, requires us to update the
SNF PPS rates for FY 2019 using a 2.4
percent SNF market basket percentage
change, instead of the estimated 2.8
percent market basket percentage
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change adjusted by the multifactor
productivity adjustment as described
below. Additionally, as discussed in
section II.B. of this final rule, we no
longer compute update factors to adjust
a facility-specific portion of the SNF
PPS rates, because the initial threephase transition period from facilityspecific to full federal rates that started
with cost reporting periods beginning in
July 1998 has expired.
c. 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), § 413.337(d)(2) provides for an
adjustment to account for market basket
forecast error. The initial adjustment for
market basket forecast error applied to
the update of the FY 2003 rate for FY
2004, and took into account the
cumulative forecast error for the period
from FY 2000 through FY 2002,
resulting in an increase of 3.26 percent
to the FY 2004 update. Subsequent
adjustments in succeeding FYs take into
account the forecast error from the most
recently available FY for which there is
final data, and apply the difference
between the forecasted and actual
change in the market basket when the
difference exceeds a specified threshold.
We originally used a 0.25 percentage
point threshold for this purpose;
however, for the reasons specified in the
FY 2008 SNF PPS final rule (72 FR
43425, August 3, 2007), we adopted a
0.5 percentage point threshold effective
for FY 2008 and subsequent FYs. As we
stated in the final rule for FY 2004 that
first issued the market basket forecast
error adjustment (68 FR 46058, August
4, 2003), the adjustment will reflect both
upward and downward adjustments, as
appropriate.
For FY 2017 (the most recently
available FY for which there is final
data), the estimated increase in the
market basket index was 2.7 percentage
points, while the actual increase for FY
2017 was 2.7 percentage points,
resulting in the actual increase being the
same as the estimated increase.
Accordingly, as the difference between
the estimated and actual amount of
change in the market basket index does
not exceed the 0.5 percentage point
threshold, the FY 2019 market basket
percentage change of 2.7 percent would
not have been adjusted to account for
the forecast error correction. Table 3
shows the forecasted and actual market
basket amounts for FY 2017.
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TABLE 3—DIFFERENCE BETWEEN THE FORECASTED AND ACTUAL MARKET BASKET INCREASES FOR FY 2017
Index
Forecasted
FY 2017
increase *
Actual
FY 2017
increase **
FY 2017
difference
SNF ..............................................................................................................................................
2.7
2.7
0.0
* Published in Federal Register; based on second quarter 2016 IGI forecast (2010-based index).
** Based on the second quarter 2018 IGI forecast, with historical data through the first quarter 2018 (2010-based index).
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d. 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
(Affordable Care Act) (Pub. L. 111–148,
enacted on March 23, 2010) requires
that, in FY 2012 and in subsequent FYs,
the market basket percentage under the
SNF payment system (as described in
section 1888(e)(5)(B)(i) of the Act) is to
be reduced annually by the multifactor
productivity (MFP) adjustment
described in section 1886(b)(3)(B)(xi)(II)
of the Act. Section 1886(b)(3)(B)(xi)(II)
of the Act, in turn, defines the MFP
adjustment to be equal to the 10-year
moving average of changes in annual
economy-wide private nonfarm business
multi-factor productivity (as projected
by the Secretary for the 10-year period
ending with the applicable FY, year,
cost-reporting period, or other annual
period). The Bureau of Labor Statistics
(BLS) is the agency that publishes the
official measure of private nonfarm
business MFP. We refer readers to the
BLS website at 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 website at https://www.cms.gov/
Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/
MedicareProgramRatesStats/
MarketBasketResearch.html.
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1. Incorporating the MFP Adjustment
Into the Market Basket Update
Per section 1888(e)(5)(A) of the Act,
the Secretary shall establish a SNF
market basket index that reflects
changes over time in the prices of an
appropriate mix of goods and services
included in covered SNF services.
Section 1888(e)(5)(B)(ii) of the Act,
added by section 3401(b) of the
Affordable Care Act, requires that for FY
2012 and each subsequent FY, after
determining the market basket
percentage described in section
1888(e)(5)(B)(i) of the Act, the Secretary
shall reduce such percentage by the
productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act
(which we refer to as the MFP
adjustment). Section 1888(e)(5)(B)(ii) of
the Act further states that the reduction
of the market basket percentage by the
MFP adjustment may result in the
market basket percentage being less than
zero for a FY, and may result in
payment rates under section 1888(e) of
the Act being less than such payment
rates for the preceding fiscal year.
The MFP adjustment, calculated as
the 10-year moving average of changes
in MFP for the period ending September
30, 2019, is estimated to be 0.8 percent
based on IGI’s second quarter 2018
forecast. Also, consistent with section
1888(e)(5)(B)(i) of the Act and
§ 413.337(d)(2), the market basket
percentage for FY 2019 for the SNF PPS
is based on IGI’s second quarter 2018
forecast of the SNF market basket
percentage, which is estimated to be 2.8
percent. The proposed rule reflected a
market basket percentage for FY 2019 of
2.7 percent and an MFP adjustment of
0.8 percent based on IGI’s first quarter
2018 forecast.
If not for the enactment of section
53111 of the BBA 2018, the FY 2019
update would have been calculated in
accordance with section 1888(e)(5)(B)(i)
and (ii) of the Act, pursuant to which
the market basket percentage
determined under section
1888(e)(5)(B)(i) of the Act (that is, 2.8
percent) would have been reduced by
the MFP adjustment (the 10-year
moving average of changes in MFP for
the period ending September 30, 2019)
of 0.8 percent, which would have been
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calculated as described above and based
on IGI’s second quarter 2018 forecast.
Absent the enactment of section 53111
of the BBA 2018, the resulting MFPadjusted SNF market basket update
would have been equal to 2.0 percent,
or 2.8 percent less 0.8 percentage point.
However, as discussed above, section
1888(e)(5)(B)(iv) of the Act, added by
section 53111 of the BBA 2018, requires
us to apply a 2.4 percent market basket
percentage increase in determining the
FY 2019 SNF payment rates set forth in
this final rule (without regard to the
MFP adjustment described above).
e. Market Basket Update Factor for FY
2019
Sections 1888(e)(4)(E)(ii)(IV) and
1888(e)(5)(i) of the Act require that the
update factor used to establish the FY
2019 unadjusted federal rates be at a
level equal to the market basket index
percentage change. Accordingly, we
determined the total growth from the
average market basket level for the
period of October 1, 2017, through
September 30, 2018 to the average
market basket level for the period of
October 1, 2018, through September 30,
2019. This process yields a percentage
change in the 2014-based SNF market
basket of 2.8 percent.
As further explained in section
III.B.2.c. of this final rule, as applicable,
we adjust the market basket percentage
change by the forecast error from the
most recently available FY for which
there is final data and apply this
adjustment whenever the difference
between the forecasted and actual
percentage change in the market basket
exceeds a 0.5 percentage point
threshold. Since the difference between
the forecasted FY 2017 SNF market
basket percentage change and the actual
FY 2017 SNF market basket percentage
change (FY 2017 is the most recently
available FY for which there is
historical data) did not exceed the 0.5
percentage point threshold, the FY 2019
market basket percentage change of 2.8
percent would not be adjusted by the
forecast error correction.
If not for the enactment of section
53111 of the BBA 2018, the SNF market
basket for FY 2019 would have been
determined in accordance with section
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1888(e)(5)(B)(ii) of the Act, which
requires us to reduce the market basket
percentage change by the MFP
adjustment (the 10-year moving average
of changes in MFP for the period ending
September 30, 2019) of 0.8 percent, as
described in section III.B.2.d.1. of this
final rule. Thus, absent the enactment of
the BBA 2018, the resulting net SNF
market basket update would have been
equal to 2.0 percent, or 2.8 percent less
the 0.8 percentage point MFP
adjustment. We note that our policy has
been that, if more recent data become
available (for example, a more recent
estimate of the SNF market basket and/
or MFP adjustment), we would use such
data, if appropriate, to determine the
SNF market basket percentage change,
labor-related share relative importance,
forecast error adjustment, and MFP
adjustment in the SNF PPS final rule.
Historically, we have used the SNF
market basket, adjusted as described
above, to adjust each per diem
component of the federal rates forward
to reflect the change in the average
prices from one year to the next.
However, section 1888(e)(5)(B)(iv) of the
Act, as added by section 53111 of the
BBA 2018, requires us to use a market
basket percentage of 2.4 percent, after
application of the MFP to adjust the
federal rates for FY 2019. Under section
1888(e)(5)(B)(iv) of the Act, the market
basket percentage increase used to
determine the federal rates set forth in
Table 4 and 5 in this final rule will be
2.4 percent for FY 2019.
In addition, we note that section
1888(e)(6)(A)(i) of the Act provides that,
beginning with FY 2018, SNFs that fail
to submit data, as applicable, in
accordance with sections
1888(e)(6)(B)(i)(II) and (III) of the Act for
a fiscal year will receive a 2.0
percentage point reduction to their
market basket update for the fiscal year
involved, after application of section
1888(e)(5)(B)(ii) of the Act (the MFP
adjustment) and section
1888(e)(5)(B)(iii) of the Act (the 1
percent market basket increase for FY
2018). In addition, section
1888(e)(6)(A)(ii) of the Act states that
application of the 2.0 percentage point
reduction (after application of section
1888(e)(5)(B)(ii) and (iii) of the Act) may
result in the market basket index
percentage change being less than 0.0
for a fiscal year, and may result in
payment rates for a fiscal year being less
than such payment rates for the
preceding fiscal year. Section
1888(e)(6)(A)(iii) of the Act further
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specifies that the 2.0 percentage point
reduction is applied in a noncumulative
manner, so that any reduction made
under section 1888(e)(6)(A)(i) of the Act
applies only with respect to the fiscal
year involved, and that the reduction
cannot be taken into account in
computing the payment amount for a
subsequent fiscal year.
Accordingly, we proposed that for
SNFs that do not satisfy the reporting
requirements for the FY 2019 SNF QRP,
we would apply a 2.0 percentage point
reduction to the SNF market basket
percentage change for that fiscal year,
after application of any applicable
forecast error adjustment as specified in
§ 413.337(d)(2) and the MFP adjustment
as specified in § 413.337(d)(3). In the FY
2019 SNF PPS proposed rule (83 FR
21024), we proposed that, for FY 2019,
the application of this reduction to
SNFs that have not met the
requirements for the FY 2019 SNF QRP
would result in a market basket index
percentage change for FY 2019 that is
less than zero (specifically, a net update
of negative 0.1 percentage point, derived
by subtracting 2 percent from the MFPadjusted market basket update of 1.9
percent), and would also result in FY
2019 payment rates that are less than
such payment rates for the preceding
FY. However, we inadvertently applied
the 2.0 percent reduction to the market
basket adjustment factor that would
have applied were it not for the
application of the BBA 2018 stipulated
market basket update factor rather than
to the BBA 2018 stipulated market
basket update factor of 2.4 percent.
Therefore, when properly applied, the
net update for providers that fail to meet
the requirements for the FY 2019 SNF
QRP will be 0.4 percent, rather than the
negative 0.1 percent discussed in the
proposed rule. We invited comments on
these proposals.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the Market Basket Update
Factor for FY 2019. A discussion of
these comments, along with our
responses, appears below.
Comment: We received a number of
comments in relation to applying the FY
2019 market basket update factor in the
determination of the FY 2019
unadjusted federal per diem rates, with
some commenters supporting its
application in determining the FY 2019
unadjusted per diem rates, while others
opposed its application. In their March
2018 report (available at https://
www.medpac.gov/docs/default-source/
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reports/mar18_medpac_ch8_sec.pdf)
and in their comment on the FY 2019
SNF PPS proposed rule, MedPAC
recommended that we eliminate the
market basket update for SNFs
altogether for FY 2019 and FY 2020 and
implement revisions to the SNF PPS.
Response: We appreciate all of the
comments received on the proposed
market basket update for FY 2019. In
response to those comments opposing
the application of the FY 2019 market
basket update factor in determining the
FY 2019 unadjusted federal per diem
rates, specifically MedPAC’s proposal to
eliminate the market basket update for
SNFs, we are required to update the
unadjusted Federal per diem rates for
FY 2019 by 2.4 percent under section
1888(e)(4)(E)(ii)(IV) and (e)(5)(B) of the
Act. as amended by section 53111 of the
BBA 2018.
Comment: A few commenters
expressed concern with regard to CMS
applying the 2.0 percentage point
reduction to the market basket increase
to the standard market basket
adjustment of 1.9 percent, rather than to
the market basket required as a result of
the BBA 2018. These commenters
requested that CMS reconsider this
decision and to apply the QRP-related
market basket reduction to the BBA
2018-stipulated market basket.
Response: We appreciate the
comments on this issue. Further, we
agree with commenters that the QRPrelated reduction to the market basket
should be applied to the BBA 2018stipulated market basket. Therefore, the
market basket update factor that would
be applied in cases where a provider has
not met the requirements of the FY 2019
SNF QRP would be a positive 0.4
percent, rather than the negative 0.1
percent discussed in the FY 2019 SNF
PPS proposed rule.
Accordingly, for the reasons specified
in this final rule and in the FY 2019
SNF PPS proposed rule (83 FR 21021
through 21024), we are applying the FY
2019 SNF market basket increase factor
of 2.4 percent, as stipulated by the BBA
2018, in our determination of the FY
2019 SNF PPS unadjusted federal per
diem rates. As described in this section,
we are adjusting each per diem
component of the federal rates forward
to reflect the BBA 2018 stipulated
update factor for FY 2019.
Tables 4 and 5 reflect the updated
components of the unadjusted federal
rates for FY 2019, prior to adjustment
for case-mix.
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39169
TABLE 4—FY 2019 UNADJUSTED FEDERAL RATE PER DIEM—URBAN
Rate component
Nursing—
case-mix
Therapy—
case-mix
Therapy—
non-case-mix
Non-case-mix
Per Diem Amount ............................................................................................
$181.44
$136.67
$18.00
$92.60
TABLE 5—FY 2019 UNADJUSTED FEDERAL RATE PER DIEM—RURAL
Rate component
Nursing—
case-mix
Therapy—
case-mix
Therapy—
Non-case-mix
Non-case-mix
Per Diem Amount ............................................................................................
$173.34
$157.60
$19.23
$94.31
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3. Case-Mix Adjustment
Under section 1888(e)(4)(G)(i) of the
Act, the federal rate also incorporates an
adjustment to account for facility casemix, using a classification system that
accounts for the relative resource
utilization of different patient types.
The statute specifies that the adjustment
is to reflect both a resident classification
system that the Secretary establishes to
account for the relative resource use of
different patient types, as well as
resident assessment data and other data
that the Secretary considers appropriate.
In the interim final rule with comment
period that initially implemented the
SNF PPS (63 FR 26252, May 12, 1998),
we developed the RUG–III case-mix
classification system, which tied the
amount of payment to resident resource
use in combination with resident
characteristic information. Staff time
measurement (STM) studies conducted
in 1990, 1995, and 1997 provided
information on resource use (time spent
by staff members on residents) and
resident characteristics that enabled us
not only to establish RUG–III, but also
to create case-mix indexes (CMIs). The
original RUG–III grouper logic was
based on clinical data collected in 1990,
1995, and 1997. As discussed in the
SNF PPS proposed rule for FY 2010 (74
FR 22208), we subsequently conducted
a multi-year data collection and analysis
under the Staff Time and Resource
Intensity Verification (STRIVE) project
to update the case-mix classification
system for FY 2011. The resulting
Resource Utilization Groups, Version 4
(RUG–IV) case-mix classification system
reflected the data collected in 2006
through 2007 during the STRIVE
project, and was finalized in the FY
2010 SNF PPS final rule (74 FR 40288)
to take effect in FY 2011 concurrently
with an updated new resident
assessment instrument, version 3.0 of
the Minimum Data Set (MDS 3.0),
which collects the clinical data used for
case-mix classification under RUG–IV.
We note that case-mix classification is
based, in part, on the beneficiary’s need
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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
final 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
timeframes for MDS completion in our
Resident Assessment Instrument (RAI)
Manual. For an MDS to be considered
valid for use in determining payment,
the MDS assessment must be completed
in compliance with the instructions in
the RAI Manual in effect at the time the
assessment is completed. For payment
and quality monitoring purposes, the
RAI Manual consists of both the Manual
instructions and the interpretive
guidance and policy clarifications
posted on the appropriate MDS website
at https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/
MDS30RAIManual.html.
In addition, we note that section 511
of the Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA, Pub. L. 108–173, enacted
December 8, 2003) 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
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MMA add-on for SNF residents with
AIDS is also discussed in Program
Transmittal #160 (Change Request
#3291), issued on April 30, 2004, which
is available online at www.cms.gov/
transmittals/downloads/r160cp.pdf. In
the SNF PPS final rule for FY 2010 (74
FR 40288), we did not address this
certification in that final rule’s
implementation of the case-mix
refinements for RUG–IV, thus allowing
the add-on payment required by section
511 of the MMA to remain in effect for
the time being. (We discuss in section
V.H. of this final rule the specific
payment adjustments that we proposed
under the proposed PDPM to provide
for an appropriate adjustment in the
case mix to compensate for the
increased costs associated with such
residents.)
For the limited number of SNF
residents that qualify for the MMA addon, there is a significant increase in
payments. As explained in the FY 2016
SNF PPS final rule (80 FR 46397
through 46398), on October 1, 2015
(consistent with section 212 of PAMA),
we converted from using ICD–9–CM
code 042 to ICD–10–CM code B20 for
identifying those residents for whom it
is appropriate to apply the AIDS add-on
established by section 511 of the MMA.
For FY 2019, an urban facility with a
resident with AIDS in RUG–IV group
‘‘HC2’’ would have a case-mix adjusted
per diem payment of $453.52 (see Table
6) 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 $1,034.03.
Under section 1888(e)(4)(H), each
update of the payment rates must
include the case-mix classification
methodology applicable for the
upcoming FY. The FY 2019 payment
rates set forth in this final rule reflect
the use of the RUG–IV case-mix
classification system from October 1,
2018, through September 30, 2019. We
list the final case-mix adjusted RUG–IV
payment rates for FY 2019, provided
separately for urban and rural SNFs, in
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Tables 6 and 7 with corresponding casemix values. We use the revised OMB
delineations adopted in the FY 2015
SNF PPS final rule (79 FR 45632, 45634)
to identify a facility’s urban or rural
status for the purpose of determining
which set of rate tables would apply to
the facility. Tables 6 and 7 do not reflect
the add-on for SNF residents with AIDS
enacted by section 511 of the MMA,
which we apply only after making all
other adjustments (such as wage index
and case-mix). Additionally, Tables 6
and 7 do not reflect adjustments which
may be made to the SNF PPS rates as
a result of either the SNF QRP,
discussed in section VI.B of this final
rule, or the SNF VBP program,
discussed in sections III.B.5 and VI.C of
this final rule.
TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN
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RUG–IV category
Nursing
index
RUX ..............................
RUL ..............................
RVX ..............................
RVL ..............................
RHX ..............................
RHL ..............................
RMX .............................
RML ..............................
RLX ..............................
RUC .............................
RUB ..............................
RUA ..............................
RVC ..............................
RVB ..............................
RVA ..............................
RHC .............................
RHB ..............................
RHA ..............................
RMC .............................
RMB .............................
RMA .............................
RLB ..............................
RLA ..............................
ES3 ..............................
ES2 ..............................
ES1 ..............................
HE2 ..............................
HE1 ..............................
HD2 ..............................
HD1 ..............................
HC2 ..............................
HC1 ..............................
HB2 ..............................
HB1 ..............................
LE2 ...............................
LE1 ...............................
LD2 ...............................
LD1 ...............................
LC2 ...............................
LC1 ...............................
LB2 ...............................
LB1 ...............................
CE2 ..............................
CE1 ..............................
CD2 ..............................
CD1 ..............................
CC2 ..............................
CC1 ..............................
CB2 ..............................
CB1 ..............................
CA2 ..............................
CA1 ..............................
BB2 ..............................
BB1 ..............................
BA2 ..............................
BA1 ..............................
PE2 ..............................
PE1 ..............................
PD2 ..............................
PD1 ..............................
PC2 ..............................
PC1 ..............................
PB2 ..............................
VerDate Sep<11>2014
20:44 Aug 07, 2018
2.67
2.57
2.61
2.19
2.55
2.15
2.47
2.19
2.26
1.56
1.56
0.99
1.51
1.11
1.10
1.45
1.19
0.91
1.36
1.22
0.84
1.50
0.71
3.58
2.67
2.32
2.22
1.74
2.04
1.60
1.89
1.48
1.86
1.46
1.96
1.54
1.86
1.46
1.56
1.22
1.45
1.14
1.68
1.50
1.56
1.38
1.29
1.15
1.15
1.02
0.88
0.78
0.97
0.90
0.70
0.64
1.50
1.40
1.38
1.28
1.10
1.02
0.84
Jkt 244001
Therapy
index
1.87
1.87
1.28
1.28
0.85
0.85
0.55
0.55
0.28
1.87
1.87
1.87
1.28
1.28
1.28
0.85
0.85
0.85
0.55
0.55
0.55
0.28
0.28
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
PO 00000
Frm 00010
Nursing
component
Therapy
component
$484.44
466.30
473.56
397.35
462.67
390.10
448.16
397.35
410.05
283.05
283.05
179.63
273.97
201.40
199.58
263.09
215.91
165.11
246.76
221.36
152.41
272.16
128.82
649.56
484.44
420.94
402.80
315.71
370.14
290.30
342.92
268.53
337.48
264.90
355.62
279.42
337.48
264.90
283.05
221.36
263.09
206.84
304.82
272.16
283.05
250.39
234.06
208.66
208.66
185.07
159.67
141.52
176.00
163.30
127.01
116.12
272.16
254.02
250.39
232.24
199.58
185.07
152.41
Fmt 4701
Non-case mix
therapy comp
Non-case mix
component
$255.57
255.57
174.94
174.94
116.17
116.17
75.17
75.17
38.27
255.57
255.57
255.57
174.94
174.94
174.94
116.17
116.17
116.17
75.17
75.17
75.17
38.27
38.27
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
18.00
$92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
92.60
Sfmt 4700
E:\FR\FM\08AUR2.SGM
08AUR2
Total
rate
$832.89
814.74
741.34
665.11
671.66
599.06
616.13
565.31
541.10
631.42
631.42
527.97
541.69
469.09
467.27
472.01
424.82
374.00
414.66
389.25
320.28
403.16
259.78
760.41
595.25
531.72
513.57
426.45
480.90
401.04
453.68
379.26
448.23
375.63
466.38
390.15
448.23
375.63
393.78
332.07
373.82
317.55
415.56
382.89
393.78
361.11
344.78
319.37
319.37
295.77
270.36
252.21
286.70
273.99
237.69
226.80
382.89
364.74
361.11
342.96
310.29
295.77
263.10
39171
Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN—Continued
RUG–IV category
Nursing
index
PB1 ..............................
PA2 ..............................
PA1 ..............................
0.78
0.59
0.54
Therapy
index
........................
........................
........................
Nursing
component
Therapy
component
141.52
107.05
97.98
Non-case mix
therapy comp
Non-case mix
component
18.00
18.00
18.00
92.60
92.60
92.60
........................
........................
........................
Total
rate
252.21
217.73
208.65
TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL
amozie on DSK3GDR082PROD with RULES2
RUG–IV category
Nursing
index
RUX ..............................
RUL ..............................
RVX ..............................
RVL ..............................
RHX ..............................
RHL ..............................
RMX .............................
RML ..............................
RLX ..............................
RUC .............................
RUB ..............................
RUA ..............................
RVC ..............................
RVB ..............................
RVA ..............................
RHC .............................
RHB ..............................
RHA ..............................
RMC .............................
RMB .............................
RMA .............................
RLB ..............................
RLA ..............................
ES3 ..............................
ES2 ..............................
ES1 ..............................
HE2 ..............................
HE1 ..............................
HD2 ..............................
HD1 ..............................
HC2 ..............................
HC1 ..............................
HB2 ..............................
HB1 ..............................
LE2 ...............................
LE1 ...............................
LD2 ...............................
LD1 ...............................
LC2 ...............................
LC1 ...............................
LB2 ...............................
LB1 ...............................
CE2 ..............................
CE1 ..............................
CD2 ..............................
CD1 ..............................
CC2 ..............................
CC1 ..............................
CB2 ..............................
CB1 ..............................
CA2 ..............................
CA1 ..............................
BB2 ..............................
BB1 ..............................
BA2 ..............................
BA1 ..............................
PE2 ..............................
PE1 ..............................
PD2 ..............................
PD1 ..............................
PC2 ..............................
VerDate Sep<11>2014
20:44 Aug 07, 2018
2.67
2.57
2.61
2.19
2.55
2.15
2.47
2.19
2.26
1.56
1.56
0.99
1.51
1.11
1.10
1.45
1.19
0.91
1.36
1.22
0.84
1.50
0.71
3.58
2.67
2.32
2.22
1.74
2.04
1.60
1.89
1.48
1.86
1.46
1.96
1.54
1.86
1.46
1.56
1.22
1.45
1.14
1.68
1.50
1.56
1.38
1.29
1.15
1.15
1.02
0.88
0.78
0.97
0.90
0.70
0.64
1.50
1.40
1.38
1.28
1.10
Jkt 244001
Therapy
index
1.87
1.87
1.28
1.28
0.85
0.85
0.55
0.55
0.28
1.87
1.87
1.87
1.28
1.28
1.28
0.85
0.85
0.85
0.55
0.55
0.55
0.28
0.28
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
PO 00000
Frm 00011
Nursing
component
Therapy
component
$462.82
445.48
452.42
379.61
442.02
372.68
428.15
379.61
391.75
270.41
270.41
171.61
261.74
192.41
190.67
251.34
206.27
157.74
235.74
211.47
145.61
260.01
123.07
620.56
462.82
402.15
384.81
301.61
353.61
277.34
327.61
256.54
322.41
253.08
339.75
266.94
322.41
253.08
270.41
211.47
251.34
197.61
291.21
260.01
270.41
239.21
223.61
199.34
199.34
176.81
152.54
135.21
168.14
156.01
121.34
110.94
260.01
242.68
239.21
221.88
190.67
Fmt 4701
Non-case mix
therapy comp
Non-case mix
component
$294.71
294.71
201.73
201.73
133.96
133.96
86.68
86.68
44.13
294.71
294.71
294.71
201.73
201.73
201.73
133.96
133.96
133.96
86.68
86.68
86.68
44.13
44.13
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
19.23
$94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
94.31
Sfmt 4700
E:\FR\FM\08AUR2.SGM
08AUR2
Total
rate
$852.10
834.76
748.68
675.85
670.48
601.13
609.32
560.77
530.34
659.64
659.64
560.81
557.95
488.59
486.86
479.76
434.67
386.12
416.86
392.59
326.70
398.57
261.59
734.31
576.52
515.83
498.50
415.27
467.29
390.99
441.28
370.19
436.08
366.72
453.41
380.59
436.08
366.72
384.06
325.11
364.99
311.23
404.87
373.66
384.06
352.85
337.24
312.97
312.97
290.43
266.15
248.81
281.76
269.62
234.94
224.54
373.66
356.32
352.85
335.51
304.30
39172
Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL—Continued
RUG–IV category
amozie on DSK3GDR082PROD with RULES2
PC1
PB2
PB1
PA2
PA1
Nursing
index
..............................
..............................
..............................
..............................
..............................
1.02
0.84
0.78
0.59
0.54
Therapy
index
........................
........................
........................
........................
........................
4. 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 proposed to continue this
practice for FY 2019, as we continue to
believe that in the absence of SNFspecific wage data, using the hospital
inpatient wage index data is appropriate
and reasonable for the SNF PPS. As
explained in the update notice for FY
2005 (69 FR 45786), the SNF PPS does
not use the hospital area wage index’s
occupational mix adjustment, as this
adjustment serves specifically to define
the occupational categories more clearly
in a hospital setting; moreover, the
collection of the occupational wage data
also excludes any wage data related to
SNFs. Therefore, we believe that using
the updated wage data exclusive of the
occupational mix adjustment continues
to be appropriate for SNF payments. For
FY 2019, the updated wage data are for
hospital cost reporting periods
beginning on or after October 1, 2014
and before October 1, 2015 (FY 2015
cost report data).
We note that section 315 of the
Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection
Act of 2000 (BIPA, Pub. L. 106–554,
enacted on December 21, 2000)
authorized us to establish a geographic
reclassification procedure that is
specific to SNFs, but only after
collecting the data necessary to establish
a SNF wage index that is based on wage
data from nursing homes. However, to
date, this has proven to be unfeasible
due to the volatility of existing SNF
wage data and the significant amount of
resources that would be required to
improve the quality of that data. More
specifically, auditing all SNF cost
reports, similar to the process used to
audit inpatient hospital cost reports for
purposes of the Inpatient Prospective
Payment System (IPPS) wage index,
would place a burden on providers in
terms of recordkeeping and completion
of the cost report worksheet. As
VerDate Sep<11>2014
20:44 Aug 07, 2018
Jkt 244001
Nursing
component
Therapy
component
176.81
145.61
135.21
102.27
93.60
Frm 00012
Fmt 4701
Non-case mix
component
19.23
19.23
19.23
19.23
19.23
94.31
94.31
94.31
94.31
94.31
........................
........................
........................
........................
........................
discussed in greater detail later in this
section, 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 proposed to continue
to use the same methodology discussed
in the SNF PPS final rule for FY 2008
(72 FR 43423) to address those
geographic areas in which there are no
hospitals, and thus, no hospital wage
index data on which to base the
calculation of the FY 2019 SNF PPS
wage index. For rural geographic areas
that do not have hospitals, and
therefore, lack hospital wage data on
which to base an area wage adjustment,
we would use the average wage index
from all contiguous Core-Based
Statistical Areas (CBSAs) as a
reasonable proxy. For FY 2019, there are
no rural geographic areas that do not
have hospitals, and thus, this
methodology would not be applied. For
rural Puerto Rico, we would not apply
this methodology due to the distinct
economic circumstances that exist there
(for example, due to the close proximity
to one another of almost all of Puerto
Rico’s various urban and non-urban
areas, this methodology would produce
a wage index for rural Puerto Rico that
is higher than that in half of its urban
areas); instead, we would continue to
use the most recent wage index
previously available for that area. For
urban areas without specific hospital
wage index data, we would use the
average wage indexes of all of the urban
areas within the state to serve as a
reasonable proxy for the wage index of
that urban CBSA. For FY 2019, the only
urban area without wage index data
available is CBSA 25980, HinesvilleFort Stewart, GA. The final wage index
PO 00000
Non-case mix
therapy comp
Sfmt 4700
Total
rate
290.43
259.22
248.81
215.87
207.20
applicable to FY 2019 is set forth in
Tables A and B available on the CMS
website at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/WageIndex.html.
In the SNF PPS final rule for FY 2006
(70 FR 45026, August 4, 2005), we
adopted the changes discussed in OMB
Bulletin No. 03–04 (June 6, 2003),
which announced revised definitions
for MSAs and the creation of
micropolitan statistical areas and
combined statistical areas. In adopting
the CBSA geographic designations, we
provided for a 1-year transition in FY
2006 with a blended wage index for all
providers. For FY 2006, the wage index
for each provider consisted of a blend of
50 percent of the FY 2006 MSA-based
wage index and 50 percent of the FY
2006 CBSA-based wage index (both
using FY 2002 hospital data). We
referred to the blended wage index as
the FY 2006 SNF PPS transition wage
index. As discussed in the SNF PPS
final rule for FY 2006 (70 FR 45041),
since the expiration of this 1-year
transition on September 30, 2006, we
have used the full CBSA-based wage
index values.
In the FY 2015 SNF PPS final rule (79
FR 45644 through 45646), we finalized
changes to the SNF PPS wage index
based on the newest OMB delineations,
as described in OMB Bulletin No. 13–
01, beginning in FY 2015, including a 1year 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
E:\FR\FM\08AUR2.SGM
08AUR2
Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
amozie on DSK3GDR082PROD with RULES2
provided in OMB Bulletin No. 15–01 are
based on the application of the 2010
Standards for Delineating Metropolitan
and Micropolitan Statistical Areas to
Census Bureau population estimates for
July 1, 2012 and July 1, 2013. As we
previously stated in the FY 2008 SNF
PPS proposed and final rules (72 FR
25538 through 25539, and 72 FR 43423),
we wish to note that this and all
subsequent SNF PPS rules and notices
are considered to incorporate any
updates and revisions set forth in the
most recent OMB bulletin that applies
to the hospital wage data used to
determine the current SNF PPS wage
index.
On August 15, 2017, OMB announced
that one Micropolitan Statistical Area
now qualifies as a Metropolitan
Statistical Area (OMB Bulletin No. 17–
01). The new urban CBSA is as follows:
• Twin Falls, Idaho (CBSA 46300).
This CBSA is comprised of the principal
city of Twin Falls, Idaho in Jerome
County, Idaho and Twin Falls County,
Idaho.
The OMB bulletin is available on the
OMB website at https://
www.whitehouse.gov/sites/
whitehouse.gov/files/omb/bulletins/
2017/b-17-01.pdf. As we stated in the
proposed rule (83 FR 21028), we did not
have sufficient time to include this
change in the computation of the
proposed FY 2019 wage index, rate
setting, and tables. We also stated that
this new CBSA may affect the budget
neutrality factor and wage indexes,
depending on the impact of the overall
payments of the hospital located in this
new CBSA. In the proposed rule, we
provided an estimate of this new area’s
wage index based on the average hourly
wage, unadjusted for occupational mix,
for new CBSA 46300 and the national
average hourly wages from the wage
data for the proposed FY 2019 wage
index. Currently, provider 130002 is the
only hospital located in Twin Falls
County, Idaho, and there are no
hospitals located in Jerome County,
Idaho. Thus, the wage index for CBSA
46300 is calculated using the average
hourly wage data for one provider
(provider 130002). In this final rule, we
are providing below this new area’s
wage index based on the updated
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average hourly wage, unadjusted for
occupational mix, for new CBSA 46300
and the updated national average hourly
wages from the wage data for the FY
2019 wage index, and we are
incorporating this change into the final
FY 2019 wage index, rate setting and
tables. Taking the unadjusted average
hourly wage of $35.8336 of new CBSA
46300 and dividing by the national
average hourly wage of $42.955567020
results in the FY 2019 wage index of
0.8334 for CBSA 46300.
In the proposed rule, we stated that in
the final rule, we would incorporate this
change into the final FY 2019 wage
index, rate setting and tables. We did
not receive any comments on this issue.
Thus, in this final rule, we have
incorporated this change into the final
FY 2019 wage index, rate setting and
tables. As we proposed, for FY 2019, we
will use the OMB delineations that were
adopted beginning with FY 2015 to
calculate the area wage indexes, with
updates as reflected in OMB Bulletin
Nos. 15–01 and 17–01. As noted above,
the wage index applicable to FY 2019
(with the CBSA update from OMB
Bulletin No. 17–01 specified above) is
set forth in Tables A and B available on
the CMS website at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/WageIndex.html.
Once calculated, we stated in the
proposed rule that we would apply the
wage index adjustment to the laborrelated portion of the federal rate. Each
year, we calculate a revised laborrelated share, based on the relative
importance of labor-related cost
categories (that is, those cost categories
that are labor-intensive and vary with
the local labor market) in the input price
index. In the SNF PPS final rule for FY
2018 (82 FR 36548 through 36566), we
finalized a proposal to revise the laborrelated share to reflect the relative
importance of the 2014-based SNF
market basket cost weights for the
following cost categories: Wages and
Salaries; Employee Benefits;
Professional Fees: Labor-Related;
Administrative and Facilities Support
Services; Installation, Maintenance, and
Repair Services; All Other: LaborRelated Services; and a proportion of
Capital-Related expenses.
PO 00000
Frm 00013
Fmt 4701
Sfmt 4700
39173
We calculate the labor-related relative
importance from the SNF market basket,
and it approximates the labor-related
portion of the total costs after taking
into account historical and projected
price changes between the base year and
FY 2019. The price proxies that move
the different cost categories in the
market basket do not necessarily change
at the same rate, and the relative
importance captures these changes.
Accordingly, the relative importance
figure more closely reflects the cost
share weights for FY 2019 than the base
year weights from the SNF market
basket.
We calculate the labor-related relative
importance for FY 2019 in four steps.
First, we compute the FY 2019 price
index level for the total market basket
and each cost category of the market
basket. Second, we calculate a ratio for
each cost category by dividing the FY
2019 price index level for that cost
category by the total market basket price
index level. Third, we determine the FY
2019 relative importance for each cost
category by multiplying this ratio by the
base year (2014) weight. Finally, we add
the FY 2019 relative importance for
each of the labor-related cost categories
(Wages and Salaries, Employee Benefits,
Professional Fees: Labor-Related,
Administrative and Facilities Support
Services, Installation, Maintenance, and
Repair Services, All Other: Labor-related
services, and a portion of CapitalRelated expenses) to produce the FY
2019 labor-related relative importance.
Table 8 summarizes the updated laborrelated share for FY 2019, based on IGI’s
second quarter 2018 forecast with
historical data through first quarter
2018, compared to the labor-related
share that was used for the FY 2018 SNF
PPS final rule. In the FY 2019 proposed
rule, we presented the FY 2019 laborrelated share based on IGI’s first quarter
2018 forecast and further stated that if
more recent data became 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, laborrelated share relative importance,
forecast error adjustment, and MFP
adjustment in the SNF PPS final rule.
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TABLE 8—LABOR-RELATED RELATIVE IMPORTANCE, FY 2018 AND FY 2019
Relative
importance,
labor-related,
FY 2018
17:2 forecast 1
Relative
importance,
labor-related,
FY 2019
18:2 forecast 2
Wages and salaries .........................................................................................................................................
Employee benefits ...........................................................................................................................................
Professional Fees: Labor-Related ...................................................................................................................
Administrative and facilities support services ..................................................................................................
Installation, Maintenance and Repair Services ...............................................................................................
All Other: Labor Related Services ...................................................................................................................
Capital-related (.391) .......................................................................................................................................
50.3
10.2
3.7
0.5
0.6
2.5
3.0
50.2
10.1
3.7
0.5
0.6
2.5
2.9
Total ..........................................................................................................................................................
70.8
70.5
1 Published
2 Based
in the Federal Register; based on second quarter 2017 IGI forecast.
on second quarter 2018 IGI forecast, with historical data through first quarter 2018.
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Tables 9 and 10 show the RUG–IV
case-mix adjusted federal rates for FY
2019 by labor-related and non-laborrelated components. Tables 9 and 10 do
not reflect the add-on for SNF residents
with AIDS enacted by section 511 of the
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MMA, which we apply only after
making all other adjustments (such as
wage index and case-mix). Additionally,
Tables 9 and 10 do not reflect
adjustments which may be made to the
SNF PPS rates as a result of either the
PO 00000
Frm 00014
Fmt 4701
Sfmt 4700
SNF QRP, discussed in section VI.B. of
this final rule, or the SNF VBP program,
discussed in sections III.B.5. and VI.C.
of this final rule.
BILLING CODE 4120–01–P
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TABLE 9: RUG-IV Case-Mix Adjusted Federal Rates for Urban SNFs
By Labor and Non-Labor Component
VerDate Sep<11>2014
Total
Rate
$832.61
$814.47
$741.10
$664.89
$671.44
$598.87
$615.93
$565.12
$540.92
$631.22
$631.22
$527.80
$541.51
$468.94
$467.12
$471.86
$424.68
$373.88
$414.53
$389.13
$320.18
$403.03
$259.69
$760.16
$595.04
$531.54
$513.40
$426.31
$480.74
$400.90
$453.52
$379.13
$448.08
$375.50
$466.22
20:44 Aug 07, 2018
Labor
Portion
$586.99
$574.20
$522.48
$468.75
$473.37
$422.20
$434.23
$398.41
$381.35
$445.01
$445.01
$372.10
$381.76
$330.60
$329.32
$332.66
$299.40
$263.59
$292.24
$274.34
$225.73
$284.14
$183.08
$535.91
$419.50
$374.74
$361.95
$300.55
$338.92
$282.63
$319.73
$267.29
$315.90
$264.73
$328.69
Jkt 244001
Non-Labor
Portion
$245.62
$240.27
$218.62
$196.14
$198.07
$176.67
$181.70
$166.71
$159.57
$186.21
$186.21
$155.70
$159.75
$138.34
$137.80
$139.20
$125.28
$110.29
$122.29
$114.79
$94.45
$118.89
$76.61
$224.25
$175.54
$156.80
$151.45
$125.76
$141.82
$118.27
$133.79
$111.84
$132.18
$110.77
$137.53
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Frm 00015
I
Total
Rate
$390.02
$448.08
$375.50
$393.65
$331.96
$373.69
$317.44
$415.42
$382.76
$393.65
$360.99
$344.66
$319.26
$319.26
$295.67
$270.27
$252.12
$286.60
$273.90
$237.61
$226.72
$382.76
$364.62
$360.99
$342.84
$310.18
$295.67
$263.01
$252.12
Labor
Portion
$274.96
$315.90
$264.73
$277.52
$234.03
$263.45
$223.80
$292.87
$269.85
$277.52
$254.50
$242.99
$225.08
$225.08
$208.45
$190.54
$177.74
$202.05
$193.10
$167.52
$159.84
$269.85
$257.06
$254.50
$241.70
$218.68
$208.45
$185.42
$177.74
Non-Labor
Portion
$115.06
$132.18
$110.77
$116.13
$97.93
$110.24
$93.64
$122.55
$112.91
$116.13
$106.49
$101.67
$94.18
$94.18
$87.22
$79.73
$74.38
$84.55
$80.80
$70.09
$66.88
$112.91
$107.56
$106.49
$101.14
$91.50
$87.22
$77.59
$74.38
PA2
$217.65
$153.44
$64.21
PAl
Fmt 4701
RUG-IV
Category
LEI
LD2
LDl
LC2
LCl
LB2
LBl
CE2
CEl
CD2
CDl
CC2
CCI
CB2
CBl
CA2
CAl
BB2
BBl
BA2
BAl
PE2
PEl
PD2
PDl
PC2
PCl
PB2
PBl
$208.58
$147.05
$61.53
Sfmt 4725
E:\FR\FM\08AUR2.SGM
08AUR2
I
ER08AU18.000
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RUG-IV
Category
RUX
RUL
RVX
RVL
RHX
RHL
RMX
RML
RLX
RUC
RUB
RUA
RVC
RVB
RVA
RHC
RHB
RHA
RMC
RMB
RMA
RLB
RLA
ES3
ES2
ESl
HE2
HEl
HD2
HDl
HC2
HCl
HB2
HBl
LE2
Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
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BILLING CODE 4120–01–C
Section 1888(e)(4)(G)(ii) of the Act
also requires that we apply this wage
index in a manner that does not result
in aggregate payments under the SNF
PPS that are greater or less than would
otherwise be made if the wage
adjustment had not been made. For FY
2019 (federal rates effective October 1,
2018), we stated in the proposed rule
that we would apply an adjustment to
fulfill the budget neutrality requirement.
We stated we would meet this
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requirement by multiplying each of the
components of the unadjusted federal
rates by a budget neutrality factor equal
to the ratio of the weighted average
wage adjustment factor for FY 2018 to
the weighted average wage adjustment
factor for FY 2019. For this calculation,
we stated we would use the same FY
2017 claims utilization data for both the
numerator and denominator of this
ratio. We define the wage adjustment
factor used in this calculation as the
labor share of the rate component
PO 00000
Frm 00016
Fmt 4701
Sfmt 4700
multiplied by the wage index plus the
non-labor share of the rate component.
We did not receive any comments
regarding our proposed budget
neutrality factor calculation. Thus, we
are finalizing the budget neutrality
methodology as proposed. The final
budget neutrality factor for FY 2019 is
0.9999. We note that this is different
from the budget neutrality factor
(1.0002) provided in the FY 2018 SNF
PPS proposed rule (83 FR 21031) due to
an updated wage index file and updated
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Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
claims file used to calculate the budget
neutrality factor.
As discussed above, we have
historically used, and propose to
continue using, pre-reclassified IPPS
hospital wage data, unadjusted for
occupational mix and the rural and
imputed floors, as the basis for the SNF
wage index. That being said, in the
proposed rule, we noted that we have
received recurring comments in prior
rulemaking (most recently in the FY
2018 SNF PPS final rule (82 FR 36539
through 36541)) regarding the
development of a SNF-specific wage
index. It has been suggested that we
develop a SNF-specific wage index
utilizing SNF cost report wage data
instead of hospital wage data. We have
noted, in response that developing such
a wage index would require a resourceintensive audit process similar to that
used for IPPS hospital data, to improve
the quality of the SNF cost report data
in order for it to be used as part of this
analysis. This audit process is quite
extensive in the case of approximately
3,300 hospitals, and it would be
significantly more so in the case of
approximately 15,000 SNFs. As
discussed previously in this rule, we
believe auditing all SNF cost reports,
similar to the process used to audit
inpatient hospital cost reports for
purposes of the IPPS wage index, would
place a burden on providers in terms of
recordkeeping and completion of the
cost report worksheet. We also believe
that adopting such an approach would
require a significant commitment of
resources by CMS and the Medicare
Administrative Contractors, potentially
far in excess of those required under the
IPPS given that there are nearly five
times as many SNFs as there are
hospitals. Therefore, while we continue
to review all available data and
contemplate the potential
methodological approaches for a SNFspecific wage index in the future, we
continue to believe that in the absence
of the appropriate SNF-specific wage
data, using the pre-reclassified, pre-rural
and imputed floor hospital inpatient
wage data (without the occupational
mix adjustment) is appropriate and
reasonable for the SNF PPS.
As an alternative to a SNF-specific
wage index, it has also been suggested
that we consider adopting certain wage
index policies in use under the IPPS,
such as geographic reclassification or
rural floor. Although we have the
authority under section 315 of BIPA to
establish a geographic reclassification
procedure specific to SNFs under
certain conditions, as discussed
previously, under BIPA, we cannot
adopt a reclassification policy until we
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have collected the data necessary to
establish a SNF-specific wage index.
Thus, we cannot adopt a reclassification
procedure at this time. With regard to
adopting a rural floor policy, as we
stated in the FY 2017 SNF PPS final rule
(82 FR 36540), MedPAC has
recommended eliminating the rural
floor policy (which actually sets a floor
for urban hospitals) from the calculation
of the IPPS wage index (see, for
example, Chapter 3 of MedPAC’s March
2013 Report to Congress on Medicare
Payment Policy, available at https://
medpac.gov/docs/default-source/
reports/mar13_ch03.pdf, which notes
on page 65 that in 2007, MedPAC had
‘‘. . . recommended eliminating these
special wage index adjustments and
adopting a new wage index system to
avoid geographic inequities that can
occur due to current wage index
policies (Medicare Payment Advisory
Commission 2007b.’’). As we stated in
the FY 2017 SNF PPS final rule, if we
were to adopt the rural floor under the
SNF PPS, we believe that the SNF PPS
wage index could become vulnerable to
problems similar to those that MedPAC
identified in its March 2013 Report to
Congress.
Given the perennial nature of these
comments and responses on the SNF
PPS wage index policy, in the proposed
rule (89 FR 21032) we invited further
comments on the issues discussed
above. Specifically, we requested
comment on how a SNF-specific wage
index may be developed without
creating significant administrative
burdens for providers, CMS, or its
contractors. Further, we requested
comments on specific alternatives we
may consider in future rulemaking
which could be implemented in
advance of, or in lieu of, a SNF-specific
wage index. A discussion of the
comments we received, along with our
responses, appear below.
Comment: One commenter
encouraged CMS to continue using
hospital wage data when determining
the SNF wage index, since it did not
have a proposal for how to obtain a
SNF-specific wage index in a manner
that does not cause burden on
providers.
Response: We appreciate the
commenter’s encouragement to continue
using hospital wage data as a proxy for
a SNF wage index.
Comment: Several commenters
recommend that CMS pursue the
establishment of a SNF-specific wage
index. These commenters proposed
phased-in recommendations to trim
hospital wage data (as an interim step),
to reflect positions staffed in nursing
homes, allow for a reclassification
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Sfmt 4700
39177
system, account for occupational mix
differences between hospitals and each
post-acute care (PAC) setting using
published BLS data, and apply a rural
floor. Further, if determining a SNF
wage index using SNF cost report data
is too administratively complex, it was
recommended that Payroll-based
Journal (PBJ) data be used. Finally, the
commenters recommended
communicating with hospitals through
Medicare Learning Network (MLN)
transmittals for education and technical
support.
Response: We appreciate the
commenter’s recommendation for
collecting SNF cost report wage data to
establish a SNF-specific wage index. We
note that, consistent with the preceding
discussion in this final rule as well as
our previous responses to these
recurring comments (most recently
published in the FY 2018 SNF PPS final
rule (82 FR 36540 through 36541)),
developing such a wage index would
require a resource-intensive audit
process similar to that used for IPPS
hospital data, to improve the quality of
the SNF cost report data in order for it
to be used as part of this analysis.
Further, we appreciate these
commenters’ suggestion that we modify
the current hospital wage data used to
construct the SNF PPS wage index to
reflect the SNF environment more
accurately by trimming hospital wage
data to reflect positions staffed in
nursing homes, weighing it by
occupational mix data published by the
BLS, and using PBJ data. While we
consider whether or not such an
approach may constitute an interim step
in the process of developing a SNFspecific wage index, we would note that
other provider types also use the
hospital wage index as the basis for
their associated wage index. As such,
we believe that such a recommendation
should be part of a broader discussion
on wage index reform across Medicare
payment systems. With regard to the PBJ
recommendation, we will pass this
comment to our colleagues managing
that initiative for further consideration.
With regard to reclassification and
rural floor, as discussed above, section
315 of BIPA authorized us to establish
a geographic reclassification procedure
that is specific to SNFs, only after
collecting the data necessary to establish
a SNF-specific wage index that is based
on data from nursing homes. However,
to date this has been infeasible 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. Furthermore, we do
not believe that using hospital
reclassification data would be
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appropriate as this data is specific to the
requesting hospitals and it may or may
not apply to a given SNF in a given
instance. With regard to implementing a
rural floor, we do not believe it would
be prudent at this time to adopt such a
policy, because MedPAC has
recommended eliminating the rural
floor policy from the calculation of the
IPPS wage index (see, for example,
Chapter 3 of MedPAC’s March 2013
Report to Congress on Medicare
Payment Policy, available at https://
medpac.gov/documents/reports/mar13_
entirereport.pdf, which notes on page 65
that in 2007, MedPAC had
‘‘. . . recommended eliminating these
special wage index adjustments and
adopting a new wage index system to
avoid geographic inequities that can
occur due to current wage index
policies (Medicare Payment Advisory
Commission 2007b.’’) If we adopted the
rural floor at this time under the SNF
PPS, we believe that, the SNF PPS wage
index could become vulnerable to
problems similar to those that MedPAC
identified in its March 2013 Report to
Congress.
While we continue to review all
available data and contemplate the
potential methodological approaches for
a SNF-specific wage index in the future,
we continue to believe that in the
absence of the appropriate SNF-specific
wage data, using the pre-reclassified,
pre-rural and imputed floor hospital
inpatient wage data (without the
occupational mix adjustment) is
appropriate and reasonable for the SNF
PPS. We believe the commenters’
recommendations should be part of a
broader discussion of wage index reform
across Medicare payment systems. In
the event that a SNF-specific wage
index is implemented in the future,
CMS will provide education and
support in a manner it deems
appropriate, which may include MLN
transmittals. We will continue to
monitor closely research efforts
surrounding the development of an
alternative hospital wage index for the
IPPS and the potential impact or
influence of that research on the SNF
PPS.
5. SNF Value-Based Purchasing Program
Beginning with payment for services
furnished on October 1, 2018, section
1888(h) of the Act requires the Secretary
to reduce the adjusted Federal per diem
rate determined under section
1888(e)(4)(G) of the Act otherwise
applicable to a SNF for services
furnished during a fiscal year by 2
percent, and to adjust the resulting rate
for a SNF by the value-based incentive
payment amount earned by the SNF
based on the SNF’s performance score
for that fiscal year under the SNF VBP
Program. To implement these
requirements, we proposed to add a new
paragraph (f) to § 413.337. We did not
receive any public comments regarding
this proposal. Therefore, we are
finalizing the addition of paragraph (f)
to § 413.337 as proposed, without
modification.
Please see section VI.C. of this final
rule for further information regarding
the SNF VBP Program, including a
discussion of the methodology we will
use to make the payment adjustments.
6. Adjusted Rate Computation Example
Using the hypothetical SNF XYZ,
Table 11 shows the adjustments made to
the federal per diem rates (prior to
application of any adjustments under
the SNF QRP and SNF VBP programs as
discussed above) to compute the
provider’s actual per diem PPS payment
for FY 2019. We derive the Labor and
Non-labor columns from Table 9. The
wage index used in this example is
based on the FY 2019 SNF PPS wage
index that appears in Table A available
on the CMS website at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
WageIndex.html. As illustrated in Table
11, SNF XYZ’s total PPS payment for FY
2019 would equal $48,779.14.
TABLE 11—ADJUSTED RATE COMPUTATION EXAMPLE SNF XYZ: LOCATED IN FREDERICK, MD (URBAN CBSA 43524),
WAGE INDEX: 0.9880
[See wage index in Table A] 1
RUG–IV group
Wage
index
Labor
RVX ..................................................
ES2 ..................................................
RHA ..................................................
CC2 2 ................................................
BA2 ..................................................
Adjusted
labor
Non-labor
Adjusted
rate
Percent
adjustment
Medicare
days
Payment
$522.48
419.50
263.59
242.99
167.52
0.9880
0.9880
0.9880
0.9880
0.9880
$516.21
414.47
260.43
240.07
165.51
$218.62
175.54
110.29
101.67
70.09
$734.83
590.01
370.72
341.74
235.60
$734.83
590.01
370.72
779.17
235.60
14
30
16
10
30
$10,287.62
17,700.30
5,931.52
7,791.70
7,068.00
..................
..................
..................
..................
..................
..................
100
48,779.14
1 Available
2 Reflects
on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
a 128 percent adjustment from section 511 of the MMA.
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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 casemix classification system discussed in
section III.B.3. of this final rule. This
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approach includes an administrative
presumption that utilizes a beneficiary’s
initial classification in one of the upper
52 RUGs of the current 66-group RUG–
IV case-mix classification system to
assist in making certain SNF level of
care determinations.
In accordance with the regulations at
§ 413.345, we include in each update of
the federal payment rates in the Federal
Register a discussion of the resident
classification system that provides the
basis for case-mix adjustment. Under
that discussion, we designate those
specific classifiers under the case-mix
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Fmt 4701
Sfmt 4700
classification system that represent the
required SNF level of care, as provided
in § 409.30. As set forth in the FY 2011
SNF PPS update notice (75 FR 42910),
this designation reflects an
administrative presumption under the
66-group RUG–IV system that
beneficiaries who are correctly assigned
to one of the upper 52 RUG–IV groups
on the initial 5-day, Medicare-required
assessment are automatically classified
as meeting the SNF level of care
definition up to and including the
assessment reference date (ARD) on the
5-day Medicare-required assessment.
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A beneficiary assigned to any of the
lower 14 RUG–IV groups is not
automatically classified as either
meeting or not meeting the definition,
but instead receives an individual level
of care determination using the existing
administrative criteria. This
presumption recognizes the strong
likelihood that beneficiaries assigned to
one of the upper 52 RUG–IV groups
during the immediate post-hospital
period require a covered level of care,
which would be less likely for those
beneficiaries assigned to one of the
lower 14 RUG–IV groups.
In the July 30, 1999 final rule (64 FR
41670), we indicated that we would
announce any changes to the guidelines
for Medicare level of care
determinations related to modifications
in the case-mix classification structure.
The FY 2018 final rule (82 FR 36544)
further specified that we would
henceforth disseminate the standard
description of the administrative
presumption’s designated groups via the
SNF PPS website at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
index.html (where such designations
appear in the paragraph entitled ‘‘Case
Mix Adjustment’’), and would publish
such designations in rulemaking only to
the extent that we actually intend to
make changes in them. (We discuss in
section V.G. of this final rule the
modifications to the administrative level
of care presumption that we are
finalizing in order to accommodate the
PDPM case-mix classification system.)
However, we note that this
administrative presumption policy does
not supersede the SNF’s responsibility
to ensure that its decisions relating to
level of care are appropriate and timely,
including a review to confirm that the
services prompting the assignment of
one of the designated case-mix
classifiers (which, in turn, serves to
trigger the administrative presumption)
are themselves medically necessary. As
we explained in the FY 2000 SNF PPS
final rule (64 FR 41667), the
administrative presumption is itself
rebuttable in those individual cases in
which the services actually received by
the resident do not meet the basic
statutory criterion of being reasonable
and necessary to diagnose or treat a
beneficiary’s condition (according to
section 1862(a)(1) of the Act).
Accordingly, the presumption would
not apply, for example, in those
situations in which a resident’s
assignment to one of the upper groups
is itself based on the receipt of services
that are subsequently determined to be
not reasonable and necessary. Moreover,
we want to stress the importance of
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careful monitoring for changes in each
patient’s condition to determine the
continuing need for Part A SNF benefits
after the ARD of the 5-day assessment.
B. Consolidated Billing
Sections 1842(b)(6)(E) and 1862(a)(18)
of the Act (as added by section 4432(b)
of the BBA 1997) require a SNF to
submit consolidated Medicare bills to
its Medicare Administrative Contractor
(MAC) for almost all of the services that
its residents receive during the course of
a covered Part A stay. In addition,
section 1862(a)(18) of the Act places the
responsibility with the SNF for billing
Medicare for physical therapy,
occupational therapy, and speechlanguage pathology services that the
resident receives during a noncovered
stay. (Please refer to section VI.A. of this
final rule for a discussion of a revision
to the regulation text that describes a
beneficiary’s status as a SNF ‘‘resident’’
for consolidated billing purposes.)
Section 1888(e)(2)(A) of the Act
excludes a small list of services from the
consolidated billing provision
(primarily those services furnished by
physicians and certain other types of
practitioners), which remain separately
billable under Part B when furnished to
a SNF’s Part A resident. These excluded
service categories are discussed in
greater detail in section V.B.2. of the
May 12, 1998 interim final rule (63 FR
26295 through 26297).
A detailed discussion of the
legislative history of the consolidated
billing provision is available on the SNF
PPS website at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/
Legislative_History_04152015.pdf. In
particular, section 103 of the Medicare,
Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (BBRA, Pub. L.
106–113, enacted on November 29,
1999) amended section 1888(e)(2)(A) of
the Act by further excluding a number
of individual high-cost, low probability
services, identified by Healthcare
Common Procedure Coding System
(HCPCS) codes, within several broader
categories (chemotherapy items,
chemotherapy administration services,
radioisotope services, and customized
prosthetic devices) that otherwise
remained subject to the provision. We
discuss this BBRA amendment in
greater detail in the SNF PPS proposed
and final rules for FY 2001 (65 FR 19231
through 19232, April 10, 2000, and 65
FR 46790 through 46795, July 31, 2000),
as well as in Program Memorandum
AB–00–18 (Change Request #1070),
issued March 2000, which is available
online at www.cms.gov/transmittals/
downloads/ab001860.pdf.
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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 the proposed rule (83 FR
21033), we specifically invited public
comments identifying HCPCS codes in
any of these four service categories
(chemotherapy items, chemotherapy
administration services, radioisotope
services, and customized prosthetic
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devices) representing recent medical
advances that might meet our criteria for
exclusion from SNF consolidated
billing. We stated that we may consider
excluding a particular service if it met
our criteria for exclusion as specified
above. We further stated that
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, we stated in the proposed
rule that, in the event that we identify
through the current rulemaking cycle
any new services that would actually
represent a substantive change in the
scope of the exclusions from SNF
consolidated billing, we would identify
these additional excluded services by
means of the HCPCS codes that are in
effect as of a specific date (in this case,
as of October 1, 2018). By making any
new exclusions in this manner, we
could similarly accomplish routine
future updates of these additional codes
through the issuance of program
instructions.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the consolidated billing
aspects of the SNF PPS. A discussion of
these comments, along with our
responses, appears below.
Comment: Some commenters
reiterated previous recommendations
regarding the exclusion of certain drugs
from consolidated billing that had been
submitted and addressed repeatedly in
a number of prior rulemaking cycles.
One such recommendation involved
excluding the commonly used prostate
cancer drug Lupron® (leuprolide
acetate). Other commenters once again
raised the issue of nursing home
residents bringing their own
medications, as a means of minimizing
the nursing home’s cost of caring for the
resident. Still another reiterated
previous recommendations to exclude a
broader range of expensive drugs
beyond the category of chemotherapy
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alone, citing anecdotal evidence that
leaving such drugs within the SNF PPS
bundle may, among other things, create
a disincentive for admitting those
patients who require them.
Response: For the reasons discussed
previously in prior rulemaking, the
particular drugs cited in these
comments remain subject to
consolidated billing. In the case of
leuprolide acetate, the most recent
discussion appears in the SNF PPS final
rule for FY 2015 (79 FR 45642, August
5, 2014), which explained that this drug
is unlikely to meet the criterion of ‘‘low
probability’’ specified in the BBRA.
Regarding the issue of nursing homes
having residents supply their own
medications, the SNF PPS final rule for
FY 2018 (82 FR 36548, August 4, 2017)
explained that the applicable terms of
the SNF’s provider agreement would
preclude this practice, in that they
require the SNF to accept Medicare’s
payment for covered services as
payment in full. Finally, the issue of
establishing a broader exclusion that
would encompass expensive nonchemotherapy drugs was addressed in
the SNF PPS final rule for FY 2017 (81
FR 51985, August 5, 2016), which
explained that existing law does not
provide for such an expansion. In
addition, it is worth noting in this
context that in accounting more
accurately for the costs of NTA services
such as drugs, the PDPM model has the
potential to ameliorate some of the
concerns cited in these comments.
Comment: One commenter urged us
to expand the scope of the
chemotherapy exclusion, advancing an
interpretation of the Secretary’s
authority under section
1888(e)(2)(A)(iii)(II) of the Act to
designate ‘‘additional’’ chemotherapy
items for exclusion as not actually being
restricted to the types of ‘‘high-cost, low
probability’’ chemotherapy items and
services described elsewhere in that
provision, and further suggesting that
identifying a given item or service as
either ‘‘high-cost’’ or ‘‘low probability’’
alone should be sufficient grounds for
its exclusion. The commenter also
submitted well over 100 codes that it
suggested should be added to the
chemotherapy portion of the exclusion
list. The commenter reiterated previous
recommendations to expand the existing
chemotherapy exclusion to encompass
related drugs such as anti-emetics (antinausea drugs)—which, while they do
not in themselves fight cancer, are
commonly administered along with the
chemotherapy drug to ameliorate its
side effects. While we have, in fact,
already addressed such
recommendations repeatedly in
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previous rulemaking (most recently, in
the FY 2015 SNF PPS final rule (79 FR
45642, August 5, 2014)), the commenter
cited in further support of its position
the similarity between the
recommended approach and the
existing policy under the dialysis
exclusion from consolidated billing, in
which the exclusion encompasses
related services along with the dialysis
itself. In addition, the commenter
reiterated previous concerns about the
complexity of the existing set of
consolidated billing exclusions,
suggesting that it should be streamlined
and simplified.
Response: Approximately two-thirds
of the codes that the commenter
submitted already appear on the
chemotherapy exclusion list. Of the
remaining codes, several were already
in existence in 1999 when the BBRA
enacted the statutory ranges of excluded
codes, but were skipped over by those
ranges; as discussed repeatedly in
previous rulemaking—most recently, in
the FY 2018 SNF PPS final rule (82 FR
36547, August 4, 2017)—this action
indicates that such drugs were intended
to remain within the SNF PPS bundle,
subject to the BBRA Conference Report’s
provision for a GAO review of the code
set that was conducted the following
year. Still others were codes such as
those for anti-emetic (anti-nausea)
drugs, which serve to address the
chemotherapy drug’s side effects rather
than actually fighting the cancer itself;
as we have noted repeatedly in prior
rulemaking (most recently, in the FY
2015 SNF PPS final rule, 79 FR 45642,
August 5, 2014), such drugs do not, in
fact, represent ‘‘chemotherapy’’ (that is,
cancer-fighting) drugs within the
meaning of this exclusion. Further, the
commenter’s proposed interpretation
suggesting that the exclusion is not
restricted to ‘‘high-cost, low
probability’’ chemotherapy services, or
that a given chemotherapy service need
only be either ‘‘high-cost’’ or ‘‘low
probability’’ alone in order to qualify for
exclusion would not be consistent with
Congress’ stated intent with respect to
this provision. In fact, in the above-cited
BBRA Conference Report (H.R. Rep.
106–479 at 854 (1999) (Conf. Rep.)), the
Congress clearly specified the overall
purpose of this provision: ‘‘This
provision is an attempt to exclude from
the PPS certain services and costly items
that are provided infrequently in SNFs’’
(emphasis added); thus, any
‘‘additional’’ chemotherapy services that
the Secretary might designate for
exclusion under this authority, like
those already excluded, would remain
subject to both the ‘‘high-cost’’ and ‘‘low
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probability’’ thresholds. Regarding the
commenter’s further suggestion that the
dialysis exclusion might serve as a
possible precedent for broadening the
chemotherapy exclusion to include
related services, we note that as one of
the BBA 1997’s original set of
consolidated billing exclusions enacted
in clause (ii) of section 1888(e)(2)(A) of
the Act, the dialysis exclusion
fundamentally differs from the BBRA’s
subsequent, more targeted set of
exclusions in clause (iii) of that section
(such as the one for chemotherapy) in
that the BBA 1997 excluded entire
service categories from consolidated
billing, whereas the BBRA focused more
narrowly on excluding certain
designated ‘‘high-cost, low probability’’
services, identified by HCPCS code,
within several broader categories that
otherwise remained subject to the
provision. In the FY 2015 SNF PPS final
rule (79 FR 45644, August 5, 2014), we
specifically contrasted the relatively
broad exclusions enacted in the BBA
1997 with the more narrowly targeted
BBRA exclusions, in the context of
another one of the latter exclusions that
involves radioisotope services. In that
context, we noted that the statutory
exclusion for ‘‘radioisotope services’’ at
section 1888(e)(2)(A)(iii)(IV) of the Act
stands in marked contrast, for example,
to the ones for dialysis and
erythropoietin (EPO) at section
1888(e)(2)(A)(ii) of the Act, which
consist of—and, in fact, are defined
by—explicit cross-references to the
corresponding Part B benefit categories
appearing in sections 1861(s)(2)(F) and
1861(s)(2)(O) of the Act, respectively.
Under this framework, the scope of the
consolidated billing provision’s dialysis
exclusion is effectively defined by the
scope of coverage under the separate
Part B dialysis benefit at section
1861(s)(2)(F) of the Act, which would
encompass dialysis-related services
along with the dialysis itself. By
contrast, the more targeted BBRA
exclusions in areas such as
chemotherapy and radioisotope services
focus specifically on those particular
services that are directly designated as
in themselves meeting the applicable
criteria for exclusion.
Finally, regarding the comment about
the complexity of this provision, in the
FY 2010 SNF PPS final rule (74 FR
40355, August 11, 2009), we noted in
response to a previous, similar comment
that while the commenter’s interest in
promoting improved ease of
administration is understandable,
current law contains no authority to
effect a comprehensive overhaul of the
existing requirements administratively.
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However, we would also note in this
context that we continue to conduct an
active educational and training
initiative on the consolidated billing
provision that includes the following:
• A recently updated and expanded
set of consolidated billing instructions
in Chapter 6 of the Medicare Claims
Processing Manual (available online at
https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/
Downloads/clm104c06.pdf), at §§ 10–
20.6;
• Addressing questions that arise on
this topic during CMS’s recurring
nationwide SNF/Long-Term Care Open
Door Forums (https://www.cms.gov/
Outreach-and-Education/Outreach/
OpenDoorForums/ODF_SNFLTC.html);
• Development of sample model
agreements between SNFs and their
suppliers, which are posted online for
review at our ‘‘Best Practices’’ website
(at https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/BestPractices.html); and
• Creation of a web-based training
(WBT) module accessible from the
Medicare Learning Network (MLN)
website at https://www.cms.gov/
Outreach-and-Education/MedicareLearning-Network-MLN/MLNProducts/
WebBasedTraining.html, which offers
interactive online training on
consolidated billing.
Comment: One commenter
recommended for exclusion a pair of
oral chemotherapy drugs, ZYTIGA®
(abiraterone acetate) and ERLEADA®
(apalutamide), which are used in
treating certain uncommon and
otherwise resistant forms of prostate
cancer. The commenter acknowledged
our previous discussion of oral drugs in
this context in the FY 2017 SNF PPS
final rule (81 FR 51985, August 5, 2016),
which described them as not reasonably
characterized as meeting the BBRA’s
chemotherapy exclusion criterion of
‘‘requiring special staff expertise to
administer.’’ However, the commenter
then went on to point out that the
accompanying Conference Report
language (H. Conf. Rep. No. 106–479 at
854), in discussing the statutory
exclusion of ‘‘high-cost, low
probability’’ chemotherapy items, lists
as examples those drugs that ‘‘. . . are
not typically administered in a SNF, or
are exceptionally expensive, or are
given as infusions, thus requiring
special staff expertise to administer’’
(emphasis added). Thus, the commenter
suggested that while the Conference
Report language itself specifies ‘‘highcost, low probability’’ as the applicable
standard for the chemotherapy
exclusion, its use of the word ‘‘or’’ in
the specific context of ‘‘requiring special
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39181
staff expertise to administer’’ identifies
this particular criterion as merely an
illustrative example that is not an
absolute prerequisite for meeting the
standard in all cases. The commenter
also acknowledged our explanation in
the FY 2015 SNF PPS final rule (79 FR
45642, August 5, 2014) in connection
with a previous comment regarding
ZYTIGA® and another oral
chemotherapy drug, REVLIMID®
(lenalidomide), that it would not be
operationally feasible to utilize a
miscellaneous ‘‘not otherwise specified’’
(NOS) code such as J8999 to effect such
an exclusion, and then urged us to
consider other options, such as
establishing a separate code or modifier
for the particular drugs in question, or
utilizing the already-existing National
Drug Codes (NDCs) that are specific to
those drugs. Other commenters
similarly recommended the oral
chemotherapy drugs REVLIMID® and
GLEEVEC® (imatinib mesylate) for
exclusion.
Response: We believe that the
commenter’s point that an oral
chemotherapy drug which does not
require ‘‘special staff expertise to
administer’’ can nonetheless qualify for
exclusion as long as it can otherwise
meet the ‘‘high-cost, low probability’’
standard merits further consideration.
However, we note that the four oral
chemotherapy drugs at issue here differ
from previously-excluded, non-oral
chemotherapy drugs in that they are not
covered under Part B. We note that
while Part B would authorize coverage
for drugs (including those
chemotherapy drugs that are excluded
from consolidated billing under section
1888(e)(2)(A)(iii)(II) of the Act) as either
an incident to a physician’s professional
services (under section 1861(s)(2)(A) of
the Act) or as an outpatient hospital
service (under section 1861(s)(2)(B) of
the Act), this authority is specifically
limited in both cases to those drugs
‘‘that are not usually self-administered
by the patient,’’ thus effectively
excluding oral drugs as a class. Further,
while Part B does, in fact, include a
specific benefit category for oral
chemotherapy drugs (at section
1861(s)(2)(Q) of the Act), that benefit is
restricted to those with the same
indication and active ingredient(s) as a
covered non-oral anti-cancer drug,
which is not the case for the specific
four drugs in question.
Because the drugs at issue here would
not be covered under Part B, we believe
that the applicable provisions at section
1888(e)(2)(A) may not provide a basis
for excluding them from consolidated
billing. Accordingly, because of the
need for further consideration of this
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issue, we are unable to adopt the
commenters’ recommendations at this
time.
Comment: A few commenters
reiterated previous recommendations to
expand the existing exclusion for
certain high-intensity outpatient
hospital services to encompass nonhospital settings as well.
Response: Similar concerns have been
raised and addressed repeatedly in prior
rulemaking (most recently, in the FY
2018 SNF PPS final rule (82 FR 36547,
August 4, 2017)), as follows:
• As noted in numerous previous
rules, as well as in Medicare Learning
Network (MLN) Matters article SE0432
(available online at https://
www.cms.gov/Outreach-and-Education/
Medicare-Learning-Network-MLN/
MLNMattersArticles/Downloads/
SE0432.pdf), the rationale for
establishing this exclusion was to
address those types of services that are
so far beyond the normal scope of SNF
care that they require the intensity of the
hospital setting in order to be furnished
safely and effectively. Moreover, when
the Congress enacted the consolidated
billing exclusion for certain RHC and
FQHC services in section 410 of the
MMA, the accompanying legislative
history’s description of present law
directly acknowledged the hospitalspecific nature of this exclusion.
• Ever since its inception, this
exclusion was intended to be hospitalspecific; as explained in the original
SNF PPS interim final rule (63 FR
26298, May 12, 1998), this exclusion
was created within the context of the
concurrent development of a new PPS
specifically for outpatient hospital
services, reflecting the need to delineate
the respective areas of responsibility for
the SNF under the consolidated billing
provision, and for the hospital under the
outpatient bundling provision, with
regard to these services. This point was
further reinforced in the subsequent
final rule for FY 2000 (64 FR 41676, July
30, 1999), in which we explained that
a key concern underlying the
development of the consolidated billing
exclusion of certain outpatient hospital
services specifically involved the need
to distinguish those services that
comprise the SNF bundle from those
that will become part of the outpatient
hospital bundle that is currently being
developed in connection with the
outpatient hospital PPS. Accordingly,
we noted at that time that we would not
be extending the outpatient hospital
exclusion from consolidated billing to
encompass any other, freestanding
settings.
• Finally, the FY 2010 final rule (74
FR 40355, August 11, 2009), while
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acknowledging that advances in medical
technology over time may make it
feasible to perform such high-intensity
outpatient services more widely in
nonhospital settings, then went on to
cite the FY 2006 final rule (70 FR 45049,
August 4, 2005) in noting that such a
development would not argue in favor
of excluding the nonhospital
performance of the service from
consolidated billing, but rather, would
call into question whether the service
should continue to be excluded from
consolidated billing at all, even when
performed in the hospital setting.
Comment: Several commenters
reiterated comments submitted
previously during the FY 2016
rulemaking cycle in the context of the
SNF VBP provision, in which they had
sought to portray a portable x-ray
service’s transportation and setup as a
separately billable ‘‘physician’’ service
by suggesting that such activities should
appropriately be regarded as part of the
diagnostic test’s professional component
(PC) for interpreting the test results
rather than the technical component
(TC) for performing the test itself. They
now reiterated those same comments in
the context of the PDPM, and
additionally indicated that allowing
these services to be paid separately
outside of the Part A bundle would be
consistent with the proration policy that
applies under Part B when a single
portable x-ray visit serves multiple
patients, under which the trip itself is
allocated among all of the patients
served (regardless of payment source) in
order to calculate the prorated payment
amount that applies specifically to each
of the Part B patients. Some of the
commenters also cited certain HCPCS
codes, such as R0076 (‘‘transportation of
portable EKG to facility or location, per
patient’’), and suggested that all of the
‘‘medical and other health services’’
enumerated in section 1861(s) of the
Act—including the diagnostic test
benefit at section 1861(s)(3) of the Act—
should be regarded as excluded
‘‘physician’’ services.
Response: As we explained
previously in the FY 2016 SNF PPS
final rule (80 FR 46408, August 4, 2015),
we do not share the view of those
commenters who would categorize a
portable x-ray service’s transportation
and setup as part of the separately
billable PC. In that discussion, we cited
§ 90.5 of the Medicare Claims
Processing Manual, Chapter 13
(available online at https://
www.cms.gov/Regulations-andGuidance/Guidance/Manuals/
Downloads/clm104c13.pdf), which
states that the bundled TC (to which
consolidated billing applies) specifically
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includes ‘‘any associated transportation
and setup costs.’’ As indicated in the FY
2016 SNF PPS final rule (80 FR 46408,
August 4, 2015), to be considered a
separately billable ‘‘physician’’ service
in this context, a given service must not
only be furnished personally by a
physician, but must actually be a type
of service that ordinarily requires such
performance; we further noted that a
portable x-ray service’s transportation
and setup would never meet these
criteria, as the service’s excluded PC
relates solely to reading the x-ray rather
than taking it, and the physician’s
personal performance clearly would not
be required for activities such as driving
the supplier’s vehicle to the SNF, or
setting up the equipment once it arrives
there.
Further, we believe the comments that
cited the proration policy in this context
(which involves a single portable x-ray
trip that serves multiple patients) may
reflect a certain amount of
misunderstanding about the proration
policy’s actual nature and purpose. As
explained in the Medicare Physician
Fee Schedule (MPFS) final rule for
calendar year (CY) 2016 (80 FR 70886,
November 16, 2015), the reason for
allocating such a trip among all of the
patients served is to ensure that
Medicare Part B should not pay for more
than its share of the transportation costs
for portable x-ray services (80 FR 71068
through 71069). However, while all of
the patients served (both the Part B and
non-Part B patients) would be included
in calculating the proration itself, the
resulting prorated amount would be
payable only for the Part B patients. By
contrast, for any Part A SNF residents
served by the same trip, the
transportation cost associated with the
portable x-ray service would be
subsumed in the SNF’s payment to the
supplier for the bundled TC, as
discussed above. In terms of Part A
payment, that bundled TC, in turn,
would be included (along with all other
bundled services) within the global PPS
per diem that the SNF receives for the
covered Part A stay itself. Moreover, the
SNF’s actual payment amount to its
supplier in this scenario would not be
tied to the prorated payment amount
made for the Part B patients served on
the same trip; as explained in § 70.4 of
the Medicare Benefit Policy Manual,
Chapter 8 (available online at https://
www.cms.gov/Regulations-andGuidance/Guidance/Manuals/
Downloads/bp102c08.pdf), for a
bundled service, the specific details of
the ensuing payment arrangement
between the SNF and the outside
supplier (such as the actual payment
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amount and timeframe) represent a
private, ‘‘marketplace’’ transaction that
is negotiated between the parties
themselves.
Regarding the suggestion that all of
the Part B ‘‘medical and other health
services’’ specified in section 1861(s) of
the Act (including diagnostic tests such
as portable x-ray services) should be
considered physician services, we note
that the physician services benefit at
section 1861(s)(1) of the Act actually
represents only a small subset of the
overall ‘‘medical and other health
services’’ enumerated throughout
section 1861(s) of the Act, and that the
diagnostic test benefit at section
1861(s)(3) of the Act (which would
encompass the TC for a portable x-ray
service) is, in fact, a separate and
distinct benefit category from the one at
section 1861(s)(1) of the Act for
physician services. Finally, regarding
the comments on certain HCPCS codes,
we acknowledge that among the various
consolidated billing exclusions listed in
section 1888(e)(2)(A)(ii) of the Act are
‘‘transportation costs of
electrocardiogram equipment for
electrocardiogram test services (HCPCS
code R0076).’’ However, that portion of
the law additionally specifies that this
particular exclusion is in effect ‘‘only
with respect to services furnished
during 1998;’’ accordingly, the statutory
exclusion for these particular services
has long since expired.
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 SNFlevel 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, SNFlevel 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 final rule for the SNF
PPS also apply to all non-CAH swingbed rural hospitals. A complete
discussion of assessment schedules, the
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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, nonCAH swing-bed rural hospitals are
required to complete an MDS 3.0 swingbed assessment which is limited to the
required demographic, payment, and
quality items. The latest changes in the
MDS for swing-bed rural hospitals
appear on the SNF PPS website at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/. We refer readers to
section V.D.2. of this final rule for a
discussion of the revisions we are
finalizing to the MDS 3.0 swing-bed
assessment effective October 1, 2019.
V. Revisions to SNF PPS Case-Mix
Classification Methodology
A. Background and General Comments
In the FY 2019 SNF PPS proposed
rule, we discussed our proposed
changes to the SNF PPS, specifically the
proposed comprehensive revisions to
the SNF PPS case-mix classification
system whereby we proposed to replace
the current RUG–IV system with the
Patient Driven Payment Model (PDPM)
effective October 1, 2019. In section V.A
of the FY 2019 SNF PPS proposed rule
(83 FR 21034–21036), we discuss the
basis for the proposed PDPM and our
reasons for proposing to replace the
existing case-mix classification system
with the PDPM, effective October 1,
2019.
Section 1888(e)(4)(G)(i) of the Act
requires the Secretary to make an
adjustment to the per diem rates to
account for case-mix. The statute
specifies that the adjustment is to be
based on both a resident classification
system that the Secretary establishes
that accounts for the relative resource
use of different resident types, as well
as resident assessment and other data
that the Secretary considers appropriate.
In general, the case-mix classification
system currently used under the SNF
PPS classifies residents into payment
classification groups, called RUGs,
based on various resident characteristics
and the type and intensity of therapy
services provided to the resident. Under
the existing SNF PPS methodology,
there are two case-mix-adjusted
components of payment: Nursing and
therapy. Each RUG is assigned a CMI for
each payment component to reflect
relative differences in cost and resource
intensity. The higher the CMI, the
higher the expected resource utilization
and cost associated with residents
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assigned to that RUG. The case-mixadjusted nursing component of payment
reflects relative differences in a
resident’s associated nursing and nontherapy ancillary (NTA) costs, based on
various resident characteristics, such as
resident comorbidities, and treatments.
The case-mix-adjusted therapy
component of payment reflects relative
differences in a resident’s associated
therapy costs, which is based on a
combination of PT, OT, and SLP
services. Resident classification under
the existing therapy component is based
primarily on the amount of therapy the
SNF chooses to provide to a SNF
resident. Under the RUG–IV model,
residents are classified into
rehabilitation groups, where payment is
determined primarily based on the
intensity of therapy services received by
the resident, and into nursing groups,
based on the intensity of nursing
services received by the resident and
other aspects of the resident’s care and
condition. However, only the higher
paying of these groups is used for
payment purposes. For example, if a
resident is classified into a both the
RUA (Rehabilitation) and PA1 (Nursing)
RUG–IV groups, where RUA has a
higher per-diem payment rate than PA1,
the RUA group is used for payment
purposes. It should be noted that the
vast majority of Part A covered SNF
days (over 90 percent) are paid using a
rehabilitation RUG. A variety of
concerns have been raised with the
current SNF PPS, specifically the RUG–
IV model, which we discuss below.
When the SNF PPS was first
implemented in 1998 (63 FR 26252), we
developed the RUG–III case-mix
classification model, which tied the
amount of payment to resident resource
use in combination with resident
characteristic information. Staff time
measurement (STM) studies conducted
in 1990, 1995, and 1997 provided
information on resource use (time spent
by staff members on residents) and
resident characteristics that enabled us
not only to establish RUG–III but also to
create CMIs. This initial RUG–III model
was refined by changes finalized in the
FY 2006 SNF PPS final rule (70 FR
45032), which included adding nine
case-mix groups to the top of the
original 44-group RUG–III hierarchy,
which created the RUG–53 case-mix
model.
In the FY 2010 SNF PPS proposed
rule (74 FR 22208), we proposed the
RUG–IV model based on, among other
reasons, concerns that incentives in the
SNF PPS had changed the relative
amount of nursing resources required to
treat SNF residents (74 FR 22220).
These concerns led us to conduct a new
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Staff Time Measurement (STM) study,
the Staff Time and Resource Intensity
Verification (STRIVE) project, which
served as the basis for developing the
current SNF PPS case-mix classification
model, RUG–IV, which became effective
in FY 2011. At that time, we considered
alternative case mix models, including
predictive models of therapy payment
based on resident characteristics;
however, we had a great deal of concern
that by separating payment from the
actual provision of services, the system,
and more importantly, the beneficiaries
would be vulnerable to underutilization
(74 FR 22220). Other options considered
at the time included a non-therapy
ancillary (NTA) payment model based
on resident characteristics (74 FR
22238) and a DRG-based payment model
that relied on information from the prior
inpatient stay (74 FR 22220); these and
other options are discussed in detail in
a CMS Report to Congress issued in
December 2006 (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
Downloads/RC_2006_PC-PPSSNF.pdf).
As we explained in the proposed rule
(83 FR 21034), in the years since we
implemented the SNF PPS, finalized
RUG–IV, and made statements regarding
our concerns about underutilization of
services in previously considered
models, we have witnessed a significant
trend that has caused us to reconsider
these concerns. More specifically, as
discussed in section V.E. of the FY 2015
SNF PPS proposed rule (79 FR 25767),
we documented and discussed trends
observed in therapy utilization in a
memo entitled ‘‘Observations on
Therapy Utilization Trends’’ (which
may be accessed at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
Downloads/Therapy_Trends_Memo_
04212014.pdf). The two most notable
trends discussed in that memo were that
the percentage of residents classifying
into the Ultra-High therapy category has
increased steadily and, of greater
concern, that the percentage of residents
receiving just enough therapy to surpass
the Ultra-High and Very-High therapy
thresholds has also increased. In that
memo, we state ‘‘the percentage of
claims-matched MDS assessments in the
range of 720 minutes to 739 minutes,
which is just enough to surpass the 720
minute threshold for RU groups, has
increased from 5 percent in FY 2005 to
33 percent in FY 2013’’ and this trend
has continued since that time. We stated
in the proposed rule (83 FR 21035) that
while it might be possible to attribute
the increasing share of residents in the
Ultra-High therapy category to
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increasing acuity within the SNF
population, we believe the increase in
‘‘thresholding’’ (that is, of providing just
enough therapy for residents to surpass
the relevant therapy thresholds) is a
strong indication of service provision
predicated on financial considerations
rather than resident need. We discussed
this issue in response to comments in
the FY 2015 SNF PPS final rule. In that
rule, in response to comments regarding
the lack of ‘‘current medical evidence
related to how much therapy a given
resident should receive,’’ we stated that
with regard to the comments which
highlight the lack of existing medical
evidence for how much therapy a given
resident should receive, we would note
that the number of therapy minutes
provided to SNF residents within
certain therapy RUG categories is, in
fact, clustered around the minimum
thresholds for a given therapy RUG
category. We further stated that given
the comments highlighting the lack of
medical evidence related to the
appropriate amount of therapy in a
given situation, it is all the more
concerning that practice patterns would
appear to be as homogenized as the data
would suggest. (79 FR 45651).
In response to comments which
highlighted potential explanatory
factors for the observed trends, such as
internal pressure within SNFs that
would override clinical judgment, we
stated that we found these potential
explanatory factors troubling and
entirely inconsistent with the intended
use of the SNF benefit. Specifically, the
minimum therapy minute thresholds for
each therapy RUG category are certainly
not intended as ceilings or targets for
therapy provision. As discussed in
Chapter 8, Section 30 of the Medicare
Benefit Policy Manual (Pub. 100–02), to
be covered, the services provided to a
SNF resident must be ‘‘reasonable and
necessary for the treatment of a patient’s
illness or injury, that is, are consistent
with the nature and severity of the
individual’s illness or injury, the
individual’s particular medical needs,
and accepted standards of medical
practice.’’ Therefore, we stated that
services which are not specifically
tailored to meet the individualized
needs and goals of the resident, based
on the resident’s condition and the
evaluation and judgment of the
resident’s clinicians, may not meet this
aspect of the definition for covered SNF
care, and we stated we believe that
internal provider rules should not seek
to circumvent the Medicare statute,
regulations and policies, or the
professional judgment of clinicians. (79
FR 45651 through 45652).
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In addition to this discussion of
observed trends, we noted in the
proposed rule (83 FR 21035) that others
have also identified potential areas of
concern within the current SNF PPS.
The two most notable sources are the
Office of the Inspector General (OIG)
and the Medicare Payment Advisory
Commission (MedPAC).
For the OIG, three recent OIG reports
describe the OIG’s concerns with the
current SNF PPS. In December 2010, the
OIG released a report entitled
‘‘Questionable Billing by Skilled
Nursing Facilities’’ (which may be
accessed at https://oig.hhs.gov/oei/
reports/oei-02-09-00202.pdf). In this
report, among its findings, the OIG
found that ‘‘from 2006 to 2008, SNFs
increasingly billed for higher paying
RUGs, even though beneficiary
characteristics remained largely
unchanged’’ (OEI–02–09–00202, ii), and
among other things, recommended that
we should ‘‘consider several options to
ensure that the amount of therapy paid
for by Medicare accurately reflects
beneficiaries’ needs’’ (OEI–02–09–
00202, iii). Further, in November 2012,
the OIG released a report entitled
‘‘Inappropriate Payments to Skilled
Nursing Facilities Cost Medicare More
Than a Billion Dollars in 2009’’ (which
may be accessed at https://oig.hhs.gov/
oei/reports/oei-02-09-00200.pdf). In this
report, the OIG found that ‘‘SNFs billed
one-quarter of all claims in error in
2009’’ and that the ‘‘majority of the
claims in error were upcoded; many of
these claims were for ultrahigh
therapy.’’ (OEI–02–09–00200, Executive
Summary). Among its
recommendations, the OIG stated that
‘‘the findings of this report provide
further evidence that CMS needs to
change how it pays for therapy’’ (OEI–
02–09–00200, 15). Finally, in September
2015, the OIG released a report entitled
‘‘The Medicare Payment System for
Skilled Nursing Facilities Needs to be
Reevaluated’’ (which may be accessed at
https://oig.hhs.gov/oei/reports/oei-0213-00610.pdf). Among its findings, the
OIG found that ‘‘Medicare payments for
therapy greatly exceed SNFs’ costs for
therapy,’’ further noting that ‘‘the
difference between Medicare payments
and SNFs’ costs for therapy, combined
with the current payment method,
creates an incentive for SNFs to bill for
higher levels of therapy than necessary’’
(OEI–02–13–00610, 7). Among its
recommendations, the OIG stated that
CMS should ‘‘change the method of
paying for therapy’’, further stating that
‘‘CMS should accelerate its efforts to
develop and implement a new method
of paying for therapy that relies on
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beneficiary characteristics or care
needs.’’ (OEI–02–13–00610, 12).
For MedPAC’s recommendations in
this area, Chapter 8 of MedPAC’s March
2017 Report to Congress (available at
https://www.medpac.gov/docs/defaultsource/reports/mar17_medpac_ch8.pdf)
includes the following recommendation:
‘‘The Congress should . . . direct the
Secretary to revise the prospective
payment system (PPS) for skilled
nursing facilities’’ and ‘‘. . . make any
additional adjustments to payments
needed to more closely align payment
with costs.’’ (March 2017 MedPAC
Report to Congress, 220). This
recommendation is seemingly
predicated on MedPAC’s own analysis
of the current SNF PPS, where they state
that ‘‘almost since its inception the SNF
PPS has been criticized for encouraging
the provision of excessive rehabilitation
therapy services and not accurately
targeting payments for nontherapy
ancillaries’’ (March 2017 MedPAC
Report to Congress, 202). Finally, with
regard to the possibility of changing the
existing SNF payment system, MedPAC
stated that ‘‘since 2015, [CMS] has
gathered four expert panels to receive
input on aspects of possible design
features before it proposes a revised
PPS’’ and further that ‘‘the designs
under consideration are consistent with
those recommended by the
Commission’’ (March 2017 MedPAC
Report to Congress, 203).
As we discussed in the proposed rule
(83 FR 21035), the combination of the
observed trends in the current SNF PPS
discussed above (which strongly suggest
that providers may be basing service
provision on financial reasons rather
than resident need), the issues raised in
the OIG reports discussed above, and
the issues raised by MedPAC, has
caused us to consider significant
revisions to the existing SNF PPS, in
keeping with our overall responsibility
to ensure that payments under the SNF
PPS accurately reflect both resident
needs and resource utilization.
We explained in the proposed rule (83
FR 20135 through 21036) that under the
RUG–IV system, therapy service
provision determines not only therapy
payments but also nursing payments.
This is because, as noted above,
payment is based on the highest RUG
category that the resident could be
assigned to, so only one of a resident’s
assigned RUG groups, rehabilitation or
nursing, is used for payment purposes.
Each rehabilitation group is assigned a
nursing CMI to reflect relative
differences in nursing costs for residents
in those rehabilitation groups, which is
less specifically tailored to the
individual nursing costs for a given
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resident than the nursing CMIs assigned
for the nursing RUGs. We explained
that, as mentioned above, because most
resident days are paid using a
rehabilitation RUG, and since
assignment into a rehabilitation RUG is
based on therapy service provision, this
means that therapy service provision
effectively determines nursing payments
for those residents who are assigned to
a rehabilitation RUG. Thus, we stated
that we believe any attempts to revise
the SNF PPS payment methodology to
better account for therapy service
provision under the SNF PPS would
need to be comprehensive and affect
both the therapy and nursing case-mix
components. Moreover, we noted that in
the FY 2015 SNF PPS final rule, in
response to comments regarding access
for certain ‘‘specialty’’ populations
(such as those with complex nursing
needs), that we agreed with the
commenter that access must be
preserved for all categories of SNF
residents, particularly those with
complex medical and nursing needs. We
stated that, as appropriate, we would
examine our current monitoring efforts
to identify any revisions which may be
necessary to account appropriately for
these populations. (79 FR 45651).
In addition, MedPAC, in its March
2017 Report to Congress, stated that it
has previously recommended that we
revise the current SNF PPS to ‘‘base
therapy payments on patient
characteristics (not service provision),
remove payments for NTA services from
the nursing component, [and] establish
a separate component within the PPS
that adjusts payments for NTA services’’
(March 2017 MedPAC Report to
Congress, 202). Accordingly, included
among the proposed revisions we
discussed in the proposed rule were
revisions to the SNF PPS to address
longstanding concerns regarding the
ability of the RUG–IV system to account
for variation in nursing and NTA
services.
In May 2017, CMS released an
Advance Notice of Proposed
Rulemaking with comment (82 FR
20980) (the ANPRM), in which we
discussed the history of and analyses
conducted during the SNF Payment
Models Research (PMR) project, which
sought to address these concerns with
the RUG–IV model, and sought
comments on a possible replacement to
the current RUG–IV model, which we
called the Resident Classification
System, Version I (RCS–I). As we stated
in the proposed rule (83 FR 21036), this
model was intended as an improvement
over the RUG–IV model because it
would better account for resident
characteristics and care needs, thus
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better aligning SNF PPS payments with
resource use and eliminating therapy
provision-related financial incentives
inherent in the current payment model
used in the SNF PPS. We received many
comments from stakeholders on a wide
variety of aspects of the RCS–I model.
After considering these comments, we
made significant revisions to the RCS–
I model to account for the concerns or
questions raised by stakeholders,
resulting in a revised case-mix
classification model which we proposed
in the FY 2019 SNF PPS proposed rule
(83 FR 21018). To make clear the
purpose and intent of replacing the
existing RUG–IV system, the model we
proposed is called the Patient-Driven
Payment Model (PDPM). We refer
readers to the FY 2019 SNF PPS
proposed rule (83 FR 21036) for a
discussion of the SNF PMR project, and
the resulting SNF PMR technical report
which contains supporting language and
documentation related to the RCS–I
model (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
Downloads/SNF_Payment_Models_
Research_Technical_Report201704.pdf),
and the SNF PDPM technical report
which presents analyses and results that
were used to develop the proposed
PDPM (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
Downloads/PDPM_Technical_
Report_508.pdf). We invited comments
on any and all aspects of the proposed
PDPM, including the research analyses
described in the proposed rule, the SNF
PDPM technical report and the SNF
PMR technical report.
As further detailed below, and as we
stated in the proposed rule (83 FR
21036), we believe that the PDPM
represents an improvement over the
RUG–IV model and the RCS–I model
because it would better account for
resident characteristics and care needs
while reducing both systemic and
administrative complexity. To better
ensure that resident care decisions
appropriately reflect each resident’s
actual care needs, we believe it is
important to remove, to the extent
possible, service-based metrics from the
SNF PPS and derive payment from
verifiable resident characteristics. In the
sections that follow, we describe the
comprehensive revisions we are
implementing to the SNF PPS through
the PDPM. Additionally, we discuss the
comments we received on each of the
proposed policies, our responses to
these comments and the PDPM-related
policies we are finalizing in this rule.
Before moving into the specific policy
areas, we first discuss general comments
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we received on the PDPM, along with
our responses.
Comment: Many commenters
expressed support for the goals of the
proposed PDPM, acknowledging that
changes must be made to the current
payment system. Many commenters also
expressed concerns regarding the
potential impacts on patient care which
could result from implementing PDPM,
specifically that PDPM will introduce
new incentives into SNF payment that
will have a negative impact on patient
care. Some commenters believe that
SNF providers could stint on care, most
notably therapy services, and that such
providers will be overcompensated for
care that is not being delivered. Some
commenters urged CMS to monitor the
impacts on patient care of implementing
PDPM and take action upon evidence of
adverse trends. One commenter noted
that PDPM does not correct the
problems in the existing reimbursement
model, assigning too few resources to
nursing and NTAs.
Response: We appreciate the support
we have received for PDPM and its
goals. With respect to the concerns
raised by commenters with regard to the
potential impact of PDPM on patient
care, specifically the possibility that
some providers may stint on care or
provide fewer services to patients, we
plan to monitor closely service
utilization, payment, and quality trends
which may change as a result of
implementing PDPM. If changes in
practice and/or coding patterns arise,
then we may take further action, which
may include administrative action
against providers as appropriate and/or
proposing changes in policy (for
example, system recalibration, rebasing
case-mix weights, case mix creep
adjustment) to address any concerns.
We will also continue to work with the
HHS Office of Inspector General, should
any specific provider behavior be
identified which may justify a referral
for additional action.
With regard to the comment that
PDPM does not correct the issues with
the current reimbursement model and
assigns too few resources to nursing and
NTAs, we would refer the commenter to
the impact analysis presented in Table
37, which indicates that the broadest
shifts in payment are to those patients
with high nursing and NTA needs.
Comment: Several commenters raised
concerns regarding the use of historical
data as the basis for developing PDPM.
One commenter stated that PDPM is
overly complex and that the majority of
patient days are captured in a small
number of case-mix groups. One
commenter stated that because PDPM is
based on historical utilization, it does
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not sufficiently reflect current best
practices or high quality care.
Response: Historical data are the only
form of data that can be used for any
data analysis, so it is not clear what
other data, that are not historical, CMS
could have used to develop PDPM.
Further, as these data are reported by
SNFs, we believe that these data should
be best reflective of SNF costs and
patient needs. With regard to the
comment that the majority of patient
days are captured in a small number of
case-mix groups, we agree with this
comment and believe that this is
precisely part of the motivation for
implementing a new case-mix
classification model. The current casemix model has caused a homogenization
in patient classification such that the
current payment model does not
adequately reflect differences among
SNF patients. We believe that PDPM is
a significant improvement in this
regard, better reflecting the myriad
differences between SNF patients in
terms of their characteristics, care
needs, and goals.
With regard to the comment that the
historical data do not sufficiently reflect
current best practices or high quality
care, while we are concerned about this
assertion from a patient care
perspective, we do not believe that this
would affect the accuracy of the
reported data in terms of reflecting
relative differences in costs, which is all
that is necessary for developing accurate
case-mix groups.
Comment: Several commenters
requested clarification on the effect of
implementing PDPM on the
development of a unified Post-Acute
Care (PAC) PPS and how PDPM would
interact with a PAC PPS. One
commenter requested that CMS
establish a panel to advise on payment
system changes across the PAC
continuum.
Response: As a PAC PPS has not been
established, we cannot provide
guidance as to how the PDPM would
interact with such a system, once
developed. However, given that PDPM
shifts away from the current case-mix
model that utilizes service-based
metrics as the primary determinant of
payment for most days paid under the
SNF Part A benefit to a model that
utilizes patient characteristics as the
basis for payment, and that most other
PAC payment systems already rely more
heavily on patient characteristics within
their payment model, we believe that
PDPM will better align the SNF PPS for
this eventual transition to a PAC PPS as
it brings the SNF PPS closer to those
other PAC payment systems. We will
consider the commenter’s
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recommendation to establish a panel on
payment system changes across the PAC
continuum, particularly as we work to
develop a PAC PPS.
Comment: Some commenters
suggested that CMS consider including
quality measures of effective
rehabilitation services when evaluating
the impact of PDPM.
Response: We appreciate these
commenters’ suggestion. In monitoring
the impact of the PDPM, we will
consider including measures for a
variety of service areas as a component
of our planned monitoring efforts.
Comment: Several commenters
suggested that CMS should establish a
plan to recalibrate the system to address
any unanticipated impacts. More
specifically, these commenters
requested that CMS provide more
details on plans to recalibrate the
system in case of unanticipated service
and performance changes, as well as
plans to recalibrate the payment weights
associated with the revised payment
model.
Response: We appreciate the
suggestions made by these commenters
with regard to CMS providing plans for
recalibrating the payment system after
implementing PDPM. However, such
recalibrations will depend largely on the
results of our monitoring efforts and
could take various forms. For example,
in the FY 2012 SNF PPS final rule (76
FR 48486), we recalibrated the parity
adjustment that was intended to ensure
that SNF payments under RUG–IV
matched those that would have been
made under RUG–III, similar to how the
parity adjustment discussed below for
PDPM is intended to ensure that SNF
payments under PDPM mirror those that
would have been made under RUG–IV.
As discussed in that rule, our
assumptions regarding case-mix
distribution that were used to calculate
the RUG–IV parity adjustment
subsequently proved to be inaccurate,
which caused us to recalculate the
RUG–IV parity adjustment in the
following year. We anticipate similarly
monitoring PDPM implementation
closely and may propose adjustments as
appropriate if we discover evidence that
payments are either higher or lower
than anticipated, or if provider costs
change in such a manner that the
current relationship between provider
costs and provider payments changes
from that currently observed.
Comment: One commenter raised the
concern that the PDPM model has low
explanatory power and lacks an
objective threshold for inclusion of
various components in the model. This
commenter suggested that if CMS
intends to update this model with new
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data over time to reflect changes in
clinical practice and resource
utilization, there is a need for a
systematic determination of the
minimum acceptable R-squared values
for the model features. Model
components currently excluded may
increase in predictive power over time
and merit inclusion in future versions of
PDPM. In addition, current model
components may decrease in predictive
power such that they should be
removed from the model.
Response: Setting an absolute
minimum threshold would not only be
arbitrary but also deviates from the
practical use of the R-squared metric,
which is to evaluate the proportion of
variance explained and compare models
with the same dependent variable
vector. Additionally, R-squared is not
the only measure we use to evaluate
PDPM. In fact, because the current
system is heavily based on service
provision and most residents are
classified into the Ultra-High therapy
category, we are dealing with a dataset
with little explainable variance. Each of
the PDPM case-mix groups meets
clinical expectations, which is a
convincing validation of the model
given the data available. We note that
with the change to a patient driven
model, we expect more variation will
appear in therapy costs. This will allow
for future development of models with
higher explanatory power.
Comment: Several commenters
requested clarification on how PDPM
would interact with other CMS
initiatives, such as the SNF Quality
Reporting Program (QRP), Value-Based
Purchasing (VBP) program, revised
conditions of participation and other
such initiatives. A few commenters also
requested clarification on how PDPM
accounts for or would interact with the
Jimmo v Sebelius settlement
surrounding the provision of
maintenance therapy. These
commenters requested clarification on
how CMS would track maintenance
therapy services, as compared to other
forms of therapy. Several commenters
requested clarification on how
Comprehensive Person-Centered Plan
maintenance services, new
Requirements of Participation and other
CMS initiatives will be factored into
CMS burden estimates and that CMS
should revise existing burden estimates
to incorporate these changes.
Response: We anticipate that PDPM
will only serve to strengthen the various
quality and payment reform initiatives
throughout CMS, by shifting payment
away from the current service-driven
model that has produced nearly
homogenized care for SNF beneficiaries,
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to a more resident-centered model that
focuses more on the individual patient’s
needs and characteristics. We also
believe that through the use of
standardized assessment items (as
discussed in section V.D. of this final
rule) and changes to the assessment
schedule to mirror that of other PAC
settings that use a similar admission/
discharge assessment model (as
discussed in section V.E. of this final
rule), the PDPM would better align with
the current direction of PAC reform and
standardization efforts supported by the
IMPACT Act.
With regard to the comment about
tracking maintenance services, we do
not believe it is necessary at this time
to track maintenance services
separately. Such tracking would be
burdensome and it would be difficult to
do so accurately, as it is possible that
many patients have both maintenance
and restorative goals, and allocating
therapy minutes among these varied
goals would be particularly complicated
for providers.
With regard to the burden of the
Comprehensive Person-Centered Plan,
new requirements of participation, and
other CMS initiatives, the burdens
estimated in relation to PDPM are only
those in relation to implementation of
the PDPM and its related policies. As
the Comprehensive Person-Centered
Plan and other issues mentioned are
outside of these PDPM related policies,
we do not address the potential burden
of such issues in this section.
Comment: Several commenters
expressed concerns regarding the
potential impact of implementing PDPM
on Medicaid programs. A few
commenters raised concerns regarding
the impact of PDPM on calculating the
Upper Payment Limit (UPL), which is
utilized as part of calculating Medicaid
payment rates. One commenter
questioned if states would be permitted
to still use RUG–IV as the basis for
estimating the UPL. One commenter
requested clarification on if any changes
would be necessary for Medicaid claims
systems. One commenter stated that
Medicaid providers will have less
incentive to provide therapy and
Medicaid beneficiaries will have lower
nursing case-mix scores under PDPM,
thereby incentivizing states to transition
to PDPM in order to reduce Medicaid
spending. Commenters suggested that
CMS work closely with states, who may
wish to transition to PDPM, to ensure a
smooth transition. Some commenters
also stated that, should certain states not
transition to PDPM, this would mean
operating two different payment
systems. A few commenters requested
clarification on if CMS would continue
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to support previous payment systems
for states that do not make the transition
to PDPM or have access to MDS data for
Medicaid rate-setting purposes. These
commenters also requested if CMS
could provide a further breakdown of
certain cost categories, such as NTA
costs, in a manner that would be more
helpful to states in conducting UPL
calculations.
Response: We appreciate the
commenters’ concerns with the
potential impact of PDPM on Medicaid
programs. We agree with the
commenters that this is an area that
deserves significant attention in terms of
education and training, and we plan to
work with states to ensure a smooth
transition between the current RUG–IV
model and PDPM. With regard to
questions on how PDPM may relate to
UPL calculations, these calculations are
based on how Medicare pays for
services under Part A and not based on
a prior payment system. Therefore, UPL
calculations, after PDPM has been
implemented, would need to be based
on the payments made under PDPM.
That being said, we expect that, because
PDPM bases payment on patient
characteristics and not service
utilization, payments made under
PDPM will more accurately reflect
patient needs and goals, which should
also improve the basis for Medicaid
payments which may be related to
Medicare payments. With regard to
having the data necessary for such UPL
calculations, whether in regard to
specific rate components (for example,
NTA costs) or more generally, we will
work with states to help ensure that
they have the necessary information so
PDPM implementation does not
negatively impact on their ability to
manage their Medicaid programs.
With regard to the comment that
states may have more of an incentive to
transition to PDPM in order to reduce
Medicaid spending, we believe that the
primary reason that Medicaid programs
may adopt PDPM is due to its focus on
patient characteristics and goals, rather
than on service utilization. Given the
improvements in Medicare payment
that this transition represents, we would
expect a similar improvement in
Medicaid payments in states that make
this transition.
With regard to the comment that
Medicaid providers will be incentivized
to provide less therapy or that Medicaid
beneficiaries will have lower nursing
case-mix scores, we would encourage
states that decide to transition to PDPM
to ensure they are monitoring the
impacts of such a change on their
beneficiaries and the care they receive.
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In terms of those states that opt not to
transition to PDPM and instead use
some form of legacy payment system,
we would note that a number of states
use systems quite distinct from the
existing RUG–IV model and we are not
aware of any difficulties or complexities
for providers or states in managing these
systems concurrently. These states still
have access to MDS data for ratesetting
purposes and nothing associated with
PDPM implementation, in and of itself,
would affect state access to MDS data.
That being said, we would likely need
to evaluate the costs and benefits of
continued support for certain legacy
payment systems, most notably any
RUG–III based payment models.
Comment: One commenter requested
that CMS consider the possibility that
some Medicare Advantage plans could
reform their payment models to mirror
PDPM, while others may maintain their
existing payment models, which could
include models that resemble RUG–IV.
The commenter requested that CMS
consider working with those plans that
opt to modify their payment models to
resemble PDPM and consider the impact
of having multiple payment models that
providers must operate under
simultaneously.
Response: We acknowledge that some
Medicare Advantage plans could change
their payment models to mirror PDPM,
while others may not change their
payment models in relation to the
changes finalized in this rule. We would
note, however, that, as private plans,
Medicare Advantage plans currently
take a wide variety of forms, with some
already approximating the structure of
PDPM, using patient characteristics
rather than service utilization as the
basis for payment. We will work
generally with stakeholders, including
these private plans, to help ensure that
adequate education and resources are
available for all parties.
Comment: One commenter requested
clarification on how CMS will track and
reconcile patient diagnosis and
classification information reported at
admission with such information at
discharge, expressing concern regarding
what might occur in the case that the
information from these two points is
different, as well as diagnosis or
procedural information from the
preceding hospital stay, noting that
some information for SNF payment
comes from the hospital, and how these
issues could affect provider risk of
alleged improper billing and recovery
efforts.
Response: We plan to develop a
robust monitoring program that utilizes
data from many sources, such as
assessments, claims, cost reports and
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other data that would prove valuable in
assessing both the impact of
implementing PDPM, as well as identify
any provider level issues related to
PDPM payments. While the vast
majority of information related to PDPM
classification and payment is derived
from the SNF, there is one area (surgical
procedural information) which may
come from the preceding hospital stay.
However, nothing in PDPM should
change the relationship or need for
information between the hospital and
SNF, given that the information that
PDPM requires is no more information
than the SNF would need simply for
basic care planning purposes. As such,
there should be no impact on improper
billing or recovery efforts that derive
from the implementation of PDPM.
Comment: One commenter requested
clarification on how PDPM will address
the number of face-to-face hours the
registered therapist spends treating the
patients. This commenter states they
have observed nursing staff instructed to
complete certain activities with patients
who are receiving therapy.
Response: PDPM does not address the
specific number of face-to-face hours
that therapists spend with their patients.
The expectations for what is considered
skilled therapy and reasonable and
necessary care found in Chapter 8 of the
Medicare Benefit Policy Manual
(https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/
downloads/bp102c08.pdf) and the MDS
3.0 RAI manual (https://
downloads.cms.gov/files/MDS-30-RAIManual-v115-October-2017.pdf) will not
change under PDPM. We continue to
expect that patients will receive high
quality skilled rehabilitation services
based on their individual needs and we
do not believe that patients should have
any nursing care that they require
reduced because they happen to be
receiving therapy. If a patient requires
nursing care (including restorative
nursing), the SNF should provide that
nursing care as medically necessary.
Similarly, if a patient requires therapy,
the SNF should provide the therapy as
medically necessary. One should not
impact the other and PDPM does not
affect this either.
Comment: Several commenters
requested clarification about how SNFs
are expected to comply with Medicare
and Medicaid Conditions of
Participation and whether SNFs will
continue to be required to complete the
discharge assessments required by the
Omnibus Budget Reconciliation Act
(OBRA), as well as the end of therapyrelated assessments.
Response: PDPM is not intended to
affect any of the Medicare and Medicaid
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Conditions of Participation for SNFs.
Facilities should continue to follow
these regulations as they always have.
Additionally, even though under PDPM,
the majority of PPS assessments will
now be removed (as discussed later in
this final rule), all OBRA assessments
will still be required. PDPM will not
affect the OBRA requirements. With
regard to existing therapy-related
assessments (the Start of Therapy, End
of Therapy, and Change of Therapy
assessments), these assessments would
no longer exist under PDPM.
Comment: Several commenters
expressed concern that PDPM may not
fully account for mild cognitive
impairment and encouraged CMS to
collect more sensitive data, in line with
the IMPACT Act, to ensure necessary
attention to cognition.
Response: We appreciate these
commenters’ concerns and also believe
that attention should be paid to
cognition as an area for potential future
system refinements. However, as the
only change in the proposed use of
cognition as a factor in payment
classification is under the SLP
component, and because for this
component, we proposed to use even
mild cognitive impairment as the basis
for a payment classification, we believe
that PDPM does adequately account for
mild cognitive impairment. We will
consider the commenter’s concerns as
we continue to evaluate potential
refinements to our assessment tools.
Comment: One commenter expressed
concern that PDPM does not incorporate
incentives for quality improvement.
Response: PDPM, as a case-mix
classification system, is intended to
classify SNF patients for purposes of
reimbursement based on the resource
utilization associated with treating those
patients. However, there do exist
programs, such as the SNF VBP
program, that is a part of the SNF PPS
which does incentivize quality
improvement. Therefore, while we agree
that PDPM, in and of itself, does not
include incentives for quality
improvement, other aspects of the SNF
PPS do include such incentives.
Comment: Some commenters
requested clarification about the appeals
process that will be available to help
patients in case of shortcomings in their
care and coverage, including any
inaccurate assignments to payment
classifications.
Response: We appreciate this
comment, but would note that nothing
associated with PDPM implementation
would affect existing patient appeal
rights or processes.
Comment: One commenter requested
clarification on how items Z0100A and
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Z0150A on the MDS would be
populated and how the classifications
would translate to a billable claim code.
Response: We will provide detail on
how these MDS items, which relate to
patient billing codes, will be populated
as part of our updates to the MDS
manual.
Comment: One commenter requested
clarification on how a patient’s voice
would be heard in a care design driven
by medical information.
Response: While patient case-mix
classification, for purposes of payment,
would be driven by medical
information, as occurs under the current
payment system, care design should be
driven by patient goals and needs, as
well as discussions with the patient and
his or her family. Further, while under
the current payment model over 90
percent of patient days are paid for
using a therapy RUG, which utilizes
only therapy minutes and ADLs as the
basis for payment, PDPM provides a
more holistic approach to payment
classifications. More specifically, by
separately adjusting for the nursing
component, which utilizes patient
interviews as a major component of
patient classification, we believe that
this achieves the commenter’s goal of
elevating the patient’s voice.
Comment: Some commenters
requested that CMS consider adopting
an outlier policy as part of the SNF PPS
to account for patients whose costs far
exceed the cost of typical patients.
These commenters stated that a SNF
outlier policy would ensure access to
clinically complex patients and align
with other PAC systems.
Response: Under the current statutory
provisions governing the SNF PPS, there
is no specific statutory authority for an
outlier payment as part of the SNF PPS.
B. Revisions to SNF PPS Federal Base
Payment Rate Components
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1. Background on SNF PPS Federal Base
Payment Rates and Components
Section 1888(e)(4) of the Act requires
that the SNF PPS per diem federal
payment rates be based on FY 1995
costs, updated for inflation to the first
effective period of the PPS. These base
rates are then required to be adjusted to
reflect differences among facilities in
patient case-mix and in average wage
levels by area. In keeping with this
statutory requirement, the base per diem
payment rates were set in 1998 and
reflect average SNF costs in a base year
(FY 1995), updated for inflation to the
first period of the SNF PPS, which was
the 15-month period beginning on July
1, 1998. The federal base payment rates
were calculated separately for urban and
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rural facilities and based on allowable
costs from the FY 1995 cost reports of
hospital-based and freestanding SNFs,
where allowable costs included all
routine, ancillary, and capital-related
costs (excluding those related to
approved educational activities)
associated with SNF services provided
under Part A, and all services and items
for which payment could be made
under Part B prior to July 1, 1998.
In general, routine costs are those
included by SNFs in a daily service
charge and include regular room,
dietary, and nursing services, medical
social services and psychiatric social
services, as well as the use of certain
facilities and equipment for which a
separate charge is not made. Ancillary
costs are directly identifiable to
residents and cover specialized services,
including therapy, drugs, and laboratory
services. Lastly, capital-related costs
include the costs of land, building, and
equipment and the interest incurred in
financing the acquisition of such items
(63 FR 26253).
There are four federal base payment
rate components which may factor into
SNF PPS payment. Two of these
components, ‘‘nursing case-mix’’ and
‘‘therapy case-mix,’’ are case-mix
adjusted components, while the
remaining two components, ‘‘therapy
non-case-mix’’ and ‘‘non-case-mix,’’ are
not case-mix adjusted. While we
discussed the details of the proposed
PDPM and justifications for certain
associated policies we proposed
throughout section V of the FY 2019
SNF PPS proposed rule, we note that, as
part of the PDPM case-mix model, we
proposed to bifurcate the ‘‘nursing casemix’’ component of the federal base
payment rate into two case-mix adjusted
components and separate the ‘‘therapy
case-mix’’ component of the federal base
payment rate into three case-mix
adjusted components, thereby creating
five case-mix adjusted components of
the federal base per diem rate. More
specifically, we proposed to separate the
‘‘therapy case-mix’’ rate component into
a ‘‘Physical Therapy’’ (PT) component,
an ‘‘Occupational Therapy’’ (OT)
component, and a ‘‘Speech-Language
Pathology’’ (SLP) component. Our
rationale for separating the therapy casemix component in this manner is
presented in section V.D.3.b. of the
proposed rule. Based on the results of
the SNF PMR, we also proposed to
separate the ‘‘nursing case-mix’’ rate
component into a ‘‘Nursing’’ component
and a ‘‘Non-Therapy Ancillary’’ (NTA)
component. Our rationale for proposing
to bifurcate the nursing case-mix
component in this manner is presented
in section V.D.3.d. of the proposed rule.
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Given that all SNF residents under
PDPM would be assigned to a
classification group for each of the three
proposed therapy-related case-mix
adjusted components as further
discussed below, we proposed
eliminating the ‘‘therapy non-case-mix’’
rate component under PDPM and stated
that we would distribute the dollars
associated with this current rate
component amongst the proposed
PDPM therapy components. We also
stated in the proposed rule (83 FR
21038) that the existing non-case-mix
component would be maintained as it is
currently constituted under the existing
SNF PPS. We explained that although
the case-mix components of the
proposed PDPM case-mix classification
system would address costs associated
with individual resident care based on
an individual’s specific needs and
characteristics, the non-case-mix
component addresses consistent costs
that are incurred for all residents, such
as room and board and various capitalrelated expenses. As these costs are not
likely to change, regardless of what
changes we might make to the SNF PPS,
we proposed to maintain the non-casemix component as it is currently used.
In the next section, we discuss the
methodology used to create the
proposed PDPM case-mix adjusted
components, as well as the data sources
used in this calculation. As we stated in
the proposed rule (83 FR 21038), the
proposed methodology does not
calculate new federal base payment
rates but simply proposes to modify the
existing base rate case-mix components
for therapy and nursing. The
methodology and data used in this
calculation are based on the data and
methodology used in the calculation of
the original federal payment rates in
1998, as further discussed below.
2. Data Sources Utilized for Revision of
Federal Base Payment Rate Components
Section II.A.2. of the interim final rule
with comment period that initially
implemented the SNF PPS (63 FR 26256
through 26260) provides a detailed
discussion of the data sources used to
calculate the original federal base
payment rates in 1998. Except as
discussed below, we proposed to use
the same data sources (that is, cost
information from FY 1995 cost reports)
to determine the portion of the therapy
case-mix component base rate that
would be assigned to each of the
proposed therapy component base rates
(PT, OT, and SLP). As we stated in the
proposed rule (83 FR 21038), we believe
that using the same data sources, to the
extent possible, that were used to
calculate the original federal base
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payment rates in 1998 results in base
rates for the components that resemble
as closely as possible what they would
have been had these components
initially been established in 1998. The
portion of the nursing component base
rate that corresponds to NTA costs was
already calculated using the same data
source used to calculate the federal base
payment rates in 1998. As explained
below and in the proposed rule (83 FR
21038), we used the previously
calculated percentage of the nursing
component base rate corresponding to
NTA costs to set the NTA base rate and
verified this calculation with the
analysis described in section V.C.3. of
the FY 2019 SNF PPS proposed rule.
Therefore, the steps described below
address the calculations performed to
separate out the therapy base rates
alone.
As discussed in the proposed rule (83
FR 21038), the percentage of the current
therapy case-mix component of the
federal base payment rates that would
be assigned to the three proposed
therapy components (PT, OT, and SLP)
of the federal base payment rates was
determined using cost information from
FY 1995 cost reports, after making the
following exclusions and adjustments:
First, only settled and as-submitted cost
reports for hospital-based and
freestanding SNFs for periods beginning
in FY 1995 and spanning 10 to 13
months were included. This set of
restrictions replicates the restrictions
used to derive the original federal base
payment rates as set forth in the 1998
interim final rule with comment period
(63 FR 26256). Following the
methodology used to derive the SNF
PPS base rates, routine and ancillary
costs from as-submitted cost reports
were adjusted down by 1.31 and 3.26
percent, respectively. As discussed in
the 1998 interim final rule with
comment period, the specific
adjustment factors were chosen to
reflect average adjustments resulting
from cost report settlement and were
based on a comparison of as-submitted
and settled reports from FY 1992 to FY
1994 (63 FR 26256); these adjustments
are in accordance with section
1888(e)(4)(A)(i) of the Act. We used
similar data, exclusions, and
adjustments as in the original base rates
calculation so the resulting base rates
for the components would resemble as
closely as possible what they would
have been had they been established in
1998. However, as we discussed in the
proposed rule, there were two ways in
which the PT, OT, and SLP percentage
calculations deviate from the 1998 base
rates calculation. First, the 1998
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calculation of the base rates excluded
reports for facilities exempted from cost
limits in the base year. The available
data do not identify which facilities
were exempted from cost limits in the
base year, so this restriction was not
implemented. As we stated in the
proposed rule, we do not believe this
had a notable impact on our estimate of
the PT, OT, and SLP percentages,
because only a small fraction of
facilities were exempted from cost
limits. Consistent with the 1998 base
rates calculation, we excluded facilities
with per diem costs more than three
standard deviations higher than the
geometric mean across facilities.
Therefore, facilities with unusually high
costs did not influence our estimate.
Second, the 1998 calculation of the base
rates excluded costs related to
exceptions payments and costs related
to approved educational activities. The
available cost report data did not
identify costs related to exceptions
payments nor indicate what percentage
of overall therapy costs or costs by
therapy discipline were related to
approved educational activities, so these
costs are not excluded from the PT, OT,
and SLP percentage calculations. We
stated in the proposed rule that because
exceptions were only granted for routine
costs, we believe the inability to exclude
these costs should not affect our
estimate of the PT, OT, and SLP
percentages as exceptions would not
apply to therapy costs. Additionally, the
data indicate that educational costs
made up less than one-hundredth of 1
percent of overall SNF costs. Therefore,
we stated that we believe the inability
to exclude educational costs should
have a negligible impact on our
estimates.
In addition to Part A costs from the
cost report data, the 1998 federal base
rates calculation incorporated estimates
of amounts payable under Part B for
covered SNF services provided to Part A
SNF residents, as required by section
1888(e)(4)(A)(ii) of the Act. We stated in
the proposed rule (83 FR 21038) that in
calculating the PT, OT, and SLP
percentages, we also estimated the
amounts payable under Part B for
covered SNF services provided to Part A
residents. All Part B claims associated
with Part A SNF claims overlapping
with FY 1995 cost reports were matched
to the corresponding facility’s cost
report. For each cost center (PT, OT, and
SLP) in each cost report, a ratio was
calculated to determine the amount by
which Part A costs needed to be
increased to account for the portion of
costs payable under Part B. This ratio
for each cost center was determined by
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dividing the total charges from the
matched Part B claims by the total
charges from the Part A SNF claims
overlapping with the cost report. The
1998 interim final rule (63 FR 26256)
states that to estimate the amounts
payable under Part B for covered SNF
services provided to Part A SNF
residents, CMS (then known as HCFA)
matched 100 percent of Part B claims
associated with Part A covered SNF
stays to the corresponding facility’s cost
report. Part B allowable charges were
then incorporated at the facility level by
the appropriate cost report center.
Although the interim final rule does not
provide further detail on how Part B
allowable charges were incorporated at
the facility level, we stated in the
proposed rule that we believe our
methodology reasonably approximates
the methodology described in the
interim final rule, and provides a
reasonable estimate of the amounts
payable under Part B for covered SNF
services provided to Part A residents for
purposes of calculating the PT, OT, and
SLP percentages. Therefore, we stated
that we believe it is reasonable to use
this methodology to calculate the PT,
OT, and SLP percentages of the therapy
case-mix component.
Finally, the 1998 federal base rates
calculation standardized the cost data
for each facility to control for the effects
of case-mix and geographic-related wage
differences, as required by section
1888(e)(4)(C) of the Act. As we stated in
the proposed rule, when calculating the
PT, OT and SLP shares of the current
therapy base rate, we replicated the
method used in 1998 to standardize for
wage differences, as described in the
1998 interim final rule with comment
period (63 FR 26259 through 26260). We
applied a hospital wage index to the
labor-related share of costs, estimated at
75.888 percent, and used an index
composed of hospital wages from FY
1994. We noted in the proposed rule
that the PT, OT, and SLP percentage
calculations did not include the casemix adjustment used in the 1998
calculation because the 1998 adjustment
relied on the obsolete RUG–III
classification system. In the 1998 federal
base rates calculation, information from
SNF and inpatient claims was mapped
to RUG–III clinical categories at the
resident level to case-mix adjust facility
per diem costs. However, the 1998
interim final rule did not document this
mapping, and the data used as the basis
for this adjustment are no longer
available, and therefore, this step could
not be replicated. We stated in the
proposed rule that we believe the
inability to apply the case-mix
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adjustment likely has a small impact on
our estimate of the PT, OT, and SLP
percentages. The 1998 interim final rule
indicates that the case-mix adjustment
was applied by dividing facility per
diem costs for a given component by
average facility case mix for that
component; in other words, multiplying
by the inverse of average facility case
mix. As we discussed in the proposed
rule, as long as average facility case-mix
values are within a relatively narrow
range, adjustment for facility case mix
should not have a large impact on the
estimated PT, OT, and SLP percentages.
Because the RUG–III case-mix indexes
shown in the 1998 interim final rule are
within a relatively narrow range (for
example, therapy indexes range from
0.43 to 2.25), we stated that we do not
expect the inability to apply the casemix adjustment to facility per diem
costs to have a large influence on the
estimated PT, OT, and SLP percentages.
These data sources are described in
more detail in section 3.10. of the SNF
PDPM technical report, available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html.
We invited comments on the data
sources used to determine the PT, OT,
and SLP rate components, as discussed
above.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the Data Sources Utilized
for Proposed Revision of Federal Base
Payment Rate Components. A
discussion of these comments, along
with our responses, appears below.
Comment: One commenter requested
additional information on the data
sources used to develop PDPM.
Specifically, the commenter requested
that CMS clarify which year of claims
and cost report data was used to
develop PDPM.
Response: As detailed in section 3.1
of the SNF PDPM technical report and
FY 2019 SNF PPS proposed rule (83 FR
21041), we used data, including claims
and assessments, corresponding to
Medicare Part A SNF stays with
admissions in FY 2017. This was the
most complete year of data available
when PDPM was developed and
continues to be the most complete year
of data available as of the FY 2019 final
rule. Foundational analyses—for
example, those discussed throughout
the SNF PMR technical report that
accompanied the 2017 ANPRM—used
FY 2014 data, as that was the most
recent complete year of data available
when those analyses were completed.
Finally, based on suggestions from
commenters responding to the 2017
ANPRM, the analysis that established
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the list of comorbidities used for
payment in the PDPM NTA component
and the points associated with each
comorbid condition used multiple years
of data to generate more robust results.
Specifically, resource utilization and
assessment data from FYs 2014–2017
were used to determine the comorbid
conditions associated with high NTA
utilization and estimate the specific
resource utilization associated with
each condition for the purpose of
assigning points and payment to these
conditions under PDPM. This
methodology is discussed in further
detail in section 3.7 of the SNF PDPM
technical report and in the FY 2019 SNF
PPS proposed rule (83 FR 21056). In
terms of cost reports, since providers
have their own fiscal year and reporting
schedule, we used the cost report
closest to the stay window among the
cost reports of that provider recorded in
the database as of November 2017.
Comment: Some commenters
questioned whether it is appropriate to
use the same data sources and
methodology from 1998 (that is, 1995
cost reports) to set base rates given
updated technology and changes in SNF
care practices since then. Particularly, a
few commenters stated that the
estimated share of the nursing base rate
attributed to NTA services (43 percent)
is outdated and not representative of the
proportion of the nursing base rate that
corresponds to NTA services. These
commenters requested that we consider
recalculating SNF base rates using more
recent data on SNF costs.
Response: We appreciate the
commenters’ suggestion to use more
recent data in calculating the SNF base
rates. However, in accordance with
section 1888(e)(4)(A) of the Act, the
federal per diem rates used for SNF
payment are based on the FY 1995 cost
reports. Therefore, we cannot consider
recalculating the SNF base rates using
more recent data. Additionally, given
this statutory requirement, we believed
that it was appropriate to use these cost
reports to set the base rates for the
proposed new components to reflect as
closely as possible what the base rates
would have been for these components
if they had been separately established
in 1998. Finally, while it may be the
case that, as the commenter stated,
changes in SNF care practices may have
occurred, such changes would more
likely be reflected in differences in the
relative costs of treating different types
of patients and these types of changes in
relative costs are reflected in the revised
case-mix weights under PDPM, which
does use more recent data than FY 1995.
Specifically, as discussed in section 3.1
of the SNF PDPM technical report and
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FY 2019 SNP PPS proposed rule (83 FR
21041), we developed PDPM using data,
including claims and assessments,
corresponding to Medicare Part A SNF
stays with admissions in FY 2017.
Comment: One commenter
recommends that CMS treat respiratory
therapy as ‘‘therapy’’ and not ‘‘nursing’’
for purpose of payment, and
recommends CMS consider
incorporating an add-on payment for
respiratory therapy to ensure it is
reimbursed appropriately to safeguard
the continuation of these therapy
services.
Response: Under Chapter 8 of the
Medicare Benefit Policy manual, section
30.4, ‘‘skilled therapy services’’ includes
physical therapy, occupational therapy,
and speech-language pathology therapy
(reflecting the regulations at 42 CFR
409.23). Respiratory therapy, on the
other hand, is treated as a separate
service category in section 50.8.2 of the
same chapter (reflecting the regulations
at § 409.27(b)). As such, respiratory
therapy is distinct from other forms of
therapy and is not included among the
other therapy components.
Additionally, therapy services, as
defined in § 409.33 make specific
reference to skilled therapy services
provided by physical and occupational
therapists and speech-language
pathologists. Finally, while respiratory
therapists have specialized training in
addressing respiratory issues, much of
the work conducted by respiratory
therapists falls within the scope of
practice for nurses, which further
supports the closer relationship between
respiratory therapy and nursing, rather
than with the three therapy disciplines.
With regard to developing an add-on
payment for respiratory therapy, given
that such services are currently captured
through the global per diem payment,
we do not believe that an add-on
payment would be warranted.
3. Methodology Used for the Calculation
of Federal Base Payment Rate
Components
As discussed previously in this
section, we proposed to separate the
current therapy components into a PT
component, an OT component, and an
SLP component. To do this, we
calculated the percentage of the current
therapy component of the federal base
rate that corresponds to each of the
three proposed PDPM therapy
components (PT, OT, and SLP) in
accordance with the methodology set
forth below and in the FY 2019 SNF
PPS proposed rule (83 FR 21039).
The data described in section V.C.2.
of the proposed rule (primarily, cost
information from FY 1995 cost reports)
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provides cost estimates for the Medicare
Part A SNF population for each cost
report that met the inclusion criteria.
Cost reports stratify costs by a number
of cost centers that indicate different
types of services. For instance, costs are
reported separately for each of the three
therapy disciplines (PT, OT, and SLP).
Cost reports also include the number of
Medicare Part A utilization days during
the cost reporting period. As we stated
in the proposed rule, this allows us to
calculate both average total therapy
costs per day and average therapy costs
by discipline in the facility during the
cost reporting period. Therapy costs are
defined as the sum of costs for the three
therapy disciplines.
As explained in the proposed rule (83
FR 21039), the goal of this methodology
is to estimate the proportion of therapy
costs that corresponds to each of the
three therapy disciplines. We use the
facility-level per-diem costs developed
from 1995 cost reports to derive average
per diem amounts for both total therapy
costs and for PT, OT, and SLP costs
separately. To do this, we followed the
methodology outlined in section II.A.3.
of the 1998 interim final rule with
comment period (63 FR 26260), which
was used by CMS (then known as
HCFA) to create the federal base
payment rates:
(1) For each of the four measures of
cost (PT, OT, SLP, and total therapy
costs per day), we computed the mean
based on data from freestanding SNFs
only. This mean was weighted by the
total number of Medicare days of the
facility.
(2) For each of the four measures of
cost (PT, OT, SLP, and total therapy
costs per day), we computed the mean
based on data from both hospital-based
and freestanding SNFs. This mean was
weighted by the total number of
Medicare days of the facility.
(3) For each of the four measures of
cost (PT, OT, SLP, and total therapy
costs per day), we calculated the
arithmetic mean of the amounts
determined under steps (1) and (2)
above.
In section 3.10.3. of the SNF PDPM
technical report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html), we show the results of
these calculations.
The three steps outlined above
produce a measure of costs per day by
therapy discipline and a measure of
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total therapy costs per day. We divided
the discipline-specific (PT, OT, SLP)
cost measure by the total therapy cost
measure to obtain the percentage of the
therapy component that corresponds to
each therapy discipline. As we
discussed in the proposed rule (83 FR
21039), we believe that following a
methodology to derive the disciplinespecific therapy percentages that is
consistent with the methodology used to
determine the base rates in the 1998
interim final rule with comment period
is appropriate because a consistent
methodology helps to ensure that the
resulting base rates for the components
resemble what they would be had they
been established in 1998. We found that
PT, OT, and SLP costs correspond to
43.4 percent, 40.4 percent, and 16.2
percent of the therapy component of the
federal per diem rate for urban SNFs,
and 42.9 percent, 39.4 percent, and 17.7
percent of the therapy component of the
federal per diem rate for rural SNFs.
Under the proposed PDPM, we stated
that the current therapy case-mix
component would be separated into a
Physical Therapy component, an
Occupational Therapy component, and
a Speech-Language Pathology
component using the percentages
derived above. We stated that this
process would be done separately for
urban and for rural facilities. In the
appendix of the SNF PDPM technical
report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html) we provided the specific
cost centers used to identify PT, OT,
and SLP costs.
In addition, we proposed to separate
the current nursing case-mix component
into a nursing case-mix component and
an NTA component. Similar to the
therapy component, we calculated the
percentage of the current nursing
component of the federal base rates that
corresponds to each of the two proposed
PDPM components (NTA and nursing).
The 1998 reopening of the comment
period for the interim final rule (63 FR
65561, November 27, 1998) states that
NTA costs comprise 43.4 percent of the
current nursing component of the urban
federal base rate, and the remaining 56.6
percent accounts for nursing and social
services salary costs. These percentages
for the nursing component of the federal
base rate for rural facilities are 42.7
percent and 57.3 percent, respectively
(63 FR 65561). Therefore, we proposed
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to assign 43 percent of the current
nursing component of the federal base
rates to the new NTA component of the
federal base rates and assign the
remaining 57 percent to the new nursing
component of the federal base rates to
reflect what the base rates would have
been for these components if they had
been separately established in 1998.
As discussed in the proposed rule (83
FR 21040), we verified the 1998
calculation of the percentages of the
nursing component federal base rates
that correspond to NTA costs by
developing a measure of NTA costs per
day for urban and rural facilities. We
used the same data (that is, cost
information from 1995 cost reports) and
followed the same methodology
described above to develop measures of
PT, OT, and SLP costs per day and total
therapy costs per day. The measure of
NTA costs per day produced by this
analysis was $47.70 for urban facilities
and $47.30 for rural facilities. The
original 1998 federal base rates for the
nursing component, which relied on a
similar methodology, were $109.48 for
urban facilities and $104.88 for rural
facilities. Therefore, our measure of
NTA costs in urban facilities was
equivalent to 43.6 percent of the urban
1998 federal nursing base rate, and our
measure of NTA costs in rural facilities
was equivalent to 45.1 percent of the
rural 1998 federal nursing base rate.
These results are similar to the estimates
published in the 1998 reopening of the
comment period for the interim final
rule (63 FR 65561, November 27, 1998),
which we stated we believe supports the
validity of the 43 percent figure stated
above.
For illustration purposes, Tables 12
and 13 set forth what we stated the
unadjusted federal per diem rates would
be for each of the case-mix adjusted
components if we were to apply the
proposed PDPM to the FY 2019 base
rates given in Tables 4 and 5. These
were derived by dividing the FY 2019
SNF PPS base rates according to the
percentages described above. Tables 12
and 13 also show what the unadjusted
federal per diem rates for the non-casemix component would be, which are not
affected by the change in case-mix
methodology from RUG–IV to PDPM.
We used these unadjusted federal per
diem rates in calculating the impact
analysis discussed in section V.J. of the
proposed rule.
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39193
TABLE 12—FY 2019 PDPM UNADJUSTED FEDERAL RATE PER DIEM—URBAN 1
Rate component
Nursing
NTA
PT
OT
SLP
Non-case-mix
Per Diem Amount ....................................
$103.46
$78.05
$59.33
$55.23
$22.15
$92.63
1 The
rates shown in Tables 12 and 13 illustrate what the adjusted federal per diem rates would be for each of the case-mix adjusted components if we were to apply the proposed PDPM to the proposed FY 2019 base rates given in Tables 4 and 5.
TABLE 13—FY 2019 PDPM UNADJUSTED FEDERAL RATE PER DIEM—RURAL
Nursing
NTA
PT
OT
SLP
Non-case-mix
Per Diem Amount ....................................
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Rate component
$98.83
$74.56
$67.63
$62.11
$27.90
$94.34
We invited comments on the
proposed data sources and proposed
methodology for calculating the
unadjusted federal per diem rates that
would be used in conjunction with the
proposed PDPM effective October 1,
2019.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the Methodology Used for
the Calculation of Federal Base Payment
Rate Components. A discussion of these
comments, along with our responses,
appears below.
Comment: Some commenters
supported the proposed changes to the
SNF PPS base rates. One commenter
specifically highlighted their support for
including an NTA component. Some
commenters sought clarification
regarding how CMS intends to
distribute system resources currently
associated with the ‘‘therapy non-casemix’’ base rate. Specifically, they stated
that the FY 2019 SNF proposed rule and
the SNF PDPM technical report that
accompanied the proposed rule appear
to be inconsistent in describing how
resources associated with this payment
component will be distributed under the
new payment model. Commenters note
that the proposed rule stated that
resources associated with the ‘‘therapy
non-case-mix’’ base rate will be
redistributed among the three PDPM
case-mix therapy components, while the
SNF PDPM technical report states that
the ‘‘therapy non-case-mix’’ payment
component is dropped from the
payment model under PDPM.
Response: We appreciate the support
for our proposed changes. As stated in
the proposed rule, we believe it is
appropriate to eliminate the non-casemix therapy base rate because facilities
will be compensated for residents who
receive nominal amounts of therapy (for
example, therapy evaluations) through
the three PDPM base rates
corresponding to the three disciplines of
therapy provided in the SNF setting (PT,
OT, and SLP) under the new payment
model. In other words, whereas under
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the existing RUG–IV reimbursement
model, facilities receive a non-case-mix
therapy payment for residents who
receive nominal amounts of therapy,
under PDPM facilities would receive
payment for these residents through the
PT, OT, and SLP payment components.
Additionally, in setting component
base rates under PDPM, we sought to
replicate the methodology used to
estimate the SNF PPS original base rates
in 1998 as closely as possible. This is
consistent with the requirements of
section 1888(e)(4) of the Act, which
requires that SNF PPS per diem federal
payment rates be based on FY 1995
costs reports. Therefore, to ensure that
the PDPM base rates resembled as
closely as possible what they would
have been had these components been
established in 1998, we used FY 1995
cost reports to determine the share of
therapy costs accounted for by PT, OT,
and SLP. As described in the proposed
rule (83 FR 21038 through 21039) and
in section 3.10 of the SNF PDPM
technical report, we then used the
percentage of costs associated with each
of these disciplines to calculate the
corresponding base rates for the PT, OT,
and SLP components under PDPM.
Finally, as further discussed in
section 3.11 of the SNF PDPM technical
report, we adjusted CMIs for each of the
five case-mix-adjusted components of
PDPM to ensure budget neutrality
between RUG–IV and PDPM. In doing
so, we applied a multiplier to CMIs for
all five case-mix-adjusted PDPM
payment components so that total
estimated payments under PDPM are
budget neutral relative to RUG–IV. This
procedure effectively distributes
resources that are currently associated
with the ‘‘therapy non-case-mix’’
component of RUG–IV across all five
case-mix components of PDPM. We
acknowledge that the proposed rule
inadvertently stated that the resources
associated with the therapy non-case
mix component were distributed across
only the three PDPM case-mix therapy
components. Thus, we are clarifying
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that, while we did eliminate the therapy
non-case mix component from the
model, we redistributed resources
associated with this component across
the five PDPM case-mix components as
described in section 3.11 of the PDPM
technical report.
Comment: Many commenters
expressed concern regarding the base
rate for the SLP component, specifically
that it is much lower than that of the
other therapy base rates. Commenters
suggested that this may be taken to
devalue SLP services and that low
reimbursement will lead to a decrease in
the utilization of SLP services. Some
commenters further suggested that such
low reimbursement rates could lead to
layoffs among SLPs and believe that
PDPM should pay equally for all three
therapy disciplines.
Response: We appreciate the concerns
raised by these commenters regarding
the potential impact on SLP services
resulting from the payment policies in
relation to SLP services discussed in the
proposed rule. With regard to the
comment about the SLP component base
rate, as described above, we utilized the
proportion of the current therapy base
rate corresponding to each therapy
discipline as the basis for allocating the
therapy base rate as the basis for
allocating the therapy base rate among
each of the individual components. As
SLP services represented approximately
17 percent, on average, of overall
therapy costs, we believed it was
appropriate to allocate this percentage
as the base rate for the SLP component.
If we were to make all three components
equal, as one commenter had suggested,
then this would overinflate SLP
payment in relation to SLP costs. We
would note, however, that while the
base rate for the SLP component is
lower than the other therapy component
base rates, the case-mix weights for this
component, as described in section
V.B.3.c. of this final rule, are far greater
for the SLP component than for either
of the PT or OT components. This
reflects that when SLP services are
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predicted to be necessary, there is
adequate reimbursement for these
services. Therefore, we expect that
utilization of and access to SLP services
should not be adversely affected merely
because the base rate is lower for this
component.
Accordingly, after considering the
comments received, for the reasons
specified in the FY 2019 SNF PPS
proposed rule and in this final rule, we
are finalizing, effective October 1, 2019,
our proposals related to the calculation
of the federal base payment rate
components, as described in this
section, with the following clarification.
As discussed above, we are clarifying
that, while we did eliminate the therapy
non-case mix component from the
model, we redistributed resources
associated with this component across
the five PDPM case-mix components as
described in the PDPM technical report.
4. Updates and Wage Adjustments of
Revised Federal Base Payment Rate
Components
In section III.B. of the proposed rule,
we described the process used to update
the federal per diem rates each year.
Additionally, as discussed in section
III.B.4 of the proposed rule, SNF PPS
rates are adjusted for geographic
differences in wages using the most
recent hospital wage index data. Under
PDPM, we proposed to continue to
update the federal base payment rates
and adjust for geographic differences in
wages following the current
methodology used for such updates and
wage index adjustments under the SNF
PPS (83 FR 21040). Specifically, we
proposed to continue the practice of
using the SNF market basket, adjusted
as described in section III.B. of the
proposed rule to update the federal base
payment rates and to adjust for
geographic differences in wages as
described in section III.B.4. of the
proposed rule.
We received comments on the
proposed methodology for updating the
federal base payment rates and adjusting
the per diem rates for geographic
differences in wages under the PDPM.
Those comments, and our responses,
appear below.
Comment: Most commenters agreed
with using the standard rate update
policy and the existing wage index
policy as the basis for updating the
payment rates and adjusting the rates for
geographic variation. One commenter
stated that the lack of separate laborshare adjustment for each component
may lead to provision of fewer services
as each component would not be
appropriately wage adjusted. This
commenter stated that because CMS has
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classification system that accounts for
the relative resource utilization of
different patient types. The current casemix classification system uses a
combination of resident characteristics
and service intensity metrics (for
example, therapy minutes) to assign
residents to one of 66 RUGs, each of
which corresponds to a therapy CMI
and a nursing CMI, which are indicative
of the relative cost to a SNF of treating
residents within that classification
category. However, as noted in section
V.A. of the proposed rule, incorporating
service-based metrics into the payment
system can incentivize the provision of
services based on a facility’s financial
considerations rather than resident
needs. To better ensure that resident
care decisions appropriately reflect each
resident’s actual care needs, we stated
in the proposed rule (83 FR 21040) that
we believe it is important to remove, to
the extent possible, service-based
metrics from the SNF PPS and derive
payment from verifiable resident
characteristics that are patient, and not
facility, centered. To that end, as we
stated in the proposed rule, the
proposed PDPM was developed to be a
payment model which derives payment
classifications almost exclusively from
verifiable resident characteristics.
Additionally, the current RUG–IV
case-mix classification system reduces
the varied needs and characteristics of
a resident into a single RUG–IV group
that is used for payment. As of FY 2017,
of the 66 possible RUG classifications,
over 90 percent of covered SNF PPS
days are billed using one of the 23
Rehabilitation RUGs, with over 60
percent of covered SNF PPS days billed
using one of the three Ultra-High
Rehabilitation RUGs. As we stated in
the proposed rule (83 FR 21040), the
implication of this pattern is that more
than half of the days billed under the
SNF PPS effectively utilize only a
resident’s therapy minutes and
Activities of Daily Living (ADL) score to
determine the appropriate payment for
all aspects of a resident’s care. Both of
these metrics, more notably a resident’s
therapy minutes, may not derive so
much from the resident’s own
characteristics, but rather, from the type
and amount of care the SNF decides to
provide to the resident. We stated that
even assuming that the facility takes the
C. Design and Methodology for Case-Mix resident’s needs and unique
characteristics into account in making
Adjustment of Federal Rates
these service decisions, the focus of
1. Background on PDPM
payment remains centered, to a
Section 1888(e)(4)(G)(i) of the Act
potentially great extent, on the facility’s
requires that the Secretary provide an
own decision making and not on the
appropriate adjustment to account for
resident’s needs.
We explained in the proposed rule (83
case mix and that such an adjustment
FR 21041) that while the RUG–IV model
shall be based on a resident
already calculated payment amounts for
each component and because cost
reports contain all the information
necessary to determine the labor share
for each component, it would be
appropriate for CMS to make separate
wage adjustment calculations for each
PDPM component.
Response: We appreciate the support
for this proposal. With regard to the
comment that CMS should separately
wage adjust each PDPM component, the
labor-related share reflects the facility
Medicare-allowable costs (including all
of the PDPM components) that are laborintensive and vary with the local labor
market. Specifically, it is equal to the
following cost categories from the 2014based SNF market basket: Wages and
Salaries; Employee Benefits;
Professional Fees: Labor-Related;
Administrative and Facilities Support
Services; Installation, Maintenance, and
Repair Services; All Other: LaborRelated Services; and a proportion of
Capital-Related expenses. The majority
of these labor-related costs are derived
using the MCR data; however, a notable
portion is based on other government
data sources. A complete description of
the methodology used to derive the
2014-based SNF market basket is
available in the FY 2018 final rule (82
FR 36548 through 36566). Given that
these categories cut across PDPM
components, to wage adjust for each
component separately would require a
substantial increase in the specificity of
reporting these MCR data items, as well
as developing a methodology for
accurately assigning these costs to each
component. We believe that the
additional reporting burden associated
with implementing this suggestion
would not justify the increased
specificity of applying the wage index
adjustment to each component under
PDPM.
Accordingly, after considering the
comments received, for the reasons
specified in the FY 2019 SNF PPS
proposed rule (83 FR 21040) and
discussed in this section, we are
finalizing our proposal, without
modification, for updating the federal
base payment rates and for adjusting the
per diem rates for geographic
differences in wages under the PDPM,
effective October 1, 2019.
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utilizes a host of service-based metrics
(type and amount of care the SNF
decides to provide) to classify the
resident into a single RUG–IV group, the
proposed PDPM would separately
identify and adjust for the varied needs
and characteristics of a resident’s care
and combine this information together
to determine payment. We stated we
believe the proposed PDPM would
improve the SNF PPS by basing
payments predominantly on clinical
characteristics rather than service
provision, thereby enhancing payment
accuracy and strengthening incentives
for appropriate care. For these reasons,
we proposed that, effective October 1,
2019, SNF residents would be classified
using the PDPM, as further discussed
below. As discussed in the proposed
rule and in section V.I. of this final rule,
we proposed to implement the PDPM on
October 1, 2019 to allow all
stakeholders adequate time for systems
updates and staff training needed to
assure smooth implementation.
2. Data Sources Utilized for Developing
PDPM
To understand, research, and analyze
the costs of providing Part A services to
SNF residents, we utilized a variety of
data sources in the course of research.
In the proposed rule (83 FR 21041) and
in this section, we discuss these sources
and how they were used in the SNF
PMR in developing the proposed PDPM.
A more thorough discussion of the data
sources used during the SNF PMR is
available in section 3.1. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html).
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a. Medicare Enrollment Data
Beneficiary enrollment and
demographic information was extracted
from the CMS enrollment database
(EDB) and Common Medicare
Environment (CME). Beneficiaries’
Medicare enrollment was used to apply
restrictions to create a study population
for analysis. For example, beneficiaries
were required to have continuous
Medicare Part A enrollment during a
SNF stay. Demographic characteristics
(for example, age) were incorporated as
being predictive of resource use.
Furthermore, enrollment and
demographic information from these
data sources were used to assess the
impact of the proposed PDPM on
subpopulations of interest. In particular,
the EDB and CME include indicators for
potentially vulnerable subpopulations,
such as those dually-enrolled in
Medicaid and Medicare.
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b. Medicare Claims Data
Medicare Parts A and B claims from
the CMS Common Working File (CWF)
were used to conduct claims analyses as
part of the SNF PMR. SNF claims
(CMS–1450 form, OMB control number
0938–0997), including type of bill (TOB)
21x (SNF Inpatient Part A) and 18x
(hospital swing bed), were used to
identify Medicare Part A stays paid
under the SNF PPS. Part A stays were
constructed by linking claims that share
the same beneficiary, facility CMS
Certification Number (CCN), and
admission date. Stays created from SNF
claims were linked to other claims data
and assessment data via beneficiary
identifiers.
Acute care hospital stays that
qualified the beneficiary for the SNF
benefit were identified using Medicare
inpatient hospital claims. The dates of
the qualifying hospital stay listed in the
span codes of the SNF claim were used
to connect inpatient claims with those
dates listed as the admission and
discharge dates. Although there are
exceptions, the claims from the
preceding inpatient hospitalization
commonly contain clinical and service
information relevant to the care
administered during a SNF stay.
Components of this information were
used in the regression models predicting
therapy and NTA costs and to better
understand patterns of post-acute care
(PAC) referrals for patients requiring
SNF services. Additionally, the most
recent hospital stay was matched to the
SNF stay, which often (though not
always) was the same as the preceding
inpatient hospitalization, and used in
the regression models.
Other Medicare claims, including
outpatient hospital, physician, home
health, hospice, durable medical
equipment, and drug prescriptions,
were incorporated, as necessary, into
the analysis in one of three ways: (1) To
verify information found on assessments
or on SNF or inpatient claims; (2) to
provide additional resident
characteristics to test outside of those
found in assessment and SNF and
inpatient claims data; and (3) to stratify
modeling results to identify effects of
the system on beneficiary
subpopulations. These claims were
linked to SNF claims using beneficiary
identifiers.
c. Assessment Data
Minimum Data Set (MDS)
assessments were the primary source of
resident characteristic information used
to explain resource utilization in the
SNF setting. The data repositories
include MDS assessments submitted by
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SNFs and swing-bed hospitals. MDS
version 2.0 assessments were submitted
until October 2010, at which point MDS
version 3.0 assessments began. MDS
data were extracted from the Quality
Improvement Evaluation System (QIES).
MDS assessments were then matched to
SNF claims data using the beneficiary
identifier, assessment indicator,
assessment date, and Resource
Utilization Group (RUG).
d. Facility Data
Facility characteristics, while not
considered as explanatory variables
when modeling service use, were used
for impact analyses. By incorporating
this facility-level information, we could
identify any disproportionate effects of
the proposed case-mix classification
system on different types of facilities.
Facility-level characteristics were
taken from the Certification and Survey
Provider Enhanced Reports (CASPER).
From CASPER, we draw facility-level
characteristics such as ownership,
location, facility size, and facility type.
CASPER data were supplemented with
information from publicly available data
sources. The principal data sources that
are publicly available include the
Medicare Cost Reports (Form 2540–10,
2540–96, and 2540–92) extracted from
the Healthcare Cost Report Information
System (HCRIS) files, Provider-Specific
Files (PSF), Provider of Service files
(POS), and Nursing Home Compare
(NHC). These data sources have
information on facility costs, payment,
and characteristics that directly affect
PPS calculations.
We received comments from
stakeholders regarding the data used to
develop PDPM, though we address these
comments later in this section in
relation to the specific PDPM
component to which the comments
were addressed.
3. Resident Classification Under PDPM
a. Background
As noted above, section
1888(e)(4)(G)(i) of the Act requires that
the Secretary provide for an appropriate
adjustment to account for case mix and
that such an adjustment shall be based
on a resident classification system that
accounts for the relative resource
utilization of different patient types. As
we stated in the proposed rule (83 FR
21040), the proposed PDPM was
developed to be a payment model which
derives almost exclusively from resident
characteristics. We stated that the
proposed PDPM would separately
identify and adjust five different casemix components for the varied needs
and characteristics of a resident’s care
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and then combine these together with
the non-case-mix component to form the
full SNF PPS per diem rate for that
resident.
We stated in the proposed rule (83 FR
21041 through 21042) that, as with any
case-mix classification system based on
resident characteristics, the proposed
predictors that would be part of casemix classification under PDPM are those
which our analysis identified as
associated with variation in costs for the
given case-mix component. We
explained that the proposed federal per
diem rates discussed above serve as
‘‘base rates’’ specifically because they
set the basic average cost of treating a
typical SNF resident. Based on the
presence of certain needs or
characteristics, caring for certain
residents may cost more or less than
that average cost. We explained that a
case-mix system identifies certain
aspects of a resident or of a resident’s
care which, when present, lead to
average costs for that group being higher
or lower than the average cost of treating
a typical SNF resident. For example, if
we found that therapy costs were the
same for two residents regardless of
having a particular condition, then that
condition will not be relevant in
predicting increases in therapy costs. If,
however, we found that, holding all else
constant, the presence of a given
condition was correlated with an
increase in therapy costs for residents
with that condition over those without
that condition, then this could mean
that this condition is indicative, or
predictive, of increased costs relative to
the average cost of treating SNF
residents generally.
In the subsections that follow, we
describe each of the five case-mix
adjusted components under the
proposed PDPM and the basis for each
of the predictors that we stated would
be used within the PDPM to classify
residents for payment purposes.
b. Physical and Occupational Therapy
Case-Mix Classification
As we stated in the proposed rule (83
FR 21042), a fundamental aspect of the
proposed PDPM is to use resident
characteristics to predict the costs of
furnishing similarly situated residents
with SNF care. Costs derived from the
charges on claims and cost-to-charge
ratios (CCRs) on facility cost reports
were used as the measure of resource
use to develop the proposed PDPM. We
explained that costs better reflect
differences in the relative resource use
of residents as opposed to charges,
which partly reflect decisions made by
providers about how much to charge
payers for certain services. We further
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explained that costs derived from
charges are reflective of therapy
utilization as they are correlated to the
therapy minutes recorded for each
therapy discipline. Under the current
RUG–IV case-mix model, therapy
minutes for all three therapy disciplines
(PT, OT, SLP) are added together to
determine the appropriate case-mix
classification for the resident. However,
as shown in section 3.3.1. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html), and as
explained in the proposed rule, when
we began to investigate resident
characteristics predictive of therapy
costs for each therapy discipline, we
found that PT and OT costs per day are
only weakly correlated with SLP costs
per day (correlation coefficient of 0.04).
The set of resident characteristics from
the MDS that predicted PT and OT
utilization was different than the set of
characteristics predicting SLP
utilization. Additionally, many
predictors of high PT and OT costs per
day predicted lower SLP costs per day,
and vice versa. For example, we found
that residents with cognitive
impairments receive less physical and
occupational therapy but receive more
speech-language pathology. As a result
of this analysis, as we explained in the
proposed rule, we found that basing
case-mix classification on total therapy
costs per day obscured differences in
the determinants of PT, OT, and SLP
utilization.
In contrast, we stated in the proposed
rule (83 FR 21042) that the correlation
coefficient between PT and OT costs per
day was high (0.62). Additionally,
regression analyses found that
predictors of high PT costs per day were
also predictive of high OT costs per day.
For example, the analyses found that
late-loss ADLs are strong predictors of
both PT and OT costs per day. We then
used a range of resident characteristics
to predict PT and OT costs per day
separately and we found that the
coefficients in both models followed
similar patterns. Finally, we noted that
resident characteristics were found to be
better predictors of the sum of PT and
OT costs per day than for either PT or
OT costs separately. These analyses
used a variety of items from the MDS as
independent variables and used PT, OT,
and SLP costs per day as dependent
variables. In the proposed rule, we
referred readers to section 3.3.1. of the
SNF PMR technical report that
accompanied the ANPRM available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
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SNFPPS/therapyresearch.html for more
information on these analyses.
Given the results of this analytic
work, as well as feedback from multiple
stakeholders, we proposed three
separate case-mix adjusted components,
one corresponding to each therapy
discipline: PT, OT, and SLP. In the
original RCS–I model presented in the
ANPRM, we stated that we were
considering addressing PT and OT
services through a single component,
given the strong correlation between PT
and OT costs and our finding that very
similar predictors explained variation in
the utilization of both therapy
disciplines. However, as we explained
in the proposed rule (83 FR 21042),
commenters on the ANPRM stated that
having a single combined PT and OT
component could encourage providers
to inappropriately substitute PT for OT
and vice versa. We stated that this belief
comports with feedback received from
professional organizations and other
stakeholders during technical expert
panels (TEPs). The TEP commenters
stated that PT and OT services should
be addressed via separate components
given the different aims of the two
therapy disciplines and differences in
the clinical characteristics of the
resident subpopulations for which PT or
OT services are warranted. For example,
clinicians consulted during
development of PDPM advised that
personal hygiene, dressing, and upper
extremity motion may bear a closer
clinical relationship to OT utilization,
while lower extremity motion may be
more closely related to PT utilization.
We stated in the proposed rule that
while we do not believe that RCS–I,
which included two separate
components for PT/OT and SLP,
contained stronger incentives for
substitution across therapy disciplines
compared to RUG–IV, which reimburses
all three therapy disciplines through a
single therapy component, we concur
with the TEP commenters that PT and
OT have different aims and that there
are clinically relevant differences
between residents who could benefit
from PT, residents who could benefit
from OT, and residents who could
benefit from both disciplines. For the
foregoing reasons, we decided to
separate the combined PT/OT
component presented in the ANPRM
into two separate case-mix adjusted
components in the proposed PDPM. As
we stated in the proposed rule, because
of the strong correlation between the
dependent variables used for both
components and the similarity in
predictors, we decided to maintain the
same case-mix classification model for
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both components. We stated that in
practice, this means that the same
resident characteristics will determine a
resident’s classification for PT and OT
payment. However, we stated that each
resident would be assigned separate
case-mix groups for PT and OT
payment, which correspond to separate
case-mix indexes and payment rates. We
explained that we believe providing
separate case-mix-adjusted payments for
PT and OT may allay concerns about
inappropriate substitution across
disciplines and encourage provision of
these services according to clinical
need. We further noted that as clinical
practices evolve independently of
incentives created by the current RUG–
IV payment model, we would reevaluate the different sets of resident
characteristics that are predictive of PT
and OT utilization after the PDPM is
implemented. We stated that if based on
this re-evaluation we determine that
different sets of characteristics are
predictive of PT and OT resource
utilization, we could consider revising
the payment model to better reflect
clinical differences between residents
who receive PT services and those who
receive OT services.
After delineating the three separate
case-mix adjusted therapy components,
we continued our analysis, as described
in the proposed rule (83 FR 21043), by
identifying resident characteristics that
were best predictive of PT and OT costs
per day. To accomplish this, we
conducted cost regressions with a host
of variables from the MDS assessment,
the prior inpatient claims, and the SNF
claims that were believed to be
potentially predictive of relative
increases in PT and OT costs. As we
stated in the proposed rule, the
variables were selected with the goal of
being as inclusive as possible with
respect to characteristics related to the
SNF stay and the prior inpatient stay.
The selection also incorporated clinical
input. We explained that these initial
costs regressions were exploratory and
meant to identify a broad set of resident
characteristics that are predictive of PT
and OT resource utilization. The results
were used to inform which variables
should be investigated further and
ultimately included in the payment
system. A table of all of the variables
considered as part of this analysis
appears in the appendix of the SNF
PMR technical report that accompanied
the ANPRM available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html. As explained in the
proposed rule, based on our regression
analyses, we found that the three most
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relevant categories of predictors of PT
and OT costs per day were the clinical
reasons for the SNF stay, the resident’s
functional status, and the presence of a
cognitive impairment. More information
on this analysis can be found in section
3.4.1. of the SNF PDPM technical report
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/therapy
research.html.
Under the RUG–IV case-mix model,
residents are first categorized based on
being a rehabilitation resident or a nonrehabilitation resident, then categorized
further based on additional aspects of
the resident’s care. As explained in the
proposed rule (83 FR 21043), under the
proposed PDPM, for the purposes of
determining the resident’s PT and OT
groups and, as will be discussed below,
the resident’s SLP group, the resident
would first be categorized based on the
clinical reasons for the resident’s SNF
stay. We stated that empirical analyses
demonstrated that the clinical basis for
the resident’s stay (that is, the primary
reason the resident is in the SNF) is a
strong predictor of therapy costs. For
example, we explained that all of the
clinical categories (described below)
developed to characterize the primary
reason for a SNF stay (except the
clinical category used as the reference
group) were found to be statistically
significant predictors of therapy costs
per day. More detail on these analyses
can be found in section 3.4.1. of the SNF
PMR technical report that accompanied
the ANPRM (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html). In consultation with
stakeholders (industry representatives,
beneficiary representatives, clinicians,
and payment policy experts) at multiple
technical expert panels (TEPs), we
created a set of ten inpatient clinical
categories that we believe capture the
range of general resident types which
may be found in a SNF. These proposed
clinical categories were provided in
Table 14 of the proposed rule (83 FR
21043) and are reflected in Table 14.
TABLE 14—PDPM CLINICAL
CATEGORIES
Major Joint Replacement or Spinal Surgery.
Non-Surgical Orthopedic/Musculoskeletal.
Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery).
Acute Infections.
Medical Management.
Cancer.
Pulmonary.
Cardiovascular and Coagulations.
Acute Neurologic.
Non-Orthopedic Surgery.
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We proposed to categorize a resident
into a PDPM clinical category using
item I8000 on the MDS 3.0. We stated
in the proposed rule (83 FR 21043) that
providers would use the first line in
item I8000 to report the ICD–10–CM
code that represents the primary reason
for the resident’s Part A SNF stay. We
further stated that this code would be
mapped to one of the ten clinical
categories provided in Table 14 of the
proposed rule (set forth at Table 14 of
this final rule). The mapping between
ICD–10–CM codes and the ten clinical
categories is available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html. As explained in the
proposed rule, the mapping indicates
that in some cases, a single ICD–10–CM
code maps to more than one clinical
category because the care plan for a
resident with this diagnosis may differ
depending on the inpatient procedure
history. In these cases, we explained
that a resident may be categorized into
a surgical clinical category if the
resident received a surgical procedure
during the immediately preceding
inpatient stay that relates to the primary
reason for the Part A SNF stay and
typically requires extensive postsurgical rehabilitation or nursing care. If
the resident did not receive a related
surgical procedure during the prior
inpatient stay that typically requires
extensive post-surgical rehabilitation or
nursing care, the resident may be
categorized into a non-surgical clinical
category. For example, we explained
that certain wedge compression
fractures that were treated with an
invasive surgical procedure such as a
fusion during the prior inpatient stay
would be categorized as Major Joint
Replacement or Spinal Surgery, but if
these cases were not treated with a
surgical procedure they would be
categorized as Non-Surgical Orthopedic/
Musculoskeletal. For residents who
received a related surgical procedure
during the prior inpatient stay, we
stated that a provider would need to
indicate the type of surgical procedure
performed for the resident to be
appropriately classified under PDPM.
Thus, in these cases we proposed to
require providers to record the type of
inpatient surgical procedure performed
during the prior inpatient stay so that
residents can be appropriately classified
into a PDPM clinical category for
purposes of PT, OT, and SLP
classification. We proposed that
providers record the type of surgical
procedure performed during the prior
inpatient stay by coding an ICD–10–PCS
code that corresponds to the inpatient
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surgical procedure in the second line of
item I8000 in cases where inpatient
surgical information is required to
appropriately categorize a resident
under PDPM. We noted that if we were
to use the second line of item I8000 to
record inpatient surgical information,
we would provide a list of ICD–10–PCS
codes that map to the surgical clinical
categories. We stated that we believe
this approach would allow for patients
to be appropriately classified under the
PDPM because it would provide
sufficient information on the primary
reason for SNF care and inpatient
surgical procedures to assign a resident
to the appropriate surgical or nonsurgical clinical category. We invited
comments on this proposal. In addition,
we solicited comments on alternative
methods for recording the type of
inpatient surgical procedure to
appropriately classify a patient into a
clinical category. We explained that the
clinical category into which the resident
is classified would be used to classify
the resident into a PT and OT category
as discussed below, as well as an SLP
category, as explained in section
V.D.3.c. of the proposed rule.
As discussed above, we proposed to
categorize a resident into a PDPM
clinical category for purposes of PT, OT,
and SLP classification using the ICD–
10–CM code in the first line of item
I8000, and if applicable, the ICD–10 PCS
code in the second line of item I8000.
As an alternative to using item I8000 to
classify a resident into a clinical
category, we stated in the proposed rule
(83 FR 21044) that we were considering
using a resident’s primary diagnosis as
reflected in MDS item I0020 as the basis
for assigning the resident to a clinical
category, and were evaluating the
categories provided in item I0020 to
determine if there is sufficient overlap
between the categories used in item
I0020 and the proposed PDPM clinical
categories provided in Table 14 that this
item could serve as the basis for a
resident’s initial classification into a
clinical category under PDPM. We
stated that the MDS item I0020 would
require facilities to select a primary
diagnosis from a pre-populated list of
primary diagnoses representing the most
common types of beneficiaries treated in
a SNF, while item I8000, if used to
assign residents to clinical categories,
would require facilities to code a
specific ICD–10–CM code that
corresponds to the primary reason for
the resident’s Part A SNF stay. As
indicated above, we also proposed that
providers would code a specific ICD–
10–PCS code in the second line of item
I8000 when surgical information from
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the prior inpatient stay is necessary to
assign a resident to a clinical category.
We explained that if we were to use
item I0020 to categorize residents under
PDPM, we would not require providers
to record additional information on
inpatient surgical procedures as we
expect the primary diagnosis
information provided through item
I0020 to be adequate to appropriately
assign a resident to a clinical category.
We invited comments on our proposal
to categorize a resident into a PDPM
clinical category using the ICD–10–CM
code recorded in the first line of item
I8000 on the MDS 3.0, and the ICD–10–
PCS code recorded on the second line
of item I8000 on the MDS 3.0. In
addition, we solicited comments on the
alternative of using item I0020 on the
MDS 3.0, as discussed above, as the
basis for resident classification into one
of the ten clinical categories in Table 14.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the clinical category
assignments under PDPM. A discussion
of these comments, along with our
responses, appears below.
Comment: Several commenters
expressed concern about ICD–10 coding
requirements under PDPM. Some
commenters are concerned that these
requirements, especially ICD–10–PCS
coding requirements, would create
compliance risks because of SNFs’
limited expertise in using ICD codes. A
few commenters request that CMS offer
ICD–10 coding training for clinicians,
billers, coders, and other SNF
personnel, prior and subsequent to
PDPM implementation. Another
commenter requested that CMS provide
case studies and other resources as part
of its educational strategy with respect
to ICD–10 coding in the SNF setting.
This commenter also recommended that
CMS develop explicit instructions for
how providers should record diagnosis
and procedure information in MDS item
I8000 for resident classification
purposes under PDPM. One commenter
recommends requiring the employment
of credentialed medical record staff to
ensure accurate coding. One commenter
seeks clarification about potential
consequences of ICD–10 coding errors
during RAC audits. Another commenter
questioned if the proposed ICD–10
coding is considered a transaction under
the HIPPA transaction coding
requirement.
Response: We appreciate the
commenters’ concerns regarding ICD–10
coding, but do not concur with
stakeholder claims that SNF providers
are unfamiliar with ICD–10 coding
practices. While ICD–10 codes are not,
in most instances, a factor in
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determining payment under the current
SNF Part A benefit, ICD–10 has been an
aspect of Medicare since FY 2016.
Moreover, ICD–10 provides the most
accurate coding and diagnosis
information on patients, which can only
serve to improve provider
understanding of their patient’s
condition and resultant care plan.
Finally, we believe that given the type
of homogeneity of care currently
provided by SNF providers (as
evidenced by the existing case-mix
distribution that has over 90 percent of
patient billed days in one of 23 RUGs
that utilize therapy service utilization as
the primary determinant), moving to a
system that utilizes the primary patient
diagnosis as the key determinant of
payment will help to ensure that the
patient’s unique condition and goals is
the primary driver of care planning and
care delivery and case mix
classification, rather than the patient’s
ability to tolerate a high volume of
therapy services.
With regard to the comment that CMS
offer ICD–10 coding training for
clinicians and other personnel, we do
not believe it is the role of CMS to offer
this type of professional training, as it
is the responsibility of the provider to
ensure that their staff is properly trained
to perform these types of more general
tasks that are not specific to a given
payer or requirement. With regard to the
comment that CMS provide case studies
and other resources as part of an
educational strategy, we appreciate this
comment and will take it into
consideration as we develop the
educational materials for PDPM. In
terms of the explicit instructions for
how providers record diagnosis and
procedure information, we do intend to
provide such information in the MDS
RAI manual.
