CMS Finalizes 4.2% Payment Update for FY25 and Expansion of CMP Authority

August 02, 2024

BY Jodi Eyigor

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CMS has finalized a 4.2% increase for SNFs in FY25, accompanied by expanded authority for CMP enforcement.

The Fiscal Year 2025 (FY25) Skilled Nursing Facility (SNF) Prospective Payment System (PPS) final rule was released to the Federal Register on July 31. The rule finalizes a 4.2% payment update for FY25, expanded enforcement authority with regard to civil money penalties (CMPs), updates to the wage index, and policy changes for the SNF Quality Reporting Program and Value-Based Purchasing program. The rule will be published in the Federal Register on August 6. The provisions related to expansion of enforcement authority will take effect 60 days after the date of publication in the Federal Register. Read the LeadingAge reaction to the rule here.

Payment Updates

CMS has finalized a 4.2% payment update for FY25. Initially, CMS proposed a 4.1% increase, which was updated in the final rule based on a revised 3.0% market basket and 0.5% productivity adjustment. These revisions are based on updated IHS Global IGI forecast data for second quarter 2024. The 1.7% market basket forecast error adjustment was finalized as proposed. This 3.0% market basket, plus 1.7% forecast error adjustment, less a 0.5% productivity adjustment results in the 4.2% payment increase for FY25.

CMS finalized an update to the base year for the SNF market basket from 2018 to 2022 to better reflect the impact of the COVID-19 public health emergency. CMS also finalized an update to the wage index, adopting revised core-based statistical area delineations based on the 2020 census. CMS will apply the 5% cap, finalized in FY23, that will prevent any SNF's wage index from decreasing more than 5% from one fiscal year to the next.

Patient Driven Payment Model Updates

CMS finalized as proposed technical revisions to the code mappings used to assign patients to clinical categories in the Patient Driven Payment Model (PDPM), reassigning four ICD-10 diagnosis codes to Return to Provider. In the proposed rule, CMS also requested feedback on potential future revisions to the non-therapy ancillary component of PDPM. Areas of consideration included changes to the list of conditions and comorbidities and changes to the underlying study population. Any changes will be introduced through future rulemaking and CMS will consider the feedback received in drafting any proposals.

SNF Quality Reporting Program

CMS finalized the addition of four new Standardized Patient Data Elements (SPADEs) and modification of one SPADE beginning with FY 27 SNF Quality Reporting Program (QRP). These five SPADES cover four social determinants of health-living situation, food, utilities, and transportation-and will be collected via the Minimum Data Set (MDS) assessment beginning in FY25 on October 1, 2024. CMS requested feedback on future measure concepts for SNF QRP including a vaccine composite measure and measures on pain, depression, and patient experience of care/patient satisfaction. CMS will consider this feedback for future measure development.

CMS finalized SNF QRP policies for measure validation processes beginning with FY27 SNF QRP. The validation processes finalized for SNF QRP are consistent with those finalized in the FY24 SNF PPS rule for the SNF Value-Based Purchasing (VBP) program. For validation of assessment-based measures, validation contractors will select up to 1,500 SNFs per year who will then submit up to 10 medical records each. Medical records will be compared to MDS assessments to determine accuracy in a process that will be defined in future rulemaking. Validation of claims-based measures will be conducted according to existing Medicare Administrative Contractor processes for validating claims.

SNF Value-Based Purchasing Program

CMS finalized several policies for the SNF VBP program for FY25. The measure selection, retention, and removal policy will allow for a measure that has been adopted to be retained for subsequent years unless the measure is removed or replaced. Removal and replacement of measures will follow the normal comment and rulemaking process, subject to various measure removal factors. The policy will take effect with the FY26 SNF VBP program year.

The technical measure updates policy was finalized as proposed and will allow for non-substantive technical updates to previously finalized measures through sub-regulatory processes. Non-substantive updates include updates to case mix or risk adjustment methodology, changes in exclusion criteria, or updates required to accommodate changes in content and availability of assessment data. These policies will take effect with the FY25 SNF VBP program year.

The measure minimum policy finalized for FY27 was finalized for FY28 and subsequent years and the review and correct process finalized in FY 24 was finalized to apply to claims-based and payroll-based journal measures beginning with FY26 and MDS-based measures beginning with FY27.

CMS also finalized the extraordinary circumstance exception (ECE) policy beyond FY25 and finalized updates to the policy that expand the reasons a SNF may request an ECE and the methods by which a SNF requests an ECE. Beginning in FY25, a SNF may request an ECE if it can demonstrate that, as a result of an extraordinary circumstance, it was unable to report data on one or more SNF VBP measures by the specified deadline. Also beginning in FY25, SNFs will request ECEs by submitting information via email to the SNF VBP Help Desk, consistent with the process for submitting an ECE for the SNF QRP.

Nursing Home Enforcement

CMS finalized as proposed an expansion of authority for enforcement of CMPs. CMS will now have the authority to impose multiple per instance CMPs for the same type of noncompliance, and to enforce both per instance and per day CMPs within the same survey. CMS also finalized an expansion of the look-back period for enforcing CMPs to the last three standard surveys, clarifying that under the revised policy, CMPs will potentially be enforced only for previously cited noncompliance.

The expanded look-back period will not give surveyors ability to investigate and cite noncompliance during the look-back period that was not previously cited, though this does not change requirements that a complaint must be investigated without limitation of when the alleged event occurred. Expansion of enforcement authority will take effect sixty days after the rule is published in the Federal Register.