The Centers for Medicare and Medicaid Services (CMS) finalized new rules for both the Prospective Payment System (PPS) and the Patient Driven Payment Model (PDPM) on July 31. The final rules outline proposed Fiscal Year (FY) 2019 Medicare payment rates and quality programs for skilled nursing facilities (SNFs). The FY19 final rule establishes a market basket increase of 2.4 percent, a figure statutorily mandated by Congress, and will start October 1, 2018. 

Based on changes contained within this final rule, CMS indicates aggregate payments to SNFs will increase in FY19 by $820 million, or 2.4 percent, from payments in FY18 – $30 million less than in the notice of proposed rulemaking. AHCA is exploring potential issues with FY19 rates and impact analysis. At the same time, CMS notes that the overall economic impact of the SNF Value-Based Purchasing Program (VBP) is an estimated reduction of $211 million in aggregate payment to SNFs during FY19.

Patient-Driven Payment Model (PDPM) Final Rule

Additionally, CMS finalized a payment system called the Patient-Driven Payment Model (PDPM) to replace the current RUGs-based SNF PPS. The PDPM is an updated version of the 2017 Advanced Notice of Proposed Rulemaking Resident Classification System Version 1 (RCS-1). CMS notes RCS-1 was revised based on stakeholder input. The implementation date for the final system is October 1, 2019 (FY20) and will be done in a budget neutral manner.

Of note, AHCA has identified a number of anomalies in various tables throughout the final rule primarily pertaining to the FY19 RUG rates, as well as the FY19 Impact Analysis. AHCA staff and Reimbursement Committee members are in the process of analyzing these and other items that changed from the proposed to the final rule.

Click here to access a recording of the AHCA Payment Rule Webinar from August 1.

AHCA will provide additional updates on its dialogue with CMS as we work to ensure the necessary corrections and updates to the final rule. Please contact Mike Cheek with comments, suggestions, and questions. 

Additional Resources

• AHCA Summary of the SNF PPS Final Rule (AHCA/NCAL log-in required)
• AHCA Statement on 2019 SNF PPS Final Rule
• FY19 Final Rule
• CMS Fact Sheet: Medicare issues fiscal year 2019 payment & policy changes for skilled nursing facilities
• CMS Wage Index webpage (FY19 SNF PPS wage index will be available in the coming weeks.)