Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Value-Based Purchasing Program for Federal Fiscal Year 2021
| Published date | 05 August 2020 |
| Citation | 85 FR 47594 |
| Record Number | 2020-16900 |
| Section | Rules and Regulations |
| Court | Centers For Medicare & Medicaid Services |
Federal Register, Volume 85 Issue 151 (Wednesday, August 5, 2020)
[Federal Register Volume 85, Number 151 (Wednesday, August 5, 2020)]
[Rules and Regulations]
[Pages 47594-47633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16900]
[[Page 47593]]
Vol. 85
Wednesday,
No. 151
August 5, 2020
Part V
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
42 CFR Parts 409 and 413
Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities; Updates to the Value-Based Purchasing
Program for Federal Fiscal Year 2021; Final Rule
Federal Register / Vol. 85, No. 151 / Wednesday, August 5, 2020 /
Rules and Regulations
[[Page 47594]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 409 and 413
[CMS-1737-F]
RIN 0938-AU13
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities; Updates to the Value-Based
Purchasing Program for Federal Fiscal Year 2021
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule updates the payment rates used under the
prospective payment system (PPS) for skilled nursing facilities (SNFs)
for fiscal year (FY) 2021. We are also making changes to the case-mix
classification code mappings used under the SNF PPS and making two
minor revisions in the regulation text. Additionally, we are adopting
the recent revisions in Office of Management and Budget (OMB)
statistical area delineations. This rule also updates the Skilled
Nursing Facility Value-Based Purchasing (VBP) Program that affects
Medicare payment to SNFs.
DATES: These regulations are effective on October 1, 2020.
FOR FURTHER INFORMATION CONTACT:
Penny Gershman, (410) 786-6643, for information related to SNF PPS
clinical issues.
Anthony Hodge, (410) 786-6645, for information related to
consolidated billing, and payment for SNF-level swing-bed services.
John Kane, (410) 786-0557, for information related to the
development of the payment rates and case-mix indexes, and general
information.
Kia Sidbury, (410) 786-7816, for information related to the wage
index.
Lang Le, (410) 786-5693, for information related to the skilled
nursing facility value-based purchasing program.
SUPPLEMENTARY INFORMATION:
Availability of Certain Tables Exclusively Through the Internet on the
CMS Website
As discussed in the FY 2014 SNF PPS final rule (78 FR 47936),
tables setting forth the Wage Index for Urban Areas Based on CBSA Labor
Market Areas and the Wage Index Based on CBSA Labor Market Areas for
Rural Areas are no longer published in the Federal Register. Instead,
these tables are available exclusively through the internet on the CMS
website. The wage index tables for this final rule can be accessed on
the SNF PPS Wage Index home page, at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
Readers who experience any problems accessing any of these online
SNF PPS wage index tables should contact Kia Sidbury at (410) 786-7816.
To assist readers in referencing sections contained in this
document, we are providing the following Table of Contents.
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of Major Provisions
C. Summary of Cost and Benefits
D. Advancing Health Information Exchange
II. Background on SNF PPS
A. Statutory Basis and Scope
B. Initial Transition for the SNF PPS
C. Required Annual Rate Updates
III. Analysis and Responses to Public Comments on the FY 2021 SNF
PPS Proposed Rule
A. General Comments on the FY 2021 SNF PPS Proposed Rule
B. SNF PPS Rate Setting Methodology and FY 2021 Update
1. Federal Base Rates
2. SNF Market Basket Update
3. Case-Mix Adjustment
4. Wage Index Adjustment
5. SNF Value-Based Purchasing Program
6. Adjusted Rate Computation Example
C. Additional Aspects of the SNF PPS
1. SNF Level of Care--Administrative Presumption
2. Consolidated Billing
3. Payment for SNF-Level Swing-Bed Services
4. Revisions to the Regulation Text
D. Other Issues
1. Finalized Changes to SNF PPS Wage Index
2. Technical Updates to PDPM ICD-10 Mappings
3. Skilled Nursing Facility Value-Based Purchasing Program (SNF
VBP)
IV. Collection of Information Requirements
V. Economic Analyses
A. Regulatory Impact Analysis
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act Analysis
D. Federalism Analysis
E. Reducing Regulation and Controlling Regulatory Costs
F. Congressional Review Act
G. Regulatory Review Costs
I. Executive Summary
A. Purpose
This final rule updates the SNF prospective payment rates for
fiscal year (FY) 2021 as required under section 1888(e)(4)(E) of the
Social Security Act (the Act). It also responds to section
1888(e)(4)(H) of the Act, which requires the Secretary to provide for
publication of certain specified information relating to the payment
update (see section II.C. of this final rule) in the Federal Register,
before the August 1 that precedes the start of each FY. As discussed in
section III.C.4. of this final rule, it also makes two minor revisions
in the regulation text. In addition, we are making changes to the code
mappings used under the SNF PPS for classifying patients into case-mix
groups. Additionally, we are also updating the OMB delineations used to
identify a facility's status as an urban or rural facility and to
calculate the wage index. This final rule also updates the Skilled
Nursing Facility Value-Based Purchasing Program (SNF VBP). There are no
updates in this final rule related to the Skilled Nursing Facility
Quality Reporting Program (SNF QRP).
B. Summary of Major Provisions
In accordance with sections 1888(e)(4)(E)(ii)(IV) and (e)(5) of the
Act, the federal rates in this final rule will reflect an update to the
rates that we published in the SNF PPS final rule for FY 2020 (84 FR
38728). In this final rule, we adopt the most recent OMB delineations,
which are used to identify a provider's status as either an urban or
rural facility and to calculate the provider's wage index. This final
rule also includes two revisions to the regulations text. This final
rule also includes revisions to the International Classification of
Diseases, Version 10 (ICD-10) code mappings used under Patient Driven
Payment Model (PDPM) to classify patients into case-mix groups.
Additionally, we are finalizing a several updates to our SNF VBP
regulations, including a 30-day Phase One Review and Correction
deadline for the baseline period quality measure report that is
typically issued in December.
C. Summary of Cost and Benefits
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D. Advancing Health Information Exchange
The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care and patient access
to their health information. The Office of the National Coordinator for
Health Information Technology (ONC) and CMS work collaboratively to
advance interoperability across settings of care, including post-acute
care.
To further interoperability in post-acute care settings, CMS
continues to explore opportunities to advance electronic exchange of
patient information across payers, providers and with patients,
including developing systems that use nationally recognized health IT
standards such as the Logical Observation Identifiers Names and Codes
(LOINC), the Systematized Nomenclature of Medicine (SNOMED), and the
Fast Healthcare Interoperability Resources (FHIR). In addition, CMS and
ONC established the Post-Acute Care Interoperability Workgroup (PACIO)
to facilitate collaboration with industry stakeholders to develop FHIR
standards that could support the exchange and reuse of patient
assessment data derived from the minimum data set (MDS), inpatient
rehabilitation facility patient assessment instrument (IRF-PAI), long
term care hospital continuity assessment record and evaluation (LCDS),
outcome and assessment information set (OASIS) and other sources.
The Data Element Library (DEL) continues to be updated and serves
as the authoritative resource for PAC assessment data elements and
their associated mappings to health IT standards. The DEL furthers CMS'
goal of data standardization and interoperability. These interoperable
data elements can reduce provider burden by allowing the use and
exchange of healthcare data, support provider exchange of electronic
health information for care coordination, person-centered care, and
support real-time, data driven, clinical decision making. Standards in
the Data Element Library (https://del.cms.gov/DELWeb/pubHome) can be
referenced on the CMS website and in the ONC Interoperability Standards
Advisory (ISA). The 2020 ISA is available at https://www.healthit.gov/isa.
