Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program and Value-Based Purchasing Program for Federal Fiscal Year 2025, 64048-64163 [2024-16907]

Agencies

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

[Federal Register Volume 89, Number 151 (Tuesday, August 6, 2024)]
[Rules and Regulations]
[Pages 64048-64163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16907]



[[Page 64047]]

Vol. 89

Tuesday,

No. 151

August 6, 2024

Part II





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Parts 413 and 488





Medicare Program; Prospective Payment System and Consolidated Billing 
for Skilled Nursing Facilities; Updates to the Quality Reporting 
Program and Value-Based Purchasing Program for Federal Fiscal Year 
2025; Final Rule

Federal Register / Vol. 89, No. 151 / Tuesday, August 6, 2024 / Rules 
and Regulations

[[Page 64048]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 488

[CMS-1802-F]
RIN 0938-AV30


Medicare Program; Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities; Updates to the Quality 
Reporting Program and Value-Based Purchasing Program for Federal Fiscal 
Year 2025

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule finalizes changes and updates to the policies 
and payment rates used under the Skilled Nursing Facility (SNF) 
Prospective Payment System (PPS) for fiscal year (FY) 2025. First, we 
are rebasing and revising the SNF market basket to reflect a 2022 base 
year. Next, we update the wage index used under the SNF PPS to reflect 
data collected during the most recent decennial census. Additionally, 
we finalize several technical revisions to the code mappings used to 
classify patients under the Patient Driven Payment Model (PDPM) to 
improve payment and coding accuracy. This final rule also updates the 
requirements for the SNF Quality Reporting Program and the SNF Value-
Based Purchasing Program. Finally, we also are revising CMS' 
enforcement authority for imposing civil money penalties (CMPs) and 
including revisions to strengthen nursing home enforcement regulations.

DATES: These regulations are effective on October 1, 2024.

FOR FURTHER INFORMATION CONTACT: 
    [email protected] for issues related to the SNF PPS.
    Heidi Magladry, (410) 786-6034, for information related to the 
skilled nursing facility quality reporting program.
    Christopher Palmer, (410) 786-8025, for information related to the 
skilled nursing facility value-based purchasing program.
    Celeste Saunders, (410) 786-5603, for information related to 
Nursing Home Enforcement.

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 Core-Based 
Statistical Area (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 Burwell 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
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 2025 SNF 
PPS Proposed Rule
    A. General Comments on the FY 2025 SNF PPS Proposed Rule
IV. SNF PPS Rate Setting Methodology and FY 2025 Update
    A. Federal Base Rates
    B. SNF Market Basket Update
    C. Case-Mix Adjustment
    D. Wage Index Adjustment
    E. SNF Value-Based Purchasing Program
    F. Adjusted Rate Computation Example
V. Additional Aspects of the SNF PPS
    A. SNF Level of Care--Administrative Presumption
    B. Consolidated Billing
    C. Payment for SNF-Level Swing-Bed Services
VI. Other SNF PPS Issues
    A. Rebasing and Revising the SNF Market Basket
    B. Changes to SNF PPS Wage Index
    C. Technical Updates to PDPM ICD-10 Mappings
    D. Request for Information: Update to PDPM Non-Therapy Ancillary 
Component
VII. Skilled Nursing Facility Quality Reporting Program (SNF QRP)
    A. Background and Statutory Authority
    B. General Considerations Used for the Selection of Measures for 
the SNF QRP
    C. Collection of Four Additional Items as Standardized Patient 
Assessment Data Elements and Modification of One Item Collected as a 
Standardized Patient Assessment Data Element Beginning With the FY 
2027 SNF QRP
    D. SNF QRP Quality Measure Concepts Under Consideration for 
Future Years--Request for Information (RFI)
    E. Form, Manner, and Timing of Data Submission Under the SNF QRP
    F. Policies Regarding Public Display of Measure Data for the SNF 
QRP
VIII. Skilled Nursing Facility Value-Based Purchasing (SNF VBP) 
Program
    A. Statutory Background
    B. Regulation Text Technical Updates
    C. SNF VBP Program Measures
    D. SNF VBP Performance Standards
    E. SNF VBP Performance Scoring Methodology
    F. Updates to the SNF VBP Review and Correction Process
    G. Updates to the SNF VBP Extraordinary Circumstances Exception 
Policy
IX. Nursing Home Enforcement
    A. Background
    B. Analysis of the Provisions of the Proposed Regulations
X. Collection of Information Requirements
XI. Economic Analyses
    A. Regulatory Impact Analysis
    B. Regulatory Flexibility Act Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Federalism Analysis
    E. Regulatory Review Costs

I. Executive Summary

A. Purpose

    This final rule will update the SNF prospective payment rates for 
fiscal year (FY) 2025, as required under section 1888(e)(4)(E) of the 
Social Security Act (the Act). It also responds to section 
1888(e)(4)(H) of the Act, which requires the Secretary to provide for 
publication of certain specified information relating to the payment 
update (see section II.C. of this final rule) in the Federal Register 
before the August 1 that precedes the start of each FY. Additionally, 
in this final rule, we are finalizing the rebasing and revising of the 
SNF market basket to reflect a 2022 base year. Next, we are finalizing 
the update to the wage index used under the SNF PPS to reflect data 
collected during the most recent decennial census. We also finalize 
several technical revisions to the code mappings used to classify 
patients under the PDPM to improve payment and coding accuracy. This 
final rule updates the requirements for the SNF QRP, including the 
collection of four new items as standardized patient assessment data 
elements, and the modification of one item collected and submitted 
using the Minimum Data Set (MDS) beginning with the FY 2027 SNF QRP. We 
also finalize a policy that SNFs, which participate in the SNF QRP, 
participate in a validation process beginning with the FY 2027 SNF QRP. 
We also provide a summary of the

[[Page 64049]]

comments received on the request for information on quality measure 
concepts under consideration for future SNF QRP program years. This 
final rule also includes requirements for the Skilled Nursing Facility 
Value-Based Purchasing (SNF VBP) Program, including adopting a measure 
selection, retention, and removal policy, a technical measure updates 
policy, a measure minimum for FY 2028 and subsequent years, updates to 
the review and correction policy to accommodate new measure data 
sources, updates to the Extraordinary Circumstances Exception policy, 
and updates to the SNF VBP regulation text. We also proposed revisions 
to existing long-term care (LTC) enforcement regulations that would 
enable CMS and the States to impose CMPs to better reflect amounts that 
are more consistent with the type of noncompliance that occurred.

B. Summary of Major Provisions

    In accordance with sections 1888(e)(4)(E)(ii)(IV) and (e)(5) of the 
Act, this final rule updates the annual rates that we published in the 
SNF PPS final rule for FY 2024 (88 FR 53200, August 7, 2023). In 
addition, this final rule includes a forecast error adjustment for FY 
2025. We are also finalizing the rebasing and revising of the SNF 
market basket to reflect a 2022 base year. Next, we are finalizing the 
update of the wage index used under the SNF PPS to reflect data 
collected during the most recent decennial census. We are also 
finalizing several technical revisions to the code mappings used to 
classify patients under the PDPM to improve payment and coding 
accuracy.
    We are finalizing several updates for the SNF VBP Program. We are 
adopting a measure selection, retention, and removal policy that aligns 
with policies we have adopted in other CMS quality programs. We are 
adopting a technical measure updates policy that allows us to 
incorporate technical measure updates into SNF VBP measure 
specifications and to update the numerical values of the performance 
standards for a program year if a measure's specifications were 
technically updated between the time that we published the performance 
standards for a measure and the time that we calculate SNF performance 
on that measure at the conclusion of the applicable performance period. 
We are adopting the same measure minimum we previously finalized for 
the FY 2027 program year for the FY 2028 program year and subsequent 
program years. We are adopting modifications to Phase One of our review 
and correction policy such that the policy applies to all SNF VBP 
measures regardless of the measure's data source. We are updating the 
SNF VBP extraordinary circumstances exception (ECE) policy to allow 
SNFs to request an ECE if the SNF can demonstrate that, as a result of 
the extraordinary circumstance, it cannot report SNF VBP data on one or 
more measures by the specified deadline. We are also updating the 
instructions for requesting an extraordinary circumstance exception 
(ECE). Lastly, we are adopting several updates to the SNF VBP 
regulation text to align with previously finalized definitions and 
policies.
    Beginning with the FY 2027 SNF QRP, we are finalizing requirements 
that SNFs participating in the SNF QRP collect and submit through the 
MDS four new items as standardized patient assessment data elements 
under the social determinants of health (SDOH) category: one item for 
Living Situation, two items for Food, and one item for Utilities. 
Additionally, we are finalizing our proposal to modify the current 
Transportation item. We are finalizing with modification a validation 
process for the SNF QRP, similar to the process that we adopted for the 
SNF VBP beginning with the FY 2027 SNF QRP. We are also finalizing with 
modification amendments to the regulation text at Sec.  413.360 to 
implement the validation process we are finalizing. Finally, this final 
rule also summarizes comments we received in response to a request for 
information (RFI) on quality measure concepts under consideration for 
future SNF QRP years.
    We are finalizing revisions to CMS' existing enforcement authority 
to expand the number and types of CMPs that can be imposed on LTC 
facilities, allowing for more per-instance (PI) CMPs to be imposed in 
conjunction with per-day (PD) CMPs. This update also expands our 
authority to impose multiple PI CMPs when the same type of 
noncompliance is identified on more than one day. Lastly, the final 
revisions will enable CMS or the States to impose a CMP for the number 
of days of previously cited noncompliance since the last three standard 
surveys for which a CMP has not yet been imposed to ensure that 
identified noncompliance may be subject to a penalty.

C. Summary of Cost and Benefits

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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 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 virtually 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_2018-10-01.pdf.
    Section 215(a) of the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93, enacted 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. In 
2014, section 2(c)(4) of the Improving Medicare Post-Acute Care 
Transformation (IMPACT) Act of 2014 (Pub. L. 113-185, enacted October 
6, 2014) amended section 1888(e)(6) of the Act, which requires the 
Secretary to implement a QRP for SNFs under which SNFs report data on 
measures and resident assessment data. Finally, section 111 of the 
Consolidated Appropriations Act, 2021 (CAA, 2021) (Pub. L. 116-260, 
enacted December 27, 2020) amended section 1888(h) of the Act, 
authorizing the Secretary to apply up to nine additional measures to 
the VBP program for SNFs.

B. Initial Transition for the SNF PPS

    Under sections 1888(e)(1)(A) and (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 
2024 (88 FR 53200, August 7, 2023), as amended by the subsequent 
correction document (88 FR 68486, October 4, 2023).
    Section 1888(e)(4)(H) of the Act specifies that we provide for 
publication annually in the Federal Register 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 set out the required annual updates to the per diem 
payment rates for SNFs for FY 2025.

[[Page 64051]]

III. Analysis and Responses to Public Comments on the FY 2025 SNF PPS 
Proposed Rule

A. General Comments on the FY 2025 SNF PPS Proposed Rule

    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Some commenters expressed concerns regarding several items 
outside the scope of this rule or outside the scope of CMS's current 
authorities. These comments included issues related to the recently 
finalized nursing home staffing rule (outside of issues related to that 
rule and calculation of the SNF market basket, which are addressed 
later in this rule), and a request that CMS remove the 3-day qualifying 
hospital stay (QHS) prerequisite for Part A SNF coverage.
    Response: With regard to those comments related to the recently 
finalized nursing home staffing rule, any such issues are out of scope 
for this rule and should be directed to 
[email protected]. With regard to the request that 
we remove the QHS requirement for Part A SNF coverage, we maintain that 
we do not have the statutory authority to pursue this change at this 
time. Moreover, we have previously conducted analyses of the associated 
cost of removing the 3-day stay requirement and found that it would 
significantly increase Medicare outlays.
    Comment: Several commenters raised concerns with therapy treatment 
under PDPM, specifically related to reductions in the amount of therapy 
furnished to SNF patients since PDPM was implemented. Some of these 
commenters stated that CMS should revise the existing limit on 
concurrent and group therapy to provide a financial penalty in cases 
where the facility exceeds this limit. These commenters also 
recommended that CMS direct its review contractors to examine the 
practices of facilities that changed their therapy service provision 
after PDPM was implemented. Additionally, commenters want CMS to 
release the results of any monitoring efforts around therapy provision. 
Some commenters stated that the therapy items in O0400 should be 
maintained to track therapy provision. Finally, some commenters stated 
that CMS should reinstate the assessment schedule that had existed 
prior to implementing PDPM.
    Response: We appreciate commenters raising these concerns around 
therapy provision under PDPM, as compared the Resource Utilization 
Groups, Version IV (RUG-IV). We agree with commenters that the amount 
of therapy that is furnished to patients under PDPM is less than that 
delivered under RUG-IV. As we stated in the FY 2020 SNF PPS final rule, 
we believe that close, real-time monitoring is essential to identifying 
any adverse trends under PDPM. While we have identified the same 
reduction in therapy services and therapy staff, we believe that these 
findings must be considered within the context of patient outcomes. To 
the extent that facilities are able to maintain or improve patient 
outcomes, we believe that this supersedes changes in service provision, 
whether this be in the amount of therapy furnished or the mode in which 
it is furnished. We continue to monitor all aspects of PDPM and advise 
our review contractors on any adverse trends. With regard to 
implementing a specific penalty for exceeding the group and concurrent 
therapy threshold, based on our current data, we have not identified 
any widespread misuse of this limit. Should we identify such misuse, 
either at a provider-level or at a broader level, we will pursue an 
appropriate course of action.
    With regard to eliminating certain therapy tracking items in O0400, 
while the O0400 items are able to track therapy minutes, these items 
only track therapy provision for the seven days up to and including the 
assessment reference date. We agree with the commenters that items 
should exist to track therapy provision over the course of a full 
Medicare stay, which is the purpose of the O0425 items on the 
assessment.
    Finally, with regard to the recommendation that we reinstate 
something akin to the assessment schedule that was in effect under RUG- 
IV, given that PDPM does not reimburse on the basis of therapy minutes, 
we do not believe that such an increase in administrative burden on 
providers would have an impact on therapy provision. That being said, 
we strongly encourage interested parties to continue to provide 
suggestions on how to ensure that SNF patients receive the care they 
need based on their unique characteristics and goals.
    Comment: One commenter requested that we consider including 
recreational therapy time provided to SNF residents by recreational 
therapists into the case- mix adjusted therapy component of PDPM, 
rather than having it be considered part of the nursing component. This 
commenter further suggested that CMS begin collecting data, as part of 
a demonstration project, on the utilization of recreational therapy, as 
a distinct and separate service, and its impact on patient care cost 
and quality.
    Response: We appreciate the commenter raising this issue, but we do 
not believe there is sufficient evidence at this time regarding the 
efficacy of recreational therapy interventions. More notably, we do not 
believe there are data that would substantiate a determination of the 
effect on payment of such interventions, as such services were not 
considered separately when the PDPM was being developed, unlike 
physical, occupational and speech-language pathology services. That 
being said, we would note that Medicare Part A originally paid for 
institutional care in various provider settings, including SNF, on a 
reasonable cost basis, but now makes payment using PPS methodologies, 
such as the SNF PPS. To the extent that one of these SNFs furnished 
recreational therapy to its inpatients under the previous, reasonable 
cost methodology, the cost of the services would have been included in 
the base payments when SNF PPS payment rates were derived. Under the 
PPS methodology, Part A makes a comprehensive payment for the bundled 
package of items and services that the facility furnishes during the 
course of a Medicare-covered stay. This package encompasses nearly all 
services that the beneficiary receives during the course of the stay--
including any medically necessary recreational therapy--and payment for 
such services is included within the facility's comprehensive SNF PPS 
payment for the covered Part A stay itself. With regard to developing a 
demonstration project focused on this particular service, we do not 
believe that creating such a project would substantially improve the 
accuracy of the SNF PPS payment rates. Moreover, in light of comments 
discussed previously in this section on the impact of PDPM 
implementation on therapy provision more generally, we believe that 
carving out recreational therapy as a separate discipline will not have 
a significant impact on access to recreational therapy services for SNF 
patients.

IV. SNF PPS Rate Setting Methodology and FY 2025 Payment Update

A. Federal Base Rates

    Under section 1888(e)(4) of the Act, the SNF PPS uses per diem 
Federal payment rates based on mean SNF costs in a base year (FY 1995) 
updated for inflation to the first effective period of the PPS. We 
developed the Federal payment rates using allowable costs from 
hospital-based and freestanding SNF cost reports for reporting periods

[[Page 64052]]

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 the SNF market basket, and then standardized for 
geographic variations in wages and for the costs of facility 
differences in case-mix. In compiling the database used to compute the 
Federal payment rates, we excluded those providers that received new 
provider exemptions from the routine cost limits, as well as costs 
related to payments for exceptions to the routine cost limits. Using 
the formula that the BBA 1997 prescribed, we set the Federal rates at a 
level equal to the weighted mean of freestanding costs plus 50 percent 
of the difference between the freestanding mean and weighted mean of 
all SNF costs (hospital-based and freestanding) combined. We computed 
and applied separately the payment rates for facilities located in 
urban and rural areas and adjusted the portion of the Federal rate 
attributable to wage-related costs by a wage index to reflect 
geographic variations in wages.

B. SNF Market Basket Update

1. SNF Market Basket
    Section 1888(e)(5)(A) of the Act requires us to establish a SNF 
market basket 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 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 2022 (86 FR 42444 through 42463), we rebased and revised the SNF 
market basket, which included updating the base year from 2014 to 2018. 
In the SNF PPS proposed rule for FY 2025 (89 FR 23427 through 23451), 
we proposed to rebase and revise the SNF market basket and update the 
base year from 2018 to 2022. We are finalizing the 2022-based SNF 
market basket as proposed, as discussed in section VI.A. of this final 
rule. The SNF market basket is used to compute the market basket 
percentage increase 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 increase is adjusted by a forecast error 
adjustment, 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 IV.B.4. of this final rule.
    As outlined in the proposed rule, we proposed a FY 2025 SNF market 
basket percentage increase of 2.8 percent based on IHS Global Inc.'s 
(IGI's) fourth-quarter 2023 forecast of the proposed 2022-based SNF 
market basket (before application of the forecast error adjustment and 
productivity adjustment). We also proposed that if more recent data 
subsequently became available (for example, a more recent estimate of 
the market basket and/or the productivity adjustment), we would use 
such data, if appropriate, to determine the FY 2025 SNF market basket 
percentage increase, labor-related share relative importance, forecast 
error adjustment, or productivity adjustment in this SNF PPS final 
rule.
    Since the proposed rule, we have updated the FY 2025 market basket 
percentage increase based on IGI's second quarter 2024 forecast with 
historical data through the first quarter of 2024. The FY 2025 growth 
rate of the 2022-based SNF market basket is estimated to be 3.0 
percent.
2. Market Basket Update for FY 2025
    Section 1888(e)(5)(B) of the Act defines the SNF market basket 
percentage increase as the percentage change in the SNF market basket 
from the midpoint of the previous FY to the midpoint of the current FY. 
For the Federal rates outlined in the proposed rule, we used the 
percentage change in the SNF market basket to compute the update factor 
for FY 2025. This factor was based on the FY 2025 percentage increase 
in the proposed 2022-based SNF market basket reflecting routine, 
ancillary, and capital-related expenses. Sections 1888(e)(4)(E)(ii)(IV) 
and (e)(5)(B)(i) of the Act require that the update factor used to 
establish the FY 2025 unadjusted Federal rates be at a level equal to 
the SNF market basket percentage increase. Accordingly, we determined 
the total growth from the average market basket level for the period of 
October 1, 2023, through September 30, 2024, to the average market 
basket level for the period of October 1, 2024, through September 30, 
2025. As outlined in the proposed rule, we proposed a FY 2025 SNF 
market basket percentage increase of 2.8 percent. For this final rule, 
based on IGI's second quarter 2024 forecast with historical data 
through the first quarter of 2024, the FY 2025 growth rate of the 2022-
based SNF market basket is estimated to be 3.0 percent.
    As further explained in section IV.B.3. of this final rule, as 
applicable, we adjust the percentage increase by the forecast error 
adjustment 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 increase in the market basket exceeds 
a 0.5 percentage point threshold in absolute terms. Additionally, 
section 1888(e)(5)(B)(ii) of the Act requires us to reduce the market 
basket percentage increase by the productivity adjustment (the 10-year 
moving average of changes in annual economy-wide private nonfarm 
business total factor productivity (TFP) for the period ending 
September 30, 2025) which is estimated to be 0.5 percentage point, as 
described in section IV.B.4. of this final rule.
    We also 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 
productivity adjustment) and section 1888(e)(5)(B)(iii) of the Act (the 
market basket increase). 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 percentage change being less than zero 
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 to the fiscal year involved, and that the reduction cannot 
be taken into account in computing the payment amount for a subsequent 
fiscal year.
    The following is a of the public comments received on the proposed 
FY 2025 SNF market basket percentage increase to the SNF PPS rates, 
along with our responses.
    Comment: Many commenters stated that they appreciate and support 
the proposed net 4.1 percent payment update and forecast error 
adjustment; however, some commenters expressed concerns about missed 
forecasts and whether the market basket is appropriately capturing 
inflation.

[[Page 64053]]

    Commenters cited a report from the AHA, which found that hospital 
employee compensation has grown by 45 percent since 2014, and workforce 
shortages that may persist into the future could continue to drive 
labor-related inflation higher. As a result, providers have turned to 
more expensive contract labor to sustain operations. Several commenters 
noted themselves or their members experiencing high rates of inflation 
in equipment and supplies, and questioned whether the inflation is 
being properly captured in the market basket.
    A few commenters noted that there have now been four consecutive 
years of under-forecasts, and that growth in the Consumer Price Index 
All Urban totaled 16.8 percent between 2021 and 2023 while SNF market 
basket growth totaled only 15.5 percent over the same time period. 
Several commenters also expressed that the proposed 4.1 percent payment 
update will fall short of covering the costs of the finalized minimum 
staffing rule. Two commenters urged CMS to consider a prospective 
adjustment for labor inflation. Two commenters urged CMS to use more 
recent data to determine the FY SNF market basket update in the final 
rule.
    Response: We recognize commenters' concerns in relation to forecast 
error during a high inflationary period. SNF PPS market basket updates 
are set prospectively, which means that the market basket update relies 
on a mix of both historical data for part of the period for which the 
update is calculated and forecasted data for the remainder. For 
instance, the FY 2025 market basket update in this final rule reflects 
historical data through the first quarter of 2024 and forecasted data 
through the third quarter of 2025. IHS Global Inc. (IGI) is a 
nationally recognized economic and financial forecasting firm with 
which CMS contracts to forecast the components of the market baskets. 
We believe that basing the prospective update on these forecasts is an 
appropriate method, while also acknowledging that these are 
expectations of trends and may differ from actual experience.
    We also understand commenters' concerns regarding the minimum 
staffing rule not being taken into account. The 2022-based SNF market 
basket is a fixed-weight, Laspeyres-type price index that measures the 
change in price, over time, of the same mix of goods and services 
purchased in the base period. Any changes in the quantity or mix of 
goods and services (that is, intensity) purchased over time relative to 
a base period are not measured. The cost weights in this final rule are 
based on the most recent set of complete and comprehensive cost data 
for the universe of SNF providers available at the time of rulemaking, 
and the price proxies for each cost category include expectations of 
the inflationary pressures for each category of expenses in the market 
basket. Any changes in intensity relative to the 2022-based SNF market 
basket will be reflected in future Medicare cost reports and thus 
captured in the next rebasing. We will continue to monitor Medicare 
cost report data for freestanding SNFs as it becomes available to 
assess whether the 2022-based SNF market basket cost weights continue 
to be appropriate in the coming years.
    We recognize the challenges facing SNFs in operating during a high 
inflationary environment. Due to SNF payments under PPS being set 
prospectively, we rely on a projection of the SNF market basket that 
reflects both recent historical trends, as well as forecast 
expectations over the next 18 months. The forecast error for a market 
basket update is calculated as the actual market basket increase for a 
given year, less the forecasted market basket increase. Due to the 
uncertainty regarding future price trends, forecast errors can be both 
positive or negative. We are confident that the forecast error 
adjustments built into the SNF market basket update factor will account 
for these discrepancies over time.
    The proposed FY 2025 SNF market basket percentage increase of 2.8 
percent reflected the most-recent forecast available at that time of 
rulemaking. As stated in the SNF PPS proposed rule for FY 2025 (89 FR 
23451), we also proposed that if more recent data subsequently became 
available (for example, a more recent estimate of the market basket 
and/or the productivity adjustment), we would use such data, if 
appropriate, to determine the FY 2025 SNF market basket percentage 
increase, labor-related share relative importance, forecast error 
adjustment, or productivity adjustment in the SNF PPS final rule. For 
this final rule, we have incorporated the most recent historical data 
and forecasts provided by IGI to capture the expected price and wage 
pressures facing SNFs in FY 2025. For this final rule, based on IGI's 
second-quarter 2024 forecast with historical data through first-quarter 
2024, the FY 2025 growth rate of the 2022-based SNF market basket is 
3.0 percent. By incorporating the most recent estimates available of 
the market basket percentage increase, we believe these data reflect 
the best available projection of input price inflation faced by SNFs in 
FY 2025.
    After consideration of the comments received on the FY 2025 SNF 
market basket proposals, we are finalizing a FY 2025 SNF market basket 
percentage increase of 3.0 percent (prior to the application of the 
forecast error adjustment and productivity adjustment, which are 
discussed later in this section).
3. Forecast Error Adjustment
    As discussed in the June 10, 2003 supplemental proposed rule (68 FR 
34768) and finalized in the August 4, 2003 final rule (68 FR 46057 
through 46059), Sec.  413.337(d)(2) provides for an adjustment to 
account for market basket forecast error. The initial adjustment for 
market basket forecast error applied to the update of the FY 2003 rate 
for FY 2004 and took into account the cumulative forecast error for the 
period from FY 2000 through FY 2002, resulting in an increase of 3.26 
percent to the FY 2004 update. Subsequent adjustments in succeeding FYs 
take into account the forecast error from the most recently available 
FY for which there is final data and apply the difference between the 
forecasted and actual change in the market basket when the difference 
exceeds a specified threshold. We originally used a 0.25 percentage 
point threshold for this purpose; however, for the reasons specified in 
the FY 2008 SNF PPS final rule (72 FR 43425), 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), the adjustment will 
reflect both upward and downward adjustments, as appropriate.
    For FY 2023 (the most recently available FY for which there is 
final data), the forecasted or estimated increase in the SNF market 
basket was 3.9 percent, and the actual increase for FY 2023 was 5.6 
percent, resulting in the actual increase being 1.7 percentage points 
higher than the estimated increase. Accordingly, as the difference 
between the estimated and actual amount of change in the market basket 
exceeds the 0.5 percentage point threshold, under the policy previously 
described (comparing the forecasted and actual market basket percentage 
increase), the FY 2025 market basket percentage increase of 3.0 percent 
is adjusted upward to account for the forecast error adjustment of 1.7 
percentage points, resulting in a SNF market basket percentage increase 
of 4.7 percent, which is then reduced by the productivity adjustment of 
0.5

[[Page 64054]]

percentage point, discussed in section IV.B.4. of this final rule. This 
results in a SNF market basket update for FY 2025 of 4.2 percent.
    Table 2 shows the forecasted and actual market basket increases for 
FY 2023.
[GRAPHIC] [TIFF OMITTED] TR06AU24.001

    A discussion of the public comments received on the forecast error 
adjustment, along with our responses, can be found below.
    Comment: Several commenters noted that while they appreciate the 
forecast error adjustment, forecast error adjustments are made two 
years after the year in question and SNFs must contend with the 
underpayment for two years before it is reconciled. One commenter 
suggested updating the method to use more timely data that would 
capture increased costs in recent years.
    Response: While we understand that earlier forecast error 
adjustments might be preferable, a two-year lag is necessary because 
historical data for the current fiscal year are not available until 
after the following year's update is determined.
    Comment: One commenter stated that not including Federal relief 
funds, the aggregate fee-for-service (FFS) Medicare margin for 
freestanding SNFs in 2022 was over 18 percent, the 23rd consecutive 
year this this margin has exceeded 10 percent. They note that high 
margins indicate that a reduction is needed to more closely align 
aggregate payments to aggregate costs.
    The commenter also noted that although CMS is required by statute 
to update the payment rates each year by the estimated change in the 
market basket, CMS is not required to make automatic forecast error 
corrections. They maintain that they do not support forecast error 
adjustments for three reasons. First, in some years, such as the one 
addressed by the proposed rule for FY 2025, the forecast error 
correction results in making a larger payment increase in addition to 
the statutory update, even as the aggregate FFS Medicare margin is 
high. Second, the adjustments result in more variable updates than had 
no adjustment been made. Since FY 2004, when CMS implemented the 
adjustment, forecast error corrections have ranged from a 3.26 percent 
increase (in FY 2004) to a -0.8 percent reduction (in FY 2022). 
Eliminating the adjustment for forecast errors would result in more 
stable updates. Third, the adjustment results in inconsistent 
approaches to updates across settings: except for the updates to the 
capital payments to acute care hospitals, CMS does not apply forecast 
error adjustments to any other market basket updates.
    Response: We appreciate the commenter's input and suggestions. We 
note that apart from the last several years of various unprecedented 
market shocks and resulting volatility, forecast errors have generally 
been relatively small and clustered near zero. We agree that forecast 
error adjustments have potential to introduce more variable and 
unstable updates. As a result, for FY 2008 and subsequent years we 
increased the threshold at which adjustments are triggered from 0.25 
percentage point to 0.5 percentage point. Our intent in raising the 
threshold was to distinguish typical statistical variances from more 
major unanticipated impacts, such as unforeseen disruptions of the 
economy or unexpected inflationary patterns.
    As was stated when the SNF forecast error adjustment was introduced 
in the FY 2004 SNF PPS final rule (68 FR 46035), our goal continues to 
be to ``pay the appropriate amount, to the correct provider, for the 
proper service, at the right time.'' Accordingly, we are optimistic 
that market volatility will soon subside to a point where forecast 
errors will not be frequently triggered. Nonetheless, we will continue 
to monitor the effects of forecast error adjustments, and their 
appropriateness in responding to unforeseen inflationary patterns. Any 
changes, if deemed necessary, would be proposed through notice and 
comment rulemaking.
    After consideration of the comments received, we are finalizing the 
application of the proposed forecast error adjustment without 
modification. As stated above, based on IGI's second-quarter 2024 
forecast with historical data through the first quarter of 2024, the FY 
2025 growth rate of the 2022-based SNF market basket is estimated to be 
3.0 percent. Accordingly, as the difference between the estimated and 
actual amount of change in the market basket exceeds the 0.5 percentage 
point threshold, under the policy previously described (comparing the 
forecasted and actual market basket percentage increase), the FY 2025 
market basket percentage increase of 3.0 percent is adjusted upward to 
account for the forecast error adjustment of 1.7 percentage points, 
resulting in a SNF market basket percentage increase of 4.7 percent, 
which is then reduced by the productivity adjustment as discussed later 
in this section.
4. 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 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 productivity 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 productivity adjustment to be equal to the 
10-year moving average of changes in annual economy-wide, private 
nonfarm business multifactor productivity (MFP) (as projected by the 
Secretary for the 10-year period ending with the applicable FY, year, 
cost-reporting period, or other annual period).
    The U.S. Department of Labor's Bureau of Labor Statistics (BLS) 
publishes the official measure of productivity for the U.S. We note 
that previously the productivity measure referenced at section 
1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private 
nonfarm business multifactor

[[Page 64055]]

productivity. Beginning with the November 18, 2021, release of 
productivity data, BLS replaced the term MFP with TFP. BLS noted that 
this is a change in terminology only and will not affect the data or 
methodology. As a result of the BLS name change, the productivity 
measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is now 
published by BLS as private nonfarm business total factor productivity. 
We refer readers to the BLS website at www.bls.gov for the BLS 
historical published TFP data. A complete description of the TFP 
projection methodology is available on our website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, in 
the FY 2022 SNF final rule (86 FR 42429) we noted that, effective with 
FY 2022 and forward, we changed the name of this adjustment to refer to 
it as the ``productivity adjustment,'' rather than the ``MFP 
adjustment.''
    Per section 1888(e)(5)(A) of the Act, the Secretary shall establish 
a SNF market basket 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. Section 1888(e)(5)(B)(ii) of the Act 
further states that the reduction of the market basket percentage by 
the productivity 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. Thus, if the application of the productivity 
adjustment to the market basket percentage calculated under section 
1888(e)(5)(B)(i) of the Act results in a productivity-adjusted market 
basket percentage that is less than zero, then the annual update to the 
unadjusted Federal per diem rates under section 1888(e)(4)(E)(ii) of 
the Act would be negative, and such rates would decrease relative to 
the prior FY.
    Based on the data available for this FY 2025 SNF PPS final rule, 
the productivity adjustment (the 10-year moving average of changes in 
annual economy-wide private nonfarm business TFP for the period ending 
September 30, 2025) is projected to be 0.5 percentage point.
    Comment: A few commenters noted that they are disappointed in the 
productivity adjustment, and that CMS should closely monitor the effect 
of such productivity adjustments and explore ways to use its authority 
to offset or waive them.
    Response: Section 1888(e)(5)(B)(ii) of the Act requires the 
application of the productivity adjustment described in section 
1886(b)(3)(xi)(II) of the Act to the SNF PPS market basket increase 
factor. As required by statute, the FY 2025 productivity adjustment is 
derived based on the 10-year moving average growth in economy-wide 
productivity for the period ending in FY 2025. We recognize the 
concerns of the commenters regarding the appropriateness of the 
productivity adjustment; however, we are required under section 
1888(e)(5)(B)(ii) of the Act to apply the specific productivity 
adjustment described here in this section.
    As stated previously, in the proposed rule the productivity 
adjustment was estimated to be 0.4 percentage point based on IGI's 
fourth-quarter 2024 forecast. For this final rule, based on IGI's 
second-quarter 2024 forecast, the productivity adjustment (the 10-year 
moving average of changes in annual economy-wide private nonfarm 
business TFP for the period ending September 30, 2025) is 0.5 
percentage point.
    Consistent with section 1888(e)(5)(B)(i) of the Act and Sec.  
413.337(d)(2), and as outlined previously in section IV.B.1. of this 
final rule, the market basket percentage increase for FY 2025 for the 
SNF PPS is based on IGI's second quarter 2024 forecast of the SNF 
market basket percentage increase, which is estimated to be 3.0 
percent. This market basket percentage increase is then increased by 
1.7 percentage points, due to application of the forecast error 
adjustment outlined earlier in section IV.B.3. of this final rule. 
Finally, as outlined earlier in this section, we are applying a 0.5 
percentage point productivity adjustment to the FY 2025 SNF market 
basket percentage increase. Therefore, the resulting productivity-
adjusted FY 2025 SNF market basket update is equal to 4.2 percent, 
which reflects a market basket percentage increase of 3.0 percent, plus 
the 1.7 percentage points forecast error adjustment, and reduced by the 
0.5 percentage point productivity adjustment. Thus, we apply a net SNF 
market basket update factor of 4.2 percent in our determination of the 
FY 2025 SNF PPS unadjusted Federal per diem rates.
5. Unadjusted Federal Per Diem Rates for FY 2025
    As discussed in the FY 2019 SNF PPS final rule (83 FR 39162), in FY 
2020 we implemented a new case-mix classification system to classify 
SNF patients under the SNF PPS, the PDPM. As discussed in section 
V.B.1. of that final rule (83 FR 39189), under PDPM, the unadjusted 
Federal per diem rates are divided into six components, five of which 
are case-mix adjusted components (Physical Therapy (PT), Occupational 
Therapy (OT), Speech-Language Pathology (SLP), Nursing, and Non-Therapy 
Ancillaries (NTA)), and one of which is a non-case-mix component, as 
existed under the previous RUG-IV model. We proposed to use the SNF 
market basket, adjusted as outlined previously in sections III.B.1. 
through III.B.4. of the proposed rule, to adjust each per diem 
component of the Federal rates forward to reflect the change in the 
average prices for FY 2024 from the average prices for FY 2023. We also 
proposed to further adjust the rates by a wage index budget neutrality 
factor, outlined in section III.D. of the proposed rule.
    Further, in the past, we used the revised Office of Management and 
Budget (OMB) delineations adopted in the FY 2015 SNF PPS final rule (79 
FR 45632, 45634), with updates as reflected in OMB Bulletin Nos. 15-01 
and 17-01, to identify a facility's urban or rural status for the 
purpose of determining which set of rate tables apply to the facility. 
As discussed in the FY 2021 SNF PPS proposed and final rules, we 
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) to identify a facility's urban or rural status 
effective beginning with FY 2021. However, as further outlined in 
section V.A of the proposed rule, the current CBSAs are based on OMB 
standards contained in Bulletin 20-01, which is based on data collected 
during the 2010 Decennial Census. In this final rule, we are updating 
the SNF PPS wage index using the CBSAs defined within Bulletin 23-01.
    Tables 3 and 4 reflect the proposed unadjusted Federal rates for FY 
2025, prior to adjustment for case-mix.

[[Page 64056]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.002

[GRAPHIC] [TIFF OMITTED] TR06AU24.003

C. Case-Mix Adjustment

    Under section 1888(e)(4)(G)(i) of the Act, the Federal rate also 
incorporates an adjustment to account for facility case-mix, using a 
classification system that accounts for the relative resource 
utilization of different patient types. The statute specifies that the 
adjustment is to reflect both a resident classification system that the 
Secretary establishes to account for the relative resource use of 
different patient types, as well as resident assessment data and other 
data that the Secretary considers appropriate. In the FY 2019 final 
rule (83 FR 39162, August 8, 2018), we finalized a new case-mix 
classification model, the PDPM, which took effect beginning October 1, 
2019. The previous RUG-IV model classified most patients into a therapy 
payment group and primarily used the volume of therapy services 
provided to the patient as the basis for payment classification, thus 
creating an incentive for SNFs to furnish therapy regardless of the 
individual patient's unique characteristics, goals, or needs. PDPM 
eliminates this incentive and improves the overall accuracy and 
appropriateness of SNF payments by classifying patients into payment 
groups based on specific, data-driven patient characteristics, while 
simultaneously reducing the administrative burden on SNFs.
    The PDPM uses clinical data from the MDS to assign case-mix 
classifiers to each patient that are then used to calculate a per diem 
payment under the SNF PPS, consistent with the provisions of section 
1888(e)(4)(G)(i) of the Act. As outlined in section IV.A. of the 
proposed rule, the clinical orientation of the case-mix classification 
system supports the SNF PPS's use of an administrative presumption that 
considers a beneficiary's initial case-mix classification to assist in 
making certain SNF level of care determinations. Further, because the 
MDS is used as a basis for payment, as well as a clinical assessment, 
we have provided extensive training on proper coding and the timeframes 
for MDS completion in our Resident Assessment Instrument (RAI) Manual. 
As we have stated in prior rules, for an MDS to be considered valid for 
use in determining payment, the MDS assessment should 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.
    Under section 1888(e)(4)(H) of the Act, each update of the payment 
rates must include the case-mix classification methodology applicable 
for the upcoming FY. The FY 2025 payment rates set forth in this final 
rule reflect the use of the PDPM case-mix classification system from 
October 1, 2023, through September 30, 2024. The case-mix adjusted PDPM 
payment rates for FY 2025 are listed separately for urban and rural 
SNFs, in Tables 5 and 6 with corresponding case-mix values.
    Given the differences between the previous RUG-IV model and PDPM in 
terms of patient classification and billing, it was important that the 
format of Tables 5 and 6 reflect these differences. More specifically, 
under both RUG-IV and PDPM, providers use a Health Insurance 
Prospective Payment System (HIPPS) code on a claim to bill for covered 
SNF services. Under RUG-IV, the HIPPS code included the three-character 
RUG-IV group into which the patient classified, as well as a two-
character assessment indicator code that represented the assessment 
used to generate this code. Under PDPM, while providers still use a 
HIPPS code, the characters in that code represent different things. For 
example, the first character represents the PT and OT group into which 
the patient classifies. If the patient is classified into the PT and OT 
group ``TA'', then the first character in the patient's HIPPS code 
would be an A. Similarly, if the patient is classified into the SLP 
group ``SB'', then the second character in the patient's HIPPS code 
would be a B. The third character represents the Nursing group into 
which the patient classifies. The fourth character represents the NTA 
group into which the patient classifies. Finally, the fifth character 
represents the assessment used to generate the HIPPS code.
    Tables 5 and 6 reflect the PDPM's structure. Accordingly, Column 1 
of Tables 5 and 6 represents the character in the HIPPS code associated 
with a given PDPM component. Columns 2 and 3 provide the case-mix index 
and associated case-mix adjusted component rate, respectively, for the 
relevant PT group. Columns 4 and 5 provide the case-mix index and 
associated case-mix adjusted component rate, respectively, for the 
relevant OT group. Columns 6 and 7 provide the case-mix index and 
associated case-mix adjusted component rate, respectively, for the 
relevant SLP group. Column 8 provides the nursing case-mix group (CMG) 
that is connected with a given PDPM HIPPS character. For example, if 
the patient qualified for the nursing group CBC1, then the third 
character in the patient's HIPPS code would be a ``P.'' Columns 9 and 
10 provide the case-mix index and associated case-mix adjusted 
component rate, respectively, for the relevant nursing group. Finally, 
columns 11 and 12 provide the case-mix index and associated case-mix 
adjusted component rate, respectively, for the relevant NTA group.
    Tables 5 and 6 do not reflect adjustments which may be made to the 
SNF PPS rates as a result of the SNF VBP Program, outlined in section 
VII. of this final rule, or other adjustments,

[[Page 64057]]

such as the variable per diem adjustment.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR06AU24.004


[[Page 64058]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.005

BILLING CODE 4120-01-C

D. Wage Index Adjustment

    Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the 
Federal rates to account for differences in area wage levels, using a 
wage index that the Secretary determines appropriate. Since the 
inception of the SNF PPS, we have used hospital inpatient wage data in 
developing a wage index to be applied to SNFs. We will continue this 
practice for FY 2025, 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 under the inpatient prospective payment system (IPPS) 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. As in previous 
years, we continue to use the pre-reclassified IPPS hospital wage data, 
without applying the occupational mix, rural floor, or outmigration 
adjustment, as the basis for the SNF PPS wage index. For FY 2025, the 
updated wage data are for hospital cost reporting periods beginning on 
or after October 1, 2020, and before October 1, 2021 (FY 2021 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 December 21, 2000) gave the Secretary the discretion to 
establish a geographic reclassification procedure specific to SNFs, but 
only after collecting the data necessary to establish a SNF PPS wage 
index that is based on wage data from nursing homes. 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 the data. More specifically, 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. Adopting such an approach would require a significant 
commitment of resources by CMS and the Medicare Administrative 
Contractors (MACs), 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. While we do not believe this undertaking is 
feasible at this time, we will continue to explore implementation of a 
spot audit process to improve SNF cost reports to ensure they are 
adequately accurate for cost development purposes, in such a manner as 
to permit us to establish a SNF-specific wage index in the future.
    In addition, we will 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 2025 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 will continue

[[Page 64059]]

using the average wage index from all contiguous Core-Based Statistical 
Areas (CBSAs) as a reasonable proxy. For FY 2025, the only rural area 
without wage index data available is North Dakota. We have determined 
that the borders of 18 rural counties are local and contiguous with 8 
urban counties. Therefore, under this methodology, the wage indexes for 
the counties of Burleigh/Morton/Oliver (CBSA 13900: 0.9020), Cass (CBSA 
22020: 0.8763), Grand Forks (CBSA 24220: 0.7865), and McHenry/Renville/
Ward (CBSA 33500: 0.7686) are averaged, resulting in an imputed rural 
wage index of 0.8334 for rural North Dakota for FY 2025. In past years 
for rural Puerto Rico, we did not apply this methodology due to the 
distinct economic circumstances there; due to the close proximity of 
almost all of Puerto Rico's various urban and non-urban areas, this 
methodology will produce a wage index for rural Puerto Rico that is 
higher than that in half of its urban areas. However, because rural 
Puerto Rico now has hospital wage index data on which to base an area 
wage adjustment, we will not apply this policy for FY 2025. For urban 
areas without specific hospital wage index data, we will continue using 
the average wage indexes of all urban areas within the State to serve 
as a reasonable proxy for the wage index of that urban CBSA. For FY 
2025, the only urban area without wage index data available is CBSA 
25980, Hinesville-Fort Stewart, GA.
    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), after the expiration of this 1-year transition on September 30, 
2006, we 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 in the June 28, 
2010 Federal Register (75 FR 37246 through 37252). Subsequently, on 
July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provided minor 
updates to and superseded OMB Bulletin No. 13-01 that was issued on 
February 28, 2013. The attachment to OMB Bulletin No. 15-01 provided 
detailed information on the update to statistical areas since February 
28, 2013. The updates provided in OMB Bulletin No. 15-01 were 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, and were adopted under the SNF PPS 
in the FY 2017 SNF PPS final rule (81 FR 51983, August 5, 2016). In 
addition, on August 15, 2017, OMB issued Bulletin No. 17-01 which 
announced a new urban CBSA, Twin Falls, Idaho (CBSA 46300), which was 
adopted in the SNF PPS final rule for FY 2019 (83 FR 39173, August 8, 
2018).
    As discussed in the FY 2021 SNF PPS final rule (85 FR 47594), we 
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) beginning October 1, 2020, including a 1-year 
transition for FY 2021 under which we applied a 5 percent cap on any 
decrease in a hospital's wage index compared to its wage index for the 
prior fiscal year (FY 2020). The updated OMB delineations more 
accurately reflect the contemporary urban and rural nature of areas 
across the country, and the use of such delineations allows us to 
determine more accurately the appropriate wage index and rate tables to 
apply under the SNF PPS.
    In the FY 2023 SNF PPS final rule (87 FR 47521 through 47525), we 
finalized a policy to apply a permanent 5 percent cap on any decreases 
to a provider's wage index from its wage index in the prior year, 
regardless of the circumstances causing the decline. We amended the SNF 
PPS regulations at 42 CFR 413.337(b)(4)(ii) to reflect this permanent 
cap on wage index decreases. Additionally, we finalized a policy that a 
new SNF would be paid the wage index for the area in which it is 
geographically located for its first full or partial FY with no cap 
applied because a new SNF would not have a wage index in the prior FY. 
A full discussion of the adoption of this policy is found in the FY 
2023 SNF PPS final rule.
    As we previously stated in the FY 2008 SNF PPS proposed and final 
rules (72 FR 25538 through 25539, and 72 FR 43423), 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. OMB issued further revised CBSA delineations in OMB 
Bulletin No. 20-01, on March 6, 2020 (available on the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf). 
However, we determined that the changes in OMB Bulletin No. 20-01 do 
not impact the CBSA-based labor market area delineations adopted in FY 
2021. Therefore, we did not propose to adopt the revised OMB 
delineations identified in OMB Bulletin No. 20-01 for FY 2022 through 
FY 2024.
    On July 21, 2023, OMB issued OMB Bulletin No. 23-01 which updates 
and supersedes OMB Bulletin No. 20-01 based on the decennial census. 
OMB Bulletin No. 23-01 revised delineations for CBSAs which are made up 
of counties and equivalent entities (for example, boroughs, a city and 
borough, and a municipality in Alaska, planning regions in Connecticut, 
parishes in Louisiana, municipios in Puerto Rico, and independent 
cities in Maryland, Missouri, Nevada, and Virginia). For FY 2025, we 
proposed to adopt the revised OMB delineations identified in OMB 
Bulletin No. 23-01 (available at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf). The wage index applicable to 
FY 2025 is set forth in Table 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 will apply the wage index adjustment to the 
labor-related portion of the Federal rate. Each year, we calculate a 
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 2022 (86 FR 42437), we 
finalized a proposal to revise the labor-related share to reflect the 
relative importance of the 2018-based SNF market basket cost weights 
for the

[[Page 64060]]

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. 
The methodology for calculating the labor-related portion beginning in 
FY 2022 is discussed in detail in the FY 2022 SNF PPS final rule (86 FR 
42461 through 42463). Effective beginning in FY 2025, as described in 
section VI.A. of this final rule, we are rebasing and revising the 
labor-related share to reflect the relative importance of the 2022-
based SNF market basket cost weights for the following 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. The methodology for 
calculating the labor-related share of the 2022-based SNF market basket 
is detailed in section VI.A.4. of this final rule.
    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 2025. 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 2025 than the base year weights 
from the SNF market basket. We calculate the labor-related relative 
importance for FY 2025 in four steps. First, we compute the FY 2025 
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 2025 price index level for that cost category by the 
total market basket price index level. Third, we determine the FY 2025 
relative importance for each cost category by multiplying this ratio by 
the base year (2022) weight. Finally, we add the FY 2025 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 2025 
labor-related relative importance.
    For the proposed rule, the labor-related share for FY 2025 was 
based on IGI's fourth quarter 2023 forecast of the proposed 2022-based 
SNF market basket with historical data through third-quarter 2023. For 
this final rule, as proposed, we estimate the labor-related share for 
FY 2025 based on IGI's more recent second quarter 2024 forecast, with 
historical data through the first quarter of 2024. Table 7 summarizes 
the labor-related share for FY 2025, based on IGI's second quarter 2024 
forecast of the 2022-based SNF market basket, compared to the labor-
related share that was used for the FY 2024 SNF PPS final rule.
[GRAPHIC] [TIFF OMITTED] TR06AU24.006

    To calculate the labor portion of the case-mix adjusted per diem 
rate, we will multiply the total case-mix adjusted per diem rate, which 
is the sum of all five case-mix adjusted components into which a 
patient classifies, and the non-case-mix component rate, by the FY 2025 
labor-related share percentage provided in Table 7. The remaining 
portion of the rate will be the non-labor portion. Under the previous 
RUG-IV model, we included tables which provided the case-mix adjusted 
RUG-IV rates, by RUG-IV group, broken out by total rate, labor portion 
and non-labor portion, such as Table 9 of the FY 2019 SNF PPS final 
rule (83 FR 39175). However, as we discussed in the FY 2020 final rule 
(84 FR 38738), under PDPM, as the total rate is calculated as a 
combination of six different component rates, five of which are case-
mix adjusted, and given the sheer volume of possible combinations of 
these five case-mix adjusted components, it is not feasible to provide 
tables similar to those that existed in the prior rulemaking.
    Therefore, to aid interested parties in understanding the effect of 
the wage index on the calculation of the SNF per diem rate, we have 
included a hypothetical rate calculation in Table 9.
    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

[[Page 64061]]

adjustment had not been made. For FY 2025 (Federal rates effective 
October 1, 2023), we apply an adjustment to fulfill the budget 
neutrality requirement. We 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 2025 to the weighted average wage adjustment factor for 
FY 2025. For this calculation, we will use the same FY 2023 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 portion of the rate component multiplied by the wage index plus 
the non-labor portion of the rate component. The budget neutrality 
factor for FY 2025 is 1.0005.
    In the proposed rule, we noted that if more recent data became 
available (for example, revised wage data), we would use such data, if 
appropriate, to determine the wage index budget neutrality factor in 
the SNF PPS final rule.

E. SNF Value-Based Purchasing Program

    Beginning with payment for services furnished on October 1, 2018, 
section 1888(h) of the Act requires the Secretary to reduce the 
adjusted Federal per diem rate determined under section 1888(e)(4)(G) 
of the Act otherwise applicable to a SNF for services furnished during 
a fiscal year by 2 percent, and to adjust the resulting rate for a SNF 
by the value-based incentive payment amount earned by the SNF based on 
the SNF's performance score for that fiscal year under the SNF VBP 
Program. To implement these requirements, we finalized in the FY 2019 
SNF PPS final rule the addition of Sec.  413.337(f) to our regulations 
(83 FR 39178).
    Please see section VIII. of this final rule for further discussion 
of the updates we are finalizing for the SNF VBP Program.

F. Adjusted Rate Computation Example

    Tables 8 through 10 provide examples generally illustrating payment 
calculations during FY 2025 under PDPM for a hypothetical 30-day SNF 
stay, involving the hypothetical SNF XYZ, located in Frederick, MD 
(Urban CBSA 23224), for a hypothetical patient who is classified into 
such groups that the patient's HIPPS code is NHNC1. Table 8 shows the 
adjustments made to the Federal per diem rates (prior to application of 
any adjustments under the SNF VBP Program as discussed) to compute the 
provider's case-mix adjusted per diem rate for FY 2025, based on the 
patient's PDPM classification, as well as how the variable per diem 
(VPD) adjustment factor affects calculation of the per diem rate for a 
given day of the stay. Table 9 shows the adjustments made to the case-
mix adjusted per diem rate from Table 8 to account for the provider's 
wage index. The wage index used in this example is based on the FY 2025 
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. Finally, Table 10 provides the case-mix and wage 
index adjusted per-diem rate for this patient for each day of the 30-
day stay, as well as the total payment for this stay. Table 10 also 
includes the VPD adjustment factors for each day of the patient's stay, 
to clarify why the patient's per diem rate changes for certain days of 
the stay. As illustrated in Table 10, SNF XYZ's total PPS payment for 
this particular patient's stay would equal $23,032.18.
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[[Page 64062]]


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BILLING CODE 4120-01-C

V. 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 outlined in 
section III.C. of the proposed rule. This approach includes an 
administrative presumption that utilizes a beneficiary's correct 
assignment, at the outset of the SNF stay, of one of the case-mix 
classifiers designated for this purpose to assist in making certain SNF 
level of care determinations.
    In accordance with 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. We also designate those specific classifiers under the 
case-mix classification system that represent the required SNF level of 
care, as provided in 42 CFR 409.30. This designation reflects an 
administrative presumption that those beneficiaries who are correctly 
assigned one of the designated case-mix classifiers on the initial 
Medicare assessment are automatically classified as meeting the SNF 
level of care definition up to and including the assessment reference 
date (ARD) for that assessment.
    A beneficiary who does not qualify for the presumption is not 
automatically classified as either meeting or not meeting the level of 
care definition, but instead receives an individual determination on 
this point using the existing administrative criteria. This presumption 
recognizes the strong likelihood that those beneficiaries who are 
correctly assigned one of the designated case-mix classifiers during 
the immediate post-hospital period would require a covered level of 
care, which would be less likely for other beneficiaries.
    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/

[[Page 64063]]

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 propose 
changes in them. Under that approach, the set of case-mix classifiers 
designated for this purpose under PDPM was finalized in the FY 2019 SNF 
PPS final rule (83 FR 39253) and is posted on the SNF PPS website 
(https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/), in the paragraph entitled ``Case Mix Adjustment.''
    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 any 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 where the sole classifier that 
triggers the presumption is itself assigned through 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 Assessment Reference 
Date (ARD) of the initial Medicare 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. 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). Effective with services furnished on or after 
January 1, 2024, section 4121(a)(4) of the Consolidated Appropriations 
Act, 2023 (CAA, 2023) (Pub. L. 117-328, enacted December 29, 2022) 
added marriage and family therapists and mental health counselors to 
the list of practitioners at section 1888(e)(2)(A)(ii) of the Act whose 
services are excluded from the consolidated billing provision.
    Section 103 of the Medicare, Medicaid, and SCHIP Balanced Budget 
Refinement Act of 1999 (BBRA 1999) (Pub. L. 106-113, enacted November 
29, 1999) amended section 1888(e)(2)(A)(iii) 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 1999 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 1999 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 these four specified service categories. In the proposed 
rule for FY 2001, we also noted that the BBRA 1999 Conference report 
(H.R. Conf. Rep. No. 106-479 at 854 (1999)) 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 1999 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 1999 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.
    Effective with items and services furnished on or after October 1, 
2021, section 134 in Division CC of the CAA, 2021 established an 
additional fifth category of excluded codes in section 
1888(e)(2)(A)(iii)(VI) of the Act, for certain blood clotting factors 
for the treatment of patients with hemophilia and other bleeding 
disorders along with items and services related to the furnishing of 
such factors under section 1842(o)(5)(C) of the Act. Like the 
provisions enacted in the BBRA 1999, section 1888(e)(2)(A)(iii)(VI) of 
the Act gives the Secretary the authority to designate additional items 
and services for exclusion within the category of items and services 
related to blood clotting factors, as described in that section.
    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_2018-10-01.pdf.
    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 1999: they must fall within one of the 
five service categories specified in the BBRA 1999 and CAA, 2021; and 
they also must meet the same standards of high cost and low probability 
in the SNF setting, as discussed in the BBRA 1999 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, we specifically solicited public comments 
identifying HCPCS codes in any of these five

[[Page 64064]]

service categories (chemotherapy items, chemotherapy administration 
services, radioisotope services, customized prosthetic devices, and 
blood clotting factors) representing recent medical advances that might 
meet our criteria for exclusion from SNF consolidated billing. We 
considered excluding a particular service if it met our criteria for 
exclusion as specified previously in this section of the preamble. We 
requested that commenters 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 noted that the original BBRA amendment and the CAA, 2021 
identified a set of excluded items and services by means of specifying 
individual HCPCS codes within the designated categories that were in 
effect as of a particular date (in the case of the BBRA 1999, July 1, 
1999, and in the case of the CAA, 2021, July 1, 2020), as subsequently 
modified by the Secretary. In addition, as noted previously in this 
section of the preamble, the statute (sections 1888(e)(2)(A)(iii)(II) 
through (VI) of the Act) gives the Secretary authority to identify 
additional items and services for exclusion within the five specified 
categories of items and services described in the statute, which are 
also designated by HCPCS code. Designating the excluded services in 
this manner makes it possible for us to utilize program issuances as 
the vehicle for accomplishing routine updates to the excluded codes to 
reflect any minor revisions that might subsequently occur in the coding 
system itself, such as the assignment of a different code number to a 
service already designated as excluded, or the creation of a new code 
for a type of service that falls within one of the established 
exclusion categories and meets our criteria for exclusion.
    Accordingly, we stated in the proposed rule that if we identify 
through the current rulemaking cycle any new services that meet the 
criteria for exclusion from SNF consolidated billing, we will identify 
these additional excluded services by means of the HCPCS codes that are 
in effect as of a specific date (in this case, October 1, 2024). By 
making any new exclusions in this manner, we can similarly accomplish 
routine future updates of these additional codes through the issuance 
of program instructions. The latest list of excluded codes can be found 
on the SNF Consolidated Billing website at https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: A few commenters suggested CMS consider several items for 
exclusion from SNF consolidated billing which have already been 
suggested and considered in previous rulemaking, including: Imatinib; 
Erleada; Venetoclax; Dasatinib; Ponatinib; Cabozantinib; Sunitinib; 
Lenalidomide; and Lupron (leuprolide).
    Response: We have considered each of these suggestions in previous 
rulemaking and we reiterate that these items cannot be excluded from 
SNF consolidated billing. We refer commenters to previous SNF final 
rules in which these suggestions were addressed, including FY 2024 (88 
FR 53200, August 7, 2023) and FY 2021 (85 FR 47609 through 47610, 
August 5, 2020).
    Comment: Commenters suggested several specific HCPCS codes for 
exclusion that have not already been addressed in previous rulemaking: 
Jakafi (ruxolitinib), Tafinlar (dabrafenib), Nilotinib, and Tumor 
Treating Fields (``TTFields'') therapy.
    Response: With regard to Jakafi, Tafinlar, and Nilotinib, these 
three services are all targeted medications that ``target'' specific 
signals involved in cancer growth, but they are not chemotherapy 
treatments. Chemotherapy is a specific subset of cancer treatment 
characterized by its systemic attacking of cell growth. Likewise, Tumor 
Treating Fields therapy is a type of electromagnetic field therapy used 
to treat cancer and is not a form of chemotherapy. As these are not 
considered chemotherapy services, the suggestions do not fit the 
chemotherapy category or any other of the five service categories in 
which we have statutory authority to add exclusions, and therefore we 
may not exclude these items from SNF consolidated billing. Excluding 
such items would require an act of Congress to modify the law.
    Comment: Commenters reiterated several general comments that are 
outside of the agency's statutory authority and/or have already been 
addressed in prior rulemaking cycles. Comments stated that CMS should 
modify consolidated billing rules for SNFs to use a ``price/cost 
threshold'' rather than base the program on specific HCPCS codes. 
Comments requested CMS exclude non-chemotherapy cancer treatments. 
Another comment requested the exclusion of HIV drugs and associated 
administration and other less commonly used medication and 
administration drugs and treatments that exceed SNF reimbursement 
rates.
    Response: As previously specified in this section of the preamble, 
the authority afforded to us under the law to modify the list of 
services excluded from SNF consolidated billing is limited to adding or 
removing HCPCS codes representing high-cost low-probability services 
from the five specific service categories identified in the statute. 
Any of the modifications to consolidated billing and/or the SNF program 
suggested by the previously mentioned comments would require an act of 
Congress to modify the law.
    Comment: A commenter requested that CMS consider adopting a 
formalized process in which entities may propose an item, service, or 
drug be added to the excluded list for consolidated billing on a case-
by-case or permanent basis.
    Response: In addition to conducting our own routine internal 
reviews of new and modified HCPCS codes, we solicit feedback from 
interested parties on consolidated billing exclusions through this 
annual rulemaking process. At this time, we consider this process 
sufficient to identify services that should be excluded.
    Comment: Commenters stated general appreciation for CMS soliciting 
public comments to identify HCPCS codes that meet the criteria for 
exclusion from consolidated billing. Comments stated they would 
continue to try to identify such HCPCS codes.
    Response: We thank commenters for their review.

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

[[Page 64065]]

sections of this proposed rule for the SNF PPS also apply to all non-
CAH swing-bed rural hospitals. 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. As discussed in the FY 2019 SNF PPS final 
rule (83 FR 39235), revisions were made to the swing bed assessment to 
support implementation of PDPM, effective October 1, 2019. A discussion 
of the assessment schedule and the MDS effective beginning FY 2020 
appears in the FY 2019 SNF PPS final rule (83 FR 39229 through 39237). 
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/.