With regard to the comment that we
should require that providers employ
credentialed medical record staff to
ensure accurate coding, we agree that
the emphasis on ICD–10 could cause
changes in staffing at some providers.
However, we do not believe it would be
appropriate for CMS, in this instance, to
specifically identify the type of staff that
providers must employ to ensure
accurate coding, as this is a decision
best left to the provider. With regard to
the potential consequences of ICD–10
coding errors on RAC audits, as under
the current payment system, the
information reported to CMS must be
accurate. Inaccuracies in the data
reported to CMS, or a failure to
document the basis for such data, will
necessitate the same types of
administrative actions as occur today.
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Finally, with regard to the question of
whether the reporting of ICD–10 coding
information constitutes a HIPAA
transaction, we note that while some
HIPAA Administrative Simplification
requirements at 45 CFR part 162 require
the use of ICD–10 codes, reporting ICD–
10 codes does not in and of itself
constitute a HIPAA transaction.
Comment: One commenter stated that
CMS’s proposal to use the first line of
I8000 to capture the primary reason for
SNF stay, the second line to capture
procedure code, and the remaining
spaces to capture comorbidities is
overly complex. The commenter
expressed concern that coding a
procedure code in the second line of
I8000 would not follow current RAI
coding instructions. Some commenters
support using MDS item I0020 to record
the primary diagnosis, stating this will
reduce provider burden. Other
commenters opposed using item I0020
for this purpose because this item is
designed for the Quality Reporting
Program and does not align well with
the PDPM clinical categories. One
commenter stated that coding primary
reason for SNF care in both item I8000
and item I0020 for different purposes
will be confusing and will lead to errors.
Another commenter sought clarity on
whether providers would still be
required to code ICD–10 diagnosis or
procedure codes in item I8000 if item
I0020 is used for resident classification.
This commenter also questioned what
providers should do if a resident does
not fall into one of the I0020 categories.
A few commenters suggest instead
adding checkboxes in section I of the
MDS to indicate the ten PDPM clinical
categories. One commenter
recommended the use of MDS item
J2000 for procedure information,
because SNFs have minimal experience
with ICD–10–PCS codes and it can be
difficult to obtain precise information
on procedures performed during the
preceding inpatient stay.
Response: We appreciate these
comments regarding the complexity of
the proposed methodology for collecting
diagnosis and procedure information
and appreciate the suggestions for ways
to improve coding without
compromising the overall integrity of
the information reported. We agree with
commenters who stated that the I0020
categories are not currently aligned with
the clinical categories used under
PDPM, specifically that the categories
used under I0020 do not match the
clinical categories that we use under
PDPM, which means that using I0020 at
this time would not be appropriate. We
will continue to work to determine if
refinements may be made in that item
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in the future which could allow for a
transition to this item. With regard to
comments concerning the potential for
confusion associated with coding the
patient’s primary diagnosis in both
I8000 and I0020 for different purposes,
we believe this both affords the
potential to confirm the primary
diagnosis coding on the MDS (to the
extent that we can identify areas of
alignment between the two items) and
helps us to refine the categories for a
potential future transition to item I0020
under PDPM. With regard to the
question of what providers should do if
a patient does not fall into one of the
I0020 categories, we would recommend
that the provider refer to the I0020
coding instructions in the MDS manual
for guidance on this issue.
With regard to suggestions of using a
checkbox for recording diagnosis
information, we believe that the use of
such checkboxes for recording diagnosis
information may not provide sufficient
granularity for CMS to monitor properly
the effects of PDPM implementation or
to accurately classify patients for
payment purposes, nor provide enough
information for the SNF in terms of care
planning. Given the use of ICD–10
diagnosis coding in other Medicare
payment systems and given efforts to
align payment across multiple postacute care payment systems, we believe
that using the actual diagnosis code,
rather than a checkbox for a category,
will provide greater consistency
between payment systems and would
provide a smoother transition to the
extent such payment systems are
aligned further in the future.
With regard to the comment that CMS
consider using item J2000 to report
procedural information, we believe that
while the actual ICD–10 code is
important in the case of diagnosis
coding, we agree with the commenter
that the procedural information may be
coded at a more aggregated level, as this
information is only being used to
augment the patient’s classification
rather than as the primary basis for the
classification. However, we believe that
item J2000 (which requires providers to
report if the patient experienced a
surgical procedure in the preceding 100
days) would not adequately link to the
care being delivered in the SNF,
potentially close to 100 days after the
surgical event. To address this,
consistent with this commenter’s
suggestion, and in response to other
concerns about the complexity of the
proposed methodology, we believe that
it would be appropriate and sufficient to
develop subitems for item J2000 that
would allow providers to report,
through a checkbox-style mechanism, if
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a surgical procedure occurred during
the preceding hospital stay (as opposed
to the previous 100 days, as is used for
J2000), and then provide a series of
procedural categories, related to the
PDPM clinical categories, that providers
could select using a checkbox style
mechanism, that would allow the
provider to report on the relevant
procedural information (rather than
recording the specific ICD–10–PCS
code). We believe this is a substantial
improvement to the procedure we
proposed for recording surgical
procedure information, as it reduces the
burden and complexity of provider
reporting on procedural information
while maintaining payment accuracy
and integrity. Moreover, similar to how
PDPM utilizes the procedural
information to augment the patient’s
clinical category classification, we
believe that using a checkbox
mechanism also augments care-planning
by helping ensure that the procedural
history information from the hospital is
properly taken into account in
determining the resident’s care needs
and care plan. Therefore, we are
developing sub-items for item J2000,
which will allow providers to report the
patient’s procedural information in a
way that uses a checkbox mechanism,
and this procedural information will be
used in concert with the patient’s
diagnosis information, as was discussed
above and in the FY 2019 SNF PPS
proposed rule, to classify the patient
into a clinical category. We will provide
both the subitems under item J2000, and
the instructions regarding their use, for
this purpose in the RAI manual.
Comment: One commenter was
opposed to PDPM’s focus on one
primary diagnosis, as SNF residents can
be admitted with complex medical
conditions and multiple diagnoses. The
commenter recommends that SNFs
should select all resident conditions and
allow the software to select the highest
case-mix index achieved. In a similar
vein, another commenter requested that
CMS clarify which inpatient procedure
SNFs should select for purposes of
resident classification and payment
under PDPM when the patient record
includes multiple procedure codes.
Response: While we agree with the
commenter that a SNF patient may
suffer from multiple conditions, we
believe that one of these reasons
prompted transfer to the SNF. This
reason would function as the patient’s
primary diagnosis, as it represents the
primary reason for the patient being in
the SNF. We would also note that
primary diagnosis, as a concept, is used
throughout the Medicare program as the
basis for payment and, in each area in
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which it is used, patients have the
potential to present with multiple
conditions and multiple diagnoses.
Therefore, we do not believe it would be
appropriate for providers simply to
report all conditions and be paid for the
highest case-mix index, but rather that
providers should determine the primary
reason for the patient’s stay, as this
should also be the primary motivation
behind the patient’s SNF care.
With regard to the comment related to
multiple inpatient surgical procedures,
we expect that the checkbox mechanism
discussed above, which would include
more aggregated procedural groupings,
should address much of this possibility,
as often times multiple procedures may
be done of the same type. In the case of
different types of procedures, providers
should code or check-off all information
supportable by the patient’s medical
record.
Comment: One commenter stated that
ICD–10 codes do not contain adequate
specificity to indicate whether a
condition is active/stable or active/nonstable. This information, according to
the commenter, is needed to identify
relevant comorbidities. As a result, the
commenter states that SNFs may
inappropriately use active/stable
conditions to achieve higher
reimbursement although these
conditions may not indicate higher
resource utilization.
Response: We do not agree with the
commenter that the ICD–10 codes do
not contain this degree of specificity.
Further, to the extent that providers
would code conditions solely for
purposes of achieving higher
reimbursement, this type of behavior
can be identified through medical
record reviews, which could prompt
additional administrative action.
Comment: One commenter stated that
chronic conditions may not be coded
consistently year over year. Specifically,
a chronic condition may be coded one
year but not the following year for a
long term care resident moving in and
out of post-acute stays or a post-acutecare patient with more than one spell of
illness. For example, the commenter
noted that care may have been provided
to the patient but the provider did not
accurately capture it in reporting. The
commenter further stated that such
coding inconsistencies may lead to
unexpected payment changes. The
commenter recommended that CMS
should clarify how chronic conditions
should be reported and handled by
medical reviewers as PDPM is
implemented.
Response: We do not believe that any
of the PDPM-related policies should
affect the reporting of chronic
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conditions. Care should be properly
documented, regardless of whether it is
for a chronic or acute condition. Failure
to document and code such information
accurately could lead not only to
payment errors, but also to patient care
errors. We encourage providers to
ensure the accuracy and completeness
of their documentation.
Comment: Several commenters
expressed concern about potential
logistical issues arising from the time
lag in SNFs receiving clinical
information on admitted patients from
the prior inpatient stay. Specifically,
they state that it is difficult for SNF
providers to obtain diagnosis and
procedure information, as well as other
clinical information such as discharge
summaries, from the facility where a
resident was treated during their prior
inpatient stay. A commenter
recommended that CMS require
hospitals to provide diagnostic and
procedural information within 48 hours
of discharge to the receiving facility.
This commenter requested that CMS
clarify which medical records SNFs may
rely upon to determine the principal
reason for a SNF stay or which inpatient
procedures were performed. The
commenter questioned how SNFs
should assess this information if they
lack adequate documentation.
Additionally, commenters stated that
ICD–10–CM and ICD–10–PCS coding
require a high level of clinical detail
that may be difficult to obtain without
clinical information from the prior
inpatient stay.
Response: For case-mix classification
under the PDPM, SNFs will not be
required to collect any information from
the hospital where the prior inpatient
stay took place beyond that which is
required under the current RUG–IV
system, except for the procedural
information discussed above. The
information that SNFs already collect
from hospitals should already include
sufficient information for the SNF to be
able to properly care plan and provide
care based on the patient’s condition. In
order to do this effectively, SNFs should
already be receiving documentation and
records from the hospital that
substantiate the need for care and the
type of care that is required for that
patient. This level of information, that is
essential in developing an appropriate
care plan for the patient, should be
sufficient for addressing the payment
requirements under PDPM. For proper
classification and payment under
PDPM, facilities will only be required to
record the primary reason for SNF care
at the time of SNF admission and record
the associated ICD–10–CM code and
procedural information. As discussed in
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Chapter 8 of the Medicare Benefit Policy
Manual, a beneficiary in a Medicare Part
A SNF stay must require skilled nursing
care for a condition that was treated
during the qualifying hospital stay, or
for a condition that arose while in the
SNF for treatment of a condition for
which the beneficiary was previously
treated in the hospital. However, CMS
recognizes that in many cases, the
primary reason for SNF care may not be
the same as the primary reason for the
prior inpatient stay. For example, a
beneficiary may be treated in a SNF for
a secondary condition that arose during
the prior inpatient stay but that is
different from the condition that
precipitated the acute inpatient stay in
the first place. PDPM requires facilities
to code the diagnosis that corresponds
most closely to the primary reason for
SNF care (in this case, the secondary
condition that arose during the hospital
stay) rather than the primary reason for
the prior hospitalization. Facilities
currently must assess beneficiaries’
health status and reason for SNF care at
admission in order to treat them
appropriately and formulate a patientcentered care plan. PDPM does not
require a level of data collection that
exceeds the requirements of the existing
admission and care planning processes.
Therefore, PDPM does not require SNFs
to obtain additional clinical information
from the inpatient setting, beyond the
surgical procedure information
discussed above.
Comment: One commenter
recommended that CMS allow providers
to correct the diagnosis or procedure
information recorded at admission any
time prior to discharge and to direct
Medicare Administrative Contractors,
Recovery Audit Contractors, and other
contractors to assign low priority to
reviewing ICD–10 codes in the medical
review process.
Response: We appreciate the
commenter’s concern and would note
that there are existing processes for
modifying and correcting MDS
assessments, as described in Chapter 5
of the MDS RAI manual. With regard to
the comment on CMS directing
contractor review activities, we see no
reason to assign low priority to any
issues at this time.
Comment: One commenter requested
additional information about codes
listed as ‘‘Return to Provider’’ in the
PDPM Clinical Category Mapping.
Specifically, the commenter requested
that CMS provide clarity on why these
codes are not accepted as valid primary
diagnoses for the purposes of resident
classification. Additionally, the
commenter requests clarification on
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what actions providers are required to
take when a code is returned.
Response: As discussed above and in
the proposed rule (83 FR 21043), PDPM
would use ICD–10–CM diagnosis codes
entered in the first line of section I8000
on the MDS assessment to assign
residents to clinical categories for
classification and payment purposes in
three PDPM payment components (PT,
OT, and SLP). Codes listed in the PDPM
Clinical Category Mapping as ‘‘Return to
Provider’’ are not deemed appropriate to
enter as the primary reason for SNF
care. Such codes either lack certainty
and specificity required to properly
categorize a resident under PDPM or the
underlying condition cannot be the
main reason of care in SNFs. Therefore,
these codes cannot be used to assign a
resident to a clinical category for
payment purposes under PDPM. When
a code is returned to a provider, the
provider is to select an appropriate ICD–
10–CM diagnosis code from the SNF
PDPM Clinical Category Mapping
available at CMS’ website.
Comment: Another commenter stated
that the PDPM Clinical Category
Mapping file inappropriately includes
ICD–10–CM codes that correspond to an
initial encounter. The commenter states
that initial encounter codes include ‘‘A’’
as the 7th character and can only occur
in a hospital where the initial treatment
is completed. According to the
commenter, initial encounter codes
cannot be used in the SNF setting and
should be excluded from the clinical
category mapping. Additionally, the
commenter states that Z codes are not
appropriate to assign to patients
receiving aftercare for traumatic
fractures. These issues, state the
commenter, lead to non-traumatic major
joint replacements being assigned to
Major Joint Replacement while major
joint replacements as a result of
traumatic injury are assigned to
Orthopedic Surgery (Except Major Joint
Replacement or Spinal Surgery). The
commenter stated that this is
inappropriate because aftercare of a
traumatic injury resulting in hip
replacement needs higher complexity of
care than a scheduled non-traumatic hip
replacement.
Response: We do not agree with the
commenter’s assertion that initial
encounter codes cannot be used in the
SNF and should be excluded from the
clinical category mapping. Particularly
given the increased focus of some
commenters on the ability of PDPM to
allow alignment across different payer
types, we believe it is possible that some
conditions could result as an initial
encounter in the SNF. Moreover, as SNF
services may be covered for conditions
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that arise in the hospital or arise in the
SNF, we believe that it is important to
allow for initial encounter codes to be
coded within the SNF and mapped to
clinical categories in case such a
condition serves as the primary
diagnosis for a SNF stay.
With regard to the comment that Z
codes are not appropriate for traumatic
fractures, as detailed in the ICD–10–CM
Official Guidelines for Coding and
Reporting, the aftercare codes cover
situations when the initial treatment of
a disease has been performed and the
patient requires continued care during
the healing or recovery phase, or for the
long-term consequences of the disease.
The aftercare Z codes should not be
used if treatment is directed at a current,
acute disease. Therefore, the aftercare Z
codes should not be used for aftercare
for traumatic fractures. For aftercare of
a traumatic fracture, providers are
instructed to assign the acute fracture
code with the appropriate 7th character.
We agree with the commenter and will
update the PDPM mapping accordingly.
Comment: Some commenters
expressed concern over the use of MS–
DRGs to develop the PDPM clinical
categories. Commenters noted that
hospital MS–DRGs are unrelated to the
reason for SNF admission and are poor
predictors of cost in post-acute care.
These commenters stated that if SNF
MDS coding produces a substantially
different set of case-mix adjustments
from the case-mix derived from hospital
DRG assignments, then the model will
produce inappropriate payment rates for
the cases which deviate from the
‘‘predicted’’ case mix rate. They
suggested that CMS should consider
retroactively evaluating this case-mix
adjustment as soon as it has SNF data
following PDPM implementation to
correct any inaccurate payments in
future updates of the PDPM. A
commenter states that PDPM will need
significant recalibration due to payment
inaccuracies based on the discrepancy
between inpatient hospital and SNF
reason for admission.
Response: We appreciate the
commenters’ concerns with the use of
MS–DRGs to develop the PDPM clinical
categories. We would note, however,
that while the MS–DRGs were used to
identify patient categories in the SNF,
they were not used to determine the cost
of treating these types of patients. Given
this distinction, while we might expect
some difference in the distribution of
SNF case-mix based on the potential
differences between the prior hospital
MS–DRG and SNF-generated diagnosis
information under PDPM, we do not
believe that using the MS–DRGs
compromised the integrity of the
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clinical categories themselves. In
developing PDPM clinical categories,
we used MS–DRGs from the prior
inpatient stay to define the primary
reason for SNF care and assign residents
to clinical categories. As stated in
section 3.4.1 of the SNF PDPM technical
report, we selected this source of
diagnosis information because of data
quality concerns relating to the
principal diagnosis from the SNF claim.
At the time the clinical categories were
developed, we found that 47 percent of
SNF claims assigned generic ICD–9–CM
codes, with roughly a third assigned
V57.89 ‘‘care involving other specified
rehabilitation procedure’’, as the
principal diagnosis, limiting the
usefulness of diagnoses from SNF
claims in classifying residents. Per the
Medicare Benefit Policy Manual, the
SNF reason for admission must be
related to a condition treated during the
qualifying inpatient stay. Therefore, we
believe it is reasonable to use clinical
information from the prior inpatient
stay to characterize the major types of
beneficiaries who receive SNF care.
Additionally, the clinical categories
were validated by multiple clinicians
consulted by CMS and participants at
technical expert panels. Therefore, we
believe the proposed clinical categories
are appropriate to use to classify major
clinical types found in the SNF setting.
With regard to the possibility that the
actual case-mix distribution may be
distinct from the ‘‘predicted’’ case-mix
distribution, we intend to monitor for
these types of effects and may make
adjustments to the payment rates as may
be appropriate. We also appreciate the
commenter’s suggestion to recalibrate
PDPM in the future.
Accordingly, after considering the
comments received, for the reasons
discussed above and in the proposed
rule, we are finalizing our proposals
discussed above relating to PT and OT
case-mix classification under the PDPM,
with the modification discussed below.
As discussed above, rather than
requiring providers to record the type of
inpatient surgical procedure performed
during the prior inpatient hospital stay
by coding an ICD–10–PCS code in the
second line of item I8000 as we
proposed, we will instead require
providers to select, as necessary, a
surgical procedure category in a subitem within Item J2000 which would
identify the relevant surgical procedure
that occurred during the patient’s
preceding hospital stay and which
would augment the patient’s PDPM
clinical category.
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(i) Clinical Categories
Once we identified these clinical
categories as being generally predictive
of resource utilization in a SNF, we then
undertook the necessary work to
identify those categories predictive of
PT and OT costs specifically. As we
discussed in the proposed rule (83 FR
21044), we conducted additional
regression analyses to determine if any
of these categories predicted similar
levels of PT and OT as other categories,
which may provide a basis for
combining categories. As a result of this
analysis, for the RCS–I model presented
in the ANPRM, we found that the ten
inpatient clinical categories could be
collapsed into five clinical categories,
which predict varying degrees of PT and
OT costs. However, as explained in the
proposed rule, we received comments
on the ANPRM regarding the number of
possible case-mix group combinations
under RCS–I, so we sought to try and
reduce this number of possible case-mix
group combinations by further
simplifying the model. As part of that
effort, we observed similar PT and OT
resource utilization patterns in the
clinical categories of Non-Orthopedic
Surgery and Acute Neurologic and,
therefore, proposed to collapse these
categories for the purpose of PT and OT
classification. Additionally, as reflected
in the RCS–I model presented in the
ANPRM, we proposed that under
PDPM, the remaining clinical categories
would be collapsed as follows: Acute
infections, cancer, pulmonary,
cardiovascular and coagulations, and
medical management would be
collapsed into one clinical category
entitled ‘‘Medical Management’’
because their residents had similar PT
and OT costs. Similarly, we proposed
that orthopedic surgery (except major
joint replacement or spinal surgery) and
non-surgical orthopedic/
musculoskeletal would be collapsed
into a new ‘‘Other Orthopedic’’ category
for equivalent reasons. Finally, the
remaining category, Major Joint
Replacement, showed a distinct PT and
OT cost profile and, thus, we proposed
to retain it as an independent category.
More information on this analysis can
be found in section 3.4.2. of the SNF
PMR technical report that accompanied
the ANPRM and in section 3.4.2. of the
SNF PDPM technical report, both
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html. These proposed
collapsed categories, which would be
used to categorize a resident initially
under the proposed PT and OT case-mix
components, were presented in Table 15
of the proposed rule (and are reflected
in Table 15 of this final rule).
TABLE 15—COLLAPSED CLINICAL CATEGORIES FOR PT AND OT CLASSIFICATION
PDPM clinical category
Collapsed PT and OT clinical category
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Major Joint Replacement or Spinal Surgery ............................................
Non-Orthopedic Surgery ...........................................................................
Acute Neurologic.
Non-Surgical Orthopedic/Musculoskeletal ................................................
Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery).
Medical Management ...............................................................................
Acute Infections.
Cancer.
Pulmonary.
Cardiovascular and Coagulations.
We received several comments
regarding the collapsed PT and OT
clinical categories. These comments,
along with our responses, appear below.
Comment: A commenter disagreed
with the decision to collapse the initial
10 clinical categories into five clinical
groupings for purposes of resident
classification and payment in the PT
and OT components. The commenter
stated that the five clinical categories
used for resident classification in the PT
and OT components are too broad and
not representative of the clinical needs
of residents. Another commenter
recommends that CMS not finalize the
proposal to combine the Acute
Neurologic and Non-Orthopedic Surgery
residents into a single category because
patients should be classified based on
clinically coherent categories, not on
similar cost patterns observed under the
current SNF case-mix classification
model, for the latter is reflective of
current reimbursement incentives to
provide therapy based on financial
considerations. A commenter suggests
that CMS consider separate clinical
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Major Joint Replacement or Spinal Surgery.
Non-Orthopedic Surgery and Acute Neurologic.
Other Orthopedic.
Medical Management.
category for elective major joint
replacement of the lower extremity
because its cost profile is different from
other episode types. The commenter
suggests that joint replacements as a
result of a fracture could possibly be
combined into the Other Orthopedic
category.
Response: As described in section
3.4.2 of the SNF PMR technical report
that accompanied the 2017 ANPRM, in
developing RCS–I (the predecessor to
PDPM), we created 10 broad clinical
categories to characterize the major
patient types found in the SNF setting.
In using the CART algorithm to develop
resident groups for PT and OT payment,
we included the 10 clinical categories as
a categorical variable. Allowing the
CART algorithm to group the 10 clinical
categories into a smaller number of
groups resulted in fewer resident groups
but a similar R-squared value for
predicting costs. In building PDPM we
first retained these five collapsed
clinical categories to characterize major
patient types relevant to predicting PT
and OT utilization. As detailed in the
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proposed rule, we then further
collapsed the clinical categories into
four categories, in response to
comments on the ANPRM regarding the
number of possible case-mix group
combinations under RCS–I. Based on
the greater simplicity achieved in using
fewer clinical categories for PT and OT
classification and the maintenance in
predictive accuracy, we believe using
the collapsed four categories is a
superior option to capture variation in
PT and OT utilization and to
characterize the major types of clinical
conditions relevant to PT and OT
utilization in the SNF population. NonOrthopedic Surgery and Acute
Neurologic are combined into one
category based on their similar PT and
OT resource utilization pattern, as
shown in section 3.4.2 and Table 16 of
the SNF PDPM technical report. We
recognize that the observed data are
reflective of current reimbursement
incentives to provide therapy based on
financial considerations, which may
disguise the relationship between
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clinical traits and patient need based on
best practice assumptions. We will
monitor closely the resource utilization
pattern of the 10 clinical categories after
the implementation of PDPM. Regarding
the elective major joint replacement
comment, as detailed in section 3.4.1 of
the SNF PMR technical report, we
observed that MS–DRG groups with a
high percentage of elective surgeries
correspond to two types of procedures:
Major joint replacements and spinal
surgeries, while MS–DRG groups with a
high percentage of emergent surgeries
include other types of orthopedic
surgeries involving extremities, often
related to falls. We discovered that
average therapy costs per day were
similar for resident in a given surgical
orthopedic MS–DRG group regardless of
whether they received elective or
emergent surgery.
Accordingly, after considering the
comments received, for the reasons
discussed above and in the proposed
rule, we are finalizing our proposals
without modification relating to the
collapsed clinical categories for the PT
and OT components.
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(ii) Functional Status
As discussed previously in this
section and in the proposed rule (83 FR
21044), regression analyses
demonstrated that the resident’s
functional status is also predictive of PT
and OT costs in addition to the
resident’s initial clinical categorization.
In the RCS–I model discussed in the
ANPRM, we presented a function score
similar to the existing ADL score to
measure functional abilities for the
purposes of PT and OT payment. In
response to the ANPRM, we received
comments requesting that we consider
replacing the functional items used to
build the RCS–I function score with
newer, IMPACT Act-compliant items
from section GG. Therefore, we
constructed, and proposed as discussed
below, a new function score for PT and
OT payment based on section GG
functional items.
Under the RUG–IV case-mix system, a
resident’s ADL or function score is
calculated based on a combination of
self-performance and support items
coded by SNFs in section G of the MDS
3.0 for four ADL areas: Transfers, eating,
toileting, and bed mobility. These four
areas are referred to as late-loss ADLs
because they are typically the last
functional abilities to be lost as a
resident’s function declines. Each ADL
is assigned a score of up to four points,
with a potential total score as high as 16
points. Under the proposed PDPM, we
proposed that section G items would be
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replaced with functional items from
section GG of the MDS 3.0 (Functional
Abilities and Goals) as the basis for
calculating the function score for
resident classification used under
PDPM. We explained that section GG
offers standardized and more
comprehensive measures of functional
status and therapy needs. Additionally,
we stated that the use of section GG
items better aligns the payment model
with other quality initiatives. SNFs have
been collecting section GG data since
October 2016 as part of the requirements
for the IMPACT Act. We stated that
given the advantages of section GG and
of using a more comprehensive measure
of functional abilities, we received
numerous comments in response to the
ANPRM requesting the incorporation of
section GG items and of early ADLs
items into the function score.
As explained in the proposed rule (83
FR 21045), multiple stakeholders
commented on the ANPRM that lateloss items do not adequately reflect
functional abilities on their own. These
commenters stated that early-loss ADL
items also capture essential clinical
information on functional status.
Therefore, we stated in the proposed
rule that in building a new function
score based on section GG items, we
also investigated the incorporation of
early-loss items. To explore the
incorporation of section GG items, we
evaluated each item’s relationship with
PT and OT costs. We ran individual
regressions using each of the 12 section
GG items assessed at admission to
separately predict PT and OT costs per
day. As explained in the proposed rule,
the regression results showed that earlyloss items are indeed strong predictors
of PT and OT costs, with the exception
of two wheeling items. Both wheeling
items were excluded from the functional
measure due to their weak predictive
relationship with PT and OT costs. We
observed high predictive ability among
the remaining items. In total, we
selected ten items for inclusion in the
functional measure for the PT and OT
components based on the results of the
analysis. Thus, under the proposed
functional measure for the PT and OT
components, a resident’s function
would be measured using four late-loss
ADL activities (bed mobility, transfer,
eating, and toileting) and two early-loss
ADL activities (oral hygiene and
walking). Specifically, the proposed
measure includes: Two bed mobility
items, three transfer items, one eating
item, one toileting item, one oral
hygiene item, and two walking items
that were all found to be highly
predictive of PT and OT costs per day.
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A list of proposed section GG items that
would be included in the functional
measure for the PT and OT components
was included in Table 18 of the
proposed rule (and is shown in Table 18
of this final rule). Section 3.4.1. in the
SNF PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html) provides
more detail on these analyses.
We explained in the proposed rule (83
FR 21045) that, similar to the RUG–IV
ADL score, each of these ADL areas
would be assigned a score of up to 4
points. However, in contrast to the
RUG–IV ADL score, we stated that
points were assigned to each response
level to track functional independence
rather than functional dependence. In
other words, higher points are assigned
to higher levels of independence. We
stated that this approach is consistent
with functional measures in other care
settings, such as the IRF PPS. Further,
under the RUG–IV model, if the SNF
codes that the ‘‘activity did not occur’’
or ‘‘occurred only once,’’ these items are
assigned the same point value as
‘‘independent.’’ However, as explained
in the proposed rule, we observed that
residents who were unable to complete
an activity had similar PT and OT costs
as dependent residents. Therefore, we
stated that when the activity cannot be
completed, the equivalent section GG
responses (‘‘Resident refused,’’ ‘‘Not
applicable,’’ ‘‘Not attempted due to
medical condition or safety concerns’’)
are grouped with ‘‘dependent’’ for the
purpose of point assignment. For the
two walking items, we proposed an
additional response level to reflect
residents who skip the walking
assessment due to their inability to
walk. We stated that we believe this is
appropriate because this allows us to
assess the functional abilities of
residents who cannot walk and assign
them a function score. We explained
that without this modification, we could
not calculate a function score for
residents who cannot walk because they
would not be assessed on the two
walking items included in the function
score. We further stated that residents
who are coded as unable to walk receive
the same score as dependent residents
to match with clinical expectations. In
Tables 16 and 17 of the proposed rule
(set forth at Tables 16 and 17 in this
final rule), we provided the proposed
scoring algorithm for the PT and OT
functional measure.
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TABLE 16—PT AND OT FUNCTION SCORE CONSTRUCTION
[Except walking items]
Response
Score
05, 06—Set-up assistance, Independent ............................................................................................................................................
04—Supervision or touching assistance .............................................................................................................................................
03—Partial/moderate assistance .........................................................................................................................................................
02—Substantial/maximal assistance ...................................................................................................................................................
01, 07, 09, 88—Dependent, Refused, N/A, Not Attempted ................................................................................................................
4
3
2
1
0
TABLE 17—PT AND OT FUNCTION SCORE CONSTRUCTION FOR WALKING ITEMS
Response
Score
05, 06—Set-up assistance, Independent ............................................................................................................................................
04—Supervision or touching assistance .............................................................................................................................................
03—Partial/moderate assistance .........................................................................................................................................................
02—Substantial/maximal assistance ...................................................................................................................................................
01, 07, 09, 88—Dependent, Refused, N/A, Not Attempted, Resident Cannot Walk * ........................................................................
4
3
2
1
0
* Coded based on response to GG0170H1 (Does the resident walk?).
We explained in the proposed rule (83
FR 21046) that, unlike section G, section
GG measures functional areas with more
than one item. We noted that this results
in substantial overlap between the two
bed mobility items, the three transfer
items, and the two walking items.
Because of this overlap, we stated that
a simple sum of all scores for each item
may inappropriately overweight
functional areas measured by multiple
items. Therefore, to adjust for this
overlap, we proposed to calculate an
average score for these related items.
That is, we would average the scores for
the two bed mobility items, the three
transfer items, and the two walking
items. We stated that the average bed
mobility, transfer, and walking scores
would then be summed with the scores
for eating, oral hygiene, and toileting
hygiene, resulting in equal weighting of
the six activities. This proposed scoring
algorithm produces a function score that
ranges from 0 to 24. In section 3.4.1. of
the SNF PDPM technical report
(available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html), we provide
additional information on the analyses
that led to the construction of this
proposed function score.
TABLE 18—SECTION GG ITEMS INCLUDED IN PT AND OT FUNCTIONAL MEASURE
Section GG item
Score
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GG0130A1—Self-care: Eating ......................................................................................................................................
GG0130B1—Self-care: Oral Hygiene ...........................................................................................................................
GG0130C1—Self-care: Toileting Hygiene ....................................................................................................................
GG0170B1—Mobility: Sit to lying .................................................................................................................................
GG0170C1—Mobility: Lying to sitting on side of bed.
GG0170D1—Mobility: Sit to stand ................................................................................................................................
GG0170E1—Mobility: Chair/bed-to-chair transfer.
GG0170F1—Mobility: Toilet transfer.
GG0170J1—Mobility: Walk 50 feet with 2 turns ..........................................................................................................
GG0170K1—Mobility: Walk 150 feet.
We received comments on the use of
section GG items as the basis for
determining the patient’s PDPM
functional score for purposes of
classifying under the PT and OT
components. Those comments, along
with our responses, appear below.
Comment: Some comments welcomed
the use of IMPACT-Act compliant
section GG data to build new function
scores for the PT, OT, and nursing
components of PDPM, which was a
recommendation provided by many
commenters on the ANPRM. However,
commenters also expressed concern
about using section GG data, stating that
this data should first be validated and
that the results of this validation should
be made public. Commenters stated that
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the first year of section GG data likely
contains inaccuracies as providers
adjust to the new items. Some
commenters therefore stated that it is
inappropriate to base resident
classification and payment on a single
year of section GG data and request that
CMS collect a minimum of two years of
section GG data to ensure reliability and
validity before using this data to
determine payment. One commenter
suggested that, due to the issues with
section GG, CMS should continue to use
section G as the basis for functional
assessment under the payment system.
Another commenter sought clarification
regarding whether CMS compared the
first 6 months of section GG data to the
second 6 months of section GG data to
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0–4.
0–4.
0–4.
0–4 (average of 2 items).
0–4 (average of 3 items).
0–4 (average of 2 items).
determine whether there were any
changes in assessment practices for the
new assessment items.
Response: We conducted several
investigations to validate the section GG
data. First, we verified that the
relationship between section G
responses and PT and OT utilization
was very similar to the relationship
between corresponding section GG
responses and PT and OT utilization.
Second, we determined that section GG
items performed similarly to section G
items in predicting PT and OT
utilization. Finally, we compared
coding of section GG items during the
first 6 months of FY 2017 to coding of
these items during the second 6 months
of FY 2017 and found only small
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changes in the frequency of responses.
Based on the results of these checks, we
believe the FY 2017 section GG data are
valid and reliable, and therefore,
appropriate to use as a basis of resident
classification and payment under
PDPM.
Comment: One commenter stated that
the proposed PDPM function scores
ignore missing values for section GG
assessment items and urged CMS to
map missing values to a function score.
Another commenter stated that the
function score should incorporate the
new response ‘‘10. Not attempted due to
environmental limitations’’. A few
commenters requested that CMS
consider assigning a score of 1 to
‘‘dependent’’ responses instead of 0,
stating that this scoring aligns better
with the SNF Quality Reporting
Program. These commenters also seek
clarification on the rationale for
grouping ‘‘dependent’’ responses with
‘‘resident refused,’’ ‘‘not applicable,’’
and ‘‘not attempted due to medical
conditions or safety concerns.’’ One
commenter pointed out that the MDS
item GG0170H1 (Does the resident
walk) will be retired on September 30,
2018, and recommended that CMS
adopt MDS item GG0170I (Walk 10 feet)
as a substitute for retired item
GG0170H1.
Response: We appreciate the
comment that missing values for section
GG assessments items are not currently
mapped to a point value for computing
function score. CMS will follow this
suggestion to map all values to a
function score by assigning missing
section GG responses to receive zero
points for the function score calculation
as other incomplete responses are also
assigned zero points. This is also
consistent with the current RUG–IV
ADL scoring methodology, which
assigns the same point value for missing
responses and other incomplete
responses. Similarly, we will map the
new response of 10: ‘‘Not attempted due
to environmental limitations,’’ which
was highlighted by another commenter,
to receive zero points for function score
assignment to make sure every response
has a corresponding point value. We
believe these point value assignments
are appropriate as they are consistent
with other similar responses that receive
zero points for function score
assignment, including ‘‘resident
refused,’’ ‘‘not applicable,’’ and ‘‘not
attempted due to medical condition or
safety concerns’’. In response to the
comment requesting us to consider
assigning 1 point to ‘‘dependent’’
responses instead of 0, this suggested
scoring would group ‘‘dependent’’
responses with ‘‘substantial/maximal
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assistance’’ responses. However, we
found that dependent residents have
different levels of PT and OT resource
utilization than residents receiving
substantial/maximal assistance. As
described in section 3.4.1 the SNF
PDPM technical report, we observed
that residents who were unable to
complete an activity had similar PT and
OT costs as dependent residents.
Therefore, we grouped the equivalent
section GG responses (‘‘resident
refused,’’ ‘‘not applicable,’’ and ‘‘not
attempted due to medical condition or
safety concerns’’) with ‘‘dependent’’
responses for the purpose of point
assignment in constructing the function
score for PT and OT classification and
payment. In terms of alignment with the
SNF QRP quality measures, the PDPM
function score uses similar scoring logic
as the QRP functional outcome measure.
As with the PDPM function score, the
QRP Change in Self-Care score assigns
higher points to higher levels of
functional independence and assigns
the same point value to ‘‘dependent’’
and incomplete responses. The QRP
functional outcome measure, however,
differs in scale. Whereas the PDPM
function score ranges from 0–4, the QRP
Change in Self-Care score ranges from
1–6. The QRP functional outcome
measure assigns 1 point to ‘‘dependent’’
and all ‘‘activity was not attempted’’
codes (‘‘resident refused,’’ ‘‘not
applicable,’’ and ‘‘not attempted due to
medical condition or safety concerns’’),
and 2 points to ‘‘substantial/maximal
assistance’’. This score assignment is
very similar to that of the PDPM
function score. Additionally, one item
currently used to compute function
score, MDS GG0170H1 (Does the
resident walk), which is used to
determine if the resident can walk
before proceeding to assess GG0170J1
(Walk 50 Feet with Two Turns) and
GG0170K1 (Walk 150 Feet), is set to be
retired on September 30, 2018 with the
introduction of the newer, more detailed
SNF QRP mobility and self-care
outcome measure items. CMS concurs
with the commenter’s suggestion to
select a replacement for PDPM
implementation. Consistent with the
commenter’s suggestion, MDS item
GG0170I1 (Walk 10 feet) will be used as
the substitute for MDS GG0170H1 since
the inability to walk at least 10 feet or
to complete the assessment for this item
suggests a significant mobility
impairment that is essentially
equivalent to the definition of the
retired ‘‘cannot walk’’ MDS item.
Responses 07: ‘‘resident refused,’’ 09:
‘‘not applicable,’’ 10: ‘‘not attempted
due to environmental limitations,’’ or
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88: ‘‘not attempted due to medical
condition or safety concerns’’ from MDS
item GG0170I1 will be used to identify
residents who cannot walk.
Comment: Commenters also stated
that the proposed function scores
should be updated to reflect new section
GG items for FY 2019. Specifically, they
stated that toileting, dressing, and
bathing are important activities of daily
living that are addressed by
occupational therapy, and therefore,
should be considered in measuring
residents’ functional status under
PDPM.
Response: In constructing the
function score for PT and OT payment,
we investigated the use of all existing
section GG items. Toileting is one of the
items included in the proposed function
scores for the PT, OT, and nursing
components of PDPM. We are aware
that additional section GG items are
scheduled to be implemented in FY
2019, including items that measure a
resident’s dressing and bathing abilities.
However, because these new items have
not yet been implemented, there is no
data available on resource utilization
associated with these items. Therefore,
it is not appropriate to include these
items in the calculation of the PDPM
function scores at this time. We will
consider adding section GG items that
are demonstrated to have a meaningful
relationship with utilization of SNF
resources as new items are added and
an appropriate amount of data (for
example, one year) is available to assess
this relationship. We will also consider
other changes to the function score as
necessary to reflect additional updates
to the section GG items, for example, the
addition, deletion, or modification of
particular items or responses.
Comment: One commenter advised
CMS to account for weight bearing
restrictions among residents who are
categorized into the Major Joint
Replacement or Spinal Surgery or Other
Orthopedic clinical categories. The
commenter stated that patients who
cannot bear weight have a more
complicated post-surgical recovery.
Response: We appreciate the concern
of the commenter regarding postsurgical residents who cannot bear
weight. However, we believe the ability
of a resident to bear weight is
adequately captured by the mobility
items in MDS item GG0170, which are
included in the function score used for
classification and payment in the PT
and OT components. Therefore, we do
not believe additional modifications are
necessary at this time.
Comment: One commenter noted that
in some cases, PT and OT payment is
higher for case-mix groups with higher
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functional independence. The
commenter said this is counterintuitive
because it implies that some residents
who are more dependent require less
therapy. Another commenter sought
clarification on the relationship between
function score and average PT and OT
costs per day.
Response: The commenter is correct
that in some cases payment is higher for
residents who have higher levels of
functional independence. This reflects
the finding that PT and OT utilization
is highest for residents with moderate
functional independence and lower for
residents with both the highest levels of
functional dependence and
independence. In the first case, this
likely reflects residents whose
functional abilities are too impaired to
receive intensive therapy, while the
second case likely corresponds to
residents who require less therapy
because they already have a high level
of functional independence. Therefore,
we believe PDPM appropriately assigns
payment according to the observed
relationship between functional
independence and PT/OT utilization.
Comment: One commenter expressed
concern regarding the potential for
gaming the function score and
recommended that CMS remove the
function score from use as a patient
classifier.
Response: We appreciate this concern
for gaming of the function score and
plan to monitor closely for any changes
in functional coding before and after
implementation of PDPM. That being
said, we do believe that a patient’s
functional score is relevant in terms of
predicting payment accurately, as
described elsewhere in this section.
Therefore, we believe it is important to
keep function as an aspect of patient
classification for payment.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing our
proposals relating to the use of the
section GG items as the basis for
determining the patient’s PDPM
functional score and for classifying the
patient under PDPM PT and OT
components, with modifications. As
discussed above, in response to
comments, all missing values for section
GG assessment items will receive zero
points as a function score. Similarly, the
function score will incorporate a new
response ‘‘10. Not attempted due to
environmental limitations’’ and we will
assign it a point value of zero.
Furthermore, consistent with a
commenter’s suggestion, we will adopt
MDS item GG0170I1 (Walk 10 feet) as a
substitute for retired item GG0170H1
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(Does the resident walk), and we will
use responses 07: ‘‘resident refused,’’
09: ‘‘not applicable,’’ 10: ‘‘not attempted
due to environmental limitations,’’ or
88: ‘‘not attempted due to medical
condition or safety concerns’’ from MDS
item GG0170I1 to identify residents who
cannot walk.
(iii) Cognitive Status
Under the RCS–I case-mix model
presented in the ANPRM, we used
cognitive status to classify residents
under the PT and OT components in
addition to the primary reason for SNF
care and functional ability. As
explained in the proposed rule (83 FR
21046) and in greater detail below, after
publication of the ANPRM, we removed
cognitive status as a determinant of
resident classification for the PT and OT
components. Still, although cognitive
status was not ultimately selected as a
determinant of PT and OT classification,
it was considered as a possible element
in developing the proposed resident
groups for these components via the
Classification and Regression Trees
(CART) algorithm described in greater
detail in the proposed rule and below.
Because we included cognitive status as
an independent variable in the CART
analysis used to develop case-mix
groups for PT and OT, we stated that we
believed it was appropriate to discuss
construction of the proposed new
cognitive measure here even though it
was not ultimately selected as a
determinant of payment for PT and OT.
Thus, we discussed construction of the
instrument used to measure cognitive
status under the proposed PDPM in the
section addressing case-mix
classification under the PT and OT
components, rather than introducing it
when discussing SLP classification, in
which we proposed cognitive status as
a determinant of resident classification.
Under the current SNF PPS, cognitive
status is used to classify a small portion
of residents that fall into the Behavioral
Symptoms and Cognitive Performance
RUG–IV category. For all other
residents, cognitive status is not used in
determining the appropriate payment
for a resident’s care. However, as we
explained in the proposed rule, industry
representatives and clinicians at
multiple TEPs suggested that a
resident’s cognitive status can have a
significant impact on a resident’s PT
and OT costs. Based on this feedback,
we explored a resident’s cognitive status
as a predictor of PT and OT costs.
Under the RUG–IV model, cognitive
status is assessed using the Brief
Interview for Mental Status (BIMS) on
the MDS 3.0. The BIMS is based on
three items: ‘‘repetition of three words,’’
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‘‘temporal orientation,’’ and ‘‘recall.’’
These items are summed to produce the
BIMS summary score. The BIMS score
ranges from 0 to 15, with 0 assigned to
residents with the worst cognitive
performance and 15 assigned to
residents with the highest performance.
Residents with a BIMS score less than
or equal to 9 classify for the Behavioral
Symptoms and Cognitive Performance
category. Residents with a summary
score greater than 9 but not 99 (resident
interview was not successful) are
considered cognitively intact for the
purpose of classification under RUG–IV.
As we explained in the proposed rule
(83 FR 21046), in approximately 15
percent of 5-day MDS assessments, the
BIMS is not completed: in 12 percent of
cases the interview is not attempted,
and for 3 percent of cases the interview
is attempted but cannot be completed.
The MDS directs assessors to skip the
BIMS if the resident is rarely or never
understood (this is scored as
‘‘skipped’’). In these cases, the MDS
requires assessors to complete the Staff
Assessment for Mental Status (items
C0700 through C1000). The Cognitive
Performance Scale (CPS) is then used to
assess cognitive function based on the
Staff Assessment for Mental Status and
other MDS items (‘‘Comatose’’ (B0100),
‘‘Makes Self Understood’’ (B0700), and
the self-performance items of the four
late-loss ADLs). The Staff Assessment
for Mental Status consists of four items:
‘‘Short-term Memory OK,’’ ‘‘Long-term
Memory OK,’’ ‘‘Memory/Recall Ability,’’
and ‘‘Cognitive Skills for Daily Decision
Making.’’ Only ‘‘Short-term Memory
OK’’ and ‘‘Cognitive Skills for Daily
Decision Making’’ are currently used for
payment. In MDS 2.0, the CPS was used
as the sole measure of cognitive status.
A resident was assigned a CPS score
from 0 to 6 based on the Staff
Assessment for Mental Status and other
MDS items, with 0 indicating the
resident was cognitively intact and 6
indicating the highest level of cognitive
impairment. In addition to the items on
the Staff Assessment for Mental Status,
MDS items ‘‘Comatose’’ (B0100),
‘‘Makes Self Understood’’ (B0700), and
the self-performance items of the four
late-loss ADLs factored into the CPS
score. Any score of 3 or above was
considered cognitively impaired. The
CPS on the current version of the MDS
(3.0) functions very similarly. Instead of
assigning a score to each resident, a
resident is determined to be cognitively
impaired if he or she meets the criteria
to receive a score of 3 or above on the
CPS, based on the MDS items
mentioned above. In other words,
whereas the MDS 2.0 assigned a CPS
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score to each resident, the MDS 3.0 only
determines whether a resident’s score is
greater than or equal to 3 and does not
assign a specific score to each resident
for whom the CPS is used to assess
cognitive status. Residents who are
determined to be cognitively impaired
based on the CPS are classified in the
Behavioral Symptoms and Cognitive
Performance category under RUG–IV, if
they do not meet the criteria for a
higher-paying category.
We stated in the proposed rule (83 FR
21047) that given that the 15 percent of
residents who are not assessed on the
BIMS must be assessed using a different
scale that relies on a different set of
MDS items, there is currently no single
measure of cognitive status that allows
comparison across all residents. To
address this issue, Thomas et al., in a
2015 paper, proposed use of a new
cognitive measure, the Cognitive
Function Scale (CFS), which combines
scores from the BIMS and CPS into one
scale that can be used to compare
cognitive function across all residents
(Thomas KS, Dosa D, Wysocki A, Mor
V; The Minimum Data Set 3.0 Cognitive
Function Scale. Med Care. https://
www.ncbi.nlm.nih.gov/pubmed/?term=
25763665). Following a suggestion from
the June 2016 TEP, we explored using
the CFS as a measure of cognition and
found that there is a relationship
between the different levels of the
cognitive scale and resident costs.
Specifically, we observed that as
cognitive function declines, PT and OT
costs per day decrease, while SLP costs
per day more than double. More
information on this analysis can be
found in section 3.4.1. of the SNF PMR
technical report that accompanied the
ANPRM available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html. Based on these
initial investigations, we used the CFS
as a cognitive measure in the RCS–I
payment model described in the
ANPRM. As we noted above, the RUG–
IV system incorporates both the BIMS
and CPS score separately, but the CFS
blends them together into one measure
of cognitive status. Details on how the
BIMS score and CPS score are
determined using the MDS assessment
are described above. The CFS uses these
scores to place residents into one of four
cognitive performance categories, as
shown in Table 19 of the proposed rule
(set forth in Table 19 of this final rule).
After publication of the ANPRM, we
received stakeholder comments
questioning this scoring methodology,
39207
specifically the classification of a CPS
score of 0 as ‘‘mildly impaired.’’ Based
on a subsequent analysis showing that
residents with a CPS score of 0 were
similar to residents classified as
‘‘cognitively intact’’ under the CFS
methodology, as well as clinical
feedback, we determined that it was
appropriate to reclassify residents with
a CPS score of 0 as cognitively intact,
consistent with ANPRM feedback. This
analysis is described in more detail in
section 3.4.1. of the SNF PDPM
technical report, available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html. The scoring
methodology for the proposed PDPM
cognitive measure was shown in Table
20 of the proposed rule (set forth in
Table 20 of this final rule). We would
note once again that while we discussed
this scoring methodology in section
V.D.3.b of the proposed rule (83 FR
21046 through 21047) and this section
of the final rule because cognitive status
was considered in developing the PT
and OT classification, the cognitive
score was not proposed as a factor in
classification for the PT and OT
components under PDPM, as further
discussed in the proposed rule (83 FR
21047) and below.
TABLE 19—COGNITIVE FUNCTION SCALE (CFS) SCORING METHODOLOGY
Cognitive level
BIMS score
CPS score
Cognitively Intact .....................................................................................................................................................
Mildly Impaired .........................................................................................................................................................
Moderately Impaired ................................................................................................................................................
Severely Impaired ....................................................................................................................................................
13–15
8–12
0–7
........................
........................
0–2
3–4
5–6
TABLE 20—PDPM COGNITIVE MEASURE CLASSIFICATION METHODOLOGY
Cognitive level
BIMS score
Cognitively Intact .....................................................................................................................................................
Mildly Impaired .........................................................................................................................................................
Moderately Impaired ................................................................................................................................................
Severely Impaired ....................................................................................................................................................
13–15
8–12
0–7
........................
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(iv) PT and OT Case-Mix Groups
As explained in the proposed rule (83
FR 21047), once each of these
variables—clinical reasons for the SNF
stay, the resident’s functional status,
and the presence of a cognitive
impairment—was identified, we then
used a statistical regression technique
called Classification and Regression
Trees (CART) to explore the most
appropriate splits in PT and OT casemix groups using these three variables.
In other words, CART was used to
investigate how many PT and OT casemix groups should exist under the
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proposed PDPM and what types of
residents or score ranges should be
combined to form each of those PT and
OT case-mix groups. CART is a nonparametric decision tree learning
technique that produces either
classification or regression trees,
depending on whether the dependent
variable is categorical or numeric,
respectively. We stated that using the
CART technique to create payment
groups is advantageous because it is
resistant to both outliers and irrelevant
parameters. The CART algorithm has
been used to create payment groups in
other Medicare settings. For example, it
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Fmt 4701
Sfmt 4700
CPS score
0
1–2
3–4
5–6
was used to determine Case Mix Groups
(CMGs) splits within rehabilitation
impairment groups (RICs) when the
inpatient rehabilitation facility (IRF)
PPS was developed. This methodology
is more thoroughly explained in section
3.4.2. of the SNF PDPM technical report
(available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html).
As explained in the proposed rule (83
FR 21047), we used CART to develop
splits within the four collapsed clinical
categories shown in Table 15 of the
proposed rule (set forth in Table 15 of
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this final rule). Splits within each of
these four collapsed clinical categories
were based on the two independent
variables included in the algorithm:
Function score and cognitive status. The
CART algorithm split residents into 18
groups for the PT component and 14
groups for the OT component. These
splits are primarily based on differences
in resident function. As stated in the
proposed rule, in the CART-generated
groups, cognitive status plays a role in
categorizing less than half of the PT
groups and only two of the 14 OT
groups. In addition, we stated that to
create the proposed resident
classification for the PT and OT
components, we made certain
administrative decisions that further
refined the PT and OT case-mix
classification groups beyond those
produced through use of the CART
algorithm. For example, while CART
may have created slightly different
breakpoints for the function score in
different clinical categories, we state
that we believe using a consistent split
in scores across clinical categories
improves the simplicity of the case-mix
model without compromising its
accuracy. Therefore, we used the splits
created by the CART algorithm as the
basis for the consistent splits selected
for the case-mix groups, simplifying the
CART output while retaining important
features of the CART-generated splits. In
our proposed classification for the PT
and OT components, we retained
function as the sole determinant of
resident categorization within each of
the four collapsed clinical categories.
We created function score bins based on
breakpoints that recurred in the CART
splits, such as 5, 9, and 23. As noted in
the proposed rule (83 FR 21048) and
above, we dropped cognitive status as a
determinant of classification because of
the reduced role it played in
categorizing residents within the CARTgenerated groups. Finally, we used the
same function score bins to categorize
residents within each of the four
collapsed clinical categories for both the
PT and OT components. As shown in
section 3.4.2. of the SNF PDPM
technical report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.htm), and as explained
in the proposed rule, using the proposed
case-mix groups for the PT and OT
components results in a reduction of
0.005 in the R-squared values for both
PT and OT classification models. We
stated that this shows that although the
proposed case-mix groups improve
simplicity by removing one predictor
revealed to be less important in
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categorizing residents (cognitive status)
and grouping residents similarly (using
the same function score bins) across
clinical categories, these decisions have
only a minor negative impact on
predictive accuracy. These analyses are
described in further detail in section
3.4.2. of the SNF PDPM technical report
(available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html).
Based on the CART results and the
administrative decisions described
above, we proposed 16 case-mix groups
to classify residents for PT and OT
payment. We noted in the proposed rule
(83 FR 21048) that this represents a
marked reduction in the number of casemix groups for PT and OT classification
under the RCS–I model discussed in the
ANPRM. As discussed in the proposed
rule and throughout the sections above,
after publication of the ANPRM, we
received feedback from stakeholders
that the RCS–I payment model was
overly complex. In particular,
commenters expressed concern about
the relatively large number of possible
combinations of case-mix groups. Based
on this feedback, we sought to reduce
the number of resident groups in the PT
and OT components. First, as discussed
in the proposed rule and in this final
rule, because we observed similar PT
and OT resource utilization patterns in
the clinical categories of NonOrthopedic Surgery and Acute
Neurologic, we decided to collapse
these categories for the purpose of PT
and OT classification. In addition, as
discussed in the proposed rule and in
this final rule, we replaced the section
G-based functional measure from RCS–
I with a new functional measure based
on section GG items. We found that the
inclusion of the section GG-based
functional measure in the CART
algorithm resulted in case-mix groups in
which cognitive function played a less
important role in classification. Based
on these results, we determined that we
could remove cognitive function as a
determinant of PT and OT classification
without a notable loss in the predictive
ability of the payment model, as
discussed above. We also consulted
with clinicians who advised CMS
during development of PDPM, who
confirmed the appropriateness of this
decision. We stated in the proposed rule
that the decisions to collapse NonOrthopedic Surgery and Acute
Neurologic into one clinical category
and remove cognitive status resulted in
a large reduction in the number of PT
and OT case-mix groups, from the 30 in
RCS–I to the 16 in the proposed PDPM
PO 00000
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Fmt 4701
Sfmt 4700
provided in Table 21 of the proposed
rule (and set forth in Table 21 of this
final rule). We provided the criteria for
each of these groups along with its CMI
for both the PT and OT components in
Table 21. As shown in Table 21, two
factors would be used to classify each
resident for PT and OT payment:
Clinical category and function score.
Each case-mix group corresponds to one
clinical category and one function score
range. We proposed classifying each
SNF resident into one of the 16 groups
shown in Table 21 based on these two
factors.
To help ensure that payment reflects
the average relative resource use at the
per diem level, we stated in the
proposed rule (83 FR 21048) that CMIs
would be set to reflect relative case-mix
related differences in costs across
groups. We stated that this method
helps ensure that the share of payment
for each case-mix group would be equal
to its share of total costs of the
component. We further explained that
CMIs for the PT and OT components
were calculated based on two factors.
One factor was the average per diem
costs of a case-mix group relative to the
population average. The other factor
was the average variable per diem
adjustment factor of the group relative
to the population average. In this
calculation, average per diem costs
equaled total PT or OT costs in the
group divided by number of utilization
days in the group. Similarly, the average
variable per diem adjustment factor
equaled the sum of variable per diem
adjustment factors corresponding to a
given component (PT or OT) for all
utilization days in the group divided by
the number of utilization days in the
group. We calculated CMIs such that
they equal the ratio of relative average
per diem costs for a group to the relative
average variable per diem adjustment
factor for the group. In this calculation,
relative average per diem costs and the
relative average variable per diem
adjustment factor were weighted by
length of stay to account for the
different length of stay distributions
across case-mix groups (as further
discussed in section 3.11.1. of the SNF
PDPM technical report, available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html). The
relative average variable per diem
adjustment factors for a given PT group
and the corresponding OT group were
the same because residents were
classified into the same case-mix group
under both components. However,
relative average per diem costs were
different across the two corresponding
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PT and OT groups, therefore the
resulting CMIs calculated for each group
were different, as shown in Table 21.
After calculating CMIs as described
above, we then applied adjustments to
help ensure that the distribution of
resources across payment components is
aligned with the statutory base rates. We
stated that the base rates implicitly
allocate resources to case-mix
components in proportion to the relative
magnitude of the respective component
base rates. For example, if the base rate
for one component were twice as large
as the base rate for another component,
this would imply that the component
with the larger base rate should receive
double the resources of the other
component. To ensure that the
distribution of resources across payment
components was aligned with the
statutory base rates, in the proposed
rule, we set CMIs such that the average
product of the CMI and the variable per
diem adjustment factor for a day of care
equals 1.0 for each of the five case-mixadjusted components in PDPM. If the
average product of the CMI and the
variable per diem adjustment factor for
a day of care were different across casemix components, this would result in
allocating resources in a manner
inconsistent with the distribution of
resources implied by the statutory base
rates.
39209
After adjusting the CMIs to align the
distribution of resources across payment
components with the statutory base
rates, a parity adjustment was then
applied by multiplying the CMIs by the
ratio of case-mix-related payments in
RUG–IV over estimated case-mix-related
payments in PDPM, as further discussed
in section V.J. of the proposed rule.
More information on the variable per
diem adjustment factors is discussed in
section V.D.4. of the proposed rule. The
full methodology used to develop CMIs
is presented in section 3.11. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html).
TABLE 21—PT AND OT CASE-MIX CLASSIFICATION GROUPS
Section GG
function score
Clinical category
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Major Joint Replacement or Spinal Surgery ....................................................
Major Joint Replacement or Spinal Surgery ....................................................
Major Joint Replacement or Spinal Surgery ....................................................
Major Joint Replacement or Spinal Surgery ....................................................
Other Orthopedic .............................................................................................
Other Orthopedic .............................................................................................
Other Orthopedic .............................................................................................
Other Orthopedic .............................................................................................
Medical Management ......................................................................................
Medical Management ......................................................................................
Medical Management ......................................................................................
Medical Management ......................................................................................
Non-Orthopedic Surgery and Acute Neurologic ..............................................
Non-Orthopedic Surgery and Acute Neurologic ..............................................
Non-Orthopedic Surgery and Acute Neurologic ..............................................
Non-Orthopedic Surgery and Acute Neurologic ..............................................
We stated in the proposed rule that,
under the proposed PDPM, all residents
would be classified into one and only
one of these 16 PT and OT case-mix
groups for each of the two components.
We explained that as opposed to the
RUG–IV system that determines therapy
payments based only on the amount of
therapy provided, these groups classify
residents based on the two resident
characteristics shown to be most
predictive of PT and OT utilization:
Clinical category and function score.
Thus, we believe that the PT and OT
case-mix groups better reflect relative
resource use of clinically relevant
resident subpopulations, and therefore,
provide for more appropriate payment
under the SNF PPS.
Commenters submitted the following
additional comments related to the
proposed rule’s discussion of the
Physical and Occupational Therapy
Case-Mix Classification. A discussion of
these comments, along with our
responses, appears below.
Comment: Several commenters
expressed concern that CMS did not
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0–5
6–9
10–23
24
0–5
6–9
10–23
24
0–5
6–9
10–23
24
0–5
6–9
10–23
24
include cognition or swallowing
disorders as determinants of payment
for the OT component. One commenter
stated that the removal of cognitive
status as a determinant of PT and OT
payment will lead to underpayment
because cognitive impairment leads to
longer recovery time and an increased
need for therapy services, particularly
occupational therapy.
Response: As discussed in the
proposed rule (83 FR 21046) and in
section 3.4.2 of the SNF PDPM technical
report, cognitive status was initially
considered as a determinant of resident
classification and payment in the PT
and OT components of PDPM. However,
after replacing the section G-based
function score for PT and OT
classification with a function score
based on new, IMPACT Act-compliant
section GG items, we reran the CART
analysis used to develop possible casemix groups. We found that after
including the section GG-based function
score, cognitive status played a minimal
role in resident classification. As noted
in the proposed rule (83 FR 21047),
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Fmt 4701
Sfmt 4700
PT OT casemix group
TA
TB
TC
TD
TE
TF
TG
TH
TI
TJ
TK
TL
TM
TN
TO
TP
PT case-mix
index
1.53
1.69
1.88
1.92
1.42
1.61
1.67
1.16
1.13
1.42
1.52
1.09
1.27
1.48
1.55
1.08
OT case-mix
index
1.49
1.63
1.68
1.53
1.41
1.59
1.64
1.15
1.17
1.44
1.54
1.11
1.30
1.49
1.55
1.09
cognition played a role in categorizing
less than half of the 18 CART-generated
PT groups and only two of the 14 CARTgenerated OT groups. Based on the
reduced role of cognition in resident
classification for PT and OT payment,
we decided to remove cognitive status
as a determinant of payment for these
components. This decision also allowed
us to substantially reduce the number of
case-mix groups for the PT and OT
components from the 30 presented in
the 2017 ANPRM to the 16 presented in
the proposed rule, contributing to a
simplification of the payment model,
which was requested by a number of
commenters responding to the ANPRM.
We also confirmed that the decision to
remove cognitive status as a
determinant of PT and OT classification
had only a minor negative impact on
predictive accuracy, reducing the Rsquared values of the both the PT and
OT classification models by only 0.005.
Comment: One commenter expressed
concern about the reliability of the
cognitive measure used in PDPM.
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Response: As detailed in section 3.4.1
of the SNF PDPM technical report, the
PDPM cognitive measure was built
based on two existing cognitive
measures: The Brief Interview for
Mental Status (BIMS) and the Cognitive
Performance Scale (CPS). Both measures
are used in the current RUG–IV system
to determine cognitive impairment.
BIMS is used when the resident is able
to complete the interview, while CPS is
used when the resident is unable to
complete the interview and the staff
assessment has to be conducted. Thus,
the PDPM cognitive measure is based on
cognitive measures that have been
validated and used for years. It
combines the existing scores from BIMS
and CPS into one scale that can be used
to compare cognitive function across all
residents.
Comment: Some commenters stated
that CMS should consider including
comorbidities related to PT or OT
utilization, in particular conditions
associated with high therapy intensity
or duration. Commenters stated
coronary artery disease, congestive heart
failure, diabetes, chronic obstructive
pulmonary disease (COPD), asthma,
chronic wounds, depression,
swallowing disorders and multiple
sclerosis are conditions that could be
considered as possible comorbidities for
the PT or OT components.
Response: As described in section
3.4.1 of the SNF PDPM technical report,
we investigated the impact of a broad
list of conditions on PT and OT
utilization. These conditions were
selected for investigation based on
comments received in response to the
2017 ANPRM, clinical input, and a
literature search. This broad list
included several of the conditions
mentioned by commenters, including
congestive heart failure, diabetes,
depression, and swallowing disorders.
To focus on conditions that have nonnegligible impact on increasing costs,
only those that had a positive impact on
PT or OT costs per day of $2 or more
were selected for further investigation.
None of the conditions mentioned by
commenters that were included in this
investigation (congestive heart failure,
diabetes, depression, swallowing
disorders, and multiple sclerosis) met
this criterion; therefore, they were not
selected for inclusion in the payment
model. Additionally, as mentioned in
section 3.4.1 of the SNF PDPM technical
report, we investigated the impact of an
even broader range of MDS items,
diagnosis-related groups (DRGs), and
hierarchical condition categories (HCCs)
on PT and OT utilization. Among the
conditions included in this analysis
were coronary artery disease, COPD,
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asthma, and various types of wounds/
wound care including wound infection,
surgical wounds, and surgical wound
care. Based on this analysis, we
determined that all of these conditions
had either a small or statistically
insignificant impact on PT costs per day
and OT costs per day. As previously
stated, because the current system is
heavily based on service provision and
most residents are classified into the
Ultra-High therapy category, there is
currently little variance available in PT
and OT costs per day to be explained by
the presence of comorbidities. For the
foregoing reasons, we do not believe it
is appropriate to include the conditions
mentioned by commenters as
comorbidities for PT or OT payment at
this time. However, as care practices
change over time, we may consider
adding comorbidities that have a strong
impact on PT or OT utilization.
Comment: Many commenters
supported the proposed separation of
the PT and OT components, as
compared to the RCS–I model that
combined these components into a
single component. One commenter
questioned if therapy would be covered
for pain management and wound care
treatments as these types of treatments
are not explicitly covered under the
clinical categories.
Response: We appreciate the support
for the decision to separate the PT and
OT components. With regard to the
question of therapy coverage for certain
conditions, we would note that neither
the clinical categories, nor any other
aspects of PDPM implementation,
should be taken to change any coverage
guidelines.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
the final rule, we are finalizing the
proposed PT and OT components under
the PDPM and our proposals relating to
the methodology for classifying
residents under the PT and OT
components, effective October 1, 2019,
with the modifications discussed in this
section. As discussed above, in response
to comments, rather than requiring
providers to record the type of inpatient
surgical procedure performed during the
prior inpatient hospital stay by coding
an ICD–10–PCS code in the second line
of item I8000 as we proposed, we will
instead require providers to select, as
necessary, a surgical procedure category
in a sub-item within Item J2000 which
would identify the relevant surgical
procedure that occurred during the
patient’s preceding hospital stay and
which would augment the patient’s
PDPM clinical category. For purposes of
calculating the function score, all
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Sfmt 4700
missing values for section GG
assessment items will receive zero
points. Similarly, the function score will
incorporate a new response ‘‘10. Not
attempted due to environmental
limitations’’ and we will assign it a
point value of zero. Furthermore,
consistent with a commenter’s
suggestion, we will adopt MDS item
GG0170I1 (Walk 10 feet) as a substitute
for retired item GG0170H1 (Does the
resident walk), and we will use
responses 07: ‘‘resident refused,’’ 09:
‘‘not applicable,’’ 10: ‘‘not attempted
due to environmental limitations,’’ or
88: ‘‘not attempted due to medical
condition or safety concerns’’ from MDS
item GG0170I1 to identify residents who
cannot walk.
c. Speech-Language Pathology Case-Mix
Classification
As discussed above and in the
proposed rule (83 FR 21049), many of
the resident characteristics that we
found to be predictive of increased PT
and OT costs were predictive of lower
SLP costs. We stated that as a result of
this inverse relationship, using the same
set of predictors to case-mix adjust all
three therapy components would
obscure important differences in
variables predicting variation in costs
across therapy disciplines and make any
model that attempts to predict total
therapy costs inherently less accurate.
Therefore, we stated that we believe it
is appropriate to have a separately
adjusted case-mix SLP component that
is specifically designed to predict
relative differences in SLP costs. As
discussed in the proposed rule and in
the prior section of this final rule, costs
derived from the charges on claims and
CCRs on facility cost reports were used
as the measure of resource use to
develop an alternative payment model.
Costs are reflective of therapy utilization
as they are correlated to therapy
minutes recorded for each therapy
discipline.
Following the same methodology we
used to identify predictors of PT and OT
costs, we explained in the proposed rule
that our project team conducted cost
regressions with a host of variables from
the MDS assessment, prior inpatient
claims, and SNF claims that were
identified as likely to be predictive of
relative increases in SLP costs. The
variables were selected with the goal of
being as inclusive of the measures
recorded on the MDS assessment as
possible and also included diagnostic
information from the prior inpatient
stay. The selection process also
incorporated clinical input from TEP
panelists, the contractor’s clinical staff,
and CMS clinical staff. We stated that
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these initial costs regressions were
exploratory and meant to identify a
broad set of resident characteristics that
are predictive of SLP resource
utilization. The results were used to
inform which variables should be
investigated further and ultimately
included in the payment system. A table
of all of the variables considered in this
analysis appears in the appendix of the
SNF PMR technical report that
accompanied the ANPRM (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html).
As we stated in the proposed rule (83
FR 21049), based on these cost
regressions, we identified a set of three
categories of predictors relevant in
predicting relative differences in SLP
costs: Clinical reasons for the SNF stay,
presence of a swallowing disorder or
mechanically-altered diet, and the
presence of an SLP-related comorbidity
or cognitive impairment. We explained
that a model using these predictors to
predict SLP costs per day accounted for
14.5 percent of the variation in SLP
costs per day, while a very extensive
model using 1,016 resident
characteristics only predicted 19.3
percent of the variation. We stated that
this shows that these predictors alone
explain a large share of the variation in
SLP costs per day that can be explained
with resident characteristics.
As with the proposed PT and OT
components, we began with the set of
clinical categories identified in Table 14
of the proposed rule (set forth in Table
14 of this final rule) meant to capture
general differences in resident resource
utilization and ran cost regressions to
determine which categories may be
predictive of generally higher relative
SLP costs. Through this analysis, we
found that one clinical category, the
Acute Neurologic group, was
particularly predictive of increased SLP
costs. More detail on this investigation
can be found in section 3.5.2. of the SNF
PMR technical report that accompanied
the ANPRM, available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html. Therefore, to
determine the initial resident
classification into an SLP group under
the proposed PDPM, we stated that
residents would first be categorized into
one of two groups using the clinical
reasons for the resident’s SNF stay
recorded on the first line of Item I8000
on the MDS assessment: Either the
‘‘Acute Neurologic’’ clinical category or
a ‘‘Non-Neurologic’’ group that includes
the remaining clinical categories in
Table 14 (Major Joint Replacement or
Spinal Surgery; Non-Surgical
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Orthopedic/Musculoskeletal;
Orthopedic Surgery (Except Major Joint
Replacement or Spinal Surgery); Acute
Infections; Cancer; Pulmonary; NonOrthopedic Surgery; Cardiovascular and
Coagulations; and Medical
Management).
In addition to the clinical reason for
the SNF stay, based on cost regressions
and feedback from TEP panelists, we
stated in the proposed rule (83 FR
21050) that we also identified the
presence of a swallowing disorder or a
mechanically-altered diet (which refers
to food that has been altered to make it
easier for the resident to chew and
swallow to address a specific resident
need) as a predictor of relative increases
in SLP costs. First, we stated that
residents who exhibited the signs and
symptoms of a swallowing disorder, as
identified using K0100Z on the MDS
3.0, demonstrated significantly higher
SLP costs than those who did not
exhibit such signs and symptoms.
Therefore, we considered including the
presence of a swallowing disorder as a
component in predicting SLP costs.
However, when this information was
presented during the October 2016 TEP,
stakeholders indicated that the signs
and symptoms of a swallowing disorder
may not be as readily observed when a
resident is on a mechanically-altered
diet and requested that we also consider
evaluating the presence of a
mechanically-altered diet, as
determined by item K0510C2 on the
MDS 3.0, as an additional predictor of
increased SLP costs. As we further
explained in the proposed rule, our
project team conducted this analysis
and found that there was an associated
increase in SLP costs when a
mechanically-altered diet was present.
Moreover, we stated that this analysis
revealed that while SLP costs may
increase when either a swallowing
disorder or mechanically-altered diet is
present, resident SLP costs increased
even more when both of these items
were present. More detail on this
investigation and these analyses can be
found in section 3.5.3. of the SNF PDPM
technical report, available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html. As a result, we
agreed with the stakeholders that both
swallowing disorder and mechanicallyaltered diet are important components
of predicting relative increases in
resident SLP costs, and thus, in addition
to the clinical categorization, we
proposed classifying residents as having
either a swallowing disorder, being on
a mechanically altered diet, both, or
neither for the purpose of classifying the
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39211
resident under the SLP component. We
also noted that we plan to monitor
specifically for any increases in the use
of mechanically altered diet among the
SNF population that may suggest that
beneficiaries are being prescribed such
a diet based on facility financial
considerations, rather than for clinical
need.
As a final aspect of the proposed SLP
component case-mix adjustment, we
explored how SLP costs vary according
to cognitive status and the presence of
an SLP-related comorbidity. As we
explained in the proposed rule, we
observed that SLP costs were notably
higher for residents who had a mild to
severe cognitive impairment as defined
by the PDPM cognitive measure
methodology described in Table 20 of
the proposed rule (set forth in Table 20
of this final rule) or who had an SLPrelated comorbidity present. We stated
that for each condition or service
included as an SLP-related comorbidity,
the presence of the condition or service
was associated with at least a 43 percent
increase in average SLP costs per day.
The presence of a mild to severe
cognitive impairment was associated
with at least a 100 percent increase in
average SLP costs per day. Similar to the
analysis conducted in relation to the PT
and OT components, the project team
ran cost regressions on a broad list of
possible conditions. As we stated in the
proposed rule (83 FR 21050), based on
that analysis, and in consultation with
stakeholders during our TEPs and
clinicians, we identified the conditions
listed in Table 22 of the proposed rule
(set forth in Table 22 of this final rule)
as SLP-related comorbidities which we
believe best predict relative differences
in SLP costs. As discussed in the
proposed rule, we used diagnosis codes
on the most recent inpatient claim and
the first SNF claim, as well as MDS
items on the 5-day assessment for each
SNF stay to identify these diagnoses and
found that residents with these
conditions had much higher SLP costs
per day. Further, we stated that rather
than accounting for each SLP-related
comorbidity separately, all conditions
were combined into a single flag. If the
resident has at least one SLP-related
comorbidity, the combined flag is
turned on. We explained in the
proposed rule that we combined all
SLP-related comorbidities into a single
flag because we found that the
predictive ability of including a
combined SLP comorbidity flag is
comparable to the predictive ability of
including each SLP-related comorbidity
as an individual predictor. Additionally,
we stated that using a combined SLP-
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related comorbidity flag greatly
improves the simplicity of the payment
model. More detail on these analyses
can be found in section 3.5.1. of the SNF
PMR technical report that accompanied
the ANPRM (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html).
TABLE 22—SLP-RELATED
COMORBIDITIES
Aphasia.
CVA, TIA, or Stroke.
Hemiplegia or Hemiparesis.
Traumatic Brain Injury.
Tracheostomy Care (While a Resident).
Ventilator or Respirator (While a Resident).
Laryngeal Cancer.
Apraxia.
Dysphagia.
ALS.
Oral Cancers.
Speech and Language Deficits.
Once each of these variables—clinical
reasons for the SNF stay, presence of a
swallowing disorder or mechanicallyaltered diet, and the presence of an SLPrelated comorbidity or cognitive
impairment—found to be useful in
predicting resident SLP costs was
identified, as we discussed in the
proposed rule (83 FR 21050), we used
the CART algorithm, as we discussed
above in relation to the PT and OT
components, to determine appropriate
splits in SLP case-mix groups based on
CART output breakpoints using these
three variables. We stated we then
further refined the SLP case-mix
classification groups beyond those
produced by the CART algorithm. We
used consistent criteria to group
residents into 18 payment groups across
the two clinical categories determined
to be relevant to SLP utilization (Acute
Neurologic and Non-Neurologic). These
groups simplified the SLP case-mix
classification by reducing the number of
groups while maintaining the CART
predictive power in terms of R-squared.
This methodology and the results of our
analysis are more thoroughly explained
in sections 3.4.2. and 3.5.2. of the SNF
PMR technical report that accompanied
the ANPRM (available at https://
www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/SNFPPS/
therapyresearch.html).
Under the original RCS–I SLP
component, a resident could be
classified into one of 18 possible casemix groups. Comments received in
response to the ANPRM expressed
concern over the complexity of the
payment model due to the high number
of possible combinations of case-mix
groups. We stated in the proposed rule
(83 FR 21051) that, to reduce the
number of possible SLP case-mix
groups, we simplified the consistent
splits model selected for RCS–I. To
accomplish this, we combined clinical
category (Acute Neurologic or NonNeurologic), cognitive impairment, and
the presence of an SLP-related
comorbidity into a single predictor due
to the clinical relationship between
acute neurologic conditions, cognition,
and SLP comorbidities. We explained in
the proposed rule that these three
predictors are highly interrelated as
acute neurologic conditions may often
result in cognitive impairment or SLPrelated comorbidities such as speech
and language deficits. As we discussed
in the proposed rule, using this
combined variable along with presence
of a swallowing disorder or
mechanically-altered diet results in 12
groups. We compared the predictive
ability of the simplified model with
more complex classification options,
including the original RCS–I SLP model.
We explained that regression results
showed that the reduction in case-mix
groups by collapsing independent
variables had little to no effect on
payment accuracy. Specifically, we
noted that the proposed PDPM SLP
model has an R-squared value almost
identical to that of the original RCS–I
SLP model, while reducing the number
of resident groups from 18 to 12.
Therefore, we determined that 12 casemix groups would be necessary to
classify residents adequately in terms of
their SLP costs in a manner that
captures sufficient variation in SLP
costs without creating unnecessarily
granular separations. More information
on this analysis can be found in section
3.5.2. of the SNF PDPM technical report
(available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html). We provided the
criteria for each of these groups along
with its CMI in Table 23 of the proposed
rule (set forth in Table 23 of this final
rule).
To help ensure that payment reflects
the average relative resource use at the
per diem level, we stated in the
proposed rule (83 FR 21051) that CMIs
would be set to reflect relative case-mix
related differences in costs across
groups. We stated that this method
helps ensure that the share of payment
for each case-mix group would be equal
to its share of total costs of the
component. We further explained that
CMIs for the SLP component were
calculated based on the average per
diem costs of a case-mix group relative
to the population average. Relative
average differences in costs were
weighted by length of stay to account for
the different length of stay distributions
across case-mix groups (as further
discussed in section 3.11.1. of the SNF
PDPM technical report, available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html). In this
calculation, average per diem costs
equaled total SLP costs in the group
divided by number of utilization days in
the group. Because the SLP component
does not have a variable per diem
schedule (as further discussed in section
3.9.1. of the SNF PDPM technical report,
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/therapy
research.html), variable per diem
adjustment factors were not involved in
SLP CMI calculation. We further stated
that a parity adjustment was then
applied by multiplying the CMI by the
ratio of case-mix-related payments in
RUG–IV over estimated case-mix-related
payments in PDPM, as further discussed
in section V.J. of the proposed rule. We
stated that this method helps ensure
that the share of payment for each casemix group is equal to its share of total
costs of the component and that PDPM
is budget neutral relative to RUG–IV.
The full methodology used to develop
CMIs is presented in section 3.11. of the
SNF PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html).
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TABLE 23—SLP CASE-MIX CLASSIFICATION GROUPS
Presence of acute neurologic condition, SLP-related
comorbidity, or cognitive impairment
Mechanically altered diet or swallowing disorder
None .............................................................................
None .............................................................................
None .............................................................................
Neither ..........................................................................
Either ............................................................................
Both ..............................................................................
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group
SLP case-mix
index
SA
SB
SC
0.68
1.82
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39213
TABLE 23—SLP CASE-MIX CLASSIFICATION GROUPS—Continued
Presence of acute neurologic condition, SLP-related
comorbidity, or cognitive impairment
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Any one
Any one
Any one
Any two
Any two
Any two
All three
All three
All three
Mechanically altered diet or swallowing disorder
........................................................................
........................................................................
........................................................................
.........................................................................
.........................................................................
.........................................................................
........................................................................
........................................................................
........................................................................
As with the PT and OT components,
we stated that all residents would be
classified into one and only one of these
12 SLP case-mix groups under the
PDPM. We explained that, as opposed to
the RUG–IV system that determines
therapy payments based only on the
amount of therapy provided, under the
PDPM, residents would be classified
into SLP case-mix groups based on
resident characteristics shown to be
predictive of SLP utilization. Thus, we
stated that believe the SLP case-mix
groups will provide a better measure of
resource use and will provide for more
appropriate payment under the SNF
PPS.
We invited comments on the
approach we proposed above to classify
residents for SLP payment under the
proposed PDPM.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the classification of
residents for SLP payment under the
PDPM. A discussion of these comments,
along with our responses, appears
below.
Comment: Some commenters agreed
with the SLP-related patient classifiers.
Some commenters suggested using a
different assessment of cognition than
that currently used on the MDS, such as
the Montreal Cognitive Assessment
(MOCA). One commenter expressed
concerns regarding the use of cognition
as a first tier classification criterion, as
changes in cognition can be difficult to
identify and this could impact on the
possibility of late or missed IPAs. This
commenter suggested moving cognition
into the second tier classification
criteria.
Response: We appreciate the support
for the SLP component classification
criteria. With regard to the comment on
using a different assessment for
assessing cognition, we are not opposed
to this idea and would encourage
stakeholders to work with CMS in
developing potential revisions to the
MDS to improve care planning and
management. That being said, as the
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Neither ..........................................................................
Either ............................................................................
Both ..............................................................................
Neither ..........................................................................
Either ............................................................................
Both ..............................................................................
Neither ..........................................................................
Either ............................................................................
Both ..............................................................................
MOCA is not currently in use on the
MDS, we must utilize the data and
assessment tools to which we currently
have access. Finally, with regard to the
concern about the interplay between
cognition and the IPA, we expect that
this concern would be addressed by
having the IPA be completed on an
optional basis, as described in section
V.D.1 of this final rule.
Comment: One commenter expressed
concern that having a separate SLP
component could result in the
overutilization of SLP services,
specifically for treating cognitive
impairments. The commenter advised
CMS to limit the overutilization of SLP
services for cognitive impairment
issues.
Response: As discussed above, we
found that cognitive impairment is a
relevant characteristic in predicting SLP
resource utilization and costs. However,
we understand the concern regarding
the potential for providers to overutilize
SLP services in certain instances and
will monitor the use of SLP services
under PDPM to identify any potential
consequences of using this payment
classifier as part of the SLP component.
Comment: A commenter questioned
the accuracy of using the same primary
diagnosis to assign clinical category
across the PT, OT, and SLP components.
This commenter states that multiple
diagnoses can contribute to the reason
for the SNF stay and proposes
distinguishing between PT/OT and SLP
diagnoses. Specifically, the commenter
suggests allowing providers to enter the
clinical reason for PT/OT services in the
first two lines of MDS item I8000 and
the clinical reason for SLP services in
the third line of item I8000. This
commenter points to our decision to
separate therapy disciplines into
different payment components based on
our observation that different sets of
resident characteristics were predictive
of PT and OT costs, on one hand, and
SLP costs, on the other. Given that
utilization of PT and OT resources and
utilization of SLP services are explained
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SLP case-mix
group
SLP case-mix
index
SD
SE
SF
SG
SH
SI
SJ
SK
SL
1.46
2.33
2.97
2.04
2.85
3.51
2.98
3.69
4.19
by a different set of predictors, this
commenter concludes that the clinical
reasons for receiving SLP services are
distinct from those motivating PT/OT
services.
Response: As detailed in the proposed
rule (83 FR 21043) and section 3.4.1 of
the SNF PDPM technical report, when
constructing the ten clinical categories,
we explored conditions that are
clinically relevant to general SNF
resource utilization. Within each
component, we further consolidated the
ten clinical categories into groups that
have significant impact on componentspecific resource utilization. We found
that the clinical reason for a SNF stay
as represented by the clinical categories
was highly predictive of PT, OT, and
SLP utilization, and thus we do not
believe it is necessary to enter separate
clinical reasons for PT/OT and SLP
services, as suggested by the
commenter. For this reason, we believe
it is appropriate to include the clinical
categories as determinants of resident
classification and payment for all three
components. We would also emphasize
that clinical category is the only
predictor shared by the PT/OT and SLP
components. The other independent
variables are unique to the PT and OT
or SLP components and capture other
clinical reasons for PT/OT and SLP
services. As a result, in many cases, a
resident’s cognitive status and the
presence of SLP-related comorbidities
may be as relevant as primary diagnosis
in determining resident classification
and payment.
Comment: A few commenters stated
that the proposed SLP-related
comorbidity list is an incomplete
reflection of all comorbidities that
require SLP treatment. One commenter
stated that the SLP comorbidity list
should include progressive neurologic
disorders that increase SLP resource
use. This commenter suggests relabeling
the ‘‘ALS’’ MDS checkbox item as
‘‘Progressive Neurologic Diseases’’ and
updating the MDS manual definition for
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this item to meet the criteria of specific
progressive neurologic diseases.
Response: We appreciate commenters’
concerns regarding additional
conditions that may be related to SLP
utilization. We may consider adding
conditions that have a demonstrated
relationship to SLP resource use in
future revisions to the payment model.
To examine the impact of PDPM on
residents with chronic neurological
conditions, we included this
subpopulation in our resident impact
analysis and found that PDPM is
estimated to slightly increase the
payment associated with these
residents.
Comment: Some commenters agreed
with the use of mechanically altered
diet as a payment classifier. One
commenter requested that CMS provide
evidence that a mechanically altered
diet is associated with higher SLP
utilization than other nutritional
approaches such as personal assistance
with feeding. One commenter requested
that CMS monitor the use of
mechanically altered diets under PDPM
to identify any potentially inappropriate
use of such diets. One commenter stated
that overutilization of such diets can
have negative repercussions for patient
care.
Response: As described in section
3.5.1 and 3.5.2 of the SNF PMR
technical report, besides mechanically
altered diet, we additionally explored
feeding tube as a determinant of
classification and payment for the SLP
component. We used CART to test
several SLP models with different
variables related to swallowing and
nutritional approach. This investigation
found that mechanically altered diet
notably increased the predictive power
of the models, whereas feeding tube
only had a small impact on predictive
ability. While feeding tube was
associated with an increase in SLP costs
per day, we did not include feeding tube
in the payment model because it only
had a small impact on the predictive
accuracy of the model relative to
mechanically altered diet. We also
explored the MDS item Eating SelfPerformance (G0110H1) as a potential
predictor of SLP utilization. While
increased eating dependence was
associated with higher SLP utilization,
when we included Eating SelfPerformance as an independent variable
in the CART analysis used to explore
possible case-mix groups, Eating SelfPerformance was only selected as a
determinant of classification for half of
the 18 groups created by the CART
algorithm. As a result, we determined
that we could remove Eating SelfPerformance from the SLP classification
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without notably sacrificing predictive
ability. As shown in section 3.5.2 of the
SNF PMR technical report, removing
Eating Self-Performance and combining
various independent variables to
simplify the classification reduced the
R-squared value of the classification by
only 0.005. As a result, this
classification was used as the basis for
the proposed PDPM SLP component.
With regard to the possibility of some
providers prescribing mechanically
altered diets inappropriately or the
possibility of overutilization, we do
plan to monitor the use of these diets as
part of our general PDPM monitoring
strategy.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing, without
modification, the proposed SLP
component of PDPM and our proposals
relating to the classification of residents
under the SLP component.
d. Nursing Case-Mix Classification
As we explained in the proposed rule
(83 FR 21051 through 21052), the RUG–
IV classification system first divides
residents into ‘‘rehabilitation residents’’
and ‘‘non-rehabilitation residents’’
based on the amount of therapy a
resident receives. We stated that
differences in nursing needs can be
obscured for rehabilitation residents,
where the primary driver of payment
classification is the intensity of therapy
services that a resident receives. For
example, for two residents classified
into the RUB RUG–IV category, which
would occur on the basis of therapy
intensity and ADL score alone, the
nursing component for each of these
residents would be multiplied by a CMI
of 1.56. We stated that this reflects that
residents in that group were found,
during our previous Staff time
measurement (STM) work, to have
nursing costs 56 percent higher than
residents with a 1.00 index. We noted
that while this CMI also includes
adjustments made in FY 2010 and FY
2012 for budget-neutrality purposes,
what is clear is that two residents, who
may have significantly different nursing
needs, are nevertheless deemed to have
the very same nursing costs, and SNFs
would receive the same nursing
payment for each. Given the discussion
above and in the proposed rule, which
noted that approximately 60 percent of
resident days are billed using one of
three Ultra-High Rehabilitation RUGs
(two of which have the same nursing
index), we stated that the current casemix model effectively classifies a
significant portion of SNF therapy
residents as having exactly the same
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degree of nursing needs and requiring
exactly the same amount of nursing
resources. As such, we stated we
believed that further refinement of the
case-mix model would be appropriate to
better differentiate among patients,
particularly those who receive therapy
services with different nursing needs.
We further explained in the proposed
rule (83 FR 21052) that an additional
concern in the RUG–IV system is the
use of therapy minutes to determine not
only therapy payments but also nursing
payments. For example, residents
classified into the RUB RUG fall in the
same ADL score range as residents
classified into the RVB RUG. The only
difference between those residents is the
number of therapy minutes that they
received. However, as we stated in the
proposed rule, the difference in
payment that results from this
difference in therapy minutes impacts
not only the RUG–IV therapy
component but also the nursing
component: Nursing payments for RUB
residents are 40 percent higher than
nursing payments for RVB residents. We
stated that as a result of this feature of
the RUG–IV system, the amount of
therapy minutes provided to a resident
is one of the main sources of variation
in nursing payments, while other
resident characteristics that may better
reflect nursing needs play a more
limited role in determining payment.
As discussed in the proposed rule (83
FR 21052), the more nuanced and
resident-centered classifications in
current RUG–IV non-rehabilitation
categories are obscured under the
current payment model, which utilizes
only a single RUG–IV category for
payment purposes and has over 90
percent of resident days billed using a
rehabilitation RUG. The RUG–IV nonrehabilitation groups classify residents
based on their ADL score, the use of
extensive services, the presence of
specific clinical conditions such as
depression, pneumonia, or septicemia,
and the use of restorative nursing
services, among other characteristics.
These characteristics are associated with
nursing utilization, and the STRIVE
study accounted for relative differences
in nursing staff time across groups.
Therefore, we proposed to use the
existing RUG–IV methodology for
classifying residents into nonrehabilitation RUGs to develop a
proposed nursing classification that
helps ensure nursing payment reflects
expected nursing utilization rather than
therapy utilization.
For example, in the proposed rule (83
FR 21052), we considered two residents.
The first patient classifies into the RUB
rehabilitation RUG (on the basis of the
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resident’s therapy minutes) and into the
CC1 non-rehabilitation RUG (on the
basis of having pneumonia), while the
second classifies into the RUB
rehabilitation RUG (on the basis of the
resident’s therapy minutes) and the HC1
non-rehabilitation RUG (on the basis of
the resident having quadriplegia and a
high ADL score). Under the current
RUG–IV based payment model, the
billing for both residents would utilize
only the RUB rehabilitation RUG,
despite clear differences in their
associated nursing needs and resident
characteristics. We proposed an
approach where, for the purpose of
determining payment under the nursing
component, the first resident would be
classified into CC1, while the second
would be classified into HC1 under the
PDPM. We stated that believe
classifying the residents in this manner
for payment purposes would capture
variation in nursing costs in a more
accurate and granular way than relying
on the rehabilitation RUG’s nursing
CMI.
While resident classification in the
proposed PDPM nursing component is
guided by RUG–IV methodology, we
proposed to make several modifications
to the RUG–IV nursing RUGs and
classification methodology under the
proposed PDPM. First, we proposed
under the PDPM to reduce the number
of nursing RUGs by decreasing
distinctions based on function. We
stated that under RUG–IV, residents
with a serious medical condition/
service such as septicemia or respiratory
therapy are classified into one of eight
nursing RUGs in the Special Care High
category. The specific RUG into which
a resident is placed depends on the
resident’s ADL score and whether the
resident is depressed. RUG–IV groups
ADL score into bins for simplicity (for
example, 2–5 and 6–10). For example,
under RUG–IV, a resident in the Special
Care High category who has depression
and an ADL score of 3 would fall into
the 2–5 ADL score bin, and therefore, be
classified into the HB2 RUG, which
corresponds to Special Care High
residents with depression and an ADL
score between 2 and 5 (a mapping of
clinical traits and ADL score to RUG–IV
nursing groups is shown in the
appendix of the SNF PDPM technical
report, available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html). To explore options to
reduce the number of nursing RUGs, we
explained in the proposed rule that we
compared average nursing utilization
across all 43 RUG–IV nursing RUGs.
The dependent variable used in this
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investigation was the average wageweighted staff time (WWST) for each
nursing RUG from the STRIVE study.
WWST is a measure of nursing resource
utilization used in the STRIVE study. As
discussed in more detail in the
proposed rule (83 FR 21052) and in
section 3.2.1. of the PDPM technical
report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html), we were unable to
construct a measure of nursing
utilization based on current data
because facilities do not report residentspecific nursing costs. As discussed in
the proposed rule, we observed that
nursing resource use as measured by
WWST does not vary markedly between
nursing case-mix groups defined by
contiguous ADL score bins (for example,
11–14 and 15–16) but otherwise sharing
the same clinical traits (for example,
classified into Special Care High and
depressed). We explained that this
suggests that collapsing contiguous ADL
score bins for RUGs that are otherwise
defined by the same set of clinical traits
is unlikely to notably affect payment
accuracy. Section 3.6.1. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html) provides
more detail on this analysis.
In the Special Care High, Special Care
Low, Clinically Complex, and Reduced
Physical Function classification groups
(RUGs beginning with H, L, C, or P), for
nursing groups that were otherwise
defined with the same clinical traits (for
example, extensive services, medical
conditions, depression, restorative
nursing services received), we proposed
to combine the following pairs of
second characters due to their
contiguous ADL score bins: (E, D) and
(C, B). These characters correspond to
ADL score bins (15 to 16, 11 to 14) and
(6 to 10, 2 to 5), respectively. We
observed that nursing utilization did not
vary notably across these contiguous
ADL score bins; therefore, we stated that
we believe it is appropriate to collapse
pairs of RUGs in these classification
groups that correspond to contiguous
ADL score bins but are otherwise
defined by the same clinical traits. For
example, HE2 and HD2, which are both
in the Special Care High group and both
indicate the presence of depression,
would be collapsed into a single nursing
case-mix group. Similarly, we stated
that PC1 and PB1 (Reduced Physical
Function and 0 to 1 restorative nursing
services) also would be combined into
a single nursing case-mix group. Section
3.6.1. of the SNF PDPM technical report
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39215
(available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/therapy
research.html) provides more detail on
this analysis. In the Behavioral and
Cognitive Performance classification
group (RUGs beginning with B), for
RUGs that are otherwise defined by the
same number of restorative nursing
services (0 to1 or 2 or more), we
proposed to combine RUGs with the
second character B and A, which
correspond to contiguous ADL score
bins 2 to 5 and 0 to 1, respectively. We
observed that nursing utilization did not
vary notably across these contiguous
ADL score bins; therefore, we stated that
we believe it is appropriate to collapse
pairs of RUGs in this classification
group that correspond to contiguous
ADL score bins but are otherwise
defined by the same clinical traits. In
other words, BB2 and BA2 would be
combined into a single nursing group,
and BB1 and BA1 would also be
combined into a single nursing group.
Section 3.6.1. of the SNF PDPM
technical report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html) provides more detail on
this analysis. We proposed to maintain
CA1, CA2, PA1, and PA2 as separate
case-mix groups under the nursing
component of the PDPM. We observed
that these RUGs do not share similar
levels of nursing resource use with
RUGs in adjacent ADL score bins that
are otherwise defined by the same
clinical traits (for example, medical
conditions, depression, restorative
nursing services received). Rather, we
noted that CA1, CA2, PA1, and PA2 are
associated with distinctly lower nursing
utilization compared to RUGs that
otherwise have the same clinical traits
(for example, medical conditions,
depression, restorative nursing services
received) but higher ADL score bins.
Section 3.6.1. of the SNF PDPM
technical report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapy
research.html) provides more detail on
this analysis. We further stated that ES3,
ES2, and ES1 also would be maintained
as separate case-mix groups under the
nursing component of the proposed
PDPM because, although they are
defined by the same ADL score bin, they
are defined by different clinical traits
unlike the pairs of RUGs that were
combined. Specifically, ES3, ES2, and
ES1 are defined by different
combinations of extensive services. We
stated that we believe collapsing casemix groups based on ADL score for the
RUGs specified above would reduce
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model complexity by decreasing the
number of nursing case-mix groups from
43 to 25, which thereby decreases the
total number of possible combinations
of case-mix groups under the proposed
PDPM. Table 26 of the proposed rule
(set forth in Table 26 of this final rule)
shows the proposed 25 case-mix groups
for nursing payment. Section 3.6.1. of
the SNF PDPM technical report
(available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/therapy
research.html) provides more detail on
the analyses and data supporting these
proposals.
As explained in the proposed rule (83
FR 21053), the second modification to
the RUG–IV nursing classification
methodology would update the nursing
ADL score to incorporate section GG
items. Currently, the RUG–IV ADL score
is based on four late-loss items from
section G of MDS 3.0: eating, toileting,
transfer, and bed mobility. We stated
that under the proposed PDPM, these
section G items would be replaced with
an eating item, a toileting item, three
transfer items, and two bed mobility
items from the admission performance
assessment of section GG. In contrast to
the RUG–IV ADL score, the proposed
PDPM score assigns higher points to
higher levels of independence.
Therefore, an ADL score of 0
(independent) corresponds to a section
GG-based function score of 16, while an
ADL score of 16 (dependent)
corresponds to a section GG-based
function score of 0. We explained that
this scoring methodology is consistent
with the proposed PDPM PT and OT
function score, as well as functional
scores in other care settings, such as the
IRF PPS. The proposed nursing scoring
methodology also assigns 0 points when
an activity cannot be completed
(‘‘Resident refused,’’ ‘‘Not applicable,’’
‘‘Not attempted due to medical
condition or safety concerns’’). As
described in section V.D.3.c. (PT and
OT Case-Mix Classification) of the
proposed rule, grouping these responses
with ‘‘dependent’’ aligns with clinical
expectations of resource utilization for
residents who cannot complete an ADL
activity. The proposed scoring
methodology is shown in Table 24 of
the proposed rule (set forth in Table 24
of this final rule). As discussed in
section V.D.3.c. of the proposed rule,
section GG measures functional areas
with more than one item, which results
in substantial overlap between the two
bed mobility items and the three
transfer items. To address overlap, we
proposed to calculate an average score
for each of these related items. That is,
we stated we would average the scores
for the two bed mobility items and for
the three transfer items. This averaging
approach was also used in the proposed
PT and OT function scores and is
illustrated in Table 25 of the proposed
rule (set forth in Table 25 of this final
rule). We stated that the final score
sums the average bed mobility and
transfer scores with eating and toileting
scores, resulting in a nursing function
score that ranges from 0 to 16.
TABLE 24—NURSING FUNCTION SCORE CONSTRUCTION
Response
ADL score
05, 06—Set-up assistance, Independent ............................................................................................................................................
04—Supervision or touching assistance .............................................................................................................................................
03—Partial/moderate assistance .........................................................................................................................................................
02—Substantial/maximal assistance ...................................................................................................................................................
01, 07, 09, 88—Dependent, Refused, N/A, Not Attempted ................................................................................................................
4
3
2
1
0
TABLE 25—SECTION GG ITEMS INCLUDED IN NURSING FUNCTIONAL MEASURE
Section GG item
ADL score
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GG0130A1—Self-care: Eating ........................................................................................................................................
GG0130C1—Self-care: Toileting Hygiene ......................................................................................................................
GG0170B1—Mobility: Sit to lying ...................................................................................................................................
GG0170C1—Mobility: Lying to sitting on side of bed.
GG0170D1—Mobility: Sit to stand .................................................................................................................................
GG0170E1—Mobility: Chair/bed-to-chair transfer.
GG0170F1—Mobility: Toilet transfer.
In addition to proposing to replace the
nursing ADL score with a function score
based on section GG items and to
collapse certain nursing RUGs, we also
proposed (83 FR 21054) to update the
existing nursing CMIs using the STRIVE
staff time measurement data that were
originally used to create these indexes.
We explained that under the current
payment system, non-rehabilitation
nursing indexes were calculated to
capture variation in nursing utilization
by using only the staff time collected for
the non-rehabilitation population. We
stated we believe that, to provide a more
accurate reflection of the relative
nursing resource needs of the SNF
population, the nursing indexes should
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reflect nursing utilization for all
residents. To accomplish this, we stated
in the proposed rule that we replicated
the methodology described in the FY
2010 SNF PPS rule (74 FR 22236
through 22238) but classified the full
STRIVE study population under nonrehabilitation RUGs using the RUG–IV
classification rules. The methodology
set forth in the proposed rule for
updating resource use estimates for each
nursing RUG proceeded according to the
following steps:
(1) Calculate average wage-weighted
staff time (WWST) for each STRIVE
study resident using FY 2015 SNF
wages.
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0–4.
0–4.
0–4 (average of 2 items).
0–4 (average of 3 items).
(2) Assign the full STRIVE population
to the appropriate non-rehabilitation
RUG.
(3) Apply sample weights to WWST
estimates to allow for unbiased
population estimates. The reason for
this weighting is that the STRIVE study
was not a random sample of residents.
Certain key subpopulations, such as
residents with HIV/AIDS, were oversampled to ensure that there were
enough residents to draw conclusions
on the subpopulations’ resource use. As
a result, STRIVE researchers also
developed sample weights, equal to the
inverse of each resident’s probability of
selection, to permit calculation of
unbiased population estimates.
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Applying the sample weights to a
summary statistic results in an estimate
that is representative of the actual
population. The sample weight method
is explained in Phase I of the STRIVE
study. A link to the STRIVE study is
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/TimeStudy.html.
(4) Smooth WWST estimates that do
not match RUG hierarchy in the same
manner as the STRIVE study. RUG–IV,
from which the nursing RUGs are
derived, is a hierarchical classification
in which payment should track clinical
acuity. It is intended that residents who
are more clinically complex or who
have other indicators of acuity,
including a higher ADL score,
depression, or restorative nursing
services, would receive higher payment.
When STRIVE researchers estimated
WWST for each RUG, several inversions
occurred because of imprecision in the
means. These are defined as WWST
estimates that are not in line with
clinical expectations. The methodology
used to smooth WWST estimates is
explained in Phase II of the STRIVE
study. A link to the STRIVE study is
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/TimeStudy.html.
(5) Calculate nursing indexes, which
reflect the average WWST for each of
the 25 nursing case-mix groups divided
by the average WWST for the study
population used throughout our
research. To impute WWST for each
stay in the population, we assigned each
resident the average WWST of the
collapsed nursing RUG into which they
are categorized. To derive the average
WWST of each collapsed RUG, we first
estimate the average WWST of the
original 43 nursing RUGs based on steps
1 through 4 above, then calculate a
weighted mean of the average WWST of
the two RUGs that form the collapsed
RUG. More details on this analysis can
be found in section 3.6.3. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html).
Through this refinement, we stated
that we believe the nursing indexes
under the proposed PDPM better reflect
the varied nursing resource needs of the
full SNF population. In Table 26 of the
proposed rule (set forth in Table 26 of
this final rule), we provided the nursing
indexes under the proposed PDPM.
To help ensure that payment reflects
the average relative resource use at the
per diem level, we stated that the
39217
nursing CMIs would be set to reflect
case-mix related relative differences in
WWST across groups. We further stated
that Nursing CMIs would be calculated
based on the average per diem nursing
WWST of a case-mix group relative to
the population average. In this
calculation, average per diem WWST
equaled total WWST in the group
divided by number of utilization days in
the group. We further explained that
because the nursing component does
not have a variable per diem schedule
(as further discussed in section 3.9.1. of
the SNF PDPM technical report,
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html), variable per
diem adjustment factors were not
involved in nursing CMI calculation.
We then applied a parity adjustment by
multiplying the CMI by the ratio of casemix-related payments in RUG–IV over
estimated case-mix-related payments in
PDPM, as discussed further in section
V.J. of the proposed rule. The full
methodology used to develop CMIs is
presented in section 3.11. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html).
TABLE 26—NURSING INDEXES UNDER PDPM CLASSIFICATION MODEL
RUG–IV nursing
RUG
Extensive services
Clinical conditions
Depression
Number of
restorative
nursing
services
ES3 ..................
..................................................................................
....................
....................
0–14
ES3
4.04
..................................................................................
....................
....................
0–14
ES2
3.06
ES1 ..................
HE2/HD2 .........
Tracheostomy & Ventilator.
Tracheostomy or Ventilator.
Infection ..........................
.........................................
....................
Yes .............
....................
....................
0–14
0–5
ES1
HDE2
2.91
2.39
HE1/HD1 .........
.........................................
No ...............
....................
0–5
HDE1
1.99
HC2/HB2 .........
.........................................
Yes .............
....................
6–14
HBC2
2.23
HC1/HB1 .........
.........................................
No ...............
....................
6–14
HBC1
1.85
LE2/LD2 ...........
.........................................
Yes .............
....................
0–5
LDE2
2.07
LE1/LD1 ...........
.........................................
No ...............
....................
0–5
LDE1
1.72
LC2/LB2 ...........
.........................................
Yes .............
....................
6–14
LBC2
1.71
LC1/LB1 ...........
.........................................
No ...............
....................
6–14
LBC1
1.43
CE2/CD2 .........
.........................................
Yes .............
....................
0–5
CDE2
1.86
CE1/CD1 .........
.........................................
No ...............
....................
0–5
CDE1
1.62
CC2/CB2 .........
.........................................
Yes .............
....................
6–14
CBC2
1.54
CA2 ..................
.........................................
Yes .............
....................
15–16
CA2
1.08
CC1/CB1 .........
.........................................
No ...............
....................
6–14
CBC1
1.34
CA1 ..................
.........................................
No ..............
....................
15–16
CA1
0.94
BB2/BA2 ..........
BB1/BA1 ..........
PE2/PD2 ..........
.........................................
.........................................
.........................................
..................................................................................
Serious medical conditions e.g. comatose, septicemia, respiratory therapy.
Serious medical conditions e.g. comatose, septicemia, respiratory therapy.
Serious medical conditions e.g. comatose, septicemia, respiratory therapy.
Serious medical conditions e.g. comatose, septicemia, respiratory therapy.
Serious medical conditions e.g. radiation therapy or
dialysis.
Serious medical conditions e.g. radiation therapy or
dialysis.
Serious medical conditions e.g. radiation therapy or
dialysis.
Serious medical conditions e.g. radiation therapy or
dialysis.
Conditions requiring complex medical care e.g.
pneumonia, surgical wounds, burns.
Conditions requiring complex medical care e.g.
pneumonia, surgical wounds, burns.
Conditions requiring complex medical care e.g.
pneumonia, surgical wounds, burns.
Conditions requiring complex medical care e.g.
pneumonia, surgical wounds, burns.
Conditions requiring complex medical care e.g.
pneumonia, surgical wounds, burns.
Conditions requiring complex medical care e.g.
pneumonia, surgical wounds, burns.
Behavioral or cognitive symptoms ...........................
Behavioral or cognitive symptoms ...........................
Assistance with daily living and general supervision
....................
....................
....................
2 or more ...
0–1 .............
2 or more ...
11–16
11–16
0–5
BAB2
BAB1
PDE2
1.04
0.99
1.57
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ES2 ..................
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GGbased
function
score
PDPM
nursing
case-mix
group
Nursing
case-mix
index
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TABLE 26—NURSING INDEXES UNDER PDPM CLASSIFICATION MODEL—Continued
Extensive services
PE1/PD1 ..........
PC2/PB2 ..........
PA2 ..................
PC1/PB1 ..........
PA1 ..................
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RUG–IV nursing
RUG
.........................................
.........................................
.........................................
.........................................
.........................................
Clinical conditions
Assistance
Assistance
Assistance
Assistance
Assistance
As with the previously discussed
components, we stated that all residents
would be classified into one and only
one of these 25 nursing case-mix groups
under the proposed PDPM. As
explained in the proposed rule (83 FR
21055), we also used the STRIVE data
to quantify the effects of an HIV/AIDS
diagnosis on nursing resource use. We
controlled for case mix by including the
proposed PDPM resident groups (in this
case, the nursing RUGs) as independent
variables. The results showed that even
after controlling for nursing RUG, HIV/
AIDS status is associated with a positive
and significant increase in nursing
utilization. Based on the results of
regression analyses, we found that
wage-weighted nursing staff time is 18
percent higher for residents with HIV/
AIDS. (The estimate of average wageweighted nursing staff time for the SNF
population was adjusted to account for
the deliberate over-sampling of certain
sub-populations in the STRIVE study.
Specifically, we applied sample weights
from the STRIVE dataset equal to the
inverse of each resident’s probability of
selection to permit calculation of an
unbiased estimate.) Based on these
findings, as discussed in the proposed
rule, we concluded that the proposed
PDPM nursing groups may not fully
capture the additional nursing costs
associated with HIV/AIDS residents.
More information on this analysis can
be found in section 3.8.2. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html). Thus,
as part of the case-mix adjustment of the
nursing component, we proposed an 18
percent increase in payment for the
nursing component for residents with
HIV/AIDS. We stated that this
adjustment would be applied based on
the presence of ICD–10–CM code B20
on the SNF claim. In cases where a
resident is coded as having this
diagnosis, we stated that the nursing
component per diem rate for this
resident would be multiplied by 1.18, to
account for the 18 percent increase in
nursing costs for residents with this
diagnosis. We also discussed this
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with
with
with
with
with
daily
daily
daily
daily
daily
living
living
living
living
living
and
and
and
and
and
Depression
general
general
general
general
general
supervision
supervision
supervision
supervision
supervision
....................
....................
....................
....................
....................
proposal, as well as its relation to the
existing AIDS add-on payment under
RUG–IV, in section V.I. of the proposed
rule.
We invited comments on the
approach we proposed to classify
residents for nursing payment under the
proposed PDPM.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the classification of
residents for nursing payment under the
PDPM. A discussion of these comments,
along with our responses, appears
below.
Comment: One commenter supported
the nursing case-mix classification
model that would be used under PDPM,
specifically citing the nursing function
score refinements and using a separate
function score for the therapy
components than would be used for the
nursing component. This commenter
also requested that CMS consider
aligning the nursing classification under
PDPM with certain hospice criteria.
Finally, one commenter expressed
concern regarding the collapsing of
nursing groups to only 25 groups and
that these groups may not accurately
account for the variety of patient
conditions.
Response: We appreciate the support
for the nursing component classification
criteria. We can examine the hospice
criteria specified by the commenter for
future consideration. With regard to the
comment on the collapsed nursing
groups, we believe that, given that we
collapsed groups primarily based on
functional score bins and did not
collapse any of the general nursing
group categories (such as extensive
services and special care high), we
believe that the level of granularity in
the nursing classifications is not
significantly impacted. As stated in the
proposed rule (83 FR 21052) and in
section 3.6.1 of the SNF PDPM technical
report, we collapsed groups based on
function score due to the observation
that among nursing RUGs defined by the
same clinical traits, nursing resource
use is similar across contiguous
functional score bins (for example, 11–
14 and 15–16). Since WWST does not
vary markedly between nursing RUGs
PO 00000
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Number of
restorative
nursing
services
0–1
2 or
2 or
0–1
0–1
.............
more ...
more ...
.............
.............
GGbased
function
score
0–5
6–14
15–16
6–14
15–16
PDPM
nursing
case-mix
group
PDE1
PBC2
PA2
PBC1
PA1
Nursing
case-mix
index
1.47
1.21
0.70
1.13
0.66
defined by contiguous functional score
bins, collapsing groups based on
functional score bins simplifies the
payment model without a notable loss
in accuracy. Therefore, we believe that
25 nursing rugs sufficiently captures
variation in patient conditions.
Comment: Several commenters
questioned the appropriateness of using
staff-time measurement data from the
STRIVE study to estimate relative
differences in nursing utilization across
the nursing groups given the age of the
data, methodological flaws in the
collection of therapy minutes, and small
sample sizes for certain resident groups
used to estimate CMIs. Additionally,
one commenter stated that the STRIVE
study underestimates the nursing needs
of residents by only measuring the usual
nursing time provided to residents in
the sampled homes. The commenter
further stated that the STRIVE study did
not take into account nursing time
needed to assure resident safety and
maintain resident well-being. The
commenter expressed concern that
basing nursing payment on STRIVE data
will provide inadequate reimbursement,
which will result in understaffing. A
couple of commenters recommended
replacing STRIVE with the Schnelle et
al. 2016 simulation model to estimate
nursing resource requirements.
Response: Unlike the therapy and
NTA charges, nursing charges are
reported on SNF claims as part of
routine revenue centers, which also
include non-case mix services such as
room and board, rather than revenue
centers specific to nursing. Due to the
lack of resident-specific nursing
charges, we used WWST from STRIVE
data as a measure of nursing resource
use in limited instances. Specifically,
STRIVE data was not used to select
determinants of payment for the nursing
component. We only used STRIVE data
to update case-mix indexes for the
nursing component, so that nursing
CMIs were calculated based on the
entire SNF population rather than only
on non-rehabilitation residents. We
conducted a series of investigations into
possible changes in resident
characteristics from the time of the
STRIVE study (2006) to fiscal year 2014
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to determine if resident characteristics
had changed in a manner that would
suggest it would not be appropriate to
use data from the STRIVE study in
designing payment alternatives. The
resident characteristics investigated
include, but not limited to, most
common Major Diagnostic Categories
(MDC), percent of stays with
complications or comorbidities in the
qualifying inpatient stay, and frequency
of MDS section I active diagnoses. The
result of the investigations suggest that
although there are small changes in
prior inpatient hospital stay and SNF
stay lengths, there have not been notable
changes in resident characteristics or
acuity over time. Given the stability of
resident characteristics over time, there
is no strong evidence of change in the
relative resource utilization pattern
among nursing groups since the time of
STRIVE study in 2006.
In response to the concern about the
methodology in collecting therapy
minutes, we note that we only used
nursing time to estimate CMIs for the
nursing component under PDPM.
Because therapy minutes were not
included in the nursing staff time
measure, concerns about how the
STRIVE study collected therapy
utilization data are not relevant to our
use of STRIVE data to estimate nursing
CMIs under PDPM.
As for the comments on the small
sample sizes of certain resident groups
in the STRIVE study, as detailed in
section 4.1.2 of the STRIVE Phase II
Report available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
TimeStudy.html, the STRIVE study used
several procedures to address these
concerns. First, STRIVE researchers
deliberately over-sampled certain
vulnerable resident groups to obtain
more robust estimates of resource
utilization for these subpopulations.
Second, the STRIVE authors applied
sample weights to obtain reliable
population estimates. Because the
proportion of facilities included in the
study varied from state to state, the
study population was not truly random.
To account for this, the study developed
sampling weights equal to the inverse of
a resident’s probability of selection for
inclusion in the study population. The
use of sampling weights allows the
calculation of unbiased population
estimates from the sample data, as
described in section 4.1.2 of the STRIVE
Phase II Report.
With regard to the comment stating
concerns about how the STRIVE study
measured nursing time, it is unclear
what the commenter means by ‘‘usual
nursing time’’ and ‘‘nursing time needed
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to assure resident safety and maintain
resident well-being.’’ As discussed in
the STRIVE Phase I and Phase II reports
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/TimeStudy.html, the
STRIVE study collected three kinds of
staff time: Resident Specific Time (RST),
Non-Resident Specific Time (NRST),
and Non-Study Time (NST). It was not
appropriate to include NST in the
dependent variable used to measure
nursing utilization because these
minutes did not benefit residents in the
study population. As for NRST, while
these minutes did benefit the study
population, there are numerous
methodological issues involved in
including these minutes in the
dependent variable. As noted in the
STRIVE Phase II Report available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/TimeStudy.html, for many
types of NRST, it is not clear how to
allocate these non-resident specific
minutes to specific residents. The
STRIVE authors note that during
development of RUG–III, NRST was
allocated to individual residents in
proportion to a resident’s RST, based on
the assumption that a resident’s
utilization of NRST was proportional to
their utilization of RST. However, as the
STRIVE authors note, this assumption
may not be accurate. Accurate allocation
of NRST would have involved extensive
additional data collection that was
beyond the scope of the STRIVE study.
Without confidence in the allocation
methodology, including NRST in the
dependent variable for nursing would
have introduced substantial noise into
the dependent variable that could
obscure the relationships between
resident characteristics and resource
utilization. As a result, the STRIVE
authors decided to set relative payment
weights based on RST alone. However,
we disagree with the commenter if they
are suggesting that excluding NRST
leads us to underestimate nursing
utilization. As noted in the STRIVE
Phase II Report, the STRIVE study was
only used to allocate nursing resources
based on estimated relative resource
utilization. It did not determine
aggregate nursing resources, which are
largely determined based on the
methodology for setting and updating
the federal per diem rates as specified
in the Act. Therefore, it is incorrect to
assert that relying on the STRIVE data
for case-mix adjustment leads to
inadequate nursing reimbursement
since STRIVE is used to determine
allocation of nursing resources rather
than total nursing resources.
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In response to the alternative data
source proposed by commenters, the
Schnelle et al. simulation model
estimates resource use for nurse aides
only; therefore, it is not a
comprehensive or appropriate measure
of nursing utilization.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing our
proposals, without modification,
relating to the methodology, as
described in this section, for classifying
patients under the nursing component
of PDPM.
e. Non-Therapy Ancillary Case-Mix
Classification
Under the current SNF PPS, payments
for NTA costs incurred by SNFs are
incorporated into the nursing
component. This means that the CMIs
used to adjust the nursing component of
the SNF PPS are intended to reflect not
only differences in nursing resource use
but also NTA costs. However, as we
explained in the proposed rule (83 FR
21055), there have been concerns that
the current nursing CMIs do not
accurately reflect the basis for or the
magnitude of relative differences in
resident NTA costs. In its March 2016
Report to Congress, MedPAC wrote:
‘‘Almost since its inception, the SNF
PPS has been criticized for encouraging
the provision of unnecessary
rehabilitation therapy services and not
accurately targeting payments for
nontherapy ancillary (NTA) services
such as drugs (Government
Accountability Office 2002, Government
Accountability Office 1999, White et al.
2002)’’ (available at https://medpac.gov/
docs/default-source/reports/chapter-7skilled-nursing-facility-services-march2016-report-.pdf). In the proposed rule,
we stated that while the proposed PT,
OT, and SLP components were designed
to address the issue related to provision
of therapy services raised by MedPAC
above, the proposed NTA component
was designed to address the issue
related to accurately targeting payments
for NTA services—specifically, that the
current manner of using the RUG–IV
case-mix system to determine NTA
payment levels inadequately adjusts for
relative differences in resident NTA
costs.
As noted in the quotation from
MedPAC above, MedPAC is not the only
group to offer this critique of the SNF
PPS. We stated in the proposed rule that
just as the aforementioned criticisms
that MedPAC cited have existed almost
since the inception of the SNF PPS
itself, ideas for addressing this concern
have a similarly long history. In
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response to comments on the 1998
interim final rule which served to
establish the SNF PPS, we published a
final rule on July 30, 1999 (64 FR
41644). In this 1998 interim final rule,
we acknowledged the commenters’
concerns about the new system’s ability
to account accurately for NTA costs,
stating that there were a number of
comments expressing concern with the
adequacy of the PPS rates to cover the
costs of ancillary services other than
occupational, physical, and speech
therapy (non-therapy ancillaries),
including such things as drugs,
laboratory services, respiratory therapy,
and medical supplies. We stated in the
1998 interim final rule that prescription
drugs or medication therapy were
frequently noted areas of concern due to
their potentially high cost for particular
residents. Some commenters suggested
that the RUG–III case-mix classification
methodology did not adequately
provide for payments that account for
the variation in, or the real costs of,
these services provided to their
residents. (64 FR 41647)
In response to those comments, we
stated in the 1998 interim final rule that
‘‘we are funding substantial research to
examine the potential for refinements to
the case-mix methodology, including an
examination of medication therapy,
medically complex patients, and other
nontherapy ancillary services’’ (64 FR
41648). In the FY 2019 SNF PPS
proposed rule (83 FR 21055 through
21056), we proposed a methodology that
we believe would case-mix adjust SNF
PPS payments more appropriately to
reflect differences in NTA costs.
Following the same methodology we
used for the proposed PT, OT, and SLP
components, the project team ran cost
regression models to determine which
resident characteristics may be
predictive of relative increases in NTA
costs. As explained in the proposed
rule, the three categories of cost-related
resident characteristics identified
through this analysis were resident
comorbidities, the use of extensive
services (services provided to residents
that are particularly expensive and/or
invasive), and resident age. However, as
discussed in the proposed rule, we
removed age from further consideration
as part of the NTA component based on
concerns shared by TEP panelists
during the June 2016 TEP. Particularly,
some panelists expressed concern that
including age as a determinant of NTA
payment could create access issues for
older populations. Additionally, we
state that the CART algorithm used to
explore potential resident groups for the
NTA component only selected age as a
determinant of classification for 2 of the
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7 groups created. We noted that we also
tested a classification option that used
age as a determinant of classification for
every NTA group. This only led to a 5
percent increase in the R-squared value
of the NTA classification. More
information on these analyses can be
found in section 3.7.1. of the SNF PMR
technical report available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html.
As we explained in the proposed rule
(83 FR 21056), with regard to capturing
comorbidities and extensive services
associated with high NTA utilization,
we used multiple years of data (FY 2014
to FY 2017) to estimate the impact of
comorbidities and extensive services on
NTA costs. This was in response to
comments on the ANPRM that the
design of the NTA component should be
more robust and remain applicable in
light of potential changes in the SNF
population and care practices over time.
We explained in the proposed rule that
conditions and services were defined in
three ways. First, clinicians identified
MDS items that correspond to
conditions/extensive services likely
related to NTA utilization. However, we
stated that since many conditions/
extensive services related to NTA
utilization are not included on the MDS
assessment, we then mapped ICD–10
diagnosis codes from the prior inpatient
claim, the first SNF claim, and section
I8000 of the 5-day MDS assessment to
condition categories from the Part C risk
adjustment model (CCs) and the Part D
risk adjustment model (RxCCs). The CCs
and RxCCs define conditions by
aggregating related diagnosis codes into
a single condition flag. We use the
condition flags defined by the CCs and
RxCCs to predict Part A and B
expenditures or Part D expenditures,
respectively for Medicare beneficiaries.
The predicted relationship between the
conditions defined in the respective
models and Medicare expenditures is
then used to risk-adjust capitated
payments to Part C and Part D sponsors.
Similarly, we explained that our
comorbidities investigation aimed to use
a comprehensive list of conditions and
services to predict resource utilization
for beneficiaries in Part A-covered SNF
stays. As we stated in the proposed rule,
ultimately, the predicted relationship
between these conditions/services and
utilization of NTA services would be
used to case-mix adjust payments to
SNF providers, in a process similar to
risk adjustment of capitated payments.
Given these similarities, we decided to
use the diagnosis-defined conditions
from the Part C and Part D risk
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adjustment models to define conditions
and services that were not defined on
the MDS. Because the CCs were
developed to predict utilization of Part
A and B services, while the RxCCs were
developed to predict Part D drug costs,
the largest component of NTA costs, we
stated that believe using both sources
allows us to define the conditions and
services potentially associated with
NTA utilization more comprehensively.
Lastly, we used ICD–10 diagnosis codes
to define additional conditions that
clinicians who advised CMS during
PDPM development identified as being
potentially associated with increased
NTA service utilization but are not fully
reflected in either the MDS or the CCs/
RxCCs. The resulting list was meant to
encompass as many diverse and
expensive conditions and extensive
services as possible from the MDS
assessment, the CCs, the RxCCs, and
diagnoses. As discussed in the proposed
rule, using cost regressions, we found
that certain comorbidity conditions and
extensive services were highly
predictive of relative differences in
resident NTA costs. These conditions
and services were identified in Table 27
of the proposed rule (set forth in Table
27 in this final rule). More information
on this analysis can be found in section
3.7.1. of the SNF PDPM technical report
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html. We noted in the
proposed rule that certain conditions
that were associated with higher NTA
utilization were nevertheless excluded
from the list because of clinical
concerns. Esophageal reflux was
excluded because it is a very common
condition in the SNF population and
clinicians noted that coding can be
discretionary. Migraine headache was
also excluded due to clinicians’
concerns about coding reliability.
Additionally, we noted that clinicians
stated that in many cases migraine
headache is not treated by medication,
the largest component of NTA costs.
Having identified the list of relevant
conditions and services for adjusting
NTA payments, in the proposed rule (83
FR 21056 through 21057), we
considered different options for how to
capture the variation in NTA costs
explained by these identified conditions
and services. We stated that one such
method would be merely to count the
number of comorbidities and services a
resident receives and assign a score to
that resident based on this count. We
found that this option accounts for the
additive effect of having multiple
comorbidities and extensive services but
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did not adequately reflect the relative
differences in the impact of certain
higher-cost conditions and services. We
also considered a tier system similar to
the one used in the IRF PPS, where SNF
residents would be placed into payment
tiers based on the costliest comorbidity
or extensive service. However, we found
that this option did not account for the
additive effect noted above. To address
both of these issues, we proposed basing
a resident’s NTA score, which would be
used to classify the resident into an
NTA case-mix classification group, on a
weighted-count methodology.
Specifically, as shown in Table 27, each
of the comorbidities and services that
factored into a resident’s NTA
classification was assigned a certain
number of points based on its relative
impact on a resident’s NTA costs. Those
conditions and services with a greater
impact on NTA costs were assigned
more points, while those with less of an
impact were assigned fewer points. The
relative impacts are estimated based the
coefficients of an ordinary least squares
(OLS) regression that used the selected
conditions and extensive services to
predict NTA costs per day. Points were
assigned by grouping together
conditions and extensive services with
similar OLS regression estimates. More
information on this methodology and
analysis can be found in section 3.7.1.
of the SNF PDPM technical report
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html. We stated that the
effect of this methodology was that the
NTA component would adequately
reflect relative differences in the NTA
costs for each condition or service, as
well as the additive effect of having
multiple comorbidities.
We stated in the proposed rule (83 FR
21057) that a resident’s total
comorbidity score, which would be the
sum of the points associated with all of
a resident’s comorbidities and services,
would be used to classify the resident
into an NTA case-mix group. For
conditions and services where the
source is indicated as MDS item I8000,
SNF PDPM NTA Comorbidity Mapping
(which accompanied the FY 2019 SNF
PPS proposed rule) (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html) provides a
crosswalk between the listed condition
and the ICD–10–CM codes which may
be coded to qualify that condition to
serve as part of the resident’s NTA
classification. MDS item I8000 is an
open-ended item in the MDS assessment
where the assessment provider can fill
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in additional active diagnoses that are
not explicitly on the MDS for the
resident in the form of ICD–10 codes. In
the case of Parenteral/IV Feeding, we
stated that we observed that NTA costs
per day increase as the amount of intake
through parenteral or tube feeding
increases. For this reason, we proposed
to separate this item into a high
intensity item and a low intensity item,
similar to how it is defined in the RUG–
IV system. In order for a resident to
qualify for the high intensity category,
the percent of calories taken in by the
resident by parenteral or tube feeding,
as reported in item K0710A2 on the
MDS 3.0, must be greater than 50
percent. We further stated that in order
to qualify for the low intensity category,
the percent of calories taken in by the
resident by parenteral or tube feeding,
as reported in item K0710A2 on the
MDS 3.0, must be greater than 25
percent but less than or equal to 50
percent, and the resident must receive
an average fluid intake by IV or tube
feeding of at least 501cc per day, as
reported in item K0710B2 of the MDS
3.0.
We also noted that the source of the
HIV/AIDS diagnosis is listed as the SNF
claim. We explained in the proposed
rule that this is because 16 states have
state laws that prevent the reporting of
HIV/AIDS diagnosis information to CMS
through the current assessment system
and/or prevent CMS from seeing such
diagnosis information within that
system, should that information be
mistakenly reported. We noted that the
states are Alabama, Alaska, California,
Colorado, Connecticut, Idaho, Illinois,
Massachusetts, Nevada, New
Hampshire, New Jersey, New Mexico,
South Carolina, Texas, Washington, and
West Virginia. Given this restriction, it
would not be possible to have SNFs
utilize the MDS 3.0 as the vehicle to
report HIV/AIDS diagnosis information
for purposes of determining a resident’s
NTA classification. We noted that the
current SNF PPS uses a claims reporting
mechanism as the basis for the
temporary AIDS add-on payment which
exists under RUG–IV. To address the
issue discussed above with respect to
reporting of HIV/AIDS diagnosis
information under the proposed PDPM,
we proposed to utilize this existing
claims reporting mechanism to
determine a resident’s HIV/AIDS status
for the purpose of NTA classification.
More specifically, we explained that
HIV/AIDS diagnosis information
reported on the MDS would be ignored
by the GROUPER software used to
classify a resident into an NTA case-mix
group. Instead, we stated that providers
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would be instructed to locate the HIPPS
code provided to the SNF on the
validation report associated with that
assessment and report it to CMS on the
associated SNF claim. Following current
protocol, the provider would then enter
ICD–10–CM code B20 on the associated
SNF claim as if it were being coded to
receive payment through the current
AIDS add-on payment. The PRICER
software, which we use to determine the
appropriate per diem payment for a
provider based on their wage index and
other factors, would make the
adjustment to the resident’s NTA casemix group based on the presence of the
B20 code on the claim, as well as adjust
the associated per diem payment based
on the adjusted resident HIPPS code.
Again, we noted that this methodology
follows the same logic that the SNF PPS
currently uses to pay the temporary
AIDS add-on adjustment but merely
changes the target and type of
adjustment from the SNF PPS per diem
to the NTA component of the proposed
PDPM. We explained that the difference
is that while under the current system,
the presence of the B20 code would lead
to a 128 percent increase in the per
diem rate, under the proposed PDPM,
the presence of the B20 code would
mean the addition of 8 points (as
determined by the OLS regression
described above) to the resident’s NTA
score, the categorization of the resident
into the appropriate NTA group, and an
adjustment to the nursing component,
as described in section V.D.3.d. of the
proposed rule. Section 1888(e)(12) of
the Act enacted a temporary 128 percent
increase in the PPS per diem payment
for SNF residents with HIV/AIDS and
stipulated that the temporary
adjustment was to be applied only until
the Secretary certifies that there is an
appropriate case-mix adjustment to
compensate for the increased costs
associated with this population. As we
explained in the proposed rule, based
on this language, we conducted an
analysis similar to that used to
determine the HIV/AIDS add-on for the
nursing component to examine the
adequacy of payment for ancillary
services (all non-nursing services: PT,
OT, SLP, and NTA) for residents with
HIV/AIDS under the proposed PDPM.
This analysis determined that after
accounting for the 8 points assigned for
HIV/AIDS in the NTA component and
controlling for case-mix classification
across the three therapy components
and NTA component, HIV/AIDS was
not associated with an increase in
ancillary costs. We noted that nursing
costs were not included in this
regression because we separately
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investigated the increased nursing
utilization associated with HIV/AIDS, as
described in section V.D.3.d. of the
proposed rule. Based on the results of
this investigation, we concluded that
the four ancillary case-mix components
(PT, OT, SLP, and NTA) adequately
reimburse costs associated with
residents with HIV/AIDS. Therefore, we
stated that we do not believe an HIV/
AIDS add-on is warranted for the
ancillary cost components. More
information on this analysis can be
found in section 3.8.2. of the PDPM
technical report available at https://
www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/SNFPPS/
therapyresearch.html.
Table 27 provides the proposed list of
conditions and extensive services that
would be used for NTA classification,
the source of that information, and the
associated number of points for that
condition.
TABLE 27—CONDITIONS AND EXTENSIVE SERVICES USED FOR NTA CLASSIFICATION
Condition/extensive service
Source
HIV/AIDS .......................................................................................................................................
Parenteral IV Feeding: Level High ................................................................................................
Special Treatments/Programs: Intravenous Medication Post-admit Code ...................................
Special Treatments/Programs: Ventilator or Respirator Post-admit Code ...................................
Parenteral IV feeding: Level Low ..................................................................................................
SNF Claim ...............................
MDS Item K0510A2, K0710A2
MDS Item O0100H2 ................
MDS Item O0100F2 .................
MDS Item K0510A2, K0710A2,
K0710B2.
MDS Item I8000 .......................
MDS Item O0100I2 ..................
MDS Item I8000 .......................
MDS Item I5200 .......................
MDS Item I8000 .......................
MDS Item I6200 .......................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item I2500 .......................
MDS Item I2900 .......................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item M1040B ..................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item O0100E2 ................
MDS Item I1700 .......................
MDS Item O0100M2 ................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item O0100B2 ................
MDS Item M0300X1 ................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item M1040A, M1040B,
M1040C.
MDS Item I8000 .......................
MDS Item H0100D ..................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item O0100D2 ................
MDS Item I8000 .......................
MDS Item I8000 .......................
MDS Item I8000 .......................
8
7
5
4
3
MDS
MDS
MDS
MDS
MDS
MDS
MDS
MDS
MDS
MDS
1
1
1
1
1
1
1
1
1
1
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Lung Transplant Status .................................................................................................................
Special Treatments/Programs: Transfusion Post-admit Code .....................................................
Major Organ Transplant Status, Except Lung ..............................................................................
Active Diagnoses: Multiple Sclerosis Code ..................................................................................
Opportunistic Infections .................................................................................................................
Active Diagnoses: Asthma COPD Chronic Lung Disease Code ..................................................
Bone/Joint/Muscle Infections/Necrosis—Except Aseptic Necrosis of Bone .................................
Chronic Myeloid Leukemia ............................................................................................................
Wound Infection Code ..................................................................................................................
Active Diagnoses: Diabetes Mellitus (DM) Code ..........................................................................
Endocarditis ...................................................................................................................................
Immune Disorders .........................................................................................................................
End-Stage Liver Disease ..............................................................................................................
Other Foot Skin Problems: Diabetic Foot Ulcer Code ..................................................................
Narcolepsy and Cataplexy ............................................................................................................
Cystic Fibrosis ...............................................................................................................................
Special Treatments/Programs: Tracheostomy Care Post-admit Code .........................................
Active Diagnoses: Multi-Drug Resistant Organism (MDRO) Code ..............................................
Special Treatments/Programs: Isolation Post-admit Code ...........................................................
Specified Hereditary Metabolic/Immune Disorders .......................................................................
Morbid Obesity ..............................................................................................................................
Special Treatments/Programs: Radiation Post-admit Code .........................................................
Highest Stage of Unhealed Pressure Ulcer—Stage 4 .................................................................
Psoriatic Arthropathy and Systemic Sclerosis ..............................................................................
Chronic Pancreatitis ......................................................................................................................
Proliferative Diabetic Retinopathy and Vitreous Hemorrhage ......................................................
Other Foot Skin Problems: Foot Infection Code, Other Open Lesion on Foot Code, Except Diabetic Foot Ulcer Code.
Complications of Specified Implanted Device or Graft .................................................................
Bladder and Bowel Appliances: Intermittent Catheterization .......................................................
Inflammatory Bowel Disease ........................................................................................................
Aseptic Necrosis of Bone ..............................................................................................................
Special Treatments/Programs: Suctioning Post-admit Code .......................................................
Cardio-Respiratory Failure and Shock ..........................................................................................
Myelodysplastic Syndromes and Myelofibrosis ............................................................................
Systemic Lupus Erythematosus, Other Connective Tissue Disorders, and Inflammatory
Spondylopathies.
Diabetic Retinopathy—Except Proliferative Diabetic Retinopathy and Vitreous Hemorrhage .....
Nutritional Approaches While a Resident: Feeding Tube .............................................................
Severe Skin Burn or Condition .....................................................................................................
Intractable Epilepsy .......................................................................................................................
Active Diagnoses: Malnutrition Code ............................................................................................
Disorders of Immunity—Except: RxCC97: Immune Disorders .....................................................
Cirrhosis of Liver ...........................................................................................................................
Bladder and Bowel Appliances: Ostomy ......................................................................................
Respiratory Arrest .........................................................................................................................
Pulmonary Fibrosis and Other Chronic Lung Disorders ...............................................................
Given the NTA scoring methodology
described in the proposed rule (83 FR
21058 through 21059) and above, and
following the same methodology used
for the PT, OT, and SLP components,
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we used the CART algorithm to
determine the most appropriate splits in
resident NTA case-mix groups. This
methodology is more thoroughly
explained in sections 3.4.2. and 3.7.2. of
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Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Points
I8000 .......................
K0510B2 .................
I8000 .......................
I8000 .......................
I5600 .......................
I8000 .......................
I8000 .......................
H0100C ..................
I8000 .......................
I8000 .......................
the SNF PDPM technical report
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html. Based on the
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1
1
1
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breakpoints generated by the CART
algorithm, we determined that 6 casemix groups would be necessary to
classify residents adequately in terms of
their NTA costs in a manner that
captures sufficient variation in NTA
costs without creating unnecessarily
granular separations. As discussed in
the proposed rule, we made certain
administrative decisions that further
refined the NTA case-mix classification
groups beyond those produced through
use of the CART algorithm but
maintained the CART output predictive
accuracy. We explained that the
proposed NTA case-mix classification
departs from the CART comorbidity
score bins in grouping residents with a
comorbidity score of 1 with residents
with scores of 2 instead of with
residents with scores of 0. This is to
maintain the distinction between
residents with no comorbidities and the
rest of the population. In addition, we
grouped residents with a score of 5
together with residents with scores of 3
to 4 based on their similarity in average
NTA costs per day. More information on
this analysis can be found in section
3.7.2. of the SNF PDPM technical report
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html. We provided the
criteria for each of these groups along
with its CMI in Table 28 of the proposed
rule (set forth in Table 28 of this final
rule).
We stated in the proposed rule (83 FR
21059) that to help ensure payment
reflects the average relative resource use
at the per diem level, CMIs would be set
to reflect relative case-mix related
differences in costs across groups. We
further stated that this method helps
ensure that the share of payment for
each case-mix group would be equal to
its share of total costs of the component.
CMIs for the NTA component were
calculated based on two factors. One
factor was the average per diem costs of
a case-mix group relative to the
population average. The other factor
was the average variable per diem
adjustment factor of the group relative
to the population average. In this
calculation, average per diem costs
equaled total NTA costs in the group
divided by number of utilization days in
the group. Similarly, the average
variable per diem adjustment factor
equaled the sum of NTA variable per
diem adjustment factors for all
utilization days in the group divided by
the number of utilization days in the
group. We calculated CMIs such that
they equaled the ratio of relative average
per diem costs for a group to the relative
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average variable per diem adjustment
factor for the group. In this calculation,
relative average per diem costs and the
relative average variable per diem
adjustment factor were weighted by
length of stay to account for the
different length of stay distributions
across case-mix groups (as further
discussed in section 3.11.1. of the SNF
PDPM technical report, available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html). After
calculating CMIs as described above, we
then applied adjustments to ensure that
the distribution of resources across
payment components was aligned with
the statutory base rates as discussed in
section V.D.3.b. of the proposed rule.
We also applied a parity adjustment by
multiplying the CMIs by the ratio of
case-mix-related payments in RUG–IV
over estimated case-mix-related
payments in PDPM, as further discussed
in section V.J. of the proposed rule.
More information on the variable per
diem adjustment factor is discussed in
section V.D.4. of the proposed rule. The
full methodology used to develop CMIs
is presented in section 3.11. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html).
39223
We invited comments on the
approach proposed above to classify
residents for NTA payment under the
proposed PDPM.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the classification of
residents for NTA payment under the
PDPM. A discussion of these comments,
along with our responses, appears
below.
Comment: A few commenters
recommended CMS include additional
conditions as comorbidities for NTA
classification and payment, including:
Parkinson’s disease, non-refractory
epilepsy/seizure disorders, and mental
health conditions that bear a strong
relationship to NTA utilization. One
commenter recommended that CMS
include all conditions associated with
higher NTA costs, not only the 50
costliest comorbidities. Another
commenter suggested implementing a
periodic review process to update the
NTA comorbidity list based on changes
in care practices. One commenter
recommended CMS add cardiorespiratory failure and shock,
respiratory arrest, pulmonary fibrosis or
other chronic lung disorders, oxygen
therapy, and non-invasive ventilation
(for example, BiPAP/CPAP) to the NTA
comorbidity list, as these conditions/
services reflect medical complexity and
high acuity. Another commenter stated
TABLE 28—NTA CASE-MIX
that NTA comorbidities should include
CLASSIFICATION GROUPS
wound care and all pressure ulcers, not
only stage 4 pressure ulcers.
NTA
NTA
Response: As described in section
NTA score range
case-mix
case-mix
3.7.1 of the SNF PDPM technical report,
group
index
we investigated a broad list of
12+ ....................
NA
3.25 conditions and services as potential
9–11 ..................
NB
2.53 NTA comorbidities, defined using MDS
6–8 ....................
NC
1.85 items, ICD–10–CM diagnoses, and CCs
3–5 ....................
ND
1.34 and RxCCs from the Medicare Parts C
1–2 ....................
NE
0.96 and D risk adjustment models. We used
0 ........................
NF
0.72
MDS item I5300 to identify residents
with Parkinson’s disease, RxCC 164 to
We stated in the proposed rule (83 FR identify residents with non-refractory
21059) that as with the previously
epilepsy, CC 84 to identify residents
discussed components, all residents
with cardio-respiratory failure and
would be classified into one and only
shock, CC 83 to identify residents with
one of these 6 NTA case-mix groups
respiratory arrest, CC 112 and RxCC 227
under the proposed PDPM. We
to identify residents with pulmonary
explained that the proposed PDPM
fibrosis or other chronic lung disorders,
would create a separate payment
MDS item M1200F to identify residents
component for NTA services, as
receiving wound care, and MDS item
opposed to combining NTA and nursing M0300X1 to identify residents with a
into one component as in the RUG–IV
pressure ulcer. For mental health
system. This separation would allow
conditions, we used RxCC 135 to
payment for NTA services to be based
identify residents with anxiety, RxCC
on resident characteristics that predict
133 to identify residents with specified
NTA resource utilization rather than
anxiety, personality, and behavior
nursing staff time. Thus, we stated that
disorders, RxCC 132 and 134 to identify
we believe the proposed NTA case-mix
residents with depression, CC 58 to
groups would provide a better measure
identify residents with Major
of resource utilization and lead to more
Depressive, Bipolar, and Paranoid
accurate payments under the SNF PPS.
Disorder, CC 57, RxCC 130 to identify
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residents with schizophrenia, CC 54 to
identify residents with drug or alcohol
psychosis, and CC 55 to identify
residents with drug or alcohol
dependence. Neither Parkinson’s
disease, non-refractory epilepsy,
pulmonary fibrosis or other chronic
lung disorders, nor any mental health
condition were among the top 50
costliest conditions/services in terms of
NTA utilization. Non-refractory
epilepsy was associated with an
increase of about $1.60 in NTA costs per
day, while Parkinson’s disease was
associated with an increase of about
$2.50 in NTA costs per day and
pulmonary fibrosis or other chronic
lung disorders were associated with an
increase of about $4 per day in NTA
costs. Wound care was associated with
an increase of about $2 in NTA costs per
day, while stage 3 pressure ulcers (the
next highest level of severity after stage
4) were associated with an increase of
about $1 in NTA costs per day. Among
mental health conditions, major
depression was the most costly and
associated with an increase of about $4
per day in NTA costs. The other mental
health conditions were associated with
less than $2 in NTA costs per day. In
contrast, the least costly comorbidity
included in the final list of included
comorbidities for NTA classification
and payment was associated with an
increase of about $4.50 in NTA costs per
day. Therefore, these conditions were
not included as NTA comorbidities. On
the other hand, cardio-respiratory
failure and shock, as well as respiratory
arrest were found to be among the 50
costliest conditions in terms of NTA
utilization. Therefore, these two
conditions were included in the final
list of NTA comorbidities. As for oxygen
therapy and non-invasive ventilation
such as BiPAP and CPAP, clinicians
advised CMS that it was not appropriate
to include these services in the payment
model because their inclusion would
likely lead to inappropriate provision of
these services in excess of clinical need.
We do not believe it is appropriate to
include conditions/services that do not
have a notable impact on NTA costs per
day, and therefore, we only included the
50 costliest comorbidities.
Comment: A commenter states that
the points assigned to ventilator care
should be much higher because this
service requires 24-hour assistance.
Additionally, this commenter requests
CMS modify the term ‘‘ventilator/
respirator’’ to only ‘‘ventilator’’ as the
term ‘‘respirator’’ is outdated. Another
commenter recommended further
evaluation of the proposed point
assignment, particularly for pressure
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ulcers, diabetic ulcers, respiratory
failure, severe burns, multi-drug
resistant organisms, and morbid obesity.
According to the commenter, these
items require higher resource utilization
compared to other conditions/services
that are assigned the same number of
points.
Response: As described in section
3.7.1 of the SNF PDPM technical report,
after determining the 50 costliest
comorbidities in terms of NTA
utilization, we ran an OLS regression to
estimate the increase in NTA costs
associated with each included condition
or service. We then assigned points to
each condition/service in proportion to
the associated increase in NTA costs by
dividing the coefficient for each
condition or service by 10 and then
rounding to the nearest integer. Based
on this procedure, we assigned 4 points
to ventilator/respirator care to reflect
our finding that this service was
associated with an increase of about $40
in NTA costs per day. Using the same
procedure, we assigned 1 point to stage
4 pressure ulcers, diabetic foot ulcers,
respiratory failure, severe burns, multidrug resistant organisms, and morbid
obesity as each of these conditions was
associated with an increase of roughly
$10 in NTA costs per day. Therefore,
our analysis does not support increasing
the points assigned to these services.
The nomenclature used to refer to
ventilator/respirator care under PDPM is
consistent with the description of this
service on the current version of the
MDS 3.0 assessment. We appreciate the
feedback on the appropriateness of the
current name and will consider
modifying the name of this item as
appropriate to reflect current usage.
Comment: One commenter states that
given the theoretical maximum NTA
score is 83, the highest NTA score bin
should not be 12+. This commenter
suggests creating additional score bins
at the upper end of the score, such as
12–14, 15–17, and 18+, to more
accurately reflect residents with highly
complex conditions and multiple
extensive services.
Response: While it is true that some
stays have very high NTA costs, we find
that stays with an NTA comorbidity
score of 12 or above are very rare (about
1 percent of all stays). As the number of
stays included in each group declines,
the magnitude of the standard error
associated with the estimate of a group’s
resource utilization increases, raising
concerns about the precision of these
estimates. For the foregoing reasons, we
do not believe it is appropriate to add
additional NTA groups to include
residents with extraordinarily high NTA
utilization at this time. We will also
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consider revisiting both the list of
included NTA comorbidities and the
points assigned to each condition/
service based on changes in the resident
population and care practices over time.
Comment: Another commenter
expressed concern that NTA costs,
especially high-cost cases, are
impossible to predict through use of
existing administrative data due to the
small sample size of these high-cost
outliers. Since PDPM was developed on
data that may fail to account for highcost outliers, the commenter believes
that PDPM is not sufficient to explain
NTA utilization and will underpay the
actual high-cost cases that cannot be
predicted. One commenter questioned
the validity of current NTA data, stating
that providers do not accurately record
NTA costs because these services are
not important determinants of payment
under RUG–IV. As a result, current data
may underestimate NTA costs.
Therefore, PDPM may not accurately
reimburse NTA utilization.
Response: As shown in section 3.7.1
of the SNF PDPM technical report,
average NTA costs per day by
comorbidity score varies from around
$30 to near $180, which indicates the
data being used captures great variations
of NTA costs and includes many
expensive cases. The NTA comorbidity
list as shown in Table 27 of the
proposed rule (83 FR 21058) captures
comorbidities and services with high
NTA costs. Moreover the selected
comorbidities and services meet clinical
expectations of conditions that are
expected to require high NTA
utilization. Although the data available
may be limited in capturing high-cost
cases due to the small sample size of
less common comorbidities, the
proposed rule (83 FR 21073 through
21077) and section 3.12 of the SNF
PDPM technical report show that
payments for beneficiaries with high
NTA costs will increase notably under
PDPM compared with RUG IV. In
particular, our impact analysis finds
that payment increases by 27.2 percent
for residents with 12 or more conditions
under PDPM compared to RUG–IV.
Regarding the concern that current
administrative data may not fully
capture NTA utilization for the SNF
population, first, as described in Section
3.2.2. of the SNF PDPM technical report,
we checked the quality of self-reported
NTA utilization data by comparing
charges from cost reports and charges
from claims and verifying that these
were generally consistent. Second, we
used four years of data (FYs 2014–2017)
to identify the conditions and services
associated with high NTA utilization
and assign points to these comorbidities
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reflective of their impact on resource
use. Using several years of data
addresses a key concern of commenters
responding to the 2017 ANPRM and
ensures a higher level of robustness
compared to using a single year of data.
Third, if NTA utilization is indeed
underreported overall, this should not
affect relative NTA resource use across
different types of residents, therefore
PDPM should still assign payment
appropriately based on observed relative
differences in NTA utilization. Fourth,
clinicians reviewed the proposed NTA
classification and verified that it accords
with clinical expectations regarding
conditions and services that are
associated with high NTA utilization.
Finally, as SNF care practices and
reporting patterns change in response to
the new payment model and other
factors, we will consider revising
elements of PDPM, including the NTA
comorbidities, to reflect changes in
relative resource use.
Comment: One commenter requested
clarification on the NTA comorbidity
list change from RCS–I to PDPM.
Response: The change in the
comorbidity list from RCS–I to PDPM is
due to the following: first, we used 4
years of data (FY2014–FY2017) under
PDPM instead of a single year of data
under RCS–I to make the list more
robust to changes in the SNF population
and care practices over time; second, we
added Part D condition categories to
better capture conditions associated
with high medication costs; finally, we
expanded the list to the top 50
comorbidities to include more
conditions.
Comment: One commenter
recommended that PDPM include an
NTA default category to accommodate
new conditions and services for greater
flexibility.
Response: We are not clear on how
such a default category would operate,
nor what level of reimbursement would
be appropriate to set for the addition of
new conditions and services. We would
need additional information on how
such a default category could be
constructed.
Comment: One commenter expressed
concern regarding access to novel
therapies, and encouraged CMS to
consider adding a new technology addon payment, similar to that done for
inpatient hospitals, and make additional
payments to SNFs when new treatment
options become available. One
commenter also stated that PDPM does
not account for new classes of expensive
medications.
Response: The points associated with
each NTA comorbidity under the PDPM
are based on existing cost data, which
may be updated in future years to reflect
the costs of new technologies and
treatments or new classes of
medications. Rather than merely
incentivizing new treatments, we expect
providers to utilize the best treatments
for a given patient, which may or may
not be more costly than existing
treatments. Further, we note that the
inpatient hospital PPS’s new technology
add-on payment is specifically
authorized by sections 1886(d)(5)(K)
and (L) of the Act, whereas no similar
statutory authority exists under the SNF
PPS.
Comment: One commenter expressed
concern that using a patient’s NTA score
as a first tier classification criterion
could put providers at risk of late or
missing IPAs.
Response: As discussed in section V.D
of this final rule, the IPA would be an
39225
optional assessment and, as such, not
susceptible to late or missed assessment
penalties.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing the
proposed NTA component of the PDPM
and the proposed classification
methodology for the NTA component,
without modification.
f. Payment Classifications Under PDPM
RUG–IV classifies each resident into a
single RUG, with a single payment for
all services. By contrast, the PDPM
classifies each resident into five
components (PT, OT, SLP, NTA, and
nursing) and provide a single payment
based on the sum of these individual
classifications. The payment for each
component would be calculated by
multiplying the CMI for the resident’s
group first by the component federal
base payment rate, then by the specific
day in the variable per diem adjustment
schedule (as discussed in section V.D.4
of the proposed rule and in section
V.D.4 of this final rule). Additionally,
for residents with HIV/AIDS indicated
on their claim, the nursing portion of
payment would be multiplied by 1.18
(as discussed in section V.D.3.d. of the
proposed rule and section V.H of this
final rule). These payments would then
be added together along with the noncase-mix component payment rate to
create a resident’s total SNF PPS per
diem rate under the PDPM. This section
describes how two hypothetical
residents would be classified into
payment groups under the current
RUG–IV model and PDPM. To begin,
consider two residents, Resident A and
Resident B, with the resident
characteristics identified in Table 29.
TABLE 29—HYPOTHETICAL RESIDENT CHARACTERISTICS
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Resident characteristics
Resident A
Rehabilitation Received? ...............................................................................................
Therapy Minutes ............................................................................................................
Extensive Services ........................................................................................................
ADL Score .....................................................................................................................
Clinical Category ............................................................................................................
PT and OT Function Score ...........................................................................................
Nursing Function Score .................................................................................................
Cognitive Impairment .....................................................................................................
Swallowing Disorder? ....................................................................................................
Mechanically Altered Diet? ............................................................................................
SLP Comorbidity? ..........................................................................................................
Comorbidity Score .........................................................................................................
Other Conditions ............................................................................................................
Depression? ...................................................................................................................
Yes .....................................
730 .....................................
No .......................................
9 .........................................
Acute Neurologic ................
10 .......................................
7 .........................................
Moderate ............................
No .......................................
Yes .....................................
No .......................................
7 (IV Medication and DM) ..
Dialysis ...............................
No .......................................
Currently under the SNF PPS,
Resident A and Resident B would be
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classified into the same RUG–IV group.
They both received rehabilitation, did
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Resident B
Yes.
730.
No.
9.
Major Joint Replacement.
10.
7.
Intact.
No.
No.
No.
1 (Chronic Pancreatitis).
Septicemia.
Yes.
not receive extensive services, received
730 minutes of therapy, and have an
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ADL score of 9. This places the two
residents into the ‘‘RUB’’ RUG–IV group
and SNFs would be paid at the same
rate, despite the many differences
between these two residents in terms of
their characteristics, expected care
needs, and predicted costs of care.
Under the PDPM, however, these two
residents would be classified very
differently. With regard to the PT and
OT components, Resident A would fall
into group TO, as a result of his
categorization in the Acute Neurologic
group and a function score within the
10 to 23 range. Resident B, however,
would fall into group TC for the PT and
OT components, as a result of his
categorization in the Major Joint
Replacement group and a function score
within the 10 to 23 range. For the SLP
component, Resident A would be
classified into group SH, based on his
categorization in the Acute Neurologic
group, the presence of moderate
cognitive impairment, and the presence
of Mechanically-Altered Diet, while
Resident B would be classified into
group SA, based on his categorization in
the Non-Neurologic group, the absence
of cognitive impairment or any SLPrelated comorbidity, and the lack of any
swallowing disorder or mechanicallyaltered diet. For the Nursing
component, following the existing
nursing case-mix methodology, Resident
A would fall into group LBC1, based on
his use of dialysis services and a
nursing function score of 7, while
Resident B would fall into group HBC2,
due to the diagnosis of septicemia,
presence of depression, and a nursing
function score of 7. Finally, with regard
to NTA classification, Resident A would
be classified in group NC, with an NTA
score of 7, while Resident B would be
classified in group NE, with an NTA
score of 1. This demonstrates that,
under the PDPM, more aspects of a
resident’s unique characteristics and
needs factor into determining the
resident’s payment classification, which
makes for a more resident-centered casemix model while also eliminating, or
greatly reducing, the number of servicebased factors which are used to
determine the resident’s payment
classification. Because this system is
based on specific resident
characteristics predictive of resource
utilization for each component, we
expect that payments will be better
aligned with resident need.
4. Variable per Diem Adjustment
Factors and Payment Schedule
Section 1888(e)(4)(G)(i) of the Act
provides that payments must be
adjusted for case mix, based on a
resident classification system which
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accounts for the relative resource
utilization of different types of
residents. Additionally, section
1888(e)(1)(B) of the Act specifies that
payments to SNFs through the SNF PPS
must be made on a per-diem basis.
Currently under the SNF PPS, each RUG
is paid at a constant per diem rate,
regardless of how many days a resident
is classified in that particular RUG.
However, we explained in the proposed
rule (83 FR 21060) that during the
course of the SNF PMR project, analyses
on cost over the stay for each of the
case-mix adjusted components revealed
different trends in resource utilization
over the course of the SNF stay. These
analyses utilized costs derived from
claim charges as a measure of resource
utilization. Costs were derived by
multiplying charges from claims by the
CCRs on facility-level costs reports. As
described in section V.B.3.b. of the
proposed rule, costs better reflect
differences in the relative resource use
of residents as opposed to charges,
which partly reflect decisions made by
providers about how much to charge
payers for certain services. In examining
costs over a stay, we stated we found
that for certain categories of SNF
services, notably PT, OT and NTA
services, costs declined over the course
of a stay. Based on the claim submission
schedule and variation in the point
during the month when a stay began, we
were able to estimate resource use for a
specific day in a stay. Facilities are
required to submit monthly claims.
Each claim covers the period from the
first day during the month a resident is
in the facility to the end of the month.
If a resident was admitted on the first
day of the month, remains in the
facility, and continues to have Part A
SNF coverage until the end of the
month, the claim for that month will
include all days in the month. However,
if a resident is admitted after the first
day of the month, the first claim
associated with the resident’s stay will
be shorter than a month. We stated in
the proposed rule that to estimate
resource utilization for each day in the
stay, we used the marginal estimated
cost from claims of varying length based
on random variation in the day of a
month when a stay began. Using this
methodology, we observed a decline in
the marginal estimated cost of each
additional day of SNF care over the
course of the stay. We further stated that
to supplement this analysis, we also
looked at changes in the number of
therapy minutes reported in different
assessments throughout the stay.
Because therapy minutes are recorded
on the MDS, the presence of multiple
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assessments throughout the stay
provided information on changes in
resource use. For example, it was clear
whether the number of therapy minutes
a resident received changed from the 5day assessment to the 14-day
assessment. We explained that the
results from this analysis were
consistent with the cost from claims
analysis and showed that, on average,
the number of therapy minutes is lower
for assessments conducted later in the
stay. This finding was consistent across
different lengths of stay. More
information on these analyses can be
found in section 3.9. of the SNF PDPM
technical report and section 3.9. of the
SNF PMR technical report that
accompanied the ANPRM, both
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html.
As discussed in the proposed rule (83
FR 21060 through 21061), analyses of
the SLP component revealed that the
per diem costs remain relatively
constant over time, while the PT, OT,
and NTA component cost analyses
indicate that the per diem cost for these
three components decline over the
course of the stay. We stated in the
proposed rule that in the case of the PT
and OT components, costs start higher
at the beginning of the stay and decline
slowly over the course of the stay. By
comparison, the NTA component cost
analyses indicated significantly
increased NTA costs at the beginning of
a stay that then drop to a much lower
level that holds relatively constant over
the remainder of the SNF stay. This is
consistent with how most SNF drug
costs are typically incurred at the outset
of a SNF stay. We stated that these
results indicate that resource utilization
for PT, OT, and NTA services changes
over the course of the stay. More
information on these analyses can be
found in section 3.9.1. of the SNF PMR
technical report that accompanied the
ANPRM available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html. As we stated in
the proposed rule, we were unable to
assess potential changes in the level of
nursing costs over a resident’s stay, in
particular because nursing charges are
not separately identifiable in SNF
claims, and nursing minutes are not
reported on the MDS assessments.
However, stakeholders (industry
representatives and clinicians) at
multiple TEPs indicated that nursing
costs tend to remain relatively constant
over the course of a resident’s stay.
We explained in the proposed rule
that constant per diem rates, by
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definition, do not track variations in
resource use throughout a SNF stay. We
stated we believe this may lead to too
few resources being allocated for SNF
providers at the beginning of a stay.
Given the trends in resource utilization
over the course of a SNF stay discussed
above, and that section 1888(e)(4)(G)(i)
of the Act requires the case-mix
classification system to account for
relative resource use, we proposed
adjustments to the PT, OT, and NTA
components in the proposed PDPM to
account for changes in resource
utilization over a stay. These
adjustments were referred to as the
variable per diem adjustments. We did
not propose such adjustments to the
SLP and nursing components based on
findings and stakeholder feedback, as
discussed above, that resource use tends
to remain relatively constant over the
course of a SNF stay.
As noted above and in the proposed
rule (83 FR 21061), and discussed more
thoroughly in section 3.9. of the SNF
PMR technical report that accompanied
the ANPRM (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html), PT and OT costs
decline at a slower rate than the decline
in NTA costs. Therefore, in addition to
proposing a variable per diem
adjustment, we further proposed
separate adjustment schedules and
indexes for the PT and OT components
and the NTA component to reflect more
closely the rate of decline in resource
utilization for each component. Table 30
of the proposed rule provided the
adjustment factors and schedule that we
proposed for the PT and OT
components, while Table 31 of the
proposed rule provided the adjustment
factors and schedule that we proposed
for the NTA component.
In Table 30 of the proposed rule, the
adjustment factor for the PT and OT
components was 1.00 for days 1 to 20.
We explained that this was because the
analyses described above indicated that
PT and OT costs remain relatively high
for the first 20 days and then decline.
The estimated daily rates of decline for
PT and OT costs relative to the initial
20 days were both 0.3 percent. Thus, we
stated that a convenient and appropriate
way to reflect this was to bin days in the
PT and OT variable per diem
adjustment schedules such that
payment declines at less frequent
intervals, while still reflecting a 0.3
percent daily rate of decline in PT and
OT costs. Therefore, we proposed to set
the adjustment factors such that
payment would decline 2 percent every
7 days after day 20 (0.3 * 7 = 2.1). We
explained that the 0.3 percent rate of
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decline was derived from a regression
model that estimates the level of
resource use for each day in the stay
relative to the beginning of the stay. The
regression methodology and results are
presented in section 3.9. of the SNF
PDPM technical report, available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html.
As described previously in this
section and in the proposed rule (83 FR
21061), NTA resource utilization
exhibits a somewhat different pattern.
The analyses described above indicate
that NTA costs are very high at the
beginning of the stay, drop rapidly after
the first 3 days, and remain relatively
stable from the fourth day of the stay.
We stated that starting on day 4 of a
stay, the per diem costs drop to roughly
one-third of the per diem costs in the
initial 3 days. We explained that this
suggests that many NTA services are
provided in the first few days of a SNF
stay. Therefore, we proposed setting the
NTA adjustment factor to 3.00 for days
1 to 3 to reflect the extremely high
initial costs, then setting it at 1.00 (twothirds lower than the initial level) for
subsequent days. We explained that the
value of the adjustment factor was set at
3.00 for the first 3 days and 1.00 after
(rather than, for example, 1.00 and 0.33,
respectively) for simplicity. The results
are presented in section 3.9. of the SNF
PDPM technical report, available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html.
As we described in the proposed rule
(83 FR 21061), case-mix adjusted federal
per diem payment for a given
component and a given day would be
equal to the base rate for the relevant
component (either urban or rural),
multiplied by the CMI for that resident,
multiplied by the variable per diem
adjustment factor for that specific day,
as applicable. Additionally, as described
in further detail in section V.D.3.d. of
the proposed rule, we stated that an
additional 18 percent would be added to
the nursing per-diem payment to
account for the additional nursing costs
associated with residents who have
HIV/AIDS. We further explained that
these payments would then be added
together along with the non-case-mix
component payment rate to create a
resident’s total SNF PPS per diem rate
under the proposed PDPM. We invited
comments on the proposed variable per
diem adjustment factors and payment
schedules discussed in this section.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the variable per diem
adjustment factors and payment
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39227
schedules. A discussion of these
comments, along with our responses,
appears below.
Comment: Some commenters
supported the use of the variable per
diem adjustment under PDPM. Several
commenters stated that PDPM,
specifically the variable per diem
payment adjustments included in the
PT, OT, and NTA components, may
negatively affect access for beneficiaries
with long stays and complex medical
needs. These commenters stated that the
variable per diem payment adjustments
will encourage early discharges and the
provision of fewer services. One
commenter stated that residents with
chronic conditions may not exhibit a
trend of declining NTA utilization over
a stay and that resource utilization for
these patients is sustained at a relatively
constant level throughout the stay. The
commenter states that in these cases,
variable per diem payment adjustments
will incentivize facilities to provide less
expensive medications later in the stay,
which the commenter states may be
harmful to the patient. Finally, one
commenter seeks clarification on the
rationale for beginning the decline in
payment for the PT and OT components
after day 20 of a stay.
Response: We note that we
investigated the impact of PDPM on
various resident subpopulations,
including residents with many
expensive comorbidities, multiple
extensive services, severe cognitive
impairment, long stays (utilization days
= 100), stroke, IV medication, diabetes,
wound infection, amputation/prosthesis
care, Alzheimer’s, or the presence of
addictions, bleeding disorders,
behavioral issues, chronic neurological
conditions, or bariatric care. CMS
investigated the potential impact of the
proposed payment model on these
subpopulations based on comments
received in response to the 2017
ANPRM. For almost all of these
subpopulations with complex medical
needs, we found that PDPM is estimated
to increase payment associated with
these residents compared to RUG–IV, as
discussed in the proposed rule (83 FR
21075) and section 3.12 of the SNF
PDPM technical report. Thus, we do not
believe the variable per diem payment
will negatively affect access for
beneficiaries with expensive
comorbidities or complex medical
needs. We estimated that payment
associated with very long stays
(utilization = 100 days) would decline
by 1.9 percent under PDPM, and we
obtained similar results for stays longer
than 90 days. However, this decline in
payment is a reflection of the lower
resource utilization per day associated
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Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
with longer stays. We observed that
stays longer than 90 days have lower
therapy and NTA costs per day than
their shorter counterparts. However, the
majority of such long stays are
categorized as ultra-high rehabilitation
groups in the current case-mix
classification suggesting potential
overpayment. Nevertheless, given the
potential payment reduction for long
stays, we plan to monitor provider
behavior closely to identify facilities
whose beneficiaries experience
inappropriate early discharge or
provision of fewer services.
Regarding the concern about resource
utilization patterns of residents with
chronic conditions, we would note that
as discussed above, we estimated that
PDPM would actually increase overall
per-stay payment for many resident
subpopulations with chronic
conditions. Further, while payment
would be highest during the early part
of a stay, facilities would have
flexibility to allocate this payment to
cover costs later in a stay, as they do
now. Our research, discussed in the
proposed rule (83 FR 21061) and section
3.9 of the SNF PDPM technical report,
revealed that for the average SNF stay,
NTA utilization declines dramatically
after the first 3 days of a stay. Of course,
we acknowledge that there are cases that
may not match this resource utilization
pattern exactly. However, we believe
that PDPM, because it is based on the
observed relationship between patient
characteristics and resource utilization,
represents an improvement over the
current payment model in terms of
payment accuracy. Further, as stated,
our investigations show that for many of
the specific cases cited by commenters
as potential concerns, we expect PDPM
actually to increase associated payment
compared to RUG–IV. While the
variable per diem schedule decreases
pay throughout the stay, the overall
increase in payment accounts for the
treatment cost of chronic conditions,
which is costly due to the sustained
level of care needed to manage chronic
conditions.
As discussed in the proposed rule (83
FR 21060 through 21061) and section
3.9 of the SNF PDPM technical report,
we developed a methodology to
estimate per-diem resource use over a
stay for PT, OT, and NTA. Based on this
methodology, we observed that
estimated per-diem PT and OT costs
remain high for the first 20 days of a
stay and decline thereafter. Therefore,
we established a variable per diem
payment adjustment schedule for the PT
and OT components that begins to
adjust payment downward beginning on
day 21.
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Comment: Some commenters
suggested that CMS consider creating a
waiver from the variable per diem
adjustment for NTAs to mitigate
potential access issues for patients in
SNF stays that exceed 90 days.
Additionally, these commenters
expressed concern that, for long stays,
the variable per diem payment
adjustment may erode payments to the
point where payment for the stay is
below the cost of providing the
associated services. Some commenters
believe that decreasing payment for PT
and OT over the course of the stay
without exceptions is not patientcentered and urged CMS to identify
certain diagnoses associated with longer
duration of high-intensity therapy
services as exceptions to the variable
per diem schedule. Several commenters
requested clarification on if and how
CMS intends to monitor the impact of
the variable per diem adjustment on
patient access and length of stay,
expressing concerns that the variable
per diem adjustment could have a
disproportionate impact on patients
with chronic conditions. Finally, one
commenter believed that reducing
payments over time through the variable
per diem adjustment will reduce
treatment options for stroke and trauma
victims.
Response: With regard to the waiver
for either the PT and OT variable per
diem adjustment or the NTA variable
per diem adjustment in cases of long
stays, we do not believe that such a
waiver is necessary. While payments do
reduce over time, as discussed above,
this reduction is to reflect the decrease
in patient costs over time. Therefore,
given the parallel reductions in costs
and payments, over the course of the
stay, providers should be adequately
reimbursed for the provision of care,
even in cases of long stays. With regard
to the commenters’ concern regarding
the impact on stroke and trauma
patients, as well as those with chronic
conditions, we do plan to monitor
closely these types of SNF patients
under PDPM to identify any adverse
trends which may result from
application of the variable per diem
adjustment. That being said, given that
we proposed to implement PDPM in a
budget neutral manner, this means that
while the overall sum of monies paid
out under the SNF benefit would not
change under PDPM, the allocation and
distribution of that money to individual
SNFs could change. Given that PT, OT,
and NTA costs at the beginning of a stay
tend to be higher than those at the
middle or end of a stay, most notably in
the case of long stay patients,
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maintaining a constant per diem rate
will allocate too few funds at the
beginning of the stay, thereby increasing
the chance that the early portions of a
stay may not be adequately reimbursed.
By aligning the payments with the cost
trends, this produces the best chance to
ensure that providers receive adequate
and appropriate reimbursement at every
point in the stay. Finally, as stated
above, we do plan to monitor the impact
of this policy and may consider
revisions to the policy if there is
evidence of adverse trends either
systemically or within certain patient
populations.
Comment: One commenter questioned
if CMS would expect the variable per
diem adjustment to continue until the
payment reaches zero, for purposes of
calculating the UPL for the PT and OT
components.
