CMS Issues FY 2020 Medicare SNF PDPM Rates Effective October 1, 2019

The Centers for Medicare & Medicaid Services (CMS) published the final rule updating Medicare rates for skilled nursing facilities for federal Fiscal Year (FY) 2020 in the August 7, 2019, Federal Register. The rates will be effective from October 1, 2019, through September 30, 2020. The final rules provide for a 2.4% net market basket increase over FY 2019. CMS estimates the update will increase nationwide SNF payments by approximately $820 million.

After many years of research and planning, CMS has finalized the Patient-Driven Payment Model (PDPM), which will replace the RUG-IV PPS system currently in effect. PDPM was designed in an effort to move away from therapy being the main driver of reimbursement for Part A Medicare stays. 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)

PDPM will begin in full on October 1, 2019. There will be no transition period from RUG-IV to PDPM. Therefore, all Part A residents in your facility on October 1, 2019 must be reassessed to determine the appropriate PDPM categories.

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 ensure readiness on October 1, 2019.

For more information on the specifics of PDPM, please see our previous article on PDPM implementation.


The links in the list below provide the detailed calculations of the PDPM rates for each of the 15 CBSAs in Ohio. The rates provided for the individual CBSAs are shown prior to the Quality Reporting Program and Value-Based Purchasing adjustments.

Please select the CBSA from the list below in which your county resides to open a printable PDF file. If you are not sure which CBSA to choose, please click the first link to open a crosswalk between the county names and the CBSA names.


With the move from 66 groups in the RUG-IV system to over 28,000 possible groups in PDPM, as well as tapering of the non-therapy ancillary and therapy components, these rates are not as meaningful as the RUG-IV rates we provided in previous years, as all six components must be combined to determine the daily rate.

We have developed a calculator to assist in calculating rates for all PDPM groups. The calculator can assist you in seeing the change in reimbursement over the course of Part A stay due to the potential impacts of tapering and AIDS diagnoses. Please contact us for more information if you are interested.

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 with PDPM payer setups, including Medicare, MyCare Ohio and managed care, Quality Reporting Program (QRP) and Value-Based Purchasing (VBP) adjustments and other issues as needed.

It is important to note that net Medicare rates will be calculated in the following order:

    1. 10/1/19 PDPM Federal Medicare rate (sum of federal rate for each PDPM category)
    2. Apply CBSA-specific wage adjustment
    3. Apply 2% QRP penalty, if applicable
    4. Apply VBP incentive payment multiplier
    5. Apply 2% sequestration after reduction of coinsurance

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.

The move to PDPM will be complex from both a clinical and billing perspective. You will need to ensure you understand not only how your Medicare reimbursement will be impacted, but how reimbursement under each of your managed care contracts will be impacted. Your systems must be set up to properly handle all Medicare and managed care claims. Our team of skilled revenue cycle and software specialists are available to assist you throughout the change to PDPM.


The results of the SNF Value-Based Purchasing Program will be updated for all facilities on October 1, 2019. 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 are 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 2020, providers were scored on the better of their performance on the measure in fiscal year 2018 and their improvement over fiscal year 2016. CMS has not publically released the minimum and maximum multipliers for FY 2020. For reference, FY 2019 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, 2020, based on data from FY 2017 (baseline year) and FY 2019 (performance year).

Facility specific VBP reports are available in CASPER. Please note, CMS posted revised reports for some providers at the end of August. If you accessed your report prior to August 31, 2019, you should check CASPER to ensure you have the most recent VBP report for your facility.


Effective October 1, 2019, 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 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, 2020.


The CMS Five Star rating program for skilled nursing facilities has seen numerous updates over the past year. For more information, please see our recent article regarding five-star ratings decreasing.


CMS recently clarified its Medicare coinsurance bad debt policy. Effective for cost reporting periods beginning on or after October 1, 2019 (i.e., 2020 cost reports for the calendar year providers), providers must write off unpaid coinsurance amounts for Medicare-Medicaid (dual eligible) crossover claims to a bad debt expense account in their general ledgers. Dual-eligible coinsurance amounts can no longer be written off to a contractual allowance account. CMS indicated this was a long-standing requirement in the Provider Reimbursement Manual.

While the overall reimbursement for dual-eligible coinsurance bad debts remains at 65%, providers may need to adjust how amounts are written off in their general ledgers to ensure continued reimbursement of coinsurance bad debts.


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