VI. Other SNF PPS Issues

A. Rebasing and Revising the SNF Market Basket

    Section 1888(e)(5)(A) of the Act requires the Secretary to 
establish a market basket that reflects the changes over time in the 
prices of an appropriate mix of goods and services included in covered 
SNF services. Accordingly, we have developed a SNF market basket that 
encompasses the most commonly used cost categories for SNF routine 
services, ancillary services, and capital-related expenses.
    The SNF market basket is used to compute the market basket 
percentage increase that is used to update the SNF Federal per diem 
rates on an annual basis, as required by section 1888(e)(4)(E)(ii)(IV) 
of the Act. This market basket percentage increase is adjusted by a 
forecast error adjustment, if applicable, and then further adjusted by 
the application of a productivity adjustment as required by section 
1888(e)(5)(B)(ii) of the Act and described in section III.B.4. of the 
proposed rule. The SNF market basket is also used to determine the 
labor-related share on an annual basis.
    The SNF market basket is a fixed-weight, Laspeyres-type price 
index. A Laspeyres price index measures the change in price, over time, 
of the same mix of goods and services purchased in the base period. Any 
changes in the quantity or mix of goods and services (that is, 
intensity) purchased over time relative to a base period are not 
measured.
    The index itself is constructed in three steps. First, a base 
period is selected (the base period is 2022) and total base period 
costs are estimated for a set of mutually exclusive and exhaustive 
spending categories and the proportion of total costs that each 
category represents is calculated. These proportions are called cost 
weights. Second, each cost category is matched to an appropriate price 
or wage variable, referred to as a price proxy. In nearly every 
instance, these price proxies are derived from publicly available 
statistical series that are published on a consistent schedule 
(preferably at least on a quarterly basis). Finally, the cost weight 
for each cost category is multiplied by the level of its respective 
price proxy. The sum of these products (that is, the cost weights 
multiplied by their price levels) for all cost categories yields the 
composite index level of the market basket in a given period. Repeating 
this step for other periods produces a series of market basket levels 
over time. Dividing an index level for a given period by an index level 
for an earlier period produces a rate of growth in the input price 
index over that timeframe.
    Since the inception of the SNF PPS, the market basket used to 
update SNF PPS payments has been periodically rebased and revised. We 
last rebased and revised the market basket applicable to the SNF PPS in 
the FY 2022 SNF PPS final rule (86 FR 42444 through 42463) where we 
adopted a 2018-based SNF market basket. References to the historical 
market baskets used to update SNF PPS payments are listed in the FY 
2022 SNF PPS final rule (86 FR 42445).
    Effective for FY 2025 and subsequent fiscal years, we proposed to 
rebase and revise the market basket to reflect 2022 Medicare-allowable 
total cost data (routine, ancillary, and capital-related) from 
freestanding SNFs and to revise applicable cost categories and price 
proxies used to determine the market basket. Medicare-allowable costs 
are those costs that are eligible to be paid under the SNF PPS. For 
example, the SNF market basket excludes home health agency (HHA) costs 
as these costs would be paid under the HHA PPS, and therefore, these 
costs are not SNF PPS Medicare-allowable costs. We proposed to maintain 
our policy of using data from freestanding SNFs, of which about 91 
percent of SNFs that submitted a Medicare cost report for 2022 are 
represented in our sample shown in Table 11. We believe using 
freestanding SNF Medicare cost report data, as opposed to the hospital-
based SNF Medicare cost report data, for the cost weight calculation is 
most appropriate because of the complexity of hospital-based data and 
the representativeness of the freestanding data. Because hospital-based 
SNF expenses are embedded in the hospital cost report, any attempt to 
incorporate data from hospital-based facilities requires more complex 
calculations and assumptions regarding the ancillary costs related to 
the hospital-based SNF unit. We believe the use of freestanding SNF 
cost report data is technically appropriate for reflecting the cost 
structures of SNFs serving Medicare beneficiaries.
    We proposed to use 2022 as the base year as we believe that the 
2022 Medicare cost reports represent the most recent, complete set of 
Medicare cost report data available to develop cost weights for SNFs at 
the time of rulemaking. We believe it is important to regularly rebase 
and revise the SNF market basket to reflect more recent data. 
Historically, the cost weights change minimally from year to year as 
they represent the percent of total costs rather than cost levels; 
however, given the COVID-19 Public Health Emergency (PHE), we have been 
monitoring the Medicare cost report data to see if a more frequent 
rebasing schedule is necessary than our recent historical precedent of 
about every 4 years. Accordingly, while it has been only three years 
since the last SNF rebasing, we proposed to incorporate data that is 
more reflective of recent SNF expenses that have been impacted over the 
most recent few years. The 2022 Medicare cost reports are for cost 
reporting periods beginning on and after October 1, 2021 and before 
October 1, 2022. While these dates appear to reflect fiscal year data, 
we noted in the proposed rule that a Medicare cost report that begins 
in this timeframe is generally classified as a ``2022 cost report''. 
For example, we found that of the available 2022 Medicare cost reports 
for SNFs, approximately 7 percent had an October 1, 2021, begin date, 
approximately 75 percent of the reports had a January 1, 2022, begin 
date, and approximately 12 percent had a July 1, 2022 begin date. For 
this reason, we are defining the base year of the market basket as 
``2022-based'' instead of ``FY 2022-based''.
    We received approximately 22 comments on the proposed rebasing and 
revising of the SNF market basket. A discussion of these comments, with 
our responses, appears throughout this section.
    Comment: Several commenters noted that they support CMS' decision 
to rebase the SNF market basket 1 year earlier than is typical, and 
that rebasing and revising the market basket more frequently than the 
recent historical precedent of approximately every 4

[[Page 64066]]

years is warranted to more accurately reflect costs faced by SNFs at 
this time.
    Response: We thank the commenters for their support in rebasing and 
revising of the SNF market basket, and we will continue to monitor the 
data that inform the frequency of the rebasing.
    Comment: One commenter stated that the need for both auditing cost 
reports and requiring SNFs to submit audited cost reports is especially 
critical this year as CMS plans to rebase the SNF market basket using 
cost report data from 2022. They stated that there are too many 
indications of flawed and possibly fraudulent data, and CMS cannot 
simply assume that cost report data are accurate.
    Response: We recognize the commenter's concerns and reiterate that 
accurate and complete reporting of all data on the Medicare cost 
reports by SNFs help to ensure that the cost weights for the SNF market 
basket are reflective of the cost structure of SNFs. We also note that 
we analyze the Medicare cost report data to evaluate their 
representativeness; for example, we reweight the data reported by 
ownership type and urban/rural so that it reflects the universe of 
providers and compare it to the proposed cost weights that are based on 
reported data. Our analysis shows the proposed cost weights are 
representative across these dimensions. In addition, we also trim the 
data to eliminate outliers as described in section VI.A.1.a of this 
final rule.
    As stated in the FY 2024 SNF PPS final rule (88 FR 53212), 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. Adopting such an approach would require a 
significant commitment of resources by CMS and the Medicare 
Administrative Contractors (MACs), potentially far in excess of those 
required under the IPPS, given that there are nearly five times as many 
SNFs as there are IPPS hospitals. We continue to believe that the 
development of such an audit process could improve SNF cost reports, 
but we do not believe this undertaking is feasible at this time.
    Final Decision: We are finalizing our proposal to rebase the SNF 
market basket to reflect a 2022 base year for FY 2025.
    We provide a summary of the more detailed public comments received 
on our proposed methodology for developing the 2022-based SNF market 
basket and our responses in the sections that follow.
    We proposed to develop cost category weights for the proposed 2022-
based SNF market basket in two stages. The major types of costs 
underlying the proposed 2022-based SNF market basket are derived from 
the 2022 Medicare cost report data (CMS Form 2540-10, OMB NO. 0938-
0463) for freestanding SNFs. Specifically, we used the Medicare cost 
reports for seven specific costs: Wages and Salaries; Employee 
Benefits; Contract Labor; Pharmaceuticals; Professional Liability 
Insurance; Home Office/Related Organization Contract Labor; and 
Capital-related. A residual ``All Other'' category is then estimated 
and reflects all remaining costs that are not captured in the seven 
types of costs identified above. The 2018-based SNF market basket 
similarly used 2018 Medicare cost report data. Second, we proposed to 
divide the residual ``All Other'' cost category into more detailed 
subcategories, using U.S. Department of Commerce Bureau of Economic 
Analysis' (BEA) 2017 Benchmark Input-Output (I-O) ``The Use Table 
(Supply-Use Framework)'' for the Nursing and Community Care Facilities 
industry (North American Industry Classification System (NAICS) code 
623A00) aged to 2022 using applicable price proxy growth for each 
category of costs. Furthermore, we proposed to continue to use the same 
overall methodology as was used for the 2018-based SNF market basket to 
develop the capital related cost weights of the proposed 2022-based SNF 
market basket.
1. Development of Cost Categories and Weights
a. Use of Medicare Cost Report Data To Develop Major Cost Weights
    In order to create a market basket that is representative of 
freestanding SNF providers serving Medicare patients and to help ensure 
accurate major cost weights (which is the percent of total Medicare-
allowable costs, as defined below), we proposed to apply edits to 
remove reporting errors and outliers. Specifically, the SNF Medicare 
cost reports used to calculate the market basket cost weights exclude 
any providers that reported costs less than or equal to zero for the 
following categories: total facility costs (Worksheet B, part 1, column 
18, line 100); total operating costs (Worksheet B, part 1, column 18, 
line 100 less Worksheet B, part 2, column 18, line 100); Medicare 
general inpatient routine service costs (Worksheet D, part 1, column 1, 
line 1); and Medicare PPS payments (Worksheet E, part 3, column 1, line 
1). We also limited our sample to providers that had a Medicare cost 
report reporting period that was between 10 and 14 months. The final 
sample used included roughly 13,100 Medicare cost reports (about 90 
percent of the universe of SNF Medicare cost reports for 2022). The 
sample of providers is representative of the national universe of 
providers by region (each region is represented within plus or minus 1 
percentage point of universe distribution), by ownership-type 
(proprietary, nonprofit, and government) (within 0.8 percentage point 
of universe), and by urban/rural status (within 0.1 percentage point of 
universe). Of the providers that were excluded from our final sample, 
86 percent were due to having a cost reporting period less than 10 
months or greater than 14 months, 10 percent were due to total facility 
costs or total operating costs not being greater than zero, and 4 
percent were due to Medicare general inpatient routine service costs or 
Medicare PPS payments not being greater than zero.
    Additionally, for all of the major cost weights, except Home 
Office/Related Organization Contract Labor costs, the data are trimmed 
to remove outliers (a standard statistical process) by: (1) requiring 
that major expenses (such as Wages and Salaries costs) and total 
Medicare-allowable costs are greater than zero; and (2) excluding the 
top and bottom 5 percent of the major cost weight (for example, Wages 
and Salaries costs as a percent of total Medicare-allowable costs). We 
noted in the proposed rule that missing values are assumed to be zero, 
consistent with the methodology for how missing values are treated in 
the 2018-based SNF market basket methodology.
    For the Home Office/Related Organization Contract Labor cost 
weight, we proposed to first exclude providers whose Home Office/
Related Organization Contract Labor costs are greater than Medicare-
allowable total costs and then apply a trim that excludes those 
reporters with a Home Office/Related Organization Contract Labor cost 
weight above the 99th percentile. This allows providers with no Home 
Office/Related Organization Contract Labor costs to be included in the 
Home Office/Related Organization Contract Labor cost weight 
calculation. If we were to trim the top and bottom Home Office/Related 
Organization Contract Labor cost weight, we would exclude providers 
with a cost weight of zero (84 percent of the sample) and the Medicare 
cost report data (Worksheet S-2 line 45) indicate that not all SNF 
providers have a home office. Providers

[[Page 64067]]

without a home office would report administrative costs that might 
typically be associated with a home office in the Wages and Salaries 
and Employee Benefits cost weights, or in the residual ``All-Other'' 
cost weight if they purchased these types of services from external 
contractors. We believe the trimming methodology that excludes those 
who report Home Office/Related Organization Contract Labor costs above 
the 99th percentile is appropriate as it removes extreme outliers while 
also allowing providers with zero Home Office/Related Organization 
Contract Labor costs, which is the majority of providers, to be 
included in the Home Office/Related Organization Contract Labor cost 
weight calculation.
    The trimming process is done individually for each cost category so 
that providers excluded from one cost weight calculation are not 
automatically excluded from another cost weight calculation. We noted 
in the proposed rule that these trimming methods are the same types of 
edits performed for the 2018-based SNF market basket, as well as other 
PPS market baskets (including but not limited to the IPPS market basket 
and home health market basket). We believe this trimming process 
improves the accuracy of the data used to compute the major cost 
weights by removing possible data misreporting.
    The final weights of the proposed 2022-based SNF market basket are 
based on weighted means. For example, the aggregate Wages and Salaries 
cost weight, after trimming, is equal to the sum of total Medicare-
allowable wages and salaries (as defined in the ``Wages and Salaries'' 
section that follows) of all providers divided by the sum of total 
Medicare-allowable costs (as defined in the next paragraph) for all 
providers in the sample (as defined above in this section). This 
methodology is consistent with the methodology used to calculate the 
2018-based SNF market basket cost weights and other PPS market basket 
cost weights. We noted in the proposed rule that for each of the cost 
weights, we evaluated the distribution of providers and costs by 
region, by ownership-type, and by urban/rural status. For all of the 
cost weights, the trimmed sample was nationally representative.
    For all of the cost weights, we used Medicare-allowable total costs 
as the denominator (for example, Wages and Salaries cost weight = Wages 
and Salaries costs divided by Medicare-allowable total costs). 
Medicare-allowable total costs were equal to total costs (after 
overhead allocation) from Worksheet B part I, column 18, for lines 30, 
40 through 49, 51, 52, and 71 plus estimated Medicaid drug costs, as 
defined below. We included estimated Medicaid drug costs in the 
pharmacy cost weight, as well as the denominator for total Medicare-
allowable costs. This is the same methodology used for the 2018-based 
SNF market basket. The inclusion of Medicaid drug costs was finalized 
in the FY 2008 SNF PPS final rule (72 FR 43425 through 43430), and for 
the same reasons set forth in that final rule, we proposed to continue 
to use this methodology in the proposed 2022-based SNF market basket.
    We describe the detailed methodology for obtaining costs for each 
of the eight cost categories determined from the Medicare Cost Report 
below. The methodology used in the 2018-based SNF market basket can be 
found in the FY 2022 SNF PPS final rule (86 FR 42446 through 42452).
(1) Wages and Salaries
    To derive Wages and Salaries costs for the Medicare-allowable cost 
centers, we proposed first to calculate total facility wages and 
salaries costs as reported on Worksheet S-3, part II, column 3, line 1. 
We then proposed to remove the wages and salaries attributable to non-
Medicare-allowable cost centers (that is, excluded areas), as well as a 
portion of overhead wages and salaries attributable to these excluded 
areas. Excluded area wages and salaries are equal to wages and salaries 
as reported on Worksheet S-3, part II, column 3, lines 3, 4, and 7 
through 11 plus nursing facility and non-reimbursable salaries from 
Worksheet A, column 1, lines 31, 32, 50, and 60 through 63.
    Overhead wages and salaries are attributable to the entire SNF 
facility; therefore, we proposed to include only the proportion 
attributable to the Medicare-allowable cost centers. We proposed to 
estimate the proportion of overhead wages and salaries attributable to 
the non-Medicare-allowable costs centers in two steps. First, we 
proposed to estimate the ratio of excluded area wages and salaries (as 
defined above) to non-overhead total facility wages and salaries (total 
facility wages and salaries (Worksheet S-3, part II, column 3, line 1) 
less total overhead wages and salaries (Worksheet S-3, Part III, column 
3, line 14)). Next, we proposed to multiply total overhead wages and 
salaries by the ratio computed in step 1. We excluded providers whose 
excluded areas wages and salaries were greater than total facility 
wages and salaries and/or their excluded area overhead wages and 
salaries were greater than total facility wages and salaries (about 50 
providers). This is the same methodology used to derive Wages and 
Salaries costs in the 2018-based SNF market basket.
(2) Employee Benefits
    Medicare-allowable employee benefits are equal to total facility 
benefits as reported on Worksheet S-3, part II, column 3, lines 17 
through 19 minus non-Medicare-allowable (that is, excluded area) 
employee benefits and minus a portion of overhead benefits attributable 
to these excluded areas. Excluded area employee benefits are derived by 
multiplying total excluded area wages and salaries (as defined above in 
the `Wages and Salaries' section) times the ratio of total facility 
benefits to total facility wages and salaries. This ratio of benefits 
to wages and salaries is defined as total facility benefit costs to 
total facility wages and salary costs (as reported on Worksheet S-3, 
part II, column 3, line 1). Likewise, the portion of overhead benefits 
attributable to the excluded areas is derived by multiplying overhead 
wages and salaries attributable to the excluded areas (as defined in 
the ``Wages and Salaries'' section) times the ratio of total facility 
benefit costs to total facility wages and salary costs (as defined 
above). Similar to the Wages and Salaries costs, we excluded providers 
whose excluded areas benefits were greater than total facility benefits 
and/or their excluded area overhead benefits were greater than total 
facility benefits (zero providers were excluded because of this edit). 
This is the same methodology used to derive Employee Benefits costs in 
the 2018-based SNF market basket.
(3) Contract Labor
    We proposed to derive Medicare-allowable contract labor costs from 
Worksheet S-3, part II, column 3, line 14, which reflects costs for 
contracted direct patient care services (that is, nursing, therapeutic, 
rehabilitative, or diagnostic services furnished under contract rather 
than by employees and management contract services). This is the same 
methodology used to derive the Contract Labor costs in the 2018-based 
SNF market basket.
(4) Pharmaceuticals
    We proposed to calculate pharmaceuticals costs using the non-salary 
costs from the Pharmacy cost center (Worksheet B, part I, column 0, 
line 11 less Worksheet A, column 1, line 11) and the Drugs Charged to 
Patients' cost center (Worksheet B, part I, column 0, line 49 less 
Worksheet A, column 1, line 49). Since these drug costs were 
attributable to the entire SNF and not limited to Medicare-allowable 
services,

[[Page 64068]]

we proposed to adjust the drug costs by the ratio of Medicare-allowable 
pharmacy total costs (Worksheet B, part I, column 11, for lines 30, 40 
through 49, 51, 52, and 71) to total pharmacy costs from Worksheet B, 
part I, column 11, line 11. Worksheet B, part I allocates the general 
service cost centers, which are often referred to as ``overhead costs'' 
(in which pharmacy costs are included) to the Medicare-allowable and 
non-Medicare-allowable cost centers. This adjustment was made for those 
providers who reported Pharmacy cost center expenses. Otherwise, we 
assumed the non-salary Drugs Charged to Patients costs were Medicare-
allowable. Since drug costs for Medicare patients are included in the 
SNF PPS per diem rate, a provider with Medicare days should have also 
reported costs in the Drugs Charged to Patient cost center. We found a 
small number of providers (roughly 90) did not report Drugs Charged to 
Patients' costs despite reporting Medicare days (an average of about 
2,000 Medicare days per provider), and therefore, these providers were 
excluded from the Pharmaceuticals cost weight calculations. This is the 
same methodology used for the 2018-based SNF market basket.
    Second, as was done for the 2018-based SNF market basket, we 
proposed to continue to adjust the drug expenses reported on the 
Medicare cost report to include an estimate of total Medicaid drug 
costs, which are not represented in the Medicare-allowable drug cost 
weight. As stated previously in this section, the proposed 2022-based 
SNF market basket reflects total Medicare-allowable costs (that is, 
total costs for all payers for those services reimbursable under the 
SNF PPS). For the FY 2006-based SNF market basket (72 FR 43426), 
commenters noted that the total pharmaceutical costs reported on the 
Medicare cost report did not include pharmaceutical costs for dual-
eligible Medicaid patients as these were directly reimbursed by 
Medicaid. Since all of the other cost category weights reflect expenses 
associated with treating Medicaid patients (including the compensation 
costs for dispensing these drugs), we made an adjustment to include 
these Medicaid drug expenses so the market basket cost weights would be 
calculated consistently.
    Similar to the 2018-based SNF market basket, we proposed to 
estimate Medicaid drug costs based on data representing dual-eligible 
Medicaid beneficiaries. Medicaid drug costs are estimated by 
multiplying Medicaid dual-eligible drug costs per day times the number 
of Medicaid days as reported in the Medicare-allowable skilled nursing 
cost center (Worksheet S-3, part I, column 5, line 1) in the SNF 
Medicare cost report. Medicaid dual-eligible drug costs per day (where 
the day represents an unduplicated drug supply day) were estimated 
using 2022 Part D claims for those dual-eligible beneficiaries who had 
a Medicare SNF stay during the year. The total drug costs per 
unduplicated day for 2022 of $27.43 represented all drug costs 
(including the drug ingredient cost, the dispensing fee, vaccine 
administration fee and sales tax) incurred during the 2022 calendar 
year (CY) for those dual-eligible beneficiaries who had a SNF Medicare 
stay during CY 2022. Therefore, they include drug costs incurred during 
a Medicaid SNF stay occurring in CY 2022. By comparison, the 2018-based 
SNF market basket also relied on data from the Part D claims, which 
yielded a dual-eligible Medicaid drug cost per day of $24.48 for 2018.
    We continue to believe that Medicaid dual-eligible beneficiaries 
are a reasonable proxy for the estimated drug costs per day incurred by 
Medicaid patients staying in a skilled nursing unit under a Medicaid 
stay. The skilled nursing unit is the Medicare-allowable unit in a SNF, 
which encompasses more skilled nursing and rehabilitative care compared 
to a nursing facility or long-term care unit. We believe that Medicaid 
patients receiving this skilled nursing care would on average have 
similar drug costs per day to dual-eligible Medicare beneficiaries who 
have received Medicare skilled nursing care in the skilled nursing care 
unit during the year. We noted in the proposed rule that our previous 
analysis of the Part D claims data showed that Medicare beneficiaries 
with a SNF stay during the year have higher drug costs than Medicare 
patients without a SNF stay during the year. Also, in 2022, dual-
eligible beneficiaries with a SNF stay during the year had drug costs 
per day of $27.43, which were approximately two times higher than the 
drug costs per day of $15.83 for nondual-eligible beneficiaries with a 
SNF Part A stay during the year.
    The Pharmaceuticals cost weight using only 2022 Medicare cost 
report data (without the inclusion of the Medicaid dual-eligible drug 
costs) is 2.0 percent, compared to the proposed Pharmaceuticals cost 
weight (including the adjustment for Medicaid dual-eligible drug costs) 
of 6.4 percent. The 2018-based SNF market basket had a Pharmaceuticals 
cost weight using only 2018 Medicare cost report data without the 
inclusion of the Medicaid dual-eligible drug costs of 2.6 percent and a 
total Pharmaceuticals cost weight of 7.5 percent. Therefore, the 1.1 
percentage point decrease in the Pharmaceuticals cost weight between 
2018 and 2022 is a result of a 0.5-percentage point decrease in the 
Medicaid dual-eligible drug cost weight (reflecting the 12 percent 
increase in the Medicaid dual-eligible drug costs per day, and a 14 
percent decrease in Medicaid inpatient days between 2018 and 2022) and 
a 0.6-percentage point decrease in the Medicare cost report drug cost 
weight. The decrease in the Medicare cost report drug cost weight was 
consistent, in aggregate, across urban and rural status SNFs, as well 
as across for-profit, government, and nonprofit ownership type SNFs.
(5) Professional Liability Insurance
    We proposed to calculate the professional liability insurance (PLI) 
costs from Worksheet S-2 of the Medicare cost reports as the sum of 
premiums; paid losses; and self-insurance (Worksheet S-2, Part I, 
columns 1 through 3, line 41). This was the same methodology used to 
derive the Professional Liability costs for the 2018-based SNF market 
basket.
    About 60 percent of SNFs (about 7,700) reported professional 
liability costs. After trimming, about 6,900 (reflecting about 730,000 
Skilled Nursing unit beds) were included in the calculation of the PLI 
cost weight for the proposed 2022-based SNF market basket. These 
providers treated roughly 750,000 Medicare beneficiaries and had a 
Medicare length of stay (LOS) of 58 days, a skilled nursing unit 
occupancy rate of 72 percent, and an average skilled nursing unit bed 
size of 106 beds, which are all consistent with the national averages. 
We also verified that this sample of providers are representative of 
the national distribution of providers by ownership-type, urban/rural 
status, and region.
    We believe the Medicare cost report data continues to be the most 
appropriate data source to calculate the PLI cost weight for the 
proposed 2022-based SNF market basket as it is representative of SNFs 
serving Medicare beneficiaries and reflects PLI costs (premiums, paid 
losses, and self-insurance) incurred during the provider's cost 
reporting year. A fuller discussion of the Medicare cost report data on 
PLI costs compared to other sources is available in the FY 2022 SNF PPS 
final rule (86 FR 42448).
(6) Capital-Related
    We proposed to derive the Medicare-allowable capital-related costs 
from Worksheet B, part II, column 18 for lines

[[Page 64069]]

30, 40 through 49, 51, 52, and 71. This is the same methodology to 
derive capital-related costs used in the 2018-based SNF market basket.
(7) Home Office/Related Organization Contract Labor Costs
    We proposed to calculate Medicare-allowable Home Office/Related 
Organization Contract Labor costs to be equal to data reported on 
Worksheet S-3, part II, column 3, line 16. About 7,100 providers (about 
54 percent) in 2022 reported having a home office (as reported on 
Worksheet S-2, part I, line 45) about the same share of providers as 
those in the 2018-based SNF market basket. As outlined in section 
V.A.1. of the proposed rule, providers without a home office can incur 
these expenses directly by having their own staff, for which the costs 
would be included in the Wages and Salaries and Employee Benefits cost 
weights. Alternatively, providers without a home office could also 
purchase related services from external contractors for which these 
expenses would be captured in the residual ``All-Other'' cost weight. 
For this reason, unlike the other major cost weights described 
previously, we did not exclude providers that did not report Home 
Office/Related Organization Contract Labor costs. This is the same 
methodology that was used in the 2018-based SNF market basket.
(8) All Other (Residual)
    The ``All Other'' cost weight is a residual, calculated by 
subtracting the major cost weights (Wages and Salaries, Employee 
Benefits, Contract Labor, Pharmaceuticals, Professional Liability 
Insurance, Capital-Related, and Home Office/Related Organization 
Contract Labor) from 100.
    We did not receive public comments on our proposed major cost 
weights, nor their respective methodologies of derivation. For the 
reasons discussed above and in the FY 2025 SNF PPS proposed rule, we 
are finalizing the major cost weights as proposed, without 
modification.
    Table 11 shows the major cost categories and their respective cost 
weights as derived from the 2022 Medicare cost reports.
[GRAPHIC] [TIFF OMITTED] TR06AU24.010

    As we did for the 2018-based SNF market basket (86 FR 42449), we 
proposed to allocate contract labor costs to the Wages and Salaries and 
Employee Benefits cost weights based on their relative proportions 
under the assumption that contract labor costs are composed of both 
wages and salaries and employee benefits. The contract labor allocation 
proportion for wages and salaries is equal to the Wages and Salaries 
cost weight as a percent of the sum of the Wages and Salaries cost 
weight and the Employee Benefits cost weight. Using the 2022 Medicare 
cost report data, this percentage is 85 percent (1 percentage point 
higher than the percentage in the 2018-based SNF market basket); 
therefore, we proposed to allocate approximately 85 percent of the 
Contract Labor cost weight to the Wages and Salaries cost weight and 15 
percent to the Employee Benefits cost weight.
    We did not receive public comments on our proposed allocation of 
contract labor costs to Wages and Salaries and Employee Benefits. For 
the reasons discussed above and in the FY 2025 SNF PPS proposed rule, 
we are finalizing the allocation methodology and percentages as 
proposed, without modification.
    Table 12 shows the Wages and Salaries and Employee Benefits cost 
weights after contract labor allocation for the 2022-based SNF market 
basket and the 2018-based SNF market basket.
[GRAPHIC] [TIFF OMITTED] TR06AU24.011


[[Page 64070]]


    Compared to the 2018-based SNF market basket, the Wages and 
Salaries cost weight and the Employee Benefits cost weight as 
calculated directly from the Medicare cost reports each decreased by 
0.8 percentage point. The Contract Labor cost weight increased 2.6 
percentage points and so in aggregate, the Compensation cost weight 
increased 1.0 percentage point from 60.2 percent to 61.2 percent.
b. Derivation of the Detailed Operating Cost Weights
    To further divide the ``All Other'' residual cost weight estimated 
from the 2022 Medicare cost report data into more detailed cost 
categories, we proposed to use the 2017 Benchmark I-O ``The Use Table 
(Supply-Use Framework)'' for Nursing and Community Care Facilities 
industry (NAICS 623A00), published by the Census Bureau's, Bureau of 
Economic Analysis (BEA). These data are publicly available at https://www.bea.gov/industry/input-output-accounts-data. The BEA Benchmark I-O 
data are generally scheduled for publication every 5 years with 2017 
being the most recent year for which data are available. The 2017 
Benchmark I-O data are derived from the 2017 Economic Census and are 
the building blocks for BEA's economic accounts; therefore, they 
represent the most comprehensive and complete set of data on the 
economic processes or mechanisms by which output is produced and 
distributed.\1\ BEA also produces Annual I-O estimates. However, while 
based on a similar methodology, these estimates are less comprehensive 
and provide less detail than benchmark data. Additionally, the annual 
I-O data are subject to revision once benchmark data become available. 
For these reasons, we proposed to inflate the 2017 Benchmark I-O data 
aged forward to 2022 by applying the annual price changes from the 
respective price proxies to the appropriate market basket cost 
categories that are obtained from the 2017 Benchmark I-O data. Next, 
the relative shares of the cost shares that each cost category 
represents to the total residual I-O costs are calculated. These 
resulting 2022 cost shares of the I-O data are applied to the ``All 
Other'' residual cost weight to obtain detailed cost weights for the 
residual costs for the proposed 2022-based SNF market basket. For 
example, the cost for Food: Direct Purchases represents 12.8 percent of 
the sum of the ``All Other'' 2017 Benchmark I-O Expenditures inflated 
to 2022. Therefore, the Food: Direct Purchases cost weight is 2.8 
percent of the proposed 2022-based SNF market basket (12.8 percent x 
22.2 percent = 2.8 percent). For the 2018-based SNF market basket (86 
FR 42449), we used a similar methodology utilizing the 2012 Benchmark 
I-O data (aged to 2018).
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    \1\ https://www.bea.gov/resources/methodologies/concepts-methods-io-accounts.
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    Using this methodology, we proposed to derive 19 detailed SNF 
market basket cost category weights from the proposed 2022-based SNF 
market basket ``All Other'' residual cost weight (22.2 percent). These 
categories are: (1) Fuel: Oil and Gas; (2) Electricity and Other Non-
Fuel Utilities; (3) Food: Direct Purchases; (4) Food: Contract 
Services; (5) Chemicals; (6) Medical Instruments and Supplies; (7) 
Rubber and Plastics; (8) Paper and Printing Products; (9) Apparel; (10) 
Machinery and Equipment; (11) Miscellaneous Products; (12) Professional 
Fees: Labor-Related; (13) Administrative and Facilities Support 
Services; (14) Installation, Maintenance, and Repair Services; (15) All 
Other: Labor-Related Services; (16) Professional Fees: Nonlabor-
Related; (17) Financial Services; (18) Telephone Services; and (19) All 
Other: Nonlabor-Related Services. These are the same detailed cost 
categories as those that were used in the 2018-based SNF market basket.
    We noted in the proposed rule that the machinery and equipment 
expenses are for equipment that is paid for in a given year and not 
depreciated over the asset's useful life. Depreciation expenses for 
movable equipment are accounted for in the capital component of the 
proposed 2022-based SNF market basket (described in section V.A.1.c. of 
the proposed rule).
    We did not receive any public comments on our proposed methodology 
for deriving the detailed operating cost weights. Therefore, for the 
reasons discussed above and in the FY 2025 SNF PPS proposed rule, we 
are finalizing the detailed operating cost weights and methodology as 
proposed, without modification.
c. Derivation of the Detailed Capital Cost Weights
    Similar to the 2018-based SNF market basket, we further divided the 
Capital-related cost weight into: Depreciation, Interest, Lease and 
Other Capital-related cost weights.
    We calculated the depreciation cost weight (that is, depreciation 
costs excluding leasing costs) using depreciation costs from Worksheet 
S-2, column 1, lines 20 and 21. Since the depreciation costs reflect 
the entire SNF facility (Medicare and non-Medicare-allowable units), we 
used total facility capital costs (Worksheet B, Part I, column 18, line 
100) as the denominator. This methodology assumes that the depreciation 
of an asset is the same regardless of whether the asset was used for 
Medicare or non-Medicare patients. This methodology yielded 
depreciation costs as a percent of capital costs of 22.6 percent for 
2022. We then apply this percentage to the proposed 2022-based SNF 
market basket Medicare-allowable Capital-related cost weight of 8.3 
percent, yielding a proposed Medicare-allowable depreciation cost 
weight (excluding leasing expenses, which is described in more detail 
below) of 1.9 percent for 2022. To further disaggregate the Medicare-
allowable depreciation cost weight into fixed and movable depreciation, 
we proposed to use the 2022 SNF Medicare cost report data for end-of-
the-year capital asset balances as reported on Worksheet A-7. The 2022 
SNF Medicare cost report data showed a fixed/movable split of 86/14. 
The 2018-based SNF market basket, which utilized the same data from the 
2018 Medicare cost reports, also had a fixed/movable split of 86/14.
    We derived the interest expense share of capital-related expenses 
from 2022 SNF Medicare cost report data, specifically from Worksheet A, 
column 2, line 81. Similar to the depreciation cost weight, we 
calculated the interest cost weight using total facility capital costs. 
This methodology yielded interest costs as a percent of capital costs 
of 17.7 percent for 2022. We then apply this percentage to the proposed 
2022-based SNF market basket Medicare-allowable Capital-related cost 
weight of 8.3 percent, yielding a Medicare-allowable interest cost 
weight (excluding leasing expenses) of 1.5 percent. As done with the 
last rebasing (86 FR 42450), we proposed to determine the split of 
interest expense between for-profit and not-for-profit facilities based 
on the distribution of long-term debt outstanding by type of SNF (for-
profit or not-for-profit/government) from the 2022 SNF Medicare cost 
report data. We estimated the split between for-profit and not-for-
profit interest expense to be 30/70 percent compared to the 2018-based 
SNF market basket with 25/75 percent.
    Because the detailed data were not available in the Medicare cost 
reports, we used the most recent 2021 Census Bureau Service Annual 
Survey (SAS) data to derive the capital-related expenses attributable 
to leasing and other capital-related expenses. The 2018-based SNF 
market basket used the 2017 SAS data.

[[Page 64071]]

    Based on the 2021 SAS data, we determined that leasing expenses are 
65 percent of total leasing and capital-related expenses costs. In the 
2018-based SNF market basket, leasing costs represent 62 percent of 
total leasing and capital-related expenses costs. We then apply this 
percentage to the 2022-based SNF market basket residual Medicare-
allowable capital costs of 4.9 percent derived from subtracting the 
Medicare-allowable depreciation cost weight and Medicare-allowable 
interest cost weight from the 2022-based SNF market basket of total 
Medicare-allowable capital cost weight (8.3 percent-1.9 percent-1.5 
percent = 4.9 percent). This produces the 2022-based SNF Medicare-
allowable leasing cost weight of 3.2 percent and all-other capital-
related cost weight of 1.7 percent.
    Lease expenses are not broken out as a separate cost category in 
the SNF market basket, but are distributed among the cost categories of 
depreciation, interest, and other capital-related expenses, reflecting 
the assumption that the underlying cost structure and price movement of 
leasing expenses is similar to capital costs in general. As was done 
with past SNF market baskets and other PPS market baskets, we assumed 
10 percent of lease expenses are overhead and assigned them to the 
other capital-related expenses cost category. This is based on the 
assumption that leasing expenses include not only depreciation, 
interest, and other capital-related costs but also additional costs 
paid to the lessor. We distributed the remaining lease expenses to the 
three cost categories based on the proportion of depreciation, 
interest, and other capital-related expenses to total capital costs, 
excluding lease expenses.
    We did not receive any public comments on our proposed methodology 
for deriving the detailed capital cost weights. Therefore, for the 
reasons discussed above and in the FY 2025 SNF PPS proposed rule, we 
are finalizing the detailed capital cost weights and methodology as 
proposed, without modification.
    Table 13 shows the capital-related expense distribution (including 
expenses from leases) in the 2022-based SNF market basket and the 2018-
based SNF market basket.
[GRAPHIC] [TIFF OMITTED] TR06AU24.012

    Table 14 presents the 2022-based SNF market basket and the 2018-
based SNF market basket cost categories and cost weights.
BILLING CODE 4120-01-P

[[Page 64072]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.013

BILLING CODE 4120-01-C
2. Price Proxies Used To Measure Operating Cost Category Growth
    After developing the 27 cost weights for the 2022-based SNF market 
basket, we selected the most appropriate wage and price proxies 
currently available to represent the rate of change for each cost 
category. With four exceptions (three for the capital-related expenses 
cost categories and one for PLI), we base the wage and price proxies on 
Bureau of Labor Statistics (BLS) data, and group them into one of the 
following BLS categories:
     Employment Cost Indexes. Employment Cost Indexes (ECIs) 
measure the rate of change in

[[Page 64073]]

employment wage rates and employer costs for employee benefits per hour 
worked. These indexes are fixed-weight indexes and strictly measure the 
change in wage rates and employee benefits per hour. ECIs are superior 
to Average Hourly Earnings (AHE) as price proxies for input price 
indexes because they are not affected by shifts in occupation or 
industry mix, and because they measure pure price change and are 
available by both occupational group and by industry. The industry ECIs 
are based on the NAICS and the occupational ECIs are based on the 
Standard Occupational Classification System (SOC).
     Producer Price Indexes. Producer Price Indexes (PPIs) 
measure the average change over time in the selling prices received by 
domestic producers for their output. The prices included in the PPI are 
from the first commercial transaction for many products and some 
services (https://www.bls.gov/ppi/).
     Consumer Price Indexes. Consumer Price Indexes (CPIs) 
measure the average change over time in the prices paid by urban 
consumers for a market basket of consumer goods and services (https://www.bls.gov/cpi/). CPIs are only used when the purchases are similar to 
those of retail consumers rather than purchases at the producer level, 
or if no appropriate PPIs are available.
    We evaluate the price proxies using the criteria of reliability, 
timeliness, availability, and relevance:
     Reliability. Reliability indicates that the index is based 
on valid statistical methods and has low sampling variability. Widely 
accepted statistical methods ensure that the data were collected and 
aggregated in a way that can be replicated. Low sampling variability is 
desirable because it indicates that the sample reflects the typical 
members of the population. (Sampling variability is variation that 
occurs by chance because only a sample was surveyed rather than the 
entire population.)
     Timeliness. Timeliness implies that the proxy is published 
regularly, preferably at least once a quarter. The market baskets are 
updated quarterly, and therefore, it is important for the underlying 
price proxies to be up-to-date, reflecting the most recent data 
available. We believe that using proxies that are published regularly 
(at least quarterly, whenever possible) helps to ensure that we are 
using the most recent data available to update the market basket. We 
strive to use publications that are disseminated frequently, because we 
believe that this is an optimal way to stay abreast of the most current 
data available.
     Availability. Availability means that the proxy is 
publicly available. We prefer that our proxies are publicly available 
because this will help ensure that our market basket updates are as 
transparent to the public as possible. In addition, this enables the 
public to be able to obtain the price proxy data on a regular basis.
     Relevance. Relevance means that the proxy is applicable 
and representative of the cost category weight to which it is applied.
    We believe that the CPIs, PPIs, and ECIs that we have selected meet 
these criteria. Therefore, we believe that they continue to be the best 
measure of price changes for the cost categories to which they would be 
applied.
    Table 19 lists all price proxies for the 2022-based SNF market 
basket. Below is a detailed explanation of the price proxies we 
proposed to use for each operating cost category.
a. Wages and Salaries
    We proposed to use the ECI for Wages and Salaries for Private 
Industry Workers in Nursing Care Facilities (NAICS 6231; BLS series 
code CIU2026231000000I) to measure price growth of this category. NAICS 
623 includes facilities that provide a mix of health and social 
services, with many of the health services requiring some level of 
nursing services. Within NAICS 623 is NAICS 6231, which includes 
nursing care facilities primarily engaged in providing inpatient 
nursing and rehabilitative services. These facilities, which are most 
comparable to Medicare-certified SNFs, provide skilled nursing and 
continuous personal care services for an extended period of time, and, 
therefore, have a permanent core staff of registered or licensed 
practical nurses. This is the same index used in the 2018-based SNF 
market basket.
b. Employee Benefits
    We proposed to use the ECI for Benefits for Nursing Care Facilities 
(NAICS 6231) to measure price growth of this category. The ECI for 
Benefits for Nursing Care Facilities is calculated using BLS's total 
compensation (BLS series ID CIU2016231000000I) for nursing care 
facilities series and the relative importance of wages and salaries 
within total compensation. We believe this constructed ECI series is 
technically appropriate for the reason stated previously in the Wages 
and Salaries price proxy section of this final rule. This is the same 
index used in the 2018-based SNF market basket.
c. Electricity and Other Non-Fuel Utilities
    We proposed to use the PPI Commodity for Commercial Electric Power 
(BLS series code WPU0542) to measure the price growth of this cost 
category as Electricity costs account for 93 percent of these expenses. 
This is the same index used for the Electricity cost category in the 
2018-based SNF market basket.
d. Fuel: Oil and Gas
    We proposed to use a blended proxy composed of the PPI Industry for 
Petroleum Refineries (NAICS 324110) (BLS series code PCU32411-32411), 
the PPI Commodity for Natural Gas (NAICS 221200)(BLS series code 
WPU0531), and the PPI for Other Petroleum and Coal Products 
manufacturing (NAICS 324190)(BLS series code PCU32419-32419).
    Our analysis of 2017 Benchmark I-O data for Nursing and Community 
Care Facilities found that these three NAICS industries account for 
approximately 93 percent of SNF Fuel: Oil and Gas expenses. The 
remaining 7 percent of SNF Fuel: Oil and Gas expenses are for two other 
incidental NAICS industries including Coal Mining and Petrochemical 
Manufacturing. We proposed to create a blended index based on the three 
NAICS Fuel: Oil and Gas expenses listed above that account for 93 
percent of SNF Fuel: Oil and Gas expenses. We created this blend based 
on each NAICS' expenses as a share of their sum. These expenses as a 
share of their sum are listed in Table 15.
    The 2018-based SNF market basket used a blended Fuel: Oil and Gas 
proxy that was based on 2012 Benchmark I-O data. We believe the Fuel: 
Oil and Gas blended index for the 2022-based SNF market basket is 
technically appropriate as it reflects more recent data on SNFs 
purchasing patterns. Table 15 provides the weights for the 2022- and 
2018-based blended Fuel: Oil and Gas index.

[[Page 64074]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.014

e. Professional Liability Insurance
    We proposed to use the CMS Hospital Professional Liability 
Insurance Index to measure price growth of this category. We were 
unable to find a reliable data source that collects SNF-specific PLI 
data. Therefore, we proposed to use the CMS Hospital Professional 
Liability Index, which tracks price changes for commercial insurance 
premiums for a fixed level of coverage, holding non-price factors 
constant (such as a change in the level of coverage). This is the same 
index used in the 2018-based SNF market basket. We believe this is an 
appropriate proxy to measure the price growth associated of SNF PLI as 
it captures the price inflation associated with other medical 
institutions that serve Medicare patients.
    Comment: One commenter mentioned a 2006 case study on the nursing 
home liability insurance market in Florida that relied on information 
from the National Conference of State Legislatures Health Policy 
Tracking Service and suggested that CMS should be looking for credible 
sources of information about SNF liability insurance rather than using 
the CMS Hospital Professional Liability Insurance Index as this market 
basket's price proxy.
    Response: The criteria we use to evaluate and select price proxies 
are: timeliness (published and available on a regular basis, preferably 
at least quarterly, with little lag), reliability (consistent 
historical time-series as well as being technically and 
methodologically sound), availability (the proxy is publicly 
available), and relevance (the proxy is applicable and representative 
of the cost category weight to which it is applied). While we are 
unaware of any data sources that would meet these criteria and serve as 
an appropriate substitute at this time, we are interested in 
information on this topic and will continue to search for, and remain 
open to, any credible data source that meets the aforementioned 
criteria. Nonetheless, we continue to believe that the CMS Hospital 
Professional Liability Insurance Index is an appropriate price proxy as 
it captures the price inflation associated with other medical 
institutions that serve Medicare patients, which includes hospital-
based SNFs. Any changes to this price proxy in the future would be set 
forth through notice and comment rulemaking.
f. Pharmaceuticals
    We proposed to use the PPI Commodity for Pharmaceuticals for Human 
Use, Prescription (BLS series code WPUSI07003) to measure the price 
growth of this cost category. This is the same index used in the 2018-
based SNF market basket.
g. Food: Direct Purchases
    We proposed to use the PPI Commodity for Processed Foods and Feeds 
(BLS series code WPU02) to measure the price growth of this cost 
category. This is the same index used in the 2018-based SNF market 
basket.
h. Food: Contract Services
    We proposed to use the CPI All Urban for Food Away From Home (All 
Urban Consumers) (BLS series code CUUR0000SEFV) to measure the price 
growth of this cost category. This is the same index used in the 2018-
based SNF market basket.
i. Chemicals
    For measuring price change in the Chemicals cost category, we 
proposed to use a blended PPI composed of the Industry PPIs for Other 
Basic Organic Chemical Manufacturing (NAICS 325190) (BLS series code 
PCU32519-32519), Soap and Cleaning Compound Manufacturing (NAICS 
325610) (BLS series code PCU32561-32561), and All Other Chemical 
Product and Preparation Manufacturing (NAICS 3259A0) (BLS series code 
PCU325998325998).
    Using the 2017 Benchmark I-O data, we found that these three NAICS 
industries accounted for approximately 95 percent of SNF chemical 
expenses. The remaining 5 percent of SNF chemical expenses are for 
three other incidental NAICS chemicals industries such as Paint and 
Coating Manufacturing. We proposed to create a blended index based on 
the three NAICS chemical expenses listed above that account for 95 
percent of SNF chemical expenses. We create this blend based on each 
NAICS' expenses as a share of their sum. These expenses as a share of 
their sum are listed in Table 16.
    The 2018-based SNF market basket used a blended chemical proxy that 
was based on 2012 Benchmark I-O data. We believe the chemical blended 
index for the 2022-based SNF market basket is technically appropriate 
as it reflects more recent data on SNFs purchasing patterns. Table B6 
provides the weights for the 2022-based blended chemical index and the 
2018-based blended chemical index.
[GRAPHIC] [TIFF OMITTED] TR06AU24.015


[[Page 64075]]


j. Medical Instruments and Supplies
    For measuring price change in the Medical Instruments and Supplies 
cost category, we proposed to use a blended proxy. The 2017 Benchmark 
I-O data shows 62 percent of medical instruments and supply costs are 
for Surgical and medical instrument manufacturing costs (NAICS 339112) 
and 38 percent are for Surgical appliance and supplies manufacturing 
costs (NAICS 339113). To proxy the price changes associated with NAICS 
339112, we proposed using the PPI--Commodity--Surgical and medical 
instruments (BLS series code WPU1562). To proxy the price changes 
associated with NAICS 339113, we proposed to use 50 percent for the 
PPI--Commodity--Medical and surgical appliances and supplies (BLS 
series code WPU1563) and 50 percent for the PPI Commodity data for 
Miscellaneous products--Personal safety equipment and clothing (BLS 
series code WPU1571). The latter price proxy would reflect personal 
protective equipment including but not limited to face shields and 
protective clothing. The 2017 Benchmark I-O data does not provide 
specific expenses for personal protective equipment (which would be 
reflected in the NAICS 339113 expenses); however, we recognize that 
this category reflects costs faced by SNFs. In absence of any specific 
cost data on personal protective equipment, we proposed to include the 
PPI Commodity data for Miscellaneous products--Personal safety 
equipment and clothing (BLS series code WPU1571) in the blended proxy 
for Medical Instruments and Supplies cost category with a weight of 19 
percent (that is, 50 percent of the NAICS 339113 expenses as a percent 
of the sum of NAICS 339113 and NAICS 339112 expenses from the I-O).
    The 2018-based SNF market basket used a blended Medical Instruments 
and Supplies proxy that was based on 2012 Benchmark I-O data. We 
believe the blended index for the 2022-based SNF market basket is 
technically appropriate as it reflects more recent data on SNFs 
purchasing patterns. Table 17 provides the Medical Instruments and 
Supplies cost weight blended price proxy.
[GRAPHIC] [TIFF OMITTED] TR06AU24.016

k. Rubber and Plastics
    We proposed to use the PPI Commodity for Rubber and Plastic 
Products (BLS series code WPU07) to measure price growth of this cost 
category. This is the same index used in the 2018-based SNF market 
basket.
l. Paper and Printing Products
    We proposed to use a 86/14 blend of the PPI Commodity for Converted 
Paper and Paperboard Products (BLS series code WPU0915) and the PPI 
Commodity for Publications Printed Matter and Printing Material (BLS 
Series Code WPU094) to measure the price growth of this cost category. 
The 2017 Benchmark I-O data shows that 86 percent of paper and printing 
expenses are for paper manufacturing (NAICS 322) and the remaining 
expenses are for Printing (NAICS 323110). The 2018-based SNF market 
basket used the PPI Commodity for Converted Paper and Paperboard 
Products (BLS series code WPU0915) to measure the price growth of this 
cost category.
m. Apparel
    We proposed to use the PPI Commodity for Apparel (BLS series code 
WPU0381) to measure the price growth of this cost category. This is the 
same index used in the 2018-based SNF market basket.
n. Machinery and Equipment
    We proposed to use the PPI Commodity for Machinery and Equipment 
(BLS series code WPU11) to measure the price growth of this cost 
category. This is the same index used in the 2018-based SNF market 
basket.
o. Miscellaneous Products
    For measuring price change in the Miscellaneous Products cost 
category, we proposed to use the PPI Commodity for Finished Goods less 
Food and Energy (BLS series code WPUFD4131). Both food and energy are 
already adequately represented in separate cost categories and should 
not also be reflected in this cost category. This is the same index 
used in the 2018-based SNF market basket.
p. Professional Fees: Labor-Related
    We proposed to use the ECI for Total Compensation for Private 
Industry Workers in Professional and Related (BLS series code 
CIU2010000120000I) to measure the price growth of this category. This 
is the same index used in the 2018-based SNF market basket.
q. Administrative and Facilities Support Services
    We proposed to use the ECI for Total Compensation for Private 
Industry Workers in Office and Administrative Support (BLS series code 
CIU2010000220000I) to measure the price growth of this category. This 
is the same index used in the 2018-based SNF market basket.
r. Installation, Maintenance and Repair Services
    We proposed to use the ECI for Total Compensation for All Civilian 
Workers in Installation, Maintenance, and Repair (BLS series code 
CIU1010000430000I) to measure the price growth of this new cost 
category. This is the same index used in the 2018-based SNF market 
basket.
s. All Other: Labor-Related Services
    We proposed to use the ECI for Total Compensation for Private 
Industry Workers in Service Occupations (BLS series code 
CIU2010000300000I) to measure the price growth of this cost

[[Page 64076]]

category. This is the same index used in the 2018-based SNF market 
basket.
t. Professional Fees: Non-Labor-Related
    We proposed to use the ECI for Total Compensation for Private 
Industry Workers in Professional and Related (BLS series code 
CIU2010000120000I) to measure the price growth of this category. This 
is the same index used in the 2018-based SNF market basket.
u. Financial Services
    We proposed to use the ECI for Total Compensation for Private 
Industry Workers in Financial Activities (BLS series code 
CIU201520A000000I) to measure the price growth of this cost category. 
This is the same index used in the 2018-based SNF market basket.
v. Telephone Services
    We proposed to use the CPI All Urban for Telephone Services (BLS 
series code CUUR0000SEED) to measure the price growth of this cost 
category. This is the same index used in the 2018-based SNF market 
basket.
w. All Other: Non-Labor-Related Services
    We proposed to use the CPI All Urban for All Items Less Food and 
Energy (BLS series code CUUR0000SA0L1E) to measure the price growth of 
this cost category. This is the same index used in the 2018-based SNF 
market basket.
    After consideration of the public comments we received, for the 
reasons discussed above and in the FY 2025 SNF PPS proposed rule, we 
are finalizing the price proxies of the operating cost categories as 
proposed, without modification.
3. Price Proxies Used To Measure Capital Cost Category Growth
    We proposed to apply the same capital price proxies as were used in 
the 2018-based SNF market basket, and below is a detailed explanation 
of the price proxies used for each capital cost category. We also 
proposed to continue to vintage weight the capital price proxies for 
Depreciation and Interest to capture the long-term consumption of 
capital. This vintage weighting method is the same method that was used 
for the 2018-based SNF market basket and is described below.
     Depreciation--Building and Fixed Equipment: We proposed to 
use the BEA Chained Price Index for Private Fixed Investment in 
Structures, Nonresidential, Hospitals and Special Care (BEA Table 
5.4.4. Price Indexes for Private Fixed Investment in Structures by 
Type). This BEA index is intended to capture prices for construction of 
facilities such as hospitals, nursing homes, hospices, and 
rehabilitation centers. This is the same index used in the 2018-based 
SNF market basket.
     Depreciation--Movable Equipment: We proposed to use the 
PPI Commodity for Machinery and Equipment (BLS series code WPU11). This 
price index reflects price inflation associated with a variety of 
machinery and equipment that would be utilized by SNFs, including but 
not limited to medical equipment, communication equipment, and 
computers. This is the same index used in the 2018-based SNF market 
basket.
     Nonprofit Interest: We proposed to use the average yield 
on Municipal Bonds (Bond Buyer 20-bond index). This is the same index 
used in the 2018-based SNF market basket.
     For-Profit Interest: For the For-Profit Interest cost 
category, we proposed to use the iBoxx AAA Corporate Bond Yield index. 
This is the same index used in the 2018-based SNF market basket.
     Other Capital: Since this category includes fees for 
insurances, taxes, and other capital-related costs, we proposed to use 
the CPI for Rent of Primary Residence (BLS series code CUUS0000SEHA), 
which would reflect the price growth of these costs. This is the same 
index used in the 2018-based SNF market basket.
    We believe that these price proxies are the most appropriate 
proxies for SNF capital costs that meet our selection criteria of 
relevance, timeliness, availability, and reliability.
    As stated previously in this final rule, we proposed to continue to 
vintage weight the capital price proxies for Depreciation and Interest 
to capture the long-term consumption of capital. To capture the long-
term nature, the price proxies are vintage-weighted and the vintage 
weights are calculated using a two-step process. First, we determine 
the expected useful life of capital and debt instruments held by SNFs. 
Second, we identify the proportion of expenditures within a cost 
category that is attributable to each individual year over the useful 
life of the relevant capital assets, or the vintage weights.
    We rely on Bureau of Economic Analysis (BEA) fixed asset data to 
derive the useful lives of both fixed and movable capital, which is the 
same data source used to derive the useful lives for the 2018-based SNF 
market basket. The specifics of the data sources used are explained 
below.
a. Calculating Useful Lives for Movable and Fixed Assets
    Estimates of useful lives for movable and fixed assets for the 
2022-based SNF market basket are 9 and 27 years, respectively. These 
estimates are based on three data sources from the BEA: (1) current-
cost average age; (2) historical-cost average age; and (3) industry-
specific current cost net stocks of assets.
    BEA current-cost and historical-cost average age data by asset type 
are not available by industry but are published at the aggregate level 
for all industries. The BEA does publish current-cost net capital 
stocks at the detailed asset level for specific industries. There are 
64 detailed movable assets (including intellectual property) and there 
are 32 detailed fixed assets in the BEA estimates. Since we seek 
aggregate useful life estimates applicable to SNFs, we developed a 
methodology to approximate movable and fixed asset ages for nursing and 
residential care services (NAICS 623) using the published BEA data. For 
the 2022-based SNF market basket, we use the current-cost average age 
for each asset type from the BEA fixed assets Table 2.9 for all assets 
and weight them using current-cost net stock levels for each of these 
asset types in the nursing and residential care services industry, 
NAICS 6230. For example, nonelectro medical equipment current-cost net 
stock (accounting for about 29 percent of total movable equipment 
current-cost net stock in 2022 is multiplied by an average age of 4.8 
years for nonelectro medical equipment for all industries. Current-cost 
net stock levels are available for download from the BEA website at 
https://apps.bea.gov/iTable/index_FA.cfm. We then aggregate the 
``weighted'' current-cost net stock levels (average age multiplied by 
current-cost net stock) into movable and fixed assets for NAICS 6230. 
We then adjust the average ages for movable and fixed assets by the 
ratio of historical-cost average age (Table 2.10) to current-cost 
average age (Table 2.9).
    This produces historical cost average age data for fixed 
(structures) and movable (equipment and intellectual property) assets 
specific to NAICS 6230 of 13.6 and 4.4 years for 2022, respectively. 
This reflects the average age of an asset at a given point in time, 
whereas we want to estimate a useful life of the asset. To do this, we 
multiply each of the average age estimates by two to convert to average 
useful lives with the assumption that the average age reflects the 
midpoint of useful life and is normally distributed (about half of the 
assets are below the average at a given

[[Page 64077]]

point in time, and half above the average at a given point in time). 
This produces estimates of likely useful lives of 27.2 and 8.8 years 
for fixed and movable assets, which we round to 27 and 9 years, 
respectively. We proposed an interest vintage weight time span of 25 
years, obtained by weighting the fixed and movable vintage weights (27 
years and 9 years, respectively) by the fixed and movable split (86 
percent and 14 percent, respectively). This is the same methodology 
used for the 2018-based SNF market basket, which had useful lives of 26 
years and 9 years for fixed and movable assets, respectively.
b. Constructing Vintage Weights
    Given the expected useful life of capital (fixed and movable 
assets) and debt instruments, we must determine the proportion of 
capital expenditures attributable to each year of the expected useful 
life for each of the three asset types: building and fixed equipment, 
movable equipment, and interest. These proportions represent the 
vintage weights. We were not able to find a historical time series of 
capital expenditures by SNFs. Therefore, we approximated the capital 
expenditure patterns of SNFs over time using alternative SNF data 
sources. For building and fixed equipment, we used the stock of beds in 
nursing homes from the National Nursing Home Survey (NNHS) conducted by 
the National Center for Health Statistics (NCHS) for 1962 through 1999. 
For 2000 through 2018, we extrapolated the 1999 bed data forward using 
measurements of the moving average rate of growth in the number of beds 
as reported in SNF Medicare cost report data on Worksheet S-3, part I, 
column 1, line 8. A more detailed discussion of this methodology was 
published in the FY 2022 SNF final rule (86 FR 42457). We proposed to 
continue this methodology for the 2022-based SNF market basket by 
extrapolating the 2018 bed data forward using the average growth in the 
number of beds over the 2019 to 2022 time period. We then proposed to 
use the change in the stock of beds each year to approximate building 
and fixed equipment purchases for that year. This procedure assumes 
that bed growth reflects the growth in capital-related costs in SNFs 
for building and fixed equipment. We believe that this assumption is 
reasonable because the number of beds reflects the size of a SNF, and 
as a SNF adds beds, it also likely adds fixed capital.
    As was done for the 2018-based SNF market basket (as well as prior 
market baskets), we proposed to estimate movable equipment purchases 
based on the ratio of ancillary costs to routine costs. The time series 
of the ratio of ancillary costs to routine costs for SNFs measures 
changes in intensity in SNF services, which are assumed to be 
associated with movable equipment purchase patterns. The assumption 
here is that as ancillary costs increase compared to routine costs, the 
SNF caseload becomes more complex and would require more movable 
equipment. The lack of movable equipment purchase data for SNFs over 
time required us to use alternative SNF data sources. A more detailed 
discussion of this methodology was published in the FY 2008 SNF final 
rule (72 FR 43428). We believe the resulting two time series, 
determined from beds and the ratio of ancillary to routine costs, 
reflect real capital purchases of building and fixed equipment and 
movable equipment over time.
    To obtain nominal purchases, which are used to determine the 
vintage weights for interest, we converted the two real capital 
purchase series from 1963 through 2022 determined above to nominal 
capital purchase series using their respective price proxies (the BEA 
Chained Price Index for Nonresidential Construction for Hospitals & 
Special Care Facilities and the PPI for Machinery and Equipment). We 
then combined the two nominal series into one nominal capital purchase 
series for 1963 through 2022. Nominal capital purchases are needed for 
interest vintage weights to capture the value of debt instruments.
    Once we created these capital purchase time series for 1963 through 
2022, we averaged different periods to obtain an average capital 
purchase pattern over time: (1) for building and fixed equipment, we 
averaged 34, 27-year periods; (2) for movable equipment, we averaged 
52, 9-year periods; and (3) for interest, we averaged 36, 25-year 
periods. We calculate the vintage weight for a given year by dividing 
the capital purchase amount in any given year by the total amount of 
purchases during the expected useful life of the equipment or debt 
instrument.
    We did not receive any public comments on our proposed price 
proxies used for each of the detailed capital cost categories or on our 
methodology for deriving the vintage weights. For the reasons discussed 
above and in the FY 2025 SNF PPS proposed rule, we are finalizing the 
price proxies of the capital cost categories, the vintage weights, and 
the methodology for deriving the vintage weights, as proposed without 
modification.
    The vintage weights for the 2022-based SNF market basket and the 
2018-based SNF market basket are presented in Table 18.
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    The process of creating vintage-weighted price proxies requires 
applying the vintage weights to the price proxy index where the last 
applied vintage weight in Table 18 is applied to the most recent data 
point. We have provided on the CMS website an example of how the 
vintage weighting price proxies are calculated, using example vintage 
weights and example price indices. The example can be found at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html in the zip 
file titled ``Weight Calculations as described in this IPPS FY 2010 
Proposed Rule.''
    After consideration of public comments, we are finalizing the 2022-
based SNF market basket as proposed. Table 19 shows all the price 
proxies for the 2022-based SNF market basket.