In the September 30, 2019 Federal Register, CMS published a final
rule, ``Medicare and Medicaid Programs; Revisions to Requirements for
Discharge Planning'' (84 FR 51836) (``Discharge Planning final rule''),
that revises the discharge planning requirements that hospitals
(including psychiatric hospitals, long-term care hospitals, and
inpatient rehabilitation facilities), critical access hospitals (CAHs),
and home health agencies, must meet to participate in Medicare and
Medicaid programs. The rule supports CMS' interoperability efforts by
promoting the exchange of patient information between health care
settings, and by ensuring that a patient's necessary medical
information is transferred with the patient after discharge from a
hospital, CAH, or post-acute care services provider. For more
information on the Discharge planning requirements, please visit the
final rule at https://www.federalregister.gov/documents/2019/09/30/2019-20732/medicare-and-medicaid-programs-revisions-to-requirements-for-discharge-planning-for-hospitals.
The 21st Century Cures Act (Cures Act) (Pub. L. 114-255, enacted on
December 13, 2016) requires HHS to take new steps to enable the
electronic sharing of health information ensuring interoperability for
providers and settings across the care continuum. On May 1 2020, ONC
and CMS published the final rules, ``21st Century Cures Act:
Interoperability, Information Blocking, and the ONC Health IT
Certification Program,'' (85 FR 25642) and ``Medicare and Medicaid
Programs; Patient Protection and Affordable Care Act; Interoperability
and Patient Access'' (85 FR 25510), respectively, to promote secure and
more immediate access to health information for patients and healthcare
providers through the use of standards-based application programming
interfaces (APIs) that enable easier access to electronic health
information. The CMS Interoperability and Patient Access rule also
finalizes a new regulation under the Conditions of Participation for
hospitals (85 FR 25584), including CAHs and psychiatric hospitals,
which will require these providers to send electronic patient event
notifications of a patient's admission, discharge, and/or transfer to
appropriate recipients, including applicable post-acute care providers
and suppliers. These notifications can help alert post-acute care
providers and suppliers when a patient has been seen in the ED or
admitted to the hospital, supporting more effective care coordination
across settings. We invite providers to learn more about these
important developments and how they are likely to affect SNFs.
II. Background on SNF PPS
A. Statutory Basis and Scope
As amended by section 4432 of the Balanced Budget Act of 1997 (BBA
1997) (Pub. L. 105-33, enacted August 5, 1997), section 1888(e) of the
Act provides for the implementation of a PPS for SNFs. This methodology
uses prospective, case-mix adjusted per diem payment rates applicable
to all covered SNF services defined in section 1888(e)(2)(A) of the
Act. The SNF PPS is effective for cost reporting periods beginning on
or after July 1, 1998, and covers all costs of furnishing covered SNF
services (routine, ancillary, and capital-related costs) other than
costs associated with approved educational activities and bad debts.
Under section 1888(e)(2)(A)(i) of the Act, covered SNF services include
post-hospital extended care services for which benefits are provided
under Part A, as well as those items and services (other than a small
number of excluded services, such as physicians' services) for which
payment may otherwise be made under Part B and which are furnished to
Medicare beneficiaries who are residents in a SNF during a covered Part
A stay. A comprehensive discussion of these provisions appears in the
May 12, 1998 interim final rule (63 FR 26252). In
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addition, a detailed discussion of the legislative history of the SNF
PPS is available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf.
Section 215(a) of the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93, enacted April 1, 2014) added section 1888(g) to
the Act requiring the Secretary to specify an all-cause all-condition
hospital readmission measure and an all-condition risk-adjusted
potentially preventable hospital readmission measure for the SNF
setting. Additionally, section 215(b) of PAMA added section 1888(h) to
the Act requiring the Secretary to implement a VBP program for SNFs.
Finally, section 2(c)(4) of the IMPACT Act amended section 1888(e)(6)
of the Act, which requires the Secretary to implement a QRP for SNFs
under which SNFs report data on measures and resident assessment data.
B. Initial Transition for the SNF PPS
Under sections 1888(e)(1)(A) and (e)(11) of the Act, the SNF PPS
included an initial, three-phase transition that blended a facility-
specific rate (reflecting the individual facility's historical cost
experience) with the federal case-mix adjusted rate. The transition
extended through the facility's first 3 cost reporting periods under
the PPS, up to and including the one that began in FY 2001. Thus, the
SNF PPS is no longer operating under the transition, as all facilities
have been paid at the full federal rate effective with cost reporting
periods beginning in FY 2002. As we now base payments for SNFs entirely
on the adjusted federal per diem rates, we no longer include adjustment
factors under the transition related to facility-specific rates for the
upcoming FY.
C. Required Annual Rate Updates
Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates
to be updated annually. The most recent annual update occurred in a
final rule that set forth updates to the SNF PPS payment rates for FY
2020 (84 FR 38728).
Section 1888(e)(4)(H) of the Act specifies that we provide for
publication annually in the Federal Register the following:
The unadjusted federal per diem rates to be applied to
days of covered SNF services furnished during the upcoming FY.
The case-mix classification system to be applied for these
services during the upcoming FY.
The factors to be applied in making the area wage
adjustment for these services.
Along with other revisions discussed later in this preamble, this
final rule provides the required annual updates to the per diem payment
rates for SNFs for FY 2021.
III. Analysis of and Responses to Public Comments on the FY 2021 SNF
PPS Proposed Rule
In response to the publication of the FY 2021 SNF PPS proposed rule
(85 FR 20914), we received 47 public comments from individuals,
providers, corporations, government agencies, private citizens, trade
associations, and major organizations. The following are brief
summaries of each proposed provision, a summary of the public comments
that we received related to that proposal, and our responses to the
comments.
A. General Comments on the FY 2021 SNF PPS Proposed Rule
In addition to the comments we received on specific proposals
contained within the proposed rule (which we address later in this
final rule), commenters also submitted the following, more general,
observations on the SNF PPS and SNF QRP generally. A discussion of
these comments, along with our responses, appears below.
Comment: We received a significant number of comments and
recommendations that are outside the scope of the proposed rule
addressing a number of different policies, including the Coronavirus
disease 2019 (COVID-19) pandemic, the group and concurrent therapy
limit under PDPM, and other suggested changes to the PDPM case-mix
classification model and quality programs under the SNF PPS.
Response: We greatly appreciate these comments and suggestions for
revisions to policies under the SNF PPS. However, because these
comments are outside the scope of the current rulemaking, we are not
addressing them in this final rule, but will take them under
consideration.
Comment: We received several comments on the SNF QRP. The proposed
rule contained no SNF QRP proposals. Several commenters thanked CMS for
granting an exception to the SNF QRP reporting requirements for quarter
1 and quarter 2 of 2020. Several commenters requested that CMS modify
the use of COVID-19 affected data in the SNF QRP, by excluding or
delineating the data. One commenter requested that measure reliability
analyses be performed and shared to ensure the accuracy of measure
calculations in light of truncated, incomplete, or COVID-19 affected
data. One commenter requested CMS conduct stakeholder meetings to
address the impacts of the truncated performance period on performance
compliance. One commenter recommended that all SNFs be held harmless
for non-compliance during the FY 2022 performance period. Several
commenters provided recommendations for the addition of new SNF QRP
measures. Finally, a commenter recommended measures be modified to
protect specialty populations.
Response: These comments fall outside the scope of the current
rulemaking. We refer providers to 85 FR 27596 through 27597 regarding
the delay in the adoption of the MDS 3.0 v1.18.1. We also refer
providers to our June 23, 2020 announcement at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Skilled-Nursing-Facility-Quality-Reporting-Program/SNF-quality-Reporting-Program-Spotlights-and-Announcements that
effective July 1, 2020 providers must resume reporting their quality
data.
