In a final rule issued on July 31, 2017, the Centers for Medicare and Medicaid Services (CMS) finalized some key components of the Skilled Nursing Facility Value Based Purchasing (SNF VBP) program, which impacts reimbursements starting next year. AHCA has provided an outline of the newly finalized program components.

Starting on October 1, 2018 for FY 2019, CMS will adjust Medicare payments to providers based on how well they manage hospital readmissions based on performance in this calendar year (CY) 2017 compared to CY 2015. Some SNFs will see some sort of payment reduction, which can be as high as two percent for all of their Part A Medicare payments for an entire fiscal year. There is a potential for some SNFs who achieve low rehospitalization rates to see an increase in reimbursements, but how many and by how much will not be determined until the performance period of CY 2017 concludes.

Starting in FY 2019…

• Size of incentive pool. CMS will calculate two percent of all SNF Part A payments and use 60 percent of that figure to calculate the payment adjustment for SNFs. CMS was mandated to use between 50 and 70 percent. Despite AHCA’s recommendations to set the percentage to 70 to maximize the incentive pool available to providers, CMS opted to set the rate to 60.

• Method to link rehospitalization rates to your payment adjustment (a.k.a., exchange function). CMS elected to utilize a logistic exchange function to translate a provider’s performance in the SNF Readmission Measure (SNFRM) into a value-based incentive payment multiplier. This aligns with AHCA’s recommendation because it incentivizes providers to continuously improve their readmission rates, regardless of their current SNFRM rate, and allows for the greatest number of SNFs to receive net positive payments. 
  

• SNF VBP scores will be rounded to five significant digits. To measure providers as precisely as possible and minimize tied rankings, CMS will round SNF VBP scores to no more than five significant digits. We modeled the effect of using extra decimal points, and found the impact will be minimal to all impacted SNFs (<$1,000 payment adjustment per year compared to not rounding).

Starting in FY 2020… 

• New achievement and benchmark rates. CMS finalized the Achievement and Benchmark rates used in the determination of a SNF’s VBP score for the second year of the VBP program, which will impact payment in FY 2020. SNFs with SNFRM rehospitalization rates greater than the Achievement rate of 19.8 percent will receive no points and will lose two percent of their Medicare payments, while providers with rehospitalization rates less than the Benchmark rate of 16.3 percent, will receive 100 points and are likely to have net positive payments.

• Switching performance and baseline periods to fiscal years from calendar years. CMS is switching the measurement windows to fiscal years in the second year of the program to ensure timely notification to providers of their value-based incentive payment adjustments no later than 60 days prior to the start of a fiscal year. Switching to a fiscal year will allow CMS an extra three months for data collection, measure calculation and reporting. This means the baseline period for the second year of the program will be FY 2016 (Oct. 2015 – Sept. 2016) and the performance period will be FY 2018 (Oct. 2017 – Sept. 2018). Additionally, this means the fourth quarter of 2017 (Oct. 2017 – Dec. 2017) will count towards the performance period of both the first and second year of the program.
  

For more information on the SNF VBP program and to access tools and resources on ahcancalED and other sites visit AHCA’s VBP website. 

Please contact David Gifford or Thomas Martin with any questions.