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[[Page 64080]]

4. Labor-Related Share
    We define the labor-related share (LRS) as those expenses that are 
labor-intensive and vary with, or are influenced by, the local labor 
market. Each year, we calculate a revised labor-related share based on 
the relative importance of labor-related cost categories in the input 
price index. Effective for FY 2025, we proposed to revise and update 
the labor-related share to reflect the relative importance of the 2022-
based SNF market basket cost categories that we believe are labor-
intensive and vary with, or are influenced by, the local labor market. 
For the 2022-based SNF market basket these are: (1) Wages and Salaries 
(including allocated contract labor costs as described above); (2) 
Employee Benefits (including allocated contract labor costs as 
described above); (3) Professional Fees: Labor-Related; (4) 
Administrative and Facilities Support Services; (5) Installation, 
Maintenance, and Repair Services; (6) All Other: Labor-Related 
Services; and (7) a proportion of capital-related expenses. We proposed 
to continue to include a proportion of capital-related expenses because 
a portion of these expenses are deemed to be labor-intensive and vary 
with, or are influenced by, the local labor market. For example, a 
proportion of construction costs for a medical building would be 
attributable to local construction workers' compensation expenses.
    Consistent with previous SNF market basket revisions and rebasings, 
the All Other: Labor-related services cost category is mostly comprised 
of building maintenance and security services (including, but not 
limited to, landscaping services, janitorial services, waste management 
services services) and dry cleaning and laundry services. Because these 
services tend to be labor-intensive and are mostly performed at the SNF 
facility or in the local area (and therefore, unlikely to be purchased 
in the national market), we believe that they meet our definition of 
labor-related services.
    These are the same cost categories we have included in the labor-
related share for the 2018-based SNF market basket rebasing (86 FR 
42461), as well as the same categories included in the labor-related 
share for the 2021-based inpatient rehabilitation facility (IRF) market 
basket (88 FR 50984), and 2021-based inpatient psychiatric facility 
(IPF) market basket (88 FR 51078).
    As discussed in the FY 2022 SNF PPS final rule (86 FR 42462), in an 
effort to determine more accurately the share of nonmedical 
professional fees (included in the 2022-based SNF market basket 
Professional Fees cost categories) that should be included in the 
labor-related share, we surveyed SNFs regarding the proportion of those 
fees that are attributable to local firms and the proportion that are 
purchased from national firms. Based on these weighted results, we 
determined that SNFs purchase, on average, the following portions of 
contracted professional services inside their local labor market:
     78 percent of legal services.
     86 percent of accounting and auditing services.
     89 percent of architectural, engineering services.
     87 percent of management consulting services.
    Together, these four categories represent 3.6 percentage points of 
the total costs for the proposed 2022-based SNF market basket. We 
applied the percentages from this special survey to their respective 
SNF market basket weights to separate them into labor-related and 
nonlabor-related costs. As a result, we are designating 2.8 of the 3.6 
percentage points total to the labor-related share, with the remaining 
0.8 percentage point categorized as nonlabor-related.
    In addition to the professional services as previously listed, for 
the 2022-based SNF market basket, we proposed to allocate a proportion 
of the Home Office/Related Organization Contract Labor cost weight, 
calculated using the Medicare cost reports as previously stated, into 
the Professional Fees: Labor-Related and Professional Fees: Nonlabor-
Related cost categories. We proposed to classify these expenses as 
labor-related and nonlabor-related as many facilities are not located 
in the same geographic area as their home office, and, therefore, do 
not meet our definition for the labor-related share that requires the 
services to be purchased in the local labor market.
    Similar to the 2018-based SNF market basket, we proposed for the 
2022-based SNF market basket to use the Medicare cost reports for SNFs 
to determine the home office labor-related percentages. The Medicare 
cost report requires a SNF to report information regarding its home 
office provider. Using information on the Medicare cost report, we 
compared the location of the SNF with the location of the SNF's home 
office. We proposed to classify a SNF with a home office located in 
their respective labor market if the SNF and its home office are 
located in the same Metropolitan Statistical Area (MSA). Then we 
determined the proportion of the Home Office/Related Organization 
Contract Labor cost weight that should be allocated to the labor-
related share based on the percent of total Home Office/Related 
Organization Contract Labor costs for those SNFs that had home offices 
located in their respective local labor markets of total Home Office/
Related Organization Contract Labor costs for SNFs with a home office. 
We determined a SNF's and its home office's MSA using their zip code 
information from the Medicare cost report.
    Using this methodology, we determined that 25 percent of SNFs' Home 
Office/Related Organization Contract Labor costs were for home offices 
located in their respective local labor markets. Therefore, we proposed 
to allocate 25 percent of the Home Office/Related Organization Contract 
Labor cost weight (0.1 percentage point = 0.6 percent x 25 percent) to 
the Professional Fees: Labor-Related cost weight and 75 percent of the 
Home Office/Related Organization Contract Labor cost weight to the 
Professional Fees: Nonlabor-Related cost weight (0.4 percentage point = 
0.6 percent x 75 percent). The 2018-based SNF market basket used a 
similar methodology for allocating the Home Office/Related Organization 
Contract Labor cost weight to the labor-related share.
    In summary, based on the two allocations mentioned earlier, we 
proposed to apportion 2.9 percentage points into the Professional Fees: 
Labor-Related cost category consisting of the Professional Fees (2.8 
percentage points) and Home Office/Related Organization Contract Labor 
(0.1 percentage point) cost weights. This amount was added to the 
portion of professional fees that we already identified as labor-
related using the I-O data such as contracted advertising and marketing 
costs (approximately 0.6 percentage point of total costs) resulting in 
a Professional Fees: Labor-Related cost weight of 3.6 percent.
    Based on IHS Global, Inc.'s fourth-quarter 2023 forecast with 
historical data through the third quarter of 2023, we proposed a FY 
2025 labor-related share of 71.9 percent.
    Comment: One commenter did not support any increases in the labor-
related share because facilities with a wage index less than 1.0 will 
suffer financially from a rise in the labor-related share. They stated 
that across the country, there is a growing disparity between the high-
wage and low-wage States.
    Response: We appreciate the commenter's concern. However, for this 
final rule, we are finalizing our proposal to rebase the SNF market 
basket to reflect a 2022 base year so that we can

[[Page 64081]]

incorporate more recent data on SNF cost structures. In addition, we 
calculate a labor-related share based on the relative importance of 
labor-related cost categories, to account for historical and projected 
price changes between the base year and the payment year (FY 2025 in 
this rule). The price proxies for the different cost categories in the 
market basket do not necessarily change at the same rate, and the 
relative importance measure captures these changes. We recognize that a 
change in the labor-related share can have differential impacts for 
providers, but we believe it is important to continue to update the 
labor-related share to reflect the current SNF cost environment.
    As was stated in the FY 2025 SNF PPS proposed rule (89 FR 23451), 
if more recent data subsequently became available, we would use such 
data, if appropriate, to determine the FY 2025 SNF labor-related share 
relative importance. Accordingly, based on IGI's second-quarter 2024 
forecast with historical data through the first quarter of 2024, the 
labor-related share for FY 2025 based on the finalized 2022-based SNF 
market basket is 72.0 percent.
    Table 20 compares the FY 2025 labor-related share based on the 
2022-based SNF market basket relative importance and the FY 2024 labor-
related share based on the 2018-based SNF market basket relative 
importance as finalized in the FY 2024 SNF final rule (88 FR 53213).
[GRAPHIC] [TIFF OMITTED] TR06AU24.019

    The FY 2025 SNF labor-related share is 0.9 percentage point higher 
than the FY 2024 SNF labor-related share (based on the 2018-based SNF 
market basket). The higher labor-related share is primarily due to 
incorporating the 2022 Medicare cost report data, which resulted in a 
higher Compensation cost weight, as well as higher relative importance 
of the Capital cost category.
5. FY 2025 Market Basket Percentage Increase for the SNF PPS Update
    As discussed previously in this rule, beginning with the FY 2025 
SNF PPS update, we are adopting the 2022-based SNF market basket as the 
appropriate market basket of goods and services for the SNF PPS. 
Consistent with historical practice, we estimate the market basket 
update for the SNF PPS based on IHS Global Inc.'s (IGI) forecast. IGI 
is a nationally recognized economic and financial forecasting firm with 
which CMS contracts to forecast the components of the market baskets 
and total factor productivity (TFP).
    Based on IGI's fourth-quarter 2023 forecast with historical data 
through the third quarter of 2023, the proposed 2022-based SNF market 
basket update for FY 2025 was estimated to be 2.8 percent--which was 
0.1 percentage point lower than the FY 2025 percent change of the 2018-
based SNF market basket. We are also proposed that if more recent data 
subsequently became available (for example, a more recent estimate of 
the market basket and/or the TFP), we would use such data, if 
appropriate, to determine the FY 2025 SNF market basket percentage 
increase, labor-related share, forecast error adjustment, or 
productivity adjustment in the SNF PPS final rule. Accordingly, based 
on IGI's second-quarter 2024 forecast with historical data through the 
first quarter of 2024, the most recent estimate of the 2022-based SNF 
market basket percentage increase for FY 2025 is 3.0 percent.
    Table 21 compares the 2022-based SNF market basket and the 2018-
based SNF market basket percent changes. While there are slight 
differences of up to 0.2 percentage point in certain years, there is no 
difference in the average growth rates between the two market baskets 
in the historical period (FY 2020-FY 2023) and a 0.1 percentage point 
difference in the forecast period (FY 2024-FY 2026) when rounded to one 
decimal place.

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B. Changes to SNF PPS Wage Index

1. Core-Based Statistical Areas (CBSAs) for the FY 2025 SNF PPS Wage 
Index
a. Background
    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 2025, 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 under the IPPS 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. As in previous years, we would continue 
to use, as the basis for the SNF PPS wage index, the IPPS hospital wage 
data, unadjusted for occupational mix, without taking into account 
geographic reclassifications under section 1886(d)(8) and (d)(10) of 
the Act, and without applying the rural floor under section 4410 of the 
BBA 1997 and the outmigration adjustment under section 1886(d)(13) of 
the Act. For FY 2025, the updated wage data are for hospital cost 
reporting periods beginning on or after October 1, 2020, and before 
October 1, 2021 (FY 2021 cost report data).
    The applicable SNF PPS wage index value is assigned to a SNF on the 
basis of the labor market area in which the SNF is geographically 
located. 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 Metropolitan 
Statistical Area (MSA) and the creation of micropolitan statistical 
areas and combined statistical areas. In adopting the Core-Based 
Statistical Areas (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 MSAs, 
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 in the June 28, 2010 Federal Register (75 FR 
37246 through 37252). Subsequently, on July 15, 2015, OMB issued OMB 
Bulletin No. 15-01, which provided minor updates to and superseded OMB 
Bulletin No. 13-01 that was issued on February 28, 2013. The attachment 
to OMB Bulletin No. 15-01 provided detailed information on the update 
to statistical areas since February 28, 2013. The updates provided in 
OMB Bulletin No. 15-01 were 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. In addition, on August 15, 2017, OMB issued Bulletin No. 17-01 
which announced a new urban CBSA, Twin Falls, Idaho (CBSA 46300). As we 
previously stated in the FY 2008 SNF PPS proposed and final rules (72 
FR 25538 through 25539, and 72 FR 43423), and as we noted in the 
proposed rule, 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 April 10, 2018, OMB issued OMB Bulletin No. 18-03 which 
superseded the August 15, 2017 OMB Bulletin No. 17-01. Subsequently, on 
September 14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded 
the April 10, 2018 OMB Bulletin No. 18-03. These bulletins established 
revised delineations for MSAs, Micropolitan Statistical Areas, and 
Combined Statistical Areas, and provided guidance on the use of the 
delineations of these statistical areas. A copy of OMB Bulletin No. 18-
04, may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.

[[Page 64083]]

While OMB Bulletin No. 18-04 is not based on new census data, it 
includes some material changes to the OMB statistical area 
delineations, including some new CBSAs, urban counties that would 
become rural, rural counties that would become urban, and existing 
CBSAs that would be split apart. OMB issued further revised CBSA 
delineations in OMB Bulletin No. 20-01, on March 6, 2020 (available on 
the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf). However, we determined that the changes in OMB 
Bulletin No. 20-01 do not impact the CBSA-based labor market area 
delineations adopted in FY 2021. Therefore, CMS did not propose to 
adopt the revised OMB delineations identified in OMB Bulletin No. 20-01 
for FY 2022 through FY 2024.
    On July 21, 2023, OMB issued OMB Bulletin No. 23-01 (available at 
https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf) which updates and supersedes OMB Bulletin No. 20-01 based upon 
the 2020 Standards for Delineating Core Based Statistical Areas (``the 
2020 Standards'') published by the Office of Management and Budget 
(OMB) on July 16, 2021 (86 FR 37770). OMB Bulletin No. 23-01 revised 
CBSA delineations which are comprised of counties and equivalent 
entities (for example, boroughs, a city and borough, and a municipality 
in Alaska, planning regions in Connecticut, parishes in Louisiana, 
municipios in Puerto Rico, and independent cities in Maryland, 
Missouri, Nevada, and Virginia). For FY 2025, we are adopting the 
revised OMB delineations identified in OMB Bulletin No. 23-01.
    To implement these changes for the SNF PPS beginning in FY 2025, it 
is necessary to identify the revised labor market area delineation for 
each affected county and provider in the country. The revisions OMB 
published on July 21, 2023 contain a number of significant changes. For 
example, under the revised OMB delineations, there would be new CBSAs, 
urban counties that would become rural, rural counties that would 
become urban, and existing CBSAs that would split apart. We discussed 
these changes in more detail in the proposed rule.
b. Implementation of Revised Labor Market Area Delineations
    We typically delay implementing OMB labor market area delineations 
to allow for sufficient time to assess the new changes. For example, as 
discussed in the FY 2014 SNF PPS proposed rule (78 FR 26448) and final 
rule (78 FR 47952), we delayed implementing the revised OMB statistical 
area delineations described in OMB Bulletin No. 13-01 to allow for 
sufficient time to assess the new changes. We believe it is important 
for the SNF PPS to use the latest labor market area delineations 
available as soon as is reasonably possible to maintain a more accurate 
and up-to-date payment system that reflects the reality of population 
shifts and labor market conditions. We further believe that using the 
delineations reflected in OMB Bulletin No. 23-01 would increase the 
integrity of the SNF PPS wage index system by creating a more accurate 
representation of geographic variations in wage levels. We have 
reviewed our findings and impacts relating to the revised OMB 
delineations set forth in OMB Bulletin No. 23-01 and find no compelling 
reason to further delay implementation. Because we believe we have 
broad authority under section 1888(e)(4)(G)(ii) of the Act to determine 
the labor market areas used for the SNF PPS wage index, and because we 
believe the delineations reflected in OMB Bulletin No. 23-01 better 
reflect the local economies and wage levels of the areas in which 
hospitals are currently located, we proposed to implement the revised 
OMB delineations as described in the July 21, 2023 OMB Bulletin No. 23-
01, for the SNF PPS wage index effective beginning in FY 2025. In 
addition, we will apply the permanent 5 percent cap policy in FY 2025 
on decreases in a hospital's wage index compared to its wage index for 
the prior fiscal year (FY 2024) to assist providers in adapting to the 
revised OMB delineations (if we finalize the implementation of such 
delineations for the SNF PPS wage index beginning in FY 2025). This 
policy is discussed in more detail in the proposed rule. We solicited 
comments on these proposals.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Commenters generally support the proposed policies for FY 
2025. One commenter stated that it ``seems to strike a balance between 
fairly compensating SNFs, promoting quality care, and enhancing 
regulatory oversight.'' Another commenter appreciates that CMS is not 
requiring the commitment resources needed to do cost report audits at 
this time. However, a number of these commenters also recommend CMS 
continue to reform the wage index policies. These recommendations 
included suggestions such as modifying the current methodology by 
developing a reclassification policy similar to the hospital wage index 
reclassification policy or developing a SNF-specific wage index.
    Response: We appreciate the commenters' support of the wage index 
proposed policies for FY 2025. In the absence of a SNF-specific wage 
index, we continue to believe the use of the pre-reclassified and pre-
floor hospital wage data (without the occupational mix adjustment) 
continue to be an appropriate and reasonable proxy for the SNF PPS. For 
a detailed discussion of the rationale for our current wage index 
policies and for responses to these recurring comments, we refer 
readers to the FY 2024 SNF PPS final rule (88 FR 53211 through 53215) 
and the FY 2016 SNF PPS final rule (80 FR 46401 through 46402).
    Comment: One commenter, who disagrees with the proposed delineation 
changes, specifically expressed concerns with the wage index decrease 
of both Rock County, Minnesota, and McHenry County, North Dakota. Both 
counties will transition from rural to urban designation and in turn 
will experience slightly over a 12 percent decrease from FY 2024 to FY 
2025. Due to the decline in wage index, the commenter strongly requests 
CMS to review the wage index data for Trinity Health (the only rural 
PPS hospital in North Dakota prior to the proposed designation change).
    Response: We understand that some CBSAs may experience a wage index 
decline compared to the previous fiscal year. For North Dakota, our 
investigation discovered the wage data for Trinity Health (provider 
350006) was audited in FY 2025 with no issues reported. The average 
hourly wage reported for Trinity Health declined 7 percent since FY 
2024. For the purposes of the SNF PPS, if a SNF (not hospital) 
experience a rural or urban redesignation due to the proposed 
delineation changes for FY 2025 and their wage index resulted in 
decline since FY 2024, the 5 percent cap policy will be applied. 
Therefore, we continue to believe that the 5 percent cap policy will 
mitigate any significant decreases a SNF may experience due to the 
revised OMB delineations. Additional details on the wage index 
transition policy for FY 2025 is discussed further below in this 
section. After consideration of public comments, we are finalizing our 
proposal regarding the implementation of the revised labor market area 
delineations for FY 2025.
(1) Micropolitan Statistical Areas
    As discussed in the FY 2006 SNF PPS proposed rule (70 FR 29093 
through 29094) and final rule (70 FR 45041), we

[[Page 64084]]

considered how to use the Micropolitan Statistical Area definitions in 
the calculation of the wage index. OMB defines a ``Micropolitan 
Statistical Area'' as a CBSA ``associated with at least one urban 
cluster that has a population of at least 10,000, but less than 
50,000'' (75 FR 37252). We refer to these as Micropolitan Areas. After 
extensive impact analysis, consistent with the treatment of these areas 
under the IPPS as discussed in the FY 2005 IPPS final rule (69 FR 49029 
through 49032), we determined the best course of action would be to 
treat Micropolitan Areas as ``rural'' and include them in the 
calculation of each State's SNF PPS rural wage index (see 70 FR 29094 
and 70 FR 45040 through 45041).
    Thus, the SNF PPS statewide rural wage index is determined using 
IPPS hospital data from hospitals located in non-MSA areas, and the 
statewide rural wage index is assigned to SNFs located in those areas. 
Because Micropolitan Areas tend to encompass smaller population centers 
and contain fewer hospitals than MSAs, we determined that if 
Micropolitan Areas were to be treated as separate labor market areas, 
the SNF PPS wage index would have included significantly more single-
provider labor market areas. As we explained in the FY 2006 SNF PPS 
proposed rule (70 FR 29094), recognizing Micropolitan Areas as 
independent labor markets would generally increase the potential for 
dramatic shifts in year-to-year wage index values because a single 
hospital (or group of hospitals) could have a disproportionate effect 
on the wage index of an area. Dramatic shifts in an area's wage index 
from year-to-year are problematic and create instability in the payment 
levels from year-to-year, which could make fiscal planning for SNFs 
difficult if we adopted this approach. For these reasons, we adopted a 
policy to include Micropolitan Areas in the State's rural wage area for 
purposes of the SNF PPS wage index and have continued this policy 
through the present.
    We believe that the best course of action would be to continue the 
policy established in the FY 2006 SNF PPS final rule and include 
Micropolitan Areas in each State's rural wage index. These areas 
continue to be defined as having relatively small urban cores 
(populations of 10,000 to 49,999). We do not believe it would be 
appropriate to calculate a separate wage index for areas that typically 
may include only a few hospitals for the reasons discussed in the FY 
2006 SNF PPS proposed rule, and as discussed earlier. Therefore, in 
conjunction with our implementing of the revised OMB labor market 
delineations beginning in FY 2025 and consistent with the treatment of 
Micropolitan Areas under the IPPS, we proposed to continue to treat 
Micropolitan Areas as ``rural'' and to include Micropolitan Areas in 
the calculation of the State's rural wage index.
(2) Urban Counties That Would Become Rural Under the Revised OMB 
Delineations
    As previously discussed, we proposed to implement the new OMB 
statistical area delineations (based upon the 2020 decennial Census 
data) beginning in FY 2025 for the SNF PPS wage index. Our analysis 
shows that a total of 54 counties (and county equivalents) that are 
currently considered part of an urban CBSA will be considered located 
in a rural area, for SNF PPS payment beginning in FY 2025, when we 
adopt the new OMB delineations. Table 22 lists the 54 urban counties 
that will be rural when we finalized our proposal to implement the new 
OMB delineations.
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[[Page 64086]]


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BILLING CODE 4120-01-C
    We proposed that, for purposes of determining the wage index under 
the SNF PPS, the wage data for all hospitals located in the counties 
listed in Table 22 would be considered rural when calculating their 
respective State's rural wage index under the SNF PPS. We recognize 
that rural areas typically have lower area wage index values than urban 
areas, and SNFs located in these counties may experience a negative 
impact in their SNF PPS payment due to the adoption of the revised OMB 
delineations. Furthermore, for SNF providers currently located in an 
urban county that will be considered rural when this proposal will be 
finalized, we will utilize the rural unadjusted per diem rates, found 
in Table 14, as the basis for determining payment rates for these 
facilities beginning on October 1, 2024.
(3) Rural Counties That Would Become Urban Under the Revised OMB 
Delineations
    As previously discussed, we proposed to implement the revised OMB 
statistical area delineations based upon OMB Bulletin No. 18-04 
beginning in FY 2025. Analysis of these OMB statistical area 
delineations shows that a total of 54 counties (and county equivalents) 
that are currently located in rural areas will be located in urban 
areas when we finalize our proposal to implement the revised OMB 
delineations.
    Table 23 lists the 54 rural counties that will be urban when we 
finalize this proposal.
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    We proposed that, for purposes of calculating the area wage index 
under the SNF PPS, the wage data for hospitals located in the counties 
listed in Table 23 will be included in their new respective urban 
CBSAs. Typically, SNFs located in an urban area will receive a wage 
index value higher than or equal to SNFs located in their State's rural 
area. Furthermore, for SNFs currently located in a rural county that 
will be considered urban when this proposal be finalized, we will 
utilize the urban unadjusted per diem rates found in Table 23, as the 
basis for determining the payment rates for these facilities beginning 
October 1, 2024.
(4) Urban Counties That Would Move to a Different Urban CBSA Under the 
Revised OMB Delineations
    In addition to rural counties becoming urban and urban counties 
becoming rural, several urban counties will shift from one urban CBSA 
to another urban CBSA under adoption of the new OMB delineations. In 
other cases, when we adopt the new OMB delineations, counties will 
shift between existing and new CBSAs, changing the constituent makeup 
of the CBSAs.
    In one type of change, an entire CBSA will be subsumed by another 
CBSA. For example, CBSA 31460 (Madera, CA) currently is a single county 
(Madera, CA) CBSA. Madera County will be a part of CBSA 23420 (Fresno, 
CA) under the new OMB delineations.
    In another type of change, some CBSAs have counties that would 
split off to become part of, or to form, entirely new labor market 
areas. For example, CBSA 29404 (Lake County-Kenosha County, IL-WI) 
currently is comprised of two counties (Lake County, IL, and Kenosha 
County, WI). Under the new OMB delineations, Kenosha county will split 
off and form the new CBSA 28450 (Kenosha, WI), while Lake county would 
remain in CBSA 29404.
    Finally, in some cases, a CBSA will lose counties to another 
existing CBSA when we adopt the new OMB delineations. For example, 
Meade County, KY, will move from CBSA 21060 (Elizabethtown-Fort Knox, 
KY) to CBSA 31140 (Louisville/Jefferson County, KY-IN). CBSA 21060 will 
still exist in the new labor market delineations with fewer constituent 
counties. Table 24 lists the urban counties that will move from one 
urban CBSA to another urban CBSA under the new OMB delineations.
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    If providers located in these counties move from one CBSA to 
another under the new OMB delineations, there may be impacts, both 
negative and positive, upon their specific wage index values.
    In other cases, adopting the revised OMB delineations will involve 
a change only in CBSA name and/or number, while the CBSA continues to 
encompass the same constituent counties. For example, CBSA 19430 
(Dayton-Kettering, OH) will experience a change to its name and become 
CBSA 19430 (Dayton-Kettering-Beavercreek, OH), while all of its three 
constituent counties will remain the same. We consider these changes 
(where only the CBSA name and/or number will change) to be 
inconsequential changes with respect to the SNF PPS wage index. Table 
25 sets forth a list of such CBSAs where there will be a change in CBSA 
name and/or number only when we adopt the revised OMB delineations.
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5. Change to County-Equivalents in the State of Connecticut
    The June 6, 2022 Census Bureau Notice (87 FR 34235-34240), OMB 
Bulletin No. 23-01 replaced the 8 counties in Connecticut with 9 new 
``Planning Regions.'' Planning regions now serve as county-equivalents 
within the CBSA system. We proposed to adopt the planning regions as 
county equivalents for wage index purposes. We believe it is necessary 
to adopt this migration from counties to planning region county-
equivalents in order to maintain consistency with OMB updates. As 
outlined in the proposed rule, we are providing the following crosswalk 
with the current and proposed FIPS county and county-equivalent codes 
and CBSA assignments.

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2. Transition Policy for FY 2025 Wage Index Changes
    Overall, we believe that implementing the new OMB delineations will 
result in wage index values being more representative of the actual 
costs of labor in a given area. We recognize that some SNFs (43 
percent) will experience decreases in their area wage index values as a 
result of this change, though less than 1 percent of providers will 
experience a significant decrease (that is, greater than 5 percent) in 
their area wage index value. We also realize that many SNFs (57 
percent) will have higher area wage index values after adopting the 
revised OMB delineations.
    CMS recognizes that SNFs in certain areas may experience reduced 
payment due to the adoption of the revised OMB delineations and has 
finalized transition policies to mitigate negative financial impacts 
and provide stability to year-to-year wage index variations. In FY 
2023, the 5 percent cap policy was made permanent for all SNFs. This 5 
percent cap on reductions policy is discussed in further detail in FY 
2023 final rule at 87 FR 47521 through 47523. It is CMS' long held 
opinion that revised labor market delineations should be adopted as 
soon as is possible to maintain the integrity the wage index system. We 
believe the 5 percent cap policy will sufficiently mitigate significant 
disruptive financial impacts on SNFs negatively affected by the 
adoption of the revised OMB delineations. We do not believe any 
additional transition is necessary considering that the current cap on 
wage index decreases, which was not in place when implementing prior 
decennial census updates in FY 2006 and FY 2015, ensures that a SNF's 
wage index will not be less than 95 percent of its final wage index for 
the prior year.
    Furthermore, consistent with the requirement at section 
1888(e)(4)(G)(ii) of the Act that wage index adjustments must be made 
in a budget neutral manner, the applied 5 percent cap on the decrease 
in an SNF's wage index will not result in any change in estimated 
aggregate SNF PPS payments by applying a budget neutrality factor to 
the unadjusted Federal per diem rates. The methodology for calculating 
this budget neutrality factor is outlined in section III.D of the 
proposed rule.
    We solicited comments on our proposed implementation of revised 
labor market area delineations. The proposed wage index applicable to 
FY 2025 is set forth in Table A and B available on the CMS website at 
https://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Several commenters support the existing 5 percent 
permanent cap policy but raised concerns on varying impacts it has on 
different providers. A commenter recommends that the 5 percent cap be 
applied in a non-budget neutral manner. Another commenter suggest that 
CMS apply a 1-year transition period to allow time to study the impact 
of the delineation changes. A commenter suggest CMS lower the cap 
amount to mitigate changes caused by revisions to the CBSA 
delineations.
    Response: We appreciate the commenters' support of the permanent 5 
percent cap on wage index decreases policy. When the permanent 5 
percent cap policy was established in FY 2023, our provider level 
impact analysis determined approximately 97 percent of SNFs would 
experience a wage index change within 5 percent. Therefore, we believe 
applying a 5-percent cap on all wage index decreases each year, 
regardless of the reason for the decrease, would effectively mitigate 
instability in SNF PPS payments due to any significant wage index 
decreases that may affect providers in any year. As discussed earlier 
in this section, it is CMS' long held opinion that revised labor market 
delineations should be adopted as soon as is possible to maintain the 
integrity the wage index system. We believe the 5 percent cap policy 
will sufficiently mitigate significant disruptive financial impacts on 
SNFs negatively affected by the proposed adoption of the revised OMB 
delineations. As for budget neutrality, we do not believe that the 
permanent 5 percent cap policy for the SNF wage index should be applied 
in a non-budget-neutral manner. As a matter of fact, the statute at 
section 1888(e)(4)(G)(ii) of the Act requires that adjustments for 
geographic variations in labor costs for a FY are made in a budget-
neutral manner. We refer readers to the FY 2023 SNF PPS final rule (87 
FR 47521 through 47523) for a detailed discussion and for responses to 
these and other comments relating to the wage index cap policy.
    After consideration of public comments, we are finalizing our 
proposal regarding the wage index adjustment for FY 2025.

C. Technical Updates to the PDPM ICD-10 Mappings

1. Background
    In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the 
implementation of the Patient Driven Payment Model (PDPM), effective 
October 1, 2019. The PDPM utilizes the International Classification of 
Diseases, 10th Revision, Clinical Modification (ICD-10-CM, hereafter 
referred to as ICD-10) codes in several ways, including using the 
patient's primary diagnosis to assign patients to clinical categories 
under several PDPM components, specifically the PT, OT,

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SLP, and NTA components. While other ICD-10 codes may be reported as 
secondary diagnoses and designated as additional comorbidities, the 
PDPM does not use secondary diagnoses to assign patients to clinical 
categories. The PDPM ICD-10 code to clinical category mapping, ICD-10 
code to SLP comorbidity mapping, and ICD-10 code to NTA comorbidity 
mapping (hereafter collectively referred to as the PDPM ICD-10 code 
mappings) are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM.
    In the FY 2020 SNF PPS final rule (84 FR 38750), we outlined the 
process by which we maintain and update the PDPM ICD-10 code mappings, 
as well as the SNF Grouper software and other such products related to 
patient classification and billing, to ensure that they reflect the 
most up to date codes. Beginning with the updates for FY 2020, we apply 
non-substantive changes to the PDPM ICD-10 code mappings through a sub-
regulatory process consisting of posting the updated PDPM ICD-10 code 
mappings on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM. Such nonsubstantive changes are 
limited to those specific changes that are necessary to maintain 
consistency with the most current PDPM ICD-10 code mappings.
    On the other hand, substantive changes that go beyond the intention 
of maintaining consistency with the most current PDPM ICD-10 code 
mappings, such as changes to the assignment of a code to a clinical 
category or comorbidity list, would be through notice and comment 
rulemaking because they are changes that affect policy. We noted in the 
proposed rule that in the case of any diagnoses that are either 
currently mapped to Return to Provider or that we are finalizing to 
classify into this category, this is not intended to reflect any 
judgment on the importance of recognizing and treating these 
conditions. Rather, we believe that there are more specific or 
appropriate diagnoses that would better serve as the primary diagnosis 
for a Part-A covered SNF stay.
2. Clinical Category Changes for New ICD-10 Codes for FY 2025
    Each year, we review the clinical category assigned to new ICD-10 
diagnosis codes and proposed changing the assignment to another 
clinical category if warranted. This year, we proposed changing the 
clinical category assignment for the following four new codes that were 
effective on October 1, 2023.
     E88.10 Metabolic Syndrome was initially mapped to the 
clinical category of Medical Management. The National Institutes of 
Health (NIH) defines metabolic syndrome as the presence of at least 
three of the following traits: Large waist, elevated triglyceride 
levels, reduced high-density lipoprotein (HDL) cholesterol, increased 
blood pressure, and/or elevated fasting blood glucose. Metabolic 
syndrome is a cluster of metabolic risk factors for cardiovascular 
diseases and type 2 diabetes mellitus. The root causes of metabolic 
syndrome are overweight/obesity, physical inactivity, and genetic 
factors. Given this, treatment for Metabolic Syndrome typically occurs 
outside of a Part A SNF stay and we do not believe it would serve 
appropriately as the primary diagnosis for a Part A-covered SNF stay. 
For this reason, we proposed to change the mapping of this code from 
Medical Management to the clinical category of Return to Provider.
     E88.811 Insulin Resistance Syndrome, Type A was initially 
mapped to the clinical category of Medical Management. Type A insulin 
resistance syndrome (TAIRS) is a rare disorder characterized by severe 
insulin resistance due to defects in insulin receptor signaling and 
treatment typically occurs outside of a Part A SNF stay. For this 
reason, we proposed to change the mapping of this code from Medical 
Management to the clinical category of Return to Provider.
     E88.818 Other Insulin Resistance was initially mapped to 
the clinical category of Medical Management. Other Insulin Resistance 
is used to specify a medical diagnosis of other insulin resistance such 
as Insulin resistance, Type B. Treatment typically occurs outside of a 
Part A SNF stay. For this reason, we proposed to change the mapping of 
this code from Medical Management to the clinical category of Return to 
Provider.
     E88.819 Insulin Resistance, Unspecified was initially 
mapped to the clinical category of Medical Management and is utilized 
to indicate when a specific type of insulin resistance has not been 
specifically identified. Treatment typically occurs outside of a Part A 
SNF stay. For this reason, we proposed to change the mapping of this 
code from Medical Management to the clinical category of Return to 
Provider.
    We solicited comments on the proposed substantive changes to the 
PDPM ICD-10 code mappings outlined in this section, as well as comments 
on additional substantive and non-substantive changes that commenters 
believe are necessary.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Several commenters supported the proposed reclassification 
of the PDPM ICD-10 mappings of E88.10 Metabolic Syndrome, E88.811 
Insulin Resistance Syndrome, E88.818 Other Insulin Resistance, and 
E88.819 Insulin Resistance, Unspecified from Medical Management to the 
Return to Provider (RTP) category. Commenters agreed these mapping 
changes would improve billing accuracy, promote more appropriate 
diagnoses for SNF stays, and ultimately improve patient care.
    Response: We appreciate the support for these proposed ICD-10 
mapping changes.
    Comment: One commenter stated CMS should reconsider mapping ICD-10 
code M62.81, Muscle Weakness (Generalized) from RTP to alternative 
category and be used as a primary diagnosis.
    Response: We considered this request and, as noted in 87 FR 47524, 
continue to believe, as discussed in the FY 2023 SNF PPS final rule (87 
FR 47524), that M62.81 Muscle Weakness (Generalized) is nonspecific and 
if the original condition is resolved, but the resulting muscle 
weakness persists because of the known original diagnosis, there are 
more specific codes that exist that would account for why the muscle 
weakness is on-going. Many musculoskeletal conditions are the result of 
a previous injury or trauma to a site or are recurrent conditions. This 
symptom, without any specification of the etiology or severity, is not 
a reason for daily skilled care in a SNF. Patients with Muscle Weakness 
(Generalized) should obtain a more specific diagnosis causing the 
generalized muscle weakness. The specific diagnosis should be used to 
develop an appropriate care plan for the patient.
    Comment: Several commenters recommended that CMS consider 
additional changes to the ICD-10 mappings. These include additional 
dysphagia code mappings for the Speech Language Pathology component, 
changes to how PDPM classifies dialysis patients, and adding codes that 
will reflect complications related to the GI devices.
    Response: We appreciate the comments and, to the extent that these 
changes represent substantive changes to the ICD-10 code mappings, we 
will consider these comments for future rulemaking.
    After consideration of public comments, we are finalizing the 
changes described above, as proposed.

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D. Request for Information: Update to PDPM Non-Therapy Ancillary 
Component

1. Background
    In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the 
implementation of the PDPM, effective October 1, 2019. Under the PDPM, 
payment is determined through the combination of six payment 
components. Five of the components (PT, OT, SLP, NTA, and nursing) are 
case-mix adjusted. Additionally, there is a non-case-mix adjusted 
component to cover utilization of SNF resources that do not vary 
according to patient characteristics.
    The NTA component utilizes a comorbidity score to assign the 
patient to an NTA component case-mix group, which is determined by the 
presence of conditions or the use of extensive services (henceforth 
also referred to as comorbidities) that were found to be correlated 
with increases in NTA costs for SNF patients. The presence of these 
comorbidities is reported by providers on certain items of the Minimum 
Data Set (MDS) resident assessment, with some comorbidities being 
identified by ICD-10-CM diagnosis codes (hereafter referred to as ICD-
10 codes) that are coded in Item I8000 of the MDS. MDS Item I8000 is an 
open-ended item on the MDS assessment where the provider can fill in 
additional active diagnoses for the patient that are either not 
explicitly on the MDS, or are more severe or specific diagnoses, in the 
form of ICD-10 codes. For conditions and extensive services where the 
source is indicated as MDS Item I8000, CMS posts an NTA comorbidity to 
ICD-10 mapping, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/patient-driven-model, that provides a crosswalk between the listed condition 
and the ICD-10 codes that may be coded to qualify that condition to 
serve as part of the patient's NTA classification.
    During the development of PDPM, CMS identified a list of 50 
conditions and extensive services that were associated with increases 
in NTA costs. Each of the 50 comorbidities used under PDPM for NTA 
classification is assigned a certain number of points based on its 
relative costliness. To determine the patient's NTA comorbidity score, 
a provider would identify all the comorbidities for which a patient 
would qualify and then add the points for each comorbidity together. 
The resulting sum represents the patient's NTA comorbidity score, which 
is then used to classify the patient into an NTA component 
classification group. More information about the creation of the NTA 
component scoring method can be found in section 3.7 of the SNF PDPM 
Technical Report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research.
    In response to feedback from interested parties, CMS stated in the 
FY 2019 SNF PPS final rule that we would consider revisiting both the 
list of comorbidities used under the NTA component and the points 
assigned to each condition or extensive service based on changes in the 
patient population and care practices over time (83 FR 39224). 
Accordingly, in the FY 2025 SNF PPS proposed rule, we released a 
request for information (RFI) soliciting comment on the methodology CMS 
is currently considering for updating the NTA component (89 FR 23459 
through 89 FR 23461).
2. Updates to the Study Population and Methodology
    We are considering several changes to the NTA study population as a 
foundation upon which to update the NTA component. First, we are 
considering updating the years used for data corresponding to Medicare 
Part A SNF stays, including claims, assessments, and cost reports. To 
develop PDPM, CMS used a study population of Medicare Part A SNF stays 
with admissions from FY 2014 through FY 2017 (see FY 2019 SNF PPS final 
rule, 83 FR 39220). This methodology is described in more detail in 
section 3.2.1 of the SNF PDPM technical report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research. The updated study population 
will instead use Medicare Part A SNF stays with admissions from FY 2019 
through FY 2022. However, as discussed in the FY 2023 SNF PPS final 
rule (87 FR 47526 through 47528), data from much of this time period 
was affected by the national COVID-19 PHE with significant impacts on 
nursing homes. We are therefore considering using the same subset 
population used for the PDPM parity adjustment recalibration by 
excluding stays with either a COVID-19 diagnosis or stays using a 
COVID-19 PHE-related modification under section 1812(f) of the Act.
    Next, we are considering making certain methodological changes to 
reflect more accurate and reliable coding of NTA conditions and 
extensive services on SNF Part A claims and the MDS after PDPM 
implementation. We had taken a broad approach when creating the initial 
list of conditions and services used under the NTA component to predict 
what NTA coding practices would be after PDPM implementation, given the 
absence of analogous data in the previous Resource Utilization Groups, 
Version IV (RUG-IV) payment model. The initial list of comorbidities 
used under the NTA component was therefore created using data from a 
variety of different sources, including using Medicare inpatient, 
outpatient, and Part B claims to identify the presence of condition 
categories from the Medicare Parts C and D risk adjustment models 
(hereafter referred to as CCs and RxCCs, respectively). More 
information about this methodology can be found in section 3.7 of the 
SNF PDPM Technical Report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research. Given that we now have several years of post-PDPM 
implementation data, we believe it would more accurately reflect the 
coding of conditions and extensive services under PDPM to rely 
exclusively upon SNF PPS Part A claims and the MDS. We are therefore 
considering updating the methodology to only utilize SNF Part A claims 
and the MDS, and not claim types from other Medicare settings.
    Additionally, we are considering modifying the overlap methodology 
to rely more upon the MDS items that use a checkbox to record the 
presence of conditions and extensive services whenever possible, while 
allowing for potentially more severe or specific diagnoses to be 
indicated on MDS Item I8000 when it would be useful for more accurate 
patient classification under PDPM. During the development of the NTA 
component, CMS included both MDS items and ICD-10 diagnoses from the 
Medicare Part C CCs and Part D RxCCs. Because the CCs were developed to 
predict utilization of Medicare Part C services, while the RxCCs were 
developed to predict Medicare Part D drug costs, the largest component 
of NTA costs, we stated in the FY 2019 SNF PPS final rule that we 
believed using both sources allowed us to define the conditions and 
extensive services potentially associated with NTA utilization more 
comprehensively (83 FR 39220). In cases where there was considerable 
overlap between an MDS item and its CC or RxCC definition, to ensure 
accurate estimation of statistically significant regression results, we 
chose the CC or RxCC definition if it had higher average NTA cost per 
day than the MDS item before

[[Page 64096]]

running the final regression analysis. More information about this 
methodology can be found in section 3.7 of the SNF PDPM Technical 
Report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research.
    Since the implementation of PDPM, we believe patient conditions and 
extensive services are now more accurately and reliably reported by 
providers using MDS items. We are therefore considering prioritizing 
the reporting of conditions on the MDS by raising the cost threshold 
for selecting the overlapping CC or RxCC definitions from any 
additional cost to 5 dollars in average NTA cost per day, which is the 
amount that we observe to be generally associated with a 1-point NTA 
increase. Specifically, since any dollar amount less than 5 dollars 
would render the two options indistinguishable from each other in the 
point assignment when comparing relative costliness, choosing MDS items 
over the overlapping CC or RxCC definitions will not lead to any loss 
of the most expensive representations of the conditions and services in 
the regression model.
3. Updates to Conditions and Extensive Services Used for NTA 
Classification
    Table 27 provides the list of conditions and extensive services 
that would be used for NTA classification following the various changes 
to the methodology described in the RFI. For each comorbidity, we have 
also included the frequency of stays, the average NTA cost per day, the 
ordinary least squares (OLS) estimate of its impact on NTA costs per 
day, and the assigned number of points based on its relative impact on 
a patient's NTA costs. Conditions and extensive services with a greater 
impact on NTA costs were assigned more points, while those with less of 
an impact were assigned fewer points. More information about this 
methodology can be found in section 3.7 of the SNF PDPM Technical 
Report, available at https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research.
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    We solicited comments on the RFI for updates to the NTA component 
of PDPM. The following is a summary of the comments we received.
    Commenters supported some additions and opposed some removals to 
the list of conditions and services used under the NTA component. Some 
commenters thanked CMS for the additions of rheumatoid arthritis and 
mobility devices for limb prosthesis. Other commenters objected to the 
removal of several conditions, such as proliferative diabetic 
retinopathy and vitreous hemorrhage, ostomy, malnutrition and at risk 
for malnutrition, feeding tube, infection of and open lesions on the 
foot, radiation, tracheostomy, pulmonary fibrosis and other chronic 
lung disorders, and systemic lupus erythematosus, other connective 
tissue disorders, and inflammatory spondylopathies.
    Commenters requested that CMS consider other suggestions for the 
list of conditions and services used under the NTA component, such as 
increasing point values, adding other conditions, or not making any 
changes to the list. For example, some commenters objected to decreased 
points for parenteral IV feeding, invasive mechanical ventilator or 
respirator, wound infections, and HIV/AIDS. Some commenters also 
questioned the underlying data behind the OLS cost estimate decreases 
for multi-drug resistant organism and morbid obesity, even though the 
NTA point allocation did not change for those conditions, with some 
commenters requesting increased points for morbid obesity. Commenters 
further suggested that CMS consider adding comorbidities such as end-
stage renal disease, mental health-related diagnoses such as 
schizophrenia and major depression, chemotherapy, end-of life 
prognosis, and unstageable pressure injuries with slough or eschar. One 
commenter objected to any changes to the current allocation of NTA 
points, noting that reducing points for comorbidities that are commonly 
admitted to SNFs, while adding points for comorbidities that are not as 
commonly admitted, may result in reduced payment to facilities for 
conditions that are frequently cared for. Similarly, another commenter 
stated that while adding comorbidities makes sense, removing 
comorbidities does not because the correlated increased cost was set by 
the CMS data-driven studies completed for PDPM implementation.
    Many commenters specifically objected to the removal of 
malnutrition and at risk for malnutrition. These commenters emphasized 
that malnutrition is prevalent among beneficiaries in the post-acute 
care setting, with undiagnosed and untreated malnutrition potentially 
resulting in a gradual deterioration of overall health and a decline in 
both physical and cognitive capabilities. In turn, malnutrition can 
lead to extended hospital stays, increased readmission rates, a wide 
range of chronic health issues (commonly the development of pressure 
injuries, infections, decreased ability to complete activities of daily 
living, and frailty/fractures), and fatalities. Additionally, if 
malnutrition is not identified and treated early, the need and 
incidence for placement of an enteral feeding tube is heightened, which 
precipitates more risk and expense. Commenters were concerned that 
removing malnutrition from the list of comorbidities used under the NTA 
component could prevent needed resources from going to this population 
and reduce the importance of the role of registered dietitians, who are 
integral members of the patient care team. Many commenters suggested 
that malnutrition should increase to two NTA points while leaving at 
risk for malnutrition and tube feeding at one NTA point. One commenter 
suggested that malnutrition should become a stand-alone therapy for 
increased reimbursement separate from the list of conditions and 
services used under the NTA component.
    Other commenters suggested that the criteria for defining 
malnutrition could be further refined, rather than being removed 
entirely from the list of comorbidities used under the NTA component. 
For example, commenters noted that registered dietitian nutritionists 
receive evidenced-based training to identify malnutrition using the 
validated Academy of Nutrition and Dietetics and American Society for 
Parenteral and Enteral Nutrition (ASPEN) indicators of malnutrition 
(AAIM) and suggested that CMS adopt the AAIM criteria in the RAI manual 
for MDS Item I5600 malnutrition (protein or calorie) or at risk for 
malnutrition. Some commenters suggested that CMS utilize the ICD-10 
diagnosis code range E40 through E46 to define malnutrition and exclude 
at risk of malnutrition because there is no official ICD-10 diagnosis 
code. Many commenters suggested that CMS provide clear guidance 
consisting of specific examples and coding criteria in the RAI manual 
for malnutrition or at risk for malnutrition, which would ensure 
consistency and accuracy in coding practices across healthcare 
facilities.
    We also received some comments about the data and methodology that 
we presented in this RFI for how CMS revised the list of comorbidities 
used under the NTA component. Some commenters supported updating the 
NTA study methodology with more recent data, while excluding those with 
COVID-19 diagnoses. However, other commenters stated that there was 
insufficient information provided in the RFI to provide meaningful and 
specific feedback. Commenters recommended that CMS work through 
potential NTA component changes in a more transparent manner, such as 
publishing more detailed data and considering other opportunities to 
gain additional feedback from interested parties.

[[Page 64099]]

Commenters objected to the use of FY 2019 through FY 2022 data because 
of the COVID-19 PHE and the effects of this PHE on the SNF patient 
population and data collected during this time, suggesting that CMS 
should instead use more stable data from FY 2022 onwards with no COVID-
19 related data exclusions. Some commenters recommended that CMS wait 
until it has at least three years of data after the end of the COVID-19 
PHE. Commenters generally agreed with CMS' methodological approaches to 
only utilize SNF Part A claims and the MDS and not claim types from 
other Medicare settings that were used as a proxy to develop PDPM, but 
requested the flexibility to use such data in the future to include new 
NTA conditions as needed, such as emergent diagnoses, treatment 
innovations, or costs associated with certain CMS policies such as 
Enhanced Barrier Precautions (EBP) in nursing homes. Lastly, commenters 
generally agreed with modifying the overlap methodology to rely more 
upon MDS items that use a checkbox to record the presence of conditions 
and extensive services, but disagreed with CMS' method of prioritizing 
the MDS items by raising the cost threshold for selecting the 
overlapping CC or RxCC definitions (comprised of ICD-10 diagnosis codes 
to be entered into MDS Item I8000) from any additional cost to five 
dollars in average NTA cost per day.
    Finally, commenters sought clarification on whether routine updates 
to the NTA component would be needed or beneficial in the future, as 
well as on the net financial impacts and if the changes would be 
implemented in a budget-neutral manner.
    We thank commenters for their responses to the NTA RFI and we will 
take these comments under advisement as we consider proposed changes to 
the NTA component of PDPM in future rulemaking.

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

A. Background and Statutory Authority

    The Skilled Nursing Facility Quality Reporting Program (SNF QRP) is 
authorized by section 1888(e)(6) of the Act, and it applies to 
freestanding SNFs, SNFs affiliated with acute care facilities, and all 
non-critical access hospital (CAH) swing-bed rural hospitals. Section 
1888(e)(6)(A)(i) of the Act requires the Secretary to reduce by 2 
percentage points the annual market basket percentage increase 
described in section 1888(e)(5)(B)(i) of the Act applicable to a SNF 
for a fiscal year (FY), after application of section 1888(e)(5)(B)(ii) 
of the Act (the productivity adjustment) and section 1888(e)(5)(B)(iii) 
of the Act, in the case of a SNF that does not submit data in 
accordance with sections 1888(e)(6)(B)(i)(II) and (III) of the Act for 
that FY. Section 1890A of the Act requires that the Secretary establish 
and follow a pre-rulemaking process, in coordination with the 
consensus-based entity (CBE) with a contract under section 1890(a) of 
the Act, to solicit input from certain groups regarding the selection 
of quality and efficiency measures for the SNF QRP. We have codified 
our program requirements in our regulations at Sec.  413.360.
    In the proposed rule, we proposed to require SNFs to collect and 
submit through the Minimum Data Set (MDS) four new items and modify one 
item on the MDS as described in section VI.C. of the proposed rule. In 
section VI.E.3. of the proposed rule, we proposed to adopt a similar 
validation process for the SNF QRP that we adopted for the SNF VBP, and 
to amend regulation text at Sec.  413.360 to implement the validation 
process we proposed. We also sought information on future measure 
concepts for the SNF QRP in section VI.D. of the proposed rule.

B. General Considerations Used for the Selection of Measures for the 
SNF QRP

    For a detailed discussion of the considerations we use for the 
selection of SNF QRP quality, resource use, or other measures, we refer 
readers to the FY 2016 SNF PPS final rule (80 FR 46429 through 46431).
1. Quality Measures Currently Adopted for the SNF QRP
    The SNF QRP currently has 15 adopted measures, which are listed in 
Table 28. For a discussion of the factors used to evaluate whether a 
measure should be removed from the SNF QRP, we refer readers to Sec.  
413.360(b)(2).

[[Page 64100]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.032

    We did not propose to adopt any new measures for the SNF QRP.

C. Collection of Four New Items as Standardized Patient Assessment Data 
Elements and Modification of One Item Collected as a Standardized 
Patient Assessment Data Element Beginning With the FY 2027 SNF QRP

    In the proposed rule, we proposed to require SNFs to report the 
following four new items \2\ as standardized patient assessment data 
elements under the social determinants of health (SDOH) category: one 
item for Living Situation; two items for Food; and one item for 
Utilities. We also proposed to modify one of the current items 
collected as a standardized patient assessment data element under the 
SDOH category (the Transportation item), as described in section 
VI.C.5. of the proposed rule.\3\
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    \2\ Items may also be referred to as ``data elements.''
    \3\ As noted in section VI.C.3 of the proposed rule and section 
VII.C.3 of this final rule, hospitals are required to report whether 
they have screened patients for five standardized SDOH categories: 
housing instability, food insecurity, utility difficulties, 
transportation needs, and interpersonal safety.
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1. Definition of Standardized Patient Assessment Data
    Section 1888(e)(6)(B)(i)(III) of the Act requires SNFs to submit 
standardized patient assessment data required under section 1899B(b)(1) 
of the Act. Section 1899B(b)(1)(A) of the Act requires post-acute care 
(PAC) providers to submit standardized patient assessment data under 
applicable reporting provisions (which, for SNFs, is the SNF QRP) with 
respect to the admission and discharge of an individual (and more 
frequently as the Secretary deems appropriate) using a standardized 
patient assessment instrument. Section 1899B(a)(1)(C) of the Act 
requires, in part, the Secretary to modify the PAC assessment 
instruments in order for PAC providers, including SNFs, to submit 
standardized patient assessment data under the Medicare program. SNFs 
are currently required to report standardized patient assessment data 
through the patient assessment instrument, referred to as the MDS. 
Section 1899B(b)(1)(B) of the Act describes standardized patient 
assessment data as data required for at least the quality measures 
described in section 1899B(c)(1) of the Act and that is with respect to 
the following categories: (1) functional status, such as mobility and 
self-care at admission to a PAC provider and before discharge from a 
PAC provider; (2) cognitive function, such as ability to express ideas 
and to understand, and mental status, such as depression and dementia; 
(3) special services, treatments, and interventions, such as need for 
ventilator use, dialysis, chemotherapy, central line placement, and 
total parenteral nutrition; (4) medical conditions and comorbidities, 
such as diabetes, congestive heart failure, and pressure ulcers; (5) 
impairments, such as incontinence and an impaired ability to hear, see, 
or swallow, and (6) other categories deemed necessary and appropriate 
by the Secretary.
2. Social Determinants of Health Collected as Standardized Patient 
Assessment Data Elements
    Section 1899B(b)(1)(B)(vi) of the Act authorizes the Secretary to 
collect standardized patient assessment data elements with respect to 
other categories deemed necessary and appropriate. Accordingly, we 
finalized the creation of the SDOH category of

[[Page 64101]]

standardized patient assessment data elements in the FY 2020 SNF PPS 
final rule (84 FR 38805 through 38817), and defined SDOH as the 
socioeconomic, cultural, and environmental circumstances in which 
individuals live that impact their health.\4\ According to the World 
Health Organization, research shows that the SDOH can be more important 
than health care or lifestyle choices in influencing health, accounting 
for between 30 to 55 percent of health outcomes.\5\ This is part of a 
growing body of research that highlights the importance of SDOH on 
health outcomes. Subsequent to the FY 2020 SNF PPS final rule, we 
expanded our definition of SDOH: SDOH are the conditions in the 
environments where people are born, live, learn, work, play, worship, 
and age that affect a wide range of health, functioning, and quality-
of-life outcomes and risks.6 7 8 This expanded definition 
aligns our definition of SDOH with the definition used by HHS agencies, 
including OASH, the Centers for Disease Control and Prevention (CDC) 
and the White House Office of Science and Technology 
Policy.9 10 We currently collect seven items in this SDOH 
category of standardized patient assessment data elements: ethnicity, 
race, preferred language, interpreter services, health literacy, 
transportation, and social isolation (84 FR 38805 through 38817).\11\
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    \4\ FY 2020 SNF PPS final rule (84 FR 38805).
    \5\ World Health Organization. Social determinants of health. 
Available at https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
    \6\ Using Z Codes: The Social Determinants of Health (SDOH). 
Data Journey to Better Outcomes.
    \7\ Improving the Collection of Social Determinants of Health 
(SDOH) Data with ICD-10-CM Z Codes. https://www.cms.gov/files/document/cms-2023-omh-z-code-resource.pdf.
    \8\ CMS.gov. Measures Management System (MMS). CMS Focus on 
Health Equity. Health Equity Terminology and Quality Measures. 
https://mmshub.cms.gov/about-quality/quality-at-CMS/goals/cms-focus-on-health-equity/health-equity-terminology.
    \9\ Centers for Disease Control and Prevention. Social 
Determinants of Health (SDOH) and PLACES Data.
    \10\ ``U.S. Playbook To Address Social Determinants Of Health'' 
from the White House Office Of Science And Technology Policy 
(November 2023).
    \11\ These SDOH data are also collected for purposes outlined in 
section 2(d)(2)(B) of the Improving Medicare Post-Acute Care 
Transitions Act (IMPACT Act). For a detailed discussion on SDOH data 
collection under section 2(d)(2)(B) of the IMPACT Act, see the FY 
2020 SNF PPS final rule (84 FR 38805 through 38817).
---------------------------------------------------------------------------

    In accordance with our authority under section 1899B(b)(1)(B)(vi) 
of the Act, we similarly finalized the creation of the SDOH category of 
standardized patient assessment data elements for Inpatient 
Rehabilitation Facilities (IRFs) in the FY 2020 IRF PPS final rule (84 
FR 39149 through 39161), for Long-Term Care Hospitals (LTCHs) in the FY 
2020 Inpatient Prospective Payment System (IPPS)/LTCH PPS final rule 
(84 FR 42577 through 84 FR 42588), and for Home Health Agencies (HHAs) 
in the Calendar Year (CY) 2020 HH PPS final rule (84 60597 through 
60608). We also collect the same seven SDOH items in these PAC 
providers' respective patient assessment instruments (84 FR 39161, 84 
FR 42590, and 84 FR 60610, respectively).
    Access to standardized data relating to SDOH on a national level 
permits us to conduct periodic analyses, and to assess their 
appropriateness as risk adjustors or in future quality measures. Our 
ability to perform these analyses relies on existing data collection of 
SDOH items from PAC settings. We adopted these SDOH items using common 
standards and definitions across the four PAC providers to promote 
interoperable exchange of longitudinal information among these PAC 
providers, including SNFs, and other providers. We believe this 
information may facilitate coordinated care, continuity in care 
planning, and the discharge planning process from PAC settings.
    We noted in the FY 2020 SNF PPS final rule that each of the items 
we were adopting at that time was identified in the 2016 National 
Academies of Sciences, Engineering, and Medicine (NASEM) report as 
impacting care use, cost and outcomes for Medicare beneficiaries (84 FR 
38806). At that time, we acknowledged that other items may also be 
useful to understand. The SDOH items we proposed to adopt as 
standardized patient assessment data elements under the SDOH category 
in the proposed rule were also identified in the 2016 NASEM report \12\ 
or the 2020 NASEM report \13\ as impacting care use, cost and outcomes 
for Medicare beneficiaries. The items have the capacity to take into 
account treatment preferences and care goals of residents and their 
caregivers, to inform our understanding of resident complexity and SDOH 
that may affect care outcomes, and ensure that SNFs are in a position 
to impact them through the provision of services and supports, such as 
connecting residents and their caregivers with identified needs with 
social support programs.
---------------------------------------------------------------------------

    \12\ National Academies of Sciences, Engineering, and Medicine. 
2016. Accounting for Social Risk Factors in Medicare Payment: 
Identifying Social Risk Factors. Washington, DC: The National 
Academies Press. https://doi.org/10.17226/21858.
    \13\ National Academies of Sciences, Engineering, and Medicine. 
2020. Leading Health Indicators 2030: Advancing Health, Equity, and 
Well-Being. Washington, DC: The National Academies Press. https://doi.org/10.17226/25682.
---------------------------------------------------------------------------

    Health-related social needs (HRSNs) are individual-level, adverse 
social conditions that negatively impact a person's health or health 
care,\14\ and are the resulting effects of SDOH. Examples of HRSNs 
include lack of access to food, housing, or transportation, and have 
been associated with poorer health outcomes, greater use of emergency 
departments and hospitals, and higher health care costs.\15\ Certain 
HRSNs can directly influence an individual's physical, psychosocial, 
and functional status. This is particularly true for food security, 
housing stability, utilities security, and access to 
transportation.\16\
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    \14\ Centers for Medicare & Medicaid Services. ``A Guide to 
Using the Accountable Health Communities Health-Related Social Needs 
Screening Tool: Promising Practices and Key Insights.'' August 2022. 
Available at https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \15\ Berkowitz, S.A., T.P. Baggett, and S.T. Edwards, 
``Addressing Health-Related Social Needs: Value-Based Care or 
Values-Based Care?'' Journal of General Internal Medicine, vol. 34, 
no. 9, 2019, pp. 1916-1918, https://doi.org/10.1007/s11606-019-05087-3.
    \16\ Hugh Alderwick and Laura M. Gottlieb, ``Meanings and 
Misunderstandings: A Social Determinants of Health Lexicon for 
Health Care Systems: Milbank Quarterly,'' Milbank Memorial Fund, 
November 18, 2019, https://www.milbank.org/quarterly/articles/meanings-and-misunderstandings-a-social-determinants-of-health-lexicon-for-health-care-systems/.
---------------------------------------------------------------------------

    We proposed to require SNFs to collect and submit four new items in 
the MDS as standardized patient assessment data elements under the SDOH 
category because these items would collect information not already 
captured by the current SDOH items. Specifically, we believe the 
ongoing identification of SDOH would have three significant benefits. 
First, promoting screening for these SDOH could serve as evidence-based 
building blocks for supporting healthcare providers in actualizing 
their commitment to address disparities that disproportionately impact 
underserved communities. Second, screening for SDOH improves health 
equity through identifying potential social needs so the SNF may 
address those with the resident, their caregivers, and community 
partners during the discharge planning process, if indicated.\17\ 
Third, these SDOH items could support our ongoing SNF QRP initiatives 
by providing data with which to stratify SNF's performance on

[[Page 64102]]

measures and in future quality measures.
---------------------------------------------------------------------------

    \17\ American Hospital Association (2020). Health Equity, 
Diversity & Inclusion Measures for Hospitals and Health System 
Dashboards. December 2020. Accessed: January 18, 2022. Available at 
https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
---------------------------------------------------------------------------

    Collection of additional SDOH items would permit us to continue 
developing the statistical tools necessary to maximize the value of 
Medicare data and improve the quality of care for all beneficiaries. 
For example, we recently developed and released the Health Equity 
Confidential Feedback Reports, which provided data to SNFs on whether 
differences in quality measure outcomes are present for their residents 
by dual-enrollment status and race and ethnicity.\18\ We noted in the 
proposed rule that advancing health equity by addressing the health 
disparities that underlie the country's health system is one of our 
strategic pillars \19\ and a Biden-Harris Administration priority.\20\
---------------------------------------------------------------------------

    \18\ In October 2023, we released two new annual Health Equity 
Confidential Feedback Reports to SNFs: The Discharge to Community 
(DTC) Health Equity Confidential Feedback Report and the Medicare 
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback 
Report. The PAC Health Equity Confidential Feedback Reports 
stratified the DTC and MSPB measures by dual-enrollment status and 
race/ethnicity. For more information on the Health Equity 
Confidential Feedback Reports, please refer to the Education and 
Outreach materials available on the SNF QRP Training web page at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Training.
    \19\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go 
from Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \20\ The Biden-Harris Administration's strategic approach to 
addressing health related social needs can be found in The U.S. 
Playbook to Address Social Determinants of Health (SDOH) (2023): 
https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf.
---------------------------------------------------------------------------