B. SNF PPS Rate Setting Methodology and FY 2021 Update
1. Federal Base Rates
Under section 1888(e)(4) of the Act, the SNF PPS uses per diem
federal payment rates based on mean SNF costs in a base year (FY 1995)
updated for inflation to the first effective period of the PPS. We
developed the federal payment rates using allowable costs from
hospital-based and freestanding SNF cost reports for reporting periods
beginning in FY 1995. The data used in developing the federal rates
also incorporated a Part B add-on, which is an estimate of the amounts
that, prior to the SNF PPS, would be payable under Part B for covered
SNF services furnished to individuals during the course of a covered
Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to
the first effective year of the PPS (the 15-month period beginning July
1, 1998) using a SNF market basket index, and then standardized for
geographic variations in wages and for the costs of facility
differences in case mix. In compiling the database used to compute the
federal payment rates, we excluded those providers that received new
provider exemptions from the routine cost limits, as well as costs
related to payments for exceptions to the routine cost limits. Using
the formula that the BBA 1997 prescribed, we set the federal
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rates at a level equal to the weighted mean of freestanding costs plus
50 percent of the difference between the freestanding mean and weighted
mean of all SNF costs (hospital-based and freestanding) combined. We
computed and applied separately the payment rates for facilities
located in urban and rural areas, and adjusted the portion of the
federal rate attributable to wage-related costs by a wage index to
reflect geographic variations in wages.
2. SNF Market Basket Update
a. SNF Market Basket Index
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket index that reflects changes over time in the prices of an
appropriate mix of goods and services included in covered SNF services.
Accordingly, we have developed a SNF market basket index that
encompasses the most commonly used cost categories for SNF routine
services, ancillary services, and capital-related expenses. In the SNF
PPS final rule for FY 2018 (82 FR 36548 through 36566), we revised and
rebased the market basket index, which included updating the base year
from FY 2010 to 2014.
The SNF market basket index is used to compute the market basket
percentage change that is used to update the SNF federal rates on an
annual basis, as required by section 1888(e)(4)(E)(ii)(IV) of the Act.
This market basket percentage update is adjusted by a forecast error
correction, if applicable, and then further adjusted by the application
of a productivity adjustment as required by section 1888(e)(5)(B)(ii)
of the Act and described in section III.B.2.d. of this final rule. In
the FY 2021 SNF PPS proposed rule (85 FR 20916), we proposed the FY
2021 SNF market basket update of 2.7 percent based on IHS Global Inc.'s
(IGI's) first quarter 2020 forecast of the 2014-based SNF market basket
with historical data through fourth quarter 2019. We also proposed that
if more recent data subsequently became available (for example, a more
recent estimate of the market basket and/or the MFP), we would use such
data, if appropriate, to determine the FY 2021 SNF market basket
percentage change, labor-related share relative importance, forecast
error adjustment, or MFP adjustment in the SNF PPS final rule (85 FR
20918).
For this final rule, based on IGI's second quarter 2020 forecast
with historical data through the first quarter of 2020, the FY 2021
growth rate of the 2014-based SNF market basket is estimated to be 2.2
percent. We note that the first quarter 2020 forecast used for the
proposed market basket update was developed prior to the economic
impacts of the COVID-19 pandemic. This lower update (2.2 percent) for
FY 2021 relative to the proposed rule (2.7 percent) is primarily driven
by slower than anticipated compensation growth for both health-related
and other occupations as labor markets are expected to be significantly
impacted during the recession that started in February 2020 and
throughout the anticipated recovery.
In section III.B.2.e. of this final rule, we discuss the 2 percent
reduction applied to the market basket update for those SNFs that fail
to submit measures data as required by section 1888(e)(6)(A) of the
Act.
b. Use of the SNF Market Basket Percentage
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage as the percentage change in the SNF market basket index from
the midpoint of the previous FY to the midpoint of the current FY. For
the federal rates set forth in this final rule, we use the percentage
change in the SNF market basket index to compute the update factor for
FY 2021. This factor is based on the FY 2021 percentage increase in the
2014-based SNF market basket index reflecting routine, ancillary, and
capital-related expenses. As stated above, in the proposed rule, the
SNF market basket percentage was estimated to be 2.7 percent for FY
2021 based on IGI's first quarter 2020 forecast (with historical data
through fourth quarter 2019). In this final rule, the SNF market basket
percentage is estimated to be 2.2 percent for FY 2021 based on IGI's
second quarter 2020 forecast (with historical data through first
quarter 2020).
c. Forecast Error Adjustment
As discussed in the June 10, 2003 supplemental proposed rule (68 FR
34768) and finalized in the August 4, 2003 final rule (68 FR 46057
through 46059), 42 CFR 413.337(d)(2) provides for an adjustment to
account for market basket forecast error. The initial adjustment for
market basket forecast error applied to the update of the FY 2003 rate
for FY 2004, and took into account the cumulative forecast error for
the period from FY 2000 through FY 2002, resulting in an increase of
3.26 percent to the FY 2004 update. Subsequent adjustments in
succeeding FYs take into account the forecast error from the most
recently available FY for which there is final data, and apply the
difference between the forecasted and actual change in the market
basket when the difference exceeds a specified threshold. We originally
used a 0.25 percentage point threshold for this purpose; however, for
the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425),
we adopted a 0.5 percentage point threshold effective for FY 2008 and
subsequent FYs. As we stated in the final rule for FY 2004 that first
issued the market basket forecast error adjustment (68 FR 46058), the
adjustment will reflect both upward and downward adjustments, as
appropriate.
For FY 2019 (the most recently available FY for which there is
final data), the forecasted or estimated increase in the market basket
index was 2.8 percentage points, and the actual increase for FY 2019 is
2.3 percentage points, resulting in the difference between the
estimated and actual increase to be 0.5 percentage point. In the FY
2014 final rule (78 FR 47946 through 47947), we finalized our proposal
to report the forecast error to the second significant digit in only
those instances where the forecast error rounds to 0.5 percentage point
at one significant digit, so that we can determine whether the forecast
error adjustment threshold has been exceeded. As we stated in the FY
2014 SNF PPS final rule, once we determine that a forecast error
adjustment is warranted, we will continue to apply the adjustment
itself at one significant digit (otherwise referred to as a tenth of a
percentage point). When rounded to the second significant digit, the
percent change in the estimated market basket is 2.75 percent and the
actual FY 2019 market basket increase is 2.34 percent. Subtracted, this
yields a forecast error of 0.41 percentage point (2.75-2.34).
Accordingly, as the difference between the estimated and actual amount
of change in the market basket index does not exceed the 0.5 percentage
point threshold, we stated in the proposed rule (85 FR 20917) that
under the policy previously described (comparing the forecasted and
actual increase in the market basket), the FY 2021 market basket
percentage change would not be adjusted to account for the forecast
error correction.
However, as discussed in the FY 2019 SNF PPS final rule (83 FR
39166), the market basket increase for FY 2019 was set at 2.4 percent,
as a result of section 53111 of the Bipartisan Budget Act of 2018 (BBA
2018) (Pub. L. 115-123, enacted on February 9, 2018), which amended
section 1888(e) of the Act to add section 1888(e)(5)(B)(iv) of the Act.
Given that the market basket adjustment for FY 2019 was set by law,
meaning that the forecasted 2014-based market
[[Page 47598]]
basket percentage increase for FY 2019 was not used to calculate the
SNF PPS per diem rates for FY 2019, and because the forecast error
adjustment discussed in this section is intended to correct for
differences between the forecasted market basket increase for a given
year and the actual market basket increase for that year, we stated in
the proposed rule that we do not believe that it would be appropriate
to apply a forecast error correction for FY 2019.
Table 2 shows the forecasted and actual market basket amounts for
FY 2019.
[GRAPHIC] [TIFF OMITTED] TR05AU20.002
d. Multifactor Productivity Adjustment
Section 1888(e)(5)(B)(ii) of the Act, as added by section 3401(b)
of the Patient Protection and Affordable Care Act (Affordable Care Act)
(Pub. L. 111-148, enacted March 23, 2010) requires that, in FY 2012 and
in subsequent FYs, the market basket percentage under the SNF payment
system (as described in section 1888(e)(5)(B)(i) of the Act) is to be
reduced annually by the multifactor productivity (MFP) adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act, in turn, defines the MFP adjustment
to be equal to the 10-year moving average of changes in annual economy-
wide private nonfarm business multi-factor productivity (as projected
by the Secretary for the 10-year period ending with the applicable FY,
year, cost-reporting period, or other annual period). The Bureau of
Labor Statistics (BLS) is the agency that publishes the official
measure of private nonfarm business MFP. We refer readers to the BLS
website at http://www.bls.gov/mfp for the BLS historical published MFP
data.