Response: As the variable per diem
adjustment was developed based on
Medicare Part A data, we cannot speak
to the ability of the adjustment factor to
be drawn out past the point of the
Medicare Part A stay. Moreover, as
coverage for a Medicare Part A stay
cannot be longer than 100 days, the
variable per diem adjustment, for
purposes of calculating the UPL, would
go as far as Day 100 in Table 30.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing our
proposal without modification to apply
a variable per diem adjustment as part
of the PDPM effective October 1, 2019.
Table 30 sets forth the final PDPM
Variable Per Diem Payment Adjustment
Factors and Schedule for the PT and OT
components, and Table 31 sets for the
final PDPM Variable Per Diem Payment
Adjustment Factors and Schedule for
the NTA component.
TABLE 30—VARIABLE PER-DIEM ADJUSTMENT FACTORS AND SCHEDULE—PT AND OT
Medicare payment days
1–20 ......................................
21–27 ....................................
28–34 ....................................
35–41 ....................................
42–48 ....................................
49–55 ....................................
56–62 ....................................
63–69 ....................................
70–76 ....................................
77–83 ....................................
84–90 ....................................
91–97 ....................................
98–100 ..................................
E:\FR\FM\08AUR2.SGM
08AUR2
Adjustment
factor
1.00
0.98
0.96
0.94
0.92
0.90
0.88
0.86
0.84
0.82
0.80
0.78
0.76
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TABLE 31—VARIABLE PER-DIEM AD- standard Medicare payment windows
JUSTMENT FACTORS AND SCHED- associated with each scheduled
assessment. More specifically, each of
ULE—NTA
the Medicare-required scheduled
assessments has defined days within
Medicare payment days
which the Assessment Reference Date
(ARD) must be set. The ARD is the last
1–3 ........................................
3.0
day of the observation (or ‘‘look-back’’)
4–100 ....................................
1.0
period that the assessment covers for the
resident. The facility is required to set
D. Use of the Resident Assessment
the ARD on the MDS form itself or in
Instrument—Minimum Data Set,
the facility software within the
Version 3
appropriate timeframe of the assessment
1. Revisions to Minimum Data Set
type being completed. The clinical data
(MDS) Completion Schedule
collected from the look-back period is
used to determine the payment
Consistent with section 1888(e)(6)(B)
associated with each assessment. For
of the Act, to classify residents under
example, the ARD for the 5-day PPS
the SNF PPS, we use the MDS 3.0
Assessment is any day between days 1
Resident Assessment Instrument.
to 8 (including Grace Days). The clinical
Within the SNF PPS, there are two
data collected during the look-back
categories of assessments, scheduled
and unscheduled. In terms of scheduled period for that assessment is used to
determine the SNF payment for days 1
assessments, SNFs are currently
to 14. Unscheduled assessments, such
required to complete assessments on or
around days 5, 14, 30, 60, and 90 of a
as the Start of Therapy (SOT) Other
resident’s Part A SNF stay, including
Medicare Required Assessment
certain grace days. Payments based on
(OMRA), the End of Therapy OMRA
these assessments depend upon
(EOT OMRA), the Change of Therapy
Adjustment
factor
39229
(COT) OMRA, and the Significant
Change in Status Assessment (SCSA or
Significant Change), may be required
during the resident’s Part A SNF stay
when triggered by certain defined
events.
For example, if a resident is being
discharged from therapy services, but
remaining within the facility to
continue the Part A stay, then the
facility may be required to complete an
EOT OMRA. Each of the unscheduled
assessments affects payment in different
and defined manners. A description of
the SNF PPS scheduled and
unscheduled assessments, including the
criteria for using each assessment, the
assessment schedule, payment days
covered by each assessment, and other
related policies, are set forth in the MDS
3.0 RAI manual on the CMS website
(available at https://downloads.cms.gov/
files/MDS-30-RAI-Manual-v115October-2017.pdf).
Table 32 outlines when each of the
current SNF PPS assessments is
required to be completed and its effect
on SNF PPS payment.
TABLE 32—CURRENT PPS ASSESSMENT SCHEDULE
Medicare MDS
assessment schedule type
Assessment
reference
date grace
days
Assessment reference date
Applicable
standard medicare
payment days
Scheduled PPS assessments
5-day .......................................................................
14-day .....................................................................
30-day .....................................................................
60-day .....................................................................
90-day .....................................................................
Days
Days
Days
Days
Days
1–5 ................................................................
13–14 ............................................................
27–29 ............................................................
57–59 ............................................................
87–89 ............................................................
6–8
15–18
30–33
60–63
90–93
1 through 14.
15 through 30.
31 through 60.
61 through 90.
91 through 100.
Unscheduled PPS assessments
Start of Therapy OMRA ...................
5–7 days after the start of therapy ..
End of Therapy OMRA ....................
1–3 days after all therapy has
ended.
Day 7 (last day) of the COT observation period.
Change of Therapy OMRA ..............
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Significant Change in Status Assessment.
No later than 14 days after significant change identified.
As we explained in the proposed rule
(83 FR 21062), an issue which has been
raised in the past with regard to the
existing SNF PPS assessment schedule
is that the sheer number of assessments,
as well as the complex interplay of the
assessment rules, significantly increases
the administrative burden associated
with the SNF PPS. We stated that casemix classification under the proposed
SNF PDPM relies to a much lesser
extent on characteristics that may
change very frequently over the course
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Date of the first day of therapy through the end of the standard
payment period.
First non-therapy day through the end of the standard payment period.
The first day of the COT observation period until end of standard
payment period, or until interrupted by the next COT–OMRA assessment or scheduled or unscheduled PPS Assessment.
ARD of Assessment through the end of the standard payment period.
of a resident’s stay (for example, therapy
minutes may change due to resident
refusal or unexpected changes in
resident status), but instead relies on
more stable predictors of resource
utilization by tying case-mix
classification, to a much greater extent,
to resident characteristics such as
diagnosis information. We explained
that in view of the greater reliance of the
proposed SNF PDPM (as compared to
the RUG–IV model) on resident
characteristics that are relatively stable
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over a stay and our general focus on
reducing administrative burden for
providers across the Medicare program,
we are making an effort to reduce the
administrative burden on providers by
concurrently proposing to revise the
assessments that would be required
under the proposed SNF PDPM.
Specifically, we proposed to use the 5day SNF PPS scheduled assessment to
classify a resident under the proposed
SNF PDPM for the entirety of his or her
Part A SNF stay effective beginning FY
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Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
2020 in conjunction with the
implementation of the proposed PDPM,
except as described below. We stated
that if we were to finalize this proposal,
we would propose revisions to the
regulations at § 413.343(b) during the
FY 2020 rulemaking cycle so that such
regulations would no longer reflect the
RUG–IV SNF PPS assessment schedule
as of the proposed conversion to the
PDPM on October 1, 2019.
We also stated in the proposed rule
(83 FR 21062) that we understand
Medicare beneficiaries are each unique
and can experience clinical changes
which may require a SNF to reassess the
resident to capture changes in the
resident’s condition. Therefore, to allow
SNFs to capture these types of changes,
effective October 1, 2019 in conjunction
with the proposed implementation of
the PDPM, we proposed to require
providers to reclassify residents as
appropriate from the initial 5-day
classification using a new assessment
called an Interim Payment Assessment
(IPA), which would be comprised of the
5-day SNF PPS MDS Item Set (Item Set
NP). We stated that providers would be
required to complete an IPA in cases
where the following two criteria are
met:
(1) There is a change in the resident’s
classification in at least one of the first
tier classification criteria for any of the
components under the proposed PDPM
(which are those clinical or nursing
payment criteria identified in the first
column in Tables 21, 23, 26, and 27 of
the proposed rule), such that the
resident would be classified into a
classification group for that component
that differs from that provided by the 5day scheduled PPS assessment, and the
change in classification group results in
a change in payment either in one
particular payment component or in the
overall payment for the resident; and
(2) The change(s) are such that the
resident would not be expected to
return to his or her original clinical
status within a 14-day period.
In addition, we proposed that the
Assessment Reference Date (ARD) for
the IPA would be no later than 14 days
after a change in a resident’s first tier
classification criteria is identified. We
stated that the IPA is meant to capture
substantial changes to a resident’s
clinical condition and not everyday,
frequent changes. We believe 14 days
gives the facility an adequate amount of
time to determine whether the changes
identified are in fact routine or
substantial. To clarify, we explained
that the change in classification group
described above refers not only to a
change in one of the first tier
classification criteria in any of the
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proposed payment components, but also
to one that would be sufficient to
change payment in either one
component or in the overall payment for
the resident. For example, we stated that
given the collapsed categories under the
PT and OT components, this would
mean that a change from the medical
management group to the cancer group
would not necessitate an IPA, as they
are both collapsed under the medical
management group for purposes of the
PT and OT components. However, we
stated a change from the major joint
replacement group to the medical
management group would necessitate an
IPA, as this would change the resident’s
clinical category group for purposes of
categorization under the PT and OT
components and would result in a
change in payment.
We stated that we believe the
proposed requirement to complete an
IPA balances the need to ensure
accurate payment and monitor for
changes in the resident’s condition with
the importance of ensuring a more
streamlined assessment approach under
the proposed PDPM.
In cases where the IPA is required and
a facility fails to complete one, we
proposed that the facility would follow
the guidelines for late and missed
unscheduled MDS assessments which
are explained in Chapters 2.13 and 6.8
of the MDS RAI Manual (https://
downloads.cms.gov/files/MDS-30-RAIManual-v115-October-2017.pdf).
Specifically, we stated in the proposed
rule (83 FR 21063) that if the SNF fails
to set the ARD within the defined ARD
window for an IPA, and the resident is
still in a Part A stay, the SNF would be
required to complete a late assessment.
The ARD can be no earlier than the day
the error was identified. We explained
that if the ARD on the late assessment
is set for a date that is prior to the end
of the time period during which the
assessment would have controlled the
payment, had the ARD been set timely,
the SNF would bill the default rate for
the number of days that the assessment
is out of compliance. This is equal to the
number of days between the day
following the last day of the available
ARD window and the late ARD
(including the late ARD). We provided
an example where a SNF Part A
resident, who is in the major joint
replacement payment category for the
PT and OT components, develops a skin
ulcer of such a nature that, in terms of
developing a care and treatment plan for
this resident, the skin ulcer takes
precedence as the resident’s primary
diagnosis. As a result, the resident’s
primary diagnosis, as coded in item
I8000, is for this skin ulcer, which
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would cause him to be classified into
the medical management category for
these components. The facility notes
this clinical change on November 10,
2018. However, they do not complete
the IPA until November 26, 2018 which
is 16 days after the change in criteria
was identified and two days after the
ARD window. The facility would bill
the default rate for the two days that it
was out of compliance. We stated that
if the SNF fails to set the ARD for an IPA
within the defined ARD window for that
assessment, and the resident has been
discharged from Part A, the assessment
is missed and cannot be completed. We
noted that all days that would have been
paid by the missed assessment (had it
been completed timely) are considered
provider-liable. Taking the example
above, we stated that if the facility
recognized the IPA needed to be
completed after the resident has left the
building, the facility would be liable for
all days from November 10, 2018 until
the date of the resident’s Part A
Discharge.
In addition to proposing to require
completion of the IPA as described
above, we also considered the
implications of a SNF completing an
IPA on the variable per diem adjustment
schedule described in section V.D.4. the
proposed rule. More specifically, in the
proposed rule, we considered whether
an SNF completing an IPA should cause
a reset in the variable per diem
adjustment schedule for the associated
resident. In examining costs over a stay,
we found that for certain categories of
SNF services, notably PT, OT, and NTA
services, costs declined over the course
of a stay. Our analyses showed that, on
average, the number of therapy minutes
is lower for assessments conducted later
in the stay. Additionally, we stated that
we were concerned that by providing for
the variable per diem adjustment
schedule to be reset after an IPA is
completed, providers may be
incentivized to conduct multiple IPAs
during the course of a resident’s stay to
reset the variable per diem adjustment
schedule each time the adjustment is
reduced. Therefore, in cases where an
IPA is completed, we proposed that this
assessment would reclassify the resident
for payment purposes as outlined in
Table 33 of the proposed rule, but that
the resident’s variable per diem
adjustment schedule would continue
rather than being reset on the basis of
completing the IPA.
Finally, we stated that believe,
regardless of the payment system or
case-mix classification model used,
residents should continue to receive
therapy that is appropriate to their care
needs, and this includes both the
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intensity and modes of therapy utilized.
However, we recognized that because
the initial 5-day PPS assessment would
classify a resident for the entirety of his
or her Part A SNF stay (except in cases
where an IPA is completed) as outlined
above, there would be no mechanism by
which SNFs are required to report the
amount of therapy provided to a
resident over the course of the stay or
by which we may monitor that they are
in compliance with the proposed 25
percent group and concurrent therapy
limit as described in section V.F. of the
proposed rule. Therefore, for these
reasons, under the proposed PDPM, we
proposed to require that SNFs continue
to complete the PPS Discharge
Assessment, as appropriate (including
the proposed therapy items discussed in
section V.E.3. of the proposed rule), for
each SNF Part A resident at the time of
Part A or facility discharge (see section
V.E. of this proposed rule for a
discussion of our proposed revisions to
this assessment to include therapy
items). Under the current instructions in
the MDS 3.0 RAI manual, the Part A
PPS Discharge assessment is completed
when a resident’s Medicare Part A stay
ends, but the resident remains in the
facility (MDS 3.0 RAI Manual Chapter
2.5). However, we proposed to require
this assessment to be completed at the
time of facility discharge for Part A
residents as well. Thus, we would
continue to collect data on therapy
provision as proposed in section V.F. of
the proposed rule, to assure that
residents are receiving therapy that is
reasonable, necessary, and specifically
tailored to meet their unique needs. We
stated that we believe the combination
of the 5-day Scheduled PPS Assessment,
the IPA Assessment, and PPS Discharge
Assessment would provide flexibility
for providers to capture and report
accurately the resident’s condition, as
well as accurately reflect resource
utilization associated with that resident,
while minimizing the administrative
burden on providers under the proposed
SNF PDPM.
In addition to these proposed
changes, we also examined in the
proposed rule (83 FR 21064) the current
use of grace days in the MDS assessment
schedule. Grace days have been a
longstanding part of the SNF PPS. They
were created in order to allow clinical
flexibility when setting ARD dates of
scheduled PPS assessments. In the FY
2012 final rule (76 FR 48519), we
discussed that in practice, there is no
difference between regular ARD
windows and grace days and we
encouraged the use of grace days if their
use would allow a facility more clinical
flexibility or would more accurately
capture therapy and other treatments.
Thus, we do not intend to penalize any
facility that chooses to use the grace
39231
days for assessment scheduling or to
audit facilities based solely on their
regular use of grace days. We may
explore the option of incorporating the
grace days into the regular ARD window
in the future; nevertheless, we will
retain them as part of the assessment
schedule at the present time consistent
with the current policy and the new
assessment schedule proposed in the
proposed rule.
We proposed, effective beginning
October 1, 2019, in conjunction with the
proposed implementation of the PDPM,
to incorporate the grace days into the
existing assessment window. We
explained that this proposal would
eliminate grace days as such from the
SNF PPS assessment calendar and
provide for only a standard assessment
window. We stated that, as discussed,
there is no practical difference between
the regular assessment window and
grace days and there is no penalty for
using grace days. Accordingly, we stated
that we believe it would be appropriate
to eliminate the use of grace days in PPS
assessments.
Table 33 of the proposed rule, set
forth at Table 33 of this final rule, sets
forth the proposed SNF PPS assessment
schedule, incorporating the proposed
revisions discussed above, which we
stated would be effective October 1,
2019 concurrently with the proposed
PDPM.
TABLE 33—PPS ASSESSMENT SCHEDULE UNDER PDPM
Medicare MDS assessment schedule type
Assessment reference date
Applicable standard Medicare payment days
5-day Scheduled PPS Assessment ...................
Days 1–8 ..........................................................
Interim Payment Assessment (IPA) ...................
No later than 14 days after change in resident’s first tier classification criteria is identified.
PPS Discharge: Equal to the End Date of the
Most Recent Medicare Stay (A2400C) or
End Date.
All covered Part A days until Part A discharge
(unless an IPA is completed).
ARD of the assessment through Part A discharge (unless another IPA assessment is
completed).
N/A.
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PPS Discharge Assessment ..............................
We noted in the proposed rule (83 FR
21064) that, as in previous years, we
intend to continue to work with
providers and software developers to
assist them in understanding changes
we proposed to the MDS. Further, we
noted that none of the proposals related
to changes to the MDS assessment
schedule should be understood to
change any assessment requirements
which derive from the Omnibus Budget
Reconciliation Act of 1987 (OBRA 87),
which establishes assessment
requirements for all nursing home
residents, regardless of payer. We
invited comments on our proposals to
revise the SNF PPS assessment schedule
and related policies as discussed above.
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We also solicited comment on the
extent to which implementing these
proposals would reduce provider
burden.
Commenters submitted the following
comments related to the proposed
changes to the MDS assessment
schedule and related assessment
policies as discussed above. A
discussion of these comments, along
with our responses, appears below.
Comment: One commenter expressed
approval of the proposal to incorporate
grace days into the existing assessment
window. This commenter agrees that
this will simplify things and reduce
burden, cost and time for providers.
Many commenters agreed with using the
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5-day assessment to establish per diem
payment for the stay. However, several
commenters were concerned that the
timing of 5-day assessments may still be
difficult for SNFs. These commenters
stated that securing clinician sign off
and all needed information, such as lab
results, will be challenging for SNFs.
Several commenters requested an
allowance for 5-day assessments to be
submitted up until Day 14 of a SNF stay.
Response: We appreciate the support
for incorporating grace days into the
existing assessment window and for
using the 5-day assessment to establish
per diem payment for the entirety of the
stay, assuming that an IPA is not
completed. Regarding the timing of the
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5-day assessment under the current
RUG–IV system, the 5-day assessment
window (which goes until Day 8 of a
SNF stay) is no different than that
proposed under PDPM. FY 2017 MDS
data show that almost 98 percent of 5day assessments were completed timely.
This demonstrates that facilities have
been able to complete this assessment
with minimal difficulty until now and
we do not foresee the new system
adding an amount of complexity that
would prevent them from completing it
going forward. Regarding the suggestion
to allow providers to have until Day 14
to submit the initial assessment, we do
not believe this is necessary or
appropriate, given that, as the data
above indicate, there is sufficient time
for coding the 5-day assessment and
because the 5-day assessment provides
a snapshot of the resident closer to the
point of admission.
Comment: One commenter questioned
if on the 5-day Assessment a facility
were to establish a RUG in the Ultra
High category for a patient, would that
RUG be maintained throughout the
entire stay regardless of whether there is
a drop in the amount of minutes of
therapy provided in an assessment
window.
Response: We would note that the
proposed changes to the assessment
schedule would take place upon
implementation of PDPM, and under
PDPM, patients would no longer be
classified into RUG–IV categories. They
would instead be classified into case
mix groups (CMGs) based on PDPM
classification as described in the
proposed rule (83 FR 21034–21061).
Once a patient is classified into a CMG,
that payment group would be
maintained through the entire stay
unless an Interim Payment Assessment
(IPA), as discussed below, is completed
and reclassifies the patient into a
different CMG.
Comment: Several commenters were
concerned with the proposed reduction
in payment assessments. They believe
that the reduction in assessments could
limit the ability of CMS and surveyors
to track changes in status and progress
of patients and reduce the amount of
data CMS has available to use as a basis
for future payment adjustments on.
These commenters urged CMS to keep
the existing PPS assessments as they
are. Several commenters recommended
that CMS revise the assessment period
and ARD to align more closely with
other PAC providers in order to
implement standardized patient data
elements as required by the IMPACT
Act.
Response: We appreciate commenters’
concern that a reduction in assessments
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could limit the ability of CMS and
surveyors to track status changes and
could reduce the amount of data
available for use in future payment
policy development. However, PDPM
relies on stable characteristics that we
do not expect to change significantly
over the course of the stay. Therefore,
additional SNF PPS payment
assessments would not necessarily
capture different data throughout the
stay. Additionally, the OBRA
assessment schedule will remain the
same and those assessments would
provide needed information and data for
surveyors and research purposes.
Moreover, if clinical characteristics do
change, we would expect facilities to
elect the option (as discussed further
below) to complete the IPA to track
these changes.
We appreciate the recommendation to
revise the assessment period and ARD
to align more closely with other PAC
providers in order to implement
standardized patient data elements
required by the IMPACT Act. We
believe that many of the policies being
finalized as part of PDPM serve to
improve alignment with other PAC
settings such as the utilization of
functional measures similar to those in
IRFs, and the interrupted stay policy
which is similar to the IRF and IPF
policies, and we hope to continue to
improve this alignment in future
refinements. As such, we may consider
these recommendations in the future.
Comment: Most commenters
supported CMS reducing the number of
assessments that are required for SNF
payment. These commenters expressed
that their support for the reduction of
the number of payment assessments is
due to burden relief and a desire to align
with other PAC settings such as IRFs
and Home Health that require far fewer
patient assessments than SNFs require.
One commenter was concerned that
while the number of assessments have
been reduced, the MDS itself has
become more complex with new
reporting requirements and items,
leaving administrative burden
unchanged. Additionally, most
commenters conveyed confusion about
the proposed IPA. The first area of
confusion arose from which criteria
CMS wants SNFs to use to determine
whether an IPA needs to be completed.
Commenters noted that in the proposed
rule (83 FR 21063) we stated that there
must be a change in the resident’s
classification in at least one of the first
tier classification criteria for any of the
components under the proposed PDPM
(which are those clinical or nursing
payment criteria identified in the first
column in Tables 21, 23, 26, and 27),
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such that the resident would be
classified into a classification group for
that component that differs from that
provided by the 5-day scheduled PPS
assessment, and the change in
classification group must result in a
change in payment either in one
particular payment component or in the
overall payment for the resident.
Additionally, the commenter stated that
later in the proposed rule, we clarified
that the change in classification group
described above refers to not only a
change in one of the first tier
classification criteria in any of the
proposed payment components, but also
to one that would be sufficient to
change payment in either one
component or in the overall payment for
the resident (83 FR 21063). Commenters
questioned whether an IPA would be
required when there is any clinical
change that would cause a payment
change for a SNF patient. Many
commenters requested a general
simplification and more guidance
surrounding the IPA criterion.
Additionally, several commenters
believed that there should be guidance
about whether an IPA is needed when
a patient’s functional status and need
for specific services changes and
whether the IPA should include section
GG in order to capture function change.
Most commenters were concerned
about the complexity of the proposed
IPA. They believed it would create more
burden for providers to have to monitor
the clinical changes and subsequent
payment changes that would trigger the
IPA on a daily basis. Several
commenters doubted whether the
proposed changes would support CMS’
Patients over Paperwork initiative and
related Medicare Simplifying Document
Requirements. One commenter stated
that monitoring the first tier changes in
each of the case-mix adjusted
components would be just as
burdensome as the current assessment
schedule and is too high a bar,
particularly for NTAs. Furthermore,
some commenters communicated that
the complexities and uncertainties of
the IPA would cause providers not to do
them and the aim of CMS to provide
SNFs with satisfactory reimbursement
would not come to fruition. Similarly,
some commenters expressed that
because of the confusion and burden
related to the IPA, this would
unnecessarily increase the risk of
provider error and potential medical
review. This, in turn, would cause
facilities to complete fewer IPAs and
consequently this could lead to less
quality care provided to patients who
otherwise would have needed it had it
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been identified appropriately using the
IPA. Some commenters are concerned
that the IPA will likely require MDS
coordinators to take on more of a care
coordination role which would require
additional operating costs for SNFs.
Response: We are pleased that so
many commenters support the proposal
to reduce the number of payment
assessments in SNFs. We agree that
alignment across PAC settings is very
important and anticipate that the
reduction of assessments will further
this alignment. We also agree that the
reduction of assessments will
significantly decrease the burden for
providers.
We disagree with the commenter that
stated that even though the number of
assessments have been reduced, the
MDS itself has become more complex
with new reporting requirements and
items, leaving administrative burden
unchanged. Section VII. of this final rule
discusses burden associated with the
changes we are making and our
calculations show that there is a
significant reduction in administrative
burden to providers under PDPM.
We thank the commenters for calling
our attention to their questions and
confusion about the IPA. We continue to
believe that it is necessary for SNFs to
continually monitor the clinical status
of each and every patient in the facility
regularly regardless of payment or
assessment requirements and we believe
that there should be a mechanism in
place that would allow facilities to do
this. However, we also believe that
providers may be best situated, as in the
case of the Significant Change in Status
Assessment, to determine when a
change has occurred that should be
reported through the IPA. Therefore, to
further ease the administrative burden
associated with PDPM and improve
clarity on when an IPA should be
completed, we have decided to make
the IPA an optional assessment.
Facilities will be able to determine
when IPAs will be completed for their
patients to address potential changes is
clinical status and what criteria should
be used to decide when an IPA would
be necessary. We are not finalizing the
proposed criteria for the triggering of the
IPA, but rather we will seek additional
stakeholder input on this issue. We note
that we are finalizing the proposal
surrounding IPA completions and the
variable per diem adjustment schedule
(including the NTA variable per diem,
that is, the completion of an IPA will
not reset the variable per diem
adjustment schedule)) even though the
IPA will now be optional. However,
because the IPA will be optional and
providers can determine their own
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criteria for when an IPA is completed,
we are revising the ARD criteria we
proposed. The ARD for the IPA will be
the date the facility chooses to complete
the assessment relative to the triggering
event that causes a facility to choose to
complete the IPA. Payment based on the
IPA will begin the same day as the ARD.
The IPA will not be susceptible to
assessment penalties, given the optional
nature of the assessment. We reiterate
that we expect facilities to complete
IPAs as they deem necessary to address
clinical changes throughout a SNF stay
and that the removal of the requirement
to complete these assessments does not
in any way negate the need to provide
excellent skilled nursing and
rehabilitative care and continually
monitor and document patient status.
Comment: Many comments addressed
the IPA criteria that ‘‘. . . the resident
would not be expected to return to his
or her original clinical status within a
14-day period.’’ Commenters stated that
this is a very subjective determination
and that it is difficult for providers to
predict the course of recovery for
patients who have an acute clinical
change and providers would not
necessarily know if this episode would
or would not resolve in a 2-week period.
On the other hand, several other
commenters expressed that the 14-day
period seemed excessive since the
average of most SNF stays is currently
around 19 or 20 days and CMS
estimates the majority of the stays under
PDPM will be between 1–15 days. Some
commenters recommend that CMS
shorten the timeframe to 3 days
consistent with the proposed
interrupted stay policy. Other
commenters suggested that this time
period should be reduced to 7 days. One
commenter recommended that CMS
should use an approach similar to the
change in status policy in the home
health setting (https://www.cms.gov/
medicare/quality-initiatives-patientassessment-instruments/oasis/
downloads/qandadocument0909.pdf).
Many comments requested more
examples that show various scenarios in
which an IPA would be required.
Additionally, several commenters
requested CMS to describe when an IPA
would be used versus a Significant
Change in Status Assessment.
Response: Given that the IPA will
now be an optional assessment under
PDPM and we are not finalizing criteria
for when an IPA should be completed,
but rather, will seek additional
stakeholder input on this issue, we will
take all of the comments regarding these
criteria under consideration for future
policy making.
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Comment: One commenter requested
clarification on the nursing
classification change that would trigger
an IPA. This commenter questioned
what constitutes a substantial change
versus a titration of services. Another
commenter requested clarification as to
what would constitute a first tier change
in the nursing component. Another
commenter requested clarification on
what a first tier change in the SLP CaseMix classification would look like.
Response: We appreciate the requests
for clarification on the IPA triggers.
However, because the IPA will now be
an optional assessment, we will allow
facilities to determine on their own
when IPAs are necessary. As such, we
will seek additional stakeholder
feedback on this issue in the future.
Comment: Many commenters
supported the addition of the IPA; with
several commenters supporting the
variable per diem adjustment policy
relating to the IPA, stating that this
would reduce the incentive for
providers to complete multiple IPAs
over the course of a SNF stay each time
payment was reduced based on the
adjustment. Some commenters
disagreed and stated that the variable
per diem for the NTA component
should be reset following the
completion of an IPA, while other
commenters supported the variable per
diem adjustment but had concerns
about the NTA per diem rate following
the completion of an IPA. These
commenters suggested the variable per
diem rate be reset for NTA services
when an IPA is completed. Some
commenters stated they recognize CMS’
concern that providers might be
incentivized to complete multiple IPAs
in order to reset the NTA rate during
one SNF stay. However, these
commenters were concerned that in
cases where IPAs are legitimately
completed and the result is a change in
NTA use, the potential financial loss
could be significant or could result in
re-hospitalization if facilities do not end
up providing NTAs that patients need
because of financial considerations.
Commenters offered several solutions to
this concern. One commenter suggested
that the NTA variable per diem
adjustment schedule be reset for
patients who experience adverse
changes in status resulting in the
completion of an IPA. Another
commenter suggested that CMS use the
points associated with NTAs to develop
a threshold of additional NTA points
that would allow facilities to reset the
NTA variable per diem rate to Day 1.
One commenter suggested a physician
verified post-stay process for patients to
dispute the variable per diem
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adjustment when their need for PT, OT,
or NTAs would substantially increase
from what was originally anticipated.
Response: We are pleased that so
many commenters supported the
addition of the IPA, and appreciate the
support for not resetting the variable per
diem adjustment when an IPA is
completed. We disagree with those
commenters who suggested that the
variable per diem be reset every time an
IPA is completed. As stated in the
proposed rule (83 FR 21060), in
examining costs over a stay, we found
that for certain categories of SNF
services, notably PT, OT and NTA
services, costs declined over the course
of a stay. Our analyses showed that, on
average, the number of therapy minutes
is lower for assessments conducted later
in the stay.
We believe that the ability to reset the
variable per diem would incentivize
providers to complete IPAs every time
the variable per diem was reduced. We
also believe it is possible that providers
may refrain from coding certain
conditions on an initial assessment and
then code other conditions on later
assessments to justify the variable per
diem adjustment reset.
With regard to the ideas presented by
commenters for when the variable per
diem should be reset, we do not believe
that the variable per diem should be
reset except in cases of an entirely new
SNF stay (we also refer readers to
section V.F. of this final rule for a
discussion of our interrupted stay
policy). We understand that some
commenters are concerned that unless
the variable per diem adjustment
schedule is reset, a patient’s per diem
rate may not reflect changes in NTA use
identified in an IPA that is completed
during a patient’s stay. However, we
note that if a new condition is coded on
an IPA during a SNF stay, the SNF PPS
per diem payment for the patient may
in fact increase to reflect changes in the
patient’s clinical condition if the new
condition results in a change to the
patient’s case-mix group. Thus, a
patient’s case-mix group and associated
payment could change within a stay to
reflect a change in NTA use on the IPA.
However, we do not think that resetting
the variable per diem adjustment would
be appropriate each time such a change
occurs. As we explained above, we
found that for PT, OT, and NTA
services, costs generally decline over the
course of a stay and we believe the
variable per diem adjustment
appropriately accounts for this decline
in costs. Furthermore, as the SNF PPS
is a prospective payment system, it is
not intended to reimburse for each
additional condition or service
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separately, but rather provides a
predictive payment based on a snapshot
of the patient’s condition. Resetting the
variable per diem adjustment in each
case of a change in the patient’s
condition would be more akin to a
traditional fee-for-service model,
providing additional payment for each
additional service or condition, which is
precisely the opposite of the goals of
implementing PDPM.
Commenters were also concerned that
there might be financial implications to
not re-setting the variable per diem for
NTAs and that this might result in
facilities not providing the drugs that
patients require because of financial
reasons. However, we do not believe
that the variable per diem adjustment
creates new financial implications that
would affect patient care, as this
incentive also exists under the current
payment system that utilizes a constant
per diem rate and we have no evidence
that SNF patients are being denied
necessary medications or services.
Further, we would note that there are
quality safeguards in place such as
readmission penalties and quality
metrics such as the SNF QRP quality
measures that should provide a
disincentive against providers engaging
in this type of stinting behavior.
Comment: Several commenters
requested that CMS consider adding
additional assessments to capture
changes in patient need during the SNF
stay. These commenters explained their
concern that PDPM does not
differentiate between processes
designed to adjust payment and the
continuous need to assess patient care
needs. Additionally, these commenters
believe that status changes-especially of
the functional nature-that may not rise
to the level of a required IPA might be
missed, especially in longer stay
patients. These commenters stated that
therapy assessments may not be
documented frequently enough to
capture serious status changes of
patients under PDPM. Specifically, they
noted that patient care needs must be
documented through an additional
assessment after day 20 and they are
apprehensive that the change in the
variable per diem payment after Day 20
of a SNF stay may directly affect patient
care if these assessments are not
completed. These commenters
suggested that CMS add an additional
assessment after Day 20 of the stay that
would specifically capture therapy
needs.
Response: We appreciate the
commenters’ concerns regarding how
assessments relate to functional change,
the ongoing need to assess patient care
needs, and the necessity to capture
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therapy needs throughout the stay,
especially during long stays. It is our
expectation that the optional nature of
the IPA will allow facilities to capture
all of these changes as they occur during
a SNF stay. Facilities will determine
when IPAs should be completed, and
we expect them to pay special attention
to clinical and functional changes. It
should be noted that, even absent an
IPA requirement, we expect SNFs to
constantly evaluate, capture, document
and treat clinical and functional
changes that occur in patients
throughout a SNF stay. We defer to the
judgment of clinicians and expect that
the care they are providing is always
evaluative in nature, meaning that
therapists are continually assessing the
needs of the patient and changing
interventions as needed throughout the
course of the therapy regimen, and we
note that the absence or presence of a
required assessment tool should not
change this.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing our
proposed changes to the MDS
assessment schedule and related
assessment policies as discussed in the
proposed rule, with the following
modifications. As discussed above,
rather than making the IPA a required
assessment as we proposed, this
assessment will be optional, and
providers may determine whether and
when an IPA is completed. In addition,
because the IPA is an optional
assessment and providers can determine
their own criteria for when an IPA is
completed, we are revising the ARD
criteria such that the ARD will be the
date the facility chooses to complete the
IPA relative to the triggering event that
causes the facility to choose to complete
the IPA. Payment based on the IPA
would begin the same day as the ARD.
These changes will be effective October
1, 2019 in conjunction with the
implementation of the PDPM.
2. Item Additions to the Swing Bed PPS
Assessment
As noted previously in section IV.C of
this final rule, section 1883 of the Act
permits certain small, rural hospitals to
enter into a Medicare swing-bed
agreement, under which the hospital
can use its beds to provide either acute
or SNF care, as needed. For critical
access hospitals (CAHs), Part A pays on
a reasonable cost basis for SNF services
furnished under a swing-bed agreement.
However, in accordance with section
1888(e)(7) of the Act, such services
furnished by non-CAH rural hospitals
are paid under the SNF PPS, effective
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with cost reporting periods beginning
on or after July 1, 2002. A more detailed
discussion of this provision appears in
section IV.C of the proposed rule.
For purposes of the proposed PDPM,
we proposed to add three items to the
Swing Bed PPS Assessment. Until now,
these additional items have not been
part of the Swing Bed PPS Assessment
form because they have not been used
for payment. However, we stated in the
proposed rule (83 FR 21064) that
presence of each of these items would
be used to classify swing bed residents
under the proposed SNF PDPM as
explained in section V.D. of the
proposed rule. Thus, we stated that
believed it was necessary and
appropriate to include these items in the
Swing Bed PPS Assessment beginning
October 1, 2019, in conjunction with the
proposed implementation of the PDPM.
The items we proposed to add to the
Swing Bed PPS assessment are provided
in Table 34 of the proposed rule (also
set forth in Table 34).
Commenters submitted the following
comments related to the proposed
addition of three items to the Swing Bed
PPS assessment. A discussion of these
comments, along with our responses,
appears below.
Comment: Commenters supported the
addition of the three proposed items to
the Swing Bed PPS assessment and
stated that these items will be important
to establish the SLP and NTA
component case-mix rates.
Response: We are pleased that
commenters support the addition of
these items to the Swing Bed PPS
Assessment. We agree that these items
are necessary to determine the SLP and
NTA case-mix rates. We will continue to
consider additions to the Swing Bed
PPS Assessment as it becomes necessary
to ensure consistency between swing
bed and non-swing bed providers.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing the
addition of the items in Table 34 to the
Swing Bed PPS Assessment as proposed
without modification, effective October
1, 2019 in conjunction with the
implementation of the PDPM.
TABLE 34—ITEMS TO ADD TO SWING BED PPS ASSESSMENT
Related
PDPM
payment
component
MDS Item No.
Item name
K0100 ................
I4300 .................
O0100D2 ...........
Swallowing Disorder ...............................................................................................................................................
Active Diagnoses: Aphasia ....................................................................................................................................
Special Treatments, Procedures and Programs: Suctioning, While a Resident ...................................................
3. Items To Be Added to the PPS
Discharge Assessment
Under the MDS 3.0, the Part A PPS
Discharge assessment is completed
when a resident’s Medicare Part A stay
ends, but the resident remains in the
facility (MDS 3.0 RAI Manual Chapter
2.5). The PPS Discharge Assessment
uses the Item Set NPE and does not
currently contain section O of the MDS
3.0. The therapy items in section O of
the MDS allow CMS to collect data from
providers on the volume, type (physical
therapy, occupational therapy and
speech-language pathology), and mode
(individual, concurrent, or group
therapy) of the therapy provided to SNF
residents. As noted in comments
received on the ANPRM in relation to
therapy provision, this data would be
particularly important to monitor.
Specifically, a significant number of
commenters expressed concerns that the
amount of therapy provided to SNF
residents, were RCS–I to have been
implemented, would drop considerably
as compared to the amount currently
delivered under RUG–IV. Commenters
noted that this is because the incentive
to provide a high volume of therapy
services to SNF residents (to achieve the
highest resident therapy group
classification) would no longer exist
under RCS–I, potentially leading
providers to reduce significantly the
amount of therapy provided to SNF
residents.
We stated in the proposed rule (83 FR
21065) that, given that the RCS–I model
and PDPM both present the potential for
providers to reduce significantly the
amount of therapy provided to SNF
residents as compared to RUG–IV, we
SLP
SLP
NTA
believe that the same potential result
may occur under the proposed PDPM as
commenters identified with RCS–I. To
better track therapy utilization under
PDPM, and to better ensure that
residents continue to receive an
appropriate amount of therapy
commensurate with their needs, given
the reduction in the frequency of
resident assessments required under the
proposed PDPM, we proposed to add
therapy collection items to the PPS
Discharge assessment and to require
providers to complete these items
beginning October 1, 2019, in
conjunction with the proposed
implementation of the PDPM.
Specifically, we proposed to add the
items listed in Table 35 of the proposed
rule (as set forth in Table 35 of this final
rule) to the PPS Discharge Assessment.
TABLE 35—ITEMS TO ADD TO SNF PPS DISCHARGE ASSESSMENT
MDS Item No.
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O0400A5 ..........
O0400A6 ..........
O0400A7 ..........
O0400A8 ..........
O0400A9 ..........
O0400A10 ........
O0400B5 ..........
O0400B6 ..........
O0400B7 ..........
O0400B8 ..........
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Item name
Special
Special
Special
utes.
Special
utes.
Special
Special
Special
Special
Special
Special
Treatments, Procedures and Programs: Speech-Language Pathology and Audiology Services: Therapy Start Date.
Treatments, Procedures and Programs: Speech-Language Pathology and Audiology Services: Therapy End Date.
Treatments, Procedures and Programs: Speech-Language Pathology and Audiology Services: Total Individual MinTreatments, Procedures and Programs: Speech-Language Pathology and Audiology Services: Total Concurrent MinTreatments,
Treatments,
Treatments,
Treatments,
Treatments,
Treatments,
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Procedures
Procedures
Procedures
Procedures
Procedures
Procedures
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and
and
and
and
and
and
Programs:
Programs:
Programs:
Programs:
Programs:
Programs:
Frm 00075
Speech-Language Pathology and Audiology Services: Total Group Minutes.
Speech-Language Pathology and Audiology Services: Total Days.
Occupational Therapy: Therapy Start Date.
Occupational Therapy: Therapy End Date.
Occupational Therapy: Total Individual Minutes.
Occupational Therapy: Total Concurrent Minutes.
Fmt 4701
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TABLE 35—ITEMS TO ADD TO SNF PPS DISCHARGE ASSESSMENT—Continued
MDS Item No.
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O0400B9 ..........
O0400B10 ........
O0400C5 ..........
O0400C6 ..........
O0400C7 ..........
O0400C8 ..........
O0400C9 ..........
O0400C10 ........
Item name
Special
Special
Special
Special
Special
Special
Special
Special
Treatments,
Treatments,
Treatments,
Treatments,
Treatments,
Treatments,
Treatments,
Treatments,
Procedures
Procedures
Procedures
Procedures
Procedures
Procedures
Procedures
Procedures
We stated that for the proposed items,
which refer to the total number of
minutes for each therapy discipline and
each therapy mode, this would allow
CMS both to conduct reviews of changes
in the volume and intensity of therapy
services provided to SNF residents
under the proposed PDPM compared to
that provided under RUG–IV, as well as
to assess compliance with the proposed
group and concurrent therapy limit
discussed in section V.F of the FY 2019
SNF PPS proposed rule. We further
stated that the proposed ‘‘total days’’
items for each discipline and mode of
therapy would further support our
monitoring efforts for therapy, as
requested by commenters on the
ANPRM, by allowing us to monitor not
just the total minutes of therapy
provided to SNF residents under the
proposed PDPM, but also assess the
daily intensity of therapy provided to
SNF residents under the proposed
PDPM, as compared to that provided
under RUG–IV. As we explained in the
proposed rule, ultimately, these
proposed items would allow facilities to
easily report therapy minutes provided
to SNF residents and allow us to
monitor the volume and intensity of
therapy services provided to SNF
residents under the proposed PDPM, as
suggested by commenters on the
ANPRM. We stated that if we
discovered that the amount of therapy
provided to SNF residents did change
significantly under the proposed PDPM,
if implemented, then we would assess
the need for additional policies to
ensure that SNF residents continued to
receive sufficient and appropriate
therapy services consistent with their
unique needs and goals.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the SNF PPS Discharge
Assessment. A discussion of these
comments, along with our responses,
appears below.
Comment: Several commenters
opposed the addition of items and the
reporting of therapy services in section
O of the SNF PPS Discharge
Assessment. These commenters
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and
and
and
and
and
and
and
and
Programs:
Programs:
Programs:
Programs:
Programs:
Programs:
Programs:
Programs:
Occupational Therapy: Total Group Minutes.
Occupational Therapy: Total Days.
Physical Therapy: Therapy Start Date.
Physical Therapy: Therapy End Date.
Physical Therapy: Total Individual Minutes.
Physical Therapy: Total Concurrent Minutes.
Physical Therapy: Total Group Minutes.
Physical Therapy: Total Days.
acknowledged that the fundamental
design of PDPM (which will no longer
tie payment to the amount of therapy a
patient receives, as occurs under the
current RUG–IV payment system) could
perhaps cause some patients
appropriately to receive less therapy.
The commenters stated that this would
be a positive anticipated outcome for
many residents considering that the
recurring concern of RUG–IV has been
that the model may incentivize SNFs to
provide therapy services beyond what
patients need. These commenters noted
that while they recognize the
importance of monitoring the impacts of
policy changes especially in the initial
stages of the implementation, they were
disappointed that CMS appears to be
interested in collecting this data merely
in order to monitor changes in volume
of services and that CMS did not discuss
evaluating this aspect of PDPM in
relation to quality and outcomes
measures (such as through the SNF
Quality Reporting Program) that are
normally associated with effective
therapy provision. These commenters
noted that the MDS should be used for
care-planning and case-mix payment
determination and that since therapy
time is not relevant to the case-mix
methodology under PDPM, this
proposed addition of therapy collection
of items serves no purpose on the MDS.
These commenters suggested that
instead of collecting therapy provision
information on the MDS, facilities
should gather and report therapy
provision information on claims on a
line-item, date-of-service basis that
would be in line with Medicare Part B
and other payers and limit provider
burden.
Response: We agree with commenters
that it is possible that, in some cases,
less therapy will be provided under
PDPM than under RUG–IV and that this
would be a positive development in
those cases where therapy was provided
regardless of patient need and simply
because of higher payments for higher
volumes of therapy. However, we
continue to be concerned that under
PDPM, providers may reduce the
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amount of therapy provided to SNF
patients because of financial
considerations. We agree with
commenters that quality and outcomes
measures (like those in the SNF Quality
Reporting Program) would be a positive
way to evaluate the efficacy of therapy
provision, and we will take this into
consideration for future policy
development. However, we disagree that
the collection of these items is not
relevant to case-mix determination.
While the days and minutes of therapy
provided will not be a determining
factor in the therapy case-mix
classification under PDPM, the need to
ensure beneficiary protection under this
payment system is very relevant to the
therapy case-mix classification, and the
ability to collect this data will safeguard
the integrity of the case-mix
classification and help ensure that
patients receive an appropriate amount
of therapy services. Should we discover
that the amount of therapy under PDPM
is distinctly different from the amount
of therapy under RUG–IV, we will
evaluate the potential reasons for this
change and consider potential actions,
either at the provider or systemic level,
to address these issues.
We appreciate the commenters’
suggestion of using claims information
as the basis for therapy reporting, but
would note that this mechanism would
be more complicated and not provide
the same level of detail in the data as
is currently reported in section O of the
MDS. Further, as providers are already
familiar with the section O items, we
believe that this method will provide
the simplest transition for providers.
Comment: Many commenters
supported the proposal to add therapy
collection items to the SNF PPS
Discharge Assessment in order to
monitor compliance with the group and
concurrent therapy limits. One
commenter stated that they believed this
proposal may protect against therapists
being pressured to provide an
unreasonable amount of group or
concurrent therapy. Several
commenters, however, were concerned
that the monitoring effort proposed is
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not strong enough to enforce the
aforementioned limits. One commenter
suggested that based on CMS’ assertion
that ‘‘services furnished to SNF
residents may be considered reasonable
and necessary insomuch as services are
consistent with ‘the individual’s
particular medical needs,’ ’’ (83 FR
21068) they question whether excessive
group and concurrent therapy serves as
justification to deny SNF coverage. This
commenter proposed that rather than a
‘‘warning edit’’ that would notify
providers that they have exceeded the
group and concurrent threshold, CMS
should decide whether these
occurrences violate coverage
requirements and if it is determined that
they do, payment should be denied for
the claim. Many commenters suggested
that in addition to monitoring the
therapy provision, CMS should monitor
resident outcomes. One commenter
recommended that CMS utilize the four
new SNF QRP section GG outcome
measures, and current readmission
measures and qualitatively measure the
current the effectiveness of therapy
provided in the SNF.
Response: We appreciate the
comments we received in support of the
proposal to add therapy collection items
to the SNF PPS Discharge Assessment.
We agree that this proposal would
enable us to monitor group and
concurrent therapy compliance and will
hopefully help prevent therapists from
feeling pressured to provide an
unreasonable amount of group and/or
concurrent therapy. We appreciate the
concern that the monitoring effort
proposed is not strict enough to enforce
the concurrent and group therapy limits.
We would note that the monitoring plan
is intended for this exact reason. As
stated in the proposed rule (83 CFR
21067), as part of our regular monitoring
efforts on SNF Part A services, we
would monitor group and concurrent
therapy utilization under the proposed
PDPM and consider making future
proposals to address abuses of this
proposed policy or flag providers for
additional review should an individual
provider be found to consistently
exceed the proposed threshold after the
implementation of the proposed PDPM.
We appreciate the suggestion to deny
claims if the threshold is exceeded and
we may consider this option further in
the future. As stated in the FY 2019 SNF
PPS proposed rule (83 FR 21068),
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services furnished to SNF residents may
be considered reasonable and necessary
insomuch as the services are consistent
with the individual’s particular medical
needs and that excessive levels of group
and/or concurrent therapy could
constitute a reason to deny SNF
coverage for such stays. We appreciate
the suggestion to monitor patient
outcomes in addition to collecting
therapy provision data, as well as the
recommendation to specifically use the
four new SNF QRP section GG outcome
measures and current readmission
measures to measure the effectiveness of
therapy provided in SNFs. We may
consider these suggestions in future
policy making decisions.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing the
addition of the items in Table 35 to the
PPS Discharge Assessment as proposed,
without modification, effective October
1, 2019 in conjunction with the
implementation of the PDPM.
E. Revisions to Therapy Provision
Policies Under the SNF PPS
Currently, almost 90 percent of
residents in a Medicare Part A SNF stay
receive therapy services. Under the
current RUG–IV model, therapy services
are case mix-adjusted primarily based
on the therapy minutes reported on the
MDS. As discussed in the proposed rule
(83 FR 21065), when the original SNF
PPS model was developed, most therapy
services were furnished on an
individual basis, and the minutes
reported on the MDS served as a proxy
for the staff resource time needed to
provide the therapy care. Over the years,
we have monitored provider behavior
and have made policy changes as it
became apparent that, absent safeguards
like quality measurement to ensure that
the amount of therapy provided did not
exceed the resident’s actual needs, there
were certain inherent incentives for
providers to furnish as much therapy as
possible. Thus, for example, in the SNF
PPS FY 2010 final rule (74 FR 40315
through 40319), we decided to allocate
concurrent therapy minutes for
purposes of establishing the RUG–IV
group to which the patient belongs, and
to limit concurrent therapy to two
patients at a time who were performing
different activities.
As we explained in the proposed rule
(83 FR 21066), following the decision to
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allocate concurrent therapy, using
STRIVE data as a baseline, we found
two significant provider behavior
changes with regard to therapy
provision under the RUG–IV payment
system. First, there was a significant
decrease in the amount of concurrent
therapy that was provided in SNFs.
Simultaneously, we observed a
significant increase in the provision of
group therapy, which was not subject to
allocation at that time. We concluded
that the manner in which group therapy
minutes were counted in determining a
patient’s RUG–IV group created a
payment incentive to provide group
therapy rather than individual therapy
or concurrent therapy, even in cases
where individual therapy (or concurrent
therapy) was more appropriate for the
resident. Thus, we stated that we made
two policy changes regarding group
therapy in the FY 2012 SNF PPS final
rule (76 FR 48511 through 48517). We
defined group therapy as exactly four
residents who are performing the same
or similar therapy activities.
Additionally, we allocated group
therapy among the four patients
participating in group therapy—
meaning that the total amount of time
that a therapist spent with a group will
be divided by 4 (the number of patients
that comprise a group) to establish the
RUG–IV group to which the patient
belongs.
We stated in the proposed rule (83 FR
21066) that since we began allocating
group therapy and concurrent therapy,
these modes of therapy (group and
concurrent) represent less than one
percent of total therapy provided to SNF
residents. Table 36, which appeared in
the FY 2014 SNF PPS Proposed Rule (78
FR 26464) (and was also presented in
the FY 2019 SNF PPS proposed rule)
and sets forth our findings with respect
to the effect of policies finalized in the
FY 2012 SNF PPS Final Rule,
demonstrates the change in therapy
provision between the STRIVE study
and the implementation of the therapy
policy changes in FY 2012. As we noted
in the proposed rule, the distribution of
therapy modes presented in Table 36
reflecting therapy provision in FY 2012
is also an accurate reflection of current
therapy provision based on resident
data collected in the QIES Database and
continued monitoring of therapy
utilization.
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TABLE 36—MODE OF THERAPY PROVISION
STRIVE
(%)
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Individual ......................................................................................................................................
Concurrent ...................................................................................................................................
Group ...........................................................................................................................................
As we explained in the proposed rule
(83 FR 21066), based on our prior
experience with the provision of
concurrent and group therapy in SNFs,
we again were concerned that if we
were to implement the proposed SNF
PDPM, providers may base decisions
regarding the particular mode of therapy
to use for a given resident on financial
considerations rather than on the
clinical needs of SNF residents. We
stated that because the proposed SNF
PDPM would not use the minutes of
therapy provided to a resident to
classify the resident for payment
purposes, we were concerned that SNFs
may once again become incentivized to
emphasize group and concurrent
therapy, over the kind of individualized
therapy which is tailored to address
each beneficiary’s specific care needs
which we believe is generally the most
appropriate mode of therapy for SNF
residents. As we stated in the FY 2012
proposed rule (76 FR 26387), while
group therapy can play an important
role in SNF patient care, group therapy
is not appropriate for either all patients
or for all conditions, and is primarily
effective as a supplement to individual
therapy, which we maintain should be
considered the primary therapy mode
and standard of care in therapy services
provided to SNF residents. We stated in
the FY 2012 proposed rule that, as
evidenced by the application of a cap on
the amount of group therapy services
that may be provided to SNF residents,
we do not believe that a SNF providing
the preponderance of therapy in the
form of group therapy would be
demonstrating the intensity of therapy
appropriate to this most frail and
vulnerable nursing home population.
We stated in the FY 2019 SNF PPS
proposed rule (83 FR 21066) that since
the inception of the SNF PPS, we have
limited the amount of group therapy
provided to each SNF Part A resident to
25 percent of the therapy provided to
them by discipline. We referred to the
FY 2000 final rule (64 FR 41662), where
we stated that although we recognize
that receiving PT, OT, or ST as part of
a group has clinical merit in select
situations, we do not believe that
services received within a group setting
should account for more than 25 percent
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of the Medicare resident’s therapy
regimen during the SNF stay.
We explained that although we
recognize that group and concurrent
therapy may have clinical merit in
specific situations, we also continue to
believe that individual therapy is
generally the best way of providing
therapy to a resident because it is most
tailored to that specific resident’s care
needs. As such, we stated that
individual therapy should represent the
majority of the therapy services received
by SNF residents both from a clinical
and payment perspective. As we stated
in the FY 2012 proposed rule (76 CFR
26372), even under the previous RUG–
53 model, it was clear that the
predominant mode of therapy that the
payment rates were designed to address
was individual therapy rather than
concurrent or group therapy.
We stated in the proposed rule (83 FR
21066) that to help ensure that SNF
residents would receive the majority of
therapy services on an individual basis,
if we were to implement the proposed
PDPM, we believed concurrent and
group therapy combined should be
limited to no more than 25 percent of
a SNF resident’s therapy minutes by
discipline. In combination, this limit
would ensure that at least 75 percent of
a resident’s therapy minutes are
provided on an individual basis. We
stated that because the change in how
therapy services would be used to
classify residents under the proposed
PDPM gives rise to the concern that
providers may begin to utilize more
group and concurrent therapy due to
financial considerations, we proposed to
set a combined 25 percent limit on
concurrent therapy and group therapy
for each discipline of therapy provided.
For example, if a resident received 800
minutes of physical therapy, no more
than 200 minutes of this therapy could
be provided on a concurrent or group
basis. Finally, we noted that under
RUG–IV, we currently allocate minutes
of therapy because we pay for therapy
based on therapy minutes and not
resident characteristics. We stated that
given that therapy minutes would no
longer be a factor in determining
payment classifications for residents
under the proposed PDPM, we would
utilize the total, unallocated number of
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FY 2011
(%)
74
25
<1
91.8
0.8
7.4
FY 2012
(%)
99.5
0.4
0.1
minutes by therapy mode reported on
the MDS, to determine compliance with
the proposed limit. We explained that
utilizing unallocated therapy minutes
also serves to underscore the patientdriven nature of the PDPM, as it focuses
the proposed limit on concurrent and
group therapy on the way in which the
therapy is received by the beneficiary,
rather than furnished by the therapist,
and would better ensure that individual
therapy represents at least a vast
majority of the therapy services received
by a resident.
In the proposed rule (83 FR 21067),
we considered other possible limits, and
even no limit, on group and concurrent
therapy. For example, we considered
placing no limit on group or concurrent
therapy, in order to afford providers the
greatest degree of flexibility in designing
a therapy program for each SNF
resident. However, even in response to
this option to have no limit on
concurrent and group therapy, many
commenters on the ANPRM expressed
concerns regarding the lack of
appropriate safeguards for ensuring that
SNF residents continue to receive an
appropriate level of therapy under the
revised case-mix model. We stated in
the proposed rule that we agree with
these commenters and believe that there
should be some limit on the amount of
group and concurrent therapy that is
provided to residents in order to ensure
that residents receive an appropriate
amount of individual therapy that is
tailored to their specific needs. Also, in
the ANPRM, we discussed the
possibility of proposing a 25 percent
limit on each of concurrent and group
therapy, allowing for up to 50 percent
of therapy services provided in the SNF
to be provided in a non-individual
modality. We stated in the proposed
rule that this option sought to balance
the flexibility afforded to therapists in
designing an appropriate therapy plan
that meets the needs and goals of the
specific resident with the importance of
ensuring that SNF residents receive an
appropriate level of individual therapy.
However, we were concerned that a
separate 25 percent limit for group and
concurrent therapy would not provide
sufficient assurance that at least a
majority of a resident’s therapy would
be provided on an individual basis.
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Therefore, we stated that we believe the
separate 25 percent limits on concurrent
and group therapy discussed in the
ANPRM, or any option which would
impose a higher limit on group and
concurrent therapy, would not provide
the necessary protection for SNF
residents. By contrast, we stated that we
believe a combined 25 percent limit on
group and concurrent therapy would
provide sufficient assurance that at least
a majority of each resident’s therapy
would be provided on an individual
basis, consistent with our position that
individual therapy is generally the best
way of providing therapy to SNF
residents because it is most tailored to
their care needs. We noted that,
assuming that existing therapy delivery
patterns (as set forth in Table 36) are
accurate and they reflect the
individually-tailored needs of SNF
residents currently being treated under
the SNF benefit, the number of group
and concurrent minutes that have been
reported by SNFs thus far are
significantly lower than the limit
described in our proposal. In other
words, we stated that, based on the data
presented in Table 36, the proposed
limit on group and concurrent therapy
affords a significantly greater degree of
flexibility on therapy modality than
appears to be required to meet the needs
of SNF residents, given that less than
one percent of therapy currently being
delivered is either group or concurrent
therapy. Therefore, we concluded that a
combined limit of 25 percent for group
and concurrent therapy should provide
SNFs with more than enough flexibility
with respect to therapy mode to meet
the care needs of their residents.
As discussed in the proposed rule (83
FR 21067), we believe that individual
therapy is usually the best mode of
therapy provision as it permits the
greatest degree of interaction between
the resident and therapist, and should
therefore represent, at a minimum, the
majority of therapy provided to an SNF
resident. However, we recognized that,
in very specific clinical situations,
group or concurrent therapy may be the
more appropriate mode of therapy
provision, and therefore, we stated we
would want to allow providers the
flexibility to be able to utilize these
modes. We continued to stress that
group and concurrent therapy should
not be utilized to satisfy therapist or
resident schedules, and that all group
and concurrent therapy should be well
documented in a specific way to
demonstrate why they are the most
appropriate mode for the resident and
reasonable and necessary for his or her
individual condition.
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Currently the RUG–IV grouper
calculates the percentage of group
therapy each resident receives in the
SNF based on the algorithms described
in section 6.6 of the MDS RAI Manual
(found at https://downloads.cms.gov/
files/MDS-30-RAI-Manual-v115October-2017.pdf). When a resident is
found to have exceeded the 25 percent
group therapy limit, the minutes of
therapy received in excess are not
counted towards the calculation of the
RUG–IV therapy classification. We
explained that because the proposed
PDPM would not use the minutes of
therapy provided to a resident to
classify the resident for payment
purposes, we would need to determine
a way under the proposed PDPM to
address situations in which facilities
exceed the combined 25 percent group
and concurrent therapy limit.
Therefore, we proposed that at a
component level (PT, OT, SLP), when
the amount of group and concurrent
therapy exceeds 25 percent within a
given therapy discipline, that providers
would receive a non-fatal warning edit
on the validation report that the
provider receives when submitting an
assessment which would alert the
provider that the therapy provided to
that resident exceeded the threshold. To
explain, a fatal error in the QIES ASAP
system occurs when one or more items
in the submitted record fail to pass the
requirements identified in the MDS data
submission specifications. A warning
error occurs when an item or
combination of items in the submitted
record trigger a non-fatal edit in the
QIES ASAP system. We stated that the
non-fatal warning would serve as a
reminder to the facility that they are out
of compliance with the proposed limit
for group and concurrent therapy. We
also stated that, as part of our regular
monitoring efforts on SNF Part A
services, we would monitor group and
concurrent therapy utilization under the
proposed PDPM and consider making
future proposals to address abuses of
this proposed policy or flag providers
for additional review should an
individual provider consistently be
found to exceed the proposed threshold
after the implementation of the
proposed PDPM. We noted that as the
proportion of group and/or concurrent
therapy (which are, by definition, nonindividual modes of therapy provision)
increases, the chances that the provider
is still meeting the individualized needs
of each resident would diminish. We
stated that given that meeting the
individualized needs of the resident is
a component of meeting the coverage
requirements for SNF Part A services, as
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39239
described in section 1814(a)(2)(B) of the
Act and further described in section 30
of Chapter 8 of the Medicare Benefit
Policy Manual (accessible at https://
www.cms.gov/Regulations-andGuidance/Guidance/Manuals/
downloads/bp102c08.pdf), where it
states that services furnished to SNF
residents may be considered reasonable
and necessary insomuch as the services
are consistent with ‘‘the individual’s
particular medical needs’’, excessive
levels of group and/or concurrent
therapy could constitute a reason to
deny SNF coverage for such stays. We
invited comments on this proposed
compliance mechanism.
Commenters submitted the following
comments related to the proposed
revisions to the therapy policies under
the PDPM. A discussion of these
comments, along with our responses,
appears below.
Comment: The vast majority of
commenters supported the proposal to
limit concurrent and group therapy to
25 percent. Several stated that the
combined limit is not restrictive enough
and recommended that CMS implement
further real-time efforts (beyond the
warning edit outlined in the proposed
rule) to ensure that patients are
receiving the therapy they need,
monitor compliance, and have stricter
enforcement outcomes. Conversely,
several commenters supported the
notion that CMS could possibly raise
the group and concurrent therapy limit
following close monitoring of utilization
and determining that patients are
indeed receiving the individualized
therapy they need even in group and
concurrent sessions, and that SNFs are
not taking advantage of the financial
incentives that providing group and
concurrent therapy offer. These
commenters stated that they were in
favor of the idea that providers would
be reporting and counting the patients’
time in therapy rather than the
therapists’ allocated time to determine
compliance with the proposed group
and concurrent therapy limit under
PDPM since this is more consistent with
the concept of patient-centered care and
best clinical practice.
Response: We are pleased that the
vast majority of commenters supported
the proposal to limit concurrent and
group therapy to 25 percent. We
appreciate both the concern that 25
percent may not be restrictive enough
and the concern that it is too restrictive,
and we will continue to track the
amount of therapy provided via the
different modes in conjunction with our
monitoring efforts described throughout
section V. of this final rule. We will
determine whether group and
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concurrent therapy are being over or
underutilized and we will consider
revising the policy and enforcement
efforts as necessary. Because therapy
minutes would no longer be a factor in
determining case-mix classification
under the PDPM, as it is under RUG–IV,
we agree with the commenters that
using the total, unallocated number of
minutes by therapy mode reported on
the MDS versus therapists’ allocated
time makes the most sense in
determining compliance with the group
and concurrent therapy limit, and we
appreciate that the commenters
recognized the patient-centered nature
of the proposal.
Comment: Several commenters stated
that the current policy regarding group
and concurrent therapy allocation has
increased provider costs. Specifically,
these comments stated that concurrent
and group therapy are more costeffective modes than individual therapy
and that the 25 percent drop in the
delivery of concurrent and group
therapy from FY 2011 until now
demonstrates a significant increase in
provider costs. These commenters
believe that restoring flexibility in
therapy service under PDPM will permit
SNFs to develop more cost-effective
innovative approaches to care.
Response: We disagree with the
assertion that the current policy to
allocate group and concurrent therapy
increases cost. As we stated in the FY
2012 final rule (76 FR 48515), to fulfill
our responsibilities to ensure
appropriate payment based on resource
utilization and cost, we proposed the
allocation of group therapy minutes,
which equalizes the reimbursement
incentives across modes of therapy.
Although case-mix classification under
PDPM is not based primarily on volume
of services provided, as is the case with
the RUG–IV payment system, it is still
important that there are equal financial
incentives to provide the different
modes of therapy. Further, given that
the payment incentives are equal among
the various therapy modes because of
the allocation of minutes and that over
99 percent of therapy minutes are
reported as individual therapy, this
provides evidence that the mode of
therapy that providers believe is most
effective in addressing a beneficiary’s
needs is individual therapy. Regarding
the need to restore flexibility in therapy
service under PDPM, we think that the
25 percent cap will allow for flexibility
in therapy services. As mentioned
above, since currently, over 99 percent
of therapy minutes are delivered
individually, SNFs should continue to
have adequate leeway to provide the
mode of therapy which is most
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appropriate for the patients even with
the revised cap. Nevertheless, to the
extent that provider costs have
increased, these cost increases have
been captured as part of the data
analysis used to set the case-mix
weights under PDPM. To the extent that
these costs change as a result of PDPM,
more specifically changes in the mode
of therapy service delivery, we can
consider revising the case-mix weights
to reflect these changes in provider
costs.
Comment: Several commenters
opposed the proposed limitations on
group and concurrent therapy and
expressed concern that even though
there is a lack of data demonstrating
what the most appropriate threshold is
for each individual patient, the
combined 25 percent group and
concurrent therapy limit is an arbitrary
amount and would restrict therapists’
ability to make appropriate treatment
decisions. These commenters also stated
that setting a limit on group and
concurrent therapy may also restrict
some patients from receiving the most
appropriate mode of therapy for their
individual need and that group or
concurrent therapy might indeed be the
most appropriate mode of therapy for a
patient. These commenters stressed the
importance of trusting the professional
judgment of therapists in deciding
which combination of each mode of
therapy is appropriate for each patient
in conjunction with Medicare
guidelines for skilled therapy and
medical necessity.
Response: We agree that therapists are
the most appropriate professionals to
determine the mode of therapy a patient
should receive and that professional
judgment must be trusted and used in
SNFs. However we do not agree that 25
percent is an arbitrary amount. As stated
in the proposed rule, (83 FR 21066),
since we began allocating group therapy
and concurrent therapy, these modes of
therapy (group and concurrent)
represent less than one percent of total
therapy provided to SNF residents.
Further, we do not agree that data do
not exist with regard to the appropriate
threshold for each individual patient, as
over 99 percent of therapy services are
currently reported as individual. This
would suggest that a much lower
threshold for concurrent and group
therapy would likely be acceptable and
appropriate, though we also believe that
added flexibility is important under a
new payment system. Therefore, we
believe it is appropriate to use the 25
percent combined therapy limit for
concurrent and group therapy.
We also do not agree that setting a
limit on group and concurrent therapy
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may restrict some patients from
receiving the most appropriate mode of
therapy for their individual needs. We
currently have a 25 percent limit in
place for group therapy and, based on
our data, this limit has not restricted
patients from receiving what we assume
is the most appropriate amount of
therapy for their individual needs.
Given the stakeholders’ comments that
individual therapy is the most costly
form of therapy along with the evidence
of therapy being furnished to SNF
patients on the basis of financial
considerations rather than patient need,
the extremely high prevalence of
individual therapy would indicate that
the amount of individual therapy,
despite being the most costly, is the
most effective for beneficiaries, which
would comport with our reasons for
supporting either the limit we proposed
or a lower such limit. To hold otherwise
would indicate that the minutes
currently being reported are an
inaccurate representation of the way in
which therapy is currently being
delivered, which could potentially
constitute fraud on the part of some SNF
providers. Based on the MDS
assessment data mentioned above that
demonstrate that almost no group or
concurrent therapy is being reported on
the MDS currently, the commenters’
characterization of the proposed limit
(which is far above the current level of
furnishing such services) as
insufficiently flexible would actually
beg the question of why commenters
would appear to believe that group and
concurrent therapy would be better
suited to address patient needs under
PDPM rather than under RUG–IV.
Given the historical precedent of 25
percent as a therapy threshold and the
very limited amount that group and
concurrent therapy that has actually
been reported in SNFs, we believe it is
an appropriate threshold. That being
said, using the new items in section O
of the PPS Discharge Assessment, we
will monitor therapy provision as
discussed in section V.D of this final
rule and we will consider policy
changes as we receive data and see how
therapy is being furnished under PDPM.
Comment: Some commenters
suggested that CMS revise the group
therapy definition to include two to four
participants while many commenters
suggested that CMS revise the definition
to include two to six participants doing
the same or similar activities. In
addition to better aligning with other
settings such as Inpatient Rehabilitation
Facilities (IRFs), commenters stated that
this revision would allow increased
flexibility so that patients in smaller
SNFs could utilize and benefit from
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group therapy. One commenter stated
that the CMS definition of concurrent
therapy is arbitrary and does not reflect
therapists’ preferred practice. This
commenter urged us to redefine
concurrent therapy. Several commenters
requested that CMS reconsider the
‘‘rigid’’ documentation requirements
that accompany group therapy
provision, stating a preference as a
practitioner to use group therapy when
patients can benefit from it. One
commenter requested that we provide
additional guidance to providers and
MACs related to the level of appropriate
documentation required for
participation in group or concurrent
therapy.
Response: We recognize the
importance of alignment across settings.
We may consider changing the
definition of group therapy and/or
concurrent therapy to align with other
PAC settings in future rulemaking
efforts.
With regard to the ‘‘rigid’’
documentation requirements, we would
like to remind the commenter that we
did not impose new documentation
requirements on SNFs with regard to
concurrent and group therapy. Rather,
in the FY 2012 proposed rule, we
simply clarified certain alreadyestablished documentation standards
(76 FR 26387 through 26388). As we
wrote in the FY 2012 final rule in
response to comments, since we simply
clarified existing expectations, we did
not agree that these documentation
guidelines would increase or create
undue burden on therapists, or that
these guidelines create a disincentive
for clinicians to perform group therapy
due to increased paperwork. We stated
that there should be no additional
burden to provide this documentation,
as it should be a standard part of any
documentation. We agreed with those
commenters who stated that
rehabilitation professionals need to
support the work they do through
documentation, and that the
documentation should reflect the need
for skilled care and the mode of therapy
provided, as well as demonstrate how
the therapy provision will support
patients’ needs and goals. (76 FR
48516).
We continue to believe that it is vital
for SNFs to document services
appropriately in order to demonstrate
the skilled nature and the fact that the
services are reasonable and necessary.
This will be especially important when
the 25 percent cap on concurrent and
group therapy is in place after the
implementation of PDPM. We will
monitor the mode of therapy given and
we will be interested to see how
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facilities document the therapy used so
we can determine whether we will
increase, decrease or maintain the limit
following extensive monitoring.
Regarding the request to provide
additional guidance related to
documentation of group and concurrent
therapy, we remind commenters of the
guidance provided in the FY2012
proposed rule (76 FR 26388) regarding
group therapy: Because group therapy is
not appropriate for either all patients or
all conditions, and in order to verify
that group therapy is medically
necessary and appropriate to the needs
of each beneficiary, SNFs should
include in the patient’s plan of care an
explicit justification for the use of
group, rather than individual or
concurrent, therapy. This description
should include, but need not be limited
to, the specific benefits to that particular
patient of including the documented
type and amount of group therapy; that
is, how the prescribed type and amount
of group therapy will meet the patient’s
needs and assist the patient in reaching
the documented goals. In addition, we
believe that the above documentation is
necessary to demonstrate that the SNF
is providing services to attain or
maintain the highest practicable
physical, mental, and psychosocial
well-being of each resident in
accordance with section 1819(b)(2) of
the Act.
While the above guidance was
provided in relation to group therapy,
we believe that it applies to concurrent
therapy as well.
Comment: Some commenters
disagreed with the proposal of a
combined limit of 25 percent for
concurrent and group therapy, with one
commenter stating that this contradicted
the discussion in the ANPRM that
considered a 25 percent limit on
concurrent therapy and a separate 25
percent limit on group therapy. This
commenter pointed out that we stated,
we believe that individual therapy is
usually the best mode of therapy
provision as it permits the greatest
degree of interaction between the
resident and therapist, and should
therefore represent, at a minimum, the
majority of therapy provided to an SNF
resident (82 FR 21004). This commenter
and several others requested that CMS
return to the separate 25 percent caps
for concurrent therapy and for group
therapy, as discussed in the ANPRM.
According to these commenters, prior to
CMS allocating concurrent and group
therapy in FY 2011 and FY 2012,
respectively, the average amount of
concurrent and group therapy that was
furnished to all residents combined was
about 26 percent. These commenters
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believe this means that there were many
residents who received higher amounts
than an average of 25 percent group and
concurrent therapy and others who
received lower amounts based on their
clinical status and need. According to
these commenters, CMS has not
produced any evidence the quality of
care changed dramatically since FY
2011 and FY 2012, which would suggest
the quality of care furnished in FY 2010
and earlier was meeting individual
resident needs of patients. One
commenter suggested that we
implement a 25 percent combined cap
for group and concurrent therapy at a
facility level rather than at a per-patient
level. One commenter requested that
CMS consider having providers report
‘‘individual’’ and ‘‘non-individual’’
therapy, rather than separately reporting
group and concurrent therapy.
Response: We do not agree that there
is a contradiction between the ANPRM
and our current proposal. We continue
to believe that individual therapy
should represent a majority of therapy
provided in a SNF. We continue to
contend that although group and
concurrent therapy may have clinical
merit in specific situations, we believe
that individual therapy is generally the
best way of providing therapy to a
resident because it is most tailored to
that specific resident’s care needs. As
such, we believe that individual therapy
should represent at least the majority of
the therapy services received by SNF
residents. (82 FR 21004).
Our latest (FY 2017) data indicate that
individual therapy was provided 99.77
percent of the time, meaning that group
and concurrent therapy combined was
reported as having been provided 0.23
percent of the time. If therapy continues
to be provided in the same way, there
is no reason to believe that a combined
25 percent limit on group and
concurrent therapy is not a generous
limit given the amount of group and
concurrent therapy that has been
provided under RUG IV. Therefore, we
do not agree with the request to
implement the separate 25 percent caps
for group and concurrent therapy
discussed in the ANPRM. We further
disagree that CMS put restrictions on
the ‘‘ability to furnish concurrent and
group therapy.’’ We did not change any
restrictions in FY 2011 and FY 2012 on
the amount or type of therapy provided.
The 25 percent cap on group therapy
was in place since the inception of the
SNF PPS. Rather, we allocated first
concurrent therapy in FY 2011 (74 FR
40315–40319) and then group therapy
in FY 2012 (76 FR 48511–48517) as a
way to equalize payment across therapy
modes and remove any financial
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incentives for providing a certain
therapy mode, which appeared to drive
at least some portion of the
approximately 1,000 percentage
increase in the amount of group therapy
provided under the SNF Part A benefit
in FY 2011. This was not an effort to
restrict any mode of therapy. As we
wrote in the FY 2012 final rule (76 FR
48513, 48514), by allocating group
therapy among the four group therapy
participants, we are also equalizing the
reimbursement incentive across the
modes of therapy. We stated we believe
this would once again encourage
clinicians to choose the mode of therapy
based on clinical rather than financial
reasons. We stated in the FY 2012 final
rule that the purpose of our allocation
policy is to provide payment that better
reflects resource utilization and cost,
and that we do not believe this policy
should affect clinical determinations
regarding the appropriate mode of
therapy provided to a patient.
We appreciate the suggestion to
implement a combined 25 percent group
and concurrent therapy limit at the
facility level rather than the patient
level; however, given that a significant
part of the reason we proposed a limit
on group and concurrent therapy is so
that patients receive therapy that
reflects their individualized needs, we
believe that implementing a facility
based limit on concurrent and group
therapy would defeat the purpose. With
regard to a facility level limit, as
opposed to the patient-level limit, we
believe that therapy decisions should be
driven by clinical standards and
judgment related to an individual
patient and not in relation to all patients
within a facility. Utilizing a facilitylevel cap may allow for certain patients
to receive excessive levels of group or
concurrent therapy, which we do not
believe would be advisable for any
patient.
With regard to the comment that
providers not be required to report
group and concurrent therapy
separately, while we have a combined
cap, we believe that it is important to
understand which of the two modes of
therapy, concurrent or group therapy, is
actually occurring in relation to this
cap. Given that some commenters
requested separate caps on group and
concurrent therapy, we would not be in
a position to assess the need for this
separation in the future if group and
concurrent therapy were reported under
a single heading.
Comment: Several commenters
expressed concern with how the
combined group and concurrent therapy
limit would interplay with student
supervision in SNFs. One commenter
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stated the following, ‘‘Students’ minutes
are often counted as concurrent therapy
when the clinical instructor is also
treating a patient and we anticipate
residents being treated by students will
quickly exceed the 25 percent
threshold.’’ The commenters went on to
explain that the 25 percent limitation on
group and concurrent therapy minutes
could make it inefficient for the treating
therapist or assistant and could deter
facilities from taking students. One
commenter was concerned that ‘‘CMS
currently requires that student treatment
must be labeled as ‘‘concurrent,’’ and
therefore, this would fall under the 25
percent limitation on group and
concurrent therapy. They stated that
positive clinical education experiences
in post-acute settings often translate into
quality therapists and assistants getting
jobs in those settings upon graduation.
One commenter explained that if a SNF
accepts more students, ‘‘the average of
1 percent for group and concurrent
therapy represented in CMS data may
not prove accurate.’’ They described a
scenario where SNFs that prefer to have
higher than average volumes of students
may deliver concurrent therapy in
excess of 25 percent and that the
combined 25 percent limit of group and
concurrent therapy could be a deterrent
to SNFs taking therapy students One
commenter recommended that CMS
create a reporting requirement that
would delineate between student and
therapist/assistant minutes so that those
minutes could be separated from the
total of group and concurrent therapy
minutes.
Response: We appreciate the concern
that these commenters raised. We agree
that our policies should not deter SNFs
from taking students, and we agree that
the therapy student internship is crucial
to ensuring that students gain valuable
SNF experience that would cause
quality therapist and assistant graduates
to pursue employment at SNFs when
they eventually graduate. We appreciate
the candor with which the commenters
have described how they provide
concurrent therapy at the same time as
their therapy students consistent with
current policy allowances. We would
like to clarify that CMS does not require
that student therapy be labeled as
concurrent. The following is written in
the MDS 3.0 RAI Manual (Chapter 3,
section O):
When a therapy student is involved with
the treatment, and one of the following
occurs, the minutes may be coded as
concurrent therapy: The therapy student is
treating one resident and the supervising
therapist/assistant is treating another
resident, and both residents are in line of
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sight of the therapist/assistant or student
providing their therapy.
This instruction is describing one
possible scenario. We would like to
reiterate that CMS does not require
students to do concurrent therapy. As
stated in the FY 2012 final rule (76 FR
48511), as the therapy student is under
the direction of the supervising
therapist (even if no longer required to
be under line-of-sight supervision), the
time the student spends with a patient
will continue to be billed as if it were
the supervising therapist alone
providing the therapy. In other words,
the therapy student, for the purpose of
billing, is treated as simply an extension
of the supervising therapist rather than
being counted as an additional
practitioner.
We suspect that, as noted in the FY
2012 final rule referenced above,
because we do not allow facilities to
count therapy students’ independent
time on the MDS, many facilities rely on
the MDS instructions above (allowing a
therapist or assistant and a student to
treat one patient each while both
residents are in line of sight of the
therapist/assistant or student providing
their therapy) to permit them to count
student concurrent therapy time.
However, this should in no way be
considered mandatory practice and like
all concurrent therapy, should be used
sparingly.
Further, as mentioned above, our
most recent (FY 2017) data show that
individual therapy was provided 99.77
percent of the time, meaning that group
and concurrent therapy combined was
reported as having been provided 0.23
percent of the time. It concerns us that
commenters have stated that they are
providing so much concurrent therapy
with students that the 25 percent cap
would be too low for them, because this
would suggest that either the comments
were provided mistakenly or that
facilities are falsely reporting concurrent
therapy as individual therapy. While we
agree with commenters that the
opportunity to supervise student
therapists in SNFs is valuable to the
education of future therapists and
assistants, our data indicate that a 25
percent combined cap on group and
concurrent therapy should not deter
facilities from taking more therapy
students. We believe the
recommendation to monitor student
therapy minutes along with just
therapist/assistant minutes has merit
and it is something we will consider for
future policy making.
Comment: Some commenters
expressed concern with CMS’
implication that clinical decisions about
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therapy are principally driven by ‘‘. . .
financial considerations rather than the
clinical needs of the SNF residents’’.
Response: The available data support
our assertion that at least some SNFs
principally utilize financial
considerations, rather than relying on
clinical judgment, when making
decisions regarding the manner and
amount of care to provide to SNF
residents. In 2016, CMS released the
Skilled Nursing Facility Utilization and
Payment Public Use File (Skilled
Nursing Facility PUF) (https://
www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/Medicare-Provider-ChargeData/SNF.html). The Skilled Nursing
Facility PUF contained information on
utilization, payment (allowed amount,
Medicare payment and standard
payment), submitted charges, and
beneficiary demographic and chronic
condition indicators organized by CMS
Certification Number (6-digit provider
identification number), Resource
Utilization Group (RUG), and state of
service. The SNF PUF included
information on the number of provider
assessments where residents were
classified into an Ultra-High
Rehabilitation RUG or a Very-High
Rehabilitation RUG. It also included the
percentage of those assessments that
were within ten minutes of the
minimum threshold used to classify a
resident into that Rehabilitation RUG
category (that is, between 500–510
minutes for RV RUGs and 720–730
minutes for RU RUGs). Based on this
information, we found the following:
• 51 percent of all RV assessments
showed therapy provided between 500
and 510 minutes.
• 65 percent of all RU assessments
showed therapy provided between 720
and 730 minutes.
• For 88 providers, all of their RV
assessments showed therapy provided
between 500 and 510 minutes.
• For 215 providers, all of their RU
assessments showed therapy provided
between 720 and 730 minutes.
• More than one in five providers had
more than 75 percent of both RU and RV
assessments that showed therapy
provided within 10 minutes of the
minimum threshold.
This clear evidence of thresholding
behavior supports our assertion
regarding SNFs that are driven by
payment considerations rather than
therapy needs of patients. Furthermore,
we received a significant number of
comments from stakeholders on the
proposed rule who believe that the
quality and volume of therapy services
are likely to diminish under PDPM. This
belief is, itself, predicated on the notion
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that SNFs will continue to utilize
financial considerations as the basis for
care planning decisions. However, with
better and more reliable patient
diagnosis and characteristic data and
given the removal of therapy service
volume as a component of the payment
system, we expect that we will be better
positioned under PDPM to exercise our
authority to make case-mix creep
adjustments under section 1888(e)(4)(F)
of the Act, as may be appropriate, to
address any changes in payment which
are merely the result of changes in the
coding or classification of SNF patients
that do not reflect actual changes in case
mix. This type of analysis will also be
a part of CMS monitoring efforts under
PDPM.
Comment: One commenter
recommended that, in the future, CMS
consider whether it would be reasonable
to track rehabilitative versus
maintenance therapy, similar to how it
is done in the home health setting.
Response: We appreciate this
suggestion and may take it into
consideration for future policy making
decisions.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing our
proposal, without modification, to set a
combined 25 percent limit on group and
concurrent therapy per discipline.
Additionally, we are finalizing our
proposal, without modification, to
implement a non-fatal warning edit on
the validation report upon submission
when the amount of group and
concurrent therapy exceeds 25 percent
within a given therapy discipline,
which would alert the provider to the
fact that the therapy provided to that
resident exceeded the threshold.
F. Interrupted Stay Policy
Under section 1812(a)(2)(A) of the
Act, Medicare Part A covers a maximum
of 100 days of SNF services per spell of
illness, or ‘‘benefit period.’’ A benefit
period starts on the day the beneficiary
begins receiving inpatient hospital or
SNF benefits under Medicare Part A.
(See section 1861(a) of the Act;
§ 409.60). SNF coverage also requires a
prior qualifying, inpatient hospital stay
of at least 3 consecutive days’ duration
(counting the day of inpatient admission
but not the day of discharge). (See
section 1861(i) of the Act;
§ 409.30(a)(1)). Once the 100 available
days of SNF benefits are used, the
current benefit period must end before
a beneficiary can renew SNF benefits
under a new benefit period. For the
current benefit period to end so a new
benefit period can begin, a period of 60
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39243
consecutive days must elapse
throughout which the beneficiary is
neither an inpatient of a hospital nor
receiving skilled care in a SNF. (See
section 1861(a) of the Act; § 409.60).
Once a benefit period ends, the
beneficiary must have another
qualifying 3-day inpatient hospital stay
and meet the other applicable
requirements before Medicare Part A
coverage of SNF care can resume. (See
section 1861(i); § 409.30)
While the majority of SNF benefit
periods, approximately 77 percent,
involve a single SNF stay, it is possible
for a beneficiary to be readmitted
multiple times to a SNF within a single
benefit period, and such cases represent
the remaining 23 percent of SNF benefit
periods. For instance, a resident can be
readmitted to a SNF within 30 days after
a SNF discharge without requiring a
new qualifying 3-day inpatient hospital
stay or beginning a new benefit period.
SNF admissions that occur between 31
and 60 days after a SNF discharge
require a new qualifying 3-day inpatient
hospital stay, but fall within the same
benefit period. (See sections 1861(a) and
(i) of the Act; §§ 409.30, 409.60)
Other Medicare post-acute care (PAC)
benefits have ‘‘interrupted stay’’ policies
that provide for a payment adjustment
when the beneficiary temporarily goes
to another setting, such as an acute care
hospital, and then returns within a
specific timeframe. In the inpatient
rehabilitation facility (IRF) and
inpatient psychiatric facility (IPF)
settings, for instance, an interrupted
stay occurs when a patient returns to the
same facility (or in the case of an IPF,
the same or another IPF) within 3 days
of discharge. The interrupted stay policy
for long-term care hospitals (LTCHs) is
more complex, consisting of several
policies depending on the length of the
interruption and, at times, the discharge
destination: An interruption of 3 or
fewer days is always treated as an
interrupted stay, which is similar to the
IRF PPS and IPF PPS policies; if there
is an interruption of more than 3 days,
the length of the gap required to trigger
a new stay varies depending on the
discharge setting. In these three settings,
when a beneficiary is discharged and
returns to the facility within the
interrupted stay window, Medicare
treats the two segments as a single stay.
As we explained in the proposed rule
(83 FR 21068), while other Medicare
PAC benefit categories have interrupted
stay policies, the SNF benefit under the
RUG–IV case-mix model had no need
for such a policy because, given a
resident’s case-mix group, payment did
not change over the course of a stay. In
other words, assuming no change in a
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patient’s condition or treatment, the
payment rate was the same on Day 1 of
a covered SNF stay as it is at Day 7.
Accordingly, a beneficiary’s
readmission to the SNF—even if only a
few days may have elapsed since a
previous discharge—could essentially
be treated as a new and different stay
without affecting the payment rates.
However, as described in section V.D
of the proposed rule (83 FR 21068) and
section V.C.4 of this final rule, we stated
that the PDPM would adjust the per
diem rate across the length of a stay (the
variable per diem adjustment) to better
reflect how and when costs are incurred
and resources used over the course of
the stay, such that earlier days in a
given stay receive higher payments,
with payments trending lower as the
stay continues. In other words, the
adjusted payment rate on Day 1 and Day
7 of a SNF stay may not be the same.
Although we stated that we believe this
variable per diem adjustment schedule
more accurately reflects the increased
resource utilization in the early portion
of a stay for single-stay benefit periods
(which represent the majority of cases),
we considered whether and how such
an adjustment should be applied to
payment rates for cases involving
multiple stays per benefit period. In
other words, in the proposed rule, we
considered instances in which a
resident has a Part A stay in a SNF,
leaves the facility for some reason, and
then is readmitted to the same SNF or
a different SNF; and how this
readmission should be viewed in terms
of both resident classification and the
variable per diem adjustment schedule
under the proposed PDPM. We
explained that application of the
variable per diem adjustment is of
particular concern because providers
may consider discharging a resident and
then readmitting the resident shortly
thereafter to reset the resident’s variable
per diem adjustment schedule and
maximize the payment rates for that
resident.
We stated in the proposed rule (83 FR
21068) that, given the potential harm
which may be caused to the resident if
discharged inappropriately, and other
concerns outlined previously in this
section and in the proposed rule, we
discussed in last year’s FY 2018
ANPRM the possibility of adopting an
interrupted stay policy under the SNF
PPS in conjunction with the
implementation of the RCS–I case-mix
model. Several commenters expressed
support for this interrupted stay policy
in responding to the ANPRM, saying
that the interrupted stay policy is in
alignment with similar policies in other
post-acute settings, and that a similar
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policy would likely be implemented
under any cross-setting PAC payment
system.
Thus, we proposed to implement an
interrupted stay policy as part of the
SNF PPS, effective beginning FY 2020
in conjunction with the proposed
implementation of the SNF PDPM.
Specifically, in cases where a resident is
discharged from a SNF and returns to
the same SNF by 12:00 a.m. at the end
of the third day of the interruption
window (as defined below), we
proposed treating the resident’s stay as
a continuation of the previous stay for
purposes of both resident classification
and the variable per diem adjustment
schedule. In cases where the resident’s
absence from the SNF exceeds this 3day interruption window (as defined
below), or in any case where the
resident is readmitted to a different
SNF, we proposed treating the
readmission as a new stay, in which the
resident would receive a new 5-day
assessment upon admission and the
variable per diem adjustment schedule
for that resident would reset to Day 1.
We stated in the proposed rule (83 FR
21068 through 21069) that, consistent
with the existing interrupted stay
policies for the IRF and IPF settings, we
would define the interruption window
as the 3-day period starting with the
calendar day of discharge and
additionally including the 2
immediately following calendar days.
We stated that for the purposes of the
interrupted stay policy, the source of the
readmission would not be relevant. That
is, the beneficiary may be readmitted
from the community, from an
intervening hospital stay, or from a
different kind of facility, and the
interrupted stay policy would operate in
the same manner. We explained that the
only relevant factors in determining if
the interrupted stay policy would apply
are the number of days between the
resident’s discharge from a SNF and
subsequent readmission to a SNF, and
whether the resident is readmitted to
the same or a different SNF.
In the proposed rule (83 FR 21069),
we presented the following examples,
which we believed aided in clarifying
how this policy would be implemented:
Example A: A beneficiary is
discharged from a SNF on Day 3 of the
stay. Four days after the date of
discharge, the beneficiary is then
readmitted (as explained above, this
readmission would be in the same
benefit period) to the same SNF. The
SNF would conduct a new 5-day
assessment at the start of the second
admission and reclassify the beneficiary
accordingly. In addition, for purposes of
the variable per diem adjustment
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schedule, the payment schedule for the
second admission would reset to Day 1
payment rates for the beneficiary’s new
case-mix classification.
Example B: A beneficiary is
discharged from a SNF stay on Day 7
and is readmitted to the same SNF
within the 3-day interruption window.
For the purposes of classification and
payment, this would be considered a
continuation of the previous stay (an
interrupted stay). The SNF would not
conduct a new 5-day assessment to
reclassify the patient and for purposes
of the variable per diem adjustment
schedule, the payment schedule would
continue where it left off at the rate for
the day of discharge; we stated in the
proposed rule that, in this case, the first
day of the second stay would be paid at
the Day 8 per diem rates under that
schedule.
Example C: A beneficiary is
discharged from a SNF stay on Day 7
and is readmitted to a different SNF
within the 3-day interruption window.
The SNF would conduct a new 5-day
assessment at the start of the second
admission and classify the beneficiary
accordingly. In addition, for purposes of
the variable per diem adjustment
schedule, the payment schedule for the
second admission would reset to Day 1
payment rates for the beneficiary’s new
case-mix classification.
We note two clarifications to the
preceding examples. In each of the
above examples, when the beneficiary is
discharged from the SNF stay, the SNF
would complete the required PPS
Discharge Assessment (see Table 33:
PPS Assessment Schedule under
PDPM). Additionally, in Example B, we
inadvertently indicated in the proposed
rule that the first day of the second stay
would be paid at the Day 8 per diem
rates. However, the first day of the
second stay would actually be paid at
the rate for the day of discharge, Day 7.
These points are further addressed in
our responses to comments below.
We also stated in the proposed rule
(83 FR 21069) that we considered
alternative ways of structuring the
interrupted stay policy. For example, we
considered possible ranges for the
interrupted stay window other than the
3 calendar day window proposed. For
example, we considered windows of
fewer than 3 days (for example, 1 or 2
day windows for readmission), as well
as windows of more than 3 days (for
example, 4 or 5 day windows for
readmission). However, we stated we
believe that 3 days represents a
reasonable window after which it is
more likely that a resident’s condition
and resource needs will have changed.
We also stated that we believe
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consistency with other payment
systems, like that of IRF and IPF, is
helpful in providing clarity and
consistency to providers in
understanding Medicare payment
systems, as well as making progress
toward standardization among PAC
payment systems.
In addition, we explained that, to
determine how best to operationalize an
interrupted stay policy within the SNF
setting, we considered three broad
categories of benefit periods consisting
of multiple stays. The first type of
scenario, SNF-to-SNF transfers, is one in
which a resident is transferred directly
from one SNF to a different SNF. The
second case we considered, and the
most common of all three multiple-stay
benefit period scenarios, is a benefit
period that includes a readmission
following a new hospitalization between
the two stays—for instance, a resident
who was discharged from a SNF back to
the community, re-hospitalized at a later
date, and readmitted to a SNF (the same
SNF or a different SNF) following the
new hospital stay. The last case we
considered was a readmission to the
same SNF or a different SNF following
a discharge to the community, with no
intervening re-hospitalization.
We further explained that, to simplify
the analysis, we primarily examined
benefit periods with two stays. We
stated that benefit periods with exactly
two stays account for a large majority
(70 percent) of all benefit periods with
multiple stays, and benefit periods with
more than two stays represent a very
small portion (less than 7 percent) of all
benefit periods overall. We therefore
assume the data for cases where there
are exactly two stays in a benefit period
are representative of all benefit periods
with multiple stays. We noted that, of
cases where there are exactly two stays
in a benefit period, over three quarters
(76.4 percent) consist of rehospitalization and readmission (to the
same SNF or a different SNF). Discharge
to the community and readmission
without re-hospitalization cases
represent approximately 14 percent of
cases, while direct SNF-to-SNF transfers
represent approximately 10 percent.
For each of these case types, in which
a resident was readmitted to a SNF after
discharge, we explained that we
examined whether (1) the variable per
diem adjustment schedule should be
‘‘reset’’ back to the Day 1 rates at the
outset of the second stay versus
‘‘continuing’’ the variable per diem
adjustment schedule at the point at
which the previous stay ended, and (2)
a new 5-day assessment and resident
classification should be required at the
start of the subsequent SNF stay.
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With regard to the first question
above, specifically whether or not a
readmission to a SNF within the
proposed 3-day interruption window
would reset the resident’s variable per
diem adjustment schedule, we stated
that in each of the cases described
above, we were concerned generally that
an interrupted stay policy that ‘‘restarts’’
the variable per diem adjustment
schedule to Day 1 after readmissions
could incentivize unnecessary
discharges with quick readmissions. We
explained that this concern is
particularly notable in the second and
third cases described above, as the
beneficiary may return to the same
facility. As we discussed in the
proposed rule (83 FR 21069), to
investigate this question, we conducted
linear regression analyses to examine
changes in costs in terms of both PT/OT
and NTA costs per day from the first to
second admission for the three scenarios
described above (SNF-to-SNF direct
transfers, readmissions following rehospitalization, and readmissions
following community discharge). As
discussed in section V.D.4. of the
proposed rule (83 FR 21060 through
21061) and in section V.C.4 of this final
rule, investigations revealed that
utilization of PT, OT, and NTA services
changes over the course of a stay. Based
on both empirical analysis and feedback
from multiple technical expert panels,
we determined that SLP and nursing
utilization remained fairly constant over
a stay. Therefore, we proposed variable
per diem adjustment schedules for the
PT, OT, and NTA components but not
for the SLP or nursing components. We
stated in the proposed rule that, because
the analysis of changes in costs across
two stays in a single benefit period is
relevant to determining how the
variable per diem payment adjustments
should apply to benefit periods with
multiple stays, we restricted our
analysis to the three payment
components for which we are proposing
variable per diem adjustments (PT, OT,
and NTA). For this analysis, both the rehospitalization and community
discharge cases were separated into two
sub-cases: When the resident returns to
the same SNF, and when the resident is
admitted to a different SNF. By
definition, SNF-to-SNF transfer cases
always have different providers for the
first and second stays. We stated in the
proposed rule that the regression results
showed that PT/OT costs from the first
to second admission were very similar
for SNF-to-SNF transfers and for
readmissions to a different provider
following re-hospitalization or discharge
to community, suggesting that the
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second admission is comparable to a
new stay. NTA costs from the first to
second admission also were very similar
for SNF-to-SNF transfers. We stated
that, for readmissions following rehospitalization or discharge to
community, NTA costs for readmissions
to the same provider were notably less
than NTA costs for readmissions to a
different provider. We explained that,
overall, these results suggest that a
readmission to a different SNF,
regardless of whether it was a direct
SNF-to-SNF transfer, or whether the
beneficiary was re-hospitalized or
discharged to the community before the
second admission, are more comparable
to a new stay than an interrupted stay.
Thus, we proposed to always reset the
variable per diem adjustment schedule
to Day 1 whenever residents are
discharged and readmitted to a different
SNF. We acknowledged that this could
lead to patterns of inappropriate
discharges and readmissions that could
be inconsistent with the intent of this
policy; for example, we stated we would
be concerned about patients in SNF A
consistently being admitted to SNF B to
the exclusion of other SNFs in the area.
We explained that should we discover
such behavior, we would flag these
facilities for additional scrutiny and
review and consider potential policy
changes in future rulemaking. However,
based on the results of our regression
analyses, and because of the concern
that a SNF provider could discharge and
promptly readmit a resident to reset the
variable per diem adjustment schedule
to Day 1, we stated that in cases where
a resident returns to the same provider
we were proposing to allow the
payment schedule to reset only when
the resident has been out of the facility
for at least 3 days. As previously
mentioned, we stated that believe 3 days
represents a reasonable window after
which it is more likely that a resident’s
condition and resource needs will have
changed, and this 3-day requirement is
also consistent with the interrupted stay
policies of similar Medicare PAC
benefits. Moreover, we stated that while
we found that PT and OT costs for cases
where the gap is longer than 3 days are
similar to PT and OT costs for cases
where the gap is shorter than 3 days,
NTA costs are notably higher for cases
where the gap is longer than 3 days. We
explained that this provides further
support for resetting the variable per
diem schedule for cases where the gap
is longer than 3 days (as costs tend to
be higher, similar to a new stay). More
information on these analyses can be
found in section 3.10.3. of the SNF PMR
technical report available at https://
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www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html.
We explained in the proposed rule (83
FR 21070) that with regard to the
question of whether or not SNFs would
be required to complete a new 5-day
assessment and reclassify the resident
after returning to the SNF within the
proposed 3-day interruption window,
we investigated changes in resident
characteristics from the first to the
second stay within a benefit period.
First, we looked at changes in clinical
categories from the first to second stay
for residents with an intervening rehospitalization. We explained that this
analysis could only be conducted for
residents with a re-hospitalization
because, as described in section 3.10.2.
of the SNF PMR technical report, for
research purposes, classification into
clinical categories was based on the
diagnosis from the prior inpatient stay.
We stated that for those residents who
had a re-hospitalization and were
readmitted to a SNF (either the same or
a different SNF), and therefore, could be
reclassified into a new clinical category
(because of new diagnostic information
as a result of the intervening rehospitalization), we found that a
majority had the same clinical category
for both the first and second admission.
We further explained that because we
could not conduct this investigation for
SNF-to-SNF transfers or community
discharge cases (as they lack a new
hospitalization), we separately
investigated changes in function from
the first to second stay for SNF-to-SNF
transfers and for readmissions following
community discharge. We found that in
a large majority of cases, there was no
change in function from the first to
second stay, regardless of whether the
second provider was the same or
different as the first provider. Thus, we
stated we believe it would be
appropriate to maintain the
classification from the first stay for
those residents returning to the same
SNF no more than 3 calendar days after
discharge from the same facility.
However, we stated that because we
proposed to exclude from the
interrupted stay policy readmissions to
a different SNF (regardless of the
number of days between admissions)
and readmissions to the same SNF when
the gap between admissions is longer
than 3 days, and to treat these
readmissions as new stays for purpose
of the variable per diem adjustment
schedule, we believe it would be
appropriate and consistent to treat these
cases as new stays for purposes of
clinical classification and to require a
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new 5-day PPS assessment. More
information on these analyses can be
found in section 3.10.2. of the SNF PMR
technical report available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html. Additionally, we
noted that under the approach
discussed in section V.E.1. of the
proposed rule, providers would be
afforded the flexibility to use the IPA,
which would allow for resident
reclassification under certain
circumstances.
We also noted that we believe that
frequent SNF readmissions may be
indicative of poor quality care being
provided by the SNF. Given this belief,
we stated we plan to monitor the use of
this policy closely to identify those
facilities whose beneficiaries experience
frequent readmission, particularly
facilities where the readmissions occur
just outside the 3-day window used as
part of the proposed interrupted stay
policy. We stated that should we
discover such behavior, we would flag
these facilities for additional scrutiny
and review and consider potential
policy changes in future rulemaking.
We invited comments on the
proposals outlined above. Commenters
submitted the following comments
related to the proposed rule’s discussion
of the proposed interrupted stay policy
under the PDPM. A discussion of these
comments, along with our responses,
appears below.
Comment: Several commenters
pointed out a potential adverse
incentive associated with the interaction
between the interrupted stay policy, the
proposed Interim Payment Assessment
(IPA), and the variable per diem
adjustment. Specifically, these
comments were concerned with issues
that could arise because an IPA does not
return the NTA component to day 1
payment rates under the variable per
diem adjustment schedule. Commenters
stated that if a patient requires a new
high cost medication or piece of
equipment, the inability to return to day
1 of the variable per diem adjustment
schedule could result in an array of
unintended issues. Commenters noted
that these unintended issues include
incentivizing unnecessary discharges to
a hospital followed by quick
readmissions (which, the commenter
pointed out, was a risk CMS had
specifically considered and attempted to
avoid in crafting the proposed
interrupted stay policy) and reluctance
to admit patients who are at high risk of
changes in care needs. One commenter
stated that CMS has not aligned the
planned monitoring of unnecessary
discharges with existing quality
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measures, and instead has created an
incentive for unnecessary discharges
and readmissions just outside the 3-day
interruption window by prohibiting
providers from returning patients to
days one through three of the variable
per diem adjustment schedule for
typically high cost NTAs when an IPA
is conducted or in the instance of
interrupted stays of 3 or less days.
Response: While we appreciate the
commenters’ concerns regarding the
potential for an adverse incentive, we
believe that frequent SNF readmissions
may be indicative of poor quality care
being provided by the SNF. CMS plans
to monitor the use of this policy closely
to identify those facilities whose
beneficiaries experience frequent
readmission, particularly facilities
where the readmissions occur just
outside the 3-day window used as part
of the proposed interrupted stay policy.
Should we discover such behavior, we
will flag these facilities for additional
scrutiny and review and consider
potential policy changes in future
rulemaking.
We do not believe that facilities have
cause for reluctance to admit patients
who are at high risk of changes in care
needs. The optional IPA allows for
patients to be reclassified in cases of
significant changes in care needs.
With regard to the question of the IPA
resetting the variable per diem
adjustment, this issue is addressed in
our responses to comments in section
V.D. of this final rule.
With regard to the question of
interruptions of 3 or less days resetting
the variable per diem adjustment, as we
stated in the proposed rule, our analyses
found that some costs, specifically NTA
costs, are notably higher for cases where
the gap is longer than 3 days, compared
to cases where the interruption is 3 or
less days, where costs are more similar
to uninterrupted stays. We believe this
supports the use of a 3-day gap as the
metric for when to reset the variable per
diem adjustment.
Regarding any current alignment of
quality measures and the monitoring of
unnecessary discharges, we interpret the
commenter to be suggesting that CMS
does not currently have in place quality
measures that address unnecessary
discharges to the hospital during the
SNF Stay. We disagree with this
assertion in that CMS has developed
and implemented a hospital
readmission measure for SNF.
Comment: Commenters requested
clarification as to whether the
readmission of a patient under the
interrupted stay policy (for example,
within the 3-day window) would trigger
an IPA.
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Response: As discussed in section
V.D. of this final rule, the IPA under
PDPM would be an optional assessment.
Therefore, readmission after an
interrupted stay would not trigger an
IPA. If the provider believes, even in the
case of a short absence from the facility,
that an IPA is warranted, then we would
encourage the provider to complete an
IPA in that instance.
Comment: Several commenters
requested clarification about completing
initial evaluations for therapy upon
readmission of a patient in an
interrupted stay under the interrupted
stay policy. Commenters questioned
whether CMS has an expectation that
therapists will always complete a new
evaluation upon the resident’s return to
a SNF as currently instructed in the
MDS RAI Manual, or whether CMS
would defer to the clinical judgment of
the therapist in a way that is more like
the EOT/EOT–R practice. Commenters
also questioned whether CMS would
require SNFs to indicate on the claim
form when a resident has been
readmitted and/or when an evaluation
was complete after the resident was
readmitted. Commenters pointed out
that, per the current instruction in
section O of the MDS RAI Manual, ‘‘If
a resident returns from a hospital stay,
an initial evaluation must be performed
after entry to the facility, and only those
therapies that occurred since admission/
reentry to the facility and after the
initial evaluation shall be counted.’’
(MDS 3.0 Chapter 3, section O, V1.15,
page O–19). On the other hand,
commenters pointed out that the
premise for the interrupted stay policy
is similar to the policy for the End-of
Therapy (EOT) Other Medicare
Required Assessment (OMRA), which
leaves it to the clinician’s judgment
whether or not a new therapy evaluation
should be completed. Commenters
stated that when therapy is the primary
skill, and the patient misses 3
consecutive calendar days of therapy,
the provider must complete an EOT
OMRA, which effectively changes the
payment resource utilization group
(RUG). Commenters pointed out that in
cases where therapy resumes after the
EOT–OMRA is performed and the
resumption of therapy date is no more
than 5 consecutive calendar days after
the last day of therapy provided, and the
therapy services have resumed at the
same RUG–IV classification level, and
with the same therapy plan of care that
had been in effect prior to the EOT
OMRA, an EOT OMRA with
Resumption (EOT–R) may be
completed. Commenters noted that in
these cases, it is left to the clinician’s
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judgment whether or not a new therapy
evaluation should be completed.
Response: Given that an interrupted
stay does not prompt the need for a new
5-day PPS assessment and continues the
stay from the point when the
interruption occurred, providers should
not be required to always complete an
evaluation upon the resident’s
readmission after an interrupted stay.
Per the proposed interrupted stay
policy, a new 5-day assessment must be
completed only if the interruption lasts
longer than 3 days (or if the beneficiary
is readmitted to a different SNF). If the
interruption was less than 3 days but
patient care needs have changed
significantly, clinicians may complete
an IPA at their discretion. The
instructions in the MDS RAI Manual
will be updated accordingly as part of
the implementation of PDPM.
With regard to whether providers
would be required to report on the claim
form when a patient is readmitted or an
evaluation is completed for such a
patient, we do not anticipate such
changes in claims reporting, though we
would have providers report on the
claim when an interrupted stay
occurred.
Comment: Many commenters had
questions and concerns related to
discharge practices under the
interrupted stay policy, and requested
clarification of the requirements
surrounding the PPS Part A Discharge
(NPE) when beneficiaries meet the
criteria of an interrupted stay. One
commenter stated that it is unclear in
the proposed rule whether the NPE
would be completed in example B in the
FY 2019 SNF PPS proposed rule (83 FR
21069). Assuming that an NPE would be
required once the resident has been out
of the facility for 24 hours, whether the
resident returns within 1 day or 3 days,
commenters questioned how the facility
would manage the assessment schedule
versus the payment schedule. Other
commenters questioned whether CMS
expects SNFs to wait to see whether the
beneficiary returns before completing
the discharge assessment. Commenters
questioned what the implications would
be for setting the Assessment Reference
Date (ARD) approximately 4 to 5 days
after discharge in cases when the
beneficiary does not return within the 3day window. Commenters stated that as
currently defined, doing this would be
considered a late assessment, and could
subject the SNF to penalties.
Commenters also stated that if this
discharge assessment is required, then
this adds to the administrative burden,
which is contradictory to CMS’ stated
goals.
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Response: As is the current policy,
SNFs would be expected to complete
the PPS discharge assessment and/or
OBRA discharge assessment upon any
discharge and within currently
established timeframes, regardless of
any expectation as to whether or not a
patient might be readmitted and/or
whether the readmission would be
considered an interrupted stay. This
does not add administrative burden
beyond what SNFs are currently
expected to do. This information is also
important in our ability to assess
instances in which facilities may abuse
the interrupted stay policy.
With regard to managing the
assessment schedule and payment
schedule, we would refer commenters to
the assessment schedule discussed in
section V.D of this final rule, which
outlines both the assessment calendar
and payment timeline for each
assessment under PDPM.
Comment: Some commenters sought
clarification as to how the SNF should
count the total volume, mode, and type
of therapy to report in section O of the
MDS for purposes of the discharge
assessment when a resident’s stay
included one or more interrupted stays.
Would they count it from Day 1, the
original admission date, even though
there was an interrupted stay, or would
this discharge assessment only include
the volume, mode, and type of therapy
delivered since the time of return to
discharge?
Response: In cases where a resident is
discharged and then readmitted to a
SNF in a manner that triggers an
interrupted stay under the interrupted
stay policy, only those therapies that
occurred since the readmission would
be included in section O of the MDS for
each discharge assessment.
Comment: A commenter expressed
concerns related to the use of the length
of an interruption in days (for example,
less than or equal to 3 days) as the
trigger for a 5-day assessment. The
commenter stated appreciation for CMS
efforts to reduce the number of 5-day
assessments, but stated that no
reduction in burden is achieved by not
requiring a 5-day assessment for
patients returning following 3 or fewer
days, assuming that SNFs must still
conduct a patient assessment upon
readmission for all patients. Also, the
commenter believes not performing a 5day assessment for all returning patients
creates unneeded risk for patients and
SNFs. The commenter recommended
performing the 5-day assessment after
every readmission, the result of which—
not the number of days in the
interruption—should determine
whether the patient’s condition has
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changed and new care needs are present
that would warrant resetting the
variable per diem rate. Commenters
stated that the number of days in an
interruption is irrelevant to costs of
treatment and it is the patient’s
condition upon return from the
interruption that should determine
whether the payment resets to day 1 per
diem rates or not.
Response: Contrary to the
commenter’s assertion, we believe that a
reduction in burden is, in fact, achieved
by not requiring a 5-day assessment for
patients returning following 3 or fewer
days. While SNFs may be required to
complete OBRA assessments and other
statutorily required assessments beyond
the scope of SNF PPS payment, it will
no longer be the case that SNFs must
conduct a patient assessment upon
readmission for all patients for the
purposes of PPS payment. As discussed
above, in conjunction with the
implementation of the PDPM, CMS will
reduce the assessment schedule
significantly to ease provider burden
(see section V. E. and Table 33 of the
proposed rule). The Start of Therapy
OMRA, the assessment that would have
previously been required for PPS
payment upon a readmission, is no
longer required. The new schedule
utilizes the 5-day Assessment and PPS
Discharge Assessments as the only
required assessments, with IPAs being
optional at clinician discretion.
We disagree that not performing an
assessment for all returning patients
creates unneeded risk. We believe that
the new assessment schedule we
proposed achieves efficiencies in terms
of provider burden while still providing
enough data to accurately monitor
provider behavior, changes in patient
condition, and outcomes via the 5-day
assessment, IPA assessments, and
discharge assessments. While a 5-day
assessment would not be required upon
readmission in the case of an
interrupted stay, the provider has the
option of completing an IPA as it
determines appropriate to assess
whether the patient’s condition and care
needs have changed.
While we appreciate the commenter’s
concern, we believe the use of the
number of days between discharge and
readmission to determine whether there
is an interrupted stay is appropriate. As
described in the proposed rule, our
analyses found that some types of costs,
notably NTA costs, tend to be higher for
cases where the gap is longer than 3
days, suggesting that such stays are
more like new stays than continuing
stays and thus supporting the 3-day
metric for resetting the variable per
diem schedule. The length of the
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interruption is also used in determining
whether there is an interrupted stay in
other Medicare post-acute payment
systems and we expect that its use here
will be just as effective.
With regard to the commenters’
recommendation that a 5-day
assessment be completed upon
readmission after an interrupted stay,
we believe that this would constitute an
unnecessary burden on providers,
particularly given the provider’s option
to complete an IPA upon readmission to
the SNF. We also do not believe a 5-day
assessment is necessary upon
readmission after an interrupted stay of
3 days or less. While we found that PT
and OT costs for cases where the gap is
longer than 3 days are similar to PT and
OT costs for cases where the gap is
shorter than 3 days, NTA costs are
notably higher for cases where the gap
is longer than 3 days. We explained that
this provides further support for
resetting the variable per diem schedule
for cases where the gap is longer than
3 days (as costs tend to be higher,
similar to a new stay). As discussed in
section 3.10 of the SNF PMR technical
report, our analyses also showed that
clinical category (in cases with an
intervening re-hospitalization) and
functional status (in cases involving
SNF-to-SNF transfers and readmissions
following community discharge) tended
not to change between the first stay and
the second stay in an interrupted stay of
3 days or less. Thus, we believe our
research suggests that stays with
interruptions of 3 days or less are more
similar in cost to uninterrupted stays
and are less likely to involve significant
changes in patient condition or
function. Therefore, we do not agree
that a 5-day assessment should be
required upon readmission after an
interrupted stay, or that it is appropriate
to reset the variable per diem
adjustment schedule to day 1 after an
interrupted stay.
We agree with the commenter that the
patient’s condition should be the most
relevant factor in determining the need
for a new assessment, and CMS has
given providers the option of
performing an IPA at their discretion
based on changing conditions. As we
explained previously, if a new condition
is coded on an IPA, the SNF PPS per
diem payment for the patient could
increase to reflect changes in the
patient’s clinical condition if there is a
change in the patient’s case-mix group.
Comment: A commenter stated that
CMS does not explicitly discuss
discharge to the community and the
interrupted stay policy, and requested
clarification.
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Response: In the FY 2019 SNF PPS
proposed rule (83 FR 21068 through
21069), we discussed discharge to the
community and the interrupted stay
policy. The beneficiary may be
readmitted from the community, from
an intervening hospital stay, or from a
different kind of facility, and the
interrupted stay policy would operate in
the same manner. The interrupted stay
policy would operate in the same
manner for discharges to the
community.
Comment: One commenter
commented that the RAI User’s Manual
instructions for A2400A, on page A–32,
are to code 1, yes, if the resident has had
a Medicare Part A covered SNF stay
since the most recent admission/entry
or reentry. The commenter stated that
providers also use the Medicare Stay
End Date Algorithm on page A–37 of the
RAI User’s Manual to correctly code
A2400C, the end of the Medicare SNF
stay. A2400C is also used to determine
whether the PPS Part A Discharge
assessment is required. The commenter
referenced Example B on page 21069 of
the proposed rule, which describes a
beneficiary who is discharged on day 7
and is readmitted to the same SNF
within the 3-day interruption window.
The example states a SNF would not
conduct a new 5-day assessment, and
for the purposes of payment, this would
be considered a continuation of the
previous stay. The commenter
expressed concern that, even though the
Example B beneficiary is considered a
continuation of the previous stay for
payment purposes, A2400 on the MDS
would still be coded as two separate
Medicare stays. The commenter stated
that when the resident is discharged on
day 7, this date would be considered the
end of the Medicare stay at A2400C. The
entry record completed when the
resident returned would have a new
Medicare start date (A2400B) that would
equal the reentry date. The commenter
stated that this could lead to unmatched
stays and inaccurate SNF QRP
measures.
Response: We appreciate the
comments on the potential revisions
needed to the MDS manual or any
technical specifications associated with
SNF programs to implement the
interrupted stay policy, and will
consider these issues when making
revisions to these materials as part of
implementing the PDPM and related
policies. With regard to the commenter’s
concern about the alignment of
individual stays in the SNF QRP and the
PDPM, we are aware of the issue and
will revise the codes so that a hospital
admission and return to the SNF does
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not trigger a new Medicare stay for
purposes of the SNF QRP.
Comment: A commenter expressed
concern regarding how the interrupted
stay policy will operate in situations
where the SNF provided the resident
with the Notice of Medicare NonCoverage (NOMNC), which is required
to be provided prior to a discharge to
the community. The commenter
requested clarification on how or if
issuance of the NOMNC or SNFABN
would have any effect on the
interrupted stay policy. Their concern
was that if a resident meets the criteria
of an interrupted stay following a
discharge where denial notices were
issued, the resident would be
considered a new admission to the SNF.
The commenter stated the cost of an
admission in this situation is more like
that of a new admission than a
readmission. They recommended that
the interrupted stay policy not be
applied following a discharge with
issuance of denial notices.
Response: The basic purpose of the
interrupted stay policy is to ensure that
when two segments of a resident’s stay
in the facility are separated by only a
brief absence, the variable per diem
payment adjustment is not
inappropriately reset to Day 1 upon the
resident’s return. We do not believe that
the mere issuance of a denial notice
such as a NOMNC or SNFABN prior to
the resident’s departure would, in itself,
have any effect on the nature of the care
needed by the resident upon subsequent
resumption of SNF care, the costs of
readmission, or the way in which
providers would be paid under the
PDPM, and, accordingly, we are not
adopting the commenter’s suggestion.
Comment: A commenter expressed
concern about the impact an OBRA
Discharge Return Not Anticipated
assessment would have on the
interrupted stay policy. The commenter
stated that currently, when a resident
discharges to the community with the
intent not to return, the SNF is required
to complete the OBRA Discharge Return
Not Anticipated assessment and would
combine this assessment with the PPS
Part A Discharge. The commenter stated
that the OBRA Discharge Return Not
Anticipated ends the resident’s
‘‘episode of care.’’ The commenter
stated that if this resident were to be
readmitted to the SNF within the
interruption window, this would be
considered a new admission, require an
admission type of entry record, and start
a new ‘‘episode of care.’’ Furthermore,
the commenter stated that this discharge
would end all of the resident’s orders,
meaning that a new admission order is
required, along with new physician
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certification of skilled care and new
therapy evaluations. The commenter
was highly concerned that the
interrupted stay policy would apply
following an OBRA Discharge Return
Not Anticipated assessment, when the
resident is considered a ‘‘new
admission’’ for all other regulations. The
commenter stated that the cost of an
admission in this situation is more like
that of a new admission than a
readmission. The commenter
recommended that the interrupted stay
policy not be applied following a
Discharge Return Not Anticipated.
Response: We appreciate this concern
though we do not agree that the
interrupted stay policy should not apply
in cases where the resident is
discharged return not anticipated. While
the provider may have prepared a
discharge plan for this patient based on
the notion that the patient would not
return, the patient’s return to the SNF
within that 3-day window would
suggest that either the patient was not
adequately prepared for discharge or
may have been discharged too early
from the facility. Further, providers
should consider the possibility that a
patient may return before finalizing the
precise discharge type coded on the
MDS. Finally, we believe that
exempting such discharges from the
interrupted stay policy could
incentivize providers to merely code
discharges in this manner only for this
purpose and without sufficient basis.
Comment: One commenter stated that
currently a Medicare Part A stay in the
SNF will end if the resident has been
discharged to the community, has been
admitted to the hospital, or is on a
hospital observation stay or emergency
room visit that spans midnight and
exceeds 24 hours. The commenter stated
that the interrupted stay policy would
consider any readmission within the
3-day interruption window as a
continuation of the previous stay,
therefore changing the number of
Medicare stays the facility would have
had prior to this proposal. One
commenter expressed concern that the
reduction in Medicare stays has the
potential to affect the SNF QRP
measures adversely by resulting in a
higher number of unmatched stays and
potential errors with SNF QRP measure
calculation. The commenter referenced
the Skilled Nursing Facility Quality
Reporting Program Measure Calculation
and Reporting User’s Manual 1.0
(https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/
Downloads/SNF-QM-Users-ManualV10-FINAL-5-22-17.pdf) and the
instructions on how to identify a
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Medicare Part A stay for SNF QRP: Start
by sorting assessments in reverse order
during the 12-month target period. If the
most recent assessment is a PPS Part A
Discharge assessment, look for the next
qualifying assessment; if the assessment
is a 5-day, this is a matched assessment,
and if not a 5-day, the stay is
unmatched. The commenter expressed
concern for potential negative impact to
the SNF QRP measures, regardless of
whether the Discharge Assessment NPE
is required with the discharge prior to
the interrupted stay, with the following
reasoning.
The commenter described a sequence
of assessments and events that the
commenter stated would occur under
the current payment system if Example
B on page 21069 were to occur: 5-day
assessment, NPE, discharge of less than
3 days, 5-day assessment, and final NPE.
This would be counted as two Medicare
stays for SNF QRP.
The commenter then described how
this sequence might differ under the
new system, depending on whether the
NPE is required or not. In Example B,
if the NPE was required on day 7 when
the resident was discharged, but a new
5-day assessment was not required
when the resident returned within the
interruption window, then the sequence
of assessments and events would be:
5-day assessment, NPE, interrupted stay,
NPE. This would result in one
unmatched stay (between the return
from the interrupted stay to the final
NPE) and one matched stay.
In Example B, if the NPE is not
required on day 7 when the resident
discharges for less than 3 days, the
sequence would be: 5-day assessment,
interrupted stay, NPE. This would result
in only one Medicare stay.
The commenter requested
clarification on how the Medicare stays
will be calculated with the interrupted
stay policy, presumably for the purposes
of the QRP, and recommended
evaluation by the SNF QRP CMS team
to evaluate any further risks, errors, or
concerns that may arise from this
proposed policy.
Response: We agree with the
commenter’s description of how the
current matching occurs for
assessments. As previously discussed,
we are aware that admissions and
discharges are currently coded for
purposes of the SNF QRP in a way that
might conflict with how stays will be
captured under the new PDPM. We
intend to revise the codes so that a
Medicare stay is captured the same way
for purposes of the SNF QRP and the
PDPM.
Comment: One commenter stated
concerns with the suggestion that CMS
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would monitor this interrupted stay
policy for frequent readmission,
particularly facilities where the
readmissions occur just outside the
3-day window used as part of the
proposed interrupted stay policy. The
commenter stated that SNFs already are
the most highly regulated and
monitored profession in health care.
They stated a new policy with
additional scrutiny and risk increases
provider burden. They pointed out that
CMS has programs in place to monitor
and penalize SNFs for rehospitalization.
The commenter stated that the SNF
Rehospitalization VPB Program reduces
all SNF rates by 2 percent. The
commenter further stated that SNFs may
earn a portion of these funds back by
keeping rehospitalization rates low.
Also, the commenter pointed out that
SNF performance on return to
community and related quality
measures under the SNF QRP are
publicly reported. The commenter
stated that SNFs that perform poorly on
QRP measures are less likely to be
included in Medicare Advantage Plan or
Accountable Care Organization provider
networks. Thus, the commenter
concluded that heightened scrutiny for
poor performance already is in place.
They recommended that SNF readmissions to hospitals under the
existing program—presumably meaning
the SNF Rehospitalization VPB
Program—should serve as the
monitoring tool. They stated that, as
with the SNF VBP Program, QRP
performance also will serve a
monitoring tool. They added that poorly
performing SNFs will be penalized by
the market, so that no additional
government action is needed.
Response: We acknowledge that these
monitoring tools exist and will utilize
these existing tools to the fullest extent
possible, but will also monitor
specifically for inappropriate behavior
in the context of the interrupted stay
policy and decide the appropriate form
of administrative action for whatever
behavior is identified.
Comment: One commenter stated that
CMS should develop a policy specific to
the interrupted stay and the calculation
of group/concurrent minutes. An
interrupted stay could prevent the
individual therapy minutes from being
provided, and therefore, result in
exceeding the 25 percent threshold. For
example, if a resident is admitted to a
facility and receives 100 percent group
therapy on Day 1 of their SNF stay, with
the full intent to move the resident to
individual therapy in the days that
follow, and then an interrupted stay
occurs on Day 2 of the resident’s stay;
what would be the resulting impact to
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the facility from the resident receiving
over the allowed 25 percent group
therapy?
Response: As noted in section V.E of
this final rule, there currently is no
penalty associated with the group and
concurrent therapy limits; instead,
providers will receive a non-fatal
warning edit on the validation report.
We stated that we would monitor and
evaluate how group and concurrent
therapy are used under PDPM and
consider making future proposals to
address abuses of this policy or flag
providers for additional review should a
provider be found to consistently
exceed the threshold. That being said, in
terms of calculating adherence with the
concurrent and group therapy limit,
such a calculation is, as described in
section V.E. of this final rule, completed
at the stay level. Therefore, in cases of
an interrupted stay, the therapy minutes
over the course of the entire stay, both
before and after the interruption, would
be used to calculate the proportion of
therapy time furnished within a
concurrent or group setting. We believe
this is the fairest option, as to calculate
the proportion of such minutes based on
only one portion of the stay may unduly
identify a given provider as having
failed to adhere to the established limit
only because that particular portion of
the stay had a larger amount of a given
therapy mode.
Comment: Several commenters
pointed out a discrepancy in the
Medicare days count in Example B in
the FY 2019 SNF PPS proposed rule (83
FR 21069). Specifically, commenters
highlighted that Example B states that
the resident is discharged on day 7 and
that ‘‘the first day of the second stay
would be paid at the Day 8 per diem
rates under that schedule.’’ This implies
that if a SNF resident has an interrupted
stay, for the purposes of determining
day in the stay for the per diem
payment, when the patient returns to
the SNF after the interruption, the stay
resumes on the next day of the stay. For
example, if a SNF resident is on day 7
of a stay which is then interrupted,
when the resident returns within a
certain time frame the day in the stay
would be day 8. If the resident is
discharged on day 7 of the stay, the SNF
would be unable to bill for this day,
resulting in the beneficiary using only 6
of the Medicare days. This would be
unfair for both the resident and the SNF.
Commenters recommended that CMS
clarify the policy so that providers are
paid for the day when a resident leaves
a SNF in the case of an interrupted stay.
Commenters said that under the policy
as proposed, providers would not be
paid for the day the resident leaves the
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SNF and so would lose one day of
reimbursement.
Response: We agree with commenters
regarding this typographical error and
that payments should resume at the rate
of the day of discharge, rather than the
day after discharge. In other words, if a
SNF resident is on day 7 of a stay which
is interrupted, when the resident is
readmitted, the payment rate would
resume at day 7, not day 8, as Example
B incorrectly stated.
The day of discharge in an interrupted
stay would not be counted against the
beneficiary’s count of 100 days of
covered Part A care in a benefit period.
SNFs are not currently paid for the day
of discharge, even with an anticipated
leave of absence, unless the patient
returns to the SNF before midnight of
the same day. We do not believe there
is anything about the interrupted stay
policy that warrants changing this.
Comment: Multiple commenters
expressed general support for the
interrupted stay policy as proposed.
Commenters supported the
implementation of a SNF interrupted
stay policy that is consistent with the
policies in other post-acute care
settings. Commenters recognized that
with the proposed changes under the
PDPM, which include variable per diem
payment adjustments that provide
higher payments at the beginning of the
stay, implementing an interrupted stay
policy will be appropriate for SNFs. As
a further point of support, commenters
noted that under the current system,
rates of discharge to institutions (such
as acute hospital or emergency
department) are monitored very closely.
Commenters expected that the proposed
interrupted stay policy would allow for
short term discharges where medically
necessary while allowing for
appropriate payment across a patient’s
stay.
Response: We agree with the
commenters that the PDPM will benefit
from the interrupted stay policy
proposed.
Accordingly, after considering the
comments received, for the reasons
discussed in the proposed rule and in
this final rule, we are finalizing our
proposed interrupted stay policy
without modification, to be effective
October 1, 2019 in conjunction with the
implementation of the PDPM.
G. Relationship of the PDPM to Existing
Skilled Nursing Facility Level of Care
Criteria
As discussed in the proposed rule (83
FR 21070), the establishment of the SNF
PPS did not change Medicare’s
fundamental requirements for SNF
coverage. However, because the case-
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mix adjustment aspect of the SNF PPS
has been based, in part, on the
beneficiary’s need for skilled nursing
care and therapy, we have coordinated
claims review procedures with the
existing resident assessment process
and case-mix classification system. This
approach includes an administrative
presumption that utilizes a beneficiary’s
initial classification in one of the upper
52 RUGs of the 66-group RUG–IV
system to assist in making certain SNF
level of care determinations.
As further discussed below, in the
proposed rule (83 FR 21070–72), we
proposed to adopt a similar approach
under the PDPM effective October 1,
2019, by retaining an administrative
presumption mechanism that would
utilize the initial assignment of one of
the case-mix classifiers that we
designate for this purpose to assist in
making certain SNF level of care
determinations. This designation would
reflect an administrative presumption
under the PDPM that beneficiaries who
are correctly assigned one of the
designated case-mix classifiers on the
initial 5-day, Medicare-required
assessment are automatically classified
as meeting the SNF level of care
definition up to and including the
assessment reference date on the 5-day
Medicare required assessment.
We stated that, as under the existing
RUG–IV administrative presumption, a
beneficiary who is not assigned one of
the designated classifiers would not
automatically be classified as either
meeting or not meeting the level of care
definition, but instead would receive an
individual level of care determination
using the existing administrative
criteria. We stated that the use of the
administrative presumption reflects the
strong likelihood that those
beneficiaries who are assigned one of
the designated classifiers during the
immediate post-hospital period require
a covered level of care, which would be
less likely for other beneficiaries.
In the ANPRM (82 FR 21007), we
discussed some potential adaptations of
the RUG–IV model’s administrative
presumption to accommodate specific
features of the RCS–I model, including
the possible designation of the following
case-mix classifiers for purposes of the
administrative presumption:
• Continued designation of the same
nursing (non-rehabilitation) groups that
currently comprise the Extensive
Services, Special Care High, Special
Care Low, and Clinically Complex
categories under RUG–IV, as those
groups would crosswalk directly from
RUG–IV to the RCS–I model we were
considering;
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• In addition, designation of the most
intensive functional score (14 to 18)
under the RCS–I model’s combined PT/
OT component, as well as the
uppermost comorbidity score (11+)
under its NTA component.
In response, a number of comments
expressed concern that the possible
adaptations of the presumption could
adversely affect access to care for some
beneficiaries. Others questioned
whether using the PT/OT component’s
highest functional score bin (14 to 18)
as a trigger for the presumption would
be appropriate, inasmuch as the
residents that typically require the most
therapy are those with only moderate
functional impairments. In addition,
commenters questioned the discussion’s
inclusion of the RCS–I model’s NTA
component as a possible classifier under
the presumption, as well as its omission
of RCS–I’s SLP component.
Regarding the commenters’ concerns
about access to care, we noted in the
proposed rule that we have indicated in
the ANPRM and in previous rulemaking
that the actual purpose of the level of
care presumption has always been to
afford a streamlined and simplified
administrative procedure for readily
identifying those beneficiaries with the
greatest likelihood of meeting the level
of care criteria; however, we have also
emphasized that in focusing on such
beneficiaries, this approach in no way
serves to disadvantage other
beneficiaries who may also meet the
level of care criteria. As we noted in the
ANPRM, an individual beneficiary’s
inability to qualify for the
administrative presumption would not
in itself serve to disqualify that resident
from receiving SNF coverage. While
such residents are not automatically
presumed to require a skilled level of
care, neither are they automatically
classified as requiring nonskilled care;
rather, any resident who does not
qualify for the presumption would
instead receive an individual level of
care determination using the existing
administrative criteria (82 FR 21007). As
we further explained in the FY 2016
SNF PPS final rule (80 FR 46406,
August 4, 2015), structuring the
presumption in this manner serves
specifically to ensure that the
presumption does not disadvantage
such residents, by providing them with
an individualized level of care
determination that fully considers all
pertinent factors.
As for concerns about the
appropriateness of certain classifiers,
including the possible use of the PT/OT
component’s highest functional score
bin (14 to 18) for this purpose under
RCS–I, we noted in the proposed rule
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that the case-mix classification model
for PT and OT that we were proposing
in connection with the PDPM would
essentially reconfigure the PT/OT
component from the RCS–I model. As
discussed in section V.D.3.b. of the
proposed rule, the proposed PDPM
would divide the RCS–I model’s
combined PT/OT component into two
separate case-mix adjusted components,
under which each resident would be
assigned separate case-mix groups for
PT and OT payment. Those groups
would classify residents based on
clinical category and function score, the
two resident characteristics shown to be
most predictive of PT and OT
utilization.
The proposed rule’s discussion also
cited section III.B.4. of the ANPRM
(‘‘Variable Per Diem Adjustment Factors
and Payment Schedule’’), as well as
section V.D.4. of the proposed rule
itself, which indicated that our initial
analyses revealed that in contrast to the
SLP component—where per diem costs
remain relatively constant over time—
costs for the PT, OT, and NTA
components typically are highest at the
outset and then decline over the course
of the stay. The proposed rule noted that
our research to date continues to show
a strong correlation between the
dependent variables used for the
proposed separate PT and OT
components and a similarity in
predictors, in that the associated costs
for both therapy disciplines remain
highest in the initial (and typically most
intensive) portion of the SNF stay. We
stated that this heightened resource
intensity during the initial part of the
SNF stay under the PT, OT, and NTA
components, in turn, more closely
reflects the distinctive utilization
patterns that served as the original
foundation for the level of care
presumption itself—that is, the
tendency as noted in the FY 2000 SNF
PPS final rule for SNF stays to be at
their most intensive and unstable
immediately following admission as
justifying a presumption of coverage at
the very outset of the SNF stay (64 FR
41667, July 30, 1999). We also stated
that we believe this would make the
most intensive classifiers within each of
these three proposed components wellsuited to serve as clinical proxies for
identifying those beneficiaries with the
most intensive care needs and greatest
likelihood of requiring an SNF level of
care.
Accordingly, for purposes of the
administrative presumption under the
proposed PDPM, we proposed to
continue utilizing the same designated
nursing (non-rehabilitation) categories
under the PDPM as had been used to
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date under RUG–IV. We noted that the
most direct crosswalk between the
existing RUG–IV model and the
proposed PDPM would involve nursing
services, for which, under the proposed
PDPM, each resident would continue to
be classified into one of the groups that
fall within the existing nonrehabilitation RUG–IV categories. (As
explained in section V.D.3.d. of the
proposed rule, while the PDPM would
streamline the total number of nursing
case-mix groups from the current 43
under RUG–IV down to 25 through the
consolidation of similar groups within
individual categories, the overall
number and structure of the nursing
categories themselves would remain the
same.) Under our proposal, effective in
conjunction with the proposed
implementation of the PDPM (that is, as
of October 1, 2019), we stated that the
administrative presumption would
apply to those groups encompassed by
the same nursing categories as have
been designated for this purpose under
the existing RUG–IV model:
• Extensive Services;
• Special Care High;
• Special Care Low; and,
• Clinically Complex.
In addition, along with the continued
use of the RUG–IV nursing categories
above, we also proposed to apply the
administrative presumption using those
other classifiers under the proposed
PDPM that we identified as relating the
most directly to identifying a patient’s
need for skilled care at the outset of the
SNF stay. We proposed to designate
such classifiers for this purpose based
on their ability to fulfill the
administrative presumption’s role as
described in the FY 2000 SNF PPS final
rule (64 FR 41668 through 41669, July
30, 1999)—that is, to identify those
situations that involve a high
probability of the need for skilled care
when taken in combination with the
characteristic tendency for an SNF
resident’s condition to be at its most
unstable and intensive state at the outset
of the SNF stay.
Specifically, we additionally
proposed to designate for this purpose
proposed PT and OT case-mix groups
TB, TC, TD, TF, and TG, the groups
displayed in Table 21 of the proposed
rule that collectively accounted for the
five highest case-mix indexes for PT, as
well as for OT and, thus, would
consistently be associated with the most
resource-intensive care across both of
these therapy disciplines. We also
proposed to designate the uppermost
comorbidity group under the NTA
component, in the belief that this
particular classifier would serve to
identify those cases that are the most
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likely to involve the kind of complex
medication regimen (for example, a
highly intensive drug requiring
specialized expertise to administer, or
an exceptionally large and diverse
assortment of medications posing an
increased risk of adverse drug
interactions) that would require skilled
oversight to manage safely and
effectively. As discussed in section
V.D.3.e of this final rule, the specific
value assigned to the NTA component’s
uppermost comorbidity score (which
was 11+ under the RCS–I model and is
12+ under PDPM) might change once
again in the future if the NTA score bins
are reconfigured to reflect changes in
the resident population and care
practices over time.
We further explained that under this
proposed approach, those residents not
classifying into a case-mix group in one
of the designated nursing RUG
categories under the proposed PDPM on
the initial, 5-day Medicare-required
assessment could nonetheless still
qualify for the administrative
presumption on that assessment by
being placed in one of the designated
case-mix groups for either the PT or OT
components, or by receiving the
uppermost comorbidity score under the
NTA component. We indicated that
these particular case-mix classifiers
would appropriately serve to fulfill the
administrative presumption’s role of
identifying those cases with the highest
probability of requiring an SNF level of
care throughout the initial portion of the
SNF stay. We additionally noted that in
order to help improve the accuracy of
these newly-designated groups in
serving this function, we would
continue to review the new designations
going forward and may make further
adjustments to the proposed
designations over time as we gain actual
operating experience under the new
classification model. As discussed
above, this proposed administrative
presumption mechanism would take
effect October 1, 2019 in conjunction
with the proposed PDPM itself. We
invited comments on our proposed
administrative presumption mechanism
under the proposed PDPM.
Commenters submitted the following
comments related to the proposed rule’s
discussion on our proposed
administrative presumption mechanism
under the proposed PDPM. A discussion
of these comments, along with our
responses, appears below.
Comment: One commenter mistakenly
assumed that under the PDPM, the
administrative presumption would
change from its current use of the
initial, 5-day Medicare-required
assessment to using the initial MDS
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assessment (that is, the OBRA-required
Admission assessment) instead, and
expressed concern that the timeframes
associated with the latter would be
inappropriate for this purpose.
Response: We note that consistent
with the discussion in the proposed rule
(83 FR 21070–21072), the presumption’s
current use of the initial, 5-day
Medicare-required assessment will, in
fact, continue under the PDPM.
Comment: Several commenters urged
us to designate other therapy groups, in
addition to those set forth in the
proposed rule, as appropriately serving
to identify a level of acuity that would
qualify for the presumption. They
equated the omission of a given casemix classifier from the presumption
with a restriction on access and
coverage, and characterized the
individual level of care determinations
that SNFs would routinely conduct
absent the presumption as an added
administrative burden. The commenters
specifically cited as a concern the
proposed rule’s omission of any PT and
OT groups for non-orthopedic
conditions, as well as of any groups at
all from the SLP component. One
commenter took issue with the
proposed rule’s stated rationale for the
omission of SLP (that is, that such
services, unlike PT and OT, remain
relatively constant over time and are not
concentrated in the initial portion of the
stay), noting that nursing services
similarly do not taper off over the
course of the stay and yet have been
utilized under the presumption ever
since its inception. The commenter
pointed out that as with the other
components, it is possible to identify
individual groups within the SLP
component that have relatively high
service intensity. Along with the groups
from the PT and OT components that
were already proposed for designation
under the presumption, the commenter
recommended the designation of several
additional PT and OT groups (that is,
TA, TE, TJ, TK, TN, and TO), as well as
a number of groups (that is, SC, SE, SF,
SH, SI, SJ, SK, and SL) from the SLP
component, and presented these
particular groups as reflecting the most
intensive therapy needs within their
respective clinical categories. The
commenter also suggested that the
proposed designation of the NTA’s
uppermost comorbidity group might not
actually be necessary, as anyone
assigned to that group would likely
qualify for the presumption already,
based on their classification under the
nursing component. Another
commenter recommended that all of the
PT and OT groups in the Other
Orthopedic category should be
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designated for use under the
presumption, and pointed out that
under PDPM, the NTA component’s
uppermost comorbidity score is actually
12+ rather than 11+ as indicated in the
proposed rule.
Response: We agree with the
commenters that the administrative
presumption should encompass all of
the groups that serve to fulfill the basic
purpose of this provision—that is,
readily identifying those beneficiaries
with the greatest likelihood of meeting
the level of care criteria. With one
exception, we also concur with the
commenters’ analysis that the additional
therapy groups recommended for
designation under the presumption
would appropriately serve to reflect the
most intensive therapy needs within
their respective clinical categories, as
evidenced by the relatively high CMI
that is associated with each of the
recommended groups. However,
regarding the recommendation to
designate all PT and OT groups in the
Other Orthopedic category, we note that
one such group, TH, has a significantly
lower CMI than all of the other
recommended groups and, thus, is not
being selected for designation under the
presumption. Accordingly, we are
adopting the remainder of the
commenters’ recommendations
regarding the designation of additional
groups from the PT and OT
components, as well as all of the
recommended groups from the SLP
component. In addition, we are
finalizing as proposed the use of the
designated classifiers from the nursing
component along with the uppermost
comorbidity score of the NTA
component. Regarding the latter, we
appreciate the comment pointing out
that the specific value assigned to the
NTA component’s uppermost
comorbidity score under the PDPM is,
in fact, 12+ and not 11+ as incorrectly
indicated in the proposed rule’s
discussion of the presumption. We also
appreciate another commenter’s concern
that the proposed NTA classifier might
in some instances prove redundant in
relation to the nursing groups; however,
because we believe, as stated above, that
the presumption should encompass all
appropriate classifiers, we are finalizing
the use of this particular classifier as we
believe this particular classifier would
serve to identify those cases that are the
most likely to involve the kind of
complex medication regimen that would
require skilled oversight to manage
safely and effectively. We also will
evaluate the use of this classifier in
actual operation and confirm whether
there are instances in which it
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appropriately serves this function
independently of the nursing groups. As
we indicated in the proposed rule (83
FR 21072) regarding the NTA and other
components, we will continue to review
the new designations going forward and
make further adjustments over time as
we gain actual operating experience
under the new classification model.
However, we would also note in this
context that we do not share and cannot
support the view that would essentially
equate a given case-mix classifier’s nondesignation under the administrative
presumption with a restriction on access
or a denial of SNF coverage, or an
increase in administrative burden. SNF
coverage ultimately is based not on
whether a beneficiary is assigned one of
the designated classifiers, but on
whether the SNF level of care criteria
are met. As further explained in the
proposed rule (83 FR 21071), the
purpose of the administrative
presumption is solely to afford a
streamlined and simplified
administrative procedure for readily
identifying those beneficiaries with the
greatest likelihood of meeting the level
of care criteria, which in no way serves
to disadvantage other beneficiaries who
may also meet the level of care criteria.
In fact, far from creating an overall
increase in administrative burden from
the non-designated classifiers, we
expect that the presumption’s
framework of streamlined and
simplified initial determinations for the
designated classifiers will actually serve
to free up staff resources, which can
then be used for assessing coverage in
the other cases.
Accordingly, for the reasons set forth
in the proposed rule and in this final
rule, we are finalizing our proposed
classifiers for purposes of applying the
administrative presumption under the
PDPM with the following modifications.
As discussed above, we are adding the
following PT and OT classifiers to those
we proposed: TA, TE, TJ, TK, TN and
TO. We are also adding the following 8
SLP classifiers: SC, SE, SF, SH, SI, SJ,
SK, and SL. Thus, effective October 1,
2019, we are designating the classifiers
shown below for purposes of the
administrative presumption under the
PDPM:
• The case-mix classifiers in the
following nursing categories: Extensive
Services, Special Care High, Special
Care Low, and Clinically Complex;
• The following PT and OT groups:
TA, TB, TC, TD, TE, TF, TG, TJ, TK, TN,
and TO;
• The following SLP groups: SC, SE,
SF, SH, SI, SJ, SK, and SL; and
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• The NTA component’s uppermost
comorbidity group (which, as finalized
in this final rule, is 12+).
H. Effect of PDPM on Temporary AIDS
Add-On Payment
As discussed in section V.I. of the
proposed rule (83 FR 21072) and also in
section III.E. of the ANPRM (82 FR
21007), section 511(a) of the MMA
amended section 1888(e)(12) of the Act
to provide for a temporary increase of
128 percent in the PPS per diem
payment for any SNF residents with
Acquired Immune Deficiency Syndrome
(AIDS), effective with services furnished
on or after October 1, 2004. This special
add-on for SNF residents with AIDS was
intended to be of limited duration, as
the MMA legislation specified that it
was to remain in effect only until the
Secretary certifies that there is an
appropriate adjustment in the case mix
to compensate for the increased costs
associated with such residents.
The temporary add-on for SNF
residents with AIDS is also discussed in
Program Transmittal #160 (Change
Request #3291), issued on April 30,
2004, which is available online at
www.cms.gov/transmittals/downloads/
r160cp.pdf. In the SNF PPS final rule for
FY 2010 (74 FR 40288, August 11,
2009), we did not address this
certification in that final rule’s
implementation of the case-mix
refinements for RUG–IV, thus allowing
the add-on payment required by section
511 of the MMA to remain in effect for
the time being.
In the House Ways and Means
Committee Report that accompanied the
MMA, the explanation of the MMA’s
temporary AIDS adjustment notes the
following under Reason for Change:
‘‘According to prior work by the Urban
Institute, AIDS patients have much
higher costs than other patients in the
same resource utilization groups in
skilled nursing facilities. The
adjustment is based on that data
analysis’’ (H. Rep. No. 108–178, Part 2
at 221). The data analysis from that
February 2001 Urban Institute study
(entitled ‘‘Medicare Payments for
Patients with HIV/AIDS in Skilled
Nursing Facilities’’), in turn, had been
conducted under a Report to Congress
mandated under a predecessor
provision, section 105 of the BBRA.
This earlier BBRA provision, which
ultimately was superseded by the
temporary AIDS add-on provision
required by the MMA, had amended
section 1888(e)(12) of the Act to provide
for special consideration for facilities
serving specialized patient populations
(that is, those who are ‘‘immunocompromised secondary to an infectious
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disease, with specific diagnoses as
specified by the Secretary’’).
As we noted in the ANPRM and in the
proposed rule, at that point over a
decade and a half had elapsed since the
Urban Institute conducted its study on
AIDS patients in SNFs, a period that has
seen major advances in the state of
medical practice in treating this
condition. We stated that these
advances have notably included the
introduction of powerful new drugs and
innovative prescription regimens that
have dramatically improved the ability
to manage the viral load (the amount of
human immunodeficiency virus (HIV)
in the blood). We noted that the
decrease in viral load secondary to
medications has contributed to a shift
from intensive nursing services for
AIDS-related illnesses to an increase in
antiretroviral therapy. We further stated
that this phenomenon, in turn, is
reflected in our recent analysis of
differences in SNF resource utilization,
which indicates that while the overall
historical disparity in costs between
AIDS and non-AIDS patients has not
entirely disappeared, that disparity is
now far greater with regard to drugs
than it is for nursing. Specifically, as
explained in the proposed rule, NTA
costs per day for residents with AIDS
were 151 percent higher than those for
other residents while the difference in
wage-weighted nursing staff time
between the two groups was only 19
percent, as discussed in section 3.8.3. of
the SNF PMR technical report (available
at https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html), which
the ANPRM referenced for further
information on the underlying data
analysis (82 FR 21007 through 21008).
In the ANPRM, we also described how
the RCS–I model would account for
those NTA costs, including drugs,
which specifically relate to residents
with AIDS (82 FR 20997 through
20999). We additionally discussed in
the ANPRM the possibility of making a
specific 19 percent AIDS adjustment as
part of the case-mix adjustment of the
nursing component (82 FR 20995
through 20997). We further expressed
our belief in the ANPRM (82 FR 21008)
that when taken collectively, these
adjustments would appropriately serve
to justify issuing the certification
prescribed under section 511(a) of the
MMA, which would permit the MMA’s
existing, temporary AIDS add-on to be
replaced by a permanent adjustment in
the case mix that appropriately
compensates for the increased costs
associated with these residents.
As discussed in the proposed rule, in
response to the ANPRM, we received
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comments expressing concerns that a
projected 40 percent drop in overall
payments for SNF residents with AIDS
under the RCS–I model could adversely
affect access to care for this patient
population. Regarding those concerns,
we noted in the proposed rule that the
special add-on for SNF residents with
AIDS itself was never meant to be
permanent, and does not serve as a
specific benchmark for use in
establishing either the appropriate
methodology or level of payment for
this patient population. Rather, we
stated that, as discussed in the ANPRM,
it was designed to be only a temporary
measure, representing a general
approximation that reflected the current
state of research and clinical practice at
the time (82 FR 21007 through 21008).
As such, we stated that the special addon would not account for the significant
changes in the care and treatment of this
condition that have occurred over the
intervening years. We further noted that
as a simple across-the-board multiplier,
the MMA adjustment by its very nature
is not accurately targeted at those
particular rate components that actually
account for the disparity in cost
between AIDS patients and others.
As discussed in section V.D.3.e. of the
proposed rule (83 FR 21058), our
updated investigations into the
adequacy of payments under the
proposed PDPM for residents with HIV/
AIDS indicated that the four proposed
ancillary payment components (PT, OT,
SLP, and NTA) would adequately
reimburse ancillary costs associated
with HIV/AIDS residents (see section
3.8.2. of the SNF PDPM technical report,
available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/therapyresearch.
html). Therefore, we stated that we
believe it would be appropriate to issue
the prescribed certification under
section 511(a) of the MMA on the basis
of the proposed PDPM’s ancillary casemix adjustment alone, as effectively
providing the required appropriate
adjustment in the case mix to
compensate for the increased costs
associated with such residents.
However, to further ensure that the
proposed PDPM would account as fully
as possible for any remaining disparity
with regard to nursing costs, as
discussed in section V.D.3.d. of the
proposed rule (83 FR 21055), we
additionally proposed to include a
specific AIDS adjustment as part of the
case-mix adjustment of the nursing
component. As discussed in section
V.D.3.d. of the proposed rule, we used
the STRIVE data to quantify the effects
of HIV/AIDS diagnosis on nursing
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resource use. Regression analyses found
that wage-weighted nursing staff time is
18 percent higher for residents with
HIV/AIDS, controlling for the nonrehabilitation RUG of the resident. We
noted that this figure is slightly lower
than the 19 percent increase in wageweighted nursing staff time reported in
the ANPRM and the SNF PRM technical
report because the updated investigation
uses a FY 2017 study population and is
based on the PDPM case-mix groups,
while the earlier analysis was based on
a FY 2014 study population and the
RCS–I case-mix groups. More
information on this analysis can be
found in section 3.8.2. of the SNF PDPM
technical report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html). Thus, we
proposed an 18 percent increase in
payment for the nursing component for
residents with HIV/AIDS under the
proposed PDPM to account for the
increased nursing costs for such
residents. We stated that similar to the
proposed NTA adjustment for residents
with HIV/AIDS, this adjustment would
be identified by ICD–10–CM code B20
on the SNF claim and would be
processed through the PRICER software
used by CMS to set the appropriate
payment rate for a resident’s SNF stay.
We also explained (83 FR 21073) that
the 18 percent adjustment would be
applied to the unadjusted base rate for
the nursing component, and then this
amount would be further case-mix
adjusted per the resident’s PDPM
nursing classification.
In the proposed rule, we expressed
the belief that when taken collectively,
these adjustments under the proposed
PDPM would appropriately serve to
justify issuing the certification
prescribed under section 511(a) of the
MMA effective with the proposed
conversion to the PDPM on October 1,
2019, thus permitting the MMA’s
existing, temporary AIDS add-on to be
replaced by a permanent adjustment in
the case mix (as proposed under the
PDPM) that appropriately compensates
for the increased costs associated with
these residents, and we invited
comments on this proposal. At the same
time, we acknowledged that even with
an accurately targeted model that
compensates for the increased costs of
SNF residents with AIDS, an abrupt
conversion to an altogether different
payment methodology might
nevertheless be potentially disruptive
for facilities, particularly those that
serve a significant number of patients
with AIDS and may have become
accustomed to operating under the
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existing payment methodology for those
patients. Accordingly, we also invited
comments on possible ways to help
mitigate any potential disruption
stemming from the proposed
replacement of the special add-on
payment with the permanent case-mix
adjustments for SNF residents with
AIDS under the proposed PDPM.
Commenters submitted the following
comments related to the proposed rule’s
discussion on the Effect of the Proposed
PDPM on Temporary AIDS Add-on
Payment. A discussion of these
comments, along with our responses,
appears below.
Comment: Several commenters
expressed concern about the adequacy
of payments under the PDPM for SNF
residents with AIDS, once again citing
the projected decrease in payments
relative to the RUG–IV model (which
currently includes the MMA’s
temporary 128 percent adjustment for
such residents). One commenter
specifically questioned the adequacy of
the PDPM’s NTA component in
addressing the drug costs of AIDS
patients, and cited a 2017 MedPAC
report that characterized the SNF PPS’s
NTA payments as poorly targeted.
Response: We note that as with the
previous comments on the
corresponding aspect of the ANPRM,
most of the commenters’ concerns in
this area stemmed from comparing the
projected payment levels under the
PDPM to those under the existing RUG–
IV model’s temporary 128 percent AIDS
adjustment, and focused specifically on
the contrast in payment levels between
the two models. However, as noted
above and explained in the proposed
rule (83 FR 21073), it is not appropriate
to use the MMA adjustment as a
benchmark in assessing the accuracy of
the PDPM’s payment methodology, as
the special add-on for SNF residents
with AIDS itself was never meant to be
permanent, and does not serve as a
specific benchmark for use in
establishing either the appropriate
methodology or level of payment for
this patient population. Rather, it was
designed to be only a temporary
measure, representing a general
approximation that reflected the current
state of research and clinical practice at
the time. As such, the special add-on
would not account for the significant
changes in the care and treatment of this
condition that have occurred over the
intervening years. Moreover, as a simple
across-the-board multiplier, the MMA
adjustment by its very nature is not
accurately targeted at those particular
rate components that actually account
for the disparity in cost between AIDS
patients and others.
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Regarding that final point about the
imprecision of applying an across-theboard multiplier in this context, we
further noted in the proposed rule (83
FR 20180) that our research found that
HIV/AIDS was associated with a
negative and statistically significant
decrease in PT, OT and SLP costs per
day. This means inherently that, to the
extent that the existing add-on is
applied against the full SNF PPS per
diem payment, the magnitude of the
add-on payment increases with
increases in therapy payment, which
conflicts with the data described above
regarding the relationship between
therapy costs and the presence of an
AIDS diagnosis. As a result, maintaining
the current add-on would create an
inconsistency between how SNF
payments would be made and the data
regarding AIDS diagnoses and resident
therapy costs.
Furthermore, to the extent that the
RUG–IV model’s case-mix classification
system may have included inherent
incentives toward the overprovision of
therapy services, the MMA adjustment’s
operation as an across-the-board
multiplier would actually serve to
magnify the effects of any such
incentives, by inflating the resulting
payment levels even further beyond the
patient’s actual therapy care needs. In
this context, we note that the specific
standard prescribed for the Secretary’s
required certification under section
511(a) of the MMA is that ‘‘. . . there is
an appropriate adjustment in the case
mix . . . to compensate for the
increased costs’’ associated with SNF
residents with AIDS. As set forth in the
proposed rule, we believe that the
PDPM’s payment methodology for
patients with AIDS clearly meets this
statutory standard of appropriately
accounting for the actual costs incurred
in caring for such patients. In fact, we
believe it provides a far more accurate
and current accounting of those costs
than the temporary MMA adjustment
that it would replace, which represents
only a very broad approximation that
was developed at a time when the
treatment regimens for this condition
differed dramatically from what they are
currently. Finally, it is worth noting that
the cited 2017 MedPAC report, which
characterized the SNF PPS’s NTA
payments as poorly targeted, reflected
that the SNF PPS has always included
NTA costs within its nursing
component rather than accounting for
them separately, and the longstanding
concerns about that approach were, in
fact, the very impetus behind our
development of a separate component
for NTA costs under the PDPM.
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Accordingly, for the reasons
discussed in the proposed rule and in
this final rule, the Secretary is certifying
that there is an appropriate adjustment
in the PDPM to compensate for the
increased costs associated with
residents with AIDS, and thus we are
finalizing our proposal without
modification to replace the temporary
MMA add-on with the PDPM’s
permanent adjustment in the case mix
that appropriately accounts for the
increased costs of patients with AIDS,
effective with the conversion to the
PDPM on October 1, 2019.
I. Potential Impacts of Implementing the
PDPM and Parity Adjustment
This section outlines the projected
impacts of implementing the PDPM
effective October 1, 2019 under the SNF
PPS and the related policies finalized in
sections V of this final rule that would
be effective in conjunction with the
PDPM. This impact analysis makes a
series of assumptions, as described
below (as were discussed in the
proposed rule (83 FR 21073 through
21080)). First, the impacts presented
here assume consistent provider
behavior in terms of how care is
provided under RUG–IV and how care
might be provided under the PDPM, as
we do not make any attempt to
anticipate or predict provider reactions
to the implementation of the PDPM.
That being said, we acknowledge the
possibility that implementing the PDPM
could substantially affect resident care
and coding behaviors. Most notably,
based on the concerns raised during a
number of TEPs, we acknowledge the
possibility that, as therapy payments
under the PDPM would not have the
same connection to service provision as
they do under RUG–IV, it is possible
that some providers may choose to
reduce their provision of therapy
services to increase margins under the
PDPM. However, we do not have any
basis on which to assume the
approximate nature or magnitude of
these behavioral responses, nor have we
received any sufficiently specific
guidance on the likely nature or
magnitude of behavioral responses from
ANPRM commenters, TEP panelists, or
other sources of feedback. As a result,
lacking an appropriate basis to forecast
behavioral responses, we do not adjust
our analyses of resident and provider
impacts discussed in this section for
projected changes in provider behavior.
However, we do intend to monitor
behavior which may occur in response
to the implementation of PDPM, and
may consider proposing policies in the
future to address such behaviors to the
extent determined appropriate.
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Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
Additionally, we acknowledge that a
number of states utilize some form of
the RUG–IV case-mix classification
system as part of their Medicaid
programs and that any change in
Medicare policy can have an impact on
state programs. Again, we do not have
any basis on which to assume the
approximate nature or magnitude of
these responses, for the same reasons
cited above. Additionally, we do not
expect impacts on state Medicaid
programs resulting from PDPM
implementation to have a notable
impact on payments for Medicarecovered SNF stays, which are the basis
for the impact analyses discussed in this
section. Therefore, we do not consider
possible changes to state Medicaid
programs when conducting these
analyses. We invited comments on our
assumptions that behavior would
remain unchanged under the proposed
PDPM and that changes in state
Medicaid programs resulting from
PDPM implementation would not have
a notable impact on payments for
Medicare-covered SNF stays. We also
invited comment on the impact of these
policy proposals on state Medicaid
programs. These comments are
addressed among the general comments
in section V.A. of this final rule.
As with prior system transitions, we
proposed to implement the PDPM casemix system, along with the other policy
changes discussed throughout this
section, in a budget neutral manner
through application of a parity
adjustment to the case-mix weights
under the proposed PDPM, as further
discussed below. We proposed to
implement the PDPM in a budget
neutral manner because, as with prior
system transitions, in proposing changes
to the case-mix methodology, we do not
intend to change the aggregate amount
of Medicare payments to SNFs. Rather,
we aim to utilize a case-mix
methodology to classify residents in
such a manner as to best ensure that
payments made for specific residents
are an accurate reflection of resource
utilization without introducing
potential incentives which could
encourage inappropriate care delivery,
as we believe may exist under the
current case-mix methodology.
Therefore, the impact analysis presented
here assumes implementation of these
proposed changes in a budget neutral
manner. We invited comments on the
proposal, as further discussed below, to
implement the PDPM in a budget
neutral manner. In addition, we
solicited comment on whether it would
be appropriate to implement the
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Jkt 244001
proposed PDPM in a manner that is not
budget neutral.
As discussed above, the impact
analysis presented here assumes
implementation of these changes in a
budget neutral manner without a
behavioral change. The prior sections
describe how case-mix weights are set to
reflect relative resource use for each
case-mix group. We stated in the
proposed rule that the proposed PDPM
payment before application of a parity
adjustment would be calculated using
the unadjusted CMI for each
component, the variable per diem
payment adjustment schedule, the
unadjusted urban and rural federal per
diem rates shown in Tables 12 and 13,
the labor-related share, and the
geographic wage indexes. In applying a
parity adjustment to the case-mix
weights, we stated in the proposed rule
that we would maintain the relative
value of each CMI but would multiply
every CMI by a ratio to achieve parity
in overall SNF PPS payments under the
PDPM and under the RUG–IV case-mix
model. The parity adjustment multiplier
was calculated through the following
steps, as described in the proposed rule
(83 FR 21074). First, we calculated
RUG–IV total payment. Total RUG–IV
payments were calculated by adding
total allowed amounts across all FY
2017 SNF claims. The total allowed
amount in the study population was the
summation of Medicare and nonMedicare payments for Medicarecovered days. More specifically, it was
the sum of Medicare claim payment
amount, National Claim History (NCH)
primary payer claim paid amount, NCH
beneficiary inpatient deductible
amount, NCH beneficiary Part A
coinsurance liability amount, and NCH
beneficiary blood deductible liability
amount. Second, we calculated what
total payment would have been under
the proposed PDPM in FY 2017 before
application of the parity adjustment.
Total estimated payments under PDPM
were calculated by summing the
predicted payment for each case-mix
component together for all FY 2017 SNF
stays. This represented the total allowed
amount if PDPM had been in place in
FY 2017. Total estimated FY 2017
payments under the PDPM were
calculated using resident information
from FY 2017 SNF claims, the MDS
assessment, and other Medicare claims,
as well as the unadjusted CMI for each
component, the variable per diem
payment adjustment schedule, the
unadjusted urban and rural federal per
diem rates shown in Tables 12 and 13,
the labor-related share, and the
geographic wage indexes. After
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calculating total actual RUG–IV
payments and total estimated case-mixrelated PDPM payments, we subtracted
non-case-mix component payments
from total RUG–IV payments, as this
component does not change across
systems. This subtraction did not
include the temporary add-on for
residents with HIV/AIDS in the RUG–IV
system, which PDPM replaces with
additional payments for residents with
HIV/AIDS through the NTA and nursing
components (as discussed in section V.I.
of the proposed rule and section V.H. of
this final rule). By retaining the portion
of non-case-mix component payments
associated with the temporary HIV/
AIDS add-on in total RUG–IV payments,
all payments associated with the add-on
under RUG–IV were re-allocated to the
case-mix-adjusted components in
PDPM. This was appropriate because, as
discussed, under the PDPM, additional
payments for residents with HIV/AIDS
are made exclusively through the casemix-adjusted components (that is, the
nursing and NTA components). Lastly,
in calculating budget neutrality, we set
total estimated case-mix-related
payment under PDPM such that it
equals total allowable Medicare
payments under RUG–IV. To do this, we
divided the remaining total RUG–IV
payments over the remaining total
estimated PDPM payments prior to the
parity adjustment. This division yielded
a ratio (parity adjustment) of 1.46 by
which the PDPM CMIs were multiplied
so that total estimated payments under
the PDPM would be equal to total actual
payments under RUG–IV, assuming no
changes in the population, provider
behavior, and coding. We stated in the
proposed rule that, if this parity
adjustment had not been applied, total
estimated payments under the PDPM
would be 46 percent lower than total
actual payments under RUG–IV,
therefore the implementation of the
PDPM would not be budget neutral.
More details regarding this calculation
and analysis are described in section
3.11.2. of the SNF PDPM technical
report (available at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/
therapyresearch.html). The impact
analysis presented in this section (and
in the proposed rule) focuses on how
payments under the PDPM would be reallocated across different resident
groups and among different facility
types, assuming implementation in a
budget neutral manner.
The projected resident-level impacts
are presented in Table 37. The first
column identifies different resident
subpopulations and the second column
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Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
shows what percent of SNF stays in FY
2017 are represented by the given
subpopulation. The third column shows
the projected change in total payments
for residents in a given subpopulation,
represented as a percentage change in
actual FY 2017 payments made for that
subpopulation under RUG–IV versus
estimated payments which would have
been made to that subpopulation in FY
2017 had the PDPM been in place. Total
RUG–IV payments are calculated by
adding total allowed amounts across all
FY 2017 SNF claims associated with a
resident subpopulation. The total
allowed amount in the study population
is the summation of Medicare and nonMedicare payments for Medicarecovered days. More specifically, it is the
summation of Medicare claim payment
amount, NCH primary payer claim paid
amount, NCH beneficiary inpatient
deductible amount, NCH beneficiary
Part A coinsurance liability amount, and
NCH beneficiary blood deductible
liability amount. Payments
corresponding to the non-case-mix
component are subtracted from the
RUG–IV total payments, not including
the portion of non-case-mix payments
corresponding to the temporary add-on
for residents with HIV/AIDS. Total
estimated payments under PDPM are
calculated by summing the predicted
payment for each case-mix component
together for all FY 2017 SNF stays
associated with a resident
subpopulation. Positive changes in this
column represent a projected positive
shift in payments for that subpopulation
under the PDPM, while negative
changes in this column represent
projected negative shifts in payment for
that subpopulation. More information
on the construction of current payments
under RUG–IV and payments under the
PDPM for purposes of this impact
analysis can be found in section 3.12. of
the SNF PDPM technical report
(available at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/
therapyresearch.html). Based on the
data presented in Table 37, we observe
that the most significant shift in
payments created by implementation of
the PDPM would be to redirect
payments away from residents who are
receiving very high amounts of therapy
under the current SNF PPS, which
strongly incentivizes the provision of
therapy, to residents with more complex
clinical needs. For example, we project
that for residents whose most common
39257
therapy level is RU (ultra-high
therapy)—the highest therapy level,
there would be a reduction in associated
payments of 8.4 percent, while
payments for residents currently
classified as non-rehabilitation would
increase by 50.5 percent. Other resident
types for which there may be higher
relative payments under the PDPM are:
Residents who have high NTA costs,
receive extensive services, are dually
enrolled in Medicare and Medicaid, use
IV medication, have ESRD, diabetes, or
a wound infection, receive amputation/
prosthesis care, and/or have longer prior
inpatient stays. Additionally, we
received several comments in response
to the 2017 ANPRM requesting that we
estimate the impact of RCS–1 on the
following potentially vulnerable
subpopulations: Residents with
addictions, bleeding disorders,
behavioral issues, chronic neurological
conditions, and bariatric care. In
response to these comments, we added
these subpopulations to our PDPM
impact analysis. Table 37 shows that the
PDPM is projected to increase the
proportion of total payment associated
with each of those subpopulations.
TABLE 37—PDPM IMPACT ANALYSIS, RESIDENT-LEVEL
Percent of
stays
amozie on DSK3GDR082PROD with RULES2
Resident characteristics
All Stays ...................................................................................................................................................................
Sex:
Female ..............................................................................................................................................................
Male ..................................................................................................................................................................
Age:
Below 65 years .................................................................................................................................................
65–74 years ......................................................................................................................................................
75–84 years ......................................................................................................................................................
85–89 years ......................................................................................................................................................
Over 90 years ...................................................................................................................................................
Race/Ethnicity:
White .................................................................................................................................................................
Black .................................................................................................................................................................
Hispanic ............................................................................................................................................................
Asian .................................................................................................................................................................
Native American ...............................................................................................................................................
Other or Unknown ............................................................................................................................................
Medicare/Medicaid Dual Status:
Dually Enrolled .................................................................................................................................................
Not Dually Enrolled ...........................................................................................................................................
Original Reason for Medicare Enrollment:
Aged .................................................................................................................................................................
Disabled ............................................................................................................................................................
ESRD ................................................................................................................................................................
Utilization Days:
1–15 days .........................................................................................................................................................
16–30 days .......................................................................................................................................................
31+ days ...........................................................................................................................................................
Utilization Days = 100:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Length of Prior Inpatient Stay:
0–2 days ...........................................................................................................................................................
3 days ...............................................................................................................................................................
4–30 days .........................................................................................................................................................
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Percent
change
100.0
0.0
60.3
39.7
¥0.8
1.2
10.3
24.1
32.5
17.6
15.6
7.2
3.1
¥0.4
¥3.1
¥4.3
83.8
11.2
1.7
1.3
0.5
1.5
¥0.2
0.8
0.9
¥0.6
7.1
0.8
34.7
65.3
3.3
¥2.1
74.6
24.5
0.9
¥1.7
4.8
10.5
35.4
33.8
30.9
13.7
0.0
¥2.5
98.4
1.6
0.1
¥1.9
2.2
22.5
73.6
1.3
¥3.3
0.7
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Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
TABLE 37—PDPM IMPACT ANALYSIS, RESIDENT-LEVEL—Continued
Percent of
stays
amozie on DSK3GDR082PROD with RULES2
Resident characteristics
31+ days ...........................................................................................................................................................
Most Common Therapy Level:
RU .....................................................................................................................................................................
RV .....................................................................................................................................................................
RH .....................................................................................................................................................................
RM ....................................................................................................................................................................
RL .....................................................................................................................................................................
Non-Rehab .......................................................................................................................................................
Number of Therapy Disciplines Used:
0 ........................................................................................................................................................................
1 ........................................................................................................................................................................
2 ........................................................................................................................................................................
3 ........................................................................................................................................................................
Physical Therapy Utilization:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Occupational Therapy Utilization:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Speech Language Pathology Utilization:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Therapy Utilization:
PT+OT+SLP .....................................................................................................................................................
PT+OT Only .....................................................................................................................................................
PT+SLP Only ....................................................................................................................................................
OT+SLP Only ...................................................................................................................................................
PT Only .............................................................................................................................................................
OT Only ............................................................................................................................................................
SLP Only ..........................................................................................................................................................
Non-Therapy .....................................................................................................................................................
NTA Costs ($):
0–10 ..................................................................................................................................................................
10–50 ................................................................................................................................................................
50–150 ..............................................................................................................................................................
150+ ..................................................................................................................................................................
NTA Comorbidity Score:
0 ........................................................................................................................................................................
1–2 ....................................................................................................................................................................
3–5 ....................................................................................................................................................................
6–8 ....................................................................................................................................................................
9–11 ..................................................................................................................................................................