3. Collection of Four New Items as Standardized Patient Assessment Data 
Elements Beginning With the FY 2027 SNF QRP
    We proposed to require SNFs to collect and submit four new items as 
standardized patient assessment data elements under the SDOH category 
using the MDS: one item for Living Situation, as described in section 
VI.C.3.(a) of the proposed rule; two items for Food, as described in 
section VI.C.3.(b) of the proposed rule; and one item for Utilities, as 
described in section VI.C.3.(c) of the proposed rule.
    We selected the SDOH items from the Accountable Health Communities 
(AHC) Health-Related Social Needs (HRSN) Screening Tool developed for 
the AHC Model.\21\ The AHC HRSN Screening Tool is a universal, 
comprehensive screening for HRSNs that addresses five core domains as 
follows: (1) housing instability (for example, homelessness, poor 
housing quality); (2) food insecurity; (3) transportation difficulties; 
(4) utility assistance needs; and (5) interpersonal safety concerns 
(for example, intimate-partner violence, elder abuse, child 
maltreatment).\22\
---------------------------------------------------------------------------

    \21\ The AHC Model was a 5-year demonstration project run by the 
Centers for Medicare & Medicaid Innovation between May 1, 2017 and 
April 30, 2023. For more information go to https://www.cms.gov/priorities/innovation/innovation-models/ahcm.
    \22\ More information about the AHC HRSN Screening Tool is 
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
---------------------------------------------------------------------------

    We believe that requiring SNFs to report the Living Situation, 
Food, Utilities, and Transportation items that are included in the AHC 
HRSN Screening Tool will further standardize the screening of SDOH 
across quality programs. For example, as outlined in the proposed rule, 
our proposal will align, in part, with the requirements of the Hospital 
Inpatient Quality Reporting (IQR) Program and the Inpatient Psychiatric 
Facility Quality Reporting (IPFQR) Program. As of January 2024, 
hospitals are required to report whether they have screened patients 
for the standardized SDOH categories of housing instability, food 
insecurity, utility difficulties, transportation needs, and 
interpersonal safety to meet the Hospital IQR Program requirements.\23\ 
Additionally, beginning January 2025, IPFs will also be required to 
report whether they have screened patients for the same set of SDOH 
categories.\24\ As we continue to standardize data collection across 
PAC settings, we believe using common standards and definitions for new 
items is important to promote interoperable exchange of longitudinal 
information between SNFs and other providers to facilitate coordinated 
care, continuity in care planning, and the discharge planning process.
---------------------------------------------------------------------------

    \23\ Centers for Medicare & Medicaid Services, FY2023 IPPS/LTCH 
PPS final rule (87 FR 49202 through 49215).
    \24\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
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    Below we describe each of the four items in more detail.
(a) Living Situation
    Healthy People 2030 prioritizes economic stability as a key SDOH, 
of which housing stability is a component.25 26 Lack of 
housing stability encompasses several challenges, such as having 
trouble paying rent, overcrowding, moving frequently, or spending the 
bulk of household income on housing.\27\ These experiences may 
negatively affect one's physical health and access to health care. 
Housing instability can also lead to homelessness, which is housing 
deprivation in its most severe form.\28\ On a single night in 2023, 
roughly 653,100 people, or 20 out of every 10,000 people in the United 
States, were experiencing homelessness.\29\ Studies also found that 
people who are homeless have an increased risk of premature death and 
experience chronic disease more often than among the general 
population.\30\ We believe that SNFs can use information obtained from 
the Living Situation item during a resident's discharge planning. For 
example, SNFs could work in partnership with community care hubs and 
community-based organizations to establish new care transition 
workflows, including referral pathways, contracting mechanisms, data 
sharing strategies, and implementation training that can track HRSNs to 
ensure unmet needs, such as housing, are successfully addressed through 
closed loop referrals and follow-up.\31\ SNFs could also take action to 
help alleviate a resident's other related costs of living, like food, 
by

[[Page 64103]]

referring the resident to community-based organizations that would 
allow the resident's additional resources to be allocated towards 
housing without sacrificing other needs.\32\ Finally, SNFs could use 
the information obtained from the Living Situation item to better 
coordinate with other healthcare providers, facilities, and agencies 
during transitions of care, so that referrals to address a resident's 
housing stability are not lost during vulnerable transition periods.
---------------------------------------------------------------------------

    \25\ Office of Disease Prevention and Health Promotion. (n.d.). 
Healthy People 2030 [verbar] Priority Areas: Social Determinants of 
Health. Retrieved from U.S. Department of Health and Human Services: 
https://health.gov/healthypeople/priority-areas/social-determinants-health.
    \26\ Healthy People 2030 is a long-term, evidence-based effort 
led by the U.S. Department of Health and Human Services (HHS) that 
aims to identify nationwide health improvement priorities and 
improve the health of all Americans.
    \27\ Kushel, M.B., Gupta, R., Gee, L., & Haas, J.S. (2006). 
Housing instability and food insecurity as barriers to health care 
among low-income Americans. Journal of General Internal Medicine, 
21(1), 71-77. doi: 10.1111/j.1525-1497.2005.00278.x.
    \28\ Homelessness is defined as ``lacking a regular nighttime 
residence or having a primary nighttime residence that is a 
temporary shelter or other place not designed for sleeping.'' 
Crowley, S. (2003). The affordable housing crisis: Residential 
mobility of poor families and school mobility of poor children. 
Journal of Negro Education, 72(1), 22-38. https://doi.org/10.2307/3211288.
    \29\ The 2023 Annual Homeless Assessment Report (AHAR) to 
Congress. The U.S. Department of Housing and Urban Development 2023. 
https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf.
    \30\ Baggett, T.P., Hwang, S.W., O'Connell, J.J., Porneala, 
B.C., Stringfellow, E.J., Orav, E.J., Singer, D.E., & Rigotti, N.A. 
(2013). Mortality among homeless adults in Boston: Shifts in causes 
of death over a 15-year period. JAMA Internal Medicine, 173(3), 189-
195. https://doi.org/10.1001/jamainternmed.2013.1604. Schanzer, B., 
Dominguez, B., Shrout, P.E., & Caton, C.L. (2007). Homelessness, 
health status, and health care use. American Journal of Public 
Health, 97(3), 464-469. doi: https://doi.org/10.2105/ajph.2005.076190.
    \31\ U.S. Department of Health & Human Services (HHS), Call to 
Action, ``Addressing Health Related Social Needs in Communities 
Across the Nation.'' November 2023. https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.
    \32\ Henderson, K.A., Manian, N., Rog, D.J., Robison, E., Jorge, 
E., AlAbdulmunem, M. ``Addressing Homelessness Among Older Adults'' 
(Final Report). Washington, DC: Office of the Assistant Secretary 
for Planning and Evaluation, U.S. Department of Health and Human 
Services. October 26, 2023.
---------------------------------------------------------------------------

    Due to the potential negative impacts housing instability can have 
on a resident's health, we proposed to adopt the Living Situation item 
as a new standardized patient assessment data element under the SDOH 
category. The proposed Living Situation item is based on the Living 
Situation item collected in the AHC HRSN Screening 
Tool,33 34 and was adapted from the Protocol for Responding 
to and Assessing Patients' Assets, Risks, and Experiences (PRAPARE) 
tool.\35\ The proposed Living Situation item asks, ``What is your 
living situation today?'' The proposed response options are: (0) I have 
a steady place to live; (1) I have a place to live today, but I am 
worried about losing it in the future; (2) I do not have a steady place 
to live; (7) Resident declines to respond; and (8) Resident unable to 
respond. A draft of the Living Situation item proposed as a 
standardized patient assessment data element under the SDOH category 
can be found in the Downloads section of the SNF QRP Measures and 
Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
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    \33\ More information about the AHC HRSN Screening Tool is 
available on the website at https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
    \34\ The AHC HRSN Screening Tool Living Situation item includes 
two questions. In an effort to limit SNF burden, we only proposed 
the first question.
    \35\ National Association of Community Health Centers and 
Partners, National Association of Community Health Centers, 
Association of Asian Pacific Community Health Organizations, 
Association OPC, Institute for Alternative Futures. ``PRAPARE.'' 
2017. https://prapare.org/the-prapare-screening-tool/.
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(b) Food
    The U.S. Department of Agriculture, Economic Research Service 
defines a lack of food security as a household-level economic and 
social condition of limited or uncertain access to adequate food.\36\ 
Adults who are food insecure may be at an increased risk for a variety 
of negative health outcomes and health disparities. For example, a 
study found that food-insecure adults may be at an increased risk for 
obesity.\37\ Another study found that food-insecure adults have a 
significantly higher probability of death from any cause or 
cardiovascular disease in long-term follow-up care, in comparison to 
adults that are food secure.\38\
---------------------------------------------------------------------------

    \36\ U.S. Department of Agriculture, Economic Research Service 
(n.d.). Definitions of food security. Retrieved March 10, 2022, from 
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/definitions-of-food-security/.
    \37\ Hernandez, D.C., Reesor, L.M., & Murillo, R. (2017). Food 
insecurity and adult overweight/obesity: Gender and race/ethnic 
disparities. Appetite, 117, 373-378.
    \38\ Banerjee, S., Radak, T., Khubchandani, J., & Dunn, P. 
(2021). Food Insecurity and Mortality in American Adults: Results 
From the NHANES-Linked Mortality Study. Health promotion practice, 
22(2), 204-214. https://doi.org/10.1177/1524839920945927
---------------------------------------------------------------------------

    While having enough food is one of many predictors for health 
outcomes, a diet low in nutritious foods is also a factor.\39\ The 
United States Department of Agriculture (USDA) defines nutrition 
security as ``consistent and equitable access to healthy, safe, 
affordable foods essential to optimal health and well-being.'' \36\ 
Nutrition security builds on and complements long standing efforts to 
advance food security. Studies have shown that older adults struggling 
with food insecurity consume fewer calories and nutrients and have 
lower overall dietary quality than those who are food secure, which can 
put them at nutritional risk.\40\ Older adults are also at a higher 
risk of developing malnutrition, which is considered a state of 
deficit, excess, or imbalance in protein, energy, or other nutrients 
that adversely impacts an individual's own body form, function, and 
clinical outcomes.\41\ Up to 50 percent of older adults are affected by 
or at risk for malnutrition, which is further aggravated by a lack of 
food security and poverty.\42\ These facts highlight why the Biden-
Harris Administration launched the White House Challenge to End Hunger 
and Build Health Communities.\43\
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    \39\ National Center for Health Statistics (2022, September 6). 
Exercise or Physical Activity. Retrieved from Centers for Disease 
Control and Prevention: https://www.cdc.gov/nchs/fastats/exercise.htm.
    \40\ Ziliak, J.P., & Gundersen, C. (2019). The State of Senior 
Hunger in America 2017: An Annual Report. Prepared for Feeding 
America. Available at https://www.feedingamerica.org/research/senior-hunger-research/senior.
    \41\ The Malnutrition Quality Collaborative (2020). National 
Blueprint: Achieving Quality Malnutrition Care for Older Adults, 
2020 Update. Washington, DC: Avalere Health and Defeat Malnutrition 
Today. Available at https://defeatmalnutrition.today/advocacy/blueprint/.
    \42\ Food Research & Action Center (FRAC). ``Hunger is a Health 
Issue for Older Adults: Food Security, Health, and the Federal 
Nutrition Programs.'' December 2019. https://frac.org/wp-content/uploads/hunger-is-a-health-issue-for-older-adults-1.pdf.
    \43\ The White House Challenge to End Hunger and Build Health 
Communities (Challenge) was a nationwide call-to-action released on 
March 24, 2023 to interested parties across all of society to make 
commitments to advance President Biden's goal to end hunger and 
reduce diet-related diseases by 2030--all while reducing 
disparities. More information on the White House Challenge to End 
Hunger and Build Health Communities can be found: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/fact-sheet-biden-harris-administration-launches-the-white-house-challenge-to-end-hunger-and-build-healthy-communities-announces-new-public-private-sector-actions-to-continue-momentum-from-hist/.
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    We believe that adopting items to collect and analyze information 
about a resident's food security at home could provide additional 
insight to their health complexity and help facilitate coordination 
with other healthcare providers, facilities, and agencies during 
transitions of care, so that referrals to address a resident's food 
security are not lost during vulnerable transition periods. For 
example, a SNF's dietitian or other clinically qualified nutrition 
professional could work with the resident and their caregiver to plan 
healthy, affordable food choices prior to discharge.\44\ SNFs could 
also refer a resident that indicates lack of food security to 
government initiatives such as the Supplemental Nutrition Assistance 
Program (SNAP) and food pharmacies (programs to increase access to 
healthful foods by making them affordable), two initiatives that have 
been associated with lower health care costs and reduced 
hospitalization and emergency department visits.\45\
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    \44\ Schroeder K, Smaldone A. Food Insecurity: A Concept 
Analysis. Nurse Forum. 2015 Oct-Dec;50(4):274-84. doi: 10.1111/
nuf.12118. Epub 2015 Jan 21. PMID: 25612146; PMCID: PMC4510041.
    \45\ Tsega M, Lewis C, McCarthy D, Shah T, Coutts K. Review of 
Evidence for Health-Related Social Needs Interventions. July 2019. 
The Commonwealth Fund. https://www.commwealthfund.org/sites/default/files/2019-07/ROI-evidence-review-final-version.pdf.
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    We proposed to adopt two Food items as new standardized patient 
assessment data elements under the SDOH category. These proposed items 
are based on the Food items collected in the AHC HRSN Screening Tool 
and were adapted from the USDA 18-item Household Food Security Survey 
(HFSS).\46\ The first

[[Page 64104]]

proposed Food item states, ``Within the past 12 months, you worried 
that your food would run out before you got money to buy more.'' The 
second proposed Food item states, ``Within the past 12 months, the food 
you bought just didn't last and you didn't have money to get more.'' We 
proposed the same response options for both items: (0) Often true; (1) 
Sometimes true; (2) Never True; (7) Resident declines to respond; and 
(8) Resident unable to respond. A draft of the Food items proposed to 
be adopted as standardized patient assessment data elements under the 
SDOH category can be found in the Downloads section of the SNF QRP 
Measures and Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
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    \46\ More information about the HFSS tool can be found at 
https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/survey-tools/.
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(c) Utilities
    A lack of energy (utility) security can be defined as an inability 
to adequately meet basic household energy needs.\47\ According to the 
United States Department of Energy, one in three households in the U.S. 
are unable to adequately meet basic household energy needs.\48\ The 
consequences associated with a lack of utility security are represented 
by three primary dimensions: economic; physical; and behavioral. 
Residents with low incomes are disproportionately affected by high 
energy costs, and they may be forced to prioritize paying for housing 
and food over utilities.\49\ Some residents may face limited housing 
options, and therefore, are at increased risk of living in lower-
quality physical conditions with malfunctioning heating and cooling 
systems, poor lighting, and outdated plumbing and electrical 
systems.\50\ Residents with a lack of utility security may use negative 
behavioral approaches to cope, such as using stoves and space heaters 
for heat.\51\ In addition, data from the Department of Energy's U.S. 
Energy Information Administration confirm that a lack of energy 
security disproportionately affects certain populations, such as low-
income and African American households.\52\ The effects of a lack of 
utility security include vulnerability to environmental exposures such 
as dampness, mold, and thermal discomfort in the home, which have a 
direct impact on a person's health.\53\ For example, research has shown 
associations between a lack of energy security and respiratory 
conditions as well as mental health-related disparities and poor sleep 
quality in vulnerable populations such as the elderly, children, the 
socioeconomically disadvantaged, and the medically vulnerable.\54\
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    \47\ Hern[aacute]ndez D. Understanding `energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct; 167:1-10. doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \48\ US Energy Information Administration. ``One in Three U.S. 
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017 
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
    \49\ Hern[aacute]ndez D. ``Understanding energy insecurity' and 
why it matters to health.'' Soc Sci Med. 2016; 167:1-10.
    \50\ Hern[aacute]ndez D. Understanding `energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct;167:1-10. doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \51\ Hern[aacute]ndez D. ``What `Merle' Taught Me About Energy 
Insecurity and Health.'' Health Affairs, VOL.37, NO.3: Advancing 
Health Equity Narrative Matters. March 2018. https://doi.org/10.1377/hlthaff.2017.1413.
    \52\ US Energy Information Administration. ``One in Three U.S. 
Households Faced Challenges in Paying Energy Bills in 2015.'' 2017 
Oct 13. https://www.eia.gov/consumption/residential/reports/2015/energybills/.
    \53\ Hern[aacute]ndez D. Understanding `energy insecurity' and 
why it matters to health. Soc Sci Med. 2016 Oct;167:1-10. doi: 
10.1016/j.socscimed.2016.08.029. Epub 2016 Aug 21. PMID: 27592003; 
PMCID: PMC5114037.
    \54\ Hern[aacute]ndez D, Siegel E. Energy insecurity and its ill 
health effects: A community perspective on the energy-health nexus 
in New York City. Energy Res Soc Sci. 2019 Jan;47:78-83. doi: 
10.1016/j.erss.2018.08.011. Epub 2018 Sep 8. PMID: 32280598; PMCID: 
PMC7147484.
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    We believe adopting an item to collect information about a 
resident's utility security would facilitate the identification of 
residents who may not have utility security and who may benefit from 
engagement efforts. For example, SNFs may be able to use the 
information on utility security to help connect some residents in need 
to programs that can help older adults pay for their home energy 
(heating/cooling) costs, like the Low-Income Home Energy Assistance 
Program (LIHEAP).\55\ SNFs may also be able to partner with community 
care hubs and community-based organizations to assist the resident in 
applying for these and other local utility assistance programs, as well 
as helping them navigate the enrollment process.\56\
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    \55\ U.S. Department of Health & Human Services. Office of 
Community Services. Low Income Home Energy Assistance Program 
(LIHEAP). https://www.acf.hhs.gov/ocs/programs/liheap.
    \56\ National Council on Aging (NCOA). ``How to Make It Easier 
for Older Adults to Get Energy and Utility Assistance.'' Promising 
Practices Clearinghouse for Professionals. Jan. 13, 2022. https://www.ncoa.org/article/how-to-make-it-easier-for-older-adults-to-get-energy-and-utility-assistance.
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    We proposed to adopt a new item, Utilities, as a new standardized 
patient assessment data element under the SDOH category. This proposed 
item is based on the Utilities item collected in the AHC HRSN Screening 
Tool, and was adapted from the Children's Sentinel Nutrition Assessment 
Program (C-SNAP) survey.\57\ The proposed Utilities item asks, ``In the 
past 12 months, has the electric, gas, oil, or water company threatened 
to shut off services in your home?'' The proposed response options are: 
(0) Yes; (1) No; (2) Already shut off; (7) Resident declines to 
respond; and (8) Resident unable to respond. A draft of the Utilities 
item proposed as a standardized patient assessment data element under 
the SDOH category can be found in the Downloads section of the SNF QRP 
Measures and Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
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    \57\ This validated survey was developed as a clinical indicator 
of household energy security among pediatric caregivers. Cook, J.T., 
D.A. Frank., P.H. Casey, R. Rose-Jacobs, M.M. Black, M. Chilton, S. 
Ettinger de Cuba, et al. ``A Brief Indicator of Household Energy 
Security: Associations with Food Security, Child Health, and Child 
Development in US Infants and Toddlers.'' Pediatrics, vol. 122, no. 
4, 2008, pp. e874-e875. https://doi.org/10.1542/peds.2008-0286.
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4. Interested Parties Input
    We developed our updates to add these items after considering 
feedback we received in response to our request for information (RFI) 
on ``Principles for Selecting and Prioritizing SNF QRP Quality Measures 
and Concepts Under Consideration for Future Years'' in the FY 2024 SNF 
PPS final rule (88 FR 53265 through 53267). This RFI sought to obtain 
input on a set of principles to identify SNF QRP measures, as well as 
additional thoughts about measurement gaps, and suitable measures for 
filling these gaps. In response to this solicitation, many commenters 
generally stated that the inclusion of a malnutrition screening and 
intervention measures would promote both quality and health equity. 
Other measures and measurement concepts included health equity, 
psychosocial issues, and caregiver status. The FY 2024 SNF PPS final 
rule includes a summary of the public comments that we received in 
response to the RFI and our responses to those comments (88 FR 53265 
through 53267).
    We also considered comments received in response to our Health 
Equity Update in the FY 2024 SNF PPS final rule. Comments were 
generally supportive of CMS' efforts to develop ways to measure and 
mitigate health inequities. One commenter referenced their belief that 
collection of SDOH would enhance holistic care, call attention to 
impairments that might be

[[Page 64105]]

mitigated or resolved, and facilitate clear communication between 
residents and SNFs. While there were commenters who urged CMS to 
balance reporting requirements so as not to create undue administrative 
burden, another commenter suggested CMS incentivize collection of data 
on SDOH such as housing stability and food security. The FY 2024 SNF 
PPS final rule (88 FR 53268 through 53269) includes a summary of the 
public comments that we received in response to the Health Equity 
Update and our responses to those comments.
    Additionally, we considered feedback we received when we proposed 
the creation of the SDOH category of standardized patient assessment 
data elements in the FY 2020 SNF PPS proposed rule (84 FR 17671 through 
17679). Commenters were generally in favor of the concept of collecting 
SDOH items and stated that, if implemented appropriately, the data 
could be useful in identifying and addressing health care disparities, 
as well as refining the risk adjustment of outcome measures. The FY 
2020 SNF PPS final rule (84 FR 38805 through 38818) includes a summary 
of the public comments that we received and our responses to those 
comments. We incorporated this input into the development of this 
update.
    We solicited comment on the proposal to adopt four new items as 
standardized patient assessment data elements under the SDOH category 
beginning with the FY 2027 SNF QRP: one Living Situation item; two Food 
items; and one Utilities item.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Many commenters supported the proposed new SDOH assessment 
items, viewing this as an important step towards identifying health 
disparities, improving health outcomes, understanding diverse resident 
needs, improving discharge planning and care coordination, and 
fostering continuous quality improvement. Many of these commenters also 
emphasized the importance of SDOH data collection in achieving health 
equity, and one commenter emphasized the importance of identifying, 
documenting, and addressing SDOH to provide equitable, high-quality, 
holistic, resident-centered care. Several commenters noted the 
importance of the proposed new SDOH assessment items in facilitating 
discharge planning strategies that can account for a person's housing, 
food, utilities, and transportation needs. One of these commenters 
agreed that risk factors such as a person's living situation in the 
community, and access to adequate nutrition and utilities necessary for 
a safe and health-promoting environment, need to be identified and 
addressed in the plan of care. This commenter went on to say that 
reducing housing, food, utility, and transportation security barriers 
as part of a SNF's discharge planning processes can reduce the risk for 
negative outcomes, such as hospital readmissions and readmission to the 
nursing facility for long-term care, when they return to the community. 
One of these commenters noted that collecting more granular SDOH data 
is crucial, especially for those residents who transition from SNFs to 
home or community-based settings. Two of these commenters also noted 
that the lack of information on residents' social risk factors is a 
barrier to providing social services to high-risk and underserved 
populations and believe the value of including data collection on these 
new assessment items outweighs the additional administrative burden.
    Response: We appreciate the support. We agree that the collection 
of the new SDOH assessment items will support SNFs that wish to 
understand the health disparities that affect their resident 
populations, facilitate coordinated care, foster continuity in care 
planning, and assist with the discharge planning process from the SNF 
setting.
    Comment: One commenter supported CMS's decision to align and 
standardize new SDOH data collection in the SNF QRP with data already 
being collected in other settings, such as the Hospital Inpatient 
Quality Reporting (IQR) Program and the Inpatient Psychiatric Facility 
Quality Reporting (IPFQR) Program requirements.
    Response: We thank the commenter for recognizing that our proposal 
aligns, in part, with the requirements of the Hospital IQR Program and 
the IPFQR Program. as we continue to standardize data collection across 
settings, we believe using common standards and definitions for new 
assessment items is important to promote interoperable exchange of 
longitudinal information between SNFs and other providers. We also 
believe collecting this information may facilitate coordinated care, 
continuity in care planning, and the discharge planning process from 
PAC settings, including SNFs.
    Comment: Several commenters agreed with the importance of 
collecting SDOH assessment items through the MDS, but also expressed 
concerns about the additional administrative burden associated with 
collecting the proposed SDOH data beginning in FY 2025 for the FY 2027 
SNF QRP. Several of these commenters noted that data collection is 
financially burdensome and increases burden on already overextended 
staff. One commenter noted that because CMS proposed to add the 
assessment items to the MDS, SNFs would also be required to collect 
this data on Medicaid residents as well, which would add to the 
reporting and administrative burden. Another commenter requested 
additional funding for the increased costs associated with what they 
noted to be tasks outside the normal day-to-day operations of the 
facilities.
    Response: Although the addition of four new SDOH assessment items 
to the MDS will increase the burden associated with completing the MDS, 
we carefully considered this increased burden against the benefits of 
adopting the assessment items for the MDS. Collection of additional 
SDOH assessment items will permit us to continue developing the 
statistical tools necessary to maximize the value of Medicare data and 
improve the quality of care for all beneficiaries, and therefore we do 
not want to delay the implementation of the new SDOH assessment items. 
As noted in section VI.C.2 of the proposed rule (89 FR 23464) and 
section VII.C.2 of this final rule, we recently developed and released 
the Health Equity Confidential Feedback Reports, which provided data to 
SNFs on whether differences in quality measure outcomes are present for 
their residents by dual-enrollment status and race and ethnicity.\58\ 
In balancing the reporting burden for SNFs, we prioritized our policy 
objective to collect additional SDOH standardized patient assessment 
data elements that will inform care planning and coordination and 
quality improvement across care settings.
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    \58\ In October 2023, we released two new annual Health Equity 
Confidential Feedback Reports to SNFs: The Discharge to Community 
(DTC) Health Equity Confidential Feedback Report and the Medicare 
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback 
Report. The PAC Health Equity Confidential Feedback Reports 
stratified the DTC and MSPB measures by dual-enrollment status and 
race/ethnicity. For more information on the Health Equity 
Confidential Feedback Reports, please refer to the Education and 
Outreach materials available on the SNF QRP Training web page at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Training.
---------------------------------------------------------------------------

    Regarding the comment requesting additional funding for the 
increased costs associated with collecting data on these new assessment 
items, we find the comment unclear. We interpret the commenter to mean 
that they do not believe that current SNF PPS payments

[[Page 64106]]

are sufficient to cover the increased burden (specifically, costs) 
associated with collection of this additional data for the proposed new 
SDOH assessment items. As discussed previously, we carefully considered 
the increased burden associated with collection of these four new SDOH 
assessment items against the benefits of adopting these items for the 
MDS. This collection could be useful to SNFs as they identify the 
discharge needs of each resident. This includes developing and 
implementing an effective discharge planning process that focuses on 
the resident's discharge goals, preparing residents to be active 
partners, effectively transitioning them to post-discharge care, and 
reducing factors leading to preventable readmissions. The new SDOH 
assessment items we proposed to adopt were identified in the 2016 NASEM 
report \59\ or the 2020 NASEM report \60\ as impacting care use, cost, 
and outcomes for Medicare beneficiaries. We believe the proposed new 
SDOH assessment items have the potential to generate actionable data 
SNFs can use to implement effective discharge planning processes that 
can reduce the risk for negative outcomes such as hospital readmissions 
and admission to a nursing facility for long-term care. Given that SNFs 
must develop and implement an effective discharge planning process that 
ensures the discharge needs of each resident are identified, we believe 
SNFs are likely collecting some of this data already. Collection of 
these new SDOH items will provide key information to SNFs to support 
effective discharge planning.
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    \59\ National Academies of Sciences, Engineering, and Medicine. 
2016. Accounting for Social Risk Factors in Medicare Payment: 
Identifying Social Risk Factors. Washington, DC: The National 
Academies Press. https://doi.org/10.17226/21858.
    \60\ National Academies of Sciences, Engineering, and Medicine. 
2020. Leading Health Indicators 2030: Advancing Health, Equity, and 
Well-Being. Washington, DC: The National Academies Press. https://doi.org/10.17226/25682.
---------------------------------------------------------------------------

    Regarding the commenter's concern that SNFs would be required to 
collect this data on Medicaid residents, it is unclear specifically 
what the commenter's concerns are. In section VII.E.3. of this final 
rule, we proposed to adopt four new SDOH assessment items for the SNF 
QRP. For the SNF QRP, SNFs are required to collect and submit data for 
MDS items specified by CMS for Medicare Part A fee-for service 
residents receiving skilled services. We did not propose and would not 
require SNFs to collect and submit data for the four new SDOH 
assessment items and modified Transportation item on Medicaid residents 
residing in the nursing facility.
    Finally, we plan to provide training resources in advance of the 
initial collection of the new SDOH assessment items to ensure that SNFs 
have the tools necessary to administer these new items and reduce the 
burden to SNFs having to create their own training resources. These 
training resources may include online learning modules, tip sheets, 
questions and answers documents and/or recorded webinars and videos. We 
anticipate that we will make these materials available to SNFs in mid-
2025, which will give SNFs several months prior to required collection 
and reporting to take advantage of the learning opportunities.
    Comment: One commenter who supported the proposal to collect the 
new and modified SDOH assessment items, also encouraged CMS to ensure 
the new assessment items are valid and reliable. Two commenters, who 
did not support the proposal, noted concerns with the validity and 
reliability of the proposed new and modified SDOH assessment items, and 
one of these commenters recommended further testing of the proposed 
items.
    Response: We disagree that the proposed new SDOH assessment items 
require further testing prior to requiring SNFs to collect them on the 
MDS for the SNF QRP. The AHC HRSN Screening Tool is evidence-based and 
informed by practical experience. With input from a panel of national 
experts convened by our contractor, We developed the tool under the 
Center for Medicare and Medicaid Innovation (CMMI) by conducting a 
review of existing screening tools and questions focused on core and 
supplemental HRSN domains, including housing instability, food 
insecurity, transportation difficulties, utility assistance needs, and 
interpersonal safety concerns.\61\ These domains were chosen based upon 
literature review and expert consensus utilizing the following three 
criteria: (1) availability of high-quality scientific evidence linking 
a given HRSN to adverse health outcomes and increased healthcare 
utilization, including hospitalizations and associated costs; (2) 
ability for a given HRSN to be screened and identified in the inpatient 
setting prior to discharge, addressed by community-based services, and 
potentially improve healthcare outcomes, including reduced 
readmissions; and (3) evidence that a given HRSN is not systematically 
addressed by healthcare providers.\62\ In addition to established 
evidence of their association with health status, risk, and outcomes, 
these domains were selected because they can be assessed across the 
broadest spectrum of individuals in a variety of 
settings.63 64
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    \61\ https://nam.edu/standardized-screening-for-health-related-social-needs-in-clinical-settings-the-accountable-health-communities-screening-tool/.
    \62\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at https://doi.org/10.31478/201705b. Accessed on June 9, 2024.
    \63\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at https://doi.org/10.31478/201705b. Accessed on June 9, 2024.
    \64\ Centers for Medicare & Medicaid Services (2021). 
Accountable Health Communities Model. Accountable Health Communities 
Model [verbar] CMS Innovation Center. Available at https://innovation.cms.gov/innovation-models/ahcm. Accessed on February 20, 
2023.
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    Through this process, over 50 screening tools totaling more than 
200 questions were compiled. To refine this list, CMS' contractor 
consulted a technical expert panel (TEP) consisting of a diverse group 
of tool developers, public health and clinical researchers, clinicians, 
population health and health systems executives, community-based 
organization leaders, and Federal partners. Over the course of several 
meetings, this TEP met to discuss opportunities and challenges involved 
in screening for HRSNs; consider and pare down CMS's list of evidence-
based screening questions; and recommend a short list of questions for 
inclusion in the final tool. The AHC HRSN Screening Tool was tested 
across many care delivery sites in diverse geographic locations across 
the United States. More than one million Medicare and Medicaid 
beneficiaries have been screened using the AHC HRSN Screening Tool. 
This tool was evaluated psychometrically and demonstrated evidence of 
both reliability and validity, including inter-rater reliability and 
concurrent and predictive validity. Moreover, the AHC HRSN Screening 
Tool can be implemented in a variety of places where individuals seek 
healthcare, including SNFs.
    We selected these proposed assessment items for the SNF QRP from 
the AHC HRSN Screening Tool because we believe that collecting 
information on living situation, food, utilities, and transportation 
could have a direct and positive impact on resident care in SNFs. 
Specifically, collecting this information provides an opportunity for 
the SNF to identify residents' potential HRSNs, and if indicated, to 
address

[[Page 64107]]

those with the resident, their caregivers, and community partners 
during the discharge planning process, potentially resulting in 
improvements in resident outcomes.
    Comment: One commenter referenced CMS' second evaluation of the AHC 
model from 2018 through 2021,\65\ and said they interpret the Findings 
at a Glance to conclude the AHC HRSN Screening Tool ``did not appear to 
increase beneficiaries' connection to community services or HRSN 
resolution.''
---------------------------------------------------------------------------

    \65\ https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt-fg.
---------------------------------------------------------------------------

    Response: This two-page summary of the AHC Model 2018-2021 \66\ 
describes the results of testing whether systematically identifying and 
connecting beneficiaries to community resources for their HRSNs 
improved health care utilization outcomes and reduced costs. To ensure 
consistency in the screening offered to beneficiaries across both an 
individual community's clinical delivery sites and across all the 
communities in the model, we developed a standardized HRSN screening 
tool. This AHC HRSN Screening Tool was used to screen Medicare and 
Medicaid beneficiaries for core HRSNs to determine their eligibility 
for inclusion in the AHC Model. If a Medicare or Medicaid beneficiary 
was eligible for the AHC Model, they were randomly assigned to one of 
two tracks: (1) Assistance; or (2) Alignment. The Assistance Track 
tested whether navigation assistance that connects navigation-eligible 
beneficiaries with community services results in increased HRSN 
resolution, reduced health care expenditures, and unnecessary 
utilization. The Alignment Track tested whether navigation assistance, 
combined with engaging key interested parties in continuous quality 
improvement (CQI) to align community service capacity with 
beneficiaries' HRSNs, results in greater increases in HRSN resolution 
and greater reductions in health expenditures and utilization than 
navigation assistance alone. Regardless of assigned track, all 
beneficiaries received HRSN screening, community referrals, and 
navigation to community services.\67\
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    \66\ https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt-fg.
    \67\ Accountable Health Communities (AHC) Model Evaluation, 
Second Evaluation Report. May 2023. This project was funded by the 
Centers for Medicare & Medicaid Services under contract no. HHSM-
500-2014-000371, Task Order75FCMC18F0002. https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt.
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    We believe the commenter inadvertently misinterpreted the findings, 
believing these findings were with respect to the effectiveness and 
scientific validity of the AHC HRSN Screening Tool itself. The findings 
section of this two-page summary described six key findings from the 
AHC Model, which examined whether the Assistance Track or the Alignment 
Track resulted in greater increases in HRSN resolution and greater 
reductions in health expenditures and utilization. Particularly, the 
AHC Model reduced emergency department visits among Medicaid and FFS 
Medicare beneficiaries in the Assistance Track, which was suggestive 
that navigation may help patients use the health care system more 
effectively. We acknowledge that navigation alone did not increase 
beneficiaries' connection to community services or HRSN resolution, and 
this was attributed to gaps between community resource availability and 
beneficiary needs. The AHC HRSN Screening Tool used in the AHC Model 
was limited to identifying Medicare and Medicaid beneficiaries with at 
least one core HRSN who could be eligible to participate in the AHC 
Model. Our review of the AHC Model did not identify any issues with the 
validity and scientific reliability of the AHC HRSN Screening Tool.
    Finally, as part of our routine item and measure monitoring work, 
we continually assess the implementation of new assessment items, and 
we will include the four new proposed SDOH assessment items in our 
monitoring work.
    Comment: Two commenters requested that CMS articulate its vision 
for how the data collected from the proposed SDOH standardized patient 
assessment data elements will be used in quality and payment programs. 
These commenters were concerned that CMS may use the SDOH assessment 
data to develop a SNF QRP measure that would hold SNFs solely 
accountable for social drivers of health that require resources and 
engagement across an entire community to address. One of these 
commenters recommended that CMS not finalize this proposal and instead 
engage interested parties in the industry to understand the role that 
SNFs can play in improving SDOH.
    Response: We proposed the four new SDOH assessment items because 
collection of additional SDOH items would permit us to continue 
developing the statistical tools necessary to maximize the value of 
Medicare data and improve the quality of care for all beneficiaries. 
For example, we recently developed and released the Health Equity 
Confidential Feedback Reports, which provided data to SNFs on whether 
differences in quality measure outcomes are present for their residents 
by dual-enrollment status and race and ethnicity.\68\ We note that 
advancing health equity by addressing the health disparities that 
underlie the country's health system is one of our strategic pillars 
\69\ and a Biden-Harris Administration priority.\70\ Furthermore, any 
updates to the SNF QRP measure set would be addressed through future 
notice-and-comment rulemaking, as necessary.
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    \68\ In October 2023, we released two new annual Health Equity 
Confidential Feedback Reports to SNFs: The Discharge to Community 
(DTC) Health Equity Confidential Feedback Report and the Medicare 
Spending Per Beneficiary (MSPB) Health Equity Confidential Feedback 
Report. The PAC Health Equity Confidential Feedback Reports 
stratified the DTC and MSPB measures by dual-enrollment status and 
race/ethnicity. For more information on the Health Equity 
Confidential Feedback Reports, please refer to the Education and 
Outreach materials available on the SNF QRP Training web page at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-Quality-Reporting-Program-Training.
    \69\ Brooks-LaSure, C. (2021). My First 100 Days and Where We Go 
from Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \70\ The Biden-Harris Administration's strategic approach to 
addressing health related social needs can be found in The U.S. 
Playbook to Address Social Determinants of Health (SDOH) (2023): 
https://www.whitehouse.gov/wp-content/uploads/2023/11/SDOH-Playbook-3.pdf.
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    Comment: One commenter said they recognize the importance of 
collecting standardized patient assessment data elements to better 
serve residents' needs and for identifying and addressing potential 
issues of equity. However, they urged CMS to reevaluate the utility of 
collecting this information, particularly compared to the burden of 
data collection. Specifically, they noted that CMS must keep the role 
of the social worker in a SNF in mind when considering these assessment 
items. They stated that a social worker's job in a SNF is to meet the 
needs of SNF residents during their SNF stay and to coordinate services 
for a successful return to the community, but the SNF social worker has 
no control over what happens after the resident discharges from the SNF 
and cannot become the resident's community social worker. Therefore, 
they believe a SNF's responses to the proposed new and modified SDOH 
assessment items would neither impact nor be impacted by the SNF stay.
    Response: While we recognize the role that social workers have in 
the SNF, we believe that the proposed new and modified SDOH assessment 
items are relevant to the SNF's interdisciplinary

[[Page 64108]]

care team and could impact the discharge planning occurring during the 
SNF stay. We proposed the collection of new and modified SDOH 
assessment items at the time of admission to the SNF because we believe 
that having information on residents' living situation, food, and 
utilities will give SNFs an opportunity to better understand and 
address the broader needs of their residents. We also believe this 
information is essential for comprehensive resident care, potentially 
leading to improved health outcomes and more effective discharge 
planning. As we stated in the proposed rule and in section VII.C.2 of 
this final rule, according to the World Health Organization, research 
shows that SDOH can be more important than health care or lifestyle 
choices in influencing health, accounting for between 30 to 55 percent 
of health outcomes.\71\ This is part of a growing body of research that 
highlights the importance of SDOH on health outcomes. As noted 
previously, SNFs are already required by our regulation at Sec.  
483.21(c)(1) to develop and implement an effective discharge planning 
process.
---------------------------------------------------------------------------

    \71\ World Health Organization. Social determinants of health. 
Available at https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1.
---------------------------------------------------------------------------

    Comment: One of these commenters did not agree with CMS that the 
proposed SDOH assessment items would produce interoperable data within 
the CMS quality programs because the proposed requirements for SNF are 
not standardized with the SDOH collection requirements in the Hospital 
IQR Program and IPFQR Programs. This commenter noted that the Screening 
for SDOH measures in the Hospital IQR and IPFQR Programs do not specify 
when a patient is screened (for example, at admission) and how the 
screening questions are asked (in other words, specific wording and 
responses). Instead, providers reporting these measures under the 
Hospital IQR and IPFQR Programs are only asked to document that a 
patient was screened for the following domains: housing instability, 
food insecurity, transportation difficulties, utility assistance needs, 
and interpersonal safety concerns.
    Response: We disagree that the proposed collection of four new SDOH 
assessment items and one modified SDOH assessment item for the SNF QRP 
and the requirements for the Hospital IQR and IPFQR Programs do not 
promote standardization. Although hospitals and IPFs participating in 
these programs can use a self-selected SDOH screening tool, the 
Screening for SDOH and Screen Positive Rate for SDOH measures we have 
adopted for the Hospital IQR and IPFQR Programs address the same SDOH 
domains that we have proposed to collect as standardized patient 
assessment data under the SNF QRP: housing instability, food 
insecurity, utility difficulties, and transportation needs. We believe 
that this partial alignment will facilitate longitudinal data 
collection on the same topics across healthcare settings. As we 
continue to standardize data collection, we believe using common 
standards and definitions for new assessment items is important to 
promote the interoperable exchange of longitudinal information between 
SNFs and other providers to facilitate coordinated care, continuity in 
care planning, and the discharge planning process. This is evidenced by 
our recent proposals to add these four SDOH assessment items and one 
modified SDOH assessment item in the IRF QRP (89 FR 22275 through 
22280), LTCH QRP (89 FR 36345 through 36350), and Home Health QRP (89 
FR 55383 through 55388).
(a) Comments on the Living Situation Assessment Item
    Comment: Several commenters supported the proposal to adopt the 
Living Situation item as a standardized patient assessment data element 
in the MDS. Several of these commenters emphasized that having 
information on living situation is critical for developing tailored and 
effective discharge plans. Two of these commenters noted that this 
information will allow providers to better understand social and 
environmental factors that affect their residents' health outcomes, and 
one of these commenters also noted that collecting and reporting living 
situation data could encourage SNFs to care for residents who may have 
more difficult discharges. Another commenter noted that having living 
situation information enables better care coordination, identifies 
support gaps, and allows SNFs to develop tailored care plans. Finally, 
another commenter noted that understanding a person's living situation 
can ensure the appropriate provision of necessary adaptive equipment to 
address their needs.
    Response: We agree that a person's living situation may negatively 
affect their physical health and access to health care, and that SNFs 
can use information obtained from the Living Situation item for 
discharge planning, partnerships with community care hubs and 
community-based organizations, and coordination with other healthcare 
providers, facilities, and agencies during transitions of care.
    Comment: One commenter recommended that the Living Situation item 
incorporate information on whether a resident's living situation is 
suitable for their potentially new complex care needs. This commenter 
highlighted the changing nature of SNF residents' needs and noted that 
some residents may have been housing secure prior to their condition, 
but their prior living situation may no longer be suitable for their 
current needs, which may include specific requirements such as mobility 
equipment.
    Response: While we proposed to require the collection of the Living 
Situation item at admission only, the collection could potentially 
prompt the SNF to initiate additional conversations with their 
residents about their living situation needs throughout their stay. As 
the commenter pointed out, it is important to think about the 
resident's living situation in the context of their new care needs, and 
collecting the Living Situation assessment item at admission would be 
an important first step to that process. Additionally, SNFs may seek to 
collect any additional information that they believe may be relevant to 
their resident population to inform their care and discharge planning 
process.
    Comment: One commenter recommended that a timeframe be added to the 
response options for the proposed Living Situation item. This commenter 
suggested that adding a timeframe of one year or less to these response 
options would allow healthcare providers to promptly intervene and 
mitigate any eminent negative housing situations. They were concerned 
that, if left open-ended, residents may respond yes, thinking about 
many possible scenarios that may occur in the distant future.
    Response: We interpret the comment to be suggesting that a time 
frame be added to two of the Living Situation response options, 
specifically: (1) I have a place to live today, but I am worried about 
losing it in the future; and (2) I do not have a steady place to live. 
We want to clarify that the proposed Living Situation item frames the 
question as, ``What is your living situation today?'' The question 
establishes the timeframe (the present) the resident should consider in 
responding to the item.
    Comment: Two commenters recommended that instead of collecting data 
on the proposed Living Situation assessment item, CMS should propose an 
item to collect information on financial insecurity. Both commenters 
stressed that financial insecurity

[[Page 64109]]

underpins all the proposed SDOH items. One of these commenters 
encouraged CMS to eventually develop a mechanism to ensure that such 
needs are not only assessed but met with delivered services.
    Response: We will consider this feedback as we evaluate future 
policy options. We note that although we proposed to require the 
collection of the Living Situation item for the SNF QRP, nothing would 
preclude SNFs from choosing to screen their residents for additional 
SDOH they believe are relevant for their resident population and the 
community they serve, including financial insecurity.
(b) Comments on the Food Assessment Items
    Comment: We received several comments supporting the collection of 
the two proposed Food assessment items because of the importance of 
nutrition and food access to SNF residents' health outcomes, and the 
usefulness of this information for treatment and discharge planning. 
Specifically, two of these commenters highlighted the association 
between food insecurity and malnutrition with health outcomes, and one 
of these commenters highlighted the importance of addressing food 
insecurity among Medicare residents, particularly among elderly 
residents or those with chronic conditions. This commenter noted that 
addressing food security will help foster better health outcomes, lower 
healthcare costs, and enhance quality of life. Another one of these 
commenters noted that the responses to the Food assessment items would 
help providers incorporate treatment strategies that address residents' 
food access and guide the selection of interventions and training (for 
example, meal planning) provided throughout the plan of care. Moreover, 
another one of these commenters noted that the two proposed Food 
assessment items are critical to facilitating coordination with other 
healthcare providers and community-based organizations during 
transitions of care for residents at risk for inadequate food intake or 
who may need support in accessing healthy foods aligned with medically 
tailored meals or prescription diets. Finally, another commenter 
acknowledged the intersection between these proposed SDOH assessment 
items, highlighting the important relationship between transportation 
and a person's ability to access food. This commenter provided the 
example that a person may have enough funds to purchase food, but not 
have access to transportation to obtain food.
    Response: We agree that a person's access to food affects their 
health outcomes and risk for adverse events, and understanding the 
potential needs of residents admitted to a SNF through the collection 
of the two new Food assessment items can help SNFs facilitate resources 
to better address a SNF resident's access to food when discharged.
    Comment: One commenter did not support the proposed Food assessment 
items stating that, although the assessment items are valid, they do 
not provide clear information on nutritional status because there could 
be family members or community organizations that provide food support. 
Additionally, this commenter noted that ``food'' is a general term and 
does not address selection or intake of food.
    Response: While we acknowledge that the proposed Food assessment 
items do not ask for specific information on residents' nutritional 
status or whether they have family members or community organizations 
that provide food support, our intent was to collect information on 
whether the resident may have worries about their access to food or are 
experiencing concerns about access to food. We believe that adopting 
the proposed Food assessment items will help SNFs identify any 
potential issues. Having this information could also help SNFs 
coordinate care upon discharge of their residents. We also note that, 
while the proposal would require the collection of the Food assessment 
items at admission only, the collection could potentially prompt the 
SNF to initiate conversations between the SNF and its residents about 
their food needs throughout their stay. Finally, we remind the 
commenter that nothing would preclude the SNF from choosing to screen 
its residents for additional SDOH they believe are relevant for their 
resident population and the community they serve, including family or 
community support.
    Comment: One commenter expressed concerns that the proposed Food 
assessment items ask residents to rate the frequency of food shortages 
using a three-point scale, which is inconsistent with other questions 
on the MDS such as the resident mood, behavioral symptoms, and daily 
preference assessment items, which use a four-point scale to determine 
frequency. This commenter noted that this inconsistency may lead to 
confusion for staff and residents.
    Response: We clarify that the proposed draft Food assessment items 
include three frequency responses in addition to response options in 
the event the resident declines to respond or is unable to respond: (0) 
Often true; (1) Sometimes true; (2) Never True; (7) Resident declines 
to respond; and (8) Resident unable to respond. We acknowledge that 
there are a number of resident interview assessment items on the MDS 
that use a four-point scale, but there are also assessment items on the 
MDS that do not use a four-point scale. For example, the Health 
Literacy (B1300), Social Isolation (D0700), and the Pain Interference 
with Therapy Activities (J0520) assessment items currently use a five-
point scale item. We chose the proposed Food assessment items from the 
AHC HRSN Screening Tool, and they were tested and validated using a 
three-point response scale. Since the MDS currently includes assessment 
items that use varying response scales, we do not believe staff and 
residents will be confused. we plan to develop resources SNF staff can 
use to ensure residents understand the proposed item questions and 
response options. For example, we developed cue cards to assist SNFs in 
conducting the Brief Interview for Mental Status (BIMS) in Writing, the 
Resident Mood Interview (PHQ-2 to 9), the Pain Assessment Interview, 
and the Interview for Daily and Activity Preference.\72\
---------------------------------------------------------------------------

    \72\ These cue cards are currently available on the SNF QRP 
Training web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/training.
---------------------------------------------------------------------------

    Comment: One commenter expressed concerns with the lack of evidence 
supporting the proposed Food assessment items in the older adult 
population and requested that CMS provide more detailed supporting 
evidence, or not finalize the proposal until it can produce such 
evidence. This commenter noted that the proposed Food assessment items 
were based on a research study for families with young children, and 
that they did not see information that would support their use in the 
older population.
    Response: We interpret the commenter to be referring to the 
citation in the draft of the Food items posted on the SNF QRP Measures 
and Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information. We acknowledge that the AHC Screening Tool includes a 
citation to a study that was done in children. However, as discussed in 
section VI.C.3(b) of the proposed rule and section VII.C.3(b) of this 
final rule, these items are also found in the USDA 18-item Household 
Food Security Survey (HFSS). The HFSS has been extensively used with 
adults both in the U.S. and

[[Page 64110]]

internationally. More information about its use and research over the 
last 25 years can be found on the USDA website at https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/history-background/.
    Comment: Two commenters were concerned with the 12-month look-back 
period for the proposed Food assessment items, noting that this broad 
look-back period may capture needs that occurred in the past, but have 
been resolved. These commenters recommended a three-month look-back 
period instead, to capture true concerns that should inform the SNFs' 
care and discharge planning.
    Response: We disagree that the 12-month look back period for the 
proposed Food assessment items is too long and that it will not result 
in reliable responses. We believe a 12-month look back period is more 
appropriate than a shorter, three-month look-back period because a 
person's Food situation may fluctuate over time. One study of Medicare 
Advantage beneficiaries found that approximately half of U.S. adults 
report one or more HRSNs over four quarters.\73\ However, at the 
individual level, participants had substantial fluctuations: 47.4 
percent of the participants fluctuated between 0 and 1 or more HRSNs 
over the four quarters, and 21.7 percent of participants fluctuated 
between one, two, three, or four or more HRSNs over the four quarters. 
The researchers noted that the dynamic nature of individual-level HRSNs 
requires consideration by healthcare providers screening for HRSNs.
---------------------------------------------------------------------------

    \73\ Haff, N, Choudhry, N.K., Bhatkhande, G., Li, Y., Antol, D., 
Renda, A., Laufffenburger, J. Frequency of Quarterly Self-reported 
Health-Related Social Needs Among Older Adults, 2020. JAMA Network 
Open. 2022;5(6):e2219645. Doi:101001/jamanetworkopen.2022.19645. 
Accessed June 9, 2024.
---------------------------------------------------------------------------

    To account for potentially changing Food needs over time, we 
believe it is important to use a longer look-back period to 
comprehensively capture any Food needs a SNF resident may have had, so 
that SNFs may consider them in their care and discharge planning.
    Comment: Three commenters recognized the importance of collecting 
information on residents' food access through a streamlined data 
collection process, but recommended that CMS combine the two proposed 
Food assessment items into a singular comprehensive assessment item to 
enhance efficiency and reduce respondent burden, while still capturing 
the nuanced aspects of food insecurity crucial for care planning and 
recourse allocation. Two of these commenters also noted that 
beneficiaries may be uncomfortable sharing this sensitive personal 
information with facility staff and may be reluctant to respond to two 
nearly identical questions.
    Response: We appreciate the commenters' recommendation to combine 
the two separate proposed Food assessment items into a single 
comprehensive assessment item to reduce respondent burden. However, 
past testing of the items found that the item sensitivity was higher 
when using both Food assessment items, as opposed to just one. 
Specifically, these analyses found that an affirmative response to just 
one of the questions provided a sensitivity of 93 percent or 82 
percent, depending on the item, whereas collecting both of the proposed 
Food items, and evaluating whether there is an affirmative response to 
the first and/or second item yielded a sensitivity of 97 percent.\74\ 
This means that only 3 percent of respondents who have food needs were 
likely to be misclassified. Therefore, we believe it is important to 
include both proposed Food assessment items.
---------------------------------------------------------------------------

    \74\ Gundersen C, Engelhard E, Crumbaugh A, Seligman, H.K. Brief 
assessment of Food insecurity Accurately Identifies High0Risk US 
Adults. Public Health Nutrition, 2017. Doi: 10.1017/
S1368980017000180. https://childrenshealthwatch.org/wp-content/uploads/brief-assessment-of-food-insecurity-accurately-identifies-high-risk-us-adults.pdf. Accessed July 2, 2024.
---------------------------------------------------------------------------

    In response to commenters who noted that beneficiaries may be 
uncomfortable sharing this sensitive personal information with facility 
staff, we acknowledge that the Food assessment items require the 
resident to be asked potentially sensitive questions. We recommend that 
SNFs ensure residents feel comfortable answering these questions and 
explain to residents that the information will be helpful to developing 
an individualized plan of care and discharge plan. Additionally, the 
proposed items include a response option, (7) Resident declines to 
respond, for residents who may decline to respond to the proposed Food 
assessment items. Information provided by residents in response to the 
proposed Food assessment items may be protected health information 
(PHI),\75\ and SNFs are responsible for adopting reasonable safeguards 
to ensure that residents' information is not impermissibly disclosed 
contrary to applicable confidentiality, security, and privacy laws.
---------------------------------------------------------------------------

    \75\ https://www.hhs.gov/answers/hipaa/what-is-phi/.
---------------------------------------------------------------------------

    We plan to provide training resources in advance of the initial 
collection of the proposed new Food assessment items to ensure that 
SNFs have the tools necessary to administer the new proposed new Food 
assessment items and reduce the burden to SNFs in creating their own 
training resources. These training resources may include online 
learning modules, tip sheets, questions and answers documents, and/or 
recorded webinars and videos, and would be available to providers in 
mid-2025, allowing SNFs several months to ensure their staff take 
advantage of the learning opportunities.
(c) Comments on the Utilities Assessment Item
    Comment: Several commenters supported the proposal to add a new 
Utility assessment item to the MDS and highlighted that a resident's 
access to utilities is crucial for maintaining a safe and healthy 
living environment. These commenters noted that understanding 
residents' utility needs will help SNFs in their discharge planning. 
One of these commenters noted that by assessing a resident's utility 
security, SNFs may be able to improve their access by referring them to 
programs like the Low-Income Home Energy Assistance Program (LIHEAP) 
\76\ or other organizations that provide assistance to those with 
utility needs. Two commenters highlighted that SNF residents are often 
discharged with equipment requiring constant, consistent electricity 
(for example, supplemental oxygen, vents, continuous positive airway 
pressure (CPAP), bilevel positive airway pressure (BiPAP), continuous 
ambulatory delivery device (CADD) pumps for Dobutamine, and left 
ventricular assist device (LVAD). If a resident does not have access to 
a reliable power source for these critical supports, they are at risk 
of not using the equipment as prescribed or dying.
---------------------------------------------------------------------------

    \76\ U.S. Department of Health & Human Services. Office of 
Community Services. Low Income Home Energy Assistance Program 
(LIHEAP). https://www.acf.hhs.gov/ocs/programs/liheap. Accessed July 
2, 2024.
---------------------------------------------------------------------------

    Response: We thank the commenters for their support and agree that 
residents' utilities needs can affect SNF residents' health outcomes, 
and the collection of the proposed Utilities assessment item can equip 
SNFs with the information to inform care plans and discharge planning.
    Comment: Two commenters were concerned with the 12-month look-back 
period for the proposed Utility assessment item, noting that this broad 
look-back period may not result in reliable responses, or their needs 
may have been resolved. One of these commenters recommended a three-
month look-back period instead, to

[[Page 64111]]

provide more reliable, valid, timely, and actionable information for 
the transition of care.
    Response: We disagree that the 12-month look back period for the 
proposed Utility assessment item is too long and that it will not 
result in reliable responses. We believe a 12-month look-back period is 
more appropriate than a shorter, 3-month look-back period because a 
person's Utilities situation may fluctuate over time. As we noted in an 
earlier response, a study of Medicare Advantage beneficiaries found 
that approximately half of U.S. adults report one or more HRSNs over 4 
quarters. However, at the individual level, participants had 
substantial fluctuations: 47.4 percent of the participants fluctuated 
between 0 and 1 or more HRSNs over the four quarters, and 21.7 percent 
of participants fluctuated between one, two, three, or four or more 
HRSNs over the 4 quarters.\77\ The researchers noted that the dynamic 
nature of individual-level HRSNs requires consideration by healthcare 
providers screening for HRSNs.
---------------------------------------------------------------------------

    \77\ Haff, N, Choudhry, N.K., Bhatkhande, G., Li, Y., Antol, D., 
Renda, A., Laufffenburger, J. Frequency of Quarterly Self-reported 
Health-Related Social Needs Among Older Adults, 2020. JAMA Network 
Open. 2022;5(6):e2219645. Doi:101001/jamanetworkopen.2022.19645. 
Accessed June 9, 2024.
---------------------------------------------------------------------------

    To account for potentially changing Utilities needs over time, we 
believe it is important to use a longer look-back period to 
comprehensively capture any Utilities needs a SNF resident may have 
had, so that SNFs may consider them in their care and discharge 
planning.
    Comment: Two commenters suggested that CMS consider assessing 
family caregiver burden as well as services delivery, the latter of 
which would capture whether referrals to appropriate services resulted 
in actual service delivery. One of the commenters also recommended the 
inclusion of assessment items to improve the overall resident care 
among those with disabilities, such as: disability-status, residents' 
independent living status, and ability to return to work.
    Response: We agree that it is important to understand family 
caregiver burden, service delivery, and the needs of residents with 
disabilities. as we continue to evaluate SDOH standardized patient 
assessment data elements and future policy options, we will consider 
this feedback. We note that although we proposed to require the 
collection of the Utilities item for the SNF QRP, nothing would 
preclude SNFs from choosing to screen their residents for additional 
SDOH they believe are relevant to their resident population and the 
community they serve, including screening for caregiver burden and 
service delivery.
    After careful consideration of the public comments we received, we 
are finalizing our proposal to adopt four new items as standardized 
patient assessment data elements under the SDOH category beginning with 
the FY 2027 SNF QRP: one Living Situation item; two Food items; and one 
Utilities item.
5. Modification of the Transportation Item Beginning With the FY 2027 
SNF QRP
    Beginning October 1, 2023, SNFs began collecting seven items 
adopted as standardized patient assessment data elements under the SDOH 
category on the MDS.\78\ One of these items, Item A1250. 
Transportation, collects data on whether a lack of transportation has 
kept a resident from getting to and from medical appointments, 
meetings, work, or from getting things they need for daily living. This 
item was adopted as a standardized patient assessment data element 
under the SDOH category in the FY 2020 SNF PPS final rule (84 FR 38805 
through 38809). As we stated in the FY 2020 SNF PPS final rule (84 FR 
38814 through 42588), we continue to believe that access to 
transportation for ongoing health care and medication access needs, 
particularly for those with chronic diseases, is essential to 
successful chronic disease management and that the collection of a 
Transportation item would facilitate the connection to programs that 
can address identified needs (84 FR 38815 through 42588).
---------------------------------------------------------------------------

    \78\ The seven SDOH items are ethnicity, race, preferred 
language, interpreter services, health literacy, transportation, and 
social isolation (84 FR 38805 through 38818).
---------------------------------------------------------------------------

    As part of our routine item and measure monitoring work, we 
continually assess the implementation of the new SDOH items. We have 
identified an opportunity to improve the data collection for A1250. 
Transportation in the MDS by aligning it with the Transportation 
category collected in our other programs.\79\ Specifically, we proposed 
to modify the current Transportation item in the MDS so that it aligns 
with a Transportation item collected on the AHC HRSN Screening Tool, 
one of the potential tools the IPFQR and Hospital IQR Programs may 
select for data collection for the Screening for SDOH measure, as 
discussed previously.
---------------------------------------------------------------------------

    \79\ Centers for Medicare & Medicaid Services, FY2024 Inpatient 
Psychiatric Prospective Payment System--Rate Update (88 FR 51107 
through 51121).
---------------------------------------------------------------------------

    A1250. Transportation collected in the MDS asks: ``Has lack of 
transportation kept you from medical appointments, meetings, work, or 
from getting things needed for daily living?'' The response options 
are: (A) Yes, it has kept me from medical appointments or from getting 
my medications; (B) Yes, it has kept me from non-medical meetings, 
appointments, work, or from getting things that I need; (C) No; (X) 
Resident unable to respond; and (Y) Resident declines to respond. The 
Transportation item collected in the AHC HRSN Screening Tool asks, ``In 
the past 12 months, has lack of reliable transportation kept you from 
medical appointments, meetings, work or from getting things needed for 
daily living?'' The two response options are: Yes; and No. Consistent 
with the AHC HRSN Screening Tool and adapted from the PRAPARE tool, we 
proposed to modify the A1250. Transportation item collected in the SNF 
MDS in two ways: (1) revise the look-back period for when the resident 
experienced lack of reliable transportation; and (2) simplify the 
response options.
    First, the modification of the Transportation item would use a 
defined 12-month look back period, while the current Transportation 
item uses a look back period of 6 to 12 months. We believe the 
distinction of a 12-month look back period would reduce ambiguity for 
both residents and clinicians, and therefore, improve the validity of 
the data collected. Second, we proposed to simplify the response 
options. Currently, SNFs separately collect information on whether a 
lack of transportation has kept the patient from medical appointments 
or from getting medications, and whether a lack of transportation has 
kept the resident from non-medical meetings, appointments, work, or 
from getting things they need. Although transportation barriers can 
directly affect a person's ability to attend medical appointments and 
obtain medications, a lack of transportation can also affect a person's 
health in other ways, including accessing goods and services, obtaining 
adequate food and clothing, and social activities.\80\ The modified 
Transportation item would collect information on whether a lack of 
reliable transportation has kept the resident from medical 
appointments, meetings, work or from getting things

[[Page 64112]]

needed for daily living, rather than collecting the information 
separately. As discussed previously, we believe reliable transportation 
services are fundamental to a person's overall health, and as a result, 
the burden of collecting this information separately outweighs its 
potential benefit.
---------------------------------------------------------------------------

    \80\ Victoria Transport Policy Institute (2016, August 25). 
Basic access and basic mobility: Meeting society's most important 
transportation needs. Retrieved from.
---------------------------------------------------------------------------

    For the reasons outlined in the proposed rule, we proposed to 
modify A1250. Transportation based on the Transportation item adopted 
for use in the AHC HRSN Screening Tool and adapted from the PRAPARE 
tool. The Transportation item asks, ``In the past 12 months, has a lack 
of reliable transportation kept you from medical appointments, 
meetings, work or from getting things needed for daily living?'' The 
response options are: (0) Yes; (1) No; (7) Resident declines to 
respond; and (8) Resident unable to respond. A draft of the proposed 
modified Transportation item can be found in the Downloads section of 
the SNF QRP Measures and Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
    We solicited comment on the proposal to modify the current 
Transportation item previously adopted as a standardized patient 
assessment data element under the SDOH category beginning with the FY 
2027 SNF QRP.
    We received public comments on this proposal. The following is a 
summary of the comments we received and our responses.
    Comment: Several commenters supported the proposal to modify the 
Transportation assessment item. Two commenters supported the simplified 
response options, noting that it would make it easier for residents to 
answer the question. These commenters also expressed support for the 
new 12-month look-back period because it would help clarify the 
question, improve resident comprehension of the proposed Transportation 
assessment item, and reduce provider burden. Another commenter noted 
that knowing this information will allow the SNF to connect residents, 
particularly those who are dependent on a wheelchair or other assisted 
device for mobility, with reliable transportation services.
    Response: We thank the commenters for their support of the proposed 
modification of the Transportation assessment item. We agree that the 
proposed changes would help streamline the data collection process by 
simplifying the item for both residents and SNF staff that collect the 
data. The use of a 12-month look-back period will reduce ambiguity for 
both residents and staff, and therefore, improve the validity of the 
data collected.
    Comment: Two commenters expressed concerns about the 12-month look-
back period, noting that it may not offer reliable and valid 
information, and recommended a 3-month look-back period instead. Both 
commenters also noted that there are limitations with the response 
options because the responses do not allow for understanding the 
frequency of the concern, the reasons why reliable transportation is 
not available or the special accommodations a person may need for 
transportation.
    Response: We disagree that the 12-month look-back period for the 
proposed modification to the Transportation assessment item is too long 
and that it will not result in reliable responses. We believe a 12-
month look-back period is more appropriate than a shorter, three-month 
look-back period because a person's Transportation needs may fluctuate 
over time. As we have noted in an earlier response, a study of Medicare 
Advantage beneficiaries found that approximately half of U.S. adults 
report one or more HRSNs over 4 quarters. However, at the individual 
level, participants had substantial fluctuations: 47.4 percent of the 
participants fluctuated between 0 and 1 or more HRSNs over the 4 
quarters, and 21.7 percent of participants fluctuated between one, two, 
three, or four or more HRSNs over the 4 quarters.\81\ The researchers 
noted that the dynamic nature of individual-level HRSNs requires 
consideration by healthcare providers screening for HRSNs. To account 
for potentially changing Transportation needs over time, we believe it 
is important to use a longer look-back window to comprehensively 
capture any Transportation needs a person may have had, so that SNFs 
may consider them in their care and discharge planning.
---------------------------------------------------------------------------

    \81\ Haff, N, Choudhry, N.K., Bhatkhande, G., Li, Y., Antol, D., 
Renda, A., Laufffenburger, J. Frequency of Quarterly Self-reported 
Health-Related Social Needs Among Older Adults, 2020. JAMA Network 
Open. 2022;5(6):e2219645. Doi:101001/jamanetworkopen.2022.19645. 
Accessed June 9, 2024.
---------------------------------------------------------------------------

    Regarding the comment stating the responses do not allow for 
nuanced understanding of the resident's transportation needs (the 
frequency of the concern, the reasons why reliable transportation is 
not available, or the special accommodations a person may need for 
transportation), we note that although the proposal would require the 
collection of the Transportation assessment item at admission only, the 
collection could potentially prompt the SNF to initiate conversations 
with its residents about their specific Transportation needs. 
Additionally, SNFs may seek to collect any additional information that 
they believe may be relevant to their resident population to inform 
their care and discharge planning process.
    After careful consideration of the public comments we received, we 
are finalizing our proposal to modify the current Transportation item 
previously adopted as a standardized patient assessment data element 
under the SDOH category beginning with the FY 2027 SNF QRP.

