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In a move that pleased the skilled nursing profession, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule (CMS-1718-P) for Fiscal Year (FY) 2020 Medicare reimbursement that calls for a 2.5 percent payment rate increase for skilled nursing facilities (SNFs).

However, the transition from the Resource Utilization Group (RUG) prospective payment system to the Patient-Driven Payment Model (PDPM) is budget neutral, that is, the spending level remains the same through the transition.

To ensure a budget-neutral transition, CMS included a budget neutrality multiplier of 1.463.  The combined effect of the standard multiplier and the one-time budget neutrality multiplier is approximately a 3.09 percent update to the FY 2020 unadjusted federal base rates relative to the FY 2019 rates.

Inside the proposal, CMS also seeks to change the definition of group therapy when the new PDPM starts Oct. 1, another welcome step, according to sources with the American Health Care Association (AHCA).

This rate proposal translates to a roughly $887 million boost to SNFs in Medicare reimbursement on an aggregate basis, the agency said.

The proposed rule also said the Value-Based Purchasing program would reduce payments to SNFs by $213.6 million in FY 2020.

In response to the CMS proposal, Mark Parkinson, president and chief executive officer of AHCA/National Center for Assisted Living, said, “We applaud CMS for issuing this SNF PPS proposed rule. The 2.5 percent market basket increase is critical for multiple reasons. We are transitioning to a new payment system, and the sector is on the financial brink,” Parkinson added.

“MedPAC [Medicare Payment Advisory Commission] just reported that our all-in margin is only 0.5 percent, and many skilled nursing providers are facing devastating closures, particularly in rural areas. This increase doesn’t solve these problems, but it gets us headed in the right direction,” he said. “We thank [CMS] Administrator [Seema] Verma and the administration for this action.”

Beyond the payment provisions of the draft rule, CMS also proposes to expand the definition of group therapy starting on Oct. 1 when its new PDPM kicks in.

This would mark a major step forward for providers, according to Daniel Ciolek, associate vice president, therapy advocacy, for AHCA.

Currently, a group must be four people to be called group therapy. But, long term and post-acute care providers believe this definition restricts the use of group therapy, and CMS agreed by stating in the proposed rule that starting with the new PDPM a group can consist of between two and six patients.

Ciolek says the change would allow the therapist the autonomy to provide the most appropriate care based on the resident’s current care needs and evidence-based research.

“Secondly, the standardization across post-acute provider settings for patients with similar characteristics represents an important step in achieving the aspirations of the IMPACT Act in reducing care variability and outcomes across post-acute care settings,” Ciolek says.

IMPACT refers to the Improving Medicare Post-Acute Care Transformation Act of 2014, a law that seeks to change and improve Medicare’s post-acute care services and how they are reported.

Other than the proposed revision in the definition of group therapy in the proposed rule, the most significant CMS clarifications related to therapy services that have already been furnished via the often updated PDPM Frequently Asked Questions on the CMS PDPM website, Ciolek says.

He adds that the relatively low number of changes being made to PDPM is also a positive for providers that are preparing for the transition this fall.

“The lack of policy volatility is helpful at this time as most providers have already initiated RUGs to PDPM transition activities, including self-assessment, gap analysis, planning, and training, none of which will require a significant alteration based upon this NPRM [Notice of Proposed Rulemaking],” Ciolek says.        

There are some other minor changes to PDPM that AHCA is still evaluating, particularly in situations like how CMS intends to approach updating PDPM policies via regulatory or subregulatory processes, depending on whether a change is deemed substantive or nonsubstantive.

“For example, CMS proposes to provide routine updates to the PDPM ICD-10 [International Classification of Diseases, Tenth Revision, Clinical Modification] code mappings and lists by updating tables on the CMS PDPM website, while more substantive changes would be proposed through rulemaking,” Ciolek says.

Overall, the assessment of the proposed rule turns on the fact that CMS is clearly making the final turn toward the implementation of PDPM on Oct. 1 and that the limited scope of proposed changes in this NPRM indicates, “CMS is ready to roll,” Ciolek says.