12+ ....................................................................................................................................................................
Extensive Services Level:
Tracheostomy and Ventilator/Respirator ..........................................................................................................
Tracheostomy or Ventilator/Respirator .............................................................................................................
Infection Isolation ..............................................................................................................................................
Neither ..............................................................................................................................................................
CFS Level:
Cognitively Intact ..............................................................................................................................................
Mildly Impaired .................................................................................................................................................
Moderately Impaired .........................................................................................................................................
Severely Impaired .............................................................................................................................................
Clinical Category:
Acute Infections ................................................................................................................................................
Acute Neurologic ..............................................................................................................................................
Cancer ..............................................................................................................................................................
Cardiovascular and Coagulations ....................................................................................................................
Major Joint Replacement or Spinal Surgery ....................................................................................................
Medical Management .......................................................................................................................................
Non-Orthopedic Surgery ...................................................................................................................................
Non-Surgical Orthopedic/Musculoskeletal ........................................................................................................
Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery) .....................................................
Pulmonary .........................................................................................................................................................
Level of Complications in MS–DRG of Prior Inpatient Stay:
No Complication ...............................................................................................................................................
CC/MCC ...........................................................................................................................................................
Stroke:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
HIV/AIDS:
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E:\FR\FM\08AUR2.SGM
08AUR2
Percent
change
1.7
6.7
58.4
22.4
6.8
3.3
0.1
9.1
¥8.4
11.4
27.4
41.1
67.5
50.5
2.3
2.4
51.6
43.7
63.1
44.2
1.6
¥3.1
3.7
96.3
50.9
¥0.7
4.5
95.5
47.7
¥0.8
55.0
45.0
2.8
¥2.5
43.7
50.8
0.4
0.4
1.3
0.6
0.5
2.3
¥3.1
1.3
27.3
30.1
41.3
47.9
46.8
63.1
13.7
44.5
32.2
9.6
¥3.5
¥3.2
4.2
18.7
23.5
30.5
31.0
9.9
3.6
1.4
¥10.4
¥4.7
4.0
15.0
24.4
27.2
0.3
0.6
1.1
98.0
22.2
7.3
9.1
¥0.3
58.5
20.7
16.8
3.9
¥0.3
¥0.2
¥0.7
8.8
6.5
6.4
4.6
9.8
8.6
30.4
10.8
5.9
8.9
8.1
3.4
¥3.7
¥3.2
0.5
¥2.1
0.0
5.7
¥6.1
¥2.4
5.4
35.8
64.2
¥3.1
1.7
90.9
9.1
0.0
0.3
Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
39259
TABLE 37—PDPM IMPACT ANALYSIS, RESIDENT-LEVEL—Continued
Percent of
stays
Resident characteristics
amozie on DSK3GDR082PROD with RULES2
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
IV Medication:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Diabetes:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Wound Infection:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Amputation/Prosthesis Care:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Presence of Dementia:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
MDS Alzheimer’s:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Unknown ...........................................................................................................................................................
Presence of Addictions:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Presence of Bleeding Disorders:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Presence of Behavioral Issues:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Presence of Chronic Neurological Conditions:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
Presence of Bariatric Care:
No .....................................................................................................................................................................
Yes ....................................................................................................................................................................
The projected provider-level impacts
are presented in Table 38. The first
column identifies different facility
subpopulations and the second column
shows what percentage of SNFs in FY
2017 are represented by the given
subpopulation. The third column shows
the projected change in total payments
for facilities in a given subpopulation,
represented as a percentage change in
actual FY 2017 payments made for that
subpopulation under RUG–IV versus
estimated payments which would have
been made to that subpopulation in FY
2017 had the PDPM been in place. Total
RUG–IV payments are calculated by
adding total allowed amounts across all
FY 2017 SNF claims associated with a
facility subpopulation. The total
allowed amount in the study population
is the summation of Medicare and nonMedicare payments for Medicarecovered days. More specifically, it is the
summation of Medicare claim payment
amount, NCH primary payer claim paid
amount, NCH beneficiary inpatient
deductible amount, NCH beneficiary
Part A coinsurance liability amount, and
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NCH beneficiary blood deductible
liability amount. Payments
corresponding to the non-case-mix
component are subtracted from the
RUG–IV total payments, not including
the portion of non-case-mix payments
corresponding to the temporary add-on
for residents with HIV/AIDS. Total
estimated payments under PDPM are
calculated by summing the predicted
payment for each case-mix component
together for all FY 2017 SNF stays
associated with a facility subpopulation.
Positive changes in this column
represent a projected positive shift in
payments for that subpopulation under
the PDPM, while negative changes in
this column represent projected
negative shifts in payment for that
subpopulation. More information on the
construction of current payments under
RUG–IV and payments under the PDPM
for purposes of this impact analysis can
be found in section 3.12. of the SNF
PDPM technical report (available at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
SNFPPS/therapyresearch.html). Based
PO 00000
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Sfmt 4700
Percent
change
99.7
0.3
0.3
¥40.5
91.7
8.3
¥2.1
23.5
64.0
36.0
¥3.0
5.4
98.9
1.1
¥0.3
22.2
100.0
0.0
0.0
6.4
70.9
29.1
0.5
¥1.2
95.2
4.8
0.0
0.0
¥0.3
5.0
94.6
5.4
¥0.1
1.8
90.9
9.1
¥0.1
1.5
53.1
46.9
¥0.9
1.0
74.4
25.6
¥0.2
0.6
91.3
8.7
¥0.6
6.5
on the data presented in Table 38, we
observe that the most significant shift in
Medicare payments created by
implementation of the PDPM would be
from facilities with a high proportion of
rehabilitation residents (particularly
facilities with high proportions of UltraHigh Rehabilitation residents) to
facilities with high proportions of nonrehabilitation residents. We project that
payments to facilities that bill 0 to 10
percent of utilization days as RU (ultrahigh rehabilitation) would increase an
estimated 27.6 percent under the PDPM
while facilities that bill 90 to 100
percent of utilization days as RU would
see an estimated decrease in payments
of 9.8 percent. Other facility types that
may see higher relative payments under
the PDPM are small facilities, non-profit
facilities, government-owned facilities,
and hospital-based and swing-bed
facilities.
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39260
Federal Register / Vol. 83, No. 153 / Wednesday, August 8, 2018 / Rules and Regulations
TABLE 38—PDPM IMPACT ANALYSIS, FACILITY-LEVEL
Percent of
providers
amozie on DSK3GDR082PROD with RULES2
Provider characteristics
All Stays ............................................................................................................................................................
Ownership:
For profit ...........................................................................................................................................................
Non-profit ..........................................................................................................................................................
Government ......................................................................................................................................................
Number of Certified SNF Beds:
0–49 ..................................................................................................................................................................
50–99 ................................................................................................................................................................
100–149 ............................................................................................................................................................
150–199 ............................................................................................................................................................
200+ ..................................................................................................................................................................
Location:
Urban ................................................................................................................................................................
Rural .................................................................................................................................................................
Facility Type:
Freestanding .....................................................................................................................................................
Hospital-Based/Swing Bed ...............................................................................................................................
Location by Facility Type:
Urban | Freestanding:
Urban | Hospital-Based/Swing Bed ..................................................................................................................
Rural | Freestanding .........................................................................................................................................
Rural | Hospital-Based/Swing Bed ...................................................................................................................
Census Division:
New England ....................................................................................................................................................
Middle Atlantic ..................................................................................................................................................
East North Central ............................................................................................................................................
West North Central ...........................................................................................................................................
South Atlantic ...................................................................................................................................................
East South Central ...........................................................................................................................................
West South Central ..........................................................................................................................................
Mountain ...........................................................................................................................................................
Pacific ...............................................................................................................................................................
Location by Region:
Urban | New England .......................................................................................................................................
Urban | Middle Atlantic .....................................................................................................................................
Urban | East North Central ...............................................................................................................................
Urban | West North Central ..............................................................................................................................
Urban | South Atlantic ......................................................................................................................................
Urban | East South Central ..............................................................................................................................
Urban | West South Central .............................................................................................................................
Urban | Mountain ..............................................................................................................................................
Urban | Pacific ..................................................................................................................................................
Rural | New England ........................................................................................................................................
Rural | Middle Atlantic ......................................................................................................................................
Rural | East North Central ................................................................................................................................
Rural | West North Central ...............................................................................................................................
Rural | South Atlantic ........................................................................................................................................
Rural | East South Central ...............................................................................................................................
Rural | West South Central ..............................................................................................................................
Rural | Mountain ...............................................................................................................................................
Rural | Pacific ...................................................................................................................................................
% Stays with Maximum Utilization Days = 100:
0–10 ..................................................................................................................................................................
10–25 ................................................................................................................................................................
25–100 ..............................................................................................................................................................
% Medicare/Medicaid Dual Enrollment:
0–10 ..................................................................................................................................................................
10–25 ................................................................................................................................................................
25–50 ................................................................................................................................................................
50–75 ................................................................................................................................................................
75–90 ................................................................................................................................................................
90–100 ..............................................................................................................................................................
% Utilization Days Billed as RU:
0–10 ..................................................................................................................................................................
10–25 ................................................................................................................................................................
25–50 ................................................................................................................................................................
50–75 ................................................................................................................................................................
75–90 ................................................................................................................................................................
90–100 ..............................................................................................................................................................
% Utilization Days Billed as Non-Rehab:
0–10 ..................................................................................................................................................................
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E:\FR\FM\08AUR2.SGM
08AUR2
Percent
change
100.0
0.0
72.0
22.6
5.4
¥0.7
1.9
4.2
10.0
38.2
34.7
11.1
5.9
3.5
0.6
¥0.2
¥0.3
¥1.8
72.7
27.3
¥0.7
3.8
96.2
3.8
¥0.3
16.7
70.6
2.2
25.6
1.6
¥1.0
15.3
3.2
21.1
5.9
10.8
20.6
12.5
15.7
6.6
13.1
4.7
10.1
2.0
¥2.6
0.7
6.7
¥0.4
1.0
¥1.0
1.1
¥0.8
5.1
9.5
14.4
6.0
12.6
3.6
8.7
3.4
9.5
0.8
1.3
6.2
6.5
3.1
3.0
4.4
1.3
0.6
1.8
¥2.9
¥0.1
4.6
¥1.1
0.3
¥1.2
0.1
¥0.9
4.0
2.7
3.6
10.5
4.2
2.1
¥0.1
6.2
2.2
94.4
5.1
0.4
0.1
¥2.8
¥3.6
8.6
17.5
36.0
26.5
8.2
3.1
¥1.3
¥1.3
0.3
1.3
0.4
1.6
8.9
8.0
24.1
39.2
17.2
2.6
27.6
15.5
7.0
¥0.4
¥6.0
¥9.8
79.8
¥1.5
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39261
TABLE 38—PDPM IMPACT ANALYSIS, FACILITY-LEVEL—Continued
Percent of
providers
Provider characteristics
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10–25 ................................................................................................................................................................
25–50 ................................................................................................................................................................
50–75 ................................................................................................................................................................
75–90 ................................................................................................................................................................
90–100 ..............................................................................................................................................................
We proposed to implement the PDPM
effective beginning in FY 2020 (that is,
October 1, 2019). This effective date
would incorporate a 1-year period to
allow time for provider education and
training, internal system transitions, and
to allow states to make any Medicaid
program changes which may be
necessary based on the changes related
to PDPM.
With regard to the changes finalized
in this rule, we provide our reasons for
each change throughout the subsections
above. Below in this section, we discuss
alternatives we considered which relate
generally to implementation of the
PDPM.
When making major system changes,
CMS often considers possible transition
options for providers and other
stakeholders between the former system
and the new system. For example, when
we updated OMB delineations used to
establish a provider’s wage index under
the SNF PPS in FY 2015, we utilized a
blended rate in the first year of
implementation, whereby 50 percent of
the provider’s payment was derived
from their former OMB delineation and
50 percent from their new OMB
delineation (79 FR 45644–45646).
However, due to the fundamental
nature of the change from the current
RUG–IV case-mix model to the PDPM,
which includes differences in resident
assessment, payment algorithms, and
other policies, as we stated in the
proposed rule (83 FR 21079), we believe
that proposing a blended rate for the
whole system (that would require two
full case-mix systems—RUG–IV and the
PDPM—to run concurrently) is not
advisable as part of any transition
strategy for implementing the PDPM,
due to the significant administrative and
logistical issues that would be
associated with such a transition
strategy. Specifically, CMS and
providers would be required to manage
both the RUG–IV payment model and
PDPM simultaneously, creating
significant burden and undue
complexity for all involved parties.
Furthermore, providers would be
required to follow both sets of MDS
assessment rules, each of which carries
with it its own level of complexity. CMS
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would also be required to process
assessments and claims under each
system, which would entail a significant
amount of resources and burden for
CMS, MACs, and providers. Finally, a
blended rate option would also mitigate
some of the burden reduction associated
with implementing PDPM, estimated to
save SNFs close to $200 million per year
as compared to estimated burden under
RUG–IV, given that the current
assessment schedule would need to
continue until full implementation of
PDPM was achieved. As we stated in the
proposed rule, we believe these issues
also would be implicated in any
alternative transition strategy which
would require both case-mix systems to
exist concurrently, such as giving
providers a choice in the first year of
implementation of operating under
either the RUG–IV or PDPM. Therefore,
we did not pursue any alternatives
which required concurrent operation of
both the RUG–IV and PDPM.
As discussed in the proposed rule (83
FR 21079), we then considered
alternative effective dates for
implementing the PDPM, and other
associated policy changes. We
considered implementing the new casemix model effective beginning in FY
2019, but we believe that this would not
permit sufficient time for providers and
other stakeholders, including CMS, to
make the necessary preparations for a
change of this magnitude in the SNF
PPS. We also believe that such a quick
transition would not be in keeping with
how similar types of SNF PPS changes
have been implemented in the past. We
also considered implementing PDPM
more than one year after being finalized,
such as implementing the PDPM
effective beginning October 1, 2020 (FY
2021). However, we believe that setting
the effective date of PDPM this far out
is not necessary, based on our prior
experience with similar SNF PPS
changes. As is customary, we plan to
continue to provide free software to
providers which can be used to group
residents under the PDPM, as well as
providing data specifications for this
grouper software as soon as is
practicable, thereby mitigating potential
concerns around software vendors
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16.6
2.7
0.4
0.2
0.4
Percent
change
8.6
23.1
35.8
41.8
33.6
having sufficient time to develop
products for PDPM. Moreover, given the
issues identified throughout the
proposed rule and this final rule with
the current RUG–IV model, notably the
issues surrounding the burden and
complexity of the current SNF PPS
assessment schedule and concerns
around the incentives for therapy
overprovision under the RUG–IV
system, we believe it appropriate to
implement the PDPM as soon as is
practicable.
Finally, we considered alternatives
related to the proposal discussed in
section V.I. of this final rule, specifically
the proposed certification that we have
met the requirements set forth in section
511(a) of the MMA, which would permit
us to use the PDPM’s permanent casemix adjustments for SNF residents with
AIDS to replace the temporary special
add-on in the PPS per diem payment for
such residents. As noted in section V.I.
of this final rule, this special add-on for
SNF residents with AIDS was intended
to be of limited duration, as the MMA
legislation specified that it was to
remain in effect only until the Secretary
certifies that there is an appropriate
adjustment in the case mix to
compensate for the increased costs
associated with such residents. We
considered maintaining this adjustment
under the PDPM. However, given the
adjustment incorporated into the NTA
and nursing components under the
PDPM to account for the increased costs
of treating residents with AIDS, this
would result in a substantial increase in
payment for such residents beyond even
the current add-on payment. Moreover,
as discussed in section V.I. of this final
rule, we believe that the PDPM provides
a tailored case-mix adjustment that
more accurately accounts for the
additional costs and resource use of
residents with AIDS, as compared to an
undifferentiated add-on which simply
applies an across-the-board multiplier to
the full SNF PPS per diem. Finally, as
stated in section 3.8.2. of the SNF PDPM
technical report (available at https://
www.cms.gov/Medicare/MedicareFeefor-Service-Payment/SNFPPS/
therapyresearch.html), HIV/AIDS was
associated with a negative and
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statistically significant decrease in PT,
OT and SLP costs per day. This means
inherently that, to the extent that the
existing add-on is applied against the
full SNF PPS per diem payment, the
magnitude of the add-on payment
increases with increases in therapy
payment, which conflicts with the data
described above regarding the
relationship between therapy costs and
the presence of an AIDS diagnosis. As
a result, maintaining the current add-on
would create an inconsistency between
how SNF payments would be made and
the data regarding AIDS diagnoses and
resident therapy costs. Therefore, we
proposed (and are finalizing in this rule)
replacing this add-on payment with
appropriate case-mix adjustments for
the increased costs of care for this
population of residents through the
NTA and nursing components of the
PDPM.
We invited comments on the
projected impacts and on the proposals
and alternatives discussed throughout
this section.
Commenters submitted the following
comments related to the proposed rule’s
discussion of the Potential Impacts of
Implementing the Proposed PDPM and
Proposed Parity Adjustment. A
discussion of these comments, along
with our responses, appears below.
Comment: Commenters agreed that
PDPM should be implemented in a
budget neutral manner. With regard to
the impact analysis, several commenters
suggest that CMS run the entire PDPM
model on a second year of data (or
partial 2018 data) to examine the impact
on individual providers and
beneficiaries. Commenters state that
using only one year of data does not
allow analysis of the impact of changing
patient populations over time.
Response: We appreciate the support
for our proposed budget neutral
implementation. With regards to the
comment that CMS should use more
than one year of data for the impact
analysis, we would note that while CMS
did not specifically examine the impact
of PDPM on individual providers and
beneficiaries across multiple years, we
did take several steps to ensure
robustness of our results. First, to ensure
that the classification would be relevant
for the current SNF population, we used
the latest complete year of data
available, FY 2017, to construct the
payment model. Second, based on
comments received in response to the
2017 ANPRM, we used four years of
data (FYs 2014–2017) to determine
which comorbidities to include in the
NTA component and the number of
points to assign to each condition/
service for purposes of resident
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classification and payment. Third, as
discussed in section 1.3 of the SNF
PDPM technical report, we conducted a
series of investigations to test the
robustness of our results across multiple
years. We found that: The distribution
of stays and resource utilization by each
classifier used in the payment model
(for example, clinical category, cognitive
status, etc.), the case-mix groups
generated by the CART algorithm, the
costliest NTA comorbidities, and the
distribution of stays across nursing
RUGs was very similar across multiple
years. Fourth, we examined changes in
SNF resident characteristics over time
in response to concerns raised by
participants in technical expert panels,
focusing on specific resident
characteristics that TEP panelists
identified as indicators of increasing
acuity. These investigations generally
found that resident characteristics
changed little over time.
Finally, while we did not analyze the
impact of PDPM on individual
providers and beneficiaries across
multiple years, we note that we also
examined the impact of the RCS–I
payment model, which has substantially
similar classification criteria as PDPM,
on various resident and provider
subpopulations using FY 2014 data. The
results of this analysis, shown in section
3.13 of the SNF PMR technical report
and the 2017 ANPRM (82 FR 21008
through 21012), were consistent with
the resident and provider subpopulation
impact analysis conducted for PDPM
(section 3.12 of the SNF PDPM technical
report) in showing that a payment
model based on the set of resident
characteristics used to construct PDPM
would be expected to increase payment
associated with resident subpopulations
with complex clinical needs, such as
extensive services, high NTA
utilization, IV medications, ESRD,
diabetes, wound infections, amputation/
prosthesis care, and longer inpatient
stays. For all of the foregoing reasons,
we expect PDPM to be robust and to
have similar impacts on residents and
providers across multiple years.
Comment: One commenter stated that
there are several methodological issues
that may affect the accuracy of PDPM
impact calculations under budget
neutrality. This includes:
(1) The use of hospital MS–DRGs in
developing clinical categories will likely
result in an inaccurate estimation of
payment. Payment rates were set and
impacts predicted based on using the
MS–DRG assignment of the patient,
whereas PDPM when implemented will
rely on MDS responses. If SNFs report
patients at a net lower acuity level in
MDS data than the predicted clinical
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categorization, then the budget
neutrality assumptions made by PDPM
will be invalid.
(2) The conversion of charges to costs
will likely result in an underestimation
of payment. Because SNF charges have
not driven payments under the SNF PPS
before, it is possible SNFs will
systematically re-evaluate their charges
practices to bring them more in line
with the cost information within their
accounting systems. As a result, the use
of SNF charges may need to be rapidly
reevaluated once PDPM is implemented.
(3) The quality of FY 2017 section GG
data is questionable due to the likely
inaccuracies in newly implemented
items. Thus, PDPM impacts may need to
be re-run once more stable section GG
data are available to ensure PDPM
accurately accounts for patient
functional characteristics.
Response: As stated in the proposed
rule (83 FR 21074) and section 3.11.2 of
the SNF PDPM technical report, the
budget neutrality assumption refers to
having total payments if PDPM had
been in place be equal to total actual
RUG–IV payments in FY 2017. It does
not account for provider behavior
change after the implementation of
PDPM. We appreciate the concerns
raised, and we will monitor the
reporting of MDS clinical categories,
charges, and section GG items under
PDPM.
Comment: One commenter stated that
PDPM does not adequately account for
residents with behavioral health issues.
The commenter stated that SNFs are
treating younger patients with longer
stays and complex behavioral needs.
Further, the commenter said
representatives of geriatric behavioral
health services were not included in the
TEPs that were convened during PDPM
development. A few commenters
requested that CMS study the impact of
PDPM on beneficiaries with long stays,
such as those exceeding 84 days in
length to determine whether the
payment model creates potential access
issues for such beneficiaries.
Response: While our TEPs did not
include a specific representative of
geriatric behavioral health services, in
response to the feedback received from
TEP panelists, we investigated the
impact of PDPM on residents with
behavioral health issues. As discussed
in section 3.12 of the SNF PDPM
technical report, we found that PDPM is
predicted to slightly increase payment
associated with residents who have
behavioral issues. Therefore, we believe
the proposed payment model
appropriately accounts for the resource
needs of this subpopulation.
Additionally, we found that PDPM is
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expected to notably increase payment
associated with younger residents
(below 65 and 65–74 years of age).
However, we also estimated that
payment associated with very long stays
(utilization = 100 days) would decline
by 1.9 percent under PDPM. We do plan
to monitor the impact of PDPM on many
different subpopulations, including
those with long SNF stays.
Comment: Another commenter raised
concerns about the provider-specific
impact analysis included in the
supplementary materials that were
designed to aid stakeholders in
reviewing and commenting on the
proposed rule. The commenter stated
that there were large differences in the
estimated payment impact on
individual providers between the
provider-level impact file that
accompanied the 2017 ANPRM and the
provider-level impact file that
accompanied the FY 2019 proposed
rule. Additionally, the commenter
stated that some providers have impact
estimates in the RCS–I provider-level
impact file (which accompanied the
2017 ANPRM) but are missing estimates
in the PDPM provider-level impact file
(which accompanied the FY 2019 SNF
PPS proposed rule). According to the
commenter, these discrepancies raise
concerns about the reliability, accuracy,
and completeness of the data used to
develop PDPM.
Response: The commenter that raised
concerns about changes in the providerlevel impacts between the RCS–I and
the PDPM provider-level impact files
correctly notes that the provider-level
impacts changed across the two files.
There are two main reasons for changes
in provider-level impacts across these
two files that do not raise concerns
about the quality of the data used to
conduct the provider-specific impact
analysis or to develop PDPM. First, the
year of analysis is different across the
two files. The RCS–I analysis uses data
from FY 2014, which was also the year
of data used to develop RCS–I, while the
PDPM analysis uses data from FY 2017.
Changes in the resident population of
specific providers could contribute to
changes in the estimated provider-level
impact of the payment models.
Second, the two provider-level files
provide impacts for two different
payment models: The first displays
impacts for RCS–I, while the second
displays impacts for PDPM. While the
two payment models are similar,
differences between the two models also
contribute to changes in estimated
provider-level impacts. For the
foregoing reasons, we should not expect
the estimated payment impact for each
provider be the same across the two
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payment models and data years. We
further note that at the population level,
the estimated impact on specific types
of providers and residents was similar
under RCS–I and PDPM, reflecting the
similarity of the payment models.
Specifically, for both models we
estimate that payment would shift from
stays receiving high amounts of therapy
and providers that provide high
amounts of therapy to stays associated
with medically complex beneficiaries
and providers that serve these
beneficiaries.
Regarding providers that were
included in the RCS–I provider-specific
file but not in the PDPM providerspecific file, this occurs for three
reasons: (1) The provider had no stays
in FY 2017, the year of analysis for the
PDPM file, (2) after applying matching
and validity restrictions, the provider
had no stays remaining in the dataset,
or had fewer than 11 stays (and
therefore could not be included for
confidentiality reasons), or (3) after
excluding stays that did not have
sufficient information to be classified
into a case-mix group for each PDPM
component, the provider had fewer than
11 stays. Of the roughly 1,100 providers
that were included in the RCS–I file but
not included in the PDPM file, about 60
percent were excluded for reason (3); of
the remaining excluded providers, about
half were excluded for reason (1) and
half were excluded for reason (2). It
should also be noted that in total, there
are about 700 fewer providers in the
PDPM file than there are in the RCS–I
file. Because this number is less than
the number of providers included in the
RCS–I file but not included in the PDPM
file, this indicates that there are also a
number of providers that are included
in the PDPM file but not in the RCS–I
file. To confirm the representativeness
of our PDPM study population, we
compared resident characteristics for
the study population and the Medicare
Part A SNF population, as shown in
section 3.1.5 of the SNF PDPM technical
report. As noted in the technical report,
the two populations are similar in most
respects, although the study population
contains a higher proportion of stays
from for-profit and freestanding
facilities and a lower proportion of stays
from non-profit, government, hospitalbased, and swing bed facilities. Given
the similarity of the two populations,
we do not believe our population
restrictions compromised the
representativeness of our study
population or the reliability of our
results.
Comment: One commenter stated that
there are apparent errors in the PDPM
provider-specific impact file. The
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39263
commenter states that the total numbers
of days and stays shown in the file do
not match the sum of the values in the
respective columns. Additionally, the
commenter states that the percentages of
stays shown in the case-mix group
distribution does not sum to 500 percent
(as they should because 100 percent of
days are assigned to a case-mix group
within each of the five components) for
three specific facilities. The commenter
notes that all other rows in this tab
correctly sum to 500 percent. The
commenter recommends CMS research
these issues and publish a corrected file
as necessary.
Response: The commenter that stated
the total stays and days shown in
provider-specific file do not match the
sum of the values in the respective
columns is correct. The reason for this
apparent discrepancy is that, while the
total stays and days shown in this file
include providers with fewer than 11
stays, these providers are not shown
separately in the file for confidentiality
reasons. As a result, the displayed totals
across all facilities do not match the
totals calculated from summing across
rows. Regarding the three instances the
commenter cites in which the
percentages for the case-mix group
distribution do not sum to 500 percent,
we were unable to replicate this issue.
We verified that the case-mix group
distribution shown in the providerspecific file for each of these three
providers does in fact sum to 500
percent and further verified that the
case-mix group distribution sums to 500
percent for all providers shown in the
file. Therefore, we do not believe a
correction is warranted.
Comment: Some commenters
supported CMS’ decision not to propose
a blended rate transition between RUG–
IV and PDPM, but rather to make a full
transition from one system to the other.
Some commenters expressed support for
a transition, requesting that CMS
conduct a feasibility study to examine
the impact of PDPM, particularly the
therapy components, on access to
medically necessary therapy. One
commenter requested that CMS phase-in
any negative impacts on providers from
implementing PDPM. One commenter
stated that, given the similarities
between the RCS–I model and the
PDPM, CMS should move forward with
implementing PDPM in FY 2019. One
commenter requested clarification on
how a patient’s reimbursement would
be affected if the stay began under RUG–
IV and ended under PDPM.
Response: We appreciate the support
for our decision not to implement a
transition strategy such as a blended
rate option. We do not believe that such
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a transition, or one that would phase in
negative impacts, would be beneficial
for SNFs or their patients given the
complexity of operating two systems
simultaneously. With regard to the
suggestion that CMS conduct a
feasibility study to examine the impact
of PDPM, we believe that the monitoring
program we plan to undertake with
implementation of PDPM will provide
all of the necessary information in an
efficient and expeditious manner that
would negate the reasons for conducting
a feasibility study. Finally, with regard
to the comment that CMS implement
PDPM in FY 2019, despite the
similarities between RCS–I and PDPM,
the education and training efforts
necessary to ensure successful
implementation of PDPM will likely
require more time than such an
implementation date would permit.
With regard to the comment about a
patient that begins a stay under RUG–
IV but ends under PDPM, given that
there will be no transition period
between RUG–IV and PDPM, providers
would bill under RUG–IV for all days
up to and including September 30, 2019
and then bill under PDPM for all days
beginning October 1, 2019. Further,
RUG–IV assessment scheduling and
other RUG–IV payment-related policies
would be in effect until September 30,
2019. Beginning on October 1, 2019, all
PDPM related assessment scheduling
and other PDPM payment-related
policies would take effect.
Comment: One commenter stated that
PDPM would require a minimum of 12
months for programming, testing,
validating and deploying of software
updates and tools. This commenter
requested that CMS allow for our
systems to report to providers RUG–IV
payment data, such as associated HIPPS
codes, up to 60 days after
implementation of PDPM.
Response: We agree with the
commenter regarding the timeframe for
software development, which is part of
the reason we are implementing PDPM
on October 1, 2019, rather than in 2018.
With regard to the comment that we
report RUG–IV payment data after
implementation of PDPM, we will
consider this suggestion as part of
transition planning.
Comment: Many commenters stressed
the importance of provider education
and training to support successful
implementation of the PDPM. These
commenters suggested that extensive
education and training of all involved
parties will be needed because PDPM is
such a significant change from the
existing system. These commenters
recommend that CMS immediately
begin work with stakeholders to identify
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and to plan for meeting these needs and
to provide the necessary tools to
implement the new system smoothly.
Further, commenters suggested that, in
Fall 2018, CMS should convene a PDPM
Implementation Technical Expert Panel
(TEP) comprised of SNF PPS
stakeholders, representatives from
states, referral sources, and payer
representatives, and that the TEP Report
should be made public and serve as the
basis for a PDPM Transition Plan.
Finally, several commenters urged CMS
to release any technical specifications
and manual revisions as soon as
possible, to give providers and vendors
as much time as possible to adapt to any
PDPM-related changes.
Response: We agree with the
comments regarding the importance of
provider education and training and
will be providing extensive
opportunities and resources to
accomplish this task. With regard to the
suggestion for a TEP related to PDPM
implementation, we appreciate this
suggestion and will consider several
methods to engage the stakeholder
community in preparing for PDPM
implementation. With regard to the
comments on the need for transition
planning and for CMS’ timely release of
any technical specifications and manual
revisions, we agree with commenters
and intend to release technical
specifications and manual revisions as
soon as possible, which will include
specific instructions on operationalizing
the transition from RUG–IV to PDPM.
Comment: A few commenters
requested that CMS establish a formal
and transparent process and timeline for
refining the PDPM therapy components
after implementation of PDPM.
Response: While we agree with using
a transparent process for refining PDPM,
as was used during its development, we
believe it is premature at this time to
provide such a timeframe for revisions
to the model, until we are able to
observe the impact of implementing this
model.
Comment: One commenter requested
that CMS consider providing additional
funding during initial implementation
of PDPM, given that providers will be
under financial pressures associated
with training, software purchases, as
well as changes associated with other
CMS initiatives.
Response: We do not believe that
additional funding would be warranted
for the activities described by the
commenter. Given that CMS provides
free grouper software, as well as a
myriad of training and education
resources, we believe that additional
costs, such as software purchases, are
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private business decisions that exist
outside the scope of SNF payments.
Accordingly, after considering the
comments received, for the reasons
discussed throughout section V of the
FY 2019 SNF PPS proposed rule and for
the reasons presented in this final rule,
we are finalizing our proposals to
implement the PDPM, as well as the
other PDPM related changes discussed
in this final rule, with the modifications
previously discussed in this final rule,
effective beginning October 1, 2019.
Specifically, in section V.B of this final
rule, we finalized our proposal, without
modification, for updating the federal
base payment rates and for adjusting the
per diem rates for geographic
differences under the PDPM. In section
V.C.3.b of this final rule, we finalized
the proposed PT and OT components
under the PDPM and our proposals
relating to the methodology for
classifying residents under the PT and
OT components, effective October 1,
2019, with the modifications discussed
in that section. More specifically, in
response to comments, rather than
requiring providers to record the type of
inpatient surgical procedure performed
during the prior inpatient hospital stay
by coding an ICD–10–PCS code in the
second line of item I8000 as we
proposed, we will instead require
providers to select, as necessary, a
surgical procedure category in a subitem within Item J2000 which would
identify the relevant surgical procedure
that occurred during the patient’s
preceding hospital stay and which
would augment the patient’s PDPM
clinical category. For purposes of
calculating the function score, all
missing values for section GG
assessment items will receive zero
points. Similarly, the function score will
incorporate a new response ‘‘10. Not
attempted due to environmental
limitations’’ and we will assign it a
point value of zero. Furthermore,
consistent with a commenter’s
suggestion, we will adopt MDS item
GG0170I1 (Walk 10 feet) as a substitute
for retired item GG0170H1 (Does the
resident walk), and we will use
responses 07: ‘‘resident refused,’’ 09:
‘‘not applicable,’’ 10: ‘‘not attempted
due to environmental limitations,’’ or
88: ‘‘not attempted due to medical
condition or safety concerns’’ from MDS
item GG0170I1 to identify residents who
cannot walk. In section V.C.3.b of this
final rule, we finalized, without
modification, the proposed SLP
component of PDPM and our proposals
relating to the classification of residents
under the SLP component. In section
V.C.3.d of this final rule, we finalized,
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without modification, our proposals
relating to the methodology for
classifying patients under the nursing
component of PDPM. In section V.C.3.e
of this final rule, we finalized, without
modification, our proposed NTA
component of the PDPM and the
proposed classification methodology for
the NTA component. In section V.C.4 of
this final rule, we finalized, without
modification, to apply a variable per
diem adjustment as part of the PDPM,
utilizing the adjustment factors and
schedule for the PT and OT components
found in Table 30 and the adjustment
factors and schedule for the NTA
component found in Table 31. In section
V.D.1 of this final rule, we finalized our
proposed changes to the MDS
assessment schedule and related
assessment policies as discussed in the
proposed rule, with the following
modifications. As discussed in that
section, rather than making the IPA a
required assessment as we proposed,
this assessment will be optional, and
providers may determine whether and
when an IPA is completed. In addition,
because the IPA is an optional
assessment and providers can determine
their own criteria for when an IPA is
completed, we are revising the ARD
criteria such that the ARD will be the
date the facility chooses to complete the
assessment relative to the triggering
event that makes the facility complete
the IPA. Payment based on the IPA
would begin the same day as the ARD.
In section V.D.2 of this final rule, we
finalized, without modification, our
proposed additions to the Swing Bed
PPS Assessment found in Table 34 of
this final rule. In section V.D.3 of this
final rule, we finalized, without
modification, the proposed additions to
the PPS Discharge Assessment found in
Table 35 of this final rule. In section V.E
of this final rule, we finalized, without
modification, our proposed application
of a combined 25 percent limit on group
and concurrent therapy, per therapy
discipline, as well as our proposal to
implement a non-fatal warning edit on
a provider’s validation report when the
amount of group and concurrent therapy
exceeds 25 percent within a given
therapy discipline. In section V.F of this
final rule, we finalized, without
modification, our proposed interrupted
stay policy. In section V.G of this final
rule, we finalized our proposed
classifiers for purposes of applying the
administrative presumption, with the
following modification. As discussed in
that section, we added 6 PT and OT
classifiers and 8 SLP classifiers. In
section V.H of this final rule, we
finalized our proposal to replace the
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existing MMA add-on for patients with
AIDS with the PDPM permanent
adjustment in the case-mix that
appropriate accounts for the increased
costs of patients with AIDS.
As we proposed and as discussed in
section V.I of this final rule, we will
implement the PDPM and the other
PDPM-related changes finalized in this
rule in a budget neutral manner.
VI. Other Issues
A. Other Revisions to the Regulation
Text
Along with our revisions to the
regulations as discussed elsewhere in
this final rule, we also proposed (83 FR
21080) to make two other revisions in
the regulation text. The first involves
§ 411.15(p)(3)(iv), which specifies that
whenever a beneficiary is formally
discharged (or otherwise departs) from
the SNF, this event serves to end that
beneficiary’s status as a ‘‘resident’’ of
the SNF for purposes of consolidated
billing (the SNF ‘‘bundling’’
requirement), unless he or she is
readmitted (or returns) to that or another
SNF ‘‘by midnight of the day of
departure.’’ In initially establishing this
so-called ‘‘midnight rule,’’ the FY 2001
SNF PPS final rule (65 FR 46770, July
31, 2000) noted in this particular
context that, as we explained in the
proposed rule, a patient ‘‘day’’ begins at
12:01 a.m. and ends the following
midnight, so that the phrase ‘‘midnight
of the day of departure’’ refers to the
midnight that immediately follows the
actual moment of departure, rather than
to the midnight that immediately
precedes it (65 FR 46792).
However, the Medicare program’s
standard practice for counting inpatient
days is actually one in which an
inpatient day would begin at midnight
(see, for example, § 20.1 in the Medicare
Benefit Policy Manual, Chapter 3, which
specifies that in counting inpatient
days, ‘‘. . . a day begins at midnight
and ends 24 hours later’’ (emphasis
added)). Accordingly, in order to ensure
consistency with that approach, we
proposed to revise § 411.15(p)(3)(iv) to
specify that for consolidated billing
purposes, a beneficiary’s ‘‘resident’’
status ends whenever he or she is
formally discharged (or otherwise
departs) from the SNF, unless he or she
is readmitted (or returns) to that or
another SNF ‘‘before the following
midnight.’’ We further noted that this
revision would not alter the underlying
principle that a beneficiary’s SNF
‘‘resident’’ status in this context ends
upon departure from the SNF unless he
or she returns to that or another SNF
later on that same day; rather, it would
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simply serve to conform the actual
wording of the applicable regulations
text with the Medicare manual’s
standard definition of the starting point
of a patient ‘‘day.’’
We also proposed a technical
correction to § 424.20(a)(1)(i) (which
describes the required content of the
SNF level of care certification) in order
to conform it more closely to that of the
corresponding statutory requirements at
section 1814(a)(2)(B) of the Act. This
statutory provision defines the SNF
level of care in terms of skilled services
furnished on a daily basis which, as a
practical matter, can only be provided
on an inpatient basis in a SNF. In
addition, it provides that the SNF-level
care must be for either:
• An ongoing condition that was one
of the conditions that the beneficiary
had during the qualifying hospital stay;
or
• A new condition that arose while
the beneficiary was in the SNF for
treatment of that ongoing condition.
In setting forth the SNF level of care
definition itself, the implementing
regulations at § 409.31 reflect both of the
above two criteria (at paragraphs
(b)(2)(i) and (b)(2)(ii), respectively);
however, as we stated in the proposed
rule (83 FR 21080), the regulations
describing the content of the initial level
of care certification at § 424.20(a)(1)(i)
have inadvertently omitted the second
criterion. Further, while that criterion
admittedly might not be relevant in
those instances where the initial
certification is obtained promptly ‘‘at
the time of admission’’ in accordance
with the regulations at 42 CFR
424.20(b)(1), that same provision
alternatively allows this requirement to
be met ‘‘as soon thereafter as is
reasonable and practicable.’’
Accordingly, in order to rectify this
omission, we proposed to revise
§ 424.20(a)(1)(i) so that it more
accurately tracks the language in the
corresponding statutory authority at
section 1814(a)(2)(B) of the Act.
We invited comments on our
proposed revisions to § 411.15(p)(3)(iv)
and § 424.20(a)(1)(i), but received no
comments on either revision.
Accordingly, in this final rule, we are
finalizing both revisions as proposed,
without further modification.
B. Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP)
1. Background
The Skilled Nursing Facility Quality
Reporting Program (SNF QRP) is
authorized by section 1888(e)(6) of the
Act and it applies to freestanding SNFs,
SNFs affiliated with acute care facilities,
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and all non-CAH swing-bed rural
hospitals. Under the SNF QRP, the
Secretary reduces by 2 percentage
points the annual market basket
percentage update described in section
1888(e)(5)(B)(i) of the Act applicable to
a SNF for a fiscal year, after application
of section 1888(e)(5)(B)(ii) of the Act
(the MFP adjustment) and section
1888(e)(5)(B)(iii) of the Act (the 1
percent market basket increase for FY
2018), in the case of a SNF that does not
submit data in accordance with sections
1888(e)(6)(B)(i) of the Act for that fiscal
year. For more information on the
requirements we have adopted for the
SNF QRP, we refer readers to the FY
2016 SNF PPS final rule (80 FR 46427
through 46429), FY 2017 SNF PPS final
rule (81 FR 52009 through 52010) and
FY 2018 SNF PPS final rule (82 FR
36566).
Although we have historically used
the preamble to the SNF PPS proposed
and final rules each year to remind
stakeholders of all previously finalized
program requirements, we have
concluded that repeating the same
discussion each year is not necessary for
every requirement, especially if we have
codified it in our regulations.
Accordingly, the following discussion is
limited as much as possible to a
discussion of our proposals, responses
to comments submitted on those
proposals, and policies we are finalizing
for future years of the SNF QRP after
consideration of the comments, and it
represents the approach we intend to
use in our rulemakings for this program
going forward.
2. General Considerations Used for the
Selection of Measures for the SNF QRP
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a. Background
For a detailed discussion of the
considerations we historically used for
the selection of SNF QRP quality,
resource use, and other measures, we
refer readers to the FY 2016 SNF PPS
final rule (80 FR 46429 through 46431).
We received several comments
generally related to the SNF QRP. The
comments and our responses are
discussed below.
Comment: Several commenters
expressed general support for CMS’s
proposals related to the SNF QRP,
acknowledging CMS’s goal of improving
the quality of health care for Medicare
beneficiaries through improvements to
patient assessments and quality
reporting. One commenter highlighted
the need for additional transparency
from CMS through this ongoing process.
Another commenter requested that CMS
ensure that the SNF QRP efforts do not
negatively impact specialty populations.
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Response: We appreciate commenters’
general support for the SNF QRP
proposals. To foster transparency, we
continue to seek stakeholder input and
will take into consideration the impact
of specialty populations in the ongoing
measure development and maintenance
efforts of the SNF QRP.
Comment: One commenter expressed
support for the IMPACT Act’s
objectives. However, the commenter
expressed concern over the rapid
development and implementation of the
standardized patient assessment data
element (SPADE) work, suggesting that
further evaluation is necessary.
Response: We understand the
concerns raised by commenters
pertaining to the development and
implementation of the SPADEs. As
discussed in the FY 2018 SNF PPS Final
Rule, we agreed that further evaluation
of the data elements was necessary.
Specifically, we thought that more time
was needed to develop, test, to think
through the implementation, and to
reflect on how to maximize the time
SNFs have to prepare for the reporting
of standardized resident assessment
data in these categories. We have
worked to be responsive to the concerns
raised by stakeholders while meeting
our obligation to require the reporting of
standardized resident assessment data
with respect to the categories described
in section 1899B(b)(1)(B) of the Act.
Therefore, as outlined in the FY 2018
SNF PPS final rule, we did not finalize
the standardized assessment data
elements we proposed for three of the
five categories under section
1899B(b)(1)(B) of the Act: Cognitive
Function and Mental Status; Special
Services, Treatments, and Interventions;
and Impairments in that we felt this
work needed more time for
development and evaluation. Since the
time of this proposal work, we have
worked closely with stakeholders,
solicited comments, reconvened our
TEP, and are currently re-testing the
SPADEs in a national field test (also
known as the Alpha test). For more
information on our prior proposal
addressed in the FY 2018 SNF PPS final
rule (82 FR 36568 through 36570, 36597
through 36605), we refer the reader to
that detailed discussion. For more
information on our national field test
and associated work for SPADEs, please
see: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/IMPACT-Act-Standardized-AssessmentNational-Testing-.html.
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b. Accounting for Social Risk Factors in
the SNF QRP
In the FY 2018 SNF PPS final rule (82
FR 36567 through 36568), we discussed
the importance of improving beneficiary
outcomes including reducing health
disparities. We also discussed our
commitment to ensuring that medically
complex residents, as well as those with
social risk factors, receive excellent
care. We discussed how studies show
that social risk factors, such as being
near or below the poverty level as
determined by HHS, belonging to a
racial or ethnic minority group, or living
with a disability, can be associated with
poor health outcomes and how some of
this disparity is related to the quality of
health care.3 Among our core objectives,
we aim to improve health outcomes,
attain health equity for all beneficiaries,
and ensure that complex residents, as
well as those with social risk factors
receive excellent care. Within this
context, reports by the Office of the
Assistant Secretary for Planning and
Evaluation (ASPE) and the National
Academy of Medicine have examined
the influence of social risk factors in our
value-based purchasing programs.4 As
we noted in the FY 2018 SNF PPS final
rule (82 FR 36567 through 36568),
ASPE’s report to Congress, which was
required by the IMPACT Act, found
that, in the context of value-based
purchasing programs, dual eligibility
was the most powerful predictor of poor
health care outcomes among those
social risk factors that they examined
and tested. ASPE is continuing to
examine this issue in its second report
required by the IMPACT Act, which is
due to Congress in the fall of 2019. In
addition, as we noted in the FY 2018
SNF PPS final rule (82 FR 36567), the
National Quality Forum (NQF)
undertook a 2-year trial period in which
certain new measures and measures
undergoing maintenance review have
been assessed to determine if risk
adjustment for social risk factors is
3 See, for example, United States Department of
Health and Human Services. ‘‘Healthy People 2020:
Disparities. 2014.’’ Available at https://
www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies
of Sciences, Engineering, and Medicine. Accounting
for Social Risk Factors in Medicare Payment:
Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and
Medicine 2016.
4 Department of Health and Human Services
Office of the Assistant Secretary for Planning and
Evaluation (ASPE), ‘‘Report to Congress: Social Risk
Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016.
Available at https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
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appropriate for these measures.5 The
trial period ended in April 2017 and a
final report is available at https://
www.qualityforum.org/SES_Trial_
Period.aspx. The trial concluded that
‘‘measures with a conceptual basis for
adjustment generally did not
demonstrate an empirical relationship’’
between social risk factors and the
outcomes measured. This discrepancy
may be explained in part by the
methods used for adjustment and the
limited availability of robust data on
social risk factors. NQF has extended
the socioeconomic status (SES) trial,6
allowing further examination of social
risk factors in outcome measures.
In the FY 2018/CY 2018 proposed
rules for our quality reporting and
value-based purchasing programs, we
solicited feedback on which social risk
factors provide the most valuable
information to stakeholders and the
methodology for illuminating
differences in outcomes rates among
patient groups within a provider that
would also allow for a comparison of
those differences, or disparities, across
providers. Feedback we received across
our quality reporting programs included
encouraging us to explore whether
factors that could be used to stratify or
risk adjust the measures (beyond dual
eligibility); to consider the full range of
differences in resident backgrounds that
might affect outcomes; to explore risk
adjustment approaches; and to offer
careful consideration of what type of
information display would be most
useful to the public.
We also sought public comment on
confidential reporting and future public
reporting of some of our measures
stratified by resident dual eligibility. In
general, commenters noted that
stratified measures could serve as tools
for SNFs to identify gaps in outcomes
for different groups of residents,
improve the quality of health care for all
residents, and empower consumers to
make informed decisions about health
care. Commenters encouraged us to
stratify measures by other social risk
factors such as age, income, and
educational attainment. With regard to
value-based purchasing programs,
commenters also cautioned CMS to
balance fair and equitable payment
while avoiding payment penalties that
mask health disparities or discouraging
the provision of care to more medically
complex patients. Commenters also
noted that value-based payment
5 Available at https://www.qualityforum.org/SES_
Trial_Period.aspx.
6 Available at https://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier=
id&ItemID=86357.
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program measure selection, domain
weighting, performance scoring, and
payment methodology must account for
social risk.
As a next step, we are considering
options to improve health disparities
among patient-groups within and across
hospitals by increasing the transparency
of disparities as shown by quality
measures. We also are considering how
this work applies to other CMS quality
programs in the future. We refer readers
to the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38403 through 38409) for
more details, where we discuss the
potential stratification of certain
Hospital Inpatient Quality Reporting
(IQR) Program outcome measures.
Furthermore, we continue to consider
options to address equity and disparities
in our value-based purchasing
programs.
We plan to continue working with
ASPE, the public, and other key
stakeholders on this important issue to
identify policy solutions that achieve
the goals of attaining health equity for
all beneficiaries and minimizing
unintended consequences.
Comment: Several commenters
supported CMS’ continuing evaluation
of how social risk factors could impact
SNF QRP measure rates and encouraged
CMS to consider strategies and solutions
in this area. Specific comments noted
that lack of adjustment for social risk
factors may negatively impact facility
measure rates, and CMS should
incorporate risk adjustment for
sociodemographic and socioeconomic
status into appropriate SNF QRP
measures. We also received comments
about the public display of measure
information related to social risk factors,
suggesting stratified measures be used
and expressing concerns that publicly
reported outcome measures could be
misleading to consumers.
Response: We thank commenters for
their comments and will take these
comments into account as we further
consider how to appropriately account
for social risk factors in the SNF QRP.
We also refer the reader to the FY 2018
SNF PPS final rule (82 FR 36567
through 36568) where we discussed in
depth many of the issues raised by these
commenters.
3. New Measure Removal Factor for
Previously Adopted SNF QRP Measures
As a part of our Meaningful Measures
Initiative discussed in section I.D. of
this final rule, we strive to put patients
first, ensuring that they, along with their
clinicians, are empowered to make
decisions about their own healthcare
using data-driven information that is
increasingly aligned with a
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parsimonious set of meaningful quality
measures. We began reviewing the SNF
QRP’s measures in accordance with the
Meaningful Measures Initiative, and we
are working to identify how to move the
SNF QRP forward in the least
burdensome manner possible while
continuing to incentivize improvement
in the quality of care provided to
patients.
Specifically, we believe the goals of
the SNF QRP and the measures used in
the program cover most of the
Meaningful Measures Initiative
priorities, including making care safer,
strengthening person and family
engagement, promoting coordination of
care, promoting effective prevention and
treatment, and making care affordable.
We also evaluated the appropriateness
and completeness of the SNF QRP’s
current measure removal factors. We
have previously finalized that we would
use notice and comment rulemaking to
remove measures from the SNF QRP
based on the following factors 7
• Factor 1. Measure performance
among SNFs is so high and unvarying
that meaningful distinctions in
improvements in performance can no
longer be made.
• Factor 2. Performance or
improvement on a measure does not
result in better resident outcomes.
• Factor 3. A measure does not align
with current clinical guidelines or
practice.
• Factor 4. A more broadly applicable
measure (across settings, populations, or
conditions) for the particular topic is
available.
• Factor 5. A measure that is more
proximal in time to desired resident
outcomes for the particular topic is
available.
• Factor 6. A measure that is more
strongly associated with desired
resident outcomes for the particular
topic is available.
• Factor 7. Collection or public
reporting of a measure leads to negative
unintended consequences other than
resident harm.
We continue to believe that these
measure removal factors are appropriate
for use in the SNF QRP. However, even
if one or more of the measure removal
factors applies, we may nonetheless
choose to retain the measure for certain
specified reasons. Examples of such
instances could include when a
particular measure addresses a gap in
quality that is so significant that
removing the measure could in turn
7 We refer readers to the FY 2016 SNF PPS final
rule (80 FR 46431 through 46432) for more
information on the factors we consider for removing
measures.
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result in poor quality, or in the event
that a given measure is statutorily
required. We note further that,
consistent with other quality reporting
programs, we apply these factors on a
case-by-case basis.
In the FY 2019 SNF PPS proposed
rule (83 FR 21082), we proposed to
adopt an additional factor to consider
when evaluating potential measures for
removal from the SNF QRP measure set:
• Factor 8. The costs associated with
a measure outweigh the benefit of its
continued use in the program.
As we discussed in section I.D. of this
final rule, with respect to our new
Meaningful Measures Initiative, we are
engaging in efforts to ensure that the
SNF QRP measure set continues to
promote improved health outcomes for
beneficiaries while minimizing the
overall costs associated with the
program. We believe these costs are
multifaceted and include not only the
burden associated with reporting, but
also the costs associated with
implementing and maintaining the
program. We have identified several
different types of costs, including, but
not limited to: (1) The provider and
clinician information collection burden
and burden associated with the
submission/reporting of quality
measures to CMS; (2) the provider and
clinician cost associated with
complying with other programmatic
requirements; (3) the provider and
clinician cost associated with
participating in multiple quality
programs, and tracking multiple similar
or duplicative measures within or across
those programs; (4) the cost to CMS
associated with the program oversight of
the measure including measure
maintenance and public display; and (5)
the provider and clinician cost
associated with compliance with other
federal and/or state regulations (if
applicable).
For example, it may be needlessly
costly and/or of limited benefit to retain
or maintain a measure which our
analyses show no longer meaningfully
supports program objectives (for
example, informing beneficiary choice).
It may also be costly for health care
providers to track the confidential
feedback, preview reports, and publicly
reported information on a measure
where we use the measure in more than
one program. CMS may also have to
expend unnecessary resources to
maintain the specifications for the
measure, as well as the tools we need to
collect, validate, analyze, and publicly
report the measure data. Furthermore,
beneficiaries may find it confusing to
see public reporting on the same
measure in different programs.
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When these costs outweigh the
evidence supporting the continued use
of a measure in the SNF QRP, we
believe it may be appropriate to remove
the measure from the program.
Although we recognize that one of the
main goals of the SNF QRP is to
improve beneficiary outcomes by
incentivizing health care providers to
focus on specific care issues and making
data public related to those issues, we
also recognize that those goals can have
limited utility where, for example, the
publicly reported data is of limited use
because it cannot be easily interpreted
by beneficiaries and used to influence
their choice of providers. In these cases,
removing the measure from the SNF
QRP may better accommodate the costs
of program administration and
compliance without sacrificing
improved health outcomes and
beneficiary choice.
We proposed that we would remove
measures based on this factor on a caseby-case basis. We might, for example,
decide to retain a measure that is
burdensome for health care providers to
report if we conclude that the benefit to
beneficiaries justifies the reporting
burden. Our goal is to move the program
forward in the least burdensome manner
possible, while maintaining a
parsimonious set of meaningful quality
measures and continuing to incentivize
improvement in the quality of care
provided to patients.
We invited public comment on our
proposal to adopt an additional measure
removal Factor 8. The costs associated
with a measure outweigh the benefit of
its continued use in the program.
We also proposed to add a new
§ 413.360(b)(3) that would codify the
removal factors we have previously
finalized for the SNF QRP, as well as the
new measure removal factor that we
proposed to adopt in the proposed rule.
We sought comments on these
proposals. A discussion of these
comments, along with our responses,
appears below.
Comment: Several commenters
expressed support for an additional
factor to consider when evaluating
potential measures for removal from the
SNF QRP measure set: Factor 8. The
costs associated with a measure
outweigh the benefit of its continued
use in the program. One commenter
acknowledged that removal of a
measure from the program may be
appropriate when the costs outweigh
the evidence supporting its continued
use. Another commenter supported the
addition of the new measure removal
factor because it reduces unnecessary
administrative burden.
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Response: We appreciate the
commenters’ support.
Comment: One commenter supported
CMS’ proposal to codify the proposed
measure removal factor in the regulatory
text.
Response: We appreciate the
commenter’s support.
Comment: Some commenters
expressed concerns related to the new
measure removal factor. One commenter
did not support the addition of the
factor, suggesting that the costs and
benefits considered under this factor are
not equivalent, as costs are typically
imposed on providers while benefits are
rendered to beneficiaries. This
commenter expressed the concern that
providers may argue for removal of a
measure that is costly to collect and
report despite its benefits. Another
commenter suggested that using
administrative cost to CMS as a basis for
removal may be problematic if
clinicians or patients believe the
measure is important. Another
commenter added that the proposed
measure removal factor is subjective and
recommended clearer guidelines and
criteria for determining the costs and
benefits of a measure before it is
removed.
Response: We agree that it is possible
that providers may recommend removal
of measures they do not support based
on the argument that these measures are
costly to report. However, input from
providers is only one element of our
case-by-case analysis of measures that
we would take into account when
weighing the costs associated with a
measure against the benefit of retaining
the measure in a program. We will
weigh input we receive from all
stakeholders with our own analysis of
each measure to make our case-by-case
determination of whether it would be
appropriate to remove a measure based
on its costs outweighing the benefit of
its continued use in the program. We
wish to clarify that it is not our intent
to remove measures that continue to
benefit residents or providers solely
because these measures incur
administrative costs to CMS; this is only
one example of costs that would be
weighed against the benefits when
considering each measure on a case-bycase basis.
Regarding concern over the
subjectivity of the new measure removal
factor and the suggestion for clearer
guidelines and criteria for determining
the costs and benefits of a measure
before it is removed, we intend to be
transparent in our assessment of
measures under this measure removal
factor. As described above, there are
various considerations of costs and
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benefits, direct and indirect, financial
and otherwise, that we will evaluate in
applying removal Factor 8, and we will
take into consideration the perspectives
of multiple stakeholders. However,
because we intend to evaluate each
measure on a case-by-case basis, and
each measure has been adopted to fill
different needs in the SNF QRP, we do
not believe it would be meaningful to
identify a specific set of assessment
criteria to apply to all measures. We
believe costs include costs to
stakeholders such as patients,
caregivers, providers, CMS, and other
entities. In addition, we note that the
benefits we will consider center around
benefits to residents and caregivers as
the primary beneficiaries of our quality
reporting program. When we propose
through rulemaking to remove a
measure under this measure removal
factor, we will provide information on
the costs and benefits we considered in
evaluating the measure.
Comment: One commenter noted that
the existing seven removal factors are
sufficient for appropriate measure
evaluation.
Response: While we acknowledge that
there are seven factors currently
adopted that may be used for
considering measure removal from the
SNF QRP, we believe the proposed new
measure removal factor adds a new
criterion that is not captured in the
other seven factors. The proposed new
measure removal factor will help
advance the goals of the Meaningful
Measures Initiative, which aims to
improve outcomes for patients, their
families, and health care providers
while reducing burden and costs for
clinicians and providers. We are also
making minor grammatical edits to the
SNF QRP measure removal factor
language to align with the language of
other CMS quality programs.
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After considering the comments, we
are finalizing our proposal to add an
additional measure removal factor:
Factor 8. The costs associated with a
measure outweigh the benefit of its
continued use in the program. We are
also finalizing our proposal to the
updates to the regulatory text and to
codify the seven removal factors we
have previously finalized for the SNF
QRP, as well as the new measure
removal factor, Factor 8 at new
§ 413.360(b)(3). We are also making
minor grammatical edits to the SNF
QRP measure removal factor language to
align with the language of other CMS
quality programs.
4. Quality Measures Currently Adopted
for the FY 2020 SNF QRP
The SNF QRP currently has 12
measures for the FY 2020 program year,
which are outlined in Table 39.
TABLE 39—QUALITY MEASURES CURRENTLY ADOPTED FOR THE FY 2020 SNF QRP
Short name
Measure name and data source
Resident Assessment Instrument Minimum Data Set
Pressure Ulcer ................................
Pressure Ulcer/Injury ......................
Application of Falls ..........................
Application of Functional Assessment/Care Plan.
Change in Mobility Score ................
Discharge Mobility Score ................
Change in Self-Care Score .............
Discharge Self-Care Score .............
DRR ................................................
Percent of Residents or Patients With Pressure Ulcers That Are New or Worsened (Short Stay) (NQF
#0678).*
Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury.
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).
Application of IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients (NQF #2634).
Application of IRF Functional Outcome Measure: Discharge Mobility Score for Medical Rehabilitation Patients (NQF #2636).
Application of the IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation
Patients (NQF #2633).
Application of IRF Functional Outcome Measure: Discharge Self-Care Score for Medical Rehabilitation Patients (NQF #2635).
Drug Regimen Review Conducted With Follow-Up for Identified Issues—Post Acute Care (PAC) Skilled
Nursing Facility (SNF) Quality Reporting Program (QRP).
Claims-Based
MSPB SNF ......................................
DTC .................................................
PPR .................................................
Medicare Spending Per Beneficiary (MSPB)—Post Acute Care (PAC) Skilled Nursing Facility (SNF) Quality
Reporting Program (QRP).
Discharge to Community—Post Acute Care (PAC) Skilled Nursing Facility (SNF) Quality Reporting Program (QRP).
Potentially Preventable 30-Day Post-Discharge Readmission Measure for Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
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* The measure will be replaced with the Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury measure, effective October 1, 2018.
Comment: While we did not solicit
comment on currently adopted or future
measures for the SNF QRP, we received
multiple comments suggesting the
removal or modification of measures
finalized in previous rules as well as
recommendations for future measure
development.
Response: We thank commenters for
their comments. We did not propose
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any changes to our previously finalized
measures or to adopt any new measures
for the SNF QRP. We will take these
comments into consideration as we
engage in future measure development
and selection activities for the SNF
QRP. The SNF QRP measures described
in Table 39 were adopted in the FY
2016 SNF PPS final rule (80 FR 46432
through 46453), FY 2017 SNF PPS final
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rule (81 FR 52012 through 52039), or FY
2018 SNF PPS final rule (82 FR 36570
through 36594), and we refer the reader
to those detailed discussions.
5. IMPACT Act Implementation Update
In the FY 2018 SNF PPS final rule (82
FR 36596 through 36597), we stated that
we intended to specify two measures
that would satisfy the domain of
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accurately communicating the existence
and provision of the transfer of health
information and care preferences under
section 1899B(c)(1)(E) of the Act no later
than October 1, 2018, and intended to
propose to adopt them for the FY 2021
SNF QRP, with data collection
beginning on or about October 1, 2019.
As stated in the FY 2019 SNF PPS
proposed rule (83 FR 21083), as a result
of the input provided during a public
comment period between November 10,
2016 and December 11, 2016, input
provided by a technical expert panel
(TEP), and pilot measure testing
conducted in 2017, we are engaging in
continued development work on these
two measures, including supplementary
measure testing and providing the
public with an opportunity for comment
in 2018. We stated that we would
reconvene a TEP for these measures in
mid-2018 which occurred in April 2018.
We stated that we now intend to specify
the measures under section
1899B(c)(1)(E) of the Act no later than
October 1, 2019 and intend to propose
to adopt the measures for the FY 2022
SNF QRP, with data collection
beginning with residents admitted as
well as discharged on or after October
1, 2020. For more information on the
pilot testing, we refer readers to https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/
IMPACT-Act-Downloads-andVideos.html.
Comment: A few commenters
supported the delayed implementation
of the measures. One commenter
supported the continued evaluation and
testing of the measures prior to
adoption. The commenter believed that
this delay is appropriate as it allows
more time for thorough measure
development, continued field testing of
the measures, and public input on the
draft measures. This commenter noted
that continued development of the
measures will help to ensure they are
measuring the domain of interest and
will have a meaningful impact on the
quality of care.
Response: We appreciate the
commenters support.
6. Form, Manner, and Timing of Data
Submission Under the SNF QRP
Under our current policy, SNFs report
data on SNF QRP assessment-based
measures and standardized resident
assessment data by reporting the
designated data elements for each
applicable resident on the Minimum
Data Set (MDS) resident assessment
instrument and then submitting
completed instruments to CMS using
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the Quality Improvement Evaluation
System Assessment Submission and
Processing (QIES ASAP) system. We
refer readers to the FY 2018 SNF PPS
final rule (82 FR 36601 through 36603)
for the data collection and submission
time frames for assessment-based
measures and standardized resident
assessment data that we finalized for the
SNF QRP.
7. Changes to the SNF QRP
Reconsideration Requirements
Section 413.360(d)(1) of our
regulations states, in part, that SNFs that
do not meet the SNF QRP requirements
for a program year will receive a letter
of non-compliance through the QIES
ASAP system, as well as through the
United States Postal Service.
In the FY 2019 SNF PPS proposed
rule (83 FR 21083), we proposed to
revise § 413.360(d)(1) to expand the
methods by which we would notify a
SNF of non-compliance with the SNF
QRP requirements for a program year.
Revised § 413.360(d)(1) would state that
we would notify SNFs of noncompliance with the SNF QRP
requirements via a letter sent through at
least one of the following notification
methods: The QIES ASAP system; the
United States Postal Service; or via an
email from the Medicare Administrative
Contractor (MAC). We believe that this
change will address feedback from
providers who requested additional
methods for notification.
In addition, § 413.360(d)(4) currently
states that we will make a decision on
the request for reconsideration and
provide notice of the decision to the
SNF through the QIES ASAP system
and via letter sent through the United
States Postal Service.
We proposed to revise § 413.360(d)(4)
to state that we will notify SNFs, in
writing, of our final decision regarding
any reconsideration request via a letter
sent through at least one of the
following notification methods: The
QIES ASAP system, the United States
Postal Service, or via an email from the
Medicare Administrative Contractor
(MAC).
We invited public comments on these
proposals.
Comment: Several commenters
expressed support for CMS’ efforts to
expand the methods for notifying
providers of non-compliance and
decisions on reconsideration requests.
One commenter acknowledged that the
addition of email notifications from the
Medicare Administrative Contractor
(MAC) as a third notification method
may help reduce burden, adding that
providers should be notified via at least
two of the three methods and that letters
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should require return receipt to ensure
notifications are not lost in the mail.
Another commenter recommended that
CMS either specify a notification
method that will always be used, allow
providers to select a preferred method,
or consistently use all three methods to
ensure that notifications are received by
appropriate organization leaders.
Several commenters suggested that CMS
provide additional information
regarding how to specify appropriate
recipients of email notifications from
the Medicare Administrative Contractor
(MAC). Another commenter
recommended selecting a consistent
notification process, using the same
methods for all SNFs, noting that
consistent and predictable notification
will reduce provider burden and lower
the risk of missing a notification.
Response: We thank commenters for
their support. We will use at least one
method of notification, and providers
will be notified regarding the specific
method of communication that CMS
will use via the SNF QRP
Reconsideration and Exception and
Extension website at https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/
Skilled-Nursing-Facility-QualityReporting-Program/SNF-QRReconsideration-and-Exception-andExtension.html and announcements via
the PAC listserv. The announcements
will be posted annually following the
May 15th data submission deadline—
prior to the distribution of the initial
notices of non-compliance
determination in late spring/early
summer. Messaging will include the
method of communication for the
notices, instructions for sending a
reconsideration request, and the final
deadline for submitting the request.
This policy would be effective October
1, 2018.
With regard to the comment about
specifying the recipient of notification
for a facility, our notifications are sent
to the point of contact on file in the
QIES database. This information is
populated via ASPEN. It is the
responsibility of the facility to ensure
that this information is up-to-date. For
information regarding how to update
provider information in QIES, we refer
providers to contact their Medicare
Administrative Contractor or CMS
Regional Office at https://www.cms.gov/
About-CMS/Agency-Information/
RegionalOffices/. Downloads
of contact information for each Regional
Office are available at the bottom of the
web page.
We disagree with the
recommendation that CMS notify all
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SNFs using the same method in order to
account for circumstances that are
beyond our control, such as technical
issues that may impede the delivery of
electronic notifications. As discussed,
providers will be notified in advance of
the specific method of communication
that CMS will use.
We are finalizing our proposal to
revise § 413.360(d)(1) to state that we
will notify a SNF of non-compliance
with the SNF QRP requirements for a
program year via a letter sent through at
least one of the following notification
methods: The QIES ASAP system; the
United States Postal Service; or via an
email from the Medicare Administrative
Contractor (MAC).
We are also finalizing our proposal, to
revise § 413.360(d)(4) to state that we
will notify SNFs, in writing, of our final
decision regarding any reconsideration
request via a letter sent through at least
one of the following notification
methods: The QIES ASAP system, the
United States Postal Service, or via an
email from the Medicare Administrative
Contractor (MAC).
8. Policies Regarding Public Display for
the SNF QRP
Section 1899B(g) of the Act requires
the Secretary to establish procedures for
the public reporting of SNFs’
performance on measures under
sections 1899B(c)(1) and 1899B(d)(1) of
the Act. SNF QRP measure data will be
displayed on the Nursing Home
Compare website, an interactive web
tool that assists individuals by
providing information on SNF quality of
care to those who need to select a SNF.
In the FY 2018 SNF PPS final rule (82
FR 36606 through 36607), we finalized
that we would publicly display the
Medicare Spending Per Beneficiary-PAC
SNF QRP and Discharge to CommunityPAC SNF QRP measures in calendar
year 2018 based on discharges from
October 1, 2016 through September 30,
2017. In the FY 2019 SNF PPS proposed
rule (83 FR 21084), we proposed to
increase the number of years of data
used to calculate the Medicare Spending
Per Beneficiary-PAC SNF QRP and
Discharge to Community-PAC SNF QRP
measures for purposes of display from 1
year to 2 years. Under this proposal,
data on these measures would be
publicly reported in CY 2019, or as soon
thereafter as operationally feasible,
based on discharges from October 1,
2016 through September 30, 2018.
Increasing the measure calculation
and public display periods from 1 to 2
years of data increases the number of
SNFs with enough data adequate for
public reporting for the Medicare
Spending Per Beneficiary-PAC SNF QRP
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measure from 86 percent (based on 2016
Medicare FFS claims data) to 95 percent
(based on 2015 through 2016 Medicare
FFS claims data), and for the Discharge
to Community-PAC SNF QRP measure
from 83 percent (based on 2016
Medicare FFS claims data) to 94 percent
(based on 2015 through 2016 Medicare
FFS claims data). Increasing measure
public display periods to 2 years also
aligns with the public display periods of
these measures in the IRF QRP and
LTCH QRP.
We also proposed to begin publicly
displaying data in CY 2020, or as soon
thereafter as is operationally feasible, on
the following four assessment-based
measures: (1) Application of IRF
Functional Outcome Measure: Change
in Self-Care Score for Medical
Rehabilitation Patients (NQF #2633)
(Change in Self-Care Score); (2)
Application of IRF Functional Outcome
Measure: Change in Mobility Score for
Medical Rehabilitation Patients (NQF
#2634) (Change in Mobility Score); (3)
Application of IRF Functional Outcome
Measure: Discharge Self-Care Score for
Medical Rehabilitation Patients (NQF
#2635) (Discharge Self-Care Score); and
(4) Application of IRF Functional
Outcome Measure: Discharge Mobility
Score for Medical Rehabilitation
Patients (NQF #2636) (Discharge
Mobility Score). SNFs are required to
submit data on these four assessmentbased measures with respect to
admissions as well as discharges
occurring on or after October 1, 2018.
We proposed to display data for these
assessment-based measures based on 4
rolling quarters of data, initially using 4
quarters of discharges from January 1,
2019 through December 31, 2019. To
ensure the statistical reliability of the
measure rates for these four assessmentbased measures, we also proposed that
if a SNF has fewer than 20 eligible cases
during any 4 consecutive rolling
quarters of data that we are displaying
for any of these measures, then we
would note in our public display of that
measure that with respect to that SNF,
the number of cases/resident stays is too
small to publicly report.
Comment: One commenter supported
the proposal to publicly display the four
SNF functional outcome measures on
the SNF Compare website in CY 2020.
Response: We thank the commenter
for the support.
Comment: Several commenters,
including MedPAC, supported
increasing the number of years of data
used to calculate the Medicare Spending
per Beneficiary-PAC SNF QRP and
Discharge to Community-PAC SNF QRP
measures from 1 year to 2 years to
increase the number of providers that
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can be included in public reporting and
also to align the measurement period
with that used in other PAC settings.
One commenter was concerned that
increasing the measurement period to 2
years would penalize facilities that
showed improvement in a one-year
period, as the data would be aggregated
across 2 years. Two commenters agreed
with increasing the measurement period
from 1 to 2 years but questioned the
usefulness of a measure that they stated
required a significant adjustment in
collection methods to acquire data
necessary to calculate a rate.
Response: We thank MedPAC and the
other commenters for their support to
increase the number of years of data
used to calculate the Medicare Spending
per Beneficiary-PAC SNF QRP measure
and Discharge to Community-PAC SNF
QRP measure from 1 to 2 years. We
appreciate the commenter’s concern
about the impact of aggregating data
across 2 years on the ability to
demonstrate improvement in a 1-year
period; however, we believe that the
benefit of increasing the number of
SNFs in public reporting outweighs the
expressed concern associated with
increasing the measurement period to 2
years because it would provide more
information to consumers who may
have a limited number of SNFs in their
area. Further, improvements in 1-year
period will be included in the 2-year
data, so providers’ efforts to improve
can still be reflected in their measure
scores. The proposed change will also
align with the measurement period of
the three claims-based measures
(Medicare Spending per Beneficiary,
Discharge to Community, and
Potentially Preventable Readmissions)
across the IRF, LTCH, and SNF QRPs.
Comment: MedPAC suggested that if
CMS increases the measurement period
for the Medicare Spending per
Beneficiary PAC SNF QRP measure and
Discharge to Community PAC SNF QRP
measure to 2 years, CMS could consider
giving more weight to the most recent
performance year. MedPAC also
suggested that CMS reconsider the
approach to establishing minimum
counts of episodes for public reporting
of the Medicare Spending per
Beneficiary-PAC SNF QRP measure to
ensure accurate representation of a
provider’s performance.
Response: We thank MedPAC for its
suggestion to consider greater weighting
of the most recent year of data and to
reconsider the approach to establishing
minimum counts of episodes for public
reporting. We will consider testing these
suggestions in the future.
Comment: A commenter noted the
importance of understanding the
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relationship between the Medicare
Spending per Beneficiary-PAC SNF QRP
measure, quality, and beneficiary out-ofpocket expenses. The commenter also
noted the importance of educating
consumers on this measure. The
commenter suggested that CMS analyze
these relationships further and define a
strategy for interpreting the results
before making the measure results
public. Another commenter noted that
facilities should not be penalized for
decisions made by physicians that are
beyond providers’ control.
Response: We thank the commenters
for the suggestions for additional
analyses on the relationship between
the Medicare Spending per BeneficiaryPAC SNF QRP measure, quality, and
out-of-pocket spending. We will
consider analyses on these topics in the
future. Regarding beneficiary education
for interpreting results, we will continue
to work to develop language to support
beneficiary understanding of the
measures in public reporting. Regarding
the comment on facility penalty for
physician decision-making, the measure
is intended to promote care
coordination and improve efficiency by
creating a continuum of accountability
between Medicare providers.
Comment: Some commenters
suggested that the public reporting of
the SNF functional outcome measures:
(1) Change in Self-Care Score; (2)
Change in Mobility Score; (3) Discharge
Self-Care Score; and (4) Discharge
Mobility Score, on the SNF Compare
website be delayed beyond CY 2020.
One commenter suggested that the
reporting be delayed until additional
measures that address the maintenance
of functional abilities are also developed
and reported alongside the functional
improvement measures and also
encouraged the development of
measures related to other nursing goals.
Other commenters suggested that CMS
reconsider publicly reporting the SNF
functional quality measures in CY 2020
if these measures do not receive NQF
endorsement prior to public display.
Response: We thank the commenters
for their suggestions. We addressed the
importance of measuring functional
maintenance for SNF residents in the
FY 2018 SNF PPS final rule (82 FR
36588). We interpret the commenter’s
recommendation of ‘‘at least one
nursing goals measure’’ to refer to the
development of new measures relating
to functional status for SNF residents.
We support future quality measurement
work that will address the development
of other measures that focus on
maintaining function and the slowing of
functional decline. We agree that the
NQF endorsement process is an
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important part of measure development.
The four functional outcome quality
measures that we proposed to publicly
report are NQF-endorsed for the IRF
setting, and we plan to submit these
four assessment-based measures to NQF
for endorsement consideration in the
SNF setting as soon as feasible.
After consideration of public
comments we received, we are
finalizing our proposal, to increase the
number of years of data used to
calculate the Medicare Spending per
Beneficiary-PAC SNF QRP measure and
Discharge to Community-PAC SNF QRP
measure for purposes of public display
from 1 to 2 years, starting in CY 2019
or as soon thereafter as operationally
feasible. We are also finalizing our
proposal to begin publicly displaying
data in CY 2020, or as soon thereafter
as is operationally feasible, on the
following four assessment-based
measures: (1) Application of IRF
Functional Outcome Measure: Change
in Self-Care Score for Medical
Rehabilitation Patients (NQF #2633); (2)
Application of IRF Functional Outcome
Measure: Change in Mobility Score for
Medical Rehabilitation Patients (NQF
#2634); (3) Application of IRF
Functional Outcome Measure: Discharge
Self-Care Score for Medical
Rehabilitation Patients (NQF #2635);
and (4) Application of IRF Functional
Outcome Measure: Discharge Mobility
Score for Medical Rehabilitation
Patients (NQF #2636).
C. Skilled Nursing Facility Value-Based
Purchasing Program (SNF VBP)
1. Background
Section 215(b) of the Protecting
Access to Medicare Act of 2014 (PAMA)
(Pub. L. 113–93) authorized the SNF
VBP Program (the ‘‘Program’’) by adding
section 1888(h) to the Act. As a
prerequisite to implementing the SNF
VBP Program, in the FY 2016 SNF PPS
final rule (80 FR 46409 through 46426),
we adopted an all-cause, all-condition
hospital readmission measure, as
required by section 1888(g)(1) of the
Act. In the FY 2017 SNF PPS final rule
(81 FR 51986 through 52009), we
adopted an all-condition, risk-adjusted
potentially preventable hospital
readmission measure for SNFs, as
required by section 1888(g)(2) of the
Act. In the FY 2018 SNF PPS final rule
(82 FR 36608 through 36623), we
adopted additional policies for the
Program, including an exchange
function methodology for disbursing
value-based incentive payments.
Section 1888(h)(1)(B) of the Act
requires that the SNF VBP Program
apply to payments for services
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furnished on or after October 1, 2018.
The SNF VBP Program applies to
freestanding SNFs, SNFs affiliated with
acute care facilities, and all non-CAH
swing-bed rural hospitals. We believe
the implementation of the SNF VBP
Program is an important step towards
transforming how care is paid for,
moving increasingly towards rewarding
better value, outcomes, and innovations
instead of merely rewarding volume.
For additional background
information on the SNF VBP Program,
including an overview of the SNF VBP
Report to Congress and a summary of
the Program’s statutory requirements,
we refer readers to the FY 2016 SNF
PPS final rule (80 FR 46409 through
46410). We also refer readers to the FY
2017 SNF PPS final rule (81 FR 51986
through 52009) for discussion of the
policies that we adopted related to the
potentially preventable hospital
readmission measure, scoring, and other
topics. Finally, we refer readers to the
FY 2018 SNF PPS final rule (82 FR
36608 through 36623) for discussions of
the policies that we adopted related to
value-based incentive payments, the
exchange function, and other topics.
We proposed additional requirements
for the FY 2021 SNF VBP Program in
the FY 2019 SNF PPS proposed rule (83
FR 21084 through 21089). We received
several general comments on the SNF
VBP Program.
Comment: One commenter supported
our goal of reducing preventable
hospital readmissions, noting that those
readmissions increase costs for the
Medicare program, significantly affect
beneficiaries, and increase the
likelihood of medical errors related to
care coordination.
Response: We thank the commenter
for this support.
Comment: A commenter suggested
that we consider developing an
integrated approach that provides
incentives to SNFs to accept more
medically complex patients and
promotes readmission prevention. The
commenter suggested that, while the
PDPM and SNF VBP Programs are
authorized separately, integrating them
might be helpful to that end, and could
include payments for telemedicine,
post-discharge care coordination, and
training on readmission prevention
protocols and refinements to Interrupted
Stay policies. The commenter stated
that readmissions prevention strategies
can be very effective at saving Medicare
spending and improving the patient
experience, but can also require initial
investments in technology and staff
training.
Response: We agree that readmission
prevention strategies can be effective at
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saving Medicare spending and
improving the patient experience. At
this time, we do not believe it is
possible to integrate the PDPM and SNF
VBP Program given their separate
authorities and purposes. However, we
will continue to monitor the effects of
the SNF VBP Program and the case-mix
classification methodology in the SNF
prospective payment system, including
the PDPM.
Comment: One commenter
encouraged us to make public as much
SNF VBP data as possible on Nursing
Home Compare and data.medicare.gov,
including individual facilities’ baseline
and performance period readmissions
rates, achievement and improvement
points, performance scores, rankings,
and value-based incentive payment
percentages. The commenter noted that
CMS has provided most of this type of
information for other programs, and that
the public should expect the same level
of transparency from SNF VBP.
Response: We agree with the
comment and intend to be as
transparent as possible in order to
inform consumer decision-making,
quality improvement initiatives, and
high quality patient care. As required by
section 1888(h)(9) of the Act, we will
publish facility performance
information, including SNF
performance scores and rankings, the
range of SNF performance scores, the
number of SNFs receiving value-based
incentive payments, and the range and
total amounts of those payments, on the
Nursing Home Compare website.
Comment: One commenter requested
that we ensure that specialty
populations such as children, patients
with HIV/AIDS, ventilator-dependent
patients, and those with Huntington’s
disease or other neurodegenerative
disorders, do not experience unintended
negative results based on the SNF VBP
Program’s incentives.
Response: We monitor numerous
aspects of the SNF VBP Program,
including trends in measure rates, SNF
performance scores, and starting with
FY 2019, value-based incentive payment
percentages and their effects on SNFs’
care quality and on beneficiaries’ access
to care. We understand the commenter’s
concerns about specialty patient
populations, and we will continue
working to ensure that such populations
do not experience unintended
consequences because of the SNF VBP
Program.
2. Measures
For background on the measures we
have adopted for the SNF VBP Program,
we refer readers to the FY 2016 SNF
PPS final rule (80 FR 46419), where we
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finalized the Skilled Nursing Facility
30-Day All-Cause Readmission Measure
(SNFRM) (NQF #2510) that we are
currently using for the SNF VBP
Program. We also refer readers to the FY
2017 SNF PPS final rule (81 FR 51987
through 51995), where we finalized the
Skilled Nursing Facility 30-Day
Potentially Preventable Readmission
Measure (SNFPPR) that we will use for
the SNF VBP Program instead of the
SNFRM as soon as practicable, as
required by statute.
We did not propose any changes to
the Program’s measures. However, we
received several comments on the
Program’s measures.
Comment: One commenter requested
that we announce when we will
transition the SNF VBP Program to a
measure of potentially preventable
readmissions rather than the current allcause readmissions measure. One
commenter recommended that we not
replace the SNFRM with the SNFPPR
before FY 2021 to allow SNFs time to
adjust to the SNFRM and other
measures of readmissions. Another
commenter encouraged us to transition
the Program to the measure of
potentially preventable readmissions,
stating that the PPR will exclude
planned readmissions that are not
considered a negative outcome, and
therefore, should not be counted against
SNFs. Other commenters urged us to
seek NQF endorsement and input from
the Measure Applications Partnership as
soon as possible on the SNFPPR, and
requested that we provide a timeline for
when we will replace the all-cause
measure with the SNFPPR. Another
commenter requested that we consider
standardizing and consolidating various
SNF hospitalization measures used in
Medicare to focus SNFs’ quality
improvement efforts. The commenter
noted that state initiatives may also
have similar measures based on
different data, and that the multitude of
hospitalization measures may be
confusing for consumers and may dilute
provider improvement efforts.
Response: We sought input from the
MAP on the SNFPPR prior to proposing
it for adoption in the SNF VBP. The
MAP published its views in a February
2016 report, as we described in the FY
2017 SNF PPS final rule (81 FR 51989
through 51990). In that report,8 MAP
noted the statutory requirement that we
specify a measure of potentially
preventable readmissions for the SNF
VBP Program, and explained support for
8 Available at https://www.qualityforum.org/
Publications/2016/02/MAP_2016_Considerations_
for_Implementing_Measures_in_Federal_Programs_
-_PAC-LTC.aspx.
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the importance of the measure and its
acknowledgement that ‘‘readmission for
the SNF setting is not an occasional
occurrence.’’ MAP’s report also noted
public commenters’ input, including
general support for the recommendation
to ‘‘encourage continued development’’
of the SNFPPR and some concerns about
the measure’s specifications and MAP’s
making a recommendation on a measure
that is not fully tested. Regarding
submission of the SNFPPR for
consensus endorsement, we currently
plan to submit the measure for NQF
endorsement in 2019 upon completion
of additional testing. We plan to
propose transitioning to this measure
after the completion of the endorsement
process.
We also acknowledge the
commenter’s concern about the number
of hospitalization measures in Medicare
and in other quality programs, including
those used by the states. We will
consider how we might further
streamline our quality programs,
particularly under the Meaningful
Measures Initiative. However, we note
that all rehospitalization measures share
the same underlying care focus—that is,
avoiding rehospitalizations—even if
they vary somewhat in the specifics of
which hospitalizations they measure.
We continue to believe that SNFs
working to improve care quality and
minimize rehospitalizations for their
patients will perform well on
hospitalization measures.
We continue to determine when it is
practicable to transition the Program to
the measure of potentially preventable
readmissions, and we will propose that
transition in future rulemaking, which
we believe will provide sufficient notice
to SNFs about the quality measure that
will form the basis for the SNF VBP
Program. We intend to take all of the
views expressed by public commenters
into account when we make that
decision, as well as the operational
necessities of the Program (such as the
time needed to calculate measure rates
on the SNFPPR and how that time
interacts with the Program’s
performance and baseline periods).
However, we would like to clarify that
the SNFRM currently excludes certain
planned readmissions.
Comment: One commenter stated that
the SNF VBP Program should consist of
more than just one hospital
readmissions measure, and encouraged
us to work with Congress to include
additional measures in the Program,
potentially including those currently
displayed on Nursing Home Compare,
were part of the SNF VBP
demonstration, or are part of the SNF
QRP. The commenter also specifically
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suggested measures including turnover
as a percentage of nursing staff, total
CNA hours per patient day, and total
licensed nursing hours per patient day,
noting that higher staffing levels are
correlated with higher quality of care
outcomes.
Response: We thank the commenter
for these suggestions. As the commenter
noted, any changes to expand the SNF
VBP Program’s measure set would
require Congressional action.
Comment: One commenter expressed
concern about the data elements that
SNFs must document to track their
performance on the SNFRM, noting that
they are different than those used for the
CMS Star Ratings. The commenter also
urged us to better align the measures
between the SNF QRP and SNF VBP
Programs, stating that SNFs want
harmonization in what they are required
to collect, document, and extract for
performance tracking and improvement
purposes.
Response: SNFs may choose to track
readmissions to the hospitals as part of
their quality improvement efforts, and
we note that the measures that we have
specified for the SNF VBP program
impose no data collection requirements
on SNFs. Additionally, while we
understand the potential benefits of
quality measure alignment between the
SNF QRP and SNF VBP Programs, we
do not believe that this type of
alignment meets the SNF VBP Program’s
needs at this time. While we generally
agree that aligning measures across
programs is ideal, we hesitate to do so
when it is inappropriate to the programs
and does not align with statutory
direction. In this case, aligning with the
SNF QRP readmission measure would
require the SNF VBP Program to ignore
readmissions that occur during the SNF
stay, and we believe this is
inappropriate to a value-based
purchasing program intended to reduce
readmissions among SNF patients in
accordance with the statute. Likewise,
the SNF QRP readmission measure must
follow a statutory requirement to align
with readmission measures in other
post-acute QRPs that are not compatible
with the needs of the SNF VBP program.
We thank the commenters for their
feedback on SNF VBP measures.
a. Accounting for Social Risk Factors in
the SNF VBP Program
In the FY 2018 SNF PPS final rule (82
FR 36611 through 36613), we discussed
the importance of improving beneficiary
outcomes including reducing health
disparities. We also discussed our
commitment to ensuring that medically
complex patients, as well as those with
social risk factors, receive excellent
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care. We discussed how studies show
that social risk factors, such as being
near or below the poverty level as
determined by HHS, belonging to a
racial or ethnic minority group, or living
with a disability, can be associated with
poor health outcomes and how some of
this disparity is related to the quality of
health care.9 Among our core objectives,
we aim to improve health outcomes,
attain health equity for all beneficiaries,
and ensure that complex patients, as
well as those with social risk factors,
receive excellent care. Within this
context, reports by the Office of the
Assistant Secretary for Planning and
Evaluation (ASPE) and the National
Academy of Medicine have examined
the influence of social risk factors in our
value-based purchasing programs.10 As
we noted in the FY 2018 SNF PPS final
rule (82 FR 36611), ASPE’s report to
Congress found that, in the context of
value-based purchasing programs, dual
eligibility for Medicare and Medicaid
was the most powerful predictor of poor
health care outcomes among those
social risk factors that they examined
and tested. In addition, as noted in the
FY 2018 SNF PPS final rule, the
National Quality Forum (NQF)
undertook a 2-year trial period in which
certain new measures and measures
undergoing maintenance review have
been assessed to determine if risk
adjustment for social risk factors is
appropriate for these measures.11 The
trial period ended in April 2017 and a
final report is available at https://
www.qualityforum.org/SES_Trial_
Period.aspx. The trial concluded that
‘‘measures with a conceptual basis for
adjustment generally did not
demonstrate an empirical relationship’’
between social risk factors and the
outcomes measured. This discrepancy
may be explained in part by the
methods used for adjustment and the
limited availability of robust data on
social risk factors. NQF has extended
9 See, for example United States Department of
Health and Human Services. ‘‘Healthy People 2020:
Disparities. 2014.’’ Available at https://
www.healthypeople.gov/2020/about/foundationhealth-measures/Disparities; or National Academies
of Sciences, Engineering, and Medicine. Accounting
for Social Risk Factors in Medicare Payment:
Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and
Medicine 2016.
10 Department of Health and Human Services
Office of the Assistant Secretary for Planning and
Evaluation (ASPE), ‘‘Report to Congress: Social Risk
Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016.
Available at https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
11 Available at https://www.qualityforum.org/SES_
Trial_Period.aspx.
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the socioeconomic status (SES) trial,12
allowing further examination of social
risk factors in outcome measures.
In the FY 2018/CY 2018 proposed
rules for our quality reporting and
value-based purchasing programs, we
solicited feedback on which social risk
factors provide the most valuable
information to stakeholders and the
methodology for illuminating
differences in outcomes rates among
patient groups within a provider that
would also allow for a comparison of
those differences, or disparities, across
providers. Feedback we received across
our quality reporting programs included
encouraging CMS to explore whether
factors could be used to stratify or risk
adjust the measures (beyond dual
eligibility); to consider the full range of
differences in patient backgrounds that
might affect outcomes; to explore risk
adjustment approaches; and to offer
careful consideration of what type of
information display would be most
useful to the public.
We also sought public comment on
confidential reporting and future public
reporting of some of our measures
stratified by patient dual eligibility. In
general, commenters noted that
stratified measures could serve as tools
for hospitals to identify gaps in
outcomes for different groups of
patients, improve the quality of health
care for all patients, and empower
consumers to make informed decisions
about health care. Commenters
encouraged us to stratify measures by
other social risk factors such as age,
income, and educational attainment.
With regard to value-based purchasing
programs, commenters also cautioned
CMS to balance fair and equitable
payment while avoiding payment
penalties that mask health disparities, or
discouraging the provision of care to
more medically complex patients.
Commenters also noted that value-based
payment program measure selection,
domain weighting, performance scoring,
and payment methodology must
account for social risk.
We stated in the FY 2019 SNF VBP
PPS proposed rule that as a next step,
we are considering options to improve
health disparities among patient groups
within and across hospitals, SNFs, and
other health care providers by
increasing the transparency of
disparities as shown by quality
measures. We also stated that we are
considering how this work applies to
other CMS quality programs in the
future. We refer readers to the FY 2018
12 Available at https://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier=id&
ItemID=86357.
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IPPS/LTCH PPS final rule (82 FR 38403
through 38409) for more details, where
we discuss the potential stratification of
certain Hospital Inpatient Quality
Reporting Program outcome measures.
Furthermore, we stated that we continue
to consider options to address equity
and disparities in our value-based
purchasing programs.
We plan to continue working with
ASPE, the public, and other key
stakeholders on this important issue to
identify policy solutions that achieve
the goals of attaining health equity for
all beneficiaries and minimizing
unintended consequences.
We received several comments on our
discussion of social risk factors.
Comment: One commenter suggested
that we consider adjusting for social risk
factors through peer grouping to avoid
masking disparities in clinical
performance. The commenter also
suggested that we target technical
assistance resources to low-performing
providers and support research to
reduce measurement bias. Another
commenter was concerned that we had
not yet adjusted the SNF Readmission
Measure based on socioeconomic
factors. The commenter expressed
concern that we would score SNFs
unfairly due to more challenging case
mixes, and stated that we must adjust
readmission scores to avoid unfair
payment penalties for those SNFs
serving patient populations with lower
socioeconomic status. One commenter
acknowledged that we are required by
statute to adopt a measure of all-cause
readmissions, but expressed concerns
about the SNFRM due to its lack of risk
adjustment for socioeconomic status, its
lacking focus on preventable
readmissions, and some design
elements. The commenter encouraged
us to create a socioeconomic status risk
adjustment for this measure, noting that
SNFs in underserved areas
predominantly caring for low-income,
dual-eligible residents may be penalized
by measures of all-cause readmissions.
Another commenter urged us to include
risk adjustment for socioeconomic
status for any readmission measures
adopted under the SNF VBP Program.
The commenter concurred with the
December 2016 Report to Congress on
Social Risk Factors’ conclusion that
social risk factors are essential
determinants of health and stated that
the IMPACT Act provides CMS with a
wealth of patient-specific data that it
can use to develop additional risk
adjustment policies. The commenter
encouraged us to use those data to
adjust SNF VBP measures and provide
incentives to SNFs caring for patients
with social risk factors.
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Response: We thank the commenters
for these suggestions and will take them
into account as we develop additional
policies on social risk factors in the
future. However, in response to the
commenter who expressed concern
about the current SNF Readmission
Measure, we note that the SNF
Readmission Measure includes the
following case-mix adjustments that we
believe promote fairness in the
application of financial penalties:
Demographic characteristics (age and
sex), principal diagnosis from the
Medicare claim corresponding to the
prior proximal hospitalization as
categorized by AHRQ’s Clinical
Classification Software (CCS) groupings,
length of stay during the patient’s prior
proximal hospitalization, length of stay
in the intensive care unit (ICU), endstage renal disease (ESRD) status, the
patient’s disability status, the number of
prior hospitalizations in the previous
365 days, system-specific surgical
indicators, individual comorbidities as
grouped by Hierarchical Condition
Categories (HCCs) or other comorbidity
indices, and a variable counting the
number of comorbidities if the patient
had more than two HCCs. We refer
readers to the FY 2016 SNF PPS final
rule (80 FR 46411 through 46419) for
additional technical details on the
SNFRM.
Comment: One commenter
encouraged us to continue using
findings from the NQF
Sociodemographic Status trial to inform
our efforts to address equity and
disparities in our VBP Programs, but
recommended that we not add SES
covariates to the SNFRM risk
adjustment model as that action may
create biases in reporting, undermine
system-based approaches to providing
high quality care, and create access to
care problems.
Response: We remain concerned
about the possibility that additional risk
adjustment may mask important
performance differences for providers
and suppliers that treat patients with
additional comorbidities or
complications, and we will continue
studying the issue. We intend to
monitor NQF’s ongoing work on this
topic carefully.
Comment: One commenter agreed
with recommendations to incorporate
social risk factors in risk adjustment, but
was not sure about which risk
characteristics are available in the
Medicare eligibility files and whether
those characteristics have been
evaluated independently. The
commenter also suggested that we
coordinate research efforts with states
that may already be conducting work in
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this area. One commenter urged us to
incorporate risk adjustment for
sociodemographic and socioeconomic
status into SNF VBP measures, but
expressed support for the continued use
of unadjusted data for measures related
to items that are within the SNF’s
control. The commenter urged us to
make unadjusted performance measure
data available to the public to ensure
that analysis of health care disparities
can continue, and until risk-adjusted
measures are available, to report
stratified measure rates to the public.
The commenter also expressed support
for alternative payment mechanisms
that account for the complexities of
extremely disadvantaged patients, and
called on us to monitor the effects of our
quality improvement programs
carefully. Another commenter
supported our continued evaluation of
social determinants of health, including
providers’ commitments to caring for
the Medicaid population, and their
impact on our payment systems. The
commenter encouraged us to ensure that
our payment methodologies are updated
consistently to account for these factors
and maintain equitable access to care.
Response: We intend to continue
working with states and other
stakeholders to the greatest extent
possible to understand the challenges
associated with additional risk
adjustment for socioeconomic and
sociodemographic status in quality
measurement programs, including
assessing the appropriateness of
incorporating specific risk factors in the
risk adjustment models. That work
includes identifying appropriate data
sources for social risk factors, and we
will consider the commenter’s point
about the Medicare eligibility files as a
potential data source.
We agree with the commenters that
studying health care disparities is
critically important for the health care
system, and we will continue to do so.
We will also take that point under
consideration as we consider social risk
factors adjustment policies for the SNF
VBP Program in the future. We will
continue monitoring the SNF VBP
Program to ensure that Medicare
beneficiaries maintain access to needed
SNF care.
We thank the commenters for this
feedback, and will take it account as we
consider the appropriateness of
accounting for social risk factors in the
SNF VBP Program.
3. Performance Standards
a. FY 2021 Performance Standards
We refer readers to the FY 2017 SNF
PPS final rule (81 FR 51995 through
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51998) for a summary of the statutory
provisions governing performance
standards under the SNF VBP Program
and our finalized performance standards
policy, as well as the numerical values
for the achievement threshold and
benchmark for the FY 2019 program
year. We also responded to public
comments on these policies in that final
rule.
We published the final numerical
values for the FY 2020 performance
standards in the FY 2018 SNF PPS final
rule (82 FR 36613), and for reference,
we are displaying those values again in
Table 40.
TABLE 40—FINAL FY 2020 SNF VBP PROGRAM PERFORMANCE STANDARDS
Measure ID
Measure description
Achievement
threshold
Benchmark
SNFRM ..........
SNF 30-Day All-Cause Readmission Measure (NQF #2510) ....................................................
0.80218
0.83721
We will continue to use the
achievement threshold and benchmark
as previously finalized in the FY 2018
SNF PPS final rule. However, due to
timing constraints associated with the
compilation of the FY 2017 MedPAR
file to include 3 months of data
following the last discharge date, we
were unable to provide estimated
numerical values for the FY 2021
Program year’s performance standards
in the proposed rule. As discussed
further below, we proposed to adopt FY
2017 as the baseline period for the FY
2021 program year. While we did not
expect either the achievement threshold
or benchmark to change significantly
from what was finalized for the FY 2020
Program year, we stated our intent to
publish the final numerical values for
the performance standards based on the
FY 2017 baseline period in the FY 2019
SNF PPS final rule.
We welcomed public comment on
this approach.
Comment: One commenter urged us
to score SNFs on achievement only,
stating that Medicare’s quality programs
should reward providers based on clear,
absolute, and prospectively set
performance targets.
Response: While we appreciate this
suggestion, we note that we are required
by section 1888(h)(3)(B) of the Act to
establish performance standards that
include levels of achievement and
improvement, and to use to the higher
of either improvement or achievement
when calculating the SNF performance
score.
Comment: One commenter stated its
understanding of the timing constraints
that we discussed with respect to the
MedPAR file for performance standards
calculations, and reiterated its prior
support for the Program’s switch to
fiscal year instead of calendar year
performance periods.
Response: We appreciate the
continued support for the policy we
finalized in the FY 2018 SNF PPS final
rule (82 FR 36613 through 36614) to
change the SNF VBP Program’s
performance and baseline periods from
calendar years to fiscal years.
Additionally, as we note further below,
we are finalizing FY 2019 (October 1,
2018 through September 30, 2019) as
the performance period for the FY 2021
SNF VBP Program year.
Comment: One commenter supported
our efforts to measure improvement and
encouraged us to reward providers that
consistently achieve high performance
under the SNF VBP Program.
Response: We believe that the
performance standards that we are
adopting, which include levels of
achievement and improvement as
required by the SNF VBP Program’s
statute, continue to offer opportunities
for us to recognize both SNFs that
achieve high performance and those
SNFs that improve over time.
After consideration of the public
comments, we are finalizing the
numerical values for the FY 2021 SNF
VBP Program based on the FY 2017
baseline period. Those values follow
below in Table 41.
TABLE 41—FINAL FY 2021 SNF VBP PROGRAM PERFORMANCE STANDARDS
Measure ID
Measure description
Achievement
threshold
Benchmark
SNFRM ..........
SNF 30-Day All-Cause Readmission Measure (NQF #2510) ....................................................
0.79476
0.83212
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b. Correction of Performance Standard
Numerical Values in Cases of Errors
As noted previously, section
1888(h)(3)(C) of the Act requires that we
establish and announce the performance
standards for a fiscal year not later than
60 days prior to the performance period
for the fiscal year involved. However,
we currently do not have a policy that
would address the situation where,
subsequent to publishing the numerical
values for the finalized performance
standards for a program year, we
discover an error that affects those
numerical values. Examples of the types
of errors that we could subsequently
discover are inaccurate variables on
Medicare claims, programming errors,
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excluding data should have been
included in the performance standards
calculations, and other technical errors
that resulted in inaccurate achievement
threshold and benchmark calculations.
While we do not have reason to believe
that the SNF VBP Program has
previously published inaccurate
numerical values for performance
standards, in the FY 2019 SNF PPS
proposed rule (83 FR 21086), we stated
our concern about the possibility that
we would discover an error in the future
and have no ability to correct the
numerical values.
We are aware that SNFs rely on the
performance standards that we publicly
display in order to target quality
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improvement efforts, and we do not
believe that it would be fair to SNFs to
repeatedly update our finalized
performance standards if we were to
identify multiple errors. In order to
balance the need of SNFs to know what
performance standards they will be held
accountable to for a SNF VBP program
year with our obligation to provide
SNFs with the most accurate
performance standards that we can
based on the data available at the time,
we proposed that if we discover an error
in the calculations subsequent to having
published the numerical values for the
performance standards for a program
year, we would update the numerical
values to correct the error. We also
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proposed that we would only update the
numerical values one time, even if we
subsequently identified a second error,
because we believe that a one-time
correction would allow us to
incorporate new information into the
calculations without subjecting SNFs to
multiple updates. Any update we would
make to the numerical values based on
a calculation error would be announced
via the CMS website, listservs, and other
available channels to ensure that SNFs
are made fully aware of the update.
We welcomed public comments on
this proposal.
Comment: One commenter supported
our proposal to adopt correction
authority for performance standards and
agreed that making multiple changes to
the performance standards in a given
program year would be difficult for
SNFs’ quality improvement efforts. The
commenter also urged us to be
transparent if we find additional
technical errors.
Response: We thank the commenter
for the support, and we intend to be as
transparent as possible if we identify
any errors in the calculation of the
numerical values of the SNF VBP
Program’s performance standards.
After consideration of the public
comments we have received, we are
finalizing our policy to correct
performance standard numerical values
in cases of errors as proposed.
4. FY 2021 Performance Period and
Baseline Period and for Subsequent
Years
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a. Background
We refer readers to the FY 2016 SNF
PPS final rule (80 FR 46422) for a
discussion of our considerations for
determining performance periods under
the SNF VBP Program. Based on those
considerations, as well as public
comment, we adopted CY 2017 as the
performance period for the FY 2019
SNF VBP Program, with a
corresponding baseline period of CY
2015.
Additionally, in the FY 2018 SNF PPS
final rule (82 FR 36613 through 36614),
we adopted FY 2018 as the performance
period for the FY 2020 SNF VBP
Program, with a corresponding baseline
period of FY 2016. We refer readers to
that rule for a discussion of the need to
shift the Program’s measurement
periods from the calendar year to the
fiscal year.
b. FY 2021 Performance and Baseline
Periods
As we discussed with respect to the
FY 2019 and FY 2020 SNF VBP Program
years, we continue to believe that a 12-
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month duration for the performance and
baseline period is the most appropriate
for the SNF VBP Program. Therefore, we
proposed to adopt FY 2019 (October 1,
2018 through September 30, 2019) as
the performance period for the FY 2021
SNF VBP Program year. We also
proposed to adopt FY 2017 (October 1,
2016 through September 30, 2017)
hospital discharges as the baseline
period for the FY 2021 SNF VBP
Program year.
We welcomed public comment on
these proposals.
Comment: One commenter expressed
concern about our proposal to use FY
2019 as the performance period for the
FY 2021 SNF VBP Program year, stating
that SNFs need more time to improve
their data collection, reporting, and
evaluation efforts. The commenter
requested that we align our measures
with the SNF QRP and other quality
programs, which will allow SNFs
additional time for performance tracking
and improvement activities. The
commenter also requested that we
provide SNFs with more timely
performance feedback to help them
identify areas for improvement efforts.
One commenter expressed concern
about the proposed performance period,
stating that SNFs do not believe they are
ready for FY 2019 to be used as the
performance period and indicated that
the collection and reporting of quality
measures is a significant administrative
burden. The commenter urged us to
move to an automated system to reduce
the reporting burden on SNFs and
requested that we provide SNFs with
timely performance feedback that they
can use to identify areas where they
need to focus their improvement efforts.
Response: We would like to clarify for
the commenter that the SNF VBP
Program’s measure is calculated based
on hospital claims, and therefore, does
not require data collection or impose
any reporting burden on SNFs, though
SNFs may choose to track readmissions
to the hospital for their patients as part
of their care coordination and quality
improvement efforts. We do not believe
that SNFs need additional time to track
readmissions to the hospital for their
patients or to undertake quality
improvement efforts to minimize those
readmissions because SNFs have had
ample notice about the SNF VBP
Program’s operations and its focus on
measures of hospital readmissions. We
will, however, strive to provide as much
timely information to SNFs as possible
on their measured performance, but we
note that the measure that we have
specified for the Program includes
significant calculations, including
detailed risk adjustment, that
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complicates our intention to provide
feedback more promptly than on a
quarterly basis to SNFs.
Comment: One commenter supported
our performance and baseline period
proposals and agreed that 12-month
periods are appropriate for both the
SNFRM and the SNFPPR.
Response: We thank the commenter
for the support.
After consideration of the public
comments that we received, we are
finalizing the performance period and
baseline period for FY 2021 as
proposed.
c. Performance Periods and Baseline
Periods for Subsequent Program Years
As we have described in previous
rules (see, for example, the FY 2016
SNF PPS final rule, 80 FR 46422), we
strive to link performance furnished by
SNFs as closely as possible to the
program year to ensure clear
connections between quality
measurement and value-based payment.
We also strive to measure performance
using a sufficiently reliable population
of patients that broadly represent the
total care provided by SNFs.
Therefore, we proposed that
beginning with the FY 2022 program
year and for subsequent program years,
we would adopt for each program year,
a performance period that is the 1-year
period following the performance
period for the previous program year.
We also proposed that beginning with
the FY 2022 program year and for
subsequent program years, we would
adopt for each program year a baseline
period that is the 1-year period
following the baseline period for the
previous year. Under this policy, the
performance period for the FY 2022
program year would be FY 2020 (the 1year period following the proposed FY
2021 performance period of FY 2019),
and the baseline period for the FY 2022
program year would be FY 2018 (the 1year period following the proposed FY
2021 baseline period of FY 2017). We
believe adopting this policy will
provide SNFs with certainty about the
performance and baseline periods
during which their performance will be
assessed for future program years.
We welcomed public comments on
this proposal.
Comment: One commenter supported
our proposal to adopt performance and
baseline periods automatically for
subsequent program years.
Response: We thank the commenter
for the support.
After consideration of the public
comments that we have received, we are
finalizing our policy to adopt
performance periods and baseline
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periods for subsequent program years as
proposed.
5. SNF VBP Performance Scoring
a. Background
We refer readers to the FY 2017 SNF
PPS final rule (81 FR 52000 through
52005) for a detailed discussion of the
scoring methodology that we have
finalized for the Program, along with
responses to public comments on our
policies and examples of scoring
calculations. We also refer readers to the
FY 2018 SNF PPS final rule (82 FR
36614 through 36616) for discussion of
the rounding policy we adopted, our
request for comments on SNFs with zero
readmissions, and our request for
comments on a potential extraordinary
circumstances exception policy.
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b. Scoring Policy for SNFs Without
Sufficient Baseline Period Data
In some cases, a SNF will not have
sufficient baseline period data available
for scoring for a Program year, whether
due to the SNF not being open during
the baseline period, only being open for
a small portion of the baseline period,
or other reasons (such as receiving an
extraordinary circumstance exception,
which we finalize below). The
availability of baseline data for each
SNF is an integral component of our
scoring methodology, and we are
concerned that the absence of sufficient
baseline data for a SNF will preclude us
from being able to score that SNF on
improvement for a program year. As
discussed further below, with respect to
the proposed scoring adjustment for a
SNF without sufficient data in the
performance period to create a reliable
SNF performance score, we are
concerned that measuring SNFs with
fewer than 25 eligible stays (or index
SNF stays that would be included in the
calculation of the SNF readmission
measure) during the baseline period
may result in unreliable improvement
scores, and as a result, unreliable SNF
performance scores. We considered
policy options to address this issue.
We continue to believe it is important
to compare SNF performance during the
same periods to control for factors that
may not be attributable to the SNF, such
as increased patient case-mix acuity
during colder weather periods when
influenza, pneumonia, and other
seasonal conditions and illnesses are
historically more prevalent in the
beneficiary population. Using a 12month performance and baseline period
for all SNFs ensures that, to the greatest
extent possible, differences in
performance can be attributed to the
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SNF’s care quality rather than to
exogenous factors.
Additionally, because we have
proposed that for FY 2021 and future
Program years, the start of the
performance period for a Program year
would begin exactly 12-months after the
end of the baseline period for that
Program year and there would not be
sufficient time to compute riskstandardized readmission rates from
another 12-month baseline period before
the performance period if a SNF had
insufficient data during the baseline
period. For the FY 2021 Program, for
example, the proposed baseline period
would conclude at the end of FY 2017
(September 30, 2017) and the proposed
performance period would begin on the
first day of FY 2019 (October 1, 2018).
We also do not believe it would be
equitable to score SNFs without
sufficient baseline period data using
data from a different period. Doing so
would, in our view, impede our ability
to compare SNFs’ performance on the
Program’s quality measure fairly, as
additional factors that may affect SNFs’
care could arise when comparing
performance during different time
periods. Therefore, we have concluded
that it is not operationally feasible or
equitable to use different baseline
periods for purposes of awarding
improvement scores to SNFs for a
Program year.
We believe that SNFs without
sufficient data from a single baseline
period, which we would define for this
purpose as SNFs with fewer than 25
eligible stays during the baseline period
for a fiscal year based on an analysis of
Pearson correlation coefficients at
various denominator counts, should not
be measured on improvement for that
Program year. Accordingly, we are
proposing to score these SNFs based
only on their achievement during the
performance period for any Program
year for which they do not have
sufficient baseline period data. The
analysis of Pearson correlation
coefficients at various denominator
counts used in developing this proposal
is available on our website at https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Value-Based-Programs/
Other-VBPs/SNFRM-Reliability-TestingMemo.pdf.
We proposed to codify this proposal
by adding § 413.338(d)(1)(iv). We
welcomed public comment on this
proposal.
Comment: One commenter agreed
with our proposal to not score SNFs on
improvement when they do not have
sufficient data during the baseline
period for appropriate year-over-year
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comparisons. However, the commenter
expressed concern that this approach is
different for this group of low-volume
SNFs compared to SNFs that are
consistently low-volume. The
commenter expressed continued
concerns with the readmission rates
awarded to SNFs when they have low
case volume.
Response: We note that the policies
that we have proposed for SNFs without
sufficient baseline period data and for
low-volume adjustment are intended to
address separate permutations of the
SNFRM reliability issue. In the first
case, our intent is to ensure that we
compare sufficiently-reliable SNFRM
rates when assessing SNFs’
improvement over time. That
assessment relies on SNFRM rates being
sufficiently reliable in both the baseline
period and performance period to make
the comparison that we use to award
improvement points. In contrast, the
low-volume scoring adjustment
proposal focuses on the SNFRM’s
reliability during the performance
period, which is necessary for both
achievement and improvement scoring.
We believe that these proposals ensure
that SNFRM rates are sufficiently
reliable for purposes of SNF VBP
scoring, and as the commenter
requested, ensure that SNFs are not
scored on the SNFRM when the
measure’s case count is too low to
produce sufficiently reliable scores.
Comment: One commenter supported
our proposal to score SNFs without
sufficient baseline period data on
achievement only, agreeing with our
view that measure results in those cases
are susceptible to random variation and
may not reliably represent quality in
that facility.
Response: We thank the commenter
for the support.
After consideration of the public
comments that we received, we are
finalizing our scoring policy for SNFs
without sufficient baseline period data
as proposed. We are also finalizing our
regulation text on this policy as
proposed.
c. SNF VBP Scoring Adjustment for
Low-Volume SNFs
In previous rules, we have discussed
and sought comment on policies related
to SNFs with zero readmissions during
the performance period. For example, in
the FY 2018 SNF PPS rule (82 FR 36615
through 36616), we sought comment on
policies we should consider for SNFs
with zero readmissions during the
performance period because under the
risk adjustment and the statistical
approach used to calculate the SNFRM,
outlier values are shifted towards the
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mean, especially for smaller SNFs. As a
result, SNFs with observed readmission
rates of zero may receive riskstandardized readmission rates that are
greater than zero. We continue to be
concerned about the effects of the
SNFRM’s risk adjustment and statistical
approach on the scores that we award to
SNFs under the Program. We are
specifically concerned that as a result of
this approach, the SNFRM is not
sufficiently reliable to generate accurate
performance scores for SNFs with a low
number of eligible stays during the
performance period. We would like to
ensure that the Program’s scoring
methodology results in fair and reliable
SNF performance scores because those
scores are linked to a SNF’s ranking and
payment.
Therefore, we considered whether we
should make changes to our
methodology for assessing the total
performance of SNFs for a Program year
that better accounts for SNFs with zero
or low numbers of eligible stays during
the performance period. Because the
number of eligible SNF stays makes up
the denominator of the SNFRM, we
have concluded that the reliability of a
SNF’s measure rate and resulting
performance score is adversely
impacted if the SNF has less than 25
eligible stays during the performance
period, as the Pearson correlation
coefficient is lower at denominator
counts of 5, 10, 15, and 20 eligible stays
in comparison to 25 eligible stays. The
analysis of Pearson correlation
coefficients at various denominator
counts used in developing this proposal
is available on our website at https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Value-Based-Programs/
Other-VBPs/SNFRM-Reliability-TestingMemo.pdf.
We believe that the most appropriate
way to ensure that low-volume SNFs
(which we define for purposes of the
SNF VBP Program as SNFs with fewer
than 25 eligible stays during the
performance period) receive sufficiently
reliable SNF performance scores is to
adopt an adjustment to the scoring
methodology we use for the SNF VBP
Program. We proposed that if a SNF has
less than 25 eligible stays during a
performance period for a Program year,
we would assign a performance score to
the SNF for that Program year. That
assigned performance score would,
when used to calculate the value-based
incentive payment amount for the SNF,
result in a value-based incentive
payment amount that is equal to the
adjusted Federal per diem rate that the
SNF would have received for the fiscal
year in the absence of the Program. The
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actual performance score that we would
assign to an individual low-volume SNF
for a Program year would be identified
based on the distribution of all SNFs’
performance scores for that Program
year after calculating the exchange
function. We would then assign that
score to an individual low-volume SNF,
and we would notify the low-volume
SNF that it would be receiving an
assigned performance score for the
Program year in the SNF Performance
Score Report that we provide not later
than 60 days prior to the fiscal year
involved.
We believe this scoring adjustment
policy would appropriately ensure that
our SNF performance score
methodology is fair and reliable for
SNFs with fewer than 25 eligible stays
during the performance period for a
Program year.
In section X.A.6. of the proposed rule,
we estimated that $527.4 million would
be withheld from SNFs’ payments for
the FY 2019 Program year based on the
most recently available data.
Additionally, the 60 percent payback
percentage would result in an estimated
$316.4 million being paid to SNFs in the
form of value-based incentive payments
with respect to FY 2019 services. Of the
$316.4 amount, we estimated that $8.6
million will be paid to low-volume
SNFs. However, if our proposal to adopt
a scoring adjustment for low-volume
SNFs were finalized, we estimated that
we would redistribute an additional
$6.7 million in value-based incentive
payments to low-volume SNFs with
respect to FY 2019 services, for a total
of $15.3 million of the estimated $527.4
million available for value-based
incentive payments for that Program
year. The additional $6.7 million in
value-based incentive payments that
would result from finalizing this
proposal would increase the 60 percent
payback percentage for FY 2019 by
approximately 1.28 percent, which
would result in a payback percentage
61.28 percent of withheld funds. The
payback percentage would similarly
increase for all other Program years,
however the actual amount of the
increase for a particular Program year
would vary based on the number of lowvolume SNFs that we identify for that
Program year and the distribution of all
SNFs’ performance scores for that
Program year.
As an alternative, we considered
assigning a performance score to SNFs
with fewer than 25 eligible stays during
the performance period that would
result in a value-based incentive
payment percentage of 1.2 percent, or 60
percent of the 2 percent withhold. This
amount would match low-volume SNFs’
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incentive payment percentages with the
finalized SNF VBP Program payback
percentage of 60 percent, and would
represent a smaller adjustment to lowvolume SNFs’ incentive payment
percentages than the proposed policy
described above. We estimated that this
alternative would redistribute an
additional $1 million with respect to FY
2019 services to low-volume SNFs. We
also estimated that this alternative
would increase the 60 percent payback
percentage for FY 2019 by
approximately 0.18 percent of the
approximately $527.4 million of the
total withheld from SNFs’ payments,
which would result in a payback
percentage of 60.18 percent of the
estimated $527.4 million in withheld
funds for that Program year. However,
as with the proposal above, we stated
that the specific amount by which the
payback percentage would increase for
each Program year would vary based on
the number of low-volume SNFs that we
identify for each Program year and the
distribution of all SNFs’ performance
scores for that Program year.
We welcomed public comments on
this proposal and on the alternative that
we considered. We also proposed to
codify the definition of low-volume SNF
at § 413.338(a)(16), and the definition of
eligible stay at § 413.338(a)(17). We
proposed to codify the low-volume
scoring adjustment proposal at
§ 413.338(d)(3). We also proposed a
conforming edit to the payback
percentage policy at § 413.338(c)(2)(i).
Comment: One commenter expressed
support for our proposed low-volume
adjustment that would provide SNFs
with a neutral value-based incentive
payment percentage.
Response: We thank the commenter
and appreciate the support.
Comment: One commenter requested
clarification on how the SNF VBP will
affect newly certified facilities that have
no data from either the performance
period or baseline period for the FY
2019 SNF VBP Program year.
Response: SNFs with zero eligible
stays during both the baseline and
performance periods are not covered by
the low-volume adjustment policy. For
the purposes of the SNF readmission
measure, an eligible stay is an index
SNF admission that would be included
in the denominator of the measure. We
will notify all SNFs of their incentive
multipliers for the Program year,
including SNFs with zero eligible stays
during the baseline and performance
periods. These SNFs will receive an
incentive multiplier that results in the
adjusted Federal per diem rate under
the Medicare SNF PPS that they would
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otherwise have received absent the
Program.
Comment: Commenter suggested as an
alternative to our low-volume
adjustment proposal that we consider
adopting a 2-year performance period
for low-volume SNFs only and weight
the most recent year more highly.
Response: We thank the commenter
for this feedback and will consider this
in future rulemaking.
Comment: One commenter suggested
that we consider assigning a 2 percent
payment penalty to low-volume SNFs
instead of adopting the low-volume
scoring adjustment as proposed. The
commenter suggested that this policy
would encourage low-volume SNFs to
increase their Medicare cases sizes,
which would enable Medicare to
adequately measure their care quality
and hold all SNFs accountable for their
care.
Response: We do not believe the
intent of the SNF VBP was to
incentivize SNFs to increase their
Medicare case volume. We wish to
avoid increasing possible healthcare
disparities for smaller facilities when
payment differences are driven solely by
smaller measure denominators, and not
quality of care as reflected in measure
performance. Finally, we are concerned
about the possibility of gaming this kind
of policy, as SNFs might seek out
Medicare cases to avoid the 2 percent
penalty the commenter suggests.
Comment: One commenter expressed
support for our proposed low-volume
adjustment and opposition to the
alternative that we presented, stating
that performance scores under the
Program can be skewed by a single
readmission and that the alternative
would reduce Medicare rates for lowvolume SNFs regardless of their
performance and with no opportunity to
earn additional incentive payments.
Another commenter supported our
proposal to adopt a low-volume scoring
adjustment, noting that the evidence
shows that the SNFRM is not a reliable
quality indicator when facilities have
fewer than 25 qualifying admissions.
The commenter also agreed with our
proposal to adjust the Program’s
payback percentage to account for this
policy.
Response: We thank the commenters
for the support.
Comment: One commenter stated that
low-volume SNFs should be excluded
from the SNF VBP Program since they
have no realistic opportunity to earn
value-based incentive payments.
Response: We believe that the lowvolume scoring adjustment policy
ensures that these SNFs are adequately
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protected from being scored on
insufficiently-reliable SNFRM rates.
Comment: One commenter
appreciated our efforts to address lowvolume SNFs and SNFs without
baseline period data. However, the
commenter was concerned that CMS
had not provided enough information
on these topics and requested additional
clarity.
Response: We believe we have
provided as much clarity as possible on
the effects of the low-volume scoring
adjustment policy in both the preamble
of the proposed rule and the Regulatory
Impact Analysis that was included in
the proposed rule. We have also
provided additional clarity in this final
rule and in the Regulatory Impact
Analysis that is included in this final
rule. We will also ensure that affected
SNFs are made fully aware when their
SNF performance scores were assigned
as a result of the policy and notify them
of their value-based incentive payment
percentage for the fiscal year, as
required by section 1888(h)(7) of the
Act. We believe that notification will
ensure that SNFs are aware of the effects
that this policy has on their SNF
performance scores and incentive
payments.
After consideration of the public
comments that we have received, we are
finalizing our scoring adjustment for
low-volume SNFs as proposed. We are
also finalizing our regulation text on
this policy as proposed.
d. Extraordinary Circumstances
Exception Policy for the SNF VBP
Program
In the FY 2018 SNF PPS final rule (82
FR 36616), we summarized public
comments that we received on the topic
of a possible extraordinary
circumstances exception policy for the
SNF VBP Program. As we stated in that
rule, in other value-based purchasing
and quality reporting programs, we have
adopted Extraordinary Circumstances
Exceptions (ECE) policies intended to
allow facilities to receive relief from
program requirements due to natural
disasters or other circumstances beyond
the facility’s control that may affect the
facility’s ability to provide high-quality
health care.
In other programs, we have defined a
‘‘disaster’’ as any natural or man-made
catastrophe which causes damages of
sufficient severity and magnitude to
partially or completely destroy or delay
access to medical records and associated
documentation or otherwise affect the
facility’s ability to continue normal
operations. Natural disasters could
include events such as hurricanes,
tornadoes, earthquakes, volcanic
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eruptions, fires, mudslides, snowstorms,
and tsunamis. Man-made disasters
could include such events as terrorist
attacks, bombings, flood caused by manmade actions, civil disorders, and
explosions. A disaster may be
widespread and impact multiple
structures or be isolated and affect a
single site only. As a result of either a
natural or man-made disaster, we are
concerned that SNFs’ care quality and
subsequent impact on measure
performance in the SNF VBP Program
may suffer, and as a result, SNFs might
be penalized under the Program’s
quality measurement and scoring
methodology. However, we do not wish
to penalize SNFs in these
circumstances. For example, we
recognize that SNFs might receive
patients involuntarily discharged from
hospitals facing mandatory evacuation
due to probable flooding, and these
patients might be readmitted to
inpatient acute care hospitals and result
in poorer readmission measure
performance in the SNF VBP Program.
We therefore proposed to adopt an ECE
policy for the SNF VBP Program to
provide relief to SNFs affected by
natural disasters or other circumstances
beyond the facility’s control that affect
the care provided to the facility’s
patients. We proposed that if a SNF can
demonstrate that an extraordinary
circumstance affected the care that it
provided to its patients and subsequent
measure performance, we would
exclude from the calculation of the
measure rate for the applicable baseline
and performance periods the calendar
months during which the SNF was
affected by the extraordinary
circumstance. Under this proposal, a
SNF requesting an ECE would indicate
the dates and duration of the
extraordinary circumstance in its
request, along with any available
evidence of the extraordinary
circumstance, and if approved, we
would exclude the corresponding
calendar months from that SNF’s
measure rate for the applicable
measurement period and by extension,
its SNF performance score.
We further proposed that SNFs must
submit this ECE request to CMS by
filling out the ECE request form that we
will place on the QualityNet website to
the SNFVBPinquiries@cms.hhs.gov
mailbox within 90 days following the
extraordinary circumstance.
To accompany an ECE request, SNFs
must provide any available evidence
showing the effects of the extraordinary
circumstance on the care they provided
to their patients, including, but not
limited to, photographs, newspaper and
other media articles, and any other
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materials that would aid CMS in making
its decision. We stated that we will
review exception requests, and at our
discretion based on our evaluation of
the impact of the extraordinary
circumstances on the SNF’s care,
provide a response to the SNF as
quickly as feasible.
We stated our intent for this policy to
offer relief to SNFs whose care provided
to patients suffered as a result of the
disaster or other extraordinary
circumstance, and we believe that
excluding calendar months affected by
extraordinary circumstances from SNFs’
measure performance under the
Program appropriately ensures that such
circumstances do not unduly affect
SNFs’ performance rates or performance
scores. We developed this process to
align with the ECE process adopted by
the SNF Quality Reporting Program to
the greatest extent possible and to
minimize burden on SNFs. This policy
is not intended to preclude us from
granting exceptions to SNFs that have
not requested them when we determine
that an extraordinary circumstance,
such as an act of nature, affects an entire
region or locale. If we made the
determination to grant an exception to
all SNFs in a region or locale, we
proposed to communicate this decision
through routine communication
channels to SNFs and vendors,
including but not limited to, issuing
memos, emails, and notices on our SNF
VBP website at https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Value-BasedPrograms/Other-VBPs/SNF-VBP.html.
We noted that if we finalize this
policy, we would score any SNFs
receiving ECEs on achievement and
improvement for any remaining months
during the performance period,
provided the SNF had at least 25
eligible stays during both of those
periods. If a SNF should receive an
approved ECE for 6 months of the
performance period, for example, we
would score the SNF on its achievement
during the remaining 6 months on the
Program’s measure as long as the SNF
met the proposed 25 eligible stay
threshold during the performance
period. We would also score the SNF on
improvement as long as it met the
proposed 25 eligible stay threshold
during the applicable baseline period.
We welcomed public comments on
this proposal. We also proposed to
codify this proposal at § 413.338(d)(4).
Comment: Two commenters
expressed appreciation and support for
our proposal to adopt an ECE policy for
the SNF VBP Program. The commenters
acknowledged that these exceptions are
provided in other programs and agreed
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that we should align our ECE policy
with the Hospital VBP Program as much
as possible. A third commenter
reiterated its previous support for an
ECE policy in the SNF VBP Program.
Response: We thank the commenters
for the support.
After consideration of the public
comments that we received, we are
finalizing our Extraordinary
Circumstances Exception policy as
proposed. We are also finalizing our
regulation text on this policy as
proposed.
6. SNF Value-Based Incentive Payments
We refer readers to the FY 2018 SNF
PPS final rule (82 FR 36616 through
36621) for discussion of the exchange
function methodology that we have
adopted for the Program, as well as the
specific form of the exchange function
(logistic, or S-shaped curve) that we
finalized, and the payback percentage of
60 percent. We adopted these policies
for FY 2019 and subsequent fiscal years.
As required by section 1888(h)(7) of
the Act, we will inform each SNF of the
adjustments to its Medicare payments as
a result of the SNF VBP Program that we
will make not later than 60 days prior
to the fiscal year involved. We will
fulfill that requirement via SNF
Performance Score Reports that we will
circulate to SNFs using the QIES–
CASPER system, which is also how we
distribute the quarterly confidential
feedback reports that we are required to
provide to SNFs under section
1888(g)(5) of the Act. The SNF
Performance Score Reports will contain
the SNF’s performance score, ranking,
and value-based incentive payment
adjustment factor that will be applied to
claims submitted for the applicable
fiscal year. Additionally, as we finalized
in the FY 2018 SNF PPS final rule (82
FR 36622 through 36623), the provision
of the SNF Performance Score Report
will trigger the Phase Two Review and
Corrections Process, and SNFs will have
30 days from the date we post the report
on the QIES–CASPER system to submit
corrections to their SNF performance
score and ranking to the
SNFVBPinquiries@cms.hhs.gov
mailbox.
Finally, as we discussed in the FY
2018 SNF PPS final rule (82 FR 36618),
beginning with FY 2019 (October 1,
2018) payments, we intend to make the
2 percent reduction and the SNFspecific value-based incentive payment
adjustment to SNF claims
simultaneously. Beginning with FY
2019, we will identify the adjusted
federal per diem rate for each SNF for
claims under the SNF PPS. We will then
reduce that amount by 2 percent by
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39281
multiplying the per diem amount by
0.98, in accordance with the
requirements in section 1888(h)(6) of
the Act. We will then multiply the
result of that calculation by each SNF’s
specific value-based incentive payment
adjustment factor, which will be based
on each SNF’s performance score for the
program year and will be calculated by
the exchange function, to generate the
value-based incentive payment amount
that applies to the SNF for the fiscal
year. Finally, we will add the valuebased incentive payment amount to the
reduced rate, resulting in a new
adjusted federal per diem rate that
applies to the SNF for the fiscal year.
At the time of the publication of the
proposed rule, we had not completed
SNF performance score calculations for
the FY 2019 program year. However, we
stated our intent to provide the range of
value-based incentive payment
adjustment factors applicable to the FY
2019 program year in this final rule. For
the FY 2019 SNF VBP Program Year,
and incorporating the 2 percent
reduction to SNFs’ payments, we
estimate the value-based incentive
payment adjustment factors that we will
award to SNFs range from 0.9802915381
to 1.02326809. That is, we estimate that
SNFs may receive incentive payment
percentages ranging from approximately
¥1.97 percent to approximately +2.33
percent, on a net basis.
We proposed to codify the SNF VBP
Program’s payment adjustments at
§ 413.337(f).
Comment: Two commenters urged us
to revisit the payback percentage policy
that we adopted in the FY 2018 SNF
PPS final rule (82 FR 36619 through
36621), stating that we should distribute
70 percent of the funds withheld from
SNFs’ Medicare payments through the
SNF VBP Program, the maximum
amount allowable under the statute.
One commenter requested that we
return the remaining 30 percent of funds
for SNF quality improvement initiatives,
including programs to improve SNFs’
performance when they have high
readmission rates, while the other
commenter stated that we should remit
100 percent of the Program’s funds as is
done in the Hospital Value-Based
Purchasing Program.
Response: As we discussed in the FY
2018 SNF PPS final rule (82 FR 36621),
we are not authorized to distribute the
30 percent of SNFs’ Medicare payments
that would remain after the payment
withhold is determined for any
purposes. Those funds are retained in
the Medicare Trust Fund and used for
other Medicare Program purposes
authorized by statute. We are not
allowed under current law to distribute
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100 percent of the withheld funds for
SNF VBP purposes.
Further, we do not believe it is
appropriate to revisit the payback
percentage policy at this time, with the
exception of the low-volume policy,
which we view as a narrow exception to
the 60 percent payback percentage that
would have no effect on the majority of
facilities. At the time of the publication
of this final rule, the SNF VBP Program
will not yet have delivered its first
incentive payments based on measured
performance, and we do not believe we
should consider whether to change the
payback percentage further until we are
able to more fully assess the effects that
it has on the quality of care provided in
SNFs. We refer readers to the FY 2018
SNF PPS final rule (82 FR 36619
through 36621) for our full discussion of
the payback percentage policy that we
have adopted for the SNF VBP Program.
We thank the commenters for their
feedback. As noted in section III.B.5. of
this final rule, we are finalizing the
codification of the SNF VBP program
payment adjustment as proposed.
D. Request for Information on Promoting
Interoperability and Electronic
Healthcare Information Exchange
Through Possible Revisions to the CMS
Patient Health and Safety Requirements
for Skilled Nursing Facility Providers
and Suppliers
In the FY 2019 SNF PPS proposed
rule, we included a Request for
Information (RFI) related to promoting
interoperability and electronic
healthcare information exchange (83 FR
21089). We received 22 comments on
this RFI, and appreciate the input
provided by commenters.
VII. 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.
In our May 8, 2018 proposed rule (83
FR 21018), we solicited public comment
on each of the section 3506(c)(2)(A)required issues for the following
information collection requirements
(ICRs).We did not receive any comments
on the ICR section of the proposed rule.
A. Wages
To derive average costs, we used data
from the U.S. Bureau of Labor Statistics’
May 2017 National Occupational
Employment and Wage Estimates for all
salary estimates (as compared to the FY
2019 SNF PPS proposed rule when we
used May 2016 estimates) (https://
www.bls.gov/oes/current/oes_nat.htm).
In this regard, Table 42 presents the
mean hourly wage, the cost of fringe
benefits and overhead (calculated at 100
percent of salary), and the adjusted
hourly wage. We are using the adjusted
wages to derive our cost estimates.
TABLE 42—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES
Occupation
title
Occupation
code
Health Information Technician .........................................................................
Registered Nurse .............................................................................................
As indicated, we are adjusting our
employee hourly wage estimates by a
factor of 100 percent. This is necessarily
a rough adjustment, both because fringe
benefits and overhead costs vary
significantly from employer to
employer, and because methods of
estimating these costs vary widely from
study to study. We believe that doubling
the hourly wage to estimate total cost is
a reasonably accurate estimation
method.
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B. Information Collection Requirements
(ICRs)
1. ICRs Regarding the SNF PPS
Assessment Schedule Under the PDPM
The following sets out the
requirements and burden associated
with the MDS assessment schedule that
will be effective October 1, 2019 under
the SNF PPS in conjunction with
implementation of the PDPM. The
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29–2071
29–1141
requirements and burden will be
submitted to OMB for approval under
control number 0938–1140 (CMS–
10387).
Section V.D. of this final rule finalizes
revisions to the current SNF PPS
assessment schedule to require only two
scheduled assessments (as opposed to
the current requirement for five
scheduled assessments) for each SNF
stay: A 5-day scheduled PPS assessment
and a discharge assessment.
The current 5-day scheduled PPS
assessment will be used as the
admission assessment under this rule’s
finalized PDPM and set the resident’s
case-mix classification for the resident’s
SNF stay. The PPS discharge assessment
(which is already required for all SNF
Part A residents) will serve as the
discharge assessment and be used for
monitoring purposes. In section V.D. of
this final rule, we discuss that while we
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Frm 00122
Fmt 4701
Sfmt 4700
Mean hourly
wage
($/hr)
20.59
35.36
Fringe
benefits and
overhead
($/hr)
20.59
35.36
Adjusted
hourly wage
($/hr)
41.18
70.72
proposed to require SNFs to reclassify
residents under the PDPM using the
Interim Payment Assessment (IPA) if
certain criteria are met, we have decided
in this final rule to make this
assessment optional, thereby leaving
completion of this assessment at the
discretion of the individual provider.
Thus, the 5-day SNF PPS scheduled
assessment will be the only PPS
assessment required to classify a
resident under the PDPM for payment
purposes, while the IPA may also be
completed, as discussed in section V.D.
of this final rule. This eliminates the
requirement for the following
assessments under the SNF PPS: 14-day
scheduled PPS assessment, 30-day
scheduled PPS assessment, 60-day
scheduled PPS assessment, 90-day
scheduled PPS assessment, Start of
Therapy Other Medicare Required
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Assessment (OMRA), End of Therapy
OMRA, and Change of Therapy OMRA.
In estimating the amount of time to
complete a PPS assessment, we utilize
the OMRA assessment, or the NO/SO
item set (this is consistent with the
current information collection request
as approved by OMB on July 28, 2017;
see https://www.reginfo.gov/public/do/
PRAViewDocument?ref_nbr=2017030938-018) as a proxy for all assessments.
In section V.D. of this final rule, we
finalized the addition of 18 items to the
PPS discharge assessment in order to
calculate and monitor the total amount
of therapy provided during a SNF stay.
These items are listed in Table 35 under
section V.D. of this final rule. Given that
the PPS OMRA assessment has 272
items (as compared to 125 items
currently on the PPS discharge
assessment) we believe the items that
we are adding to the PPS discharge
assessment, while increasing burden for
each of the respective assessments, is
accounted for by using the longer PPS
OMRA assessment as a proxy for the
time required to complete all
assessments.
When calculating the burden for each
assessment, we estimated that it will
take 40 minutes (0.6667 hours) at
$70.72/hr for an RN to collect the
information necessary for preparing the
assessment, 10 minutes (0.1667 hours)
at $55.95/hr (the average hourly wage
for RN ($70.72/hr) and health
information technician ($41.18/hr)) for
staff to code the responses, and 1
minute (0.0167 hours) at $41.18/hr for a
health information technician to
transmit the results. In total, we
estimate that it would take 51 minutes
(0.85 hours) to complete a single PPS
assessment. Based on the adjusted
hourly wages for the noted staff, we
estimate that it would cost $57.17
[($70.72/hr × 0.6667 hr) + ($55.95/hr ×
0.1667 hr) + ($41.18/hr × 0.0167 hr)] to
prepare, code, and transmit each PPS
assessment.
The ongoing burden associated with
the revisions to the SNF PPS assessment
schedule is the time and effort it would
take each Medicare Part A SNF to
complete the 5-day PPS and discharge
assessments. Based on our most current
data, there are 15,471 Medicare Part A
SNFs (as opposed to the 15,455
discussed in the proposed rule). Based
on FY 2017 data, we estimate that
2,406,401 5-day PPS assessments will be
completed and submitted by Part A
SNFs each year under the PDPM. We
used the same number of assessments
(2,406,401) as a proxy for the number of
PPS discharge assessments that would
be completed and submitted each year,
since all residents who require a 5-day
PPS assessment will also require a
discharge assessment under the SNF
PDPM.
As compared to the FY 2019 SNF PPS
proposed rule, in which we used the
Significant Change in Status Assessment
(SCSA) as a proxy to estimate the
number of IPAs (83 FR 21093), we have
eliminated this portion of our burden
estimate as this assessment would not
be required, per the discussion in
section V.D. of this final rule. Therefore,
we estimate that the total number of 5day scheduled PPS assessments, and
PPS discharge assessments that would
be completed across all facilities is
4,812,802 assessments (2,406,401 +
2,406,401, respectively) instead of
4,905,042 assessments (2,406,401 +
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92,240 + 2,406,401) that was set out in
the proposed rule. For all assessments
under the PDPM, we estimated a burden
of 4,090,882 hours (4,812,802
assessments × 0.85 hr/assessment) at a
cost of $275,147,890 (4,812,802
assessments × $57.17/assessment).
Based on the same FY 2017 data,
there were 5,833,476 non-discharge
related assessments (scheduled and
unscheduled PPS assessments)
completed under the RUG- IV payment
system. To this number we add the
same proxy as above for the number of
discharge assessments (2,406,401), since
every resident under RUG–IV who
required a 5-day scheduled PPS
assessment would also require a
discharge assessment. This brings the
total number of estimated assessments
under RUG–IV to 8,239,877. Using the
same wage and time figures (per
assessment), we estimated a burden of
7,003,895 hours (8,239,877 assessments
× 0.85 hr/assessment) at a cost of
$471,073,768 (8,239,877 assessments ×
$57.17/assessment).
When comparing the currently
approved RUG–IV burden with the
PDPM burden, we estimate a savings of
2,913,013 administrative hours
(7,003,895 RUG–IV hours ¥ 4,090,882
PDPM hours) or approximately 188
hours per provider per year (2,913,013
hours/15,471 providers). As depicted in
Table 43, we also estimate a cost savings
of $195,925,878 ($471,073,768 RUG–IV
costs ¥ $275,147,890 PDPM costs) or
$12,664 per provider per year
($195,925,878/15,471 providers). This
represents a significant decrease in
administrative burden to providers
under PDPM.
TABLE 43—PDPM SAVINGS
Burden reconciliation
Respondents *
RUG–IV ...............................................................................
PDPM ..................................................................................
SAVINGS .............................................................................
15,455 ............
15,471 ............
(16) ................
8,239,877
4,812,802
(3,427,075)
Burden per
response
(hours)
Responses
(assessments)
0.85 ................
0.85 ................
No change .....
Total annual
burden
(hours)
7,003,895
4,090,882
(2,913,013)
Cost
($)
471,073,768
275,147,890
(195,925,878)
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* The RUG–IV number of respondents is based on the last approved PRA package in 2017. Numbers of respondents changes from year to
year.
Finally, in section V.D. of this final
rule, we finalized the addition of 3
items, as listed in Table 34 of this final
rule), to the MDS 3.0 for Nursing Homes
and Swing Bed Providers. Based on the
small number of items being added and
the small percentage of assessments that
Swing Bed providers make up, we do
not believe this action will cause any
measurable adjustments to our currently
approved burden estimates.
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Consequently, we are not revising any of
those estimates.
2. ICRs Regarding the SNF VBP Program
In section VI.C.5.d. of this final rule,
we are adopting an Extraordinary
Circumstances Exception (ECE) process
for the SNF VBP. Because the same CMS
Extraordinary Circumstances Exceptions
(ECE) Request Form would be used
across ten quality programs: Hospital
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IQR Program, Hospital Outpatient
Reporting Program, Inpatient
Psychiatric Facility Quality Reporting
Program, PPS-Exempt Cancer Hospital
Quality Reporting Program, Ambulatory
Surgical Center Quality Reporting
Program, Hospital VBP Program,
Hospital-Acquired Condition Reduction
Program, Hospital Readmissions
Reduction Program, End Stage Renal
Disease Quality Incentive Program, and
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Skilled Nursing Facility Value-Based
Purchasing Program—the form and its
associated requirements/burden will be
submitted to OMB for approval under
one information collection request
(CMS–10210, OMB control number:
0938–1022) and in association with our
IPPS final rule (CMS–1694–F; RIN
0938–AT27). To avoid double counting
we are not setting out the form’s SNFrelated burden in this final rule.
Separately, we are not removing or
adding any new or revised SNF VBP
measure-related requirements or burden
in this rule. Consequently, this final rule
does not set out any new VBP-related
collections of information that would be
subject to OMB approval under the
authority of the PRA.
3. ICRs for the SNF Quality Reporting
Program (QRP)
related requirements or burden in this
rule. Consequently, this final rule does
not set out any new QRP-related
collections of information that would be
subject to OMB approval under the
authority of the PRA.
C. Summary of Requirements and
Annual Burden Estimates
We are not removing or adding any
new or revised SNF QRP measure-
TABLE 44—INFORMATION COLLECTION REQUIREMENTS AND BURDEN ESTIMATES
Requirement
SNF PPS Assessment
Schedule.
OMB control
No.
Respondents
Responses
(per
respondent)
Total
responses
Time per
response
(hr)
Total time
(hr)
Labor cost per
hour
($/hr)
Annualized cost
($)
0938–1140
15,471
(311)
(4,812,802)
0.85
(4,090,882)
Varies .............
(275,147,890)
VIII. Economic Analyses
A. Regulatory Impact Analysis
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1. Statement of Need
This final rule will update the FY
2018 SNF prospective payment rates as
required under section 1888(e)(4)(E) of
the Act. It also responds to section
1888(e)(4)(H) of the Act, which requires
the Secretary to provide for publication
in the Federal Register before the
August 1 that precedes the start of each
FY, the unadjusted federal per diem
rates, the case-mix classification system,
and the factors to be applied in making
the area wage adjustment. As these
statutory provisions prescribe a detailed
methodology for calculating and
disseminating payment rates under the
SNF PPS, we do not have the discretion
to adopt an alternative approach on
these issues. We did not include the
impacts of the proposed PDPM and
related policies in the sections that
follow, as we have included this
discussion in section V.I. of this final
rule.
2. Introduction
We have examined the impacts of this
final 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).
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Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This rule
has been designated an economically
significant rule, under section 3(f)(1) of
Executive Order 12866. Accordingly, we
have prepared a regulatory impact
analysis (RIA) as further discussed
below. Also, the rule has been reviewed
by OMB.
Executive Order 13771, titled
Reducing Regulation and Controlling
Regulatory Costs, was issued on January
30, 2017. OMB’s implementation
guidance, issued on April 5, 2017,
explains that ‘‘Federal spending
regulatory actions that cause only
income transfers between taxpayers and
program beneficiaries (for example,
regulations associated with . . .
Medicare spending) are considered
‘transfer rules’ and are not covered by
E.O. 13771. . . . However . . . such
regulatory actions may impose
requirements apart from transfers . . .
In those cases, the actions would need
to be offset to the extent they impose
more than de minimis costs. Examples
of ancillary requirements that may
require offsets include new reporting or
recordkeeping requirements.’’ As
discussed in section VII. of this final
rule, we estimate that this final rule will
lead to paperwork cost savings of
approximately $196 million per year, or
$171 million per year on an ongoing
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basis discounted at 7 percent relative to
year 2016, over a perpetual time
horizon. This final rule is considered an
E.O. 13771 deregulatory action.
3. Overall Impacts
This final rule sets forth updates of
the SNF PPS rates contained in the SNF
PPS final rule for FY 2018 (82 FR
36530). We estimate that the aggregate
impact will be an increase of
approximately $820 million in
payments to SNFs in FY 2019, resulting
from the SNF market basket update to
the payment rates, as required by
section 53111 of the BBA 2018. Absent
the application of section 53111 of the
BBA 2018, as discussed in section
III.A.2. of this final rule, the aggregate
impact from the 2.0 percentage point
market basket increase factor would
have been approximately $680 million.
We note that these impact numbers do
not incorporate the SNF VBP reductions
that we estimate will total $527.4
million for FY 2019.
We would note that events may occur
to limit the scope or accuracy of our
impact analysis, as this analysis is
future-oriented, and thus, very
susceptible to forecasting errors due to
events that may occur within the
assessed impact time period. In
accordance with sections 1888(e)(4)(E)
and 1888(e)(5) of the Act, we update the
FY 2018 payment rates by a factor equal
to the market basket index percentage
change adjusted by the MFP adjustment
to determine the payment rates for FY
2019. As discussed previously, section
53111 of the BBA 2018 stipulates a
market basket increase factor of 2.4
percent. The impact to Medicare is
included in the total column of Table
45. In updating the SNF PPS rates for
FY 2019, we made a number of standard
annual revisions and clarifications
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mentioned elsewhere in this final 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
final rule applies to SNF PPS payments
in FY 2019. Accordingly, the analysis of
the impact of the annual update that
follows only describes the impact of this
single year. Furthermore, in accordance
with the requirements of the Act, we
will publish a rule or notice for each
subsequent FY that will provide for an
update to the payment rates and include
an associated impact analysis.
4. Detailed Economic Analysis
The FY 2019 SNF PPS payment
impacts appear in Table 45. Using the
most recently available data, in this case
FY 2017, we apply the current FY 2018
wage index and labor-related share
value to the number of payment days to
simulate FY 2018 payments. Then,
using the same FY 2017 data, we apply
the proposed FY 2019 wage index and
labor-related share value to simulate FY
2019 payments. We tabulate the
resulting payments according to the
classifications in Table 45 (for example,
facility type, geographic region, facility
ownership), and compare the simulated
FY 2018 payments to the simulated FY
2019 payments to determine the overall
impact. The breakdown of the various
categories of data Table 45 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.
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• The third column shows the effect
of the annual update to the wage index.
This represents the effect of using the
most recent wage data available. The
total impact of this change is 0 percent;
however, there are distributional effects
of the change.
• The fourth column shows the effect
of all of the changes on the FY 2019
payments. The update of 2.4 percent is
constant for all providers and, though
not shown individually, is included in
the total column. It is projected that
aggregate payments will increase by 2.4
percent, assuming facilities do not
change their care delivery and billing
practices in response.
As illustrated in Table 45, the
combined effects of all of the changes
vary by specific types of providers and
by location. For example, due to
changes in this rule, providers in the
urban Pacific region will experience a
3.4 percent increase in FY 2019 total
payments.
TABLE 45—IMPACT TO THE SNF PPS FOR FY 2019
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Number of
facilities
FY 2019
(%)
Group:
Total ......................................................................................................................................
Urban ....................................................................................................................................
Rural .....................................................................................................................................
Hospital-based urban ...........................................................................................................
Freestanding urban ..............................................................................................................
Hospital-based rural .............................................................................................................
Freestanding rural ................................................................................................................
Urban by region:
New England ........................................................................................................................
Middle Atlantic ......................................................................................................................
South Atlantic .......................................................................................................................
East North Central ................................................................................................................
East South Central ...............................................................................................................
West North Central ...............................................................................................................
West South Central ..............................................................................................................
Mountain ...............................................................................................................................
Pacific ...................................................................................................................................
Outlying .................................................................................................................................
Rural by region:
New England ........................................................................................................................
Middle Atlantic ......................................................................................................................
South Atlantic .......................................................................................................................
East North Central ................................................................................................................
East South Central ...............................................................................................................
West North Central ...............................................................................................................
West South Central ..............................................................................................................
Mountain ...............................................................................................................................
Pacific ...................................................................................................................................
Ownership:
Government ..........................................................................................................................
Profit .....................................................................................................................................
Non-Profit ..............................................................................................................................
Update wage
data
(%)
Total change
(%)
15,471
11,042
4,429
498
10,544
555
3,874
0.0
0.0
0.1
0.0
0.0
0.0
0.2
2.4
2.4
2.5
2.4
2.4
2.4
2.6
790
1,481
1,869
2,127
555
920
1,346
527
1,421
6
¥0.7
0.0
¥0.1
¥0.4
¥0.2
¥0.4
0.3
¥0.8
1.0
¥0.5
1.7
2.4
2.3
2.0
2.2
2.0
2.7
1.6
3.4
1.9
134
215
494
931
523
1,074
734
229
95
¥0.7
0.1
0.1
0.1
¥0.3
0.3
1.0
0.2
¥0.5
1.6
2.5
2.5
2.5
2.1
2.7
3.5
2.6
1.9
10,887
3,570
1,014
0.0
¥0.1
0.0
2.4
2.3
2.4
Note: The Total column includes the 2.4 percent market basket increase required by section 53111 of the BBA 2018. Additionally, we found no
SNFs in rural outlying areas.
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5. Impacts for the SNF QRP
We did not propose to add, remove,
or revise any measures in the SNF QRP.
Consequently, this final rule does not
set out any new QRP-related impacts
associated with the SNF QRP.
6. Impacts for the SNF VBP Program
In Table 44 of the FY 2019 SNF PPS
proposed rule (83 FR 21096 through
20197), we estimated the impacts of the
FY 2019 SNF VBP Program without
taking into account our low-volume
scoring adjustment proposal. We
modeled SNFs’ performance in the
Program using SNFRM data from CY
2014 as the baseline period and FY 2016
as the performance period.
Additionally, we modeled a logistic
exchange function with a payback
percentage of 60 percent, as we finalized
in the FY 2018 SNF PPS final rule (82
FR 36619 through 36621), and based the
following analyses on payments to SNFs
in FY 2016. We estimated the total
reductions to payments required by
section 1888(h)(6) of the Act, to be
$527.4 million for FY 2019. Based on
the 60 percent payback percentage, we
estimated that we would disburse
approximately $316.4 million in valuebased incentive payments to SNFs in FY
2019, which we estimated would result
in approximately $211 million in
savings to the Medicare program in FY
2019.
In Table 45 of the FY 2019 SNF PPS
proposed rule (83 FR 21097), we also
modeled the estimated impacts of the
FY 2019 SNF VBP Program and
included in that model the impacts of
our proposed scoring adjustment for
low-volume SNFs. We estimated that
the scoring adjustment policy proposal
would redistribute an additional $6.7
million to the group of low volume
SNFs. As we discuss further in section
II.E.3.e. of this final rule, we are
finalizing our low-volume scoring
adjustment policy, and our estimated
FY 2019 SNF VBP impacts, which we
described in Table 45 of the proposed
rule, are reproduced as Table 46 below.
We continue to estimate that this
policy will result in increasing low-
volume SNFs’ value-based incentive
payment percentages by approximately
0.99 percent, on average, from the valuebased incentive payment percentage
that they would receive in the absence
of the low-volume adjustment. An
increase in value-based incentive
payment percentages by 0.99 percent is
needed to bring low-volume SNFs back
to the 2.0 percent that was withheld
from their payments. We also continue
to estimate that we will pay an
additional $6.7 million in incentive
payments to low-volume SNFs, which
would increase the 60 percent payback
percentage for FY 2019 by
approximately 1.28 percent, making the
new payback percentage for FY 2019
equal to 61.28 percent of the estimated
$527.4 million in withheld funds for
that fiscal year.
Our detailed analysis of the impacts
of the FY 2019 SNF VBP Program,
including the finalized low-volume
scoring adjustment policy, follows in
Table 46.
TABLE 46—ESTIMATED SNF VBP PROGRAM IMPACTS INCLUDING EFFECTS OF THE FINALIZED LOW-VOLUME SCORING
ADJUSTMENT
Criterion
Group ..................................
Total ...................................
Urban ..................................
Rural ...................................
Total ...................................
01=Boston ..........................
02=New York ......................
03=Philadelphia ..................
04=Atlanta ..........................
05=Chicago ........................
06=Dallas ...........................
07=Kansas City ..................
08=Denver ..........................
09=San Francisco ..............
10=Seattle ..........................
Total ...................................
01=Boston ..........................
02=New York ......................
03=Philadelphia ..................
04=Atlanta ..........................
05=Chicago ........................
06=Dallas ...........................
07=Kansas City ..................
08=Denver ..........................
09=San Francisco ..............
10=Seattle ..........................
Total ...................................
Government ........................
Profit ...................................
Non-Profit ...........................
Total ...................................
1st Quartile: ........................
2nd Quartile: .......................
3rd Quartile: .......................
4th Quartile: ........................
Urban by Region .................
Rural by Region ..................
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Ownership Type ..................
Number of Beds ..................
RSRR
(mean)
Number of
facilities
Category
12,845
9,604
3,241
9,604
713
836
1,040
1,767
1,961
1,134
510
241
1,098
304
3,241
115
77
240
764
818
557
421
132
48
69
12,847
688
9,250
2,909
12,847
3,222
3,221
3,197
3,207
Mean SNF
performance
score
Mean
incentive
multiplier
(60% payback)
Percent
of
proposed
payback
0.18912
0.18957
0.18779
........................
0.19089
0.19029
0.18601
0.19332
0.18784
0.19416
0.19057
0.17832
0.18908
0.17808
........................
0.18133
0.18366
0.18789
0.19283
0.18397
0.19355
0.18634
0.18000
0.17780
0.17628
........................
0.18529
0.19039
0.18597
........................
0.18760
0.18878
0.19048
0.18963
41.371
40.956
41.011
........................
37.26777
40.90383
45.31896
37.28735
43.06368
34.53275
39.26278
57.62596
40.80722
56.67839
........................
51.89294
50.48193
42.12621
36.51452
47.85089
34.00868
42.64769
52.38900
61.50419
60.70084
........................
46.450
39.526
46.038
........................
42.466
40.971
40.242
41.800
1.192
1.177
1.181
........................
1.059
1.165
1.325
1.052
1.246
0.949
1.132
1.790
1.176
1.713
........................
1.568
1.569
1.218
1.032
1.399
0.952
1.236
1.544
1.931
1.836
........................
1.380
1.127
1.353
........................
1.226
1.175
1.153
1.212
99.9 *
84.4
15.4
........................
4.9
11.8
10.1
13.3
16.0
6.1
2.6
2.9
12.5
4.2
........................
0.9
0.5
1.3
3.3
4.5
1.7
1.2
0.7
0.6
0.7
........................
5.2
72.0
22.9
........................
24.6
24.4
23.3
27.7
* This category does not add to 100% because a small number of SNFs did not have urban/rural designations in our data.
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7. Alternatives Considered
As described in this section, we
estimated that the aggregate impact for
FY 2019 under the SNF PPS will be an
increase of approximately $820 million
in payments to SNFs, resulting from the
SNF market basket update to the
payment rates, as required by section
53111 of the BBA 2018. Absent
application of section 53111 of the BBA
2018, as discussed in section III.A.2. of
this final rule, the market basket
increase factor of 2.0 percent would
have resulted in an aggregate increase in
payments to SNFs of approximately
$680 million.
Section 1888(e) of the Act establishes
the SNF PPS for the payment of
Medicare SNF services for cost reporting
periods beginning on or after July 1,
1998. This section of the statute
prescribes a detailed formula for
calculating base payment rates under
the SNF PPS, and does not provide for
the use of any alternative methodology.
It specifies that the base year cost data
to be used for computing the SNF PPS
payment rates must be from FY 1995
(October 1, 1994, through September 30,
1995). In accordance with the statute,
we also incorporated a number of
elements into the SNF PPS (for example,
case-mix classification methodology, a
market basket index, a wage index, and
the urban and rural distinction used in
the development or adjustment of the
federal rates). Further, section
1888(e)(4)(H) of the Act specifically
requires us to disseminate the payment
rates for each new FY through the
Federal Register, and to do so before the
August 1 that precedes the start of the
new FY; accordingly, we are not
pursuing alternatives for this process.
As discussed in section VI.C. of this
final rule, we also considered an
alternative SNF VBP low-volume
scoring policy. This alternative scoring
assignment would result in a valuebased incentive payment percentage of
1.2 percent, or 60 percent of the 2
percent withhold. This amount would
match low-volume SNFs’ incentive
payment percentages with the finalized
SNF VBP Program payback percentage
of 60 percent, and would represent a
smaller adjustment to low-volume
SNFs’ incentive payment percentages
than the proposed policy described
above. We estimated that this alternative
would redistribute an additional $1
million with respect to FY 2019 services
to low-volume SNFs. We also estimated
that this alternative would increase the
60 percent payback percentage for FY
2019 by approximately 0.18 percent of
the approximately $527.4 million of the
total withheld from SNFs’ payments,
which would result in a payback
percentage of 60.18 percent of the
estimated $527.4 million in withheld
funds for that Program year. We
estimated that this alternative would
pay back SNFs about $5.7 million less
than the proposed low-volume scoring
39287
methodology adjustment in total
estimated payments on an annual basis.
However, under this alternative, like the
policy we are finalizing, the specific
amount by which the payback
percentage would increase for each
Program year would vary based on the
number of low-volume SNFs that we
identify for each Program year and the
distribution of all SNFs’ performance
scores for that Program year.
We discussed the comments that we
received on this alternative and our
responses to those comments in section
II.E.3.e. of this final rule in our
discussion of the low-volume scoring
adjustment policy.
8. Accounting Statement
As required by OMB Circular A–4
(available online at https://
obamawhitehouse.archives.gov/omb/
circulars_a004_a-4/), in Tables 48 and
49, we have prepared an accounting
statement showing the classification of
the expenditures associated with the
provisions of this final rule for FY 2019.
Tables 45 and 48 provides our best
estimate of the possible changes in
Medicare payments under the SNF PPS
as a result of the policies in this final
rule, based on the data for 15,471 SNFs
in our database. Tables 46 and 49
provide our best estimate of the possible
changes in Medicare payments under
the SNF VBP as a result of the policies
in this final rule.
TABLE 47—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2018 SNF PPS FISCAL
YEAR TO THE 2019 SNF PPS FISCAL YEAR
Category
Transfers
Annualized Monetized Transfers .......................................................................................
From Whom To Whom? ....................................................................................................
$820 million.*
Federal Government to SNF Medicare Providers.
* The net increase of $820 million in transfer payments is a result of the market basket increase of $820 million.
TABLE 48—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FOR THE FY 2019 SNF VBP
PROGRAM
Category
Transfers
Annualized Monetized Transfers .......................................................................................
From Whom To Whom? ....................................................................................................
$316.4 million.*
Federal Government to SNF Medicare Providers.
* This estimate does not include the two percent reduction to SNFs’ Medicare payments (estimated to be $527.4 million) required by statute.
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9. Conclusion
This final rule sets forth updates of
the SNF PPS rates contained in the SNF
PPS final rule for FY 2018 (82 FR
36530). Based on the above, we estimate
the overall estimated payments for SNFs
in FY 2019 are projected to increase by
approximately $820 million, or 2.4
percent, compared with those in FY
2018. We estimate that in FY 2019
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under RUG–IV, SNFs in urban and rural
areas will experience, on average, a 2.4
percent increase and 2.5 percent
increase, respectively, in estimated
payments compared with FY 2018.
Providers in the urban rural West South
Central region will experience the
largest estimated increase in payments
of approximately 3.5 percent. Providers
in the urban Mountain and rural New
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England regions will experience the
smallest estimated increase in payments
of 1.6 percent.
B. Regulatory Flexibility Act Analysis
The RFA requires agencies to analyze
options for regulatory relief of small
entities, if a rule has a significant impact
on a substantial number of small
entities. For purposes of the RFA, small
entities include small businesses, non-
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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, for the purposes
of the RFA, we estimate that almost all
SNFs are small entities as that term is
used in the RFA, according to the Small
Business Administration’s latest size
standards (NAICS 623110), with total
revenues of $27.5 million or less in any
1 year. (For details, see the Small
Business Administration’s website at
https://www.sba.gov/category/
navigation-structure/contracting/
contracting-officials/eligibility-sizestandards). In addition, approximately
20 percent of SNFs classified as small
entities are non-profit organizations.
Finally, individuals and states are not
included in the definition of a small
entity.
This final rule sets forth updates of
the SNF PPS rates contained in the SNF
PPS final rule for FY 2018 (82 FR
36530). Based on the above, we estimate
that the aggregate impact for FY 2019
will be an increase of $820 million in
payments to SNFs, resulting from the
SNF market basket update to the
payment rates. While it is projected in
Table 45 that providers will experience
a net increase in payments, we note that
some individual providers within the
same region or group may experience
different impacts on payments than
others due to the distributional impact
of the FY 2019 wage indexes and the
degree of Medicare utilization.
Guidance issued by the Department of
Health and Human Services on the
proper assessment of the impact on
small entities in rulemakings, utilizes a
cost or revenue impact of 3 to 5 percent
as a significance threshold under the
RFA. In their March 2017 Report to
Congress (available at 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 45. As indicated in
Table 45, the effect on facilities is
projected to be an aggregate positive
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impact of 2.4 percent for FY 2019. As
the overall impact on the industry as a
whole, and thus on small entities
specifically, is less than the 3 to 5
percent threshold discussed previously,
the Secretary has determined that this
final rule will not have a significant
impact on a substantial number of small
entities for FY 2019.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 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 final rule will 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 will
be similar to the impact on SNF
providers overall. Moreover, as noted in
previous SNF PPS final rules (most
recently, the one for FY 2018 (82 FR
36530)), the category of small rural
hospitals is included within the analysis
of the impact of this final rule on small
entities in general. As indicated in Table
45, the effect on facilities for FY 2019
is projected to be an aggregate positive
impact of 2.4 percent. As the overall
impact on the industry as a whole is less
than the 3 to 5 percent threshold
discussed above, the Secretary has
determined that this final rule will not
have a significant impact on a
substantial number of small rural
hospitals for FY 2019.
C. Unfunded Mandates Reform Act
Analysis
Section 202 of the Unfunded
Mandates Reform Act of 1995 also
requires that agencies assess anticipated
costs and benefits before issuing any
rule whose mandates require spending
in any 1 year of $100 million in 1995
dollars, updated annually for inflation.
In 2018, that threshold is approximately
$150 million. This final 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 final rule
that imposes substantial direct
requirement costs on state and local
governments, preempts state law, or
otherwise has federalism implications.
This final rule will have no substantial
direct effect on state and local
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governments, preempt state law, or
otherwise have federalism implications.
E. Congressional Review Act
This final 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
final 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
year’s 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 is a fair estimate of the
number of reviewers of this rule. In the
FY 2019 SNF PPS proposed rule (83 FR
21099), we welcomed any comments on
the approach in estimating the number
of entities which will review the
proposed rule.
We also recognize that different types
of entities are in many cases affected by
mutually exclusive sections of this final
rule, and therefore, for the purposes of
our estimate we assume that each
reviewer reads approximately 50
percent of the rule. We sought
comments on this assumption in the FY
2019 SNF PPS proposed rule (83 FR
21099).
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
$107.38 per hour, including overhead
and fringe benefits https://www.bls.gov/
oes/current/oes_nat.htm. Assuming an
average reading speed, we estimate that
it would take approximately 4 hours for
the staff to review half of the proposed
rule. For each SNF that reviews the rule,
the estimated cost is $429.52 (4 hours ×
$107.38). Therefore, we estimate that
the total cost of reviewing this
regulation is $124,561 ($429.52 × 247
reviewers).
In accordance with the provisions of
Executive Order 12866, this final rule
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was reviewed by the Office of
Management and Budget.
List of Subjects
42 CFR Part 411
Diseases, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 413
Health facilities, Diseases, Medicare,
Reporting and recordkeeping
requirements.
42 CFR Part 424
Emergency medical services, Health
facilities, Health professions, Medicare,
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR
chapter IV as set forth below:
PART 411—EXCLUSIONS FROM
MEDICARE AND LIMITATIONS ON
MEDICARE PAYMENT
1. The authority citation for part 411
is revised to read as follows:
■
Authority: 42 U.S.C. 1302, 1395w–101
through 1395w–152, 1395hh, and 1395nn.
§ 411.15
[Amended]
2. Section 411.15 is amended in
paragraph (p)(3)(iv) by removing the
phrase ‘‘by midnight of the day of
departure’’ and adding in its place the
phrase ‘‘before the following midnight’’.
■
PART 413—PRINCIPLES OF
REASONABLE COST
REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE
SERVICES; PROSPECTIVELY
DETERMINED PAYMENT RATES FOR
SKILLED NURSING FACILITIES;
PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS
3. The authority citation for part 413
is revised to read as follows:
■
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Authority: 42 U.S.C. 1302, 1395d(d),
1395f(b), 1395g, 1395l(a), (i), and (n),
1395x(v), 1395hh, 1395rr, 1395tt, and
1395ww; and sec. 124 of Public Law 106–
113, 113 Stat. 1501A–332; sec. 3201 of Public
Law 112–96, 126 Stat. 156; sec. 632 of Public
Law 112–240, 126 Stat. 2354; sec. 217 of
Public Law 113–93, 129 Stat. 1040; and sec.
204 of Public Law 113–295, 128 Stat. 4010;
and sec. 808 of Public Law 114–27, 129 Stat.
362.
4. Section 413.337 is amended by
revising paragraph (d)(1)(v) and adding
paragraphs (d)(1)(vi) and (vii) and (f) to
read as follows:
■
§ 413.337 Methodology for calculating the
prospective payment rates.
*
*
*
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*
20:44 Aug 07, 2018
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(d) * * *
(1) * * *
(v) For each subsequent fiscal year,
the unadjusted Federal payment rate is
equal to the rate computed for the
previous fiscal year increased by a factor
equal to the SNF market basket index
percentage change for the fiscal year
involved, except as provided in
paragraphs (d)(1)(vi) and (vii) of this
section.
(vi) For fiscal year 2018, the
unadjusted Federal payment rate is
equal to the rate computed for the
previous fiscal year increased by a SNF
market basket index percentage change
of 1 percent (after application of
paragraphs (d)(2) and (3) of this section).
(vii) For fiscal year 2019, the
unadjusted Federal payment rate is
equal to the rate computed for the
previous fiscal year increased by a SNF
market basket index percentage change
of 2.4 percent (after application of
paragraphs (d)(2) and (3) of this section).
*
*
*
*
*
(f) Adjustments to payment rates
under the SNF Value-Based Purchasing
Program. Beginning with payment for
services furnished on October 1, 2018,
the adjusted Federal per diem rate (as
defined in § 413.338(a)(2)) otherwise
applicable to a SNF for the fiscal year
is reduced by the applicable percent (as
defined in § 413.338(a)(3)). The
resulting amount is then adjusted by the
value-based incentive payment amount
(as defined in § 413.338(a)(14)) based on
the SNF’s performance score for that
fiscal year under the SNF Value-Based
Purchasing Program, as calculated
under § 413.338.
■ 5. Section 413.338 is amended by—
■ a. Revising the section heading;
■ b. Adding paragraphs (a)(16) and (17);
■ c. Revising paragraph (c)(2)(i); and
■ d. Adding paragraphs (d)(1)(iv) and
(d)(3) and (4).
The additions and revision read as
follows:
§ 413.338 Skilled nursing facility valuebased purchasing program.
(a) * * *
(16) Low-volume SNF means a SNF
with fewer than 25 eligible stays
included in the SNF readmission
measure denominator during the
performance period for a fiscal year.
(17) Eligible stay means, for purposes
of the SNF readmission measure, an
index SNF admission that would be
included in the denominator of that
measure.
*
*
*
*
*
(c) * * *
(2) * * *
(i) Total amount available for a fiscal
year. The total amount available for
PO 00000
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Fmt 4701
Sfmt 4700
39289
value-based incentive payments for a
fiscal year is at least 60 percent of the
total amount of the reduction to the
adjusted SNF PPS payments for that
fiscal year, as estimated by CMS, and
will be increased as appropriate for each
fiscal year to account for the assignment
of a performance score to low-volume
SNFs under paragraph (d)(3) of this
section.
(d) * * *
(1) * * *
(iv) CMS will not award points for
improvement to a SNF that has fewer
than 25 eligible stays during the
baseline period.
*
*
*
*
*
(3) If CMS determines that a SNF is
a low-volume SNF with respect to a
fiscal year, CMS will assign a
performance score to the SNF for the
fiscal year that, when used to calculate
the value-based incentive payment
amount (as defined in paragraph (a)(14)
of this section), results in a value-based
incentive payment amount that is equal
to the adjusted Federal per diem rate (as
defined in paragraph (a)(2) of this
section) that would apply to the SNF for
the fiscal year without application of
§ 413.337(f).
(4)(i) A SNF may request and CMS
may grant exceptions to the SNF ValueBased Purchasing Program’s
requirements under this section for one
or more calendar months when there are
certain extraordinary circumstances
beyond the control of the SNF.