MFP is derived by subtracting the contribution of labor and capital
inputs growth from output growth. The projections of the components of
MFP are currently produced by IGI, a nationally recognized economic
forecasting firm with which CMS contracts to forecast the components of
the market baskets and MFP. To generate a forecast of MFP, IGI
replicates the MFP measure calculated by the BLS, using a series of
proxy variables derived from IGI's U.S. macroeconomic models. For a
discussion of the MFP projection methodology, we refer readers to the
FY 2012 SNF PPS final rule (76 FR 48527 through 48529) and the FY 2016
SNF PPS final rule (80 FR 46395). A complete description of the MFP
projection methodology is available on our website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html.
(1) Incorporating the MFP Into the Market Basket Update
Per section 1888(e)(5)(A) of the Act, the Secretary shall establish
a SNF market basket index that reflects changes over time in the prices
of an appropriate mix of goods and services included in covered SNF
services. Section 1888(e)(5)(B)(ii) of the Act, added by section
3401(b) of the Affordable Care Act, requires that for FY 2012 and each
subsequent FY, after determining the market basket percentage described
in section 1888(e)(5)(B)(i) of the Act, the Secretary shall reduce such
percentage by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (which we refer to as the MFP
adjustment). Section 1888(e)(5)(B)(ii) of the Act further states that
the reduction of the market basket percentage by the MFP adjustment may
result in the market basket percentage being less than zero for a FY,
and may result in payment rates under section 1888(e) of the Act being
less than such payment rates for the preceding fiscal year. Thus, if
the application of the MFP adjustment to the market basket percentage
calculated under section 1888(e)(5)(B)(i) of the Act results in an MFP-
adjusted market basket percentage that is less than zero, then the
annual update to the unadjusted federal per diem rates under section
1888(e)(4)(E)(ii) of the Act would be negative, and such rates would
decrease relative to the prior FY.
In the FY 2021 SNF PPS proposed rule (85 FR 20917), we proposed a
MFP adjustment of 0.4 percentage point based on IGI's first quarter
2020 forecast. Based on the more recent data available for this FY 2021
SNF PPS final rule, the current estimate of the 10-year moving average
growth of MFP for FY 2021 would be -0.1 percentage point. This MFP is
based on the most recent macroeconomic outlook from IGI at the time of
rulemaking (released June 2020) in order to reflect more current
historical economic data. IGI produces monthly macroeconomic forecasts,
which include projections of all of the economic series used to derive
MFP. In contrast, IGI only produces forecasts of the more detailed
price proxies used in the 2014-based SNF market basket on a quarterly
basis. Therefore, IGI's second quarter 2020 forecast is the most recent
forecast of the 2014-based SNF market basket percentage.
We note that it has typically been our practice to base the
projection of the market basket price proxies and MFP in the final rule
on the second quarter IGI forecast. For this FY 2021 SNF final rule, we
are using the IGI June 2020 macroeconomic forecast for MFP because it
is a more recent forecast, and it is important to use more recent data
during this period when economic trends, particularly employment and
labor productivity, are notably uncertain because of the COVID-19
pandemic. Historically, the MFP adjustment based on the second quarter
IGI forecast has been very similar to the MFP adjustment derived with
IGI's June macroeconomic forecast. Substantial changes in the
macroeconomic indicators in between monthly forecasts are atypical.
Given the unprecedented economic uncertainty as a result of the
COVID-19 pandemic, the changes in the IGI
[[Page 47599]]
macroeconomic series used to derive MFP between the IGI second quarter
2020 forecast and the IGI June 2020 macroeconomic forecast is
significant. Therefore, we believe it is appropriate to use IGI's more
recent June 2020 macroeconomic forecast to determine the MFP adjustment
for the final rule as it reflects more recent historical data. For
comparison purposes, the 10-year moving average growth of MFP for FY
2021 is projected to be -0.1 percentage point based on IGI's June 2020
macroeconomic forecast compared to a FY 2021 projected 10-year moving
average growth of MFP of 0.7 percentage point based on IGI's second
quarter 2020 forecast. Mechanically subtracting the negative 10-year
moving average growth of MFP from the SNF market basket percentage
using the data from the IGI June 2020 macroeconomic forecast would have
resulted in a 0.1 percentage point increase in the FY 2021 SNF payment
update percentage. However, under section 1888(e)(5)(B)(ii) of the Act,
the Secretary is required to reduce (not increase) the SNF market
basket percentage by changes in economy-wide productivity. Accordingly,
we will be applying a 0.0 percentage point MFP adjustment to the SNF
market basket percentage. Therefore, the SNF payment update percentage
for FY 2021 is 2.2 percent.
Consistent with section 1888(e)(5)(B)(i) of the Act and Sec.
413.337(d)(2), the market basket percentage for FY 2021 for the SNF PPS
is based on IGI's second quarter 2020 forecast of the SNF market basket
percentage, which is estimated to be 2.2 percent. As discussed above,
given that applying the 10-year moving average growth of MFP of -0.1
percentage point would have resulted in an increase in the market
basket percentage, contrary to the provisions of section
1888(e)(5)(B)(ii) of the Act, we are applying a 0.0 percentage point
MFP adjustment to the FY 2021 SNF market basket percentage. The FY 2021
SNF market basket update is, therefore, equal to 2.2 percent.
e. Market Basket Update Factor for FY 2021
Sections 1888(e)(4)(E)(ii)(IV) and (e)(5)(i) of the Act require
that the update factor used to establish the FY 2021 unadjusted federal
rates be at a level equal to the market basket index percentage change.
Accordingly, we determined the total growth from the average market
basket level for the period of October 1, 2019, through September 30,
2020 to the average market basket level for the period of October 1,
2020, through September 30, 2021. We stated in the proposed rule that
this process yields a percentage change in the 2014-based SNF market
basket of 2.7 percent. However, as stated above, based on a more recent
forecast, in this final rule, this process yields a percentage change
in the 2014-based SNF market basket of 2.2 percent.
As further explained in section III.B.2.c. of this final rule, as
applicable, we adjust the market basket percentage change by the
forecast error from the most recently available FY for which there is
final data and apply this adjustment whenever the difference between
the forecasted and actual percentage change in the market basket
exceeds a 0.5 percentage point threshold. Since the difference between
the forecasted FY 2019 SNF market basket percentage change and the
actual FY 2019 SNF market basket percentage change (FY 2019 is the most
recently available FY for which there is historical data) did not
exceed the 0.5 percentage point threshold, in the proposed rule, the FY
2021 market basket percentage change was not adjusted by the forecast
error correction. Moreover, given that the market basket for FY 2019
was set independent of these estimates, as discussed previously, we
stated in the proposed rule that we do not believe a forecast error
adjustment would be warranted even if the difference for FY 2019
exceeded 0.5 percentage point.
Section 1888(e)(5)(B)(ii) of the Act requires us to reduce the
market basket percentage change by the 10-year moving average of
changes in MFP for the period ending September 30, 2021 which, in the
proposed rule, was estimated to be 0.4 percent, as described in section
III.B.2.d. of this final rule. We stated that the resulting net SNF
market basket update would equal 2.3 percent, or 2.7 percent less the
projected 10-year moving average growth of MFP of 0.4 percentage point
. Thus, as discussed in the FY 2021 SNF PPS proposed rule, we proposed
to apply the SNF market basket update factor of 2.3 percent in our
determination of the FY 2021 SNF PPS unadjusted federal per diem rates,
which reflected a market basket increase factor of 2.7 percent, less
the projected 0.4 percentage point MFP adjustment.