D. SNF QRP Quality Measure Concepts Under Consideration for Future 
Years--Request for Information (RFI)

    In the proposed rule, we solicited input on the importance, 
relevance, appropriateness, and applicability of each of the concepts 
under consideration listed in Table 29 for future years in the SNF QRP. 
The FY 2024 SNF PPS proposed rule (88 FR 21353 through 21355) included 
a request for information (RFI) on a set of principles for selecting 
and prioritizing SNF QRP measures, identifying measurement gaps, and 
suitable measures for filling these gaps. We also sought input on data 
available to develop measures, approaches for data collection, 
perceived challenges or barriers, and approaches for addressing 
identified challenges. We refer readers to the FY 2024 SNF PPS final 
rule (88 FR 53265 through 53267) for a summary of the public comments 
we received in response to the RFI.
    Subsequently, our measure development contractor convened a 
Technical Expert Panel (TEP) on December 15, 2023, to obtain expert 
input on the future measure concepts that could fill the measurement 
gaps identified in our FY 2024 RFI.\82\ The TEP also discussed the 
alignment of PAC and Hospice measures with CMS' ``Universal 
Foundation'' of quality measures.\83\
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    \82\ The Post-Acute Care (PAC) and Hospice Quality Reporting 
Program Cross-Setting TEP summary report will be published in early 
summer or as soon as technically feasible. SNFs can monitor the 
Partnership for Quality Measurement website at https://mmshub.cms.gov/get-involved/technical-expert-panel/updates for 
updates.
    \83\ Centers for Medicare & Medicaid Services. Aligning Quality 
Measures Across CMS--the Universal Foundation. November 17, 2023. 
https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
---------------------------------------------------------------------------

    In consideration of the feedback we have received through these 
activities, we solicited input on four concepts for the SNF QRP (See 
Table 29). One is a

[[Page 64113]]

composite of vaccinations \84\ which could represent overall 
immunization status of residents such as the Adult Immunization Status 
measure \85\ in the Universal Foundation. A second concept on which we 
sought feedback is the concept of depression for the SNF QRP, which may 
be similar to the Clinical Screening for Depression and Follow-up 
measure \86\ in the Universal Foundation. Finally, we sought feedback 
on the concepts of pain management and patient experience of care/
patient satisfaction for the SNF QRP.
---------------------------------------------------------------------------

    \84\ A composite measure can summarize multiple measures through 
the use of one value or piece of information. More information can 
be found at https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/mms/downloads/composite-measures.pdf.
    \85\ CMS Measures Inventory Tool. Adult immunization status 
measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=26.
    \86\ MS Measures Inventory Tool. Clinical Depression Screening 
and Follow-Up measure found at https://cmit.cms.gov/cmit/#/FamilyView?familyId=672.
[GRAPHIC] [TIFF OMITTED] TR06AU24.033

We received public comments on this RFI. The following is a summary of 
the comments we received.
1. Vaccination Composite
    Comment: Most commenters stated they understand CMS' efforts to 
promote vaccination among residents, and many commenters supported the 
idea of adding a composite vaccination measure like the Adult 
Immunization Status (AIS) measure into the SNF QRP. One commenter noted 
that a composite vaccination measure could improve vaccination rates 
for those vaccines recommended by the Advisory Committee on 
Immunization Practices (ACIP), reduce administrative burden through 
alignment with the Universal Foundation,\87\ and potentially improve 
immunization rates in PAC settings, including SNFs. Another commenter 
noted that vaccines may not only help prevent illness, or minimize 
symptoms, but also save lives, especially for key conditions including 
COVID-19, influenza, respiratory syncytial virus (RSV), and pneumonia 
that have the most severe impact on older adults and individuals with 
multiple chronic conditions that receive post-acute or long-term care 
in nursing homes. Another commenter noted that, while in previous years 
they have shared concerns on the Patient/Resident COVID-19 Vaccine 
measure in rulemaking comments, if this measure is rolled into a 
composite vaccination measure, they would support the concept, 
particularly if the weight of the COVID-19 vaccination for residents is 
weighed appropriately in relation to the influenza vaccine.
---------------------------------------------------------------------------

    \87\ Centers for Medicare & Medicaid Services. Aligning Quality 
Measures Across CMS--the Universal Foundation. November 17, 2023. 
https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
---------------------------------------------------------------------------

    Several commenters, however, did not support the idea of adding a 
composite vaccination measure into the SNF QRP for a number of reasons. 
They questioned whether the SNF is the appropriate setting for 
collecting vaccination rates, and pointed to several challenges SNFs 
would experience in gathering information on vaccination status and 
insuring the validity of the measure.
    Two commenters suggested that a composite vaccination measure 
should focus on primary care practices as the appropriate setting in 
which to report vaccination status, and this information could be 
shared with other healthcare providers when a resident requires 
services in another setting. Another commenter did not support the use 
of composite vaccination measures stating that they may mask specific 
vaccination uptake and make it more difficult to interpret vaccination 
status. This commenter recommended that CMS report on specific 
vaccination rates because it would provide more actionable data to 
SNFs. One of these commenters also questioned whether there would be 
exclusions for medical contraindications and deeply held religious 
beliefs, and how a measure reported by residents in the SNF would be 
verified.
    Three commenters also noted that there are numerous reasons beyond 
health contraindications that residents may decide whether to receive 
vaccinations, and these reasons are largely dependent on factors 
outside of a SNF's control, such as where the facility is located and 
personal preference of the residents. Two of these commenters suggested 
that, by requiring a composite vaccination measure, a SNF could be 
incentivized either not to offer admission to residents who are not up 
to date with vaccinations or admit the resident and administer the 
vaccinations, even when vaccine administration may increase the risk of 
adverse health outcomes.
2. Pain Management
    Comment: Most commenters supported the pain management measure 
concept. One of these commenters noted that a resident's experience of 
pain can affect numerous aspects of their care, including their ability 
to tolerate therapy, their ability to gain function, their mental 
health, and their overall experience of care. Another one of these 
commenters stated that these measures could potentially inform future 
efforts to address inequities in SNF care. Three of these commenters 
urged CMS to recognize the value of nonpharmacological treatment 
options, and one these commenters noted that collecting data on pain 
management strategies would ensure the highest effectiveness, lowest 
cost, and least invasive and addictive modalities are used in the 
treatment of chronic or subacute pain. One of these commenters 
supported the concept but also encouraged CMS to use the Centers for 
Disease Control and Prevention (CDC) Clinical Practice Guideline for

[[Page 64114]]

Prescribing Opioids for Pain \88\ as some SNF residents may 
appropriately need these medications, suggesting that there are key 
populations that should be excluded from any measures that could reduce 
their access to these medications. Another one of these commenters 
stated that they were hopeful that the recently implemented MDS items 
in section J0300-J0600 which assesses pain interference with daily 
activities, sleep, and participation in therapy could provide a 
foundation for future proposed measures, if it can overcome the 
potential to incentivize inappropriate use of pain medication. They 
also noted that one of the largest challenges in the nursing facility 
environment is the high proportion of residents with cognitive deficits 
who may be unable to effectively verbalize pain responses. This 
commenter urged CMS to consider the fact that these residents may 
convey pain in other ways including gestures, vocalizations, or 
atypical behaviors and to consider how these residents could be 
incorporated into a future pain measure.
---------------------------------------------------------------------------

    \88\ Dowell D, Ragan KR, Jones CM, Baldwin GT, Chou R. CDC 
Clinical Practice Guideline for Prescribing Opioids for Pain--United 
States, 2022. MMWR Recomm Rep 2022;71(No. RR-3):1-95. DOI: https://dx.doi.org/10.15585/mmwr.rr7103a1.
---------------------------------------------------------------------------

    One commenter opposed the measure concept, stating that pain 
management is a challenging topic to address, including in the SNF, and 
a SNF's goal is to manage the resident's pain and discomfort. This 
commenter and others opposed the idea of a SNF QRP measure that 
included an expectation of an improvement in pain since it could 
unintentionally incentivize providers to lower resident pain levels by 
prescribing medications, including opioids. One of these commenters 
suggested that improving care and treatment for mental health substance 
use disorders would be a better use of resources in the SNF QRP.
3. Depression
    Comment: We received several comments on the concept of depression 
for a future SNF QRP measure, and many commenters supported the 
concept. One of these commenters noted that identifying a resident's 
risk of depression early and implementing interventions to address 
depression in the SNF setting can help to improve overall resident 
outcomes and quality of life. Another one of these commenters 
encouraged CMS to pursue development of this measure as part of larger 
equity efforts within the program. Another one of these commenters 
agreed, noting that mental health parity and access policies are 
grounded in the health equity view that mental and behavioral health 
treatment, access, and coverage should be the same as for physical 
healthcare.
    One commenter, who supported the measure concept, also noted that 
groundwork is needed to identify the importance, relevance, 
appropriateness, feasibility, and applicability of such a measure or 
measures. This commenter noted that the MDS has two resident mood 
screening tools, the Patient Health Questionnaire (PHQ)-2 to 9 (PHQ-2 
to 9) and the Staff Assessment of Resident Mood PHQ-9-OV,\89\ creating 
challenges with the data that would need to be considered if a 
depression quality measure were developed using both MDS-based resident 
mood depression screening tools. Another one of these commenters 
recommended that CMS develop a measure that reports the number of 
residents who are identified as having depression and then receive 
follow up care, stating that recognizing when SNF's provide care to 
such residents would be more meaningful than a measure that simply 
reports the number of residents with depression.
---------------------------------------------------------------------------

    \89\ Both the PHQ-2 to-9 and Staff Assessment of Resident Mood 
PHQ-9-OV are collection on the MDS 3.0.
---------------------------------------------------------------------------

    Two commenters opposed the measure concept of depression, noting 
that a measure may require SNFs to have additional resources to treat 
depression, to which they may not have access. One of these commenters 
noted that they already collect information and use physician 
documentation to identify mental health or other behavioral health 
issues, stating that adding another screening requirement would not 
improve the quality of care, but it would add cost and burden to the 
SNF clinical team.
4. Patient Experience of Care/Patient Satisfaction
    Comment: We received many comments on the concept of a patient 
experience of care/patient satisfaction measure, and all commenters 
supported the idea of further development. One commenter noted that the 
lack of a patient experience of care/patient satisfaction measure is a 
notable gap in quality measurement and patient reported measures should 
be given equal consideration as data driven measures in the SNF QRP. 
Two commenters called patient self-report the gold standard to assess 
care quality, while another one recommended that patient experience 
measures include a focus on activities that have a meaningful impact on 
function rather than emphasizing activities that may be appealing to 
residents and caregivers, but do not support improvement of function.
    Two commenters noted the value in a patient experience of care/
patient satisfaction measure; specifically, noting that persons who 
believe their personal goals, care preferences, and priorities (GPP) 
are heard and followed-up on by the care team applying a person-
centered approach are more likely to participate in their environment, 
be happier, and have better clinical outcomes. One of these commenters 
also encouraged CMS to look at the activities of the Moving Forward 
coalition in this area.
    Two commenters made recommendations for a patient satisfaction 
measure, like the CoreQ, or a patient experience measure, such as the 
Consumer Assessment of Healthcare Providers and Systems (CAHPS), while 
several other commenters made recommendations for the type of questions 
that should be included, the number of questions a survey should have, 
how it should be completed, potential submission methods, exclusion 
criteria, psychometric properties, and CBE endorsement status.
5. Other Suggestions for Future Measure Concepts
    Comment: In addition to comments received on the four measure 
concepts of pain, depression, vaccination, and patient experience of 
care/patient satisfaction, we also received a couple of comments urging 
careful consideration of the feedback CMS receives to ensure that 
future proposals account for the additional burden on providers, 
evaluate the operational impact on SNFs, and minimize the risk of 
gaming or inappropriately influencing performance results. Some 
commenters also made suggestions for future measure concepts for the 
SNF QRP.
    One commenter suggested we consider measures that assessed 
management of degenerative cognitive conditions, effectiveness of 
disposition planning and care transitions, changes in resident 
function, rates of follow-up care, and residents' access to appropriate 
treatments and medications. Another commenter recommended measures 
related to timely and appropriate referral to hospice, advance care 
planning, and palliative care access and utilization. One commenter 
recommended developing a measure addressing needs navigation, utilizing 
the new Principal Illness Navigation (PIN) codes adopted in the 2025

[[Page 64115]]

Physician Fee Schedule,\90\ to provide insight into the type of 
residents receiving these services and its utilization, while another 
commenter recommended the Patient Active Measure (PAM[supreg]) 
instrument \91\ be added to the MDS or required in parallel to the MDS.
---------------------------------------------------------------------------

    \90\ Principal Illness Navigation (PIN) services describe 
services that auxiliary personnel, including care navigators or peer 
support specialists, may perform incidental to the professional 
services of a physician or other billing practitioner, under general 
supervision. Two codes describe PIN services, and two codes describe 
Principal Illness Navigation-Peer Support (PIN-PS) services, which 
are intended more for patients with high-risk behavioral health 
conditions and have slightly different service elements that better 
describe the scope of practice of peer support specialists. In 
general, where we describe aspects of PIN, it also applies to PIN-PS 
unless otherwise specified. MLN9201074 January 2024. https://www.cms.gov/files/document/mln9201074-health-equity-services-2024-physician-fee-schedule-final-rule.pdf-0.
    \91\ Patient Activation Measure[supreg] (PAM[supreg]). https://www.insigniahealth.com/pam/.
---------------------------------------------------------------------------

    Response: We thank all the commenters for responding to this RFI. 
While we are not responding to specific comments in response to the RFI 
in this final rule, we will take this feedback into consideration for 
our future measure development efforts for the SNF QRP.

E. Form, Manner, and Timing of Data Submission Under the SNF QRP

1. Background
    We refer readers to the current regulatory text at Sec.  413.360(b) 
for information regarding the policies for reporting specified data for 
the SNF QRP.
2. Reporting Schedule for the New Standardized Patient Assessment Data 
Elements, and the Modified Transportation Data Element, Beginning 
October 1, 2025, for the FY 2027 SNF QRP
    As outlined in sections VI.C.3. and VI.C.5. of the proposed rule, 
we proposed to adopt four new items as standardized patient assessment 
data elements under the SDOH category (one Living Situation item, two 
Food items, and one Utilities item) and to modify the Transportation 
standardized patient assessment data element previously adopted under 
the SDOH category beginning with the FY 2027 SNF QRP.
    We proposed that SNFs would be required to report these new items 
and the modified Transportation item using the MDS beginning with 
residents admitted on October 1, 2025, through December 31, 2025, for 
purposes of the FY 2027 SNF QRP. Starting in CY 2026, we proposed that 
SNFs would be required to submit data for the entire calendar year for 
each program year.
    We also proposed that SNFs that submit the Living Situation, Food, 
and Utilities items with respect to admission only would be deemed to 
have submitted those items with respect to both admission and 
discharge. We proposed that SNFs would be required to submit these four 
items at admission only (and not at discharge) because it is unlikely 
that the assessment of those items at admission would differ from the 
assessment of the same item at discharge. This will align the data 
collection for these proposed items with other SDOH items (that is, 
Race, Ethnicity, Preferred Language, and Interpreter Services) which 
are only collected at admission.\92\ A draft of the proposed items is 
available in the Downloads section of the SNF QRP Measures and 
Technical Information web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
---------------------------------------------------------------------------

    \92\ FY 2020 SNF PPS final rule (84 FR 38817 through 38818).
---------------------------------------------------------------------------

    As we noted in section VI.C.5 of the proposed rule and in section 
VII.C.6 of this final rule, we continually assess the implementation of 
the new SDOH items, including A1250. Transportation, as part of our 
routine item and measure monitoring work. We received feedback from 
interested parties in response to the FY 2020 SNF PPS proposed rule (84 
FR 17676 through 17678) noting their concern with the burden of 
collecting the Transportation item at admission and discharge. 
Specifically, commenters stated that a resident's access to 
transportation is unlikely to change between admission and discharge. 
We analyzed the data SNFs reported from October 1, 2023, through 
December 31, 2023 (Quarter 4 of CY 2023), and found that residents' 
responses do not significantly change from admission to discharge.\93\ 
Specifically, the proportion of residents \94\ who responded ``Yes'' to 
the Transportation item at admission versus at discharge differed by 
only 0.60 percentage points during this period. We find these results 
convincing, and therefore we proposed to require SNFs to collect and 
submit the modified standardized patient assessment data element, 
Transportation, at admission only.
---------------------------------------------------------------------------

    \93\ Due to data availability of SNF SDOH standardized patient 
assessment data elements, this is based on one quarter of 
Transportation data.
    \94\ The analysis is limited to residents who responded to the 
Transportation item at both admission and discharge.
---------------------------------------------------------------------------

    We solicited public comment on our proposal to collect data on the 
following items proposed as standardized patient assessment data 
elements under the SDOH category at admission only beginning with 
October 1, 2025, SNF admissions: (1) Living Situation as described in 
section VI.C.3(a) of the proposed rule; (2) Food as described in 
section VI.C.3(b) of the proposed rule; and (3) Utilities as described 
in section VI.C.3(c) of the proposed rule. We also solicited comment on 
our proposal to collect the modified standardized patient assessment 
data element, Transportation, at admission only beginning with October 
1, 2025, SNF admissions as described in section VI.C.5 of the proposed 
rule.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Several commenters supported the proposed collection of 
the SDOH assessment items once, upon admission, noting that this would 
mitigate the administrative burden of data collection and reduce 
redundancy. One commenter acknowledged CMS's internal analysis of the 
Transportation assessment item that demonstrated a less than one 
percent change in the assessment item response between admission and 
discharge.
    Response: We appreciate the commenters' input on the timing of 
collecting the proposed SDOH assessment items. We continually assess 
the implementation of the new SDOH assessment items as part of our 
routine item and measure monitoring work, and when we identify an 
opportunity to improve data collection, we want to implement it. In the 
FY 2025 SNF proposed rule (89 FR 23468 through 23469), we proposed to 
collect these new and modified assessment items at admission only 
because we believe it is unlikely that the assessment of these items at 
admission would differ from the assessment of the same items at 
discharge. We are mindful of provider burden and appreciate the support 
from several commenters who agreed that collection at admission only, 
rather than at both admission and discharge, would mitigate the 
administrative burden of data collection on these new and modified 
assessment items.
    Comment: One commenter recommended CMS collect the proposed new 
SDOH assessment items at discharge only, rather than at admission, to 
facilitate discharge planning. One commenter expressed concerns about 
data for the SDOH items being collected on every assessment, noting 
that responses will not change during the resident's stay.

[[Page 64116]]

    Response: We believe that collecting the SDOH assessment items at 
discharge only would be too late for the SNF to act on the information 
if it so chooses. As we explained in our proposal, obtaining this 
information early in the resident's stay will ensure the SNF has 
information that it could use to inform how it cares for the resident 
and during the discharge planning processes.
    Regarding the commenter who expressed concerns about collecting the 
proposed new and modified assessment items on every assessment, we did 
not propose that SNFs would collect these items on every assessment of 
a resident. Rather, we proposed that SNFs would be required to report 
these new assessment items and the modified Transportation item using 
the MDS beginning with residents admitted on October 1, 2025, through 
December 31, 2025, for purposes of the FY 2027 SNF QRP, and for the 
entire calendar year for each program year thereafter. We note the SNF 
QRP's reporting requirements currently only apply to residents 
receiving skilled care in a SNF covered by Medicare Part A.
    Comment: Two commenters suggested that CMS offer the flexibility 
for SNFs to use SDOH data collected during the transition of care to 
the SNF or during the look-back period, rather than requiring its 
collection at admission. These commenters stated that they believed 
CMS' focus should be on how SDOH information is used in care planning 
and discharge planning, rather than requiring this information be 
obtained via a resident's verbal responses during the look-back period 
of the initial assessment.
    Several commenters noted that CMS already collects many of the 
proposed SDOH assessment items from other health care providers, such 
as hospitals or other post-acute providers, prior to a SNF stay, and 
encouraged CMS to consider supporting data portability and screening 
interoperability across healthcare providers to avoid unnecessary 
duplication of screenings and assessments.
    Response: We interpret these commenters to be suggesting that CMS 
should allow SNFs to obtain information collected in previous 
healthcare settings, rather than requiring SNFs to obtain this 
information from the resident upon the resident's admission to the SNF. 
Obtaining information about the Living Situation, Food, Utilities, and 
Transportation assessment items directly from the resident, sometimes 
called ``hearing the resident's voice,'' is more reliable and accurate 
than obtaining it from a health care provider that previously cared for 
the resident for several reasons: the SNF would not know whether it was 
collected from the resident or from a family member or other source; 
the SNF would not know how the SDOH domain was defined--for example, 
whether utilities included electricity, gas, oil, or water or only 
asked about electricity; and the SNF would not be able to determine 
whether the potential problem had been resolved since then. Most 
importantly, we believe that by asking the resident these questions at 
admission, it may prompt further discussion with the resident about 
their needs and help formulate an appropriate discharge care plan.
    We also appreciate the statements from commenters encouraging CMS 
to support data portability and screening interoperability. As we noted 
in the FY 2023 SNF PPS final rule (87 FR 47503 and 47504), to further 
interoperability in post-acute care settings, CMS, and the Office of 
the National Coordinator for Health Information Technology (ONC) 
participate in the Post-Acute Care Interoperability Workgroup (PACIO) 
to facilitate collaboration with interested parties to develop Health 
Level Seven International[supreg] (HL7) Fast Healthcare 
Interoperability Resource[supreg] (FHIR) standards. These standards 
could support the exchange and reuse of patient assessment data derived 
from the post-acute care (PAC) setting assessment tools, such as the 
MDS, Inpatient Rehabilitation Facility--Patient Assessment Instrument 
(IRF-PAI), Long-Term Care Hospital (LTCH) Continuity Assessment Record 
and Evaluation (CARE) Data Set (LCDS), the Outcome and Assessment 
Information Set (OASIS) used by Home Health Agencies, and other 
sources. The CMS Data Element Library (DEL) continues to be updated and 
serves as a resource for PAC assessment data elements, as well as 
furthers CMS' goal of data standardization and interoperability. We 
acknowledge that there are still opportunities to advance these goals, 
and we will take these comments into consideration.
    Comment: Several commenters offered suggestions or recommendations 
for guidance related to collecting the proposed SDOH assessment items. 
One commenter recommended that CMS include coding logic to allow 
skipping the Utilities assessment item if a resident indicated that 
they do not have a steady place to live, since it would be 
inappropriate to ask about utilities if a resident has no place to 
live.
    Response: We appreciate all the comments we received about coding 
these proposed new and modified SDOH assessment items, including the 
Utilities assessment item. We proposed that SNFs would be required to 
collect and submit information on the four new assessment items, to 
have complete information. We do not agree that it would be 
inappropriate to ask about utilities just because a resident does not 
have a place to live at the time of the assessment. The resident may be 
living in temporary housing or a shelter, and gathering this 
information would still be important for their discharge planning.
    Comment: Some commenters were also concerned that the proposed SDOH 
assessment items will be challenging for SNF residents to respond to, 
considering that many SNF residents have cognitive impairments or are 
more severely ill than the average Medicare beneficiary for whom the 
AHC HRSN Screening Tool was developed.
    Response: We believe SNFs are accustomed to working with residents 
with very complex medical conditions, including multiple comorbidities, 
stroke, and cognitive decline, and we are confident in their ability to 
collect this data in a consistent manner. There are currently several 
resident interview assessment items on the MDS, and SNFs are accustomed 
to administering these questions to cognitively impaired patients.
    We also plan to provide training resources in advance of the 
initial collection of the assessment items to ensure that SNFs have the 
tools necessary to administer the new SDOH assessment items and reduce 
the burden to SNFs in creating their own training resources. These 
training resources may include online learning modules, tip sheets, 
questions and answers documents, and/or recorded webinars and videos, 
and would be available to providers in mid-2025, allowing SNFs several 
months to ensure their staff take advantage of the learning 
opportunities.
    Comment: Another commenter expressed concerns about collecting data 
on the Transportation assessment item from residents younger than 18 
years old and recommended that CMS provide consideration for residents 
requiring special accommodations. Additionally, one commenter 
recommended that CMS consider a response option for SDOH assessment 
items that residents refuse to answer due to concerns about 
confidentiality or embarrassment.
    Response: We are uncertain what the commenter's concerns are 
related to collecting the Transportation assessment item from residents 
younger than 18 years old, but we interpret the commenter to be 
concerned that these residents would be too young to provide a response 
or that these residents may be too young to have a driver's license,

[[Page 64117]]

so the question would not be applicable to them.
    In response to the first potential concern that residents would be 
too young to provide a response, we highlight that there is growing 
recognition of the need for effective screening methods for HRSNs in 
all patient populations, including pediatrics and adolescents. Children 
are especially vulnerable to HRSN, as poverty in childhood correlates 
to poor health outcomes.95 96 97 Although there is no 
standardized protocol for screening in pediatric settings,\98\ 
organizations like the American Academy of Pediatrics provide toolkits 
with suggestions for a screening protocol. Transportation has been 
identified by hospitals and clinics 99 100 that care for 
pediatric and adolescent patients as an important area to screen. One 
hospital system began using the AHC HRSN Screening Tool, including the 
proposed Transportation item, during selected well child visits at a 
Federally Qualified Health Center, and found the tool was feasible to 
administer and identified more than a third of patients with one or 
more HRSNs.\101\
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    \95\ Feltner C WI, Berkman N, et al. Screening for Intimate 
Partner Violence, Elder Abuse, and Abuse of Vulnerable Adults: An 
Evidence Review for the U.S. Preventive Services Task Force Agency 
for Healthcare Research and Quality. 2018. Available at https://www.ncbi.nlm.nih.gov/books/NBK533720/.
    \96\ National Academy of Science EaM. A Roadmap to Reducing 
Child Poverty. The National Academies; 2019.
    \97\ Wise PH. Child poverty and the promise of Human Capacity: 
childhood as a foundation for healthy aging. Acad Pediatr. 
2016;16(suppl 3):S37-S45.
    \98\ Boch S, Keedy H, Chavez L, et al. An integrative review of 
social determinants of health screenings used in primary care 
settings. J Health Care Poor Underserved. 2020;31:603-622.
    \99\ Halpin, K, Colvin, JD, Clements, MA, et al. Outcomes of 
Health-Related Social Needs Screening in a Midwest Pediatric 
Diabetes Clinic Network. Diabetes. 2023; Vol. 72; Iss: Supplement 1.
    \100\ Nerlinger, AL, Kopsombut, G. Social determinants of health 
screening in pediatric healthcare settings. Curr Opin Pediatr. 2023 
Feb 1;35(1):14-21. Doi: 10.1097/MOP.0000000000001191.
    \101\ Gray, T.W., Podewils, L.J., Rasulo, R.M., Weiss, R.P., 
Tomcho M.M. Examining the Implementation of Health-Related Social 
Need (HRSN) Screenings at a Pediatric Community Health Center. 
Journal of Primary Care & Community Health. 2023. Volume 14: 1-8. 
https://doi.org/10.1177/21501319231171519.
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    In response to the second potential concern that the question would 
not be applicable to these residents because they may be too young to 
have a driver's license, we believe that even if a patient younger than 
18 years old cannot drive themselves, they may rely on others, or they 
may use public transportation. As a result, they may still have 
transportation access needs that should be identified.
    We interpret the second part of the comment to be recommending that 
we modify the response options to collect information about residents 
requiring special transportation accommodations. Although the proposal 
would require SNFs to collect the modified Transportation assessment 
item as described in section VII.E.2. of this final rule, such 
collection could potentially prompt the SNF to initiate conversations 
with its residents about their potential Transportation needs, such as 
special accommodations a resident may need to access transportation. 
Additionally, SNFs may seek to collect any additional information that 
they believe may be relevant to their resident population to inform 
their care and discharge planning process.
    Comment: One commenter recommended that CMS consider a response 
option for SDOH assessment items that residents refuse to answer due to 
concerns about confidentiality or embarrassment.
    Response: As described in sections VII.C.3.(a), VII.C.3.(b), 
VII.C.3.(c), and VII.C.5., each proposed new and modified SDOH item 
includes response options for those scenarios where a resident declines 
or is unable to provide information: (7) Resident declines to respond; 
and (8) Resident is unable to respond.
    Comment: A few commenters recommended provide SNFs more 
flexibilities in collecting the new and modified SDOH assessment items. 
Two of these commenters suggested the use of interviews, paper, and 
electronic survey tools to administer the new and modified SDOH 
assessment items. One of these commenters also noted that many provider 
pre-admission processes now involve residents filling out pre-admission 
questionnaires via paper, mobile apps, or resident portals.
    Response: We appreciate the commenters' input on the mechanism of 
collecting the new and modified SDOH assessment items. SNFs may use 
different methods to collect the information from the resident, as long 
as they are consistent with the coding guidance and defined look-back 
periods in the MDS RAI manual.
    Comment: One commenter expressed confusion with how CMS planned to 
collect the proposed new SDOH assessment items, since the MDS does not 
currently ask these questions.
    Response: As stated in section VI.E.2 of the proposed rule, we 
proposed adding these assessment items to a future version of the MDS 
and requiring SNFs to begin collecting the assessment items for 
residents admitted on or after October 1, 2025. A draft of the 
assessment items can be found on the SNF QRP Measures and Technical 
Information web page in the Downloads section at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information.
    Comment: One commenter was concerned that SNFs would not be able to 
collect the data on admission without knowledge of whether a patient is 
expected to successfully rehabilitate and return home or would have to 
remain in the nursing home as a long-stay resident.
    Response: We acknowledge that residents' needs may change through 
the course of their recovery in the SNF, but we also note that while 
the proposal would require the collection of the SDOH items at 
admission, we hope the questions would enable future conversations 
between the SNF and residents about their potential SDOH needs. As the 
commenter pointed out, it is important to think about the resident's 
living situation in the context at multiple points during their care 
journey, and collecting these items at admission would be an important 
first step to that process.
    Comment: Some commenters were concerned that the proposed SDOH 
assessment items are not applicable to long-term residents receiving 
skilled care under their Medicare Part A fee-for-service benefit, but 
who have no plans to discharge back to the community. One commenter 
specifically stated that the Utilities and Food assessment items are 
not appropriate for these long-term residents because they reside in 
the nursing home prior to their SNF stay. Two commenters recommended 
that CMS consider adding a response option or a skip pattern for SNF 
residents who are expected to be a long-term nursing home resident, or 
for those who have resided in the facility during the 12-month look-
back period.
    Response: We interpret these comments to be discussing long-term 
residents of a nursing facility (NF) who become eligible for a SNF stay 
and who are also not expected to be discharged from the SNF to the 
community. If a resident has resided in a NF for at least 366 days 
prior to the initiation of a new SNF stay, we acknowledge that such 
long-term residents of the NF will have had the HRSNs that are the 
subject of the proposed SDOH assessment items addressed by the NF 
during the 12-month look-back period that applies to those items.

[[Page 64118]]

    After consideration of these comments, we are finalizing a 
modification to the data specifications of the new and modified SDOH 
items so that they exclude any SNF residents who, immediately prior to 
their hospitalization that preceded a new SNF stay, resided in a NF for 
at least 366 continuous days. The SNF will not be required to ask the 
resident regarding their specific living situation, food, utilities, or 
transportation access during the 12-month look-back period because the 
NF was responsible for providing these needed services. We believe 
applying this criterion will decrease SNFs' burden of collecting these 
SDOH items from SNF residents who have received services from a NF for 
the entirety of the 12-month look-back period.
    Comment: One commenter recommended we also require Medicare 
Advantage (MA) plans to collect and submit SDOH data. They contend that 
MA plans do not collect data on SDOH, but also make skilled coverage 
and discharge decisions for plan enrollees. As a result, SDOH data is 
not part of MA plans' decision-making process for discharge planning 
and SNFs often disagree with the discharge and coverage decisions 
issued by MA plans.
    Response: We thank the commenter for their recommendation and 
acknowledge that MA plans have a role to play in advancing health 
equity. While this recommendation is outside the scope of this 
rulemaking, we will consider this feedback for future policymaking. we 
note the SNF QRP's reporting requirements currently only apply to 
residents receiving skilled care covered by Medicare Part A.
    Comment: One commenter spoke about how they convened multiple 
interested parties to discuss the various social needs related 
screening measures and how quality measures and quality programs can 
best meet resident needs and policymakers' objectives. The result of 
the meeting was ten principles for adoption, updating, and implementing 
quality measures related to social needs, and they encouraged CMS to 
consider these principles in furthering SDOH-related policies within 
quality reporting and payment programs.
    Response: We thank the commenter and note that we are not proposing 
measures related to screening for HRSNs. We will consider this feedback 
for future policymaking.
    Comment: In response to the proposal to adopt two new Food 
assessment items, one commenter urged CMS to require or strongly 
encourage SNFs to immediately refer residents to social services to 
provide residents and caregivers information on post-discharge 
nutrition and food services (such as meal programs and oral nutrition 
supplement options); as well as create a post-discharge nutrition/food 
service plan to ensure services are provided as quickly as possible 
after discharge from the SNF.
    Response: We did not propose to require SNFs to do anything 
specific with the information they obtain from the resident in response 
to the Food items. SNFs already are required to develop and implement 
an effective discharge planning process that focuses on the resident's 
discharge goals, the preparation of residents to be active partners and 
effectively transition them to post-discharge care, and the reduction 
of factors leading to preventable readmissions. We believe the proposed 
new SDOH assessment items have the potential to generate actionable 
data SNFs can use to implement effective discharge planning processes 
that can reduce the risk for negative outcomes such as hospital 
readmissions and admission to a nursing facility for long-term care. 
Given that SNFs must develop and implement an effective discharge 
planning process that ensures the discharge needs of each resident are 
identified, we believe collection of these new SDOH items will provide 
key information to SNFs to support effective discharge planning.
    Comment: Another commenter described the ongoing burden of CMS' 
requirement for facilities to collect COVID-19 data. They noted the 
lack of appropriate technology to manage regulatory requirements 
necessitates the development of numerous internal processes, and 
implementing the necessary technology requires significant time and 
financial investment.
    Response: This comment is out of scope for our proposals for the 
SNF QRP. We will take this feedback into consideration with future 
policy development work.
    After careful consideration of the public comments we received, we 
are finalizing our proposal to require SNFs to collect and submit data 
on the following items adopted as standardized patient assessment data 
elements under the SDOH category at admission only beginning with 
October 1, 2025, SNF admissions: (1) Living Situation as described in 
section VII.C.3(a) of this final rule; (2) Food as described in section 
VII.C.3(b) of this final rule; and (3) Utilities as described in 
section VII.C.3(c) of this final rule. We are also finalizing our 
proposal to require SNFs to collect and submit the modified 
standardized patient assessment data element, Transportation, at 
admission only beginning with October 1, 2025, SNF admissions as 
described in section VII.C.5 of this final rule. However, we are 
finalizing a modification to the data specifications of the new and 
modified SDOH items so that they exclude any SNF residents who, 
immediately prior to their hospitalization that preceded a new SNF 
stay, resided in a NF for at least 366 continuous days. SNFs can 
monitor the MDS 3.0 Technical Information web page at https://www.cms.gov/medicare/quality/nursing-home-improvement/minimum-data-set-technical-information for updates.
3. Participation in a Validation Process Beginning With the FY 2027 SNF 
QRP
    Section 1888(h)(12)(A) of the Act (as added by section 111(a)(4) of 
Division CC of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260)) requires the Secretary to apply a process to validate data 
submitted under the SNF QRP. Accordingly, we proposed to require SNFs 
to participate in a validation process that would apply to data 
submitted using the MDS and SNF Medicare fee-for-service claims as a 
SNF QRP requirement beginning with the FY 2027 SNF QRP. We proposed to 
amend the regulation text at Sec.  413.360.
    We are also considering additional validation methods that may be 
appropriate to include in the future for the current measures submitted 
through the National Healthcare Safety Network (NHSN), as well as for 
other new measures we may consider for the program. Any updates to 
specific program requirements related to the validation process would 
be addressed through separate and future notice-and-comment rulemaking, 
as necessary.
(a) Participation in a Validation Process for Assessment-Based Measures
    The MDS is a resident assessment instrument that SNFs must complete 
for all residents in a Medicare or Medicaid certified nursing facility, 
and for residents whose stay is covered under SNF PPS in a non-critical 
access hospital swing bed facility. The MDS includes the resident in 
the assessment process, and uses standard protocols used in other 
settings to improve clinical assessment and support the credibility of 
programs that rely on MDS, like the SNF QRP.\102\
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    \102\ Centers for Medicare and Medicaid Services (CMS) (2023, 
March 29). Minimum Data Set (MDS) 3.0 for Nursing Homes and Swing 
Bed Providers. https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/nursinghomequalityinits/nhqimds30.

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[[Page 64119]]

    We proposed to adopt a validation process for the SNF QRP that is 
similar to the validation process that we have adopted for the SNF 
Value-Based Purchasing (VBP) program in the FY 2024 SNF PPS final rule 
(88 FR 53323 through 53325) beginning with the FY 2027 SNF QRP. We 
proposed that this process would closely align with the validation 
process we have adopted for the SNF VBP program and would have the 
following elements:
     We proposed that our validation contractor would select, 
on an annual basis, up to 1,500 SNFs that submit at least one MDS 
record in the calendar year (CY) 3 years prior to the applicable FY SNF 
QRP. For example, for the FY 2027 SNF QRP, we would choose up to 1,500 
SNFs that submitted at least one MDS record in CY 2024. We also 
proposed that the SNFs that are selected to participate in the SNF QRP 
validation for a program year would be the same SNFs that are randomly 
selected to participate in the SNF VBP validation process for the 
corresponding SNF VBP program year.
     We proposed that our validation contractor would request 
up to 10 medical records from each of the selected SNFs. Each SNF 
selected would only be required to submit records once in a fiscal 
year, for a maximum of 10 records for each SNF selected. To decrease 
the burden for the selected SNF, we proposed that the validation 
contractor would request that the SNFs submit the same medical records, 
at the same time, that are required from the same SNFs for purposes of 
the SNF VBP validation.
     We proposed that the selected SNFs would have the option 
to submit digital or paper copies of the requested medical records to 
the validation contractor and would be required to submit the medical 
records within 45 days of the date of the request (as documented on the 
request). If the validation contractor has not received the medical 
records within 30 days of the date of the request, the validation 
contractor would send the SNF a reminder in writing to inform the SNF 
that it must submit the requested medical records within 45 days of the 
date of the initial request.
    We proposed that if a SNF does not submit the requested number of 
medical records within 45 days of the initial request, we would, under 
section 1888(e)(6)(A) of the Act, reduce the SNF's otherwise applicable 
annual market basket percentage update by 2 percentage points. The 
reduction would be applied to the payment update 2 fiscal years after 
the fiscal year for which the validation contractor requested records. 
For example, if the validation contractor requested records for FY 
2027, and the SNF did not send them, we would reduce the SNF's 
otherwise applicable annual market basket percentage update by 2 
percentage points for the FY 2029 SNF QRP.
    We also stated that we intended to propose in future rulemaking the 
process by which we would evaluate the submitted medical records 
against the MDS to determine the accuracy of the MDS data that the SNF 
reported and that CMS used to calculate the measure results. We 
solicited public comment on what that process could include.
    We solicited public comments on our proposal to require SNFs that 
participate in the SNF QRP to participate in a validation process for 
assessment-based measures beginning with the FY 2027 SNF QRP.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Several commenters supported our proposal to require SNFs 
to participate in a validation process that would apply to data 
submitted using the MDS, and specifically to adopt a validation process 
for the SNF QRP that is similar to the validation process we have 
adopted for the SNF VBP program. Most of these commenters appreciated 
the fact that we proposed using the same process that was adopted for 
the SNF VBP program, and that records requested and submitted would 
apply to the validation processes for both the SNF QRP and SNF VBP, 
reducing provider burden.
    Response: We agree that adopting a validation process for the SNF 
QRP that is similar to the validation process that we adopted for the 
SNF VBP program and using the same charts for both programs closely 
aligns the validation processes and reduces burden for SNFs.
    Comment: Several commenters noted that SNFs are required to submit 
data for the SNF QRP and SNF VBP on different timelines and questioned 
how the same records could be used for both programs. Specifically, 
they pointed to the fact that SNFs submit data for the SNF QRP on a 
calendar year (CY) basis, whereas SNFs submit data for the SNF VBP on a 
fiscal year (FY) basis for purposes of both baseline and performance 
period calculations. These commenters requested that CMS resolve the 
apparent misalignment between the two programs' performance periods 
prior to finalizing the proposal.
    Response: Our intent is to use the same records, to the extent 
feasible. However, we acknowledge that our proposal could have created 
confusion for SNFs.
    Therefore, we are finalizing this proposal with modification to 
align the data collection period for the SNF QRP validation process 
with the SNF VBP validation process so that the requested charts will 
apply to the same FY program year for the SNF QRP and SNF VBP. 
Specifically, we are finalizing that our validation contractor will 
select, on an annual basis, up to 1,500 SNFs that submit at least one 
MDS record in the fiscal year (FY) 2 years prior to the applicable FY 
SNF QRP. For example, if the validation contractor requested records 
for FY 2025, and the SNF did not submit them 45 days of the initial 
request, we would reduce the SNF's otherwise applicable annual market 
basket percentage update by 2 percentage points for the FY 2027 SNF QRP 
(See Table 30). We are also finalizing conforming modifications to the 
regulation text at Sec.  413.360(g)(1)(i), as discussed in section 
VII.E.3(c) of this final rule.
    This change will not affect the data collection or data submission 
periods for the SNF QRP or the application of any reduction of the 
SNF's otherwise applicable APU for meeting the SNF QRP reporting 
requirements, including the required thresholds for the standardized 
patient assessment data collected using the MDS or the data collected 
and submitted through the CDC NHSN. This modification to our proposal 
to use a FY period from which to identify MDS for validation rather 
than a CY data collection period will only impact the new data 
validation process requirement. We acknowledge that this will result in 
SNFs having different data collection periods within the SNF QRP.

[[Page 64120]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.034

    Therefore, if the validation contractor requested records for FY 
2025, and the SNF did not submit them within 45 days of the initial 
request, the SNF would be found to be non-compliant with the SNF QRP 
requirements for the FY 2027 SNF QRP. SNFs will be notified through the 
already established methods if they are found to be non-compliant with 
the SNF QRP requirements, including this new validation process as 
finalized. Specifically, CMS issues notices of non-compliance to SNFs 
via a letter distributed through at least one of the following 
notification methods: the Non-Compliance Notification folders within 
the internet Quality Improvement and Evaluation System (iQIES), the 
United States Postal Service (USPS); or via an email from the SNFs 
Medicare Administrative Contractor. For more information on this 
process and timeline, see the SNF QRP Reconsideration and Exception & 
Extension web page at https://www.cms.gov/medicare/quality/snf-quality-reporting-program/reconsideration-and-exception-extension.
    Comment: Commenters questioned how one chart could be used to 
validate data on measures that have different measure specifications in 
the SNF QRP versus the SNF VBP and provided an example. They noted that 
the SNF VBP program uses the Percent of Residents Experiencing One or 
More Falls with Major Injury (Long stay) measure which reports the 
percentage of long-stay nursing home residents with 101 or more 
cumulative days in the facility and had one or more falls with major 
injury reported, while the SNF QRP uses the Application of Percent of 
Residents Experiencing One or More Falls with Major Injury (Long stay) 
measure, which reports the percentage of Medicare Part A SNF stays 
during which one or more falls with major injury were reported.
    Response: We understand that measures used in the SNF QRP and the 
SNF VBP program may have different measure specifications, including 
the measure noted by the commenters. For example, Resident C and 
Resident D were both residents of a SNF. Resident C was admitted to a 
SNF for 26 days and then was discharged to home. Resident D, however, 
had been a resident of a NF for 2 year and then received care as a 
hospital inpatient making them eligible for a SNF stay. After Resident 
D's hospital inpatient stay, they subsequently received skilled 
services at the same NF/SNF.
    If the validation contractor requested the medical records for 
Resident C, the SNF would be subject to the 2 percentage penalty if 
they failed to submit the medical record for the validation process. If 
the validation contractor requested the medical records for Resident D, 
the SNF QRP measures related to Resident D skilled stay are subject to 
validation using the medical record and the SNF would be subject to the 
2-percentage penalty if they failed to submit the medical record for 
the validation process. With respect to the SNF VBP program measures, 
Resident D's medical records would be used to validate the Percent of 
Residents Experiencing One or More Falls with Major Injury (Long stay) 
measure as required by the SNF VBP program validation process but will 
not be subject to the SNF QRP penalty for failure to submit the medical 
record. Any action for not submitting required medical records for the 
SNF VBP program that are not part of the SNF QRP program will be 
included in future rulemaking.
    Comment: A commenter requested that CMS clarify that the 2 
percentage point penalty would apply in total to both the SNF QRP and 
SNF VBP program data validation processes.
    Response: The 2 percentage point penalty would apply to the SNF QRP 
only. There is currently no validation penalty in the SNF VBP.
    Comment: A commenter requested that CMS clarify whether the 2 
percentage point reduction to the applicable annual market basket 
update when a SNF does not submit the requested number of medical 
records within 45 days of the initial request is the same 2 percentage 
point reduction that would apply to a SNF who did not meet the 
reporting threshold, or whether there are two separate 2 percentage 
point penalties. they are concerned a SNF will be penalized for the 
same error in more than one way simultaneously, creating a double 
jeopardy.
    Response: We interpret the commenter's reference to a reporting 
threshold to be referring to the data completion thresholds for 
reporting measures data and standardized patient assessment data 
collected using the MDS and the data collected and submitted through 
the NHSN. In section VI.E.3.(c) of the proposed rule, we proposed to 
add paragraph (f)(1)(iv) to our regulation at Sec.  413.360 to 
establish that, if the SNF is selected for the validation process, the 
SNF must submit 100 percent of medical records requested (up to 10), in 
their entirety, within 45 days of the initial request. Failure to meet 
this proposed data completeness requirement (submitting medical records 
in their entirety as requested) or the required thresholds currently in 
place (for the standardized patient assessment data collected using the 
MDS or the data collected and submitted through the CDC NHSN) would 
result in application of the 2 percentage point penalty to the SNF only 
under the SNF QRP.
    To summarize, we are finalizing that SNFs must comply with the 
validation process to avoid application of the 2 percent penalty under 
section 1888(e)(6)(A) of the Act. If the SNF fails to submit those 
medical records within 45 days of the date on the initial request, then 
we would apply the 2 percentage point penalty to FY 2027 SNF payments. 
We would not apply more than one penalty to a SNF for the same program 
year for failure to meet one or more of the SNF QRP's reporting 
requirements for that program year.
    Comment: Two commenters suggested CMS extend the time period for 
SNFs to submit the medical records for data validation. One of these 
commenters suggested an extension to 60 days. The other commenter 
stated that only one

[[Page 64121]]

written notification sent and one follow-up after 30 days was not 
adequate. They noted that written letters are easily misplaced, 
especially in facilities with administration turnover, and requested 
that CMS propose additional ways to notify providers of these reviews, 
including placing the request on the claim remittance.
    Response: We disagree with the commenters and believe that 45 days 
with two notifications is the appropriate amount of notification. This 
is consistent with other auditing time periods for SNFs. For example, 
additional documentation requests (ADRs) sent by the Medicare 
Administrative Contractors, Special Medicare Review Contractors and 
Recovery Audit Contractors require records to be submitted within 45 
days of the receipt of the letter.\103\
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    \103\ https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs/medical-review-and-education/additional-documentation-request.
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    Comment: One commenter requested further clarification on the 
process by which a SNF would be notified they had been selected for a 
validation audit and how CMS would provide confirmation that the 
records had been received.
    Response: SNFs selected for a validation audit will be notified via 
a letter sent through the internet Quality Improvement and Evaluation 
System (iQIES). We will notify SNFs that the medical records were 
received via a letter sent through iQIES or via email.
    Comment: Several commenters stated they were concerned about the 
impact of a 2 percentage point payment adjustment to a randomly 
selected SNF that was required to submit documentation to support one 
MDS per year versus a randomly selected SNF that was required to submit 
documentation to support a maximum of 10 MDSs per year. These 
commenters stated that the risk of possibly dropping below an arbitrary 
threshold for a SNF that was required to submit documentation to 
support a maximum 10 MDS per year. They believe this barrier would be 
extremely difficult to overcome in a fair manner.
    Response: In section VII.E.3.(a) of this final rule, we proposed 
that our validation contractor would request up to 10 medical records 
from each of the randomly selected SNFs. If a SNF is selected for the 
validation process and the SNF submits the requested number of medical 
records within 45 days of the date of the initial letter, then the SNF 
has met the proposed data completeness requirement for the validation 
process. While we acknowledge the highly unlikely scenario of a SNF 
being selected for validation on the basis of a single MDS submission 
during the relevant time period, we believe it is necessary to 
initially include all SNFs in the data validation process to meet the 
statutory requirement to implement a validation process for all data 
submitted for the SNF QRP.
    We also noted in the same section of the rule that we intend to 
propose in future rulemaking the process by which we would evaluate the 
submitted medical records against the MDS to determine the accuracy of 
the MDS data that the SNF reported and that CMS would use to calculate 
the measure results (89 FR 23469). In establishing a validation 
threshold in future rulemaking, we will consider feedback about small 
sample sizes and/or uncertainty associated with sampling into account 
in our statistical approach.
    Comment: Several commenters were concerned that our proposed 
timeline for implementation of the validation process for assessment-
based measures in the FY 2027 SNF QRP year does not allow time for 
future rulemaking to determine the process by which we would evaluate 
the submitted medical records against the MDS, determine the accuracy 
of the MDS data the SNF reported, and provide subsequent notification 
to the provider in a timely manner that would allow for reconsideration 
requests, if needed.
    They also stated they were concerned about a number of aspects of 
the validation process that CMS did not describe in the proposed rule, 
including the appeal process if a SNF disagreed with the validation 
contractor's findings, the expected threshold for compliance with the 
data validation, the penalty for noncompliance with the validation 
threshold, and the penalty for noncompliance with the validation 
threshold for the SNF VBP program. These commenters are concerned that 
if CMS establishes an arbitrary minimum MDS accuracy threshold for the 
SNF QRP validation process in the future without first establishing 
clear guidelines understood by both the providers and the SNF QRP 
validation contractors regarding support documentation requirements for 
each SNF QRP assessment-based element, there could be severe variation 
in the SNFs' performance scores. As a result, they believe that without 
clear guidelines the results of a validation audit would be dependent 
upon the SNF QRP validation contractor's independent determination 
rather than on whether the MDS was accurately completed per CMS 
requirements.
    Response: Our proposal was limited to requiring SNFs that are 
selected for validation to submit the requested medical records and to 
impose a penalty if they do not comply with the request. Therefore, we 
believe that our proposed implementation timeline is reasonable. We 
intend to propose in future rulemaking a methodology for validating the 
submitted medical records against the MDS to determine the accuracy of 
the MDS data the SNF reported and CMS used to calculate the measure 
results.
    Comment: One commenter recommended that CMS not sample the same 
facilities year over year if those facilities are performing well, but 
rather target low performers so as not to impose undue burden on 
facilities that are appropriately completing the MDS.
    Response: We proposed to align the validation processes between the 
SNF QRP and SNF VBP programs to reduce the potential burden associated 
with the SNF QRP validation process. In the FY 2024 SNF PPS final rule 
(88 FR 53324 through 53325), CMS adopted a SNF VBP program validation 
process in which we would randomly select the SNFs to participate for 
the corresponding SNF VBP program year. However, we also recognize that 
SNFs would want an opportunity to provide input on potential criteria 
we would use in a targeted selection process as well as need ample 
notification regarding any targeted selection criteria. We will 
consider moving to a targeted selection process for future rulemaking.
    We note that beginning with a random selection process and moving 
to a targeted selection process is consistent with the validation 
process for the Hospital IQR Program. We began with random selection of 
participating hospitals for the Reporting Hospital Quality Data for 
Annual Payment Update (RHQDAPU) program (now the Hospital IQR Program) 
for the FY 2012 payment determination (74 FR 43884 through 43889). For 
the FY 2013 payment determination and subsequent years, we finalized 
the adoption of an initial targeting criterion after soliciting 
comments about potential targeting criteria (75 FR 50227 through 
50229). As with the Hospital IQR Program's validation process, the SNF 
QRP will start with a random selection process and consider moving to a 
targeted selection process in future rulemaking. This is to ensure that 
we gain experience in auditing the MDS and the corresponding SNF 
medical records before we consider whether to propose a targeting 
methodology. We believe that this experience will ensure a fair and 
equitable audit process for all SNFs.