(ii) A SNF may request an exception
within 90 days of the date that the
extraordinary circumstances occurred
by sending an email to
SNFVBPinquiries@cms.hhs.gov that
includes a completed Extraordinary
Circumstances Request form (available
on the SNF VBP section of QualityNet
at https://www.qualitynet.org/) and any
available evidence of the impact of the
extraordinary circumstances on the care
that the SNF furnished to patients,
including, but not limited to,
photographs, newspaper, and other
media articles.
(iii) Except as provided in paragraph
(d)(4)(iv) of this section, CMS will not
consider an exception request unless the
SNF requesting such exception has
complied fully with the requirements in
this paragraph (d).
(iv) CMS may grant exceptions to
SNFs without a request if it determines
that an extraordinary circumstance
affects an entire region or locale.
(v) CMS will calculate a SNF
performance score for a fiscal year for a
SNF for which it has granted an
exception request that does not include
its performance on the SNF readmission
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measure during the calendar months
affected by the extraordinary
circumstance.
*
*
*
*
*
■ 6. Section 413.360 is amended by
adding paragraph (b)(3) and revising
paragraphs (d)(1) and (4) to read as
follows:
§ 413.360 Requirements under the Skilled
Nursing Facility (SNF) Quality Reporting
Program (QRP).
*
*
*
*
(b) * * *
(3) CMS may remove a quality
measure from the SNF QRP based on
one or more of the following factors:
(i) Measure performance among SNFs
is so high and unvarying that
meaningful distinctions in
improvements in performance can no
longer be made.
(ii) Performance or improvement on a
measure does not result in better
resident outcomes.
(iii) A measure does not align with
current clinical guidelines or practice.
(iv) The availability of a more broadly
applicable (across settings, populations,
or conditions) measure for the particular
topic.
(v) The availability of a measure that
is more proximal in time to desired
resident outcomes for the particular
topic.
(vi) The availability of a measure that
is more strongly associated with desired
resident outcomes for the particular
topic.
amozie on DSK3GDR082PROD with RULES2
*
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20:44 Aug 07, 2018
Jkt 244001
(vii) Collection or public reporting of
a measure leads to negative unintended
consequences other than resident harm.
(viii) The costs associated with a
measure outweigh the benefit of its
continued use in the program.
*
*
*
*
*
(d) * * *
(1) SNFs that do not meet the
requirements in paragraph (b) of this
section for a program year will receive
a written notification of non-compliance
through at least one of the following
methods: Quality Improvement
Evaluation System (QIES) Assessment
Submission and Processing (ASAP)
system, the United States Postal Service,
or via an email from the Medicare
Administrative Contractor (MAC). A
SNF may request reconsideration no
later than 30 calendar days after the date
identified on the letter of noncompliance.
*
*
*
*
*
(4) CMS will notify SNFs, in writing,
of its final decision regarding any
reconsideration request through at least
one of the following notification
methods: QIES ASAP system, the
United States Postal Service, or via
email from the Medicare Administrative
Contractor (MAC).
*
*
*
*
*
■
PART 424—CONDITIONS FOR
MEDICARE PAYMENT
Dated: July 26, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human
Services.
7. The authority citation for part 424
is revised to read as follows:
■
Authority: 42 U.S.C. 1302 and 1395hh.
PO 00000
Frm 00130
Fmt 4701
Sfmt 9990
8. Section 424.20 is amended by
revising paragraph (a)(1)(i) to read as
follows:
§ 424.20 Requirements for posthospital
SNF care.
*
*
*
*
*
(a) * * *
(1) * * *
(i) The individual needs or needed on
a daily basis skilled nursing care
(furnished directly by or requiring the
supervision of skilled nursing
personnel) or other skilled rehabilitation
services that, as a practical matter, can
only be provided in an SNF or a swingbed hospital on an inpatient basis, and
the SNF care is or was needed for a
condition for which the individual
received inpatient care in a participating
hospital or a qualified hospital, as
defined in § 409.3 of this chapter, or for
a new condition that arose while the
individual was receiving care in the
SNF or swing-bed hospital for a
condition for which he or she received
inpatient care in a participating or
qualified hospital; or.
*
*
*
*
*
Dated: July 26, 2018.
Seema Verma,
Administrator, Centers for Medicare &
Medicaid Services.
[FR Doc. 2018–16570 Filed 7–31–18; 4:15 pm]
BILLING CODE 4120–01–P
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Agencies
[Federal Register Volume 83, Number 153 (Wednesday, August 8, 2018)]
[Rules and Regulations]
[Pages 39162-39290]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16570]
[[Page 39161]]
Vol. 83
Wednesday,
No. 153
August 8, 2018
Part II
Department of Health and Human Service
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Centers for Medicare & Medicaid Services
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42 CFR Parts 411, 413, and 424
Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities (SNF) Final Rule for FY 2019, SNF Value-
Based Purchasing Program, and SNF Quality Reporting Program; Final Rule
Federal Register / Vol. 83 , No. 153 / Wednesday, August 8, 2018 /
Rules and Regulations
[[Page 39162]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 411, 413, and 424
[CMS-1696-F]
RIN 0938-AT24
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities (SNF) Final Rule for FY 2019,
SNF Value-Based Purchasing Program, and SNF Quality Reporting Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule updates the payment rates used under the
prospective payment system (PPS) for skilled nursing facilities (SNFs)
for fiscal year (FY) 2019. This final rule also replaces the existing
case-mix classification methodology, the Resource Utilization Groups,
Version IV (RUG-IV) model, with a revised case-mix methodology called
the Patient-Driven Payment Model (PDPM) beginning on October 1, 2019.
The rule finalizes revisions to the regulation text that describes a
beneficiary's SNF ``resident'' status under the consolidated billing
provision and the required content of the SNF level of care
certification. The rule also finalizes updates to the SNF Quality
Reporting Program (QRP) and the Skilled Nursing Facility Value-Based
Purchasing (VBP) Program.
DATES:
Effective Date: This final rule is effective October 1, 2018.
Implementation Date: The implementation date for revised case-mix
methodology, PDPM, and associated policies discussed in section V. is
October 1, 2019.
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, and general
information.
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, and consolidated billing.
Mary Pratt, (410) 786-6867, for information related to the skilled
nursing facility quality reporting program.
Celeste Bostic, (410) 786-5603, for information related to the
skilled nursing facility value-based purchasing program.
SUPPLEMENTARY INFORMATION:
Availability of Certain Tables Exclusively Through the Internet on the
CMS Website
As discussed in the FY 2014 SNF PPS final rule (78 FR 47936),
tables setting forth the Wage Index for Urban Areas Based on CBSA Labor
Market Areas and the Wage Index Based on CBSA Labor Market Areas for
Rural Areas are no longer published in the Federal Register. Instead,
these tables are available exclusively through the internet on the CMS
website. The wage index tables for this final 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
A. Purpose
B. Summary of Major Provisions
C. Summary of Cost and Benefits
D. Improving Patient Outcomes and Reducing Burden Through
Meaningful Measures
E. Advancing Health Information Exchange
II. Background on SNF PPS
A. Statutory Basis and Scope
B. Initial Transition for the SNF PPS
C. Required Annual Rate Updates
III. Analysis and Responses to Public Comments on the FY 2019 SNF
PPS Proposed Rule
A. General Comments on the FY 2019 SNF PPS Proposed Rule
B. SNF PPS Rate Setting Methodology and FY 2019 Update
1. Federal Base Rates
2. SNF Market Basket Update
3. Case-Mix Adjustment
4. Wage Index Adjustment
5. SNF Value-Based Purchasing Program
6. 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. Revisions to SNF PPS Case-Mix Classification Methodology
A. Background and General Comments
B. Revisions to SNF PPS Federal Base Payment Rate Components
C. Design and Methodology for Case-Mix Adjustment of Federal
Rates
D. Use of the Resident Assessment Instrument--Minimum Data Set,
Version 3
E. Revisions to Therapy Provision Policies Under the SNF PPS
F. Interrupted Stay Policy
G. Relationship of PDPM to Existing Skilled Nursing Facility
Level of Care Criteria
H. Effect of PDPM on Temporary AIDS Add-On Payment
I. Potential Impacts of Implementing the PDPM and Parity
Adjustment
VI. Other Issues
A. Other Revisions to the Regulation Text
B. Skilled Nursing Facility (SNF) Quality Reporting Program
(QRP)
C. Skilled Nursing Facility Value-Based Purchasing Program (SNF
VBP)
D. Request for Information on Promoting Interoperability and
Electronic Healthcare Information Exchange Through Possible
Revisions to the CMS Patient Health and Safety Requirements for
Hospitals and Other Medicare- and Medicaid-Participating Providers
and Suppliers
VII. Collection of Information Requirements
VIII. Economic Analyses
A. Regulatory Impact Analysis
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act Analysis
D. Federalism Analysis
E. Congressional Review Act
F. Regulatory Review Costs
I. Executive Summary
A. Purpose
This final rule updates the SNF prospective payment rates for FY
2019 as required under section 1888(e)(4)(E) of the Social Security Act
(the Act). It will 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 final rule). This final rule also replaces
the existing case-mix classification methodology, the Resource
Utilization Groups, Version IV (RUG-IV) model, with a revised case-mix
methodology called the Patient-Driven Payment Model (PDPM) effective
October 1, 2019. This rule also finalizes updates to the Skilled
Nursing Facility Quality Reporting Program (SNF QRP) and Skilled
Nursing Facility Value-Based Purchasing Program (SNF VBP).
B. Summary of Major Provisions
In accordance with sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of
the Act, the federal rates in this final rule will reflect an update to
the rates that we published in the SNF PPS final
[[Page 39163]]
rule for FY 2018 (82 FR 36530), as corrected in the FY 2018 SNF PPS
correction notice (82 FR 46163), which reflects the SNF market basket
update for FY 2019, as required by section 1888(e)(5)(B)(iv) of the Act
(as added by section 53111 of the Bipartisan Budget Act of 2018). This
final rule also replaces the existing case-mix classification
methodology, the Resource Utilization Groups, Version IV (RUG-IV)
model, with a revised case-mix methodology called the Patient-Driven
Payment Model (PDPM). It also finalizes revisions at 42 CFR
411.15(p)(3)(iv), which describes a beneficiary's SNF ``resident''
status under the consolidated billing provision, and 42 CFR
424.20(a)(1)(i), which describes the required content of the SNF level
of care certification. Furthermore, in accordance with section 1888(h)
of the Act, this final rule, beginning October 1, 2018, will reduce the
adjusted federal per diem rate determined under section 1888(e)(4)(G)
of the Act by 2 percent, and adjust the resulting rate by the value-
based incentive payment amount earned by the SNF for that fiscal year
under the SNF VBP Program. Additionally, this final rule updates
policies for the SNF VBP, including requirements that apply beginning
with the FY 2021 SNF VBP program year, changes to the SNF VBP scoring
methodology, and the adoption of an Extraordinary Circumstances
Exception policy. Finally, this rule updates requirements for the SNF
QRP, including adopting a new quality measure removal factor and
codifying in our regulations a number of requirements.
C. Summary of Cost and Benefits
Table 1--Cost and Benefits
------------------------------------------------------------------------
Provision description Total transfers
------------------------------------------------------------------------
FY 2019 SNF PPS payment rate update\... The overall economic impact of
this final rule is an
estimated increase of $820
million in aggregate payments
to SNFs during FY 2019.
FY 2019 SNF VBP changes................ The overall economic impact of
the SNF VBP Program is an
estimated reduction of $211
million in aggregate payments
to SNFs during FY 2019.
------------------------------------------------------------------------
D. Improving Patient Outcomes and Reducing Burden Through Meaningful
Measures
Regulatory reform and reducing regulatory burden are high
priorities for us. To reduce the regulatory burden on the healthcare
industry, lower health care costs, and enhance patient care, in October
2017, we launched the Meaningful Measures Initiative.\1\ This
initiative is one component of our agency-wide Patients Over Paperwork
Initiative,\2\ which is aimed at evaluating and streamlining
regulations with a goal to reduce unnecessary cost and burden, increase
efficiencies, and improve beneficiary experience. The Meaningful
Measures Initiative is aimed at identifying the highest priority areas
for quality measurement and quality improvement in order to assess the
core quality of care issues that are most vital to advancing our work
to improve patient outcomes. The Meaningful Measures Initiative
represents a new approach to quality measures that fosters operational
efficiencies, and will reduce costs including the collection and
reporting burden while producing quality measurement that is more
focused on meaningful outcomes.
---------------------------------------------------------------------------
\1\ Meaningful Measures web page: https:/www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitativesGenIndo/MMF/General-info-Sub-Page.html.
\2\ See Remarks by Administrator Seema Verma at the Health Care
Payment Learning and Action Network (LAN) Fall Summit, as prepared
for delivery on October 30, 2017 https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html
---------------------------------------------------------------------------
The Meaningful Measures Framework has the following objectives:
Address high-impact measure areas that safeguard public
health;
Patient-centered and meaningful to patients;
Outcome-based where possible;
Fulfill each program's statutory requirements;
Minimize the level of burden for health care providers
(for example, through a preference for EHR-based measures where
possible, such as electronic clinical quality measures);
Significant opportunity for improvement;
Address measure needs for population based payment through
alternative payment models; and
Align across programs and/or with other payers.
In order to achieve these objectives, we have identified 19
Meaningful Measures areas and mapped them to six overarching quality
priorities as shown in Table 2.
Table 2--Meaningful Measures Framework Domains and Measure Areas
------------------------------------------------------------------------
Quality priority Meaningful measure area
------------------------------------------------------------------------
Making Care Safer by Reducing Harm Healthcare-Associated
Caused in the Delivery of Care. Infections.
Preventable Healthcare Harm.
Strengthen Person and Family Engagement Care is Personalized and
as Partners in Their Care. Aligned with Patient's Goals.
End of Life Care according to
Preferences.
Patient's Experience of Care
Patient Reported Functional
Outcomes.
Promote Effective Communication and Medication Management.
Coordination of Care.
Admissions and Readmissions to
Hospitals.
Transfer of Health Information
and Interoperability.
Promote Effective Prevention and Preventive Care.
Treatment of Chronic Disease.
Management of Chronic
Conditions.
Prevention, Treatment, and
Management of Mental Health.
Prevention and Treatment of
Opioid and Substance Use
Disorders.
Risk Adjusted Mortality.
Work with Communities to Promote Best Equity of Care.
Practices of Healthy Living.
Community Engagement.
[[Page 39164]]
Make Care Affordable.................... Appropriate Use of Healthcare.
Patient-focused Episode of
Care.
Risk Adjusted Total Cost of
Care.
------------------------------------------------------------------------
By including Meaningful Measures in our programs, we believe that
we can also address the following cross-cutting measure criteria:
Eliminating disparities;
Tracking measurable outcomes and impact;
Safeguarding public health;
Achieving cost savings;
Improving access for rural communities; and
Reducing burden.
We believe that the Meaningful Measures Initiative will improve
outcomes for patients, their families, and health care providers while
reducing burden and costs for clinicians and providers and promoting
operational efficiencies.
Comment: We received numerous comments from stakeholders regarding
the Meaningful Measures Initiative and the impact of its implementation
in CMS' quality programs. Many of these comments pertained to specific
program proposals, and are discussed in the appropriate program-
specific sections of this final rule. However, commenters also provided
insights and recommendations for the ongoing development of the
Meaningful Measures Initiative generally, including: ensuring
transparency in public reporting and usability of publicly reported
data; evaluating the benefit of individual measures to patients via use
in quality programs weighed against the burden to providers of
collecting and reporting that measure data; and identifying additional
opportunities for alignment across CMS quality programs.
Response: We will continue to work with stakeholders to refine and
further implement the Meaningful Measures Initiative, and will take
commenters' insights and recommendations into account moving forward.
E. Advancing Health Information Exchange
The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care. The Office of the
National Coordinator for Health Information Technology (ONC) and CMS
work collaboratively to advance interoperability across settings of
care, including post-acute care.
The Improving Medicare Post-Acute Care Transformation Act of 2015
(IMPACT Act, Pub. L. 113-185) requires assessment data to be
standardized and interoperable to allow for exchange of the data among
post-acute providers and other providers. To further interoperability
in post-acute care, CMS has developed a Data Element Library to serve
as a publicly available centralized, authoritative resource for
standardized data elements and their associated mappings to health IT
standards. These interoperable data elements can reduce provider burden
by allowing the use and reuse of healthcare data, support provider
exchange of electronic health information for care coordination,
person-centered care, and support real-time, data driven, clinical
decision making. Standards in the Data Element Library (https://del.cms.gov/) can be referenced on the CMS website and in the ONC
Interoperability Standards Advisory (ISA). The 2018 Interoperability
Standards Advisory (ISA) is available at https://www.healthit.gov/isa.
Most recently, the 21st Century Cures Act (Pub. L. 114-255),
enacted in late 2016, requires HHS to take new steps to enable the
electronic sharing of health information ensuring interoperability for
providers and settings across the care continuum. Specifically,
Congress directed ONC to ``develop or support a trusted exchange
framework, including a common agreement among health information
networks nationally.'' This framework (https://beta.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement)
outlines a common set of principles for trusted exchange and minimum
terms and conditions for trusted exchange in order to enable
interoperability across disparate health information networks. In
another important provision, Congress defined ``information blocking''
as practices likely to interfere with, prevent, or materially
discourage access, exchange, or use of electronic health information,
and established new authority for HHS to discourage these practices.
We invite providers to learn more about these important
developments and how they are likely to affect SNFs.
II. Background on SNF PPS
A. Statutory Basis and Scope
As amended by section 4432 of the Balanced Budget Act of 1997 (BBA
1997, Pub. L. 105-33, enacted on August 5, 1997), section 1888(e) of
the Act provides for the implementation of a PPS for SNFs. This
methodology uses prospective, case-mix adjusted per diem payment rates
applicable to all covered SNF services defined in section 1888(e)(2)(A)
of the Act. The SNF PPS is effective for cost reporting periods
beginning on or after July 1, 1998, and covers all costs of furnishing
covered SNF services (routine, ancillary, and capital-related costs)
other than costs associated with approved educational activities and
bad debts. Under section 1888(e)(2)(A)(i) of the Act, covered SNF
services include post-hospital extended care services for which
benefits are provided under Part A, as well as those items and services
(other than a small number of excluded services, such as physicians'
services) for which payment may otherwise be made under Part B and
which are furnished to Medicare beneficiaries who are residents in a
SNF during a covered Part A stay. A comprehensive discussion of these
provisions appears in the May 12, 1998 interim final rule (63 FR
26252). In addition, a detailed discussion of the legislative history
of the SNF PPS is available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_04152015.pdf.
Section 215(a) of the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93, enacted on April 1, 2014) added section 1888(g)
to the Act requiring the Secretary to specify an all-cause all-
condition hospital readmission measure and an all-condition risk-
adjusted potentially preventable hospital readmission measure for the
SNF setting. Additionally, section 215(b) of PAMA added section 1888(h)
to the Act requiring the Secretary to implement a VBP program for SNFs.
Finally, section 2(c)(4) of the IMPACT Act added section 1888(e)(6) to
the Act, which requires the Secretary to implement a quality reporting
program for SNFs under which SNFs report data on measures and resident
assessment data.
[[Page 39165]]
B. Initial Transition for the SNF PPS
Under sections 1888(e)(1)(A) and 1888(e)(11) of the Act, the SNF
PPS included an initial, three-phase transition that blended a
facility-specific rate (reflecting the individual facility's historical
cost experience) with the federal case-mix adjusted rate. The
transition extended through the facility's first 3 cost reporting
periods under the PPS, up to and including the one that began in FY
2001. Thus, the SNF PPS is no longer operating under the transition, as
all facilities have been paid at the full federal rate effective with
cost reporting periods beginning in FY 2002. As we now base payments
for SNFs entirely on the adjusted federal per diem rates, we no longer
include adjustment factors under the transition related to facility-
specific rates for the upcoming FY.
C. Required Annual Rate Updates
Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates
to be updated annually. The most recent annual update occurred in a
final rule that set forth updates to the SNF PPS payment rates for FY
2018 (82 FR 36530), as corrected in the FY 2018 SNF PPS correction
notice (82 FR 46163).
Section 1888(e)(4)(H) of the Act specifies that we provide for
publication annually in the Federal Register of the following:
The unadjusted federal per diem rates to be applied to
days of covered SNF services furnished during the upcoming FY.
The case-mix classification system to be applied for these
services during the upcoming FY.
The factors to be applied in making the area wage
adjustment for these services.
Along with other revisions discussed later in this preamble, this
final rule will provide the required annual updates to the per diem
payment rates for SNFs for FY 2019.
III. Analysis and Responses to Public Comments on the FY 2019 SNF PPS
Proposed Rule
In response to the publication of the FY 2019 SNF PPS proposed
rule, we received 290 public comments from individuals, providers,
corporations, government agencies, private citizens, trade
associations, and major organizations. The following are brief
summaries of each proposed provision, a summary of the public comments
that we received related to that proposal, and our responses to the
comments.
A. General Comments on the FY 2019 SNF PPS Proposed Rule
In addition to the comments we received on specific proposals
contained within the proposed rule (which we address later in this
final rule), commenters also submitted the following, more general,
observations on the SNF PPS and SNF care generally. A discussion of
these comments, along with our responses, appears below.
Comment: A few commenters requested clarification of how a SNF may
comply with the coverage requirement to provide skilled services on a
daily basis and communicate intended compliance with such policy when
skilled rehabilitative services are halted temporarily due to a holiday
or patient illness, and the only skilled service required is
rehabilitation services.
Response: As stated in the FY 2000 SNF PPS final rule (64 FR
41670), the requirement for daily skilled services should not be
applied so strictly that it would not be met merely because there is a
brief, isolated absence from the facility in a situation where
discharge from the facility would not be practical. With regard to the
``daily basis'' requirement, the Medicare program does not specify in
regulations or guidelines an official list of holidays of other
specific occasions that a facility may observe as breaks in
rehabilitation services, but recognizes that the resident's own
condition dictates the amount of service that is appropriate.
Accordingly, the facility itself must judge whether a brief, temporary
pause in the delivery of therapy services would adversely affect the
resident's condition.
This policy is also discussed at Sec. 409.34(b), where the
paragraph states that a break of 1 or 2 days in the furnishing of
rehabilitation services will not preclude coverage if discharge would
not be practical for the 1 or 2 days during which, for instance, the
physician has suspended the therapy sessions because the patient
exhibited extreme fatigue.
Comment: One commenter requested that CMS allow the addition of
advanced registered nurse practitioners (ARNPs) to the rehabilitation
team to meet regulatory requirements and deal with a shortage of
rehabilitation physicians.
Response: We appreciate the comment. While ARNPs are eligible to
enroll and participate in Medicare, it is unclear what federal
regulatory requirements the commenter is concerned about that would
prevent ARNPs from participating in rehabilitation team activities.
B. SNF PPS Rate Setting Methodology and FY 2019 Update
1. 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 be payable under Part B for covered
SNF services furnished to individuals during the course of a covered
Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to
the first effective year of the PPS (the 15-month period beginning July
1, 1998) using a SNF market basket index, and then standardized for
geographic variations in wages and for the costs of facility
differences in case mix. In compiling the database used to compute the
federal payment rates, we excluded those providers that received new
provider exemptions from the routine cost limits, as well as costs
related to payments for exceptions to the routine cost limits. Using
the formula that the BBA 1997 prescribed, we set the federal rates at a
level equal to the weighted mean of freestanding costs plus 50 percent
of the difference between the freestanding mean and weighted mean of
all SNF costs (hospital-based and freestanding) combined. We computed
and applied separately the payment rates for facilities located in
urban and rural areas, and adjusted the portion of the federal rate
attributable to wage-related costs by a wage index to reflect
geographic variations in wages.
2. SNF Market Basket Update
a. SNF Market Basket Index
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket index that reflects changes over time in the prices of an
appropriate mix of goods and services included in covered SNF services.
Accordingly, we have developed a SNF market basket index that
encompasses the most commonly used cost categories for SNF routine
services, ancillary services, and capital-related expenses. In the SNF
PPS final rule for FY 2018 (82 FR 36548 through 36566), we revised and
rebased the market basket index, which
[[Page 39166]]
included updating the base year from FY 2010 to 2014.
The SNF market basket index is used to compute the market basket
percentage change that is used to update the SNF federal rates on an
annual basis, as required by section 1888(e)(4)(E)(ii)(IV) of the Act.
This market basket percentage update is adjusted by a forecast error
correction, if applicable, and then further adjusted by the application
of a productivity adjustment as required by section 1888(e)(5)(B)(ii)
of the Act and described in section III.B.2.d of this final rule. For
FY 2019, the growth rate of the 2014-based SNF market basket in the
proposed rule was estimated to be 2.7 percent, based on the IHS Global
Insight, Inc. (IGI) first quarter 2018 forecast with historical data
through fourth quarter 2017, before the multifactor productivity
adjustment is applied. Using IGIs most recent forecast, the second
quarter 2018 forecast with historical data through first quarter 2018,
we calculate a growth rate of the 2014-based SNF market basket of 2.8
percent.
However, we note that section 53111 of the Bipartisan Budget Act of
2018 (BBA 2018) (Pub. L. 115-123, enacted on February 9, 2018) amended
section 1888(e) of the Act to add section 1888(e)(5)(B)(iv) of the Act.
Section 1888(e)(5)(B)(iv) of the Act establishes a special rule for FY
2019 that requires the market basket percentage, after the application
of the productivity adjustment, to be 2.4 percent. In accordance with
section 1888(e)(5)(B)(iv) of the Act, we will use a market basket
percentage of 2.4 percent to update the federal rates set forth in this
final rule. We proposed to revise Sec. 413.337(d) to reflect this
statutorily required 2.4 percent market basket percentage for FY 2019.
In addition, to conform with section 1888(e)(5)(B)(iii) of the Act, we
proposed to update the regulations to reflect the 1 percent market
basket percentage required for FY 2018 (as discussed in the FY 2018 SNF
PPS final rule, 82 FR 36533). Accordingly, we proposed to revise
paragraph (d)(1) of Sec. 413.337, which sets forth the market basket
update formula, by revising paragraph (d)(1)(v), and by adding
paragraphs (d)(1)(vi) and (d)(1)(vii). The revision to add paragraph
(d)(1)(vi) reflects section 1888(e)(5)(B)(iii) of the Act (as added by
section 411(a) of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA) (Pub. L. 114-10)), which, as discussed above, establishes
a special rule for FY 2018 that requires the market basket percentage,
after the application of the productivity adjustment, to be 1.0
percent. The revision to add paragraph (d)(1)(vii) reflects section
1888(e)(5)(B)(iv) of the Act (as added by section 53111 of BBA 2018),
which establishes a special rule for FY 2019 that requires the market
basket percentage, after the application of the productivity
adjustment, to be 2.4 percent. These statutory provisions are self-
implementing and do not require the exercise of discretion by the
Secretary. In section III.B.2.e. of this final rule, we discuss the
specific application of the BBA 2018-specified market basket adjustment
to the forthcoming annual update of the SNF PPS payment rates. In
addition, we also discuss in that section 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.
b. Use of the SNF Market Basket Percentage
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage as the percentage change in the SNF market basket index from
the midpoint of the previous FY to the midpoint of the current FY.
Absent the addition of section 1888(e)(5)(B)(iv) of the Act, added by
section 53111 of BBA 2018, we would have used the percentage change in
the SNF market basket index to compute the update factor for FY 2019.
This factor is based on the FY 2019 percentage increase in the 2014-
based SNF market basket index reflecting routine, ancillary, and
capital-related expenses. In the proposed rule, the SNF market basket
percentage was estimated to be 2.7 percent for FY 2019 based on IGI's
first quarter 2018 forecast (with historical data through fourth
quarter 2017). In this final rule, we are using IGI's more recent
second quarter 2018 forecast (with historical data through first
quarter 2018) and we calculate a SNF market basket percentage increase
of 2.8 percent. As discussed in sections III.B.2.c and III.B.2.d of
this final rule, this market basket percentage change would have been
reduced by the applicable forecast error correction (as described in
Sec. 413.337(d)(2)) and by the MFP adjustment as required by section
1888(e)(5)(B)(ii) of the Act. As noted previously, section
1888(e)(5)(B)(iv) of the Act, added by section 53111 of the BBA 2018,
requires us to update the SNF PPS rates for FY 2019 using a 2.4 percent
SNF market basket percentage change, instead of the estimated 2.8
percent market basket percentage change adjusted by the multifactor
productivity adjustment as described below. Additionally, as discussed
in section II.B. of this final 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.
c. Forecast Error Adjustment
As discussed in the June 10, 2003 supplemental proposed rule (68 FR
34768) and finalized in the August 4, 2003 final rule (68 FR 46057
through 46059), Sec. 413.337(d)(2) provides for an adjustment to
account for market basket forecast error. The initial adjustment for
market basket forecast error applied to the update of the FY 2003 rate
for FY 2004, and took into account the cumulative forecast error for
the period from FY 2000 through FY 2002, resulting in an increase of
3.26 percent to the FY 2004 update. Subsequent adjustments in
succeeding FYs take into account the forecast error from the most
recently available FY for which there is final data, and apply the
difference between the forecasted and actual change in the market
basket when the difference exceeds a specified threshold. We originally
used a 0.25 percentage point threshold for this purpose; however, for
the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425,
August 3, 2007), we adopted a 0.5 percentage point threshold effective
for FY 2008 and subsequent FYs. As we stated in the final rule for FY
2004 that first issued the market basket forecast error adjustment (68
FR 46058, August 4, 2003), the adjustment will reflect both upward and
downward adjustments, as appropriate.
For FY 2017 (the most recently available FY for which there is
final data), the estimated increase in the market basket index was 2.7
percentage points, while the actual increase for FY 2017 was 2.7
percentage points, resulting in the actual increase being the same as
the estimated increase. Accordingly, as the difference between the
estimated and actual amount of change in the market basket index does
not exceed the 0.5 percentage point threshold, the FY 2019 market
basket percentage change of 2.7 percent would not have been adjusted to
account for the forecast error correction. Table 3 shows the forecasted
and actual market basket amounts for FY 2017.
[[Page 39167]]
Table 3--Difference Between the Forecasted and Actual Market Basket Increases for FY 2017
----------------------------------------------------------------------------------------------------------------
Forecasted FY
Index 2017 increase Actual FY 2017 FY 2017
* increase ** difference
----------------------------------------------------------------------------------------------------------------
SNF.......................................................... 2.7 2.7 0.0
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2016 IGI forecast (2010-based index).
** Based on the second quarter 2018 IGI forecast, with historical data through the first quarter 2018 (2010-
based index).
d. 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 (Affordable Care Act)
(Pub. L. 111-148, enacted on March 23, 2010) requires that, in FY 2012
and in subsequent FYs, the market basket percentage under the SNF
payment system (as described in section 1888(e)(5)(B)(i) of the Act) is
to be reduced annually by the multifactor productivity (MFP) adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act, in turn, defines the MFP adjustment
to be equal to the 10-year moving average of changes in annual economy-
wide private nonfarm business multi-factor productivity (as projected
by the Secretary for the 10-year period ending with the applicable FY,
year, cost-reporting period, or other annual period). The Bureau of
Labor Statistics (BLS) is the agency that publishes the official
measure of private nonfarm business MFP. We refer readers to the BLS
website at 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 website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html.
1. Incorporating the MFP Adjustment Into the Market Basket Update
Per section 1888(e)(5)(A) of the Act, the Secretary shall establish
a SNF market basket index that reflects changes over time in the prices
of an appropriate mix of goods and services included in covered SNF
services. Section 1888(e)(5)(B)(ii) of the Act, added by section
3401(b) of the Affordable Care Act, requires that for FY 2012 and each
subsequent FY, after determining the market basket percentage described
in section 1888(e)(5)(B)(i) of the Act, the Secretary shall reduce such
percentage by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (which we refer to as the MFP
adjustment). Section 1888(e)(5)(B)(ii) of the Act further states that
the reduction of the market basket percentage by the MFP adjustment may
result in the market basket percentage being less than zero for a FY,
and may result in payment rates under section 1888(e) of the Act being
less than such payment rates for the preceding fiscal year.
The MFP adjustment, calculated as the 10-year moving average of
changes in MFP for the period ending September 30, 2019, is estimated
to be 0.8 percent based on IGI's second quarter 2018 forecast. Also,
consistent with section 1888(e)(5)(B)(i) of the Act and Sec.
413.337(d)(2), the market basket percentage for FY 2019 for the SNF PPS
is based on IGI's second quarter 2018 forecast of the SNF market basket
percentage, which is estimated to be 2.8 percent. The proposed rule
reflected a market basket percentage for FY 2019 of 2.7 percent and an
MFP adjustment of 0.8 percent based on IGI's first quarter 2018
forecast.
If not for the enactment of section 53111 of the BBA 2018, the FY
2019 update would have been calculated in accordance with section
1888(e)(5)(B)(i) and (ii) of the Act, pursuant to which the market
basket percentage determined under section 1888(e)(5)(B)(i) of the Act
(that is, 2.8 percent) would have been reduced by the MFP adjustment
(the 10-year moving average of changes in MFP for the period ending
September 30, 2019) of 0.8 percent, which would have been calculated as
described above and based on IGI's second quarter 2018 forecast. Absent
the enactment of section 53111 of the BBA 2018, the resulting MFP-
adjusted SNF market basket update would have been equal to 2.0 percent,
or 2.8 percent less 0.8 percentage point. However, as discussed above,
section 1888(e)(5)(B)(iv) of the Act, added by section 53111 of the BBA
2018, requires us to apply a 2.4 percent market basket percentage
increase in determining the FY 2019 SNF payment rates set forth in this
final rule (without regard to the MFP adjustment described above).
e. Market Basket Update Factor for FY 2019
Sections 1888(e)(4)(E)(ii)(IV) and 1888(e)(5)(i) of the Act require
that the update factor used to establish the FY 2019 unadjusted federal
rates be at a level equal to the market basket index percentage change.
Accordingly, we determined the total growth from the average market
basket level for the period of October 1, 2017, through September 30,
2018 to the average market basket level for the period of October 1,
2018, through September 30, 2019. This process yields a percentage
change in the 2014-based SNF market basket of 2.8 percent.
As further explained in section III.B.2.c. of this final rule, as
applicable, we adjust the market basket percentage change by the
forecast error from the most recently available FY for which there is
final data and apply this adjustment whenever the difference between
the forecasted and actual percentage change in the market basket
exceeds a 0.5 percentage point threshold. Since the difference between
the forecasted FY 2017 SNF market basket percentage change and the
actual FY 2017 SNF market basket percentage change (FY 2017 is the most
recently available FY for which there is historical data) did not
exceed the 0.5 percentage point threshold, the FY 2019 market basket
percentage change of 2.8 percent would not be adjusted by the forecast
error correction.
If not for the enactment of section 53111 of the BBA 2018, the SNF
market basket for FY 2019 would have been determined in accordance with
section
[[Page 39168]]
1888(e)(5)(B)(ii) of the Act, which requires us to reduce the market
basket percentage change by the MFP adjustment (the 10-year moving
average of changes in MFP for the period ending September 30, 2019) of
0.8 percent, as described in section III.B.2.d.1. of this final rule.
Thus, absent the enactment of the BBA 2018, the resulting net SNF
market basket update would have been equal to 2.0 percent, or 2.8
percent less the 0.8 percentage point MFP adjustment. We note that our
policy has been that, if more recent data become available (for
example, a more recent estimate of the SNF market basket and/or MFP
adjustment), we would use such data, if appropriate, to determine the
SNF market basket percentage change, labor-related share relative
importance, forecast error adjustment, and MFP adjustment in the SNF
PPS final rule.
Historically, we have used the SNF market basket, adjusted as
described above, to adjust each per diem component of the federal rates
forward to reflect the change in the average prices from one year to
the next. However, section 1888(e)(5)(B)(iv) of the Act, as added by
section 53111 of the BBA 2018, requires us to use a market basket
percentage of 2.4 percent, after application of the MFP to adjust the
federal rates for FY 2019. Under section 1888(e)(5)(B)(iv) of the Act,
the market basket percentage increase used to determine the federal
rates set forth in Table 4 and 5 in this final rule will be 2.4 percent
for FY 2019.
In addition, we note that section 1888(e)(6)(A)(i) of the Act
provides that, beginning with FY 2018, SNFs that fail to submit data,
as applicable, in accordance with sections 1888(e)(6)(B)(i)(II) and
(III) of the Act for a fiscal year will receive a 2.0 percentage point
reduction to their market basket update for the fiscal year involved,
after application of section 1888(e)(5)(B)(ii) of the Act (the MFP
adjustment) and section 1888(e)(5)(B)(iii) of the Act (the 1 percent
market basket increase for FY 2018). In addition, section
1888(e)(6)(A)(ii) of the Act states that application of the 2.0
percentage point reduction (after application of section
1888(e)(5)(B)(ii) and (iii) of the Act) may result in the market basket
index percentage change being less than 0.0 for a fiscal year, and may
result in payment rates for a fiscal year being less than such payment
rates for the preceding fiscal year. Section 1888(e)(6)(A)(iii) of the
Act further specifies that the 2.0 percentage point reduction is
applied in a noncumulative manner, so that any reduction made under
section 1888(e)(6)(A)(i) of the Act applies only with respect to the
fiscal year involved, and that the reduction cannot be taken into
account in computing the payment amount for a subsequent fiscal year.
Accordingly, we proposed that for SNFs that do not satisfy the
reporting requirements for the FY 2019 SNF QRP, we would apply a 2.0
percentage point reduction to the SNF market basket percentage change
for that fiscal year, after application of any applicable forecast
error adjustment as specified in Sec. 413.337(d)(2) and the MFP
adjustment as specified in Sec. 413.337(d)(3). In the FY 2019 SNF PPS
proposed rule (83 FR 21024), we proposed that, for FY 2019, the
application of this reduction to SNFs that have not met the
requirements for the FY 2019 SNF QRP would result in a market basket
index percentage change for FY 2019 that is less than zero
(specifically, a net update of negative 0.1 percentage point, derived
by subtracting 2 percent from the MFP-adjusted market basket update of
1.9 percent), and would also result in FY 2019 payment rates that are
less than such payment rates for the preceding FY. However, we
inadvertently applied the 2.0 percent reduction to the market basket
adjustment factor that would have applied were it not for the
application of the BBA 2018 stipulated market basket update factor
rather than to the BBA 2018 stipulated market basket update factor of
2.4 percent. Therefore, when properly applied, the net update for
providers that fail to meet the requirements for the FY 2019 SNF QRP
will be 0.4 percent, rather than the negative 0.1 percent discussed in
the proposed rule. We invited comments on these proposals.
Commenters submitted the following comments related to the proposed
rule's discussion of the Market Basket Update Factor for FY 2019. A
discussion of these comments, along with our responses, appears below.
Comment: We received a number of comments in relation to applying
the FY 2019 market basket update factor in the determination of the FY
2019 unadjusted federal per diem rates, with some commenters supporting
its application in determining the FY 2019 unadjusted per diem rates,
while others opposed its application. In their March 2018 report
(available at https://www.medpac.gov/docs/default-source/reports/mar18_medpac_ch8_sec.pdf) and in their comment on the FY 2019 SNF PPS
proposed rule, MedPAC recommended that we eliminate the market basket
update for SNFs altogether for FY 2019 and FY 2020 and implement
revisions to the SNF PPS.
Response: We appreciate all of the comments received on the
proposed market basket update for FY 2019. In response to those
comments opposing the application of the FY 2019 market basket update
factor in determining the FY 2019 unadjusted federal per diem rates,
specifically MedPAC's proposal to eliminate the market basket update
for SNFs, we are required to update the unadjusted Federal per diem
rates for FY 2019 by 2.4 percent under section 1888(e)(4)(E)(ii)(IV)
and (e)(5)(B) of the Act. as amended by section 53111 of the BBA 2018.
Comment: A few commenters expressed concern with regard to CMS
applying the 2.0 percentage point reduction to the market basket
increase to the standard market basket adjustment of 1.9 percent,
rather than to the market basket required as a result of the BBA 2018.
These commenters requested that CMS reconsider this decision and to
apply the QRP-related market basket reduction to the BBA 2018-
stipulated market basket.
Response: We appreciate the comments on this issue. Further, we
agree with commenters that the QRP-related reduction to the market
basket should be applied to the BBA 2018-stipulated market basket.
Therefore, the market basket update factor that would be applied in
cases where a provider has not met the requirements of the FY 2019 SNF
QRP would be a positive 0.4 percent, rather than the negative 0.1
percent discussed in the FY 2019 SNF PPS proposed rule.
Accordingly, for the reasons specified in this final rule and in
the FY 2019 SNF PPS proposed rule (83 FR 21021 through 21024), we are
applying the FY 2019 SNF market basket increase factor of 2.4 percent,
as stipulated by the BBA 2018, in our determination of the FY 2019 SNF
PPS unadjusted federal per diem rates. As described in this section, we
are adjusting each per diem component of the federal rates forward to
reflect the BBA 2018 stipulated update factor for FY 2019.
Tables 4 and 5 reflect the updated components of the unadjusted
federal rates for FY 2019, prior to adjustment for case-mix.
[[Page 39169]]
Table 4--FY 2019 Unadjusted Federal Rate per Diem--Urban
----------------------------------------------------------------------------------------------------------------
Nursing-- case- Therapy-- case- Therapy-- non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $181.44 $136.67 $18.00 $92.60
----------------------------------------------------------------------------------------------------------------
Table 5--FY 2019 Unadjusted Federal Rate per Diem--Rural
----------------------------------------------------------------------------------------------------------------
Nursing-- case- Therapy-- case- Therapy-- Non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount............................. $173.34 $157.60 $19.23 $94.31
----------------------------------------------------------------------------------------------------------------
3. Case-Mix Adjustment
Under section 1888(e)(4)(G)(i) of the Act, the federal rate also
incorporates an adjustment to account for facility case-mix, using a
classification system that accounts for the relative resource
utilization of different patient types. The statute specifies that the
adjustment is to reflect both a resident classification system that the
Secretary establishes to account for the relative resource use of
different patient types, as well as resident assessment data and other
data that the Secretary considers appropriate. In the interim final
rule with comment period that initially implemented the SNF PPS (63 FR
26252, May 12, 1998), we developed the RUG-III case-mix classification
system, which tied the amount of payment to resident resource use in
combination with resident characteristic information. Staff time
measurement (STM) studies conducted in 1990, 1995, and 1997 provided
information on resource use (time spent by staff members on residents)
and resident characteristics that enabled us not only to establish RUG-
III, but also to create case-mix indexes (CMIs). The original RUG-III
grouper logic was based on clinical data collected in 1990, 1995, and
1997. As discussed in the SNF PPS proposed rule for FY 2010 (74 FR
22208), we subsequently conducted a multi-year data collection and
analysis under the Staff Time and Resource Intensity Verification
(STRIVE) project to update the case-mix classification system for FY
2011. The resulting Resource Utilization Groups, Version 4 (RUG-IV)
case-mix classification system reflected the data collected in 2006
through 2007 during the STRIVE project, and was finalized in the FY
2010 SNF PPS final rule (74 FR 40288) to take effect in FY 2011
concurrently with an updated new resident assessment instrument,
version 3.0 of the Minimum Data Set (MDS 3.0), which collects the
clinical data used for case-mix classification under RUG-IV.
We note that case-mix classification is based, in part, on the
beneficiary's need for skilled nursing care and therapy services. The
case-mix classification system uses clinical data from the MDS to
assign a case-mix group to each patient that is then used to calculate
a per diem payment under the SNF PPS. As discussed in section IV.A. of
this final 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 timeframes for MDS completion in our
Resident Assessment Instrument (RAI) Manual. For an MDS to be
considered valid for use in determining payment, the MDS assessment
must be completed in compliance with the instructions in the RAI Manual
in effect at the time the assessment is completed. For payment and
quality monitoring purposes, the RAI Manual consists of both the Manual
instructions and the interpretive guidance and policy clarifications
posted on the appropriate MDS website at 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 (MMA, Pub. L. 108-173,
enacted December 8, 2003) amended section 1888(e)(12) of the Act to
provide for a temporary increase of 128 percent in the PPS per diem
payment for any SNF residents with Acquired Immune Deficiency Syndrome
(AIDS), effective with services furnished on or after October 1, 2004.
This special add-on for SNF residents with AIDS was to remain in effect
only until the Secretary certifies that there is an appropriate
adjustment in the case mix to compensate for the increased costs
associated with such residents. The MMA add-on for SNF residents with
AIDS is also discussed in Program Transmittal #160 (Change Request
#3291), issued on April 30, 2004, which is available online at
www.cms.gov/transmittals/downloads/r160cp.pdf. In the SNF PPS final
rule for FY 2010 (74 FR 40288), we did not address this certification
in that final rule's implementation of the case-mix refinements for
RUG-IV, thus allowing the add-on payment required by section 511 of the
MMA to remain in effect for the time being. (We discuss in section V.H.
of this final rule the specific payment adjustments that we proposed
under the proposed PDPM to provide for an appropriate adjustment in the
case mix to compensate for the increased costs associated with such
residents.)
For the limited number of SNF residents that qualify for the MMA
add-on, there is a significant increase in payments. As explained in
the FY 2016 SNF PPS final rule (80 FR 46397 through 46398), on October
1, 2015 (consistent with section 212 of PAMA), we converted from using
ICD-9-CM code 042 to ICD-10-CM code B20 for identifying those residents
for whom it is appropriate to apply the AIDS add-on established by
section 511 of the MMA. For FY 2019, an urban facility with a resident
with AIDS in RUG-IV group ``HC2'' would have a case-mix adjusted per
diem payment of $453.52 (see Table 6) 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
$1,034.03.
Under section 1888(e)(4)(H), each update of the payment rates must
include the case-mix classification methodology applicable for the
upcoming FY. The FY 2019 payment rates set forth in this final rule
reflect the use of the RUG-IV case-mix classification system from
October 1, 2018, through September 30, 2019. We list the final case-mix
adjusted RUG-IV payment rates for FY 2019, provided separately for
urban and rural SNFs, in
[[Page 39170]]
Tables 6 and 7 with corresponding case-mix values. We use the revised
OMB delineations adopted in the FY 2015 SNF PPS final rule (79 FR
45632, 45634) to identify a facility's urban or rural status for the
purpose of determining which set of rate tables would apply to the
facility. Tables 6 and 7 do not reflect the add-on for SNF residents
with AIDS enacted by section 511 of the MMA, which we apply only after
making all other adjustments (such as wage index and case-mix).
Additionally, Tables 6 and 7 do not reflect adjustments which may be
made to the SNF PPS rates as a result of either the SNF QRP, discussed
in section VI.B of this final rule, or the SNF VBP program, discussed
in sections III.B.5 and VI.C of this final rule.
Table 6--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-IV category Nursing index Therapy index component component therapy comp component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 2.67 1.87 $484.44 $255.57 .............. $92.60 $832.89
RUL..................................... 2.57 1.87 466.30 255.57 .............. 92.60 814.74
RVX..................................... 2.61 1.28 473.56 174.94 .............. 92.60 741.34
RVL..................................... 2.19 1.28 397.35 174.94 .............. 92.60 665.11
RHX..................................... 2.55 0.85 462.67 116.17 .............. 92.60 671.66
RHL..................................... 2.15 0.85 390.10 116.17 .............. 92.60 599.06
RMX..................................... 2.47 0.55 448.16 75.17 .............. 92.60 616.13
RML..................................... 2.19 0.55 397.35 75.17 .............. 92.60 565.31
RLX..................................... 2.26 0.28 410.05 38.27 .............. 92.60 541.10
RUC..................................... 1.56 1.87 283.05 255.57 .............. 92.60 631.42
RUB..................................... 1.56 1.87 283.05 255.57 .............. 92.60 631.42
RUA..................................... 0.99 1.87 179.63 255.57 .............. 92.60 527.97
RVC..................................... 1.51 1.28 273.97 174.94 .............. 92.60 541.69
RVB..................................... 1.11 1.28 201.40 174.94 .............. 92.60 469.09
RVA..................................... 1.10 1.28 199.58 174.94 .............. 92.60 467.27
RHC..................................... 1.45 0.85 263.09 116.17 .............. 92.60 472.01
RHB..................................... 1.19 0.85 215.91 116.17 .............. 92.60 424.82
RHA..................................... 0.91 0.85 165.11 116.17 .............. 92.60 374.00
RMC..................................... 1.36 0.55 246.76 75.17 .............. 92.60 414.66
RMB..................................... 1.22 0.55 221.36 75.17 .............. 92.60 389.25
RMA..................................... 0.84 0.55 152.41 75.17 .............. 92.60 320.28
RLB..................................... 1.50 0.28 272.16 38.27 .............. 92.60 403.16
RLA..................................... 0.71 0.28 128.82 38.27 .............. 92.60 259.78
ES3..................................... 3.58 .............. 649.56 .............. 18.00 92.60 760.41
ES2..................................... 2.67 .............. 484.44 .............. 18.00 92.60 595.25
ES1..................................... 2.32 .............. 420.94 .............. 18.00 92.60 531.72
HE2..................................... 2.22 .............. 402.80 .............. 18.00 92.60 513.57
HE1..................................... 1.74 .............. 315.71 .............. 18.00 92.60 426.45
HD2..................................... 2.04 .............. 370.14 .............. 18.00 92.60 480.90
HD1..................................... 1.60 .............. 290.30 .............. 18.00 92.60 401.04
HC2..................................... 1.89 .............. 342.92 .............. 18.00 92.60 453.68
HC1..................................... 1.48 .............. 268.53 .............. 18.00 92.60 379.26
HB2..................................... 1.86 .............. 337.48 .............. 18.00 92.60 448.23
HB1..................................... 1.46 .............. 264.90 .............. 18.00 92.60 375.63
LE2..................................... 1.96 .............. 355.62 .............. 18.00 92.60 466.38
LE1..................................... 1.54 .............. 279.42 .............. 18.00 92.60 390.15
LD2..................................... 1.86 .............. 337.48 .............. 18.00 92.60 448.23
LD1..................................... 1.46 .............. 264.90 .............. 18.00 92.60 375.63
LC2..................................... 1.56 .............. 283.05 .............. 18.00 92.60 393.78
LC1..................................... 1.22 .............. 221.36 .............. 18.00 92.60 332.07
LB2..................................... 1.45 .............. 263.09 .............. 18.00 92.60 373.82
LB1..................................... 1.14 .............. 206.84 .............. 18.00 92.60 317.55
CE2..................................... 1.68 .............. 304.82 .............. 18.00 92.60 415.56
CE1..................................... 1.50 .............. 272.16 .............. 18.00 92.60 382.89
CD2..................................... 1.56 .............. 283.05 .............. 18.00 92.60 393.78
CD1..................................... 1.38 .............. 250.39 .............. 18.00 92.60 361.11
CC2..................................... 1.29 .............. 234.06 .............. 18.00 92.60 344.78
CC1..................................... 1.15 .............. 208.66 .............. 18.00 92.60 319.37
CB2..................................... 1.15 .............. 208.66 .............. 18.00 92.60 319.37
CB1..................................... 1.02 .............. 185.07 .............. 18.00 92.60 295.77
CA2..................................... 0.88 .............. 159.67 .............. 18.00 92.60 270.36
CA1..................................... 0.78 .............. 141.52 .............. 18.00 92.60 252.21
BB2..................................... 0.97 .............. 176.00 .............. 18.00 92.60 286.70
BB1..................................... 0.90 .............. 163.30 .............. 18.00 92.60 273.99
BA2..................................... 0.70 .............. 127.01 .............. 18.00 92.60 237.69
BA1..................................... 0.64 .............. 116.12 .............. 18.00 92.60 226.80
PE2..................................... 1.50 .............. 272.16 .............. 18.00 92.60 382.89
PE1..................................... 1.40 .............. 254.02 .............. 18.00 92.60 364.74
PD2..................................... 1.38 .............. 250.39 .............. 18.00 92.60 361.11
PD1..................................... 1.28 .............. 232.24 .............. 18.00 92.60 342.96
PC2..................................... 1.10 .............. 199.58 .............. 18.00 92.60 310.29
PC1..................................... 1.02 .............. 185.07 .............. 18.00 92.60 295.77
PB2..................................... 0.84 .............. 152.41 .............. 18.00 92.60 263.10
[[Page 39171]]
PB1..................................... 0.78 .............. 141.52 .............. 18.00 92.60 252.21
PA2..................................... 0.59 .............. 107.05 .............. 18.00 92.60 217.73
PA1..................................... 0.54 .............. 97.98 .............. 18.00 92.60 208.65
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 7--RUG-IV Case-Mix Adjusted Federal Rates and Associated Indexes--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-IV category Nursing index Therapy index component component therapy comp component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 2.67 1.87 $462.82 $294.71 .............. $94.31 $852.10
RUL..................................... 2.57 1.87 445.48 294.71 .............. 94.31 834.76
RVX..................................... 2.61 1.28 452.42 201.73 .............. 94.31 748.68
RVL..................................... 2.19 1.28 379.61 201.73 .............. 94.31 675.85
RHX..................................... 2.55 0.85 442.02 133.96 .............. 94.31 670.48
RHL..................................... 2.15 0.85 372.68 133.96 .............. 94.31 601.13
RMX..................................... 2.47 0.55 428.15 86.68 .............. 94.31 609.32
RML..................................... 2.19 0.55 379.61 86.68 .............. 94.31 560.77
RLX..................................... 2.26 0.28 391.75 44.13 .............. 94.31 530.34
RUC..................................... 1.56 1.87 270.41 294.71 .............. 94.31 659.64
RUB..................................... 1.56 1.87 270.41 294.71 .............. 94.31 659.64
RUA..................................... 0.99 1.87 171.61 294.71 .............. 94.31 560.81
RVC..................................... 1.51 1.28 261.74 201.73 .............. 94.31 557.95
RVB..................................... 1.11 1.28 192.41 201.73 .............. 94.31 488.59
RVA..................................... 1.10 1.28 190.67 201.73 .............. 94.31 486.86
RHC..................................... 1.45 0.85 251.34 133.96 .............. 94.31 479.76
RHB..................................... 1.19 0.85 206.27 133.96 .............. 94.31 434.67
RHA..................................... 0.91 0.85 157.74 133.96 .............. 94.31 386.12
RMC..................................... 1.36 0.55 235.74 86.68 .............. 94.31 416.86
RMB..................................... 1.22 0.55 211.47 86.68 .............. 94.31 392.59
RMA..................................... 0.84 0.55 145.61 86.68 .............. 94.31 326.70
RLB..................................... 1.50 0.28 260.01 44.13 .............. 94.31 398.57
RLA..................................... 0.71 0.28 123.07 44.13 .............. 94.31 261.59
ES3..................................... 3.58 .............. 620.56 .............. 19.23 94.31 734.31
ES2..................................... 2.67 .............. 462.82 .............. 19.23 94.31 576.52
ES1..................................... 2.32 .............. 402.15 .............. 19.23 94.31 515.83
HE2..................................... 2.22 .............. 384.81 .............. 19.23 94.31 498.50
HE1..................................... 1.74 .............. 301.61 .............. 19.23 94.31 415.27
HD2..................................... 2.04 .............. 353.61 .............. 19.23 94.31 467.29
HD1..................................... 1.60 .............. 277.34 .............. 19.23 94.31 390.99
HC2..................................... 1.89 .............. 327.61 .............. 19.23 94.31 441.28
HC1..................................... 1.48 .............. 256.54 .............. 19.23 94.31 370.19
HB2..................................... 1.86 .............. 322.41 .............. 19.23 94.31 436.08
HB1..................................... 1.46 .............. 253.08 .............. 19.23 94.31 366.72
LE2..................................... 1.96 .............. 339.75 .............. 19.23 94.31 453.41
LE1..................................... 1.54 .............. 266.94 .............. 19.23 94.31 380.59
LD2..................................... 1.86 .............. 322.41 .............. 19.23 94.31 436.08
LD1..................................... 1.46 .............. 253.08 .............. 19.23 94.31 366.72
LC2..................................... 1.56 .............. 270.41 .............. 19.23 94.31 384.06
LC1..................................... 1.22 .............. 211.47 .............. 19.23 94.31 325.11
LB2..................................... 1.45 .............. 251.34 .............. 19.23 94.31 364.99
LB1..................................... 1.14 .............. 197.61 .............. 19.23 94.31 311.23
CE2..................................... 1.68 .............. 291.21 .............. 19.23 94.31 404.87
CE1..................................... 1.50 .............. 260.01 .............. 19.23 94.31 373.66
CD2..................................... 1.56 .............. 270.41 .............. 19.23 94.31 384.06
CD1..................................... 1.38 .............. 239.21 .............. 19.23 94.31 352.85
CC2..................................... 1.29 .............. 223.61 .............. 19.23 94.31 337.24
CC1..................................... 1.15 .............. 199.34 .............. 19.23 94.31 312.97
CB2..................................... 1.15 .............. 199.34 .............. 19.23 94.31 312.97
CB1..................................... 1.02 .............. 176.81 .............. 19.23 94.31 290.43
CA2..................................... 0.88 .............. 152.54 .............. 19.23 94.31 266.15
CA1..................................... 0.78 .............. 135.21 .............. 19.23 94.31 248.81
BB2..................................... 0.97 .............. 168.14 .............. 19.23 94.31 281.76
BB1..................................... 0.90 .............. 156.01 .............. 19.23 94.31 269.62
BA2..................................... 0.70 .............. 121.34 .............. 19.23 94.31 234.94
BA1..................................... 0.64 .............. 110.94 .............. 19.23 94.31 224.54
PE2..................................... 1.50 .............. 260.01 .............. 19.23 94.31 373.66
PE1..................................... 1.40 .............. 242.68 .............. 19.23 94.31 356.32
PD2..................................... 1.38 .............. 239.21 .............. 19.23 94.31 352.85
PD1..................................... 1.28 .............. 221.88 .............. 19.23 94.31 335.51
PC2..................................... 1.10 .............. 190.67 .............. 19.23 94.31 304.30
[[Page 39172]]
PC1..................................... 1.02 .............. 176.81 .............. 19.23 94.31 290.43
PB2..................................... 0.84 .............. 145.61 .............. 19.23 94.31 259.22
PB1..................................... 0.78 .............. 135.21 .............. 19.23 94.31 248.81
PA2..................................... 0.59 .............. 102.27 .............. 19.23 94.31 215.87
PA1..................................... 0.54 .............. 93.60 .............. 19.23 94.31 207.20
--------------------------------------------------------------------------------------------------------------------------------------------------------
4. 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 proposed to continue
this practice for FY 2019, as we continue to believe that in the
absence of SNF-specific wage data, using the hospital inpatient wage
index data is appropriate and reasonable for the SNF PPS. As explained
in the update notice for FY 2005 (69 FR 45786), the SNF PPS does not
use the hospital area wage index's occupational mix adjustment, as this
adjustment serves specifically to define the occupational categories
more clearly in a hospital setting; moreover, the collection of the
occupational wage data also excludes any wage data related to SNFs.
Therefore, we believe that using the updated wage data exclusive of the
occupational mix adjustment continues to be appropriate for SNF
payments. For FY 2019, the updated wage data are for hospital cost
reporting periods beginning on or after October 1, 2014 and before
October 1, 2015 (FY 2015 cost report data).
We note that section 315 of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554,
enacted on December 21, 2000) authorized us to establish a geographic
reclassification procedure that is specific to SNFs, but only after
collecting the data necessary to establish a SNF wage index that is
based on wage data from nursing homes. However, to date, this has
proven to be unfeasible due to the volatility of existing SNF wage data
and the significant amount of resources that would be required to
improve the quality of that data. More specifically, auditing all SNF
cost reports, similar to the process used to audit inpatient hospital
cost reports for purposes of the Inpatient Prospective Payment System
(IPPS) wage index, would place a burden on providers in terms of
recordkeeping and completion of the cost report worksheet. As discussed
in greater detail later in this section, 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 proposed to continue to use the same methodology
discussed in the SNF PPS final rule for FY 2008 (72 FR 43423) to
address those geographic areas in which there are no hospitals, and
thus, no hospital wage index data on which to base the calculation of
the FY 2019 SNF PPS wage index. For rural geographic areas that do not
have hospitals, and therefore, lack hospital wage data on which to base
an area wage adjustment, we would use the average wage index from all
contiguous Core-Based Statistical Areas (CBSAs) as a reasonable proxy.
For FY 2019, there are no rural geographic areas that do not have
hospitals, and thus, this methodology would not be applied. For rural
Puerto Rico, we would not apply this methodology due to the distinct
economic circumstances that exist there (for example, due to the close
proximity to one another of almost all of Puerto Rico's various urban
and non-urban areas, this methodology would produce a wage index for
rural Puerto Rico that is higher than that in half of its urban areas);
instead, we would continue to use the most recent wage index previously
available for that area. For urban areas without specific hospital wage
index data, we would use the average wage indexes of all of the urban
areas within the state to serve as a reasonable proxy for the wage
index of that urban CBSA. For FY 2019, the only urban area without wage
index data available is CBSA 25980, Hinesville-Fort Stewart, GA. The
final wage index applicable to FY 2019 is set forth in Tables A and B
available on the CMS website 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 OMB Bulletin No. 03-04 (June
6, 2003), which announced revised definitions for MSAs and the creation
of micropolitan statistical areas and combined statistical areas. In
adopting the CBSA geographic designations, we provided for a 1-year
transition in FY 2006 with a blended wage index for all providers. For
FY 2006, the wage index for each provider consisted of a blend of 50
percent of the FY 2006 MSA-based wage index and 50 percent of the FY
2006 CBSA-based wage index (both using FY 2002 hospital data). We
referred to the blended wage index as the FY 2006 SNF PPS transition
wage index. As discussed in the SNF PPS final rule for FY 2006 (70 FR
45041), since the expiration of this 1-year transition on September 30,
2006, we have used the full CBSA-based wage index values.
In the FY 2015 SNF PPS final rule (79 FR 45644 through 45646), we
finalized changes to the SNF PPS wage index based on the newest OMB
delineations, as described in OMB Bulletin No. 13-01, beginning in FY
2015, including a 1-year transition with a blended wage index for FY
2015. OMB Bulletin No. 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
[[Page 39173]]
provided in OMB Bulletin No. 15-01 are based on the application of the
2010 Standards for Delineating Metropolitan and Micropolitan
Statistical Areas to Census Bureau population estimates for July 1,
2012 and July 1, 2013. As we previously stated in the FY 2008 SNF PPS
proposed and final rules (72 FR 25538 through 25539, and 72 FR 43423),
we wish to note that this and all subsequent SNF PPS rules and notices
are considered to incorporate any updates and revisions set forth in
the most recent OMB bulletin that applies to the hospital wage data
used to determine the current SNF PPS wage index.
On August 15, 2017, OMB announced that one Micropolitan Statistical
Area now qualifies as a Metropolitan Statistical Area (OMB Bulletin No.
17-01). The new urban CBSA is as follows:
Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of
the principal city of Twin Falls, Idaho in Jerome County, Idaho and
Twin Falls County, Idaho.
The OMB bulletin is available on the OMB website at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf. As we stated in the proposed rule (83 FR 21028), we did not
have sufficient time to include this change in the computation of the
proposed FY 2019 wage index, rate setting, and tables. We also stated
that this new CBSA may affect the budget neutrality factor and wage
indexes, depending on the impact of the overall payments of the
hospital located in this new CBSA. In the proposed rule, we provided an
estimate of this new area's wage index based on the average hourly
wage, unadjusted for occupational mix, for new CBSA 46300 and the
national average hourly wages from the wage data for the proposed FY
2019 wage index. Currently, provider 130002 is the only hospital
located in Twin Falls County, Idaho, and there are no hospitals located
in Jerome County, Idaho. Thus, the wage index for CBSA 46300 is
calculated using the average hourly wage data for one provider
(provider 130002). In this final rule, we are providing below this new
area's wage index based on the updated average hourly wage, unadjusted
for occupational mix, for new CBSA 46300 and the updated national
average hourly wages from the wage data for the FY 2019 wage index, and
we are incorporating this change into the final FY 2019 wage index,
rate setting and tables. Taking the unadjusted average hourly wage of
$35.8336 of new CBSA 46300 and dividing by the national average hourly
wage of $42.955567020 results in the FY 2019 wage index of 0.8334 for
CBSA 46300.
In the proposed rule, we stated that in the final rule, we would
incorporate this change into the final FY 2019 wage index, rate setting
and tables. We did not receive any comments on this issue. Thus, in
this final rule, we have incorporated this change into the final FY
2019 wage index, rate setting and tables. As we proposed, for FY 2019,
we will use the OMB delineations that were adopted beginning with FY
2015 to calculate the area wage indexes, with updates as reflected in
OMB Bulletin Nos. 15-01 and 17-01. As noted above, the wage index
applicable to FY 2019 (with the CBSA update from OMB Bulletin No. 17-01
specified above) is set forth in Tables A and B available on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
Once calculated, we stated in the proposed rule that we would apply
the wage index adjustment to the labor-related portion of the federal
rate. Each year, we calculate a revised labor-related share, based on
the relative importance of labor-related cost categories (that is,
those cost categories that are labor-intensive and vary with the local
labor market) in the input price index. In the SNF PPS final rule for
FY 2018 (82 FR 36548 through 36566), we finalized a proposal to revise
the labor-related share to reflect the relative importance of the 2014-
based SNF market basket cost weights for the following cost categories:
Wages and Salaries; Employee Benefits; Professional Fees: Labor-
Related; Administrative and Facilities Support Services; Installation,
Maintenance, and Repair Services; All Other: Labor-Related Services;
and a proportion of Capital-Related expenses.
We calculate the labor-related relative importance from the SNF
market basket, and it approximates the labor-related portion of the
total costs after taking into account historical and projected price
changes between the base year and FY 2019. The price proxies that move
the different cost categories in the market basket do not necessarily
change at the same rate, and the relative importance captures these
changes. Accordingly, the relative importance figure more closely
reflects the cost share weights for FY 2019 than the base year weights
from the SNF market basket.
We calculate the labor-related relative importance for FY 2019 in
four steps. First, we compute the FY 2019 price index level for the
total market basket and each cost category of the market basket.
Second, we calculate a ratio for each cost category by dividing the FY
2019 price index level for that cost category by the total market
basket price index level. Third, we determine the FY 2019 relative
importance for each cost category by multiplying this ratio by the base
year (2014) weight. Finally, we add the FY 2019 relative importance for
each of the labor-related cost categories (Wages and Salaries, Employee
Benefits, Professional Fees: Labor-Related, Administrative and
Facilities Support Services, Installation, Maintenance, and Repair
Services, All Other: Labor-related services, and a portion of Capital-
Related expenses) to produce the FY 2019 labor-related relative
importance. Table 8 summarizes the updated labor-related share for FY
2019, based on IGI's second quarter 2018 forecast with historical data
through first quarter 2018, compared to the labor-related share that
was used for the FY 2018 SNF PPS final rule. In the FY 2019 proposed
rule, we presented the FY 2019 labor-related share based on IGI's first
quarter 2018 forecast and further stated that if more recent data
became 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.
[[Page 39174]]
Table 8--Labor-Related Relative Importance, FY 2018 and FY 2019
----------------------------------------------------------------------------------------------------------------
Relative Relative
importance, importance,
labor-related, labor-related,
FY 2018 17:2 FY 2019 18:2
forecast \1\ forecast \2\
----------------------------------------------------------------------------------------------------------------
Wages and salaries.......................................................... 50.3 50.2
Employee benefits........................................................... 10.2 10.1
Professional Fees: Labor-Related............................................ 3.7 3.7
Administrative and facilities support services.............................. 0.5 0.5
Installation, Maintenance and Repair Services............................... 0.6 0.6
All Other: Labor Related Services........................................... 2.5 2.5
Capital-related (.391)...................................................... 3.0 2.9
-----------------------------------
Total................................................................... 70.8 70.5
----------------------------------------------------------------------------------------------------------------
\1\ Published in the Federal Register; based on second quarter 2017 IGI forecast.
\2\ Based on second quarter 2018 IGI forecast, with historical data through first quarter 2018.
Tables 9 and 10 show the RUG-IV case-mix adjusted federal rates for
FY 2019 by labor-related and non-labor-related components. Tables 9 and
10 do not reflect the add-on for SNF residents with AIDS enacted by
section 511 of the MMA, which we apply only after making all other
adjustments (such as wage index and case-mix). Additionally, Tables 9
and 10 do not reflect adjustments which may be made to the SNF PPS
rates as a result of either the SNF QRP, discussed in section VI.B. of
this final rule, or the SNF VBP program, discussed in sections III.B.5.
and VI.C. of this final rule.
BILLING CODE 4120-01-P
[[Page 39175]]
[GRAPHIC] [TIFF OMITTED] TR08AU18.000
[[Page 39176]]
[GRAPHIC] [TIFF OMITTED] TR08AU18.001
BILLING CODE 4120-01-C
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
under the SNF PPS that are greater or less than would otherwise be made
if the wage adjustment had not been made. For FY 2019 (federal rates
effective October 1, 2018), we stated in the proposed rule that we
would apply an adjustment to fulfill the budget neutrality requirement.
We stated we would meet this requirement by multiplying each of the
components of the unadjusted federal rates by a budget neutrality
factor equal to the ratio of the weighted average wage adjustment
factor for FY 2018 to the weighted average wage adjustment factor for
FY 2019. For this calculation, we stated we would use the same FY 2017
claims utilization data for both the numerator and denominator of this
ratio. We define the wage adjustment factor used in this calculation as
the labor share of the rate component multiplied by the wage index plus
the non-labor share of the rate component. We did not receive any
comments regarding our proposed budget neutrality factor calculation.
Thus, we are finalizing the budget neutrality methodology as proposed.
The final budget neutrality factor for FY 2019 is 0.9999. We note that
this is different from the budget neutrality factor (1.0002) provided
in the FY 2018 SNF PPS proposed rule (83 FR 21031) due to an updated
wage index file and updated
[[Page 39177]]
claims file used to calculate the budget neutrality factor.
As discussed above, we have historically used, and propose to
continue using, pre-reclassified IPPS hospital wage data, unadjusted
for occupational mix and the rural and imputed floors, as the basis for
the SNF wage index. That being said, in the proposed rule, we noted
that we have received recurring comments in prior rulemaking (most
recently in the FY 2018 SNF PPS final rule (82 FR 36539 through 36541))
regarding the development of a SNF-specific wage index. It has been
suggested that we develop a SNF-specific wage index utilizing SNF cost
report wage data instead of hospital wage data. We have noted, in
response that developing such a wage index would require a resource-
intensive audit process similar to that used for IPPS hospital data, to
improve the quality of the SNF cost report data in order for it to be
used as part of this analysis. This audit process is quite extensive in
the case of approximately 3,300 hospitals, and it would be
significantly more so in the case of approximately 15,000 SNFs. As
discussed previously in this rule, we believe auditing all SNF cost
reports, similar to the process used to audit inpatient hospital cost
reports for purposes of the IPPS wage index, would place a burden on
providers in terms of recordkeeping and completion of the cost report
worksheet. We also believe that adopting such an approach would require
a significant commitment of resources by CMS and the Medicare
Administrative Contractors, potentially far in excess of those required
under the IPPS given that there are nearly five times as many SNFs as
there are hospitals. Therefore, while we continue to review all
available data and contemplate the potential methodological approaches
for a SNF-specific wage index in the future, we continue to believe
that in the absence of the appropriate SNF-specific wage data, using
the pre-reclassified, pre-rural and imputed floor hospital inpatient
wage data (without the occupational mix adjustment) is appropriate and
reasonable for the SNF PPS.
As an alternative to a SNF-specific wage index, it has also been
suggested that we consider adopting certain wage index policies in use
under the IPPS, such as geographic reclassification or rural floor.
Although we have the authority under section 315 of BIPA to establish a
geographic reclassification procedure specific to SNFs under certain
conditions, as discussed previously, under BIPA, we cannot adopt a
reclassification policy until we have collected the data necessary to
establish a SNF-specific wage index. Thus, we cannot adopt a
reclassification procedure at this time. With regard to adopting a
rural floor policy, as we stated in the FY 2017 SNF PPS final rule (82
FR 36540), MedPAC has recommended eliminating the rural floor policy
(which actually sets a floor for urban hospitals) from the calculation
of the IPPS wage index (see, for example, Chapter 3 of MedPAC's March
2013 Report to Congress on Medicare Payment Policy, available at https://medpac.gov/docs/default-source/reports/mar13_ch03.pdf, which notes on
page 65 that in 2007, MedPAC had ``. . . recommended eliminating these
special wage index adjustments and adopting a new wage index system to
avoid geographic inequities that can occur due to current wage index
policies (Medicare Payment Advisory Commission 2007b.''). As we stated
in the FY 2017 SNF PPS final rule, if we were to adopt the rural floor
under the SNF PPS, we believe that the SNF PPS wage index could become
vulnerable to problems similar to those that MedPAC identified in its
March 2013 Report to Congress.
Given the perennial nature of these comments and responses on the
SNF PPS wage index policy, in the proposed rule (89 FR 21032) we
invited further comments on the issues discussed above. Specifically,
we requested comment on how a SNF-specific wage index may be developed
without creating significant administrative burdens for providers, CMS,
or its contractors. Further, we requested comments on specific
alternatives we may consider in future rulemaking which could be
implemented in advance of, or in lieu of, a SNF-specific wage index. A
discussion of the comments we received, along with our responses,
appear below.
Comment: One commenter encouraged CMS to continue using hospital
wage data when determining the SNF wage index, since it did not have a
proposal for how to obtain a SNF-specific wage index in a manner that
does not cause burden on providers.
Response: We appreciate the commenter's encouragement to continue
using hospital wage data as a proxy for a SNF wage index.
Comment: Several commenters recommend that CMS pursue the
establishment of a SNF-specific wage index. These commenters proposed
phased-in recommendations to trim hospital wage data (as an interim
step), to reflect positions staffed in nursing homes, allow for a
reclassification system, account for occupational mix differences
between hospitals and each post-acute care (PAC) setting using
published BLS data, and apply a rural floor. Further, if determining a
SNF wage index using SNF cost report data is too administratively
complex, it was recommended that Payroll-based Journal (PBJ) data be
used. Finally, the commenters recommended communicating with hospitals
through Medicare Learning Network (MLN) transmittals for education and
technical support.
Response: We appreciate the commenter's recommendation for
collecting SNF cost report wage data to establish a SNF-specific wage
index. We note that, consistent with the preceding discussion in this
final rule as well as our previous responses to these recurring
comments (most recently published in the FY 2018 SNF PPS final rule (82
FR 36540 through 36541)), developing such a wage index would require a
resource-intensive audit process similar to that used for IPPS hospital
data, to improve the quality of the SNF cost report data in order for
it to be used as part of this analysis.
Further, we appreciate these commenters' suggestion that we modify
the current hospital wage data used to construct the SNF PPS wage index
to reflect the SNF environment more accurately by trimming hospital
wage data to reflect positions staffed in nursing homes, weighing it by
occupational mix data published by the BLS, and using PBJ data. While
we consider whether or not such an approach may constitute an interim
step in the process of developing a SNF-specific wage index, we would
note that other provider types also use the hospital wage index as the
basis for their associated wage index. As such, we believe that such a
recommendation should be part of a broader discussion on wage index
reform across Medicare payment systems. With regard to the PBJ
recommendation, we will pass this comment to our colleagues managing
that initiative for further consideration.
With regard to reclassification and rural floor, as discussed
above, section 315 of BIPA authorized us to establish a geographic
reclassification procedure that is specific to SNFs, only after
collecting the data necessary to establish a SNF-specific wage index
that is based on data from nursing homes. However, to date this has
been infeasible 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. Furthermore, we do not believe that using
hospital reclassification data would be
[[Page 39178]]
appropriate as this data is specific to the requesting hospitals and it
may or may not apply to a given SNF in a given instance. With regard to
implementing a rural floor, we do not believe it would be prudent at
this time to adopt such a policy, because MedPAC has recommended
eliminating the rural floor policy from the calculation of the IPPS
wage index (see, for example, Chapter 3 of MedPAC's March 2013 Report
to Congress on Medicare Payment Policy, available at https://medpac.gov/documents/reports/mar13_entirereport.pdf, which notes on page 65 that
in 2007, MedPAC had ``. . . recommended eliminating these special wage
index adjustments and adopting a new wage index system to avoid
geographic inequities that can occur due to current wage index policies
(Medicare Payment Advisory Commission 2007b.'') If we adopted the rural
floor at this time under the SNF PPS, we believe that, the SNF PPS wage
index could become vulnerable to problems similar to those that MedPAC
identified in its March 2013 Report to Congress.
While we continue to review all available data and contemplate the
potential methodological approaches for a SNF-specific wage index in
the future, we continue to believe that in the absence of the
appropriate SNF-specific wage data, using the pre-reclassified, pre-
rural and imputed floor hospital inpatient wage data (without the
occupational mix adjustment) is appropriate and reasonable for the SNF
PPS. We believe the commenters' recommendations should be part of a
broader discussion of wage index reform across Medicare payment
systems. In the event that a SNF-specific wage index is implemented in
the future, CMS will provide education and support in a manner it deems
appropriate, which may include MLN transmittals. We will continue to
monitor closely research efforts surrounding the development of an
alternative hospital wage index for the IPPS and the potential impact
or influence of that research on the SNF PPS.
5. SNF Value-Based Purchasing Program
Beginning with payment for services furnished on October 1, 2018,
section 1888(h) of the Act requires the Secretary to reduce the
adjusted Federal per diem rate determined under section 1888(e)(4)(G)
of the Act otherwise applicable to a SNF for services furnished during
a fiscal year by 2 percent, and to adjust the resulting rate for a SNF
by the value-based incentive payment amount earned by the SNF based on
the SNF's performance score for that fiscal year under the SNF VBP
Program. To implement these requirements, we proposed to add a new
paragraph (f) to Sec. 413.337. We did not receive any public comments
regarding this proposal. Therefore, we are finalizing the addition of
paragraph (f) to Sec. 413.337 as proposed, without modification.
Please see section VI.C. of this final rule for further information
regarding the SNF VBP Program, including a discussion of the
methodology we will use to make the payment adjustments.
6. Adjusted Rate Computation Example
Using the hypothetical SNF XYZ, Table 11 shows the adjustments made
to the federal per diem rates (prior to application of any adjustments
under the SNF QRP and SNF VBP programs as discussed above) to compute
the provider's actual per diem PPS payment for FY 2019. We derive the
Labor and Non-labor columns from Table 9. The wage index used in this
example is based on the FY 2019 SNF PPS wage index that appears in
Table A available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. As illustrated
in Table 11, SNF XYZ's total PPS payment for FY 2019 would equal
$48,779.14.
Table 11--Adjusted Rate Computation Example SNF XYZ: Located in Frederick, MD (Urban CBSA 43524), Wage Index: 0.9880
[See wage index in Table A] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted Adjusted Percent Medicare
RUG-IV group Labor Wage index labor Non-labor rate adjustment days Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVX..................................................... $522.48 0.9880 $516.21 $218.62 $734.83 $734.83 14 $10,287.62
ES2..................................................... 419.50 0.9880 414.47 175.54 590.01 590.01 30 17,700.30
RHA..................................................... 263.59 0.9880 260.43 110.29 370.72 370.72 16 5,931.52
CC2 \2\................................................. 242.99 0.9880 240.07 101.67 341.74 779.17 10 7,791.70
BA2..................................................... 167.52 0.9880 165.51 70.09 235.60 235.60 30 7,068.00
-----------------------------------------------------------------------------------------------
.......... .......... .......... .......... .......... .......... 100 48,779.14
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
\2\ Reflects a 128 percent adjustment from section 511 of the MMA.
IV. Additional Aspects of the SNF PPS
A. SNF Level of Care--Administrative Presumption
The establishment of the SNF PPS did not change Medicare's
fundamental requirements for SNF coverage. However, because the case-
mix classification is based, in part, on the beneficiary's need for
skilled nursing care and therapy, we have attempted, where possible, to
coordinate claims review procedures with the existing resident
assessment process and case-mix classification system discussed in
section III.B.3. of this final rule. This approach includes an
administrative presumption that utilizes a beneficiary's initial
classification in one of the upper 52 RUGs of the current 66-group RUG-
IV case-mix classification system to assist in making certain SNF level
of care determinations.
In accordance with the regulations at Sec. 413.345, we include in
each update of the federal payment rates in the Federal Register a
discussion of the resident classification system that provides the
basis for case-mix adjustment. Under that discussion, we designate
those specific classifiers under the case-mix classification system
that represent the required SNF level of care, as provided in Sec.
409.30. As set forth in the FY 2011 SNF PPS update notice (75 FR
42910), this designation reflects an administrative presumption under
the 66-group RUG-IV system that beneficiaries who are correctly
assigned to one of the upper 52 RUG-IV groups on the initial 5-day,
Medicare-required assessment are automatically classified as meeting
the SNF level of care definition up to and including the assessment
reference date (ARD) on the 5-day Medicare-required assessment.
[[Page 39179]]
A beneficiary assigned to any of the lower 14 RUG-IV groups is not
automatically classified as either meeting or not meeting the
definition, but instead receives an individual level of care
determination using the existing administrative criteria. This
presumption recognizes the strong likelihood that beneficiaries
assigned to one of the upper 52 RUG-IV groups during the immediate
post-hospital period require a covered level of care, which would be
less likely for those beneficiaries assigned to one of the lower 14
RUG-IV groups.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we
would announce any changes to the guidelines for Medicare level of care
determinations related to modifications in the case-mix classification
structure. The FY 2018 final rule (82 FR 36544) further specified that
we would henceforth disseminate the standard description of the
administrative presumption's designated groups via the SNF PPS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/ (where such designations appear in the paragraph
entitled ``Case Mix Adjustment''), and would publish such designations
in rulemaking only to the extent that we actually intend to make
changes in them. (We discuss in section V.G. of this final rule the
modifications to the administrative level of care presumption that we
are finalizing in order to accommodate the PDPM case-mix classification
system.)
However, we note that this administrative presumption policy does
not supersede the SNF's responsibility to ensure that its decisions
relating to level of care are appropriate and timely, including a
review to confirm that the services prompting the assignment of one of
the designated case-mix classifiers (which, in turn, serves to trigger
the administrative presumption) are themselves medically necessary. As
we explained in the FY 2000 SNF PPS final rule (64 FR 41667), the
administrative presumption is itself rebuttable in those individual
cases in which the services actually received by the resident do not
meet the basic statutory criterion of being reasonable and necessary to
diagnose or treat a beneficiary's condition (according to section
1862(a)(1) of the Act). Accordingly, the presumption would not apply,
for example, in those situations in which a resident's assignment to
one of the upper groups is itself based on the receipt of services that
are subsequently determined to be not reasonable and necessary.
Moreover, we want to stress the importance of careful monitoring for
changes in each patient's condition to determine the continuing need
for Part A SNF benefits after the ARD of the 5-day assessment.
B. Consolidated Billing
Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by
section 4432(b) of the BBA 1997) require a SNF to submit consolidated
Medicare bills to its Medicare Administrative Contractor (MAC) for
almost all of the services that its residents receive during the course
of a covered Part A stay. In addition, section 1862(a)(18) of the Act
places the responsibility with the SNF for billing Medicare for
physical therapy, occupational therapy, and speech-language pathology
services that the resident receives during a noncovered stay. (Please
refer to section VI.A. of this final rule for a discussion of a
revision to the regulation text that describes a beneficiary's status
as a SNF ``resident'' for consolidated billing purposes.) Section
1888(e)(2)(A) of the Act excludes a small list of services from the
consolidated billing provision (primarily those services furnished by
physicians and certain other types of practitioners), which remain
separately billable under Part B when furnished to a SNF's Part A
resident. These excluded service categories are discussed in greater
detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR
26295 through 26297).
A detailed discussion of the legislative history of the
consolidated billing provision is available on the SNF PPS website at
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 (BBRA, Pub. L. 106-113, enacted on November 29, 1999) amended
section 1888(e)(2)(A) of the Act by further excluding a number of
individual high-cost, low probability services, identified by
Healthcare Common Procedure Coding System (HCPCS) codes, within several
broader categories (chemotherapy items, chemotherapy administration
services, radioisotope services, and customized prosthetic devices)
that otherwise remained subject to the provision. We discuss this BBRA
amendment in greater detail in the SNF PPS proposed and final rules for
FY 2001 (65 FR 19231 through 19232, April 10, 2000, and 65 FR 46790
through 46795, July 31, 2000), as well as in Program Memorandum AB-00-
18 (Change Request #1070), issued March 2000, which is available online
at www.cms.gov/transmittals/downloads/ab001860.pdf.
As explained in the FY 2001 proposed rule (65 FR 19232), the
amendments enacted in section 103 of the BBRA not only identified for
exclusion from this provision a number of particular service codes
within four specified categories (that is, chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices), but also gave the Secretary the
authority to designate additional, individual services for exclusion
within each of the specified service categories. In the proposed rule
for FY 2001, we also noted that the BBRA Conference report (H.R. Rep.
No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the individual
services that this legislation targets for exclusion as high-cost, low
probability events that could have devastating financial impacts
because their costs far exceed the payment SNFs receive under the PPS.
According to the conferees, section 103(a) of the BBRA is an attempt to
exclude from the PPS certain services and costly items that are
provided infrequently in SNFs. By contrast, the amendments enacted in
section 103 of the BBRA do not designate for exclusion any of the
remaining services within those four categories (thus, leaving all of
those services subject to SNF consolidated billing), because they are
relatively inexpensive and are furnished routinely in SNFs.
As we further explained in the final rule for FY 2001 (65 FR
46790), and as is consistent with our longstanding policy, any
additional service codes that we might designate for exclusion under
our discretionary authority must meet the same statutory criteria used
in identifying the original codes excluded from consolidated billing
under section 103(a) of the BBRA: they must fall within one of the four
service categories specified in the BBRA; and they also must meet the
same standards of high cost and low probability in the SNF setting, as
discussed in the BBRA Conference report. Accordingly, we characterized
this statutory authority to identify additional service codes for
exclusion as essentially affording the flexibility to revise the list
of excluded codes in response to changes of major significance that may
occur over time (for example, the development of new medical
technologies or other advances in the state of medical practice) (65 FR
46791). In the proposed rule (83 FR 21033), we specifically invited
public comments identifying HCPCS codes in any of these four service
categories (chemotherapy items, chemotherapy administration services,
radioisotope services, and customized prosthetic
[[Page 39180]]
devices) representing recent medical advances that might meet our
criteria for exclusion from SNF consolidated billing. We stated that we
may consider excluding a particular service if it met our criteria for
exclusion as specified above. We further stated that 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, we stated in
the proposed rule that, in the event that we identify through the
current rulemaking cycle any new services that would actually represent
a substantive change in the scope of the exclusions from SNF
consolidated billing, we would identify these additional excluded
services by means of the HCPCS codes that are in effect as of a
specific date (in this case, as of October 1, 2018). By making any new
exclusions in this manner, we could similarly accomplish routine future
updates of these additional codes through the issuance of program
instructions.
Commenters submitted the following comments related to the proposed
rule's discussion of the consolidated billing aspects of the SNF PPS. A
discussion of these comments, along with our responses, appears below.
Comment: Some commenters reiterated previous recommendations
regarding the exclusion of certain drugs from consolidated billing that
had been submitted and addressed repeatedly in a number of prior
rulemaking cycles. One such recommendation involved excluding the
commonly used prostate cancer drug Lupron[reg] (leuprolide acetate).
Other commenters once again raised the issue of nursing home residents
bringing their own medications, as a means of minimizing the nursing
home's cost of caring for the resident. Still another reiterated
previous recommendations to exclude a broader range of expensive drugs
beyond the category of chemotherapy alone, citing anecdotal evidence
that leaving such drugs within the SNF PPS bundle may, among other
things, create a disincentive for admitting those patients who require
them.
Response: For the reasons discussed previously in prior rulemaking,
the particular drugs cited in these comments remain subject to
consolidated billing. In the case of leuprolide acetate, the most
recent discussion appears in the SNF PPS final rule for FY 2015 (79 FR
45642, August 5, 2014), which explained that this drug is unlikely to
meet the criterion of ``low probability'' specified in the BBRA.
Regarding the issue of nursing homes having residents supply their own
medications, the SNF PPS final rule for FY 2018 (82 FR 36548, August 4,
2017) explained that the applicable terms of the SNF's provider
agreement would preclude this practice, in that they require the SNF to
accept Medicare's payment for covered services as payment in full.
Finally, the issue of establishing a broader exclusion that would
encompass expensive non-chemotherapy drugs was addressed in the SNF PPS
final rule for FY 2017 (81 FR 51985, August 5, 2016), which explained
that existing law does not provide for such an expansion. In addition,
it is worth noting in this context that in accounting more accurately
for the costs of NTA services such as drugs, the PDPM model has the
potential to ameliorate some of the concerns cited in these comments.
Comment: One commenter urged us to expand the scope of the
chemotherapy exclusion, advancing an interpretation of the Secretary's
authority under section 1888(e)(2)(A)(iii)(II) of the Act to designate
``additional'' chemotherapy items for exclusion as not actually being
restricted to the types of ``high-cost, low probability'' chemotherapy
items and services described elsewhere in that provision, and further
suggesting that identifying a given item or service as either ``high-
cost'' or ``low probability'' alone should be sufficient grounds for
its exclusion. The commenter also submitted well over 100 codes that it
suggested should be added to the chemotherapy portion of the exclusion
list. The commenter reiterated previous recommendations to expand the
existing chemotherapy exclusion to encompass related drugs such as
anti-emetics (anti-nausea drugs)--which, while they do not in
themselves fight cancer, are commonly administered along with the
chemotherapy drug to ameliorate its side effects. While we have, in
fact, already addressed such recommendations repeatedly in previous
rulemaking (most recently, in the FY 2015 SNF PPS final rule (79 FR
45642, August 5, 2014)), the commenter cited in further support of its
position the similarity between the recommended approach and the
existing policy under the dialysis exclusion from consolidated billing,
in which the exclusion encompasses related services along with the
dialysis itself. In addition, the commenter reiterated previous
concerns about the complexity of the existing set of consolidated
billing exclusions, suggesting that it should be streamlined and
simplified.
Response: Approximately two-thirds of the codes that the commenter
submitted already appear on the chemotherapy exclusion list. Of the
remaining codes, several were already in existence in 1999 when the
BBRA enacted the statutory ranges of excluded codes, but were skipped
over by those ranges; as discussed repeatedly in previous rulemaking--
most recently, in the FY 2018 SNF PPS final rule (82 FR 36547, August
4, 2017)--this action indicates that such drugs were intended to remain
within the SNF PPS bundle, subject to the BBRA Conference Report's
provision for a GAO review of the code set that was conducted the
following year. Still others were codes such as those for anti-emetic
(anti-nausea) drugs, which serve to address the chemotherapy drug's
side effects rather than actually fighting the cancer itself; as we
have noted repeatedly in prior rulemaking (most recently, in the FY
2015 SNF PPS final rule, 79 FR 45642, August 5, 2014), such drugs do
not, in fact, represent ``chemotherapy'' (that is, cancer-fighting)
drugs within the meaning of this exclusion. Further, the commenter's
proposed interpretation suggesting that the exclusion is not restricted
to ``high-cost, low probability'' chemotherapy services, or that a
given chemotherapy service need only be either ``high-cost'' or ``low
probability'' alone in order to qualify for exclusion would not be
consistent with Congress' stated intent with respect to this provision.
In fact, in the above-cited BBRA Conference Report (H.R. Rep. 106-479
at 854 (1999) (Conf. Rep.)), the Congress clearly specified the overall
purpose of this provision: ``This provision is an attempt to exclude
from the PPS certain services and costly items that are provided
infrequently in SNFs'' (emphasis added); thus, any ``additional''
chemotherapy services that the Secretary might designate for exclusion
under this authority, like those already excluded, would remain subject
to both the ``high-cost'' and ``low
[[Page 39181]]
probability'' thresholds. Regarding the commenter's further suggestion
that the dialysis exclusion might serve as a possible precedent for
broadening the chemotherapy exclusion to include related services, we
note that as one of the BBA 1997's original set of consolidated billing
exclusions enacted in clause (ii) of section 1888(e)(2)(A) of the Act,
the dialysis exclusion fundamentally differs from the BBRA's
subsequent, more targeted set of exclusions in clause (iii) of that
section (such as the one for chemotherapy) in that the BBA 1997
excluded entire service categories from consolidated billing, whereas
the BBRA focused more narrowly on excluding certain designated ``high-
cost, low probability'' services, identified by HCPCS code, within
several broader categories that otherwise remained subject to the
provision. In the FY 2015 SNF PPS final rule (79 FR 45644, August 5,
2014), we specifically contrasted the relatively broad exclusions
enacted in the BBA 1997 with the more narrowly targeted BBRA
exclusions, in the context of another one of the latter exclusions that
involves radioisotope services. In that context, we noted that the
statutory exclusion for ``radioisotope services'' at section
1888(e)(2)(A)(iii)(IV) of the Act stands in marked contrast, for
example, to the ones for dialysis and erythropoietin (EPO) at section
1888(e)(2)(A)(ii) of the Act, which consist of--and, in fact, are
defined by--explicit cross-references to the corresponding Part B
benefit categories appearing in sections 1861(s)(2)(F) and
1861(s)(2)(O) of the Act, respectively. Under this framework, the scope
of the consolidated billing provision's dialysis exclusion is
effectively defined by the scope of coverage under the separate Part B
dialysis benefit at section 1861(s)(2)(F) of the Act, which would
encompass dialysis-related services along with the dialysis itself. By
contrast, the more targeted BBRA exclusions in areas such as
chemotherapy and radioisotope services focus specifically on those
particular services that are directly designated as in themselves
meeting the applicable criteria for exclusion.
Finally, regarding the comment about the complexity of this
provision, in the FY 2010 SNF PPS final rule (74 FR 40355, August 11,
2009), we noted in response to a previous, similar comment that while
the commenter's interest in promoting improved ease of administration
is understandable, current law contains no authority to effect a
comprehensive overhaul of the existing requirements administratively.
However, we would also note in this context that we continue to conduct
an active educational and training initiative on the consolidated
billing provision that includes the following:
A recently updated and expanded set of consolidated
billing instructions in Chapter 6 of the Medicare Claims Processing
Manual (available online at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c06.pdf), at Sec. Sec. 10-
20.6;
Addressing questions that arise on this topic during CMS's
recurring nationwide SNF/Long-Term Care Open Door Forums (https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/ODF_SNFLTC.html);
Development of sample model agreements between SNFs and
their suppliers, which are posted online for review at our ``Best
Practices'' website (at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/BestPractices.html); and
Creation of a web-based training (WBT) module accessible
from the Medicare Learning Network (MLN) website at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/WebBasedTraining.html, which offers interactive online
training on consolidated billing.
Comment: One commenter recommended for exclusion a pair of oral
chemotherapy drugs, ZYTIGA[reg] (abiraterone acetate) and ERLEADA[reg]
(apalutamide), which are used in treating certain uncommon and
otherwise resistant forms of prostate cancer. The commenter
acknowledged our previous discussion of oral drugs in this context in
the FY 2017 SNF PPS final rule (81 FR 51985, August 5, 2016), which
described them as not reasonably characterized as meeting the BBRA's
chemotherapy exclusion criterion of ``requiring special staff expertise
to administer.'' However, the commenter then went on to point out that
the accompanying Conference Report language (H. Conf. Rep. No. 106-479
at 854), in discussing the statutory exclusion of ``high-cost, low
probability'' chemotherapy items, lists as examples those drugs that
``. . . are not typically administered in a SNF, or are exceptionally
expensive, or are given as infusions, thus requiring special staff
expertise to administer'' (emphasis added). Thus, the commenter
suggested that while the Conference Report language itself specifies
``high-cost, low probability'' as the applicable standard for the
chemotherapy exclusion, its use of the word ``or'' in the specific
context of ``requiring special staff expertise to administer''
identifies this particular criterion as merely an illustrative example
that is not an absolute prerequisite for meeting the standard in all
cases. The commenter also acknowledged our explanation in the FY 2015
SNF PPS final rule (79 FR 45642, August 5, 2014) in connection with a
previous comment regarding ZYTIGA[reg] and another oral chemotherapy
drug, REVLIMID[reg] (lenalidomide), that it would not be operationally
feasible to utilize a miscellaneous ``not otherwise specified'' (NOS)
code such as J8999 to effect such an exclusion, and then urged us to
consider other options, such as establishing a separate code or
modifier for the particular drugs in question, or utilizing the
already-existing National Drug Codes (NDCs) that are specific to those
drugs. Other commenters similarly recommended the oral chemotherapy
drugs REVLIMID[reg] and GLEEVEC[reg] (imatinib mesylate) for exclusion.
Response: We believe that the commenter's point that an oral
chemotherapy drug which does not require ``special staff expertise to
administer'' can nonetheless qualify for exclusion as long as it can
otherwise meet the ``high-cost, low probability'' standard merits
further consideration. However, we note that the four oral chemotherapy
drugs at issue here differ from previously-excluded, non-oral
chemotherapy drugs in that they are not covered under Part B. We note
that while Part B would authorize coverage for drugs (including those
chemotherapy drugs that are excluded from consolidated billing under
section 1888(e)(2)(A)(iii)(II) of the Act) as either an incident to a
physician's professional services (under section 1861(s)(2)(A) of the
Act) or as an outpatient hospital service (under section 1861(s)(2)(B)
of the Act), this authority is specifically limited in both cases to
those drugs ``that are not usually self-administered by the patient,''
thus effectively excluding oral drugs as a class. Further, while Part B
does, in fact, include a specific benefit category for oral
chemotherapy drugs (at section 1861(s)(2)(Q) of the Act), that benefit
is restricted to those with the same indication and active
ingredient(s) as a covered non-oral anti-cancer drug, which is not the
case for the specific four drugs in question.
Because the drugs at issue here would not be covered under Part B,
we believe that the applicable provisions at section 1888(e)(2)(A) may
not provide a basis for excluding them from consolidated billing.
Accordingly, because of the need for further consideration of this
[[Page 39182]]
issue, we are unable to adopt the commenters' recommendations at this
time.
Comment: A few commenters reiterated previous recommendations to
expand the existing exclusion for certain high-intensity outpatient
hospital services to encompass non-hospital settings as well.
Response: Similar concerns have been raised and addressed
repeatedly in prior rulemaking (most recently, in the FY 2018 SNF PPS
final rule (82 FR 36547, August 4, 2017)), as follows:
As noted in numerous previous rules, as well as in
Medicare Learning Network (MLN) Matters article SE0432 (available
online at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE0432.pdf), the rationale for
establishing this exclusion was to address those types of services that
are so far beyond the normal scope of SNF care that they require the
intensity of the hospital setting in order to be furnished safely and
effectively. Moreover, when the Congress enacted the consolidated
billing exclusion for certain RHC and FQHC services in section 410 of
the MMA, the accompanying legislative history's description of present
law directly acknowledged the hospital-specific nature of this
exclusion.
Ever since its inception, this exclusion was intended to
be hospital-specific; as explained in the original SNF PPS interim
final rule (63 FR 26298, May 12, 1998), this exclusion was created
within the context of the concurrent development of a new PPS
specifically for outpatient hospital services, reflecting the need to
delineate the respective areas of responsibility for the SNF under the
consolidated billing provision, and for the hospital under the
outpatient bundling provision, with regard to these services. This
point was further reinforced in the subsequent final rule for FY 2000
(64 FR 41676, July 30, 1999), in which we explained that a key concern
underlying the development of the consolidated billing exclusion of
certain outpatient hospital services specifically involved the need to
distinguish those services that comprise the SNF bundle from those that
will become part of the outpatient hospital bundle that is currently
being developed in connection with the outpatient hospital PPS.
Accordingly, we noted at that time that we would not be extending the
outpatient hospital exclusion from consolidated billing to encompass
any other, freestanding settings.
Finally, the FY 2010 final rule (74 FR 40355, August 11,
2009), while acknowledging that advances in medical technology over
time may make it feasible to perform such high-intensity outpatient
services more widely in nonhospital settings, then went on to cite the
FY 2006 final rule (70 FR 45049, August 4, 2005) in noting that such a
development would not argue in favor of excluding the nonhospital
performance of the service from consolidated billing, but rather, would
call into question whether the service should continue to be excluded
from consolidated billing at all, even when performed in the hospital
setting.
Comment: Several commenters reiterated comments submitted
previously during the FY 2016 rulemaking cycle in the context of the
SNF VBP provision, in which they had sought to portray a portable x-ray
service's transportation and setup as a separately billable
``physician'' service by suggesting that such activities should
appropriately be regarded as part of the diagnostic test's professional
component (PC) for interpreting the test results rather than the
technical component (TC) for performing the test itself. They now
reiterated those same comments in the context of the PDPM, and
additionally indicated that allowing these services to be paid
separately outside of the Part A bundle would be consistent with the
proration policy that applies under Part B when a single portable x-ray
visit serves multiple patients, under which the trip itself is
allocated among all of the patients served (regardless of payment
source) in order to calculate the prorated payment amount that applies
specifically to each of the Part B patients. Some of the commenters
also cited certain HCPCS codes, such as R0076 (``transportation of
portable EKG to facility or location, per patient''), and suggested
that all of the ``medical and other health services'' enumerated in
section 1861(s) of the Act--including the diagnostic test benefit at
section 1861(s)(3) of the Act--should be regarded as excluded
``physician'' services.
Response: As we explained previously in the FY 2016 SNF PPS final
rule (80 FR 46408, August 4, 2015), we do not share the view of those
commenters who would categorize a portable x-ray service's
transportation and setup as part of the separately billable PC. In that
discussion, we cited Sec. 90.5 of the Medicare Claims Processing
Manual, Chapter 13 (available online at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c13.pdf),
which states that the bundled TC (to which consolidated billing
applies) specifically includes ``any associated transportation and
setup costs.'' As indicated in the FY 2016 SNF PPS final rule (80 FR
46408, August 4, 2015), to be considered a separately billable
``physician'' service in this context, a given service must not only be
furnished personally by a physician, but must actually be a type of
service that ordinarily requires such performance; we further noted
that a portable x-ray service's transportation and setup would never
meet these criteria, as the service's excluded PC relates solely to
reading the x-ray rather than taking it, and the physician's personal
performance clearly would not be required for activities such as
driving the supplier's vehicle to the SNF, or setting up the equipment
once it arrives there.
Further, we believe the comments that cited the proration policy in
this context (which involves a single portable x-ray trip that serves
multiple patients) may reflect a certain amount of misunderstanding
about the proration policy's actual nature and purpose. As explained in
the Medicare Physician Fee Schedule (MPFS) final rule for calendar year
(CY) 2016 (80 FR 70886, November 16, 2015), the reason for allocating
such a trip among all of the patients served is to ensure that Medicare
Part B should not pay for more than its share of the transportation
costs for portable x-ray services (80 FR 71068 through 71069). However,
while all of the patients served (both the Part B and non-Part B
patients) would be included in calculating the proration itself, the
resulting prorated amount would be payable only for the Part B
patients. By contrast, for any Part A SNF residents served by the same
trip, the transportation cost associated with the portable x-ray
service would be subsumed in the SNF's payment to the supplier for the
bundled TC, as discussed above. In terms of Part A payment, that
bundled TC, in turn, would be included (along with all other bundled
services) within the global PPS per diem that the SNF receives for the
covered Part A stay itself. Moreover, the SNF's actual payment amount
to its supplier in this scenario would not be tied to the prorated
payment amount made for the Part B patients served on the same trip; as
explained in Sec. 70.4 of the Medicare Benefit Policy Manual, Chapter
8 (available online at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c08.pdf), for a bundled service, the
specific details of the ensuing payment arrangement between the SNF and
the outside supplier (such as the actual payment
[[Page 39183]]
amount and timeframe) represent a private, ``marketplace'' transaction
that is negotiated between the parties themselves.
Regarding the suggestion that all of the Part B ``medical and other
health services'' specified in section 1861(s) of the Act (including
diagnostic tests such as portable x-ray services) should be considered
physician services, we note that the physician services benefit at
section 1861(s)(1) of the Act actually represents only a small subset
of the overall ``medical and other health services'' enumerated
throughout section 1861(s) of the Act, and that the diagnostic test
benefit at section 1861(s)(3) of the Act (which would encompass the TC
for a portable x-ray service) is, in fact, a separate and distinct
benefit category from the one at section 1861(s)(1) of the Act for
physician services. Finally, regarding the comments on certain HCPCS
codes, we acknowledge that among the various consolidated billing
exclusions listed in section 1888(e)(2)(A)(ii) of the Act are
``transportation costs of electrocardiogram equipment for
electrocardiogram test services (HCPCS code R0076).'' However, that
portion of the law additionally specifies that this particular
exclusion is in effect ``only with respect to services furnished during
1998;'' accordingly, the statutory exclusion for these particular
services has long since expired.
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 final rule for the SNF PPS also apply to all
non-CAH swing-bed rural hospitals. A complete discussion of assessment
schedules, the MDS, and the transmission software (RAVEN-SB for Swing
Beds) appears in the FY 2002 final rule (66 FR 39562) and in the FY
2010 final rule (74 FR 40288). As finalized in the FY 2010 SNF PPS
final rule (74 FR 40356 through 40357), effective October 1, 2010, non-
CAH swing-bed rural hospitals are required to complete an MDS 3.0
swing-bed assessment which is limited to the required demographic,
payment, and quality items. The latest changes in the MDS for swing-bed
rural hospitals appear on the SNF PPS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/. We refer
readers to section V.D.2. of this final rule for a discussion of the
revisions we are finalizing to the MDS 3.0 swing-bed assessment
effective October 1, 2019.
V. Revisions to SNF PPS Case-Mix Classification Methodology
A. Background and General Comments
In the FY 2019 SNF PPS proposed rule, we discussed our proposed
changes to the SNF PPS, specifically the proposed comprehensive
revisions to the SNF PPS case-mix classification system whereby we
proposed to replace the current RUG-IV system with the Patient Driven
Payment Model (PDPM) effective October 1, 2019. In section V.A of the
FY 2019 SNF PPS proposed rule (83 FR 21034-21036), we discuss the basis
for the proposed PDPM and our reasons for proposing to replace the
existing case-mix classification system with the PDPM, effective
October 1, 2019.
Section 1888(e)(4)(G)(i) of the Act requires the Secretary to make
an adjustment to the per diem rates to account for case-mix. The
statute specifies that the adjustment is to be based on both a resident
classification system that the Secretary establishes that accounts for
the relative resource use of different resident types, as well as
resident assessment and other data that the Secretary considers
appropriate.
In general, the case-mix classification system currently used under
the SNF PPS classifies residents into payment classification groups,
called RUGs, based on various resident characteristics and the type and
intensity of therapy services provided to the resident. Under the
existing SNF PPS methodology, there are two case-mix-adjusted
components of payment: Nursing and therapy. Each RUG is assigned a CMI
for each payment component to reflect relative differences in cost and
resource intensity. The higher the CMI, the higher the expected
resource utilization and cost associated with residents assigned to
that RUG. The case-mix-adjusted nursing component of payment reflects
relative differences in a resident's associated nursing and non-therapy
ancillary (NTA) costs, based on various resident characteristics, such
as resident comorbidities, and treatments. The case-mix-adjusted
therapy component of payment reflects relative differences in a
resident's associated therapy costs, which is based on a combination of
PT, OT, and SLP services. Resident classification under the existing
therapy component is based primarily on the amount of therapy the SNF
chooses to provide to a SNF resident. Under the RUG-IV model, residents
are classified into rehabilitation groups, where payment is determined
primarily based on the intensity of therapy services received by the
resident, and into nursing groups, based on the intensity of nursing
services received by the resident and other aspects of the resident's
care and condition. However, only the higher paying of these groups is
used for payment purposes. For example, if a resident is classified
into a both the RUA (Rehabilitation) and PA1 (Nursing) RUG-IV groups,
where RUA has a higher per-diem payment rate than PA1, the RUA group is
used for payment purposes. It should be noted that the vast majority of
Part A covered SNF days (over 90 percent) are paid using a
rehabilitation RUG. A variety of concerns have been raised with the
current SNF PPS, specifically the RUG-IV model, which we discuss below.
When the SNF PPS was first implemented in 1998 (63 FR 26252), we
developed the RUG-III case-mix classification model, which tied the
amount of payment to resident resource use in combination with resident
characteristic information. Staff time measurement (STM) studies
conducted in 1990, 1995, and 1997 provided information on resource use
(time spent by staff members on residents) and resident characteristics
that enabled us not only to establish RUG-III but also to create CMIs.
This initial RUG-III model was refined by changes finalized in the FY
2006 SNF PPS final rule (70 FR 45032), which included adding nine case-
mix groups to the top of the original 44-group RUG-III hierarchy, which
created the RUG-53 case-mix model.
In the FY 2010 SNF PPS proposed rule (74 FR 22208), we proposed the
RUG-IV model based on, among other reasons, concerns that incentives in
the SNF PPS had changed the relative amount of nursing resources
required to treat SNF residents (74 FR 22220). These concerns led us to
conduct a new
[[Page 39184]]
Staff Time Measurement (STM) study, the Staff Time and Resource
Intensity Verification (STRIVE) project, which served as the basis for
developing the current SNF PPS case-mix classification model, RUG-IV,
which became effective in FY 2011. At that time, we considered
alternative case mix models, including predictive models of therapy
payment based on resident characteristics; however, we had a great deal
of concern that by separating payment from the actual provision of
services, the system, and more importantly, the beneficiaries would be
vulnerable to underutilization (74 FR 22220). Other options considered
at the time included a non-therapy ancillary (NTA) payment model based
on resident characteristics (74 FR 22238) and a DRG-based payment model
that relied on information from the prior inpatient stay (74 FR 22220);
these and other options are discussed in detail in a CMS Report to
Congress issued in December 2006 (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/RC_2006_PC-PPSSNF.pdf).
As we explained in the proposed rule (83 FR 21034), in the years
since we implemented the SNF PPS, finalized RUG-IV, and made statements
regarding our concerns about underutilization of services in previously
considered models, we have witnessed a significant trend that has
caused us to reconsider these concerns. More specifically, as discussed
in section V.E. of the FY 2015 SNF PPS proposed rule (79 FR 25767), we
documented and discussed trends observed in therapy utilization in a
memo entitled ``Observations on Therapy Utilization Trends'' (which may
be accessed at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Therapy_Trends_Memo_04212014.pdf). The two
most notable trends discussed in that memo were that the percentage of
residents classifying into the Ultra-High therapy category has
increased steadily and, of greater concern, that the percentage of
residents receiving just enough therapy to surpass the Ultra-High and
Very-High therapy thresholds has also increased. In that memo, we state
``the percentage of claims-matched MDS assessments in the range of 720
minutes to 739 minutes, which is just enough to surpass the 720 minute
threshold for RU groups, has increased from 5 percent in FY 2005 to 33
percent in FY 2013'' and this trend has continued since that time. We
stated in the proposed rule (83 FR 21035) that while it might be
possible to attribute the increasing share of residents in the Ultra-
High therapy category to increasing acuity within the SNF population,
we believe the increase in ``thresholding'' (that is, of providing just
enough therapy for residents to surpass the relevant therapy
thresholds) is a strong indication of service provision predicated on
financial considerations rather than resident need. We discussed this
issue in response to comments in the FY 2015 SNF PPS final rule. In
that rule, in response to comments regarding the lack of ``current
medical evidence related to how much therapy a given resident should
receive,'' we stated that with regard to the comments which highlight
the lack of existing medical evidence for how much therapy a given
resident should receive, we would note that the number of therapy
minutes provided to SNF residents within certain therapy RUG categories
is, in fact, clustered around the minimum thresholds for a given
therapy RUG category. We further stated that given the comments
highlighting the lack of medical evidence related to the appropriate
amount of therapy in a given situation, it is all the more concerning
that practice patterns would appear to be as homogenized as the data
would suggest. (79 FR 45651).
In response to comments which highlighted potential explanatory
factors for the observed trends, such as internal pressure within SNFs
that would override clinical judgment, we stated that we found these
potential explanatory factors troubling and entirely inconsistent with
the intended use of the SNF benefit. Specifically, the minimum therapy
minute thresholds for each therapy RUG category are certainly not
intended as ceilings or targets for therapy provision. As discussed in
Chapter 8, Section 30 of the Medicare Benefit Policy Manual (Pub. 100-
02), to be covered, the services provided to a SNF resident must be
``reasonable and necessary for the treatment of a patient's illness or
injury, that is, are consistent with the nature and severity of the
individual's illness or injury, the individual's particular medical
needs, and accepted standards of medical practice.'' Therefore, we
stated that services which are not specifically tailored to meet the
individualized needs and goals of the resident, based on the resident's
condition and the evaluation and judgment of the resident's clinicians,
may not meet this aspect of the definition for covered SNF care, and we
stated we believe that internal provider rules should not seek to
circumvent the Medicare statute, regulations and policies, or the
professional judgment of clinicians. (79 FR 45651 through 45652).
In addition to this discussion of observed trends, we noted in the
proposed rule (83 FR 21035) that others have also identified potential
areas of concern within the current SNF PPS. The two most notable
sources are the Office of the Inspector General (OIG) and the Medicare
Payment Advisory Commission (MedPAC).
For the OIG, three recent OIG reports describe the OIG's concerns
with the current SNF PPS. In December 2010, the OIG released a report
entitled ``Questionable Billing by Skilled Nursing Facilities'' (which
may be accessed at https://oig.hhs.gov/oei/reports/oei-02-09-00202.pdf). In this report, among its findings, the OIG found that
``from 2006 to 2008, SNFs increasingly billed for higher paying RUGs,
even though beneficiary characteristics remained largely unchanged''
(OEI-02-09-00202, ii), and among other things, recommended that we
should ``consider several options to ensure that the amount of therapy
paid for by Medicare accurately reflects beneficiaries' needs'' (OEI-
02-09-00202, iii). Further, in November 2012, the OIG released a report
entitled ``Inappropriate Payments to Skilled Nursing Facilities Cost
Medicare More Than a Billion Dollars in 2009'' (which may be accessed
at https://oig.hhs.gov/oei/reports/oei-02-09-00200.pdf). In this
report, the OIG found that ``SNFs billed one-quarter of all claims in
error in 2009'' and that the ``majority of the claims in error were
upcoded; many of these claims were for ultrahigh therapy.'' (OEI-02-09-
00200, Executive Summary). Among its recommendations, the OIG stated
that ``the findings of this report provide further evidence that CMS
needs to change how it pays for therapy'' (OEI-02-09-00200, 15).
Finally, in September 2015, the OIG released a report entitled ``The
Medicare Payment System for Skilled Nursing Facilities Needs to be
Reevaluated'' (which may be accessed at https://oig.hhs.gov/oei/reports/oei-02-13-00610.pdf). Among its findings, the OIG found that
``Medicare payments for therapy greatly exceed SNFs' costs for
therapy,'' further noting that ``the difference between Medicare
payments and SNFs' costs for therapy, combined with the current payment
method, creates an incentive for SNFs to bill for higher levels of
therapy than necessary'' (OEI-02-13-00610, 7). Among its
recommendations, the OIG stated that CMS should ``change the method of
paying for therapy'', further stating that ``CMS should accelerate its
efforts to develop and implement a new method of paying for therapy
that relies on
[[Page 39185]]
beneficiary characteristics or care needs.'' (OEI-02-13-00610, 12).
For MedPAC's recommendations in this area, Chapter 8 of MedPAC's
March 2017 Report to Congress (available at https://www.medpac.gov/docs/default-source/reports/mar17_medpac_ch8.pdf) includes the following
recommendation: ``The Congress should . . . direct the Secretary to
revise the prospective payment system (PPS) for skilled nursing
facilities'' and ``. . . make any additional adjustments to payments
needed to more closely align payment with costs.'' (March 2017 MedPAC
Report to Congress, 220). This recommendation is seemingly predicated
on MedPAC's own analysis of the current SNF PPS, where they state that
``almost since its inception the SNF PPS has been criticized for
encouraging the provision of excessive rehabilitation therapy services
and not accurately targeting payments for nontherapy ancillaries''
(March 2017 MedPAC Report to Congress, 202). Finally, with regard to
the possibility of changing the existing SNF payment system, MedPAC
stated that ``since 2015, [CMS] has gathered four expert panels to
receive input on aspects of possible design features before it proposes
a revised PPS'' and further that ``the designs under consideration are
consistent with those recommended by the Commission'' (March 2017
MedPAC Report to Congress, 203).
As we discussed in the proposed rule (83 FR 21035), the combination
of the observed trends in the current SNF PPS discussed above (which
strongly suggest that providers may be basing service provision on
financial reasons rather than resident need), the issues raised in the
OIG reports discussed above, and the issues raised by MedPAC, has
caused us to consider significant revisions to the existing SNF PPS, in
keeping with our overall responsibility to ensure that payments under
the SNF PPS accurately reflect both resident needs and resource
utilization.
We explained in the proposed rule (83 FR 20135 through 21036) that
under the RUG-IV system, therapy service provision determines not only
therapy payments but also nursing payments. This is because, as noted
above, payment is based on the highest RUG category that the resident
could be assigned to, so only one of a resident's assigned RUG groups,
rehabilitation or nursing, is used for payment purposes. Each
rehabilitation group is assigned a nursing CMI to reflect relative
differences in nursing costs for residents in those rehabilitation
groups, which is less specifically tailored to the individual nursing
costs for a given resident than the nursing CMIs assigned for the
nursing RUGs. We explained that, as mentioned above, because most
resident days are paid using a rehabilitation RUG, and since assignment
into a rehabilitation RUG is based on therapy service provision, this
means that therapy service provision effectively determines nursing
payments for those residents who are assigned to a rehabilitation RUG.
Thus, we stated that we believe any attempts to revise the SNF PPS
payment methodology to better account for therapy service provision
under the SNF PPS would need to be comprehensive and affect both the
therapy and nursing case-mix components. Moreover, we noted that in the
FY 2015 SNF PPS final rule, in response to comments regarding access
for certain ``specialty'' populations (such as those with complex
nursing needs), that we agreed with the commenter that access must be
preserved for all categories of SNF residents, particularly those with
complex medical and nursing needs. We stated that, as appropriate, we
would examine our current monitoring efforts to identify any revisions
which may be necessary to account appropriately for these populations.
(79 FR 45651).
In addition, MedPAC, in its March 2017 Report to Congress, stated
that it has previously recommended that we revise the current SNF PPS
to ``base therapy payments on patient characteristics (not service
provision), remove payments for NTA services from the nursing
component, [and] establish a separate component within the PPS that
adjusts payments for NTA services'' (March 2017 MedPAC Report to
Congress, 202). Accordingly, included among the proposed revisions we
discussed in the proposed rule were revisions to the SNF PPS to address
longstanding concerns regarding the ability of the RUG-IV system to
account for variation in nursing and NTA services.
In May 2017, CMS released an Advance Notice of Proposed Rulemaking
with comment (82 FR 20980) (the ANPRM), in which we discussed the
history of and analyses conducted during the SNF Payment Models
Research (PMR) project, which sought to address these concerns with the
RUG-IV model, and sought comments on a possible replacement to the
current RUG-IV model, which we called the Resident Classification
System, Version I (RCS-I). As we stated in the proposed rule (83 FR
21036), this model was intended as an improvement over the RUG-IV model
because it would better account for resident characteristics and care
needs, thus better aligning SNF PPS payments with resource use and
eliminating therapy provision-related financial incentives inherent in
the current payment model used in the SNF PPS. We received many
comments from stakeholders on a wide variety of aspects of the RCS-I
model. After considering these comments, we made significant revisions
to the RCS-I model to account for the concerns or questions raised by
stakeholders, resulting in a revised case-mix classification model
which we proposed in the FY 2019 SNF PPS proposed rule (83 FR 21018).
To make clear the purpose and intent of replacing the existing RUG-IV
system, the model we proposed is called the Patient-Driven Payment
Model (PDPM). We refer readers to the FY 2019 SNF PPS proposed rule (83
FR 21036) for a discussion of the SNF PMR project, and the resulting
SNF PMR technical report which contains supporting language and
documentation related to the RCS-I model (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/SNF_Payment_Models_Research_Technical_Report201704.pdf), and the SNF
PDPM technical report which presents analyses and results that were
used to develop the proposed PDPM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/PDPM_Technical_Report_508.pdf). We invited comments on any and all
aspects of the proposed PDPM, including the research analyses described
in the proposed rule, the SNF PDPM technical report and the SNF PMR
technical report.
As further detailed below, and as we stated in the proposed rule
(83 FR 21036), we believe that the PDPM represents an improvement over
the RUG-IV model and the RCS-I model because it would better account
for resident characteristics and care needs while reducing both
systemic and administrative complexity. To better ensure that resident
care decisions appropriately reflect each resident's actual care needs,
we believe it is important to remove, to the extent possible, service-
based metrics from the SNF PPS and derive payment from verifiable
resident characteristics. In the sections that follow, we describe the
comprehensive revisions we are implementing to the SNF PPS through the
PDPM. Additionally, we discuss the comments we received on each of the
proposed policies, our responses to these comments and the PDPM-related
policies we are finalizing in this rule.
Before moving into the specific policy areas, we first discuss
general comments
[[Page 39186]]
we received on the PDPM, along with our responses.
Comment: Many commenters expressed support for the goals of the
proposed PDPM, acknowledging that changes must be made to the current
payment system. Many commenters also expressed concerns regarding the
potential impacts on patient care which could result from implementing
PDPM, specifically that PDPM will introduce new incentives into SNF
payment that will have a negative impact on patient care. Some
commenters believe that SNF providers could stint on care, most notably
therapy services, and that such providers will be overcompensated for
care that is not being delivered. Some commenters urged CMS to monitor
the impacts on patient care of implementing PDPM and take action upon
evidence of adverse trends. One commenter noted that PDPM does not
correct the problems in the existing reimbursement model, assigning too
few resources to nursing and NTAs.
Response: We appreciate the support we have received for PDPM and
its goals. With respect to the concerns raised by commenters with
regard to the potential impact of PDPM on patient care, specifically
the possibility that some providers may stint on care or provide fewer
services to patients, we plan to monitor closely service utilization,
payment, and quality trends which may change as a result of
implementing PDPM. If changes in practice and/or coding patterns arise,
then we may take further action, which may include administrative
action against providers as appropriate and/or proposing changes in
policy (for example, system recalibration, rebasing case-mix weights,
case mix creep adjustment) to address any concerns. We will also
continue to work with the HHS Office of Inspector General, should any
specific provider behavior be identified which may justify a referral
for additional action.
With regard to the comment that PDPM does not correct the issues
with the current reimbursement model and assigns too few resources to
nursing and NTAs, we would refer the commenter to the impact analysis
presented in Table 37, which indicates that the broadest shifts in
payment are to those patients with high nursing and NTA needs.
Comment: Several commenters raised concerns regarding the use of
historical data as the basis for developing PDPM. One commenter stated
that PDPM is overly complex and that the majority of patient days are
captured in a small number of case-mix groups. One commenter stated
that because PDPM is based on historical utilization, it does not
sufficiently reflect current best practices or high quality care.
Response: Historical data are the only form of data that can be
used for any data analysis, so it is not clear what other data, that
are not historical, CMS could have used to develop PDPM. Further, as
these data are reported by SNFs, we believe that these data should be
best reflective of SNF costs and patient needs. With regard to the
comment that the majority of patient days are captured in a small
number of case-mix groups, we agree with this comment and believe that
this is precisely part of the motivation for implementing a new case-
mix classification model. The current case-mix model has caused a
homogenization in patient classification such that the current payment
model does not adequately reflect differences among SNF patients. We
believe that PDPM is a significant improvement in this regard, better
reflecting the myriad differences between SNF patients in terms of
their characteristics, care needs, and goals.
With regard to the comment that the historical data do not
sufficiently reflect current best practices or high quality care, while
we are concerned about this assertion from a patient care perspective,
we do not believe that this would affect the accuracy of the reported
data in terms of reflecting relative differences in costs, which is all
that is necessary for developing accurate case-mix groups.
Comment: Several commenters requested clarification on the effect
of implementing PDPM on the development of a unified Post-Acute Care
(PAC) PPS and how PDPM would interact with a PAC PPS. One commenter
requested that CMS establish a panel to advise on payment system
changes across the PAC continuum.
Response: As a PAC PPS has not been established, we cannot provide
guidance as to how the PDPM would interact with such a system, once
developed. However, given that PDPM shifts away from the current case-
mix model that utilizes service-based metrics as the primary
determinant of payment for most days paid under the SNF Part A benefit
to a model that utilizes patient characteristics as the basis for
payment, and that most other PAC payment systems already rely more
heavily on patient characteristics within their payment model, we
believe that PDPM will better align the SNF PPS for this eventual
transition to a PAC PPS as it brings the SNF PPS closer to those other
PAC payment systems. We will consider the commenter's recommendation to
establish a panel on payment system changes across the PAC continuum,
particularly as we work to develop a PAC PPS.
Comment: Some commenters suggested that CMS consider including
quality measures of effective rehabilitation services when evaluating
the impact of PDPM.
Response: We appreciate these commenters' suggestion. In monitoring
the impact of the PDPM, we will consider including measures for a
variety of service areas as a component of our planned monitoring
efforts.
Comment: Several commenters suggested that CMS should establish a
plan to recalibrate the system to address any unanticipated impacts.
More specifically, these commenters requested that CMS provide more
details on plans to recalibrate the system in case of unanticipated
service and performance changes, as well as plans to recalibrate the
payment weights associated with the revised payment model.
Response: We appreciate the suggestions made by these commenters
with regard to CMS providing plans for recalibrating the payment system
after implementing PDPM. However, such recalibrations will depend
largely on the results of our monitoring efforts and could take various
forms. For example, in the FY 2012 SNF PPS final rule (76 FR 48486), we
recalibrated the parity adjustment that was intended to ensure that SNF
payments under RUG-IV matched those that would have been made under
RUG-III, similar to how the parity adjustment discussed below for PDPM
is intended to ensure that SNF payments under PDPM mirror those that
would have been made under RUG-IV. As discussed in that rule, our
assumptions regarding case-mix distribution that were used to calculate
the RUG-IV parity adjustment subsequently proved to be inaccurate,
which caused us to recalculate the RUG-IV parity adjustment in the
following year. We anticipate similarly monitoring PDPM implementation
closely and may propose adjustments as appropriate if we discover
evidence that payments are either higher or lower than anticipated, or
if provider costs change in such a manner that the current relationship
between provider costs and provider payments changes from that
currently observed.
Comment: One commenter raised the concern that the PDPM model has
low explanatory power and lacks an objective threshold for inclusion of
various components in the model. This commenter suggested that if CMS
intends to update this model with new
[[Page 39187]]
data over time to reflect changes in clinical practice and resource
utilization, there is a need for a systematic determination of the
minimum acceptable R-squared values for the model features. Model
components currently excluded may increase in predictive power over
time and merit inclusion in future versions of PDPM. In addition,
current model components may decrease in predictive power such that
they should be removed from the model.
Response: Setting an absolute minimum threshold would not only be
arbitrary but also deviates from the practical use of the R-squared
metric, which is to evaluate the proportion of variance explained and
compare models with the same dependent variable vector. Additionally,
R-squared is not the only measure we use to evaluate PDPM. In fact,
because the current system is heavily based on service provision and
most residents are classified into the Ultra-High therapy category, we
are dealing with a dataset with little explainable variance. Each of
the PDPM case-mix groups meets clinical expectations, which is a
convincing validation of the model given the data available. We note
that with the change to a patient driven model, we expect more
variation will appear in therapy costs. This will allow for future
development of models with higher explanatory power.
Comment: Several commenters requested clarification on how PDPM
would interact with other CMS initiatives, such as the SNF Quality
Reporting Program (QRP), Value-Based Purchasing (VBP) program, revised
conditions of participation and other such initiatives. A few
commenters also requested clarification on how PDPM accounts for or
would interact with the Jimmo v Sebelius settlement surrounding the
provision of maintenance therapy. These commenters requested
clarification on how CMS would track maintenance therapy services, as
compared to other forms of therapy. Several commenters requested
clarification on how Comprehensive Person-Centered Plan maintenance
services, new Requirements of Participation and other CMS initiatives
will be factored into CMS burden estimates and that CMS should revise
existing burden estimates to incorporate these changes.
Response: We anticipate that PDPM will only serve to strengthen the
various quality and payment reform initiatives throughout CMS, by
shifting payment away from the current service-driven model that has
produced nearly homogenized care for SNF beneficiaries, to a more
resident-centered model that focuses more on the individual patient's
needs and characteristics. We also believe that through the use of
standardized assessment items (as discussed in section V.D. of this
final rule) and changes to the assessment schedule to mirror that of
other PAC settings that use a similar admission/discharge assessment
model (as discussed in section V.E. of this final rule), the PDPM would
better align with the current direction of PAC reform and
standardization efforts supported by the IMPACT Act.
With regard to the comment about tracking maintenance services, we
do not believe it is necessary at this time to track maintenance
services separately. Such tracking would be burdensome and it would be
difficult to do so accurately, as it is possible that many patients
have both maintenance and restorative goals, and allocating therapy
minutes among these varied goals would be particularly complicated for
providers.
With regard to the burden of the Comprehensive Person-Centered
Plan, new requirements of participation, and other CMS initiatives, the
burdens estimated in relation to PDPM are only those in relation to
implementation of the PDPM and its related policies. As the
Comprehensive Person-Centered Plan and other issues mentioned are
outside of these PDPM related policies, we do not address the potential
burden of such issues in this section.
Comment: Several commenters expressed concerns regarding the
potential impact of implementing PDPM on Medicaid programs. A few
commenters raised concerns regarding the impact of PDPM on calculating
the Upper Payment Limit (UPL), which is utilized as part of calculating
Medicaid payment rates. One commenter questioned if states would be
permitted to still use RUG-IV as the basis for estimating the UPL. One
commenter requested clarification on if any changes would be necessary
for Medicaid claims systems. One commenter stated that Medicaid
providers will have less incentive to provide therapy and Medicaid
beneficiaries will have lower nursing case-mix scores under PDPM,
thereby incentivizing states to transition to PDPM in order to reduce
Medicaid spending. Commenters suggested that CMS work closely with
states, who may wish to transition to PDPM, to ensure a smooth
transition. Some commenters also stated that, should certain states not
transition to PDPM, this would mean operating two different payment
systems. A few commenters requested clarification on if CMS would
continue to support previous payment systems for states that do not
make the transition to PDPM or have access to MDS data for Medicaid
rate-setting purposes. These commenters also requested if CMS could
provide a further breakdown of certain cost categories, such as NTA
costs, in a manner that would be more helpful to states in conducting
UPL calculations.
Response: We appreciate the commenters' concerns with the potential
impact of PDPM on Medicaid programs. We agree with the commenters that
this is an area that deserves significant attention in terms of
education and training, and we plan to work with states to ensure a
smooth transition between the current RUG-IV model and PDPM. With
regard to questions on how PDPM may relate to UPL calculations, these
calculations are based on how Medicare pays for services under Part A
and not based on a prior payment system. Therefore, UPL calculations,
after PDPM has been implemented, would need to be based on the payments
made under PDPM. That being said, we expect that, because PDPM bases
payment on patient characteristics and not service utilization,
payments made under PDPM will more accurately reflect patient needs and
goals, which should also improve the basis for Medicaid payments which
may be related to Medicare payments. With regard to having the data
necessary for such UPL calculations, whether in regard to specific rate
components (for example, NTA costs) or more generally, we will work
with states to help ensure that they have the necessary information so
PDPM implementation does not negatively impact on their ability to
manage their Medicaid programs.
With regard to the comment that states may have more of an
incentive to transition to PDPM in order to reduce Medicaid spending,
we believe that the primary reason that Medicaid programs may adopt
PDPM is due to its focus on patient characteristics and goals, rather
than on service utilization. Given the improvements in Medicare payment
that this transition represents, we would expect a similar improvement
in Medicaid payments in states that make this transition.
With regard to the comment that Medicaid providers will be
incentivized to provide less therapy or that Medicaid beneficiaries
will have lower nursing case-mix scores, we would encourage states that
decide to transition to PDPM to ensure they are monitoring the impacts
of such a change on their beneficiaries and the care they receive.
[[Page 39188]]
In terms of those states that opt not to transition to PDPM and
instead use some form of legacy payment system, we would note that a
number of states use systems quite distinct from the existing RUG-IV
model and we are not aware of any difficulties or complexities for
providers or states in managing these systems concurrently. These
states still have access to MDS data for ratesetting purposes and
nothing associated with PDPM implementation, in and of itself, would
affect state access to MDS data. That being said, we would likely need
to evaluate the costs and benefits of continued support for certain
legacy payment systems, most notably any RUG-III based payment models.
Comment: One commenter requested that CMS consider the possibility
that some Medicare Advantage plans could reform their payment models to
mirror PDPM, while others may maintain their existing payment models,
which could include models that resemble RUG-IV. The commenter
requested that CMS consider working with those plans that opt to modify
their payment models to resemble PDPM and consider the impact of having
multiple payment models that providers must operate under
simultaneously.
Response: We acknowledge that some Medicare Advantage plans could
change their payment models to mirror PDPM, while others may not change
their payment models in relation to the changes finalized in this rule.
We would note, however, that, as private plans, Medicare Advantage
plans currently take a wide variety of forms, with some already
approximating the structure of PDPM, using patient characteristics
rather than service utilization as the basis for payment. We will work
generally with stakeholders, including these private plans, to help
ensure that adequate education and resources are available for all
parties.
Comment: One commenter requested clarification on how CMS will
track and reconcile patient diagnosis and classification information
reported at admission with such information at discharge, expressing
concern regarding what might occur in the case that the information
from these two points is different, as well as diagnosis or procedural
information from the preceding hospital stay, noting that some
information for SNF payment comes from the hospital, and how these
issues could affect provider risk of alleged improper billing and
recovery efforts.
Response: We plan to develop a robust monitoring program that
utilizes data from many sources, such as assessments, claims, cost
reports and other data that would prove valuable in assessing both the
impact of implementing PDPM, as well as identify any provider level
issues related to PDPM payments. While the vast majority of information
related to PDPM classification and payment is derived from the SNF,
there is one area (surgical procedural information) which may come from
the preceding hospital stay. However, nothing in PDPM should change the
relationship or need for information between the hospital and SNF,
given that the information that PDPM requires is no more information
than the SNF would need simply for basic care planning purposes. As
such, there should be no impact on improper billing or recovery efforts
that derive from the implementation of PDPM.
Comment: One commenter requested clarification on how PDPM will
address the number of face-to-face hours the registered therapist
spends treating the patients. This commenter states they have observed
nursing staff instructed to complete certain activities with patients
who are receiving therapy.
Response: PDPM does not address the specific number of face-to-face
hours that therapists spend with their patients. The expectations for
what is considered skilled therapy and reasonable and necessary care
found in Chapter 8 of the Medicare Benefit Policy Manual (https://
www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/
bp102c08.pdf) and the MDS 3.0 RAI manual (https://downloads.cms.gov/files/MDS-30-RAI-Manual-v115-October-2017.pdf) will not change under
PDPM. We continue to expect that patients will receive high quality
skilled rehabilitation services based on their individual needs and we
do not believe that patients should have any nursing care that they
require reduced because they happen to be receiving therapy. If a
patient requires nursing care (including restorative nursing), the SNF
should provide that nursing care as medically necessary. Similarly, if
a patient requires therapy, the SNF should provide the therapy as
medically necessary. One should not impact the other and PDPM does not
affect this either.
Comment: Several commenters requested clarification about how SNFs
are expected to comply with Medicare and Medicaid Conditions of
Participation and whether SNFs will continue to be required to complete
the discharge assessments required by the Omnibus Budget Reconciliation
Act (OBRA), as well as the end of therapy-related assessments.
Response: PDPM is not intended to affect any of the Medicare and
Medicaid Conditions of Participation for SNFs. Facilities should
continue to follow these regulations as they always have. Additionally,
even though under PDPM, the majority of PPS assessments will now be
removed (as discussed later in this final rule), all OBRA assessments
will still be required. PDPM will not affect the OBRA requirements.
With regard to existing therapy-related assessments (the Start of
Therapy, End of Therapy, and Change of Therapy assessments), these
assessments would no longer exist under PDPM.
Comment: Several commenters expressed concern that PDPM may not
fully account for mild cognitive impairment and encouraged CMS to
collect more sensitive data, in line with the IMPACT Act, to ensure
necessary attention to cognition.
Response: We appreciate these commenters' concerns and also believe
that attention should be paid to cognition as an area for potential
future system refinements. However, as the only change in the proposed
use of cognition as a factor in payment classification is under the SLP
component, and because for this component, we proposed to use even mild
cognitive impairment as the basis for a payment classification, we
believe that PDPM does adequately account for mild cognitive
impairment. We will consider the commenter's concerns as we continue to
evaluate potential refinements to our assessment tools.
Comment: One commenter expressed concern that PDPM does not
incorporate incentives for quality improvement.
Response: PDPM, as a case-mix classification system, is intended to
classify SNF patients for purposes of reimbursement based on the
resource utilization associated with treating those patients. However,
there do exist programs, such as the SNF VBP program, that is a part of
the SNF PPS which does incentivize quality improvement. Therefore,
while we agree that PDPM, in and of itself, does not include incentives
for quality improvement, other aspects of the SNF PPS do include such
incentives.
Comment: Some commenters requested clarification about the appeals
process that will be available to help patients in case of shortcomings
in their care and coverage, including any inaccurate assignments to
payment classifications.
Response: We appreciate this comment, but would note that nothing
associated with PDPM implementation would affect existing patient
appeal rights or processes.
Comment: One commenter requested clarification on how items Z0100A
and
[[Page 39189]]
Z0150A on the MDS would be populated and how the classifications would
translate to a billable claim code.
Response: We will provide detail on how these MDS items, which
relate to patient billing codes, will be populated as part of our
updates to the MDS manual.
Comment: One commenter requested clarification on how a patient's
voice would be heard in a care design driven by medical information.
Response: While patient case-mix classification, for purposes of
payment, would be driven by medical information, as occurs under the
current payment system, care design should be driven by patient goals
and needs, as well as discussions with the patient and his or her
family. Further, while under the current payment model over 90 percent
of patient days are paid for using a therapy RUG, which utilizes only
therapy minutes and ADLs as the basis for payment, PDPM provides a more
holistic approach to payment classifications. More specifically, by
separately adjusting for the nursing component, which utilizes patient
interviews as a major component of patient classification, we believe
that this achieves the commenter's goal of elevating the patient's
voice.
Comment: Some commenters requested that CMS consider adopting an
outlier policy as part of the SNF PPS to account for patients whose
costs far exceed the cost of typical patients. These commenters stated
that a SNF outlier policy would ensure access to clinically complex
patients and align with other PAC systems.
Response: Under the current statutory provisions governing the SNF
PPS, there is no specific statutory authority for an outlier payment as
part of the SNF PPS.
B. Revisions to SNF PPS Federal Base Payment Rate Components
1. Background on SNF PPS Federal Base Payment Rates and Components
Section 1888(e)(4) of the Act requires that the SNF PPS per diem
federal payment rates be based on FY 1995 costs, updated for inflation
to the first effective period of the PPS. These base rates are then
required to be adjusted to reflect differences among facilities in
patient case-mix and in average wage levels by area. In keeping with
this statutory requirement, the base per diem payment rates were set in
1998 and reflect average SNF costs in a base year (FY 1995), updated
for inflation to the first period of the SNF PPS, which was the 15-
month period beginning on July 1, 1998. The federal base payment rates
were calculated separately for urban and rural facilities and based on
allowable costs from the FY 1995 cost reports of hospital-based and
freestanding SNFs, where allowable costs included all routine,
ancillary, and capital-related costs (excluding those related to
approved educational activities) associated with SNF services provided
under Part A, and all services and items for which payment could be
made under Part B prior to July 1, 1998.
In general, routine costs are those included by SNFs in a daily
service charge and include regular room, dietary, and nursing services,
medical social services and psychiatric social services, as well as the
use of certain facilities and equipment for which a separate charge is
not made. Ancillary costs are directly identifiable to residents and
cover specialized services, including therapy, drugs, and laboratory
services. Lastly, capital-related costs include the costs of land,
building, and equipment and the interest incurred in financing the
acquisition of such items (63 FR 26253).
There are four federal base payment rate components which may
factor into SNF PPS payment. Two of these components, ``nursing case-
mix'' and ``therapy case-mix,'' are case-mix adjusted components, while
the remaining two components, ``therapy non-case-mix'' and ``non-case-
mix,'' are not case-mix adjusted. While we discussed the details of the
proposed PDPM and justifications for certain associated policies we
proposed throughout section V of the FY 2019 SNF PPS proposed rule, we
note that, as part of the PDPM case-mix model, we proposed to bifurcate
the ``nursing case-mix'' component of the federal base payment rate
into two case-mix adjusted components and separate the ``therapy case-
mix'' component of the federal base payment rate into three case-mix
adjusted components, thereby creating five case-mix adjusted components
of the federal base per diem rate. More specifically, we proposed to
separate the ``therapy case-mix'' rate component into a ``Physical
Therapy'' (PT) component, an ``Occupational Therapy'' (OT) component,
and a ``Speech-Language Pathology'' (SLP) component. Our rationale for
separating the therapy case-mix component in this manner is presented
in section V.D.3.b. of the proposed rule. Based on the results of the
SNF PMR, we also proposed to separate the ``nursing case-mix'' rate
component into a ``Nursing'' component and a ``Non-Therapy Ancillary''
(NTA) component. Our rationale for proposing to bifurcate the nursing
case-mix component in this manner is presented in section V.D.3.d. of
the proposed rule. Given that all SNF residents under PDPM would be
assigned to a classification group for each of the three proposed
therapy-related case-mix adjusted components as further discussed
below, we proposed eliminating the ``therapy non-case-mix'' rate
component under PDPM and stated that we would distribute the dollars
associated with this current rate component amongst the proposed PDPM
therapy components. We also stated in the proposed rule (83 FR 21038)
that the existing non-case-mix component would be maintained as it is
currently constituted under the existing SNF PPS. We explained that
although the case-mix components of the proposed PDPM case-mix
classification system would address costs associated with individual
resident care based on an individual's specific needs and
characteristics, the non-case-mix component addresses consistent costs
that are incurred for all residents, such as room and board and various
capital-related expenses. As these costs are not likely to change,
regardless of what changes we might make to the SNF PPS, we proposed to
maintain the non-case-mix component as it is currently used.
In the next section, we discuss the methodology used to create the
proposed PDPM case-mix adjusted components, as well as the data sources
used in this calculation. As we stated in the proposed rule (83 FR
21038), the proposed methodology does not calculate new federal base
payment rates but simply proposes to modify the existing base rate
case-mix components for therapy and nursing. The methodology and data
used in this calculation are based on the data and methodology used in
the calculation of the original federal payment rates in 1998, as
further discussed below.
2. Data Sources Utilized for Revision of Federal Base Payment Rate
Components
Section II.A.2. of the interim final rule with comment period that
initially implemented the SNF PPS (63 FR 26256 through 26260) provides
a detailed discussion of the data sources used to calculate the
original federal base payment rates in 1998. Except as discussed below,
we proposed to use the same data sources (that is, cost information
from FY 1995 cost reports) to determine the portion of the therapy
case-mix component base rate that would be assigned to each of the
proposed therapy component base rates (PT, OT, and SLP). As we stated
in the proposed rule (83 FR 21038), we believe that using the same data
sources, to the extent possible, that were used to calculate the
original federal base
[[Page 39190]]
payment rates in 1998 results in base rates for the components that
resemble as closely as possible what they would have been had these
components initially been established in 1998. The portion of the
nursing component base rate that corresponds to NTA costs was already
calculated using the same data source used to calculate the federal
base payment rates in 1998. As explained below and in the proposed rule
(83 FR 21038), we used the previously calculated percentage of the
nursing component base rate corresponding to NTA costs to set the NTA
base rate and verified this calculation with the analysis described in
section V.C.3. of the FY 2019 SNF PPS proposed rule. Therefore, the
steps described below address the calculations performed to separate
out the therapy base rates alone.
As discussed in the proposed rule (83 FR 21038), the percentage of
the current therapy case-mix component of the federal base payment
rates that would be assigned to the three proposed therapy components
(PT, OT, and SLP) of the federal base payment rates was determined
using cost information from FY 1995 cost reports, after making the
following exclusions and adjustments: First, only settled and as-
submitted cost reports for hospital-based and freestanding SNFs for
periods beginning in FY 1995 and spanning 10 to 13 months were
included. This set of restrictions replicates the restrictions used to
derive the original federal base payment rates as set forth in the 1998
interim final rule with comment period (63 FR 26256). Following the
methodology used to derive the SNF PPS base rates, routine and
ancillary costs from as-submitted cost reports were adjusted down by
1.31 and 3.26 percent, respectively. As discussed in the 1998 interim
final rule with comment period, the specific adjustment factors were
chosen to reflect average adjustments resulting from cost report
settlement and were based on a comparison of as-submitted and settled
reports from FY 1992 to FY 1994 (63 FR 26256); these adjustments are in
accordance with section 1888(e)(4)(A)(i) of the Act. We used similar
data, exclusions, and adjustments as in the original base rates
calculation so the resulting base rates for the components would
resemble as closely as possible what they would have been had they been
established in 1998. However, as we discussed in the proposed rule,
there were two ways in which the PT, OT, and SLP percentage
calculations deviate from the 1998 base rates calculation. First, the
1998 calculation of the base rates excluded reports for facilities
exempted from cost limits in the base year. The available data do not
identify which facilities were exempted from cost limits in the base
year, so this restriction was not implemented. As we stated in the
proposed rule, we do not believe this had a notable impact on our
estimate of the PT, OT, and SLP percentages, because only a small
fraction of facilities were exempted from cost limits. Consistent with
the 1998 base rates calculation, we excluded facilities with per diem
costs more than three standard deviations higher than the geometric
mean across facilities. Therefore, facilities with unusually high costs
did not influence our estimate. Second, the 1998 calculation of the
base rates excluded costs related to exceptions payments and costs
related to approved educational activities. The available cost report
data did not identify costs related to exceptions payments nor indicate
what percentage of overall therapy costs or costs by therapy discipline
were related to approved educational activities, so these costs are not
excluded from the PT, OT, and SLP percentage calculations. We stated in
the proposed rule that because exceptions were only granted for routine
costs, we believe the inability to exclude these costs should not
affect our estimate of the PT, OT, and SLP percentages as exceptions
would not apply to therapy costs. Additionally, the data indicate that
educational costs made up less than one-hundredth of 1 percent of
overall SNF costs. Therefore, we stated that we believe the inability
to exclude educational costs should have a negligible impact on our
estimates.
In addition to Part A costs from the cost report data, the 1998
federal base rates calculation incorporated estimates of amounts
payable under Part B for covered SNF services provided to Part A SNF
residents, as required by section 1888(e)(4)(A)(ii) of the Act. We
stated in the proposed rule (83 FR 21038) that in calculating the PT,
OT, and SLP percentages, we also estimated the amounts payable under
Part B for covered SNF services provided to Part A residents. All Part
B claims associated with Part A SNF claims overlapping with FY 1995
cost reports were matched to the corresponding facility's cost report.
For each cost center (PT, OT, and SLP) in each cost report, a ratio was
calculated to determine the amount by which Part A costs needed to be
increased to account for the portion of costs payable under Part B.
This ratio for each cost center was determined by dividing the total
charges from the matched Part B claims by the total charges from the
Part A SNF claims overlapping with the cost report. The 1998 interim
final rule (63 FR 26256) states that to estimate the amounts payable
under Part B for covered SNF services provided to Part A SNF residents,
CMS (then known as HCFA) matched 100 percent of Part B claims
associated with Part A covered SNF stays to the corresponding
facility's cost report. Part B allowable charges were then incorporated
at the facility level by the appropriate cost report center. Although
the interim final rule does not provide further detail on how Part B
allowable charges were incorporated at the facility level, we stated in
the proposed rule that we believe our methodology reasonably
approximates the methodology described in the interim final rule, and
provides a reasonable estimate of the amounts payable under Part B for
covered SNF services provided to Part A residents for purposes of
calculating the PT, OT, and SLP percentages. Therefore, we stated that
we believe it is reasonable to use this methodology to calculate the
PT, OT, and SLP percentages of the therapy case-mix component.
Finally, the 1998 federal base rates calculation standardized the
cost data for each facility to control for the effects of case-mix and
geographic-related wage differences, as required by section
1888(e)(4)(C) of the Act. As we stated in the proposed rule, when
calculating the PT, OT and SLP shares of the current therapy base rate,
we replicated the method used in 1998 to standardize for wage
differences, as described in the 1998 interim final rule with comment
period (63 FR 26259 through 26260). We applied a hospital wage index to
the labor-related share of costs, estimated at 75.888 percent, and used
an index composed of hospital wages from FY 1994. We noted in the
proposed rule that the PT, OT, and SLP percentage calculations did not
include the case-mix adjustment used in the 1998 calculation because
the 1998 adjustment relied on the obsolete RUG-III classification
system. In the 1998 federal base rates calculation, information from
SNF and inpatient claims was mapped to RUG-III clinical categories at
the resident level to case-mix adjust facility per diem costs. However,
the 1998 interim final rule did not document this mapping, and the data
used as the basis for this adjustment are no longer available, and
therefore, this step could not be replicated. We stated in the proposed
rule that we believe the inability to apply the case-mix
[[Page 39191]]
adjustment likely has a small impact on our estimate of the PT, OT, and
SLP percentages. The 1998 interim final rule indicates that the case-
mix adjustment was applied by dividing facility per diem costs for a
given component by average facility case mix for that component; in
other words, multiplying by the inverse of average facility case mix.
As we discussed in the proposed rule, as long as average facility case-
mix values are within a relatively narrow range, adjustment for
facility case mix should not have a large impact on the estimated PT,
OT, and SLP percentages. Because the RUG-III case-mix indexes shown in
the 1998 interim final rule are within a relatively narrow range (for
example, therapy indexes range from 0.43 to 2.25), we stated that we do
not expect the inability to apply the case-mix adjustment to facility
per diem costs to have a large influence on the estimated PT, OT, and
SLP percentages. These data sources are described in more detail in
section 3.10. of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
We invited comments on the data sources used to determine the PT,
OT, and SLP rate components, as discussed above.
Commenters submitted the following comments related to the proposed
rule's discussion of the Data Sources Utilized for Proposed Revision of
Federal Base Payment Rate Components. A discussion of these comments,
along with our responses, appears below.
Comment: One commenter requested additional information on the data
sources used to develop PDPM. Specifically, the commenter requested
that CMS clarify which year of claims and cost report data was used to
develop PDPM.
Response: As detailed in section 3.1 of the SNF PDPM technical
report and FY 2019 SNF PPS proposed rule (83 FR 21041), we used data,
including claims and assessments, corresponding to Medicare Part A SNF
stays with admissions in FY 2017. This was the most complete year of
data available when PDPM was developed and continues to be the most
complete year of data available as of the FY 2019 final rule.
Foundational analyses--for example, those discussed throughout the SNF
PMR technical report that accompanied the 2017 ANPRM--used FY 2014
data, as that was the most recent complete year of data available when
those analyses were completed. Finally, based on suggestions from
commenters responding to the 2017 ANPRM, the analysis that established
the list of comorbidities used for payment in the PDPM NTA component
and the points associated with each comorbid condition used multiple
years of data to generate more robust results. Specifically, resource
utilization and assessment data from FYs 2014-2017 were used to
determine the comorbid conditions associated with high NTA utilization
and estimate the specific resource utilization associated with each
condition for the purpose of assigning points and payment to these
conditions under PDPM. This methodology is discussed in further detail
in section 3.7 of the SNF PDPM technical report and in the FY 2019 SNF
PPS proposed rule (83 FR 21056). In terms of cost reports, since
providers have their own fiscal year and reporting schedule, we used
the cost report closest to the stay window among the cost reports of
that provider recorded in the database as of November 2017.
Comment: Some commenters questioned whether it is appropriate to
use the same data sources and methodology from 1998 (that is, 1995 cost
reports) to set base rates given updated technology and changes in SNF
care practices since then. Particularly, a few commenters stated that
the estimated share of the nursing base rate attributed to NTA services
(43 percent) is outdated and not representative of the proportion of
the nursing base rate that corresponds to NTA services. These
commenters requested that we consider recalculating SNF base rates
using more recent data on SNF costs.
Response: We appreciate the commenters' suggestion to use more
recent data in calculating the SNF base rates. However, in accordance
with section 1888(e)(4)(A) of the Act, the federal per diem rates used
for SNF payment are based on the FY 1995 cost reports. Therefore, we
cannot consider recalculating the SNF base rates using more recent
data. Additionally, given this statutory requirement, we believed that
it was appropriate to use these cost reports to set the base rates for
the proposed new components to reflect as closely as possible what the
base rates would have been for these components if they had been
separately established in 1998. Finally, while it may be the case that,
as the commenter stated, changes in SNF care practices may have
occurred, such changes would more likely be reflected in differences in
the relative costs of treating different types of patients and these
types of changes in relative costs are reflected in the revised case-
mix weights under PDPM, which does use more recent data than FY 1995.
Specifically, as discussed in section 3.1 of the SNF PDPM technical
report and FY 2019 SNP PPS proposed rule (83 FR 21041), we developed
PDPM using data, including claims and assessments, corresponding to
Medicare Part A SNF stays with admissions in FY 2017.
Comment: One commenter recommends that CMS treat respiratory
therapy as ``therapy'' and not ``nursing'' for purpose of payment, and
recommends CMS consider incorporating an add-on payment for respiratory
therapy to ensure it is reimbursed appropriately to safeguard the
continuation of these therapy services.
Response: Under Chapter 8 of the Medicare Benefit Policy manual,
section 30.4, ``skilled therapy services'' includes physical therapy,
occupational therapy, and speech-language pathology therapy (reflecting
the regulations at 42 CFR 409.23). Respiratory therapy, on the other
hand, is treated as a separate service category in section 50.8.2 of
the same chapter (reflecting the regulations at Sec. 409.27(b)). As
such, respiratory therapy is distinct from other forms of therapy and
is not included among the other therapy components. Additionally,
therapy services, as defined in Sec. 409.33 make specific reference to
skilled therapy services provided by physical and occupational
therapists and speech-language pathologists. Finally, while respiratory
therapists have specialized training in addressing respiratory issues,
much of the work conducted by respiratory therapists falls within the
scope of practice for nurses, which further supports the closer
relationship between respiratory therapy and nursing, rather than with
the three therapy disciplines. With regard to developing an add-on
payment for respiratory therapy, given that such services are currently
captured through the global per diem payment, we do not believe that an
add-on payment would be warranted.
3. Methodology Used for the Calculation of Federal Base Payment Rate
Components
As discussed previously in this section, we proposed to separate
the current therapy components into a PT component, an OT component,
and an SLP component. To do this, we calculated the percentage of the
current therapy component of the federal base rate that corresponds to
each of the three proposed PDPM therapy components (PT, OT, and SLP) in
accordance with the methodology set forth below and in the FY 2019 SNF
PPS proposed rule (83 FR 21039).
The data described in section V.C.2. of the proposed rule
(primarily, cost information from FY 1995 cost reports)
[[Page 39192]]
provides cost estimates for the Medicare Part A SNF population for each
cost report that met the inclusion criteria. Cost reports stratify
costs by a number of cost centers that indicate different types of
services. For instance, costs are reported separately for each of the
three therapy disciplines (PT, OT, and SLP). Cost reports also include
the number of Medicare Part A utilization days during the cost
reporting period. As we stated in the proposed rule, this allows us to
calculate both average total therapy costs per day and average therapy
costs by discipline in the facility during the cost reporting period.
Therapy costs are defined as the sum of costs for the three therapy
disciplines.
As explained in the proposed rule (83 FR 21039), the goal of this
methodology is to estimate the proportion of therapy costs that
corresponds to each of the three therapy disciplines. We use the
facility-level per-diem costs developed from 1995 cost reports to
derive average per diem amounts for both total therapy costs and for
PT, OT, and SLP costs separately. To do this, we followed the
methodology outlined in section II.A.3. of the 1998 interim final rule
with comment period (63 FR 26260), which was used by CMS (then known as
HCFA) to create the federal base payment rates:
(1) For each of the four measures of cost (PT, OT, SLP, and total
therapy costs per day), we computed the mean based on data from
freestanding SNFs only. This mean was weighted by the total number of
Medicare days of the facility.
(2) For each of the four measures of cost (PT, OT, SLP, and total
therapy costs per day), we computed the mean based on data from both
hospital-based and freestanding SNFs. This mean was weighted by the
total number of Medicare days of the facility.
(3) For each of the four measures of cost (PT, OT, SLP, and total
therapy costs per day), we calculated the arithmetic mean of the
amounts determined under steps (1) and (2) above.
In section 3.10.3. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), we show the results of these calculations.
The three steps outlined above produce a measure of costs per day
by therapy discipline and a measure of total therapy costs per day. We
divided the discipline-specific (PT, OT, SLP) cost measure by the total
therapy cost measure to obtain the percentage of the therapy component
that corresponds to each therapy discipline. As we discussed in the
proposed rule (83 FR 21039), we believe that following a methodology to
derive the discipline-specific therapy percentages that is consistent
with the methodology used to determine the base rates in the 1998
interim final rule with comment period is appropriate because a
consistent methodology helps to ensure that the resulting base rates
for the components resemble what they would be had they been
established in 1998. We found that PT, OT, and SLP costs correspond to
43.4 percent, 40.4 percent, and 16.2 percent of the therapy component
of the federal per diem rate for urban SNFs, and 42.9 percent, 39.4
percent, and 17.7 percent of the therapy component of the federal per
diem rate for rural SNFs. Under the proposed PDPM, we stated that the
current therapy case-mix component would be separated into a Physical
Therapy component, an Occupational Therapy component, and a Speech-
Language Pathology component using the percentages derived above. We
stated that this process would be done separately for urban and for
rural facilities. In the appendix of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) we provided the specific cost
centers used to identify PT, OT, and SLP costs.
In addition, we proposed to separate the current nursing case-mix
component into a nursing case-mix component and an NTA component.
Similar to the therapy component, we calculated the percentage of the
current nursing component of the federal base rates that corresponds to
each of the two proposed PDPM components (NTA and nursing). The 1998
reopening of the comment period for the interim final rule (63 FR
65561, November 27, 1998) states that NTA costs comprise 43.4 percent
of the current nursing component of the urban federal base rate, and
the remaining 56.6 percent accounts for nursing and social services
salary costs. These percentages for the nursing component of the
federal base rate for rural facilities are 42.7 percent and 57.3
percent, respectively (63 FR 65561). Therefore, we proposed to assign
43 percent of the current nursing component of the federal base rates
to the new NTA component of the federal base rates and assign the
remaining 57 percent to the new nursing component of the federal base
rates to reflect what the base rates would have been for these
components if they had been separately established in 1998.
As discussed in the proposed rule (83 FR 21040), we verified the
1998 calculation of the percentages of the nursing component federal
base rates that correspond to NTA costs by developing a measure of NTA
costs per day for urban and rural facilities. We used the same data
(that is, cost information from 1995 cost reports) and followed the
same methodology described above to develop measures of PT, OT, and SLP
costs per day and total therapy costs per day. The measure of NTA costs
per day produced by this analysis was $47.70 for urban facilities and
$47.30 for rural facilities. The original 1998 federal base rates for
the nursing component, which relied on a similar methodology, were
$109.48 for urban facilities and $104.88 for rural facilities.
Therefore, our measure of NTA costs in urban facilities was equivalent
to 43.6 percent of the urban 1998 federal nursing base rate, and our
measure of NTA costs in rural facilities was equivalent to 45.1 percent
of the rural 1998 federal nursing base rate. These results are similar
to the estimates published in the 1998 reopening of the comment period
for the interim final rule (63 FR 65561, November 27, 1998), which we
stated we believe supports the validity of the 43 percent figure stated
above.
For illustration purposes, Tables 12 and 13 set forth what we
stated the unadjusted federal per diem rates would be for each of the
case-mix adjusted components if we were to apply the proposed PDPM to
the FY 2019 base rates given in Tables 4 and 5. These were derived by
dividing the FY 2019 SNF PPS base rates according to the percentages
described above. Tables 12 and 13 also show what the unadjusted federal
per diem rates for the non-case-mix component would be, which are not
affected by the change in case-mix methodology from RUG-IV to PDPM. We
used these unadjusted federal per diem rates in calculating the impact
analysis discussed in section V.J. of the proposed rule.
[[Page 39193]]
Table 12--FY 2019 PDPM Unadjusted Federal Rate per Diem--Urban \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component Nursing NTA PT OT SLP Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $103.46 $78.05 $59.33 $55.23 $22.15 $92.63
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The rates shown in Tables 12 and 13 illustrate what the adjusted federal per diem rates would be for each of the case-mix adjusted components if we
were to apply the proposed PDPM to the proposed FY 2019 base rates given in Tables 4 and 5.
Table 13--FY 2019 PDPM Unadjusted Federal Rate per Diem--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component Nursing NTA PT OT SLP Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $98.83 $74.56 $67.63 $62.11 $27.90 $94.34
--------------------------------------------------------------------------------------------------------------------------------------------------------
We invited comments on the proposed data sources and proposed
methodology for calculating the unadjusted federal per diem rates that
would be used in conjunction with the proposed PDPM effective October
1, 2019.
Commenters submitted the following comments related to the proposed
rule's discussion of the Methodology Used for the Calculation of
Federal Base Payment Rate Components. A discussion of these comments,
along with our responses, appears below.
Comment: Some commenters supported the proposed changes to the SNF
PPS base rates. One commenter specifically highlighted their support
for including an NTA component. Some commenters sought clarification
regarding how CMS intends to distribute system resources currently
associated with the ``therapy non-case-mix'' base rate. Specifically,
they stated that the FY 2019 SNF proposed rule and the SNF PDPM
technical report that accompanied the proposed rule appear to be
inconsistent in describing how resources associated with this payment
component will be distributed under the new payment model. Commenters
note that the proposed rule stated that resources associated with the
``therapy non-case-mix'' base rate will be redistributed among the
three PDPM case-mix therapy components, while the SNF PDPM technical
report states that the ``therapy non-case-mix'' payment component is
dropped from the payment model under PDPM.
Response: We appreciate the support for our proposed changes. As
stated in the proposed rule, we believe it is appropriate to eliminate
the non-case-mix therapy base rate because facilities will be
compensated for residents who receive nominal amounts of therapy (for
example, therapy evaluations) through the three PDPM base rates
corresponding to the three disciplines of therapy provided in the SNF
setting (PT, OT, and SLP) under the new payment model. In other words,
whereas under the existing RUG-IV reimbursement model, facilities
receive a non-case-mix therapy payment for residents who receive
nominal amounts of therapy, under PDPM facilities would receive payment
for these residents through the PT, OT, and SLP payment components.
Additionally, in setting component base rates under PDPM, we sought
to replicate the methodology used to estimate the SNF PPS original base
rates in 1998 as closely as possible. This is consistent with the
requirements of section 1888(e)(4) of the Act, which requires that SNF
PPS per diem federal payment rates be based on FY 1995 costs reports.
Therefore, to ensure that the PDPM base rates resembled as closely as
possible what they would have been had these components been
established in 1998, we used FY 1995 cost reports to determine the
share of therapy costs accounted for by PT, OT, and SLP. As described
in the proposed rule (83 FR 21038 through 21039) and in section 3.10 of
the SNF PDPM technical report, we then used the percentage of costs
associated with each of these disciplines to calculate the
corresponding base rates for the PT, OT, and SLP components under PDPM.
Finally, as further discussed in section 3.11 of the SNF PDPM
technical report, we adjusted CMIs for each of the five case-mix-
adjusted components of PDPM to ensure budget neutrality between RUG-IV
and PDPM. In doing so, we applied a multiplier to CMIs for all five
case-mix-adjusted PDPM payment components so that total estimated
payments under PDPM are budget neutral relative to RUG-IV. This
procedure effectively distributes resources that are currently
associated with the ``therapy non-case-mix'' component of RUG-IV across
all five case-mix components of PDPM. We acknowledge that the proposed
rule inadvertently stated that the resources associated with the
therapy non-case mix component were distributed across only the three
PDPM case-mix therapy components. Thus, we are clarifying that, while
we did eliminate the therapy non-case mix component from the model, we
redistributed resources associated with this component across the five
PDPM case-mix components as described in section 3.11 of the PDPM
technical report.
Comment: Many commenters expressed concern regarding the base rate
for the SLP component, specifically that it is much lower than that of
the other therapy base rates. Commenters suggested that this may be
taken to devalue SLP services and that low reimbursement will lead to a
decrease in the utilization of SLP services. Some commenters further
suggested that such low reimbursement rates could lead to layoffs among
SLPs and believe that PDPM should pay equally for all three therapy
disciplines.
Response: We appreciate the concerns raised by these commenters
regarding the potential impact on SLP services resulting from the
payment policies in relation to SLP services discussed in the proposed
rule. With regard to the comment about the SLP component base rate, as
described above, we utilized the proportion of the current therapy base
rate corresponding to each therapy discipline as the basis for
allocating the therapy base rate as the basis for allocating the
therapy base rate among each of the individual components. As SLP
services represented approximately 17 percent, on average, of overall
therapy costs, we believed it was appropriate to allocate this
percentage as the base rate for the SLP component. If we were to make
all three components equal, as one commenter had suggested, then this
would overinflate SLP payment in relation to SLP costs. We would note,
however, that while the base rate for the SLP component is lower than
the other therapy component base rates, the case-mix weights for this
component, as described in section V.B.3.c. of this final rule, are far
greater for the SLP component than for either of the PT or OT
components. This reflects that when SLP services are
[[Page 39194]]
predicted to be necessary, there is adequate reimbursement for these
services. Therefore, we expect that utilization of and access to SLP
services should not be adversely affected merely because the base rate
is lower for this component.
Accordingly, after considering the comments received, for the
reasons specified in the FY 2019 SNF PPS proposed rule and in this
final rule, we are finalizing, effective October 1, 2019, our proposals
related to the calculation of the federal base payment rate components,
as described in this section, with the following clarification. As
discussed above, we are clarifying that, while we did eliminate the
therapy non-case mix component from the model, we redistributed
resources associated with this component across the five PDPM case-mix
components as described in the PDPM technical report.
4. Updates and Wage Adjustments of Revised Federal Base Payment Rate
Components
In section III.B. of the proposed rule, we described the process
used to update the federal per diem rates each year. Additionally, as
discussed in section III.B.4 of the proposed rule, SNF PPS rates are
adjusted for geographic differences in wages using the most recent
hospital wage index data. Under PDPM, we proposed to continue to update
the federal base payment rates and adjust for geographic differences in
wages following the current methodology used for such updates and wage
index adjustments under the SNF PPS (83 FR 21040). Specifically, we
proposed to continue the practice of using the SNF market basket,
adjusted as described in section III.B. of the proposed rule to update
the federal base payment rates and to adjust for geographic differences
in wages as described in section III.B.4. of the proposed rule.
We received comments on the proposed methodology for updating the
federal base payment rates and adjusting the per diem rates for
geographic differences in wages under the PDPM. Those comments, and our
responses, appear below.
Comment: Most commenters agreed with using the standard rate update
policy and the existing wage index policy as the basis for updating the
payment rates and adjusting the rates for geographic variation. One
commenter stated that the lack of separate labor-share adjustment for
each component may lead to provision of fewer services as each
component would not be appropriately wage adjusted. This commenter
stated that because CMS has already calculated payment amounts for each
component and because cost reports contain all the information
necessary to determine the labor share for each component, it would be
appropriate for CMS to make separate wage adjustment calculations for
each PDPM component.
Response: We appreciate the support for this proposal. With regard
to the comment that CMS should separately wage adjust each PDPM
component, the labor-related share reflects the facility Medicare-
allowable costs (including all of the PDPM components) that are labor-
intensive and vary with the local labor market. Specifically, it is
equal to the following cost categories from the 2014-based SNF market
basket: 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. The
majority of these labor-related costs are derived using the MCR data;
however, a notable portion is based on other government data sources. A
complete description of the methodology used to derive the 2014-based
SNF market basket is available in the FY 2018 final rule (82 FR 36548
through 36566). Given that these categories cut across PDPM components,
to wage adjust for each component separately would require a
substantial increase in the specificity of reporting these MCR data
items, as well as developing a methodology for accurately assigning
these costs to each component. We believe that the additional reporting
burden associated with implementing this suggestion would not justify
the increased specificity of applying the wage index adjustment to each
component under PDPM.
Accordingly, after considering the comments received, for the
reasons specified in the FY 2019 SNF PPS proposed rule (83 FR 21040)
and discussed in this section, we are finalizing our proposal, without
modification, for updating the federal base payment rates and for
adjusting the per diem rates for geographic differences in wages under
the PDPM, effective October 1, 2019.
C. Design and Methodology for Case-Mix Adjustment of Federal Rates
1. Background on PDPM
Section 1888(e)(4)(G)(i) of the Act requires that the Secretary
provide an appropriate adjustment to account for case mix and that such
an adjustment shall be based on a resident classification system that
accounts for the relative resource utilization of different patient
types. The current case-mix classification system uses a combination of
resident characteristics and service intensity metrics (for example,
therapy minutes) to assign residents to one of 66 RUGs, each of which
corresponds to a therapy CMI and a nursing CMI, which are indicative of
the relative cost to a SNF of treating residents within that
classification category. However, as noted in section V.A. of the
proposed rule, incorporating service-based metrics into the payment
system can incentivize the provision of services based on a facility's
financial considerations rather than resident needs. To better ensure
that resident care decisions appropriately reflect each resident's
actual care needs, we stated in the proposed rule (83 FR 21040) that we
believe it is important to remove, to the extent possible, service-
based metrics from the SNF PPS and derive payment from verifiable
resident characteristics that are patient, and not facility, centered.
To that end, as we stated in the proposed rule, the proposed PDPM was
developed to be a payment model which derives payment classifications
almost exclusively from verifiable resident characteristics.
