Note:  CMS published a Correction Notice in the October 4, 2017 Federal Register, updating the Final Rule for Fiscal Year 2018 SNF PPS rates.  Click here to download the updated rates.

Reimbursement Rates in FY 2018 SNF PPS Final Rule

The Centers for Medicare & Medicaid Services (CMS) published the final rule updating Medicare SNF PPS rates for federal Fiscal Year (FY) 2018 in the August 4, 2017 Federal Register. The rates will be effective from October 1, 2017 through September 30, 2018.

The notice provides for a 1.0% net market basket increase over FY 2018. The update was limited to 1.0% as mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The limitation was used as a “pay-for” for the permanent “doc fix” to the Part B fee schedules. Absent the MACRA mandated limitation, the market basket increase would have been approximately 2.0%. CMS estimates the update will increase nationwide SNF payments by approximately $370 million.

The actual rate change from FY 2017 to FY 2018 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 4.41%, the largest increase in Ohio. The Columbus CBSA can expect a rate increase of 2.39%, while the Cincinnati CBSA will see an increase of 2.02%. A number of Ohio CBSAs will see a decrease in their PPS rates, including the Cleveland-Elyria CBSA (-.14%), the Dayton CBSA (-.35%) and the Rural CBSA (-.92%). The percentage change for each CBSA is shown on the PDFs available via the links below.


PPS Rates Effective 10/1/2017

The RUG-IV rates for all Ohio CBSAs effective October 1, 2017 through September 30, 2018 are available on our website. Click here to download the rates.

These rates reflect the CMS Correction Notice published in the October 4, 2017 Federal Register, updating the Final Rule for Fiscal Year 2018 SNF PPS rates.  CMS discovered they had used incorrect wage index data for six hospitals, which resulted in miscalculations of some of the base components of the PPS rates and CBSA-specific wage indices. The net impact of the changes for the Ohio CBSAs resulted in increases of one to seven cents for most RUG categories.  While the changes are very minor, they will be implemented into CMS’s pricing software and failure to use the updated rates in your billing system will result in small balances remaining on your accounts receivable aging for most Medicare claims.

The PPS rates are subject to change based on any subsequent Correction Notices that are issued by CMS. If another 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 2018 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.


Regulatory Changes In FY 2018 SNF PPS Final Rule


SNF Quality Reporting Program

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

  • Skin integrity and changes in skin integrity (i.e., pressure ulcers)
  • 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. The majority of the reporting is done via the MDS assessment. As a result, most facilities will meet the requirements and avoid the payment reductions.



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 stated they will return 60% of the withheld dollars to providers. The undistributed funds are to remain in the Medicare trust fund to be used as an offset to the Part B “doc fix” in previous years.

The funds will be returned to providers based on a 30-day, all cause hospital readmission measure. Providers will be scored on the better of their performance on the measure in calendar year 2017 and their improvement over 2015. CMS will rank facilities nationwide based on their results on the two measures and funds will be redistributed based on the rankings. Those facilities ranked at the bottom of the results will receive no funds back from CMS.


CMS to Freeze Five-Star Health Inspection Ratings for One Year

In a June 30, 2017 Survey and Certification Memo (S&C:17-36-NH), CMS announced its intention to freeze the SNF Five-Star health inspection ratings for one year beginning with any surveys conducted after November 28, 2017. The freeze is part of a larger effort by CMS to allow providers to transition into Phase 2 of the updated Requirements of Participation.

While CMS’s intentions may seem to be a positive for providers, facilities with deficiencies on recent surveys will not have an opportunity to improve their health inspection star scores with a good survey in 2018. This is particularly worrisome for facilities that may be held out of managed care or hospital referral networks because of a 2-star rating that could be improved with a good survey. LeadingAge has asked CMS to reconsider, but to date, CMS has not issued any additional information regarding the freeze. We will keep you updated as we know more.


CGS Begins Issuing Cost Report Tentative Settlements

CGS has started issuing tentative settlements for the December 31, 2016 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 2016 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.



Medicare Provider Enrollment Revalidation Cycle 2 is Underway

All Medicare providers/suppliers are required to resubmit and recertify the accuracy of enrollment information every 5 years (3 years for DME suppliers). Cycle 2 of the Medicare Provider Enrollment Revalidation process is currently under way. It is important to respond in a timely manner to revalidation notices to avoid a hold on your Medicare payments and possible deactivation of your Medicare billing privileges. Click here for full article.



HW Healthcare Advisors

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 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.