However, as discussed in the FY 2021 SNF PPS proposed rule, our
policy is that if more recent data become available (for example, a
more recent estimate of the SNF market basket and/or MFP), we would use
such data, if appropriate, to determine the FY 2021 SNF market basket
percentage change, labor-related share relative importance, forecast
error adjustment, or MFP adjustment in the SNF PPS final rule. As
discussed previously in this section, based on IGI's second quarter
2020 forecast, the SNF market basket percentage is estimated to be 2.2
percent. Further, as discussed above, based on IGI's June 2020
macroeconomic forecast, the 10-year moving average growth of MFP is
estimated to be -0.1 percent, which, absent the statutory directive to
``reduce'' the market basket, see section 1888(e)(5)(B)(ii) of the Act,
would have resulted in an increase in the FY 2021 SNF payment update
percentage. In keeping with Sec. 1888, therefore, we are applying a
0.0 percentage point MFP adjustment for FY 2021.
We also note that section 1888(e)(6)(A)(i) of the Act provides
that, beginning with FY 2018, SNFs that fail to submit data, as
applicable, in accordance with sections 1888(e)(6)(B)(i)(II) and (III)
of the Act for a fiscal year will receive a 2.0 percentage point
reduction to their market basket update for the fiscal year involved,
after application of section 1888(e)(5)(B)(ii) of the Act (the MFP
adjustment) and section 1888(e)(5)(B)(iii) of the Act (the 1 percent
market basket increase for FY 2018). In addition, section
1888(e)(6)(A)(ii) of the Act states that application of the 2.0
percentage point reduction (after application of section
1888(e)(5)(B)(ii) and (iii) of the Act) may result in the market basket
index percentage change being less than zero for a fiscal year, and may
result in payment rates for a fiscal year being less than such payment
rates for the preceding fiscal year. Section 1888(e)(6)(A)(iii) of the
Act further specifies that the 2.0 percentage point reduction is
applied in a noncumulative manner, so that any reduction made under
section 1888(e)(6)(A)(i) of the Act applies only to the fiscal year
involved, and that the reduction cannot be taken into account in
computing the payment amount for a subsequent fiscal year.
Commenters submitted the following comments related to the proposed
market basket update factor for FY 2021. A discussion of these
comments, along with our responses, appears below.
Comment: Many commenters supported the proposed market basket
increase factor for FY 2021. A few commenters suggested that CMS
consider reweighting the cost categories used in calculating the SNF
market basket in relation to COVID-19.
Response: We appreciate the support for applying the market basket
increase factor in calculating the FY 2021 SNF PPS per diem rates. With
regard to the comment that we consider reweighting the cost categories
based on changes in
[[Page 47600]]
SNF costs resulting from COVID-19, we do not believe that sufficient
data exists to perform this type of analysis. We may consider this
analysis in the future, when more data become available.
After considering the comments received, for the reasons set forth
in this final rule and in the FY 2021 SNF PPS proposed rule, we are
finalizing the market basket update factor of 2.2 percent, utilizing
the more recent forecast data. Based on more recent forecast data, as
discussed previously in this section, the FY 2021 market basket update
factor is 2.2 percent, which is based on an FY 2021 SNF market basket
percentage increase of 2.2 percent.
f. Unadjusted Federal Per Diem Rates for FY 2021
As discussed in the FY 2019 SNF PPS final rule (83 FR 39162), in FY
2020 we implemented a new case-mix classification system to classify
SNF patients under the SNF PPS, the PDPM. As discussed in section V.B.
of that final rule, under PDPM, the unadjusted federal per diem rates
are divided into six components, five of which are case-mix adjusted
components (Physical Therapy (PT), Occupational Therapy (OT), Speech-
Language Pathology (SLP), Nursing, and Non-Therapy Ancillaries (NTA)),
and one of which is a non-case-mix component, as exists under RUG-IV.
In the proposed rule (85 FR 20918), we used the SNF market basket,
adjusted as described previously, to adjust each per diem component of
the federal rates forward to reflect the change in the average prices
for FY 2021 from the average prices for FY 2020. We stated we would
further adjust the rates by a wage index budget neutrality factor,
described later in this section. Further, in the past, we used the
revised OMB delineations adopted in the FY 2015 SNF PPS final rule (79
FR 45632, 45634), with updates as reflected in OMB Bulletin Nos, 15-01
and 17-01, to identify a facility's urban or rural status for the
purpose of determining which set of rate tables would apply to the
facility. As discussed in the FY 2021 SNF PPS proposed rule and later
in this final rule, we proposed to adopt the revised OMB delineations
identified in OMB Bulletin No. 18-04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) to
identify a facility's urban or rural status.
Tables 3 and 4 reflect the updated unadjusted federal rates for FY
2021, prior to adjustment for case-mix.
[GRAPHIC] [TIFF OMITTED] TR05AU20.003
Commenters submitted the following comments related to the proposed
unadjusted federal per diem rates for FY 2021. A discussion of these
comments, along with our responses, appears below.
Comment: One commenter raised concerns with how the base rates used
under the SNF PPS, which have been adjusted by the SNF market basket
each year, are based on cost reports from 1995. The commenters
requested that CMS update the cost reporting base year used in deriving
the unadjusted federal rates.
Response: We appreciate the commenter's suggestion regarding
updating the cost reporting base year used for deriving the unadjusted
federal per diem rates. However, section 1888(e)(4)(A) of the Act
requires that we use the ``allowable costs of extended care services
(excluding exception payments) for the facility for cost reporting
periods beginning in 1995.'' As such, we do not have the statutory
authority to update the cost reporting base year used to derive the SNF
PPS federal per diem rates.
Accordingly, after considering the comments received, for the
reasons specified in this final rule and in the FY 2021 SNF PPS
proposed rule, we are finalizing the unadjusted federal per diem rates
set forth in Tables 3 and 4, which we derived using the SNF market
basket update factor of 2.2 percent and a budget neutrality factor of
0.9992 (as discussed later in this preamble).
3. Case-Mix Adjustment
Under section 1888(e)(4)(G)(i) of the Act, the federal rate also
incorporates an adjustment to account for facility case-mix, using a
classification system that accounts for the relative resource
utilization of different patient types. The statute specifies that the
adjustment is to reflect both a resident classification system that the
Secretary establishes to account for the relative resource use of
different patient types, as well as resident assessment data and other
data that the Secretary considers appropriate. In the FY 2019 final
rule (83 FR 39162, August 8, 2018), we finalized a new case-mix
classification model, the PDPM, which took effect beginning October 1,
2019. The previous RUG-IV model classified most patients into a therapy
payment group and primarily used the volume of therapy services
provided to the patient as the basis for payment classification, thus
inadvertently creating an incentive for SNFs to furnish therapy
regardless of the individual patient's unique characteristics, goals,
or needs. PDPM eliminates this incentive and improves the overall
accuracy and appropriateness of SNF payments by classifying patients
into payment groups based on specific, data-driven patient
characteristics, while simultaneously reducing the administrative
burden on SNFs.
As we noted in the FY 2021 SNF PPS proposed rule, we would continue
to monitor the impact of PDPM implementation on patient outcomes and
program outlays, though we believe it would be premature to release any
information related to these issues based on the amount of data
currently available. We hope to release information in the future that
relates to these issues. We will also continue to monitor the impact of
PDPM implementation as it relates to our intention to ensure that PDPM
is implemented in a budget neutral manner, as discussed in the FY 2020
SNF PPS final rule (84 FR 38734). In
[[Page 47601]]
future rulemaking, we may reconsider the adjustments made in the FY
2020 SNF PPS final rule to the case-mix weights used under PDPM to
ensure budget neutrality and recalibrate these adjustments as
appropriate, as we did after the implementation of RUG-IV in FY 2011.