Additionally, the current RUG-IV case-mix classification system
reduces the varied needs and characteristics of a resident into a
single RUG-IV group that is used for payment. As of FY 2017, of the 66
possible RUG classifications, over 90 percent of covered SNF PPS days
are billed using one of the 23 Rehabilitation RUGs, with over 60
percent of covered SNF PPS days billed using one of the three Ultra-
High Rehabilitation RUGs. As we stated in the proposed rule (83 FR
21040), the implication of this pattern is that more than half of the
days billed under the SNF PPS effectively utilize only a resident's
therapy minutes and Activities of Daily Living (ADL) score to determine
the appropriate payment for all aspects of a resident's care. Both of
these metrics, more notably a resident's therapy minutes, may not
derive so much from the resident's own characteristics, but rather,
from the type and amount of care the SNF decides to provide to the
resident. We stated that even assuming that the facility takes the
resident's needs and unique characteristics into account in making
these service decisions, the focus of payment remains centered, to a
potentially great extent, on the facility's own decision making and not
on the resident's needs.
We explained in the proposed rule (83 FR 21041) that while the RUG-
IV model
[[Page 39195]]
utilizes a host of service-based metrics (type and amount of care the
SNF decides to provide) to classify the resident into a single RUG-IV
group, the proposed PDPM would separately identify and adjust for the
varied needs and characteristics of a resident's care and combine this
information together to determine payment. We stated we believe the
proposed PDPM would improve the SNF PPS by basing payments
predominantly on clinical characteristics rather than service
provision, thereby enhancing payment accuracy and strengthening
incentives for appropriate care. For these reasons, we proposed that,
effective October 1, 2019, SNF residents would be classified using the
PDPM, as further discussed below. As discussed in the proposed rule and
in section V.I. of this final rule, we proposed to implement the PDPM
on October 1, 2019 to allow all stakeholders adequate time for systems
updates and staff training needed to assure smooth implementation.
2. Data Sources Utilized for Developing PDPM
To understand, research, and analyze the costs of providing Part A
services to SNF residents, we utilized a variety of data sources in the
course of research. In the proposed rule (83 FR 21041) and in this
section, we discuss these sources and how they were used in the SNF PMR
in developing the proposed PDPM. A more thorough discussion of the data
sources used during the SNF PMR is available in section 3.1. of the SNF
PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
a. Medicare Enrollment Data
Beneficiary enrollment and demographic information was extracted
from the CMS enrollment database (EDB) and Common Medicare Environment
(CME). Beneficiaries' Medicare enrollment was used to apply
restrictions to create a study population for analysis. For example,
beneficiaries were required to have continuous Medicare Part A
enrollment during a SNF stay. Demographic characteristics (for example,
age) were incorporated as being predictive of resource use.
Furthermore, enrollment and demographic information from these data
sources were used to assess the impact of the proposed PDPM on
subpopulations of interest. In particular, the EDB and CME include
indicators for potentially vulnerable subpopulations, such as those
dually-enrolled in Medicaid and Medicare.
b. Medicare Claims Data
Medicare Parts A and B claims from the CMS Common Working File
(CWF) were used to conduct claims analyses as part of the SNF PMR. SNF
claims (CMS-1450 form, OMB control number 0938-0997), including type of
bill (TOB) 21x (SNF Inpatient Part A) and 18x (hospital swing bed),
were used to identify Medicare Part A stays paid under the SNF PPS.
Part A stays were constructed by linking claims that share the same
beneficiary, facility CMS Certification Number (CCN), and admission
date. Stays created from SNF claims were linked to other claims data
and assessment data via beneficiary identifiers.
Acute care hospital stays that qualified the beneficiary for the
SNF benefit were identified using Medicare inpatient hospital claims.
The dates of the qualifying hospital stay listed in the span codes of
the SNF claim were used to connect inpatient claims with those dates
listed as the admission and discharge dates. Although there are
exceptions, the claims from the preceding inpatient hospitalization
commonly contain clinical and service information relevant to the care
administered during a SNF stay. Components of this information were
used in the regression models predicting therapy and NTA costs and to
better understand patterns of post-acute care (PAC) referrals for
patients requiring SNF services. Additionally, the most recent hospital
stay was matched to the SNF stay, which often (though not always) was
the same as the preceding inpatient hospitalization, and used in the
regression models.
Other Medicare claims, including outpatient hospital, physician,
home health, hospice, durable medical equipment, and drug
prescriptions, were incorporated, as necessary, into the analysis in
one of three ways: (1) To verify information found on assessments or on
SNF or inpatient claims; (2) to provide additional resident
characteristics to test outside of those found in assessment and SNF
and inpatient claims data; and (3) to stratify modeling results to
identify effects of the system on beneficiary subpopulations. These
claims were linked to SNF claims using beneficiary identifiers.
c. Assessment Data
Minimum Data Set (MDS) assessments were the primary source of
resident characteristic information used to explain resource
utilization in the SNF setting. The data repositories include MDS
assessments submitted by SNFs and swing-bed hospitals. MDS version 2.0
assessments were submitted until October 2010, at which point MDS
version 3.0 assessments began. MDS data were extracted from the Quality
Improvement Evaluation System (QIES). MDS assessments were then matched
to SNF claims data using the beneficiary identifier, assessment
indicator, assessment date, and Resource Utilization Group (RUG).
d. Facility Data
Facility characteristics, while not considered as explanatory
variables when modeling service use, were used for impact analyses. By
incorporating this facility-level information, we could identify any
disproportionate effects of the proposed case-mix classification system
on different types of facilities.
Facility-level characteristics were taken from the Certification
and Survey Provider Enhanced Reports (CASPER). From CASPER, we draw
facility-level characteristics such as ownership, location, facility
size, and facility type. CASPER data were supplemented with information
from publicly available data sources. The principal data sources that
are publicly available include the Medicare Cost Reports (Form 2540-10,
2540-96, and 2540-92) extracted from the Healthcare Cost Report
Information System (HCRIS) files, Provider-Specific Files (PSF),
Provider of Service files (POS), and Nursing Home Compare (NHC). These
data sources have information on facility costs, payment, and
characteristics that directly affect PPS calculations.
We received comments from stakeholders regarding the data used to
develop PDPM, though we address these comments later in this section in
relation to the specific PDPM component to which the comments were
addressed.
3. Resident Classification Under PDPM
a. Background
As noted above, section 1888(e)(4)(G)(i) of the Act requires that
the Secretary provide for an appropriate adjustment to account for case
mix and that such an adjustment shall be based on a resident
classification system that accounts for the relative resource
utilization of different patient types. As we stated in the proposed
rule (83 FR 21040), the proposed PDPM was developed to be a payment
model which derives almost exclusively from resident characteristics.
We stated that the proposed PDPM would separately identify and adjust
five different case-mix components for the varied needs and
characteristics of a resident's care
[[Page 39196]]
and then combine these together with the non-case-mix component to form
the full SNF PPS per diem rate for that resident.
We stated in the proposed rule (83 FR 21041 through 21042) that, as
with any case-mix classification system based on resident
characteristics, the proposed predictors that would be part of case-mix
classification under PDPM are those which our analysis identified as
associated with variation in costs for the given case-mix component. We
explained that the proposed federal per diem rates discussed above
serve as ``base rates'' specifically because they set the basic average
cost of treating a typical SNF resident. Based on the presence of
certain needs or characteristics, caring for certain residents may cost
more or less than that average cost. We explained that a case-mix
system identifies certain aspects of a resident or of a resident's care
which, when present, lead to average costs for that group being higher
or lower than the average cost of treating a typical SNF resident. For
example, if we found that therapy costs were the same for two residents
regardless of having a particular condition, then that condition will
not be relevant in predicting increases in therapy costs. If, however,
we found that, holding all else constant, the presence of a given
condition was correlated with an increase in therapy costs for
residents with that condition over those without that condition, then
this could mean that this condition is indicative, or predictive, of
increased costs relative to the average cost of treating SNF residents
generally.
In the subsections that follow, we describe each of the five case-
mix adjusted components under the proposed PDPM and the basis for each
of the predictors that we stated would be used within the PDPM to
classify residents for payment purposes.
b. Physical and Occupational Therapy Case-Mix Classification
As we stated in the proposed rule (83 FR 21042), a fundamental
aspect of the proposed PDPM is to use resident characteristics to
predict the costs of furnishing similarly situated residents with SNF
care. Costs derived from the charges on claims and cost-to-charge
ratios (CCRs) on facility cost reports were used as the measure of
resource use to develop the proposed PDPM. We explained that costs
better reflect differences in the relative resource use of residents as
opposed to charges, which partly reflect decisions made by providers
about how much to charge payers for certain services. We further
explained that costs derived from charges are reflective of therapy
utilization as they are correlated to the therapy minutes recorded for
each therapy discipline. Under the current RUG-IV case-mix model,
therapy minutes for all three therapy disciplines (PT, OT, SLP) are
added together to determine the appropriate case-mix classification for
the resident. However, as shown in section 3.3.1. of the SNF PDPM
technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), and as explained
in the proposed rule, when we began to investigate resident
characteristics predictive of therapy costs for each therapy
discipline, we found that PT and OT costs per day are only weakly
correlated with SLP costs per day (correlation coefficient of 0.04).
The set of resident characteristics from the MDS that predicted PT and
OT utilization was different than the set of characteristics predicting
SLP utilization. Additionally, many predictors of high PT and OT costs
per day predicted lower SLP costs per day, and vice versa. For example,
we found that residents with cognitive impairments receive less
physical and occupational therapy but receive more speech-language
pathology. As a result of this analysis, as we explained in the
proposed rule, we found that basing case-mix classification on total
therapy costs per day obscured differences in the determinants of PT,
OT, and SLP utilization.
In contrast, we stated in the proposed rule (83 FR 21042) that the
correlation coefficient between PT and OT costs per day was high
(0.62). Additionally, regression analyses found that predictors of high
PT costs per day were also predictive of high OT costs per day. For
example, the analyses found that late-loss ADLs are strong predictors
of both PT and OT costs per day. We then used a range of resident
characteristics to predict PT and OT costs per day separately and we
found that the coefficients in both models followed similar patterns.
Finally, we noted that resident characteristics were found to be better
predictors of the sum of PT and OT costs per day than for either PT or
OT costs separately. These analyses used a variety of items from the
MDS as independent variables and used PT, OT, and SLP costs per day as
dependent variables. In the proposed rule, we referred readers to
section 3.3.1. of the SNF PMR technical report that accompanied the
ANPRM available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html for more information on
these analyses.
Given the results of this analytic work, as well as feedback from
multiple stakeholders, we proposed three separate case-mix adjusted
components, one corresponding to each therapy discipline: PT, OT, and
SLP. In the original RCS-I model presented in the ANPRM, we stated that
we were considering addressing PT and OT services through a single
component, given the strong correlation between PT and OT costs and our
finding that very similar predictors explained variation in the
utilization of both therapy disciplines. However, as we explained in
the proposed rule (83 FR 21042), commenters on the ANPRM stated that
having a single combined PT and OT component could encourage providers
to inappropriately substitute PT for OT and vice versa. We stated that
this belief comports with feedback received from professional
organizations and other stakeholders during technical expert panels
(TEPs). The TEP commenters stated that PT and OT services should be
addressed via separate components given the different aims of the two
therapy disciplines and differences in the clinical characteristics of
the resident subpopulations for which PT or OT services are warranted.
For example, clinicians consulted during development of PDPM advised
that personal hygiene, dressing, and upper extremity motion may bear a
closer clinical relationship to OT utilization, while lower extremity
motion may be more closely related to PT utilization. We stated in the
proposed rule that while we do not believe that RCS-I, which included
two separate components for PT/OT and SLP, contained stronger
incentives for substitution across therapy disciplines compared to RUG-
IV, which reimburses all three therapy disciplines through a single
therapy component, we concur with the TEP commenters that PT and OT
have different aims and that there are clinically relevant differences
between residents who could benefit from PT, residents who could
benefit from OT, and residents who could benefit from both disciplines.
For the foregoing reasons, we decided to separate the combined PT/OT
component presented in the ANPRM into two separate case-mix adjusted
components in the proposed PDPM. As we stated in the proposed rule,
because of the strong correlation between the dependent variables used
for both components and the similarity in predictors, we decided to
maintain the same case-mix classification model for
[[Page 39197]]
both components. We stated that in practice, this means that the same
resident characteristics will determine a resident's classification for
PT and OT payment. However, we stated that each resident would be
assigned separate case-mix groups for PT and OT payment, which
correspond to separate case-mix indexes and payment rates. We explained
that we believe providing separate case-mix-adjusted payments for PT
and OT may allay concerns about inappropriate substitution across
disciplines and encourage provision of these services according to
clinical need. We further noted that as clinical practices evolve
independently of incentives created by the current RUG-IV payment
model, we would re-evaluate the different sets of resident
characteristics that are predictive of PT and OT utilization after the
PDPM is implemented. We stated that if based on this re-evaluation we
determine that different sets of characteristics are predictive of PT
and OT resource utilization, we could consider revising the payment
model to better reflect clinical differences between residents who
receive PT services and those who receive OT services.
After delineating the three separate case-mix adjusted therapy
components, we continued our analysis, as described in the proposed
rule (83 FR 21043), by identifying resident characteristics that were
best predictive of PT and OT costs per day. To accomplish this, we
conducted cost regressions with a host of variables from the MDS
assessment, the prior inpatient claims, and the SNF claims that were
believed to be potentially predictive of relative increases in PT and
OT costs. As we stated in the proposed rule, the variables were
selected with the goal of being as inclusive as possible with respect
to characteristics related to the SNF stay and the prior inpatient
stay. The selection also incorporated clinical input. We explained that
these initial costs regressions were exploratory and meant to identify
a broad set of resident characteristics that are predictive of PT and
OT resource utilization. The results were used to inform which
variables should be investigated further and ultimately included in the
payment system. A table of all of the variables considered as part of
this analysis appears in the appendix of the SNF PMR technical report
that accompanied the ANPRM available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. As
explained in the proposed rule, based on our regression analyses, we
found that the three most relevant categories of predictors of PT and
OT costs per day were the clinical reasons for the SNF stay, the
resident's functional status, and the presence of a cognitive
impairment. More information on this analysis can be found in section
3.4.1. of the SNF PDPM technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Under the RUG-IV case-mix model, residents are first categorized
based on being a rehabilitation resident or a non-rehabilitation
resident, then categorized further based on additional aspects of the
resident's care. As explained in the proposed rule (83 FR 21043), under
the proposed PDPM, for the purposes of determining the resident's PT
and OT groups and, as will be discussed below, the resident's SLP
group, the resident would first be categorized based on the clinical
reasons for the resident's SNF stay. We stated that empirical analyses
demonstrated that the clinical basis for the resident's stay (that is,
the primary reason the resident is in the SNF) is a strong predictor of
therapy costs. For example, we explained that all of the clinical
categories (described below) developed to characterize the primary
reason for a SNF stay (except the clinical category used as the
reference group) were found to be statistically significant predictors
of therapy costs per day. More detail on these analyses can be found in
section 3.4.1. of the SNF PMR technical report that accompanied the
ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). In consultation with
stakeholders (industry representatives, beneficiary representatives,
clinicians, and payment policy experts) at multiple technical expert
panels (TEPs), we created a set of ten inpatient clinical categories
that we believe capture the range of general resident types which may
be found in a SNF. These proposed clinical categories were provided in
Table 14 of the proposed rule (83 FR 21043) and are reflected in Table
14.
Table 14--PDPM Clinical Categories
------------------------------------------------------------------------
-------------------------------------------------------------------------
Major Joint Replacement or Spinal Surgery.
Non-Surgical Orthopedic/Musculoskeletal.
Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery).
Acute Infections.
Medical Management.
Cancer.
Pulmonary.
Cardiovascular and Coagulations.
Acute Neurologic.
Non-Orthopedic Surgery.
------------------------------------------------------------------------
We proposed to categorize a resident into a PDPM clinical category
using item I8000 on the MDS 3.0. We stated in the proposed rule (83 FR
21043) that providers would use the first line in item I8000 to report
the ICD-10-CM code that represents the primary reason for the
resident's Part A SNF stay. We further stated that this code would be
mapped to one of the ten clinical categories provided in Table 14 of
the proposed rule (set forth at Table 14 of this final rule). The
mapping between ICD-10-CM codes and the ten clinical categories is
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. As explained in the proposed rule,
the mapping indicates that in some cases, a single ICD-10-CM code maps
to more than one clinical category because the care plan for a resident
with this diagnosis may differ depending on the inpatient procedure
history. In these cases, we explained that a resident may be
categorized into a surgical clinical category if the resident received
a surgical procedure during the immediately preceding inpatient stay
that relates to the primary reason for the Part A SNF stay and
typically requires extensive post-surgical rehabilitation or nursing
care. If the resident did not receive a related surgical procedure
during the prior inpatient stay that typically requires extensive post-
surgical rehabilitation or nursing care, the resident may be
categorized into a non-surgical clinical category. For example, we
explained that certain wedge compression fractures that were treated
with an invasive surgical procedure such as a fusion during the prior
inpatient stay would be categorized as Major Joint Replacement or
Spinal Surgery, but if these cases were not treated with a surgical
procedure they would be categorized as Non-Surgical Orthopedic/
Musculoskeletal. For residents who received a related surgical
procedure during the prior inpatient stay, we stated that a provider
would need to indicate the type of surgical procedure performed for the
resident to be appropriately classified under PDPM. Thus, in these
cases we proposed to require providers to record the type of inpatient
surgical procedure performed during the prior inpatient stay so that
residents can be appropriately classified into a PDPM clinical category
for purposes of PT, OT, and SLP classification. We proposed that
providers record the type of surgical procedure performed during the
prior inpatient stay by coding an ICD-10-PCS code that corresponds to
the inpatient
[[Page 39198]]
surgical procedure in the second line of item I8000 in cases where
inpatient surgical information is required to appropriately categorize
a resident under PDPM. We noted that if we were to use the second line
of item I8000 to record inpatient surgical information, we would
provide a list of ICD-10-PCS codes that map to the surgical clinical
categories. We stated that we believe this approach would allow for
patients to be appropriately classified under the PDPM because it would
provide sufficient information on the primary reason for SNF care and
inpatient surgical procedures to assign a resident to the appropriate
surgical or non-surgical clinical category. We invited comments on this
proposal. In addition, we solicited comments on alternative methods for
recording the type of inpatient surgical procedure to appropriately
classify a patient into a clinical category. We explained that the
clinical category into which the resident is classified would be used
to classify the resident into a PT and OT category as discussed below,
as well as an SLP category, as explained in section V.D.3.c. of the
proposed rule.
As discussed above, we proposed to categorize a resident into a
PDPM clinical category for purposes of PT, OT, and SLP classification
using the ICD-10-CM code in the first line of item I8000, and if
applicable, the ICD-10 PCS code in the second line of item I8000. As an
alternative to using item I8000 to classify a resident into a clinical
category, we stated in the proposed rule (83 FR 21044) that we were
considering using a resident's primary diagnosis as reflected in MDS
item I0020 as the basis for assigning the resident to a clinical
category, and were evaluating the categories provided in item I0020 to
determine if there is sufficient overlap between the categories used in
item I0020 and the proposed PDPM clinical categories provided in Table
14 that this item could serve as the basis for a resident's initial
classification into a clinical category under PDPM. We stated that the
MDS item I0020 would require facilities to select a primary diagnosis
from a pre-populated list of primary diagnoses representing the most
common types of beneficiaries treated in a SNF, while item I8000, if
used to assign residents to clinical categories, would require
facilities to code a specific ICD-10-CM code that corresponds to the
primary reason for the resident's Part A SNF stay. As indicated above,
we also proposed that providers would code a specific ICD-10-PCS code
in the second line of item I8000 when surgical information from the
prior inpatient stay is necessary to assign a resident to a clinical
category. We explained that if we were to use item I0020 to categorize
residents under PDPM, we would not require providers to record
additional information on inpatient surgical procedures as we expect
the primary diagnosis information provided through item I0020 to be
adequate to appropriately assign a resident to a clinical category.
We invited comments on our proposal to categorize a resident into a
PDPM clinical category using the ICD-10-CM code recorded in the first
line of item I8000 on the MDS 3.0, and the ICD-10-PCS code recorded on
the second line of item I8000 on the MDS 3.0. In addition, we solicited
comments on the alternative of using item I0020 on the MDS 3.0, as
discussed above, as the basis for resident classification into one of
the ten clinical categories in Table 14.
Commenters submitted the following comments related to the proposed
rule's discussion of the clinical category assignments under PDPM. A
discussion of these comments, along with our responses, appears below.
Comment: Several commenters expressed concern about ICD-10 coding
requirements under PDPM. Some commenters are concerned that these
requirements, especially ICD-10-PCS coding requirements, would create
compliance risks because of SNFs' limited expertise in using ICD codes.
A few commenters request that CMS offer ICD-10 coding training for
clinicians, billers, coders, and other SNF personnel, prior and
subsequent to PDPM implementation. Another commenter requested that CMS
provide case studies and other resources as part of its educational
strategy with respect to ICD-10 coding in the SNF setting. This
commenter also recommended that CMS develop explicit instructions for
how providers should record diagnosis and procedure information in MDS
item I8000 for resident classification purposes under PDPM. One
commenter recommends requiring the employment of credentialed medical
record staff to ensure accurate coding. One commenter seeks
clarification about potential consequences of ICD-10 coding errors
during RAC audits. Another commenter questioned if the proposed ICD-10
coding is considered a transaction under the HIPPA transaction coding
requirement.
Response: We appreciate the commenters' concerns regarding ICD-10
coding, but do not concur with stakeholder claims that SNF providers
are unfamiliar with ICD-10 coding practices. While ICD-10 codes are
not, in most instances, a factor in determining payment under the
current SNF Part A benefit, ICD-10 has been an aspect of Medicare since
FY 2016. Moreover, ICD-10 provides the most accurate coding and
diagnosis information on patients, which can only serve to improve
provider understanding of their patient's condition and resultant care
plan. Finally, we believe that given the type of homogeneity of care
currently provided by SNF providers (as evidenced by the existing case-
mix distribution that has over 90 percent of patient billed days in one
of 23 RUGs that utilize therapy service utilization as the primary
determinant), moving to a system that utilizes the primary patient
diagnosis as the key determinant of payment will help to ensure that
the patient's unique condition and goals is the primary driver of care
planning and care delivery and case mix classification, rather than the
patient's ability to tolerate a high volume of therapy services.
With regard to the comment that CMS offer ICD-10 coding training
for clinicians and other personnel, we do not believe it is the role of
CMS to offer this type of professional training, as it is the
responsibility of the provider to ensure that their staff is properly
trained to perform these types of more general tasks that are not
specific to a given payer or requirement. With regard to the comment
that CMS provide case studies and other resources as part of an
educational strategy, we appreciate this comment and will take it into
consideration as we develop the educational materials for PDPM. In
terms of the explicit instructions for how providers record diagnosis
and procedure information, we do intend to provide such information in
the MDS RAI manual.
With regard to the comment that we should require that providers
employ credentialed medical record staff to ensure accurate coding, we
agree that the emphasis on ICD-10 could cause changes in staffing at
some providers. However, we do not believe it would be appropriate for
CMS, in this instance, to specifically identify the type of staff that
providers must employ to ensure accurate coding, as this is a decision
best left to the provider. With regard to the potential consequences of
ICD-10 coding errors on RAC audits, as under the current payment
system, the information reported to CMS must be accurate. Inaccuracies
in the data reported to CMS, or a failure to document the basis for
such data, will necessitate the same types of administrative actions as
occur today.
[[Page 39199]]
Finally, with regard to the question of whether the reporting of
ICD-10 coding information constitutes a HIPAA transaction, we note that
while some HIPAA Administrative Simplification requirements at 45 CFR
part 162 require the use of ICD-10 codes, reporting ICD-10 codes does
not in and of itself constitute a HIPAA transaction.
Comment: One commenter stated that CMS's proposal to use the first
line of I8000 to capture the primary reason for SNF stay, the second
line to capture procedure code, and the remaining spaces to capture
comorbidities is overly complex. The commenter expressed concern that
coding a procedure code in the second line of I8000 would not follow
current RAI coding instructions. Some commenters support using MDS item
I0020 to record the primary diagnosis, stating this will reduce
provider burden. Other commenters opposed using item I0020 for this
purpose because this item is designed for the Quality Reporting Program
and does not align well with the PDPM clinical categories. One
commenter stated that coding primary reason for SNF care in both item
I8000 and item I0020 for different purposes will be confusing and will
lead to errors. Another commenter sought clarity on whether providers
would still be required to code ICD-10 diagnosis or procedure codes in
item I8000 if item I0020 is used for resident classification. This
commenter also questioned what providers should do if a resident does
not fall into one of the I0020 categories. A few commenters suggest
instead adding checkboxes in section I of the MDS to indicate the ten
PDPM clinical categories. One commenter recommended the use of MDS item
J2000 for procedure information, because SNFs have minimal experience
with ICD-10-PCS codes and it can be difficult to obtain precise
information on procedures performed during the preceding inpatient
stay.
Response: We appreciate these comments regarding the complexity of
the proposed methodology for collecting diagnosis and procedure
information and appreciate the suggestions for ways to improve coding
without compromising the overall integrity of the information reported.
We agree with commenters who stated that the I0020 categories are not
currently aligned with the clinical categories used under PDPM,
specifically that the categories used under I0020 do not match the
clinical categories that we use under PDPM, which means that using
I0020 at this time would not be appropriate. We will continue to work
to determine if refinements may be made in that item in the future
which could allow for a transition to this item. With regard to
comments concerning the potential for confusion associated with coding
the patient's primary diagnosis in both I8000 and I0020 for different
purposes, we believe this both affords the potential to confirm the
primary diagnosis coding on the MDS (to the extent that we can identify
areas of alignment between the two items) and helps us to refine the
categories for a potential future transition to item I0020 under PDPM.
With regard to the question of what providers should do if a patient
does not fall into one of the I0020 categories, we would recommend that
the provider refer to the I0020 coding instructions in the MDS manual
for guidance on this issue.
With regard to suggestions of using a checkbox for recording
diagnosis information, we believe that the use of such checkboxes for
recording diagnosis information may not provide sufficient granularity
for CMS to monitor properly the effects of PDPM implementation or to
accurately classify patients for payment purposes, nor provide enough
information for the SNF in terms of care planning. Given the use of
ICD-10 diagnosis coding in other Medicare payment systems and given
efforts to align payment across multiple post-acute care payment
systems, we believe that using the actual diagnosis code, rather than a
checkbox for a category, will provide greater consistency between
payment systems and would provide a smoother transition to the extent
such payment systems are aligned further in the future.
With regard to the comment that CMS consider using item J2000 to
report procedural information, we believe that while the actual ICD-10
code is important in the case of diagnosis coding, we agree with the
commenter that the procedural information may be coded at a more
aggregated level, as this information is only being used to augment the
patient's classification rather than as the primary basis for the
classification. However, we believe that item J2000 (which requires
providers to report if the patient experienced a surgical procedure in
the preceding 100 days) would not adequately link to the care being
delivered in the SNF, potentially close to 100 days after the surgical
event. To address this, consistent with this commenter's suggestion,
and in response to other concerns about the complexity of the proposed
methodology, we believe that it would be appropriate and sufficient to
develop subitems for item J2000 that would allow providers to report,
through a checkbox-style mechanism, if a surgical procedure occurred
during the preceding hospital stay (as opposed to the previous 100
days, as is used for J2000), and then provide a series of procedural
categories, related to the PDPM clinical categories, that providers
could select using a checkbox style mechanism, that would allow the
provider to report on the relevant procedural information (rather than
recording the specific ICD-10-PCS code). We believe this is a
substantial improvement to the procedure we proposed for recording
surgical procedure information, as it reduces the burden and complexity
of provider reporting on procedural information while maintaining
payment accuracy and integrity. Moreover, similar to how PDPM utilizes
the procedural information to augment the patient's clinical category
classification, we believe that using a checkbox mechanism also
augments care-planning by helping ensure that the procedural history
information from the hospital is properly taken into account in
determining the resident's care needs and care plan. Therefore, we are
developing sub-items for item J2000, which will allow providers to
report the patient's procedural information in a way that uses a
checkbox mechanism, and this procedural information will be used in
concert with the patient's diagnosis information, as was discussed
above and in the FY 2019 SNF PPS proposed rule, to classify the patient
into a clinical category. We will provide both the subitems under item
J2000, and the instructions regarding their use, for this purpose in
the RAI manual.
Comment: One commenter was opposed to PDPM's focus on one primary
diagnosis, as SNF residents can be admitted with complex medical
conditions and multiple diagnoses. The commenter recommends that SNFs
should select all resident conditions and allow the software to select
the highest case-mix index achieved. In a similar vein, another
commenter requested that CMS clarify which inpatient procedure SNFs
should select for purposes of resident classification and payment under
PDPM when the patient record includes multiple procedure codes.
Response: While we agree with the commenter that a SNF patient may
suffer from multiple conditions, we believe that one of these reasons
prompted transfer to the SNF. This reason would function as the
patient's primary diagnosis, as it represents the primary reason for
the patient being in the SNF. We would also note that primary
diagnosis, as a concept, is used throughout the Medicare program as the
basis for payment and, in each area in
[[Page 39200]]
which it is used, patients have the potential to present with multiple
conditions and multiple diagnoses. Therefore, we do not believe it
would be appropriate for providers simply to report all conditions and
be paid for the highest case-mix index, but rather that providers
should determine the primary reason for the patient's stay, as this
should also be the primary motivation behind the patient's SNF care.
With regard to the comment related to multiple inpatient surgical
procedures, we expect that the checkbox mechanism discussed above,
which would include more aggregated procedural groupings, should
address much of this possibility, as often times multiple procedures
may be done of the same type. In the case of different types of
procedures, providers should code or check-off all information
supportable by the patient's medical record.
Comment: One commenter stated that ICD-10 codes do not contain
adequate specificity to indicate whether a condition is active/stable
or active/non-stable. This information, according to the commenter, is
needed to identify relevant comorbidities. As a result, the commenter
states that SNFs may inappropriately use active/stable conditions to
achieve higher reimbursement although these conditions may not indicate
higher resource utilization.
Response: We do not agree with the commenter that the ICD-10 codes
do not contain this degree of specificity. Further, to the extent that
providers would code conditions solely for purposes of achieving higher
reimbursement, this type of behavior can be identified through medical
record reviews, which could prompt additional administrative action.
Comment: One commenter stated that chronic conditions may not be
coded consistently year over year. Specifically, a chronic condition
may be coded one year but not the following year for a long term care
resident moving in and out of post-acute stays or a post-acute-care
patient with more than one spell of illness. For example, the commenter
noted that care may have been provided to the patient but the provider
did not accurately capture it in reporting. The commenter further
stated that such coding inconsistencies may lead to unexpected payment
changes. The commenter recommended that CMS should clarify how chronic
conditions should be reported and handled by medical reviewers as PDPM
is implemented.
Response: We do not believe that any of the PDPM-related policies
should affect the reporting of chronic conditions. Care should be
properly documented, regardless of whether it is for a chronic or acute
condition. Failure to document and code such information accurately
could lead not only to payment errors, but also to patient care errors.
We encourage providers to ensure the accuracy and completeness of their
documentation.
Comment: Several commenters expressed concern about potential
logistical issues arising from the time lag in SNFs receiving clinical
information on admitted patients from the prior inpatient stay.
Specifically, they state that it is difficult for SNF providers to
obtain diagnosis and procedure information, as well as other clinical
information such as discharge summaries, from the facility where a
resident was treated during their prior inpatient stay. A commenter
recommended that CMS require hospitals to provide diagnostic and
procedural information within 48 hours of discharge to the receiving
facility. This commenter requested that CMS clarify which medical
records SNFs may rely upon to determine the principal reason for a SNF
stay or which inpatient procedures were performed. The commenter
questioned how SNFs should assess this information if they lack
adequate documentation. Additionally, commenters stated that ICD-10-CM
and ICD-10-PCS coding require a high level of clinical detail that may
be difficult to obtain without clinical information from the prior
inpatient stay.
Response: For case-mix classification under the PDPM, SNFs will not
be required to collect any information from the hospital where the
prior inpatient stay took place beyond that which is required under the
current RUG-IV system, except for the procedural information discussed
above. The information that SNFs already collect from hospitals should
already include sufficient information for the SNF to be able to
properly care plan and provide care based on the patient's condition.
In order to do this effectively, SNFs should already be receiving
documentation and records from the hospital that substantiate the need
for care and the type of care that is required for that patient. This
level of information, that is essential in developing an appropriate
care plan for the patient, should be sufficient for addressing the
payment requirements under PDPM. For proper classification and payment
under PDPM, facilities will only be required to record the primary
reason for SNF care at the time of SNF admission and record the
associated ICD-10-CM code and procedural information. As discussed in
Chapter 8 of the Medicare Benefit Policy Manual, a beneficiary in a
Medicare Part A SNF stay must require skilled nursing care for a
condition that was treated during the qualifying hospital stay, or for
a condition that arose while in the SNF for treatment of a condition
for which the beneficiary was previously treated in the hospital.
However, CMS recognizes that in many cases, the primary reason for SNF
care may not be the same as the primary reason for the prior inpatient
stay. For example, a beneficiary may be treated in a SNF for a
secondary condition that arose during the prior inpatient stay but that
is different from the condition that precipitated the acute inpatient
stay in the first place. PDPM requires facilities to code the diagnosis
that corresponds most closely to the primary reason for SNF care (in
this case, the secondary condition that arose during the hospital stay)
rather than the primary reason for the prior hospitalization.
Facilities currently must assess beneficiaries' health status and
reason for SNF care at admission in order to treat them appropriately
and formulate a patient-centered care plan. PDPM does not require a
level of data collection that exceeds the requirements of the existing
admission and care planning processes. Therefore, PDPM does not require
SNFs to obtain additional clinical information from the inpatient
setting, beyond the surgical procedure information discussed above.
Comment: One commenter recommended that CMS allow providers to
correct the diagnosis or procedure information recorded at admission
any time prior to discharge and to direct Medicare Administrative
Contractors, Recovery Audit Contractors, and other contractors to
assign low priority to reviewing ICD-10 codes in the medical review
process.
Response: We appreciate the commenter's concern and would note that
there are existing processes for modifying and correcting MDS
assessments, as described in Chapter 5 of the MDS RAI manual. With
regard to the comment on CMS directing contractor review activities, we
see no reason to assign low priority to any issues at this time.
Comment: One commenter requested additional information about codes
listed as ``Return to Provider'' in the PDPM Clinical Category Mapping.
Specifically, the commenter requested that CMS provide clarity on why
these codes are not accepted as valid primary diagnoses for the
purposes of resident classification. Additionally, the commenter
requests clarification on
[[Page 39201]]
what actions providers are required to take when a code is returned.
Response: As discussed above and in the proposed rule (83 FR
21043), PDPM would use ICD-10-CM diagnosis codes entered in the first
line of section I8000 on the MDS assessment to assign residents to
clinical categories for classification and payment purposes in three
PDPM payment components (PT, OT, and SLP). Codes listed in the PDPM
Clinical Category Mapping as ``Return to Provider'' are not deemed
appropriate to enter as the primary reason for SNF care. Such codes
either lack certainty and specificity required to properly categorize a
resident under PDPM or the underlying condition cannot be the main
reason of care in SNFs. Therefore, these codes cannot be used to assign
a resident to a clinical category for payment purposes under PDPM. When
a code is returned to a provider, the provider is to select an
appropriate ICD-10-CM diagnosis code from the SNF PDPM Clinical
Category Mapping available at CMS' website.
Comment: Another commenter stated that the PDPM Clinical Category
Mapping file inappropriately includes ICD-10-CM codes that correspond
to an initial encounter. The commenter states that initial encounter
codes include ``A'' as the 7th character and can only occur in a
hospital where the initial treatment is completed. According to the
commenter, initial encounter codes cannot be used in the SNF setting
and should be excluded from the clinical category mapping.
Additionally, the commenter states that Z codes are not appropriate to
assign to patients receiving aftercare for traumatic fractures. These
issues, state the commenter, lead to non-traumatic major joint
replacements being assigned to Major Joint Replacement while major
joint replacements as a result of traumatic injury are assigned to
Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery).
The commenter stated that this is inappropriate because aftercare of a
traumatic injury resulting in hip replacement needs higher complexity
of care than a scheduled non-traumatic hip replacement.
Response: We do not agree with the commenter's assertion that
initial encounter codes cannot be used in the SNF and should be
excluded from the clinical category mapping. Particularly given the
increased focus of some commenters on the ability of PDPM to allow
alignment across different payer types, we believe it is possible that
some conditions could result as an initial encounter in the SNF.
Moreover, as SNF services may be covered for conditions that arise in
the hospital or arise in the SNF, we believe that it is important to
allow for initial encounter codes to be coded within the SNF and mapped
to clinical categories in case such a condition serves as the primary
diagnosis for a SNF stay.
With regard to the comment that Z codes are not appropriate for
traumatic fractures, as detailed in the ICD-10-CM Official Guidelines
for Coding and Reporting, the aftercare codes cover situations when the
initial treatment of a disease has been performed and the patient
requires continued care during the healing or recovery phase, or for
the long-term consequences of the disease. The aftercare Z codes should
not be used if treatment is directed at a current, acute disease.
Therefore, the aftercare Z codes should not be used for aftercare for
traumatic fractures. For aftercare of a traumatic fracture, providers
are instructed to assign the acute fracture code with the appropriate
7th character. We agree with the commenter and will update the PDPM
mapping accordingly.
Comment: Some commenters expressed concern over the use of MS-DRGs
to develop the PDPM clinical categories. Commenters noted that hospital
MS-DRGs are unrelated to the reason for SNF admission and are poor
predictors of cost in post-acute care. These commenters stated that if
SNF MDS coding produces a substantially different set of case-mix
adjustments from the case-mix derived from hospital DRG assignments,
then the model will produce inappropriate payment rates for the cases
which deviate from the ``predicted'' case mix rate. They suggested that
CMS should consider retroactively evaluating this case-mix adjustment
as soon as it has SNF data following PDPM implementation to correct any
inaccurate payments in future updates of the PDPM. A commenter states
that PDPM will need significant recalibration due to payment
inaccuracies based on the discrepancy between inpatient hospital and
SNF reason for admission.
Response: We appreciate the commenters' concerns with the use of
MS-DRGs to develop the PDPM clinical categories. We would note,
however, that while the MS-DRGs were used to identify patient
categories in the SNF, they were not used to determine the cost of
treating these types of patients. Given this distinction, while we
might expect some difference in the distribution of SNF case-mix based
on the potential differences between the prior hospital MS-DRG and SNF-
generated diagnosis information under PDPM, we do not believe that
using the MS-DRGs compromised the integrity of the clinical categories
themselves. In developing PDPM clinical categories, we used MS-DRGs
from the prior inpatient stay to define the primary reason for SNF care
and assign residents to clinical categories. As stated in section 3.4.1
of the SNF PDPM technical report, we selected this source of diagnosis
information because of data quality concerns relating to the principal
diagnosis from the SNF claim. At the time the clinical categories were
developed, we found that 47 percent of SNF claims assigned generic ICD-
9-CM codes, with roughly a third assigned V57.89 ``care involving other
specified rehabilitation procedure'', as the principal diagnosis,
limiting the usefulness of diagnoses from SNF claims in classifying
residents. Per the Medicare Benefit Policy Manual, the SNF reason for
admission must be related to a condition treated during the qualifying
inpatient stay. Therefore, we believe it is reasonable to use clinical
information from the prior inpatient stay to characterize the major
types of beneficiaries who receive SNF care. Additionally, the clinical
categories were validated by multiple clinicians consulted by CMS and
participants at technical expert panels. Therefore, we believe the
proposed clinical categories are appropriate to use to classify major
clinical types found in the SNF setting. With regard to the possibility
that the actual case-mix distribution may be distinct from the
``predicted'' case-mix distribution, we intend to monitor for these
types of effects and may make adjustments to the payment rates as may
be appropriate. We also appreciate the commenter's suggestion to
recalibrate PDPM in the future.
Accordingly, after considering the comments received, for the
reasons discussed above and in the proposed rule, we are finalizing our
proposals discussed above relating to PT and OT case-mix classification
under the PDPM, with the modification discussed below. As discussed
above, rather than requiring providers to record the type of inpatient
surgical procedure performed during the prior inpatient hospital stay
by coding an ICD-10-PCS code in the second line of item I8000 as we
proposed, we will instead require providers to select, as necessary, a
surgical procedure category in a sub-item within Item J2000 which would
identify the relevant surgical procedure that occurred during the
patient's preceding hospital stay and which would augment the patient's
PDPM clinical category.
[[Page 39202]]
(i) Clinical Categories
Once we identified these clinical categories as being generally
predictive of resource utilization in a SNF, we then undertook the
necessary work to identify those categories predictive of PT and OT
costs specifically. As we discussed in the proposed rule (83 FR 21044),
we conducted additional regression analyses to determine if any of
these categories predicted similar levels of PT and OT as other
categories, which may provide a basis for combining categories. As a
result of this analysis, for the RCS-I model presented in the ANPRM, we
found that the ten inpatient clinical categories could be collapsed
into five clinical categories, which predict varying degrees of PT and
OT costs. However, as explained in the proposed rule, we received
comments on the ANPRM regarding the number of possible case-mix group
combinations under RCS-I, so we sought to try and reduce this number of
possible case-mix group combinations by further simplifying the model.
As part of that effort, we observed similar PT and OT resource
utilization patterns in the clinical categories of Non-Orthopedic
Surgery and Acute Neurologic and, therefore, proposed to collapse these
categories for the purpose of PT and OT classification. Additionally,
as reflected in the RCS-I model presented in the ANPRM, we proposed
that under PDPM, the remaining clinical categories would be collapsed
as follows: Acute infections, cancer, pulmonary, cardiovascular and
coagulations, and medical management would be collapsed into one
clinical category entitled ``Medical Management'' because their
residents had similar PT and OT costs. Similarly, we proposed that
orthopedic surgery (except major joint replacement or spinal surgery)
and non-surgical orthopedic/musculoskeletal would be collapsed into a
new ``Other Orthopedic'' category for equivalent reasons. Finally, the
remaining category, Major Joint Replacement, showed a distinct PT and
OT cost profile and, thus, we proposed to retain it as an independent
category. More information on this analysis can be found in section
3.4.2. of the SNF PMR technical report that accompanied the ANPRM and
in section 3.4.2. of the SNF PDPM technical report, both available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. These proposed collapsed categories, which would
be used to categorize a resident initially under the proposed PT and OT
case-mix components, were presented in Table 15 of the proposed rule
(and are reflected in Table 15 of this final rule).
Table 15--Collapsed Clinical Categories for PT and OT Classification
------------------------------------------------------------------------
Collapsed PT and OT clinical
PDPM clinical category category
------------------------------------------------------------------------
Major Joint Replacement or Spinal Major Joint Replacement or
Surgery. Spinal Surgery.
Non-Orthopedic Surgery................. Non-Orthopedic Surgery and
Acute Neurologic.
Acute Neurologic.
Non-Surgical Orthopedic/Musculoskeletal Other Orthopedic.
Orthopedic Surgery (Except Major Joint
Replacement or Spinal Surgery).
Medical Management..................... Medical Management.
Acute Infections.
Cancer.
Pulmonary.
Cardiovascular and Coagulations.
------------------------------------------------------------------------
We received several comments regarding the collapsed PT and OT
clinical categories. These comments, along with our responses, appear
below.
Comment: A commenter disagreed with the decision to collapse the
initial 10 clinical categories into five clinical groupings for
purposes of resident classification and payment in the PT and OT
components. The commenter stated that the five clinical categories used
for resident classification in the PT and OT components are too broad
and not representative of the clinical needs of residents. Another
commenter recommends that CMS not finalize the proposal to combine the
Acute Neurologic and Non-Orthopedic Surgery residents into a single
category because patients should be classified based on clinically
coherent categories, not on similar cost patterns observed under the
current SNF case-mix classification model, for the latter is reflective
of current reimbursement incentives to provide therapy based on
financial considerations. A commenter suggests that CMS consider
separate clinical category for elective major joint replacement of the
lower extremity because its cost profile is different from other
episode types. The commenter suggests that joint replacements as a
result of a fracture could possibly be combined into the Other
Orthopedic category.
Response: As described in section 3.4.2 of the SNF PMR technical
report that accompanied the 2017 ANPRM, in developing RCS-I (the
predecessor to PDPM), we created 10 broad clinical categories to
characterize the major patient types found in the SNF setting. In using
the CART algorithm to develop resident groups for PT and OT payment, we
included the 10 clinical categories as a categorical variable. Allowing
the CART algorithm to group the 10 clinical categories into a smaller
number of groups resulted in fewer resident groups but a similar R-
squared value for predicting costs. In building PDPM we first retained
these five collapsed clinical categories to characterize major patient
types relevant to predicting PT and OT utilization. As detailed in the
proposed rule, we then further collapsed the clinical categories into
four categories, in response to comments on the ANPRM regarding the
number of possible case-mix group combinations under RCS-I. Based on
the greater simplicity achieved in using fewer clinical categories for
PT and OT classification and the maintenance in predictive accuracy, we
believe using the collapsed four categories is a superior option to
capture variation in PT and OT utilization and to characterize the
major types of clinical conditions relevant to PT and OT utilization in
the SNF population. Non-Orthopedic Surgery and Acute Neurologic are
combined into one category based on their similar PT and OT resource
utilization pattern, as shown in section 3.4.2 and Table 16 of the SNF
PDPM technical report. We recognize that the observed data are
reflective of current reimbursement incentives to provide therapy based
on financial considerations, which may disguise the relationship
between
[[Page 39203]]
clinical traits and patient need based on best practice assumptions. We
will monitor closely the resource utilization pattern of the 10
clinical categories after the implementation of PDPM. Regarding the
elective major joint replacement comment, as detailed in section 3.4.1
of the SNF PMR technical report, we observed that MS-DRG groups with a
high percentage of elective surgeries correspond to two types of
procedures: Major joint replacements and spinal surgeries, while MS-DRG
groups with a high percentage of emergent surgeries include other types
of orthopedic surgeries involving extremities, often related to falls.
We discovered that average therapy costs per day were similar for
resident in a given surgical orthopedic MS-DRG group regardless of
whether they received elective or emergent surgery.
Accordingly, after considering the comments received, for the
reasons discussed above and in the proposed rule, we are finalizing our
proposals without modification relating to the collapsed clinical
categories for the PT and OT components.
(ii) Functional Status
As discussed previously in this section and in the proposed rule
(83 FR 21044), regression analyses demonstrated that the resident's
functional status is also predictive of PT and OT costs in addition to
the resident's initial clinical categorization. In the RCS-I model
discussed in the ANPRM, we presented a function score similar to the
existing ADL score to measure functional abilities for the purposes of
PT and OT payment. In response to the ANPRM, we received comments
requesting that we consider replacing the functional items used to
build the RCS-I function score with newer, IMPACT Act-compliant items
from section GG. Therefore, we constructed, and proposed as discussed
below, a new function score for PT and OT payment based on section GG
functional items.
Under the RUG-IV case-mix system, a resident's ADL or function
score is calculated based on a combination of self-performance and
support items coded by SNFs in section G of the MDS 3.0 for four ADL
areas: Transfers, eating, toileting, and bed mobility. These four areas
are referred to as late-loss ADLs because they are typically the last
functional abilities to be lost as a resident's function declines. Each
ADL is assigned a score of up to four points, with a potential total
score as high as 16 points. Under the proposed PDPM, we proposed that
section G items would be replaced with functional items from section GG
of the MDS 3.0 (Functional Abilities and Goals) as the basis for
calculating the function score for resident classification used under
PDPM. We explained that section GG offers standardized and more
comprehensive measures of functional status and therapy needs.
Additionally, we stated that the use of section GG items better aligns
the payment model with other quality initiatives. SNFs have been
collecting section GG data since October 2016 as part of the
requirements for the IMPACT Act. We stated that given the advantages of
section GG and of using a more comprehensive measure of functional
abilities, we received numerous comments in response to the ANPRM
requesting the incorporation of section GG items and of early ADLs
items into the function score.
As explained in the proposed rule (83 FR 21045), multiple
stakeholders commented on the ANPRM that late-loss items do not
adequately reflect functional abilities on their own. These commenters
stated that early-loss ADL items also capture essential clinical
information on functional status. Therefore, we stated in the proposed
rule that in building a new function score based on section GG items,
we also investigated the incorporation of early-loss items. To explore
the incorporation of section GG items, we evaluated each item's
relationship with PT and OT costs. We ran individual regressions using
each of the 12 section GG items assessed at admission to separately
predict PT and OT costs per day. As explained in the proposed rule, the
regression results showed that early-loss items are indeed strong
predictors of PT and OT costs, with the exception of two wheeling
items. Both wheeling items were excluded from the functional measure
due to their weak predictive relationship with PT and OT costs. We
observed high predictive ability among the remaining items. In total,
we selected ten items for inclusion in the functional measure for the
PT and OT components based on the results of the analysis. Thus, under
the proposed functional measure for the PT and OT components, a
resident's function would be measured using four late-loss ADL
activities (bed mobility, transfer, eating, and toileting) and two
early-loss ADL activities (oral hygiene and walking). Specifically, the
proposed measure includes: Two bed mobility items, three transfer
items, one eating item, one toileting item, one oral hygiene item, and
two walking items that were all found to be highly predictive of PT and
OT costs per day. A list of proposed section GG items that would be
included in the functional measure for the PT and OT components was
included in Table 18 of the proposed rule (and is shown in Table 18 of
this final rule). Section 3.4.1. in the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on these
analyses.
We explained in the proposed rule (83 FR 21045) that, similar to
the RUG-IV ADL score, each of these ADL areas would be assigned a score
of up to 4 points. However, in contrast to the RUG-IV ADL score, we
stated that points were assigned to each response level to track
functional independence rather than functional dependence. In other
words, higher points are assigned to higher levels of independence. We
stated that this approach is consistent with functional measures in
other care settings, such as the IRF PPS. Further, under the RUG-IV
model, if the SNF codes that the ``activity did not occur'' or
``occurred only once,'' these items are assigned the same point value
as ``independent.'' However, as explained in the proposed rule, we
observed that residents who were unable to complete an activity had
similar PT and OT costs as dependent residents. Therefore, we stated
that when the activity cannot be completed, the equivalent section GG
responses (``Resident refused,'' ``Not applicable,'' ``Not attempted
due to medical condition or safety concerns'') are grouped with
``dependent'' for the purpose of point assignment. For the two walking
items, we proposed an additional response level to reflect residents
who skip the walking assessment due to their inability to walk. We
stated that we believe this is appropriate because this allows us to
assess the functional abilities of residents who cannot walk and assign
them a function score. We explained that without this modification, we
could not calculate a function score for residents who cannot walk
because they would not be assessed on the two walking items included in
the function score. We further stated that residents who are coded as
unable to walk receive the same score as dependent residents to match
with clinical expectations. In Tables 16 and 17 of the proposed rule
(set forth at Tables 16 and 17 in this final rule), we provided the
proposed scoring algorithm for the PT and OT functional measure.
[[Page 39204]]
Table 16--PT and OT Function Score Construction
[Except walking items]
------------------------------------------------------------------------
Response Score
------------------------------------------------------------------------
05, 06--Set-up assistance, Independent.................. 4
04--Supervision or touching assistance.................. 3
03--Partial/moderate assistance......................... 2
02--Substantial/maximal assistance...................... 1
01, 07, 09, 88--Dependent, Refused, N/A, Not Attempted.. 0
------------------------------------------------------------------------
Table 17--PT and OT Function Score Construction for Walking Items
------------------------------------------------------------------------
Response Score
------------------------------------------------------------------------
05, 06--Set-up assistance, Independent.................. 4
04--Supervision or touching assistance.................. 3
03--Partial/moderate assistance......................... 2
02--Substantial/maximal assistance...................... 1
01, 07, 09, 88--Dependent, Refused, N/A, Not Attempted, 0
Resident Cannot Walk *.................................
------------------------------------------------------------------------
* Coded based on response to GG0170H1 (Does the resident walk?).
We explained in the proposed rule (83 FR 21046) that, unlike
section G, section GG measures functional areas with more than one
item. We noted that this results in substantial overlap between the two
bed mobility items, the three transfer items, and the two walking
items. Because of this overlap, we stated that a simple sum of all
scores for each item may inappropriately overweight functional areas
measured by multiple items. Therefore, to adjust for this overlap, we
proposed to calculate an average score for these related items. That
is, we would average the scores for the two bed mobility items, the
three transfer items, and the two walking items. We stated that the
average bed mobility, transfer, and walking scores would then be summed
with the scores for eating, oral hygiene, and toileting hygiene,
resulting in equal weighting of the six activities. This proposed
scoring algorithm produces a function score that ranges from 0 to 24.
In section 3.4.1. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), we provide additional information on the
analyses that led to the construction of this proposed function score.
Table 18--Section GG Items Included in PT and OT Functional Measure
------------------------------------------------------------------------
Section GG item Score
------------------------------------------------------------------------
GG0130A1--Self-care: Eating...... 0-4.
GG0130B1--Self-care: Oral Hygiene 0-4.
GG0130C1--Self-care: Toileting 0-4.
Hygiene.
GG0170B1--Mobility: Sit to lying. 0-4 (average of 2 items).
GG0170C1--Mobility: Lying to
sitting on side of bed.
GG0170D1--Mobility: Sit to stand. 0-4 (average of 3 items).
GG0170E1--Mobility: Chair/bed-to-
chair transfer.
GG0170F1--Mobility: Toilet
transfer.
GG0170J1--Mobility: Walk 50 feet 0-4 (average of 2 items).
with 2 turns.
GG0170K1--Mobility: Walk 150
feet.
------------------------------------------------------------------------
We received comments on the use of section GG items as the basis for
determining the patient's PDPM functional score for purposes of
classifying under the PT and OT components. Those comments, along with
our responses, appear below.
Comment: Some comments welcomed the use of IMPACT-Act compliant
section GG data to build new function scores for the PT, OT, and
nursing components of PDPM, which was a recommendation provided by many
commenters on the ANPRM. However, commenters also expressed concern
about using section GG data, stating that this data should first be
validated and that the results of this validation should be made
public. Commenters stated that the first year of section GG data likely
contains inaccuracies as providers adjust to the new items. Some
commenters therefore stated that it is inappropriate to base resident
classification and payment on a single year of section GG data and
request that CMS collect a minimum of two years of section GG data to
ensure reliability and validity before using this data to determine
payment. One commenter suggested that, due to the issues with section
GG, CMS should continue to use section G as the basis for functional
assessment under the payment system. Another commenter sought
clarification regarding whether CMS compared the first 6 months of
section GG data to the second 6 months of section GG data to determine
whether there were any changes in assessment practices for the new
assessment items.
Response: We conducted several investigations to validate the
section GG data. First, we verified that the relationship between
section G responses and PT and OT utilization was very similar to the
relationship between corresponding section GG responses and PT and OT
utilization. Second, we determined that section GG items performed
similarly to section G items in predicting PT and OT utilization.
Finally, we compared coding of section GG items during the first 6
months of FY 2017 to coding of these items during the second 6 months
of FY 2017 and found only small
[[Page 39205]]
changes in the frequency of responses. Based on the results of these
checks, we believe the FY 2017 section GG data are valid and reliable,
and therefore, appropriate to use as a basis of resident classification
and payment under PDPM.
Comment: One commenter stated that the proposed PDPM function
scores ignore missing values for section GG assessment items and urged
CMS to map missing values to a function score. Another commenter stated
that the function score should incorporate the new response ``10. Not
attempted due to environmental limitations''. A few commenters
requested that CMS consider assigning a score of 1 to ``dependent''
responses instead of 0, stating that this scoring aligns better with
the SNF Quality Reporting Program. These commenters also seek
clarification on the rationale for grouping ``dependent'' responses
with ``resident refused,'' ``not applicable,'' and ``not attempted due
to medical conditions or safety concerns.'' One commenter pointed out
that the MDS item GG0170H1 (Does the resident walk) will be retired on
September 30, 2018, and recommended that CMS adopt MDS item GG0170I
(Walk 10 feet) as a substitute for retired item GG0170H1.
Response: We appreciate the comment that missing values for section
GG assessments items are not currently mapped to a point value for
computing function score. CMS will follow this suggestion to map all
values to a function score by assigning missing section GG responses to
receive zero points for the function score calculation as other
incomplete responses are also assigned zero points. This is also
consistent with the current RUG-IV ADL scoring methodology, which
assigns the same point value for missing responses and other incomplete
responses. Similarly, we will map the new response of 10: ``Not
attempted due to environmental limitations,'' which was highlighted by
another commenter, to receive zero points for function score assignment
to make sure every response has a corresponding point value. We believe
these point value assignments are appropriate as they are consistent
with other similar responses that receive zero points for function
score assignment, including ``resident refused,'' ``not applicable,''
and ``not attempted due to medical condition or safety concerns''. In
response to the comment requesting us to consider assigning 1 point to
``dependent'' responses instead of 0, this suggested scoring would
group ``dependent'' responses with ``substantial/maximal assistance''
responses. However, we found that dependent residents have different
levels of PT and OT resource utilization than residents receiving
substantial/maximal assistance. As described in section 3.4.1 the SNF
PDPM technical report, we observed that residents who were unable to
complete an activity had similar PT and OT costs as dependent
residents. Therefore, we grouped the equivalent section GG responses
(``resident refused,'' ``not applicable,'' and ``not attempted due to
medical condition or safety concerns'') with ``dependent'' responses
for the purpose of point assignment in constructing the function score
for PT and OT classification and payment. In terms of alignment with
the SNF QRP quality measures, the PDPM function score uses similar
scoring logic as the QRP functional outcome measure. As with the PDPM
function score, the QRP Change in Self-Care score assigns higher points
to higher levels of functional independence and assigns the same point
value to ``dependent'' and incomplete responses. The QRP functional
outcome measure, however, differs in scale. Whereas the PDPM function
score ranges from 0-4, the QRP Change in Self-Care score ranges from 1-
6. The QRP functional outcome measure assigns 1 point to ``dependent''
and all ``activity was not attempted'' codes (``resident refused,''
``not applicable,'' and ``not attempted due to medical condition or
safety concerns''), and 2 points to ``substantial/maximal assistance''.
This score assignment is very similar to that of the PDPM function
score. Additionally, one item currently used to compute function score,
MDS GG0170H1 (Does the resident walk), which is used to determine if
the resident can walk before proceeding to assess GG0170J1 (Walk 50
Feet with Two Turns) and GG0170K1 (Walk 150 Feet), is set to be retired
on September 30, 2018 with the introduction of the newer, more detailed
SNF QRP mobility and self-care outcome measure items. CMS concurs with
the commenter's suggestion to select a replacement for PDPM
implementation. Consistent with the commenter's suggestion, MDS item
GG0170I1 (Walk 10 feet) will be used as the substitute for MDS GG0170H1
since the inability to walk at least 10 feet or to complete the
assessment for this item suggests a significant mobility impairment
that is essentially equivalent to the definition of the retired
``cannot walk'' MDS item. Responses 07: ``resident refused,'' 09: ``not
applicable,'' 10: ``not attempted due to environmental limitations,''
or 88: ``not attempted due to medical condition or safety concerns''
from MDS item GG0170I1 will be used to identify residents who cannot
walk.
Comment: Commenters also stated that the proposed function scores
should be updated to reflect new section GG items for FY 2019.
Specifically, they stated that toileting, dressing, and bathing are
important activities of daily living that are addressed by occupational
therapy, and therefore, should be considered in measuring residents'
functional status under PDPM.
Response: In constructing the function score for PT and OT payment,
we investigated the use of all existing section GG items. Toileting is
one of the items included in the proposed function scores for the PT,
OT, and nursing components of PDPM. We are aware that additional
section GG items are scheduled to be implemented in FY 2019, including
items that measure a resident's dressing and bathing abilities.
However, because these new items have not yet been implemented, there
is no data available on resource utilization associated with these
items. Therefore, it is not appropriate to include these items in the
calculation of the PDPM function scores at this time. We will consider
adding section GG items that are demonstrated to have a meaningful
relationship with utilization of SNF resources as new items are added
and an appropriate amount of data (for example, one year) is available
to assess this relationship. We will also consider other changes to the
function score as necessary to reflect additional updates to the
section GG items, for example, the addition, deletion, or modification
of particular items or responses.
Comment: One commenter advised CMS to account for weight bearing
restrictions among residents who are categorized into the Major Joint
Replacement or Spinal Surgery or Other Orthopedic clinical categories.
The commenter stated that patients who cannot bear weight have a more
complicated post-surgical recovery.
Response: We appreciate the concern of the commenter regarding
post-surgical residents who cannot bear weight. However, we believe the
ability of a resident to bear weight is adequately captured by the
mobility items in MDS item GG0170, which are included in the function
score used for classification and payment in the PT and OT components.
Therefore, we do not believe additional modifications are necessary at
this time.
Comment: One commenter noted that in some cases, PT and OT payment
is higher for case-mix groups with higher
[[Page 39206]]
functional independence. The commenter said this is counterintuitive
because it implies that some residents who are more dependent require
less therapy. Another commenter sought clarification on the
relationship between function score and average PT and OT costs per
day.
Response: The commenter is correct that in some cases payment is
higher for residents who have higher levels of functional independence.
This reflects the finding that PT and OT utilization is highest for
residents with moderate functional independence and lower for residents
with both the highest levels of functional dependence and independence.
In the first case, this likely reflects residents whose functional
abilities are too impaired to receive intensive therapy, while the
second case likely corresponds to residents who require less therapy
because they already have a high level of functional independence.
Therefore, we believe PDPM appropriately assigns payment according to
the observed relationship between functional independence and PT/OT
utilization.
Comment: One commenter expressed concern regarding the potential
for gaming the function score and recommended that CMS remove the
function score from use as a patient classifier.
Response: We appreciate this concern for gaming of the function
score and plan to monitor closely for any changes in functional coding
before and after implementation of PDPM. That being said, we do believe
that a patient's functional score is relevant in terms of predicting
payment accurately, as described elsewhere in this section. Therefore,
we believe it is important to keep function as an aspect of patient
classification for payment.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing our proposals relating to the use of the section GG items as
the basis for determining the patient's PDPM functional score and for
classifying the patient under PDPM PT and OT components, with
modifications. As discussed above, in response to comments, all missing
values for section GG assessment items will receive zero points as a
function score. Similarly, the function score will incorporate a new
response ``10. Not attempted due to environmental limitations'' and we
will assign it a point value of zero. Furthermore, consistent with a
commenter's suggestion, we will adopt MDS item GG0170I1 (Walk 10 feet)
as a substitute for retired item GG0170H1 (Does the resident walk), and
we will use responses 07: ``resident refused,'' 09: ``not applicable,''
10: ``not attempted due to environmental limitations,'' or 88: ``not
attempted due to medical condition or safety concerns'' from MDS item
GG0170I1 to identify residents who cannot walk.
(iii) Cognitive Status
Under the RCS-I case-mix model presented in the ANPRM, we used
cognitive status to classify residents under the PT and OT components
in addition to the primary reason for SNF care and functional ability.
As explained in the proposed rule (83 FR 21046) and in greater detail
below, after publication of the ANPRM, we removed cognitive status as a
determinant of resident classification for the PT and OT components.
Still, although cognitive status was not ultimately selected as a
determinant of PT and OT classification, it was considered as a
possible element in developing the proposed resident groups for these
components via the Classification and Regression Trees (CART) algorithm
described in greater detail in the proposed rule and below. Because we
included cognitive status as an independent variable in the CART
analysis used to develop case-mix groups for PT and OT, we stated that
we believed it was appropriate to discuss construction of the proposed
new cognitive measure here even though it was not ultimately selected
as a determinant of payment for PT and OT. Thus, we discussed
construction of the instrument used to measure cognitive status under
the proposed PDPM in the section addressing case-mix classification
under the PT and OT components, rather than introducing it when
discussing SLP classification, in which we proposed cognitive status as
a determinant of resident classification. Under the current SNF PPS,
cognitive status is used to classify a small portion of residents that
fall into the Behavioral Symptoms and Cognitive Performance RUG-IV
category. For all other residents, cognitive status is not used in
determining the appropriate payment for a resident's care. However, as
we explained in the proposed rule, industry representatives and
clinicians at multiple TEPs suggested that a resident's cognitive
status can have a significant impact on a resident's PT and OT costs.
Based on this feedback, we explored a resident's cognitive status as a
predictor of PT and OT costs.
Under the RUG-IV model, cognitive status is assessed using the
Brief Interview for Mental Status (BIMS) on the MDS 3.0. The BIMS is
based on three items: ``repetition of three words,'' ``temporal
orientation,'' and ``recall.'' These items are summed to produce the
BIMS summary score. The BIMS score ranges from 0 to 15, with 0 assigned
to residents with the worst cognitive performance and 15 assigned to
residents with the highest performance. Residents with a BIMS score
less than or equal to 9 classify for the Behavioral Symptoms and
Cognitive Performance category. Residents with a summary score greater
than 9 but not 99 (resident interview was not successful) are
considered cognitively intact for the purpose of classification under
RUG-IV.
As we explained in the proposed rule (83 FR 21046), in
approximately 15 percent of 5-day MDS assessments, the BIMS is not
completed: in 12 percent of cases the interview is not attempted, and
for 3 percent of cases the interview is attempted but cannot be
completed. The MDS directs assessors to skip the BIMS if the resident
is rarely or never understood (this is scored as ``skipped''). In these
cases, the MDS requires assessors to complete the Staff Assessment for
Mental Status (items C0700 through C1000). The Cognitive Performance
Scale (CPS) is then used to assess cognitive function based on the
Staff Assessment for Mental Status and other MDS items (``Comatose''
(B0100), ``Makes Self Understood'' (B0700), and the self-performance
items of the four late-loss ADLs). The Staff Assessment for Mental
Status consists of four items: ``Short-term Memory OK,'' ``Long-term
Memory OK,'' ``Memory/Recall Ability,'' and ``Cognitive Skills for
Daily Decision Making.'' Only ``Short-term Memory OK'' and ``Cognitive
Skills for Daily Decision Making'' are currently used for payment. In
MDS 2.0, the CPS was used as the sole measure of cognitive status. A
resident was assigned a CPS score from 0 to 6 based on the Staff
Assessment for Mental Status and other MDS items, with 0 indicating the
resident was cognitively intact and 6 indicating the highest level of
cognitive impairment. In addition to the items on the Staff Assessment
for Mental Status, MDS items ``Comatose'' (B0100), ``Makes Self
Understood'' (B0700), and the self-performance items of the four late-
loss ADLs factored into the CPS score. Any score of 3 or above was
considered cognitively impaired. The CPS on the current version of the
MDS (3.0) functions very similarly. Instead of assigning a score to
each resident, a resident is determined to be cognitively impaired if
he or she meets the criteria to receive a score of 3 or above on the
CPS, based on the MDS items mentioned above. In other words, whereas
the MDS 2.0 assigned a CPS
[[Page 39207]]
score to each resident, the MDS 3.0 only determines whether a
resident's score is greater than or equal to 3 and does not assign a
specific score to each resident for whom the CPS is used to assess
cognitive status. Residents who are determined to be cognitively
impaired based on the CPS are classified in the Behavioral Symptoms and
Cognitive Performance category under RUG-IV, if they do not meet the
criteria for a higher-paying category.
We stated in the proposed rule (83 FR 21047) that given that the 15
percent of residents who are not assessed on the BIMS must be assessed
using a different scale that relies on a different set of MDS items,
there is currently no single measure of cognitive status that allows
comparison across all residents. To address this issue, Thomas et al.,
in a 2015 paper, proposed use of a new cognitive measure, the Cognitive
Function Scale (CFS), which combines scores from the BIMS and CPS into
one scale that can be used to compare cognitive function across all
residents (Thomas KS, Dosa D, Wysocki A, Mor V; The Minimum Data Set
3.0 Cognitive Function Scale. Med Care. https://www.ncbi.nlm.nih.gov/pubmed/?term=25763665). Following a suggestion from the June 2016 TEP,
we explored using the CFS as a measure of cognition and found that
there is a relationship between the different levels of the cognitive
scale and resident costs. Specifically, we observed that as cognitive
function declines, PT and OT costs per day decrease, while SLP costs
per day more than double. More information on this analysis can be
found in section 3.4.1. of the SNF PMR technical report that
accompanied the ANPRM available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. Based on
these initial investigations, we used the CFS as a cognitive measure in
the RCS-I payment model described in the ANPRM. As we noted above, the
RUG-IV system incorporates both the BIMS and CPS score separately, but
the CFS blends them together into one measure of cognitive status.
Details on how the BIMS score and CPS score are determined using the
MDS assessment are described above. The CFS uses these scores to place
residents into one of four cognitive performance categories, as shown
in Table 19 of the proposed rule (set forth in Table 19 of this final
rule). After publication of the ANPRM, we received stakeholder comments
questioning this scoring methodology, specifically the classification
of a CPS score of 0 as ``mildly impaired.'' Based on a subsequent
analysis showing that residents with a CPS score of 0 were similar to
residents classified as ``cognitively intact'' under the CFS
methodology, as well as clinical feedback, we determined that it was
appropriate to reclassify residents with a CPS score of 0 as
cognitively intact, consistent with ANPRM feedback. This analysis is
described in more detail in section 3.4.1. of the SNF PDPM technical
report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. The scoring methodology
for the proposed PDPM cognitive measure was shown in Table 20 of the
proposed rule (set forth in Table 20 of this final rule). We would note
once again that while we discussed this scoring methodology in section
V.D.3.b of the proposed rule (83 FR 21046 through 21047) and this
section of the final rule because cognitive status was considered in
developing the PT and OT classification, the cognitive score was not
proposed as a factor in classification for the PT and OT components
under PDPM, as further discussed in the proposed rule (83 FR 21047) and
below.
Table 19--Cognitive Function Scale (CFS) Scoring Methodology
------------------------------------------------------------------------
Cognitive level BIMS score CPS score
------------------------------------------------------------------------
Cognitively Intact...................... 13-15 ..............
Mildly Impaired......................... 8-12 0-2
Moderately Impaired..................... 0-7 3-4
Severely Impaired....................... .............. 5-6
------------------------------------------------------------------------
Table 20--PDPM Cognitive Measure Classification Methodology
------------------------------------------------------------------------
Cognitive level BIMS score CPS score
------------------------------------------------------------------------
Cognitively Intact...................... 13-15 0
Mildly Impaired......................... 8-12 1-2
Moderately Impaired..................... 0-7 3-4
Severely Impaired....................... .............. 5-6
------------------------------------------------------------------------
(iv) PT and OT Case-Mix Groups
As explained in the proposed rule (83 FR 21047), once each of these
variables--clinical reasons for the SNF stay, the resident's functional
status, and the presence of a cognitive impairment--was identified, we
then used a statistical regression technique called Classification and
Regression Trees (CART) to explore the most appropriate splits in PT
and OT case-mix groups using these three variables. In other words,
CART was used to investigate how many PT and OT case-mix groups should
exist under the proposed PDPM and what types of residents or score
ranges should be combined to form each of those PT and OT case-mix
groups. CART is a non-parametric decision tree learning technique that
produces either classification or regression trees, depending on
whether the dependent variable is categorical or numeric, respectively.
We stated that using the CART technique to create payment groups is
advantageous because it is resistant to both outliers and irrelevant
parameters. The CART algorithm has been used to create payment groups
in other Medicare settings. For example, it was used to determine Case
Mix Groups (CMGs) splits within rehabilitation impairment groups (RICs)
when the inpatient rehabilitation facility (IRF) PPS was developed.
This methodology is more thoroughly explained in section 3.4.2. of the
SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
As explained in the proposed rule (83 FR 21047), we used CART to
develop splits within the four collapsed clinical categories shown in
Table 15 of the proposed rule (set forth in Table 15 of
[[Page 39208]]
this final rule). Splits within each of these four collapsed clinical
categories were based on the two independent variables included in the
algorithm: Function score and cognitive status. The CART algorithm
split residents into 18 groups for the PT component and 14 groups for
the OT component. These splits are primarily based on differences in
resident function. As stated in the proposed rule, in the CART-
generated groups, cognitive status plays a role in categorizing less
than half of the PT groups and only two of the 14 OT groups. In
addition, we stated that to create the proposed resident classification
for the PT and OT components, we made certain administrative decisions
that further refined the PT and OT case-mix classification groups
beyond those produced through use of the CART algorithm. For example,
while CART may have created slightly different breakpoints for the
function score in different clinical categories, we state that we
believe using a consistent split in scores across clinical categories
improves the simplicity of the case-mix model without compromising its
accuracy. Therefore, we used the splits created by the CART algorithm
as the basis for the consistent splits selected for the case-mix
groups, simplifying the CART output while retaining important features
of the CART-generated splits. In our proposed classification for the PT
and OT components, we retained function as the sole determinant of
resident categorization within each of the four collapsed clinical
categories. We created function score bins based on breakpoints that
recurred in the CART splits, such as 5, 9, and 23. As noted in the
proposed rule (83 FR 21048) and above, we dropped cognitive status as a
determinant of classification because of the reduced role it played in
categorizing residents within the CART-generated groups. Finally, we
used the same function score bins to categorize residents within each
of the four collapsed clinical categories for both the PT and OT
components. As shown in section 3.4.2. of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.htm), and as explained in the proposed
rule, using the proposed case-mix groups for the PT and OT components
results in a reduction of 0.005 in the R-squared values for both PT and
OT classification models. We stated that this shows that although the
proposed case-mix groups improve simplicity by removing one predictor
revealed to be less important in categorizing residents (cognitive
status) and grouping residents similarly (using the same function score
bins) across clinical categories, these decisions have only a minor
negative impact on predictive accuracy. These analyses are described in
further detail in section 3.4.2. of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Based on the CART results and the administrative decisions
described above, we proposed 16 case-mix groups to classify residents
for PT and OT payment. We noted in the proposed rule (83 FR 21048) that
this represents a marked reduction in the number of case-mix groups for
PT and OT classification under the RCS-I model discussed in the ANPRM.
As discussed in the proposed rule and throughout the sections above,
after publication of the ANPRM, we received feedback from stakeholders
that the RCS-I payment model was overly complex. In particular,
commenters expressed concern about the relatively large number of
possible combinations of case-mix groups. Based on this feedback, we
sought to reduce the number of resident groups in the PT and OT
components. First, as discussed in the proposed rule and in this final
rule, because we observed similar PT and OT resource utilization
patterns in the clinical categories of Non-Orthopedic Surgery and Acute
Neurologic, we decided to collapse these categories for the purpose of
PT and OT classification. In addition, as discussed in the proposed
rule and in this final rule, we replaced the section G-based functional
measure from RCS-I with a new functional measure based on section GG
items. We found that the inclusion of the section GG-based functional
measure in the CART algorithm resulted in case-mix groups in which
cognitive function played a less important role in classification.
Based on these results, we determined that we could remove cognitive
function as a determinant of PT and OT classification without a notable
loss in the predictive ability of the payment model, as discussed
above. We also consulted with clinicians who advised CMS during
development of PDPM, who confirmed the appropriateness of this
decision. We stated in the proposed rule that the decisions to collapse
Non-Orthopedic Surgery and Acute Neurologic into one clinical category
and remove cognitive status resulted in a large reduction in the number
of PT and OT case-mix groups, from the 30 in RCS-I to the 16 in the
proposed PDPM provided in Table 21 of the proposed rule (and set forth
in Table 21 of this final rule). We provided the criteria for each of
these groups along with its CMI for both the PT and OT components in
Table 21. As shown in Table 21, two factors would be used to classify
each resident for PT and OT payment: Clinical category and function
score. Each case-mix group corresponds to one clinical category and one
function score range. We proposed classifying each SNF resident into
one of the 16 groups shown in Table 21 based on these two factors.
To help ensure that payment reflects the average relative resource
use at the per diem level, we stated in the proposed rule (83 FR 21048)
that CMIs would be set to reflect relative case-mix related differences
in costs across groups. We stated that this method helps ensure that
the share of payment for each case-mix group would be equal to its
share of total costs of the component. We further explained that CMIs
for the PT and OT components were calculated based on two factors. One
factor was the average per diem costs of a case-mix group relative to
the population average. The other factor was the average variable per
diem adjustment factor of the group relative to the population average.
In this calculation, average per diem costs equaled total PT or OT
costs in the group divided by number of utilization days in the group.
Similarly, the average variable per diem adjustment factor equaled the
sum of variable per diem adjustment factors corresponding to a given
component (PT or OT) for all utilization days in the group divided by
the number of utilization days in the group. We calculated CMIs such
that they equal the ratio of relative average per diem costs for a
group to the relative average variable per diem adjustment factor for
the group. In this calculation, relative average per diem costs and the
relative average variable per diem adjustment factor were weighted by
length of stay to account for the different length of stay
distributions across case-mix groups (as further discussed in section
3.11.1. of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). The relative average variable per diem
adjustment factors for a given PT group and the corresponding OT group
were the same because residents were classified into the same case-mix
group under both components. However, relative average per diem costs
were different across the two corresponding
[[Page 39209]]
PT and OT groups, therefore the resulting CMIs calculated for each
group were different, as shown in Table 21. After calculating CMIs as
described above, we then applied adjustments to help ensure that the
distribution of resources across payment components is aligned with the
statutory base rates. We stated that the base rates implicitly allocate
resources to case-mix components in proportion to the relative
magnitude of the respective component base rates. For example, if the
base rate for one component were twice as large as the base rate for
another component, this would imply that the component with the larger
base rate should receive double the resources of the other component.
To ensure that the distribution of resources across payment components
was aligned with the statutory base rates, in the proposed rule, we set
CMIs such that the average product of the CMI and the variable per diem
adjustment factor for a day of care equals 1.0 for each of the five
case-mix-adjusted components in PDPM. If the average product of the CMI
and the variable per diem adjustment factor for a day of care were
different across case-mix components, this would result in allocating
resources in a manner inconsistent with the distribution of resources
implied by the statutory base rates.
After adjusting the CMIs to align the distribution of resources
across payment components with the statutory base rates, a parity
adjustment was then applied by multiplying the CMIs by the ratio of
case-mix-related payments in RUG-IV over estimated case-mix-related
payments in PDPM, as further discussed in section V.J. of the proposed
rule. More information on the variable per diem adjustment factors is
discussed in section V.D.4. of the proposed rule. The full methodology
used to develop CMIs is presented in section 3.11. of the SNF PDPM
technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 21--PT and OT Case-Mix Classification Groups
----------------------------------------------------------------------------------------------------------------
Section GG PT OT case-mix PT case-mix OT case-mix
Clinical category function score group index index
----------------------------------------------------------------------------------------------------------------
Major Joint Replacement or Spinal Surgery....... 0-5 TA 1.53 1.49
Major Joint Replacement or Spinal Surgery....... 6-9 TB 1.69 1.63
Major Joint Replacement or Spinal Surgery....... 10-23 TC 1.88 1.68
Major Joint Replacement or Spinal Surgery....... 24 TD 1.92 1.53
Other Orthopedic................................ 0-5 TE 1.42 1.41
Other Orthopedic................................ 6-9 TF 1.61 1.59
Other Orthopedic................................ 10-23 TG 1.67 1.64
Other Orthopedic................................ 24 TH 1.16 1.15
Medical Management.............................. 0-5 TI 1.13 1.17
Medical Management.............................. 6-9 TJ 1.42 1.44
Medical Management.............................. 10-23 TK 1.52 1.54
Medical Management.............................. 24 TL 1.09 1.11
Non-Orthopedic Surgery and Acute Neurologic..... 0-5 TM 1.27 1.30
Non-Orthopedic Surgery and Acute Neurologic..... 6-9 TN 1.48 1.49
Non-Orthopedic Surgery and Acute Neurologic..... 10-23 TO 1.55 1.55
Non-Orthopedic Surgery and Acute Neurologic..... 24 TP 1.08 1.09
----------------------------------------------------------------------------------------------------------------
We stated in the proposed rule that, under the proposed PDPM, all
residents would be classified into one and only one of these 16 PT and
OT case-mix groups for each of the two components. We explained that as
opposed to the RUG-IV system that determines therapy payments based
only on the amount of therapy provided, these groups classify residents
based on the two resident characteristics shown to be most predictive
of PT and OT utilization: Clinical category and function score. Thus,
we believe that the PT and OT case-mix groups better reflect relative
resource use of clinically relevant resident subpopulations, and
therefore, provide for more appropriate payment under the SNF PPS.
Commenters submitted the following additional comments related to
the proposed rule's discussion of the Physical and Occupational Therapy
Case-Mix Classification. A discussion of these comments, along with our
responses, appears below.
Comment: Several commenters expressed concern that CMS did not
include cognition or swallowing disorders as determinants of payment
for the OT component. One commenter stated that the removal of
cognitive status as a determinant of PT and OT payment will lead to
underpayment because cognitive impairment leads to longer recovery time
and an increased need for therapy services, particularly occupational
therapy.
Response: As discussed in the proposed rule (83 FR 21046) and in
section 3.4.2 of the SNF PDPM technical report, cognitive status was
initially considered as a determinant of resident classification and
payment in the PT and OT components of PDPM. However, after replacing
the section G-based function score for PT and OT classification with a
function score based on new, IMPACT Act-compliant section GG items, we
reran the CART analysis used to develop possible case-mix groups. We
found that after including the section GG-based function score,
cognitive status played a minimal role in resident classification. As
noted in the proposed rule (83 FR 21047), cognition played a role in
categorizing less than half of the 18 CART-generated PT groups and only
two of the 14 CART-generated OT groups. Based on the reduced role of
cognition in resident classification for PT and OT payment, we decided
to remove cognitive status as a determinant of payment for these
components. This decision also allowed us to substantially reduce the
number of case-mix groups for the PT and OT components from the 30
presented in the 2017 ANPRM to the 16 presented in the proposed rule,
contributing to a simplification of the payment model, which was
requested by a number of commenters responding to the ANPRM. We also
confirmed that the decision to remove cognitive status as a determinant
of PT and OT classification had only a minor negative impact on
predictive accuracy, reducing the R-squared values of the both the PT
and OT classification models by only 0.005.
Comment: One commenter expressed concern about the reliability of
the cognitive measure used in PDPM.
[[Page 39210]]
Response: As detailed in section 3.4.1 of the SNF PDPM technical
report, the PDPM cognitive measure was built based on two existing
cognitive measures: The Brief Interview for Mental Status (BIMS) and
the Cognitive Performance Scale (CPS). Both measures are used in the
current RUG-IV system to determine cognitive impairment. BIMS is used
when the resident is able to complete the interview, while CPS is used
when the resident is unable to complete the interview and the staff
assessment has to be conducted. Thus, the PDPM cognitive measure is
based on cognitive measures that have been validated and used for
years. It combines the existing scores from BIMS and CPS into one scale
that can be used to compare cognitive function across all residents.
Comment: Some commenters stated that CMS should consider including
comorbidities related to PT or OT utilization, in particular conditions
associated with high therapy intensity or duration. Commenters stated
coronary artery disease, congestive heart failure, diabetes, chronic
obstructive pulmonary disease (COPD), asthma, chronic wounds,
depression, swallowing disorders and multiple sclerosis are conditions
that could be considered as possible comorbidities for the PT or OT
components.
Response: As described in section 3.4.1 of the SNF PDPM technical
report, we investigated the impact of a broad list of conditions on PT
and OT utilization. These conditions were selected for investigation
based on comments received in response to the 2017 ANPRM, clinical
input, and a literature search. This broad list included several of the
conditions mentioned by commenters, including congestive heart failure,
diabetes, depression, and swallowing disorders. To focus on conditions
that have non-negligible impact on increasing costs, only those that
had a positive impact on PT or OT costs per day of $2 or more were
selected for further investigation. None of the conditions mentioned by
commenters that were included in this investigation (congestive heart
failure, diabetes, depression, swallowing disorders, and multiple
sclerosis) met this criterion; therefore, they were not selected for
inclusion in the payment model. Additionally, as mentioned in section
3.4.1 of the SNF PDPM technical report, we investigated the impact of
an even broader range of MDS items, diagnosis-related groups (DRGs),
and hierarchical condition categories (HCCs) on PT and OT utilization.
Among the conditions included in this analysis were coronary artery
disease, COPD, asthma, and various types of wounds/wound care including
wound infection, surgical wounds, and surgical wound care. Based on
this analysis, we determined that all of these conditions had either a
small or statistically insignificant impact on PT costs per day and OT
costs per day. As previously stated, because the current system is
heavily based on service provision and most residents are classified
into the Ultra-High therapy category, there is currently little
variance available in PT and OT costs per day to be explained by the
presence of comorbidities. For the foregoing reasons, we do not believe
it is appropriate to include the conditions mentioned by commenters as
comorbidities for PT or OT payment at this time. However, as care
practices change over time, we may consider adding comorbidities that
have a strong impact on PT or OT utilization.
Comment: Many commenters supported the proposed separation of the
PT and OT components, as compared to the RCS-I model that combined
these components into a single component. One commenter questioned if
therapy would be covered for pain management and wound care treatments
as these types of treatments are not explicitly covered under the
clinical categories.
Response: We appreciate the support for the decision to separate
the PT and OT components. With regard to the question of therapy
coverage for certain conditions, we would note that neither the
clinical categories, nor any other aspects of PDPM implementation,
should be taken to change any coverage guidelines.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in the final rule, we are
finalizing the proposed PT and OT components under the PDPM and our
proposals relating to the methodology for classifying residents under
the PT and OT components, effective October 1, 2019, with the
modifications discussed in this section. As discussed above, in
response to comments, rather than requiring providers to record the
type of inpatient surgical procedure performed during the prior
inpatient hospital stay by coding an ICD-10-PCS code in the second line
of item I8000 as we proposed, we will instead require providers to
select, as necessary, a surgical procedure category in a sub-item
within Item J2000 which would identify the relevant surgical procedure
that occurred during the patient's preceding hospital stay and which
would augment the patient's PDPM clinical category. For purposes of
calculating the function score, all missing values for section GG
assessment items will receive zero points. Similarly, the function
score will incorporate a new response ``10. Not attempted due to
environmental limitations'' and we will assign it a point value of
zero. Furthermore, consistent with a commenter's suggestion, we will
adopt MDS item GG0170I1 (Walk 10 feet) as a substitute for retired item
GG0170H1 (Does the resident walk), and we will use responses 07:
``resident refused,'' 09: ``not applicable,'' 10: ``not attempted due
to environmental limitations,'' or 88: ``not attempted due to medical
condition or safety concerns'' from MDS item GG0170I1 to identify
residents who cannot walk.
c. Speech-Language Pathology Case-Mix Classification
As discussed above and in the proposed rule (83 FR 21049), many of
the resident characteristics that we found to be predictive of
increased PT and OT costs were predictive of lower SLP costs. We stated
that as a result of this inverse relationship, using the same set of
predictors to case-mix adjust all three therapy components would
obscure important differences in variables predicting variation in
costs across therapy disciplines and make any model that attempts to
predict total therapy costs inherently less accurate. Therefore, we
stated that we believe it is appropriate to have a separately adjusted
case-mix SLP component that is specifically designed to predict
relative differences in SLP costs. As discussed in the proposed rule
and in the prior section of this final rule, costs derived from the
charges on claims and CCRs on facility cost reports were used as the
measure of resource use to develop an alternative payment model. Costs
are reflective of therapy utilization as they are correlated to therapy
minutes recorded for each therapy discipline.
Following the same methodology we used to identify predictors of PT
and OT costs, we explained in the proposed rule that our project team
conducted cost regressions with a host of variables from the MDS
assessment, prior inpatient claims, and SNF claims that were identified
as likely to be predictive of relative increases in SLP costs. The
variables were selected with the goal of being as inclusive of the
measures recorded on the MDS assessment as possible and also included
diagnostic information from the prior inpatient stay. The selection
process also incorporated clinical input from TEP panelists, the
contractor's clinical staff, and CMS clinical staff. We stated that
[[Page 39211]]
these initial costs regressions were exploratory and meant to identify
a broad set of resident characteristics that are predictive of SLP
resource utilization. The results were used to inform which variables
should be investigated further and ultimately included in the payment
system. A table of all of the variables considered in this analysis
appears in the appendix of the SNF PMR technical report that
accompanied the ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
As we stated in the proposed rule (83 FR 21049), based on these
cost regressions, we identified a set of three categories of predictors
relevant in predicting relative differences in SLP costs: Clinical
reasons for the SNF stay, presence of a swallowing disorder or
mechanically-altered diet, and the presence of an SLP-related
comorbidity or cognitive impairment. We explained that a model using
these predictors to predict SLP costs per day accounted for 14.5
percent of the variation in SLP costs per day, while a very extensive
model using 1,016 resident characteristics only predicted 19.3 percent
of the variation. We stated that this shows that these predictors alone
explain a large share of the variation in SLP costs per day that can be
explained with resident characteristics.
As with the proposed PT and OT components, we began with the set of
clinical categories identified in Table 14 of the proposed rule (set
forth in Table 14 of this final rule) meant to capture general
differences in resident resource utilization and ran cost regressions
to determine which categories may be predictive of generally higher
relative SLP costs. Through this analysis, we found that one clinical
category, the Acute Neurologic group, was particularly predictive of
increased SLP costs. More detail on this investigation can be found in
section 3.5.2. of the SNF PMR technical report that accompanied the
ANPRM, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. Therefore, to determine
the initial resident classification into an SLP group under the
proposed PDPM, we stated that residents would first be categorized into
one of two groups using the clinical reasons for the resident's SNF
stay recorded on the first line of Item I8000 on the MDS assessment:
Either the ``Acute Neurologic'' clinical category or a ``Non-
Neurologic'' group that includes the remaining clinical categories in
Table 14 (Major Joint Replacement or Spinal Surgery; Non-Surgical
Orthopedic/Musculoskeletal; Orthopedic Surgery (Except Major Joint
Replacement or Spinal Surgery); Acute Infections; Cancer; Pulmonary;
Non-Orthopedic Surgery; Cardiovascular and Coagulations; and Medical
Management).
In addition to the clinical reason for the SNF stay, based on cost
regressions and feedback from TEP panelists, we stated in the proposed
rule (83 FR 21050) that we also identified the presence of a swallowing
disorder or a mechanically-altered diet (which refers to food that has
been altered to make it easier for the resident to chew and swallow to
address a specific resident need) as a predictor of relative increases
in SLP costs. First, we stated that residents who exhibited the signs
and symptoms of a swallowing disorder, as identified using K0100Z on
the MDS 3.0, demonstrated significantly higher SLP costs than those who
did not exhibit such signs and symptoms. Therefore, we considered
including the presence of a swallowing disorder as a component in
predicting SLP costs. However, when this information was presented
during the October 2016 TEP, stakeholders indicated that the signs and
symptoms of a swallowing disorder may not be as readily observed when a
resident is on a mechanically-altered diet and requested that we also
consider evaluating the presence of a mechanically-altered diet, as
determined by item K0510C2 on the MDS 3.0, as an additional predictor
of increased SLP costs. As we further explained in the proposed rule,
our project team conducted this analysis and found that there was an
associated increase in SLP costs when a mechanically-altered diet was
present. Moreover, we stated that this analysis revealed that while SLP
costs may increase when either a swallowing disorder or mechanically-
altered diet is present, resident SLP costs increased even more when
both of these items were present. More detail on this investigation and
these analyses can be found in section 3.5.3. of the SNF PDPM technical
report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. As a result, we agreed
with the stakeholders that both swallowing disorder and mechanically-
altered diet are important components of predicting relative increases
in resident SLP costs, and thus, in addition to the clinical
categorization, we proposed classifying residents as having either a
swallowing disorder, being on a mechanically altered diet, both, or
neither for the purpose of classifying the resident under the SLP
component. We also noted that we plan to monitor specifically for any
increases in the use of mechanically altered diet among the SNF
population that may suggest that beneficiaries are being prescribed
such a diet based on facility financial considerations, rather than for
clinical need.
As a final aspect of the proposed SLP component case-mix
adjustment, we explored how SLP costs vary according to cognitive
status and the presence of an SLP-related comorbidity. As we explained
in the proposed rule, we observed that SLP costs were notably higher
for residents who had a mild to severe cognitive impairment as defined
by the PDPM cognitive measure methodology described in Table 20 of the
proposed rule (set forth in Table 20 of this final rule) or who had an
SLP-related comorbidity present. We stated that for each condition or
service included as an SLP-related comorbidity, the presence of the
condition or service was associated with at least a 43 percent increase
in average SLP costs per day. The presence of a mild to severe
cognitive impairment was associated with at least a 100 percent
increase in average SLP costs per day. Similar to the analysis
conducted in relation to the PT and OT components, the project team ran
cost regressions on a broad list of possible conditions. As we stated
in the proposed rule (83 FR 21050), based on that analysis, and in
consultation with stakeholders during our TEPs and clinicians, we
identified the conditions listed in Table 22 of the proposed rule (set
forth in Table 22 of this final rule) as SLP-related comorbidities
which we believe best predict relative differences in SLP costs. As
discussed in the proposed rule, we used diagnosis codes on the most
recent inpatient claim and the first SNF claim, as well as MDS items on
the 5-day assessment for each SNF stay to identify these diagnoses and
found that residents with these conditions had much higher SLP costs
per day. Further, we stated that rather than accounting for each SLP-
related comorbidity separately, all conditions were combined into a
single flag. If the resident has at least one SLP-related comorbidity,
the combined flag is turned on. We explained in the proposed rule that
we combined all SLP-related comorbidities into a single flag because we
found that the predictive ability of including a combined SLP
comorbidity flag is comparable to the predictive ability of including
each SLP-related comorbidity as an individual predictor. Additionally,
we stated that using a combined SLP-
[[Page 39212]]
related comorbidity flag greatly improves the simplicity of the payment
model. More detail on these analyses can be found in section 3.5.1. of
the SNF PMR technical report that accompanied the ANPRM (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 22--SLP-Related Comorbidities
------------------------------------------------------------------------
---------------------------------------------------------------------------
Aphasia.
CVA, TIA, or Stroke.
Hemiplegia or Hemiparesis.
Traumatic Brain Injury.
Tracheostomy Care (While a Resident).
Ventilator or Respirator (While a Resident).
Laryngeal Cancer.
Apraxia.
Dysphagia.
ALS.
Oral Cancers.
Speech and Language Deficits.
------------------------------------------------------------------------
Once each of these variables--clinical reasons for the SNF stay,
presence of a swallowing disorder or mechanically-altered diet, and the
presence of an SLP-related comorbidity or cognitive impairment--found
to be useful in predicting resident SLP costs was identified, as we
discussed in the proposed rule (83 FR 21050), we used the CART
algorithm, as we discussed above in relation to the PT and OT
components, to determine appropriate splits in SLP case-mix groups
based on CART output breakpoints using these three variables. We stated
we then further refined the SLP case-mix classification groups beyond
those produced by the CART algorithm. We used consistent criteria to
group residents into 18 payment groups across the two clinical
categories determined to be relevant to SLP utilization (Acute
Neurologic and Non-Neurologic). These groups simplified the SLP case-
mix classification by reducing the number of groups while maintaining
the CART predictive power in terms of R-squared. This methodology and
the results of our analysis are more thoroughly explained in sections
3.4.2. and 3.5.2. of the SNF PMR technical report that accompanied the
ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Under the original RCS-I SLP component, a resident could be
classified into one of 18 possible case-mix groups. Comments received
in response to the ANPRM expressed concern over the complexity of the
payment model due to the high number of possible combinations of case-
mix groups. We stated in the proposed rule (83 FR 21051) that, to
reduce the number of possible SLP case-mix groups, we simplified the
consistent splits model selected for RCS-I. To accomplish this, we
combined clinical category (Acute Neurologic or Non-Neurologic),
cognitive impairment, and the presence of an SLP-related comorbidity
into a single predictor due to the clinical relationship between acute
neurologic conditions, cognition, and SLP comorbidities. We explained
in the proposed rule that these three predictors are highly
interrelated as acute neurologic conditions may often result in
cognitive impairment or SLP-related comorbidities such as speech and
language deficits. As we discussed in the proposed rule, using this
combined variable along with presence of a swallowing disorder or
mechanically-altered diet results in 12 groups. We compared the
predictive ability of the simplified model with more complex
classification options, including the original RCS-I SLP model. We
explained that regression results showed that the reduction in case-mix
groups by collapsing independent variables had little to no effect on
payment accuracy. Specifically, we noted that the proposed PDPM SLP
model has an R-squared value almost identical to that of the original
RCS-I SLP model, while reducing the number of resident groups from 18
to 12. Therefore, we determined that 12 case-mix groups would be
necessary to classify residents adequately in terms of their SLP costs
in a manner that captures sufficient variation in SLP costs without
creating unnecessarily granular separations. More information on this
analysis can be found in section 3.5.2. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). We provided the criteria
for each of these groups along with its CMI in Table 23 of the proposed
rule (set forth in Table 23 of this final rule).
To help ensure that payment reflects the average relative resource
use at the per diem level, we stated in the proposed rule (83 FR 21051)
that CMIs would be set to reflect relative case-mix related differences
in costs across groups. We stated that this method helps ensure that
the share of payment for each case-mix group would be equal to its
share of total costs of the component. We further explained that CMIs
for the SLP component were calculated based on the average per diem
costs of a case-mix group relative to the population average. Relative
average differences in costs were weighted by length of stay to account
for the different length of stay distributions across case-mix groups
(as further discussed in section 3.11.1. of the SNF PDPM technical
report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). In this calculation,
average per diem costs equaled total SLP costs in the group divided by
number of utilization days in the group. Because the SLP component does
not have a variable per diem schedule (as further discussed in section
3.9.1. of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), variable per diem adjustment factors were not
involved in SLP CMI calculation. We further stated that a parity
adjustment was then applied by multiplying the CMI by the ratio of
case-mix-related payments in RUG-IV over estimated case-mix-related
payments in PDPM, as further discussed in section V.J. of the proposed
rule. We stated that this method helps ensure that the share of payment
for each case-mix group is equal to its share of total costs of the
component and that PDPM is budget neutral relative to RUG-IV. The full
methodology used to develop CMIs is presented in section 3.11. of the
SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
TABLE 23--SLP Case-Mix Classification Groups
----------------------------------------------------------------------------------------------------------------
Presence of acute neurologic condition, SLP-
related comorbidity, or cognitive Mechanically altered diet or SLP case-mix SLP case-mix
impairment swallowing disorder group index
----------------------------------------------------------------------------------------------------------------
None....................................... Neither............................ SA 0.68
None....................................... Either............................. SB 1.82
None....................................... Both............................... SC 2.66
[[Page 39213]]
Any one.................................... Neither............................ SD 1.46
Any one.................................... Either............................. SE 2.33
Any one.................................... Both............................... SF 2.97
Any two.................................... Neither............................ SG 2.04
Any two.................................... Either............................. SH 2.85
Any two.................................... Both............................... SI 3.51
All three.................................. Neither............................ SJ 2.98
All three.................................. Either............................. SK 3.69
All three.................................. Both............................... SL 4.19
----------------------------------------------------------------------------------------------------------------
As with the PT and OT components, we stated that all residents
would be classified into one and only one of these 12 SLP case-mix
groups under the PDPM. We explained that, as opposed to the RUG-IV
system that determines therapy payments based only on the amount of
therapy provided, under the PDPM, residents would be classified into
SLP case-mix groups based on resident characteristics shown to be
predictive of SLP utilization. Thus, we stated that believe the SLP
case-mix groups will provide a better measure of resource use and will
provide for more appropriate payment under the SNF PPS.
We invited comments on the approach we proposed above to classify
residents for SLP payment under the proposed PDPM.
Commenters submitted the following comments related to the proposed
rule's discussion of the classification of residents for SLP payment
under the PDPM. A discussion of these comments, along with our
responses, appears below.
Comment: Some commenters agreed with the SLP-related patient
classifiers. Some commenters suggested using a different assessment of
cognition than that currently used on the MDS, such as the Montreal
Cognitive Assessment (MOCA). One commenter expressed concerns regarding
the use of cognition as a first tier classification criterion, as
changes in cognition can be difficult to identify and this could impact
on the possibility of late or missed IPAs. This commenter suggested
moving cognition into the second tier classification criteria.
Response: We appreciate the support for the SLP component
classification criteria. With regard to the comment on using a
different assessment for assessing cognition, we are not opposed to
this idea and would encourage stakeholders to work with CMS in
developing potential revisions to the MDS to improve care planning and
management. That being said, as the MOCA is not currently in use on the
MDS, we must utilize the data and assessment tools to which we
currently have access. Finally, with regard to the concern about the
interplay between cognition and the IPA, we expect that this concern
would be addressed by having the IPA be completed on an optional basis,
as described in section V.D.1 of this final rule.
Comment: One commenter expressed concern that having a separate SLP
component could result in the overutilization of SLP services,
specifically for treating cognitive impairments. The commenter advised
CMS to limit the overutilization of SLP services for cognitive
impairment issues.
Response: As discussed above, we found that cognitive impairment is
a relevant characteristic in predicting SLP resource utilization and
costs. However, we understand the concern regarding the potential for
providers to overutilize SLP services in certain instances and will
monitor the use of SLP services under PDPM to identify any potential
consequences of using this payment classifier as part of the SLP
component.
Comment: A commenter questioned the accuracy of using the same
primary diagnosis to assign clinical category across the PT, OT, and
SLP components. This commenter states that multiple diagnoses can
contribute to the reason for the SNF stay and proposes distinguishing
between PT/OT and SLP diagnoses. Specifically, the commenter suggests
allowing providers to enter the clinical reason for PT/OT services in
the first two lines of MDS item I8000 and the clinical reason for SLP
services in the third line of item I8000. This commenter points to our
decision to separate therapy disciplines into different payment
components based on our observation that different sets of resident
characteristics were predictive of PT and OT costs, on one hand, and
SLP costs, on the other. Given that utilization of PT and OT resources
and utilization of SLP services are explained by a different set of
predictors, this commenter concludes that the clinical reasons for
receiving SLP services are distinct from those motivating PT/OT
services.
Response: As detailed in the proposed rule (83 FR 21043) and
section 3.4.1 of the SNF PDPM technical report, when constructing the
ten clinical categories, we explored conditions that are clinically
relevant to general SNF resource utilization. Within each component, we
further consolidated the ten clinical categories into groups that have
significant impact on component-specific resource utilization. We found
that the clinical reason for a SNF stay as represented by the clinical
categories was highly predictive of PT, OT, and SLP utilization, and
thus we do not believe it is necessary to enter separate clinical
reasons for PT/OT and SLP services, as suggested by the commenter. For
this reason, we believe it is appropriate to include the clinical
categories as determinants of resident classification and payment for
all three components. We would also emphasize that clinical category is
the only predictor shared by the PT/OT and SLP components. The other
independent variables are unique to the PT and OT or SLP components and
capture other clinical reasons for PT/OT and SLP services. As a result,
in many cases, a resident's cognitive status and the presence of SLP-
related comorbidities may be as relevant as primary diagnosis in
determining resident classification and payment.
Comment: A few commenters stated that the proposed SLP-related
comorbidity list is an incomplete reflection of all comorbidities that
require SLP treatment. One commenter stated that the SLP comorbidity
list should include progressive neurologic disorders that increase SLP
resource use. This commenter suggests relabeling the ``ALS'' MDS
checkbox item as ``Progressive Neurologic Diseases'' and updating the
MDS manual definition for
[[Page 39214]]
this item to meet the criteria of specific progressive neurologic
diseases.
Response: We appreciate commenters' concerns regarding additional
conditions that may be related to SLP utilization. We may consider
adding conditions that have a demonstrated relationship to SLP resource
use in future revisions to the payment model. To examine the impact of
PDPM on residents with chronic neurological conditions, we included
this subpopulation in our resident impact analysis and found that PDPM
is estimated to slightly increase the payment associated with these
residents.
Comment: Some commenters agreed with the use of mechanically
altered diet as a payment classifier. One commenter requested that CMS
provide evidence that a mechanically altered diet is associated with
higher SLP utilization than other nutritional approaches such as
personal assistance with feeding. One commenter requested that CMS
monitor the use of mechanically altered diets under PDPM to identify
any potentially inappropriate use of such diets. One commenter stated
that overutilization of such diets can have negative repercussions for
patient care.
Response: As described in section 3.5.1 and 3.5.2 of the SNF PMR
technical report, besides mechanically altered diet, we additionally
explored feeding tube as a determinant of classification and payment
for the SLP component. We used CART to test several SLP models with
different variables related to swallowing and nutritional approach.
This investigation found that mechanically altered diet notably
increased the predictive power of the models, whereas feeding tube only
had a small impact on predictive ability. While feeding tube was
associated with an increase in SLP costs per day, we did not include
feeding tube in the payment model because it only had a small impact on
the predictive accuracy of the model relative to mechanically altered
diet. We also explored the MDS item Eating Self-Performance (G0110H1)
as a potential predictor of SLP utilization. While increased eating
dependence was associated with higher SLP utilization, when we included
Eating Self-Performance as an independent variable in the CART analysis
used to explore possible case-mix groups, Eating Self-Performance was
only selected as a determinant of classification for half of the 18
groups created by the CART algorithm. As a result, we determined that
we could remove Eating Self-Performance from the SLP classification
without notably sacrificing predictive ability. As shown in section
3.5.2 of the SNF PMR technical report, removing Eating Self-Performance
and combining various independent variables to simplify the
classification reduced the R-squared value of the classification by
only 0.005. As a result, this classification was used as the basis for
the proposed PDPM SLP component.
With regard to the possibility of some providers prescribing
mechanically altered diets inappropriately or the possibility of
overutilization, we do plan to monitor the use of these diets as part
of our general PDPM monitoring strategy.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing, without modification, the proposed SLP component of PDPM
and our proposals relating to the classification of residents under the
SLP component.
d. Nursing Case-Mix Classification
As we explained in the proposed rule (83 FR 21051 through 21052),
the RUG-IV classification system first divides residents into
``rehabilitation residents'' and ``non-rehabilitation residents'' based
on the amount of therapy a resident receives. We stated that
differences in nursing needs can be obscured for rehabilitation
residents, where the primary driver of payment classification is the
intensity of therapy services that a resident receives. For example,
for two residents classified into the RUB RUG-IV category, which would
occur on the basis of therapy intensity and ADL score alone, the
nursing component for each of these residents would be multiplied by a
CMI of 1.56. We stated that this reflects that residents in that group
were found, during our previous Staff time measurement (STM) work, to
have nursing costs 56 percent higher than residents with a 1.00 index.
We noted that while this CMI also includes adjustments made in FY 2010
and FY 2012 for budget-neutrality purposes, what is clear is that two
residents, who may have significantly different nursing needs, are
nevertheless deemed to have the very same nursing costs, and SNFs would
receive the same nursing payment for each. Given the discussion above
and in the proposed rule, which noted that approximately 60 percent of
resident days are billed using one of three Ultra-High Rehabilitation
RUGs (two of which have the same nursing index), we stated that the
current case-mix model effectively classifies a significant portion of
SNF therapy residents as having exactly the same degree of nursing
needs and requiring exactly the same amount of nursing resources. As
such, we stated we believed that further refinement of the case-mix
model would be appropriate to better differentiate among patients,
particularly those who receive therapy services with different nursing
needs.
We further explained in the proposed rule (83 FR 21052) that an
additional concern in the RUG-IV system is the use of therapy minutes
to determine not only therapy payments but also nursing payments. For
example, residents classified into the RUB RUG fall in the same ADL
score range as residents classified into the RVB RUG. The only
difference between those residents is the number of therapy minutes
that they received. However, as we stated in the proposed rule, the
difference in payment that results from this difference in therapy
minutes impacts not only the RUG-IV therapy component but also the
nursing component: Nursing payments for RUB residents are 40 percent
higher than nursing payments for RVB residents. We stated that as a
result of this feature of the RUG-IV system, the amount of therapy
minutes provided to a resident is one of the main sources of variation
in nursing payments, while other resident characteristics that may
better reflect nursing needs play a more limited role in determining
payment.
As discussed in the proposed rule (83 FR 21052), the more nuanced
and resident-centered classifications in current RUG-IV non-
rehabilitation categories are obscured under the current payment model,
which utilizes only a single RUG-IV category for payment purposes and
has over 90 percent of resident days billed using a rehabilitation RUG.
The RUG-IV non-rehabilitation groups classify residents based on their
ADL score, the use of extensive services, the presence of specific
clinical conditions such as depression, pneumonia, or septicemia, and
the use of restorative nursing services, among other characteristics.
These characteristics are associated with nursing utilization, and the
STRIVE study accounted for relative differences in nursing staff time
across groups. Therefore, we proposed to use the existing RUG-IV
methodology for classifying residents into non-rehabilitation RUGs to
develop a proposed nursing classification that helps ensure nursing
payment reflects expected nursing utilization rather than therapy
utilization.
For example, in the proposed rule (83 FR 21052), we considered two
residents. The first patient classifies into the RUB rehabilitation RUG
(on the basis of the
[[Page 39215]]
resident's therapy minutes) and into the CC1 non-rehabilitation RUG (on
the basis of having pneumonia), while the second classifies into the
RUB rehabilitation RUG (on the basis of the resident's therapy minutes)
and the HC1 non-rehabilitation RUG (on the basis of the resident having
quadriplegia and a high ADL score). Under the current RUG-IV based
payment model, the billing for both residents would utilize only the
RUB rehabilitation RUG, despite clear differences in their associated
nursing needs and resident characteristics. We proposed an approach
where, for the purpose of determining payment under the nursing
component, the first resident would be classified into CC1, while the
second would be classified into HC1 under the PDPM. We stated that
believe classifying the residents in this manner for payment purposes
would capture variation in nursing costs in a more accurate and
granular way than relying on the rehabilitation RUG's nursing CMI.
While resident classification in the proposed PDPM nursing
component is guided by RUG-IV methodology, we proposed to make several
modifications to the RUG-IV nursing RUGs and classification methodology
under the proposed PDPM. First, we proposed under the PDPM to reduce
the number of nursing RUGs by decreasing distinctions based on
function. We stated that under RUG-IV, residents with a serious medical
condition/service such as septicemia or respiratory therapy are
classified into one of eight nursing RUGs in the Special Care High
category. The specific RUG into which a resident is placed depends on
the resident's ADL score and whether the resident is depressed. RUG-IV
groups ADL score into bins for simplicity (for example, 2-5 and 6-10).
For example, under RUG-IV, a resident in the Special Care High category
who has depression and an ADL score of 3 would fall into the 2-5 ADL
score bin, and therefore, be classified into the HB2 RUG, which
corresponds to Special Care High residents with depression and an ADL
score between 2 and 5 (a mapping of clinical traits and ADL score to
RUG-IV nursing groups is shown in the appendix of the SNF PDPM
technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). To explore
options to reduce the number of nursing RUGs, we explained in the
proposed rule that we compared average nursing utilization across all
43 RUG-IV nursing RUGs. The dependent variable used in this
investigation was the average wage-weighted staff time (WWST) for each
nursing RUG from the STRIVE study. WWST is a measure of nursing
resource utilization used in the STRIVE study. As discussed in more
detail in the proposed rule (83 FR 21052) and in section 3.2.1. of the
PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), we were
unable to construct a measure of nursing utilization based on current
data because facilities do not report resident-specific nursing costs.
As discussed in the proposed rule, we observed that nursing resource
use as measured by WWST does not vary markedly between nursing case-mix
groups defined by contiguous ADL score bins (for example, 11-14 and 15-
16) but otherwise sharing the same clinical traits (for example,
classified into Special Care High and depressed). We explained that
this suggests that collapsing contiguous ADL score bins for RUGs that
are otherwise defined by the same set of clinical traits is unlikely to
notably affect payment accuracy. Section 3.6.1. of the SNF PDPM
technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more
detail on this analysis.
In the Special Care High, Special Care Low, Clinically Complex, and
Reduced Physical Function classification groups (RUGs beginning with H,
L, C, or P), for nursing groups that were otherwise defined with the
same clinical traits (for example, extensive services, medical
conditions, depression, restorative nursing services received), we
proposed to combine the following pairs of second characters due to
their contiguous ADL score bins: (E, D) and (C, B). These characters
correspond to ADL score bins (15 to 16, 11 to 14) and (6 to 10, 2 to
5), respectively. We observed that nursing utilization did not vary
notably across these contiguous ADL score bins; therefore, we stated
that we believe it is appropriate to collapse pairs of RUGs in these
classification groups that correspond to contiguous ADL score bins but
are otherwise defined by the same clinical traits. For example, HE2 and
HD2, which are both in the Special Care High group and both indicate
the presence of depression, would be collapsed into a single nursing
case-mix group. Similarly, we stated that PC1 and PB1 (Reduced Physical
Function and 0 to 1 restorative nursing services) also would be
combined into a single nursing case-mix group. Section 3.6.1. of the
SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides
more detail on this analysis. In the Behavioral and Cognitive
Performance classification group (RUGs beginning with B), for RUGs that
are otherwise defined by the same number of restorative nursing
services (0 to1 or 2 or more), we proposed to combine RUGs with the
second character B and A, which correspond to contiguous ADL score bins
2 to 5 and 0 to 1, respectively. We observed that nursing utilization
did not vary notably across these contiguous ADL score bins; therefore,
we stated that we believe it is appropriate to collapse pairs of RUGs
in this classification group that correspond to contiguous ADL score
bins but are otherwise defined by the same clinical traits. In other
words, BB2 and BA2 would be combined into a single nursing group, and
BB1 and BA1 would also be combined into a single nursing group. Section
3.6.1. of the SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on this analysis. We
proposed to maintain CA1, CA2, PA1, and PA2 as separate case-mix groups
under the nursing component of the PDPM. We observed that these RUGs do
not share similar levels of nursing resource use with RUGs in adjacent
ADL score bins that are otherwise defined by the same clinical traits
(for example, medical conditions, depression, restorative nursing
services received). Rather, we noted that CA1, CA2, PA1, and PA2 are
associated with distinctly lower nursing utilization compared to RUGs
that otherwise have the same clinical traits (for example, medical
conditions, depression, restorative nursing services received) but
higher ADL score bins. Section 3.6.1. of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides more detail on this
analysis. We further stated that ES3, ES2, and ES1 also would be
maintained as separate case-mix groups under the nursing component of
the proposed PDPM because, although they are defined by the same ADL
score bin, they are defined by different clinical traits unlike the
pairs of RUGs that were combined. Specifically, ES3, ES2, and ES1 are
defined by different combinations of extensive services. We stated that
we believe collapsing case-mix groups based on ADL score for the RUGs
specified above would reduce
[[Page 39216]]
model complexity by decreasing the number of nursing case-mix groups
from 43 to 25, which thereby decreases the total number of possible
combinations of case-mix groups under the proposed PDPM. Table 26 of
the proposed rule (set forth in Table 26 of this final rule) shows the
proposed 25 case-mix groups for nursing payment. Section 3.6.1. of the
SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides
more detail on the analyses and data supporting these proposals.
As explained in the proposed rule (83 FR 21053), the second
modification to the RUG-IV nursing classification methodology would
update the nursing ADL score to incorporate section GG items.
Currently, the RUG-IV ADL score is based on four late-loss items from
section G of MDS 3.0: eating, toileting, transfer, and bed mobility. We
stated that under the proposed PDPM, these section G items would be
replaced with an eating item, a toileting item, three transfer items,
and two bed mobility items from the admission performance assessment of
section GG. In contrast to the RUG-IV ADL score, the proposed PDPM
score assigns higher points to higher levels of independence.
Therefore, an ADL score of 0 (independent) corresponds to a section GG-
based function score of 16, while an ADL score of 16 (dependent)
corresponds to a section GG-based function score of 0. We explained
that this scoring methodology is consistent with the proposed PDPM PT
and OT function score, as well as functional scores in other care
settings, such as the IRF PPS. The proposed nursing scoring methodology
also assigns 0 points when an activity cannot be completed (``Resident
refused,'' ``Not applicable,'' ``Not attempted due to medical condition
or safety concerns''). As described in section V.D.3.c. (PT and OT
Case-Mix Classification) of the proposed rule, grouping these responses
with ``dependent'' aligns with clinical expectations of resource
utilization for residents who cannot complete an ADL activity. The
proposed scoring methodology is shown in Table 24 of the proposed rule
(set forth in Table 24 of this final rule). As discussed in section
V.D.3.c. of the proposed rule, section GG measures functional areas
with more than one item, which results in substantial overlap between
the two bed mobility items and the three transfer items. To address
overlap, we proposed to calculate an average score for each of these
related items. That is, we stated we would average the scores for the
two bed mobility items and for the three transfer items. This averaging
approach was also used in the proposed PT and OT function scores and is
illustrated in Table 25 of the proposed rule (set forth in Table 25 of
this final rule). We stated that the final score sums the average bed
mobility and transfer scores with eating and toileting scores,
resulting in a nursing function score that ranges from 0 to 16.
Table 24--Nursing Function Score Construction
------------------------------------------------------------------------
Response ADL score
------------------------------------------------------------------------
05, 06--Set-up assistance, Independent.................. 4
04--Supervision or touching assistance.................. 3
03--Partial/moderate assistance......................... 2
02--Substantial/maximal assistance...................... 1
01, 07, 09, 88--Dependent, Refused, N/A, Not Attempted.. 0
------------------------------------------------------------------------
Table 25--Section GG Items Included in Nursing Functional Measure
----------------------------------------------------------------------------------------------------------------
Section GG item ADL score
----------------------------------------------------------------------------------------------------------------
GG0130A1--Self-care: Eating................................ 0-4.
GG0130C1--Self-care: Toileting Hygiene..................... 0-4.
GG0170B1--Mobility: Sit to lying........................... 0-4 (average of 2 items).
GG0170C1--Mobility: Lying to sitting on side of bed........
GG0170D1--Mobility: Sit to stand........................... 0-4 (average of 3 items).
GG0170E1--Mobility: Chair/bed-to-chair transfer............
GG0170F1--Mobility: Toilet transfer........................
----------------------------------------------------------------------------------------------------------------
In addition to proposing to replace the nursing ADL score with a
function score based on section GG items and to collapse certain
nursing RUGs, we also proposed (83 FR 21054) to update the existing
nursing CMIs using the STRIVE staff time measurement data that were
originally used to create these indexes. We explained that under the
current payment system, non-rehabilitation nursing indexes were
calculated to capture variation in nursing utilization by using only
the staff time collected for the non-rehabilitation population. We
stated we believe that, to provide a more accurate reflection of the
relative nursing resource needs of the SNF population, the nursing
indexes should reflect nursing utilization for all residents. To
accomplish this, we stated in the proposed rule that we replicated the
methodology described in the FY 2010 SNF PPS rule (74 FR 22236 through
22238) but classified the full STRIVE study population under non-
rehabilitation RUGs using the RUG-IV classification rules. The
methodology set forth in the proposed rule for updating resource use
estimates for each nursing RUG proceeded according to the following
steps:
(1) Calculate average wage-weighted staff time (WWST) for each
STRIVE study resident using FY 2015 SNF wages.
(2) Assign the full STRIVE population to the appropriate non-
rehabilitation RUG.
(3) Apply sample weights to WWST estimates to allow for unbiased
population estimates. The reason for this weighting is that the STRIVE
study was not a random sample of residents. Certain key subpopulations,
such as residents with HIV/AIDS, were over-sampled to ensure that there
were enough residents to draw conclusions on the subpopulations'
resource use. As a result, STRIVE researchers also developed sample
weights, equal to the inverse of each resident's probability of
selection, to permit calculation of unbiased population estimates.
[[Page 39217]]
Applying the sample weights to a summary statistic results in an
estimate that is representative of the actual population. The sample
weight method is explained in Phase I of the STRIVE study. A link to
the STRIVE study is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/TimeStudy.html.
(4) Smooth WWST estimates that do not match RUG hierarchy in the
same manner as the STRIVE study. RUG-IV, from which the nursing RUGs
are derived, is a hierarchical classification in which payment should
track clinical acuity. It is intended that residents who are more
clinically complex or who have other indicators of acuity, including a
higher ADL score, depression, or restorative nursing services, would
receive higher payment. When STRIVE researchers estimated WWST for each
RUG, several inversions occurred because of imprecision in the means.
These are defined as WWST estimates that are not in line with clinical
expectations. The methodology used to smooth WWST estimates is
explained in Phase II of the STRIVE study. A link to the STRIVE study
is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/TimeStudy.html.
(5) Calculate nursing indexes, which reflect the average WWST for
each of the 25 nursing case-mix groups divided by the average WWST for
the study population used throughout our research. To impute WWST for
each stay in the population, we assigned each resident the average WWST
of the collapsed nursing RUG into which they are categorized. To derive
the average WWST of each collapsed RUG, we first estimate the average
WWST of the original 43 nursing RUGs based on steps 1 through 4 above,
then calculate a weighted mean of the average WWST of the two RUGs that
form the collapsed RUG. More details on this analysis can be found in
section 3.6.3. of the SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Through this refinement, we stated that we believe the nursing
indexes under the proposed PDPM better reflect the varied nursing
resource needs of the full SNF population. In Table 26 of the proposed
rule (set forth in Table 26 of this final rule), we provided the
nursing indexes under the proposed PDPM.
To help ensure that payment reflects the average relative resource
use at the per diem level, we stated that the nursing CMIs would be set
to reflect case-mix related relative differences in WWST across groups.
We further stated that Nursing CMIs would be calculated based on the
average per diem nursing WWST of a case-mix group relative to the
population average. In this calculation, average per diem WWST equaled
total WWST in the group divided by number of utilization days in the
group. We further explained that because the nursing component does not
have a variable per diem schedule (as further discussed in section
3.9.1. of the SNF PDPM technical report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), variable per diem adjustment factors were not
involved in nursing CMI calculation. We then applied a parity
adjustment by multiplying the CMI by the ratio of case-mix-related
payments in RUG-IV over estimated case-mix-related payments in PDPM, as
discussed further in section V.J. of the proposed rule. The full
methodology used to develop CMIs is presented in section 3.11. of the
SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 26--Nursing Indexes Under PDPM Classification Model
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of GG-based Nursing
RUG-IV nursing RUG Extensive services Clinical conditions Depression restorative function PDPM nursing case-mix
nursing services score case-mix group index
--------------------------------------------------------------------------------------------------------------------------------------------------------
ES3.................... Tracheostomy & ..................... ................... ................... 0-14 ES3 4.04
Ventilator.
ES2.................... Tracheostomy or ..................... ................... ................... 0-14 ES2 3.06
Ventilator.
ES1.................... Infection............. ..................... ................... ................... 0-14 ES1 2.91
HE2/HD2................ ...................... Serious medical Yes................ ................... 0-5 HDE2 2.39
conditions e.g.
comatose,
septicemia,
respiratory therapy.
HE1/HD1................ ...................... Serious medical No................. ................... 0-5 HDE1 1.99
conditions e.g.
comatose,
septicemia,
respiratory therapy.
HC2/HB2................ ...................... Serious medical Yes................ ................... 6-14 HBC2 2.23
conditions e.g.
comatose,
septicemia,
respiratory therapy.
HC1/HB1................ ...................... Serious medical No................. ................... 6-14 HBC1 1.85
conditions e.g.
comatose,
septicemia,
respiratory therapy.
LE2/LD2................ ...................... Serious medical Yes................ ................... 0-5 LDE2 2.07
conditions e.g.
radiation therapy or
dialysis.
LE1/LD1................ ...................... Serious medical No................. ................... 0-5 LDE1 1.72
conditions e.g.
radiation therapy or
dialysis.
LC2/LB2................ ...................... Serious medical Yes................ ................... 6-14 LBC2 1.71
conditions e.g.
radiation therapy or
dialysis.
LC1/LB1................ ...................... Serious medical No................. ................... 6-14 LBC1 1.43
conditions e.g.
radiation therapy or
dialysis.
CE2/CD2................ ...................... Conditions requiring Yes................ ................... 0-5 CDE2 1.86
complex medical care
e.g. pneumonia,
surgical wounds,
burns.
CE1/CD1................ ...................... Conditions requiring No................. ................... 0-5 CDE1 1.62
complex medical care
e.g. pneumonia,
surgical wounds,
burns.
CC2/CB2................ ...................... Conditions requiring Yes................ ................... 6-14 CBC2 1.54
complex medical care
e.g. pneumonia,
surgical wounds,
burns.
CA2.................... ...................... Conditions requiring Yes................ ................... 15-16 CA2 1.08
complex medical care
e.g. pneumonia,
surgical wounds,
burns.
CC1/CB1................ ...................... Conditions requiring No................. ................... 6-14 CBC1 1.34
complex medical care
e.g. pneumonia,
surgical wounds,
burns.
CA1.................... ...................... Conditions requiring No................. ................... 15-16 CA1 0.94
complex medical care
e.g. pneumonia,
surgical wounds,
burns.
BB2/BA2................ ...................... Behavioral or ................... 2 or more.......... 11-16 BAB2 1.04
cognitive symptoms.
BB1/BA1................ ...................... Behavioral or ................... 0-1................ 11-16 BAB1 0.99
cognitive symptoms.
PE2/PD2................ ...................... Assistance with daily ................... 2 or more.......... 0-5 PDE2 1.57
living and general
supervision.
[[Page 39218]]
PE1/PD1................ ...................... Assistance with daily ................... 0-1................ 0-5 PDE1 1.47
living and general
supervision.
PC2/PB2................ ...................... Assistance with daily ................... 2 or more.......... 6-14 PBC2 1.21
living and general
supervision.
PA2.................... ...................... Assistance with daily ................... 2 or more.......... 15-16 PA2 0.70
living and general
supervision.
PC1/PB1................ ...................... Assistance with daily ................... 0-1................ 6-14 PBC1 1.13
living and general
supervision.
PA1.................... ...................... Assistance with daily ................... 0-1................ 15-16 PA1 0.66
living and general
supervision.
--------------------------------------------------------------------------------------------------------------------------------------------------------
As with the previously discussed components, we stated that all
residents would be classified into one and only one of these 25 nursing
case-mix groups under the proposed PDPM. As explained in the proposed
rule (83 FR 21055), we also used the STRIVE data to quantify the
effects of an HIV/AIDS diagnosis on nursing resource use. We controlled
for case mix by including the proposed PDPM resident groups (in this
case, the nursing RUGs) as independent variables. The results showed
that even after controlling for nursing RUG, HIV/AIDS status is
associated with a positive and significant increase in nursing
utilization. Based on the results of regression analyses, we found that
wage-weighted nursing staff time is 18 percent higher for residents
with HIV/AIDS. (The estimate of average wage-weighted nursing staff
time for the SNF population was adjusted to account for the deliberate
over-sampling of certain sub-populations in the STRIVE study.
Specifically, we applied sample weights from the STRIVE dataset equal
to the inverse of each resident's probability of selection to permit
calculation of an unbiased estimate.) Based on these findings, as
discussed in the proposed rule, we concluded that the proposed PDPM
nursing groups may not fully capture the additional nursing costs
associated with HIV/AIDS residents. More information on this analysis
can be found in section 3.8.2. of the SNF PDPM technical report
(available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Thus, as part of the case-mix
adjustment of the nursing component, we proposed an 18 percent increase
in payment for the nursing component for residents with HIV/AIDS. We
stated that this adjustment would be applied based on the presence of
ICD-10-CM code B20 on the SNF claim. In cases where a resident is coded
as having this diagnosis, we stated that the nursing component per diem
rate for this resident would be multiplied by 1.18, to account for the
18 percent increase in nursing costs for residents with this diagnosis.
We also discussed this proposal, as well as its relation to the
existing AIDS add-on payment under RUG-IV, in section V.I. of the
proposed rule.
We invited comments on the approach we proposed to classify
residents for nursing payment under the proposed PDPM.
Commenters submitted the following comments related to the proposed
rule's discussion of the classification of residents for nursing
payment under the PDPM. A discussion of these comments, along with our
responses, appears below.
Comment: One commenter supported the nursing case-mix
classification model that would be used under PDPM, specifically citing
the nursing function score refinements and using a separate function
score for the therapy components than would be used for the nursing
component. This commenter also requested that CMS consider aligning the
nursing classification under PDPM with certain hospice criteria.
Finally, one commenter expressed concern regarding the collapsing of
nursing groups to only 25 groups and that these groups may not
accurately account for the variety of patient conditions.
Response: We appreciate the support for the nursing component
classification criteria. We can examine the hospice criteria specified
by the commenter for future consideration. With regard to the comment
on the collapsed nursing groups, we believe that, given that we
collapsed groups primarily based on functional score bins and did not
collapse any of the general nursing group categories (such as extensive
services and special care high), we believe that the level of
granularity in the nursing classifications is not significantly
impacted. As stated in the proposed rule (83 FR 21052) and in section
3.6.1 of the SNF PDPM technical report, we collapsed groups based on
function score due to the observation that among nursing RUGs defined
by the same clinical traits, nursing resource use is similar across
contiguous functional score bins (for example, 11-14 and 15-16). Since
WWST does not vary markedly between nursing RUGs defined by contiguous
functional score bins, collapsing groups based on functional score bins
simplifies the payment model without a notable loss in accuracy.
Therefore, we believe that 25 nursing rugs sufficiently captures
variation in patient conditions.
Comment: Several commenters questioned the appropriateness of using
staff-time measurement data from the STRIVE study to estimate relative
differences in nursing utilization across the nursing groups given the
age of the data, methodological flaws in the collection of therapy
minutes, and small sample sizes for certain resident groups used to
estimate CMIs. Additionally, one commenter stated that the STRIVE study
underestimates the nursing needs of residents by only measuring the
usual nursing time provided to residents in the sampled homes. The
commenter further stated that the STRIVE study did not take into
account nursing time needed to assure resident safety and maintain
resident well-being. The commenter expressed concern that basing
nursing payment on STRIVE data will provide inadequate reimbursement,
which will result in understaffing. A couple of commenters recommended
replacing STRIVE with the Schnelle et al. 2016 simulation model to
estimate nursing resource requirements.
Response: Unlike the therapy and NTA charges, nursing charges are
reported on SNF claims as part of routine revenue centers, which also
include non-case mix services such as room and board, rather than
revenue centers specific to nursing. Due to the lack of resident-
specific nursing charges, we used WWST from STRIVE data as a measure of
nursing resource use in limited instances. Specifically, STRIVE data
was not used to select determinants of payment for the nursing
component. We only used STRIVE data to update case-mix indexes for the
nursing component, so that nursing CMIs were calculated based on the
entire SNF population rather than only on non-rehabilitation residents.
We conducted a series of investigations into possible changes in
resident characteristics from the time of the STRIVE study (2006) to
fiscal year 2014
[[Page 39219]]
to determine if resident characteristics had changed in a manner that
would suggest it would not be appropriate to use data from the STRIVE
study in designing payment alternatives. The resident characteristics
investigated include, but not limited to, most common Major Diagnostic
Categories (MDC), percent of stays with complications or comorbidities
in the qualifying inpatient stay, and frequency of MDS section I active
diagnoses. The result of the investigations suggest that although there
are small changes in prior inpatient hospital stay and SNF stay
lengths, there have not been notable changes in resident
characteristics or acuity over time. Given the stability of resident
characteristics over time, there is no strong evidence of change in the
relative resource utilization pattern among nursing groups since the
time of STRIVE study in 2006.
In response to the concern about the methodology in collecting
therapy minutes, we note that we only used nursing time to estimate
CMIs for the nursing component under PDPM. Because therapy minutes were
not included in the nursing staff time measure, concerns about how the
STRIVE study collected therapy utilization data are not relevant to our
use of STRIVE data to estimate nursing CMIs under PDPM.
As for the comments on the small sample sizes of certain resident
groups in the STRIVE study, as detailed in section 4.1.2 of the STRIVE
Phase II Report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/TimeStudy.html, the STRIVE study used
several procedures to address these concerns. First, STRIVE researchers
deliberately over-sampled certain vulnerable resident groups to obtain
more robust estimates of resource utilization for these subpopulations.
Second, the STRIVE authors applied sample weights to obtain reliable
population estimates. Because the proportion of facilities included in
the study varied from state to state, the study population was not
truly random. To account for this, the study developed sampling weights
equal to the inverse of a resident's probability of selection for
inclusion in the study population. The use of sampling weights allows
the calculation of unbiased population estimates from the sample data,
as described in section 4.1.2 of the STRIVE Phase II Report.
With regard to the comment stating concerns about how the STRIVE
study measured nursing time, it is unclear what the commenter means by
``usual nursing time'' and ``nursing time needed to assure resident
safety and maintain resident well-being.'' As discussed in the STRIVE
Phase I and Phase II reports available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/TimeStudy.html, the STRIVE
study collected three kinds of staff time: Resident Specific Time
(RST), Non-Resident Specific Time (NRST), and Non-Study Time (NST). It
was not appropriate to include NST in the dependent variable used to
measure nursing utilization because these minutes did not benefit
residents in the study population. As for NRST, while these minutes did
benefit the study population, there are numerous methodological issues
involved in including these minutes in the dependent variable. As noted
in the STRIVE Phase II Report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/TimeStudy.html, for
many types of NRST, it is not clear how to allocate these non-resident
specific minutes to specific residents. The STRIVE authors note that
during development of RUG-III, NRST was allocated to individual
residents in proportion to a resident's RST, based on the assumption
that a resident's utilization of NRST was proportional to their
utilization of RST. However, as the STRIVE authors note, this
assumption may not be accurate. Accurate allocation of NRST would have
involved extensive additional data collection that was beyond the scope
of the STRIVE study. Without confidence in the allocation methodology,
including NRST in the dependent variable for nursing would have
introduced substantial noise into the dependent variable that could
obscure the relationships between resident characteristics and resource
utilization. As a result, the STRIVE authors decided to set relative
payment weights based on RST alone. However, we disagree with the
commenter if they are suggesting that excluding NRST leads us to
underestimate nursing utilization. As noted in the STRIVE Phase II
Report, the STRIVE study was only used to allocate nursing resources
based on estimated relative resource utilization. It did not determine
aggregate nursing resources, which are largely determined based on the
methodology for setting and updating the federal per diem rates as
specified in the Act. Therefore, it is incorrect to assert that relying
on the STRIVE data for case-mix adjustment leads to inadequate nursing
reimbursement since STRIVE is used to determine allocation of nursing
resources rather than total nursing resources.
In response to the alternative data source proposed by commenters,
the Schnelle et al. simulation model estimates resource use for nurse
aides only; therefore, it is not a comprehensive or appropriate measure
of nursing utilization.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing our proposals, without modification, relating to the
methodology, as described in this section, for classifying patients
under the nursing component of PDPM.
e. Non-Therapy Ancillary Case-Mix Classification
Under the current SNF PPS, payments for NTA costs incurred by SNFs
are incorporated into the nursing component. This means that the CMIs
used to adjust the nursing component of the SNF PPS are intended to
reflect not only differences in nursing resource use but also NTA
costs. However, as we explained in the proposed rule (83 FR 21055),
there have been concerns that the current nursing CMIs do not
accurately reflect the basis for or the magnitude of relative
differences in resident NTA costs. In its March 2016 Report to
Congress, MedPAC wrote: ``Almost since its inception, the SNF PPS has
been criticized for encouraging the provision of unnecessary
rehabilitation therapy services and not accurately targeting payments
for nontherapy ancillary (NTA) services such as drugs (Government
Accountability Office 2002, Government Accountability Office 1999,
White et al. 2002)'' (available at https://medpac.gov/docs/default-source/reports/chapter-7-skilled-nursing-facility-services-march-2016-report-.pdf). In the proposed rule, we stated that while the proposed
PT, OT, and SLP components were designed to address the issue related
to provision of therapy services raised by MedPAC above, the proposed
NTA component was designed to address the issue related to accurately
targeting payments for NTA services--specifically, that the current
manner of using the RUG-IV case-mix system to determine NTA payment
levels inadequately adjusts for relative differences in resident NTA
costs.
As noted in the quotation from MedPAC above, MedPAC is not the only
group to offer this critique of the SNF PPS. We stated in the proposed
rule that just as the aforementioned criticisms that MedPAC cited have
existed almost since the inception of the SNF PPS itself, ideas for
addressing this concern have a similarly long history. In
[[Page 39220]]
response to comments on the 1998 interim final rule which served to
establish the SNF PPS, we published a final rule on July 30, 1999 (64
FR 41644). In this 1998 interim final rule, we acknowledged the
commenters' concerns about the new system's ability to account
accurately for NTA costs, stating that there were a number of comments
expressing concern with the adequacy of the PPS rates to cover the
costs of ancillary services other than occupational, physical, and
speech therapy (non-therapy ancillaries), including such things as
drugs, laboratory services, respiratory therapy, and medical supplies.
We stated in the 1998 interim final rule that prescription drugs or
medication therapy were frequently noted areas of concern due to their
potentially high cost for particular residents. Some commenters
suggested that the RUG-III case-mix classification methodology did not
adequately provide for payments that account for the variation in, or
the real costs of, these services provided to their residents. (64 FR
41647)
In response to those comments, we stated in the 1998 interim final
rule that ``we are funding substantial research to examine the
potential for refinements to the case-mix methodology, including an
examination of medication therapy, medically complex patients, and
other nontherapy ancillary services'' (64 FR 41648). In the FY 2019 SNF
PPS proposed rule (83 FR 21055 through 21056), we proposed a
methodology that we believe would case-mix adjust SNF PPS payments more
appropriately to reflect differences in NTA costs.
Following the same methodology we used for the proposed PT, OT, and
SLP components, the project team ran cost regression models to
determine which resident characteristics may be predictive of relative
increases in NTA costs. As explained in the proposed rule, the three
categories of cost-related resident characteristics identified through
this analysis were resident comorbidities, the use of extensive
services (services provided to residents that are particularly
expensive and/or invasive), and resident age. However, as discussed in
the proposed rule, we removed age from further consideration as part of
the NTA component based on concerns shared by TEP panelists during the
June 2016 TEP. Particularly, some panelists expressed concern that
including age as a determinant of NTA payment could create access
issues for older populations. Additionally, we state that the CART
algorithm used to explore potential resident groups for the NTA
component only selected age as a determinant of classification for 2 of
the 7 groups created. We noted that we also tested a classification
option that used age as a determinant of classification for every NTA
group. This only led to a 5 percent increase in the R-squared value of
the NTA classification. More information on these analyses can be found
in section 3.7.1. of the SNF PMR technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
As we explained in the proposed rule (83 FR 21056), with regard to
capturing comorbidities and extensive services associated with high NTA
utilization, we used multiple years of data (FY 2014 to FY 2017) to
estimate the impact of comorbidities and extensive services on NTA
costs. This was in response to comments on the ANPRM that the design of
the NTA component should be more robust and remain applicable in light
of potential changes in the SNF population and care practices over
time. We explained in the proposed rule that conditions and services
were defined in three ways. First, clinicians identified MDS items that
correspond to conditions/extensive services likely related to NTA
utilization. However, we stated that since many conditions/extensive
services related to NTA utilization are not included on the MDS
assessment, we then mapped ICD-10 diagnosis codes from the prior
inpatient claim, the first SNF claim, and section I8000 of the 5-day
MDS assessment to condition categories from the Part C risk adjustment
model (CCs) and the Part D risk adjustment model (RxCCs). The CCs and
RxCCs define conditions by aggregating related diagnosis codes into a
single condition flag. We use the condition flags defined by the CCs
and RxCCs to predict Part A and B expenditures or Part D expenditures,
respectively for Medicare beneficiaries. The predicted relationship
between the conditions defined in the respective models and Medicare
expenditures is then used to risk-adjust capitated payments to Part C
and Part D sponsors. Similarly, we explained that our comorbidities
investigation aimed to use a comprehensive list of conditions and
services to predict resource utilization for beneficiaries in Part A-
covered SNF stays. As we stated in the proposed rule, ultimately, the
predicted relationship between these conditions/services and
utilization of NTA services would be used to case-mix adjust payments
to SNF providers, in a process similar to risk adjustment of capitated
payments. Given these similarities, we decided to use the diagnosis-
defined conditions from the Part C and Part D risk adjustment models to
define conditions and services that were not defined on the MDS.
Because the CCs were developed to predict utilization of Part A and B
services, while the RxCCs were developed to predict Part D drug costs,
the largest component of NTA costs, we stated that believe using both
sources allows us to define the conditions and services potentially
associated with NTA utilization more comprehensively. Lastly, we used
ICD-10 diagnosis codes to define additional conditions that clinicians
who advised CMS during PDPM development identified as being potentially
associated with increased NTA service utilization but are not fully
reflected in either the MDS or the CCs/RxCCs. The resulting list was
meant to encompass as many diverse and expensive conditions and
extensive services as possible from the MDS assessment, the CCs, the
RxCCs, and diagnoses. As discussed in the proposed rule, using cost
regressions, we found that certain comorbidity conditions and extensive
services were highly predictive of relative differences in resident NTA
costs. These conditions and services were identified in Table 27 of the
proposed rule (set forth in Table 27 in this final rule). More
information on this analysis can be found in section 3.7.1. of the SNF
PDPM technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. We noted
in the proposed rule that certain conditions that were associated with
higher NTA utilization were nevertheless excluded from the list because
of clinical concerns. Esophageal reflux was excluded because it is a
very common condition in the SNF population and clinicians noted that
coding can be discretionary. Migraine headache was also excluded due to
clinicians' concerns about coding reliability. Additionally, we noted
that clinicians stated that in many cases migraine headache is not
treated by medication, the largest component of NTA costs.
Having identified the list of relevant conditions and services for
adjusting NTA payments, in the proposed rule (83 FR 21056 through
21057), we considered different options for how to capture the
variation in NTA costs explained by these identified conditions and
services. We stated that one such method would be merely to count the
number of comorbidities and services a resident receives and assign a
score to that resident based on this count. We found that this option
accounts for the additive effect of having multiple comorbidities and
extensive services but
[[Page 39221]]
did not adequately reflect the relative differences in the impact of
certain higher-cost conditions and services. We also considered a tier
system similar to the one used in the IRF PPS, where SNF residents
would be placed into payment tiers based on the costliest comorbidity
or extensive service. However, we found that this option did not
account for the additive effect noted above. To address both of these
issues, we proposed basing a resident's NTA score, which would be used
to classify the resident into an NTA case-mix classification group, on
a weighted-count methodology. Specifically, as shown in Table 27, each
of the comorbidities and services that factored into a resident's NTA
classification was assigned a certain number of points based on its
relative impact on a resident's NTA costs. Those conditions and
services with a greater impact on NTA costs were assigned more points,
while those with less of an impact were assigned fewer points. The
relative impacts are estimated based the coefficients of an ordinary
least squares (OLS) regression that used the selected conditions and
extensive services to predict NTA costs per day. Points were assigned
by grouping together conditions and extensive services with similar OLS
regression estimates. More information on this methodology and analysis
can be found in section 3.7.1. of the SNF PDPM technical report
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. We stated that the effect of this
methodology was that the NTA component would adequately reflect
relative differences in the NTA costs for each condition or service, as
well as the additive effect of having multiple comorbidities.
We stated in the proposed rule (83 FR 21057) that a resident's
total comorbidity score, which would be the sum of the points
associated with all of a resident's comorbidities and services, would
be used to classify the resident into an NTA case-mix group. For
conditions and services where the source is indicated as MDS item
I8000, SNF PDPM NTA Comorbidity Mapping (which accompanied the FY 2019
SNF PPS proposed rule) (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) provides
a crosswalk between the listed condition and the ICD-10-CM codes which
may be coded to qualify that condition to serve as part of the
resident's NTA classification. MDS item I8000 is an open-ended item in
the MDS assessment where the assessment provider can fill in additional
active diagnoses that are not explicitly on the MDS for the resident in
the form of ICD-10 codes. In the case of Parenteral/IV Feeding, we
stated that we observed that NTA costs per day increase as the amount
of intake through parenteral or tube feeding increases. For this
reason, we proposed to separate this item into a high intensity item
and a low intensity item, similar to how it is defined in the RUG-IV
system. In order for a resident to qualify for the high intensity
category, the percent of calories taken in by the resident by
parenteral or tube feeding, as reported in item K0710A2 on the MDS 3.0,
must be greater than 50 percent. We further stated that in order to
qualify for the low intensity category, the percent of calories taken
in by the resident by parenteral or tube feeding, as reported in item
K0710A2 on the MDS 3.0, must be greater than 25 percent but less than
or equal to 50 percent, and the resident must receive an average fluid
intake by IV or tube feeding of at least 501cc per day, as reported in
item K0710B2 of the MDS 3.0.
We also noted that the source of the HIV/AIDS diagnosis is listed
as the SNF claim. We explained in the proposed rule that this is
because 16 states have state laws that prevent the reporting of HIV/
AIDS diagnosis information to CMS through the current assessment system
and/or prevent CMS from seeing such diagnosis information within that
system, should that information be mistakenly reported. We noted that
the states are Alabama, Alaska, California, Colorado, Connecticut,
Idaho, Illinois, Massachusetts, Nevada, New Hampshire, New Jersey, New
Mexico, South Carolina, Texas, Washington, and West Virginia. Given
this restriction, it would not be possible to have SNFs utilize the MDS
3.0 as the vehicle to report HIV/AIDS diagnosis information for
purposes of determining a resident's NTA classification. We noted that
the current SNF PPS uses a claims reporting mechanism as the basis for
the temporary AIDS add-on payment which exists under RUG-IV. To address
the issue discussed above with respect to reporting of HIV/AIDS
diagnosis information under the proposed PDPM, we proposed to utilize
this existing claims reporting mechanism to determine a resident's HIV/
AIDS status for the purpose of NTA classification. More specifically,
we explained that HIV/AIDS diagnosis information reported on the MDS
would be ignored by the GROUPER software used to classify a resident
into an NTA case-mix group. Instead, we stated that providers would be
instructed to locate the HIPPS code provided to the SNF on the
validation report associated with that assessment and report it to CMS
on the associated SNF claim. Following current protocol, the provider
would then enter ICD-10-CM code B20 on the associated SNF claim as if
it were being coded to receive payment through the current AIDS add-on
payment. The PRICER software, which we use to determine the appropriate
per diem payment for a provider based on their wage index and other
factors, would make the adjustment to the resident's NTA case-mix group
based on the presence of the B20 code on the claim, as well as adjust
the associated per diem payment based on the adjusted resident HIPPS
code. Again, we noted that this methodology follows the same logic that
the SNF PPS currently uses to pay the temporary AIDS add-on adjustment
but merely changes the target and type of adjustment from the SNF PPS
per diem to the NTA component of the proposed PDPM. We explained that
the difference is that while under the current system, the presence of
the B20 code would lead to a 128 percent increase in the per diem rate,
under the proposed PDPM, the presence of the B20 code would mean the
addition of 8 points (as determined by the OLS regression described
above) to the resident's NTA score, the categorization of the resident
into the appropriate NTA group, and an adjustment to the nursing
component, as described in section V.D.3.d. of the proposed rule.
Section 1888(e)(12) of the Act enacted a temporary 128 percent increase
in the PPS per diem payment for SNF residents with HIV/AIDS and
stipulated that the temporary adjustment was to be applied only until
the Secretary certifies that there is an appropriate case-mix
adjustment to compensate for the increased costs associated with this
population. As we explained in the proposed rule, based on this
language, we conducted an analysis similar to that used to determine
the HIV/AIDS add-on for the nursing component to examine the adequacy
of payment for ancillary services (all non-nursing services: PT, OT,
SLP, and NTA) for residents with HIV/AIDS under the proposed PDPM. This
analysis determined that after accounting for the 8 points assigned for
HIV/AIDS in the NTA component and controlling for case-mix
classification across the three therapy components and NTA component,
HIV/AIDS was not associated with an increase in ancillary costs. We
noted that nursing costs were not included in this regression because
we separately
[[Page 39222]]
investigated the increased nursing utilization associated with HIV/
AIDS, as described in section V.D.3.d. of the proposed rule. Based on
the results of this investigation, we concluded that the four ancillary
case-mix components (PT, OT, SLP, and NTA) adequately reimburse costs
associated with residents with HIV/AIDS. Therefore, we stated that we
do not believe an HIV/AIDS add-on is warranted for the ancillary cost
components. More information on this analysis can be found in section
3.8.2. of the PDPM technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Table 27 provides the proposed list of conditions and extensive
services that would be used for NTA classification, the source of that
information, and the associated number of points for that condition.
Table 27--Conditions and Extensive Services Used for NTA Classification
------------------------------------------------------------------------
Condition/extensive service Source Points
------------------------------------------------------------------------
HIV/AIDS.......................... SNF Claim........... 8
Parenteral IV Feeding: Level High. MDS Item K0510A2, 7
K0710A2.
Special Treatments/Programs: MDS Item O0100H2.... 5
Intravenous Medication Post-admit
Code.
Special Treatments/Programs: MDS Item O0100F2.... 4
Ventilator or Respirator Post-
admit Code.
Parenteral IV feeding: Level Low.. MDS Item K0510A2, 3
K0710A2, K0710B2.
Lung Transplant Status............ MDS Item I8000...... 3
Special Treatments/Programs: MDS Item O0100I2.... 2
Transfusion Post-admit Code.
Major Organ Transplant Status, MDS Item I8000...... 2
Except Lung.
Active Diagnoses: Multiple MDS Item I5200...... 2
Sclerosis Code.
Opportunistic Infections.......... MDS Item I8000...... 2
Active Diagnoses: Asthma COPD MDS Item I6200...... 2
Chronic Lung Disease Code.
Bone/Joint/Muscle Infections/ MDS Item I8000...... 2
Necrosis--Except Aseptic Necrosis
of Bone.
Chronic Myeloid Leukemia.......... MDS Item I8000...... 2
Wound Infection Code.............. MDS Item I2500...... 2
Active Diagnoses: Diabetes MDS Item I2900...... 2
Mellitus (DM) Code.
Endocarditis...................... MDS Item I8000...... 1
Immune Disorders.................. MDS Item I8000...... 1
End-Stage Liver Disease........... MDS Item I8000...... 1
Other Foot Skin Problems: Diabetic MDS Item M1040B..... 1
Foot Ulcer Code.
Narcolepsy and Cataplexy.......... MDS Item I8000...... 1
Cystic Fibrosis................... MDS Item I8000...... 1
Special Treatments/Programs: MDS Item O0100E2.... 1
Tracheostomy Care Post-admit Code.
Active Diagnoses: Multi-Drug MDS Item I1700...... 1
Resistant Organism (MDRO) Code.
Special Treatments/Programs: MDS Item O0100M2.... 1
Isolation Post-admit Code.
Specified Hereditary Metabolic/ MDS Item I8000...... 1
Immune Disorders.
Morbid Obesity.................... MDS Item I8000...... 1
Special Treatments/Programs: MDS Item O0100B2.... 1
Radiation Post-admit Code.
Highest Stage of Unhealed Pressure MDS Item M0300X1.... 1
Ulcer--Stage 4.
Psoriatic Arthropathy and Systemic MDS Item I8000...... 1
Sclerosis.
Chronic Pancreatitis.............. MDS Item I8000...... 1
Proliferative Diabetic Retinopathy MDS Item I8000...... 1
and Vitreous Hemorrhage.
Other Foot Skin Problems: Foot MDS Item M1040A, 1
Infection Code, Other Open Lesion M1040B, M1040C.
on Foot Code, Except Diabetic
Foot Ulcer Code.
Complications of Specified MDS Item I8000...... 1
Implanted Device or Graft.
Bladder and Bowel Appliances: MDS Item H0100D..... 1
Intermittent Catheterization.
Inflammatory Bowel Disease........ MDS Item I8000...... 1
Aseptic Necrosis of Bone.......... MDS Item I8000...... 1
Special Treatments/Programs: MDS Item O0100D2.... 1
Suctioning Post-admit Code.
Cardio-Respiratory Failure and MDS Item I8000...... 1
Shock.
Myelodysplastic Syndromes and MDS Item I8000...... 1
Myelofibrosis.
Systemic Lupus Erythematosus, MDS Item I8000...... 1
Other Connective Tissue
Disorders, and Inflammatory
Spondylopathies.
Diabetic Retinopathy--Except MDS Item I8000...... 1
Proliferative Diabetic
Retinopathy and Vitreous
Hemorrhage.
Nutritional Approaches While a MDS Item K0510B2.... 1
Resident: Feeding Tube.
Severe Skin Burn or Condition..... MDS Item I8000...... 1
Intractable Epilepsy.............. MDS Item I8000...... 1
Active Diagnoses: Malnutrition MDS Item I5600...... 1
Code.
Disorders of Immunity--Except: MDS Item I8000...... 1
RxCC97: Immune Disorders.
Cirrhosis of Liver................ MDS Item I8000...... 1
Bladder and Bowel Appliances: MDS Item H0100C..... 1
Ostomy.
Respiratory Arrest................ MDS Item I8000...... 1
Pulmonary Fibrosis and Other MDS Item I8000...... 1
Chronic Lung Disorders.
------------------------------------------------------------------------
Given the NTA scoring methodology described in the proposed rule
(83 FR 21058 through 21059) and above, and following the same
methodology used for the PT, OT, and SLP components, we used the CART
algorithm to determine the most appropriate splits in resident NTA
case-mix groups. This methodology is more thoroughly explained in
sections 3.4.2. and 3.7.2. of the SNF PDPM technical report available
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. Based on the
[[Page 39223]]
breakpoints generated by the CART algorithm, we determined that 6 case-
mix groups would be necessary to classify residents adequately in terms
of their NTA costs in a manner that captures sufficient variation in
NTA costs without creating unnecessarily granular separations. As
discussed in the proposed rule, we made certain administrative
decisions that further refined the NTA case-mix classification groups
beyond those produced through use of the CART algorithm but maintained
the CART output predictive accuracy. We explained that the proposed NTA
case-mix classification departs from the CART comorbidity score bins in
grouping residents with a comorbidity score of 1 with residents with
scores of 2 instead of with residents with scores of 0. This is to
maintain the distinction between residents with no comorbidities and
the rest of the population. In addition, we grouped residents with a
score of 5 together with residents with scores of 3 to 4 based on their
similarity in average NTA costs per day. More information on this
analysis can be found in section 3.7.2. of the SNF PDPM technical
report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. We provided the criteria
for each of these groups along with its CMI in Table 28 of the proposed
rule (set forth in Table 28 of this final rule).
We stated in the proposed rule (83 FR 21059) that to help ensure
payment reflects the average relative resource use at the per diem
level, CMIs would be set to reflect relative case-mix related
differences in costs across groups. We further stated that this method
helps ensure that the share of payment for each case-mix group would be
equal to its share of total costs of the component. CMIs for the NTA
component were calculated based on two factors. One factor was the
average per diem costs of a case-mix group relative to the population
average. The other factor was the average variable per diem adjustment
factor of the group relative to the population average. In this
calculation, average per diem costs equaled total NTA costs in the
group divided by number of utilization days in the group. Similarly,
the average variable per diem adjustment factor equaled the sum of NTA
variable per diem adjustment factors for all utilization days in the
group divided by the number of utilization days in the group. We
calculated CMIs such that they equaled the ratio of relative average
per diem costs for a group to the relative average variable per diem
adjustment factor for the group. In this calculation, relative average
per diem costs and the relative average variable per diem adjustment
factor were weighted by length of stay to account for the different
length of stay distributions across case-mix groups (as further
discussed in section 3.11.1. of the SNF PDPM technical report,
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). After calculating CMIs as
described above, we then applied adjustments to ensure that the
distribution of resources across payment components was aligned with
the statutory base rates as discussed in section V.D.3.b. of the
proposed rule. We also applied a parity adjustment by multiplying the
CMIs by the ratio of case-mix-related payments in RUG-IV over estimated
case-mix-related payments in PDPM, as further discussed in section V.J.
of the proposed rule. More information on the variable per diem
adjustment factor is discussed in section V.D.4. of the proposed rule.
The full methodology used to develop CMIs is presented in section 3.11.
of the SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html).
Table 28--NTA Case-Mix Classification Groups
------------------------------------------------------------------------
NTA case- NTA case-
NTA score range mix group mix index
------------------------------------------------------------------------
12+........................................... NA 3.25
9-11.......................................... NB 2.53
6-8........................................... NC 1.85
3-5........................................... ND 1.34
1-2........................................... NE 0.96
0............................................. NF 0.72
------------------------------------------------------------------------
We stated in the proposed rule (83 FR 21059) that as with the
previously discussed components, all residents would be classified into
one and only one of these 6 NTA case-mix groups under the proposed
PDPM. We explained that the proposed PDPM would create a separate
payment component for NTA services, as opposed to combining NTA and
nursing into one component as in the RUG-IV system. This separation
would allow payment for NTA services to be based on resident
characteristics that predict NTA resource utilization rather than
nursing staff time. Thus, we stated that we believe the proposed NTA
case-mix groups would provide a better measure of resource utilization
and lead to more accurate payments under the SNF PPS.
We invited comments on the approach proposed above to classify
residents for NTA payment under the proposed PDPM.
Commenters submitted the following comments related to the proposed
rule's discussion of the classification of residents for NTA payment
under the PDPM. A discussion of these comments, along with our
responses, appears below.
Comment: A few commenters recommended CMS include additional
conditions as comorbidities for NTA classification and payment,
including: Parkinson's disease, non-refractory epilepsy/seizure
disorders, and mental health conditions that bear a strong relationship
to NTA utilization. One commenter recommended that CMS include all
conditions associated with higher NTA costs, not only the 50 costliest
comorbidities. Another commenter suggested implementing a periodic
review process to update the NTA comorbidity list based on changes in
care practices. One commenter recommended CMS add cardio-respiratory
failure and shock, respiratory arrest, pulmonary fibrosis or other
chronic lung disorders, oxygen therapy, and non-invasive ventilation
(for example, BiPAP/CPAP) to the NTA comorbidity list, as these
conditions/services reflect medical complexity and high acuity. Another
commenter stated that NTA comorbidities should include wound care and
all pressure ulcers, not only stage 4 pressure ulcers.
Response: As described in section 3.7.1 of the SNF PDPM technical
report, we investigated a broad list of conditions and services as
potential NTA comorbidities, defined using MDS items, ICD-10-CM
diagnoses, and CCs and RxCCs from the Medicare Parts C and D risk
adjustment models. We used MDS item I5300 to identify residents with
Parkinson's disease, RxCC 164 to identify residents with non-refractory
epilepsy, CC 84 to identify residents with cardio-respiratory failure
and shock, CC 83 to identify residents with respiratory arrest, CC 112
and RxCC 227 to identify residents with pulmonary fibrosis or other
chronic lung disorders, MDS item M1200F to identify residents receiving
wound care, and MDS item M0300X1 to identify residents with a pressure
ulcer. For mental health conditions, we used RxCC 135 to identify
residents with anxiety, RxCC 133 to identify residents with specified
anxiety, personality, and behavior disorders, RxCC 132 and 134 to
identify residents with depression, CC 58 to identify residents with
Major Depressive, Bipolar, and Paranoid Disorder, CC 57, RxCC 130 to
identify
[[Page 39224]]
residents with schizophrenia, CC 54 to identify residents with drug or
alcohol psychosis, and CC 55 to identify residents with drug or alcohol
dependence. Neither Parkinson's disease, non-refractory epilepsy,
pulmonary fibrosis or other chronic lung disorders, nor any mental
health condition were among the top 50 costliest conditions/services in
terms of NTA utilization. Non-refractory epilepsy was associated with
an increase of about $1.60 in NTA costs per day, while Parkinson's
disease was associated with an increase of about $2.50 in NTA costs per
day and pulmonary fibrosis or other chronic lung disorders were
associated with an increase of about $4 per day in NTA costs. Wound
care was associated with an increase of about $2 in NTA costs per day,
while stage 3 pressure ulcers (the next highest level of severity after
stage 4) were associated with an increase of about $1 in NTA costs per
day. Among mental health conditions, major depression was the most
costly and associated with an increase of about $4 per day in NTA
costs. The other mental health conditions were associated with less
than $2 in NTA costs per day. In contrast, the least costly comorbidity
included in the final list of included comorbidities for NTA
classification and payment was associated with an increase of about
$4.50 in NTA costs per day. Therefore, these conditions were not
included as NTA comorbidities. On the other hand, cardio-respiratory
failure and shock, as well as respiratory arrest were found to be among
the 50 costliest conditions in terms of NTA utilization. Therefore,
these two conditions were included in the final list of NTA
comorbidities. As for oxygen therapy and non-invasive ventilation such
as BiPAP and CPAP, clinicians advised CMS that it was not appropriate
to include these services in the payment model because their inclusion
would likely lead to inappropriate provision of these services in
excess of clinical need. We do not believe it is appropriate to include
conditions/services that do not have a notable impact on NTA costs per
day, and therefore, we only included the 50 costliest comorbidities.
Comment: A commenter states that the points assigned to ventilator
care should be much higher because this service requires 24-hour
assistance. Additionally, this commenter requests CMS modify the term
``ventilator/respirator'' to only ``ventilator'' as the term
``respirator'' is outdated. Another commenter recommended further
evaluation of the proposed point assignment, particularly for pressure
ulcers, diabetic ulcers, respiratory failure, severe burns, multi-drug
resistant organisms, and morbid obesity. According to the commenter,
these items require higher resource utilization compared to other
conditions/services that are assigned the same number of points.
Response: As described in section 3.7.1 of the SNF PDPM technical
report, after determining the 50 costliest comorbidities in terms of
NTA utilization, we ran an OLS regression to estimate the increase in
NTA costs associated with each included condition or service. We then
assigned points to each condition/service in proportion to the
associated increase in NTA costs by dividing the coefficient for each
condition or service by 10 and then rounding to the nearest integer.
Based on this procedure, we assigned 4 points to ventilator/respirator
care to reflect our finding that this service was associated with an
increase of about $40 in NTA costs per day. Using the same procedure,
we assigned 1 point to stage 4 pressure ulcers, diabetic foot ulcers,
respiratory failure, severe burns, multi-drug resistant organisms, and
morbid obesity as each of these conditions was associated with an
increase of roughly $10 in NTA costs per day. Therefore, our analysis
does not support increasing the points assigned to these services. The
nomenclature used to refer to ventilator/respirator care under PDPM is
consistent with the description of this service on the current version
of the MDS 3.0 assessment. We appreciate the feedback on the
appropriateness of the current name and will consider modifying the
name of this item as appropriate to reflect current usage.
Comment: One commenter states that given the theoretical maximum
NTA score is 83, the highest NTA score bin should not be 12+. This
commenter suggests creating additional score bins at the upper end of
the score, such as 12-14, 15-17, and 18+, to more accurately reflect
residents with highly complex conditions and multiple extensive
services.
Response: While it is true that some stays have very high NTA
costs, we find that stays with an NTA comorbidity score of 12 or above
are very rare (about 1 percent of all stays). As the number of stays
included in each group declines, the magnitude of the standard error
associated with the estimate of a group's resource utilization
increases, raising concerns about the precision of these estimates. For
the foregoing reasons, we do not believe it is appropriate to add
additional NTA groups to include residents with extraordinarily high
NTA utilization at this time. We will also consider revisiting both the
list of included NTA comorbidities and the points assigned to each
condition/service based on changes in the resident population and care
practices over time.
Comment: Another commenter expressed concern that NTA costs,
especially high-cost cases, are impossible to predict through use of
existing administrative data due to the small sample size of these
high-cost outliers. Since PDPM was developed on data that may fail to
account for high-cost outliers, the commenter believes that PDPM is not
sufficient to explain NTA utilization and will underpay the actual
high-cost cases that cannot be predicted. One commenter questioned the
validity of current NTA data, stating that providers do not accurately
record NTA costs because these services are not important determinants
of payment under RUG-IV. As a result, current data may underestimate
NTA costs. Therefore, PDPM may not accurately reimburse NTA
utilization.
Response: As shown in section 3.7.1 of the SNF PDPM technical
report, average NTA costs per day by comorbidity score varies from
around $30 to near $180, which indicates the data being used captures
great variations of NTA costs and includes many expensive cases. The
NTA comorbidity list as shown in Table 27 of the proposed rule (83 FR
21058) captures comorbidities and services with high NTA costs.
Moreover the selected comorbidities and services meet clinical
expectations of conditions that are expected to require high NTA
utilization. Although the data available may be limited in capturing
high-cost cases due to the small sample size of less common
comorbidities, the proposed rule (83 FR 21073 through 21077) and
section 3.12 of the SNF PDPM technical report show that payments for
beneficiaries with high NTA costs will increase notably under PDPM
compared with RUG IV. In particular, our impact analysis finds that
payment increases by 27.2 percent for residents with 12 or more
conditions under PDPM compared to RUG-IV.
Regarding the concern that current administrative data may not
fully capture NTA utilization for the SNF population, first, as
described in Section 3.2.2. of the SNF PDPM technical report, we
checked the quality of self-reported NTA utilization data by comparing
charges from cost reports and charges from claims and verifying that
these were generally consistent. Second, we used four years of data
(FYs 2014-2017) to identify the conditions and services associated with
high NTA utilization and assign points to these comorbidities
[[Page 39225]]
reflective of their impact on resource use. Using several years of data
addresses a key concern of commenters responding to the 2017 ANPRM and
ensures a higher level of robustness compared to using a single year of
data. Third, if NTA utilization is indeed underreported overall, this
should not affect relative NTA resource use across different types of
residents, therefore PDPM should still assign payment appropriately
based on observed relative differences in NTA utilization. Fourth,
clinicians reviewed the proposed NTA classification and verified that
it accords with clinical expectations regarding conditions and services
that are associated with high NTA utilization. Finally, as SNF care
practices and reporting patterns change in response to the new payment
model and other factors, we will consider revising elements of PDPM,
including the NTA comorbidities, to reflect changes in relative
resource use.
Comment: One commenter requested clarification on the NTA
comorbidity list change from RCS-I to PDPM.
Response: The change in the comorbidity list from RCS-I to PDPM is
due to the following: first, we used 4 years of data (FY2014-FY2017)
under PDPM instead of a single year of data under RCS-I to make the
list more robust to changes in the SNF population and care practices
over time; second, we added Part D condition categories to better
capture conditions associated with high medication costs; finally, we
expanded the list to the top 50 comorbidities to include more
conditions.
Comment: One commenter recommended that PDPM include an NTA default
category to accommodate new conditions and services for greater
flexibility.
Response: We are not clear on how such a default category would
operate, nor what level of reimbursement would be appropriate to set
for the addition of new conditions and services. We would need
additional information on how such a default category could be
constructed.
Comment: One commenter expressed concern regarding access to novel
therapies, and encouraged CMS to consider adding a new technology add-
on payment, similar to that done for inpatient hospitals, and make
additional payments to SNFs when new treatment options become
available. One commenter also stated that PDPM does not account for new
classes of expensive medications.
Response: The points associated with each NTA comorbidity under the
PDPM are based on existing cost data, which may be updated in future
years to reflect the costs of new technologies and treatments or new
classes of medications. Rather than merely incentivizing new
treatments, we expect providers to utilize the best treatments for a
given patient, which may or may not be more costly than existing
treatments. Further, we note that the inpatient hospital PPS's new
technology add-on payment is specifically authorized by sections
1886(d)(5)(K) and (L) of the Act, whereas no similar statutory
authority exists under the SNF PPS.
Comment: One commenter expressed concern that using a patient's NTA
score as a first tier classification criterion could put providers at
risk of late or missing IPAs.
Response: As discussed in section V.D of this final rule, the IPA
would be an optional assessment and, as such, not susceptible to late
or missed assessment penalties.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing the proposed NTA component of the PDPM and the proposed
classification methodology for the NTA component, without modification.
f. Payment Classifications Under PDPM
RUG-IV classifies each resident into a single RUG, with a single
payment for all services. By contrast, the PDPM classifies each
resident into five components (PT, OT, SLP, NTA, and nursing) and
provide a single payment based on the sum of these individual
classifications. The payment for each component would be calculated by
multiplying the CMI for the resident's group first by the component
federal base payment rate, then by the specific day in the variable per
diem adjustment schedule (as discussed in section V.D.4 of the proposed
rule and in section V.D.4 of this final rule). Additionally, for
residents with HIV/AIDS indicated on their claim, the nursing portion
of payment would be multiplied by 1.18 (as discussed in section
V.D.3.d. of the proposed rule and section V.H of this final rule).
These payments would then be added together along with the non-case-mix
component payment rate to create a resident's total SNF PPS per diem
rate under the PDPM. This section describes how two hypothetical
residents would be classified into payment groups under the current
RUG-IV model and PDPM. To begin, consider two residents, Resident A and
Resident B, with the resident characteristics identified in Table 29.
Table 29--Hypothetical Resident Characteristics
----------------------------------------------------------------------------------------------------------------
Resident characteristics Resident A Resident B
----------------------------------------------------------------------------------------------------------------
Rehabilitation Received?......... Yes................................... Yes.
Therapy Minutes.................. 730................................... 730.
Extensive Services............... No.................................... No.
ADL Score........................ 9..................................... 9.
Clinical Category................ Acute Neurologic...................... Major Joint Replacement.
PT and OT Function Score......... 10.................................... 10.
Nursing Function Score........... 7..................................... 7.
Cognitive Impairment............. Moderate.............................. Intact.
Swallowing Disorder?............. No.................................... No.
Mechanically Altered Diet?....... Yes................................... No.
SLP Comorbidity?................. No.................................... No.
Comorbidity Score................ 7 (IV Medication and DM).............. 1 (Chronic Pancreatitis).
Other Conditions................. Dialysis.............................. Septicemia.
Depression?...................... No.................................... Yes.
----------------------------------------------------------------------------------------------------------------
Currently under the SNF PPS, Resident A and Resident B would be
classified into the same RUG-IV group. They both received
rehabilitation, did not receive extensive services, received 730
minutes of therapy, and have an
[[Page 39226]]
ADL score of 9. This places the two residents into the ``RUB'' RUG-IV
group and SNFs would be paid at the same rate, despite the many
differences between these two residents in terms of their
characteristics, expected care needs, and predicted costs of care.
Under the PDPM, however, these two residents would be classified
very differently. With regard to the PT and OT components, Resident A
would fall into group TO, as a result of his categorization in the
Acute Neurologic group and a function score within the 10 to 23 range.
Resident B, however, would fall into group TC for the PT and OT
components, as a result of his categorization in the Major Joint
Replacement group and a function score within the 10 to 23 range. For
the SLP component, Resident A would be classified into group SH, based
on his categorization in the Acute Neurologic group, the presence of
moderate cognitive impairment, and the presence of Mechanically-Altered
Diet, while Resident B would be classified into group SA, based on his
categorization in the Non-Neurologic group, the absence of cognitive
impairment or any SLP-related comorbidity, and the lack of any
swallowing disorder or mechanically-altered diet. For the Nursing
component, following the existing nursing case-mix methodology,
Resident A would fall into group LBC1, based on his use of dialysis
services and a nursing function score of 7, while Resident B would fall
into group HBC2, due to the diagnosis of septicemia, presence of
depression, and a nursing function score of 7. Finally, with regard to
NTA classification, Resident A would be classified in group NC, with an
NTA score of 7, while Resident B would be classified in group NE, with
an NTA score of 1. This demonstrates that, under the PDPM, more aspects
of a resident's unique characteristics and needs factor into
determining the resident's payment classification, which makes for a
more resident-centered case-mix model while also eliminating, or
greatly reducing, the number of service-based factors which are used to
determine the resident's payment classification. Because this system is
based on specific resident characteristics predictive of resource
utilization for each component, we expect that payments will be better
aligned with resident need.
