United States

Senior Living Health Care Connection: Value Based Purchasing


This is the second in a series of three alerts highlighting the Prospective Payment System and Consolidated Billing for skilled nursing facilities (SNFs) for FY 2016 Final Rule.

Topics to be highlighted in the series include:

  1. Staffing data collection
  2. SNF Value-Based Purchasing (VBP) program
  3. SNF Quality Reporting program

SNF VPB program

Centers for Medicare & Medicaid Services (CMS) is introducing a new Value-Based Purchasing payment plan, using a readmission measure to affect SNF payments. The goal per CMS is to “transform Medicare from a passive payer of claims to an active purchaser of quality health care for its beneficiaries.” Value-based incentive payments will apply to payments for services furnished on or after October 1, 2018.

There is a planned withhold approach of 2 percent of the SNF Part A payments if rehospitalization rates are over the threshold (yet to be determined). Fifty to 70 percent of the withheld dollars will be used to create an incentive pool, so you can earn back your 2 percent withhold. The re-hospitalization score is a combination of the level of achievement and improvement or whichever is better. The first adjustment to an SNF’s payment will be in October 2018, based on performance monitoring, which is likely to start in mid-2016. Facilities are encouraged to start now to review their patterns of discharges back to hospitals.

The SNF Readmission Measure (SNF RM) is a claims-based measure and links SNF rehospitalization to SNF Medicare A payments. The Measure is a 30-day, all-cause, risk-standardized readmission measure and includes admissions to the SNF within one day after discharge from the prior proximal stay. The 30-day risk window starts from the prior proximal hospital discharge. The Measure does not include:

  • Residents who had one or more intervening post-acute care stays (between prior proximal hospital discharge or after SNF discharge)
  • Beneficiaries not enrolled in Medicare for at least 12 months
  • Residents who were treated for cancer
  • Residents receiving care for prosthesis fittings
  • Residents discharged against medical advice
  • “Planned” readmissions, not counted, but only for certain codes, such as chemotherapy
  • “Observation” stays

The goal is to measure facility level readmission rates among beneficiaries utilizing the SNF and is designed using fee-for service Medicare claims. It harmonizes with CMS’s current Hospital-Wide All-Cause Unplanned Readmission Measure, National Quality Forum #1789 and other provider measures. The readmission measures are being developed for other post-acute care settings (e.g., inpatient rehabilitation facilities, long-term care hospitals], home health agencies and end stage renal dialysis facilities). The harmonization is intended to promote shared accountability and to improve care transitions across all settings. SNFs will have to follow their residents for 30 days after their discharge from the hospital, regardless of the discharge setting after the SNF stay.

Look for the next alert, which highlights the Quality Reporting program as detailed in the Improving Medicare Post-Acute Transformation Act of 2014.

For more information, contact Joan McCarthy at +1 312 634 3479.

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