The PDPM uses clinical data from the MDS to assign case-mix
classifiers to each patient that are then used to calculate a per diem
payment under the SNF PPS, consistent with the provisions of section
1888(e)(4)(G)(i) of the Act. As discussed in section III.C.1. of this
final rule, the clinical orientation of the case-mix classification
system supports the SNF PPS's use of an administrative presumption that
considers a beneficiary's initial case-mix classification to assist in
making certain SNF level of care determinations. Further, because the
MDS is used as a basis for payment, as well as a clinical assessment,
we have provided extensive training on proper coding and the timeframes
for MDS completion in our Resident Assessment Instrument (RAI) Manual.
As we have stated in prior rules, for an MDS to be considered valid for
use in determining payment, the MDS assessment should be completed in
compliance with the instructions in the RAI Manual in effect at the
time the assessment is completed. For payment and quality monitoring
purposes, the RAI Manual consists of both the Manual instructions and
the interpretive guidance and policy clarifications posted on the
appropriate MDS website at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html.
Under section 1888(e)(4)(H) of the Act, each update of the payment
rates must include the case-mix classification methodology applicable
for the upcoming FY. The FY 2021 payment rates set forth in this final
rule reflect the use of the PDPM case-mix classification system from
October 1, 2020, through September 30, 2021. In the FY 2021 SNF PPS
proposed rule (85 FR 20920 through 20921), we listed the proposed case-
mix adjusted PDPM payment rates for FY 2021, provided separately for
urban and rural SNFs, in Tables 5 and 6 with corresponding case-mix
values.
We stated in the proposed rule that given the differences between
the previous RUG-IV model and PDPM in terms of patient classification
and billing, it was important that the format of Tables 5 and 6 reflect
these differences. More specifically, under both RUG-IV and PDPM,
providers use a Health Insurance Prospective Payment System (HIPPS)
code on a claim to bill for covered SNF services. Under RUG-IV, the
HIPPS code included the three-character RUG-IV group into which the
patient classified as well as a two-character assessment indicator code
that represented the assessment used to generate this code. Under PDPM,
while providers would still use a HIPPS code, the characters in that
code represent different things. For example, the first character
represents the PT and OT group into which the patient classifies. If
the patient is classified into the PT and OT group ``TA'', then the
first character in the patient's HIPPS code would be an A. Similarly,
if the patient is classified into the SLP group ``SB'', then the second
character in the patient's HIPPS code would be a B. The third character
represents the Nursing group into which the patient classifies. The
fourth character represents the NTA group into which the patient
classifies. Finally, the fifth character represents the assessment used
to generate the HIPPS code.
Tables 5 and 6 reflect the PDPM's structure. Accordingly, Column 1
of Tables 5 and 6 represents the character in the HIPPS code associated
with a given PDPM component. Columns 2 and 3 provide the case-mix index
and associated case-mix adjusted component rate, respectively, for the
relevant PT group. Columns 4 and 5 provide the case-mix index and
associated case-mix adjusted component rate, respectively, for the
relevant OT group. Columns 6 and 7 provide the case-mix index and
associated case-mix adjusted component rate, respectively, for the
relevant SLP group. Column 8 provides the nursing case-mix group (CMG)
that is connected with a given PDPM HIPPS character. For example, if
the patient qualified for the nursing group CBC1, then the third
character in the patient's HIPPS code would be a ``P.'' Columns 9 and
10 provide the case-mix index and associated case-mix adjusted
component rate, respectively, for the relevant nursing group. Finally,
columns 11 and 12 provide the case-mix index and associated case-mix
adjusted component rate, respectively, for the relevant NTA group.
Tables 5 and 6 reflect the final PDPM case-mix adjusted rates and
case-mix indexes for FY 2021. We would note that these numbers differ
from those in the FY 2021 SNF PPS proposed rule, as we have used more
recent data in calculating the final budget neutrality factor, that is
used in calculating the FY 2021 SNF PPS unadjusted federal per diem
rates, as discussed in section III.D.1.d. of this final rule. Tables 5
and 6 do not reflect adjustments which may be made to the SNF PPS rates
as a result of the SNF VBP program, discussed in section III.D. of this
final rule, or other adjustments, such as the variable per diem
adjustment. Further, in the past, we used the revised OMB delineations
adopted in the FY 2015 SNF PPS final rule (79 FR 45632, 45634), with
updates as reflected in OMB Bulletin Nos, 15-01 and 17-01, to identify
a facility's urban or rural status for the purpose of determining which
set of rate tables would apply to the facility. As discussed in this
final rule and in the FY 2021 SNF PPS proposed rule (85 FR 20928), we
proposed to adopt the revised OMB delineations identified in OMB
Bulletin No. 18-04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf) to identify a facility's urban or
rural status.
BILLING CODE 4120-01-P
[[Page 47602]]
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[[Page 47603]]
[GRAPHIC] [TIFF OMITTED] TR05AU20.005
BILLING CODE 4120-01-C
4. Wage Index Adjustment
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
federal rates to account for differences in area wage levels, using a
wage index that the Secretary determines appropriate. Since the
inception of the SNF PPS, we have used hospital inpatient wage data in
developing a wage index to be applied to SNFs. In the FY 2021 SNF PPS
proposed rule (85 FR 20921), we proposed to continue this practice for
FY 2021, as we continue to believe that in the absence of SNF-specific
wage data, using the hospital inpatient wage index data is appropriate
and reasonable for the SNF PPS. As explained in the update notice for
FY 2005 (69 FR 45786), the SNF PPS does not use the hospital area wage
index's occupational mix adjustment, as this adjustment serves
specifically to define the occupational categories more clearly in a
hospital setting; moreover, the collection of the occupational wage
data under the inpatient prospective payment system (IPPS) also
excludes any wage data related to SNFs. Therefore, we believe that
using the updated wage data exclusive of the occupational mix
adjustment continues to be appropriate for SNF payments. As in previous
years, we stated in the proposed rule that we would continue to use the
pre-reclassified IPPS hospital wage data, without applying the
occupational mix, rural floor, or outmigration adjustment, as the basis
for the SNF PPS wage index. For FY 2021, the updated wage data are for
hospital cost reporting periods beginning on or after October 1, 2016
and before October 1, 2017 (FY 2017 cost report data).
We note that section 315 of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-
554, enacted December 21, 2000) authorized us to establish a geographic
reclassification procedure that is specific to SNFs, but only after
collecting the data necessary to establish a SNF PPS wage index that is
based on wage data from nursing homes. However, to date, this has
proven to be unfeasible due to the volatility of existing SNF wage data
and the significant amount of resources that would be required to
improve the quality of that data. More specifically, auditing all SNF
cost reports, similar to the process used to audit inpatient hospital
cost reports for purposes of the IPPS wage index, would place a burden
on providers in terms of recordkeeping and completion of the cost
report worksheet. In addition, adopting such an approach would require
a significant commitment of resources by CMS and the Medicare
Administrative Contractors, potentially far in excess of those required
under the IPPS given that there are nearly five times as many SNFs as
there are inpatient hospitals. Therefore, we stated in the proposed
rule that while we continue to believe that the development of such an
audit process could improve SNF cost reports in such a manner as to
permit us to establish a SNF-specific wage index, we do not believe
this undertaking is feasible at this time.
In addition, we proposed to continue to use the same methodology
discussed in the SNF PPS final rule for FY 2008 (72 FR 43423) to
address those geographic areas in which there are no hospitals, and
thus, no hospital wage index data on which to base the calculation of
the FY 2020 SNF PPS wage index. For rural geographic areas
[[Page 47604]]
that do not have hospitals, and therefore, lack hospital wage data on
which to base an area wage adjustment, we stated we would use the
average wage index from all contiguous Core-Based Statistical Areas
(CBSAs) as a reasonable proxy. For FY 2021, there are no rural
geographic areas that do not have hospitals, and thus, this methodology
will not be applied. For rural Puerto Rico, we stated we would not
apply this methodology due to the distinct economic circumstances that
exist there (for example, due to the close proximity to one another of
almost all of Puerto Rico's various urban and non-urban areas, this
methodology would produce a wage index for rural Puerto Rico that is
higher than that in half of its urban areas); instead, we stated we
would continue to use the most recent wage index previously available
for that area. For urban areas without specific hospital wage index
data, we stated we would use the average wage indexes of all of the
urban areas within the state to serve as a reasonable proxy for the
wage index of that urban CBSA. For FY 2021, the only urban area without
wage index data available is CBSA 25980, Hinesville-Fort Stewart, GA.
