Update: CMS published a Correction Notice in October 2018, updating the Final Rule for Fiscal Year 2019 SNF PPS rates.  Click here to download the updated rates.

CMS Issues FY 2019 RUG-IV Medicare SNF PPS Rates Effective October 1, 2018

The Centers for Medicare & Medicaid Services (CMS) published the final rule updating Medicare SNF PPS rates for federal Fiscal Year (FY) 2019 in the August 8, 2018 Federal Register. The rates will be effective from October 1, 2018 through September 30, 2019.

The final rules provides for a 2.4% net market basket increase over FY 2018, as mandated by the Bipartisan Budget Act of 2018. Absent the mandated limitation, the market basket increase would actually have been lower, at 1.8%, but Congress failed to consider the required productivity adjustments when crafting the budget act. We must note Congress has the authority adjust the market basket increase to the lower amount with future legislation. CMS estimates the update will increase nationwide SNF payments by approximately $820 million.

The actual rate change from FY 2018 to FY 2019 experienced by your facility is dependent on the change in wage index in your county’s Core Based Statistical Area (CBSA). Most Ohio CBSAs will see an increase, with Cleveland-Elyria increasing .95%, Columbus increasing 1.57% and Cincinnati increasing 1.42%. Only two Ohio CBSAs will see a decrease in their PPS rates, including the Springfield CBSA (-1.05%) and the Lima CBSA (-.51%). The percentage change for each CBSA is shown on the PDFs available via the links below.


The RUG-IV rates for all Ohio CBSAs effective October 1, 2018 through September 30, 2019 are available on our website. Click here to download the rates. The rates provided for the individual CBSAs are shown prior to the Quality Reporting Program and Value Based Purchasing adjustments.

You will need to work with your software provider to ensure your Medicare revenue and accounts receivable are calculating correctly. If you use PointClickCare, we can assist you in inputting the Quality Reporting Program (QRP) and Value Based Purchasing (VBP) adjustments. It is important to note that net Medicare rates will be calculated in the following order:

  1. 10/1/18 Federal Medicare rate, net of wage adjustment
  2. Apply 2% QRP penalty, if applicable
  3. Apply VBP incentive payment multiplier
  4. Apply 2% sequestration after reduction of coinsurance

The final rule published in August include a number of errors which have not yet been corrected by CMS. Therefore, these rates are subject to change. 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 2019 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.


The FY 2019 final rule also included the finalization of the Patient Driven Payment Model (PDPM), which will replace the RUG-IV PPS system effective October 1, 2019. Originally proposed in April 2017 as the Resident Classification System (RCS-1) and reintroduced in April 2018 as PDPM, the new system is a significant step in revising the SNF payment system to move away from therapy minutes as the main driver of SNF Medicare reimbursement. PDPM was designed to place additional emphasis on nursing, better capture the needs of medically complex patients and reduce the number of assessment required for each patient.

Under PDPM, each patient will be classified using various patient characteristics and diagnoses in the following categories:

  • Physical Therapy (16 groups)
  • Occupational Therapy (16 groups)
  • Speech Therapy (12 groups)
  • Skilled nursing (25 groups)
  • Non-therapy ancillaries (NTA; primarily pharmaceuticals; 6 groups)
  • Non-case mix (1 group)

Based on only one MDS assessment, which will be completed after the fifth day of a stay, a patient will be assigned a per diem reimbursement rate for each category and the total of the rates will summed to the total per diem reimbursement for that patient. Given the number of groups in each of the five clinical categories, some estimates put the total number of possible rates for a given patient at approximately 29,000. The physical therapy, occupational therapy, speech therapy and NTA rates will taper based on the length of the patient’s stay, with tapering for the therapies beginning after the 20th day and tapering for NTAs beginning after just the third day of the stay.

PDPM will require a significant change to your facility’s clinical processes, including documentation of care and diagnosis codes, your assessment process and the evaluation of referrals to your facility. It is vital that you and your clinical staff begin preparing for PDPM as soon as possible to ensure readiness on October 1, 2019. We will continue to provide additional information over the next year and beyond.


The SNF Value Based Purchasing Program will be effective October 1, 2018. The Value Based Purchasing program withholds 2% from SNF Part A payments and returns 60% of the dollars to providers based on a 30-day, all cause hospital readmission measure. The withhold and return are completed simultaneously, so no settlement or lump sums will be necessary. To do so, each provider has been assigned a “Value Based Purchasing Incentive Payment Multiplier” which adjusts the providers rates to the account for the withhold and return.

For FY 2019, providers were scored on the better of their performance on the measure in calendar year 2017 and their improvement over 2015. Incentive payment multipliers ranged from 98.02% (almost none of the withheld funds will be returned) to 101.65% (more than the 2% withheld will be returned). The multipliers will be reset on October 1, 2019 based on data from FY 2016 (baseline year) and FY 2018 (performance year).


Effective October 1, 2018, SNFs that failed to submit required quality data to CMS under the SNF Quality Reporting Program will have their Medicare payment rates reduced by two percentage points. The majority of the reporting is done via the MDS assessment. As a result, most facilities met the requirements and avoided the payment reductions. However, facilities that did not respond to CMS “Review and Correct” reports may not have qualified for the QRP, and as a result, will have their rates reduced by 2% through September 30, 2019. If your facility is subject to the 2% QRP penalty, the PDFs in the link above include a file with rates for all Ohio CBSAs net of the penalty.



The CMS Five Star rating program for skilled nursing facilities has seen numerous updates over the past year, including a freeze to the health inspection rating in November 2017 and the implementation of Payroll Based Journal data for the staffing rating in April 2018. For more information, please see our recent article on the HW&Co. website.



CGS has started issuing tentative settlements for the December 31, 2017 Medicare cost reports. We highly recommend that you review your settlement letter closely to ensure that 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 2017 cost reports. They are also calculating lump sum payments due to Medicare or your facility based on the change in the passthrough payment. We recommend that you ensure that any lump sums paid or received agree to the letters that you receive.

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, certified medical office managers and LNHAs. We are dedicated to working with the regulatory, operational and reimbursement challenges that 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.


Steve Anderson CPA