This afternoon, CMS released Medicare payment updates for Inpatient Rehabilitation and Skilled Nursing Facilities. As we have noted several times throughout this year’s rulemaking season, the annual payment update was overridden by Congress which mandated a 1 percent increase, before certain budget neutrality adjustments are applied.
CMS estimates payments to IRFs will increase $75 million or about 0.90 percent. The IRF conversion factor that serves as the base rate, before case-mix and other patient and facility specific adjustments, will increase from $15,708.62 to $15,838.00.
CMS made no major policy statements or raised any concerns that were noteworthy regarding IRFs. They did abandon certain changes to the 60-percent rule presumptive compliance methodology in response to industry concerns.
Payments to skilled nursing facilities are expected to increase $370 million in FY 2018 or about 1 percent.
Worth noting is that CMS rebased the market basket for SNFs this year. The base year of 2010 has been updated with new data from 2014. Because of the Congressional override of the FY 2018 payment update, the rebasing will have no effect this year. CMS’s analysis of market basket updates for FY 2013-2016 would have been on average 1.7 percent using the 2014 base versus an actual of 2.0 using the 2010 base. CMS’s forecast of FY 2017 – 2019 suggests no significant change in the market basket adjustment as a result of the rebasing.
As we expected, the SNF payment update does not include a forecast error adjustment. These adjustments, caused by too large a spread between the forecast and actual market basket adjustment, can reduce the annual payment update by 0.50 percent or more. In recent years, CMS’s contractor has been pretty accurate and the industry has avoided any unpleasant suprises with this adjustment.
The real action for SNFs is going to be with the development of a new payment system that removes therapy as a factor. This effort is in the preliminary “Advanced Notice of Proposed Rulemaking” comment period.
Call with questions.
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