4. Variable per Diem Adjustment Factors and Payment Schedule
Section 1888(e)(4)(G)(i) of the Act provides that payments must be
adjusted for case mix, based on a resident classification system which
accounts for the relative resource utilization of different types of
residents. Additionally, section 1888(e)(1)(B) of the Act specifies
that payments to SNFs through the SNF PPS must be made on a per-diem
basis. Currently under the SNF PPS, each RUG is paid at a constant per
diem rate, regardless of how many days a resident is classified in that
particular RUG. However, we explained in the proposed rule (83 FR
21060) that during the course of the SNF PMR project, analyses on cost
over the stay for each of the case-mix adjusted components revealed
different trends in resource utilization over the course of the SNF
stay. These analyses utilized costs derived from claim charges as a
measure of resource utilization. Costs were derived by multiplying
charges from claims by the CCRs on facility-level costs reports. As
described in section V.B.3.b. of the proposed rule, costs better
reflect differences in the relative resource use of residents as
opposed to charges, which partly reflect decisions made by providers
about how much to charge payers for certain services. In examining
costs over a stay, we stated we found that for certain categories of
SNF services, notably PT, OT and NTA services, costs declined over the
course of a stay. Based on the claim submission schedule and variation
in the point during the month when a stay began, we were able to
estimate resource use for a specific day in a stay. Facilities are
required to submit monthly claims. Each claim covers the period from
the first day during the month a resident is in the facility to the end
of the month. If a resident was admitted on the first day of the month,
remains in the facility, and continues to have Part A SNF coverage
until the end of the month, the claim for that month will include all
days in the month. However, if a resident is admitted after the first
day of the month, the first claim associated with the resident's stay
will be shorter than a month. We stated in the proposed rule that to
estimate resource utilization for each day in the stay, we used the
marginal estimated cost from claims of varying length based on random
variation in the day of a month when a stay began. Using this
methodology, we observed a decline in the marginal estimated cost of
each additional day of SNF care over the course of the stay. We further
stated that to supplement this analysis, we also looked at changes in
the number of therapy minutes reported in different assessments
throughout the stay. Because therapy minutes are recorded on the MDS,
the presence of multiple assessments throughout the stay provided
information on changes in resource use. For example, it was clear
whether the number of therapy minutes a resident received changed from
the 5-day assessment to the 14-day assessment. We explained that the
results from this analysis were consistent with the cost from claims
analysis and showed that, on average, the number of therapy minutes is
lower for assessments conducted later in the stay. This finding was
consistent across different lengths of stay. More information on these
analyses can be found in section 3.9. of the SNF PDPM technical report
and section 3.9. of the SNF PMR technical report that accompanied the
ANPRM, both available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
As discussed in the proposed rule (83 FR 21060 through 21061),
analyses of the SLP component revealed that the per diem costs remain
relatively constant over time, while the PT, OT, and NTA component cost
analyses indicate that the per diem cost for these three components
decline over the course of the stay. We stated in the proposed rule
that in the case of the PT and OT components, costs start higher at the
beginning of the stay and decline slowly over the course of the stay.
By comparison, the NTA component cost analyses indicated significantly
increased NTA costs at the beginning of a stay that then drop to a much
lower level that holds relatively constant over the remainder of the
SNF stay. This is consistent with how most SNF drug costs are typically
incurred at the outset of a SNF stay. We stated that these results
indicate that resource utilization for PT, OT, and NTA services changes
over the course of the stay. More information on these analyses can be
found in section 3.9.1. of the SNF PMR technical report that
accompanied the ANPRM available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html. As we
stated in the proposed rule, we were unable to assess potential changes
in the level of nursing costs over a resident's stay, in particular
because nursing charges are not separately identifiable in SNF claims,
and nursing minutes are not reported on the MDS assessments. However,
stakeholders (industry representatives and clinicians) at multiple TEPs
indicated that nursing costs tend to remain relatively constant over
the course of a resident's stay.
We explained in the proposed rule that constant per diem rates, by
[[Page 39227]]
definition, do not track variations in resource use throughout a SNF
stay. We stated we believe this may lead to too few resources being
allocated for SNF providers at the beginning of a stay. Given the
trends in resource utilization over the course of a SNF stay discussed
above, and that section 1888(e)(4)(G)(i) of the Act requires the case-
mix classification system to account for relative resource use, we
proposed adjustments to the PT, OT, and NTA components in the proposed
PDPM to account for changes in resource utilization over a stay. These
adjustments were referred to as the variable per diem adjustments. We
did not propose such adjustments to the SLP and nursing components
based on findings and stakeholder feedback, as discussed above, that
resource use tends to remain relatively constant over the course of a
SNF stay.
As noted above and in the proposed rule (83 FR 21061), and
discussed more thoroughly in section 3.9. of the SNF PMR technical
report that accompanied the ANPRM (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html),
PT and OT costs decline at a slower rate than the decline in NTA costs.
Therefore, in addition to proposing a variable per diem adjustment, we
further proposed separate adjustment schedules and indexes for the PT
and OT components and the NTA component to reflect more closely the
rate of decline in resource utilization for each component. Table 30 of
the proposed rule provided the adjustment factors and schedule that we
proposed for the PT and OT components, while Table 31 of the proposed
rule provided the adjustment factors and schedule that we proposed for
the NTA component.
In Table 30 of the proposed rule, the adjustment factor for the PT
and OT components was 1.00 for days 1 to 20. We explained that this was
because the analyses described above indicated that PT and OT costs
remain relatively high for the first 20 days and then decline. The
estimated daily rates of decline for PT and OT costs relative to the
initial 20 days were both 0.3 percent. Thus, we stated that a
convenient and appropriate way to reflect this was to bin days in the
PT and OT variable per diem adjustment schedules such that payment
declines at less frequent intervals, while still reflecting a 0.3
percent daily rate of decline in PT and OT costs. Therefore, we
proposed to set the adjustment factors such that payment would decline
2 percent every 7 days after day 20 (0.3 * 7 = 2.1). We explained that
the 0.3 percent rate of decline was derived from a regression model
that estimates the level of resource use for each day in the stay
relative to the beginning of the stay. The regression methodology and
results are presented in section 3.9. of the SNF PDPM technical report,
available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
As described previously in this section and in the proposed rule
(83 FR 21061), NTA resource utilization exhibits a somewhat different
pattern. The analyses described above indicate that NTA costs are very
high at the beginning of the stay, drop rapidly after the first 3 days,
and remain relatively stable from the fourth day of the stay. We stated
that starting on day 4 of a stay, the per diem costs drop to roughly
one-third of the per diem costs in the initial 3 days. We explained
that this suggests that many NTA services are provided in the first few
days of a SNF stay. Therefore, we proposed setting the NTA adjustment
factor to 3.00 for days 1 to 3 to reflect the extremely high initial
costs, then setting it at 1.00 (two-thirds lower than the initial
level) for subsequent days. We explained that the value of the
adjustment factor was set at 3.00 for the first 3 days and 1.00 after
(rather than, for example, 1.00 and 0.33, respectively) for simplicity.
The results are presented in section 3.9. of the SNF PDPM technical
report, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
As we described in the proposed rule (83 FR 21061), case-mix
adjusted federal per diem payment for a given component and a given day
would be equal to the base rate for the relevant component (either
urban or rural), multiplied by the CMI for that resident, multiplied by
the variable per diem adjustment factor for that specific day, as
applicable. Additionally, as described in further detail in section
V.D.3.d. of the proposed rule, we stated that an additional 18 percent
would be added to the nursing per-diem payment to account for the
additional nursing costs associated with residents who have HIV/AIDS.
We further explained that these payments would then be added together
along with the non-case-mix component payment rate to create a
resident's total SNF PPS per diem rate under the proposed PDPM. We
invited comments on the proposed variable per diem adjustment factors
and payment schedules discussed in this section.
Commenters submitted the following comments related to the proposed
rule's discussion of the variable per diem adjustment factors and
payment schedules. A discussion of these comments, along with our
responses, appears below.
Comment: Some commenters supported the use of the variable per diem
adjustment under PDPM. Several commenters stated that PDPM,
specifically the variable per diem payment adjustments included in the
PT, OT, and NTA components, may negatively affect access for
beneficiaries with long stays and complex medical needs. These
commenters stated that the variable per diem payment adjustments will
encourage early discharges and the provision of fewer services. One
commenter stated that residents with chronic conditions may not exhibit
a trend of declining NTA utilization over a stay and that resource
utilization for these patients is sustained at a relatively constant
level throughout the stay. The commenter states that in these cases,
variable per diem payment adjustments will incentivize facilities to
provide less expensive medications later in the stay, which the
commenter states may be harmful to the patient. Finally, one commenter
seeks clarification on the rationale for beginning the decline in
payment for the PT and OT components after day 20 of a stay.
Response: We note that we investigated the impact of PDPM on
various resident subpopulations, including residents with many
expensive comorbidities, multiple extensive services, severe cognitive
impairment, long stays (utilization days = 100), stroke, IV medication,
diabetes, wound infection, amputation/prosthesis care, Alzheimer's, or
the presence of addictions, bleeding disorders, behavioral issues,
chronic neurological conditions, or bariatric care. CMS investigated
the potential impact of the proposed payment model on these
subpopulations based on comments received in response to the 2017
ANPRM. For almost all of these subpopulations with complex medical
needs, we found that PDPM is estimated to increase payment associated
with these residents compared to RUG-IV, as discussed in the proposed
rule (83 FR 21075) and section 3.12 of the SNF PDPM technical report.
Thus, we do not believe the variable per diem payment will negatively
affect access for beneficiaries with expensive comorbidities or complex
medical needs. We estimated that payment associated with very long
stays (utilization = 100 days) would decline by 1.9 percent under PDPM,
and we obtained similar results for stays longer than 90 days. However,
this decline in payment is a reflection of the lower resource
utilization per day associated
[[Page 39228]]
with longer stays. We observed that stays longer than 90 days have
lower therapy and NTA costs per day than their shorter counterparts.
However, the majority of such long stays are categorized as ultra-high
rehabilitation groups in the current case-mix classification suggesting
potential overpayment. Nevertheless, given the potential payment
reduction for long stays, we plan to monitor provider behavior closely
to identify facilities whose beneficiaries experience inappropriate
early discharge or provision of fewer services.
Regarding the concern about resource utilization patterns of
residents with chronic conditions, we would note that as discussed
above, we estimated that PDPM would actually increase overall per-stay
payment for many resident subpopulations with chronic conditions.
Further, while payment would be highest during the early part of a
stay, facilities would have flexibility to allocate this payment to
cover costs later in a stay, as they do now. Our research, discussed in
the proposed rule (83 FR 21061) and section 3.9 of the SNF PDPM
technical report, revealed that for the average SNF stay, NTA
utilization declines dramatically after the first 3 days of a stay. Of
course, we acknowledge that there are cases that may not match this
resource utilization pattern exactly. However, we believe that PDPM,
because it is based on the observed relationship between patient
characteristics and resource utilization, represents an improvement
over the current payment model in terms of payment accuracy. Further,
as stated, our investigations show that for many of the specific cases
cited by commenters as potential concerns, we expect PDPM actually to
increase associated payment compared to RUG-IV. While the variable per
diem schedule decreases pay throughout the stay, the overall increase
in payment accounts for the treatment cost of chronic conditions, which
is costly due to the sustained level of care needed to manage chronic
conditions.
As discussed in the proposed rule (83 FR 21060 through 21061) and
section 3.9 of the SNF PDPM technical report, we developed a
methodology to estimate per-diem resource use over a stay for PT, OT,
and NTA. Based on this methodology, we observed that estimated per-diem
PT and OT costs remain high for the first 20 days of a stay and decline
thereafter. Therefore, we established a variable per diem payment
adjustment schedule for the PT and OT components that begins to adjust
payment downward beginning on day 21.
Comment: Some commenters suggested that CMS consider creating a
waiver from the variable per diem adjustment for NTAs to mitigate
potential access issues for patients in SNF stays that exceed 90 days.
Additionally, these commenters expressed concern that, for long stays,
the variable per diem payment adjustment may erode payments to the
point where payment for the stay is below the cost of providing the
associated services. Some commenters believe that decreasing payment
for PT and OT over the course of the stay without exceptions is not
patient-centered and urged CMS to identify certain diagnoses associated
with longer duration of high-intensity therapy services as exceptions
to the variable per diem schedule. Several commenters requested
clarification on if and how CMS intends to monitor the impact of the
variable per diem adjustment on patient access and length of stay,
expressing concerns that the variable per diem adjustment could have a
disproportionate impact on patients with chronic conditions. Finally,
one commenter believed that reducing payments over time through the
variable per diem adjustment will reduce treatment options for stroke
and trauma victims.
Response: With regard to the waiver for either the PT and OT
variable per diem adjustment or the NTA variable per diem adjustment in
cases of long stays, we do not believe that such a waiver is necessary.
While payments do reduce over time, as discussed above, this reduction
is to reflect the decrease in patient costs over time. Therefore, given
the parallel reductions in costs and payments, over the course of the
stay, providers should be adequately reimbursed for the provision of
care, even in cases of long stays. With regard to the commenters'
concern regarding the impact on stroke and trauma patients, as well as
those with chronic conditions, we do plan to monitor closely these
types of SNF patients under PDPM to identify any adverse trends which
may result from application of the variable per diem adjustment. That
being said, given that we proposed to implement PDPM in a budget
neutral manner, this means that while the overall sum of monies paid
out under the SNF benefit would not change under PDPM, the allocation
and distribution of that money to individual SNFs could change. Given
that PT, OT, and NTA costs at the beginning of a stay tend to be higher
than those at the middle or end of a stay, most notably in the case of
long stay patients, maintaining a constant per diem rate will allocate
too few funds at the beginning of the stay, thereby increasing the
chance that the early portions of a stay may not be adequately
reimbursed. By aligning the payments with the cost trends, this
produces the best chance to ensure that providers receive adequate and
appropriate reimbursement at every point in the stay. Finally, as
stated above, we do plan to monitor the impact of this policy and may
consider revisions to the policy if there is evidence of adverse trends
either systemically or within certain patient populations.
Comment: One commenter questioned if CMS would expect the variable
per diem adjustment to continue until the payment reaches zero, for
purposes of calculating the UPL for the PT and OT components.
Response: As the variable per diem adjustment was developed based
on Medicare Part A data, we cannot speak to the ability of the
adjustment factor to be drawn out past the point of the Medicare Part A
stay. Moreover, as coverage for a Medicare Part A stay cannot be longer
than 100 days, the variable per diem adjustment, for purposes of
calculating the UPL, would go as far as Day 100 in Table 30.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing our proposal without modification to apply a variable per
diem adjustment as part of the PDPM effective October 1, 2019. Table 30
sets forth the final PDPM Variable Per Diem Payment Adjustment Factors
and Schedule for the PT and OT components, and Table 31 sets for the
final PDPM Variable Per Diem Payment Adjustment Factors and Schedule
for the NTA component.
Table 30--Variable Per-Diem Adjustment Factors and Schedule--PT and OT
------------------------------------------------------------------------
Adjustment
Medicare payment days factor
------------------------------------------------------------------------
1-20.................................................... 1.00
21-27................................................... 0.98
28-34................................................... 0.96
35-41................................................... 0.94
42-48................................................... 0.92
49-55................................................... 0.90
56-62................................................... 0.88
63-69................................................... 0.86
70-76................................................... 0.84
77-83................................................... 0.82
84-90................................................... 0.80
91-97................................................... 0.78
98-100.................................................. 0.76
------------------------------------------------------------------------
[[Page 39229]]
Table 31--Variable Per-Diem Adjustment Factors and Schedule--NTA
------------------------------------------------------------------------
Adjustment
Medicare payment days factor
------------------------------------------------------------------------
1-3..................................................... 3.0
4-100................................................... 1.0
------------------------------------------------------------------------
D. Use of the Resident Assessment Instrument--Minimum Data Set, Version
3
1. Revisions to Minimum Data Set (MDS) Completion Schedule
Consistent with section 1888(e)(6)(B) of the Act, to classify
residents under the SNF PPS, we use the MDS 3.0 Resident Assessment
Instrument. Within the SNF PPS, there are two categories of
assessments, scheduled and unscheduled. In terms of scheduled
assessments, SNFs are currently required to complete assessments on or
around days 5, 14, 30, 60, and 90 of a resident's Part A SNF stay,
including certain grace days. Payments based on these assessments
depend upon standard Medicare payment windows associated with each
scheduled assessment. More specifically, each of the Medicare-required
scheduled assessments has defined days within which the Assessment
Reference Date (ARD) must be set. The ARD is the last day of the
observation (or ``look-back'') period that the assessment covers for
the resident. The facility is required to set the ARD on the MDS form
itself or in the facility software within the appropriate timeframe of
the assessment type being completed. The clinical data collected from
the look-back period is used to determine the payment associated with
each assessment. For example, the ARD for the 5-day PPS Assessment is
any day between days 1 to 8 (including Grace Days). The clinical data
collected during the look-back period for that assessment is used to
determine the SNF payment for days 1 to 14. Unscheduled assessments,
such as the Start of Therapy (SOT) Other Medicare Required Assessment
(OMRA), the End of Therapy OMRA (EOT OMRA), the Change of Therapy (COT)
OMRA, and the Significant Change in Status Assessment (SCSA or
Significant Change), may be required during the resident's Part A SNF
stay when triggered by certain defined events.
For example, if a resident is being discharged from therapy
services, but remaining within the facility to continue the Part A
stay, then the facility may be required to complete an EOT OMRA. Each
of the unscheduled assessments affects payment in different and defined
manners. A description of the SNF PPS scheduled and unscheduled
assessments, including the criteria for using each assessment, the
assessment schedule, payment days covered by each assessment, and other
related policies, are set forth in the MDS 3.0 RAI manual on the CMS
website (available at https://downloads.cms.gov/files/MDS-30-RAI-Manual-v115-October-2017.pdf).
Table 32 outlines when each of the current SNF PPS assessments is
required to be completed and its effect on SNF PPS payment.
Table 32--Current PPS Assessment Schedule
----------------------------------------------------------------------------------------------------------------
Assessment
Medicare MDS assessment schedule Assessment reference reference Applicable standard medicare
type date date grace payment days
days
----------------------------------------------------------------------------------------------------------------
Scheduled PPS assessments
----------------------------------------------------------------------------------------------------------------
5-day............................... Days 1-5............... 6-8 1 through 14.
14-day.............................. Days 13-14............. 15-18 15 through 30.
30-day.............................. Days 27-29............. 30-33 31 through 60.
60-day.............................. Days 57-59............. 60-63 61 through 90.
90-day.............................. Days 87-89............. 90-93 91 through 100.
----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
Unscheduled PPS assessments
------------------------------------------------------------------------
Start of Therapy OMRA........... 5-7 days after the Date of the first
start of therapy. day of therapy
through the end
of the standard
payment period.
End of Therapy OMRA............. 1-3 days after all First non-therapy
therapy has ended. day through the
end of the
standard payment
period.
Change of Therapy OMRA.......... Day 7 (last day) The first day of
of the COT the COT
observation observation
period. period until end
of standard
payment period,
or until
interrupted by
the next COT-OMRA
assessment or
scheduled or
unscheduled PPS
Assessment.
Significant Change in Status No later than 14 ARD of Assessment
Assessment. days after through the end
significant of the standard
change identified. payment period.
As we explained in the proposed rule (83 FR 21062), an issue which
has been raised in the past with regard to the existing SNF PPS
assessment schedule is that the sheer number of assessments, as well as
the complex interplay of the assessment rules, significantly increases
the administrative burden associated with the SNF PPS. We stated that
case-mix classification under the proposed SNF PDPM relies to a much
lesser extent on characteristics that may change very frequently over
the course of a resident's stay (for example, therapy minutes may
change due to resident refusal or unexpected changes in resident
status), but instead relies on more stable predictors of resource
utilization by tying case-mix classification, to a much greater extent,
to resident characteristics such as diagnosis information. We explained
that in view of the greater reliance of the proposed SNF PDPM (as
compared to the RUG-IV model) on resident characteristics that are
relatively stable over a stay and our general focus on reducing
administrative burden for providers across the Medicare program, we are
making an effort to reduce the administrative burden on providers by
concurrently proposing to revise the assessments that would be required
under the proposed SNF PDPM. Specifically, we proposed to use the 5-day
SNF PPS scheduled assessment to classify a resident under the proposed
SNF PDPM for the entirety of his or her Part A SNF stay effective
beginning FY
[[Page 39230]]
2020 in conjunction with the implementation of the proposed PDPM,
except as described below. We stated that if we were to finalize this
proposal, we would propose revisions to the regulations at Sec.
413.343(b) during the FY 2020 rulemaking cycle so that such regulations
would no longer reflect the RUG-IV SNF PPS assessment schedule as of
the proposed conversion to the PDPM on October 1, 2019.
We also stated in the proposed rule (83 FR 21062) that we
understand Medicare beneficiaries are each unique and can experience
clinical changes which may require a SNF to reassess the resident to
capture changes in the resident's condition. Therefore, to allow SNFs
to capture these types of changes, effective October 1, 2019 in
conjunction with the proposed implementation of the PDPM, we proposed
to require providers to reclassify residents as appropriate from the
initial 5-day classification using a new assessment called an Interim
Payment Assessment (IPA), which would be comprised of the 5-day SNF PPS
MDS Item Set (Item Set NP). We stated that providers would be required
to complete an IPA in cases where the following two criteria are met:
(1) There is a change in the resident's classification in at least
one of the first tier classification criteria for any of the components
under the proposed PDPM (which are those clinical or nursing payment
criteria identified in the first column in Tables 21, 23, 26, and 27 of
the proposed rule), such that the resident would be classified into a
classification group for that component that differs from that provided
by the 5-day scheduled PPS assessment, and the change in classification
group results in a change in payment either in one particular payment
component or in the overall payment for the resident; and
(2) The change(s) are such that the resident would not be expected
to return to his or her original clinical status within a 14-day
period.
In addition, we proposed that the Assessment Reference Date (ARD)
for the IPA would be no later than 14 days after a change in a
resident's first tier classification criteria is identified. We stated
that the IPA is meant to capture substantial changes to a resident's
clinical condition and not everyday, frequent changes. We believe 14
days gives the facility an adequate amount of time to determine whether
the changes identified are in fact routine or substantial. To clarify,
we explained that the change in classification group described above
refers not only to a change in one of the first tier classification
criteria in any of the proposed payment components, but also to one
that would be sufficient to change payment in either one component or
in the overall payment for the resident. For example, we stated that
given the collapsed categories under the PT and OT components, this
would mean that a change from the medical management group to the
cancer group would not necessitate an IPA, as they are both collapsed
under the medical management group for purposes of the PT and OT
components. However, we stated a change from the major joint
replacement group to the medical management group would necessitate an
IPA, as this would change the resident's clinical category group for
purposes of categorization under the PT and OT components and would
result in a change in payment.
We stated that we believe the proposed requirement to complete an
IPA balances the need to ensure accurate payment and monitor for
changes in the resident's condition with the importance of ensuring a
more streamlined assessment approach under the proposed PDPM.
In cases where the IPA is required and a facility fails to complete
one, we proposed that the facility would follow the guidelines for late
and missed unscheduled MDS assessments which are explained in Chapters
2.13 and 6.8 of the MDS RAI Manual (https://downloads.cms.gov/files/MDS-30-RAI-Manual-v115-October-2017.pdf). Specifically, we stated in
the proposed rule (83 FR 21063) that if the SNF fails to set the ARD
within the defined ARD window for an IPA, and the resident is still in
a Part A stay, the SNF would be required to complete a late assessment.
The ARD can be no earlier than the day the error was identified. We
explained that if the ARD on the late assessment is set for a date that
is prior to the end of the time period during which the assessment
would have controlled the payment, had the ARD been set timely, the SNF
would bill the default rate for the number of days that the assessment
is out of compliance. This is equal to the number of days between the
day following the last day of the available ARD window and the late ARD
(including the late ARD). We provided an example where a SNF Part A
resident, who is in the major joint replacement payment category for
the PT and OT components, develops a skin ulcer of such a nature that,
in terms of developing a care and treatment plan for this resident, the
skin ulcer takes precedence as the resident's primary diagnosis. As a
result, the resident's primary diagnosis, as coded in item I8000, is
for this skin ulcer, which would cause him to be classified into the
medical management category for these components. The facility notes
this clinical change on November 10, 2018. However, they do not
complete the IPA until November 26, 2018 which is 16 days after the
change in criteria was identified and two days after the ARD window.
The facility would bill the default rate for the two days that it was
out of compliance. We stated that if the SNF fails to set the ARD for
an IPA within the defined ARD window for that assessment, and the
resident has been discharged from Part A, the assessment is missed and
cannot be completed. We noted that all days that would have been paid
by the missed assessment (had it been completed timely) are considered
provider-liable. Taking the example above, we stated that if the
facility recognized the IPA needed to be completed after the resident
has left the building, the facility would be liable for all days from
November 10, 2018 until the date of the resident's Part A Discharge.
In addition to proposing to require completion of the IPA as
described above, we also considered the implications of a SNF
completing an IPA on the variable per diem adjustment schedule
described in section V.D.4. the proposed rule. More specifically, in
the proposed rule, we considered whether an SNF completing an IPA
should cause a reset in the variable per diem adjustment schedule for
the associated resident. In examining costs over a stay, we found that
for certain categories of SNF services, notably PT, OT, and NTA
services, costs declined over the course of a stay. Our analyses showed
that, on average, the number of therapy minutes is lower for
assessments conducted later in the stay. Additionally, we stated that
we were concerned that by providing for the variable per diem
adjustment schedule to be reset after an IPA is completed, providers
may be incentivized to conduct multiple IPAs during the course of a
resident's stay to reset the variable per diem adjustment schedule each
time the adjustment is reduced. Therefore, in cases where an IPA is
completed, we proposed that this assessment would reclassify the
resident for payment purposes as outlined in Table 33 of the proposed
rule, but that the resident's variable per diem adjustment schedule
would continue rather than being reset on the basis of completing the
IPA.
Finally, we stated that believe, regardless of the payment system
or case-mix classification model used, residents should continue to
receive therapy that is appropriate to their care needs, and this
includes both the
[[Page 39231]]
intensity and modes of therapy utilized. However, we recognized that
because the initial 5-day PPS assessment would classify a resident for
the entirety of his or her Part A SNF stay (except in cases where an
IPA is completed) as outlined above, there would be no mechanism by
which SNFs are required to report the amount of therapy provided to a
resident over the course of the stay or by which we may monitor that
they are in compliance with the proposed 25 percent group and
concurrent therapy limit as described in section V.F. of the proposed
rule. Therefore, for these reasons, under the proposed PDPM, we
proposed to require that SNFs continue to complete the PPS Discharge
Assessment, as appropriate (including the proposed therapy items
discussed in section V.E.3. of the proposed rule), for each SNF Part A
resident at the time of Part A or facility discharge (see section V.E.
of this proposed rule for a discussion of our proposed revisions to
this assessment to include therapy items). Under the current
instructions in the MDS 3.0 RAI manual, the Part A PPS Discharge
assessment is completed when a resident's Medicare Part A stay ends,
but the resident remains in the facility (MDS 3.0 RAI Manual Chapter
2.5). However, we proposed to require this assessment to be completed
at the time of facility discharge for Part A residents as well. Thus,
we would continue to collect data on therapy provision as proposed in
section V.F. of the proposed rule, to assure that residents are
receiving therapy that is reasonable, necessary, and specifically
tailored to meet their unique needs. We stated that we believe the
combination of the 5-day Scheduled PPS Assessment, the IPA Assessment,
and PPS Discharge Assessment would provide flexibility for providers to
capture and report accurately the resident's condition, as well as
accurately reflect resource utilization associated with that resident,
while minimizing the administrative burden on providers under the
proposed SNF PDPM.
In addition to these proposed changes, we also examined in the
proposed rule (83 FR 21064) the current use of grace days in the MDS
assessment schedule. Grace days have been a longstanding part of the
SNF PPS. They were created in order to allow clinical flexibility when
setting ARD dates of scheduled PPS assessments. In the FY 2012 final
rule (76 FR 48519), we discussed that in practice, there is no
difference between regular ARD windows and grace days and we encouraged
the use of grace days if their use would allow a facility more clinical
flexibility or would more accurately capture therapy and other
treatments. Thus, we do not intend to penalize any facility that
chooses to use the grace days for assessment scheduling or to audit
facilities based solely on their regular use of grace days. We may
explore the option of incorporating the grace days into the regular ARD
window in the future; nevertheless, we will retain them as part of the
assessment schedule at the present time consistent with the current
policy and the new assessment schedule proposed in the proposed rule.
We proposed, effective beginning October 1, 2019, in conjunction
with the proposed implementation of the PDPM, to incorporate the grace
days into the existing assessment window. We explained that this
proposal would eliminate grace days as such from the SNF PPS assessment
calendar and provide for only a standard assessment window. We stated
that, as discussed, there is no practical difference between the
regular assessment window and grace days and there is no penalty for
using grace days. Accordingly, we stated that we believe it would be
appropriate to eliminate the use of grace days in PPS assessments.
Table 33 of the proposed rule, set forth at Table 33 of this final
rule, sets forth the proposed SNF PPS assessment schedule,
incorporating the proposed revisions discussed above, which we stated
would be effective October 1, 2019 concurrently with the proposed PDPM.
Table 33--PPS Assessment Schedule Under PDPM
------------------------------------------------------------------------
Applicable standard
Medicare MDS assessment Assessment reference Medicare payment
schedule type date days
------------------------------------------------------------------------
5-day Scheduled PPS Days 1-8............ All covered Part A
Assessment. days until Part A
discharge (unless
an IPA is
completed).
Interim Payment Assessment No later than 14 ARD of the
(IPA). days after change assessment through
in resident's first Part A discharge
tier classification (unless another IPA
criteria is assessment is
identified. completed).
PPS Discharge Assessment.... PPS Discharge: Equal N/A.
to the End Date of
the Most Recent
Medicare Stay
(A2400C) or End
Date.
------------------------------------------------------------------------
We noted in the proposed rule (83 FR 21064) that, as in previous
years, we intend to continue to work with providers and software
developers to assist them in understanding changes we proposed to the
MDS. Further, we noted that none of the proposals related to changes to
the MDS assessment schedule should be understood to change any
assessment requirements which derive from the Omnibus Budget
Reconciliation Act of 1987 (OBRA 87), which establishes assessment
requirements for all nursing home residents, regardless of payer. We
invited comments on our proposals to revise the SNF PPS assessment
schedule and related policies as discussed above.
We also solicited comment on the extent to which implementing these
proposals would reduce provider burden.
Commenters submitted the following comments related to the proposed
changes to the MDS assessment schedule and related assessment policies
as discussed above. A discussion of these comments, along with our
responses, appears below.
Comment: One commenter expressed approval of the proposal to
incorporate grace days into the existing assessment window. This
commenter agrees that this will simplify things and reduce burden, cost
and time for providers. Many commenters agreed with using the 5-day
assessment to establish per diem payment for the stay. However, several
commenters were concerned that the timing of 5-day assessments may
still be difficult for SNFs. These commenters stated that securing
clinician sign off and all needed information, such as lab results,
will be challenging for SNFs. Several commenters requested an allowance
for 5-day assessments to be submitted up until Day 14 of a SNF stay.
Response: We appreciate the support for incorporating grace days
into the existing assessment window and for using the 5-day assessment
to establish per diem payment for the entirety of the stay, assuming
that an IPA is not completed. Regarding the timing of the
[[Page 39232]]
5-day assessment under the current RUG-IV system, the 5-day assessment
window (which goes until Day 8 of a SNF stay) is no different than that
proposed under PDPM. FY 2017 MDS data show that almost 98 percent of 5-
day assessments were completed timely. This demonstrates that
facilities have been able to complete this assessment with minimal
difficulty until now and we do not foresee the new system adding an
amount of complexity that would prevent them from completing it going
forward. Regarding the suggestion to allow providers to have until Day
14 to submit the initial assessment, we do not believe this is
necessary or appropriate, given that, as the data above indicate, there
is sufficient time for coding the 5-day assessment and because the 5-
day assessment provides a snapshot of the resident closer to the point
of admission.
Comment: One commenter questioned if on the 5-day Assessment a
facility were to establish a RUG in the Ultra High category for a
patient, would that RUG be maintained throughout the entire stay
regardless of whether there is a drop in the amount of minutes of
therapy provided in an assessment window.
Response: We would note that the proposed changes to the assessment
schedule would take place upon implementation of PDPM, and under PDPM,
patients would no longer be classified into RUG-IV categories. They
would instead be classified into case mix groups (CMGs) based on PDPM
classification as described in the proposed rule (83 FR 21034-21061).
Once a patient is classified into a CMG, that payment group would be
maintained through the entire stay unless an Interim Payment Assessment
(IPA), as discussed below, is completed and reclassifies the patient
into a different CMG.
Comment: Several commenters were concerned with the proposed
reduction in payment assessments. They believe that the reduction in
assessments could limit the ability of CMS and surveyors to track
changes in status and progress of patients and reduce the amount of
data CMS has available to use as a basis for future payment adjustments
on. These commenters urged CMS to keep the existing PPS assessments as
they are. Several commenters recommended that CMS revise the assessment
period and ARD to align more closely with other PAC providers in order
to implement standardized patient data elements as required by the
IMPACT Act.
Response: We appreciate commenters' concern that a reduction in
assessments could limit the ability of CMS and surveyors to track
status changes and could reduce the amount of data available for use in
future payment policy development. However, PDPM relies on stable
characteristics that we do not expect to change significantly over the
course of the stay. Therefore, additional SNF PPS payment assessments
would not necessarily capture different data throughout the stay.
Additionally, the OBRA assessment schedule will remain the same and
those assessments would provide needed information and data for
surveyors and research purposes. Moreover, if clinical characteristics
do change, we would expect facilities to elect the option (as discussed
further below) to complete the IPA to track these changes.
We appreciate the recommendation to revise the assessment period
and ARD to align more closely with other PAC providers in order to
implement standardized patient data elements required by the IMPACT
Act. We believe that many of the policies being finalized as part of
PDPM serve to improve alignment with other PAC settings such as the
utilization of functional measures similar to those in IRFs, and the
interrupted stay policy which is similar to the IRF and IPF policies,
and we hope to continue to improve this alignment in future
refinements. As such, we may consider these recommendations in the
future.
Comment: Most commenters supported CMS reducing the number of
assessments that are required for SNF payment. These commenters
expressed that their support for the reduction of the number of payment
assessments is due to burden relief and a desire to align with other
PAC settings such as IRFs and Home Health that require far fewer
patient assessments than SNFs require. One commenter was concerned that
while the number of assessments have been reduced, the MDS itself has
become more complex with new reporting requirements and items, leaving
administrative burden unchanged. Additionally, most commenters conveyed
confusion about the proposed IPA. The first area of confusion arose
from which criteria CMS wants SNFs to use to determine whether an IPA
needs to be completed. Commenters noted that in the proposed rule (83
FR 21063) we stated that there must be a change in the resident's
classification in at least one of the first tier classification
criteria for any of the components under the proposed PDPM (which are
those clinical or nursing payment criteria identified in the first
column in Tables 21, 23, 26, and 27), such that the resident would be
classified into a classification group for that component that differs
from that provided by the 5-day scheduled PPS assessment, and the
change in classification group must result in a change in payment
either in one particular payment component or in the overall payment
for the resident. Additionally, the commenter stated that later in the
proposed rule, we clarified that the change in classification group
described above refers to not only a change in one of the first tier
classification criteria in any of the proposed payment components, but
also to one that would be sufficient to change payment in either one
component or in the overall payment for the resident (83 FR 21063).
Commenters questioned whether an IPA would be required when there is
any clinical change that would cause a payment change for a SNF
patient. Many commenters requested a general simplification and more
guidance surrounding the IPA criterion. Additionally, several
commenters believed that there should be guidance about whether an IPA
is needed when a patient's functional status and need for specific
services changes and whether the IPA should include section GG in order
to capture function change.
Most commenters were concerned about the complexity of the proposed
IPA. They believed it would create more burden for providers to have to
monitor the clinical changes and subsequent payment changes that would
trigger the IPA on a daily basis. Several commenters doubted whether
the proposed changes would support CMS' Patients over Paperwork
initiative and related Medicare Simplifying Document Requirements. One
commenter stated that monitoring the first tier changes in each of the
case-mix adjusted components would be just as burdensome as the current
assessment schedule and is too high a bar, particularly for NTAs.
Furthermore, some commenters communicated that the complexities and
uncertainties of the IPA would cause providers not to do them and the
aim of CMS to provide SNFs with satisfactory reimbursement would not
come to fruition. Similarly, some commenters expressed that because of
the confusion and burden related to the IPA, this would unnecessarily
increase the risk of provider error and potential medical review. This,
in turn, would cause facilities to complete fewer IPAs and consequently
this could lead to less quality care provided to patients who otherwise
would have needed it had it
[[Page 39233]]
been identified appropriately using the IPA. Some commenters are
concerned that the IPA will likely require MDS coordinators to take on
more of a care coordination role which would require additional
operating costs for SNFs.
Response: We are pleased that so many commenters support the
proposal to reduce the number of payment assessments in SNFs. We agree
that alignment across PAC settings is very important and anticipate
that the reduction of assessments will further this alignment. We also
agree that the reduction of assessments will significantly decrease the
burden for providers.
We disagree with the commenter that stated that even though the
number of assessments have been reduced, the MDS itself has become more
complex with new reporting requirements and items, leaving
administrative burden unchanged. Section VII. of this final rule
discusses burden associated with the changes we are making and our
calculations show that there is a significant reduction in
administrative burden to providers under PDPM.
We thank the commenters for calling our attention to their
questions and confusion about the IPA. We continue to believe that it
is necessary for SNFs to continually monitor the clinical status of
each and every patient in the facility regularly regardless of payment
or assessment requirements and we believe that there should be a
mechanism in place that would allow facilities to do this. However, we
also believe that providers may be best situated, as in the case of the
Significant Change in Status Assessment, to determine when a change has
occurred that should be reported through the IPA. Therefore, to further
ease the administrative burden associated with PDPM and improve clarity
on when an IPA should be completed, we have decided to make the IPA an
optional assessment. Facilities will be able to determine when IPAs
will be completed for their patients to address potential changes is
clinical status and what criteria should be used to decide when an IPA
would be necessary. We are not finalizing the proposed criteria for the
triggering of the IPA, but rather we will seek additional stakeholder
input on this issue. We note that we are finalizing the proposal
surrounding IPA completions and the variable per diem adjustment
schedule (including the NTA variable per diem, that is, the completion
of an IPA will not reset the variable per diem adjustment schedule))
even though the IPA will now be optional. However, because the IPA will
be optional and providers can determine their own criteria for when an
IPA is completed, we are revising the ARD criteria we proposed. The ARD
for the IPA will be the date the facility chooses to complete the
assessment relative to the triggering event that causes a facility to
choose to complete the IPA. Payment based on the IPA will begin the
same day as the ARD. The IPA will not be susceptible to assessment
penalties, given the optional nature of the assessment. We reiterate
that we expect facilities to complete IPAs as they deem necessary to
address clinical changes throughout a SNF stay and that the removal of
the requirement to complete these assessments does not in any way
negate the need to provide excellent skilled nursing and rehabilitative
care and continually monitor and document patient status.
Comment: Many comments addressed the IPA criteria that ``. . . the
resident would not be expected to return to his or her original
clinical status within a 14-day period.'' Commenters stated that this
is a very subjective determination and that it is difficult for
providers to predict the course of recovery for patients who have an
acute clinical change and providers would not necessarily know if this
episode would or would not resolve in a 2-week period. On the other
hand, several other commenters expressed that the 14-day period seemed
excessive since the average of most SNF stays is currently around 19 or
20 days and CMS estimates the majority of the stays under PDPM will be
between 1-15 days. Some commenters recommend that CMS shorten the
timeframe to 3 days consistent with the proposed interrupted stay
policy. Other commenters suggested that this time period should be
reduced to 7 days. One commenter recommended that CMS should use an
approach similar to the change in status policy in the home health
setting (https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/oasis/downloads/qandadocument0909.pdf). Many
comments requested more examples that show various scenarios in which
an IPA would be required. Additionally, several commenters requested
CMS to describe when an IPA would be used versus a Significant Change
in Status Assessment.
Response: Given that the IPA will now be an optional assessment
under PDPM and we are not finalizing criteria for when an IPA should be
completed, but rather, will seek additional stakeholder input on this
issue, we will take all of the comments regarding these criteria under
consideration for future policy making.
Comment: One commenter requested clarification on the nursing
classification change that would trigger an IPA. This commenter
questioned what constitutes a substantial change versus a titration of
services. Another commenter requested clarification as to what would
constitute a first tier change in the nursing component. Another
commenter requested clarification on what a first tier change in the
SLP Case-Mix classification would look like.
Response: We appreciate the requests for clarification on the IPA
triggers. However, because the IPA will now be an optional assessment,
we will allow facilities to determine on their own when IPAs are
necessary. As such, we will seek additional stakeholder feedback on
this issue in the future.
Comment: Many commenters supported the addition of the IPA; with
several commenters supporting the variable per diem adjustment policy
relating to the IPA, stating that this would reduce the incentive for
providers to complete multiple IPAs over the course of a SNF stay each
time payment was reduced based on the adjustment. Some commenters
disagreed and stated that the variable per diem for the NTA component
should be reset following the completion of an IPA, while other
commenters supported the variable per diem adjustment but had concerns
about the NTA per diem rate following the completion of an IPA. These
commenters suggested the variable per diem rate be reset for NTA
services when an IPA is completed. Some commenters stated they
recognize CMS' concern that providers might be incentivized to complete
multiple IPAs in order to reset the NTA rate during one SNF stay.
However, these commenters were concerned that in cases where IPAs are
legitimately completed and the result is a change in NTA use, the
potential financial loss could be significant or could result in re-
hospitalization if facilities do not end up providing NTAs that
patients need because of financial considerations. Commenters offered
several solutions to this concern. One commenter suggested that the NTA
variable per diem adjustment schedule be reset for patients who
experience adverse changes in status resulting in the completion of an
IPA. Another commenter suggested that CMS use the points associated
with NTAs to develop a threshold of additional NTA points that would
allow facilities to reset the NTA variable per diem rate to Day 1. One
commenter suggested a physician verified post-stay process for patients
to dispute the variable per diem
[[Page 39234]]
adjustment when their need for PT, OT, or NTAs would substantially
increase from what was originally anticipated.
Response: We are pleased that so many commenters supported the
addition of the IPA, and appreciate the support for not resetting the
variable per diem adjustment when an IPA is completed. We disagree with
those commenters who suggested that the variable per diem be reset
every time an IPA is completed. As stated in the proposed rule (83 FR
21060), in examining costs over a stay, we found that for certain
categories of SNF services, notably PT, OT and NTA services, costs
declined over the course of a stay. Our analyses showed that, on
average, the number of therapy minutes is lower for assessments
conducted later in the stay.
We believe that the ability to reset the variable per diem would
incentivize providers to complete IPAs every time the variable per diem
was reduced. We also believe it is possible that providers may refrain
from coding certain conditions on an initial assessment and then code
other conditions on later assessments to justify the variable per diem
adjustment reset.
With regard to the ideas presented by commenters for when the
variable per diem should be reset, we do not believe that the variable
per diem should be reset except in cases of an entirely new SNF stay
(we also refer readers to section V.F. of this final rule for a
discussion of our interrupted stay policy). We understand that some
commenters are concerned that unless the variable per diem adjustment
schedule is reset, a patient's per diem rate may not reflect changes in
NTA use identified in an IPA that is completed during a patient's stay.
However, we note that if a new condition is coded on an IPA during a
SNF stay, the SNF PPS per diem payment for the patient may in fact
increase to reflect changes in the patient's clinical condition if the
new condition results in a change to the patient's case-mix group.
Thus, a patient's case-mix group and associated payment could change
within a stay to reflect a change in NTA use on the IPA. However, we do
not think that resetting the variable per diem adjustment would be
appropriate each time such a change occurs. As we explained above, we
found that for PT, OT, and NTA services, costs generally decline over
the course of a stay and we believe the variable per diem adjustment
appropriately accounts for this decline in costs. Furthermore, as the
SNF PPS is a prospective payment system, it is not intended to
reimburse for each additional condition or service separately, but
rather provides a predictive payment based on a snapshot of the
patient's condition. Resetting the variable per diem adjustment in each
case of a change in the patient's condition would be more akin to a
traditional fee-for-service model, providing additional payment for
each additional service or condition, which is precisely the opposite
of the goals of implementing PDPM.
Commenters were also concerned that there might be financial
implications to not re-setting the variable per diem for NTAs and that
this might result in facilities not providing the drugs that patients
require because of financial reasons. However, we do not believe that
the variable per diem adjustment creates new financial implications
that would affect patient care, as this incentive also exists under the
current payment system that utilizes a constant per diem rate and we
have no evidence that SNF patients are being denied necessary
medications or services. Further, we would note that there are quality
safeguards in place such as readmission penalties and quality metrics
such as the SNF QRP quality measures that should provide a disincentive
against providers engaging in this type of stinting behavior.
Comment: Several commenters requested that CMS consider adding
additional assessments to capture changes in patient need during the
SNF stay. These commenters explained their concern that PDPM does not
differentiate between processes designed to adjust payment and the
continuous need to assess patient care needs. Additionally, these
commenters believe that status changes-especially of the functional
nature-that may not rise to the level of a required IPA might be
missed, especially in longer stay patients. These commenters stated
that therapy assessments may not be documented frequently enough to
capture serious status changes of patients under PDPM. Specifically,
they noted that patient care needs must be documented through an
additional assessment after day 20 and they are apprehensive that the
change in the variable per diem payment after Day 20 of a SNF stay may
directly affect patient care if these assessments are not completed.
These commenters suggested that CMS add an additional assessment after
Day 20 of the stay that would specifically capture therapy needs.
Response: We appreciate the commenters' concerns regarding how
assessments relate to functional change, the ongoing need to assess
patient care needs, and the necessity to capture therapy needs
throughout the stay, especially during long stays. It is our
expectation that the optional nature of the IPA will allow facilities
to capture all of these changes as they occur during a SNF stay.
Facilities will determine when IPAs should be completed, and we expect
them to pay special attention to clinical and functional changes. It
should be noted that, even absent an IPA requirement, we expect SNFs to
constantly evaluate, capture, document and treat clinical and
functional changes that occur in patients throughout a SNF stay. We
defer to the judgment of clinicians and expect that the care they are
providing is always evaluative in nature, meaning that therapists are
continually assessing the needs of the patient and changing
interventions as needed throughout the course of the therapy regimen,
and we note that the absence or presence of a required assessment tool
should not change this.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing our proposed changes to the MDS assessment schedule and
related assessment policies as discussed in the proposed rule, with the
following modifications. As discussed above, rather than making the IPA
a required assessment as we proposed, this assessment will be optional,
and providers may determine whether and when an IPA is completed. In
addition, because the IPA is an optional assessment and providers can
determine their own criteria for when an IPA is completed, we are
revising the ARD criteria such that the ARD will be the date the
facility chooses to complete the IPA relative to the triggering event
that causes the facility to choose to complete the IPA. Payment based
on the IPA would begin the same day as the ARD. These changes will be
effective October 1, 2019 in conjunction with the implementation of the
PDPM.
2. Item Additions to the Swing Bed PPS Assessment
As noted previously in section IV.C of this final rule, section
1883 of the Act permits certain small, rural hospitals to enter into a
Medicare swing-bed agreement, under which the hospital can use its beds
to provide either acute or SNF care, as needed. For critical access
hospitals (CAHs), Part A pays on a reasonable cost basis for SNF
services furnished under a swing-bed agreement. However, in accordance
with section 1888(e)(7) of the Act, such services furnished by non-CAH
rural hospitals are paid under the SNF PPS, effective
[[Page 39235]]
with cost reporting periods beginning on or after July 1, 2002. A more
detailed discussion of this provision appears in section IV.C of the
proposed rule.
For purposes of the proposed PDPM, we proposed to add three items
to the Swing Bed PPS Assessment. Until now, these additional items have
not been part of the Swing Bed PPS Assessment form because they have
not been used for payment. However, we stated in the proposed rule (83
FR 21064) that presence of each of these items would be used to
classify swing bed residents under the proposed SNF PDPM as explained
in section V.D. of the proposed rule. Thus, we stated that believed it
was necessary and appropriate to include these items in the Swing Bed
PPS Assessment beginning October 1, 2019, in conjunction with the
proposed implementation of the PDPM. The items we proposed to add to
the Swing Bed PPS assessment are provided in Table 34 of the proposed
rule (also set forth in Table 34).
Commenters submitted the following comments related to the proposed
addition of three items to the Swing Bed PPS assessment. A discussion
of these comments, along with our responses, appears below.
Comment: Commenters supported the addition of the three proposed
items to the Swing Bed PPS assessment and stated that these items will
be important to establish the SLP and NTA component case-mix rates.
Response: We are pleased that commenters support the addition of
these items to the Swing Bed PPS Assessment. We agree that these items
are necessary to determine the SLP and NTA case-mix rates. We will
continue to consider additions to the Swing Bed PPS Assessment as it
becomes necessary to ensure consistency between swing bed and non-swing
bed providers.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing the addition of the items in Table 34 to the Swing Bed PPS
Assessment as proposed without modification, effective October 1, 2019
in conjunction with the implementation of the PDPM.
Table 34--Items To Add to Swing Bed PPS Assessment
------------------------------------------------------------------------
Related PDPM payment
MDS Item No. Item name component
------------------------------------------------------------------------
K0100................... Swallowing Disorder..... SLP
I4300................... Active Diagnoses: SLP
Aphasia.
O0100D2................. Special Treatments, NTA
Procedures and
Programs: Suctioning,
While a Resident.
------------------------------------------------------------------------
3. Items To Be Added to the PPS Discharge Assessment
Under the MDS 3.0, the Part A PPS Discharge assessment is completed
when a resident's Medicare Part A stay ends, but the resident remains
in the facility (MDS 3.0 RAI Manual Chapter 2.5). The PPS Discharge
Assessment uses the Item Set NPE and does not currently contain section
O of the MDS 3.0. The therapy items in section O of the MDS allow CMS
to collect data from providers on the volume, type (physical therapy,
occupational therapy and speech-language pathology), and mode
(individual, concurrent, or group therapy) of the therapy provided to
SNF residents. As noted in comments received on the ANPRM in relation
to therapy provision, this data would be particularly important to
monitor. Specifically, a significant number of commenters expressed
concerns that the amount of therapy provided to SNF residents, were
RCS-I to have been implemented, would drop considerably as compared to
the amount currently delivered under RUG-IV. Commenters noted that this
is because the incentive to provide a high volume of therapy services
to SNF residents (to achieve the highest resident therapy group
classification) would no longer exist under RCS-I, potentially leading
providers to reduce significantly the amount of therapy provided to SNF
residents.
We stated in the proposed rule (83 FR 21065) that, given that the
RCS-I model and PDPM both present the potential for providers to reduce
significantly the amount of therapy provided to SNF residents as
compared to RUG-IV, we believe that the same potential result may occur
under the proposed PDPM as commenters identified with RCS-I. To better
track therapy utilization under PDPM, and to better ensure that
residents continue to receive an appropriate amount of therapy
commensurate with their needs, given the reduction in the frequency of
resident assessments required under the proposed PDPM, we proposed to
add therapy collection items to the PPS Discharge assessment and to
require providers to complete these items beginning October 1, 2019, in
conjunction with the proposed implementation of the PDPM.
Specifically, we proposed to add the items listed in Table 35 of
the proposed rule (as set forth in Table 35 of this final rule) to the
PPS Discharge Assessment.
Table 35--Items To Add to SNF PPS Discharge Assessment
------------------------------------------------------------------------
MDS Item No. Item name
------------------------------------------------------------------------
O0400A5.................. Special Treatments, Procedures and Programs:
Speech-Language Pathology and Audiology
Services: Therapy Start Date.
O0400A6.................. Special Treatments, Procedures and Programs:
Speech-Language Pathology and Audiology
Services: Therapy End Date.
O0400A7.................. Special Treatments, Procedures and Programs:
Speech-Language Pathology and Audiology
Services: Total Individual Minutes.
O0400A8.................. Special Treatments, Procedures and Programs:
Speech-Language Pathology and Audiology
Services: Total Concurrent Minutes.
O0400A9.................. Special Treatments, Procedures and Programs:
Speech-Language Pathology and Audiology
Services: Total Group Minutes.
O0400A10................. Special Treatments, Procedures and Programs:
Speech-Language Pathology and Audiology
Services: Total Days.
O0400B5.................. Special Treatments, Procedures and Programs:
Occupational Therapy: Therapy Start Date.
O0400B6.................. Special Treatments, Procedures and Programs:
Occupational Therapy: Therapy End Date.
O0400B7.................. Special Treatments, Procedures and Programs:
Occupational Therapy: Total Individual
Minutes.
O0400B8.................. Special Treatments, Procedures and Programs:
Occupational Therapy: Total Concurrent
Minutes.
[[Page 39236]]
O0400B9.................. Special Treatments, Procedures and Programs:
Occupational Therapy: Total Group Minutes.
O0400B10................. Special Treatments, Procedures and Programs:
Occupational Therapy: Total Days.
O0400C5.................. Special Treatments, Procedures and Programs:
Physical Therapy: Therapy Start Date.
O0400C6.................. Special Treatments, Procedures and Programs:
Physical Therapy: Therapy End Date.
O0400C7.................. Special Treatments, Procedures and Programs:
Physical Therapy: Total Individual Minutes.
O0400C8.................. Special Treatments, Procedures and Programs:
Physical Therapy: Total Concurrent Minutes.
O0400C9.................. Special Treatments, Procedures and Programs:
Physical Therapy: Total Group Minutes.
O0400C10................. Special Treatments, Procedures and Programs:
Physical Therapy: Total Days.
------------------------------------------------------------------------
We stated that for the proposed items, which refer to the total
number of minutes for each therapy discipline and each therapy mode,
this would allow CMS both to conduct reviews of changes in the volume
and intensity of therapy services provided to SNF residents under the
proposed PDPM compared to that provided under RUG-IV, as well as to
assess compliance with the proposed group and concurrent therapy limit
discussed in section V.F of the FY 2019 SNF PPS proposed rule. We
further stated that the proposed ``total days'' items for each
discipline and mode of therapy would further support our monitoring
efforts for therapy, as requested by commenters on the ANPRM, by
allowing us to monitor not just the total minutes of therapy provided
to SNF residents under the proposed PDPM, but also assess the daily
intensity of therapy provided to SNF residents under the proposed PDPM,
as compared to that provided under RUG-IV. As we explained in the
proposed rule, ultimately, these proposed items would allow facilities
to easily report therapy minutes provided to SNF residents and allow us
to monitor the volume and intensity of therapy services provided to SNF
residents under the proposed PDPM, as suggested by commenters on the
ANPRM. We stated that if we discovered that the amount of therapy
provided to SNF residents did change significantly under the proposed
PDPM, if implemented, then we would assess the need for additional
policies to ensure that SNF residents continued to receive sufficient
and appropriate therapy services consistent with their unique needs and
goals.
Commenters submitted the following comments related to the proposed
rule's discussion of the SNF PPS Discharge Assessment. A discussion of
these comments, along with our responses, appears below.
Comment: Several commenters opposed the addition of items and the
reporting of therapy services in section O of the SNF PPS Discharge
Assessment. These commenters acknowledged that the fundamental design
of PDPM (which will no longer tie payment to the amount of therapy a
patient receives, as occurs under the current RUG-IV payment system)
could perhaps cause some patients appropriately to receive less
therapy. The commenters stated that this would be a positive
anticipated outcome for many residents considering that the recurring
concern of RUG-IV has been that the model may incentivize SNFs to
provide therapy services beyond what patients need. These commenters
noted that while they recognize the importance of monitoring the
impacts of policy changes especially in the initial stages of the
implementation, they were disappointed that CMS appears to be
interested in collecting this data merely in order to monitor changes
in volume of services and that CMS did not discuss evaluating this
aspect of PDPM in relation to quality and outcomes measures (such as
through the SNF Quality Reporting Program) that are normally associated
with effective therapy provision. These commenters noted that the MDS
should be used for care-planning and case-mix payment determination and
that since therapy time is not relevant to the case-mix methodology
under PDPM, this proposed addition of therapy collection of items
serves no purpose on the MDS. These commenters suggested that instead
of collecting therapy provision information on the MDS, facilities
should gather and report therapy provision information on claims on a
line-item, date-of-service basis that would be in line with Medicare
Part B and other payers and limit provider burden.
Response: We agree with commenters that it is possible that, in
some cases, less therapy will be provided under PDPM than under RUG-IV
and that this would be a positive development in those cases where
therapy was provided regardless of patient need and simply because of
higher payments for higher volumes of therapy. However, we continue to
be concerned that under PDPM, providers may reduce the amount of
therapy provided to SNF patients because of financial considerations.
We agree with commenters that quality and outcomes measures (like those
in the SNF Quality Reporting Program) would be a positive way to
evaluate the efficacy of therapy provision, and we will take this into
consideration for future policy development. However, we disagree that
the collection of these items is not relevant to case-mix
determination. While the days and minutes of therapy provided will not
be a determining factor in the therapy case-mix classification under
PDPM, the need to ensure beneficiary protection under this payment
system is very relevant to the therapy case-mix classification, and the
ability to collect this data will safeguard the integrity of the case-
mix classification and help ensure that patients receive an appropriate
amount of therapy services. Should we discover that the amount of
therapy under PDPM is distinctly different from the amount of therapy
under RUG-IV, we will evaluate the potential reasons for this change
and consider potential actions, either at the provider or systemic
level, to address these issues.
We appreciate the commenters' suggestion of using claims
information as the basis for therapy reporting, but would note that
this mechanism would be more complicated and not provide the same level
of detail in the data as is currently reported in section O of the MDS.
Further, as providers are already familiar with the section O items, we
believe that this method will provide the simplest transition for
providers.
Comment: Many commenters supported the proposal to add therapy
collection items to the SNF PPS Discharge Assessment in order to
monitor compliance with the group and concurrent therapy limits. One
commenter stated that they believed this proposal may protect against
therapists being pressured to provide an unreasonable amount of group
or concurrent therapy. Several commenters, however, were concerned that
the monitoring effort proposed is
[[Page 39237]]
not strong enough to enforce the aforementioned limits. One commenter
suggested that based on CMS' assertion that ``services furnished to SNF
residents may be considered reasonable and necessary insomuch as
services are consistent with `the individual's particular medical
needs,' '' (83 FR 21068) they question whether excessive group and
concurrent therapy serves as justification to deny SNF coverage. This
commenter proposed that rather than a ``warning edit'' that would
notify providers that they have exceeded the group and concurrent
threshold, CMS should decide whether these occurrences violate coverage
requirements and if it is determined that they do, payment should be
denied for the claim. Many commenters suggested that in addition to
monitoring the therapy provision, CMS should monitor resident outcomes.
One commenter recommended that CMS utilize the four new SNF QRP section
GG outcome measures, and current readmission measures and qualitatively
measure the current the effectiveness of therapy provided in the SNF.
Response: We appreciate the comments we received in support of the
proposal to add therapy collection items to the SNF PPS Discharge
Assessment. We agree that this proposal would enable us to monitor
group and concurrent therapy compliance and will hopefully help prevent
therapists from feeling pressured to provide an unreasonable amount of
group and/or concurrent therapy. We appreciate the concern that the
monitoring effort proposed is not strict enough to enforce the
concurrent and group therapy limits. We would note that the monitoring
plan is intended for this exact reason. As stated in the proposed rule
(83 CFR 21067), as part of our regular monitoring efforts on SNF Part A
services, we would monitor group and concurrent therapy utilization
under the proposed PDPM and consider making future proposals to address
abuses of this proposed policy or flag providers for additional review
should an individual provider be found to consistently exceed the
proposed threshold after the implementation of the proposed PDPM.
We appreciate the suggestion to deny claims if the threshold is
exceeded and we may consider this option further in the future. As
stated in the FY 2019 SNF PPS proposed rule (83 FR 21068), services
furnished to SNF residents may be considered reasonable and necessary
insomuch as the services are consistent with the individual's
particular medical needs and that excessive levels of group and/or
concurrent therapy could constitute a reason to deny SNF coverage for
such stays. We appreciate the suggestion to monitor patient outcomes in
addition to collecting therapy provision data, as well as the
recommendation to specifically use the four new SNF QRP section GG
outcome measures and current readmission measures to measure the
effectiveness of therapy provided in SNFs. We may consider these
suggestions in future policy making decisions.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing the addition of the items in Table 35 to the PPS Discharge
Assessment as proposed, without modification, effective October 1, 2019
in conjunction with the implementation of the PDPM.
E. Revisions to Therapy Provision Policies Under the SNF PPS
Currently, almost 90 percent of residents in a Medicare Part A SNF
stay receive therapy services. Under the current RUG-IV model, therapy
services are case mix-adjusted primarily based on the therapy minutes
reported on the MDS. As discussed in the proposed rule (83 FR 21065),
when the original SNF PPS model was developed, most therapy services
were furnished on an individual basis, and the minutes reported on the
MDS served as a proxy for the staff resource time needed to provide the
therapy care. Over the years, we have monitored provider behavior and
have made policy changes as it became apparent that, absent safeguards
like quality measurement to ensure that the amount of therapy provided
did not exceed the resident's actual needs, there were certain inherent
incentives for providers to furnish as much therapy as possible. Thus,
for example, in the SNF PPS FY 2010 final rule (74 FR 40315 through
40319), we decided to allocate concurrent therapy minutes for purposes
of establishing the RUG-IV group to which the patient belongs, and to
limit concurrent therapy to two patients at a time who were performing
different activities.
As we explained in the proposed rule (83 FR 21066), following the
decision to allocate concurrent therapy, using STRIVE data as a
baseline, we found two significant provider behavior changes with
regard to therapy provision under the RUG-IV payment system. First,
there was a significant decrease in the amount of concurrent therapy
that was provided in SNFs. Simultaneously, we observed a significant
increase in the provision of group therapy, which was not subject to
allocation at that time. We concluded that the manner in which group
therapy minutes were counted in determining a patient's RUG-IV group
created a payment incentive to provide group therapy rather than
individual therapy or concurrent therapy, even in cases where
individual therapy (or concurrent therapy) was more appropriate for the
resident. Thus, we stated that we made two policy changes regarding
group therapy in the FY 2012 SNF PPS final rule (76 FR 48511 through
48517). We defined group therapy as exactly four residents who are
performing the same or similar therapy activities. Additionally, we
allocated group therapy among the four patients participating in group
therapy--meaning that the total amount of time that a therapist spent
with a group will be divided by 4 (the number of patients that comprise
a group) to establish the RUG-IV group to which the patient belongs.
We stated in the proposed rule (83 FR 21066) that since we began
allocating group therapy and concurrent therapy, these modes of therapy
(group and concurrent) represent less than one percent of total therapy
provided to SNF residents. Table 36, which appeared in the FY 2014 SNF
PPS Proposed Rule (78 FR 26464) (and was also presented in the FY 2019
SNF PPS proposed rule) and sets forth our findings with respect to the
effect of policies finalized in the FY 2012 SNF PPS Final Rule,
demonstrates the change in therapy provision between the STRIVE study
and the implementation of the therapy policy changes in FY 2012. As we
noted in the proposed rule, the distribution of therapy modes presented
in Table 36 reflecting therapy provision in FY 2012 is also an accurate
reflection of current therapy provision based on resident data
collected in the QIES Database and continued monitoring of therapy
utilization.
[[Page 39238]]
Table 36--Mode of Therapy Provision
----------------------------------------------------------------------------------------------------------------
STRIVE (%) FY 2011 (%) FY 2012 (%)
----------------------------------------------------------------------------------------------------------------
Individual...................................................... 74 91.8 99.5
Concurrent...................................................... 25 0.8 0.4
Group........................................................... <1 7.4 0.1
----------------------------------------------------------------------------------------------------------------
As we explained in the proposed rule (83 FR 21066), based on our
prior experience with the provision of concurrent and group therapy in
SNFs, we again were concerned that if we were to implement the proposed
SNF PDPM, providers may base decisions regarding the particular mode of
therapy to use for a given resident on financial considerations rather
than on the clinical needs of SNF residents. We stated that because the
proposed SNF PDPM would not use the minutes of therapy provided to a
resident to classify the resident for payment purposes, we were
concerned that SNFs may once again become incentivized to emphasize
group and concurrent therapy, over the kind of individualized therapy
which is tailored to address each beneficiary's specific care needs
which we believe is generally the most appropriate mode of therapy for
SNF residents. As we stated in the FY 2012 proposed rule (76 FR 26387),
while group therapy can play an important role in SNF patient care,
group therapy is not appropriate for either all patients or for all
conditions, and is primarily effective as a supplement to individual
therapy, which we maintain should be considered the primary therapy
mode and standard of care in therapy services provided to SNF
residents. We stated in the FY 2012 proposed rule that, as evidenced by
the application of a cap on the amount of group therapy services that
may be provided to SNF residents, we do not believe that a SNF
providing the preponderance of therapy in the form of group therapy
would be demonstrating the intensity of therapy appropriate to this
most frail and vulnerable nursing home population.
We stated in the FY 2019 SNF PPS proposed rule (83 FR 21066) that
since the inception of the SNF PPS, we have limited the amount of group
therapy provided to each SNF Part A resident to 25 percent of the
therapy provided to them by discipline. We referred to the FY 2000
final rule (64 FR 41662), where we stated that although we recognize
that receiving PT, OT, or ST as part of a group has clinical merit in
select situations, we do not believe that services received within a
group setting should account for more than 25 percent of the Medicare
resident's therapy regimen during the SNF stay.
We explained that although we recognize that group and concurrent
therapy may have clinical merit in specific situations, we also
continue to believe that individual therapy is generally the best way
of providing therapy to a resident because it is most tailored to that
specific resident's care needs. As such, we stated that individual
therapy should represent the majority of the therapy services received
by SNF residents both from a clinical and payment perspective. As we
stated in the FY 2012 proposed rule (76 CFR 26372), even under the
previous RUG-53 model, it was clear that the predominant mode of
therapy that the payment rates were designed to address was individual
therapy rather than concurrent or group therapy.
We stated in the proposed rule (83 FR 21066) that to help ensure
that SNF residents would receive the majority of therapy services on an
individual basis, if we were to implement the proposed PDPM, we
believed concurrent and group therapy combined should be limited to no
more than 25 percent of a SNF resident's therapy minutes by discipline.
In combination, this limit would ensure that at least 75 percent of a
resident's therapy minutes are provided on an individual basis. We
stated that because the change in how therapy services would be used to
classify residents under the proposed PDPM gives rise to the concern
that providers may begin to utilize more group and concurrent therapy
due to financial considerations, we proposed to set a combined 25
percent limit on concurrent therapy and group therapy for each
discipline of therapy provided. For example, if a resident received 800
minutes of physical therapy, no more than 200 minutes of this therapy
could be provided on a concurrent or group basis. Finally, we noted
that under RUG-IV, we currently allocate minutes of therapy because we
pay for therapy based on therapy minutes and not resident
characteristics. We stated that given that therapy minutes would no
longer be a factor in determining payment classifications for residents
under the proposed PDPM, we would utilize the total, unallocated number
of minutes by therapy mode reported on the MDS, to determine compliance
with the proposed limit. We explained that utilizing unallocated
therapy minutes also serves to underscore the patient-driven nature of
the PDPM, as it focuses the proposed limit on concurrent and group
therapy on the way in which the therapy is received by the beneficiary,
rather than furnished by the therapist, and would better ensure that
individual therapy represents at least a vast majority of the therapy
services received by a resident.
In the proposed rule (83 FR 21067), we considered other possible
limits, and even no limit, on group and concurrent therapy. For
example, we considered placing no limit on group or concurrent therapy,
in order to afford providers the greatest degree of flexibility in
designing a therapy program for each SNF resident. However, even in
response to this option to have no limit on concurrent and group
therapy, many commenters on the ANPRM expressed concerns regarding the
lack of appropriate safeguards for ensuring that SNF residents continue
to receive an appropriate level of therapy under the revised case-mix
model. We stated in the proposed rule that we agree with these
commenters and believe that there should be some limit on the amount of
group and concurrent therapy that is provided to residents in order to
ensure that residents receive an appropriate amount of individual
therapy that is tailored to their specific needs. Also, in the ANPRM,
we discussed the possibility of proposing a 25 percent limit on each of
concurrent and group therapy, allowing for up to 50 percent of therapy
services provided in the SNF to be provided in a non-individual
modality. We stated in the proposed rule that this option sought to
balance the flexibility afforded to therapists in designing an
appropriate therapy plan that meets the needs and goals of the specific
resident with the importance of ensuring that SNF residents receive an
appropriate level of individual therapy. However, we were concerned
that a separate 25 percent limit for group and concurrent therapy would
not provide sufficient assurance that at least a majority of a
resident's therapy would be provided on an individual basis.
[[Page 39239]]
Therefore, we stated that we believe the separate 25 percent limits on
concurrent and group therapy discussed in the ANPRM, or any option
which would impose a higher limit on group and concurrent therapy,
would not provide the necessary protection for SNF residents. By
contrast, we stated that we believe a combined 25 percent limit on
group and concurrent therapy would provide sufficient assurance that at
least a majority of each resident's therapy would be provided on an
individual basis, consistent with our position that individual therapy
is generally the best way of providing therapy to SNF residents because
it is most tailored to their care needs. We noted that, assuming that
existing therapy delivery patterns (as set forth in Table 36) are
accurate and they reflect the individually-tailored needs of SNF
residents currently being treated under the SNF benefit, the number of
group and concurrent minutes that have been reported by SNFs thus far
are significantly lower than the limit described in our proposal. In
other words, we stated that, based on the data presented in Table 36,
the proposed limit on group and concurrent therapy affords a
significantly greater degree of flexibility on therapy modality than
appears to be required to meet the needs of SNF residents, given that
less than one percent of therapy currently being delivered is either
group or concurrent therapy. Therefore, we concluded that a combined
limit of 25 percent for group and concurrent therapy should provide
SNFs with more than enough flexibility with respect to therapy mode to
meet the care needs of their residents.
As discussed in the proposed rule (83 FR 21067), we believe that
individual therapy is usually the best mode of therapy provision as it
permits the greatest degree of interaction between the resident and
therapist, and should therefore represent, at a minimum, the majority
of therapy provided to an SNF resident. However, we recognized that, in
very specific clinical situations, group or concurrent therapy may be
the more appropriate mode of therapy provision, and therefore, we
stated we would want to allow providers the flexibility to be able to
utilize these modes. We continued to stress that group and concurrent
therapy should not be utilized to satisfy therapist or resident
schedules, and that all group and concurrent therapy should be well
documented in a specific way to demonstrate why they are the most
appropriate mode for the resident and reasonable and necessary for his
or her individual condition.
Currently the RUG-IV grouper calculates the percentage of group
therapy each resident receives in the SNF based on the algorithms
described in section 6.6 of the MDS RAI Manual (found at https://downloads.cms.gov/files/MDS-30-RAI-Manual-v115-October-2017.pdf). When
a resident is found to have exceeded the 25 percent group therapy
limit, the minutes of therapy received in excess are not counted
towards the calculation of the RUG-IV therapy classification. We
explained that because the proposed PDPM would not use the minutes of
therapy provided to a resident to classify the resident for payment
purposes, we would need to determine a way under the proposed PDPM to
address situations in which facilities exceed the combined 25 percent
group and concurrent therapy limit.
Therefore, we proposed that at a component level (PT, OT, SLP),
when the amount of group and concurrent therapy exceeds 25 percent
within a given therapy discipline, that providers would receive a non-
fatal warning edit on the validation report that the provider receives
when submitting an assessment which would alert the provider that the
therapy provided to that resident exceeded the threshold. To explain, a
fatal error in the QIES ASAP system occurs when one or more items in
the submitted record fail to pass the requirements identified in the
MDS data submission specifications. A warning error occurs when an item
or combination of items in the submitted record trigger a non-fatal
edit in the QIES ASAP system. We stated that the non-fatal warning
would serve as a reminder to the facility that they are out of
compliance with the proposed limit for group and concurrent therapy. We
also stated that, as part of our regular monitoring efforts on SNF Part
A services, we would monitor group and concurrent therapy utilization
under the proposed PDPM and consider making future proposals to address
abuses of this proposed policy or flag providers for additional review
should an individual provider consistently be found to exceed the
proposed threshold after the implementation of the proposed PDPM. We
noted that as the proportion of group and/or concurrent therapy (which
are, by definition, non-individual modes of therapy provision)
increases, the chances that the provider is still meeting the
individualized needs of each resident would diminish. We stated that
given that meeting the individualized needs of the resident is a
component of meeting the coverage requirements for SNF Part A services,
as described in section 1814(a)(2)(B) of the Act and further described
in section 30 of Chapter 8 of the Medicare Benefit Policy Manual
(accessible at https://www.cms.gov/Regulations-and-Guidance/Guidance/
Manuals/downloads/bp102c08.pdf), where it states that services
furnished to SNF residents may be considered reasonable and necessary
insomuch as the services are consistent with ``the individual's
particular medical needs'', excessive levels of group and/or concurrent
therapy could constitute a reason to deny SNF coverage for such stays.
We invited comments on this proposed compliance mechanism.
Commenters submitted the following comments related to the proposed
revisions to the therapy policies under the PDPM. A discussion of these
comments, along with our responses, appears below.
Comment: The vast majority of commenters supported the proposal to
limit concurrent and group therapy to 25 percent. Several stated that
the combined limit is not restrictive enough and recommended that CMS
implement further real-time efforts (beyond the warning edit outlined
in the proposed rule) to ensure that patients are receiving the therapy
they need, monitor compliance, and have stricter enforcement outcomes.
Conversely, several commenters supported the notion that CMS could
possibly raise the group and concurrent therapy limit following close
monitoring of utilization and determining that patients are indeed
receiving the individualized therapy they need even in group and
concurrent sessions, and that SNFs are not taking advantage of the
financial incentives that providing group and concurrent therapy offer.
These commenters stated that they were in favor of the idea that
providers would be reporting and counting the patients' time in therapy
rather than the therapists' allocated time to determine compliance with
the proposed group and concurrent therapy limit under PDPM since this
is more consistent with the concept of patient-centered care and best
clinical practice.
Response: We are pleased that the vast majority of commenters
supported the proposal to limit concurrent and group therapy to 25
percent. We appreciate both the concern that 25 percent may not be
restrictive enough and the concern that it is too restrictive, and we
will continue to track the amount of therapy provided via the different
modes in conjunction with our monitoring efforts described throughout
section V. of this final rule. We will determine whether group and
[[Page 39240]]
concurrent therapy are being over or underutilized and we will consider
revising the policy and enforcement efforts as necessary. Because
therapy minutes would no longer be a factor in determining case-mix
classification under the PDPM, as it is under RUG-IV, we agree with the
commenters that using the total, unallocated number of minutes by
therapy mode reported on the MDS versus therapists' allocated time
makes the most sense in determining compliance with the group and
concurrent therapy limit, and we appreciate that the commenters
recognized the patient-centered nature of the proposal.
Comment: Several commenters stated that the current policy
regarding group and concurrent therapy allocation has increased
provider costs. Specifically, these comments stated that concurrent and
group therapy are more cost-effective modes than individual therapy and
that the 25 percent drop in the delivery of concurrent and group
therapy from FY 2011 until now demonstrates a significant increase in
provider costs. These commenters believe that restoring flexibility in
therapy service under PDPM will permit SNFs to develop more cost-
effective innovative approaches to care.
Response: We disagree with the assertion that the current policy to
allocate group and concurrent therapy increases cost. As we stated in
the FY 2012 final rule (76 FR 48515), to fulfill our responsibilities
to ensure appropriate payment based on resource utilization and cost,
we proposed the allocation of group therapy minutes, which equalizes
the reimbursement incentives across modes of therapy. Although case-mix
classification under PDPM is not based primarily on volume of services
provided, as is the case with the RUG-IV payment system, it is still
important that there are equal financial incentives to provide the
different modes of therapy. Further, given that the payment incentives
are equal among the various therapy modes because of the allocation of
minutes and that over 99 percent of therapy minutes are reported as
individual therapy, this provides evidence that the mode of therapy
that providers believe is most effective in addressing a beneficiary's
needs is individual therapy. Regarding the need to restore flexibility
in therapy service under PDPM, we think that the 25 percent cap will
allow for flexibility in therapy services. As mentioned above, since
currently, over 99 percent of therapy minutes are delivered
individually, SNFs should continue to have adequate leeway to provide
the mode of therapy which is most appropriate for the patients even
with the revised cap. Nevertheless, to the extent that provider costs
have increased, these cost increases have been captured as part of the
data analysis used to set the case-mix weights under PDPM. To the
extent that these costs change as a result of PDPM, more specifically
changes in the mode of therapy service delivery, we can consider
revising the case-mix weights to reflect these changes in provider
costs.
Comment: Several commenters opposed the proposed limitations on
group and concurrent therapy and expressed concern that even though
there is a lack of data demonstrating what the most appropriate
threshold is for each individual patient, the combined 25 percent group
and concurrent therapy limit is an arbitrary amount and would restrict
therapists' ability to make appropriate treatment decisions. These
commenters also stated that setting a limit on group and concurrent
therapy may also restrict some patients from receiving the most
appropriate mode of therapy for their individual need and that group or
concurrent therapy might indeed be the most appropriate mode of therapy
for a patient. These commenters stressed the importance of trusting the
professional judgment of therapists in deciding which combination of
each mode of therapy is appropriate for each patient in conjunction
with Medicare guidelines for skilled therapy and medical necessity.
Response: We agree that therapists are the most appropriate
professionals to determine the mode of therapy a patient should receive
and that professional judgment must be trusted and used in SNFs.
However we do not agree that 25 percent is an arbitrary amount. As
stated in the proposed rule, (83 FR 21066), since we began allocating
group therapy and concurrent therapy, these modes of therapy (group and
concurrent) represent less than one percent of total therapy provided
to SNF residents. Further, we do not agree that data do not exist with
regard to the appropriate threshold for each individual patient, as
over 99 percent of therapy services are currently reported as
individual. This would suggest that a much lower threshold for
concurrent and group therapy would likely be acceptable and
appropriate, though we also believe that added flexibility is important
under a new payment system. Therefore, we believe it is appropriate to
use the 25 percent combined therapy limit for concurrent and group
therapy.
We also do not agree that setting a limit on group and concurrent
therapy may restrict some patients from receiving the most appropriate
mode of therapy for their individual needs. We currently have a 25
percent limit in place for group therapy and, based on our data, this
limit has not restricted patients from receiving what we assume is the
most appropriate amount of therapy for their individual needs. Given
the stakeholders' comments that individual therapy is the most costly
form of therapy along with the evidence of therapy being furnished to
SNF patients on the basis of financial considerations rather than
patient need, the extremely high prevalence of individual therapy would
indicate that the amount of individual therapy, despite being the most
costly, is the most effective for beneficiaries, which would comport
with our reasons for supporting either the limit we proposed or a lower
such limit. To hold otherwise would indicate that the minutes currently
being reported are an inaccurate representation of the way in which
therapy is currently being delivered, which could potentially
constitute fraud on the part of some SNF providers. Based on the MDS
assessment data mentioned above that demonstrate that almost no group
or concurrent therapy is being reported on the MDS currently, the
commenters' characterization of the proposed limit (which is far above
the current level of furnishing such services) as insufficiently
flexible would actually beg the question of why commenters would appear
to believe that group and concurrent therapy would be better suited to
address patient needs under PDPM rather than under RUG-IV.
Given the historical precedent of 25 percent as a therapy threshold
and the very limited amount that group and concurrent therapy that has
actually been reported in SNFs, we believe it is an appropriate
threshold. That being said, using the new items in section O of the PPS
Discharge Assessment, we will monitor therapy provision as discussed in
section V.D of this final rule and we will consider policy changes as
we receive data and see how therapy is being furnished under PDPM.
Comment: Some commenters suggested that CMS revise the group
therapy definition to include two to four participants while many
commenters suggested that CMS revise the definition to include two to
six participants doing the same or similar activities. In addition to
better aligning with other settings such as Inpatient Rehabilitation
Facilities (IRFs), commenters stated that this revision would allow
increased flexibility so that patients in smaller SNFs could utilize
and benefit from
[[Page 39241]]
group therapy. One commenter stated that the CMS definition of
concurrent therapy is arbitrary and does not reflect therapists'
preferred practice. This commenter urged us to redefine concurrent
therapy. Several commenters requested that CMS reconsider the ``rigid''
documentation requirements that accompany group therapy provision,
stating a preference as a practitioner to use group therapy when
patients can benefit from it. One commenter requested that we provide
additional guidance to providers and MACs related to the level of
appropriate documentation required for participation in group or
concurrent therapy.
Response: We recognize the importance of alignment across settings.
We may consider changing the definition of group therapy and/or
concurrent therapy to align with other PAC settings in future
rulemaking efforts.
With regard to the ``rigid'' documentation requirements, we would
like to remind the commenter that we did not impose new documentation
requirements on SNFs with regard to concurrent and group therapy.
Rather, in the FY 2012 proposed rule, we simply clarified certain
already-established documentation standards (76 FR 26387 through
26388). As we wrote in the FY 2012 final rule in response to comments,
since we simply clarified existing expectations, we did not agree that
these documentation guidelines would increase or create undue burden on
therapists, or that these guidelines create a disincentive for
clinicians to perform group therapy due to increased paperwork. We
stated that there should be no additional burden to provide this
documentation, as it should be a standard part of any documentation. We
agreed with those commenters who stated that rehabilitation
professionals need to support the work they do through documentation,
and that the documentation should reflect the need for skilled care and
the mode of therapy provided, as well as demonstrate how the therapy
provision will support patients' needs and goals. (76 FR 48516).
We continue to believe that it is vital for SNFs to document
services appropriately in order to demonstrate the skilled nature and
the fact that the services are reasonable and necessary. This will be
especially important when the 25 percent cap on concurrent and group
therapy is in place after the implementation of PDPM. We will monitor
the mode of therapy given and we will be interested to see how
facilities document the therapy used so we can determine whether we
will increase, decrease or maintain the limit following extensive
monitoring.
Regarding the request to provide additional guidance related to
documentation of group and concurrent therapy, we remind commenters of
the guidance provided in the FY2012 proposed rule (76 FR 26388)
regarding group therapy: Because group therapy is not appropriate for
either all patients or all conditions, and in order to verify that
group therapy is medically necessary and appropriate to the needs of
each beneficiary, SNFs should include in the patient's plan of care an
explicit justification for the use of group, rather than individual or
concurrent, therapy. This description should include, but need not be
limited to, the specific benefits to that particular patient of
including the documented type and amount of group therapy; that is, how
the prescribed type and amount of group therapy will meet the patient's
needs and assist the patient in reaching the documented goals. In
addition, we believe that the above documentation is necessary to
demonstrate that the SNF is providing services to attain or maintain
the highest practicable physical, mental, and psychosocial well-being
of each resident in accordance with section 1819(b)(2) of the Act.
While the above guidance was provided in relation to group therapy,
we believe that it applies to concurrent therapy as well.
Comment: Some commenters disagreed with the proposal of a combined
limit of 25 percent for concurrent and group therapy, with one
commenter stating that this contradicted the discussion in the ANPRM
that considered a 25 percent limit on concurrent therapy and a separate
25 percent limit on group therapy. This commenter pointed out that we
stated, we believe that individual therapy is usually the best mode of
therapy provision as it permits the greatest degree of interaction
between the resident and therapist, and should therefore represent, at
a minimum, the majority of therapy provided to an SNF resident (82 FR
21004). This commenter and several others requested that CMS return to
the separate 25 percent caps for concurrent therapy and for group
therapy, as discussed in the ANPRM. According to these commenters,
prior to CMS allocating concurrent and group therapy in FY 2011 and FY
2012, respectively, the average amount of concurrent and group therapy
that was furnished to all residents combined was about 26 percent.
These commenters believe this means that there were many residents who
received higher amounts than an average of 25 percent group and
concurrent therapy and others who received lower amounts based on their
clinical status and need. According to these commenters, CMS has not
produced any evidence the quality of care changed dramatically since FY
2011 and FY 2012, which would suggest the quality of care furnished in
FY 2010 and earlier was meeting individual resident needs of patients.
One commenter suggested that we implement a 25 percent combined cap for
group and concurrent therapy at a facility level rather than at a per-
patient level. One commenter requested that CMS consider having
providers report ``individual'' and ``non-individual'' therapy, rather
than separately reporting group and concurrent therapy.
Response: We do not agree that there is a contradiction between the
ANPRM and our current proposal. We continue to believe that individual
therapy should represent a majority of therapy provided in a SNF. We
continue to contend that although group and concurrent therapy may have
clinical merit in specific situations, we believe that individual
therapy is generally the best way of providing therapy to a resident
because it is most tailored to that specific resident's care needs. As
such, we believe that individual therapy should represent at least the
majority of the therapy services received by SNF residents. (82 FR
21004).
Our latest (FY 2017) data indicate that individual therapy was
provided 99.77 percent of the time, meaning that group and concurrent
therapy combined was reported as having been provided 0.23 percent of
the time. If therapy continues to be provided in the same way, there is
no reason to believe that a combined 25 percent limit on group and
concurrent therapy is not a generous limit given the amount of group
and concurrent therapy that has been provided under RUG IV. Therefore,
we do not agree with the request to implement the separate 25 percent
caps for group and concurrent therapy discussed in the ANPRM. We
further disagree that CMS put restrictions on the ``ability to furnish
concurrent and group therapy.'' We did not change any restrictions in
FY 2011 and FY 2012 on the amount or type of therapy provided. The 25
percent cap on group therapy was in place since the inception of the
SNF PPS. Rather, we allocated first concurrent therapy in FY 2011 (74
FR 40315-40319) and then group therapy in FY 2012 (76 FR 48511-48517)
as a way to equalize payment across therapy modes and remove any
financial
[[Page 39242]]
incentives for providing a certain therapy mode, which appeared to
drive at least some portion of the approximately 1,000 percentage
increase in the amount of group therapy provided under the SNF Part A
benefit in FY 2011. This was not an effort to restrict any mode of
therapy. As we wrote in the FY 2012 final rule (76 FR 48513, 48514), by
allocating group therapy among the four group therapy participants, we
are also equalizing the reimbursement incentive across the modes of
therapy. We stated we believe this would once again encourage
clinicians to choose the mode of therapy based on clinical rather than
financial reasons. We stated in the FY 2012 final rule that the purpose
of our allocation policy is to provide payment that better reflects
resource utilization and cost, and that we do not believe this policy
should affect clinical determinations regarding the appropriate mode of
therapy provided to a patient.
We appreciate the suggestion to implement a combined 25 percent
group and concurrent therapy limit at the facility level rather than
the patient level; however, given that a significant part of the reason
we proposed a limit on group and concurrent therapy is so that patients
receive therapy that reflects their individualized needs, we believe
that implementing a facility based limit on concurrent and group
therapy would defeat the purpose. With regard to a facility level
limit, as opposed to the patient-level limit, we believe that therapy
decisions should be driven by clinical standards and judgment related
to an individual patient and not in relation to all patients within a
facility. Utilizing a facility-level cap may allow for certain patients
to receive excessive levels of group or concurrent therapy, which we do
not believe would be advisable for any patient.
With regard to the comment that providers not be required to report
group and concurrent therapy separately, while we have a combined cap,
we believe that it is important to understand which of the two modes of
therapy, concurrent or group therapy, is actually occurring in relation
to this cap. Given that some commenters requested separate caps on
group and concurrent therapy, we would not be in a position to assess
the need for this separation in the future if group and concurrent
therapy were reported under a single heading.
Comment: Several commenters expressed concern with how the combined
group and concurrent therapy limit would interplay with student
supervision in SNFs. One commenter stated the following, ``Students'
minutes are often counted as concurrent therapy when the clinical
instructor is also treating a patient and we anticipate residents being
treated by students will quickly exceed the 25 percent threshold.'' The
commenters went on to explain that the 25 percent limitation on group
and concurrent therapy minutes could make it inefficient for the
treating therapist or assistant and could deter facilities from taking
students. One commenter was concerned that ``CMS currently requires
that student treatment must be labeled as ``concurrent,'' and
therefore, this would fall under the 25 percent limitation on group and
concurrent therapy. They stated that positive clinical education
experiences in post-acute settings often translate into quality
therapists and assistants getting jobs in those settings upon
graduation. One commenter explained that if a SNF accepts more
students, ``the average of 1 percent for group and concurrent therapy
represented in CMS data may not prove accurate.'' They described a
scenario where SNFs that prefer to have higher than average volumes of
students may deliver concurrent therapy in excess of 25 percent and
that the combined 25 percent limit of group and concurrent therapy
could be a deterrent to SNFs taking therapy students One commenter
recommended that CMS create a reporting requirement that would
delineate between student and therapist/assistant minutes so that those
minutes could be separated from the total of group and concurrent
therapy minutes.
Response: We appreciate the concern that these commenters raised.
We agree that our policies should not deter SNFs from taking students,
and we agree that the therapy student internship is crucial to ensuring
that students gain valuable SNF experience that would cause quality
therapist and assistant graduates to pursue employment at SNFs when
they eventually graduate. We appreciate the candor with which the
commenters have described how they provide concurrent therapy at the
same time as their therapy students consistent with current policy
allowances. We would like to clarify that CMS does not require that
student therapy be labeled as concurrent. The following is written in
the MDS 3.0 RAI Manual (Chapter 3, section O):
When a therapy student is involved with the treatment, and one
of the following occurs, the minutes may be coded as concurrent
therapy: The therapy student is treating one resident and the
supervising therapist/assistant is treating another resident, and
both residents are in line of sight of the therapist/assistant or
student providing their therapy.
This instruction is describing one possible scenario. We would like
to reiterate that CMS does not require students to do concurrent
therapy. As stated in the FY 2012 final rule (76 FR 48511), as the
therapy student is under the direction of the supervising therapist
(even if no longer required to be under line-of-sight supervision), the
time the student spends with a patient will continue to be billed as if
it were the supervising therapist alone providing the therapy. In other
words, the therapy student, for the purpose of billing, is treated as
simply an extension of the supervising therapist rather than being
counted as an additional practitioner.
We suspect that, as noted in the FY 2012 final rule referenced
above, because we do not allow facilities to count therapy students'
independent time on the MDS, many facilities rely on the MDS
instructions above (allowing a therapist or assistant and a student to
treat one patient each while both residents are in line of sight of the
therapist/assistant or student providing their therapy) to permit them
to count student concurrent therapy time. However, this should in no
way be considered mandatory practice and like all concurrent therapy,
should be used sparingly.
Further, as mentioned above, our most recent (FY 2017) data show
that individual therapy was provided 99.77 percent of the time, meaning
that group and concurrent therapy combined was reported as having been
provided 0.23 percent of the time. It concerns us that commenters have
stated that they are providing so much concurrent therapy with students
that the 25 percent cap would be too low for them, because this would
suggest that either the comments were provided mistakenly or that
facilities are falsely reporting concurrent therapy as individual
therapy. While we agree with commenters that the opportunity to
supervise student therapists in SNFs is valuable to the education of
future therapists and assistants, our data indicate that a 25 percent
combined cap on group and concurrent therapy should not deter
facilities from taking more therapy students. We believe the
recommendation to monitor student therapy minutes along with just
therapist/assistant minutes has merit and it is something we will
consider for future policy making.
Comment: Some commenters expressed concern with CMS' implication
that clinical decisions about
[[Page 39243]]
therapy are principally driven by ``. . . financial considerations
rather than the clinical needs of the SNF residents''.
Response: The available data support our assertion that at least
some SNFs principally utilize financial considerations, rather than
relying on clinical judgment, when making decisions regarding the
manner and amount of care to provide to SNF residents. In 2016, CMS
released the Skilled Nursing Facility Utilization and Payment Public
Use File (Skilled Nursing Facility PUF) (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/SNF.html). The Skilled Nursing Facility PUF
contained information on utilization, payment (allowed amount, Medicare
payment and standard payment), submitted charges, and beneficiary
demographic and chronic condition indicators organized by CMS
Certification Number (6-digit provider identification number), Resource
Utilization Group (RUG), and state of service. The SNF PUF included
information on the number of provider assessments where residents were
classified into an Ultra-High Rehabilitation RUG or a Very-High
Rehabilitation RUG. It also included the percentage of those
assessments that were within ten minutes of the minimum threshold used
to classify a resident into that Rehabilitation RUG category (that is,
between 500-510 minutes for RV RUGs and 720-730 minutes for RU RUGs).
Based on this information, we found the following:
51 percent of all RV assessments showed therapy provided
between 500 and 510 minutes.
65 percent of all RU assessments showed therapy provided
between 720 and 730 minutes.
For 88 providers, all of their RV assessments showed
therapy provided between 500 and 510 minutes.
For 215 providers, all of their RU assessments showed
therapy provided between 720 and 730 minutes.
More than one in five providers had more than 75 percent
of both RU and RV assessments that showed therapy provided within 10
minutes of the minimum threshold.
This clear evidence of thresholding behavior supports our assertion
regarding SNFs that are driven by payment considerations rather than
therapy needs of patients. Furthermore, we received a significant
number of comments from stakeholders on the proposed rule who believe
that the quality and volume of therapy services are likely to diminish
under PDPM. This belief is, itself, predicated on the notion that SNFs
will continue to utilize financial considerations as the basis for care
planning decisions. However, with better and more reliable patient
diagnosis and characteristic data and given the removal of therapy
service volume as a component of the payment system, we expect that we
will be better positioned under PDPM to exercise our authority to make
case-mix creep adjustments under section 1888(e)(4)(F) of the Act, as
may be appropriate, to address any changes in payment which are merely
the result of changes in the coding or classification of SNF patients
that do not reflect actual changes in case mix. This type of analysis
will also be a part of CMS monitoring efforts under PDPM.
Comment: One commenter recommended that, in the future, CMS
consider whether it would be reasonable to track rehabilitative versus
maintenance therapy, similar to how it is done in the home health
setting.
Response: We appreciate this suggestion and may take it into
consideration for future policy making decisions.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing our proposal, without modification, to set a combined 25
percent limit on group and concurrent therapy per discipline.
Additionally, we are finalizing our proposal, without modification, to
implement a non-fatal warning edit on the validation report upon
submission when the amount of group and concurrent therapy exceeds 25
percent within a given therapy discipline, which would alert the
provider to the fact that the therapy provided to that resident
exceeded the threshold.
F. Interrupted Stay Policy
Under section 1812(a)(2)(A) of the Act, Medicare Part A covers a
maximum of 100 days of SNF services per spell of illness, or ``benefit
period.'' A benefit period starts on the day the beneficiary begins
receiving inpatient hospital or SNF benefits under Medicare Part A.
(See section 1861(a) of the Act; Sec. 409.60). SNF coverage also
requires a prior qualifying, inpatient hospital stay of at least 3
consecutive days' duration (counting the day of inpatient admission but
not the day of discharge). (See section 1861(i) of the Act; Sec.
409.30(a)(1)). Once the 100 available days of SNF benefits are used,
the current benefit period must end before a beneficiary can renew SNF
benefits under a new benefit period. For the current benefit period to
end so a new benefit period can begin, a period of 60 consecutive days
must elapse throughout which the beneficiary is neither an inpatient of
a hospital nor receiving skilled care in a SNF. (See section 1861(a) of
the Act; Sec. 409.60). Once a benefit period ends, the beneficiary
must have another qualifying 3-day inpatient hospital stay and meet the
other applicable requirements before Medicare Part A coverage of SNF
care can resume. (See section 1861(i); Sec. 409.30)
While the majority of SNF benefit periods, approximately 77
percent, involve a single SNF stay, it is possible for a beneficiary to
be readmitted multiple times to a SNF within a single benefit period,
and such cases represent the remaining 23 percent of SNF benefit
periods. For instance, a resident can be readmitted to a SNF within 30
days after a SNF discharge without requiring a new qualifying 3-day
inpatient hospital stay or beginning a new benefit period. SNF
admissions that occur between 31 and 60 days after a SNF discharge
require a new qualifying 3-day inpatient hospital stay, but fall within
the same benefit period. (See sections 1861(a) and (i) of the Act;
Sec. Sec. 409.30, 409.60)
Other Medicare post-acute care (PAC) benefits have ``interrupted
stay'' policies that provide for a payment adjustment when the
beneficiary temporarily goes to another setting, such as an acute care
hospital, and then returns within a specific timeframe. In the
inpatient rehabilitation facility (IRF) and inpatient psychiatric
facility (IPF) settings, for instance, an interrupted stay occurs when
a patient returns to the same facility (or in the case of an IPF, the
same or another IPF) within 3 days of discharge. The interrupted stay
policy for long-term care hospitals (LTCHs) is more complex, consisting
of several policies depending on the length of the interruption and, at
times, the discharge destination: An interruption of 3 or fewer days is
always treated as an interrupted stay, which is similar to the IRF PPS
and IPF PPS policies; if there is an interruption of more than 3 days,
the length of the gap required to trigger a new stay varies depending
on the discharge setting. In these three settings, when a beneficiary
is discharged and returns to the facility within the interrupted stay
window, Medicare treats the two segments as a single stay.
As we explained in the proposed rule (83 FR 21068), while other
Medicare PAC benefit categories have interrupted stay policies, the SNF
benefit under the RUG-IV case-mix model had no need for such a policy
because, given a resident's case-mix group, payment did not change over
the course of a stay. In other words, assuming no change in a
[[Page 39244]]
patient's condition or treatment, the payment rate was the same on Day
1 of a covered SNF stay as it is at Day 7. Accordingly, a beneficiary's
readmission to the SNF--even if only a few days may have elapsed since
a previous discharge--could essentially be treated as a new and
different stay without affecting the payment rates.
However, as described in section V.D of the proposed rule (83 FR
21068) and section V.C.4 of this final rule, we stated that the PDPM
would adjust the per diem rate across the length of a stay (the
variable per diem adjustment) to better reflect how and when costs are
incurred and resources used over the course of the stay, such that
earlier days in a given stay receive higher payments, with payments
trending lower as the stay continues. In other words, the adjusted
payment rate on Day 1 and Day 7 of a SNF stay may not be the same.
Although we stated that we believe this variable per diem adjustment
schedule more accurately reflects the increased resource utilization in
the early portion of a stay for single-stay benefit periods (which
represent the majority of cases), we considered whether and how such an
adjustment should be applied to payment rates for cases involving
multiple stays per benefit period. In other words, in the proposed
rule, we considered instances in which a resident has a Part A stay in
a SNF, leaves the facility for some reason, and then is readmitted to
the same SNF or a different SNF; and how this readmission should be
viewed in terms of both resident classification and the variable per
diem adjustment schedule under the proposed PDPM. We explained that
application of the variable per diem adjustment is of particular
concern because providers may consider discharging a resident and then
readmitting the resident shortly thereafter to reset the resident's
variable per diem adjustment schedule and maximize the payment rates
for that resident.
We stated in the proposed rule (83 FR 21068) that, given the
potential harm which may be caused to the resident if discharged
inappropriately, and other concerns outlined previously in this section
and in the proposed rule, we discussed in last year's FY 2018 ANPRM the
possibility of adopting an interrupted stay policy under the SNF PPS in
conjunction with the implementation of the RCS-I case-mix model.
Several commenters expressed support for this interrupted stay policy
in responding to the ANPRM, saying that the interrupted stay policy is
in alignment with similar policies in other post-acute settings, and
that a similar policy would likely be implemented under any cross-
setting PAC payment system.
Thus, we proposed to implement an interrupted stay policy as part
of the SNF PPS, effective beginning FY 2020 in conjunction with the
proposed implementation of the SNF PDPM. Specifically, in cases where a
resident is discharged from a SNF and returns to the same SNF by 12:00
a.m. at the end of the third day of the interruption window (as defined
below), we proposed treating the resident's stay as a continuation of
the previous stay for purposes of both resident classification and the
variable per diem adjustment schedule. In cases where the resident's
absence from the SNF exceeds this 3-day interruption window (as defined
below), or in any case where the resident is readmitted to a different
SNF, we proposed treating the readmission as a new stay, in which the
resident would receive a new 5-day assessment upon admission and the
variable per diem adjustment schedule for that resident would reset to
Day 1. We stated in the proposed rule (83 FR 21068 through 21069) that,
consistent with the existing interrupted stay policies for the IRF and
IPF settings, we would define the interruption window as the 3-day
period starting with the calendar day of discharge and additionally
including the 2 immediately following calendar days. We stated that for
the purposes of the interrupted stay policy, the source of the
readmission would not be relevant. That is, the beneficiary may be
readmitted from the community, from an intervening hospital stay, or
from a different kind of facility, and the interrupted stay policy
would operate in the same manner. We explained that the only relevant
factors in determining if the interrupted stay policy would apply are
the number of days between the resident's discharge from a SNF and
subsequent readmission to a SNF, and whether the resident is readmitted
to the same or a different SNF.
In the proposed rule (83 FR 21069), we presented the following
examples, which we believed aided in clarifying how this policy would
be implemented:
Example A: A beneficiary is discharged from a SNF on Day 3 of the
stay. Four days after the date of discharge, the beneficiary is then
readmitted (as explained above, this readmission would be in the same
benefit period) to the same SNF. The SNF would conduct a new 5-day
assessment at the start of the second admission and reclassify the
beneficiary accordingly. In addition, for purposes of the variable per
diem adjustment schedule, the payment schedule for the second admission
would reset to Day 1 payment rates for the beneficiary's new case-mix
classification.
Example B: A beneficiary is discharged from a SNF stay on Day 7 and
is readmitted to the same SNF within the 3-day interruption window. For
the purposes of classification and payment, this would be considered a
continuation of the previous stay (an interrupted stay). The SNF would
not conduct a new 5-day assessment to reclassify the patient and for
purposes of the variable per diem adjustment schedule, the payment
schedule would continue where it left off at the rate for the day of
discharge; we stated in the proposed rule that, in this case, the first
day of the second stay would be paid at the Day 8 per diem rates under
that schedule.
Example C: A beneficiary is discharged from a SNF stay on Day 7 and
is readmitted to a different SNF within the 3-day interruption window.
The SNF would conduct a new 5-day assessment at the start of the second
admission and classify the beneficiary accordingly. In addition, for
purposes of the variable per diem adjustment schedule, the payment
schedule for the second admission would reset to Day 1 payment rates
for the beneficiary's new case-mix classification.
We note two clarifications to the preceding examples. In each of
the above examples, when the beneficiary is discharged from the SNF
stay, the SNF would complete the required PPS Discharge Assessment (see
Table 33: PPS Assessment Schedule under PDPM). Additionally, in Example
B, we inadvertently indicated in the proposed rule that the first day
of the second stay would be paid at the Day 8 per diem rates. However,
the first day of the second stay would actually be paid at the rate for
the day of discharge, Day 7. These points are further addressed in our
responses to comments below.
We also stated in the proposed rule (83 FR 21069) that we
considered alternative ways of structuring the interrupted stay policy.
For example, we considered possible ranges for the interrupted stay
window other than the 3 calendar day window proposed. For example, we
considered windows of fewer than 3 days (for example, 1 or 2 day
windows for readmission), as well as windows of more than 3 days (for
example, 4 or 5 day windows for readmission). However, we stated we
believe that 3 days represents a reasonable window after which it is
more likely that a resident's condition and resource needs will have
changed. We also stated that we believe
[[Page 39245]]
consistency with other payment systems, like that of IRF and IPF, is
helpful in providing clarity and consistency to providers in
understanding Medicare payment systems, as well as making progress
toward standardization among PAC payment systems.
In addition, we explained that, to determine how best to
operationalize an interrupted stay policy within the SNF setting, we
considered three broad categories of benefit periods consisting of
multiple stays. The first type of scenario, SNF-to-SNF transfers, is
one in which a resident is transferred directly from one SNF to a
different SNF. The second case we considered, and the most common of
all three multiple-stay benefit period scenarios, is a benefit period
that includes a readmission following a new hospitalization between the
two stays--for instance, a resident who was discharged from a SNF back
to the community, re-hospitalized at a later date, and readmitted to a
SNF (the same SNF or a different SNF) following the new hospital stay.
The last case we considered was a readmission to the same SNF or a
different SNF following a discharge to the community, with no
intervening re-hospitalization.
We further explained that, to simplify the analysis, we primarily
examined benefit periods with two stays. We stated that benefit periods
with exactly two stays account for a large majority (70 percent) of all
benefit periods with multiple stays, and benefit periods with more than
two stays represent a very small portion (less than 7 percent) of all
benefit periods overall. We therefore assume the data for cases where
there are exactly two stays in a benefit period are representative of
all benefit periods with multiple stays. We noted that, of cases where
there are exactly two stays in a benefit period, over three quarters
(76.4 percent) consist of re-hospitalization and readmission (to the
same SNF or a different SNF). Discharge to the community and
readmission without re-hospitalization cases represent approximately 14
percent of cases, while direct SNF-to-SNF transfers represent
approximately 10 percent.
For each of these case types, in which a resident was readmitted to
a SNF after discharge, we explained that we examined whether (1) the
variable per diem adjustment schedule should be ``reset'' back to the
Day 1 rates at the outset of the second stay versus ``continuing'' the
variable per diem adjustment schedule at the point at which the
previous stay ended, and (2) a new 5-day assessment and resident
classification should be required at the start of the subsequent SNF
stay.
With regard to the first question above, specifically whether or
not a readmission to a SNF within the proposed 3-day interruption
window would reset the resident's variable per diem adjustment
schedule, we stated that in each of the cases described above, we were
concerned generally that an interrupted stay policy that ``restarts''
the variable per diem adjustment schedule to Day 1 after readmissions
could incentivize unnecessary discharges with quick readmissions. We
explained that this concern is particularly notable in the second and
third cases described above, as the beneficiary may return to the same
facility. As we discussed in the proposed rule (83 FR 21069), to
investigate this question, we conducted linear regression analyses to
examine changes in costs in terms of both PT/OT and NTA costs per day
from the first to second admission for the three scenarios described
above (SNF-to-SNF direct transfers, readmissions following re-
hospitalization, and readmissions following community discharge). As
discussed in section V.D.4. of the proposed rule (83 FR 21060 through
21061) and in section V.C.4 of this final rule, investigations revealed
that utilization of PT, OT, and NTA services changes over the course of
a stay. Based on both empirical analysis and feedback from multiple
technical expert panels, we determined that SLP and nursing utilization
remained fairly constant over a stay. Therefore, we proposed variable
per diem adjustment schedules for the PT, OT, and NTA components but
not for the SLP or nursing components. We stated in the proposed rule
that, because the analysis of changes in costs across two stays in a
single benefit period is relevant to determining how the variable per
diem payment adjustments should apply to benefit periods with multiple
stays, we restricted our analysis to the three payment components for
which we are proposing variable per diem adjustments (PT, OT, and NTA).
For this analysis, both the re-hospitalization and community discharge
cases were separated into two sub-cases: When the resident returns to
the same SNF, and when the resident is admitted to a different SNF. By
definition, SNF-to-SNF transfer cases always have different providers
for the first and second stays. We stated in the proposed rule that the
regression results showed that PT/OT costs from the first to second
admission were very similar for SNF-to-SNF transfers and for
readmissions to a different provider following re-hospitalization or
discharge to community, suggesting that the second admission is
comparable to a new stay. NTA costs from the first to second admission
also were very similar for SNF-to-SNF transfers. We stated that, for
readmissions following re-hospitalization or discharge to community,
NTA costs for readmissions to the same provider were notably less than
NTA costs for readmissions to a different provider. We explained that,
overall, these results suggest that a readmission to a different SNF,
regardless of whether it was a direct SNF-to-SNF transfer, or whether
the beneficiary was re-hospitalized or discharged to the community
before the second admission, are more comparable to a new stay than an
interrupted stay. Thus, we proposed to always reset the variable per
diem adjustment schedule to Day 1 whenever residents are discharged and
readmitted to a different SNF. We acknowledged that this could lead to
patterns of inappropriate discharges and readmissions that could be
inconsistent with the intent of this policy; for example, we stated we
would be concerned about patients in SNF A consistently being admitted
to SNF B to the exclusion of other SNFs in the area. We explained that
should we discover such behavior, we would flag these facilities for
additional scrutiny and review and consider potential policy changes in
future rulemaking. However, based on the results of our regression
analyses, and because of the concern that a SNF provider could
discharge and promptly readmit a resident to reset the variable per
diem adjustment schedule to Day 1, we stated that in cases where a
resident returns to the same provider we were proposing to allow the
payment schedule to reset only when the resident has been out of the
facility for at least 3 days. As previously mentioned, we stated that
believe 3 days represents a reasonable window after which it is more
likely that a resident's condition and resource needs will have
changed, and this 3-day requirement is also consistent with the
interrupted stay policies of similar Medicare PAC benefits. Moreover,
we stated that while we found that PT and OT costs for cases where the
gap is longer than 3 days are similar to PT and OT costs for cases
where the gap is shorter than 3 days, NTA costs are notably higher for
cases where the gap is longer than 3 days. We explained that this
provides further support for resetting the variable per diem schedule
for cases where the gap is longer than 3 days (as costs tend to be
higher, similar to a new stay). More information on these analyses can
be found in section 3.10.3. of the SNF PMR technical report available
at https://
[[Page 39246]]
www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/
therapyresearch.html.
We explained in the proposed rule (83 FR 21070) that with regard to
the question of whether or not SNFs would be required to complete a new
5-day assessment and reclassify the resident after returning to the SNF
within the proposed 3-day interruption window, we investigated changes
in resident characteristics from the first to the second stay within a
benefit period. First, we looked at changes in clinical categories from
the first to second stay for residents with an intervening re-
hospitalization. We explained that this analysis could only be
conducted for residents with a re-hospitalization because, as described
in section 3.10.2. of the SNF PMR technical report, for research
purposes, classification into clinical categories was based on the
diagnosis from the prior inpatient stay. We stated that for those
residents who had a re-hospitalization and were readmitted to a SNF
(either the same or a different SNF), and therefore, could be
reclassified into a new clinical category (because of new diagnostic
information as a result of the intervening re-hospitalization), we
found that a majority had the same clinical category for both the first
and second admission. We further explained that because we could not
conduct this investigation for SNF-to-SNF transfers or community
discharge cases (as they lack a new hospitalization), we separately
investigated changes in function from the first to second stay for SNF-
to-SNF transfers and for readmissions following community discharge. We
found that in a large majority of cases, there was no change in
function from the first to second stay, regardless of whether the
second provider was the same or different as the first provider. Thus,
we stated we believe it would be appropriate to maintain the
classification from the first stay for those residents returning to the
same SNF no more than 3 calendar days after discharge from the same
facility. However, we stated that because we proposed to exclude from
the interrupted stay policy readmissions to a different SNF (regardless
of the number of days between admissions) and readmissions to the same
SNF when the gap between admissions is longer than 3 days, and to treat
these readmissions as new stays for purpose of the variable per diem
adjustment schedule, we believe it would be appropriate and consistent
to treat these cases as new stays for purposes of clinical
classification and to require a new 5-day PPS assessment. More
information on these analyses can be found in section 3.10.2. of the
SNF PMR technical report available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.
Additionally, we noted that under the approach discussed in section
V.E.1. of the proposed rule, providers would be afforded the
flexibility to use the IPA, which would allow for resident
reclassification under certain circumstances.
We also noted that we believe that frequent SNF readmissions may be
indicative of poor quality care being provided by the SNF. Given this
belief, we stated we plan to monitor the use of this policy closely to
identify those facilities whose beneficiaries experience frequent
readmission, particularly facilities where the readmissions occur just
outside the 3-day window used as part of the proposed interrupted stay
policy. We stated that should we discover such behavior, we would flag
these facilities for additional scrutiny and review and consider
potential policy changes in future rulemaking.
We invited comments on the proposals outlined above. Commenters
submitted the following comments related to the proposed rule's
discussion of the proposed interrupted stay policy under the PDPM. A
discussion of these comments, along with our responses, appears below.
Comment: Several commenters pointed out a potential adverse
incentive associated with the interaction between the interrupted stay
policy, the proposed Interim Payment Assessment (IPA), and the variable
per diem adjustment. Specifically, these comments were concerned with
issues that could arise because an IPA does not return the NTA
component to day 1 payment rates under the variable per diem adjustment
schedule. Commenters stated that if a patient requires a new high cost
medication or piece of equipment, the inability to return to day 1 of
the variable per diem adjustment schedule could result in an array of
unintended issues. Commenters noted that these unintended issues
include incentivizing unnecessary discharges to a hospital followed by
quick readmissions (which, the commenter pointed out, was a risk CMS
had specifically considered and attempted to avoid in crafting the
proposed interrupted stay policy) and reluctance to admit patients who
are at high risk of changes in care needs. One commenter stated that
CMS has not aligned the planned monitoring of unnecessary discharges
with existing quality measures, and instead has created an incentive
for unnecessary discharges and readmissions just outside the 3-day
interruption window by prohibiting providers from returning patients to
days one through three of the variable per diem adjustment schedule for
typically high cost NTAs when an IPA is conducted or in the instance of
interrupted stays of 3 or less days.
Response: While we appreciate the commenters' concerns regarding
the potential for an adverse incentive, we believe that frequent SNF
readmissions may be indicative of poor quality care being provided by
the SNF. CMS plans to monitor the use of this policy closely to
identify those facilities whose beneficiaries experience frequent
readmission, particularly facilities where the readmissions occur just
outside the 3-day window used as part of the proposed interrupted stay
policy. Should we discover such behavior, we will flag these facilities
for additional scrutiny and review and consider potential policy
changes in future rulemaking.
We do not believe that facilities have cause for reluctance to
admit patients who are at high risk of changes in care needs. The
optional IPA allows for patients to be reclassified in cases of
significant changes in care needs.
With regard to the question of the IPA resetting the variable per
diem adjustment, this issue is addressed in our responses to comments
in section V.D. of this final rule.
With regard to the question of interruptions of 3 or less days
resetting the variable per diem adjustment, as we stated in the
proposed rule, our analyses found that some costs, specifically NTA
costs, are notably higher for cases where the gap is longer than 3
days, compared to cases where the interruption is 3 or less days, where
costs are more similar to uninterrupted stays. We believe this supports
the use of a 3-day gap as the metric for when to reset the variable per
diem adjustment.
Regarding any current alignment of quality measures and the
monitoring of unnecessary discharges, we interpret the commenter to be
suggesting that CMS does not currently have in place quality measures
that address unnecessary discharges to the hospital during the SNF
Stay. We disagree with this assertion in that CMS has developed and
implemented a hospital readmission measure for SNF.
Comment: Commenters requested clarification as to whether the
readmission of a patient under the interrupted stay policy (for
example, within the 3-day window) would trigger an IPA.
[[Page 39247]]
Response: As discussed in section V.D. of this final rule, the IPA
under PDPM would be an optional assessment. Therefore, readmission
after an interrupted stay would not trigger an IPA. If the provider
believes, even in the case of a short absence from the facility, that
an IPA is warranted, then we would encourage the provider to complete
an IPA in that instance.
Comment: Several commenters requested clarification about
completing initial evaluations for therapy upon readmission of a
patient in an interrupted stay under the interrupted stay policy.
Commenters questioned whether CMS has an expectation that therapists
will always complete a new evaluation upon the resident's return to a
SNF as currently instructed in the MDS RAI Manual, or whether CMS would
defer to the clinical judgment of the therapist in a way that is more
like the EOT/EOT-R practice. Commenters also questioned whether CMS
would require SNFs to indicate on the claim form when a resident has
been readmitted and/or when an evaluation was complete after the
resident was readmitted. Commenters pointed out that, per the current
instruction in section O of the MDS RAI Manual, ``If a resident returns
from a hospital stay, an initial evaluation must be performed after
entry to the facility, and only those therapies that occurred since
admission/reentry to the facility and after the initial evaluation
shall be counted.'' (MDS 3.0 Chapter 3, section O, V1.15, page O-19).
On the other hand, commenters pointed out that the premise for the
interrupted stay policy is similar to the policy for the End-of Therapy
(EOT) Other Medicare Required Assessment (OMRA), which leaves it to the
clinician's judgment whether or not a new therapy evaluation should be
completed. Commenters stated that when therapy is the primary skill,
and the patient misses 3 consecutive calendar days of therapy, the
provider must complete an EOT OMRA, which effectively changes the
payment resource utilization group (RUG). Commenters pointed out that
in cases where therapy resumes after the EOT-OMRA is performed and the
resumption of therapy date is no more than 5 consecutive calendar days
after the last day of therapy provided, and the therapy services have
resumed at the same RUG-IV classification level, and with the same
therapy plan of care that had been in effect prior to the EOT OMRA, an
EOT OMRA with Resumption (EOT-R) may be completed. Commenters noted
that in these cases, it is left to the clinician's judgment whether or
not a new therapy evaluation should be completed.
Response: Given that an interrupted stay does not prompt the need
for a new 5-day PPS assessment and continues the stay from the point
when the interruption occurred, providers should not be required to
always complete an evaluation upon the resident's readmission after an
interrupted stay. Per the proposed interrupted stay policy, a new 5-day
assessment must be completed only if the interruption lasts longer than
3 days (or if the beneficiary is readmitted to a different SNF). If the
interruption was less than 3 days but patient care needs have changed
significantly, clinicians may complete an IPA at their discretion. The
instructions in the MDS RAI Manual will be updated accordingly as part
of the implementation of PDPM.
With regard to whether providers would be required to report on the
claim form when a patient is readmitted or an evaluation is completed
for such a patient, we do not anticipate such changes in claims
reporting, though we would have providers report on the claim when an
interrupted stay occurred.
Comment: Many commenters had questions and concerns related to
discharge practices under the interrupted stay policy, and requested
clarification of the requirements surrounding the PPS Part A Discharge
(NPE) when beneficiaries meet the criteria of an interrupted stay. One
commenter stated that it is unclear in the proposed rule whether the
NPE would be completed in example B in the FY 2019 SNF PPS proposed
rule (83 FR 21069). Assuming that an NPE would be required once the
resident has been out of the facility for 24 hours, whether the
resident returns within 1 day or 3 days, commenters questioned how the
facility would manage the assessment schedule versus the payment
schedule. Other commenters questioned whether CMS expects SNFs to wait
to see whether the beneficiary returns before completing the discharge
assessment. Commenters questioned what the implications would be for
setting the Assessment Reference Date (ARD) approximately 4 to 5 days
after discharge in cases when the beneficiary does not return within
the 3-day window. Commenters stated that as currently defined, doing
this would be considered a late assessment, and could subject the SNF
to penalties. Commenters also stated that if this discharge assessment
is required, then this adds to the administrative burden, which is
contradictory to CMS' stated goals.
Response: As is the current policy, SNFs would be expected to
complete the PPS discharge assessment and/or OBRA discharge assessment
upon any discharge and within currently established timeframes,
regardless of any expectation as to whether or not a patient might be
readmitted and/or whether the readmission would be considered an
interrupted stay. This does not add administrative burden beyond what
SNFs are currently expected to do. This information is also important
in our ability to assess instances in which facilities may abuse the
interrupted stay policy.
With regard to managing the assessment schedule and payment
schedule, we would refer commenters to the assessment schedule
discussed in section V.D of this final rule, which outlines both the
assessment calendar and payment timeline for each assessment under
PDPM.
Comment: Some commenters sought clarification as to how the SNF
should count the total volume, mode, and type of therapy to report in
section O of the MDS for purposes of the discharge assessment when a
resident's stay included one or more interrupted stays. Would they
count it from Day 1, the original admission date, even though there was
an interrupted stay, or would this discharge assessment only include
the volume, mode, and type of therapy delivered since the time of
return to discharge?
Response: In cases where a resident is discharged and then
readmitted to a SNF in a manner that triggers an interrupted stay under
the interrupted stay policy, only those therapies that occurred since
the readmission would be included in section O of the MDS for each
discharge assessment.
Comment: A commenter expressed concerns related to the use of the
length of an interruption in days (for example, less than or equal to 3
days) as the trigger for a 5-day assessment. The commenter stated
appreciation for CMS efforts to reduce the number of 5-day assessments,
but stated that no reduction in burden is achieved by not requiring a
5-day assessment for patients returning following 3 or fewer days,
assuming that SNFs must still conduct a patient assessment upon
readmission for all patients. Also, the commenter believes not
performing a 5-day assessment for all returning patients creates
unneeded risk for patients and SNFs. The commenter recommended
performing the 5-day assessment after every readmission, the result of
which--not the number of days in the interruption--should determine
whether the patient's condition has
[[Page 39248]]
changed and new care needs are present that would warrant resetting the
variable per diem rate. Commenters stated that the number of days in an
interruption is irrelevant to costs of treatment and it is the
patient's condition upon return from the interruption that should
determine whether the payment resets to day 1 per diem rates or not.
Response: Contrary to the commenter's assertion, we believe that a
reduction in burden is, in fact, achieved by not requiring a 5-day
assessment for patients returning following 3 or fewer days. While SNFs
may be required to complete OBRA assessments and other statutorily
required assessments beyond the scope of SNF PPS payment, it will no
longer be the case that SNFs must conduct a patient assessment upon
readmission for all patients for the purposes of PPS payment. As
discussed above, in conjunction with the implementation of the PDPM,
CMS will reduce the assessment schedule significantly to ease provider
burden (see section V. E. and Table 33 of the proposed rule). The Start
of Therapy OMRA, the assessment that would have previously been
required for PPS payment upon a readmission, is no longer required. The
new schedule utilizes the 5-day Assessment and PPS Discharge
Assessments as the only required assessments, with IPAs being optional
at clinician discretion.
We disagree that not performing an assessment for all returning
patients creates unneeded risk. We believe that the new assessment
schedule we proposed achieves efficiencies in terms of provider burden
while still providing enough data to accurately monitor provider
behavior, changes in patient condition, and outcomes via the 5-day
assessment, IPA assessments, and discharge assessments. While a 5-day
assessment would not be required upon readmission in the case of an
interrupted stay, the provider has the option of completing an IPA as
it determines appropriate to assess whether the patient's condition and
care needs have changed.
While we appreciate the commenter's concern, we believe the use of
the number of days between discharge and readmission to determine
whether there is an interrupted stay is appropriate. As described in
the proposed rule, our analyses found that some types of costs, notably
NTA costs, tend to be higher for cases where the gap is longer than 3
days, suggesting that such stays are more like new stays than
continuing stays and thus supporting the 3-day metric for resetting the
variable per diem schedule. The length of the interruption is also used
in determining whether there is an interrupted stay in other Medicare
post-acute payment systems and we expect that its use here will be just
as effective.
With regard to the commenters' recommendation that a 5-day
assessment be completed upon readmission after an interrupted stay, we
believe that this would constitute an unnecessary burden on providers,
particularly given the provider's option to complete an IPA upon
readmission to the SNF. We also do not believe a 5-day assessment is
necessary upon readmission after an interrupted stay of 3 days or less.
While we found that PT and OT costs for cases where the gap is longer
than 3 days are similar to PT and OT costs for cases where the gap is
shorter than 3 days, NTA costs are notably higher for cases where the
gap is longer than 3 days. We explained that this provides further
support for resetting the variable per diem schedule for cases where
the gap is longer than 3 days (as costs tend to be higher, similar to a
new stay). As discussed in section 3.10 of the SNF PMR technical
report, our analyses also showed that clinical category (in cases with
an intervening re-hospitalization) and functional status (in cases
involving SNF-to-SNF transfers and readmissions following community
discharge) tended not to change between the first stay and the second
stay in an interrupted stay of 3 days or less. Thus, we believe our
research suggests that stays with interruptions of 3 days or less are
more similar in cost to uninterrupted stays and are less likely to
involve significant changes in patient condition or function.
Therefore, we do not agree that a 5-day assessment should be required
upon readmission after an interrupted stay, or that it is appropriate
to reset the variable per diem adjustment schedule to day 1 after an
interrupted stay.
We agree with the commenter that the patient's condition should be
the most relevant factor in determining the need for a new assessment,
and CMS has given providers the option of performing an IPA at their
discretion based on changing conditions. As we explained previously, if
a new condition is coded on an IPA, the SNF PPS per diem payment for
the patient could increase to reflect changes in the patient's clinical
condition if there is a change in the patient's case-mix group.
Comment: A commenter stated that CMS does not explicitly discuss
discharge to the community and the interrupted stay policy, and
requested clarification.
Response: In the FY 2019 SNF PPS proposed rule (83 FR 21068 through
21069), we discussed discharge to the community and the interrupted
stay policy. The beneficiary may be readmitted from the community, from
an intervening hospital stay, or from a different kind of facility, and
the interrupted stay policy would operate in the same manner. The
interrupted stay policy would operate in the same manner for discharges
to the community.
Comment: One commenter commented that the RAI User's Manual
instructions for A2400A, on page A-32, are to code 1, yes, if the
resident has had a Medicare Part A covered SNF stay since the most
recent admission/entry or reentry. The commenter stated that providers
also use the Medicare Stay End Date Algorithm on page A-37 of the RAI
User's Manual to correctly code A2400C, the end of the Medicare SNF
stay. A2400C is also used to determine whether the PPS Part A Discharge
assessment is required. The commenter referenced Example B on page
21069 of the proposed rule, which describes a beneficiary who is
discharged on day 7 and is readmitted to the same SNF within the 3-day
interruption window. The example states a SNF would not conduct a new
5-day assessment, and for the purposes of payment, this would be
considered a continuation of the previous stay. The commenter expressed
concern that, even though the Example B beneficiary is considered a
continuation of the previous stay for payment purposes, A2400 on the
MDS would still be coded as two separate Medicare stays. The commenter
stated that when the resident is discharged on day 7, this date would
be considered the end of the Medicare stay at A2400C. The entry record
completed when the resident returned would have a new Medicare start
date (A2400B) that would equal the reentry date. The commenter stated
that this could lead to unmatched stays and inaccurate SNF QRP
measures.
Response: We appreciate the comments on the potential revisions
needed to the MDS manual or any technical specifications associated
with SNF programs to implement the interrupted stay policy, and will
consider these issues when making revisions to these materials as part
of implementing the PDPM and related policies. With regard to the
commenter's concern about the alignment of individual stays in the SNF
QRP and the PDPM, we are aware of the issue and will revise the codes
so that a hospital admission and return to the SNF does
[[Page 39249]]
not trigger a new Medicare stay for purposes of the SNF QRP.
Comment: A commenter expressed concern regarding how the
interrupted stay policy will operate in situations where the SNF
provided the resident with the Notice of Medicare Non-Coverage (NOMNC),
which is required to be provided prior to a discharge to the community.
The commenter requested clarification on how or if issuance of the
NOMNC or SNFABN would have any effect on the interrupted stay policy.
Their concern was that if a resident meets the criteria of an
interrupted stay following a discharge where denial notices were
issued, the resident would be considered a new admission to the SNF.
The commenter stated the cost of an admission in this situation is more
like that of a new admission than a readmission. They recommended that
the interrupted stay policy not be applied following a discharge with
issuance of denial notices.
Response: The basic purpose of the interrupted stay policy is to
ensure that when two segments of a resident's stay in the facility are
separated by only a brief absence, the variable per diem payment
adjustment is not inappropriately reset to Day 1 upon the resident's
return. We do not believe that the mere issuance of a denial notice
such as a NOMNC or SNFABN prior to the resident's departure would, in
itself, have any effect on the nature of the care needed by the
resident upon subsequent resumption of SNF care, the costs of
readmission, or the way in which providers would be paid under the
PDPM, and, accordingly, we are not adopting the commenter's suggestion.
Comment: A commenter expressed concern about the impact an OBRA
Discharge Return Not Anticipated assessment would have on the
interrupted stay policy. The commenter stated that currently, when a
resident discharges to the community with the intent not to return, the
SNF is required to complete the OBRA Discharge Return Not Anticipated
assessment and would combine this assessment with the PPS Part A
Discharge. The commenter stated that the OBRA Discharge Return Not
Anticipated ends the resident's ``episode of care.'' The commenter
stated that if this resident were to be readmitted to the SNF within
the interruption window, this would be considered a new admission,
require an admission type of entry record, and start a new ``episode of
care.'' Furthermore, the commenter stated that this discharge would end
all of the resident's orders, meaning that a new admission order is
required, along with new physician certification of skilled care and
new therapy evaluations. The commenter was highly concerned that the
interrupted stay policy would apply following an OBRA Discharge Return
Not Anticipated assessment, when the resident is considered a ``new
admission'' for all other regulations. The commenter stated that the
cost of an admission in this situation is more like that of a new
admission than a readmission. The commenter recommended that the
interrupted stay policy not be applied following a Discharge Return Not
Anticipated.
Response: We appreciate this concern though we do not agree that
the interrupted stay policy should not apply in cases where the
resident is discharged return not anticipated. While the provider may
have prepared a discharge plan for this patient based on the notion
that the patient would not return, the patient's return to the SNF
within that 3-day window would suggest that either the patient was not
adequately prepared for discharge or may have been discharged too early
from the facility. Further, providers should consider the possibility
that a patient may return before finalizing the precise discharge type
coded on the MDS. Finally, we believe that exempting such discharges
from the interrupted stay policy could incentivize providers to merely
code discharges in this manner only for this purpose and without
sufficient basis.
Comment: One commenter stated that currently a Medicare Part A stay
in the SNF will end if the resident has been discharged to the
community, has been admitted to the hospital, or is on a hospital
observation stay or emergency room visit that spans midnight and
exceeds 24 hours. The commenter stated that the interrupted stay policy
would consider any readmission within the 3-day interruption window as
a continuation of the previous stay, therefore changing the number of
Medicare stays the facility would have had prior to this proposal. One
commenter expressed concern that the reduction in Medicare stays has
the potential to affect the SNF QRP measures adversely by resulting in
a higher number of unmatched stays and potential errors with SNF QRP
measure calculation. The commenter referenced the Skilled Nursing
Facility Quality Reporting Program Measure Calculation and Reporting
User's Manual 1.0 (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Downloads/SNF-QM-Users-Manual-V10-FINAL-5-22-17.pdf) and the instructions on how to
identify a Medicare Part A stay for SNF QRP: Start by sorting
assessments in reverse order during the 12-month target period. If the
most recent assessment is a PPS Part A Discharge assessment, look for
the next qualifying assessment; if the assessment is a 5-day, this is a
matched assessment, and if not a 5-day, the stay is unmatched. The
commenter expressed concern for potential negative impact to the SNF
QRP measures, regardless of whether the Discharge Assessment NPE is
required with the discharge prior to the interrupted stay, with the
following reasoning.
The commenter described a sequence of assessments and events that
the commenter stated would occur under the current payment system if
Example B on page 21069 were to occur: 5-day assessment, NPE, discharge
of less than 3 days, 5-day assessment, and final NPE. This would be
counted as two Medicare stays for SNF QRP.
The commenter then described how this sequence might differ under
the new system, depending on whether the NPE is required or not. In
Example B, if the NPE was required on day 7 when the resident was
discharged, but a new 5-day assessment was not required when the
resident returned within the interruption window, then the sequence of
assessments and events would be: 5-day assessment, NPE, interrupted
stay, NPE. This would result in one unmatched stay (between the return
from the interrupted stay to the final NPE) and one matched stay.
In Example B, if the NPE is not required on day 7 when the resident
discharges for less than 3 days, the sequence would be: 5-day
assessment, interrupted stay, NPE. This would result in only one
Medicare stay.
The commenter requested clarification on how the Medicare stays
will be calculated with the interrupted stay policy, presumably for the
purposes of the QRP, and recommended evaluation by the SNF QRP CMS team
to evaluate any further risks, errors, or concerns that may arise from
this proposed policy.
Response: We agree with the commenter's description of how the
current matching occurs for assessments. As previously discussed, we
are aware that admissions and discharges are currently coded for
purposes of the SNF QRP in a way that might conflict with how stays
will be captured under the new PDPM. We intend to revise the codes so
that a Medicare stay is captured the same way for purposes of the SNF
QRP and the PDPM.
Comment: One commenter stated concerns with the suggestion that CMS
[[Page 39250]]
would monitor this interrupted stay policy for frequent readmission,
particularly facilities where the readmissions occur just outside the
3-day window used as part of the proposed interrupted stay policy. The
commenter stated that SNFs already are the most highly regulated and
monitored profession in health care. They stated a new policy with
additional scrutiny and risk increases provider burden. They pointed
out that CMS has programs in place to monitor and penalize SNFs for
rehospitalization. The commenter stated that the SNF Rehospitalization
VPB Program reduces all SNF rates by 2 percent. The commenter further
stated that SNFs may earn a portion of these funds back by keeping
rehospitalization rates low. Also, the commenter pointed out that SNF
performance on return to community and related quality measures under
the SNF QRP are publicly reported. The commenter stated that SNFs that
perform poorly on QRP measures are less likely to be included in
Medicare Advantage Plan or Accountable Care Organization provider
networks. Thus, the commenter concluded that heightened scrutiny for
poor performance already is in place. They recommended that SNF re-
admissions to hospitals under the existing program--presumably meaning
the SNF Rehospitalization VPB Program--should serve as the monitoring
tool. They stated that, as with the SNF VBP Program, QRP performance
also will serve a monitoring tool. They added that poorly performing
SNFs will be penalized by the market, so that no additional government
action is needed.
Response: We acknowledge that these monitoring tools exist and will
utilize these existing tools to the fullest extent possible, but will
also monitor specifically for inappropriate behavior in the context of
the interrupted stay policy and decide the appropriate form of
administrative action for whatever behavior is identified.
Comment: One commenter stated that CMS should develop a policy
specific to the interrupted stay and the calculation of group/
concurrent minutes. An interrupted stay could prevent the individual
therapy minutes from being provided, and therefore, result in exceeding
the 25 percent threshold. For example, if a resident is admitted to a
facility and receives 100 percent group therapy on Day 1 of their SNF
stay, with the full intent to move the resident to individual therapy
in the days that follow, and then an interrupted stay occurs on Day 2
of the resident's stay; what would be the resulting impact to the
facility from the resident receiving over the allowed 25 percent group
therapy?
Response: As noted in section V.E of this final rule, there
currently is no penalty associated with the group and concurrent
therapy limits; instead, providers will receive a non-fatal warning
edit on the validation report. We stated that we would monitor and
evaluate how group and concurrent therapy are used under PDPM and
consider making future proposals to address abuses of this policy or
flag providers for additional review should a provider be found to
consistently exceed the threshold. That being said, in terms of
calculating adherence with the concurrent and group therapy limit, such
a calculation is, as described in section V.E. of this final rule,
completed at the stay level. Therefore, in cases of an interrupted
stay, the therapy minutes over the course of the entire stay, both
before and after the interruption, would be used to calculate the
proportion of therapy time furnished within a concurrent or group
setting. We believe this is the fairest option, as to calculate the
proportion of such minutes based on only one portion of the stay may
unduly identify a given provider as having failed to adhere to the
established limit only because that particular portion of the stay had
a larger amount of a given therapy mode.
Comment: Several commenters pointed out a discrepancy in the
Medicare days count in Example B in the FY 2019 SNF PPS proposed rule
(83 FR 21069). Specifically, commenters highlighted that Example B
states that the resident is discharged on day 7 and that ``the first
day of the second stay would be paid at the Day 8 per diem rates under
that schedule.'' This implies that if a SNF resident has an interrupted
stay, for the purposes of determining day in the stay for the per diem
payment, when the patient returns to the SNF after the interruption,
the stay resumes on the next day of the stay. For example, if a SNF
resident is on day 7 of a stay which is then interrupted, when the
resident returns within a certain time frame the day in the stay would
be day 8. If the resident is discharged on day 7 of the stay, the SNF
would be unable to bill for this day, resulting in the beneficiary
using only 6 of the Medicare days. This would be unfair for both the
resident and the SNF. Commenters recommended that CMS clarify the
policy so that providers are paid for the day when a resident leaves a
SNF in the case of an interrupted stay. Commenters said that under the
policy as proposed, providers would not be paid for the day the
resident leaves the SNF and so would lose one day of reimbursement.
Response: We agree with commenters regarding this typographical
error and that payments should resume at the rate of the day of
discharge, rather than the day after discharge. In other words, if a
SNF resident is on day 7 of a stay which is interrupted, when the
resident is readmitted, the payment rate would resume at day 7, not day
8, as Example B incorrectly stated.
The day of discharge in an interrupted stay would not be counted
against the beneficiary's count of 100 days of covered Part A care in a
benefit period. SNFs are not currently paid for the day of discharge,
even with an anticipated leave of absence, unless the patient returns
to the SNF before midnight of the same day. We do not believe there is
anything about the interrupted stay policy that warrants changing this.
Comment: Multiple commenters expressed general support for the
interrupted stay policy as proposed. Commenters supported the
implementation of a SNF interrupted stay policy that is consistent with
the policies in other post-acute care settings. Commenters recognized
that with the proposed changes under the PDPM, which include variable
per diem payment adjustments that provide higher payments at the
beginning of the stay, implementing an interrupted stay policy will be
appropriate for SNFs. As a further point of support, commenters noted
that under the current system, rates of discharge to institutions (such
as acute hospital or emergency department) are monitored very closely.
Commenters expected that the proposed interrupted stay policy would
allow for short term discharges where medically necessary while
allowing for appropriate payment across a patient's stay.
Response: We agree with the commenters that the PDPM will benefit
from the interrupted stay policy proposed.
Accordingly, after considering the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing our proposed interrupted stay policy without modification,
to be effective October 1, 2019 in conjunction with the implementation
of the PDPM.
G. Relationship of the PDPM to Existing Skilled Nursing Facility Level
of Care Criteria
As discussed in the proposed rule (83 FR 21070), the establishment
of the SNF PPS did not change Medicare's fundamental requirements for
SNF coverage. However, because the case-
[[Page 39251]]
mix adjustment aspect of the SNF PPS has been based, in part, on the
beneficiary's need for skilled nursing care and therapy, we have
coordinated claims review procedures with the existing resident
assessment process and case-mix classification system. This approach
includes an administrative presumption that utilizes a beneficiary's
initial classification in one of the upper 52 RUGs of the 66-group RUG-
IV system to assist in making certain SNF level of care determinations.
As further discussed below, in the proposed rule (83 FR 21070-72),
we proposed to adopt a similar approach under the PDPM effective
October 1, 2019, by retaining an administrative presumption mechanism
that would utilize the initial assignment of one of the case-mix
classifiers that we designate for this purpose to assist in making
certain SNF level of care determinations. This designation would
reflect an administrative presumption under the PDPM that beneficiaries
who are correctly assigned one of the designated case-mix classifiers
on the initial 5-day, Medicare-required assessment are automatically
classified as meeting the SNF level of care definition up to and
including the assessment reference date on the 5-day Medicare required
assessment.
We stated that, as under the existing RUG-IV administrative
presumption, a beneficiary who is not assigned one of the designated
classifiers would not automatically be classified as either meeting or
not meeting the level of care definition, but instead would receive an
individual level of care determination using the existing
administrative criteria. We stated that the use of the administrative
presumption reflects the strong likelihood that those beneficiaries who
are assigned one of the designated classifiers during the immediate
post-hospital period require a covered level of care, which would be
less likely for other beneficiaries.
In the ANPRM (82 FR 21007), we discussed some potential adaptations
of the RUG-IV model's administrative presumption to accommodate
specific features of the RCS-I model, including the possible
designation of the following case-mix classifiers for purposes of the
administrative presumption:
Continued designation of the same nursing (non-
rehabilitation) groups that currently comprise the Extensive Services,
Special Care High, Special Care Low, and Clinically Complex categories
under RUG-IV, as those groups would crosswalk directly from RUG-IV to
the RCS-I model we were considering;
In addition, designation of the most intensive functional
score (14 to 18) under the RCS-I model's combined PT/OT component, as
well as the uppermost comorbidity score (11+) under its NTA component.
In response, a number of comments expressed concern that the
possible adaptations of the presumption could adversely affect access
to care for some beneficiaries. Others questioned whether using the PT/
OT component's highest functional score bin (14 to 18) as a trigger for
the presumption would be appropriate, inasmuch as the residents that
typically require the most therapy are those with only moderate
functional impairments. In addition, commenters questioned the
discussion's inclusion of the RCS-I model's NTA component as a possible
classifier under the presumption, as well as its omission of RCS-I's
SLP component.
Regarding the commenters' concerns about access to care, we noted
in the proposed rule that we have indicated in the ANPRM and in
previous rulemaking that the actual purpose of the level of care
presumption has always been to afford a streamlined and simplified
administrative procedure for readily identifying those beneficiaries
with the greatest likelihood of meeting the level of care criteria;
however, we have also emphasized that in focusing on such
beneficiaries, this approach in no way serves to disadvantage other
beneficiaries who may also meet the level of care criteria. As we noted
in the ANPRM, an individual beneficiary's inability to qualify for the
administrative presumption would not in itself serve to disqualify that
resident from receiving SNF coverage. While such residents are not
automatically presumed to require a skilled level of care, neither are
they automatically classified as requiring nonskilled care; rather, any
resident who does not qualify for the presumption would instead receive
an individual level of care determination using the existing
administrative criteria (82 FR 21007). As we further explained in the
FY 2016 SNF PPS final rule (80 FR 46406, August 4, 2015), structuring
the presumption in this manner serves specifically to ensure that the
presumption does not disadvantage such residents, by providing them
with an individualized level of care determination that fully considers
all pertinent factors.
As for concerns about the appropriateness of certain classifiers,
including the possible use of the PT/OT component's highest functional
score bin (14 to 18) for this purpose under RCS-I, we noted in the
proposed rule that the case-mix classification model for PT and OT that
we were proposing in connection with the PDPM would essentially
reconfigure the PT/OT component from the RCS-I model. As discussed in
section V.D.3.b. of the proposed rule, the proposed PDPM would divide
the RCS-I model's combined PT/OT component into two separate case-mix
adjusted components, under which each resident would be assigned
separate case-mix groups for PT and OT payment. Those groups would
classify residents based on clinical category and function score, the
two resident characteristics shown to be most predictive of PT and OT
utilization.
The proposed rule's discussion also cited section III.B.4. of the
ANPRM (``Variable Per Diem Adjustment Factors and Payment Schedule''),
as well as section V.D.4. of the proposed rule itself, which indicated
that our initial analyses revealed that in contrast to the SLP
component--where per diem costs remain relatively constant over time--
costs for the PT, OT, and NTA components typically are highest at the
outset and then decline over the course of the stay. The proposed rule
noted that our research to date continues to show a strong correlation
between the dependent variables used for the proposed separate PT and
OT components and a similarity in predictors, in that the associated
costs for both therapy disciplines remain highest in the initial (and
typically most intensive) portion of the SNF stay. We stated that this
heightened resource intensity during the initial part of the SNF stay
under the PT, OT, and NTA components, in turn, more closely reflects
the distinctive utilization patterns that served as the original
foundation for the level of care presumption itself--that is, the
tendency as noted in the FY 2000 SNF PPS final rule for SNF stays to be
at their most intensive and unstable immediately following admission as
justifying a presumption of coverage at the very outset of the SNF stay
(64 FR 41667, July 30, 1999). We also stated that we believe this would
make the most intensive classifiers within each of these three proposed
components well-suited to serve as clinical proxies for identifying
those beneficiaries with the most intensive care needs and greatest
likelihood of requiring an SNF level of care.
Accordingly, for purposes of the administrative presumption under
the proposed PDPM, we proposed to continue utilizing the same
designated nursing (non-rehabilitation) categories under the PDPM as
had been used to
[[Page 39252]]
date under RUG-IV. We noted that the most direct crosswalk between the
existing RUG-IV model and the proposed PDPM would involve nursing
services, for which, under the proposed PDPM, each resident would
continue to be classified into one of the groups that fall within the
existing non-rehabilitation RUG-IV categories. (As explained in section
V.D.3.d. of the proposed rule, while the PDPM would streamline the
total number of nursing case-mix groups from the current 43 under RUG-
IV down to 25 through the consolidation of similar groups within
individual categories, the overall number and structure of the nursing
categories themselves would remain the same.) Under our proposal,
effective in conjunction with the proposed implementation of the PDPM
(that is, as of October 1, 2019), we stated that the administrative
presumption would apply to those groups encompassed by the same nursing
categories as have been designated for this purpose under the existing
RUG-IV model:
Extensive Services;
Special Care High;
Special Care Low; and,
Clinically Complex.
In addition, along with the continued use of the RUG-IV nursing
categories above, we also proposed to apply the administrative
presumption using those other classifiers under the proposed PDPM that
we identified as relating the most directly to identifying a patient's
need for skilled care at the outset of the SNF stay. We proposed to
designate such classifiers for this purpose based on their ability to
fulfill the administrative presumption's role as described in the FY
2000 SNF PPS final rule (64 FR 41668 through 41669, July 30, 1999)--
that is, to identify those situations that involve a high probability
of the need for skilled care when taken in combination with the
characteristic tendency for an SNF resident's condition to be at its
most unstable and intensive state at the outset of the SNF stay.
Specifically, we additionally proposed to designate for this
purpose proposed PT and OT case-mix groups TB, TC, TD, TF, and TG, the
groups displayed in Table 21 of the proposed rule that collectively
accounted for the five highest case-mix indexes for PT, as well as for
OT and, thus, would consistently be associated with the most resource-
intensive care across both of these therapy disciplines. We also
proposed to designate the uppermost comorbidity group under the NTA
component, in the belief that this particular classifier would serve to
identify those cases that are the most likely to involve the kind of
complex medication regimen (for example, a highly intensive drug
requiring specialized expertise to administer, or an exceptionally
large and diverse assortment of medications posing an increased risk of
adverse drug interactions) that would require skilled oversight to
manage safely and effectively. As discussed in section V.D.3.e of this
final rule, the specific value assigned to the NTA component's
uppermost comorbidity score (which was 11+ under the RCS-I model and is
12+ under PDPM) might change once again in the future if the NTA score
bins are reconfigured to reflect changes in the resident population and
care practices over time.
We further explained that under this proposed approach, those
residents not classifying into a case-mix group in one of the
designated nursing RUG categories under the proposed PDPM on the
initial, 5-day Medicare-required assessment could nonetheless still
qualify for the administrative presumption on that assessment by being
placed in one of the designated case-mix groups for either the PT or OT
components, or by receiving the uppermost comorbidity score under the
NTA component. We indicated that these particular case-mix classifiers
would appropriately serve to fulfill the administrative presumption's
role of identifying those cases with the highest probability of
requiring an SNF level of care throughout the initial portion of the
SNF stay. We additionally noted that in order to help improve the
accuracy of these newly-designated groups in serving this function, we
would continue to review the new designations going forward and may
make further adjustments to the proposed designations over time as we
gain actual operating experience under the new classification model. As
discussed above, this proposed administrative presumption mechanism
would take effect October 1, 2019 in conjunction with the proposed PDPM
itself. We invited comments on our proposed administrative presumption
mechanism under the proposed PDPM.
Commenters submitted the following comments related to the proposed
rule's discussion on our proposed administrative presumption mechanism
under the proposed PDPM. A discussion of these comments, along with our
responses, appears below.
Comment: One commenter mistakenly assumed that under the PDPM, the
administrative presumption would change from its current use of the
initial, 5-day Medicare-required assessment to using the initial MDS
assessment (that is, the OBRA-required Admission assessment) instead,
and expressed concern that the timeframes associated with the latter
would be inappropriate for this purpose.
Response: We note that consistent with the discussion in the
proposed rule (83 FR 21070-21072), the presumption's current use of the
initial, 5-day Medicare-required assessment will, in fact, continue
under the PDPM.
Comment: Several commenters urged us to designate other therapy
groups, in addition to those set forth in the proposed rule, as
appropriately serving to identify a level of acuity that would qualify
for the presumption. They equated the omission of a given case-mix
classifier from the presumption with a restriction on access and
coverage, and characterized the individual level of care determinations
that SNFs would routinely conduct absent the presumption as an added
administrative burden. The commenters specifically cited as a concern
the proposed rule's omission of any PT and OT groups for non-orthopedic
conditions, as well as of any groups at all from the SLP component. One
commenter took issue with the proposed rule's stated rationale for the
omission of SLP (that is, that such services, unlike PT and OT, remain
relatively constant over time and are not concentrated in the initial
portion of the stay), noting that nursing services similarly do not
taper off over the course of the stay and yet have been utilized under
the presumption ever since its inception. The commenter pointed out
that as with the other components, it is possible to identify
individual groups within the SLP component that have relatively high
service intensity. Along with the groups from the PT and OT components
that were already proposed for designation under the presumption, the
commenter recommended the designation of several additional PT and OT
groups (that is, TA, TE, TJ, TK, TN, and TO), as well as a number of
groups (that is, SC, SE, SF, SH, SI, SJ, SK, and SL) from the SLP
component, and presented these particular groups as reflecting the most
intensive therapy needs within their respective clinical categories.
The commenter also suggested that the proposed designation of the NTA's
uppermost comorbidity group might not actually be necessary, as anyone
assigned to that group would likely qualify for the presumption
already, based on their classification under the nursing component.
Another commenter recommended that all of the PT and OT groups in the
Other Orthopedic category should be
[[Page 39253]]
designated for use under the presumption, and pointed out that under
PDPM, the NTA component's uppermost comorbidity score is actually 12+
rather than 11+ as indicated in the proposed rule.
Response: We agree with the commenters that the administrative
presumption should encompass all of the groups that serve to fulfill
the basic purpose of this provision--that is, readily identifying those
beneficiaries with the greatest likelihood of meeting the level of care
criteria. With one exception, we also concur with the commenters'
analysis that the additional therapy groups recommended for designation
under the presumption would appropriately serve to reflect the most
intensive therapy needs within their respective clinical categories, as
evidenced by the relatively high CMI that is associated with each of
the recommended groups. However, regarding the recommendation to
designate all PT and OT groups in the Other Orthopedic category, we
note that one such group, TH, has a significantly lower CMI than all of
the other recommended groups and, thus, is not being selected for
designation under the presumption. Accordingly, we are adopting the
remainder of the commenters' recommendations regarding the designation
of additional groups from the PT and OT components, as well as all of
the recommended groups from the SLP component. In addition, we are
finalizing as proposed the use of the designated classifiers from the
nursing component along with the uppermost comorbidity score of the NTA
component. Regarding the latter, we appreciate the comment pointing out
that the specific value assigned to the NTA component's uppermost
comorbidity score under the PDPM is, in fact, 12+ and not 11+ as
incorrectly indicated in the proposed rule's discussion of the
presumption. We also appreciate another commenter's concern that the
proposed NTA classifier might in some instances prove redundant in
relation to the nursing groups; however, because we believe, as stated
above, that the presumption should encompass all appropriate
classifiers, we are finalizing the use of this particular classifier as
we believe this particular classifier would serve to identify those
cases that are the most likely to involve the kind of complex
medication regimen that would require skilled oversight to manage
safely and effectively. We also will evaluate the use of this
classifier in actual operation and confirm whether there are instances
in which it appropriately serves this function independently of the
nursing groups. As we indicated in the proposed rule (83 FR 21072)
regarding the NTA and other components, we will continue to review the
new designations going forward and make further adjustments over time
as we gain actual operating experience under the new classification
model.
However, we would also note in this context that we do not share
and cannot support the view that would essentially equate a given case-
mix classifier's non-designation under the administrative presumption
with a restriction on access or a denial of SNF coverage, or an
increase in administrative burden. SNF coverage ultimately is based not
on whether a beneficiary is assigned one of the designated classifiers,
but on whether the SNF level of care criteria are met. As further
explained in the proposed rule (83 FR 21071), the purpose of the
administrative presumption is solely to afford a streamlined and
simplified administrative procedure for readily identifying those
beneficiaries with the greatest likelihood of meeting the level of care
criteria, which in no way serves to disadvantage other beneficiaries
who may also meet the level of care criteria. In fact, far from
creating an overall increase in administrative burden from the non-
designated classifiers, we expect that the presumption's framework of
streamlined and simplified initial determinations for the designated
classifiers will actually serve to free up staff resources, which can
then be used for assessing coverage in the other cases.
Accordingly, for the reasons set forth in the proposed rule and in
this final rule, we are finalizing our proposed classifiers for
purposes of applying the administrative presumption under the PDPM with
the following modifications. As discussed above, we are adding the
following PT and OT classifiers to those we proposed: TA, TE, TJ, TK,
TN and TO. We are also adding the following 8 SLP classifiers: SC, SE,
SF, SH, SI, SJ, SK, and SL. Thus, effective October 1, 2019, we are
designating the classifiers shown below for purposes of the
administrative presumption under the PDPM:
The case-mix classifiers in the following nursing
categories: Extensive Services, Special Care High, Special Care Low,
and Clinically Complex;
The following PT and OT groups: TA, TB, TC, TD, TE, TF,
TG, TJ, TK, TN, and TO;
The following SLP groups: SC, SE, SF, SH, SI, SJ, SK, and
SL; and
The NTA component's uppermost comorbidity group (which, as
finalized in this final rule, is 12+).
H. Effect of PDPM on Temporary AIDS Add-On Payment
As discussed in section V.I. of the proposed rule (83 FR 21072) and
also in section III.E. of the ANPRM (82 FR 21007), section 511(a) of
the MMA amended section 1888(e)(12) of the Act to provide for a
temporary increase of 128 percent in the PPS per diem payment for any
SNF residents with Acquired Immune Deficiency Syndrome (AIDS),
effective with services furnished on or after October 1, 2004. This
special add-on for SNF residents with AIDS was intended to be of
limited duration, as the MMA legislation specified that it was to
remain in effect only until the Secretary certifies that there is an
appropriate adjustment in the case mix to compensate for the increased
costs associated with such residents.
The temporary add-on for SNF residents with AIDS is also discussed
in Program Transmittal #160 (Change Request #3291), issued on April 30,
2004, which is available online at www.cms.gov/transmittals/downloads/r160cp.pdf. In the SNF PPS final rule for FY 2010 (74 FR 40288, August
11, 2009), we did not address this certification in that final rule's
implementation of the case-mix refinements for RUG-IV, thus allowing
the add-on payment required by section 511 of the MMA to remain in
effect for the time being.
In the House Ways and Means Committee Report that accompanied the
MMA, the explanation of the MMA's temporary AIDS adjustment notes the
following under Reason for Change: ``According to prior work by the
Urban Institute, AIDS patients have much higher costs than other
patients in the same resource utilization groups in skilled nursing
facilities. The adjustment is based on that data analysis'' (H. Rep.
No. 108-178, Part 2 at 221). The data analysis from that February 2001
Urban Institute study (entitled ``Medicare Payments for Patients with
HIV/AIDS in Skilled Nursing Facilities''), in turn, had been conducted
under a Report to Congress mandated under a predecessor provision,
section 105 of the BBRA. This earlier BBRA provision, which ultimately
was superseded by the temporary AIDS add-on provision required by the
MMA, had amended section 1888(e)(12) of the Act to provide for special
consideration for facilities serving specialized patient populations
(that is, those who are ``immuno-compromised secondary to an infectious
[[Page 39254]]
disease, with specific diagnoses as specified by the Secretary'').
As we noted in the ANPRM and in the proposed rule, at that point
over a decade and a half had elapsed since the Urban Institute
conducted its study on AIDS patients in SNFs, a period that has seen
major advances in the state of medical practice in treating this
condition. We stated that these advances have notably included the
introduction of powerful new drugs and innovative prescription regimens
that have dramatically improved the ability to manage the viral load
(the amount of human immunodeficiency virus (HIV) in the blood). We
noted that the decrease in viral load secondary to medications has
contributed to a shift from intensive nursing services for AIDS-related
illnesses to an increase in antiretroviral therapy. We further stated
that this phenomenon, in turn, is reflected in our recent analysis of
differences in SNF resource utilization, which indicates that while the
overall historical disparity in costs between AIDS and non-AIDS
patients has not entirely disappeared, that disparity is now far
greater with regard to drugs than it is for nursing. Specifically, as
explained in the proposed rule, NTA costs per day for residents with
AIDS were 151 percent higher than those for other residents while the
difference in wage-weighted nursing staff time between the two groups
was only 19 percent, as discussed in section 3.8.3. of the SNF PMR
technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html), which the ANPRM
referenced for further information on the underlying data analysis (82
FR 21007 through 21008). In the ANPRM, we also described how the RCS-I
model would account for those NTA costs, including drugs, which
specifically relate to residents with AIDS (82 FR 20997 through 20999).
We additionally discussed in the ANPRM the possibility of making a
specific 19 percent AIDS adjustment as part of the case-mix adjustment
of the nursing component (82 FR 20995 through 20997). We further
expressed our belief in the ANPRM (82 FR 21008) that when taken
collectively, these adjustments would appropriately serve to justify
issuing the certification prescribed under section 511(a) of the MMA,
which would permit the MMA's existing, temporary AIDS add-on to be
replaced by a permanent adjustment in the case mix that appropriately
compensates for the increased costs associated with these residents.
As discussed in the proposed rule, in response to the ANPRM, we
received comments expressing concerns that a projected 40 percent drop
in overall payments for SNF residents with AIDS under the RCS-I model
could adversely affect access to care for this patient population.
Regarding those concerns, we noted in the proposed rule that the
special add-on for SNF residents with AIDS itself was never meant to be
permanent, and does not serve as a specific benchmark for use in
establishing either the appropriate methodology or level of payment for
this patient population. Rather, we stated that, as discussed in the
ANPRM, it was designed to be only a temporary measure, representing a
general approximation that reflected the current state of research and
clinical practice at the time (82 FR 21007 through 21008). As such, we
stated that the special add-on would not account for the significant
changes in the care and treatment of this condition that have occurred
over the intervening years. We further noted that as a simple across-
the-board multiplier, the MMA adjustment by its very nature is not
accurately targeted at those particular rate components that actually
account for the disparity in cost between AIDS patients and others.
As discussed in section V.D.3.e. of the proposed rule (83 FR
21058), our updated investigations into the adequacy of payments under
the proposed PDPM for residents with HIV/AIDS indicated that the four
proposed ancillary payment components (PT, OT, SLP, and NTA) would
adequately reimburse ancillary costs associated with HIV/AIDS residents
(see section 3.8.2. of the SNF PDPM technical report, available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Therefore, we stated that we believe it would be
appropriate to issue the prescribed certification under section 511(a)
of the MMA on the basis of the proposed PDPM's ancillary case-mix
adjustment alone, as effectively providing the required appropriate
adjustment in the case mix to compensate for the increased costs
associated with such residents. However, to further ensure that the
proposed PDPM would account as fully as possible for any remaining
disparity with regard to nursing costs, as discussed in section
V.D.3.d. of the proposed rule (83 FR 21055), we additionally proposed
to include a specific AIDS adjustment as part of the case-mix
adjustment of the nursing component. As discussed in section V.D.3.d.
of the proposed rule, we used the STRIVE data to quantify the effects
of HIV/AIDS diagnosis on nursing resource use. Regression analyses
found that wage-weighted nursing staff time is 18 percent higher for
residents with HIV/AIDS, controlling for the non-rehabilitation RUG of
the resident. We noted that this figure is slightly lower than the 19
percent increase in wage-weighted nursing staff time reported in the
ANPRM and the SNF PRM technical report because the updated
investigation uses a FY 2017 study population and is based on the PDPM
case-mix groups, while the earlier analysis was based on a FY 2014
study population and the RCS-I case-mix groups. More information on
this analysis can be found in section 3.8.2. of the SNF PDPM technical
report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Thus, we proposed an 18
percent increase in payment for the nursing component for residents
with HIV/AIDS under the proposed PDPM to account for the increased
nursing costs for such residents. We stated that similar to the
proposed NTA adjustment for residents with HIV/AIDS, this adjustment
would be identified by ICD-10-CM code B20 on the SNF claim and would be
processed through the PRICER software used by CMS to set the
appropriate payment rate for a resident's SNF stay. We also explained
(83 FR 21073) that the 18 percent adjustment would be applied to the
unadjusted base rate for the nursing component, and then this amount
would be further case-mix adjusted per the resident's PDPM nursing
classification.
In the proposed rule, we expressed the belief that when taken
collectively, these adjustments under the proposed PDPM would
appropriately serve to justify issuing the certification prescribed
under section 511(a) of the MMA effective with the proposed conversion
to the PDPM on October 1, 2019, thus permitting the MMA's existing,
temporary AIDS add-on to be replaced by a permanent adjustment in the
case mix (as proposed under the PDPM) that appropriately compensates
for the increased costs associated with these residents, and we invited
comments on this proposal. At the same time, we acknowledged that even
with an accurately targeted model that compensates for the increased
costs of SNF residents with AIDS, an abrupt conversion to an altogether
different payment methodology might nevertheless be potentially
disruptive for facilities, particularly those that serve a significant
number of patients with AIDS and may have become accustomed to
operating under the
[[Page 39255]]
existing payment methodology for those patients. Accordingly, we also
invited comments on possible ways to help mitigate any potential
disruption stemming from the proposed replacement of the special add-on
payment with the permanent case-mix adjustments for SNF residents with
AIDS under the proposed PDPM.
Commenters submitted the following comments related to the proposed
rule's discussion on the Effect of the Proposed PDPM on Temporary AIDS
Add-on Payment. A discussion of these comments, along with our
responses, appears below.
Comment: Several commenters expressed concern about the adequacy of
payments under the PDPM for SNF residents with AIDS, once again citing
the projected decrease in payments relative to the RUG-IV model (which
currently includes the MMA's temporary 128 percent adjustment for such
residents). One commenter specifically questioned the adequacy of the
PDPM's NTA component in addressing the drug costs of AIDS patients, and
cited a 2017 MedPAC report that characterized the SNF PPS's NTA
payments as poorly targeted.
Response: We note that as with the previous comments on the
corresponding aspect of the ANPRM, most of the commenters' concerns in
this area stemmed from comparing the projected payment levels under the
PDPM to those under the existing RUG-IV model's temporary 128 percent
AIDS adjustment, and focused specifically on the contrast in payment
levels between the two models. However, as noted above and explained in
the proposed rule (83 FR 21073), it is not appropriate to use the MMA
adjustment as a benchmark in assessing the accuracy of the PDPM's
payment methodology, as the special add-on for SNF residents with AIDS
itself was never meant to be permanent, and does not serve as a
specific benchmark for use in establishing either the appropriate
methodology or level of payment for this patient population. Rather, it
was designed to be only a temporary measure, representing a general
approximation that reflected the current state of research and clinical
practice at the time. As such, the special add-on would not account for
the significant changes in the care and treatment of this condition
that have occurred over the intervening years. Moreover, as a simple
across-the-board multiplier, the MMA adjustment by its very nature is
not accurately targeted at those particular rate components that
actually account for the disparity in cost between AIDS patients and
others.
Regarding that final point about the imprecision of applying an
across-the-board multiplier in this context, we further noted in the
proposed rule (83 FR 20180) that our research found that HIV/AIDS was
associated with a negative and statistically significant decrease in
PT, OT and SLP costs per day. This means inherently that, to the extent
that the existing add-on is applied against the full SNF PPS per diem
payment, the magnitude of the add-on payment increases with increases
in therapy payment, which conflicts with the data described above
regarding the relationship between therapy costs and the presence of an
AIDS diagnosis. As a result, maintaining the current add-on would
create an inconsistency between how SNF payments would be made and the
data regarding AIDS diagnoses and resident therapy costs.
Furthermore, to the extent that the RUG-IV model's case-mix
classification system may have included inherent incentives toward the
overprovision of therapy services, the MMA adjustment's operation as an
across-the-board multiplier would actually serve to magnify the effects
of any such incentives, by inflating the resulting payment levels even
further beyond the patient's actual therapy care needs. In this
context, we note that the specific standard prescribed for the
Secretary's required certification under section 511(a) of the MMA is
that ``. . . there is an appropriate adjustment in the case mix . . .
to compensate for the increased costs'' associated with SNF residents
with AIDS. As set forth in the proposed rule, we believe that the
PDPM's payment methodology for patients with AIDS clearly meets this
statutory standard of appropriately accounting for the actual costs
incurred in caring for such patients. In fact, we believe it provides a
far more accurate and current accounting of those costs than the
temporary MMA adjustment that it would replace, which represents only a
very broad approximation that was developed at a time when the
treatment regimens for this condition differed dramatically from what
they are currently. Finally, it is worth noting that the cited 2017
MedPAC report, which characterized the SNF PPS's NTA payments as poorly
targeted, reflected that the SNF PPS has always included NTA costs
within its nursing component rather than accounting for them
separately, and the longstanding concerns about that approach were, in
fact, the very impetus behind our development of a separate component
for NTA costs under the PDPM.
Accordingly, for the reasons discussed in the proposed rule and in
this final rule, the Secretary is certifying that there is an
appropriate adjustment in the PDPM to compensate for the increased
costs associated with residents with AIDS, and thus we are finalizing
our proposal without modification to replace the temporary MMA add-on
with the PDPM's permanent adjustment in the case mix that appropriately
accounts for the increased costs of patients with AIDS, effective with
the conversion to the PDPM on October 1, 2019.
I. Potential Impacts of Implementing the PDPM and Parity Adjustment
This section outlines the projected impacts of implementing the
PDPM effective October 1, 2019 under the SNF PPS and the related
policies finalized in sections V of this final rule that would be
effective in conjunction with the PDPM. This impact analysis makes a
series of assumptions, as described below (as were discussed in the
proposed rule (83 FR 21073 through 21080)). First, the impacts
presented here assume consistent provider behavior in terms of how care
is provided under RUG-IV and how care might be provided under the PDPM,
as we do not make any attempt to anticipate or predict provider
reactions to the implementation of the PDPM. That being said, we
acknowledge the possibility that implementing the PDPM could
substantially affect resident care and coding behaviors. Most notably,
based on the concerns raised during a number of TEPs, we acknowledge
the possibility that, as therapy payments under the PDPM would not have
the same connection to service provision as they do under RUG-IV, it is
possible that some providers may choose to reduce their provision of
therapy services to increase margins under the PDPM. However, we do not
have any basis on which to assume the approximate nature or magnitude
of these behavioral responses, nor have we received any sufficiently
specific guidance on the likely nature or magnitude of behavioral
responses from ANPRM commenters, TEP panelists, or other sources of
feedback. As a result, lacking an appropriate basis to forecast
behavioral responses, we do not adjust our analyses of resident and
provider impacts discussed in this section for projected changes in
provider behavior. However, we do intend to monitor behavior which may
occur in response to the implementation of PDPM, and may consider
proposing policies in the future to address such behaviors to the
extent determined appropriate.
[[Page 39256]]
Additionally, we acknowledge that a number of states utilize some form
of the RUG-IV case-mix classification system as part of their Medicaid
programs and that any change in Medicare policy can have an impact on
state programs. Again, we do not have any basis on which to assume the
approximate nature or magnitude of these responses, for the same
reasons cited above. Additionally, we do not expect impacts on state
Medicaid programs resulting from PDPM implementation to have a notable
impact on payments for Medicare-covered SNF stays, which are the basis
for the impact analyses discussed in this section. Therefore, we do not
consider possible changes to state Medicaid programs when conducting
these analyses. We invited comments on our assumptions that behavior
would remain unchanged under the proposed PDPM and that changes in
state Medicaid programs resulting from PDPM implementation would not
have a notable impact on payments for Medicare-covered SNF stays. We
also invited comment on the impact of these policy proposals on state
Medicaid programs. These comments are addressed among the general
comments in section V.A. of this final rule.
As with prior system transitions, we proposed to implement the PDPM
case-mix system, along with the other policy changes discussed
throughout this section, in a budget neutral manner through application
of a parity adjustment to the case-mix weights under the proposed PDPM,
as further discussed below. We proposed to implement the PDPM in a
budget neutral manner because, as with prior system transitions, in
proposing changes to the case-mix methodology, we do not intend to
change the aggregate amount of Medicare payments to SNFs. Rather, we
aim to utilize a case-mix methodology to classify residents in such a
manner as to best ensure that payments made for specific residents are
an accurate reflection of resource utilization without introducing
potential incentives which could encourage inappropriate care delivery,
as we believe may exist under the current case-mix methodology.
Therefore, the impact analysis presented here assumes implementation of
these proposed changes in a budget neutral manner. We invited comments
on the proposal, as further discussed below, to implement the PDPM in a
budget neutral manner. In addition, we solicited comment on whether it
would be appropriate to implement the proposed PDPM in a manner that is
not budget neutral.
As discussed above, the impact analysis presented here assumes
implementation of these changes in a budget neutral manner without a
behavioral change. The prior sections describe how case-mix weights are
set to reflect relative resource use for each case-mix group. We stated
in the proposed rule that the proposed PDPM payment before application
of a parity adjustment would be calculated using the unadjusted CMI for
each component, the variable per diem payment adjustment schedule, the
unadjusted urban and rural federal per diem rates shown in Tables 12
and 13, the labor-related share, and the geographic wage indexes. In
applying a parity adjustment to the case-mix weights, we stated in the
proposed rule that we would maintain the relative value of each CMI but
would multiply every CMI by a ratio to achieve parity in overall SNF
PPS payments under the PDPM and under the RUG-IV case-mix model. The
parity adjustment multiplier was calculated through the following
steps, as described in the proposed rule (83 FR 21074). First, we
calculated RUG-IV total payment. Total RUG-IV payments were calculated
by adding total allowed amounts across all FY 2017 SNF claims. The
total allowed amount in the study population was the summation of
Medicare and non-Medicare payments for Medicare-covered days. More
specifically, it was the sum of Medicare claim payment amount, National
Claim History (NCH) primary payer claim paid amount, NCH beneficiary
inpatient deductible amount, NCH beneficiary Part A coinsurance
liability amount, and NCH beneficiary blood deductible liability
amount. Second, we calculated what total payment would have been under
the proposed PDPM in FY 2017 before application of the parity
adjustment. Total estimated payments under PDPM were calculated by
summing the predicted payment for each case-mix component together for
all FY 2017 SNF stays. This represented the total allowed amount if
PDPM had been in place in FY 2017. Total estimated FY 2017 payments
under the PDPM were calculated using resident information from FY 2017
SNF claims, the MDS assessment, and other Medicare claims, as well as
the unadjusted CMI for each component, the variable per diem payment
adjustment schedule, the unadjusted urban and rural federal per diem
rates shown in Tables 12 and 13, the labor-related share, and the
geographic wage indexes. After calculating total actual RUG-IV payments
and total estimated case-mix-related PDPM payments, we subtracted non-
case-mix component payments from total RUG-IV payments, as this
component does not change across systems. This subtraction did not
include the temporary add-on for residents with HIV/AIDS in the RUG-IV
system, which PDPM replaces with additional payments for residents with
HIV/AIDS through the NTA and nursing components (as discussed in
section V.I. of the proposed rule and section V.H. of this final rule).