The wage index applicable to FY 2021 is set forth in Tables A and B
available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.
In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in OMB Bulletin No. 03-04 (June
6, 2003), which announced revised definitions for MSAs and the creation
of micropolitan statistical areas and combined statistical areas. In
adopting the CBSA geographic designations, we provided for a 1-year
transition in FY 2006 with a blended wage index for all providers. For
FY 2006, the wage index for each provider consisted of a blend of 50
percent of the FY 2006 MSA-based wage index and 50 percent of the FY
2006 CBSA-based wage index (both using FY 2002 hospital data). We
referred to the blended wage index as the FY 2006 SNF PPS transition
wage index. As discussed in the SNF PPS final rule for FY 2006 (70 FR
45041), after the expiration of this 1-year transition on September 30,
2006, we used the full CBSA-based wage index values.
In the FY 2015 SNF PPS final rule (79 FR 45644 through 45646), we
finalized changes to the SNF PPS wage index based on the newest OMB
delineations, as described in OMB Bulletin No. 13-01, beginning in FY
2015, including a 1-year transition with a blended wage index for FY
2015. OMB Bulletin No. 13-01 established revised delineations for
Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas in the United States and Puerto Rico based
on the 2010 Census, and provided guidance on the use of the
delineations of these statistical areas using standards published in
the June 28, 2010 Federal Register (75 FR 37246 through 37252).
Subsequently, on July 15, 2015, OMB issued OMB Bulletin No. 15-01,
which provided minor updates to and superseded OMB Bulletin No. 13-01
that was issued on February 28, 2013. The attachment to OMB Bulletin
No. 15-01 provided detailed information on the update to statistical
areas since February 28, 2013. The updates provided in OMB Bulletin No.
15-01 were based on the application of the 2010 Standards for
Delineating Metropolitan and Micropolitan Statistical Areas to Census
Bureau population estimates for July 1, 2012 and July 1, 2013. In
addition, on August 15, 2017, OMB issued Bulletin No. 17-01 which
announced a new urban CBSA, Twin Falls, Idaho (CBSA 46300). As we
previously stated in the FY 2008 SNF PPS proposed and final rules (72
FR 25538 through 25539, and 72 FR 43423), we noted in the proposed rule
(85 FR 20922) that this and all subsequent SNF PPS rules and notices
are considered to incorporate any updates and revisions set forth in
the most recent OMB bulletin that applies to the hospital wage data
used to determine the current SNF PPS wage index. To this end, as
discussed in this final rule and in the FY 2021 SNF PPS proposed rule
(85 FR 20922), we proposed to adopt the revised OMB delineations
identified in OMB Bulletin No. 18-04 (available at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf)
beginning October 1, 2020, including a 1-year transition for FY 2021
under which we stated we would apply a 5 percent cap on any decrease in
a hospital's wage index compared to its wage index for the prior fiscal
year (FY 2020). We stated that we believe these updated OMB
delineations more accurately reflect the contemporary urban and rural
nature of areas across the country, and that use of such delineations
would allow us to more accurately determine the appropriate wage index
and rate tables to apply under the SNF PPS. Thus, we stated that we
believe it is appropriate to use these updated OMB delineations for
these purposes, to enhance the accuracy of payments under the SNF PPS.
These changes are discussed further in section III.D.1.a. of this final
rule. We solicited comments on this proposal. A discussion of these
comments, along with our responses, appears in section III.D.1. of this
final rule.
The final wage index applicable to FY 2021 is set forth in Tables A
and B and are available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Table
A provides a crosswalk between the FY 2021 wage index for a provider
using the current OMB delineations in effect in FY 2020 and the FY 2021
wage index using the revised OMB delineations, as well as the final
transition wage index values that would be in effect in FY 2021.
We stated in the proposed rule, once calculated, we would apply the
wage index adjustment to the labor-related portion of the federal rate.
Each year, we calculate a revised labor-related share, based on the
relative importance of labor-related cost categories (that is, those
cost categories that are labor-intensive and vary with the local labor
market) in the input price index. In the SNF PPS final rule for FY 2018
(82 FR 36548 through 36566), we finalized a proposal to revise the
labor-related share to reflect the relative importance of the 2014-
based SNF market basket cost weights for the following cost categories:
Wages and Salaries; Employee Benefits; Professional Fees: Labor-
Related; Administrative and Facilities Support Services; Installation,
Maintenance, and Repair Services; All Other: Labor-Related Services;
and a proportion of Capital-Related expenses.
We calculate the labor-related relative importance from the SNF
market basket, and it approximates the labor-related portion of the
total costs after taking into account historical and projected price
changes between the base year and FY 2021. The price proxies that move
the different cost categories in the market basket do not necessarily
change at the same rate, and the relative importance captures these
changes. Accordingly, the relative importance figure more closely
reflects the cost share weights for FY 2021 than the base year weights
from the SNF market basket. We calculate the labor-related relative
importance for FY 2021 in four steps. First, we compute the FY 2021
price index level for the total market basket and each cost category of
the market basket. Second, we calculate a ratio for each cost category
by dividing the FY 2021 price index level for that cost category by the
total market basket price index level. Third, we determine the FY 2021
relative importance for
[[Page 47605]]
each cost category by multiplying this ratio by the base year (2014)
weight. Finally, we add the FY 2021 relative importance for each of the
labor-related cost categories (Wages and Salaries; Employee Benefits;
Professional Fees: Labor-Related; Administrative and Facilities Support
Services; Installation, Maintenance, and Repair Services; All Other:
Labor-related services; and a portion of Capital-Related expenses) to
produce the FY 2021 labor-related relative importance. Table 7
summarizes the final labor-related share for FY 2021, based on IGI's
second quarter 2020 forecast with historical data through first quarter
2020, compared to the labor-related share that was used for the FY 2020
SNF PPS final rule.
[GRAPHIC] [TIFF OMITTED] TR05AU20.006
In the proposed rule, we stated that to calculate the labor portion
of the case-mix adjusted per diem rate, we would multiply the total
case-mix adjusted per diem rate, which is the sum of all five case-mix
adjusted components into which a patient classifies, and the non-case-
mix component rate, by the FY 2021 labor-related share percentage
provided in Table 7. The remaining portion of the rate would be the
non-labor portion. Under the previous RUG-IV model, we included tables
which provided the case-mix adjusted RUG-IV rates, by RUG-IV group,
broken out by total rate, labor portion and non-labor portion, such as
Table 9 of the FY 2019 SNF PPS final rule (83 FR 39175). However, as we
discussed in the FY 2020 final rule (84 FR 38738), under PDPM, as the
total rate is calculated as a combination of six different component
rates, five of which are case-mix adjusted, and given the sheer volume
of possible combinations of these five case-mix adjusted components, it
is not feasible to provide tables similar to those that existed in the
prior rulemaking.
Therefore, to aid stakeholders in understanding the effect of the
wage index on the calculation of the SNF per diem rate, we have
included a hypothetical rate calculation in Table 8.
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
under the SNF PPS that are greater or less than would otherwise be made
if the wage adjustment had not been made. For FY 2021 (federal rates
effective October 1, 2020), we would apply an adjustment to fulfill the
budget neutrality requirement. We would meet this requirement by
multiplying each of the components of the unadjusted federal rates by a
budget neutrality factor. Our budget neutrality calculations are
described in section III.D.1.d. of this final rule.