[[Page 64122]]

    Comment: We received several comments related to the burden 
associated with the proposals for SNFs to participate in a validation 
process for assessment-based measures reported in the SNF QRP. Many of 
these commenters were appreciative of our efforts to reduce burden 
through using the same records for both SNF VBP validation and the SNF 
QRP validation. Three of these commenters noted it would reduce the 
risk of a SNF being audited in back-to-back validation cycles. Several 
commenters stated they opposed the 2 percentage point penalty reduction 
for failure to submit the requested medical records because SNFs cannot 
afford continued decreases in their payments, and the proposal would 
create additional administrative burden for SNFs that are already 
suffering staffing deficiencies. One of these commenters noted that 
adding validation audits is not effective in improving services in a 
SNF.
    Response: We acknowledge the commenters' concerns regarding the 
potential burden associated with the proposals. We are aware of 
potential provider burden and carefully considered the options 
available to us to meet the statutory requirements while also 
mitigating provider burden. As we previously noted in section VI.E.3. 
of the proposed rule and section VII.E.3. of this final rule, section 
1888(h)(12) of the Act requires that the Secretary apply a process to 
validate data submitted under the SNF QRP. In addition, we are 
interested in ensuring the validity of the data reported by SNFs 
because use of these data has public reporting implications under the 
SNF QRP. Valid and reliable quality measures are fundamental to the 
effectiveness of our quality reporting programs. To ensure we receive 
the medical records we request from selected SNFs, we proposed to 
require timely submission of requested medical records for the SNF QRP 
validation process. Specifically, we proposed to apply the SNF QRP's 2 
percentage point reduction in accordance with section 1888(e)(6)(A) of 
the Act if the selected SNF failed to submit 100 percent of the 
requested medical records as specified. We believe these proposals will 
ensure we receive the requested medical records so we may validate the 
data they submitted for the SNF QRP.
    Our goal is to minimize the burden we impose on SNFs under the SNF 
QRP and we will continue considering this topic as we explore proposing 
additional policies for the SNF QRP validation process. As discussed 
further in section VI.E.3.(b) of this rule, we note that the claims-
based measures validation process we proposed does not impose any new 
burden on SNFs.
    We invited public comments on the future process by which we would 
evaluate the submitted medical records against the MDS to determine the 
accuracy of the MDS data that the SNF reported and that CMS would use 
to calculate the measure results. We received several comments 
providing various recommendations in response to this request.
    Comment: One commenter urged CMS to ensure the reviews are done in 
a fair and equitable manner, including having therapy professionals on 
the review team when therapy services are provided to validate the 
functional components associated with SNF QRP measures. Two commenters 
noted that when the MDS was initially developed it was intended to be a 
source record, particularly related to interview questions, and there 
was no need to document elsewhere in the medical record redundant 
assessment information. These commenters noted that as the MDS has 
become a tool for reimbursement purposes, payment auditors have 
penalized providers for not having this redundant documentation 
repeated in the medical record, and also note that some States have 
their own documentation requirements, sometimes contrasting with those 
requirements published in the MDS Resident Assessment Instrument (RAI) 
manual. Therefore, these commenters urged CMS to meet with SNFs, 
including hosting a technical expert panel. Several commenters urged 
CMS to have an appeals process SNFs could access if they disagree with 
the validation contractor's findings, and a process through which SNFs 
could apply for hardship exemption.
    Finally, one commenter urged CMS to share this information as soon 
as possible and provide ample time for evaluation and feedback prior to 
finalizing and implementing a validation process to validate MDS 
accuracy.
    Response: We thank the commenters for their suggestions, and we 
will consider this feedback as we consider future rulemaking.
    After careful consideration of the public comments we received, we 
are finalizing this proposal with modification that SNFs that 
participate in the SNF QRP will be required to participate in a 
validation process for assessment-based measures beginning with the FY 
2027 SNF QRP. Specifically, our validation contractor will select, on 
an annual basis, up to 1,500 SNFs that submit at least one MDS record 
in the FY two years prior (rather than the CY 3 years prior) to the 
applicable FY SNF QRP. For example, for the FY 2027 SNF QRP, we will 
choose up to 1,500 SNFs that submitted at least one MDS record in FY 
2025.
(b) Application of the Existing Validation Process for Claims-Based 
Measures Reported in the SNF QRP
    Beginning with the FY 2027 SNF QRP, we proposed to apply the 
process we currently use to ensure the accuracy of the Medicare fee-
for-service claims to validate claims-based measures under the SNF QRP. 
Specifically, information reported through Medicare Part A fee-for-
service claims are validated for accuracy by Medicare Administrative 
Contractors (MACs) to ensure accurate Medicare payments. MACs use 
software to determine whether billed services are medically necessary 
and should be covered by Medicare, review claims to identify any 
ambiguities or irregularities, and use a quality assurance process to 
help ensure quality and consistency in claim review and processing. 
They conduct prepayment and post-payment audits of Medicare claims, 
using both random selection and targeted reviews based on analyses of 
claims data.
    We use data to calculate claims-based measures for the SNF QRP. We 
believe that adopting the MAC's existing process of validating claims 
for medical necessity through targeted and random audits would satisfy 
the statutory requirement to adopt a validation process for data 
submitted under the SNF QRP for claims-based measures at section 
1888(h)(12)(A) of the Act (as added by section 111(a)(4) of Division CC 
of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260)).
    We solicited public comment on our proposal to apply the MAC's 
existing validation process for the SNF QRP claims-based measures 
beginning with the FY 2027 program year.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Two commenters stated that the proposal was vague and 
provides insufficient detail to estimate what the scope and burden 
would be associated with this proposal. One commenter submitted a 
number of questions seeking clarification on the process for claims-
based measure validation, including the number of SNF providers that 
would be subject to the proposed claims-based SNF QRP validation 
process, whether there was a limit to the number of claims for which a 
provider must submit supporting

[[Page 64123]]

documentation to the MAC, what specific documentation would SNFs be 
required to submit to the MAC, the specific criteria fee-for-service 
payment contractors would use to validate the accuracy of the SNF 
quality-related data, and how a fee-for-service payment auditor would 
convert/apply their payment process to review claims. Finally, these 
commenters recommended CMS rescind this proposal and meet with 
interested parties to identify a more appropriate approach to be 
presented in subsequent rulemaking.
    Response: We interpret the commenters to be seeking further 
clarification on several issues related to how claims would be 
validated. As we noted in section VI.E.3.(b) of the proposed rule and 
section VII.E.3.(b) of this final rule, we proposed to use the same 
process for the SNF QRP claims-based measures as we adopted in the FY 
2023 SNF PPS final rule (87 FR 47590 through 47591) for the SNF All-
Cause Readmission (SNFRM) measure in the SNF VBP, since many of SNF QRP 
measures have already been adopted into the SNF VBP program.
    Specifically, we believe that relying on the MACs' existing process 
of validating claims for medical necessity through targeted and random 
audits, as discussed in our proposal, satisfies our statutory 
requirement to adopt a validation process for claims-based measures for 
the SNF QRP. Given that we calculate SNFs' performance on claims-based 
measures based on claims they submit for payment under Medicare Part A, 
and SNFs do not submit any additional data for these claims-based 
measures, the only information to be validated is whether the claim 
accurately reflects the services the SNF provided. The MACs' existing 
process for validating claims, including whether they are medically 
necessary, addresses whether the information in the claims, which we 
use to calculate the claim-based measures, is accurate. We also believe 
that using the same validation process will reduce any additional 
burden and mitigate any concerns from providers. On this basis, we 
proposed to rely on the MACs' existing claims validation process to 
validate the information we use to calculate claims-based measures for 
SNFs. We clarify that we would deem the information reported through 
claims, and used for claims-based measures, as validated based on the 
MACs' existing process for validating the accuracy of claims; neither 
SNFs nor CMS would take any further action to validate claims-based 
measures under this proposal. If we decide to further validate claims-
based measures beyond the MAC's existing process, this would be done in 
future rulemaking.
    Comment: Two other commenters questioned how CMS' process to 
validate claims for medical necessity is analogous to validating data 
for accuracy in quality reporting and requests further clarification.
    Response: Specifically, we believe that relying on the MACs' 
existing process of validating claims for medical necessity through 
targeted and random audits, as discussed in our proposal, satisfies our 
statutory requirement to adopt a validation process for claims-based 
measures for the SNF QRP. Given that we calculate SNFs' performance on 
claims-based measures based on claims they submit for payment under 
Medicare Part A, and SNFs do not submit any additional data for these 
claims-based measures, the only information to be validated is whether 
the claim accurately reflects the services the SNF provided. The MACs' 
existing process for validating claims, including whether they are 
medically necessary, addresses whether the information in the claims, 
which we use to calculate the claim-based measures, is accurate. We 
also believe that using the same validation process will reduce any 
additional burden and mitigate any concerns from providers.
    After careful consideration of the public comments we received, we 
are finalizing our proposal to apply the MAC's existing validation 
process for the SNF QRP claims-based measures beginning with the FY 
2027 program year.
(c) Amending the Regulation Text at Sec.  413.360
    We proposed to amend our regulation at Sec.  413.360 to reflect 
these proposed policies. Specifically, we proposed to add paragraph (g) 
to our regulation at Sec.  413.360, which would codify the procedural 
requirements we proposed for these validation processes for SNF QRP. We 
also proposed to add paragraph (f)(1)(iv) to our regulation at Sec.  
413.360 to establish that, if the SNF is selected for the validation 
process, the SNF must submit up to 10 medical records requested, in 
their entirety. Finally, we proposed minor technical amendments for our 
regulation at Sec.  413.360(f)(3) to apply to all data completion 
thresholds implemented in Sec.  413.360(f)(1).
    We solicited public comments on our proposal to amend our 
regulation at Sec.  413.360. We received public comments on these 
proposals. The following is a summary of the comments we received and 
our responses.
    Comment: We received one comment on our proposal to amend the 
regulation text at Sec.  413.360. This commenter noted that in the 
proposed rule on display at the Federal Register (89 FR 23494 column 
2), it appears that the proposed Sec.  413.360(g)(1)(iii) may be 
misworded. Specifically, paragraph (g)(1)(iii) is under Sec.  
413.360(g), the description of MDS-assessment-based SNF QRP validation 
process requirement to submit supporting medical records documentation 
within 45 days of the date of the records request. However, it refers 
to paragraph (g)(2) which is related to the claims-based SNF QRP 
validation process, rather than referencing the MDS-based validation 
process paragraph (g)(1).
    Response: We thank the commenter for pointing out this 
typographical error. We are finalizing Sec.  413.360(g)(1)(iii) with 
modification to correct this minor technical error.
    Comment: We received one comment on our proposal to add the 
regulation text at Sec.  413.360(g)(2). This commenter requested that 
paragraph (g)(2) should be rescinded from the proposed 413.360 
revisions pending further consideration for reintroduction in a revised 
manner in future rulemaking.
    Response: We disagree with the commenter. As we noted in section 
VI.E.3.(b) of the proposed rule and section VII.E.3.(b) of this final 
rule, we proposed to use the same process for the SNF QRP claims-based 
measures as we adopted in the FY 2023 SNF PPS final rule (87 FR 47590 
through 47591) for the SNF All-Cause Readmission (SNFRM) measure in the 
SNF VBP, since many of SNF QRP measures have already been adopted into 
the SNF VBP program.
    Specifically, we believe that relying on the MACs' existing process 
of validating claims for medical necessity through targeted and random 
audits, as discussed in our proposal, satisfies our statutory 
requirement to adopt a validation process for claims-based measures for 
the SNF QRP. Given that we calculate SNFs' performance on claims-based 
measures based on claims they submit for payment under Medicare Part A, 
and SNFs do not submit any additional data for these claims-based 
measures, the only information to be validated is whether the claim 
accurately reflects the services the SNF provided. The MACs' existing 
process for validating claims, including whether they are medically 
necessary, addresses whether the information in the claims, which we 
use to calculate the claim-based measures, is accurate. We also believe 
that using the same validation process will reduce any

[[Page 64124]]

additional burden and mitigate any concerns from providers. On this 
basis, we proposed to rely on the MACs' existing claims validation 
process to validate the information we use to calculate claims-based 
measures for SNFs. We clarify that we would deem the information 
reported through claims, and used for claims-based measures, as 
validated based on the MACs' existing process for validating the 
accuracy of claims; neither SNFs nor CMS would take any further action 
to validate claims-based measures under this proposal. If we decide to 
further validate claims-based measures beyond the MAC's existing 
process, this would be done in future rulemaking.
    Comment: We received one comment related to SNF QRP data collected 
and submitted through NHSN that was out of scope of the proposals for 
the SNF QRP assessment-based measures and claims-based measures 
validation processes. This commenter requested CMS to engage with SNF 
interested parties in potential future additional SNF QRP validation 
approaches related to data submitted through NHSN. They note there have 
been multiple challenges for providers over the years with both the 
data submission processes to NHSN as well as data coordination between 
the CDC that manages NHSN reporting processes, and CMS who manages the 
SNF QRP requirements.
    Response: This comment is out of scope for our proposals for the 
SNF QRP. We will take the commenter's request into consideration for 
our future policy making with respect to the validation process.
    After careful consideration of the public comments we received, we 
are finalizing our proposal to amend our regulation at Sec.  413.360 to 
codify the data validation process for the SNF QRP with two 
modifications. First, as discussed in section VII.E.3.(a) of this final 
rule, we are finalizing our proposal for selection of SNFs for this 
validation process with modification. We are finalizing that our 
validation contractor will select, on an annual basis, up to 1,500 SNFs 
that submit at least one MDS record in the FY 2 years prior, rather 
than the CY 3 years prior, to the applicable FY SNF QRP. Therefore, we 
are finalizing the regulation text at Sec.  413.360(g)(1)(i) with 
modification to conform with this modification to our criteria for 
selecting SNFs to participate in this validation process.
    Second, we are modifying the regulation text at Sec.  
413.360(g)(1)(iii) to correct a minor technical error, so it properly 
cross-references paragraph (g)(1) instead of paragraph (g)(2).

F. Policies Regarding Public Display of Measure Data for the SNF QRP

    As outlined in the proposed rule, we did not propose any new 
policies regarding the public display of measure data in the FY 2025 
SNF PPS proposed rule. For a discussion of our policies regarding 
public display of SNF QRP measure data and procedures for the SNFs to 
review and correct data and information prior to their publication, we 
refer readers to the FY 2017 SNF PPS final rule (81 FR 52045 through 
52048).

VIII. Updates to the Skilled Nursing Facility Value-Based Purchasing 
(SNF VBP) Program

A. Statutory Background

    Through the Skilled Nursing Facility Value-Based Purchasing (SNF 
VBP) Program, we award incentive payments to SNFs to encourage 
improvements in the quality of care provided to Medicare beneficiaries. 
The SNF VBP Program is authorized by section 1888(h) of the Act, and it 
applies to freestanding SNFs, SNFs affiliated with acute care 
facilities, and all non-CAH swing bed rural hospitals. We believe the 
SNF VBP Program has helped to transform how Medicare payment is made 
for SNF care, moving increasingly towards rewarding better value and 
outcomes instead of merely rewarding volume. Our codified policies for 
the SNF VBP Program can be found in our regulations at 42 CFR 
413.337(f) and 413.338.
1. Spotlight on the CMS National Quality Strategy
    As part of the CMS National Quality Strategy,\104\ we are committed 
to aligning measures across our quality programs and ensuring we 
measure quality across the entire care continuum in a way that promotes 
the best, safest, and most equitable care for all individuals.
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    \104\ https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.
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    We believe that improving alignment of measures across the CMS 
quality programs will reduce provider burden while also improving the 
effectiveness of quality programs. However, we also recognize that a 
one-size-fits-all approach fails to capture important aspects of 
quality in our healthcare system across populations and care settings.
    To move towards a more streamlined approach that does not lose 
sight of important aspects of quality, we are implementing a building-
block approach: a ``Universal Foundation'' of quality measures across 
as many of our quality reporting and value-based care programs as 
possible, with additional measures added on depending on the population 
or setting (``add-on sets'').\105\
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    \105\ https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
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    Our goal with the Universal Foundation is to focus provider 
attention on measures that are the most meaningful for patients and 
patient outcomes, reduce provider burden by streamlining and aligning 
measures, allow for consistent stratification of measures to identify 
disparities in care between and among populations, accelerate the 
transition to interoperable, digital quality measures, and allow for 
comparisons across quality and value-based care programs to better 
understand what drives quality improvement and what does not.
    We select measures for the Universal Foundation that are of high 
national impact, can be benchmarked nationally and globally, are 
applicable to multiple populations and settings, are appropriate for 
stratification to identify disparity gaps, have scientific 
acceptability, support the transition to digital measurement, and have 
no anticipated unintended consequences with widespread measure 
implementation.
    We believe that the creation of this Universal Foundation will 
result in higher quality care for the more than 150 million Americans 
covered by our programs and will serve as an alignment standard for the 
rest of the healthcare system. We continue to collect feedback from 
interested parties through listening sessions, requests for information 
and proposed rulemaking, and other interactions to refine our approach 
as we work to implement the Universal Foundation across our quality 
programs. As we continue building the SNF VBP measure set, we intend to 
align with the measures in the Universal Foundation, as well as the 
post-acute care add-on measure set, to the extent feasible.
    We received one comment on our discussion of the CMS National 
Quality Strategy. The following is a summary of the comment we received 
and our response.
    Comment: One commenter supported CMS' intent to align the Program's 
measure set with the Universal Foundation.
    Response: We thank the commenter for their support.

B. Regulation Text Technical Updates

    We proposed to make several technical updates to our regulation 
text. First, we proposed to update

[[Page 64125]]

Sec.  413.337(f) to correct the cross-references in that section to 
Sec.  413.338(a). Second, we proposed to update the definition of ``SNF 
readmission measure'' in Sec.  413.338(a) by replacing the references 
to the Skilled Nursing Facility Potentially Preventable Readmissions 
(SNFPPR) measure with a reference to the Skilled Nursing Facility 
Within-Stay Potentially Preventable Readmission (SNF WS PPR) measure, 
by clarifying that we specified both measures under section 1888(g) of 
the Act, and by clarifying that the SNF readmission measure will be the 
SNF WS PPR measure beginning October 1, 2027. This change will align 
the definition of ``SNF readmission measure'' with policies we have 
previously finalized for the SNF VBP, including that we will not use 
the SNFPPR and that we will replace the SNFRM with the SNF WS PPR 
beginning October 1, 2027.
    In addition, we proposed to redesignate the term ``performance 
score'' at Sec.  413.338(a) with the term ``SNF performance score'' for 
consistency with the terminology we are now using in the Program, and 
to make conforming edits to the last sentence of Sec.  413.337(f). We 
also proposed to replace the references to ``program year'' with 
``fiscal year'' in the definitions of ``health equity adjustment (HEA) 
bonus points,'' ``measure performance scaler'', ``top tier performing 
SNF'', and ``underserved multiplier'' to align the terminology with 
that used in the remainder of that section.
    We also proposed to update Sec.  413.338(f) to redesignate 
paragraphs (f)(1) through (4) as paragraphs (f)(2) through (5), 
respectively. We also proposed to add a new paragraph (f)(1) and to 
revise the newly redesignated paragraphs (f)(2) and (3).
    In addition, we proposed to update Sec.  413.338(j)(3) to include 
additional components of the MDS validation process that we finalized 
in the FY 2024 SNF PPS final rule (88 FR 53324 through 53325). In 
particular, we proposed to include the SNF selection, medical record 
request, and medical record submission processes for MDS validation.
    Further, we proposed to remove Sec.  413.338(d)(5) from the 
regulation text because the only measure that will be in the SNF VBP 
Program until the FY 2026 program year is the SNFRM, and to add new 
paragraph (l)(1) which will state that the SNF VBP measure set for each 
year includes the statutorily-required SNF readmission measure and, 
beginning with the FY 2026 program year, up to nine additional measures 
specified by CMS.
    We invited public comment on these proposed technical updates to 
our regulation text.
    We did not receive public comments on these proposals, and 
therefore, we are finalizing them as proposed.

C. SNF VBP Program Measures

1. Background
    We refer readers to the FY 2024 SNF PPS final rule for background 
on the measures we have adopted for the SNF VBP Program (88 FR 53276 
through 53297).
    Table 31 lists the measures that have been adopted for the SNF VBP 
Program, along with their timeline for inclusion.
[GRAPHIC] [TIFF OMITTED] TR06AU24.035


[[Page 64126]]


2. Measure Selection, Retention, and Removal Policy Beginning With the 
FY 2026 SNF VBP Program Year
    Section 1888(h)(2) of the Act requires the Secretary to apply the 
measure specified under section 1888(g)(1) (currently the SNFRM) and 
replace that measure, as soon as practicable, with the measure 
specified under section 1888(g)(2) (currently the SNF WS PPR measure). 
Section 1888(h)(2) of the Act also allows the Secretary to apply, as 
appropriate, up to nine additional measures to the SNF VBP Program, in 
addition to the statutorily required SNF readmission measure. We have 
now adopted seven additional measures for the Program (see the FY 2023 
SNF PPS final rule (87 FR 47564 through 47580) and the FY 2024 SNF PPS 
final rule (88 FR 53280 through 53296)).
    Now that the SNF VBP Program includes measures in addition to the 
SNFRM (which will be replaced with the SNF WS PPR measure beginning 
with the FY 2028 program year), we stated in the FY 2025 SNF PPS 
proposed rule (89 FR 23471 through 23472) that we believe it is 
appropriate to adopt a policy that governs the retention of measures in 
the Program, as well as criteria we will use to consider whether a 
measure should be removed from the Program. These policies will help 
ensure that the Program's measure set remains focused on the best and 
most appropriate metrics for assessing care quality in the SNF setting. 
We also believe that the proposed measure removal policy will 
streamline the rulemaking process by providing a sub-regulatory process 
that we can utilize to remove measures from the Program that raise 
safety concerns while also providing sufficient opportunities for the 
public to consider, and provide input on, future proposals to remove a 
measure.
    Other CMS quality programs, including the SNF QRP and Hospital 
Inpatient Quality Reporting (IQR) Program, have adopted similar 
policies. For example, in the FY 2016 SNF PPS final rule (80 FR 46431 
through 46432), the SNF QRP adopted 7 removal factors and, in the FY 
2019 SNF PPS final rule (83 FR 39267 through 39269), the SNF QRP 
adopted an additional measure removal factor, such that a total of 
eight measure removal factors are now used to determine whether a 
measure should be removed. The SNF QRP also codified those factors at 
Sec.  413.360(b)(2).
    For the purposes of the SNF VBP Program, we proposed to adopt a 
measure selection, retention, and removal policy beginning with the FY 
2026 SNF VBP program year. The proposed policy would apply to all SNF 
VBP measures except for the SNF readmission measure because we are 
statutorily required to retain that measure in the measure set.
    First, we proposed that when we adopt a measure for the SNF VBP 
Program for a particular program year, that measure will be 
automatically retained for all subsequent program years unless we 
propose to remove or replace the measure. We believe that this policy 
will make clear that when we adopt a measure for the SNF VBP Program, 
we intend to include that measure in all subsequent program years. This 
policy will also avoid the need to continuously propose a measure for 
subsequent program years.
    Second, we proposed that we will use notice and comment rulemaking 
to remove or replace a measure in the SNF VBP Program to allow for 
public comment. We also proposed that we will use the following measure 
removal factors to determine whether a measure should be considered for 
removal or replacement:
    (1) SNF performance on the measure is so high and unvarying that 
meaningful distinctions and improvements in performance can no longer 
be made;
    (2) Performance and improvement on a measure do not result in 
better resident outcomes;
    (3) A measure no longer aligns with current clinical guidelines or 
practices;
    (4) A more broadly applicable measure for the particular topic is 
available;
    (5) A measure that is more proximal in time to the desired resident 
outcomes for the particular topic is available;
    (6) A measure that is more strongly associated with the desired 
resident outcomes for the particular topic is available;
    (7) The collection or public reporting of a measure leads to 
negative unintended consequences other than resident harm; and
    (8) The costs associated with a measure outweigh the benefit of its 
continued use in the Program.
    Each of these measure removal factors represent instances where the 
continued use of a measure in the Program would not support the 
Program's objective, which is to incentivize improvements in quality of 
care by linking SNF payments to performance on quality measures. 
Therefore, we believe that these are appropriate criteria for 
determining whether a measure should be removed or replaced.
    Third, upon a determination by CMS that the continued requirement 
for SNFs to submit data on a measure raises specific resident safety 
concerns, we proposed that we may elect to immediately remove the 
measure from the SNF VBP measure set. Upon removal of the measure, we 
will provide notice to SNFs and the public, along with a statement of 
the specific patient safety concerns that will be raised if SNFs 
continue to submit data on the measure. We will also provide notice of 
the removal in the Federal Register.
    We proposed to codify this policy at Sec.  413.338(l)(2) and (3) of 
our regulations.
    We invited public comment on the proposed measure selection, 
retention, and removal policy. We also invited public comment on our 
proposal to codify this policy at Sec.  413.338(l)(2) and (3).
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Many commenters supported CMS' proposal to adopt a measure 
selection, retention, and removal policy. A few commenters appreciated 
that the policy aligns with the policies used in other CMS quality 
programs. A few commenters believed this policy allows CMS to 
prioritize evidence-based quality measures that are focused on critical 
aspects of quality and helps reduce the provider burden associated with 
data collection when a measure that is no longer valuable is removed 
from the Program. A few commenters supported the proposal to use notice 
and comment rulemaking to propose removal or replacement of a measure 
as well as to provide public notification when a measure is removed. 
One commenter supported the measure removal criteria believing that 
these criteria should be met before a measure is removed from the 
Program. One commenter believed this policy provides CMS flexibility to 
remove measures with safety concerns, which the commenter believed is 
important for maintaining high standards of care. One commenter 
believed this policy aligns with the criteria used by the Consensus-
Based Entity (CBE) during the measure endorsement process.
    Response: We thank the commenters for their support. We agree that 
this policy will help ensure that the Program's measure set remains 
focused on the best and most appropriate metrics for assessing care 
quality in the SNF setting.
    Comment: A few commenters supported the measure selection, 
retention, and removal policy but also provided recommendations related 
to the proposed policy. One commenter encouraged CMS to seek input from

[[Page 64127]]

interested parties when deciding to remove a measure based on measure 
removal factor 8 (the costs associated with a measure outweigh the 
benefit of its continued use in the Program) because the cost/benefit 
relationship may be viewed differently by different interested parties. 
One commenter recommended that CMS create publicly available monitoring 
reports that assess whether a measure shows or lacks meaningful 
performance improvement because many factors influence the threshold 
for determining when facilities can no longer make improvements, and 
the commenter believed it is important for the industry to understand 
these changes over time. One commenter recommended that CMS consider 
the correlation between existing SNF VBP measures and alternative 
metrics as part of the measure selection, retention, and removal 
policy. The commenter believed that if the correlation for the same 
desired outcome between the measures is high, CMS should also consider 
the measure for removal.
    Response: We thank the commenters for their recommendations. With 
respect to the commenter's recommendation that we seek input from 
interested parties when deciding to remove a measure based on measure 
removal factor 8, we proposed to use notice and comment rulemaking to 
remove or replace a measure in the SNF VBP Program unless we determine 
that the continued requirement for SNFs to submit data on a measure 
raises specific resident safety concerns. We believe this proposal 
provides ample opportunity for interested parties to provide input. 
With respect to commenters' other recommendations, we intend to take 
these into consideration as part of our normal monitoring and 
evaluation efforts related to SNF VBP Program policies.
    Comment: One commenter recommended that measures not endorsed by 
the CBE be removed and considered ineligible for inclusion in the SNF 
VBP Program.
    Response: Although section 1888(h) of the Act does not require that 
measures adopted in the SNF VBP Program be endorsed by the CBE, we 
consider CBE-endorsed measures when selecting new measures to propose 
for the Program. In some cases, there is not a CBE-endorsed measure for 
a measure topic that we consider important for inclusion in the SNF VBP 
Program. For example, the Nursing Staff Turnover measure that we 
adopted in the FY 2024 SNF PPS final rule (89 FR 53281 through 53286) 
is not endorsed by the CBE, but we believe this measure is important 
for the SNF VBP Program given the well-documented impact of nursing 
staff turnover on resident outcomes.
    Comment: One commenter did not support CMS' proposal to immediately 
remove a measure that raises resident safety concerns because it was 
not clear to the commenter how CMS would assess and make such a 
determination. The commenter also believed that this policy would give 
CMS the ability to make immediate decisions on removing measures 
without public input and without explaining to the public how the 
determination was made.
    Response: We acknowledge the commenter's concern. We note that this 
proposed SNF VBP policy to immediately remove a measure that raises 
resident safety concerns is based on the policies finalized in other 
Programs such as the SNF QRP, which finalized this policy in the FY 
2016 SNF PPS final rule (80 FR 46431), and the Hospital Value-Based 
Purchasing Program, which finalized this policy in the FY 2017 IPPS/
LTCH PPS final rule (83 FR 41446). We intend to use this proposed 
authority narrowly and only in those circumstances where continued 
reporting on a measure poses specific and serious resident safety 
concerns. When making such a determination, we intend to review and 
analyze the available evidence raising a specific and serious resident 
safety concern and be transparent about our concerns and findings when 
the measure is removed and during subsequent rulemaking. For example, 
we announced in December 2008 that we would immediately remove the AMI-
6-Beta blockers at arrival measure from the Hospital IQR Program (then 
known as the Reporting Hospital Quality Data for Annual Payment Update 
(RHQDAPU) Program) following the release of updated clinical guidance 
and evidence of increased mortality risk for some patients. We 
subsequently confirmed the removal of the AMI-6-Beta blockers at 
arrival measure in the FY 2010 IPPS final rule (74 FR 43863). We also 
note that since we first adopted a version of this policy in FY 2010, 
we have applied the policy only sparingly.
    Further, as stated in the proposed rule (89 FR 23472), if we elect 
to immediately remove a measure from the Program, we will provide 
notice to SNFs and the public through regular communication channels, 
along with a statement of the specific resident safety concerns that 
result from the continued use of the measure in the Program. We will 
also provide notice of the removal in the Federal Register.
    After consideration of public comments, we are finalizing the 
measure selection, retention, and removal policy beginning with the FY 
2026 program year as proposed. We are also finalizing our proposal to 
codify this policy at Sec.  413.338(l)(2) and (3) of our regulations.
3. Future Measure Considerations
    Section 1888(h)(2) of the Act allows the Secretary to apply, as 
appropriate, up to nine additional measures to the SNF VBP Program, in 
addition to the statutorily required SNF readmission measure. These 
measures may include measures of functional status, patient safety, 
care coordination, or patient experience.
    In the FY 2022 SNF PPS proposed rule (86 FR 20009 through 20011), 
we requested public comment on potential future measures to include in 
the expanded SNF VBP Program. After considering the public input we 
received, we adopted three new measures in the FY 2023 SNF PPS final 
rule (87 FR 47564 through 47580). Two of those measures will be scored 
beginning with the FY 2026 program year: the SNF HAI and Total Nurse 
Staffing measures; and the third measure will be scored beginning with 
the FY 2027 program year: the DTC PAC SNF measure. In the FY 2024 SNF 
PPS final rule (88 FR 53280 through 53296), we adopted four additional 
measures. One of those measures, the Nursing Staff Turnover measure, 
will be scored beginning with the FY 2026 program year, while the other 
three measures will be scored beginning with the FY 2027 program year: 
the Falls with Major Injury (Long Stay), DC Function, and Long Stay 
Hospitalizations measures.
    With the adoption of those seven measures, in addition to the 
statutorily required SNF readmission measure, the SNF VBP Program will 
include eight measures that cover a range of quality measure topics 
important for assessing the quality of care in the SNF setting. 
Therefore, as permitted under section 1888(h)(2)(A)(ii) of the Act, we 
can add up to two additional measures in the Program unless and until 
we remove measures in the future.
    As part of our efforts to build a robust measure set for the SNF 
VBP Program, we are considering several options related to new measures 
and other measure set adjustments. First, we recognize that gaps remain 
in the current measure set and therefore, we are considering which 
measures are best suited to fill those gaps. Specifically, we are 
assessing several resident experience measures to determine their 
appropriateness and feasibility for

[[Page 64128]]

inclusion in the Program. We are also testing the appropriateness of 
measures that address other CMS priorities, such as interoperability 
and health equity/social determinants of health.
    Beyond the adoption of new measures, we are also considering other 
measure set adjustments. For example, we are assessing the feasibility 
of a staffing composite measure that would combine the two previously 
adopted staffing measures. We are also considering whether measure 
domains and domain weighting are appropriate for the SNF VBP Program.
    While we did not propose any new measures or measure set 
adjustments in the proposed rule, we will continue to assess and 
determine which, if any, of these options would help us maximize the 
impact of the SNF VBP Program measure set and further incentivize 
quality of care improvements in the SNF setting. We welcomed 
commenters' continuing feedback on potential new measure topics and 
other measure set adjustments.
    We received public comments related to future measure 
considerations for the SNF VBP Program. The following is a summary of 
the comments we received.
    Comment: Several commenters supported CMS' consideration of an 
interoperability measure for the SNF VBP Program. Specifically, a few 
commenters recommended that a potential future interoperability measure 
assess electronic exchange of data elements critical to care 
transitions and that the measure be aligned with other Federal policies 
on this topic. A few commenters also recommended that any future 
measure on interoperability be paired with financial resources or other 
assistance to support the adoption of electronic health records (EHRs) 
and other health information technology (IT) resources in the SNF 
setting, and that CMS provide a transition period of 3 to 5 years for 
facilities to incorporate these technologies. One commenter suggested 
exploring interoperability measures to enable more consistent care 
across various health settings. One commenter recommended testing the 
interoperability measure prior to inclusion in the Program.
    A few commenters expressed support for the potential future 
adoption of a resident experience measure noting that resident 
experience is a key measure of a provider's quality and that the lack 
of such a measure is the largest gap in the current SNF VBP measure 
set. One commenter recommended adoption of the CoreQ measure as it is a 
measure of resident satisfaction endorsed by the CBE. Another commenter 
recommended that CMS consider the Patient Activation Measure[supreg] 
performance measure (PAM-PM) for future application in the Program.
    A few commenters recommended other measure topics that CMS should 
consider for the SNF VBP Program including a vaccination measure, 
specifically the Adult Immunization Status (AIS) measure, as well as 
measure topics being considered for the SNF QRP, such as depression and 
pain management. One commenter recommended that CMS consider a measure 
that assesses SNF residents' access to physical medicine and 
rehabilitation (PM&R) physicians because the commenter believes that 
PM&R engagement is important in SNFs where staff may not have the 
expertise to address medical complications or barriers to therapy 
participation and progression. Another commenter recommended a measure 
that evaluates the quality of health benefits being provided to direct 
care workers. One commenter recommended measures that appropriately 
incentivize and financially reward high-performing SNFs and identified 
the Measures Under Consideration (MUC) process as especially important 
to developing and refining measures.
    One commenter recommended that CMS revise the specifications for 
the Nursing Staff Turnover measure so that the measure only counts gaps 
in employment of more than 120 days, instead of the current 60 days, as 
turnover. The commenter expressed that there are many reasons an 
employee may be on an extended leave of absence for more than 60 days 
with the intention of returning to work. The commenter believed that 
the current specifications may unfairly penalize providers and may 
mislead the public.
    One commenter did not support a staffing composite measure because 
it could reduce the contribution of each staffing metric (Total Nurse 
Staffing and Nursing Staff Turnover) in assessing a provider's 
performance.
    One commenter recommended that CMS exclude quality measures that 
are unrelated to the Program's intent. Specifically, the commenter did 
not support the use of the Total Nurse Staffing and Nursing Staff 
Turnover measures in the Program because the commenter believed these 
measures only add reporting and administrative burden for SNFs. Another 
commenter did not support the inclusion of measures that have not been 
captured or publicly reported for at least 3 years. This commenter 
believed that new measures take time for SNFs to understand and 
establish evidence-based practices for improving performance.
    One commenter did not support the use of MDS-based measures in the 
SNF VBP Program as the commenter believed MDS data are not sufficiently 
accurate. Another commenter did not support the addition of long stay 
measures, such as the Falls with Major Injury (Long Stay) and Long Stay 
Hospitalization measures, because the commenter believed these do not 
align with the intent of the Program, which is to link Medicare FFS 
reimbursement with the care and outcomes of Medicare FFS beneficiaries.
    Response: We thank the commenters for their continuing feedback. We 
will take all of this feedback into consideration as we develop future 
measure-related policies for the SNF VBP Program.

D. SNF VBP Performance Standards

1. Background
    We refer readers to the FY 2024 SNF PPS final rule (88 FR 53299 
through 53300) for a detailed history of our performance standards 
policies.
    In the FY 2024 SNF PPS final rule (88 FR 53300), we adopted the 
final numerical values for the FY 2026 performance standards and the 
final numerical values for the FY 2027 performance standards for the 
DTC PAC SNF measure.
2. Performance Standards for the FY 2027 Program Year
    In the FY 2024 SNF PPS final rule (88 FR 53300), we adopted the 
final numerical values for the FY 2027 performance standards for the 
DTC PAC SNF measure, which we provide for SNFs' reference at the bottom 
of Table 32.
    To meet the requirements at section 1888(h)(3)(C) of the Act, we 
are providing the final numerical performance standards for the 
remaining measures applicable for the FY 2027 program year: SNFRM, SNF 
HAI, Total Nurse Staffing, Nursing Staff Turnover, Falls with Major 
Injury (Long Stay), Long Stay Hospitalization, and DC Function 
measures. In accordance with our previously finalized methodology for 
calculating performance standards (81 FR 51996 through 51998), the 
final numerical values for the FY 2027 program year performance 
standards are shown in Table 32.

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[GRAPHIC] [TIFF OMITTED] TR06AU24.036

3. Performance Standards for the FY 2028 Program Year
    In the FY 2024 SNF PPS final rule (88 FR 53280 through 53281), we 
finalized that the SNF WS PPR measure will replace the SNFRM beginning 
with the FY 2028 program year. In that final rule (88 FR 53299 through 
53300), we also finalized that the baseline and performance periods for 
the SNF WS PPR measure will each be 2 consecutive years, and that FY 
2025 and FY 2026 is the performance period for the SNF WS PPR measure 
for the FY 2028 program year.
    To meet the requirements at section 1888(h)(3)(C) of the Act, we 
are providing the final numerical performance standards for the FY 2028 
program year for the SNF WS PPR measure as well as the DTC PAC SNF 
measure. In accordance with our previously finalized methodology for 
calculating performance standards (81 FR 51996 through 51998), the 
final numerical values for the FY 2028 program year performance 
standards for the DTC PAC SNF and SNF WS PPR measures are shown in 
Table 33.
    We note that we will provide the estimated numerical performance 
standards values for the remaining measures applicable in the FY 2028 
program year in the FY 2026 SNF PPS proposed rule.
[GRAPHIC] [TIFF OMITTED] TR06AU24.037

4. Policy for Incorporating Technical Measure Updates Into Measure 
Specifications and for Subsequent Updates to SNF VBP Performance 
Standards Beginning With the FY 2025 Program Year
    We are required under section 1888(h)(3) of the Act to establish 
performance standards for SNF VBP measures for a performance period for 
a fiscal year. Under that section, we are also required to establish 
performance standards that include levels of achievement and 
improvement, the higher of which is used to calculate the SNF 
performance score, and to announce those performance standards no later 
than 60 days prior to the beginning of the performance period for the 
applicable fiscal year. We refer readers to the FY 2017 SNF PPS final 
rule (81 FR 51995 through 51998) for details on our previously 
finalized performance standards methodology.
    In the FY 2019 SNF PPS final rule (83 FR 39276 through 39277), we 
finalized a policy that allows us to update the numerical values of the 
performance standards for a fiscal year if we discover an error in the 
performance standards calculations. Under this policy, if we discover 
additional errors with respect to that fiscal year, we will not further 
update the numerical values for that fiscal year.
    We currently calculate performance standards for SNF VBP measures 
using baseline period data, which are then used, in conjunction with 
performance period data, to calculate performance scores for SNFs on 
each measure for the applicable program year. However, during the long 
interval between the time we finalize the performance standards for the 
measures and the time that we calculate the achievement and improvement 
scores for those measures based on actual SNF performance, one or more 
of the measures may have been technically updated in a way that 
inhibits our ability to make appropriate comparisons between the 
baseline and performance period. We believe that to calculate the most 
accurate achievement and improvement scores for a measure, we should 
calculate the performance standards, baseline period measure results, 
and performance period measure results using the same measure 
specifications.
    Therefore, we proposed to adopt a policy that allows us to 
incorporate technical measure updates into the measure specifications 
we have adopted for the SNF VBP Program so that these measures remain 
up-to-date and ensure that we can make fair comparisons between the 
baseline and performance periods that we adopt under the Program. 
Further, we proposed that we will incorporate these technical measure 
updates in a sub-regulatory manner and that we will inform SNFs of any 
technical measure updates for any measure through postings on our SNF 
VBP website, listservs, and through other educational outreach efforts 
to SNFs. These types of technical measure updates do not substantively 
affect the measure rate calculation methodology. We also recognize that 
some updates to measures are substantive in nature and may not be 
appropriate to adopt without further rulemaking. In those instances, we 
proposed to continue to use rulemaking to adopt substantive updates to 
SNF VBP measures.
    With respect to what constitutes substantive versus non-substantive 
(technical) measure changes, we

[[Page 64130]]

proposed to make this determination on a case-by-case basis. Examples 
of technical measure changes may include, but are not limited to, 
updates to the case-mix or risk adjustment methodology, changes in 
exclusion criteria, or updates required to accommodate changes in the 
content and availability of assessment data. Examples of changes that 
we might consider to be substantive are those in which the changes are 
so significant that the measure is no longer the same measure.
    We also proposed to expand our performance standards correction 
policy beginning with the FY 2025 program year such that we will be 
able to update the numerical values for the performance standards for a 
measure for a program year if a measure's specifications were 
technically updated between the time that we published the performance 
standards for a measure and the time that we calculate SNF performance 
on that measure at the conclusion of the applicable performance period. 
Any update we make to the numerical values would be announced via the 
SNF VBP website, listservs, and through other educational outreach 
efforts to SNFs. In addition, this policy would have the effect of 
superseding the performance standards that we establish prior to the 
start of the performance period for the affected measures, but we 
stated that we believe them to be necessary to ensure that the 
performance standards in the SNF VBP Program's scoring calculations 
enable the fairest comparison of measure performance between the 
baseline and performance period.
    We noted that these proposed policies align with the Technical 
Updates Policy for Performance Standards that we adopted for the 
Hospital VBP Program in the FY 2015 IPPS/LTCH PPS final rule (79 FR 
50077 through 50079).
    Further, we proposed to codify these policies in our regulations. 
Specifically, we proposed to codify our policy to incorporate technical 
measure updates into previously finalized SNF VBP measure 
specifications in a sub-regulatory manner by adding a new paragraph 
(l)(4) to our regulations at Sec.  413.338. Our current performance 
standards policies are codified at Sec.  413.338(d)(6) of our 
regulations. However, we proposed to redesignate that paragraph as new 
Sec.  413.338(n) of our regulations and to include in paragraph (n) 
both the existing performance standards policies and this newly 
proposed expansion of our performance standards correction policy.
    We invited public comment on our proposal to adopt a policy for 
incorporating technical measure updates into the SNF VBP measure 
specifications and for subsequent updates to the SNF VBP performance 
standards beginning with the FY 2025 program year. We also invited 
public comment on our proposal to codify these policies in our 
regulations.
    We received public comments on this proposal. The following is a 
summary of the comments we received and our responses.
    Comment: One commenter supported CMS' proposal to use a sub-
regulatory process to incorporate technical measure updates into SNF 
VBP measure specifications and to update the numerical values for a 
measure's performance standards if that measure was technically updated 
between the time we published the performance standards and the time 
CMS calculates SNF performance on that measure. The commenter further 
believed that CMS should use notice and comment rulemaking to make 
substantive measure changes.
    Response: We thank the commenter for their support. As stated in 
the proposed rule (89 FR 23473), we will continue to use rulemaking to 
adopt substantive updates to SNF VBP measures.
    Comment: One commenter supported CMS' proposal to incorporate 
technical measure updates into the measure specifications adopted for 
the SNF VBP Program using a sub-regulatory process. However, the 
commenter recommended that when CMS incorporates technical measure 
updates for SNF VBP measures outside of regular rulemaking, CMS exclude 
and suppress the affected measure(s) for all SNFs and base the SNF 
performance score for the affected program year on the remaining 
measures.
    Response: We thank the commenter for their support of this 
proposal. With regard to the commenter's recommendation to exclude and 
suppress SNF VBP measures that have been technically updated, we 
reiterate that these measure updates are technical in nature and are 
not anticipated to impact SNF performance significantly. Therefore, we 
do not see any reason to suppress or exclude these measures from a 
SNF's performance score. Further, as stated in the proposed rule (89 FR 
23473), we would continue to use notice and comment rulemaking to 
propose and adopt substantive measure updates that significantly affect 
the measure. These substantive measure updates would be adopted prior 
to or in conjunction with our announcement of performance standards 
that reflect the updated measure specifications for the measure for the 
applicable program year. We would determine whether an update is 
substantive or non-substantive on a case-by-case basis. Further, we 
intend to evaluate the impacts of this policy on SNF performance as 
part of our regular monitoring and evaluation efforts.
    Comment: A few commenters did not support CMS' proposal to use a 
sub-regulatory process to update the numerical values for a measure's 
performance standards for a program year if that measure's 
specifications were technically updated between the time we published 
the performance standards and the time we calculate SNF performance on 
that measure. The commenters believed that updating previously 
established performance standards, without proper notice, would limit 
SNFs' ability to set quality improvement goals and achieve adequate 
performance, and it would cause confusion among SNFs and consumers 
because the data are used in more than 1 program year.
    Response: We proposed that a measure's specifications may be 
technically updated between the time we publish the performance 
standards and the time we calculate the achievement and improvement 
scores for that measure based on actual SNF performance. We make 
technical measure updates to measure specifications to ensure the 
measure scores reflect SNF performance as accurately and completely as 
possible. However, as stated earlier in this section, since these 
updates would be technical in nature, they are not anticipated to 
impact SNF performance significantly. We do not believe that it is fair 
or appropriate to calculate performance period measure results using 
the updated measure specifications and then compare those results to 
the performance standards and baseline period measure results that were 
calculated using the previous measure specifications to generate the 
achievement and improvement scores. We view this policy, which allows 
us to update the numerical values for a measure's performance standards 
if that measure's specifications were technically updated, as necessary 
to ensure the accuracy of SNF performance scores, which are based on 
the performance standards.
    We intend to announce updates to the numerical values of the 
performance standards as soon as we can calculate the updated 
performance standards after the measure specifications have been 
technically updated. These

[[Page 64131]]

announcements would be made via the SNF VBP website, listservs, and 
through other educational outreach efforts to SNFs. Further, we would 
not update the performance standards for a measure after the applicable 
performance period has ended.
    We disagree with commenters' suggestion that updating the 
performance standards for a measure would impact a SNF's ability to set 
quality improvement goals or their ability to achieve adequate 
performance. We make technical updates to a measure's specifications to 
ensure we measure SNF performance as accurately as possible. As stated 
earlier in this section, we view this policy, which allows us to update 
the numerical values for a measure's performance standards if that 
measure's specifications were technically updated, as necessary to 
ensure that the performance standards in the SNF VBP Program's scoring 
calculations enable the fairest comparison of measure performance 
between the baseline and performance period and to ensure the accuracy 
of SNF performance scores. We also note that while the performance 
standards we establish under the SNF VBP Program reflect levels of 
achievement and improvement and are used for the purposes of assessing 
SNF performance on the measures, they are not intended to be the 
ceiling for SNF performance on a measure. Therefore, we encourage SNFs 
to set quality improvements goals that are not limited to the measure 
rates reflected in the performance standards. With respect to achieving 
adequate performance, we note that accurate performance standards, 
which is the goal of this proposed policy, are essential for 
calculating measure scores and SNF performance scores that reflect the 
actual provision of care in SNFs.
    We also disagree with the commenters' suggestion that this policy 
would cause confusion because the measure data are used for more than 
one program year. It is true that measure data are used for more than 
one program year. For example, the performance period for the DC 
Function measure for the FY 2027 program year is FY 2025 and the 
baseline period for the FY 2029 program year is also FY 2025. However, 
if we make technical updates to a measure's specifications, all future 
calculations related to that measure will utilize the updated measure 
specifications. Therefore, we do not believe this would cause confusion 
among SNFs. We would not be able to update calculations for prior 
program years because SNFs would have already received their SNF 
performance scores and payment adjustments. Using the same example as 
above, if we make technical updates to the measure specifications for 
the DC Function measure for the FY 2027 program year, we would announce 
the updated performance standards before the end of the FY 2025 
performance period. We would subsequently calculate baseline period 
results and performance standards for the FY 2029 program year after 
the end of the FY 2025 baseline period, which would automatically 
utilize the updated measure specifications.
    For our measures with 2-year baseline and performance periods, it 
may be the case, due to performance periods overlapping, that we need 
to update the performance standards for more than one program year. If 
this situation arises, we intend to be as transparent as possible to 
ensure SNFs have a clear understanding of the impact of the technical 
measure updates.
    In addition, as stated in the proposed rule (89 FR 23474), we 
intend to announce any updates to the numerical values of the 
performance standards for affected measures via the SNF VBP website, 
listservs, and through other outreach efforts to SNFs.
    After consideration of public comments, we are finalizing our 
proposal to incorporate technical measure updates into measure 
specifications and for subsequent updates to SNF VBP performance 
standards beginning with the FY 2025 program year. We are also 
finalizing our proposal to codify these policies in our regulations.

E. SNF VBP Performance Scoring Methodology

1. Background
    We refer readers to the FY 2024 SNF PPS final rule (88 FR 53300 
through 53304) for a detailed history of our performance scoring 
methodology. Our performance scoring methodology is codified at Sec.  
413.338(d) and (e) of our regulations. We have also codified the Health 
Equity Adjustment (HEA) at Sec.  413.338(k) of our regulations.
    While we did not propose any changes to the previously adopted case 
minimum requirements, we received one comment. The following is a 
summary of the comment and our response.
    Comment: One commenter expressed concern that the existing case 
minimum requirements in the SNF VBP Program may reward and penalize 
random variation, not actual performance, for some providers. The 
commenter recommended that CMS adopt case minimum requirements that 
meet a reliability standard of 0.7, which could be accomplished by 
increasing the minimum case counts to 60. The commenter defined the 0.7 
reliability standard as 70 percent of the variation being explained by 
differences in performance and 30 percent being attributed to random 
chance. The commenter also suggested extending the performance periods 
to include multiple years because they believe this will allow more 
SNFs to meet the higher reliability threshold.
    Response: We refer readers to the FY 2023 SNF PPS final rule (87 FR 
47585 through 47587) and the FY 2024 SNF PPS final rule (88 FR 53301 
through 53302) for the case minimums we have finalized for each of the 
SNF VBP Program measures. We stated that those case minimums are 
appropriate for the SNF VBP Program because they ensure the Program 
requirements only apply to SNFs for which we can calculate reliable 
measure rates and SNF performance scores. Our testing has also 
indicated that increasing the case minimum requirements to achieve the 
reliability standard of 0.7 would result in minimal improvements to a 
measure's reliability while simultaneously increasing the number of 
SNFs that would not meet the higher case minimum requirement, which 
does not align with our goal to ensure as many SNFs as possible can 
receive a score on a given measure. Therefore, we do not believe it is 
currently necessary or feasible to adopt case minimum requirements that 
meet a reliability standard of 0.7.
    We also acknowledge the commenter's recommendation to increase 
measure reliability through longer performance periods and baseline 
periods and agree this could increase measure reliability. However, as 
stated in the FY 2016 SNF PPS final rule (80 FR 46422) and the FY 2017 
SNF PPS final rule (81 FR 51998 through 51999), we aim to balance 
measure reliability with recency of data to ensure clear connections 
between quality measurement and value-based payment. We do not believe 
that adopting longer performance and baseline periods for all SNF VBP 
measures appropriately balance these factors. Specifically, longer 
performance and baseline periods would mean that SNF performance scores 
and the resulting value-based payments would be based on data further 
in the past, which is not consistent with our desire to calculate SNF 
performance scores and value-based payments using as recent as possible 
measure data.

[[Page 64132]]

2. Measure Minimum Policies
a. Background
    We refer readers to the FY 2024 SNF PPS final rule (88 FR 53301 
through 53303) for details on our previously adopted case minimums and 
measure minimums. Our case minimum and measure minimum policies are 
also codified at Sec.  413.338(b) of our regulations. In the proposed 
rule, we proposed to apply the previously finalized FY 2027 measure 
minimum to the FY 2028 program year and subsequent years. We did not 
propose any changes to our previously finalized case minimums.
b. Application of the FY 2027 Measure Minimum to the FY 2028 SNF VBP 
Program Year and Subsequent Years
    In the FY 2024 SNF PPS final rule (88 FR 53301 through 53303), we 
adopted an updated measure minimum for the FY 2027 program year. 
Specifically, we finalized that for a SNF to receive a SNF performance 
score and value-based incentive payment for the FY 2027 program year, 
SNFs must report the minimum number of cases for four of the eight 
measures during the applicable performance period. As discussed in the 
proposed rule, we proposed to apply this measure minimum to the FY 2028 
program year and subsequent years, such that SNFs must report the 
minimum number of cases for at least four measures during the 
applicable performance period. SNFs that do not meet this measure 
minimum requirement would be excluded from the applicable program year 
and receive their adjusted Federal per diem rate for that fiscal year.
    Based on our analyses for the FY 2028 program year, which are also 
applicable to subsequent program years for which we use the same 
measure set, we estimated that, under this measure minimum, 
approximately 6 percent of SNFs would be excluded from the Program 
compared to the approximately 8 percent of SNFs that we estimate would 
be excluded from the Program in FY 2027. This estimated decrease 
indicates fewer SNFs would be excluded from the FY 2028 program year 
than the FY 2027 program year due to the SNF WS PPR measure replacing 
the SNFRM beginning in FY 2028. We also assessed the consistency of 
incentive payment multipliers (IPMs), or value-based incentive payment 
adjustment factors, between FY 2027 and FY 2028 as a proxy for SNF 
performance score reliability. We found that applying the FY 2027 
measure minimum to the FY 2028 program year would have minimal impact 
on the percentage of SNFs that would receive a net positive IPM and 
receive a net negative IPM between those 2 fiscal years, which 
indicates that the reliability of the SNF performance score would be 
minimally impacted if we applied the FY 2027 measure minimum to the FY 
2028 program year. Based on these testing results for FY 2028, we 
stated that applying the FY 2027 measure minimum to the FY 2028 program 
year and subsequent years best balances SNF performance score 
reliability with our desire to ensure that as many SNFs as possible can 
receive a SNF performance score. We noted in the proposed rule that if 
we propose in future years to revise the total number of measures in 
the Program, we would reassess this measure minimum policy to ensure it 
continues to meet our previously stated goals. If needed, we would 
propose updates in future rulemaking.
    We invited public comment on our proposal to apply the FY 2027 
measure minimum to the FY 2028 SNF VBP program year and subsequent 
program years, such that SNFs must report the minimum number of cases 
for at least four measures during the applicable performance period.
    We received public comments on this proposal. The following is a 
summary of the comments we received and our responses.
    Comment: A few commenters supported the proposed measure minimum 
for the FY 2028 program year and subsequent years.
    Response: We thank the commenters for their support of the measure 
minimum for FY 2028 program year and subsequent years.
    Comment: One commenter did not support the proposed measure minimum 
and instead recommended that CMS increase the proposed measure minimum 
to at least six of the eight measures to ensure the program addresses 
quality in multiple areas.
    Response: We disagree with the commenter's recommendation that we 
adopt a measure minimum of six measures, which the commenter believes 
would better ensure that the Program addresses quality in multiple 
areas. As stated in the proposed rule (89 FR 23474), we believe that 
requiring SNFs to report a minimum of four measures best balances SNF 
performance score reliability with our desire to ensure that as many 
SNFs as possible can receive a SNF performance score.
    We note that swing bed facilities can report a maximum of four of 
the eight SNF VBP measures because those facilities do not report 
Payroll Based Journal (PBJ) data and they do not care for long stay 
residents, which is defined as stays greater than 100 days. 
Specifically, subsection 1128I(g) of the Act requires SNFs and NFs to 
report staffing information based on payroll data. This requirement 
does not apply to swing bed facilities. Further, the direct care staff 
in a swing bed facility may not solely provide SNF care and therefore, 
we do not believe that the payroll (PBJ) data would accurately reflect 
the staffing levels for providing SNF care only. For this reason, we do 
not believe that it is fair or appropriate to require swing bed 
facilities to report PBJ data for the two SNF VBP staffing measures 
(Total Nurse Staffing and Nursing Staff Turnover measures). In 
addition, because swing bed facilities do not care for long stay 
residents, those facilities do not meet the minimum case thresholds to 
report the Long Stay Hospitalization and Falls with Major Injury (Long 
Stay) measures. Therefore, if we increased the measure minimum to more 
than four measures, all swing bed facilities would be excluded from the 
Program. This does not align with our desire to ensure that as many 
SNFs as possible are included in the Program and can receive a SNF 
performance score.
    Further, in our testing for the measure minimum of four measures, 
we found that approximately 60 percent of SNFs would continue to be 
scored on all eight measures, approximately 87 percent of SNFs would 
continue to be scored on at least six measures, and as described 
earlier in this section, over 90 percent will be scored on at least 
four measures. Therefore, as indicated by our testing of a four measure 
minimum, the vast majority of SNFs would be included in the Program and 
would be assessed on their performance across multiple quality areas.
    After consideration of public comments, we are finalizing the 
measure minimum for the FY 2028 program year and subsequent program 
years as proposed.
3. Potential Next Steps for Health Equity in the SNF VBP Program
    In the FY 2024 SNF PPS final rule (88 FR 53304 through 53318), we 
adopted a Health Equity Adjustment (HEA) that allows SNFs that provide 
high quality care and care for high proportions of SNF residents who 
are underserved to earn bonus points. We refer readers to that final 
rule for an overview of our definition of health equity, current 
disparities in quality of care in the SNF setting, our commitment to 
advancing health equity, and the details of the HEA.

[[Page 64133]]

    In the FY 2024 SNF PPS proposed rule (88 FR 21393 through 21396), 
we also included a request for information (RFI) entitled ``Health 
Equity Approaches Under Consideration for Future Program Years,'' where 
we noted that significant disparities in quality of care persist in the 
SNF setting. We stated that the goal of explicitly incorporating health 
equity-focused components into the Program was to both measure and 
incentivize equitable care in SNFs. Although the HEA rewards high 
performing SNFs that care for high proportions of SNF residents with 
underserved populations, it does not explicitly measure or reward high 
provider performance among the underserved population. We remain 
committed to achieving equity in health outcomes for residents by 
promoting SNF accountability for addressing health disparities, 
supporting SNFs' quality improvement activities to reduce these 
disparities, and incentivizing better care for all residents. Through 
the RFI, we solicited public comment on possible health equity 
advancement approaches to incorporate into the Program in future 
program years that could supplement or replace the HEA. We refer 
readers to the FY 2024 SNF PPS final rule (88 FR 53322) for a summary 
of the public comments we received in response to the health equity 
RFI. We are considering these comments as we continue to develop 
policies, quality measures, and measurement strategies on this 
important topic.
    We are currently exploring the feasibility of proposing future 
health equity-focused metrics for the Program. Specifically, we are 
considering different ways of measuring health equity that could be 
incorporated into the Program as either a new measure, combined to form 
a composite measure, or as an opportunity for SNFs to earn bonus points 
on their SNF performance score. These performance metrics described in 
more detail in the proposed rule would utilize the existing SNF HAI, DC 
Function, DTC PAC SNF, and SNF WS PPR measures that we previously 
adopted in the Program. We are considering the development of health-
equity-focused versions of these measures because they are either 
cross-setting or could be implemented in multiple programs. The health-
equity focused measures or metrics for bonus points include:
     A high-social risk factor (SRF) measure that utilizes an 
existing Program measure where the denominator of the measure only 
includes residents with a given SRF, which would allow for comparisons 
of care for underserved populations across SNFs;
     A worst-performing group measure that utilizes an existing 
Program measure and compares the quality of care among residents with 
and without a given SRF on that measure and places greater weight on 
the performance of the worst-performing group with the goal of raising 
the quality floor at every facility; and
     A within-provider difference measure that assesses 
performance differences between residents (those with and without a 
given SRF) within a SNF on an existing Program measure, creating a new 
measure of disparities within SNFs.
    We are testing these various measure concepts to determine where 
current across- and within-provider disparities exist in performance, 
how we can best incentivize SNFs to improve their quality of care for 
all residents, including those who may be underserved, and the 
feasibility of incorporating a health equity-focused measure into the 
Program.
    As we explore these and other options, we are focusing on 
approaches that:
     Include as many SNFs as possible and are feasible to 
implement;
     Integrate feedback from interested parties;
     Encourage high quality performance for all SNFs among all 
residents and discourage low quality performance;
     Are simple enough for SNFs to understand and can be used 
to guide SNFs in improvement; and
     Meet the goal of incentivizing equitable care to ensure 
all residents in all SNFs receive high quality care.
    We are also exploring how constraints, such as sample size 
limitations, may impact our ability to effectively incorporate certain 
approaches into the Program. Lastly, we continue to explore 
opportunities to align with other CMS quality programs to minimize 
provider burden.
    We received public comments related to potential next steps for 
health equity in the SNF VBP Program. The following is a summary of the 
comments we received.
    Comment: Several commenters supported incorporating additional 
health equity components into the SNF VBP Program and offered 
recommendations for doing so. A few commenters offered recommendations 
related to health equity-focused measures. Specifically, one commenter 
recommended a workforce equity metric to incentivize SNFs to promote 
workforce equity and another commenter encouraged CMS to prioritize the 
DC Function and DTC PAC SNF measures when assessing for different 
performance outcomes based on the existence of social determinants of 
health. One commenter requested that CMS not create additional burden 
when developing health equity-focused measures and instead utilize 
existing claims or MDS data. One commenter recommended that CMS 
consider and incorporate feedback from interested parties, such as 
nurses and other providers, when developing possible health equity-
focused measures. Another commenter encouraged CMS to work with the CBE 
to develop meaningful health equity-focused measures.
    A few commenters recommended that CMS consider utilizing proxies 
other than DES for defining the underserved population. One commenter 
recommended that CMS assess the impact of health equity measures in 
non-SNF settings and develop a methodology that can be applied across 
multiple care settings. Another commenter suggested that CMS should 
require all SNFs to submit data on health equity to be eligible for SNF 
VBP incentive payments. Lastly, one commenter recommended that CMS 
offer education and resources that help SNFs learn how health equity 
impacts their population and how to make changes and develop 
interventions based on that information.
    Response: We thank commenters for their recommendations. We will 
take these into consideration as we continue our work on developing the 
best approaches for incorporating health equity into the Program.

