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CMS Releases SNF PPS Final Rule for 2012

 |  By mkimball@hcpro.com  
   August 02, 2011

The Center for Medicare & Medicaid Services (CMS) released the Final Rule for SNF PPS and consolidated billing for fiscal year (FY) 2012 on Friday, July 29. An important provision included in this rule would reduce Medicare SNF PPS payments in FY 2012 by $3.87 billion, or 11.1% lower than payments for FY 2011. CMS states that the reason for this rate reduction is to correct for an unintended spike in payment levels and better align Medicare payments with costs.

CMS is committed to providing high quality care to those in skilled nursing facilities and to pay those facilities properly for that care, said CMS Administrator Donald M. Berwick, MD, in the CMS press release. The adjustments to the payment rates for next year reflect that policy.

CMS is blaming the spike in payment levels, which they are now trying to correct with lower payments in 2012, on a forecast error that occurred with the transition from RUG-III to RUG-IV. According to the CMS press release, the parity adjustment made in FY 2011, which was intended to ensure that the new RUG-IV system would not change overall spending levels from the prior year, instead resulted in a significant increase in Medicare expenditures. This increase was mainly due to shifts in the utilization of therapy modes under RUG-IV differing significantly from the projections on which the parity adjustment was based.

Facilities that are primarily focused on rehab will experience the hardest hit due to these rate cuts, says Diane L. Brown, BA, regulatory specialist and Boot Camp instructor at HCPro, Inc., in Danvers, MA. "But those facilities that have a more traditional case mix that balances residents in therapy and residents spread across the clinical RUG categories won't feel the effects of a full 11.1% decrease."

Along with the payment updates, the SNF PPS Final Rule for 2012 includes a few other significant changes for nursing facilities. Some of these changes are as follows:

  • Affordable Care Act initiatives:
    • CMS is in the process of developing the SNF value based purchasing plan and will submit a report to Congress by October 1, 2011.
    • The Secretary of the Department of Health and Human Services (HHS) will evaluate the possibility of expanding the hospital-acquired condition policy from acute care hospitals to a variety of other settings, including SNFs, and will submit a report to Congress by January 1, 2012.
    • Nursing home transparency and improvement. This will require SNFs to report expenditures separately for direct care staff wages and benefits on the Medicare cost report, for cost reporting periods beginning on or after two years after enactment, and also requires the Secretary of HHS to perform certain related activities.
  • Therapy student supervision: The Final Rule will discontinue the policy requiring lineof-sight supervision of therapy students in SNFs. Instead, effective October 1, 2011, each SNF will determine for itself the appropriate manner of supervision of therapy students consistent with state and local laws and practice standards.

  • Group therapy clarifications: Effective October 1, 2011, group therapy will be defined as therapy provided simultaneously to four patients who are performing the same or similar activities, and group therapy time will be divided by four in determining the reimbursable therapy minutes for each group therapy participant and, therefore, the appropriate RUG-IV group.
  • Five- or seven-day a week therapy clarification: Elimination of the distinction between facilities regularly furnishing therapy services on a 5- or 7-day basis for purposes of setting the date for the End of Therapy (EOT) Other Medicare Required Assessment (OMRA).
  • Introduction of the End of Therapy  Resumption (EOT-R) OMRA: Effective for services provided on or after October 1, 2011, when an EOT OMRA has been completed and therapy subsequently resumes, SNFs may complete an EOT-R OMRA rather than a Start of Therapy (SOT) OMRA, in cases where the resumption of therapy date is no more than five consecutive days after the last day of therapy provided and the therapy services have resumed at the same RUG-IV level that had been in effect prior to the EOT OMRA.
  • Introduction of the Change of Therapy (COT) OMRA: Effective for services provided on or after October 1, 2011, SNFs would be required to complete a COT OMRA for patients classified into a RUG-IV therapy group whenever the intensity of therapy (that is, the total reimbursable therapy minutes provided) changes to such a degree that it would no longer reflect the RUG-IV classification and payment assigned for a given SNF resident based on that resident's most recent assessment used for Medicare payment.

  • The ARD of the COT OMRA would be set for day seven of a COT observation period, which is a successive seven-day window beginning on the day following the ARD set for the most recent scheduled or unscheduled PPS assessment and ending every seven calendar days thereafter.
  • Changes to MDS 3.0 SNF PPS assessment schedule: The Final Rule modifies the Medicare-required assessment schedule to incorporate new assessment windows and grace days to capture more appropriately the changes in patients status, in-services, and treatments provided over the course of the stay. This will also reduce the possibility that information from the same days of the stay may be used on different scheduled MDS assessments.

To read the SNF PPS Final Rule for FY 2012 in its entirety, visit the Resources page on MDSCentral. Also, stay tuned to MDSCentral in the coming weeks for more news and analysis on this final rule.

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MacKenzie Kimball is an associate editor in the long-term care market at HCPro. She writes PPS Alert for Long-term Care and manages MDSCentral.

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