CMS Issues FY 2017 RUG-IV Medicare SNF PPS Rates Effective October 1, 2016


The Centers for Medicare & Medicaid Services (CMS) published the final rule updating Medicare SNF PPS rates for federal Fiscal Year (FY) 2017 in the August 5, 2016 Federal Register. The rates will be effective from October 1, 2016 through September 30, 2017.

The notice provides for a 2.4% net market basket increase over FY 2016. The full increase was calculated at 2.7%, but was reduced by a 0.3% productivity adjustment in accordance with the Affordable Care Act. CMS estimates the net increase in payments to SNFs to be approximately $920 million nationwide in FY 2017.

The actual rate change from FY 2016 to FY 2017 experienced by your facility is dependent on the change in wage index in your county’s Core Based Statistical Area (CBSA).  Clark County will see an increase of 3.64%, the largest increase in Ohio.  The Cleveland-Elyria CBSA can expect a rate increase of 1.00%, while the Columbus CBSA will see an increase of 1.89% and the Cincinnati CBSA will see an increase of 2.04%.  Richland County is the only county in Ohio that will see a rate decrease of (-1.07%), which is the result of a significant decrease in the wage index for the Mansfield area.


The RUG-IV rates for all Ohio CBSAs effective October 1, 2016 through September 30, 2017 are available on our website. Click here to download the rates.

The PPS rates are subject to change based on any Correction Notices issued by CMS. If a Correction Notice is issued that affects any Ohio counties, we will update our website links with the new rates.

We can help you estimate the impact of the FY 2017 rule on your facility and calculate an estimated Medicare rate for budgeting. If you would like an estimate, please contact your HW Healthcare Advisor and provide us with your year-to-date RUG-IV days.



SNF Quality Reporting Program

In addition to the rate update, the final rule includes a few additional regulatory changes.  The rule identifies four additional quality measures for skilled nursing facilities under the SNF Quality Reporting Program to be effective in FY 2018:

• Medicare spending per beneficiary
• Discharge to community
• Potentially preventable 30-day post-discharge readmissions
• Drug regimen review

As a reminder, CMS finalized three quality measures in last year’s final rule:

• Skin integrity and changes in skin integrity
• Incidence of major falls
• Functional status, cognitive function and changes in function and cognitive function

Beginning with FY 2018, SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program will have their annual payment updates reduced by two percentage points.  CMS intends to propose additional quality measures in future rules.

Note:  the drug regimen review measure will not impact payments until FY 2020.

SNF Value Based Purchasing Program

The rule also finalizes a number of issues related to the upcoming SNF Value Based Purchasing Program that will be effective in FY 2019.  The Value Based Purchasing program will withhold 2% from SNF Part A payments.  A portion of the incentive pool created by the money withheld will be redistributed based upon rehospitalization scores for each skilled nursing facility. CMS has the authority to fund the pool with 50%-70% of the money withheld.  The remaining funds were used as an offset to the Part B “doc fix” in previous years.

The FY 2017 rule finalized the calculation of the SNF Potentially Preventable Rehospitalization measure, which will be used to score facilities and redistribute the funds.  The risk-adjusted measure will look at unplanned, potentially preventable readmissions for Medicare SNF patients within 30 days of discharge from a prior hospitalization.  The 30-day window includes the period after a SNF stay should the patient be discharged from the SNF in fewer than 30 days.  As a result, proper discharge planning and follow up will be very important.

CMS has not finalized the amount of withholding that will be used to fund the incentive pool.  They also have not yet finalized how the rehospitalization scores will be linked to Part A payments.



As a reminder, the Payroll Based Journal (PBJ) system is now active and required for all providers.  SNFs will be required quarterly to submit census data and staffing data for each employee for each day worked in the quarter.  This process will be a significant undertaking for providers, as each employee will have to be assigned to a job code (e.g., RN, LPN, STNA, etc.) for each hour worked during a quarter.  If an employee works in more than one job code in a given day (e.g., 4 hours as an STNA and 4 hours in housekeeping), the hours will have to be split between each code.

The information is to be uploaded electronically and will have to meet very specific technical specifications.  Information on the PBJ, including a user manual and information on the technical specifications, can be found on CMS’s website.

The first required submission for the period from July 1, 2016 through September 30, 2016 is due by November 14, 2016.  If you have not yet registered, we highly recommend you do so as soon as possible to prepare for the required submission.  There is a significant amount of planning and preparation necessary to ensure the data you submit is complete and accurate.  We also recommend you do not wait until the deadline to submit the required data, as the PBJ system will likely be overloaded in the days leading up to the deadline.

Please see our previous newsletter for more information.  We are available to assist you with any questions or issues you may have with the Payroll Based Journal.



CGS has started issuing tentative settlements for the December 31, 2015 Medicare cost reports.  We highly recommend you review your settlement letter closely to ensure CGS is properly applying payments related to coinsurance bad debts.

CGS is also beginning to adjust passthrough payments based on bad debts reported on the 2015 cost reports.  They are taking into account the reduced coinsurance reimbursement for 2016 (65%) and the sequestration cuts (2%) when calculating the new payment amounts.  They are also calculating lump sum payments due to Medicare or your facility based on the change in the passthrough payment.  We recommend you ensure any lump sums paid or received agree to the letters you receive.  We have seen inconsistencies between what CGS believes was paid or received and what a provider actually pays or receives.

If you would like HW&Co. to review your settlement or passthrough payment calculation, please contact your HW Healthcare Advisor.



Our team consists not only of CPAs, but also highly trained and experienced billing/revenue cycle consultants, RNs, LPNs, certified medical office managers and LNHAs.  We are dedicated to working with the regulatory, operational and reimbursement challenges providers face in an ever-changing healthcare environment.

We can assist you in streamlining your processes, optimizing your operations and identifying potential opportunities and risks.  Please contact any of our HW Healthcare Advisors to discuss how we can help you and your facility stay on the path to success.