F. Updates to the SNF VBP Review and Correction Process

1. Background
    We refer readers to the FY 2024 SNF PPS final rule (88 FR 53325 
through 53326) and to Sec.  413.338(f) of our regulations for details 
on the SNF VBP Program's public reporting requirements and the two-
phase review and correction process that we have adopted for the 
Program. We also refer readers to the SNF VBP website (https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing/confidential-feedback-reporting-review-and-corrections) for 
additional details on our review and correction process. In Phase One 
of the review and correction process, we accept corrections for 30 days 
after distributing the following quarterly confidential feedback 
reports to SNFs: the two Full-Year Workbooks (one each for the baseline 
period and

[[Page 64134]]

performance period), generally released in December and June, 
respectively. Corrections are limited to errors made by CMS or its 
contractors when calculating a measure rate. In the FY 2022 SNF PPS 
final rule (86 FR 42516 through 42517), we finalized that SNFs are not 
able to correct any of the underlying administrative claims data used 
to calculate a SNF's readmission measure rate during Phase One of the 
SNF VBP review and correction process. For corrections to the 
underlying administrative claims data to be reflected in the SNF VBP 
Program's quarterly confidential feedback reports, the SNF must submit 
the claims correction request to their MAC and the MAC must process the 
correction before the ``snapshot date.'' For the SNFRM, the quarterly 
confidential feedback reports will not reflect any claims corrections 
processed after the date of the claims snapshot, which is 3 months 
following the last index SNF admission in the applicable baseline 
period or performance period.
    In Phase Two of the review and correction process, SNFs may submit 
corrections to SNF performance scores and rankings only. We accept 
Phase Two corrections for 30 days after distributing the Performance 
Score Report that we generally release in August of each year.
    Under our current review and correction policy, the SNF must 
identify the error for which it is requesting correction, explain its 
reason for requesting the correction, and submit documentation or other 
evidence, if available, supporting the request. SNFs must submit 
correction requests to the SNF VBP Program Help Desk, which is 
currently available at [email protected], and the requests must contain:
     The SNF's CMS Certification Number (CCN),
     The SNF's name,
     The correction requested, and
     The reason for requesting the correction, including any 
available evidence to support the request.
    For all review and correction requests, we will review the requests 
and notify the requesting SNF of the final decision. We will also 
implement any approved corrections before the affected data becomes 
publicly available.
    In the FY 2025 SNF PPS proposed rule (89 FR 23476), we proposed to 
apply our existing Phase One review and correction process to all 
measures adopted in the Program regardless of the data source for a 
particular measure. We also proposed ``snapshot dates'' for the new SNF 
VBP measures and to codify those snapshot dates at revised Sec.  
413.338(f)(1). We also proposed to redesignate current Sec.  
413.338(f)(1) as Sec.  413.338(f)(2) and to revise that paragraph to 
state that the underlying data used to calculate measure rates cannot 
be corrected by SNFs during the SNF VBP review and correction process.
    We received comments on our review and correction proposals. The 
following is a summary of the comments we received and our responses.
    Comment: Several commenters expressed support for CMS' proposal to 
apply the existing review and correction policies to additional measure 
types.
    Response: We thank the commenters for their support.
    Comment: A few commenters recommended that CMS make additional 
allowances in the review and correction process for SNFs. Specifically, 
one commenter suggested that CMS extend the ``snapshot dates'' to 
ensure that SNFs have adequate time to report accurate measure data. 
Another commenter suggested that CMS adopt a waiver policy for data 
errors that fall outside the ``snapshot dates'' that would allow SNFs 
to incorporate corrections into their performance data provided that 
the SNF otherwise complied with reporting deadlines.
    Response: We thank the commenters for these suggestions. In 
general, we adopt ``snapshot dates'' for the purposes of review and 
correction so we can ensure that we have as much complete and accurate 
data as possible to calculate measure scores and performance scores. We 
proposed to calculate the measure rates using a static ``snapshot'' of 
data accessed on a specific date. The use of a data ``snapshot'' 
enables us to provide as timely quality data as possible, both to SNFs 
for the purpose of quality improvement, and to the public for the 
purpose of transparency. After the data ``snapshot'' is taken through 
our extraction of Medicare claims data, PBJ staffing data, or MDS 
assessment data, it takes several months to incorporate other data 
needed for the measure calculations, generate and check the 
calculations, as well as program, populate, and deliver the 
confidential quarterly reports and accompanying data to SNFs. Because 
several months lead-time is necessary after acquiring the input data to 
generate these calculations, if we were to delay our data extraction 
point beyond the proposed measure snapshot dates, we believe this would 
create an unacceptably long delay both for SNFs to receive timely data 
for quality improvement and transparency, and incentive payments for 
purposes of this Program. For the SNFRM and other claims-based 
measures, we believe that a 3-month claims ``run-out'' period is a 
reasonable period that allows SNFs time to correct their administrative 
claims or add any missing claims before those claims are used for 
measure calculation purposes while enabling us to timely calculate the 
measure. For PBJ staffing data and MDS assessment data, the snapshot 
date aligns with the timeline to which SNFs already adhere for 
corrections to their data within the Nursing Home Quality Improvement 
Program and SNF QRP, respectively. We believe this proposed policy 
would address both fairness and operational concerns associated with 
calculating measure rates and would provide consistency across value-
based purchasing programs. We understand that these ``snapshot dates'' 
may occasionally require SNFs to work quickly to review their 
performance data, but we believe that these deadlines are necessary to 
ensure that the scoring and payment calculations that we make are as 
accurate as possible while also meeting our statutory deadlines.
2. Application of the Existing Phase One Review and Correction Policy 
to All Claims-Based Measures Beginning With the FY 2026 Program Year 
and ``Snapshot Dates'' for Recently Adopted SNF VBP Claims-Based 
Measures
    In the FY 2023 SNF PPS final rule, we adopted the SNF HAI measure 
beginning with the FY 2026 SNF VBP program year (87 FR 47564 through 
47570), and the DTC PAC SNF measure beginning with the FY 2027 SNF VBP 
program year (87 FR 47576 through 47580). In the FY 2024 SNF PPS final 
rule, we adopted the Long Stay Hospitalization measure beginning with 
the FY 2027 SNF VBP program year (88 FR 53293 through 53296), as well 
as the SNF WS PPR measure beginning with the FY 2028 SNF VBP program 
year (88 FR 53277 through 53280). Each of these measures is calculated 
using claims data.
    We proposed to apply our existing Phase One review and correction 
process to all SNF VBP Program measures calculated using claims data. 
That is, Phase One corrections for claims-based measures would be 
limited to errors made by CMS or its contractors when calculating the 
measure rates. For corrections to the underlying administrative claims 
data to be reflected in the SNF VBP Program's quarterly confidential 
feedback reports, the SNF must submit any claims correction requests to 
their MAC before the ``snapshot date'' to ensure that those corrections 
are reflected fully in measure calculations. Any corrections made to 
claims following the ``snapshot

[[Page 64135]]

date'' would not be reflected in our subsequent scoring calculations.
    For the SNF HAI, DTC PAC SNF, and SNF WS PPR measures, we proposed 
to define the ``snapshot date'' as 3 months following the last SNF 
discharge in the applicable baseline period or performance period to 
align with the ``snapshot date'' we previously adopted for the SNFRM. 
We refer readers to the FY 2022 SNF PPS final rule (86 FR 42516 through 
42517) where we explain our rationale for selecting 3 months as the 
``snapshot date.''
    For the Long Stay Hospitalization measure, we proposed to define 
the ``snapshot date'' as 3 months following the final quarter of the 
applicable baseline period or performance period. For example, for the 
FY 2027 SNF VBP program year, the performance period is FY 2025. The 
final quarter of the performance period is July 1 through September 30, 
2025. The ``snapshot date'' for this performance period is December 31, 
2025.
    We invited public comment on our proposal to apply our existing 
Phase One review and correction process to all SNF VBP claims-based 
measures and to adopt ``snapshot dates'' for recently adopted SNF VBP 
claims-based measures.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our response.
    Comment: A few commenters supported CMS' proposal to define the 
``snapshot date'' for the Long Stay Hospitalization measure as the 3 
months following the final quarter of the applicable baseline period or 
performance period. One commenter noted that the proposed ``snapshot 
date'' is consistent with the ``snapshot dates'' CMS previously adopted 
for other claims-based measures, such as the SNFRM. Another commenter 
agreed that three months should be sufficient for SNFs to identify HAIs 
that may need to be corrected for the SNF HAI measure and therefore 
supported our proposal to align its time period with previously adopted 
``snapshot dates''.
    Response: We thank the commenters for their support. We agree that 
this ``snapshot date'' is consistent with other ``snapshot dates'' CMS 
has previously adopted. In the FY 2022 SNF PPS final rule (86 FR 42516 
through 42517), we noted that since several months of lead-time is 
necessary after acquiring the input data to generate the SNFRM 
calculations, if we were to delay our data extraction point beyond the 
proposed measure ``snapshot date'', we believed this would create an 
unacceptably long delay both for SNFs to receive timely data for 
quality improvement and transparency, and incentive payments for 
purposes of this program. We believe that this rationale for the SNFRM 
also applies to the additional SNF VBP claims-based measures. We 
believe that a 3-month claims ``run-out'' period allows SNFs time to 
correct their administrative claims or add any missing claims before 
those claims are used for measure calculation purposes, while enabling 
us to timely calculate the measure.
    After consideration of public comments, we are finalizing these 
policies as proposed.
3. Application of the Existing Phase One Review and Correction Policy 
to PBJ-Based Measures Beginning With the FY 2026 Program Year and 
``Snapshot Dates'' for SNF VBP PBJ-Based Measures
    In the FY 2023 SNF PPS final rule (87 FR 47570 through 47576), we 
adopted the Total Nurse Staffing measure beginning with the FY 2026 SNF 
VBP program year. Additionally, in the FY 2024 SNF PPS final rule (88 
FR 53281 through 53286), we adopted the Nursing Staff Turnover measure 
beginning with the FY 2026 SNF VBP program year. Each of these measures 
is calculated using electronic staffing data submitted by each SNF for 
each quarter through the Payroll Based Journal (PBJ) system, along with 
daily resident census information derived from MDS 3.0 standardized 
patient assessments in the case of the Total Nurse Staffing measure.
    We proposed to apply our existing Phase One review and correction 
process to SNF VBP Program measures calculated using PBJ staffing data. 
That is, Phase One corrections would be limited to errors made by CMS 
or its contractors when calculating the measure rates for the PBJ-based 
measures applicable in the SNF VBP Program. For corrections to the 
underlying PBJ data to be reflected in the SNF VBP Program's quarterly 
confidential feedback reports, the SNF must make any corrections to the 
underlying data within the PBJ system before the ``snapshot date.'' Any 
corrections made to PBJ staffing data following the ``snapshot date'' 
would not be reflected in our subsequent scoring calculations.
    For measures calculated using PBJ staffing data, we proposed to 
define the ``snapshot date'' as 45 calendar days after the last day in 
each fiscal quarter. This deadline is consistent with the CMS Nursing 
Home Quality Improvement deadline, which requires that PBJ data 
submissions must be received by the end of the 45th calendar day (11:59 
p.m. Eastern Time (ET)) after the last day in each fiscal quarter to be 
considered timely. We aim to align CMS quality programs to the extent 
possible to reduce confusion and burden on providers. For more 
information about submitting staffing data through the PBJ system, we 
refer readers to the CMS Staffing Data Submission web page at https://www.cms.gov/medicare/quality/nursing-home-improvement/staffing-data-submission.
    We invited public comment on our proposal to apply our existing 
Phase One review and correction process to SNF VBP PBJ-based measures 
and to adopt ``snapshot dates'' for SNF VBP PBJ-based measures.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: One commenter recommended that CMS adopt a ``snapshot 
date'' for PBJ-based measures that allows PBJ staffing data corrections 
for up to 3 months after the end of the applicable baseline period or 
performance period. The commenter believed that this ``snapshot date'' 
would provide consistency with the claims-based measures. The commenter 
also suggested that, if CMS considers claims-based measures as the gold 
standard of measurement, then CMS should treat other types of measures 
similarly where possible.
    Response: We thank the commenter for this feedback. However, as we 
noted in the proposed rule (89 FR 23476), we proposed the ``snapshot 
date'' for PBJ data as 45 calendar days after the last day in each 
fiscal quarter to align with the CMS Nursing Home Quality Improvement 
deadline. For the Nursing Home Quality Improvement Program, data 
submissions must be received in PBJ by the end of the 45th calendar day 
after the last day in each fiscal quarter to be considered timely. If 
the SNF VBP Program were to allow corrections to this data past this 
date as the commenter suggests, it could result in different reported 
measure rates for the SNF VBP program and the Nursing Home Quality 
Improvement for the same measures. This could result in confusion from 
SNFs and the public when these data are publicly reported.
    Comment: One commenter recommended that CMS provide SNFs a preview 
report (like the 1705D PBJ Staffing Data Report) after the final 
submission is complete for the quarter. The commenter further suggested 
that facilities should be provided at least 15 days after this point to 
review and correct the submitted PBJ data. The

[[Page 64136]]

commenter explained that, if a facility uses a vendor to submit data on 
their behalf, the facility is held responsible for errors even if those 
errors were made by the vendor and were outside of the SNF's control. 
In addition, the commenter stated that there may be unexpected 
circumstances where there are errors or missed information identified 
by the facility later despite the facility's good faith efforts to 
submit PBJ data accurately and in a timely manner. The commenter noted 
that this additional time is important for PBJ-based measures, as the 
recently developed Nursing Staff Turnover measure requires 6 
consecutive months of PBJ data and if any quarter of data is missing or 
unusable, the staff turnover rates may not be calculated or may be 
flawed, leaving consumers without information on a facility's true 
performance.
    Response: We will consider whether it would be feasible to provide 
SNFs with preview reports in addition to the quarterly confidential 
feedback reports that we provide to SNFs under section 1888(g) and the 
SNF performance score reports that we provide to notify SNFs of their 
performance scores and incentive payment percentages. However, we note 
that we proposed the 45-day ``snapshot date'' for PBJ data to align 
with the CMS Nursing Home Quality Improvement deadline, and we continue 
to believe that this alignment will help SNFs comply with measure and 
data requirements across CMS quality programs. While the PBJ data is 
used for multiple measures across CMS quality programs, SNFs are 
required to submit the direct care staffing information in one 
centralized location via the PBJ.
    Further, we believe that SNFs must work closely with any vendors 
with which they operate to ensure that data submissions are fully 
accurate before they are provided to CMS.
    After consideration of public comments, we are finalizing these 
policies as proposed.
4. Application of the Existing Phase One Review and Correction Policy 
to MDS-Based Measures Beginning With the FY 2027 Program Year and 
``Snapshot Dates'' for SNF VBP MDS-Based Measures
    In the FY 2024 SNF PPS final rule (88 FR 53286 through 53293), we 
adopted the Falls with Major Injury (Long Stay) and DC Function 
measures, both beginning with the FY 2027 SNF VBP program year. These 
two measures are calculated using data reported by SNFs on the MDS 3.0.
    We proposed to apply our existing Phase One review and correction 
process to SNF VBP Program measures calculated using MDS data. That is, 
Phase One corrections would be limited to errors made by CMS or its 
contractors when calculating the measure rates for the MDS-based 
measures applicable in the SNF VBP Program. For corrections to the 
underlying MDS data to be reflected in the SNF VBP Program's quarterly 
confidential feedback reports, the SNF must make any corrections to the 
underlying data via the internet Quality Improvement Evaluation System 
(iQIES) before the ``snapshot date.'' Any corrections made to the MDS 
data following the ``snapshot date'' would not be reflected in our 
subsequent scoring calculations.
    For the DC Function and Falls with Major Injury (Long Stay) 
measures, we proposed that the ``snapshot date'' is the February 15th 
that is 4.5 months after the last day of the applicable baseline or 
performance period. However, if February 15th falls on a Friday, 
weekend, or Federal holiday, the data submission deadline is delayed 
until 11:59 p.m. ET on the next business day. For example, for the FY 
2027 SNF VBP program year, the performance period is FY 2025 (October 
1, 2024, through September 30, 2025). The ``snapshot date'' for this 
performance period would normally be February 15, 2026. However, 
because February 15, 2026, falls on a Sunday, the snapshot date would 
be extended until the next business day, which is Tuesday, February 17, 
2026, due to Monday, February 16, 2026, being a Federal holiday. This 
is consistent with the SNF QRP QM User's Manual available at https://www.cms.gov/files/document/snf-qm-calculations-and-reporting-users-manual-v50.pdf-0.
    We invited public comment on our proposal to apply our existing 
Phase One review and correction process to SNF VBP MDS-based measures 
and to adopt ``snapshot dates'' for SNF VBP MDS-based measures.
    We received one public comment on these proposals. The following is 
a summary of the comment we received and our response.
    Comment: One commenter supported CMS' proposal to define the 
``snapshot date'' for MDS-based measures as 4.5 months after the last 
day of the applicable baseline or performance period, noting that this 
timeline closely aligns with deadlines for claims-based measures.
    Response: We thank the commenter for their support.
    After consideration of public comments, we are finalizing these 
policies as proposed.

G. Updates to the SNF VBP Extraordinary Circumstances Exception Policy

1. Background
    Our Extraordinary Circumstances Exception (ECE) policy, which 
allows SNFs to request an exception to the SNF VBP requirements for one 
or more calendar months when there are certain extraordinary 
circumstances beyond the control of the SNF, is currently codified at 
Sec.  413.338(d)(4) of our regulations. We proposed to redesignate that 
paragraph as new Sec.  413.338(m) of our regulations to ensure the 
policy remains effective beyond FY 2025. We also proposed to amend our 
existing ECE policy to include the proposed changes discussed later in 
this section, as well as to make other technical updates to enhance the 
clarity of the ECE policy in our regulations.
2. Expanding the Reasons a SNF May Submit an Extraordinary Circumstance 
Exception Request Beginning With the FY 2025 Program Year
    Section 413.338(d)(4)(ii) of our regulations currently states that 
a SNF may request an ECE if the SNF is able to demonstrate that an 
extraordinary circumstance affected the care provided to its residents 
and subsequent measure performance. We proposed to expand this policy 
to also allow a SNF to request an ECE if the SNF can demonstrate that, 
because of the extraordinary circumstance, it cannot report SNF VBP 
data on one or more measures by the specified deadline. This expanded 
policy would avoid penalizing SNFs due to circumstances out of their 
control and would also align the SNF VBP ECE policy with the ECE 
policies we have adopted for the SNF QRP and Home Health QRP.
    If we grant an ECE to a SNF under the SNF VBP, we would, as 
previously finalized, calculate a SNF performance score that does not 
include the SNF's performance on the measure or measures during the 
months the SNF was affected by the extraordinary circumstance.
    We discuss the comments we received on this proposal and our 
responses in the next section.
3. Updates to the Instructions for Requesting an Extraordinary 
Circumstance Exception Beginning With the FY 2025 Program Year
    Under our current ECE policy, when a SNF requests an ECE, the SNF 
must

[[Page 64137]]

complete an Extraordinary Circumstances Request form (available on 
https://qualitynet.cms.gov) and send the form, along with supporting 
documentation, to the SNF VBP Program Help Desk within 90 days of the 
date that the extraordinary circumstance occurred.
    The most recent version of the ECE Request Form no longer includes 
information related to the SNF VBP Program. Although the previous form 
is still available, once it is replaced with the new version, SNFs will 
no longer be able to use this new version of the form when submitting 
an ECE request for the SNF VBP Program. Accordingly, we proposed to 
update our policy to align with the current SNF QRP ECE request 
submission process, which does not require the completion of a form and 
instead requires SNFs to submit specific information via email to a 
Help Desk. We proposed that, beginning with the FY 2025 program year, a 
SNF may request an ECE by sending an email with the subject line ``SNF 
VBP Extraordinary Circumstances Exception Request'' to the SNF VBP 
Program Help Desk with the following information:
     The SNF's CMS Certification Number (CCN);
     The SNF's business name and business address;
     Contact information for the SNF's chief executive officer 
(CEO) or CEO-designated personnel, including all applicable names, 
email addresses, telephone numbers, and the SNF's physical mailing 
address (not a P.O. Box);
     A description of the event, including the dates and 
duration of the extraordinary circumstance;
     Available evidence of the impact of the extraordinary 
circumstance on the care the SNF provided to its residents or the SNF's 
ability to report SNF VBP measure data, including, but not limited to, 
photographs, media articles, and any other materials that would aid CMS 
in determining whether to grant the ECE;
     A date when the SNF believes it will again be able to 
fully comply with the SNF VBP Program's requirements and a 
justification for the proposed date.
    We invited public comment on our proposals to expand the reasons a 
SNF may request an extraordinary circumstances exception, to update the 
instructions for requesting an extraordinary circumstances exception 
under the SNF VBP Program, and to codify this expanded ECE policy in 
our regulations.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: A few commenters supported CMS' proposal to expand the ECE 
policy to allow SNFs to request an ECE if the SNF can demonstrate that, 
as a result of an extraordinary circumstance, the SNF cannot report SNF 
VBP data on one or more measures by the specified deadline.
    Response: We thank the commenters for their support. As we stated 
in the proposed rule, we believe this policy will avoid penalizing SNFs 
due to circumstances out of their control.
    Comment: One commenter supported CMS' proposal to amend the 
existing regulation text for the ECE policy so that the policy remains 
in place past FY 2025.
    Response: We thank the commenter for their support of this 
proposal.
    Comment: A few commenters supported CMS' proposal to update the 
instructions for requesting an ECE because it will align the SNF VBP 
process with the existing process used by the SNF QRP. One commenter 
believed that eliminating the requirement to submit the distinct ECE 
form will be effective and efficient.
    Response: We thank the commenters for their support. We agree that 
these updates will streamline the process and enhance alignment with 
the SNF QRP process for requesting an ECE.
    Comment: A few commenters recommended that CMS align and streamline 
the process for submitting and receiving an ECE across programs, such 
as the SNF VBP Program and SNF QRP, so that SNFs can easily request an 
ECE. One commenter specifically recommended further streamlining the 
process for submitting an ECE request so that if a SNF is granted an 
ECE by CMS for another program, that ECE is automatically applied to 
the SNF VBP Program. Another commenter recommended that CMS provide 
clear information regarding the ECE request processes.
    Response: We thank the commenters for their recommendations. We 
will consider ways to further streamline the ECE process in future 
rulemaking. We also intend to work to ensure that information related 
to ECE request processes is accessible to providers. We note that the 
current instructions for requesting an ECE are available on the SNF VBP 
website (available at: https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing/extraordinary-circumstance-exception). We will update those instructions to include the changes 
that we are finalizing in this final rule. Along with providing the new 
ECE instructions on the SNF VBP website, we will consider additional 
channels of communication that we can leverage to introduce the new ECE 
request instructions and to clarify any details. Potential methods 
include, but are not limited to Listservs, Open Door Forums, Listening 
sessions and webinars, and the CMS News Bulletin. Furthermore, the SNF 
VBP Program Help Desk, which is currently available at [email protected], 
will be accessible to SNFs who are seeking support for the new ECE 
request instructions or have any questions regarding them.
    After consideration of public comments, we are finalizing our 
proposals to expand the reasons a SNF may request an extraordinary 
circumstances exception and to update the instructions for requesting 
an extraordinary circumstances exception under the SNF VBP Program as 
proposed. We are also finalizing our proposal to codify this expanded 
ECE policy in our regulations.

IX. Nursing Home Enforcement

A. Background

    The Biden-Harris Administration is committed to ensuring that all 
residents living in nursing homes receive safe, high-quality care. This 
includes making certain that all Americans, including older Americans 
and people with disabilities, live in a society that is accessible, 
inclusive, and equitable. To ensure that residents are receiving high-
quality, and safe care, Long-Term Care (LTC) facilities that 
participate in the Medicare and/or Medicaid program, must be certified 
as meeting Federal participation requirements. LTC facilities are 
certified as a skilled nursing facility (SNF) in Medicare and a nursing 
facility (NF) in Medicaid, or a dually-certified SNF/NF in both 
programs, as specified in sections 1819 and 1919 of the Social Security 
Act (Act), respectively, and in regulations at 42 CFR part 483, subpart 
B.
    Section 1864(a) of the Act authorizes the Secretary to enter into 
agreements with State Survey Agencies (SSAs) to conduct surveys (that 
is, inspections) to determine whether SNFs and NFs meet the Federal 
participation requirements for Medicare (generally referred to as 
requirements or Conditions of Participation (CoPs)). Section 
1902(a)(33)(B) of the Act provides for SSAs to perform the same survey 
tasks for facilities participating or seeking to participate in the 
Medicaid program. See also, section 1919(g) of the Act. The results of 
these surveys are used by CMS and the State Medicaid agency, 
respectively, as the basis for a decision to enter into, deny, or 
terminate a provider agreement with the facility.

[[Page 64138]]

They are also used to determine whether one or more enforcement 
remedies should be imposed when noncompliance with requirements is 
identified. Sections 1819(h) and 1919(h) of the Act. Surveyors observe 
the provision of care and services to residents, conduct interviews, 
and review facility and residents' documentation to determine 
compliance with Federal requirements and ensure the residents' health 
and safety are adequately protected.
    Under sections 1819(f)(1) and 1919(f)(1) of the Act, the Secretary 
must ensure that the enforcement of compliance with the participation 
requirements is adequate to protect the health, safety, welfare, and 
rights of the residents and to promote the effective use of public 
money. Additionally, under sections 1819(h)(2)(B) and 1919(h)(3)(C) of 
the Act, criteria must be specified as to when and how enforcement 
remedies are applied, the amounts of fines, and the severity of each 
remedy imposed. Criteria must also be designed to minimize the time 
between the identification of violations and the final imposition of 
the remedies. Under sections 1819(h)(2)(B) and 1919(h)(3)(C) of the 
Act, civil money penalties (CMPs) are one of the Federal statutory 
enforcement remedies available to the Secretary and the States to 
address facility noncompliance with the requirements. Under sections 
1819(h)(2)(B)(ii)(I) and 1919(h)(3)(C)(ii)(I) of the Act, CMPs may be 
imposed to remedy noncompliance at amounts not to exceed $10,000 for 
each day of noncompliance (as annually adjusted by inflation by the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015 (the 2015 Act). The statute also permits the Secretary and the 
States to impose a CMP for each day of noncompliance, even if a 
facility has since returned to substantial compliance as documented by 
an intervening standard survey (sections 1819(h)(2)(A) and 1919(h)(1) 
and (3) of the Act providing that if a facility is found to be in 
compliance with the requirements, ``. . . but, as of a previous period, 
did not meet such requirements, [the Secretary provide for] a civil 
money penalty . . . for the days in which he finds that the facility 
was not in compliance with such requirements''). The Secretary must 
follow the procedures set out in section 1128A of the Act in processing 
these CMP remedies. (Sections 1819(h)(2)(B)(ii)(I) and 
1919(h)(3)(C)(ii)(I) of the Act)
    The regulations that govern the imposition of CMPs and other 
remedies authorized by the statute were published on November 10, 1994 
(59 FR 56116), and subsequently revised on September 28, 1995 (60 FR 
50118), March 18, 1999 (64 FR 13354 through 13360), March 18, 2011 (76 
FR 15106), and September 6, 2016 (81 FR 61538). The nursing home 
enforcement rules are set forth in 42 CFR part 488, subpart F, and the 
provisions directly affecting CMPs imposed for noncompliance with the 
requirements are set forth in Sec. Sec.  488.430 through 488.444. In 
general, an enforcement action imposed is based on the severity of harm 
or potential for more than minimal harm to residents that results and 
the scope of how many residents were affected by the cited 
noncompliance. This is intended to ensure prompt and sustained 
compliance for the future, incentivizing the facility to take 
appropriate actions to permanently correct their noncompliance and 
protect residents' health and safety in the future. For example, if 
residents experienced serious harm due to noncompliance (including 
death), a less impactful enforcement remedy may not compel the facility 
to take the appropriate actions to correct and prevent a similar event 
from occurring in the future, leaving residents at risk for serious 
harm, injury, or death.
    Under 42 CFR 488.438, the amount of CMPs increases based on the 
severity and/or extent of the harm or potential for more than minimal 
harm that might result from noncompliance. Current regulations at Sec.  
488.408 allow for penalties to be assessed in the upper range of $3,050 
to $10,000 per day (PD) or $1,000 to $10,000 per instance (PI), as 
annually adjusted for inflation for noncompliance that constitutes 
immediate jeopardy (IJ) to resident health and safety, while penalties 
in the lower range of $50 to $3,000 PD or $1,000 to $10,000 PI of 
noncompliance, as annually adjusted for inflation, may be imposed where 
immediate jeopardy does not exist.
    Under the current regulations, the State and/or CMS must decide 
whether to select either a PD or PI CMP when considering whether a CMP 
will be used as a remedy. A PD CMP is an amount that may be imposed for 
each day a facility is not in compliance until the facility corrects 
the noncompliance and achieves substantial compliance. A PI CMP is an 
amount imposed for each instance in which a facility is not in 
substantial compliance. The current enforcement regulations at 42 CFR 
part 488, subpart F, do not authorize the use of both types of CMPs 
during the same survey, nor do they allow for multiple PI CMPs to be 
imposed for multiple instances within the same noncompliance deficiency 
that occurred on different days during a survey.
    While there is no statutory limitation of both a PI and PD being 
imposed on the same survey, we specified in the rulemaking that revised 
Sec.  488.430(a) (published on March 18, 1999 (64 FR 13360)), that we 
would not impose both PD and PI CMPs during a survey. Instead, the 1999 
rule required that ``a concomitant decision must be made whether the 
civil money penalty will be based on a determination of per instance or 
per day'' (64 FR 13356). Additionally, we noted that an ``instance'' 
means a singular event of noncompliance or single deficiency under a 
distinct regulatory area identified by an administrative ``F tag'' 
number used as reference on the CMS-2567, Statement of Deficiencies. 
(Id.) We proposed revisions to this limitation to enable more types of 
CMPs to be imposed during a survey once a CMP remedy is selected, 
within the statutory and regulatory limits, allowing penalties to be 
better aligned with the noncompliance identified during the survey and 
for more consistency of CMP amount across the nation. PI CMPs are often 
imposed in certain circumstances, such as when noncompliance existed 
but was corrected prior to the survey and for isolated instances of 
noncompliance unrelated to resident abuse. PI CMPs may also be imposed 
in cases where a deficiency is found, but the facility has not had any 
citations of actual or serious harm on any survey in the past three 
years. A PI CMP has typically not been imposed for findings of abuse or 
neglect, when there is continued noncompliance, or when the facility 
has a history of the same type of noncompliance causing actual harm to 
residents. PD CMPs, however, are generally imposed when these scenarios 
do not exist, and the facility has a history of similar noncompliance. 
For example, if a facility was found to be out of compliance with the 
requirements to prevent accidents where a resident was injured during a 
transfer from a wheelchair to the bed, and this was cited as an 
isolated instance of noncompliance that caused actual harm to a 
resident, a PI CMP may be imposed. We developed a Civil Money Penalty 
Analytic Tool to help determine CMP amounts when a CMP is one of the 
selected remedies, per sections 1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii) 
of the Act; 42 CFR 488.404 and 488.438.
    The Biden-Harris Administration is committed to ensuring that all 
residents living in Medicare and Medicaid nursing homes receive safe, 
high-quality care. Specifically, in February 2022,

[[Page 64139]]

alongside a suite of other reforms, CMS committed to expanding 
financial penalties and other enforcement remedies to improve the 
safety and quality of care in the Nation's certified nursing 
homes.\106\ As part of this effort, CMS examined the use of PD and PI 
CMPs and CMP impositions across states from January 1, 2022, to 
December 31, 2022. Based on this analysis, CMS believes that the prior 
approach regarding CMPs was not as effective as desired to improve 
patient safety. We found national variations in the length of time PD 
CMPs are imposed based on when the noncompliance occurred, when the 
survey was performed, and when the facility was found to have corrected 
the noncompliance. For example, from January 1, 2022, to December 31, 
2022, the State with the shortest average number of days for PD CMP 
imposition was 1 day, and the longest average number of days in a State 
was 43 days. This results in vastly differing PD CMP amounts across the 
States based on the number of days of noncompliance, as well as the 
date the survey was conducted, rather than being more focused on the 
potential or actual harm that a deficiency may cause to residents. In 
other words, the same type of noncompliance could exist in two 
facilities in different states, but the PD CMP amounts would be 
different simply due to the number of days between the identification 
of noncompliance by the surveyor and the date of correction by the 
facility. We believe that this results in at least two problems. First, 
it could create a perception of inequity in the total amount calculated 
for a CMP. Second, it prevents us from holding some facilities 
responsible for failing to adequately protect residents' health, 
safety, and well-being. Take, for example, a survey that finds 
noncompliance with the requirements of participation that increases the 
likelihood of serious injury, harm, impairment, or death to residents--
such as when residents are susceptible to falls while not being 
monitored (even when no resident actually fell as a result of the 
failure to monitor). If this deficiency is identified to have started 
100 days prior to the survey, a PD CMP would accrue for each of the 100 
days and each additional day until the facility corrected its 
noncompliance, resulting in a very high CMP. Conversely, another 
facility's similar noncompliance might result in serious harm to a 
resident, such as when two residents fall due to failures to monitor, 
resulting in serious injury. However, if these falls are identified to 
have occurred one and two days prior to the survey, a PD CMP would only 
accrue for 2 days and each additional day until the noncompliance was 
corrected, resulting in a relatively low CMP that may not encourage 
prompt or lasting compliance.
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    \106\ https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/.
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    These scenarios show how the timing of a survey can potentially 
result in a higher CMP for similar noncompliance that resulted in less 
harm to residents. As such, we want to ensure that CMS retains the 
authority to impose CMPs related to the nature of the harm that is 
caused by--or could be caused by--a facility's noncompliance and the 
length of such noncompliance, rather than the date that a standard 
survey was conducted or a finding of noncompliance was identified, even 
if the administration of imposing the CMP occurs after another survey 
has been conducted. This approach can help prevent noncompliance from 
occurring writ large, rather than just addressing it once identified.
    Therefore, as discussed in the proposed rule, we proposed to expand 
and strengthen our enforcement process by revising the regulations to 
increase CMS's flexibility when a CMP is the selected remedy and allow 
for multiple PI CMPs to be imposed for the same type of noncompliance, 
allow for both PD and PI CMPs to be imposed for noncompliance findings 
in the same survey, as well as ensure that the amount of a CMP does not 
depend solely on the date that the most recent standard survey is 
conducted or the date that surveyors identified a finding of 
noncompliance. With these revisions, in certain circumstances, CMS or 
the State may use the survey start date when imposing a PD CMP instead 
of the beginning date of the noncompliance, which maintains the benefit 
of CMPs accruing to incentivize swift correction to protect existing 
residents' safety and continuous compliance to protect future 
residents' safety. In other words, by creating the ability to impose a 
PI CMP and PD CMP on the same survey, CMS or the State could impose a 
PI CMP to address the noncompliance that occurred in the past or prior 
to the survey, and a PD CMP beginning at the start of the survey and 
continuing until the facility has corrected its noncompliance. 
Additionally, if multiple instances of noncompliance occurred prior to 
the survey, CMS or the State could impose multiple PI CMPs, as well as 
a PD CMP. This helps ensure that similar types of noncompliance receive 
similar CMPs regardless of how many days prior to the survey it 
occurred and ensures facilities are motivated to correct their 
noncompliance as soon as possible after the surveyors identify it.
    These revisions are not intended to expand the type of deficiencies 
that are subject to PD and PI CMPs. The States and CMS would continue 
to follow the existing criteria for imposing a PD CMP or PI CMP, 
including imposing a PD or PI CMP for noncompliance that occurred prior 
to the start of a survey. Rather, these revisions would allow for more 
consistent CMP amounts imposed across the nation and would expand the 
current enforcement to allow for CMPs that more closely align with the 
noncompliance that occurred. These actions will help to better ensure 
that compliance is quickly achieved and is lasting to ensure resident 
safety.
    In the April 3, 2024, Federal Register (89 FR 23424), we published 
the proposed rule setting forth our proposal for revising the 
requirements for imposing CMPs. In the proposed rule, we stated that 
our goal is to enable CMS and the States to impose CMPs to better 
reflect the type of noncompliance that occurred.
1. Imposing Multiple Per Instance Civil Money Penalties for the Same 
Type of Noncompliance
    We proposed at Sec.  488.408(e)(2)(ii), that for each instance of 
noncompliance, CMS and the State may impose a PD CMP of $3,050 to 
$10,000 (as adjusted under 45 CFR part 102), a PI CMP of $1,000 to 
$10,000 (adjusted under 45 CFR part 102), or both, in addition to the 
remedies specified in Sec.  488.408(e)(2)(i).
2. Imposing Per Instance and Per Day Civil Money Penalties on the Same 
Survey
    We proposed at Sec. Sec.  488.408(e)(2)(ii) and 488.430(a) to 
expand our authority to impose both a PI CMP and a PD CMP, not to 
exceed the statutory and regulatory maximum amount on any given day, 
even when combined, when surveyors identify noncompliance.
3. Timing of Enforcement
    We proposed at Sec.  488.430(b) to allow the imposition of CMPs for 
noncompliance that was identified since the last three standard 
surveys.

[[Page 64140]]

B. Provisions of the Proposed Regulations

1. Imposing Multiple Per Instance Civil Money Penalties for the Same 
Type of Noncompliance
    Sections 1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii) of the Act 
authorize the Secretary to impose a CMP for each day of noncompliance. 
Section 1128A(d) of the Act further states that the Secretary shall 
consider (1) the nature of claims and the circumstances under which 
they were presented, (2) the degree of culpability, history of prior 
offenses, and financial condition of the person presenting the claims, 
and (3) such other matters as justice may require when determining the 
amount or scope of any penalty. The regulations at Sec.  488.454(d) 
state that, in the case of a CMP imposed for an instance of 
noncompliance, the remedy is the specific amount of the CMP imposed for 
the particular noncompliance deficiency. The meaning of an 
``instance,'' therefore, focuses on a single deficiency citation of the 
applicable requirements of part 483, subpart B, referenced on the 
facility's statement of deficiencies (Form CMS-2567) and, under the 
current regulations, only one type of CMP can be imposed per F tag 
deficiency.
    The statute grants the Secretary broad discretion to determine how 
appropriate CMPs should be enforced and only limits the imposition to a 
maximum daily amount. As discussed in the proposed rule, we proposed to 
expand the circumstances in which a PI CMP can be imposed to allow for 
more than one PI CMP to be imposed when multiple occurrences, or 
``instances'' of a specific noncompliance are identified during a 
survey, regardless of whether they are cited at the same regulatory 
deficiency tag number in the statement of deficiencies.
    As previously mentioned, CMS imposes CMPs based on sections 
1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii) of the Act and Sec. Sec.  
488.404 and 488.438 which provides the amount of penalty, the ranges, 
the basis for penalty amount, increase/decrease of penalty amounts, and 
factors affecting the amount. While we may impose various enforcement 
remedies, CMPs are frequently imposed for deficiencies that result in 
serious injury, harm, impairment, or death to nursing home residents. 
Currently, we can only impose PI CMPs for different types of 
noncompliance identified on a survey, while other instances of the same 
noncompliance would not receive a CMP due to current regulatory 
limitations.
    To strengthen our enforcement policies, we proposed to revise Sec.  
488.401 to define ``instance'' or ``instance of noncompliance'' as a 
separate factual and temporal occurrence when a facility fails to meet 
a participation requirement. We further proposed that each instance of 
noncompliance would be sufficient to constitute a deficiency and that a 
deficiency may be comprised of multiple instances of noncompliance. We 
received combined comments in response to sections IX.B.1 and IX.B.2. A 
summary of the comments and our responses are listed at the conclusion 
of section IX.B.2 in this final rule. We received several comments in 
support of the proposed revision to Sec.  488.401.
2. Imposing Per Instance and Per Day Civil Money Penalties on the Same 
Survey
    As we noted earlier, the Act does not limit the imposition of both 
a PD and a PI on the same survey, but only limits the total amount a 
penalty may be imposed for any individual day. Section 
488.408(d)(2)(iii) through (iv) and (e)(1)(iii) through (iv) outline 
the type of remedies that may be imposed based on the severity of the 
noncompliance. However, these regulations do not state the manner in 
which the remedies may be imposed.
    Because CMPs are designed to spur permanent resolution of 
deficiencies to maintain resident safety, we believe CMS and the States 
need flexibility to determine the range of CMPs that can be imposed on 
facilities that fail to meet the conditions of participation.
    As discussed in the proposed rule, we proposed to revise Sec. Sec.  
488.408(e)(2)(ii) and 488.430(a) to expand our authority to impose both 
a PI CMP and a PD CMP, not to exceed the statutory and regulatory 
maximum amount on any given day even when combined, when surveyors 
identify noncompliance. Specifically, in Sec.  488.408(e)(2)(ii), we 
proposed that for each instance of noncompliance, CMS and the State may 
impose a PD CMP of $3,050 to $10,000 (as adjusted under 45 CFR part 
102), a PI CMP of $1,000 to $10,000 (as adjusted under 45 CFR part 
102), or both, in addition to the remedies specified in Sec.  
488.408(e)(2)(i). Additionally, we proposed that when a survey contains 
multiple instances of noncompliance, CMS and the State may impose any 
combination of per instance or per day CMP for each instance of 
noncompliance within the same survey. Additionally, we proposed to 
revise Sec.  488.430(a) to allow for each instance of noncompliance, a 
PD CMP, PI CMP, ``or both'' may be imposed, regardless of whether the 
deficiencies constitute immediate jeopardy. We also proposed to add 
that when a survey contains multiple instances of noncompliance, a 
combination of PI and PD CMPs for each instance of noncompliance may be 
imposed within the same survey.
    Additionally, we proposed to make conforming changes by revising 
Sec.  488.434(a)(2)(iii) to clarify that both PD and PI CMPs can be 
imposed on the same survey and thus are included in the penalty notice 
to the facility. Furthermore, we proposed to revise Sec.  
488.434(a)(2)(v) to indicate that the date and instance of 
noncompliance is not a singular event but rather can be multiple 
``date(s) of the instance(s) of noncompliance.'' Lastly, we proposed to 
revise Sec.  488.440(a)(2) to remove the phrase, ``for that particular 
deficiency,'' and replace with, ``per instance,'' which will allow for 
more than one PI CMP to be imposed on the same type of noncompliance or 
``F tag'' citation. We sought public comment on these proposed 
revisions and received over a 100 public comments on these proposals 
from various parties interested in addressing LTC facilities' issues, 
including advocacy groups, long-term care ombudsmen, providers and 
provider industry associations, nursing home staff and administrators, 
and others. The following is a summary of the comments we received and 
our responses.
    Comment: Several commenters supported the revised definition of 
``instance(s) of noncompliance'' at Sec.  488.401 and the proposed 
language at Sec.  488.434(a)(2)(v) that indicates instances of the same 
noncompliance (F-tag) can occur on multiple dates. Commenters also 
agreed with the revisions at Sec.  488.434(a)(2)(iii), clarifying that 
both PD and PI CMPs can be imposed simultaneously in the same survey, 
stating that both CMP types may be warranted based on the facility's 
noncompliance. Commenters stated that these regulatory changes as 
proposed, would allow for flexibility in imposing enforcement and align 
with the goal of enforcement remedies to ensure facility compliance 
with the Federal participation requirements.
    Response: We appreciate the feedback from commenters and agree that 
by improving the definition of instance(s), our authority to impose 
multiple PI CMPs and both PI and PD in the same survey will strengthen 
our enforcement and promote resident safety and quality of care and 
life.
    Comment: Many commenters opposed the change to impose multiple PI 
CMPs for the same type of noncompliance and PD and PI CMPs in the same 
survey.

[[Page 64141]]

One commenter noted that when the scope of a deficiency is cited, it 
already reflects the extent of the noncompliance when scope and 
severity are assigned to a deficiency, as doing so may unfairly punish 
the facility. For example, a PI CMP is imposed based on the scope 
(isolated, pattern, or widespread) of the cited deficiency, and the 
revised provision will also allow for multiple PI CMPs imposed at the 
same scope and severity for each instance of noncompliance. Essentially 
this commenter noted that the revised process implies that the facility 
would be fined twice with PI CMPs at the higher scope level of pattern 
or widespread. Another commenter stated these changes would deviate 
practices of CMP imposition significantly for nursing homes as compared 
to other providers, such as hospitals, home health agencies, and 
hospices causing inconsistencies across enforcement settings. 
Additionally, they added that the use of CMPs in nursing homes would 
thus be more extreme than in these other settings.
    Response: We disagree with these comments. While the scope and 
severity level of a deficiency does reflect the extent of the 
noncompliance, under current regulations, the resultant CMP may not. 
For example, imposing a single PI CMP may only reflect the scope of a 
single instance of noncompliance that occurred on a day, but that may 
not accurately reflect the type of noncompliance and harm to residents 
that may have occurred on other days. Therefore, the proposed revision 
will allow CMS to impose CMPs for multiple instances of noncompliance 
to more accurately reflect the type of noncompliance that occurred on 
multiple days, and does not represent that a facility would be fined 
twice at the higher scope and severity level.
    Furthermore, in response to comments opposing the imposition of PD 
and PI CMPs in the same survey, we note that under a PD CMP, a facility 
may already be fined for each day until the facility is in substantial 
compliance. This may include the days where specific instances of 
noncompliance occurred until the facility is determined to be in 
substantial compliance. The proposed revision gives CMS the ability to 
also impose a CMP for each instance that noncompliance occurred on 
different days within that timeframe, rather than a broader CMP that 
applies to all days from the start of the noncompliance until the 
facility is in substantial compliance.
    These changes are not intended to punish a facility, but rather to 
ensure the imposition of CMPs, like all enforcement remedies imposed on 
nursing homes voluntarily choosing to participate in the program, 
``ensure[s] prompt compliance with program requirements'' and are 
``applied on the basis of noncompliance found during surveys conducted 
by CMS or by the State survey agency.'' 42 CFR 488.402(a) and (b). 
Congress enacted sections 1819 and 1919 of the Act to provide the 
Secretary with expansive authority to craft remedies to address 
noncompliance with Federal standards for nursing home quality care, 
which is what these revisions are designed to do. The legislative 
history of the Nursing Home Reform Act of 1987 (NHRA) does not support 
an assertion that changes cannot be made to the implementing 
regulations after careful consideration and evaluation of new 
information, nor that changes cannot be made to encourage achieving and 
maintaining compliance. Congress has expressly instructed the Secretary 
that the purpose of ``Federal Remedies'' is to ``assure compliance in 
Medicaid facilities'' with the rules. H.R. Rep. No. 100-391, pt. 1 at 
475 (1987). Congress also instructed the Secretary to create penalties 
that would prevent ``yo-yo'' or ``roller coaster'' providers that 
``correct their deficiencies, and then quickly lapse into 
noncompliance.'' Id. at 471. See also id. at 474 (``The Committee is 
particularly concerned with the patterns of repeated noncompliance 
noted by both the [Institute of Medicine] Committee and the GAO.''). As 
part of this authority, we have found that changes to the implementing 
regulations are needed to better effectuate the Medicare and Medicaid 
statutes and overall regulatory enforcement scheme, that is, ensuring 
providers take all reasonable steps to care for a vulnerable population 
and help them to ``attain or maintain [their] highest practicable 
physical, mental, and psychosocial well-being.'' Sections 1819(b)(2) 
and 1919(b)(2) of the Act. We are making these revisions precisely 
because currently repeat noncompliance has been an issue, and these 
changes will, we hope, remedy that problem.
    Because CMPs are designed to spur permanent resolution of 
deficiencies so that facilities achieve and maintain compliance, we 
believe CMS and the States need flexibility to determine the range of 
CMPs that can be imposed on facilities that fail to meet the conditions 
of participation. For example, if a survey identifies isolated 
noncompliance that occurred prior to the start of the survey and also 
identifies separate noncompliance that began and continued to occur 
during the survey, we are currently unable to impose both a PI CMP and 
a PD CMP, that are within the requisite daily limits to address these 
two separate occurrences of noncompliance identified during the same 
survey. In other words, if a survey identified numerous instances of 
medication administration errors as well as systemic noncompliance with 
infection control policies, we believe imposing a PI CMP for the 
medication errors and a PD CMP for the infection control deficiencies, 
in this general example, could be a more effective enforcement response 
to both the isolated medication noncompliance incidents from prior to 
the survey and the current noncompliance with infection control 
policies. Due to the additional instances of noncompliance identified, 
a PD CMP that covers the noncompliance with infection control 
requirements alone may not encourage the facility to sustain compliance 
with medication administration. Without this type of flexibility, CMS 
cannot impose remedies that are sufficient to ensure that any systemic 
issues that caused the noncompliance are permanently corrected. 
Moreover, we have found that the failure of nursing homes to take the 
necessary steps to permanently resolve systemic problems increases the 
probability that deficiencies will recur, progressing to a higher scope 
and severity that ultimately results in harm or increased harm to 
residents. For example, if noncompliance occurred on a date prior to 
the start of a survey, and noncompliance was also identified during the 
survey, under the current structure, CMS could impose a PD CMP that 
would start accruing from the first date of noncompliance. Under the 
new revision, CMS could impose a PI CMP for the noncompliance that 
occurred prior to the survey, and PD CMP for the noncompliance that was 
identified during the survey. This will allow CMS to impose a CMP that 
is commensurate with the actual noncompliance that occurred, rather 
than having the CMP amount be impacted by the timing of the survey.
    We also disagree that there is an issue in the application of CMPs 
for nursing homes as compared to other providers. CMPs for 
noncompliance with program participation requirements are not an 
available remedy for hospitals. Though they are available for home 
health agencies and hospices, unlike these providers, the NHRA is a 
nursing home specific statute in which Congress has expressly 
instructed the Secretary to pay especial attention to nursing home 
compliance with the standards of participation in order to ensure that

[[Page 64142]]

facilities not simply meet the conditions of participation, but also 
comply with the statutory mandate that nursing homes must provide 
services and activities to ``attain or maintain the highest practicable 
physical, mental, and psychosocial well-being of each resident'' and in 
such manner and such environment that will ``promote maintenance or 
enhancement of the quality of life of each resident.'' Sections 
1819(b)(1), 1819(b)(2), 1919(b)(1), and 1919(b)(2) of the Act (emphasis 
added). Other providers have very different conditions for 
participation and enforcement of those conditions. The revisions in 
this rule are to ensure that nursing homes comply to the unique 
requirements for participation for long term care facilities.
    Comment: Commenters questioned the necessity of the revisions to 
impose PD and PI CMPs in the same survey and multiple PI CMPs for the 
same type of noncompliance. They note that CMS has existing enforcement 
authority to impose a per day CMP amount up to the regulatory maximum 
as adjusted by the 2015 Act. As such, the commenter expressed concerns 
that CMS could use the regulatory revisions to impose multiple CMPs 
that exceed the daily regulatory maximum.
    Response: We thank the commenter for their comment. As noted in the 
proposed rule and the preamble of this final rule, CMS recognizes that 
the statute limits the daily amount of a CMP imposition up to the 
regulatory maximum in accordance with Sec.  488.408, as adjusted by the 
2015 Act. Additionally, given that the timing of a revisit survey can 
vary and potentially result in a disparate CMP total among facilities 
for similar noncompliance, even when the noncompliance may have 
resulted in relatively less harm to residents, we believe these 
revisions would allow for improved consistency in the imposition of 
CMPs. Also, the regulatory revisions will provide CMS additional 
flexibility to impose CMPs at an amount that aligns with the severity 
of the noncompliance, but that does not exceed the statutory and 
regulatory maximum amount on a given day.
    Comment: Many commenters objected to the CMP proposals which they 
described as an expansion, which the commenters believed may divert a 
facility's funds away from recruiting and retaining direct care staff 
to meet the new minimum nursing home staffing requirements that would 
help improve resident quality of care. Commenters referenced the 
statements on Improving Safety and Quality in the Nation's nursing 
homes,\107\ which outlined a set of reforms including assuring that 
every nursing home provides a sufficient number of staff who are 
adequately trained to provide high-quality care. There is concern with 
how these CMP enforcement updates will interact with the finalized 
minimum staffing requirements for long-term care facilities. One 
commenter also expressed an additional concern that increased financial 
penalties may lead to additional facility closures and create issues 
related to access to care.
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    \107\ https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/.
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    Response: We thank the commenters for their comments. The ``Minimum 
Staffing Standards for Long-Term Care (LTC) Facilities and Medicaid 
Institutional Payment Transparency'' final rule \108\ was issued on 
April 22, 2024. This final rule establishes minimum nurse staffing 
requirements, which aim to significantly reduce the risk of residents 
receiving unsafe and low-quality care within LTC facilities. The 
enforcement of the new staffing requirements will not begin until those 
requirements are implemented, which is staggered over time; the 
relevant implementation dates are provided in the final rule. The 
revisions to the enforcement regulations in this final rule, however, 
will adjust our ability to impose PD and PI CMPs for noncompliance with 
any requirement and are not exclusive to the new staffing requirements. 
CMS has a statutory obligation to assure the enforcement of Federal 
requirements are adequate to protect the health, safety, welfare and 
rights of residents. Enforcement remedies, such as CMPs, address 
noncompliance with any requirement, and these revisions intend to 
improve our ability to do so in a more targeted and effective manner. 
We further note that the revisions to the CMP authorities are not 
intended to cause an increase of facility closures or create any access 
to care issues. As per Sec.  488.438(f)(2), when choosing to impose a 
CMP remedy, CMS considers a facility's financial condition, among other 
factors. CMS remains focused on improving the health and safety of 
nursing home residents by ensuring quality care and ensuring access to 
care. Reforming the CMP system can further help to improve the quality 
and safety of care that residents in SNFs and NFs receive by 
incentivizing facility violations to be remedied faster.
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    \108\ 89 FR 40876 (May 10, 2024); https://www.federalregister.gov/documents/2024/05/10/2024-08273/medicare-and-medicaid-programs-minimum-staffing-standards-for-long-term-care-facilities-and-medicaid.
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    Comment: CMS received a comment stating concerns that CMS will be 
assessing more CMPs while suggesting CMS include a limit of $5,000 on 
projects submitted to the Civil Money Penalty Reinvestment Program 
(CMPRP). The commenter notes that ``although we understand the 
importance of CMPs as an enforcement tool, we believe that the 
combination of these changes will remove even more funding from the 
nursing home sector at the same that CMS has made it extremely 
challenging to use those funds for their intended purpose of protecting 
or improving resident care.''
    Response: This comment regarding the CMPRP project limits is 
outside the scope of this final rule; however, we note that the 
proposed revisions to Sec. Sec.  488.430(a) and 488.434(a)(2)(iii) do 
not impact facilities' ability to apply for or receive grants through 
the CMPRP for eligible quality improvement programs that benefit 
residents.
    Comment: Commenters also articulated concerns regarding consistency 
in the survey process, stating, ``survey findings can vary 
significantly regardless of the actual instances of noncompliance.''
    Response: We appreciate the commenters' concerns. However, all 
surveyors are required to use CMS published protocols and interpretive 
guidance for the regulatory requirements when assessing a facility's 
compliance with Federal requirements. Noncompliance citations are based 
on violations of the regulations, which are based on observations of 
the nursing home's performance or practices as well as record review 
and interviews. We acknowledge that there are occasional variations in 
survey findings due to the unique facts and circumstances of each 
individual situation. However, while CMPs are imposed based on survey 
findings, we believe this rule may actually improve CMS' ability to 
impose CMPs in a more consistent manner nationwide and in a manner that 
better aligns with the severity of the noncompliance that occurred.
    After consideration of public comments, we are finalizing the 
revisions as proposed. This final rule is effective 60 days after it is 
published in the Federal Register. These requirements will be 
operationalized beginning March 3, 2025. This will allow CMS to make 
the corresponding changes in our systems (iQIES) while we are 
transitioning to a new technology

[[Page 64143]]

platform, and to provide the necessary training to implement these 
changes.
3. Timing of Enforcement
    Sections 1819(h)(2)(A) and 1919(h)(1) and (3) of the Act state that 
when a facility is found to be in compliance with the requirements but 
``. . . as of a previous period, did not meet such requirements,'' the 
Secretary and the State may impose a CMP for the days that the facility 
is found out of compliance with the requirements. The regulation at 
Sec.  488.430(b) states that ``CMS or the State may impose a civil 
money penalty for the number of days of past noncompliance since the 
last standard survey, including the number of days of immediate 
jeopardy.''
    As discussed in the proposed rule, due to an increase in the number 
of complaint surveys being conducted (for example, over 10,000 
additional surveys since 2015) and resulting increased enforcement 
actions, the current regulation may result in an unanticipated limit on 
CMS's authority to impose remedies for the noncompliance deficiencies 
identified when the last standard survey was performed. For example, a 
complaint survey might need to be conducted shortly after a standard 
survey, not leaving enough time to impose a CMP for deficiencies 
identified in the first survey before the second survey is concluded 
because the regulation limits how far back CMS or the State may go when 
calculating a CMP amount: since the last standard survey. We proposed 
to revise Sec.  488.430(b) by changing ``since the last standard 
survey'' to ``since the last three standard surveys.'' We believe this 
proposed revision aligns with the statutory mandate that the Secretary 
ensure that enforcement remedies ensure quality care and adequately 
protect the health and safety of nursing home residents in facilities 
where the Medicare and/or Medicaid programs pay for services. These 
proposed revisions are designed to enable CMS or State survey agencies 
to impose a variety of CMPs for noncompliance, particularly when 
surveyors have identified deficiencies during one survey that cannot be 
addressed because, for example, a subsequent survey has taken place. In 
these situations, it is important for CMS and the State to be able to 
impose a CMP (per day, per instance, or both), as warranted, to help 
ensure that the facility's correction is swift and its compliance is 
permanent. Additionally, as discussed in the proposed rule, limiting 
the imposition of CMPs for noncompliance that occurred and was cited 
since the last three standard surveys is more reflective of a 
facility's current compliance performance and is consistent with 
current CMS practices of posting survey results from the last three 
standard surveys and last three years of complaint surveys on Nursing 
Home Care Compare as well as the Nursing Home Five Star Quality Rating 
System.
    We sought public comments on this proposal and an alternative look-
back period that would also ensure CMPs are imposed in a manner that is 
not dependent on when the next standard survey is conducted. There were 
no comments regarding an alternative look-back period. The following is 
a summary of the comments we received and our responses.
    Comment: Some commenters supported the revision to Sec.  488.430(b) 
that authorizes the imposition of CMPs for noncompliance that was 
previously cited since the last three standard surveys.
    Response: We appreciate the support for this proposal and thank the 
commenters for their comments.
    Comment: We also received comments questioning how this revision 
would be used to enforce new regulations such as the ``Minimum Staffing 
Standards for Long-Term Care (LTC) Facilities and Medicaid 
Institutional Payment Transparency'' final rule.\109\
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    \109\ 89 FR 40876 (May 10, 2024); https://www.federalregister.gov/documents/2024/05/10/2024-08273/medicare-and-medicaid-programs-minimum-staffing-standards-for-long-term-care-facilities-and-medicaid.
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    Response: As stated previously, the enforcement of the new 
requirements for minimum staffing standards will not begin until the 
requirements become effective; the relevant effective and 
implementation dates are stated in the final rule. The revisions in 
this final rule will enable CMS to look-back three standard surveys for 
any noncompliance that was previously cited but no CMP was yet imposed 
and will allow for imposition of CMPs. The revision's intent is not to 
instruct that surveyors look-back to the last three standard surveys 
for noncompliance that was not previously cited. The revisions will not 
impact the new staffing regulations any differently than they impact 
CMS' ability to impose CMPs for any other noncompliance where the 
imposition of a CMP is warranted.
    Comment: We received comments voicing concerns about how the 
proposed revisions would be affected by the current survey backlog. The 
commenters are concerned that facilities affected by the survey backlog 
should not be penalized with a lengthy lookback period when they have 
no ability to change it. Additionally, in the current environment where 
some States are using contracted surveyors and there is inconsistency, 
the commenter believes it is inequitable to apply a national standard 
that could penalize some States.
    Response: We thank the commenters for their concerns, but we 
disagree. We wish to clarify that the proposal to look-back to the last 
three standard surveys pertains only to CMPs issued as part of CMS' 
oversight and enforcement of regulatory noncompliance that occurred and 
was specifically cited in a previous period, but no CMP was yet 
imposed. This regulatory revision is not intended to create a new 
ability for surveyors to investigate and cite potential or alleged 
noncompliance that occurred during the proposed look-back period that 
had not already been cited and included on a Statement of Deficiencies. 
The intent of the proposed revision is to ensure the imposition of 
CMPs, when warranted as an enforcement response, is equitable and that 
all providers, regardless of their location will be subject to the same 
amount of enforcement in accordance with the CMP Analytic Tool.\110\ 
This revision allows CMS to impose a variety of CMPs, as necessary, for 
regulatory noncompliance that occurred in a previous period even if a 
subsequent survey has taken place. We do note however, that the current 
regulatory scheme still requires that CMS investigate any received 
complaints, without any temporal limitation on the specific alleged 
deficiencies complained of, and thus the possibility of investigations 
into allegations during the proposed look-back period is possible. See 
42 CFR 488.308(f).
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    \110\ https://qcor.cms.gov/report_select.jsp?which=0.
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    After consideration of public comments we received and for the 
reasons discussed earlier in this section and in the proposed rule, we 
are finalizing the proposed revision with two modifications at Sec.  
488.430(b). First, we are replacing ``past noncompliance'' with 
``previously cited noncompliance'' as we are concerned that 
stakeholders are confusing the reference to past noncompliance with 
noncompliance that occurred and was already previously cited on a 
Statement of Deficiencies that was issued to a provider. Therefore, as 
discussed earlier in this section, ``previously cited noncompliance'' 
means noncompliance that was already previously cited on a Statement of 
Deficiencies that was issued to a provider for a survey that occurred 
since the last three standard

[[Page 64144]]

surveys but a CMP has not yet been imposed. Also, as previously stated, 
this regulatory revision is not intended to create a new ability for 
surveyors to investigate and cite potential or alleged noncompliance 
that occurred during the proposed look-back period that had not already 
been cited and included on a Statement of Deficiencies.
    Second, we proposed that CMS or the State may impose a civil money 
penalty for the ``number of days'' of previously cited noncompliance, 
but are adding, ``or instances,'' as a conforming change to specify 
that either a PD or PI CMP, or both, may be imposed for previously 
cited noncompliance, consistent with the revisions that are finalized 
in this rule. This final rule is effective 60 days after it is 
published in the Federal Register. These requirements will be 
operationalized beginning March 3, 2025. This will allow CMS to make 
the corresponding changes in our system while we are transitioning to a 
new technology platform (iQIES), and to provide the necessary training 
to implement these changes.

X. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 30-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. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 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 estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We solicited public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
    Using the following format describe the information collection 
requirements that are in each section.

A. Information Collection Requirements (ICRs)

1. ICRs Regarding the Skilled Nursing Facility Value-Based Purchasing 
Program
    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 SNF VBP-related collections of 
information that would be subject to OMB approval under the authority 
of the PRA.
2. ICRs Regarding the Skilled Nursing Facility Quality Reporting 
Program (SNF QRP)
    In accordance with section 1888(e)(6)(A)(i) of the Act, the 
Secretary must reduce by 2-percentage points the otherwise applicable 
annual payment update to a SNF for a fiscal year if the SNF does not 
comply with the requirements of the SNF QRP for that fiscal year.
    As stated in section VI.C.3. of the proposed rule and VII.C.3. of 
this final rule, we proposed to adopt four new items as standardized 
patient assessment data elements under the SDOH category and modify one 
item collected as a standardized patient assessment data element under 
the SDOH category beginning with the FY 2027 SNF QRP. In section 
VI.E.3. of the proposed rule and VII.E.3. of this final rule, we also 
proposed that SNFs participating in the SNF QRP, be required to 
participate in a validation process. Specifically, we proposed adopting 
a similar validation process for the SNF QRP that we adopted for the 
SNF VBP beginning with the FY 2027 SNF QRP.
    As stated in section VI.C.3. of the proposed rule and section 
VII.C. of this final rule, we proposed to adopt four new items as 
standardized patient assessment data elements under the SDOH category 
and modify one item collected as a standardized patient assessment data 
element under the SDOH category beginning with the FY 2027 SNF QRP. The 
proposed new and modified items would be collected using the MDS. The 
MDS, in its current form, has been approved under OMB control number 
0938-1140. Four items would need to be added to the MDS at admission to 
allow for collection of these data, and one would be modified. 
Additionally, as stated in section VI.E.2. of the proposed rule and 
section VII.E.2. of this final rule, we are finalizing our proposal to 
require SNFs to collect and submit data on the four new and one 
modified SDOH standardized patient assessment data elements at 
admission beginning October 1, 2025. However, we are finalizing a 
modification to the data specifications of the new and modified SDOH 
items so that they exclude any SNF residents who, immediately prior to 
their hospitalization that preceded a new SNF stay, resided in a NF for 
at least 366 continuous days. SNFs can monitor the MDS 3.0 Technical 
Information web page at https://www.cms.gov/medicare/quality/nursing-home-improvement/minimum-data-set-technical-information for updates.
    The net result of collecting four new items at admission and 
modifying the Transportation item (including the modification that this 
item be collected at admission only, rather than at admission and 
discharge) is an increase of 0.9 minutes or 0.015 hour of clinical 
staff time at admission [(4 items x 0.005 hour) minus (1 item x 0.005 
hour)]. We identified the staff type based on past SNF burden 
calculations, and our assumptions are based on the categories generally 
necessary to perform an assessment. We believe the new and modified 
items will be completed equally by a Registered Nurse (RN) and Licensed 
Practical and Licensed Vocational Nurse (LPN/LVN). However, individual 
SNFs determine the staffing resources necessary.
    For the purposes of calculating the costs associated with the 
collection of information requirements, we obtained median hourly wages 
for these staff from the U.S. Bureau of Labor Statistics' (BLS) May 
2022 National Occupational Employment and Wage Estimates.\111\ To 
account for other indirect costs and fringe benefits, we doubled the 
hourly wage. These amounts are detailed in Table 34. We established a 
composite cost estimate using our adjusted wage estimates. The 
composite estimate of $65.31/hr was calculated by weighting each hourly 
wage equally [($78.10/hr x 0.5) plus ($52.52/hr x 0.5) = $65.31].
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    \111\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.

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[[Page 64145]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.038

    We estimate that the burden and cost for SNFs for complying with 
requirements of the FY 2027 SNF QRP will increase under this 
requirement to collect and submit these new and modified items on the 
MDS for each resident at admission. Therefore, we are providing a 
revised estimate of burden and cost from what we estimated in section 
IX.A.2. of the proposed rule. Using FY 2023 data, we estimate 199,856 
5-day PPS assessments would be impacted by the modification within the 
MDS data specifications in order to decrease the burden of capturing 
this information on any SNF residents who, immediately prior to their 
hospitalization that preceded a new SNF stay, resided in a NF for at 
least 366 continuous days. As a result, we estimate a new total of 
1,766,806 admissions. Our estimate of planned discharge assessments is 
not changing and remains at 754,287 planned discharges. We are changing 
the number of SNFs based on more recent information and more recent 
provider to CBSA matching from 15,393 SNFs annually to 15,477 SNFs 
annually. The result is a revised increase of 30,565.41 hours in burden 
for all SNFs [(1,766,806 5-day PPS assessments x 0.02 hour for the four 
new SDOH items) minus [(199,856 5-day PPS assessments x 0.005 hour for 
the modified Transportation item) plus (754,287 planned discharges x 
0.005 hour)]], reflecting a reduction of 4,996.41 hours from the 
estimate in the proposed rule (89 FR 23424). Given 0.02 hour at $65.31 
per hour to complete an average of 114 5-day PPS assessments per 
provider per year minus the sum of 0.005 hour at $65.31 per hour to 
complete an average of 12.91 5-day PPS assessments per provider per 
year and 0.005 at $65.31 per hour to complete an average of 49 Planned 
Discharge assessments, we estimate the total cost would be increased by 
$128.98 per SNF annually, or $1,996,226.60 for all SNFs annually, a 
reduction of $21.90 per SNF annually or $326,314.88 for all SNFs 
annually from the estimate in the proposed rule (89 FR 23424). The 
increase in burden will be accounted for in a revised information 
collection request under OMB control number (0938-1140). The required 
60-day and 30-day notices would publish in the Federal Register and the 
comment periods will be separate from those associated with this 
rulemaking.
    In summary, under OMB control number (0938-1140), as a result of 
finalizing the policies in this final rule, we estimate the SNF QRP 
will result in an overall increase of 30,565.41 hours annually for 
15,477 SNFs. The total revised cost increase related to this 
information collection is approximately $1,996,226.60 and is summarized 
in Table 35.

