United States

Senior Living Health Care: Connection Medicare and quality programs

Payment rate updates


The Centers for Medicare & Medicaid Services (CMS) issued a final rule for fiscal year (FY) 2020, including Medicare payment rates and quality programs for skilled nursing facilities (SNFs) on Aug. 7, 2019.

Major points found in that final rule include:

  • The final rule includes payment updates to the SNF prospective payment rates for FY 2020. The overall impact is an estimated increase of $851 million in aggregate payments to SNFs during FY 2020 with a revised SNF market basket update of 2.8%. The resulting multifactor productivity (MFP)-adjusted SNF market basket update is equal to 2.4%, or 2.8% less the MFP 0.4 percentage point.
  • See the following two tables representing the unadjusted rates for the Patient-Driven Payment Model (PDPM) for FY 2020

Table 1—FY 2020 unadjusted federal rate per diem—urban

Rate component







Per diem amount








Table 2—FY 2020 unadjusted federal rate per diem—rural

Rate component







Per diem amount







  • PDPM will use the Health Insurance Prospective Payment System (HIPPS) codes on a claim similar to the RUG IV payment determination. However, PDPM will use the data from the five case mix indexes (PT/OT/SLP/Nursing/ and Non-therapy Ancillaries) and the assessment code to determine payment on a claim.
  • CMS will maintain support for the legacy case-mix system (RUG III and RUG IV) to enable certain states to continue the payment methodology for the Medicaid programs during the transition to the PDPM system.
  • CMS is revising the definition of group therapy. Group therapy is defined as a qualified rehabilitation therapist or therapy assistant treating two to six patients at a time who are performing the same or similar activities. CMS noted that documentation needs to justify the reason for group therapy, the benefits of the group, and the type and amount of therapy.
  • CMS is updating requirements for the Skilled Nursing Facility Quality Reporting Program (SNF QRP), including the adoption of two Transfer of Health Information quality measures and standardized patient assessment data elements that SNFs are required to begin reporting with respect to admissions and discharges that occur on or after Oct. 1, 2020.

FY 2020 updates to the SNF QRP: The overall annual cost for SNFs to submit data for the SNF QRP for the provisions in this final rule is $29 million.

  • CMS finalized the proposal to publicly display the quality measure, “Drug Regimen Review Conducted with Follow-Up for Identified Issues-Post Acute Care (PAC) Skilled Nursing Facility (SNF) Quality Reporting Program (QRP).”
  • This final rule is planning to implement a subregulatory process for updating ICD-10 code lists under the PDPM making the use of current and accurate ICD-10 codes more functional for SNFs.
  • There are a number of initiatives to support the adoption of interoperable health information technology to promote a nationwide health information exchange. The Office of the National Coordinator for Health Information Technology (ONC HIT) and CMS are working collaboratively to advance interoperability across settings of care, including post-acute care.
  • Beginning with payment for services furnished on Oct. 1, 2018, payments under the federal per diem rate were reduced by 2% and then the resulting rate was adjusted for a SNF by the value-based incentive payment amount earned by the SNF based on the SNF's performance score for that fiscal year under the SNF value-based purchasing (VBP) program.
  • The Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) is currently being used for the SNF VBP program. The name SNFRM will be replaced by the Skilled Nursing Facility Potentially Preventable Readmissions after Hospital Discharge measure (SNFPPR) as soon as is practicable. The measure will retain the same abbreviation (SNFPPR). The proposed rule also includes an update to the public reporting requirements to ensure that CMS publishes accurate performance information for low-volume SNFs. This claims-based measure assesses the facility-level risk-standardized rate of unplanned, potentially preventable hospital readmissions for SNF patients within 30 days of discharge from a prior admission to an Inpatient Prospective Payment System (IPPS) hospital, critical access hospital, or psychiatric hospital. However, we have not yet transitioned the SNF VBP program to using the SNFPPR.

FY 2020 SNF VBP changes: The overall economic impact of the SNF VBP program is an estimated reduction of $213.6 million in aggregate payments to SNFs during FY 2020.

Contact Joan McCarthy at joan.mccarthy@rsmus.com for more information.

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