By retaining the portion of non-case-mix component payments associated
with the temporary HIV/AIDS add-on in total RUG-IV payments, all
payments associated with the add-on under RUG-IV were re-allocated to
the case-mix-adjusted components in PDPM. This was appropriate because,
as discussed, under the PDPM, additional payments for residents with
HIV/AIDS are made exclusively through the case-mix-adjusted components
(that is, the nursing and NTA components). Lastly, in calculating
budget neutrality, we set total estimated case-mix-related payment
under PDPM such that it equals total allowable Medicare payments under
RUG-IV. To do this, we divided the remaining total RUG-IV payments over
the remaining total estimated PDPM payments prior to the parity
adjustment. This division yielded a ratio (parity adjustment) of 1.46
by which the PDPM CMIs were multiplied so that total estimated payments
under the PDPM would be equal to total actual payments under RUG-IV,
assuming no changes in the population, provider behavior, and coding.
We stated in the proposed rule that, if this parity adjustment had not
been applied, total estimated payments under the PDPM would be 46
percent lower than total actual payments under RUG-IV, therefore the
implementation of the PDPM would not be budget neutral. More details
regarding this calculation and analysis are described in section
3.11.2. of the SNF PDPM technical report (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). The impact analysis presented in this section
(and in the proposed rule) focuses on how payments under the PDPM would
be re-allocated across different resident groups and among different
facility types, assuming implementation in a budget neutral manner.
The projected resident-level impacts are presented in Table 37. The
first column identifies different resident subpopulations and the
second column
[[Page 39257]]
shows what percent of SNF stays in FY 2017 are represented by the given
subpopulation. The third column shows the projected change in total
payments for residents in a given subpopulation, represented as a
percentage change in actual FY 2017 payments made for that
subpopulation under RUG-IV versus estimated payments which would have
been made to that subpopulation in FY 2017 had the PDPM been in place.
Total RUG-IV payments are calculated by adding total allowed amounts
across all FY 2017 SNF claims associated with a resident subpopulation.
The total allowed amount in the study population is the summation of
Medicare and non-Medicare payments for Medicare-covered days. More
specifically, it is the summation of Medicare claim payment amount, NCH
primary payer claim paid amount, NCH beneficiary inpatient deductible
amount, NCH beneficiary Part A coinsurance liability amount, and NCH
beneficiary blood deductible liability amount. Payments corresponding
to the non-case-mix component are subtracted from the RUG-IV total
payments, not including the portion of non-case-mix payments
corresponding to the temporary add-on for residents with HIV/AIDS.
Total estimated payments under PDPM are calculated by summing the
predicted payment for each case-mix component together for all FY 2017
SNF stays associated with a resident subpopulation. Positive changes in
this column represent a projected positive shift in payments for that
subpopulation under the PDPM, while negative changes in this column
represent projected negative shifts in payment for that subpopulation.
More information on the construction of current payments under RUG-IV
and payments under the PDPM for purposes of this impact analysis can be
found in section 3.12. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Based on the data presented in Table 37, we
observe that the most significant shift in payments created by
implementation of the PDPM would be to redirect payments away from
residents who are receiving very high amounts of therapy under the
current SNF PPS, which strongly incentivizes the provision of therapy,
to residents with more complex clinical needs. For example, we project
that for residents whose most common therapy level is RU (ultra-high
therapy)--the highest therapy level, there would be a reduction in
associated payments of 8.4 percent, while payments for residents
currently classified as non-rehabilitation would increase by 50.5
percent. Other resident types for which there may be higher relative
payments under the PDPM are: Residents who have high NTA costs, receive
extensive services, are dually enrolled in Medicare and Medicaid, use
IV medication, have ESRD, diabetes, or a wound infection, receive
amputation/prosthesis care, and/or have longer prior inpatient stays.
Additionally, we received several comments in response to the 2017
ANPRM requesting that we estimate the impact of RCS-1 on the following
potentially vulnerable subpopulations: Residents with addictions,
bleeding disorders, behavioral issues, chronic neurological conditions,
and bariatric care. In response to these comments, we added these
subpopulations to our PDPM impact analysis. Table 37 shows that the
PDPM is projected to increase the proportion of total payment
associated with each of those subpopulations.
Table 37--PDPM Impact Analysis, Resident-Level
------------------------------------------------------------------------
Percent of
Resident characteristics stays Percent change
------------------------------------------------------------------------
All Stays............................... 100.0 0.0
Sex:
Female.............................. 60.3 -0.8
Male................................ 39.7 1.2
Age:
Below 65 years...................... 10.3 7.2
65-74 years......................... 24.1 3.1
75-84 years......................... 32.5 -0.4
85-89 years......................... 17.6 -3.1
Over 90 years....................... 15.6 -4.3
Race/Ethnicity:
White............................... 83.8 -0.2
Black............................... 11.2 0.8
Hispanic............................ 1.7 0.9
Asian............................... 1.3 -0.6
Native American..................... 0.5 7.1
Other or Unknown.................... 1.5 0.8
Medicare/Medicaid Dual Status:
Dually Enrolled..................... 34.7 3.3
Not Dually Enrolled................. 65.3 -2.1
Original Reason for Medicare Enrollment:
Aged................................ 74.6 -1.7
Disabled............................ 24.5 4.8
ESRD................................ 0.9 10.5
Utilization Days:
1-15 days........................... 35.4 13.7
16-30 days.......................... 33.8 0.0
31+ days............................ 30.9 -2.5
Utilization Days = 100:
No.................................. 98.4 0.1
Yes................................. 1.6 -1.9
Length of Prior Inpatient Stay:
0-2 days............................ 2.2 1.3
3 days.............................. 22.5 -3.3
4-30 days........................... 73.6 0.7
[[Page 39258]]
31+ days............................ 1.7 6.7
Most Common Therapy Level:
RU.................................. 58.4 -8.4
RV.................................. 22.4 11.4
RH.................................. 6.8 27.4
RM.................................. 3.3 41.1
RL.................................. 0.1 67.5
Non-Rehab........................... 9.1 50.5
Number of Therapy Disciplines Used:
0................................... 2.3 63.1
1................................... 2.4 44.2
2................................... 51.6 1.6
3................................... 43.7 -3.1
Physical Therapy Utilization:
No.................................. 3.7 50.9
Yes................................. 96.3 -0.7
Occupational Therapy Utilization:
No.................................. 4.5 47.7
Yes................................. 95.5 -0.8
Speech Language Pathology Utilization:
No.................................. 55.0 2.8
Yes................................. 45.0 -2.5
Therapy Utilization:
PT+OT+SLP........................... 43.7 -3.1
PT+OT Only.......................... 50.8 1.3
PT+SLP Only......................... 0.4 27.3
OT+SLP Only......................... 0.4 30.1
PT Only............................. 1.3 41.3
OT Only............................. 0.6 47.9
SLP Only............................ 0.5 46.8
Non-Therapy......................... 2.3 63.1
NTA Costs ($):
0-10................................ 13.7 -3.5
10-50............................... 44.5 -3.2
50-150.............................. 32.2 4.2
150+................................ 9.6 18.7
NTA Comorbidity Score:
0................................... 23.5 -10.4
1-2................................. 30.5 -4.7
3-5................................. 31.0 4.0
6-8................................. 9.9 15.0
9-11................................ 3.6 24.4
12+................................. 1.4 27.2
Extensive Services Level:
Tracheostomy and Ventilator/ 0.3 22.2
Respirator.........................
Tracheostomy or Ventilator/ 0.6 7.3
Respirator.........................
Infection Isolation................. 1.1 9.1
Neither............................. 98.0 -0.3
CFS Level:
Cognitively Intact.................. 58.5 -0.3
Mildly Impaired..................... 20.7 -0.2
Moderately Impaired................. 16.8 -0.7
Severely Impaired................... 3.9 8.8
Clinical Category:
Acute Infections.................... 6.5 3.4
Acute Neurologic.................... 6.4 -3.7
Cancer.............................. 4.6 -3.2
Cardiovascular and Coagulations..... 9.8 0.5
Major Joint Replacement or Spinal 8.6 -2.1
Surgery............................
Medical Management.................. 30.4 0.0
Non-Orthopedic Surgery.............. 10.8 5.7
Non-Surgical Orthopedic/ 5.9 -6.1
Musculoskeletal....................
Orthopedic Surgery (Except Major 8.9 -2.4
Joint Replacement or Spinal
Surgery)...........................
Pulmonary........................... 8.1 5.4
Level of Complications in MS-DRG of
Prior Inpatient Stay:
No Complication..................... 35.8 -3.1
CC/MCC.............................. 64.2 1.7
Stroke:
No.................................. 90.9 0.0
Yes................................. 9.1 0.3
HIV/AIDS:
[[Page 39259]]
No.................................. 99.7 0.3
Yes................................. 0.3 -40.5
IV Medication:
No.................................. 91.7 -2.1
Yes................................. 8.3 23.5
Diabetes:
No.................................. 64.0 -3.0
Yes................................. 36.0 5.4
Wound Infection:
No.................................. 98.9 -0.3
Yes................................. 1.1 22.2
Amputation/Prosthesis Care:
No.................................. 100.0 0.0
Yes................................. 0.0 6.4
Presence of Dementia:
No.................................. 70.9 0.5
Yes................................. 29.1 -1.2
MDS Alzheimer's:
No.................................. 95.2 0.0
Yes................................. 4.8 -0.3
Unknown............................. 0.0 5.0
Presence of Addictions:
No.................................. 94.6 -0.1
Yes................................. 5.4 1.8
Presence of Bleeding Disorders:
No.................................. 90.9 -0.1
Yes................................. 9.1 1.5
Presence of Behavioral Issues:
No.................................. 53.1 -0.9
Yes................................. 46.9 1.0
Presence of Chronic Neurological
Conditions:
No.................................. 74.4 -0.2
Yes................................. 25.6 0.6
Presence of Bariatric Care:
No.................................. 91.3 -0.6
Yes................................. 8.7 6.5
------------------------------------------------------------------------
The projected provider-level impacts are presented in Table 38. The
first column identifies different facility subpopulations and the
second column shows what percentage of SNFs in FY 2017 are represented
by the given subpopulation. The third column shows the projected change
in total payments for facilities in a given subpopulation, represented
as a percentage change in actual FY 2017 payments made for that
subpopulation under RUG-IV versus estimated payments which would have
been made to that subpopulation in FY 2017 had the PDPM been in place.
Total RUG-IV payments are calculated by adding total allowed amounts
across all FY 2017 SNF claims associated with a facility subpopulation.
The total allowed amount in the study population is the summation of
Medicare and non-Medicare payments for Medicare-covered days. More
specifically, it is the summation of Medicare claim payment amount, NCH
primary payer claim paid amount, NCH beneficiary inpatient deductible
amount, NCH beneficiary Part A coinsurance liability amount, and NCH
beneficiary blood deductible liability amount. Payments corresponding
to the non-case-mix component are subtracted from the RUG-IV total
payments, not including the portion of non-case-mix payments
corresponding to the temporary add-on for residents with HIV/AIDS.
Total estimated payments under PDPM are calculated by summing the
predicted payment for each case-mix component together for all FY 2017
SNF stays associated with a facility subpopulation. Positive changes in
this column represent a projected positive shift in payments for that
subpopulation under the PDPM, while negative changes in this column
represent projected negative shifts in payment for that subpopulation.
More information on the construction of current payments under RUG-IV
and payments under the PDPM for purposes of this impact analysis can be
found in section 3.12. of the SNF PDPM technical report (available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html). Based on the data presented in Table 38, we
observe that the most significant shift in Medicare payments created by
implementation of the PDPM would be from facilities with a high
proportion of rehabilitation residents (particularly facilities with
high proportions of Ultra-High Rehabilitation residents) to facilities
with high proportions of non-rehabilitation residents. We project that
payments to facilities that bill 0 to 10 percent of utilization days as
RU (ultra-high rehabilitation) would increase an estimated 27.6 percent
under the PDPM while facilities that bill 90 to 100 percent of
utilization days as RU would see an estimated decrease in payments of
9.8 percent. Other facility types that may see higher relative payments
under the PDPM are small facilities, non-profit facilities, government-
owned facilities, and hospital-based and swing-bed facilities.
[[Page 39260]]
Table 38--PDPM Impact Analysis, Facility-Level
------------------------------------------------------------------------
Percent of Percent
Provider characteristics providers change
------------------------------------------------------------------------
All Stays........................... 100.0 0.0
Ownership:
For profit.......................... 72.0 -0.7
Non-profit.......................... 22.6 1.9
Government.......................... 5.4 4.2
Number of Certified SNF Beds:
0-49................................ 10.0 3.5
50-99............................... 38.2 0.6
100-149............................. 34.7 -0.2
150-199............................. 11.1 -0.3
200+................................ 5.9 -1.8
Location:
Urban............................... 72.7 -0.7
Rural............................... 27.3 3.8
Facility Type:
Freestanding........................ 96.2 -0.3
Hospital-Based/Swing Bed............ 3.8 16.7
Location by Facility Type:
Urban [bond] Freestanding: 70.6 -1.0
Urban [bond] Hospital-Based/Swing 2.2 15.3
Bed................................
Rural [bond] Freestanding........... 25.6 3.2
Rural [bond] Hospital-Based/Swing 1.6 21.1
Bed................................
Census Division:
New England......................... 5.9 2.0
Middle Atlantic..................... 10.8 -2.6
East North Central.................. 20.6 0.7
West North Central.................. 12.5 6.7
South Atlantic...................... 15.7 -0.4
East South Central.................. 6.6 1.0
West South Central.................. 13.1 -1.0
Mountain............................ 4.7 1.1
Pacific............................. 10.1 -0.8
Location by Region:
Urban [bond] New England............ 5.1 1.8
Urban [bond] Middle Atlantic........ 9.5 -2.9
Urban [bond] East North Central..... 14.4 -0.1
Urban [bond] West North Central..... 6.0 4.6
Urban [bond] South Atlantic......... 12.6 -1.1
Urban [bond] East South Central..... 3.6 0.3
Urban [bond] West South Central..... 8.7 -1.2
Urban [bond] Mountain............... 3.4 0.1
Urban [bond] Pacific................ 9.5 -0.9
Rural [bond] New England............ 0.8 4.0
Rural [bond] Middle Atlantic........ 1.3 2.7
Rural [bond] East North Central..... 6.2 3.6
Rural [bond] West North Central..... 6.5 10.5
Rural [bond] South Atlantic......... 3.1 4.2
Rural [bond] East South Central..... 3.0 2.1
Rural [bond] West South Central..... 4.4 -0.1
Rural [bond] Mountain............... 1.3 6.2
Rural [bond] Pacific................ 0.6 2.2
% Stays with Maximum Utilization Days =
100:
0-10................................ 94.4 0.1
10-25............................... 5.1 -2.8
25-100.............................. 0.4 -3.6
% Medicare/Medicaid Dual Enrollment:
0-10................................ 8.6 -1.3
10-25............................... 17.5 -1.3
25-50............................... 36.0 0.3
50-75............................... 26.5 1.3
75-90............................... 8.2 0.4
90-100.............................. 3.1 1.6
% Utilization Days Billed as RU:
0-10................................ 8.9 27.6
10-25............................... 8.0 15.5
25-50............................... 24.1 7.0
50-75............................... 39.2 -0.4
75-90............................... 17.2 -6.0
90-100.............................. 2.6 -9.8
% Utilization Days Billed as Non-Rehab:
0-10................................ 79.8 -1.5
[[Page 39261]]
10-25............................... 16.6 8.6
25-50............................... 2.7 23.1
50-75............................... 0.4 35.8
75-90............................... 0.2 41.8
90-100.............................. 0.4 33.6
------------------------------------------------------------------------
We proposed to implement the PDPM effective beginning in FY 2020
(that is, October 1, 2019). This effective date would incorporate a 1-
year period to allow time for provider education and training, internal
system transitions, and to allow states to make any Medicaid program
changes which may be necessary based on the changes related to PDPM.
With regard to the changes finalized in this rule, we provide our
reasons for each change throughout the subsections above. Below in this
section, we discuss alternatives we considered which relate generally
to implementation of the PDPM.
When making major system changes, CMS often considers possible
transition options for providers and other stakeholders between the
former system and the new system. For example, when we updated OMB
delineations used to establish a provider's wage index under the SNF
PPS in FY 2015, we utilized a blended rate in the first year of
implementation, whereby 50 percent of the provider's payment was
derived from their former OMB delineation and 50 percent from their new
OMB delineation (79 FR 45644-45646).
However, due to the fundamental nature of the change from the
current RUG-IV case-mix model to the PDPM, which includes differences
in resident assessment, payment algorithms, and other policies, as we
stated in the proposed rule (83 FR 21079), we believe that proposing a
blended rate for the whole system (that would require two full case-mix
systems--RUG-IV and the PDPM--to run concurrently) is not advisable as
part of any transition strategy for implementing the PDPM, due to the
significant administrative and logistical issues that would be
associated with such a transition strategy. Specifically, CMS and
providers would be required to manage both the RUG-IV payment model and
PDPM simultaneously, creating significant burden and undue complexity
for all involved parties. Furthermore, providers would be required to
follow both sets of MDS assessment rules, each of which carries with it
its own level of complexity. CMS would also be required to process
assessments and claims under each system, which would entail a
significant amount of resources and burden for CMS, MACs, and
providers. Finally, a blended rate option would also mitigate some of
the burden reduction associated with implementing PDPM, estimated to
save SNFs close to $200 million per year as compared to estimated
burden under RUG-IV, given that the current assessment schedule would
need to continue until full implementation of PDPM was achieved. As we
stated in the proposed rule, we believe these issues also would be
implicated in any alternative transition strategy which would require
both case-mix systems to exist concurrently, such as giving providers a
choice in the first year of implementation of operating under either
the RUG-IV or PDPM. Therefore, we did not pursue any alternatives which
required concurrent operation of both the RUG-IV and PDPM.
As discussed in the proposed rule (83 FR 21079), we then considered
alternative effective dates for implementing the PDPM, and other
associated policy changes. We considered implementing the new case-mix
model effective beginning in FY 2019, but we believe that this would
not permit sufficient time for providers and other stakeholders,
including CMS, to make the necessary preparations for a change of this
magnitude in the SNF PPS. We also believe that such a quick transition
would not be in keeping with how similar types of SNF PPS changes have
been implemented in the past. We also considered implementing PDPM more
than one year after being finalized, such as implementing the PDPM
effective beginning October 1, 2020 (FY 2021). However, we believe that
setting the effective date of PDPM this far out is not necessary, based
on our prior experience with similar SNF PPS changes. As is customary,
we plan to continue to provide free software to providers which can be
used to group residents under the PDPM, as well as providing data
specifications for this grouper software as soon as is practicable,
thereby mitigating potential concerns around software vendors having
sufficient time to develop products for PDPM. Moreover, given the
issues identified throughout the proposed rule and this final rule with
the current RUG-IV model, notably the issues surrounding the burden and
complexity of the current SNF PPS assessment schedule and concerns
around the incentives for therapy overprovision under the RUG-IV
system, we believe it appropriate to implement the PDPM as soon as is
practicable.
Finally, we considered alternatives related to the proposal
discussed in section V.I. of this final rule, specifically the proposed
certification that we have met the requirements set forth in section
511(a) of the MMA, which would permit us to use the PDPM's permanent
case-mix adjustments for SNF residents with AIDS to replace the
temporary special add-on in the PPS per diem payment for such
residents. As noted in section V.I. of this final rule, this special
add-on for SNF residents with AIDS was intended to be of limited
duration, as the MMA legislation specified that it was to remain in
effect only until the Secretary certifies that there is an appropriate
adjustment in the case mix to compensate for the increased costs
associated with such residents. We considered maintaining this
adjustment under the PDPM. However, given the adjustment incorporated
into the NTA and nursing components under the PDPM to account for the
increased costs of treating residents with AIDS, this would result in a
substantial increase in payment for such residents beyond even the
current add-on payment. Moreover, as discussed in section V.I. of this
final rule, we believe that the PDPM provides a tailored case-mix
adjustment that more accurately accounts for the additional costs and
resource use of residents with AIDS, as compared to an undifferentiated
add-on which simply applies an across-the-board multiplier to the full
SNF PPS per diem. Finally, as stated in section 3.8.2. of the SNF PDPM
technical report (available at https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/therapyresearch.html), HIV/AIDS was
associated with a negative and
[[Page 39262]]
statistically significant decrease in PT, OT and SLP costs per day.
This means inherently that, to the extent that the existing add-on is
applied against the full SNF PPS per diem payment, the magnitude of the
add-on payment increases with increases in therapy payment, which
conflicts with the data described above regarding the relationship
between therapy costs and the presence of an AIDS diagnosis. As a
result, maintaining the current add-on would create an inconsistency
between how SNF payments would be made and the data regarding AIDS
diagnoses and resident therapy costs. Therefore, we proposed (and are
finalizing in this rule) replacing this add-on payment with appropriate
case-mix adjustments for the increased costs of care for this
population of residents through the NTA and nursing components of the
PDPM.
We invited comments on the projected impacts and on the proposals
and alternatives discussed throughout this section.
Commenters submitted the following comments related to the proposed
rule's discussion of the Potential Impacts of Implementing the Proposed
PDPM and Proposed Parity Adjustment. A discussion of these comments,
along with our responses, appears below.
Comment: Commenters agreed that PDPM should be implemented in a
budget neutral manner. With regard to the impact analysis, several
commenters suggest that CMS run the entire PDPM model on a second year
of data (or partial 2018 data) to examine the impact on individual
providers and beneficiaries. Commenters state that using only one year
of data does not allow analysis of the impact of changing patient
populations over time.
Response: We appreciate the support for our proposed budget neutral
implementation. With regards to the comment that CMS should use more
than one year of data for the impact analysis, we would note that while
CMS did not specifically examine the impact of PDPM on individual
providers and beneficiaries across multiple years, we did take several
steps to ensure robustness of our results. First, to ensure that the
classification would be relevant for the current SNF population, we
used the latest complete year of data available, FY 2017, to construct
the payment model. Second, based on comments received in response to
the 2017 ANPRM, we used four years of data (FYs 2014-2017) to determine
which comorbidities to include in the NTA component and the number of
points to assign to each condition/service for purposes of resident
classification and payment. Third, as discussed in section 1.3 of the
SNF PDPM technical report, we conducted a series of investigations to
test the robustness of our results across multiple years. We found
that: The distribution of stays and resource utilization by each
classifier used in the payment model (for example, clinical category,
cognitive status, etc.), the case-mix groups generated by the CART
algorithm, the costliest NTA comorbidities, and the distribution of
stays across nursing RUGs was very similar across multiple years.
Fourth, we examined changes in SNF resident characteristics over time
in response to concerns raised by participants in technical expert
panels, focusing on specific resident characteristics that TEP
panelists identified as indicators of increasing acuity. These
investigations generally found that resident characteristics changed
little over time.
Finally, while we did not analyze the impact of PDPM on individual
providers and beneficiaries across multiple years, we note that we also
examined the impact of the RCS-I payment model, which has substantially
similar classification criteria as PDPM, on various resident and
provider subpopulations using FY 2014 data. The results of this
analysis, shown in section 3.13 of the SNF PMR technical report and the
2017 ANPRM (82 FR 21008 through 21012), were consistent with the
resident and provider subpopulation impact analysis conducted for PDPM
(section 3.12 of the SNF PDPM technical report) in showing that a
payment model based on the set of resident characteristics used to
construct PDPM would be expected to increase payment associated with
resident subpopulations with complex clinical needs, such as extensive
services, high NTA utilization, IV medications, ESRD, diabetes, wound
infections, amputation/prosthesis care, and longer inpatient stays. For
all of the foregoing reasons, we expect PDPM to be robust and to have
similar impacts on residents and providers across multiple years.
Comment: One commenter stated that there are several methodological
issues that may affect the accuracy of PDPM impact calculations under
budget neutrality. This includes:
(1) The use of hospital MS-DRGs in developing clinical categories
will likely result in an inaccurate estimation of payment. Payment
rates were set and impacts predicted based on using the MS-DRG
assignment of the patient, whereas PDPM when implemented will rely on
MDS responses. If SNFs report patients at a net lower acuity level in
MDS data than the predicted clinical categorization, then the budget
neutrality assumptions made by PDPM will be invalid.
(2) The conversion of charges to costs will likely result in an
underestimation of payment. Because SNF charges have not driven
payments under the SNF PPS before, it is possible SNFs will
systematically re-evaluate their charges practices to bring them more
in line with the cost information within their accounting systems. As a
result, the use of SNF charges may need to be rapidly reevaluated once
PDPM is implemented.
(3) The quality of FY 2017 section GG data is questionable due to
the likely inaccuracies in newly implemented items. Thus, PDPM impacts
may need to be re-run once more stable section GG data are available to
ensure PDPM accurately accounts for patient functional characteristics.
Response: As stated in the proposed rule (83 FR 21074) and section
3.11.2 of the SNF PDPM technical report, the budget neutrality
assumption refers to having total payments if PDPM had been in place be
equal to total actual RUG-IV payments in FY 2017. It does not account
for provider behavior change after the implementation of PDPM. We
appreciate the concerns raised, and we will monitor the reporting of
MDS clinical categories, charges, and section GG items under PDPM.
Comment: One commenter stated that PDPM does not adequately account
for residents with behavioral health issues. The commenter stated that
SNFs are treating younger patients with longer stays and complex
behavioral needs. Further, the commenter said representatives of
geriatric behavioral health services were not included in the TEPs that
were convened during PDPM development. A few commenters requested that
CMS study the impact of PDPM on beneficiaries with long stays, such as
those exceeding 84 days in length to determine whether the payment
model creates potential access issues for such beneficiaries.
Response: While our TEPs did not include a specific representative
of geriatric behavioral health services, in response to the feedback
received from TEP panelists, we investigated the impact of PDPM on
residents with behavioral health issues. As discussed in section 3.12
of the SNF PDPM technical report, we found that PDPM is predicted to
slightly increase payment associated with residents who have behavioral
issues. Therefore, we believe the proposed payment model appropriately
accounts for the resource needs of this subpopulation. Additionally, we
found that PDPM is
[[Page 39263]]
expected to notably increase payment associated with younger residents
(below 65 and 65-74 years of age). However, we also estimated that
payment associated with very long stays (utilization = 100 days) would
decline by 1.9 percent under PDPM. We do plan to monitor the impact of
PDPM on many different subpopulations, including those with long SNF
stays.
Comment: Another commenter raised concerns about the provider-
specific impact analysis included in the supplementary materials that
were designed to aid stakeholders in reviewing and commenting on the
proposed rule. The commenter stated that there were large differences
in the estimated payment impact on individual providers between the
provider-level impact file that accompanied the 2017 ANPRM and the
provider-level impact file that accompanied the FY 2019 proposed rule.
Additionally, the commenter stated that some providers have impact
estimates in the RCS-I provider-level impact file (which accompanied
the 2017 ANPRM) but are missing estimates in the PDPM provider-level
impact file (which accompanied the FY 2019 SNF PPS proposed rule).
According to the commenter, these discrepancies raise concerns about
the reliability, accuracy, and completeness of the data used to develop
PDPM.
Response: The commenter that raised concerns about changes in the
provider-level impacts between the RCS-I and the PDPM provider-level
impact files correctly notes that the provider-level impacts changed
across the two files. There are two main reasons for changes in
provider-level impacts across these two files that do not raise
concerns about the quality of the data used to conduct the provider-
specific impact analysis or to develop PDPM. First, the year of
analysis is different across the two files. The RCS-I analysis uses
data from FY 2014, which was also the year of data used to develop RCS-
I, while the PDPM analysis uses data from FY 2017. Changes in the
resident population of specific providers could contribute to changes
in the estimated provider-level impact of the payment models.
Second, the two provider-level files provide impacts for two
different payment models: The first displays impacts for RCS-I, while
the second displays impacts for PDPM. While the two payment models are
similar, differences between the two models also contribute to changes
in estimated provider-level impacts. For the foregoing reasons, we
should not expect the estimated payment impact for each provider be the
same across the two payment models and data years. We further note that
at the population level, the estimated impact on specific types of
providers and residents was similar under RCS-I and PDPM, reflecting
the similarity of the payment models. Specifically, for both models we
estimate that payment would shift from stays receiving high amounts of
therapy and providers that provide high amounts of therapy to stays
associated with medically complex beneficiaries and providers that
serve these beneficiaries.
Regarding providers that were included in the RCS-I provider-
specific file but not in the PDPM provider-specific file, this occurs
for three reasons: (1) The provider had no stays in FY 2017, the year
of analysis for the PDPM file, (2) after applying matching and validity
restrictions, the provider had no stays remaining in the dataset, or
had fewer than 11 stays (and therefore could not be included for
confidentiality reasons), or (3) after excluding stays that did not
have sufficient information to be classified into a case-mix group for
each PDPM component, the provider had fewer than 11 stays. Of the
roughly 1,100 providers that were included in the RCS-I file but not
included in the PDPM file, about 60 percent were excluded for reason
(3); of the remaining excluded providers, about half were excluded for
reason (1) and half were excluded for reason (2). It should also be
noted that in total, there are about 700 fewer providers in the PDPM
file than there are in the RCS-I file. Because this number is less than
the number of providers included in the RCS-I file but not included in
the PDPM file, this indicates that there are also a number of providers
that are included in the PDPM file but not in the RCS-I file. To
confirm the representativeness of our PDPM study population, we
compared resident characteristics for the study population and the
Medicare Part A SNF population, as shown in section 3.1.5 of the SNF
PDPM technical report. As noted in the technical report, the two
populations are similar in most respects, although the study population
contains a higher proportion of stays from for-profit and freestanding
facilities and a lower proportion of stays from non-profit, government,
hospital-based, and swing bed facilities. Given the similarity of the
two populations, we do not believe our population restrictions
compromised the representativeness of our study population or the
reliability of our results.
Comment: One commenter stated that there are apparent errors in the
PDPM provider-specific impact file. The commenter states that the total
numbers of days and stays shown in the file do not match the sum of the
values in the respective columns. Additionally, the commenter states
that the percentages of stays shown in the case-mix group distribution
does not sum to 500 percent (as they should because 100 percent of days
are assigned to a case-mix group within each of the five components)
for three specific facilities. The commenter notes that all other rows
in this tab correctly sum to 500 percent. The commenter recommends CMS
research these issues and publish a corrected file as necessary.
Response: The commenter that stated the total stays and days shown
in provider-specific file do not match the sum of the values in the
respective columns is correct. The reason for this apparent discrepancy
is that, while the total stays and days shown in this file include
providers with fewer than 11 stays, these providers are not shown
separately in the file for confidentiality reasons. As a result, the
displayed totals across all facilities do not match the totals
calculated from summing across rows. Regarding the three instances the
commenter cites in which the percentages for the case-mix group
distribution do not sum to 500 percent, we were unable to replicate
this issue. We verified that the case-mix group distribution shown in
the provider-specific file for each of these three providers does in
fact sum to 500 percent and further verified that the case-mix group
distribution sums to 500 percent for all providers shown in the file.
Therefore, we do not believe a correction is warranted.
Comment: Some commenters supported CMS' decision not to propose a
blended rate transition between RUG-IV and PDPM, but rather to make a
full transition from one system to the other. Some commenters expressed
support for a transition, requesting that CMS conduct a feasibility
study to examine the impact of PDPM, particularly the therapy
components, on access to medically necessary therapy. One commenter
requested that CMS phase-in any negative impacts on providers from
implementing PDPM. One commenter stated that, given the similarities
between the RCS-I model and the PDPM, CMS should move forward with
implementing PDPM in FY 2019. One commenter requested clarification on
how a patient's reimbursement would be affected if the stay began under
RUG-IV and ended under PDPM.
Response: We appreciate the support for our decision not to
implement a transition strategy such as a blended rate option. We do
not believe that such
[[Page 39264]]
a transition, or one that would phase in negative impacts, would be
beneficial for SNFs or their patients given the complexity of operating
two systems simultaneously. With regard to the suggestion that CMS
conduct a feasibility study to examine the impact of PDPM, we believe
that the monitoring program we plan to undertake with implementation of
PDPM will provide all of the necessary information in an efficient and
expeditious manner that would negate the reasons for conducting a
feasibility study. Finally, with regard to the comment that CMS
implement PDPM in FY 2019, despite the similarities between RCS-I and
PDPM, the education and training efforts necessary to ensure successful
implementation of PDPM will likely require more time than such an
implementation date would permit.
With regard to the comment about a patient that begins a stay under
RUG-IV but ends under PDPM, given that there will be no transition
period between RUG-IV and PDPM, providers would bill under RUG-IV for
all days up to and including September 30, 2019 and then bill under
PDPM for all days beginning October 1, 2019. Further, RUG-IV assessment
scheduling and other RUG-IV payment-related policies would be in effect
until September 30, 2019. Beginning on October 1, 2019, all PDPM
related assessment scheduling and other PDPM payment-related policies
would take effect.
Comment: One commenter stated that PDPM would require a minimum of
12 months for programming, testing, validating and deploying of
software updates and tools. This commenter requested that CMS allow for
our systems to report to providers RUG-IV payment data, such as
associated HIPPS codes, up to 60 days after implementation of PDPM.
Response: We agree with the commenter regarding the timeframe for
software development, which is part of the reason we are implementing
PDPM on October 1, 2019, rather than in 2018. With regard to the
comment that we report RUG-IV payment data after implementation of
PDPM, we will consider this suggestion as part of transition planning.
Comment: Many commenters stressed the importance of provider
education and training to support successful implementation of the
PDPM. These commenters suggested that extensive education and training
of all involved parties will be needed because PDPM is such a
significant change from the existing system. These commenters recommend
that CMS immediately begin work with stakeholders to identify and to
plan for meeting these needs and to provide the necessary tools to
implement the new system smoothly. Further, commenters suggested that,
in Fall 2018, CMS should convene a PDPM Implementation Technical Expert
Panel (TEP) comprised of SNF PPS stakeholders, representatives from
states, referral sources, and payer representatives, and that the TEP
Report should be made public and serve as the basis for a PDPM
Transition Plan. Finally, several commenters urged CMS to release any
technical specifications and manual revisions as soon as possible, to
give providers and vendors as much time as possible to adapt to any
PDPM-related changes.
Response: We agree with the comments regarding the importance of
provider education and training and will be providing extensive
opportunities and resources to accomplish this task. With regard to the
suggestion for a TEP related to PDPM implementation, we appreciate this
suggestion and will consider several methods to engage the stakeholder
community in preparing for PDPM implementation. With regard to the
comments on the need for transition planning and for CMS' timely
release of any technical specifications and manual revisions, we agree
with commenters and intend to release technical specifications and
manual revisions as soon as possible, which will include specific
instructions on operationalizing the transition from RUG-IV to PDPM.
Comment: A few commenters requested that CMS establish a formal and
transparent process and timeline for refining the PDPM therapy
components after implementation of PDPM.
Response: While we agree with using a transparent process for
refining PDPM, as was used during its development, we believe it is
premature at this time to provide such a timeframe for revisions to the
model, until we are able to observe the impact of implementing this
model.
Comment: One commenter requested that CMS consider providing
additional funding during initial implementation of PDPM, given that
providers will be under financial pressures associated with training,
software purchases, as well as changes associated with other CMS
initiatives.
Response: We do not believe that additional funding would be
warranted for the activities described by the commenter. Given that CMS
provides free grouper software, as well as a myriad of training and
education resources, we believe that additional costs, such as software
purchases, are private business decisions that exist outside the scope
of SNF payments.
Accordingly, after considering the comments received, for the
reasons discussed throughout section V of the FY 2019 SNF PPS proposed
rule and for the reasons presented in this final rule, we are
finalizing our proposals to implement the PDPM, as well as the other
PDPM related changes discussed in this final rule, with the
modifications previously discussed in this final rule, effective
beginning October 1, 2019. Specifically, in section V.B of this final
rule, we finalized our proposal, without modification, for updating the
federal base payment rates and for adjusting the per diem rates for
geographic differences under the PDPM. In section V.C.3.b of this final
rule, we finalized the proposed PT and OT components under the PDPM and
our proposals relating to the methodology for classifying residents
under the PT and OT components, effective October 1, 2019, with the
modifications discussed in that section. More specifically, in response
to comments, rather than requiring providers to record the type of
inpatient surgical procedure performed during the prior inpatient
hospital stay by coding an ICD-10-PCS code in the second line of item
I8000 as we proposed, we will instead require providers to select, as
necessary, a surgical procedure category in a sub-item within Item
J2000 which would identify the relevant surgical procedure that
occurred during the patient's preceding hospital stay and which would
augment the patient's PDPM clinical category. For purposes of
calculating the function score, all missing values for section GG
assessment items will receive zero points. Similarly, the function
score will incorporate a new response ``10. Not attempted due to
environmental limitations'' and we will assign it a point value of
zero. Furthermore, consistent with a commenter's suggestion, we will
adopt MDS item GG0170I1 (Walk 10 feet) as a substitute for retired item
GG0170H1 (Does the resident walk), and we will use responses 07:
``resident refused,'' 09: ``not applicable,'' 10: ``not attempted due
to environmental limitations,'' or 88: ``not attempted due to medical
condition or safety concerns'' from MDS item GG0170I1 to identify
residents who cannot walk. In section V.C.3.b of this final rule, we
finalized, without modification, the proposed SLP component of PDPM and
our proposals relating to the classification of residents under the SLP
component. In section V.C.3.d of this final rule, we finalized,
[[Page 39265]]
without modification, our proposals relating to the methodology for
classifying patients under the nursing component of PDPM. In section
V.C.3.e of this final rule, we finalized, without modification, our
proposed NTA component of the PDPM and the proposed classification
methodology for the NTA component. In section V.C.4 of this final rule,
we finalized, without modification, to apply a variable per diem
adjustment as part of the PDPM, utilizing the adjustment factors and
schedule for the PT and OT components found in Table 30 and the
adjustment factors and schedule for the NTA component found in Table
31. In section V.D.1 of this final rule, we finalized our proposed
changes to the MDS assessment schedule and related assessment policies
as discussed in the proposed rule, with the following modifications. As
discussed in that section, rather than making the IPA a required
assessment as we proposed, this assessment will be optional, and
providers may determine whether and when an IPA is completed. In
addition, because the IPA is an optional assessment and providers can
determine their own criteria for when an IPA is completed, we are
revising the ARD criteria such that the ARD will be the date the
facility chooses to complete the assessment relative to the triggering
event that makes the facility complete the IPA. Payment based on the
IPA would begin the same day as the ARD. In section V.D.2 of this final
rule, we finalized, without modification, our proposed additions to the
Swing Bed PPS Assessment found in Table 34 of this final rule. In
section V.D.3 of this final rule, we finalized, without modification,
the proposed additions to the PPS Discharge Assessment found in Table
35 of this final rule. In section V.E of this final rule, we finalized,
without modification, our proposed application of a combined 25 percent
limit on group and concurrent therapy, per therapy discipline, as well
as our proposal to implement a non-fatal warning edit on a provider's
validation report when the amount of group and concurrent therapy
exceeds 25 percent within a given therapy discipline. In section V.F of
this final rule, we finalized, without modification, our proposed
interrupted stay policy. In section V.G of this final rule, we
finalized our proposed classifiers for purposes of applying the
administrative presumption, with the following modification. As
discussed in that section, we added 6 PT and OT classifiers and 8 SLP
classifiers. In section V.H of this final rule, we finalized our
proposal to replace the existing MMA add-on for patients with AIDS with
the PDPM permanent adjustment in the case-mix that appropriate accounts
for the increased costs of patients with AIDS.
As we proposed and as discussed in section V.I of this final rule,
we will implement the PDPM and the other PDPM-related changes finalized
in this rule in a budget neutral manner.
VI. Other Issues
A. Other Revisions to the Regulation Text
Along with our revisions to the regulations as discussed elsewhere
in this final rule, we also proposed (83 FR 21080) to make two other
revisions in the regulation text. The first involves Sec.
411.15(p)(3)(iv), which specifies that whenever a beneficiary is
formally discharged (or otherwise departs) from the SNF, this event
serves to end that beneficiary's status as a ``resident'' of the SNF
for purposes of consolidated billing (the SNF ``bundling''
requirement), unless he or she is readmitted (or returns) to that or
another SNF ``by midnight of the day of departure.'' In initially
establishing this so-called ``midnight rule,'' the FY 2001 SNF PPS
final rule (65 FR 46770, July 31, 2000) noted in this particular
context that, as we explained in the proposed rule, a patient ``day''
begins at 12:01 a.m. and ends the following midnight, so that the
phrase ``midnight of the day of departure'' refers to the midnight that
immediately follows the actual moment of departure, rather than to the
midnight that immediately precedes it (65 FR 46792).
However, the Medicare program's standard practice for counting
inpatient days is actually one in which an inpatient day would begin at
midnight (see, for example, Sec. 20.1 in the Medicare Benefit Policy
Manual, Chapter 3, which specifies that in counting inpatient days, ``.
. . a day begins at midnight and ends 24 hours later'' (emphasis
added)). Accordingly, in order to ensure consistency with that
approach, we proposed to revise Sec. 411.15(p)(3)(iv) to specify that
for consolidated billing purposes, a beneficiary's ``resident'' status
ends whenever he or she is formally discharged (or otherwise departs)
from the SNF, unless he or she is readmitted (or returns) to that or
another SNF ``before the following midnight.'' We further noted that
this revision would not alter the underlying principle that a
beneficiary's SNF ``resident'' status in this context ends upon
departure from the SNF unless he or she returns to that or another SNF
later on that same day; rather, it would simply serve to conform the
actual wording of the applicable regulations text with the Medicare
manual's standard definition of the starting point of a patient
``day.''
We also proposed a technical correction to Sec. 424.20(a)(1)(i)
(which describes the required content of the SNF level of care
certification) in order to conform it more closely to that of the
corresponding statutory requirements at section 1814(a)(2)(B) of the
Act. This statutory provision defines the SNF level of care in terms of
skilled services furnished on a daily basis which, as a practical
matter, can only be provided on an inpatient basis in a SNF. In
addition, it provides that the SNF-level care must be for either:
An ongoing condition that was one of the conditions that
the beneficiary had during the qualifying hospital stay; or
A new condition that arose while the beneficiary was in
the SNF for treatment of that ongoing condition.
In setting forth the SNF level of care definition itself, the
implementing regulations at Sec. 409.31 reflect both of the above two
criteria (at paragraphs (b)(2)(i) and (b)(2)(ii), respectively);
however, as we stated in the proposed rule (83 FR 21080), the
regulations describing the content of the initial level of care
certification at Sec. 424.20(a)(1)(i) have inadvertently omitted the
second criterion. Further, while that criterion admittedly might not be
relevant in those instances where the initial certification is obtained
promptly ``at the time of admission'' in accordance with the
regulations at 42 CFR 424.20(b)(1), that same provision alternatively
allows this requirement to be met ``as soon thereafter as is reasonable
and practicable.'' Accordingly, in order to rectify this omission, we
proposed to revise Sec. 424.20(a)(1)(i) so that it more accurately
tracks the language in the corresponding statutory authority at section
1814(a)(2)(B) of the Act.
We invited comments on our proposed revisions to Sec.
411.15(p)(3)(iv) and Sec. 424.20(a)(1)(i), but received no comments on
either revision. Accordingly, in this final rule, we are finalizing
both revisions as proposed, without further modification.
B. Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)
1. Background
The Skilled Nursing Facility Quality Reporting Program (SNF QRP) is
authorized by section 1888(e)(6) of the Act and it applies to
freestanding SNFs, SNFs affiliated with acute care facilities,
[[Page 39266]]
and all non-CAH swing-bed rural hospitals. Under the SNF QRP, the
Secretary reduces by 2 percentage points the annual market basket
percentage update described in section 1888(e)(5)(B)(i) of the Act
applicable to a SNF for a fiscal year, after application of section
1888(e)(5)(B)(ii) of the Act (the MFP adjustment) and section
1888(e)(5)(B)(iii) of the Act (the 1 percent market basket increase for
FY 2018), in the case of a SNF that does not submit data in accordance
with sections 1888(e)(6)(B)(i) of the Act for that fiscal year. For
more information on the requirements we have adopted for the SNF QRP,
we refer readers to the FY 2016 SNF PPS final rule (80 FR 46427 through
46429), FY 2017 SNF PPS final rule (81 FR 52009 through 52010) and FY
2018 SNF PPS final rule (82 FR 36566).
Although we have historically used the preamble to the SNF PPS
proposed and final rules each year to remind stakeholders of all
previously finalized program requirements, we have concluded that
repeating the same discussion each year is not necessary for every
requirement, especially if we have codified it in our regulations.
Accordingly, the following discussion is limited as much as possible to
a discussion of our proposals, responses to comments submitted on those
proposals, and policies we are finalizing for future years of the SNF
QRP after consideration of the comments, and it represents the approach
we intend to use in our rulemakings for this program going forward.
2. General Considerations Used for the Selection of Measures for the
SNF QRP
a. Background
For a detailed discussion of the considerations we historically
used for the selection of SNF QRP quality, resource use, and other
measures, we refer readers to the FY 2016 SNF PPS final rule (80 FR
46429 through 46431).
We received several comments generally related to the SNF QRP. The
comments and our responses are discussed below.
Comment: Several commenters expressed general support for CMS's
proposals related to the SNF QRP, acknowledging CMS's goal of improving
the quality of health care for Medicare beneficiaries through
improvements to patient assessments and quality reporting. One
commenter highlighted the need for additional transparency from CMS
through this ongoing process. Another commenter requested that CMS
ensure that the SNF QRP efforts do not negatively impact specialty
populations.
Response: We appreciate commenters' general support for the SNF QRP
proposals. To foster transparency, we continue to seek stakeholder
input and will take into consideration the impact of specialty
populations in the ongoing measure development and maintenance efforts
of the SNF QRP.
Comment: One commenter expressed support for the IMPACT Act's
objectives. However, the commenter expressed concern over the rapid
development and implementation of the standardized patient assessment
data element (SPADE) work, suggesting that further evaluation is
necessary.
Response: We understand the concerns raised by commenters
pertaining to the development and implementation of the SPADEs. As
discussed in the FY 2018 SNF PPS Final Rule, we agreed that further
evaluation of the data elements was necessary. Specifically, we thought
that more time was needed to develop, test, to think through the
implementation, and to reflect on how to maximize the time SNFs have to
prepare for the reporting of standardized resident assessment data in
these categories. We have worked to be responsive to the concerns
raised by stakeholders while meeting our obligation to require the
reporting of standardized resident assessment data with respect to the
categories described in section 1899B(b)(1)(B) of the Act. Therefore,
as outlined in the FY 2018 SNF PPS final rule, we did not finalize the
standardized assessment data elements we proposed for three of the five
categories under section 1899B(b)(1)(B) of the Act: Cognitive Function
and Mental Status; Special Services, Treatments, and Interventions; and
Impairments in that we felt this work needed more time for development
and evaluation. Since the time of this proposal work, we have worked
closely with stakeholders, solicited comments, reconvened our TEP, and
are currently re-testing the SPADEs in a national field test (also
known as the Alpha test). For more information on our prior proposal
addressed in the FY 2018 SNF PPS final rule (82 FR 36568 through 36570,
36597 through 36605), we refer the reader to that detailed discussion.
For more information on our national field test and associated work for
SPADEs, please see: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/-IMPACT-Act-Standardized-Assessment-National-Testing-.html.
b. Accounting for Social Risk Factors in the SNF QRP
In the FY 2018 SNF PPS final rule (82 FR 36567 through 36568), we
discussed the importance of improving beneficiary outcomes including
reducing health disparities. We also discussed our commitment to
ensuring that medically complex residents, as well as those with social
risk factors, receive excellent care. We discussed how studies show
that social risk factors, such as being near or below the poverty level
as determined by HHS, belonging to a racial or ethnic minority group,
or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\3\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex residents, as well as those with social risk factors receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in our value-based purchasing programs.\4\ As we noted in the FY 2018
SNF PPS final rule (82 FR 36567 through 36568), ASPE's report to
Congress, which was required by the IMPACT Act, found that, in the
context of value-based purchasing programs, dual eligibility was the
most powerful predictor of poor health care outcomes among those social
risk factors that they examined and tested. ASPE is continuing to
examine this issue in its second report required by the IMPACT Act,
which is due to Congress in the fall of 2019. In addition, as we noted
in the FY 2018 SNF PPS final rule (82 FR 36567), the National Quality
Forum (NQF) undertook a 2-year trial period in which certain new
measures and measures undergoing maintenance review have been assessed
to determine if risk adjustment for social risk factors is
[[Page 39267]]
appropriate for these measures.\5\ The trial period ended in April 2017
and a final report is available at https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a
conceptual basis for adjustment generally did not demonstrate an
empirical relationship'' between social risk factors and the outcomes
measured. This discrepancy may be explained in part by the methods used
for adjustment and the limited availability of robust data on social
risk factors. NQF has extended the socioeconomic status (SES) trial,\6\
allowing further examination of social risk factors in outcome
measures.
---------------------------------------------------------------------------
\3\ See, for example, United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\4\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\5\ Available at https://www.qualityforum.org/SES_Trial_Period.aspx.
\6\ Available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier= id&ItemID=86357.
---------------------------------------------------------------------------
In the FY 2018/CY 2018 proposed rules for our quality reporting and
value-based purchasing programs, we solicited feedback on which social
risk factors provide the most valuable information to stakeholders and
the methodology for illuminating differences in outcomes rates among
patient groups within a provider that would also allow for a comparison
of those differences, or disparities, across providers. Feedback we
received across our quality reporting programs included encouraging us
to explore whether factors that could be used to stratify or risk
adjust the measures (beyond dual eligibility); to consider the full
range of differences in resident backgrounds that might affect
outcomes; to explore risk adjustment approaches; and to offer careful
consideration of what type of information display would be most useful
to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by resident dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for SNFs to identify gaps in outcomes for
different groups of residents, improve the quality of health care for
all residents, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned CMS to balance fair and equitable payment while avoiding
payment penalties that mask health disparities or discouraging the
provision of care to more medically complex patients. Commenters also
noted that value-based payment program measure selection, domain
weighting, performance scoring, and payment methodology must account
for social risk.
As a next step, we are considering options to improve health
disparities among patient-groups within and across hospitals by
increasing the transparency of disparities as shown by quality
measures. We also are considering how this work applies to other CMS
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where
we discuss the potential stratification of certain Hospital Inpatient
Quality Reporting (IQR) Program outcome measures. Furthermore, we
continue to consider options to address equity and disparities in our
value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
Comment: Several commenters supported CMS' continuing evaluation of
how social risk factors could impact SNF QRP measure rates and
encouraged CMS to consider strategies and solutions in this area.
Specific comments noted that lack of adjustment for social risk factors
may negatively impact facility measure rates, and CMS should
incorporate risk adjustment for sociodemographic and socioeconomic
status into appropriate SNF QRP measures. We also received comments
about the public display of measure information related to social risk
factors, suggesting stratified measures be used and expressing concerns
that publicly reported outcome measures could be misleading to
consumers.
Response: We thank commenters for their comments and will take
these comments into account as we further consider how to appropriately
account for social risk factors in the SNF QRP. We also refer the
reader to the FY 2018 SNF PPS final rule (82 FR 36567 through 36568)
where we discussed in depth many of the issues raised by these
commenters.
3. New Measure Removal Factor for Previously Adopted SNF QRP Measures
As a part of our Meaningful Measures Initiative discussed in
section I.D. of this final rule, we strive to put patients first,
ensuring that they, along with their clinicians, are empowered to make
decisions about their own healthcare using data-driven information that
is increasingly aligned with a parsimonious set of meaningful quality
measures. We began reviewing the SNF QRP's measures in accordance with
the Meaningful Measures Initiative, and we are working to identify how
to move the SNF QRP forward in the least burdensome manner possible
while continuing to incentivize improvement in the quality of care
provided to patients.
Specifically, we believe the goals of the SNF QRP and the measures
used in the program cover most of the Meaningful Measures Initiative
priorities, including making care safer, strengthening person and
family engagement, promoting coordination of care, promoting effective
prevention and treatment, and making care affordable.
We also evaluated the appropriateness and completeness of the SNF
QRP's current measure removal factors. We have previously finalized
that we would use notice and comment rulemaking to remove measures from
the SNF QRP based on the following factors \7\
---------------------------------------------------------------------------
\7\ We refer readers to the FY 2016 SNF PPS final rule (80 FR
46431 through 46432) for more information on the factors we consider
for removing measures.
---------------------------------------------------------------------------
Factor 1. Measure performance among SNFs is so high and
unvarying that meaningful distinctions in improvements in performance
can no longer be made.
Factor 2. Performance or improvement on a measure does not
result in better resident outcomes.
Factor 3. A measure does not align with current clinical
guidelines or practice.
Factor 4. A more broadly applicable measure (across
settings, populations, or conditions) for the particular topic is
available.
Factor 5. A measure that is more proximal in time to
desired resident outcomes for the particular topic is available.
Factor 6. A measure that is more strongly associated with
desired resident outcomes for the particular topic is available.
Factor 7. Collection or public reporting of a measure
leads to negative unintended consequences other than resident harm.
We continue to believe that these measure removal factors are
appropriate for use in the SNF QRP. However, even if one or more of the
measure removal factors applies, we may nonetheless choose to retain
the measure for certain specified reasons. Examples of such instances
could include when a particular measure addresses a gap in quality that
is so significant that removing the measure could in turn
[[Page 39268]]
result in poor quality, or in the event that a given measure is
statutorily required. We note further that, consistent with other
quality reporting programs, we apply these factors on a case-by-case
basis.
In the FY 2019 SNF PPS proposed rule (83 FR 21082), we proposed to
adopt an additional factor to consider when evaluating potential
measures for removal from the SNF QRP measure set:
Factor 8. The costs associated with a measure outweigh the
benefit of its continued use in the program.
As we discussed in section I.D. of this final rule, with respect to
our new Meaningful Measures Initiative, we are engaging in efforts to
ensure that the SNF QRP measure set continues to promote improved
health outcomes for beneficiaries while minimizing the overall costs
associated with the program. We believe these costs are multifaceted
and include not only the burden associated with reporting, but also the
costs associated with implementing and maintaining the program. We have
identified several different types of costs, including, but not limited
to: (1) The provider and clinician information collection burden and
burden associated with the submission/reporting of quality measures to
CMS; (2) the provider and clinician cost associated with complying with
other programmatic requirements; (3) the provider and clinician cost
associated with participating in multiple quality programs, and
tracking multiple similar or duplicative measures within or across
those programs; (4) the cost to CMS associated with the program
oversight of the measure including measure maintenance and public
display; and (5) the provider and clinician cost associated with
compliance with other federal and/or state regulations (if applicable).
For example, it may be needlessly costly and/or of limited benefit
to retain or maintain a measure which our analyses show no longer
meaningfully supports program objectives (for example, informing
beneficiary choice). It may also be costly for health care providers to
track the confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. CMS may also have to expend unnecessary resources to maintain
the specifications for the measure, as well as the tools we need to
collect, validate, analyze, and publicly report the measure data.
Furthermore, beneficiaries may find it confusing to see public
reporting on the same measure in different programs.
When these costs outweigh the evidence supporting the continued use
of a measure in the SNF QRP, we believe it may be appropriate to remove
the measure from the program. Although we recognize that one of the
main goals of the SNF QRP is to improve beneficiary outcomes by
incentivizing health care providers to focus on specific care issues
and making data public related to those issues, we also recognize that
those goals can have limited utility where, for example, the publicly
reported data is of limited use because it cannot be easily interpreted
by beneficiaries and used to influence their choice of providers. In
these cases, removing the measure from the SNF QRP may better
accommodate the costs of program administration and compliance without
sacrificing improved health outcomes and beneficiary choice.
We proposed that we would remove measures based on this factor on a
case-by-case basis. We might, for example, decide to retain a measure
that is burdensome for health care providers to report if we conclude
that the benefit to beneficiaries justifies the reporting burden. Our
goal is to move the program forward in the least burdensome manner
possible, while maintaining a parsimonious set of meaningful quality
measures and continuing to incentivize improvement in the quality of
care provided to patients.
We invited public comment on our proposal to adopt an additional
measure removal Factor 8. The costs associated with a measure outweigh
the benefit of its continued use in the program.
We also proposed to add a new Sec. 413.360(b)(3) that would codify
the removal factors we have previously finalized for the SNF QRP, as
well as the new measure removal factor that we proposed to adopt in the
proposed rule.
We sought comments on these proposals. A discussion of these
comments, along with our responses, appears below.
Comment: Several commenters expressed support for an additional
factor to consider when evaluating potential measures for removal from
the SNF QRP measure set: Factor 8. The costs associated with a measure
outweigh the benefit of its continued use in the program. One commenter
acknowledged that removal of a measure from the program may be
appropriate when the costs outweigh the evidence supporting its
continued use. Another commenter supported the addition of the new
measure removal factor because it reduces unnecessary administrative
burden.
Response: We appreciate the commenters' support.
Comment: One commenter supported CMS' proposal to codify the
proposed measure removal factor in the regulatory text.
Response: We appreciate the commenter's support.
Comment: Some commenters expressed concerns related to the new
measure removal factor. One commenter did not support the addition of
the factor, suggesting that the costs and benefits considered under
this factor are not equivalent, as costs are typically imposed on
providers while benefits are rendered to beneficiaries. This commenter
expressed the concern that providers may argue for removal of a measure
that is costly to collect and report despite its benefits. Another
commenter suggested that using administrative cost to CMS as a basis
for removal may be problematic if clinicians or patients believe the
measure is important. Another commenter added that the proposed measure
removal factor is subjective and recommended clearer guidelines and
criteria for determining the costs and benefits of a measure before it
is removed.
Response: We agree that it is possible that providers may recommend
removal of measures they do not support based on the argument that
these measures are costly to report. However, input from providers is
only one element of our case-by-case analysis of measures that we would
take into account when weighing the costs associated with a measure
against the benefit of retaining the measure in a program. We will
weigh input we receive from all stakeholders with our own analysis of
each measure to make our case-by-case determination of whether it would
be appropriate to remove a measure based on its costs outweighing the
benefit of its continued use in the program. We wish to clarify that it
is not our intent to remove measures that continue to benefit residents
or providers solely because these measures incur administrative costs
to CMS; this is only one example of costs that would be weighed against
the benefits when considering each measure on a case-by-case basis.
Regarding concern over the subjectivity of the new measure removal
factor and the suggestion for clearer guidelines and criteria for
determining the costs and benefits of a measure before it is removed,
we intend to be transparent in our assessment of measures under this
measure removal factor. As described above, there are various
considerations of costs and
[[Page 39269]]
benefits, direct and indirect, financial and otherwise, that we will
evaluate in applying removal Factor 8, and we will take into
consideration the perspectives of multiple stakeholders. However,
because we intend to evaluate each measure on a case-by-case basis, and
each measure has been adopted to fill different needs in the SNF QRP,
we do not believe it would be meaningful to identify a specific set of
assessment criteria to apply to all measures. We believe costs include
costs to stakeholders such as patients, caregivers, providers, CMS, and
other entities. In addition, we note that the benefits we will consider
center around benefits to residents and caregivers as the primary
beneficiaries of our quality reporting program. When we propose through
rulemaking to remove a measure under this measure removal factor, we
will provide information on the costs and benefits we considered in
evaluating the measure.
Comment: One commenter noted that the existing seven removal
factors are sufficient for appropriate measure evaluation.
Response: While we acknowledge that there are seven factors
currently adopted that may be used for considering measure removal from
the SNF QRP, we believe the proposed new measure removal factor adds a
new criterion that is not captured in the other seven factors. The
proposed new measure removal factor will help advance the goals of the
Meaningful Measures Initiative, which aims to improve outcomes for
patients, their families, and health care providers while reducing
burden and costs for clinicians and providers. We are also making minor
grammatical edits to the SNF QRP measure removal factor language to
align with the language of other CMS quality programs.
After considering the comments, we are finalizing our proposal to
add an additional measure removal factor: Factor 8. The costs
associated with a measure outweigh the benefit of its continued use in
the program. We are also finalizing our proposal to the updates to the
regulatory text and to codify the seven removal factors we have
previously finalized for the SNF QRP, as well as the new measure
removal factor, Factor 8 at new Sec. 413.360(b)(3). We are also making
minor grammatical edits to the SNF QRP measure removal factor language
to align with the language of other CMS quality programs.
4. Quality Measures Currently Adopted for the FY 2020 SNF QRP
The SNF QRP currently has 12 measures for the FY 2020 program year,
which are outlined in Table 39.
Table 39--Quality Measures Currently Adopted for the FY 2020 SNF QRP
------------------------------------------------------------------------
Short name Measure name and data source
------------------------------------------------------------------------
Resident Assessment Instrument Minimum Data Set
------------------------------------------------------------------------
Pressure Ulcer.................... Percent of Residents or Patients
With Pressure Ulcers That Are New
or Worsened (Short Stay) (NQF
#0678).*
Pressure Ulcer/Injury............. Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury.
Application of Falls.............. Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay) (NQF
#0674).
Application of Functional Application of Percent of Long-Term
Assessment/Care Plan. Care Hospital (LTCH) Patients with
an Admission and Discharge
Functional Assessment and a Care
Plan That Addresses Function (NQF
#2631).
Change in Mobility Score.......... Application of IRF Functional
Outcome Measure: Change in Mobility
Score for Medical Rehabilitation
Patients (NQF #2634).
Discharge Mobility Score.......... Application of IRF Functional
Outcome Measure: Discharge Mobility
Score for Medical Rehabilitation
Patients (NQF #2636).
Change in Self-Care Score......... Application of the IRF Functional
Outcome Measure: Change in Self-
Care Score for Medical
Rehabilitation Patients (NQF
#2633).
Discharge Self-Care Score......... Application of IRF Functional
Outcome Measure: Discharge Self-
Care Score for Medical
Rehabilitation Patients (NQF
#2635).
DRR............................... Drug Regimen Review Conducted With
Follow-Up for Identified Issues--
Post Acute Care (PAC) Skilled
Nursing Facility (SNF) Quality
Reporting Program (QRP).
------------------------------------------------------------------------
Claims-Based
------------------------------------------------------------------------
MSPB SNF.......................... Medicare Spending Per Beneficiary
(MSPB)--Post Acute Care (PAC)
Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
DTC............................... Discharge to Community--Post Acute
Care (PAC) Skilled Nursing Facility
(SNF) Quality Reporting Program
(QRP).
PPR............................... Potentially Preventable 30-Day Post-
Discharge Readmission Measure for
Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
------------------------------------------------------------------------
* The measure will be replaced with the Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/Injury measure, effective October 1, 2018.
Comment: While we did not solicit comment on currently adopted or
future measures for the SNF QRP, we received multiple comments
suggesting the removal or modification of measures finalized in
previous rules as well as recommendations for future measure
development.
Response: We thank commenters for their comments. We did not
propose any changes to our previously finalized measures or to adopt
any new measures for the SNF QRP. We will take these comments into
consideration as we engage in future measure development and selection
activities for the SNF QRP. The SNF QRP measures described in Table 39
were adopted in the FY 2016 SNF PPS final rule (80 FR 46432 through
46453), FY 2017 SNF PPS final rule (81 FR 52012 through 52039), or FY
2018 SNF PPS final rule (82 FR 36570 through 36594), and we refer the
reader to those detailed discussions.
5. IMPACT Act Implementation Update
In the FY 2018 SNF PPS final rule (82 FR 36596 through 36597), we
stated that we intended to specify two measures that would satisfy the
domain of
[[Page 39270]]
accurately communicating the existence and provision of the transfer of
health information and care preferences under section 1899B(c)(1)(E) of
the Act no later than October 1, 2018, and intended to propose to adopt
them for the FY 2021 SNF QRP, with data collection beginning on or
about October 1, 2019.
As stated in the FY 2019 SNF PPS proposed rule (83 FR 21083), as a
result of the input provided during a public comment period between
November 10, 2016 and December 11, 2016, input provided by a technical
expert panel (TEP), and pilot measure testing conducted in 2017, we are
engaging in continued development work on these two measures, including
supplementary measure testing and providing the public with an
opportunity for comment in 2018. We stated that we would reconvene a
TEP for these measures in mid-2018 which occurred in April 2018. We
stated that we now intend to specify the measures under section
1899B(c)(1)(E) of the Act no later than October 1, 2019 and intend to
propose to adopt the measures for the FY 2022 SNF QRP, with data
collection beginning with residents admitted as well as discharged on
or after October 1, 2020. For more information on the pilot testing, we
refer readers to https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
Comment: A few commenters supported the delayed implementation of
the measures. One commenter supported the continued evaluation and
testing of the measures prior to adoption. The commenter believed that
this delay is appropriate as it allows more time for thorough measure
development, continued field testing of the measures, and public input
on the draft measures. This commenter noted that continued development
of the measures will help to ensure they are measuring the domain of
interest and will have a meaningful impact on the quality of care.
Response: We appreciate the commenters support.
6. Form, Manner, and Timing of Data Submission Under the SNF QRP
Under our current policy, SNFs report data on SNF QRP assessment-
based measures and standardized resident assessment data by reporting
the designated data elements for each applicable resident on the
Minimum Data Set (MDS) resident assessment instrument and then
submitting completed instruments to CMS using the Quality Improvement
Evaluation System Assessment Submission and Processing (QIES ASAP)
system. We refer readers to the FY 2018 SNF PPS final rule (82 FR 36601
through 36603) for the data collection and submission time frames for
assessment-based measures and standardized resident assessment data
that we finalized for the SNF QRP.
7. Changes to the SNF QRP Reconsideration Requirements
Section 413.360(d)(1) of our regulations states, in part, that SNFs
that do not meet the SNF QRP requirements for a program year will
receive a letter of non-compliance through the QIES ASAP system, as
well as through the United States Postal Service.
In the FY 2019 SNF PPS proposed rule (83 FR 21083), we proposed to
revise Sec. 413.360(d)(1) to expand the methods by which we would
notify a SNF of non-compliance with the SNF QRP requirements for a
program year. Revised Sec. 413.360(d)(1) would state that we would
notify SNFs of non-compliance with the SNF QRP requirements via a
letter sent through at least one of the following notification methods:
The QIES ASAP system; the United States Postal Service; or via an email
from the Medicare Administrative Contractor (MAC). We believe that this
change will address feedback from providers who requested additional
methods for notification.
In addition, Sec. 413.360(d)(4) currently states that we will make
a decision on the request for reconsideration and provide notice of the
decision to the SNF through the QIES ASAP system and via letter sent
through the United States Postal Service.
We proposed to revise Sec. 413.360(d)(4) to state that we will
notify SNFs, in writing, of our final decision regarding any
reconsideration request via a letter sent through at least one of the
following notification methods: The QIES ASAP system, the United States
Postal Service, or via an email from the Medicare Administrative
Contractor (MAC).
We invited public comments on these proposals.
Comment: Several commenters expressed support for CMS' efforts to
expand the methods for notifying providers of non-compliance and
decisions on reconsideration requests. One commenter acknowledged that
the addition of email notifications from the Medicare Administrative
Contractor (MAC) as a third notification method may help reduce burden,
adding that providers should be notified via at least two of the three
methods and that letters should require return receipt to ensure
notifications are not lost in the mail. Another commenter recommended
that CMS either specify a notification method that will always be used,
allow providers to select a preferred method, or consistently use all
three methods to ensure that notifications are received by appropriate
organization leaders. Several commenters suggested that CMS provide
additional information regarding how to specify appropriate recipients
of email notifications from the Medicare Administrative Contractor
(MAC). Another commenter recommended selecting a consistent
notification process, using the same methods for all SNFs, noting that
consistent and predictable notification will reduce provider burden and
lower the risk of missing a notification.
Response: We thank commenters for their support. We will use at
least one method of notification, and providers will be notified
regarding the specific method of communication that CMS will use via
the SNF QRP Reconsideration and Exception and Extension website 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 and announcements via the PAC listserv. The
announcements will be posted annually following the May 15th data
submission deadline--prior to the distribution of the initial notices
of non-compliance determination in late spring/early summer. Messaging
will include the method of communication for the notices, instructions
for sending a reconsideration request, and the final deadline for
submitting the request. This policy would be effective October 1, 2018.
With regard to the comment about specifying the recipient of
notification for a facility, our notifications are sent to the point of
contact on file in the QIES database. This information is populated via
ASPEN. It is the responsibility of the facility to ensure that this
information is up-to-date. For information regarding how to update
provider information in QIES, we refer providers to contact their
Medicare Administrative Contractor or CMS Regional Office at https://www.cms.gov/About-CMS/Agency-Information/RegionalOffices/.
Downloads of contact information for each Regional Office are available
at the bottom of the web page.
We disagree with the recommendation that CMS notify all
[[Page 39271]]
SNFs using the same method in order to account for circumstances that
are beyond our control, such as technical issues that may impede the
delivery of electronic notifications. As discussed, providers will be
notified in advance of the specific method of communication that CMS
will use.
We are finalizing our proposal to revise Sec. 413.360(d)(1) to
state that we will notify a SNF of non-compliance with the SNF QRP
requirements for a program year via a letter sent through at least one
of the following notification methods: The QIES ASAP system; the United
States Postal Service; or via an email from the Medicare Administrative
Contractor (MAC).
We are also finalizing our proposal, to revise Sec. 413.360(d)(4)
to state that we will notify SNFs, in writing, of our final decision
regarding any reconsideration request via a letter sent through at
least one of the following notification methods: The QIES ASAP system,
the United States Postal Service, or via an email from the Medicare
Administrative Contractor (MAC).
8. Policies Regarding Public Display for the SNF QRP
Section 1899B(g) of the Act requires the Secretary to establish
procedures for the public reporting of SNFs' performance on measures
under sections 1899B(c)(1) and 1899B(d)(1) of the Act. SNF QRP measure
data will be displayed on the Nursing Home Compare website, an
interactive web tool that assists individuals by providing information
on SNF quality of care to those who need to select a SNF.
In the FY 2018 SNF PPS final rule (82 FR 36606 through 36607), we
finalized that we would publicly display the Medicare Spending Per
Beneficiary-PAC SNF QRP and Discharge to Community-PAC SNF QRP measures
in calendar year 2018 based on discharges from October 1, 2016 through
September 30, 2017. In the FY 2019 SNF PPS proposed rule (83 FR 21084),
we proposed to increase the number of years of data used to calculate
the Medicare Spending Per Beneficiary-PAC SNF QRP and Discharge to
Community-PAC SNF QRP measures for purposes of display from 1 year to 2
years. Under this proposal, data on these measures would be publicly
reported in CY 2019, or as soon thereafter as operationally feasible,
based on discharges from October 1, 2016 through September 30, 2018.
Increasing the measure calculation and public display periods from
1 to 2 years of data increases the number of SNFs with enough data
adequate for public reporting for the Medicare Spending Per
Beneficiary-PAC SNF QRP measure from 86 percent (based on 2016 Medicare
FFS claims data) to 95 percent (based on 2015 through 2016 Medicare FFS
claims data), and for the Discharge to Community-PAC SNF QRP measure
from 83 percent (based on 2016 Medicare FFS claims data) to 94 percent
(based on 2015 through 2016 Medicare FFS claims data). Increasing
measure public display periods to 2 years also aligns with the public
display periods of these measures in the IRF QRP and LTCH QRP.
We also proposed to begin publicly displaying data in CY 2020, or
as soon thereafter as is operationally feasible, on the following four
assessment-based measures: (1) Application of IRF Functional Outcome
Measure: Change in Self-Care Score for Medical Rehabilitation Patients
(NQF #2633) (Change in Self-Care Score); (2) Application of IRF
Functional Outcome Measure: Change in Mobility Score for Medical
Rehabilitation Patients (NQF #2634) (Change in Mobility Score); (3)
Application of IRF Functional Outcome Measure: Discharge Self-Care
Score for Medical Rehabilitation Patients (NQF #2635) (Discharge Self-
Care Score); and (4) Application of IRF Functional Outcome Measure:
Discharge Mobility Score for Medical Rehabilitation Patients (NQF
#2636) (Discharge Mobility Score). SNFs are required to submit data on
these four assessment-based measures with respect to admissions as well
as discharges occurring on or after October 1, 2018. We proposed to
display data for these assessment-based measures based on 4 rolling
quarters of data, initially using 4 quarters of discharges from January
1, 2019 through December 31, 2019. To ensure the statistical
reliability of the measure rates for these four assessment-based
measures, we also proposed that if a SNF has fewer than 20 eligible
cases during any 4 consecutive rolling quarters of data that we are
displaying for any of these measures, then we would note in our public
display of that measure that with respect to that SNF, the number of
cases/resident stays is too small to publicly report.
Comment: One commenter supported the proposal to publicly display
the four SNF functional outcome measures on the SNF Compare website in
CY 2020.
Response: We thank the commenter for the support.
Comment: Several commenters, including MedPAC, supported increasing
the number of years of data used to calculate the Medicare Spending per
Beneficiary-PAC SNF QRP and Discharge to Community-PAC SNF QRP measures
from 1 year to 2 years to increase the number of providers that can be
included in public reporting and also to align the measurement period
with that used in other PAC settings. One commenter was concerned that
increasing the measurement period to 2 years would penalize facilities
that showed improvement in a one-year period, as the data would be
aggregated across 2 years. Two commenters agreed with increasing the
measurement period from 1 to 2 years but questioned the usefulness of a
measure that they stated required a significant adjustment in
collection methods to acquire data necessary to calculate a rate.
Response: We thank MedPAC and the other commenters for their
support to increase the number of years of data used to calculate the
Medicare Spending per Beneficiary-PAC SNF QRP measure and Discharge to
Community-PAC SNF QRP measure from 1 to 2 years. We appreciate the
commenter's concern about the impact of aggregating data across 2 years
on the ability to demonstrate improvement in a 1-year period; however,
we believe that the benefit of increasing the number of SNFs in public
reporting outweighs the expressed concern associated with increasing
the measurement period to 2 years because it would provide more
information to consumers who may have a limited number of SNFs in their
area. Further, improvements in 1-year period will be included in the 2-
year data, so providers' efforts to improve can still be reflected in
their measure scores. The proposed change will also align with the
measurement period of the three claims-based measures (Medicare
Spending per Beneficiary, Discharge to Community, and Potentially
Preventable Readmissions) across the IRF, LTCH, and SNF QRPs.
Comment: MedPAC suggested that if CMS increases the measurement
period for the Medicare Spending per Beneficiary PAC SNF QRP measure
and Discharge to Community PAC SNF QRP measure to 2 years, CMS could
consider giving more weight to the most recent performance year. MedPAC
also suggested that CMS reconsider the approach to establishing minimum
counts of episodes for public reporting of the Medicare Spending per
Beneficiary-PAC SNF QRP measure to ensure accurate representation of a
provider's performance.
Response: We thank MedPAC for its suggestion to consider greater
weighting of the most recent year of data and to reconsider the
approach to establishing minimum counts of episodes for public
reporting. We will consider testing these suggestions in the future.
Comment: A commenter noted the importance of understanding the
[[Page 39272]]
relationship between the Medicare Spending per Beneficiary-PAC SNF QRP
measure, quality, and beneficiary out-of-pocket expenses. The commenter
also noted the importance of educating consumers on this measure. The
commenter suggested that CMS analyze these relationships further and
define a strategy for interpreting the results before making the
measure results public. Another commenter noted that facilities should
not be penalized for decisions made by physicians that are beyond
providers' control.
Response: We thank the commenters for the suggestions for
additional analyses on the relationship between the Medicare Spending
per Beneficiary-PAC SNF QRP measure, quality, and out-of-pocket
spending. We will consider analyses on these topics in the future.
Regarding beneficiary education for interpreting results, we will
continue to work to develop language to support beneficiary
understanding of the measures in public reporting. Regarding the
comment on facility penalty for physician decision-making, the measure
is intended to promote care coordination and improve efficiency by
creating a continuum of accountability between Medicare providers.
Comment: Some commenters suggested that the public reporting of the
SNF functional outcome measures: (1) Change in Self-Care Score; (2)
Change in Mobility Score; (3) Discharge Self-Care Score; and (4)
Discharge Mobility Score, on the SNF Compare website be delayed beyond
CY 2020. One commenter suggested that the reporting be delayed until
additional measures that address the maintenance of functional
abilities are also developed and reported alongside the functional
improvement measures and also encouraged the development of measures
related to other nursing goals. Other commenters suggested that CMS
reconsider publicly reporting the SNF functional quality measures in CY
2020 if these measures do not receive NQF endorsement prior to public
display.
Response: We thank the commenters for their suggestions. We
addressed the importance of measuring functional maintenance for SNF
residents in the FY 2018 SNF PPS final rule (82 FR 36588). We interpret
the commenter's recommendation of ``at least one nursing goals
measure'' to refer to the development of new measures relating to
functional status for SNF residents. We support future quality
measurement work that will address the development of other measures
that focus on maintaining function and the slowing of functional
decline. We agree that the NQF endorsement process is an important part
of measure development. The four functional outcome quality measures
that we proposed to publicly report are NQF-endorsed for the IRF
setting, and we plan to submit these four assessment-based measures to
NQF for endorsement consideration in the SNF setting as soon as
feasible.
After consideration of public comments we received, we are
finalizing our proposal, to increase the number of years of data used
to calculate the Medicare Spending per Beneficiary-PAC SNF QRP measure
and Discharge to Community-PAC SNF QRP measure for purposes of public
display from 1 to 2 years, starting in CY 2019 or as soon thereafter as
operationally feasible. We are also finalizing our proposal to begin
publicly displaying data in CY 2020, or as soon thereafter as is
operationally feasible, on the following four assessment-based
measures: (1) Application of IRF Functional Outcome Measure: Change in
Self-Care Score for Medical Rehabilitation Patients (NQF #2633); (2)
Application of IRF Functional Outcome Measure: Change in Mobility Score
for Medical Rehabilitation Patients (NQF #2634); (3) Application of IRF
Functional Outcome Measure: Discharge Self-Care Score for Medical
Rehabilitation Patients (NQF #2635); and (4) Application of IRF
Functional Outcome Measure: Discharge Mobility Score for Medical
Rehabilitation Patients (NQF #2636).
C. Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP)
1. Background
Section 215(b) of the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93) authorized the SNF VBP Program (the
``Program'') by adding section 1888(h) to the Act. As a prerequisite to
implementing the SNF VBP Program, in the FY 2016 SNF PPS final rule (80
FR 46409 through 46426), we adopted an all-cause, all-condition
hospital readmission measure, as required by section 1888(g)(1) of the
Act. In the FY 2017 SNF PPS final rule (81 FR 51986 through 52009), we
adopted an all-condition, risk-adjusted potentially preventable
hospital readmission measure for SNFs, as required by section
1888(g)(2) of the Act. In the FY 2018 SNF PPS final rule (82 FR 36608
through 36623), we adopted additional policies for the Program,
including an exchange function methodology for disbursing value-based
incentive payments.
Section 1888(h)(1)(B) of the Act requires that the SNF VBP Program
apply to payments for services furnished on or after October 1, 2018.
The SNF VBP Program applies to freestanding SNFs, SNFs affiliated with
acute care facilities, and all non-CAH swing-bed rural hospitals. We
believe the implementation of the SNF VBP Program is an important step
towards transforming how care is paid for, moving increasingly towards
rewarding better value, outcomes, and innovations instead of merely
rewarding volume.
For additional background information on the SNF VBP Program,
including an overview of the SNF VBP Report to Congress and a summary
of the Program's statutory requirements, we refer readers to the FY
2016 SNF PPS final rule (80 FR 46409 through 46410). We also refer
readers to the FY 2017 SNF PPS final rule (81 FR 51986 through 52009)
for discussion of the policies that we adopted related to the
potentially preventable hospital readmission measure, scoring, and
other topics. Finally, we refer readers to the FY 2018 SNF PPS final
rule (82 FR 36608 through 36623) for discussions of the policies that
we adopted related to value-based incentive payments, the exchange
function, and other topics.
We proposed additional requirements for the FY 2021 SNF VBP Program
in the FY 2019 SNF PPS proposed rule (83 FR 21084 through 21089). We
received several general comments on the SNF VBP Program.
Comment: One commenter supported our goal of reducing preventable
hospital readmissions, noting that those readmissions increase costs
for the Medicare program, significantly affect beneficiaries, and
increase the likelihood of medical errors related to care coordination.
Response: We thank the commenter for this support.
Comment: A commenter suggested that we consider developing an
integrated approach that provides incentives to SNFs to accept more
medically complex patients and promotes readmission prevention. The
commenter suggested that, while the PDPM and SNF VBP Programs are
authorized separately, integrating them might be helpful to that end,
and could include payments for telemedicine, post-discharge care
coordination, and training on readmission prevention protocols and
refinements to Interrupted Stay policies. The commenter stated that
readmissions prevention strategies can be very effective at saving
Medicare spending and improving the patient experience, but can also
require initial investments in technology and staff training.
Response: We agree that readmission prevention strategies can be
effective at
[[Page 39273]]
saving Medicare spending and improving the patient experience. At this
time, we do not believe it is possible to integrate the PDPM and SNF
VBP Program given their separate authorities and purposes. However, we
will continue to monitor the effects of the SNF VBP Program and the
case-mix classification methodology in the SNF prospective payment
system, including the PDPM.
Comment: One commenter encouraged us to make public as much SNF VBP
data as possible on Nursing Home Compare and data.medicare.gov,
including individual facilities' baseline and performance period
readmissions rates, achievement and improvement points, performance
scores, rankings, and value-based incentive payment percentages. The
commenter noted that CMS has provided most of this type of information
for other programs, and that the public should expect the same level of
transparency from SNF VBP.
Response: We agree with the comment and intend to be as transparent
as possible in order to inform consumer decision-making, quality
improvement initiatives, and high quality patient care. As required by
section 1888(h)(9) of the Act, we will publish facility performance
information, including SNF performance scores and rankings, the range
of SNF performance scores, the number of SNFs receiving value-based
incentive payments, and the range and total amounts of those payments,
on the Nursing Home Compare website.
Comment: One commenter requested that we ensure that specialty
populations such as children, patients with HIV/AIDS, ventilator-
dependent patients, and those with Huntington's disease or other
neurodegenerative disorders, do not experience unintended negative
results based on the SNF VBP Program's incentives.
Response: We monitor numerous aspects of the SNF VBP Program,
including trends in measure rates, SNF performance scores, and starting
with FY 2019, value-based incentive payment percentages and their
effects on SNFs' care quality and on beneficiaries' access to care. We
understand the commenter's concerns about specialty patient
populations, and we will continue working to ensure that such
populations do not experience unintended consequences because of the
SNF VBP Program.
2. Measures
For background on the measures we have adopted for the SNF VBP
Program, we refer readers to the FY 2016 SNF PPS final rule (80 FR
46419), where we finalized the Skilled Nursing Facility 30-Day All-
Cause Readmission Measure (SNFRM) (NQF #2510) that we are currently
using for the SNF VBP Program. We also refer readers to the FY 2017 SNF
PPS final rule (81 FR 51987 through 51995), where we finalized the
Skilled Nursing Facility 30-Day Potentially Preventable Readmission
Measure (SNFPPR) that we will use for the SNF VBP Program instead of
the SNFRM as soon as practicable, as required by statute.
We did not propose any changes to the Program's measures. However,
we received several comments on the Program's measures.
Comment: One commenter requested that we announce when we will
transition the SNF VBP Program to a measure of potentially preventable
readmissions rather than the current all-cause readmissions measure.
One commenter recommended that we not replace the SNFRM with the SNFPPR
before FY 2021 to allow SNFs time to adjust to the SNFRM and other
measures of readmissions. Another commenter encouraged us to transition
the Program to the measure of potentially preventable readmissions,
stating that the PPR will exclude planned readmissions that are not
considered a negative outcome, and therefore, should not be counted
against SNFs. Other commenters urged us to seek NQF endorsement and
input from the Measure Applications Partnership as soon as possible on
the SNFPPR, and requested that we provide a timeline for when we will
replace the all-cause measure with the SNFPPR. Another commenter
requested that we consider standardizing and consolidating various SNF
hospitalization measures used in Medicare to focus SNFs' quality
improvement efforts. The commenter noted that state initiatives may
also have similar measures based on different data, and that the
multitude of hospitalization measures may be confusing for consumers
and may dilute provider improvement efforts.
Response: We sought input from the MAP on the SNFPPR prior to
proposing it for adoption in the SNF VBP. The MAP published its views
in a February 2016 report, as we described in the FY 2017 SNF PPS final
rule (81 FR 51989 through 51990). In that report,\8\ MAP noted the
statutory requirement that we specify a measure of potentially
preventable readmissions for the SNF VBP Program, and explained support
for the importance of the measure and its acknowledgement that
``readmission for the SNF setting is not an occasional occurrence.''
MAP's report also noted public commenters' input, including general
support for the recommendation to ``encourage continued development''
of the SNFPPR and some concerns about the measure's specifications and
MAP's making a recommendation on a measure that is not fully tested.
Regarding submission of the SNFPPR for consensus endorsement, we
currently plan to submit the measure for NQF endorsement in 2019 upon
completion of additional testing. We plan to propose transitioning to
this measure after the completion of the endorsement process.
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\8\ Available at https://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
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We also acknowledge the commenter's concern about the number of
hospitalization measures in Medicare and in other quality programs,
including those used by the states. We will consider how we might
further streamline our quality programs, particularly under the
Meaningful Measures Initiative. However, we note that all
rehospitalization measures share the same underlying care focus--that
is, avoiding rehospitalizations--even if they vary somewhat in the
specifics of which hospitalizations they measure. We continue to
believe that SNFs working to improve care quality and minimize
rehospitalizations for their patients will perform well on
hospitalization measures.
We continue to determine when it is practicable to transition the
Program to the measure of potentially preventable readmissions, and we
will propose that transition in future rulemaking, which we believe
will provide sufficient notice to SNFs about the quality measure that
will form the basis for the SNF VBP Program. We intend to take all of
the views expressed by public commenters into account when we make that
decision, as well as the operational necessities of the Program (such
as the time needed to calculate measure rates on the SNFPPR and how
that time interacts with the Program's performance and baseline
periods). However, we would like to clarify that the SNFRM currently
excludes certain planned readmissions.
Comment: One commenter stated that the SNF VBP Program should
consist of more than just one hospital readmissions measure, and
encouraged us to work with Congress to include additional measures in
the Program, potentially including those currently displayed on Nursing
Home Compare, were part of the SNF VBP demonstration, or are part of
the SNF QRP. The commenter also specifically
[[Page 39274]]
suggested measures including turnover as a percentage of nursing staff,
total CNA hours per patient day, and total licensed nursing hours per
patient day, noting that higher staffing levels are correlated with
higher quality of care outcomes.
Response: We thank the commenter for these suggestions. As the
commenter noted, any changes to expand the SNF VBP Program's measure
set would require Congressional action.
Comment: One commenter expressed concern about the data elements
that SNFs must document to track their performance on the SNFRM, noting
that they are different than those used for the CMS Star Ratings. The
commenter also urged us to better align the measures between the SNF
QRP and SNF VBP Programs, stating that SNFs want harmonization in what
they are required to collect, document, and extract for performance
tracking and improvement purposes.
Response: SNFs may choose to track readmissions to the hospitals as
part of their quality improvement efforts, and we note that the
measures that we have specified for the SNF VBP program impose no data
collection requirements on SNFs. Additionally, while we understand the
potential benefits of quality measure alignment between the SNF QRP and
SNF VBP Programs, we do not believe that this type of alignment meets
the SNF VBP Program's needs at this time. While we generally agree that
aligning measures across programs is ideal, we hesitate to do so when
it is inappropriate to the programs and does not align with statutory
direction. In this case, aligning with the SNF QRP readmission measure
would require the SNF VBP Program to ignore readmissions that occur
during the SNF stay, and we believe this is inappropriate to a value-
based purchasing program intended to reduce readmissions among SNF
patients in accordance with the statute. Likewise, the SNF QRP
readmission measure must follow a statutory requirement to align with
readmission measures in other post-acute QRPs that are not compatible
with the needs of the SNF VBP program.
We thank the commenters for their feedback on SNF VBP measures.
a. Accounting for Social Risk Factors in the SNF VBP Program
In the FY 2018 SNF PPS final rule (82 FR 36611 through 36613), we
discussed the importance of improving beneficiary outcomes including
reducing health disparities. We also discussed our commitment to
ensuring that medically complex patients, as well as those with social
risk factors, receive excellent care. We discussed how studies show
that social risk factors, such as being near or below the poverty level
as determined by HHS, belonging to a racial or ethnic minority group,
or living with a disability, can be associated with poor health
outcomes and how some of this disparity is related to the quality of
health care.\9\ Among our core objectives, we aim to improve health
outcomes, attain health equity for all beneficiaries, and ensure that
complex patients, as well as those with social risk factors, receive
excellent care. Within this context, reports by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) and the National
Academy of Medicine have examined the influence of social risk factors
in our value-based purchasing programs.\10\ As we noted in the FY 2018
SNF PPS final rule (82 FR 36611), ASPE's report to Congress found that,
in the context of value-based purchasing programs, dual eligibility for
Medicare and Medicaid was the most powerful predictor of poor health
care outcomes among those social risk factors that they examined and
tested. In addition, as noted in the FY 2018 SNF PPS final rule, the
National Quality Forum (NQF) undertook a 2-year trial period in which
certain new measures and measures undergoing maintenance review have
been assessed to determine if risk adjustment for social risk factors
is appropriate for these measures.\11\ The trial period ended in April
2017 and a final report is available at https://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a
conceptual basis for adjustment generally did not demonstrate an
empirical relationship'' between social risk factors and the outcomes
measured. This discrepancy may be explained in part by the methods used
for adjustment and the limited availability of robust data on social
risk factors. NQF has extended the socioeconomic status (SES)
trial,\12\ allowing further examination of social risk factors in
outcome measures.
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\9\ See, for example United States Department of Health and
Human Services. ``Healthy People 2020: Disparities. 2014.''
Available at https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences,
Engineering, and Medicine. Accounting for Social Risk Factors in
Medicare Payment: Identifying Social Risk Factors. Washington, DC:
National Academies of Sciences, Engineering, and Medicine 2016.
\10\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance Under Medicare's
Value-Based Purchasing Programs.'' December 2016. Available at
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\11\ Available at https://www.qualityforum.org/SES_Trial_Period.aspx.
\12\ Available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id& ItemID=86357.
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In the FY 2018/CY 2018 proposed rules for our quality reporting and
value-based purchasing programs, we solicited feedback on which social
risk factors provide the most valuable information to stakeholders and
the methodology for illuminating differences in outcomes rates among
patient groups within a provider that would also allow for a comparison
of those differences, or disparities, across providers. Feedback we
received across our quality reporting programs included encouraging CMS
to explore whether factors could be used to stratify or risk adjust the
measures (beyond dual eligibility); to consider the full range of
differences in patient backgrounds that might affect outcomes; to
explore risk adjustment approaches; and to offer careful consideration
of what type of information display would be most useful to the public.
We also sought public comment on confidential reporting and future
public reporting of some of our measures stratified by patient dual
eligibility. In general, commenters noted that stratified measures
could serve as tools for hospitals to identify gaps in outcomes for
different groups of patients, improve the quality of health care for
all patients, and empower consumers to make informed decisions about
health care. Commenters encouraged us to stratify measures by other
social risk factors such as age, income, and educational attainment.
With regard to value-based purchasing programs, commenters also
cautioned CMS to balance fair and equitable payment while avoiding
payment penalties that mask health disparities, or discouraging the
provision of care to more medically complex patients. Commenters also
noted that value-based payment program measure selection, domain
weighting, performance scoring, and payment methodology must account
for social risk.
We stated in the FY 2019 SNF VBP PPS proposed rule that as a next
step, we are considering options to improve health disparities among
patient groups within and across hospitals, SNFs, and other health care
providers by increasing the transparency of disparities as shown by
quality measures. We also stated that we are considering how this work
applies to other CMS quality programs in the future. We refer readers
to the FY 2018
[[Page 39275]]
IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details,
where we discuss the potential stratification of certain Hospital
Inpatient Quality Reporting Program outcome measures. Furthermore, we
stated that we continue to consider options to address equity and
disparities in our value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key
stakeholders on this important issue to identify policy solutions that
achieve the goals of attaining health equity for all beneficiaries and
minimizing unintended consequences.
We received several comments on our discussion of social risk
factors.
Comment: One commenter suggested that we consider adjusting for
social risk factors through peer grouping to avoid masking disparities
in clinical performance. The commenter also suggested that we target
technical assistance resources to low-performing providers and support
research to reduce measurement bias. Another commenter was concerned
that we had not yet adjusted the SNF Readmission Measure based on
socioeconomic factors. The commenter expressed concern that we would
score SNFs unfairly due to more challenging case mixes, and stated that
we must adjust readmission scores to avoid unfair payment penalties for
those SNFs serving patient populations with lower socioeconomic status.
One commenter acknowledged that we are required by statute to adopt a
measure of all-cause readmissions, but expressed concerns about the
SNFRM due to its lack of risk adjustment for socioeconomic status, its
lacking focus on preventable readmissions, and some design elements.
The commenter encouraged us to create a socioeconomic status risk
adjustment for this measure, noting that SNFs in underserved areas
predominantly caring for low-income, dual-eligible residents may be
penalized by measures of all-cause readmissions. Another commenter
urged us to include risk adjustment for socioeconomic status for any
readmission measures adopted under the SNF VBP Program. The commenter
concurred with the December 2016 Report to Congress on Social Risk
Factors' conclusion that social risk factors are essential determinants
of health and stated that the IMPACT Act provides CMS with a wealth of
patient-specific data that it can use to develop additional risk
adjustment policies. The commenter encouraged us to use those data to
adjust SNF VBP measures and provide incentives to SNFs caring for
patients with social risk factors.
Response: We thank the commenters for these suggestions and will
take them into account as we develop additional policies on social risk
factors in the future. However, in response to the commenter who
expressed concern about the current SNF Readmission Measure, we note
that the SNF Readmission Measure includes the following case-mix
adjustments that we believe promote fairness in the application of
financial penalties: Demographic characteristics (age and sex),
principal diagnosis from the Medicare claim corresponding to the prior
proximal hospitalization as categorized by AHRQ's Clinical
Classification Software (CCS) groupings, length of stay during the
patient's prior proximal hospitalization, length of stay in the
intensive care unit (ICU), end-stage renal disease (ESRD) status, the
patient's disability status, the number of prior hospitalizations in
the previous 365 days, system-specific surgical indicators, individual
comorbidities as grouped by Hierarchical Condition Categories (HCCs) or
other comorbidity indices, and a variable counting the number of
comorbidities if the patient had more than two HCCs. We refer readers
to the FY 2016 SNF PPS final rule (80 FR 46411 through 46419) for
additional technical details on the SNFRM.
Comment: One commenter encouraged us to continue using findings
from the NQF Sociodemographic Status trial to inform our efforts to
address equity and disparities in our VBP Programs, but recommended
that we not add SES covariates to the SNFRM risk adjustment model as
that action may create biases in reporting, undermine system-based
approaches to providing high quality care, and create access to care
problems.
Response: We remain concerned about the possibility that additional
risk adjustment may mask important performance differences for
providers and suppliers that treat patients with additional
comorbidities or complications, and we will continue studying the
issue. We intend to monitor NQF's ongoing work on this topic carefully.
Comment: One commenter agreed with recommendations to incorporate
social risk factors in risk adjustment, but was not sure about which
risk characteristics are available in the Medicare eligibility files
and whether those characteristics have been evaluated independently.
The commenter also suggested that we coordinate research efforts with
states that may already be conducting work in this area. One commenter
urged us to incorporate risk adjustment for sociodemographic and
socioeconomic status into SNF VBP measures, but expressed support for
the continued use of unadjusted data for measures related to items that
are within the SNF's control. The commenter urged us to make unadjusted
performance measure data available to the public to ensure that
analysis of health care disparities can continue, and until risk-
adjusted measures are available, to report stratified measure rates to
the public. The commenter also expressed support for alternative
payment mechanisms that account for the complexities of extremely
disadvantaged patients, and called on us to monitor the effects of our
quality improvement programs carefully. Another commenter supported our
continued evaluation of social determinants of health, including
providers' commitments to caring for the Medicaid population, and their
impact on our payment systems. The commenter encouraged us to ensure
that our payment methodologies are updated consistently to account for
these factors and maintain equitable access to care.
Response: We intend to continue working with states and other
stakeholders to the greatest extent possible to understand the
challenges associated with additional risk adjustment for socioeconomic
and sociodemographic status in quality measurement programs, including
assessing the appropriateness of incorporating specific risk factors in
the risk adjustment models. That work includes identifying appropriate
data sources for social risk factors, and we will consider the
commenter's point about the Medicare eligibility files as a potential
data source.
We agree with the commenters that studying health care disparities
is critically important for the health care system, and we will
continue to do so. We will also take that point under consideration as
we consider social risk factors adjustment policies for the SNF VBP
Program in the future. We will continue monitoring the SNF VBP Program
to ensure that Medicare beneficiaries maintain access to needed SNF
care.
We thank the commenters for this feedback, and will take it account
as we consider the appropriateness of accounting for social risk
factors in the SNF VBP Program.
3. Performance Standards
a. FY 2021 Performance Standards
We refer readers to the FY 2017 SNF PPS final rule (81 FR 51995
through
[[Page 39276]]
51998) for a summary of the statutory provisions governing performance
standards under the SNF VBP Program and our finalized performance
standards policy, as well as the numerical values for the achievement
threshold and benchmark for the FY 2019 program year. We also responded
to public comments on these policies in that final rule.
We published the final numerical values for the FY 2020 performance
standards in the FY 2018 SNF PPS final rule (82 FR 36613), and for
reference, we are displaying those values again in Table 40.
Table 40--Final 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 will continue to use the achievement threshold and benchmark as
previously finalized in the FY 2018 SNF PPS final rule. However, due to
timing constraints associated with the compilation of the FY 2017
MedPAR file to include 3 months of data following the last discharge
date, we were unable to provide estimated numerical values for the FY
2021 Program year's performance standards in the proposed rule. As
discussed further below, we proposed to adopt FY 2017 as the baseline
period for the FY 2021 program year. While we did not expect either the
achievement threshold or benchmark to change significantly from what
was finalized for the FY 2020 Program year, we stated our intent to
publish the final numerical values for the performance standards based
on the FY 2017 baseline period in the FY 2019 SNF PPS final rule.
We welcomed public comment on this approach.
Comment: One commenter urged us to score SNFs on achievement only,
stating that Medicare's quality programs should reward providers based
on clear, absolute, and prospectively set performance targets.
Response: While we appreciate this suggestion, we note that we are
required by section 1888(h)(3)(B) of the Act to establish performance
standards that include levels of achievement and improvement, and to
use to the higher of either improvement or achievement when calculating
the SNF performance score.
Comment: One commenter stated its understanding of the timing
constraints that we discussed with respect to the MedPAR file for
performance standards calculations, and reiterated its prior support
for the Program's switch to fiscal year instead of calendar year
performance periods.
Response: We appreciate the continued support for the policy we
finalized in the FY 2018 SNF PPS final rule (82 FR 36613 through 36614)
to change the SNF VBP Program's performance and baseline periods from
calendar years to fiscal years. Additionally, as we note further below,
we are finalizing FY 2019 (October 1, 2018 through September 30, 2019)
as the performance period for the FY 2021 SNF VBP Program year.
Comment: One commenter supported our efforts to measure improvement
and encouraged us to reward providers that consistently achieve high
performance under the SNF VBP Program.
Response: We believe that the performance standards that we are
adopting, which include levels of achievement and improvement as
required by the SNF VBP Program's statute, continue to offer
opportunities for us to recognize both SNFs that achieve high
performance and those SNFs that improve over time.
After consideration of the public comments, we are finalizing the
numerical values for the FY 2021 SNF VBP Program based on the FY 2017
baseline period. Those values follow below in Table 41.
Table 41--Final FY 2021 SNF VBP Program Performance Standards
----------------------------------------------------------------------------------------------------------------
Achievement
Measure ID Measure description threshold Benchmark
----------------------------------------------------------------------------------------------------------------
SNFRM................................ SNF 30-Day All-Cause Readmission 0.79476 0.83212
Measure (NQF #2510).
----------------------------------------------------------------------------------------------------------------
b. Correction of Performance Standard Numerical Values in Cases of
Errors
As noted previously, section 1888(h)(3)(C) of the Act requires that
we establish and announce the performance standards for a fiscal year
not later than 60 days prior to the performance period for the fiscal
year involved. However, we currently do not have a policy that would
address the situation where, subsequent to publishing the numerical
values for the finalized performance standards for a program year, we
discover an error that affects those numerical values. Examples of the
types of errors that we could subsequently discover are inaccurate
variables on Medicare claims, programming errors, excluding data should
have been included in the performance standards calculations, and other
technical errors that resulted in inaccurate achievement threshold and
benchmark calculations. While we do not have reason to believe that the
SNF VBP Program has previously published inaccurate numerical values
for performance standards, in the FY 2019 SNF PPS proposed rule (83 FR
21086), we stated our concern about the possibility that we would
discover an error in the future and have no ability to correct the
numerical values.
We are aware that SNFs rely on the performance standards that we
publicly display in order to target quality improvement efforts, and we
do not believe that it would be fair to SNFs to repeatedly update our
finalized performance standards if we were to identify multiple errors.
In order to balance the need of SNFs to know what performance standards
they will be held accountable to for a SNF VBP program year with our
obligation to provide SNFs with the most accurate performance standards
that we can based on the data available at the time, we proposed that
if we discover an error in the calculations subsequent to having
published the numerical values for the performance standards for a
program year, we would update the numerical values to correct the
error. We also
[[Page 39277]]
proposed that we would only update the numerical values one time, even
if we subsequently identified a second error, because we believe that a
one-time correction would allow us to incorporate new information into
the calculations without subjecting SNFs to multiple updates. Any
update we would make to the numerical values based on a calculation
error would be announced via the CMS website, listservs, and other
available channels to ensure that SNFs are made fully aware of the
update.
We welcomed public comments on this proposal.
Comment: One commenter supported our proposal to adopt correction
authority for performance standards and agreed that making multiple
changes to the performance standards in a given program year would be
difficult for SNFs' quality improvement efforts. The commenter also
urged us to be transparent if we find additional technical errors.
Response: We thank the commenter for the support, and we intend to
be as transparent as possible if we identify any errors in the
calculation of the numerical values of the SNF VBP Program's
performance standards.
After consideration of the public comments we have received, we are
finalizing our policy to correct performance standard numerical values
in cases of errors as proposed.
4. FY 2021 Performance Period and Baseline Period and for Subsequent
Years
a. Background
We refer readers to the FY 2016 SNF PPS final rule (80 FR 46422)
for a discussion of our considerations for determining performance
periods under the SNF VBP Program. Based on those considerations, as
well as public comment, we adopted CY 2017 as the performance period
for the FY 2019 SNF VBP Program, with a corresponding baseline period
of CY 2015.
Additionally, in the FY 2018 SNF PPS final rule (82 FR 36613
through 36614), we adopted FY 2018 as the performance period for the FY
2020 SNF VBP Program, with a corresponding baseline period of FY 2016.
We refer readers to that rule for a discussion of the need to shift the
Program's measurement periods from the calendar year to the fiscal
year.
b. FY 2021 Performance and Baseline Periods
As we discussed with respect to the FY 2019 and FY 2020 SNF VBP
Program years, we continue to believe that a 12-month duration for the
performance and baseline period is the most appropriate for the SNF VBP
Program. Therefore, we proposed to adopt FY 2019 (October 1, 2018
through September 30, 2019) as the performance period for the FY 2021
SNF VBP Program year. We also proposed to adopt FY 2017 (October 1,
2016 through September 30, 2017) hospital discharges as the baseline
period for the FY 2021 SNF VBP Program year.
We welcomed public comment on these proposals.
Comment: One commenter expressed concern about our proposal to use
FY 2019 as the performance period for the FY 2021 SNF VBP Program year,
stating that SNFs need more time to improve their data collection,
reporting, and evaluation efforts. The commenter requested that we
align our measures with the SNF QRP and other quality programs, which
will allow SNFs additional time for performance tracking and
improvement activities. The commenter also requested that we provide
SNFs with more timely performance feedback to help them identify areas
for improvement efforts. One commenter expressed concern about the
proposed performance period, stating that SNFs do not believe they are
ready for FY 2019 to be used as the performance period and indicated
that the collection and reporting of quality measures is a significant
administrative burden. The commenter urged us to move to an automated
system to reduce the reporting burden on SNFs and requested that we
provide SNFs with timely performance feedback that they can use to
identify areas where they need to focus their improvement efforts.
Response: We would like to clarify for the commenter that the SNF
VBP Program's measure is calculated based on hospital claims, and
therefore, does not require data collection or impose any reporting
burden on SNFs, though SNFs may choose to track readmissions to the
hospital for their patients as part of their care coordination and
quality improvement efforts. We do not believe that SNFs need
additional time to track readmissions to the hospital for their
patients or to undertake quality improvement efforts to minimize those
readmissions because SNFs have had ample notice about the SNF VBP
Program's operations and its focus on measures of hospital
readmissions. We will, however, strive to provide as much timely
information to SNFs as possible on their measured performance, but we
note that the measure that we have specified for the Program includes
significant calculations, including detailed risk adjustment, that
complicates our intention to provide feedback more promptly than on a
quarterly basis to SNFs.
Comment: One commenter supported our performance and baseline
period proposals and agreed that 12-month periods are appropriate for
both the SNFRM and the SNFPPR.
Response: We thank the commenter for the support.
After consideration of the public comments that we received, we are
finalizing the performance period and baseline period for FY 2021 as
proposed.
c. Performance Periods and Baseline Periods for Subsequent Program
Years
As we have described in previous rules (see, for example, the FY
2016 SNF PPS final rule, 80 FR 46422), we strive to link performance
furnished by SNFs as closely as possible to the program year to ensure
clear connections between quality measurement and value-based payment.
We also strive to measure performance using a sufficiently reliable
population of patients that broadly represent the total care provided
by SNFs.
Therefore, we proposed that beginning with the FY 2022 program year
and for subsequent program years, we would adopt for each program year,
a performance period that is the 1-year period following the
performance period for the previous program year. We also proposed that
beginning with the FY 2022 program year and for subsequent program
years, we would adopt for each program year a baseline period that is
the 1-year period following the baseline period for the previous year.
Under this policy, the performance period for the FY 2022 program year
would be FY 2020 (the 1-year period following the proposed FY 2021
performance period of FY 2019), and the baseline period for the FY 2022
program year would be FY 2018 (the 1-year period following the proposed
FY 2021 baseline period of FY 2017). We believe adopting this policy
will provide SNFs with certainty about the performance and baseline
periods during which their performance will be assessed for future
program years.
We welcomed public comments on this proposal.
Comment: One commenter supported our proposal to adopt performance
and baseline periods automatically for subsequent program years.
Response: We thank the commenter for the support.
After consideration of the public comments that we have received,
we are finalizing our policy to adopt performance periods and baseline
[[Page 39278]]
periods for subsequent program years as proposed.
5. SNF VBP Performance Scoring
a. Background
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52000
through 52005) for a detailed discussion of the scoring methodology
that we have finalized for the Program, along with responses to public
comments on our policies and examples of scoring calculations. We also
refer readers to the FY 2018 SNF PPS final rule (82 FR 36614 through
36616) for discussion of the rounding policy we adopted, our request
for comments on SNFs with zero readmissions, and our request for
comments on a potential extraordinary circumstances exception policy.
b. Scoring Policy for SNFs Without Sufficient Baseline Period Data
In some cases, a SNF will not have sufficient baseline period data
available for scoring for a Program year, whether due to the SNF not
being open during the baseline period, only being open for a small
portion of the baseline period, or other reasons (such as receiving an
extraordinary circumstance exception, which we finalize below). The
availability of baseline data for each SNF is an integral component of
our scoring methodology, and we are concerned that the absence of
sufficient baseline data for a SNF will preclude us from being able to
score that SNF on improvement for a program year. As discussed further
below, with respect to the proposed scoring adjustment for a SNF
without sufficient data in the performance period to create a reliable
SNF performance score, we are concerned that measuring SNFs with fewer
than 25 eligible stays (or index SNF stays that would be included in
the calculation of the SNF readmission measure) during the baseline
period may result in unreliable improvement scores, and as a result,
unreliable SNF performance scores. We considered policy options to
address this issue.
We continue to believe it is important to compare SNF performance
during the same periods to control for factors that may not be
attributable to the SNF, such as increased patient case-mix acuity
during colder weather periods when influenza, pneumonia, and other
seasonal conditions and illnesses are historically more prevalent in
the beneficiary population. Using a 12-month performance and baseline
period for all SNFs ensures that, to the greatest extent possible,
differences in performance can be attributed to the SNF's care quality
rather than to exogenous factors.
Additionally, because we have proposed that for FY 2021 and future
Program years, the start of the performance period for a Program year
would begin exactly 12-months after the end of the baseline period for
that Program year and there would not be sufficient time to compute
risk-standardized readmission rates from another 12-month baseline
period before the performance period if a SNF had insufficient data
during the baseline period. For the FY 2021 Program, for example, the
proposed baseline period would conclude at the end of FY 2017
(September 30, 2017) and the proposed performance period would begin on
the first day of FY 2019 (October 1, 2018). We also do not believe it
would be equitable to score SNFs without sufficient baseline period
data using data from a different period. Doing so would, in our view,
impede our ability to compare SNFs' performance on the Program's
quality measure fairly, as additional factors that may affect SNFs'
care could arise when comparing performance during different time
periods. Therefore, we have concluded that it is not operationally
feasible or equitable to use different baseline periods for purposes of
awarding improvement scores to SNFs for a Program year.
We believe that SNFs without sufficient data from a single baseline
period, which we would define for this purpose as SNFs with fewer than
25 eligible stays during the baseline period for a fiscal year based on
an analysis of Pearson correlation coefficients at various denominator
counts, should not be measured on improvement for that Program year.
Accordingly, we are proposing to score these SNFs based only on their
achievement during the performance period for any Program year for
which they do not have sufficient baseline period data. The analysis of
Pearson correlation coefficients at various denominator counts used in
developing this proposal is available on our website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-VBPs/SNFRM-Reliability-Testing-Memo.pdf.
We proposed to codify this proposal by adding Sec.
413.338(d)(1)(iv). We welcomed public comment on this proposal.
Comment: One commenter agreed with our proposal to not score SNFs
on improvement when they do not have sufficient data during the
baseline period for appropriate year-over-year comparisons. However,
the commenter expressed concern that this approach is different for
this group of low-volume SNFs compared to SNFs that are consistently
low-volume. The commenter expressed continued concerns with the
readmission rates awarded to SNFs when they have low case volume.
Response: We note that the policies that we have proposed for SNFs
without sufficient baseline period data and for low-volume adjustment
are intended to address separate permutations of the SNFRM reliability
issue. In the first case, our intent is to ensure that we compare
sufficiently-reliable SNFRM rates when assessing SNFs' improvement over
time. That assessment relies on SNFRM rates being sufficiently reliable
in both the baseline period and performance period to make the
comparison that we use to award improvement points. In contrast, the
low-volume scoring adjustment proposal focuses on the SNFRM's
reliability during the performance period, which is necessary for both
achievement and improvement scoring. We believe that these proposals
ensure that SNFRM rates are sufficiently reliable for purposes of SNF
VBP scoring, and as the commenter requested, ensure that SNFs are not
scored on the SNFRM when the measure's case count is too low to produce
sufficiently reliable scores.
Comment: One commenter supported our proposal to score SNFs without
sufficient baseline period data on achievement only, agreeing with our
view that measure results in those cases are susceptible to random
variation and may not reliably represent quality in that facility.
Response: We thank the commenter for the support.
After consideration of the public comments that we received, we are
finalizing our scoring policy for SNFs without sufficient baseline
period data as proposed. We are also finalizing our regulation text on
this policy as proposed.
c. SNF VBP Scoring Adjustment for Low-Volume SNFs
In previous rules, we have discussed and sought comment on policies
related to SNFs with zero readmissions during the performance period.
For example, in the FY 2018 SNF PPS rule (82 FR 36615 through 36616),
we sought comment on policies we should consider for SNFs with zero
readmissions during the performance period because under the risk
adjustment and the statistical approach used to calculate the SNFRM,
outlier values are shifted towards the
[[Page 39279]]
mean, especially for smaller SNFs. As a result, SNFs with observed
readmission rates of zero may receive risk-standardized readmission
rates that are greater than zero. We continue to be concerned about the
effects of the SNFRM's risk adjustment and statistical approach on the
scores that we award to SNFs under the Program. We are specifically
concerned that as a result of this approach, the SNFRM is not
sufficiently reliable to generate accurate performance scores for SNFs
with a low number of eligible stays during the performance period. We
would like to ensure that the Program's scoring methodology results in
fair and reliable SNF performance scores because those scores are
linked to a SNF's ranking and payment.
Therefore, we considered whether we should make changes to our
methodology for assessing the total performance of SNFs for a Program
year that better accounts for SNFs with zero or low numbers of eligible
stays during the performance period. Because the number of eligible SNF
stays makes up the denominator of the SNFRM, we have concluded that the
reliability of a SNF's measure rate and resulting performance score is
adversely impacted if the SNF has less than 25 eligible stays during
the performance period, as the Pearson correlation coefficient is lower
at denominator counts of 5, 10, 15, and 20 eligible stays in comparison
to 25 eligible stays. The analysis of Pearson correlation coefficients
at various denominator counts used in developing this proposal is
available on our website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-VBPs/SNFRM-Reliability-Testing-Memo.pdf.
We believe that the most appropriate way to ensure that low-volume
SNFs (which we define for purposes of the SNF VBP Program as SNFs with
fewer than 25 eligible stays during the performance period) receive
sufficiently reliable SNF performance scores is to adopt an adjustment
to the scoring methodology we use for the SNF VBP Program. We proposed
that if a SNF has less than 25 eligible stays during a performance
period for a Program year, we would assign a performance score to the
SNF for that Program year. That assigned performance score would, when
used to calculate the value-based incentive payment amount for the SNF,
result in a value-based incentive payment amount that is equal to the
adjusted Federal per diem rate that the SNF would have received for the
fiscal year in the absence of the Program. The actual performance score
that we would assign to an individual low-volume SNF for a Program year
would be identified based on the distribution of all SNFs' performance
scores for that Program year after calculating the exchange function.
We would then assign that score to an individual low-volume SNF, and we
would notify the low-volume SNF that it would be receiving an assigned
performance score for the Program year in the SNF Performance Score
Report that we provide not later than 60 days prior to the fiscal year
involved.
We believe this scoring adjustment policy would appropriately
ensure that our SNF performance score methodology is fair and reliable
for SNFs with fewer than 25 eligible stays during the performance
period for a Program year.
In section X.A.6. of the proposed rule, we estimated that $527.4
million would be withheld from SNFs' payments for the FY 2019 Program
year based on the most recently available data. Additionally, the 60
percent payback percentage would result in an estimated $316.4 million
being paid to SNFs in the form of value-based incentive payments with
respect to FY 2019 services. Of the $316.4 amount, we estimated that
$8.6 million will be paid to low-volume SNFs. However, if our proposal
to adopt a scoring adjustment for low-volume SNFs were finalized, we
estimated that we would redistribute an additional $6.7 million in
value-based incentive payments to low-volume SNFs with respect to FY
2019 services, for a total of $15.3 million of the estimated $527.4
million available for value-based incentive payments for that Program
year. The additional $6.7 million in value-based incentive payments
that would result from finalizing this proposal would increase the 60
percent payback percentage for FY 2019 by approximately 1.28 percent,
which would result in a payback percentage 61.28 percent of withheld
funds. The payback percentage would similarly increase for all other
Program years, however the actual amount of the increase for a
particular Program year would vary based on the number of low-volume
SNFs that we identify for that Program year and the distribution of all
SNFs' performance scores for that Program year.
As an alternative, we considered assigning a performance score to
SNFs with fewer than 25 eligible stays during the performance period
that would result in a value-based incentive payment percentage of 1.2
percent, or 60 percent of the 2 percent withhold. This amount would
match low-volume SNFs' incentive payment percentages with the finalized
SNF VBP Program payback percentage of 60 percent, and would represent a
smaller adjustment to low-volume SNFs' incentive payment percentages
than the proposed policy described above. We estimated that this
alternative would redistribute an additional $1 million with respect to
FY 2019 services to low-volume SNFs. We also estimated that this
alternative would increase the 60 percent payback percentage for FY
2019 by approximately 0.18 percent of the approximately $527.4 million
of the total withheld from SNFs' payments, which would result in a
payback percentage of 60.18 percent of the estimated $527.4 million in
withheld funds for that Program year. However, as with the proposal
above, we stated that the specific amount by which the payback
percentage would increase for each Program year would vary based on the
number of low-volume SNFs that we identify for each Program year and
the distribution of all SNFs' performance scores for that Program year.
We welcomed public comments on this proposal and on the alternative
that we considered. We also proposed to codify the definition of low-
volume SNF at Sec. 413.338(a)(16), and the definition of eligible stay
at Sec. 413.338(a)(17). We proposed to codify the low-volume scoring
adjustment proposal at Sec. 413.338(d)(3). We also proposed a
conforming edit to the payback percentage policy at Sec.
413.338(c)(2)(i).
Comment: One commenter expressed support for our proposed low-
volume adjustment that would provide SNFs with a neutral value-based
incentive payment percentage.
Response: We thank the commenter and appreciate the support.
Comment: One commenter requested clarification on how the SNF VBP
will affect newly certified facilities that have no data from either
the performance period or baseline period for the FY 2019 SNF VBP
Program year.
Response: SNFs with zero eligible stays during both the baseline
and performance periods are not covered by the low-volume adjustment
policy. For the purposes of the SNF readmission measure, an eligible
stay is an index SNF admission that would be included in the
denominator of the measure. We will notify all SNFs of their incentive
multipliers for the Program year, including SNFs with zero eligible
stays during the baseline and performance periods. These SNFs will
receive an incentive multiplier that results in the adjusted Federal
per diem rate under the Medicare SNF PPS that they would
[[Page 39280]]
otherwise have received absent the Program.
Comment: Commenter suggested as an alternative to our low-volume
adjustment proposal that we consider adopting a 2-year performance
period for low-volume SNFs only and weight the most recent year more
highly.
Response: We thank the commenter for this feedback and will
consider this in future rulemaking.
Comment: One commenter suggested that we consider assigning a 2
percent payment penalty to low-volume SNFs instead of adopting the low-
volume scoring adjustment as proposed. The commenter suggested that
this policy would encourage low-volume SNFs to increase their Medicare
cases sizes, which would enable Medicare to adequately measure their
care quality and hold all SNFs accountable for their care.
Response: We do not believe the intent of the SNF VBP was to
incentivize SNFs to increase their Medicare case volume. We wish to
avoid increasing possible healthcare disparities for smaller facilities
when payment differences are driven solely by smaller measure
denominators, and not quality of care as reflected in measure
performance. Finally, we are concerned about the possibility of gaming
this kind of policy, as SNFs might seek out Medicare cases to avoid the
2 percent penalty the commenter suggests.
Comment: One commenter expressed support for our proposed low-
volume adjustment and opposition to the alternative that we presented,
stating that performance scores under the Program can be skewed by a
single readmission and that the alternative would reduce Medicare rates
for low-volume SNFs regardless of their performance and with no
opportunity to earn additional incentive payments. Another commenter
supported our proposal to adopt a low-volume scoring adjustment, noting
that the evidence shows that the SNFRM is not a reliable quality
indicator when facilities have fewer than 25 qualifying admissions. The
commenter also agreed with our proposal to adjust the Program's payback
percentage to account for this policy.
Response: We thank the commenters for the support.
Comment: One commenter stated that low-volume SNFs should be
excluded from the SNF VBP Program since they have no realistic
opportunity to earn value-based incentive payments.
Response: We believe that the low-volume scoring adjustment policy
ensures that these SNFs are adequately protected from being scored on
insufficiently-reliable SNFRM rates.
Comment: One commenter appreciated our efforts to address low-
volume SNFs and SNFs without baseline period data. However, the
commenter was concerned that CMS had not provided enough information on
these topics and requested additional clarity.
Response: We believe we have provided as much clarity as possible
on the effects of the low-volume scoring adjustment policy in both the
preamble of the proposed rule and the Regulatory Impact Analysis that
was included in the proposed rule. We have also provided additional
clarity in this final rule and in the Regulatory Impact Analysis that
is included in this final rule. We will also ensure that affected SNFs
are made fully aware when their SNF performance scores were assigned as
a result of the policy and notify them of their value-based incentive
payment percentage for the fiscal year, as required by section
1888(h)(7) of the Act. We believe that notification will ensure that
SNFs are aware of the effects that this policy has on their SNF
performance scores and incentive payments.
After consideration of the public comments that we have received,
we are finalizing our scoring adjustment for low-volume SNFs as
proposed. We are also finalizing our regulation text on this policy as
proposed.
d. Extraordinary Circumstances Exception Policy for the SNF VBP Program
In the FY 2018 SNF PPS final rule (82 FR 36616), we summarized
public comments that we received on the topic of a possible
extraordinary circumstances exception policy for the SNF VBP Program.
As we stated in that rule, in other value-based purchasing and quality
reporting programs, we have adopted Extraordinary Circumstances
Exceptions (ECE) policies intended to allow facilities to receive
relief from program requirements due to natural disasters or other
circumstances beyond the facility's control that may affect the
facility's ability to provide high-quality health care.
In other programs, we have defined a ``disaster'' as any natural or
man-made catastrophe which causes damages of sufficient severity and
magnitude to partially or completely destroy or delay access to medical
records and associated documentation or otherwise affect the facility's
ability to continue normal operations. Natural disasters could include
events such as hurricanes, tornadoes, earthquakes, volcanic eruptions,
fires, mudslides, snowstorms, and tsunamis. Man-made disasters could
include such events as terrorist attacks, bombings, flood caused by
man-made actions, civil disorders, and explosions. A disaster may be
widespread and impact multiple structures or be isolated and affect a
single site only. As a result of either a natural or man-made disaster,
we are concerned that SNFs' care quality and subsequent impact on
measure performance in the SNF VBP Program may suffer, and as a result,
SNFs might be penalized under the Program's quality measurement and
scoring methodology. However, we do not wish to penalize SNFs in these
circumstances. For example, we recognize that SNFs might receive
patients involuntarily discharged from hospitals facing mandatory
evacuation due to probable flooding, and these patients might be
readmitted to inpatient acute care hospitals and result in poorer
readmission measure performance in the SNF VBP Program. We therefore
proposed to adopt an ECE policy for the SNF VBP Program to provide
relief to SNFs affected by natural disasters or other circumstances
beyond the facility's control that affect the care provided to the
facility's patients. We proposed that if a SNF can demonstrate that an
extraordinary circumstance affected the care that it provided to its
patients and subsequent measure performance, we would exclude from the
calculation of the measure rate for the applicable baseline and
performance periods the calendar months during which the SNF was
affected by the extraordinary circumstance. Under this proposal, a SNF
requesting an ECE would indicate the dates and duration of the
extraordinary circumstance in its request, along with any available
evidence of the extraordinary circumstance, and if approved, we would
exclude the corresponding calendar months from that SNF's measure rate
for the applicable measurement period and by extension, its SNF
performance score.
We further proposed that SNFs must submit this ECE request to CMS
by filling out the ECE request form that we will place on the
QualityNet website to the [email protected] mailbox within 90
days following the extraordinary circumstance.
To accompany an ECE request, SNFs must provide any available
evidence showing the effects of the extraordinary circumstance on the
care they provided to their patients, including, but not limited to,
photographs, newspaper and other media articles, and any other
[[Page 39281]]
materials that would aid CMS in making its decision. We stated that we
will review exception requests, and at our discretion based on our
evaluation of the impact of the extraordinary circumstances on the
SNF's care, provide a response to the SNF as quickly as feasible.
We stated our intent for this policy to offer relief to SNFs whose
care provided to patients suffered as a result of the disaster or other
extraordinary circumstance, and we believe that excluding calendar
months affected by extraordinary circumstances from SNFs' measure
performance under the Program appropriately ensures that such
circumstances do not unduly affect SNFs' performance rates or
performance scores. We developed this process to align with the ECE
process adopted by the SNF Quality Reporting Program to the greatest
extent possible and to minimize burden on SNFs. This policy is not
intended to preclude us from granting exceptions to SNFs that have not
requested them when we determine that an extraordinary circumstance,
such as an act of nature, affects an entire region or locale. If we
made the determination to grant an exception to all SNFs in a region or
locale, we proposed to communicate this decision through routine
communication channels to SNFs and vendors, including but not limited
to, issuing memos, emails, and notices on our SNF VBP website at
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-VBPs/SNF-VBP.html.
We noted that if we finalize this policy, we would score any SNFs
receiving ECEs on achievement and improvement for any remaining months
during the performance period, provided the SNF had at least 25
eligible stays during both of those periods. If a SNF should receive an
approved ECE for 6 months of the performance period, for example, we
would score the SNF on its achievement during the remaining 6 months on
the Program's measure as long as the SNF met the proposed 25 eligible
stay threshold during the performance period. We would also score the
SNF on improvement as long as it met the proposed 25 eligible stay
threshold during the applicable baseline period.
We welcomed public comments on this proposal. We also proposed to
codify this proposal at Sec. 413.338(d)(4).
Comment: Two commenters expressed appreciation and support for our
proposal to adopt an ECE policy for the SNF VBP Program. The commenters
acknowledged that these exceptions are provided in other programs and
agreed that we should align our ECE policy with the Hospital VBP
Program as much as possible. A third commenter reiterated its previous
support for an ECE policy in the SNF VBP Program.
Response: We thank the commenters for the support.
After consideration of the public comments that we received, we are
finalizing our Extraordinary Circumstances Exception policy as
proposed. We are also finalizing our regulation text on this policy as
proposed.
6. SNF Value-Based Incentive Payments
We refer readers to the FY 2018 SNF PPS final rule (82 FR 36616
through 36621) for discussion of the exchange function methodology that
we have adopted for the Program, as well as the specific form of the
exchange function (logistic, or S-shaped curve) that we finalized, and
the payback percentage of 60 percent. We adopted these policies for FY
2019 and subsequent fiscal years.
As required by section 1888(h)(7) of the Act, we will inform each
SNF of the adjustments to its Medicare payments as a result of the SNF
VBP Program that we will make not later than 60 days prior to the
fiscal year involved. We will fulfill that requirement via SNF
Performance Score Reports that we will circulate to SNFs using the
QIES-CASPER system, which is also how we distribute the quarterly
confidential feedback reports that we are required to provide to SNFs
under section 1888(g)(5) of the Act. The SNF Performance Score Reports
will contain the SNF's performance score, ranking, and value-based
incentive payment adjustment factor that will be applied to claims
submitted for the applicable fiscal year. Additionally, as we finalized
in the FY 2018 SNF PPS final rule (82 FR 36622 through 36623), the
provision of the SNF Performance Score Report will trigger the Phase
Two Review and Corrections Process, and SNFs will have 30 days from the
date we post the report on the QIES-CASPER system to submit corrections
to their SNF performance score and ranking to the
[email protected] mailbox.
Finally, as we discussed in the FY 2018 SNF PPS final rule (82 FR
36618), beginning with FY 2019 (October 1, 2018) payments, we intend to
make the 2 percent reduction and the SNF-specific value-based incentive
payment adjustment to SNF claims simultaneously. Beginning with FY
2019, we will identify the adjusted federal per diem rate for each SNF
for claims under the SNF PPS. We will then reduce that amount by 2
percent by multiplying the per diem amount by 0.98, in accordance with
the requirements in section 1888(h)(6) of the Act. We will then
multiply the result of that calculation by each SNF's specific value-
based incentive payment adjustment factor, which will be based on each
SNF's performance score for the program year and will be calculated by
the exchange function, to generate the value-based incentive payment
amount that applies to the SNF for the fiscal year. Finally, we will
add the value-based incentive payment amount to the reduced rate,
resulting in a new adjusted federal per diem rate that applies to the
SNF for the fiscal year.
At the time of the publication of the proposed rule, we had not
completed SNF performance score calculations for the FY 2019 program
year. However, we stated our intent to provide the range of value-based
incentive payment adjustment factors applicable to the FY 2019 program
year in this final rule. For the FY 2019 SNF VBP Program Year, and
incorporating the 2 percent reduction to SNFs' payments, we estimate
the value-based incentive payment adjustment factors that we will award
to SNFs range from 0.9802915381 to 1.02326809. That is, we estimate
that SNFs may receive incentive payment percentages ranging from
approximately -1.97 percent to approximately +2.33 percent, on a net
basis.
We proposed to codify the SNF VBP Program's payment adjustments at
Sec. 413.337(f).
Comment: Two commenters urged us to revisit the payback percentage
policy that we adopted in the FY 2018 SNF PPS final rule (82 FR 36619
through 36621), stating that we should distribute 70 percent of the
funds withheld from SNFs' Medicare payments through the SNF VBP
Program, the maximum amount allowable under the statute. One commenter
requested that we return the remaining 30 percent of funds for SNF
quality improvement initiatives, including programs to improve SNFs'
performance when they have high readmission rates, while the other
commenter stated that we should remit 100 percent of the Program's
funds as is done in the Hospital Value-Based Purchasing Program.
Response: As we discussed in the FY 2018 SNF PPS final rule (82 FR
36621), we are not authorized to distribute the 30 percent of SNFs'
Medicare payments that would remain after the payment withhold is
determined for any purposes. Those funds are retained in the Medicare
Trust Fund and used for other Medicare Program purposes authorized by
statute. We are not allowed under current law to distribute
[[Page 39282]]
100 percent of the withheld funds for SNF VBP purposes.
Further, we do not believe it is appropriate to revisit the payback
percentage policy at this time, with the exception of the low-volume
policy, which we view as a narrow exception to the 60 percent payback
percentage that would have no effect on the majority of facilities. At
the time of the publication of this final rule, the SNF VBP Program
will not yet have delivered its first incentive payments based on
measured performance, and we do not believe we should consider whether
to change the payback percentage further until we are able to more
fully assess the effects that it has on the quality of care provided in
SNFs. We refer readers to the FY 2018 SNF PPS final rule (82 FR 36619
through 36621) for our full discussion of the payback percentage policy
that we have adopted for the SNF VBP Program.
We thank the commenters for their feedback. As noted in section
III.B.5. of this final rule, we are finalizing the codification of the
SNF VBP program payment adjustment as proposed.
D. Request for Information on Promoting Interoperability and Electronic
Healthcare Information Exchange Through Possible Revisions to the CMS
Patient Health and Safety Requirements for Skilled Nursing Facility
Providers and Suppliers
In the FY 2019 SNF PPS proposed rule, we included a Request for
Information (RFI) related to promoting interoperability and electronic
healthcare information exchange (83 FR 21089). We received 22 comments
on this RFI, and appreciate the input provided by commenters.
VII. 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.
In our May 8, 2018 proposed rule (83 FR 21018), we solicited public
comment on each of the section 3506(c)(2)(A)-required issues for the
following information collection requirements (ICRs).We did not receive
any comments on the ICR section of the proposed rule.
A. Wages
To derive average costs, we used data from the U.S. Bureau of Labor
Statistics' May 2017 National Occupational Employment and Wage
Estimates for all salary estimates (as compared to the FY 2019 SNF PPS
proposed rule when we used May 2016 estimates) (https://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 42 presents the mean hourly
wage, the cost of fringe benefits and overhead (calculated at 100
percent of salary), and the adjusted hourly wage. We are using the
adjusted wages to derive our cost estimates.
Table 42--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe
Occupation Mean hourly benefits and Adjusted
Occupation title code wage ($/hr) overhead ($/ hourly wage
hr) ($/hr)
----------------------------------------------------------------------------------------------------------------
Health Information Technician................... 29-2071 20.59 20.59 41.18
Registered Nurse................................ 29-1141 35.36 35.36 70.72
----------------------------------------------------------------------------------------------------------------
As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent. This is necessarily a rough adjustment,
both because fringe benefits and overhead costs vary significantly from
employer to employer, and because methods of estimating these costs
vary widely from study to study. We believe that doubling the hourly
wage to estimate total cost is a reasonably accurate estimation method.
B. Information Collection Requirements (ICRs)
1. ICRs Regarding the SNF PPS Assessment Schedule Under the PDPM
The following sets out the requirements and burden associated with
the MDS assessment schedule that will be effective October 1, 2019
under the SNF PPS in conjunction with implementation of the PDPM. The
requirements and burden will be submitted to OMB for approval under
control number 0938-1140 (CMS-10387).
Section V.D. of this final rule finalizes revisions to the current
SNF PPS assessment schedule to require only two scheduled assessments
(as opposed to the current requirement for five scheduled assessments)
for each SNF stay: A 5-day scheduled PPS assessment and a discharge
assessment.
The current 5-day scheduled PPS assessment will be used as the
admission assessment under this rule's finalized PDPM and set the
resident's case-mix classification for the resident's SNF stay. The PPS
discharge assessment (which is already required for all SNF Part A
residents) will serve as the discharge assessment and be used for
monitoring purposes. In section V.D. of this final rule, we discuss
that while we proposed to require SNFs to reclassify residents under
the PDPM using the Interim Payment Assessment (IPA) if certain criteria
are met, we have decided in this final rule to make this assessment
optional, thereby leaving completion of this assessment at the
discretion of the individual provider. Thus, the 5-day SNF PPS
scheduled assessment will be the only PPS assessment required to
classify a resident under the PDPM for payment purposes, while the IPA
may also be completed, as discussed in section V.D. of this final rule.
This eliminates the requirement for the following assessments under the
SNF PPS: 14-day scheduled PPS assessment, 30-day scheduled PPS
assessment, 60-day scheduled PPS assessment, 90-day scheduled PPS
assessment, Start of Therapy Other Medicare Required
[[Page 39283]]
Assessment (OMRA), End of Therapy OMRA, and Change of Therapy OMRA.
In estimating the amount of time to complete a PPS assessment, we
utilize the OMRA assessment, or the NO/SO item set (this is consistent
with the current information collection request as approved by OMB on
July 28, 2017; see https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201703-0938-018) as a proxy for all
assessments. In section V.D. of this final rule, we finalized the
addition of 18 items to the PPS discharge assessment in order to
calculate and monitor the total amount of therapy provided during a SNF
stay. These items are listed in Table 35 under section V.D. of this
final rule. Given that the PPS OMRA assessment has 272 items (as
compared to 125 items currently on the PPS discharge assessment) we
believe the items that we are adding to the PPS discharge assessment,
while increasing burden for each of the respective assessments, is
accounted for by using the longer PPS OMRA assessment as a proxy for
the time required to complete all assessments.
When calculating the burden for each assessment, we estimated that
it will take 40 minutes (0.6667 hours) at $70.72/hr for an RN to
collect the information necessary for preparing the assessment, 10
minutes (0.1667 hours) at $55.95/hr (the average hourly wage for RN
($70.72/hr) and health information technician ($41.18/hr)) for staff to
code the responses, and 1 minute (0.0167 hours) at $41.18/hr for a
health information technician to transmit the results. In total, we
estimate that it would take 51 minutes (0.85 hours) to complete a
single PPS assessment. Based on the adjusted hourly wages for the noted
staff, we estimate that it would cost $57.17 [($70.72/hr x 0.6667 hr) +
($55.95/hr x 0.1667 hr) + ($41.18/hr x 0.0167 hr)] to prepare, code,
and transmit each PPS assessment.
The ongoing burden associated with the revisions to the SNF PPS
assessment schedule is the time and effort it would take each Medicare
Part A SNF to complete the 5-day PPS and discharge assessments. Based
on our most current data, there are 15,471 Medicare Part A SNFs (as
opposed to the 15,455 discussed in the proposed rule). Based on FY 2017
data, we estimate that 2,406,401 5-day PPS assessments will be
completed and submitted by Part A SNFs each year under the PDPM. We
used the same number of assessments (2,406,401) as a proxy for the
number of PPS discharge assessments that would be completed and
submitted each year, since all residents who require a 5-day PPS
assessment will also require a discharge assessment under the SNF PDPM.
As compared to the FY 2019 SNF PPS proposed rule, in which we used
the Significant Change in Status Assessment (SCSA) as a proxy to
estimate the number of IPAs (83 FR 21093), we have eliminated this
portion of our burden estimate as this assessment would not be
required, per the discussion in section V.D. of this final rule.
Therefore, we estimate that the total number of 5-day scheduled PPS
assessments, and PPS discharge assessments that would be completed
across all facilities is 4,812,802 assessments (2,406,401 + 2,406,401,
respectively) instead of 4,905,042 assessments (2,406,401 + 92,240 +
2,406,401) that was set out in the proposed rule. For all assessments
under the PDPM, we estimated a burden of 4,090,882 hours (4,812,802
assessments x 0.85 hr/assessment) at a cost of $275,147,890 (4,812,802
assessments x $57.17/assessment).
Based on the same FY 2017 data, there were 5,833,476 non-discharge
related assessments (scheduled and unscheduled PPS assessments)
completed under the RUG- IV payment system. To this number we add the
same proxy as above for the number of discharge assessments
(2,406,401), since every resident under RUG-IV who required a 5-day
scheduled PPS assessment would also require a discharge assessment.
This brings the total number of estimated assessments under RUG-IV to
8,239,877. Using the same wage and time figures (per assessment), we
estimated a burden of 7,003,895 hours (8,239,877 assessments x 0.85 hr/
assessment) at a cost of $471,073,768 (8,239,877 assessments x $57.17/
assessment).
When comparing the currently approved RUG-IV burden with the PDPM
burden, we estimate a savings of 2,913,013 administrative hours
(7,003,895 RUG-IV hours - 4,090,882 PDPM hours) or approximately 188
hours per provider per year (2,913,013 hours/15,471 providers). As
depicted in Table 43, we also estimate a cost savings of $195,925,878
($471,073,768 RUG-IV costs - $275,147,890 PDPM costs) or $12,664 per
provider per year ($195,925,878/15,471 providers). This represents a
significant decrease in administrative burden to providers under PDPM.
Table 43--PDPM Savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total annual
Burden reconciliation Respondents * Responses Burden per response (hours) burden Cost ($)
(assessments) (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUG-IV.................................. 15,455........................ 8,239,877 0.85.......................... 7,003,895 471,073,768
PDPM.................................... 15,471........................ 4,812,802 0.85.......................... 4,090,882 275,147,890
SAVINGS................................. (16).......................... (3,427,075) No change..................... (2,913,013) (195,925,878)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The RUG-IV number of respondents is based on the last approved PRA package in 2017. Numbers of respondents changes from year to year.
Finally, in section V.D. of this final rule, we finalized the
addition of 3 items, as listed in Table 34 of this final rule), to the
MDS 3.0 for Nursing Homes and Swing Bed Providers. Based on the small
number of items being added and the small percentage of assessments
that Swing Bed providers make up, we do not believe this action will
cause any measurable adjustments to our currently approved burden
estimates. Consequently, we are not revising any of those estimates.
2. ICRs Regarding the SNF VBP Program
In section VI.C.5.d. of this final rule, we are adopting an
Extraordinary Circumstances Exception (ECE) process for the SNF VBP.
Because the same CMS Extraordinary Circumstances Exceptions (ECE)
Request Form would be used across ten quality programs: Hospital IQR
Program, Hospital Outpatient Reporting Program, Inpatient Psychiatric
Facility Quality Reporting Program, PPS-Exempt Cancer Hospital Quality
Reporting Program, Ambulatory Surgical Center Quality Reporting
Program, Hospital VBP Program, Hospital-Acquired Condition Reduction
Program, Hospital Readmissions Reduction Program, End Stage Renal
Disease Quality Incentive Program, and
[[Page 39284]]
Skilled Nursing Facility Value-Based Purchasing Program--the form and
its associated requirements/burden will be submitted to OMB for
approval under one information collection request (CMS-10210, OMB
control number: 0938-1022) and in association with our IPPS final rule
(CMS-1694-F; RIN 0938-AT27). To avoid double counting we are not
setting out the form's SNF-related burden in this final rule.
Separately, we are not removing or adding any new or revised SNF VBP
measure-related requirements or burden in this rule. Consequently, this
final rule does not set out any new VBP-related collections of
information that would be subject to OMB approval under the authority
of the PRA.
3. ICRs for the SNF Quality Reporting Program (QRP)
We are not removing or adding any new or revised SNF QRP measure-
related requirements or burden in this rule. Consequently, this final
rule does not set out any new QRP-related collections of information
that would be subject to OMB approval under the authority of the PRA.
C. Summary of Requirements and Annual Burden Estimates
Table 44--Information Collection Requirements and Burden Estimates
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Responses (per Total Time per Total time Annualized cost
Requirement OMB control No. Respondents respondent) responses response (hr) (hr) Labor cost per hour ($/hr) ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SNF PPS Assessment Schedule.............. 0938-1140 15,471 (311) (4,812,802) 0.85 (4,090,882) Varies....................... (275,147,890)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VIII. Economic Analyses
A. Regulatory Impact Analysis
1. Statement of Need
This final rule will update the FY 2018 SNF prospective payment
rates as required under section 1888(e)(4)(E) of the Act. It also
responds to section 1888(e)(4)(H) of the Act, which requires the
Secretary to provide for publication in the Federal Register before the
August 1 that precedes the start of each FY, the unadjusted federal per
diem rates, the case-mix classification system, and the factors to be
applied in making the area wage adjustment. As these statutory
provisions prescribe a detailed methodology for calculating and
disseminating payment rates under the SNF PPS, we do not have the
discretion to adopt an alternative approach on these issues. We did not
include the impacts of the proposed PDPM and related policies in the
sections that follow, as we have included this discussion in section
V.I. of this final rule.
2. Introduction
We have examined the impacts of this final rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA,
September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March
22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August
4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive
Order 13771 on Reducing Regulation and Controlling Regulatory Costs
(January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated an economically significant
rule, under section 3(f)(1) of Executive Order 12866. Accordingly, we
have prepared a regulatory impact analysis (RIA) as further discussed
below. Also, the rule has been reviewed by OMB.
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017. OMB's implementation
guidance, issued on April 5, 2017, explains that ``Federal spending
regulatory actions that cause only income transfers between taxpayers
and program beneficiaries (for example, regulations associated with . .
. Medicare spending) are considered `transfer rules' and are not
covered by E.O. 13771. . . . However . . . such regulatory actions may
impose requirements apart from transfers . . . In those cases, the
actions would need to be offset to the extent they impose more than de
minimis costs. Examples of ancillary requirements that may require
offsets include new reporting or recordkeeping requirements.'' As
discussed in section VII. of this final rule, we estimate that this
final rule will lead to paperwork cost savings of approximately $196
million per year, or $171 million per year on an ongoing basis
discounted at 7 percent relative to year 2016, over a perpetual time
horizon. This final rule is considered an E.O. 13771 deregulatory
action.
3. Overall Impacts
This final rule sets forth updates of the SNF PPS rates contained
in the SNF PPS final rule for FY 2018 (82 FR 36530). We estimate that
the aggregate impact will be an increase of approximately $820 million
in payments to SNFs in FY 2019, resulting from the SNF market basket
update to the payment rates, as required by section 53111 of the BBA
2018. Absent the application of section 53111 of the BBA 2018, as
discussed in section III.A.2. of this final rule, the aggregate impact
from the 2.0 percentage point market basket increase factor would have
been approximately $680 million. We note that these impact numbers do
not incorporate the SNF VBP reductions that we estimate will total
$527.4 million for FY 2019.
We would note that events may occur to limit the scope or accuracy
of our impact analysis, as this analysis is future-oriented, and thus,
very susceptible to forecasting errors due to events that may occur
within the assessed impact time period. In accordance with sections
1888(e)(4)(E) and 1888(e)(5) of the Act, we update the FY 2018 payment
rates by a factor equal to the market basket index percentage change
adjusted by the MFP adjustment to determine the payment rates for FY
2019. As discussed previously, section 53111 of the BBA 2018 stipulates
a market basket increase factor of 2.4 percent. The impact to Medicare
is included in the total column of Table 45. In updating the SNF PPS
rates for FY 2019, we made a number of standard annual revisions and
clarifications
[[Page 39285]]
mentioned elsewhere in this final 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 final rule applies to SNF PPS
payments in FY 2019. Accordingly, the analysis of the impact of the
annual update that follows only describes the impact of this single
year. Furthermore, in accordance with the requirements of the Act, we
will publish a rule or notice for each subsequent FY that will provide
for an update to the payment rates and include an associated impact
analysis.
4. Detailed Economic Analysis
The FY 2019 SNF PPS payment impacts appear in Table 45. Using the
most recently available data, in this case FY 2017, we apply the
current FY 2018 wage index and labor-related share value to the number
of payment days to simulate FY 2018 payments. Then, using the same FY
2017 data, we apply the proposed FY 2019 wage index and labor-related
share value to simulate FY 2019 payments. We tabulate the resulting
payments according to the classifications in Table 45 (for example,
facility type, geographic region, facility ownership), and compare the
simulated FY 2018 payments to the simulated FY 2019 payments to
determine the overall impact. The breakdown of the various categories
of data Table 45 follows:
The first column shows the breakdown of all SNFs by urban
or rural status, hospital-based or freestanding status, census region,
and ownership.
The first row of figures describes the estimated effects
of the various changes on all facilities. The next six rows show the
effects on facilities split by hospital-based, freestanding, urban, and
rural categories. The next nineteen rows show the effects on facilities
by urban versus rural status by census region. The last three rows show
the effects on facilities by ownership (that is, government, profit,
and non-profit status).
The second column shows the number of facilities in the
impact database.
The third column shows the effect of the annual update to
the wage index. This represents the effect of using the most recent
wage data available. The total impact of this change is 0 percent;
however, there are distributional effects of the change.
The fourth column shows the effect of all of the changes
on the FY 2019 payments. The update of 2.4 percent is constant for all
providers and, though not shown individually, is included in the total
column. It is projected that aggregate payments will increase by 2.4
percent, assuming facilities do not change their care delivery and
billing practices in response.
As illustrated in Table 45, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, due to changes in this rule, providers in the urban Pacific
region will experience a 3.4 percent increase in FY 2019 total
payments.
Table 45--Impact to the SNF PPS for FY 2019
----------------------------------------------------------------------------------------------------------------
Number of
facilities FY Update wage Total change
2019 (%) data (%) (%)
----------------------------------------------------------------------------------------------------------------
Group:
Total....................................................... 15,471 0.0 2.4
Urban....................................................... 11,042 0.0 2.4
Rural....................................................... 4,429 0.1 2.5
Hospital-based urban........................................ 498 0.0 2.4
Freestanding urban.......................................... 10,544 0.0 2.4
Hospital-based rural........................................ 555 0.0 2.4
Freestanding rural.......................................... 3,874 0.2 2.6
Urban by region:
New England................................................. 790 -0.7 1.7
Middle Atlantic............................................. 1,481 0.0 2.4
South Atlantic.............................................. 1,869 -0.1 2.3
East North Central.......................................... 2,127 -0.4 2.0
East South Central.......................................... 555 -0.2 2.2
West North Central.......................................... 920 -0.4 2.0
West South Central.......................................... 1,346 0.3 2.7
Mountain.................................................... 527 -0.8 1.6
Pacific..................................................... 1,421 1.0 3.4
Outlying.................................................... 6 -0.5 1.9
Rural by region:
New England................................................. 134 -0.7 1.6
Middle Atlantic............................................. 215 0.1 2.5
South Atlantic.............................................. 494 0.1 2.5
East North Central.......................................... 931 0.1 2.5
East South Central.......................................... 523 -0.3 2.1
West North Central.......................................... 1,074 0.3 2.7
West South Central.......................................... 734 1.0 3.5
Mountain.................................................... 229 0.2 2.6
Pacific..................................................... 95 -0.5 1.9
Ownership:
Government.................................................. 10,887 0.0 2.4
Profit...................................................... 3,570 -0.1 2.3
Non-Profit.................................................. 1,014 0.0 2.4
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 2.4 percent market basket increase required by section 53111 of the BBA
2018. Additionally, we found no SNFs in rural outlying areas.
[[Page 39286]]
5. Impacts for the SNF QRP
We did not propose to add, remove, or revise any measures in the
SNF QRP. Consequently, this final rule does not set out any new QRP-
related impacts associated with the SNF QRP.
6. Impacts for the SNF VBP Program
In Table 44 of the FY 2019 SNF PPS proposed rule (83 FR 21096
through 20197), we estimated the impacts of the FY 2019 SNF VBP Program
without taking into account our low-volume scoring adjustment proposal.
We modeled SNFs' performance in the Program using SNFRM data from CY
2014 as the baseline period and FY 2016 as the performance period.
Additionally, we modeled a logistic exchange function with a payback
percentage of 60 percent, as we finalized in the FY 2018 SNF PPS final
rule (82 FR 36619 through 36621), and based the following analyses on
payments to SNFs in FY 2016. We estimated the total reductions to
payments required by section 1888(h)(6) of the Act, to be $527.4
million for FY 2019. Based on the 60 percent payback percentage, we
estimated that we would disburse approximately $316.4 million in value-
based incentive payments to SNFs in FY 2019, which we estimated would
result in approximately $211 million in savings to the Medicare program
in FY 2019.
In Table 45 of the FY 2019 SNF PPS proposed rule (83 FR 21097), we
also modeled the estimated impacts of the FY 2019 SNF VBP Program and
included in that model the impacts of our proposed scoring adjustment
for low-volume SNFs. We estimated that the scoring adjustment policy
proposal would redistribute an additional $6.7 million to the group of
low volume SNFs. As we discuss further in section II.E.3.e. of this
final rule, we are finalizing our low-volume scoring adjustment policy,
and our estimated FY 2019 SNF VBP impacts, which we described in Table
45 of the proposed rule, are reproduced as Table 46 below.
We continue to estimate that this policy will result in increasing
low-volume SNFs' value-based incentive payment percentages by
approximately 0.99 percent, on average, from the value-based incentive
payment percentage that they would receive in the absence of the low-
volume adjustment. An increase in value-based incentive payment
percentages by 0.99 percent is needed to bring low-volume SNFs back to
the 2.0 percent that was withheld from their payments. We also continue
to estimate that we will pay an additional $6.7 million in incentive
payments to low-volume SNFs, which would increase the 60 percent
payback percentage for FY 2019 by approximately 1.28 percent, making
the new payback percentage for FY 2019 equal to 61.28 percent of the
estimated $527.4 million in withheld funds for that fiscal year.
Our detailed analysis of the impacts of the FY 2019 SNF VBP
Program, including the finalized low-volume scoring adjustment policy,
follows in Table 46.
Table 46--Estimated SNF VBP Program Impacts Including Effects of the Finalized Low-Volume Scoring Adjustment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean
Number of Mean SNF incentive Percent of
Category Criterion facilities RSRR (mean) performance multiplier proposed
score (60% payback) payback
--------------------------------------------------------------------------------------------------------------------------------------------------------
Group..................................... Total....................... 12,845 0.18912 41.371 1.192 99.9 *
Urban....................... 9,604 0.18957 40.956 1.177 84.4
Rural....................... 3,241 0.18779 41.011 1.181 15.4
Urban by Region........................... Total....................... 9,604 .............. .............. .............. ..............
01=Boston................... 713 0.19089 37.26777 1.059 4.9
02=New York................. 836 0.19029 40.90383 1.165 11.8
03=Philadelphia............. 1,040 0.18601 45.31896 1.325 10.1
04=Atlanta.................. 1,767 0.19332 37.28735 1.052 13.3
05=Chicago.................. 1,961 0.18784 43.06368 1.246 16.0
06=Dallas................... 1,134 0.19416 34.53275 0.949 6.1
07=Kansas City.............. 510 0.19057 39.26278 1.132 2.6
08=Denver................... 241 0.17832 57.62596 1.790 2.9
09=San Francisco............ 1,098 0.18908 40.80722 1.176 12.5
10=Seattle.................. 304 0.17808 56.67839 1.713 4.2
Rural by Region........................... Total....................... 3,241 .............. .............. .............. ..............
01=Boston................... 115 0.18133 51.89294 1.568 0.9
02=New York................. 77 0.18366 50.48193 1.569 0.5
03=Philadelphia............. 240 0.18789 42.12621 1.218 1.3
04=Atlanta.................. 764 0.19283 36.51452 1.032 3.3
05=Chicago.................. 818 0.18397 47.85089 1.399 4.5
06=Dallas................... 557 0.19355 34.00868 0.952 1.7
07=Kansas City.............. 421 0.18634 42.64769 1.236 1.2
08=Denver................... 132 0.18000 52.38900 1.544 0.7
09=San Francisco............ 48 0.17780 61.50419 1.931 0.6
10=Seattle.................. 69 0.17628 60.70084 1.836 0.7
Ownership Type............................ Total....................... 12,847 .............. .............. .............. ..............
Government.................. 688 0.18529 46.450 1.380 5.2
Profit...................... 9,250 0.19039 39.526 1.127 72.0
Non-Profit.................. 2,909 0.18597 46.038 1.353 22.9
Number of Beds............................ Total....................... 12,847 .............. .............. .............. ..............
1st Quartile:............... 3,222 0.18760 42.466 1.226 24.6
2nd Quartile:............... 3,221 0.18878 40.971 1.175 24.4
3rd Quartile:............... 3,197 0.19048 40.242 1.153 23.3
4th Quartile:............... 3,207 0.18963 41.800 1.212 27.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This category does not add to 100% because a small number of SNFs did not have urban/rural designations in our data.
[[Page 39287]]
7. Alternatives Considered
As described in this section, we estimated that the aggregate
impact for FY 2019 under the SNF PPS will be an increase of
approximately $820 million in payments to SNFs, resulting from the SNF
market basket update to the payment rates, as required by section 53111
of the BBA 2018. Absent application of section 53111 of the BBA 2018,
as discussed in section III.A.2. of this final rule, the market basket
increase factor of 2.0 percent would have resulted in an aggregate
increase in payments to SNFs of approximately $680 million.
Section 1888(e) of the Act establishes the SNF PPS for the payment
of Medicare SNF services for cost reporting periods beginning on or
after July 1, 1998. This section of the statute prescribes a detailed
formula for calculating base payment rates under the SNF PPS, and does
not provide for the use of any alternative methodology. It specifies
that the base year cost data to be used for computing the SNF PPS
payment rates must be from FY 1995 (October 1, 1994, through September
30, 1995). In accordance with the statute, we also incorporated a
number of elements into the SNF PPS (for example, case-mix
classification methodology, a market basket index, a wage index, and
the urban and rural distinction used in the development or adjustment
of the federal rates). Further, section 1888(e)(4)(H) of the Act
specifically requires us to disseminate the payment rates for each new
FY through the Federal Register, and to do so before the August 1 that
precedes the start of the new FY; accordingly, we are not pursuing
alternatives for this process.
As discussed in section VI.C. of this final rule, we also
considered an alternative SNF VBP low-volume scoring policy. This
alternative scoring assignment would result in a value-based incentive
payment percentage of 1.2 percent, or 60 percent of the 2 percent
withhold. This amount would match low-volume SNFs' incentive payment
percentages with the finalized SNF VBP Program payback percentage of 60
percent, and would represent a smaller adjustment to low-volume SNFs'
incentive payment percentages than the proposed policy described above.
We estimated that this alternative would redistribute an additional $1
million with respect to FY 2019 services to low-volume SNFs. We also
estimated that this alternative would increase the 60 percent payback
percentage for FY 2019 by approximately 0.18 percent of the
approximately $527.4 million of the total withheld from SNFs' payments,
which would result in a payback percentage of 60.18 percent of the
estimated $527.4 million in withheld funds for that Program year. We
estimated that this alternative would pay back SNFs about $5.7 million
less than the proposed low-volume scoring methodology adjustment in
total estimated payments on an annual basis. However, under this
alternative, like the policy we are finalizing, the specific amount by
which the payback percentage would increase for each Program year would
vary based on the number of low-volume SNFs that we identify for each
Program year and the distribution of all SNFs' performance scores for
that Program year.
We discussed the comments that we received on this alternative and
our responses to those comments in section II.E.3.e. of this final rule
in our discussion of the low-volume scoring adjustment policy.
8. Accounting Statement
As required by OMB Circular A-4 (available online at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Tables 48 and
49, we have prepared an accounting statement showing the classification
of the expenditures associated with the provisions of this final rule
for FY 2019. Tables 45 and 48 provides our best estimate of the
possible changes in Medicare payments under the SNF PPS as a result of
the policies in this final rule, based on the data for 15,471 SNFs in
our database. Tables 46 and 49 provide our best estimate of the
possible changes in Medicare payments under the SNF VBP as a result of
the policies in this final rule.
Table 47--Accounting Statement: Classification of Estimated Expenditures, From the 2018 SNF PPS Fiscal Year to
the 2019 SNF PPS Fiscal Year
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers...... $820 million.*
From Whom To Whom?.................. Federal Government to SNF Medicare Providers.
----------------------------------------------------------------------------------------------------------------
* The net increase of $820 million in transfer payments is a result of the market basket increase of $820
million.
Table 48--Accounting Statement: Classification of Estimated Expenditures for the FY 2019 SNF VBP Program
----------------------------------------------------------------------------------------------------------------
Category Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers...... $316.4 million.*
From Whom To Whom?.................. Federal Government to SNF Medicare Providers.
----------------------------------------------------------------------------------------------------------------
* This estimate does not include the two percent reduction to SNFs' Medicare payments (estimated to be $527.4
million) required by statute.
9. Conclusion
This final rule sets forth updates of the SNF PPS rates contained
in the SNF PPS final rule for FY 2018 (82 FR 36530). Based on the
above, we estimate the overall estimated payments for SNFs in FY 2019
are projected to increase by approximately $820 million, or 2.4
percent, compared with those in FY 2018. We estimate that in FY 2019
under RUG-IV, SNFs in urban and rural areas will experience, on
average, a 2.4 percent increase and 2.5 percent increase, respectively,
in estimated payments compared with FY 2018. Providers in the urban
rural West South Central region will experience the largest estimated
increase in payments of approximately 3.5 percent. Providers in the
urban Mountain and rural New England regions will experience the
smallest estimated increase in payments of 1.6 percent.
B. Regulatory Flexibility Act Analysis
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, non-
[[Page 39288]]
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, for the purposes of the RFA, we estimate that
almost all SNFs are small entities as that term is used in the RFA,
according to the Small Business Administration's latest size standards
(NAICS 623110), with total revenues of $27.5 million or less in any 1
year. (For details, see the Small Business Administration's website at
https://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards). In addition,
approximately 20 percent of SNFs classified as small entities are non-
profit organizations. Finally, individuals and states are not included
in the definition of a small entity.
This final rule sets forth updates of the SNF PPS rates contained
in the SNF PPS final rule for FY 2018 (82 FR 36530). Based on the
above, we estimate that the aggregate impact for FY 2019 will be an
increase of $820 million in payments to SNFs, resulting from the SNF
market basket update to the payment rates. While it is projected in
Table 45 that providers will experience a net increase in payments, we
note that some individual providers within the same region or group may
experience different impacts on payments than others due to the
distributional impact of the FY 2019 wage indexes and the degree of
Medicare utilization.
Guidance issued by the Department of Health and Human Services on
the proper assessment of the impact on small entities in rulemakings,
utilizes a cost or revenue impact of 3 to 5 percent as a significance
threshold under the RFA. In their March 2017 Report to Congress
(available at 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 45. As
indicated in Table 45, the effect on facilities is projected to be an
aggregate positive impact of 2.4 percent for FY 2019. As the overall
impact on the industry as a whole, and thus on small entities
specifically, is less than the 3 to 5 percent threshold discussed
previously, the Secretary has determined that this final rule will not
have a significant impact on a substantial number of small entities for
FY 2019.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 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 final rule will 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 will be similar to the impact on SNF providers overall.
Moreover, as noted in previous SNF PPS final rules (most recently, the
one for FY 2018 (82 FR 36530)), the category of small rural hospitals
is included within the analysis of the impact of this final rule on
small entities in general. As indicated in Table 45, the effect on
facilities for FY 2019 is projected to be an aggregate positive impact
of 2.4 percent. As the overall impact on the industry as a whole is
less than the 3 to 5 percent threshold discussed above, the Secretary
has determined that this final rule will not have a significant impact
on a substantial number of small rural hospitals for FY 2019.
C. Unfunded Mandates Reform Act Analysis
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2018, that
threshold is approximately $150 million. This final 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 final rule that imposes substantial
direct requirement costs on state and local governments, preempts state
law, or otherwise has federalism implications. This final rule will
have no substantial direct effect on state and local governments,
preempt state law, or otherwise have federalism implications.
E. Congressional Review Act
This final 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 final 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 year's 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 is a fair estimate of the number of reviewers of this rule.
In the FY 2019 SNF PPS proposed rule (83 FR 21099), we welcomed any
comments on the approach in estimating the number of entities which
will review the proposed rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this final rule, and
therefore, for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. We sought comments
on this assumption in the FY 2019 SNF PPS proposed rule (83 FR 21099).
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 $107.38 per hour, including overhead and fringe benefits
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average
reading speed, we estimate that it would take approximately 4 hours for
the staff to review half of the proposed rule. For each SNF that
reviews the rule, the estimated cost is $429.52 (4 hours x $107.38).
Therefore, we estimate that the total cost of reviewing this regulation
is $124,561 ($429.52 x 247 reviewers).
In accordance with the provisions of Executive Order 12866, this
final rule
[[Page 39289]]
was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 411
Diseases, Medicare, Reporting and recordkeeping requirements.
42 CFR Part 413
Health facilities, Diseases, Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 424
Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT
0
1. The authority citation for part 411 is revised to read as follows:
Authority: 42 U.S.C. 1302, 1395w-101 through 1395w-152, 1395hh,
and 1395nn.
Sec. 411.15 [Amended]
0
2. Section 411.15 is amended in paragraph (p)(3)(iv) by removing the
phrase ``by midnight of the day of departure'' and adding in its place
the phrase ``before the following midnight''.
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS
0
3. The authority citation for part 413 is revised to read as follows:
Authority: 42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a),
(i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww; and sec.
124 of Public Law 106-113, 113 Stat. 1501A-332; sec. 3201 of Public
Law 112-96, 126 Stat. 156; sec. 632 of Public Law 112-240, 126 Stat.
2354; sec. 217 of Public Law 113-93, 129 Stat. 1040; and sec. 204 of
Public Law 113-295, 128 Stat. 4010; and sec. 808 of Public Law 114-
27, 129 Stat. 362.
0
4. Section 413.337 is amended by revising paragraph (d)(1)(v) and
adding paragraphs (d)(1)(vi) and (vii) and (f) to read as follows:
Sec. 413.337 Methodology for calculating the prospective payment
rates.
* * * * *
(d) * * *
(1) * * *
(v) For each subsequent fiscal year, the unadjusted Federal payment
rate is equal to the rate computed for the previous fiscal year
increased by a factor equal to the SNF market basket index percentage
change for the fiscal year involved, except as provided in paragraphs
(d)(1)(vi) and (vii) of this section.
(vi) For fiscal year 2018, the unadjusted Federal payment rate is
equal to the rate computed for the previous fiscal year increased by a
SNF market basket index percentage change of 1 percent (after
application of paragraphs (d)(2) and (3) of this section).
(vii) For fiscal year 2019, the unadjusted Federal payment rate is
equal to the rate computed for the previous fiscal year increased by a
SNF market basket index percentage change of 2.4 percent (after
application of paragraphs (d)(2) and (3) of this section).
* * * * *
(f) Adjustments to payment rates under the SNF Value-Based
Purchasing Program. Beginning with payment for services furnished on
October 1, 2018, the adjusted Federal per diem rate (as defined in
Sec. 413.338(a)(2)) otherwise applicable to a SNF for the fiscal year
is reduced by the applicable percent (as defined in Sec.
413.338(a)(3)). The resulting amount is then adjusted by the value-
based incentive payment amount (as defined in Sec. 413.338(a)(14))
based on the SNF's performance score for that fiscal year under the SNF
Value-Based Purchasing Program, as calculated under Sec. 413.338.
0
5. Section 413.338 is amended by--
0
a. Revising the section heading;
0
b. Adding paragraphs (a)(16) and (17);
0
c. Revising paragraph (c)(2)(i); and
0
d. Adding paragraphs (d)(1)(iv) and (d)(3) and (4).
The additions and revision read as follows:
Sec. 413.338 Skilled nursing facility value-based purchasing
program.
(a) * * *
(16) Low-volume SNF means a SNF with fewer than 25 eligible stays
included in the SNF readmission measure denominator during the
performance period for a fiscal year.
(17) Eligible stay means, for purposes of the SNF readmission
measure, an index SNF admission that would be included in the
denominator of that measure.
* * * * *
(c) * * *
(2) * * *
(i) Total amount available for a fiscal year. The total amount
available for value-based incentive payments for a fiscal year is at
least 60 percent of the total amount of the reduction to the adjusted
SNF PPS payments for that fiscal year, as estimated by CMS, and will be
increased as appropriate for each fiscal year to account for the
assignment of a performance score to low-volume SNFs under paragraph
(d)(3) of this section.
(d) * * *
(1) * * *
(iv) CMS will not award points for improvement to a SNF that has
fewer than 25 eligible stays during the baseline period.
* * * * *
(3) If CMS determines that a SNF is a low-volume SNF with respect
to a fiscal year, CMS will assign a performance score to the SNF for
the fiscal year that, when used to calculate the value-based incentive
payment amount (as defined in paragraph (a)(14) of this section),
results in a value-based incentive payment amount that is equal to the
adjusted Federal per diem rate (as defined in paragraph (a)(2) of this
section) that would apply to the SNF for the fiscal year without
application of Sec. 413.337(f).
(4)(i) A SNF may request and CMS may grant exceptions to the SNF
Value-Based Purchasing Program's requirements under this section for
one or more calendar months when there are certain extraordinary
circumstances beyond the control of the SNF.
(ii) A SNF may request an exception within 90 days of the date that
the extraordinary circumstances occurred by sending an email to
[email protected] that includes a completed Extraordinary
Circumstances Request form (available on the SNF VBP section of
QualityNet at https://www.qualitynet.org/) and any available evidence
of the impact of the extraordinary circumstances on the care that the
SNF furnished to patients, including, but not limited to, photographs,
newspaper, and other media articles.
(iii) Except as provided in paragraph (d)(4)(iv) of this section,
CMS will not consider an exception request unless the SNF requesting
such exception has complied fully with the requirements in this
paragraph (d).
(iv) CMS may grant exceptions to SNFs without a request if it
determines that an extraordinary circumstance affects an entire region
or locale.
(v) CMS will calculate a SNF performance score for a fiscal year
for a SNF for which it has granted an exception request that does not
include its performance on the SNF readmission
[[Page 39290]]
measure during the calendar months affected by the extraordinary
circumstance.
* * * * *
0
6. Section 413.360 is amended by adding paragraph (b)(3) and revising
paragraphs (d)(1) and (4) to read as follows:
Sec. 413.360 Requirements under the Skilled Nursing Facility (SNF)
Quality Reporting Program (QRP).
* * * * *
(b) * * *
(3) CMS may remove a quality measure from the SNF QRP based on one
or more of the following factors:
(i) Measure performance among SNFs is so high and unvarying that
meaningful distinctions in improvements in performance can no longer be
made.
(ii) Performance or improvement on a measure does not result in
better resident outcomes.
(iii) A measure does not align with current clinical guidelines or
practice.
(iv) The availability of a more broadly applicable (across
settings, populations, or conditions) measure for the particular topic.
(v) The availability of a measure that is more proximal in time to
desired resident outcomes for the particular topic.
(vi) The availability of a measure that is more strongly associated
with desired resident outcomes for the particular topic.
(vii) Collection or public reporting of a measure leads to negative
unintended consequences other than resident harm.
(viii) The costs associated with a measure outweigh the benefit of
its continued use in the program.
* * * * *
(d) * * *
(1) SNFs that do not meet the requirements in paragraph (b) of this
section for a program year will receive a written notification of non-
compliance through at least one of the following methods: Quality
Improvement Evaluation System (QIES) Assessment Submission and
Processing (ASAP) system, the United States Postal Service, or via an
email from the Medicare Administrative Contractor (MAC). A SNF may
request reconsideration no later than 30 calendar days after the date
identified on the letter of non-compliance.
* * * * *
(4) CMS will notify SNFs, in writing, of its final decision
regarding any reconsideration request through at least one of the
following notification methods: QIES ASAP system, the United States
Postal Service, or via email from the Medicare Administrative
Contractor (MAC).
* * * * *
PART 424--CONDITIONS FOR MEDICARE PAYMENT
0
7. The authority citation for part 424 is revised to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
8. Section 424.20 is amended by revising paragraph (a)(1)(i) to read as
follows:
Sec. 424.20 Requirements for posthospital SNF care.
* * * * *
(a) * * *
(1) * * *
(i) The individual needs or needed on a daily basis skilled nursing
care (furnished directly by or requiring the supervision of skilled
nursing personnel) or other skilled rehabilitation services that, as a
practical matter, can only be provided in an SNF or a swing-bed
hospital on an inpatient basis, and the SNF care is or was needed for a
condition for which the individual received inpatient care in a
participating hospital or a qualified hospital, as defined in Sec.
409.3 of this chapter, or for a new condition that arose while the
individual was receiving care in the SNF or swing-bed hospital for a
condition for which he or she received inpatient care in a
participating or qualified hospital; or.
* * * * *
Dated: July 26, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: July 26, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-16570 Filed 7-31-18; 4:15 pm]
BILLING CODE 4120-01-P