[[Page 64146]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.039

    We invited public comments on the proposed information collection 
requirements. We have summarized the comments we received in section 
VII.E.2 of this final rule and provided responses. After careful 
consideration of the public comments we received, we are finalizing our 
proposal with modification as stated above.
3. ICRs Regarding the Minimum Data Set (MDS) Beginning October 1, 2025
    The MDS is used for meeting the SNF Requirements of Participation, 
requirements under the SNF QRP, and for payment purposes under the SNF 
PPS. As outlined in the FY 2019 SNF PPS final rule (83 FR 39165 through 
39265), several MDS items are not needed in case-mix adjusting the per 
diem payment for PDPM. However, they were not accounted for in the FY 
2019 SNF PPS final rule. Therefore, we are removing these items from 
the 5-day Medicare-required assessment beginning October 1, 2025. We 
have provided an estimate of the reduction in burden here and in Table 
36. The items to be removed are:
     O0400.A.1. Speech-Language Pathology and Audiology 
Services; Individual minutes.
     O0400.A.2. Speech-Language Pathology and Audiology 
Services; Concurrent minutes.
     O0400.A.3. Speech-Language Pathology and Audiology 
Services; Group minutes.
     O0400.A.3A. Speech-Language Pathology and Audiology 
Services; Co-treatment minutes.
     O0400.A.4. Speech-Language Pathology and Audiology 
Services; Days.
     O0400.A.5. Speech-Language Pathology and Audiology 
Services; Therapy start date.
     O0400.A.6. Speech-Language Pathology and Audiology 
Services; Therapy end date.
     O0400.B.1. Occupational Therapy; Individual minutes.
     O0400.B.2. Occupational Therapy; Concurrent minutes.
     O0400.B.3. Occupational Therapy; Group minutes.
     O0400.B.3A. Occupational Therapy; Co-treatment minutes.
     O0400.B.4. Occupational Therapy; Days.
     O0400.B.5. Occupational Therapy; Therapy start date.
     O0400.B.6. Occupational Therapy; Therapy end date.
     O0400.C.1. Physical Therapy; Individual minutes.
     O0400.C.2. Physical Therapy; Concurrent minutes.
     O0400.C.3. Physical Therapy; Group minutes.
     O0400.C.3A. Physical Therapy; Co-treatment minutes.
     O0400.C.4. Physical Therapy; Days.
     O0400.C.5. Physical Therapy; Therapy start date.
     O0400.C.6. Physical Therapy; Therapy end date.
     O0400.E.2. Psychological Therapy; Days.
    The net result of removing the collection of these items is a 
decrease of 6.6 minutes of clinical staff time at admission. We believe 
that these items are completed equally by a RN and LPN/LVN. Individual 
SNFs determine the staffing resources necessary.
    For the purposes of calculating the costs associated with the 
collection of information requirements, we obtained median hourly wages 
for these staff from the BLS May 2022 National Occupational Employment 
and Wage Estimates.\112\ To account for other indirect costs and fringe 
benefits, we have doubled the hourly wage. These amounts are detailed 
in Table 36. We

[[Page 64147]]

established a composite cost estimate using our adjusted wage 
estimates. The composite estimate of $65.31/hr was calculated by 
weighting each hourly wage equally [($78.10/hr x 0.5) plus ($52.52/hr x 
0.5) = $65.31].
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    \112\ U.S. Bureau of Labor Statistics' (BLS) May 2022 National 
Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
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    Using FY 2023 data, we estimate a total of 1,966,662 admissions to 
15,477 SNFs annually. This equates to a decrease of 216,332.82 hours in 
burden for all SNFs. Given 0.11 hour at $65.31 per hour to complete an 
average of 127 5-day PPS assessments per provider per year, we estimate 
the total cost will be decreased by $912.88 per SNF annually, or 
$14,128,696.47 for all SNFs annually.
[GRAPHIC] [TIFF OMITTED] TR06AU24.040

    As noted previously in this section of the final rule, we did not 
formally propose the changes to the MDS. Rather we used this 
opportunity to provide SNFs the information collection requirements 
associated with a change that was not accounted for in the FY 2019 SNF 
PPS final rule. We received a limited number of comments about this 
notification, and are providing a summary of those here, with our 
responses.
    Comment: Three commenters supported the removal of several MDS 
items that are not needed in case-mix adjusting the per diem payment 
for PDPM but were not accounted for in the 2019 SNF PPS. These 
commenters acknowledged CMS' efforts to reduce provider burden. One of 
these commenters appreciated that CMS was not removing the Therapy 
items in Section O on the PPS Discharge Assessment that collect the 
number of physical, occupational, and speech-language pathology and 
audiology minutes provided since the start date of the resident's most 
recent Medicare Part A stay.
    Response: We appreciate the support from commenters and agree that 
removing the requirement to collect the data at the time of the 
Medicare Part A admission, while retaining the requirement to collect 
the data at the time of discharge from the Medicare Part A stay, 
balances the need to monitor the data, while also minimizing provider 
burden.
    Comment: Several commenters urged CMS not to remove these items 
from the 5-day PPS assessment because it gave the appearance that 
rehabilitation therapy was being devalued and CMS would not be able to 
track functional outcomes. Two of these commenters suggested that there 
are not enough safeguards in place to ensure patients receive the 
appropriate skilled therapy they need to achieve desired outcomes, and 
one of these commenters suggested the therapy minutes items provided a 
trigger for nursing staff to consider whether therapy should be 
implemented. One of the commenters stated it is too early to eliminate 
the items from the MDS given that PDPM was implemented approximately 5 
years ago. Other commenters noted that they were concerned that without 
these minutes documented, residents may only receive ``low'' skilled 
therapies. Finally, one of the commenters stated collection of these 
items allows CMS to ensure that when they make a therapy payment, 
therapy services are delivered.
    Response: We acknowledge the commenters concerns, and it is not our 
intent to devalue therapy. In fact, functional outcomes are a key 
component of our SNF QRP measure set, including the Discharge Function 
Score measure that was adopted in the FY 2024 SNF PPS final rule (88 FR 
53233 through 53243). As we stated at the time, the implementation of 
interventions that improve residents' functional outcomes and reduce 
the risks of associated undesirable outcomes as a part of a resident-
centered care plan is essential to maximizing functional improvement. 
For many people, the overall goals of SNF care may include optimizing 
functional improvement, returning to a previous level of independence, 
maintaining functional abilities, or avoiding institutionalization (88 
FR 53234). We take the quality of care residents receive in SNFs 
seriously, and monitor the impact of policy decisions, including adding 
or removing quality measures and assessment items. We do not believe it 
is necessary to retain these items on the 5-day PPS admission 
assessment to trigger a decision as to whether therapy services are 
needed. SNFs have a responsibility to develop and implement a baseline 
care plan for each resident that includes the instructions needed to 
provide effective and person-centered care of the resident that meet 
professional standards of quality care (Sec.  483.21(a)). Additionally, 
the facility must develop and implement a comprehensive person-centered 
care plan for each resident (Sec.  483.21(b)) that has been prepared by 
an interdisciplinary team (Sec.  483.21(b)(2)(ii)). The comprehensive 
person-centered care plan must include the services to be furnished in 
order to

[[Page 64148]]

attain or maintain the resident's highest practicable physical, mental, 
and psychosocial well-being as required under Sec.  483.24, Sec.  
483.25, or Sec.  483.40.
    We believe retaining the therapy items on the PPS discharge 
assessment will achieve the same goals, but with less burden on SNFs. 
Specifically, we will still collect the total number of individual, 
concurrent, group, and cotreatment therapy minutes by discipline, as 
well as the number of days of each therapy discipline a resident 
received over the course of their Part A stay. Therefore, we will be 
able to ensure there is no significant change in the intensity of 
therapy a resident receives and understand the relationship between the 
delivery of therapy services with functional outcomes.
    Regarding the comment that residents may receive ``low'' skilled 
therapies, we are unclear how to interpret what the commenter may have 
been referring to as ``low'' skilled therapies. Medicare only has one 
definition of skilled therapy,\113\ and the MDS RAI manual has 
consistently provided guidance to SNFs that the number of days and 
minutes recorded on the MDS may only include the skilled therapy 
treatment time. And, as noted previously in this final rule, SNFs have 
a responsibility to provide the necessary care and services to attain 
or maintain the highest practicable physical, mental, and psychosocial 
well-being, in accordance with the comprehensive assessment and plan of 
care (42 CFR 483.25). Regarding the comment that CMS will be unable to 
ensure that when they make a therapy payment, therapy services are 
delivered, we remind commenters that the SNF PPS does not use the 
number of therapy minutes to determine SNF payment. The SNF PDPM was 
implemented on October 1, 2019, replacing the Resource Utilization 
Groups (RUG) which was dependent on Section O for therapy minutes. The 
PDPM consists of five case-mix adjust components, all based on data-
driven, interested parties-vetted patient characteristics, rather than 
therapy utilization minutes.
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    \113\ Medicare Benefit Policy Manual 100-02; Chapter 8--Coverage 
of Extended Care (SNF) Services Under Hospital Insurance; Section 
30.2--Skilled Nursing and Skilled Rehabilitation Services.
---------------------------------------------------------------------------

    Comment: Two commenters urged CMS to continue tracking the therapy 
start date, which is only collected on the 5-day PPS assessment, since 
this datapoint may be useful for research on best practices and 
functional outcomes, including determining whether or how delays in the 
start of rehabilitation care may impact patient outcomes and discharge 
disposition.
    Response: We thank these commenters for their input. However, CMS 
no longer uses start dates because the data are not needed for Federal 
governmental purposes. As we noted in the FY 2019 SNF PPS final rule, 
we closely monitor service utilization, payment, and quality trends 
when evaluating patient care outcomes.
    Comment: One commenter stated the therapy start date is necessary 
to retain since it is used in calculating the Discharge Function Score 
measure, and requested CMS clarify how this measure would be calculated 
without the data point.
    Response: The Discharge Function Score measure does not use the 
O0400A5 Speech-Language Pathology and Audiology Services Start date, 
the O0400B5 Occupational Therapy Services Start date, or the O0400C5 
Physical Therapy Services Start date in the calculation. Therefore, 
these data will have no effect on the calculation of the measure 
scores.
    Comment: One commenter recognized that removing items from the MDS 
reduces administrative burden but noted that CMS overestimated the 
amount of time that it takes to track therapy utilization using the MDS 
tool and did not agree that the collection and submission of these 
items takes more than 6 minutes of staff time per patient at admission.
    Response: The commenter did not provide specific information to 
support why they believe the burden was overestimated. The 6.6 minutes 
per MDS is based on past MDS burden calculations and represents the 
time it takes to encode the MDS. Our assumptions for staff type were 
based on the categories generally necessary to perform an assessment, 
and subsequently encode it, and is consistent with past collection of 
information estimates.
    After careful consideration of the public comments we received, we 
are finalizing our intention to remove the Section O0400 items 
identified above from the MDS.
4. ICRs Regarding the Proposal for SNFs To Participate in a Validation 
Process
    In section VI.E.3. of the proposed rule, we proposed to require 
SNFs to participate in a validation process beginning with the FY 2027 
SNF QRP. We provided an estimate of burden in Table 37, and noted that 
the increase in burden will be accounted for in a new information 
collection request.
    As stated in section VI.E.3(a) of the proposed rule and section 
VII.E.3(a) of this final rule, we proposed to require SNFs to 
participate in a validation process for assessment-based measures 
beginning with the FY 2027 SNF QRP. We identified the staff type based 
on past SNF burden calculations, and our assumptions are based on the 
categories generally necessary to perform an assessment. We believe 
that the medical records will be collected and submitted by a Medical 
Records and Health Information Technologist and Medical Registrar (HIT/
MR). However, individual SNFs determine the staffing resources 
necessary. For the purposes of calculating the costs associated with 
the collection of information requirements, we obtained median hourly 
wages for these staff from the BLS May 2022 National Occupational 
Employment and Wage Estimates.\114\ To account for other indirect costs 
and fringe benefits, we doubled the hourly wage to establish an 
adjusted wage estimate of $56.02/hr. These amounts are detailed in 
Table 37.
---------------------------------------------------------------------------

    \114\ https://www.bls.gov/oes/current/oes_nat.htm.

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[[Page 64149]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.041

    We proposed that our validation contractor will select, on an 
annual basis, up to 1,500 SNFs and up to 10 medical records from each 
of the selected SNFs. We proposed that the selected SNFs will have the 
option to submit digital or paper copies of the requested medical 
records to the validation contractor.
    For the purposes of burden estimation, we assume all the activities 
associated with the SNF QRP validation process will be completed by a 
HIT/MR. For selected SNFs utilizing electronic health records (EHR), we 
anticipate an increase of 3 hours up to 7.5 hours of HIT/MR time per 
SNF to submit a sample of up to 10 records. For selected SNFs that do 
not utilize EHRs, we anticipate an increase of 5 hours up to 12.5 hours 
of HIT/MR time per SNF to submit a sample of up to 10 records. 
Additionally, SNFs that do not utilize EHRs may incur printing and 
shipping costs if they are unable to submit the records via an 
electronic portal, and for these SNFs, we estimate the cost to print 
and ship a sample of up to 10 records would range from $842.67 up to 
$4,114.35.
    We also anticipate that a sample of up to 10 medical records will 
consist of SNF stays that vary in length of stay. We estimate the 
length of stay for each of the selected medical records could range 
from 20 days (or less) up to or exceeding 366 days. For purposes of our 
burden estimate, we anticipate the average sample of up to 10 medical 
records will be distributed among the possible lengths of stay (that 
is, approximately 40 percent of stays or 4 stays would be 1 to 30 days, 
40 percent of stays or 4 stays would be 31 to 100 days, and 20 percent 
of stays or 2 stays would last 101 to 366 or more consecutive days). We 
also estimate that approximately 85 percent of nursing homes utilize 
some form of EHRs.\115\ Therefore, we estimate the total cost to submit 
up to 10 medical records will range between $335,699.85 and $477,368.10 
for all 1,500 SNFs selected, depending on the length of stay of the 
sample medical records and whether the SNFs use an EHR. We also 
estimate that total cost to submit up to 10 medical records will range 
between $263.29 [$335,699.85/(1,500 x 0.85 SNFs)] and $2,121.64 
[$477,368.10/(1,500 x 0.15 SNFs)] per SNF selected depending on the 
length of stay of the sample of medical records and whether the SNF 
uses an EHR. On average we estimate the total cost will be increased by 
$813,067.95 for all 1,500 selected SNFs [[($263.29 x (1,500 x 0.85)] 
plus [$2,121.64 x (1,500 x 0.15)]] and $542.05 per selected SNF 
($813,067.95/1,500 SNFs) annually.
---------------------------------------------------------------------------

    \115\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6591108/
#:~:text=In%20a%20nationwide%20sample%2C%20we,EHR%20adoption%20by%20n
ursing%20facilities.
---------------------------------------------------------------------------

    In section VI.E.3(b). of the proposed rule and section VII.E.3.(b) 
of this final rule, we proposed to require SNFs to participate in a 
validation process for Medicare fee-for-service claims-based measures 
beginning with the FY 2027 SNF QRP. All Medicare fee-for-service 
claims-based measures are already reported to the Medicare program for 
payment purposes, and therefore there is no additional burden for SNFs.
[GRAPHIC] [TIFF OMITTED] TR06AU24.042

    We invited public comments on the proposed information collection 
requirements. We have summarized the comments we received in section 
VII.E.3 of this final rule and provided responses. After careful 
consideration of the public comments received, and for the reasons 
outlined in this section of the final rule and our comment responses, 
we are finalizing the requirements as proposed.
5. ICRs Regarding Nursing Home Enforcement
    This rule finalizes our proposals to expand and strengthen 
enforcement processes to increase CMS' flexibility when imposing CMPs. 
While Omnibus Budget Reconciliation Act of 1987 (OBRA '87) exempts 
nursing home enforcement requirements from the PRA, the anticipated 
increase in penalties due to facility noncompliance being cited are 
quantified in the regulatory impact analysis (RIA) section of this 
preamble.

[[Page 64150]]

XI. Economic Analyses

A. Regulatory Impact Analysis

1. Statement of Need
a. Statutory Provisions
    This rule updates the FY 2025 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. These are statutory 
provisions that prescribe a detailed methodology for calculating and 
disseminating payment rates under the SNF PPS, and we do not have the 
discretion to adopt an alternative approach on these issues.
    With respect to the SNF QRP, we proposed and are finalizing several 
updates beginning with the FY 2027 SNF QRP as described in section VII. 
of this final rule. Specifically, we are finalizing our proposal to 
collect four new items as standardized patient assessment data elements 
under the SDOH category and modify one item collected as a standardized 
patient assessment data element under the SDOH category in the MDS 
beginning with the FY 2027 SNF QRP with one modification. Specifically, 
we are finalizing the data specifications of the new and modified SDOH 
items so that they exclude any SNF residents who, immediately prior to 
their hospitalization that preceded a new SNF stay, resided in a NF for 
at least 366 continuous days. We believe these new and modified items 
advance the CMS National Quality Strategy Goals of equity and 
engagement by encouraging meaningful collaboration between healthcare 
providers, caregivers, and community-based organizations to address 
SDOH prior to discharge from the SNF. We also are finalizing our 
proposal to adopt a validation process for the SNF QRP beginning with 
the FY 2027 SNF QRP with modification. Specifically, we are finalizing 
that our validation contractor will select, on an annual basis, up to 
1,500 SNFs that submit at least one MDS record in the FY 2 years prior, 
rather than the CY 3 years prior, to the applicable FY SNF QRP. We 
believe this validation process satisfies section 111(a)(4) of Division 
CC of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) which 
requires that the data submitted under the SNF QRP (section 1888(e)(6) 
of the Act) be subject to a validation process. We are also finalizing 
revisions to our regulation at Sec.  413.360.
    With respect to the SNF VBP Program, this final rule updates SNF 
VBP Program requirements for FY 2025 and subsequent years. Section 
1888(h)(3) of the Act requires the Secretary to establish and announce 
performance standards for SNF VBP Program measures no later than 60 
days before the performance period, and this final rule includes 
numerical values of the performance standards for the FY 2027 program 
year for the SNFRM, SNF HAI, Total Nurse Staffing, Nursing Staff 
Turnover, Falls with Major Injury (Long-Stay), DC Function, and Long 
Stay Hospitalization measures; and numerical values of the performance 
standards for the FY 2028 program year for the DTC PAC SNF and SNF WS 
PPR measures. We are also required under section 1888(h)(1)(C) of the 
Act to establish a minimum number of measures that apply to a facility 
for the applicable performance period. Therefore, we are finalizing the 
measure minimum for the FY 2028 program year and subsequent program 
years, which will be the same as the measure minimum we previously 
finalized for the FY 2027 program year (88 FR 53303).
b. Discretionary Provisions
    In addition, this final rule includes the following discretionary 
provisions:
(1) SNF Market Basket Adjustment
    We are rebasing and revising the SNF market basket to reflect a 
2022 base year. Since the inception of the SNF PPS, the market basket 
used to update SNF PPS payments has been periodically rebased and 
revised to reflect more recent data. We last rebased and revised the 
market basket applicable to the SNF PPS in the FY 2022 SNF PPS final 
rule (86 FR 42444 through 42463) where we adopted a 2018-based SNF 
market basket.
    Given changes to the industry in recent years and public comments 
about the timeliness of the weights, we have been monitoring the 
Medicare cost report data to determine if a more frequent rebasing 
schedule than our standard schedule (which has generally been about 
every 4 years) is necessary. In light of this analysis, we are 
incorporating data that is more reflective of recent SNF expenses.
(2) SNF Forecast Error Adjustment
    Each year, we evaluate the SNF market basket forecast error for the 
most recent year for which historical data is available. The forecast 
error is determined by comparing the projected SNF market basket 
increase each year with the actual SNF market basket increase in that 
year. In evaluating the data for FY 2023, we found that the forecast 
error for that year was 1.7 percentage points, exceeding the 0.5 
percentage point threshold we established in regulation to trigger a 
forecast error adjustment. Given that the forecast error exceeds the 
0.5 percentage point threshold for FY 2023, current regulations require 
that the SNF market basket percentage increase for FY 2025 be adjusted 
upward by 1.7 percentage points to account for forecasting error in the 
FY 2023 SNF market basket update.
(3) Technical Updates to ICD-10 Mappings
    In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the 
implementation of the PDPM, effective October 1, 2019. The PDPM 
utilizes ICD-10 codes in several ways, including using the patient's 
primary diagnosis to assign patients to clinical categories under 
several PDPM components, specifically the PT, OT, SLP, and NTA 
components. In this rule, we are finalizing several substantive changes 
to the PDPM ICD-10 code mapping.
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), Executive Order 14094, entitled 
``Modernizing Regulatory Review'' (April 6, 2023), 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), and the Congressional Review Act (5 U.S.C. 
804(2)).
    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 14094, entitled ``Modernizing Regulatory Review'', amends section 
3(f)(1) of Executive Order 12866 (Regulatory Planning and Review). The 
amended section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) having an annual effect on the

[[Page 64151]]

economy of $200 million or more in any 1 year (adjusted every 3 years 
by the Administrator of Office of Information and Regulatory Affairs 
(OIRA) for changes in gross domestic product), or adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, territorial, or tribal governments or communities; (2) creating 
a serious inconsistency or otherwise interfering with an action taken 
or planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raise legal or 
policy issues for which centralized review would meaningfully further 
the President's priorities or the principles set forth in this 
Executive order, as specifically authorized in a timely manner by the 
Administrator of OIRA in each case.
    A RIA must be prepared for major rules with significant regulatory 
action/s and/or with significant effects as per section 3(f)(1) ($200 
million or more in any 1 year). Based on our estimates, OMB's Office of 
Information and Regulatory Affairs has determined this rulemaking is 
significant per section 3(f)(1) as measured by the $200 million or more 
in any 1 year, and hence also a major rule under subtitle E of the 
Small Business Regulatory Enforcement Fairness Act of 1996 (also known 
as the Congressional Review Act). Accordingly, we have prepared a RIA 
that to the best of our ability presents the costs and benefits of the 
rulemaking. Therefore, OMB has reviewed the proposed regulations, and 
the Departments have provided the following assessment of their impact.
3. Overall Impacts
    This rule updates the SNF PPS rates contained in the SNF PPS final 
rule for FY 2024 (88 FR 53200). We estimate that the aggregate impact 
will be an increase of approximately $1.4 billion (4.2 percent) in Part 
A payments to SNFs in FY 2025. This reflects a $1.4 billion (4.2 
percent) increase from the update to the payment rates. We noted in the 
proposed rule that these impact numbers do not incorporate the SNF VBP 
Program reductions that we estimate would total $187.69 million in FY 
2025. We 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 (e)(5) of the Act and 
implementing regulations at Sec.  413.337(d), we are updating the FY 
2024 payment rates by a factor equal to the market basket percentage 
increase adjusted for the forecast error adjustment and reduced by the 
productivity adjustment to determine the payment rates for FY 2025. The 
impact to Medicare is included in the total column of Table 39. The 
annual update in this rule applies to SNF PPS payments in FY 2025. 
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 2025 SNF PPS payment impacts appear in Table 39. Using the 
most recently available claims data, in this case FY 2023 we apply the 
current FY 2024 case-mix indices (CMIs), wage index and labor-related 
share value to the number of payment days to simulate FY 2024 payments. 
Then, using the same FY 2023 claims data, we apply the FY 2025 CMIs, 
wage index and labor-related share value to simulate FY 2025 payments. 
We tabulate the resulting payments according to the classifications in 
Table 39 (for example, facility type, geographic region, facility 
ownership), and compare the simulated FY 2024 payments to the simulated 
FY 2025 payments to determine the overall impact. The breakdown of the 
various categories of data in Table 39 is as 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 contained in this final rule 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 update to the SNF 
PPS wage index due to adopting the updated census data and revised 
CBSAs in OMB Bulletin 23-01. This represents the effect of only the 
adoption of the revised CBSAs, independent of the effect of the annual 
update to the wage index.
     The fourth column shows the effect of the annual update to 
the wage index, including the updates to the labor related-share 
discussed in section VI.A of this final rule. This represents the 
effect of using the most recent wage data available as well as accounts 
for the 5 percent cap on wage index transitions. The total impact of 
this change is 0.0 percent; however, there are distributional effects 
of the change.
     The fifth column shows the effect of all of the changes on 
the FY 2025 payments. The update of 4.2 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 4.2 
percent, assuming facilities do not change their care delivery and 
billing practices in response.
    As illustrated in Table 39, 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, rural providers will experience a 
5.1 percent increase in FY 2025 total payments.
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[[Page 64152]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.043

BILLING CODE 4120-01-C
5. Impacts for the Skilled Nursing Facility Quality Reporting Program 
(SNF QRP) for FY 2027
    Estimated impacts for the SNF QRP are based on analysis discussed 
in section XI. of the proposed rule. In accordance with section 
1888(e)(6)(A)(i) of the Act, the Secretary must reduce by 2 percentage 
points the annual payment update applicable to a SNF for a fiscal year 
if the SNF does not comply with the requirements of the SNF QRP for 
that fiscal year.
    As stated in section VII.C.3. of this final rule, we are finalizing 
our proposal to adopt four new items as standardized patient assessment 
data elements under the SDOH category and modify the Transportation 
item collected as a standardized patient assessment data element under 
the SDOH category beginning with residents admitted on October 1, 2025, 
for the FY 2027 SNF QRP. However, we are finalizing a modification to 
the data specifications of the new and modified SDOH items so that they 
exclude any SNF residents who, immediately prior to their 
hospitalization that preceded a new SNF stay, resided in a NF for at 
least 366 continuous days.
    Although the increase in burden for collecting four new SDOH items 
and the modified Transportation item via the MDS for each resident at 
admission only will be accounted for in a revised information 
collection request under OMB control number (0938-1140), we are 
providing revised impact information as reflected in Table 40. As 
discussed in section X.A.2. of this final rule, while the net result of 
these finalized new and modified SDOH items will increase the burden, 
the burden of the modified Transportation item will decrease slightly 
as we are finalizing that SNFs will be required to collect this item at 
admission only, rather than at admission and discharge as is currently 
required. With 1,766,806 admissions to and 754,287 planned discharges 
from 15,477 SNFs annually, we estimate an annual burden increase of

[[Page 64153]]

30,565.41hours [(1,766,806 5-day PPS assessments x 0.02 hour for the 
four new SDOH items) minus [(199,856 5-day PPS assessments x 0.005 hour 
for the modified Transportation item) plus (754,287 planned discharges 
x 0.005 hour)]], reflecting a reduction of 4,996.41 hours from the 
estimate in the proposed rule (89 FR 23424). For each SNF, we estimate 
an annual burden increase of 1.97 hours (30,565.41hours/15,477 SNFs) at 
an additional cost of $128.98 ($1,996,226.60 total burden/15,477 SNFs).
    As stated in section VII.E.3. of this final rule, we also are 
finalizing our proposal with modification to require SNFs participating 
in the SNF QRP to participate in a validation process that will apply 
to data submitted using the MDS and SNF Medicare fee-for-service 
claims. Specifically, we are finalizing our proposal with modification 
to adopt a validation process for the SNF QRP, similar to the process 
that we adopted for the SNF VBP, beginning with the FY 2027 SNF QRP. 
This validation process is in accordance with section 111(a)(4) of 
Division CC of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260) which requires that the measures and data submitted under the SNF 
QRP Program (section 1888(e)(6) of the Act) be subject to a validation 
process.
    In section VII.E.3(a). of this final rule, we are finalizing our 
proposal to require SNFs to participate in a validation process for 
assessment-based measures beginning with the FY 2027 SNF QRP with two 
modifications. First, as discussed in section VII.E.3.(a) of this final 
rule, we are finalizing that our validation contractor will select, on 
an annual basis, up to 1,500 SNFs that submit at least one MDS record 
in the FY 2 years prior, rather than the CY 3 years prior, to the 
applicable FY SNF QRP. We are also finalizing regulation text at Sec.  
413.360(g)(1)(i) that reflects this new policy. Second, we are 
modifying the regulation text at Sec.  413.360(g)(1)(iii) to correct a 
minor technical error, so it properly cross-references paragraph (g)(1) 
instead of paragraph (g)(2). Our validation contractor will select, on 
an annual basis, up to 1,500 SNFs and request that each SNF selected 
for the validation process submit up to 10 medical records. Although 
the increase in burden will be accounted for in a new information 
collection request, we are providing impact information. We estimated 
the burden per selected SNF will range from 3 hours up to 7.5 hours for 
SNFs utilizing electronic health records and 5 hours up to 12.5 hours 
for SNFs who do not utilize electronic health records.
    We also anticipated that a sample of 10 medical records will 
consist of SNF stays that vary in length of stay. We estimated the 
length of stay for each of the selected medical records could range 
from 1 day up to or exceeding 366 days. We also estimated that 
approximately 85 percent of nursing homes utilize some form of 
electronic health records (EHR),\116\ and will not incur the costs of 
printing and shipping records. However, selected SNFs who do not 
utilize EHRs may incur printing and shipping costs if they are unable 
to submit the records via an electronic portal, and we estimate the 
cost to print and ship a sample of up to 10 records will range between 
$842.67 up to $4,114.35. Therefore, depending on the length of stay of 
the sample and whether the selected SNF uses an EHR, we estimated the 
total cost to submit medical records will range between $335,699.85 and 
$477,368.10 for all 1,500 selected SNFs and $263.29 [$335,699.85/(1,500 
x 0.85 SNFs)] and $2,121.64 [$477,368.10/(1,500 x 0.15 SNFs)] per 
selected SNF. On average, we estimated the total cost will increase by 
$813,067.95 for all 1,500 selected SNFs [[($263.29 x (1,500 x 0.85)] 
plus [$2,121.64 x (1,500 x 0.15)]] and $542.05 per selected SNF 
($813,067.95/1,500 SNFs) annually.
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    \116\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6591108/
#:~:text=In%20a%20nationwide%20sample%2C%20we,EHR%20adoption%20by%20n
ursing%20facilities.
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    In section VII.E.3(b). of this final rule, we are finalizing our 
proposal to require SNFs to participate in a validation process for 
Medicare fee-for-service claims-based measures beginning with the FY 
2027 SNF QRP.
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BILLING CODE 4120-01-C
    We invited public comments on the overall impact of the SNF QRP 
proposals for FY 2027 displayed in Table 40.
    We have summarized the comments we received in section VII of this 
final rule and provided responses. After careful consideration of the 
public comments we received, we are finalizing our proposal with 
modification as stated above.
6. Impacts for the Minimum Data Set Beginning October 1, 2025
    As stated in section X.A.3. of the proposed rule and this final 
rule, we are removing MDS items that are not needed for case-mix 
adjusting the SNF per diem payment for PDPM but were not accounted for 
in the FY 2019 SNF PPS final rule (83 FR 39165 through 39265). We are 
providing impact information here and in Table 41. With 1,966,662 
admissions to 15,477 SNFs annually, we estimate an annual burden 
decrease of 216,332.82 hours (1,966,662 admissions x 0.11 hour) and a 
decrease of $14,128,696.47 (216,332.82 hours x $65.31/hr). For each 
SNF, we estimated an annual burden decrease of 13.98 hours (216,332.82 
hours/15,477 SNFs) for a reduction in cost of $912.88 ($14,128,696.47 
total burden/15,477 SNFs).

[[Page 64155]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.045

    As noted previously in this section of the final rule, we did not 
formally propose the changes to the MDS. Rather we used this 
opportunity to provide SNFs the information collection requirements 
associated with a change that was not accounted for in the FY 2019 SNF 
PPS final rule. We received a limited number of comments about this 
notification, and have summarized the comments we received in section 
X.A.3 of this final rule with our responses.
    After careful consideration of the public comments we received, we 
are finalizing our intention to remove these items.
7. Impacts for the SNF VBP Program
    The estimated impacts of the FY 2025 SNF VBP Program are based on 
historical data and appear in Table 42. We modeled SNF performance in 
the Program using SNFRM data from FY 2019 as the baseline period and FY 
2023 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).
    For the FY 2025 program year, we will reduce each SNFs adjusted 
Federal per diem rate by 2 percent. We will then redistribute 60 
percent of that 2 percent withhold to SNFs based on their measure 
performance. Additionally, in the FY 2023 SNF PPS final rule (87 FR 
47585 through 47587), we finalized a case minimum requirement for the 
SNFRM, as required by section 1888(h)(1)(C)(ii) of the Act. As a result 
of these provisions, SNFs that do not meet the case minimum specified 
for the SNFRM for the FY 2025 program year will be excluded from the 
Program and will receive their full Federal per diem rate for that 
fiscal year. As previously finalized, this policy will maintain the 
overall payback percentage at 60 percent for the FY 2025 program year. 
Based on the 60 percent payback percentage, we estimated that we would 
redistribute approximately $281.53 million (of the estimated $469.22 
million in withheld funds) in value-based incentive payments to SNFs in 
FY 2025, which means that the SNF VBP Program is estimated to result in 
approximately $187.69 million in savings to the Medicare Program in FY 
2025.
    Our detailed analysis of the impacts of the FY 2025 SNF VBP Program 
is shown in Table 42.
BILLING CODE 4120-01-P

[[Page 64156]]

[GRAPHIC] [TIFF OMITTED] TR06AU24.046

BILLING CODE 4120-01-C
    In the FY 2024 SNF PPS final rule (88 FR 53324 through 53325), we 
adopted a validation process that applies to SNF VBP measures 
calculated using MDS data beginning with the FY 2027 program year. 
Specifically, we finalized that, on an annual basis, the validation 
contractor will randomly select up to 1,500 SNFs for validation and 
that for each SNF selected, the validation contractor will request up 
to 10 medical records. This new medical record submission requirement 
for the purposes of SNF VBP MDS validation would result in new burden 
on SNFs for the FY 2027 program year. We refer readers to the SNF QRP 
section at XI.A.5. of this final rule for details on the estimated 
annual burden increase that would result from this new chart submission 
requirement. We did not include additional details on burden in this 
SNF VBP section, to avoid double counting burden with the SNF QRP 
because the same charts will be utilized for both the SNF QRP and SNF 
VBP Program. We also note that this burden will be accounted for in the 
information collection request that has been submitted to OMB for 
approval.

[[Page 64157]]

8. Impacts for Nursing Home Enforcement Revisions
    A nursing home certified to participate in either the Medicare 
program as a SNF and Medicaid program as a NF or in both programs as a 
dually-certified SNF/NF is expected to be in compliance with all 
applicable Federal requirements of participation as a condition of 
receiving payment for services provided to beneficiaries. If a facility 
is determined to be out of compliance and an enforcement decision is 
reached to impose a civil monetary penalty (CMP) remedy, the finalized 
provisions set out in these regulatory revisions will be applied as 
applicable.
    We view the anticipated results of this rule as beneficial to 
nursing home residents as it incentivizes care quality and resident 
safety. Specifically, we believe that additional flexibility to impose 
CMPs will allow us to better tailor the response to facility 
noncompliance in a way that assures that appropriate resident care 
occurs as well as lasting facility compliance with participation 
requirements is achieved. We also recognize that not all of the 
potential effects of this rule can be anticipated. It is difficult to 
quantify the full future effect of this rule on facilities' compliance 
activities or costs. If a facility is in substantial compliance with 
the participation requirements, there is no basis to use any 
enforcement remedy. However, should a remedy be indicated as an 
appropriate enforcement response for noncompliance, several alternative 
remedies may be considered in addition to or in lieu of a CMP. Since 
CMP amounts, once that remedy is selected as an appropriate enforcement 
response, are based on when noncompliance occurred and the level of 
noncompliance, we are unable to predict the number or amount of CMPs 
that will be imposed. However, we do expect that the total amount of 
CMPs imposed will increase as a result of these updates.
    In 2022, the number of facilities that had a CMP remedy imposed was 
6,149 (40 percent). The average total amount of the CMPs imposed for 
each facility in 2022 was $17,818. The total dollar amount of per day 
(PD) CMPs imposed on facilities in 2022 was $187.0 million and the 
total dollar amount of per instance (PI) CMPs imposed was $41.2 
million. Additionally, 45 percent of surveys of facilities in 2022 that 
had multiple findings of harm to residents and that were imposed a PI 
CMP as the remedy of choice only received one PI CMP. Under the 
proposed revisions, we anticipate an increased workload to CMS and 
States, and increased total CMP amounts to providers when multiple 
instances of noncompliance resulting in harm or immediate jeopardy (IJ) 
are cited.
    We calculated the additional costs for SNFs and NFs, CMS, and 
States for the multiple PI policy revision by analyzing the number of 
surveys in CY2022 that would have had additional PI CMPs imposed by 
identifying surveys with multiple citations of noncompliance resulting 
in harm or immediate jeopardy (IJ), but only one PI CMP was imposed, or 
a PD CMP was imposed (109 surveys). We then multiplied the number of 
these surveys by the average number of citations resulting in harm or 
IJ (2.3 citations per survey), and by the average PI CMP amount 
($9,959). For the PD and PI on the same survey revision, we calculated 
the additional CMP amounts for surveys that may qualify for PD and PI 
CMPs by multiplying the number of surveys with at least 2 citations 
resulting in harm or IJ and were only imposed a PD CMP (787) by the 
average number of harm or IJ citations per survey (2.8) and also 
multiplying by the average PI CMP amount ($9,959). Adding the estimated 
additional cost to nursing homes for enabling multiple PI CMPs for a 
survey with the estimated additional cost for enabling PI CMPs to 
surveys with PD CMPs resulted in a total of approximately $25 million 
for all nursing homes for CY2022.
    We calculated the additional costs for CMS and States by 
multiplying the average hourly rate of CMS staff ($84.00 per hour) by 
the average number of hours spent by CMS staff per CMP (0.8 hours per 
CMP) by the total number of anticipated increased CMPs for surveys that 
qualify for either multiple PI CMPs (109 surveys x 2.3 average 
citations resulting in harm or IJ) or surveys that qualify for PD and 
PI CMPs (787 surveys x 2.8 average citations resulting in harm or IJ). 
We estimate this will result in a total increased cost to CMS and the 
States of $164,929 per year. Note: The estimated impact of the third 
proposed change related to the timing of imposing a CMP is embedded in 
these amounts, as these estimates are inclusive of any cases where CMS 
needs to impose a CMP for noncompliance that was previously cited, but 
no CMP has yet been imposed.
9. Alternatives Considered
    As described in this section, we estimate that the aggregate impact 
of the provisions in this final rule will result in an increase of 
approximately $1.4 billion (4.2 percent) in Part A payments to SNFs in 
FY 2025. This reflects a $1.4 billion (4.2 percent) increase from the 
update to the payment rates.
    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 update, 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.
    With regard to adopting four new assessment items as standardized 
patient assessment data elements under the SDOH category and modifying 
the Transportation standardized patient assessment data element in the 
SDOH category beginning with the FY 2027 SNF QRP, we believe these new 
and modified items advance the CMS National Quality Strategy Goals of 
equity and engagement. We considered the alternative of delaying the 
collection of these four new assessment items. However, given the fact 
they will encourage meaningful collaboration between healthcare 
providers, residents, caregivers, and community-based organizations to 
address SDOH prior to discharge from the SNF, we believe further delay 
is unwarranted.
    With regard to removing 22 items from the MDS beginning October 1, 
2025, we routinely review the MDS for opportunities to simplify data 
submission requirements. We have identified that these items are no 
longer used in the calculation of the SNF per diem payment for PDPM but 
were not accounted for in the FY 2019 SNF PPS final rule (83 FR 39165 
through 39265), and therefore no alternatives were considered.
    With regard to requiring SNFs participating in the SNF QRP to 
participate in a validation process beginning with the FY 2027 SNF QRP, 
we are required to implement a process to satisfy section 1888(h)(12) 
of the Act (as added by Division CC, section

[[Page 64158]]

111(a)(4) of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
120)). Because the validation process is statutorily required, no 
alternatives were considered.
    With regard to the updates for the SNF VBP Program, we discussed 
alternatives considered within those sections. In section VII.E.3. of 
the proposed rule, we discussed other approaches to incorporating 
health equity into the Program.
    With regard to the updates for the nursing home enforcement 
program, we discussed alternatives within those sections. In section 
IX.A. of the proposed rule, we discussed how current regulatory 
limitations create inequity in the imposition of PD CMPs and the need 
for additional flexibility to ensure that CMP amounts are more closely 
aligned with the noncompliance that occurred and are thus effective to 
encourage facilities to return and sustain compliance.
10. Accounting Statement
    As required by OMB Circular A-4 (available online at https://www.whitehouse.gov/wp-content/uploads/2023/11/CircularA-4.pdf), in 
Tables 43 through 47, we have prepared an accounting statement showing 
the classification of the expenditures associated with the provisions 
of the proposed rule for FY 2025. Tables 39 and 43 provide our best 
estimate of the possible changes in Medicare payments under the SNF PPS 
as a result of the policies outlined in this final rule, based on the 
data for 15,477 SNFs in our database. Tables 40, 44, and 45 provide our 
best estimate of the additional cost to SNFs to submit the data for the 
SNF QRP as a result of the policies outlined in this final rule. Table 
46 provides our best estimate of the possible changes in Medicare 
payments under the SNF VBP as a result of the policies for this 
program. Table 47 provides our best estimate of the Nursing Home 
Enforcement provisions.
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[[Page 64159]]


[GRAPHIC] [TIFF OMITTED] TR06AU24.051

11. Conclusion
    This rule updates the SNF PPS rates contained in the SNF PPS final 
rule for FY 2024 (88 FR 53200). Based on the above, we estimate that 
the overall payments for SNFs under the SNF PPS in FY 2025 are 
projected to increase by approximately $1.4 billion, or 4.2 percent, 
compared with those in FY 2024. We estimate that in FY 2025, SNFs in 
urban and rural areas will experience, on average, a 4.1 percent 
increase and 5.1 percent increase, respectively, in estimated payments 
compared with FY 2024. Providers in the rural Middle Atlantic region 
will experience the largest estimated increase in payments of 
approximately 7.4 percent. Providers in the urban Outlying region will 
experience the smallest estimated increase in payments of 1.5 percent.

B. Regulatory Flexibility Act Analysis

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, non-profit organizations, and small 
governmental jurisdictions. Most SNFs and most other providers and 
suppliers are small entities, either by reason of their non-profit 
status or by having revenues of $30 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 $34 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 rule updates the SNF PPS rates contained in the SNF PPS final 
rule for FY 2024 (88 FR 53200). Based on the above, we estimate that 
the aggregate impact for FY 2025 will be an increase of $1.4 billion in 
payments to SNFs, resulting from the SNF market basket update to the 
payment rates. While it is projected in Table 39 that all 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 2025 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 2024 Report to Congress 
(available at https://www.medpac.gov/wp-content/uploads/2024/03/Mar24_Ch6_MedPAC_Report_To_Congress_SEC.pdf), MedPAC states that 
Medicare covers approximately 10 percent of total patient days in 
freestanding facilities and 17 percent of facility revenue (March 2024 
MedPAC Report to Congress, 168). As indicated in Table 39, the effect 
on facilities is projected to be an aggregate positive impact of 4.2 
percent for FY 2025. As the overall impact on the industry as a whole, 
and thus on small entities specifically, meets the 3 to 5 percent 
threshold discussed previously, the Secretary has determined that this 
final rule will have a significant impact on a substantial number of 
small entities for FY 2025.
    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 2024 (88 FR 53200)), the category of small rural hospitals 
is included within the analysis of the impact of the proposed rule on 
small entities in general. As indicated in Table 39, the effect on 
facilities for FY 2025 is projected to be an aggregate positive impact 
of 4.2 percent. As the overall impact on the industry as a whole meets 
the 3 to 5 percent threshold discussed previously, the Secretary has 
determined that this final rule will have a significant impact on a 
substantial number of small rural hospitals for FY 2025.

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 2024, that 
threshold is approximately $183 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 proposed rule (and subsequent final 
rule) that imposes substantial direct requirement costs on State and 
local governments, preempts State law, or otherwise has federalism 
implications. This final rule will have no substantial direct effect on 
State and local governments, preempt State law, or otherwise have 
federalism implications.

[[Page 64160]]

E. 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 this year's proposed rule will be the number of reviewers 
of this year's final rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters reviewed this year's proposed rule in 
detail, and it is also possible that some reviewers chose not to 
comment on the proposed rule. For these reasons, we believe that the 
number of commenters on this year's proposed rule is a fair estimate of 
the number of reviewers of this final 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.
    The mean wage rate for medical and health service manages (SOC 11-
9111) in BLS Occupational Employment and Wage Statistics (OEWS) is 
$64.64, assuming benefits plus other overhead costs equal 100 percent 
of wage rate, we estimate that the cost of reviewing this rule is 
$129.28 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 will take approximately 4 hours for the staff to 
review half of this final rule. For each SNF that reviews the rule, the 
estimated cost is $517.12 (4 hours x $129.28). Therefore, we estimate 
that the total cost of reviewing this regulation is $227,015.68 
($517.12 x 439 reviewers).
    In accordance with the provisions of Executive Order 12866, this 
final rule is reviewed by the Office of Management and Budget.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on July 24, 2024.

List of Subjects

42 CFR Part 413

    Diseases, Health facilities, Medicare, Puerto Rico, Reporting and 
recordkeeping requirements.

42 CFR Part 488

    Administrative practice and procedure, 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 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
1. The authority citation for part 413 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), 
(i), and (n), 1395m, 1395x(v), 1395x(kkk), 1395hh, 1395rr, 1395tt, 
and 1395ww.


0
2. Section 413.337 is amended by revising paragraph (f) to read as 
follows:


Sec.  413.337   Methodology for calculating the prospective payment 
rates.

* * * * *
    (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)) otherwise applicable to a SNF for the fiscal year is 
reduced by the applicable percent (as defined in Sec.  413.338(a)). The 
resulting amount is then adjusted by the value-based incentive payment 
amount (as defined in Sec.  413.338(a)) based on the SNF performance 
score calculated for the SNF for that fiscal year under Sec.  413.338.

0
3. Section 413.338 is amended--
0
a. In paragraph (a) by--
0
i. Revising the definitions of ``Health equity adjustment (HEA) bonus 
points'' and ``Measure performance scaler'';
0
ii. Removing the definition of ``Performance score'';
0
iii. Adding the definition of ``SNF performance score'' in alphabetical 
order; and
0
iv. Revising the definitions of ``SNF readmission measure'', ``Top tier 
performing SNF'', and ``Underserved multiplier'';
0
b. Removing paragraphs (d)(4) through (6);
0
c. Redesignating paragraphs (f)(1) through (4) as paragraphs (f)(2) 
through (5);
0
d. Adding a new paragraph (f)(1) and revising newly redesignated 
paragraphs (f)(2) and (3);
0
e. In newly redesignated paragraph (f)(4) introductory text by removing 
the reference ``paragraphs (f)(1) and (2)'' and adding in its place the 
reference ``paragraphs (f)(2) and (3)'';
0
f. Revising paragraph (j)(3); and
0
g. Adding paragraphs (l), (m), and (n).
    The revisions and additions read as follows:


Sec.  413.338   Skilled nursing facility value-based purchasing 
program.

    (a) * * *
    Health equity adjustment (HEA) bonus points means the points that a 
SNF can earn for a fiscal year based on its performance and proportion 
of SNF residents who are members of the underserved population.
* * * * *
    Measure performance scaler means, for a fiscal year, the sum of the 
points assigned to a SNF for each measure on which the SNF is a top 
tier performing SNF.
* * * * *
    SNF performance score means the numeric score ranging from 0 to 100 
awarded to each SNF based on its performance under the SNF VBP Program 
for a fiscal year.
    SNF readmission measure means, prior to October 1, 2027, the SNF 
30-Day All-Cause Readmission Measure (SNFRM) specified under section 
1888(g)(1) of the Social Security Act. Beginning October 1, 2027, the 
term SNF readmission measure means the SNF Within-Stay Potentially 
Preventable Readmission (SNF WS PPR) Measure specified under section 
1888(g)(2) of the Social Security Act.
* * * * *
    Top tier performing SNF means a SNF whose performance on a measure 
during the applicable fiscal year meets or exceeds the 66.67th 
percentile of SNF performance on the measure during the same fiscal 
year.
    Underserved multiplier means the mathematical result of applying a 
logistic function to the number of SNF residents who are members of the 
underserved population out of the SNF's total Medicare population, as 
identified from the SNF's Part A claims, during the performance period 
that applies to the 1-year measures for the applicable fiscal year.
* * * * *
    (f) * * *
    (1) CMS will provide quarterly confidential feedback reports to 
SNFs on their performance on each measure specified for the fiscal 
year. Beginning with the baseline period and performance period quality 
measure quarterly reports issued on or after

[[Page 64161]]

October 1, 2021, CMS calculates the measure rates included in those 
reports using data that are current as of a specified date as follows:
    (i) For the SNFRM, the specified date is 3 months after the last 
index SNF admission in the applicable baseline period or performance 
period.
    (ii) For the Skilled Nursing Facility Healthcare Associated 
Infections Requiring Hospitalization (``SNF HAI''), Discharge to 
Community--Post-Acute Care Measure for Skilled Nursing Facilities 
(``DTC PAC SNF''), and Skilled Nursing Facility Within-Stay Potentially 
Preventable Readmissions (``SNF WS PPR'') measure, the specified date 
is 3 months after the last SNF discharge in the applicable baseline 
period or performance period.
    (iii) For the Number of Hospitalizations per 1,000 Long Stay 
Residents (``Long Stay Hospitalization'') measure, the specified date 
is 3 months after the last day of the final quarter of the applicable 
baseline period or performance period.
    (iv) For the Total Nursing Hours per Resident Day Staffing (``Total 
Nurse Staffing'') measure and the Total Nursing Staff Turnover 
(``Nursing Staff Turnover'') measure, the specified date is 45 days 
after the last day of each quarter of the applicable baseline period or 
performance period.
    (v) For the Discharge Function Score for SNFs (``DC Function 
measure'') and Percent of Residents Experiencing One of More Falls with 
Major Injury (Long Stay) (``Falls with Major Injury (Long Stay)'') 
measure, the specified date is the February 15th that is approximately 
4.5 months after the last day of the applicable baseline period or 
performance period.
    (2) Beginning with the baseline period and performance period 
quality measure quarterly reports issued on or after October 1, 2021, 
which contain the baseline period and performance period measure rates, 
respectively, SNFs will have 30 days following the date CMS provides in 
each of these reports to review and submit corrections to the measure 
rate calculations contained in that report. The underlying data used to 
calculate the measure rates are not subject to review and correction 
under this paragraph (f)(2). Any such correction requests must include:
    (i) The SNF's CMS Certification Number (CCN);
    (ii) The SNF's name;
    (iii) The correction requested; and
    (iv) The reason for requesting the correction, including any 
available evidence to support the request.
    (3) Beginning not later than 60 days prior to each fiscal year, CMS 
will provide reports to SNFs on their performance under the SNF VBP 
Program for a fiscal year. SNFs will have the opportunity to review and 
submit corrections to their SNF performance scores and ranking 
contained in these reports for 30 days following the date that CMS 
provides the reports. Any such correction requests must include:
    (i) The SNF's CMS Certification Number (CCN);
    (ii) The SNF's name;
    (iii) The correction requested; and
    (iv) The reason for requesting the correction, including any 
available evidence to support the request.
* * * * *
    (j) * * *
    (3) Beginning October 1, 2026, for all measures that are calculated 
using Minimum Data Set (MDS) information, CMS will validate the 
accuracy of this information. CMS will request medical records as 
follows:
    (i) On an annual basis, a CMS contractor will randomly select up to 
1,500 SNFs for validation. A SNF is eligible for selection for a year 
if the SNF submitted at least one MDS record in the calendar year that 
is 3 years prior to the applicable fiscal year or was included in the 
SNF VBP Program in the year prior to the applicable fiscal year.
    (ii) For each SNF selected under paragraph (j)(3)(i) of this 
section, the CMS contractor will request in writing up to 10 medical 
records.
    (iii) A SNF that receives a request for medical records under 
paragraph (j)(3)(ii) of this section must submit a digital or paper 
copy of each of the requested medical records within 45 days of the 
date of the request as documented on the request.
* * * * *
    (l) Measure selection, retention, and removal policy. (1) The SNF 
VBP measure set for each fiscal year includes the SNF readmission 
measure CMS has specified under section 1888(g) of the Social Security 
Act for application in the SNF VBP Program.
    (2) Beginning with FY 2026, the SNF VBP measure set for each fiscal 
year may include up to nine additional measures specified by CMS. Each 
of these measures remains in the measure set unless CMS removes or 
replaces it based on one or more of the following factors:
    (i) SNF performance on the measure is so high and unvarying that 
meaningful distinctions and improvements in performance can no longer 
be made.
    (ii) Performance or improvement on a measure do not result in 
better resident outcomes.
    (iii) A measure no longer aligns with current clinical guidelines 
or practices.
    (iv) A more broadly applicable measure for the particular topic is 
available.
    (v) A measure that is more proximal in time to the desired resident 
outcomes for the particular topic is available.
    (vi) A measure that is more strongly associated with the desired 
resident outcomes for the particular topic is available.
    (vii) The 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.
    (3) Upon a determination by CMS that the continued requirement for 
SNFs to submit data on a measure specified under paragraph (l)(2) of 
this section raises specific resident safety concerns, CMS may elect to 
immediately remove the measure from the SNF VBP Program. Upon removal 
of the measure, CMS will provide notice to SNFs and the public, along 
with a statement of the specific patient safety concern that would be 
raised if SNFs continued to submit data on the measure. CMS will also 
provide notice of the removal in the Federal Register.
    (4) CMS uses rulemaking to make substantive updates to the 
specifications of measures used in the SNF VBP Program. CMS makes 
technical measure specification updates in a sub-regulatory manner and 
informs SNFs of measure specification updates through postings on the 
CMS website, listservs, and other educational outreach efforts to SNFs.
    (m) Extraordinary circumstances exception policy. (1) 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.
    (2) A SNF may request an exception within 90 days of the date that 
the extraordinary circumstances occurred. Prior to FY 2025, the request 
must be submitted in the form and manner specified by CMS on the SNF 
VBP website at https://www.cms.gov/Medicare/Quality/Nursing-Home-
Improvement/Value-Based-Purchasing/Extraordinary-Circumstance-Exception 
and include a completed Extraordinary Circumstances Request form 
(available on https://qualitynet.cms.gov/) 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 
and media articles.

[[Page 64162]]

Beginning with FY 2025, a SNF may request an extraordinary 
circumstances exception by sending an email with the subject line ``SNF 
VBP Extraordinary Circumstances Exception Request'' to the SNF VBP 
Program Help Desk with the following information:
    (i) The SNF's CMS Certification Number (CCN);
    (ii) The SNF's business name and business address;
    (iii) Contact information for the SNF's chief executive officer 
(CEO) or CEO-designated personnel, including all applicable names, 
email addresses, telephone numbers, and the SNF's physical mailing 
address (which cannot be a P.O. Box);
    (iv) A description of the event, including the dates and duration 
of the extraordinary circumstance;
    (v) Available evidence of the impact of the extraordinary 
circumstance on the care the SNF provided to its residents or the SNF's 
ability to report SNF VBP data, including, but not limited to, 
photographs, media articles, and any other materials that would aid CMS 
in determining whether to grant the exception; and
    (vi) A date proposed by the SNF for when it will again be able to 
fully comply with the SNF VBP Program's requirements and a 
justification for the proposed date.
    (3) Except as provided in paragraph (m)(4) of this section, CMS 
will not consider an exception request unless the SNF requesting such 
exception has complied fully with the requirements in paragraph (m)(2) 
of this section.
    (4) CMS may grant exceptions to SNFs without a request if it 
determines that an extraordinary circumstance affected an entire region 
or locale.
    (5) 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 a quality measure during the calendar months 
affected by the extraordinary circumstance.
    (n) SNF VBP performance standards. (1) CMS announces the 
performance standards for each measure no later than 60 days prior to 
the start of the performance period that applies to the measure for the 
fiscal year.
    (2) Beginning with FY 2021, if CMS discovers an error in the 
performance standard calculations subsequent to publishing their 
numerical values for a fiscal year, CMS will update the numerical 
values to correct the error. If CMS subsequently discovers one or more 
other errors with respect to the fiscal year, CMS will not further 
update the numerical values for that fiscal year.
    (3) Beginning with FY 2025, CMS may update the numerical values of 
the performance standards for a measure if, between the time that CMS 
announced the performance standards for the measure for that fiscal 
year and the time that CMS calculates SNF performance on the measure at 
the conclusion of the performance period for that measure for that 
fiscal year, CMS has made technical updates to the specifications for 
the measure that affect the measure rate calculations.

0
4. Section 413.360 is amended by--
0
a. Revising paragraph (f)(1) introductory text;
0
b. Adding paragraph (f)(1)(iv);
0
c. Revising paragraph (f)(3); and
0
d. Adding paragraph (g).
    The additions and revision read as follows:


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

* * * * *
    (f) * * *
    (1) SNFs must meet or exceed the following data completeness 
thresholds with respect to a program year:
* * * * *
    (iv) If selected for the data validation process under paragraph 
(g) of this section, the threshold set at 100 percent submission of 
medical charts.
* * * * *
    (3) A SNF must meet or exceed each applicable threshold described 
in paragraph (f)(1) of this section to avoid receiving the applicable 
penalty for failure to report quality data set forth in Sec.  
413.337(d)(4).
    (g) Data validation process. (1) Beginning with the FY 2027 payment 
year: for all measures that are calculated using Minimum Data Set (MDS) 
information, CMS will validate the accuracy of this information. The 
process by which CMS will request medical records and by which SNFs 
must submit the requested medical records is as follows:
    (i) On an annual basis, a CMS contractor will select up to 1,500 
SNFs for validation. A SNF is eligible for selection for a year if it 
submitted at least one MDS record to CMS in the fiscal year that is 2 
years prior to the applicable program year, and if the SNF has been 
randomly selected for a periodic audit for the same year under Sec.  
413.338.
    (ii) For each SNF selected under this paragraph (g)(1), the CMS 
contractor will request up to 10 medical records. Each SNF selected 
will only be required to submit records once in a fiscal year, for a 
maximum of 10 records for each SNF selected. Each requested medical 
record must be the same medical record that has been requested for 
submission by the SNF for the same year under Sec.  413.338. CMS will 
submit its request in writing to the selected SNF.
    (iii) A SNF that receives a request for medical records under this 
paragraph (g)(1) must submit a digital or paper copy of each of the 
requested medical records within 45 days of the date of the request.
    (2) Beginning with the FY 2027 payment year: the information 
reported through claims for all claims-based measures are validated for 
accuracy by Medicare Administrative Contractors (MACs).

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

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

    Authority:  42 U.S.C. 1302 and 1395hh.


0
6. Section 488.401 is amended by adding the definition of ``Instance or 
instances of noncompliance'' in alphabetical order to read as follows:


Sec.  488.401   Definitions.

* * * * *
    Instance or instances of noncompliance means a factual and temporal 
occurrence(s) when a facility is not in substantial compliance with the 
requirements for participation. Each instance of noncompliance is 
sufficient to constitute a deficiency and a deficiency may comprise of 
multiple instances of noncompliance.
* * * * *

0
7. Section 488.408 is amended by revising paragraph (e)(2)(ii) to read 
as follows:


Sec.  488.408   Selection of remedies.

* * * * *
    (e) * * *
    (2) * * *
    (ii) For each instance of noncompliance, CMS and the State may 
impose a civil money penalty of $3,050-$10,000 (as adjusted annually 
under 45 CFR part 102) per day, $1,000-$10,000 (as adjusted annually 
under 45 CFR part 102) per instance of noncompliance, or both, in 
addition to imposing the remedies specified in paragraph (e)(2)(i) of 
this section. For multiple instances of noncompliance, CMS may impose 
any combination of per instance or per day civil money penalties for 
each instance within the same survey. The aggregate civil money penalty 
amount may not exceed $10,000 (as adjusted annually under 45 CFR part 
102) for each day of noncompliance.
* * * * *

[[Page 64163]]


0
8. Section 488.430 is revised to read as follows:


Sec.  488.430   Civil money penalties: Basis for imposing penalty.

    (a) CMS or the State may impose a civil money penalty for the 
number of days a facility is not in substantial compliance with one or 
more participation requirements or for each instance that a facility is 
not in substantial compliance, or both, regardless of whether or not 
the deficiencies constitute immediate jeopardy. When a survey contains 
multiple instances of noncompliance, CMS or the State may impose any 
combination of per instance or per day civil money penalties for each 
instance of noncompliance within the same survey.
    (b) CMS or the State may impose a civil money penalty for the 
number of days or instances of previously cited noncompliance, 
including the number of days of immediate jeopardy, since the last 
three standard surveys.

0
9. Section 488.434 is amended by revising paragraphs (a)(2)(iii) and 
(v) to read as follows:


Sec.  488.434   Civil money penalties: Notice of penalty.

    (a) * * *
    (2) * * *
    (iii) Either the amount of penalty per day of noncompliance or the 
amount of the penalty per instance of noncompliance or both;
* * * * *
    (v) The date(s) of the instance(s) of noncompliance or the date on 
which the penalty begins to accrue;
* * * * *

0
10. Section 488.440 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  488.440   Civil money penalties: Effective date and duration of 
penalty.

    (a) * * *
    (2) A civil money penalty for each instance of noncompliance is 
imposed in a specific amount per instance.
* * * * *

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-16907 Filed 7-31-24; 4:15 pm]
BILLING CODE 4120-01-P