A discussion of the comments we received regarding the SNF PPS wage
index, including the wage index budget neutrality calculation, along
with our responses, appears in section III.D.1 of this final rule.
5. SNF Value-Based Purchasing Program
Beginning with payment for services furnished on October 1, 2018,
section 1888(h) of the Act requires the Secretary to reduce the
adjusted federal per diem rate determined under section 1888(e)(4)(G)
of the Act otherwise applicable to a SNF for services furnished during
a fiscal year by 2 percent, and to adjust the resulting rate 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 VBP
Program. To implement these requirements, we finalized in the FY 2019
SNF PPS final rule the addition of Sec. 413.337(f) to our regulations
(83 FR 39178).
Please see section III.D.3. of this final rule for a further
discussion of our policies for the SNF VBP Program.
6. Adjusted Rate Computation Example
Tables 8, 9, and 10 provide examples generally illustrating payment
calculations during FY 2021 under PDPM for a hypothetical 30-day SNF
stay, involving the hypothetical SNF XYZ, located in Frederick, MD
(Urban CBSA 23224), for a hypothetical patient who is classified into
such groups that the patient's HIPPS code is NHNC1. Table 8 shows the
adjustments made to the federal per diem rates (prior to application of
any adjustments under the SNF VBP program as discussed previously) to
compute the provider's case-mix adjusted per diem rate for FY 2021,
based on the patient's PDPM classification, as well as how the variable
per diem (VPD) adjustment factor affects calculation of the per diem
rate for a given day of the stay. Table 9 shows the adjustments made to
the case-mix adjusted per diem rate from Table 8 to account for the
provider's wage index. The wage index used in this example is based on
the FY 2021 SNF PPS wage index that appears in Table A available on the
CMS website at http://
[[Page 47606]]
www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/
WageIndex.html. Finally, Table 10 provides the case-mix and wage index
adjusted per-diem rate for this patient for each day of the 30-day
stay, as well as the total payment for this stay. Table 10 also
includes the VPD adjustment factors for each day of the patient's stay,
to clarify why the patient's per diem rate changes for certain days of
the stay. As illustrated in Table 10, SNF XYZ's total PPS payment for
this particular patient's stay would equal $20,390.17.
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C. Additional Aspects of the SNF PPS
1. SNF Level of Care--Administrative Presumption
The establishment of the SNF PPS did not change Medicare's
fundamental requirements for SNF coverage. However, because the case-
mix classification is based, in part, on the beneficiary's need for
skilled nursing care and therapy, we have attempted, where possible, to
coordinate claims review procedures with the existing resident
assessment process and case-mix classification system discussed in
section III.B.3. of this final rule. This approach includes an
administrative presumption that utilizes a beneficiary's correct
assignment, at the outset of the SNF stay, of one of the case-mix
classifiers designated for this purpose to assist in making certain SNF
level of care determinations.
In accordance with Sec. 413.345, we include in each update of the
federal payment rates in the Federal Register a discussion of the
resident classification system that provides the basis for case-mix
adjustment. We also designate those specific classifiers under the
case-mix classification system that represent the required SNF level of
care, as provided in 42 CFR 409.30. This designation reflects an
administrative presumption that those beneficiaries who are correctly
assigned one of the designated case-mix classifiers on the initial
Medicare assessment are automatically classified as meeting the SNF
level of care definition up to and including the
[[Page 47608]]
assessment reference date (ARD) for that assessment.
A beneficiary who does not qualify for the presumption is not
automatically classified as either meeting or not meeting the level of
care definition, but instead receives an individual determination on
this point using the existing administrative criteria. This presumption
recognizes the strong likelihood that those beneficiaries who are
assigned one of the designated case-mix classifiers during the
immediate post-hospital period would require a covered level of care,
which would be less likely for other beneficiaries.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we
would announce any changes to the guidelines for Medicare level of care
determinations related to modifications in the case-mix classification
structure. The FY 2018 final rule (82 FR 36544) further specified that
we would henceforth disseminate the standard description of the
administrative presumption's designated groups via the SNF PPS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html (where such designations appear in the paragraph
entitled ``Case Mix Adjustment''), and would publish such designations
in rulemaking only to the extent that we actually intend to propose
changes in them. Under that approach, the set of case-mix classifiers
designated for this purpose under PDPM was finalized in the FY 2019 SNF
PPS final rule (83 FR 39253) and is posted on the SNF PPS website
(https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html), in the paragraph entitled ``Case Mix Adjustment.''
However, we note that this administrative presumption policy does
not supersede the SNF's responsibility to ensure that its decisions
relating to level of care are appropriate and timely, including a
review to confirm that any services prompting the assignment of one of
the designated case-mix classifiers (which, in turn, serves to trigger
the administrative presumption) are themselves medically necessary. As
we explained in the FY 2000 SNF PPS final rule (64 FR 41667), the
administrative presumption is itself rebuttable in those individual
cases in which the services actually received by the resident do not
meet the basic statutory criterion of being reasonable and necessary to
diagnose or treat a beneficiary's condition (according to section
1862(a)(1) of the Act). Accordingly, the presumption would not apply,
for example, in those situations where the sole classifier that
triggers the presumption is itself assigned through the receipt of
services that are subsequently determined to be not reasonable and
necessary. Moreover, we want to stress the importance of careful
monitoring for changes in each patient's condition to determine the
continuing need for Part A SNF benefits after the ARD of the initial
Medicare assessment.
We did not receive any comments regarding the proposed rule's
discussion of the administrative level of care presumption. As
previously stated in this final rule, the set of case mix classifiers
designated for this purpose under PDPM is posted on the SNF PPS website
(https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html).
2. Consolidated Billing
Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by
section 4432(b) of the BBA 1997) require a SNF to submit consolidated
Medicare bills to its Medicare Administrative Contractor (MAC) for
almost all of the services that its residents receive during the course
of a covered Part A stay. In addition, section 1862(a)(18) of the Act
places the responsibility with the SNF for billing Medicare for
physical therapy, occupational therapy, and speech-language pathology
services that the resident receives during a noncovered stay. Section
1888(e)(2)(A) of the Act excludes a small list of services from the
consolidated billing provision (primarily those services furnished by
physicians and certain other types of practitioners), which remain
separately billable under Part B when furnished to a SNF's Part A
resident. These excluded service categories are discussed in greater
detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR
26295 through 26297).
A detailed discussion of the legislative history of the
consolidated billing provision is available on the SNF PPS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf. In particular, section
103 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
of 1999 (BBRA, Pub. L. 106-113, enacted November 29, 1999) amended
section 1888(e)(2)(A) of the Act by further excluding a number of
individual high-cost, low probability services, identified by
Healthcare Common Procedure Coding System (HCPCS) codes, within several
broader categories (chemotherapy items, chemotherapy administration
services, radioisotope services, and customized prosthetic devices)
that otherwise remained subject to the provision. We discuss this BBRA
amendment in greater detail in the SNF PPS proposed and final rules for
FY 2001 (65 FR 19231 through 19232, April 10, 2000, and 65 FR 46790
through 46795, July 31, 2000), as well as in Program Memorandum AB-00-
18 (Change Request #1070), issued March 2000, which is available online
at www.cms.gov/transmittals/downloads/ab001860.pdf.
As explained in the FY 2001 proposed rule (65 FR 19232), the
amendments enacted in section 103 of the BBRA not only identified for
exclusion from this provision a number of particular service codes
within four specified categories (that is, chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices), but also gave the Secretary the
authority to designate additional, individual services for exclusion
within each of these four specified service categories. In the proposed
rule for FY 2001, we also noted that the BBRA Conference report (H.R.
Rep. No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the
individual services that this legislation targets for exclusion as
high-cost, low probability events that could have devastating financial
impacts because their costs far exceed the payment SNFs receive under
the PPS. According to the conferees, section 103(a) of the BBRA is an
attempt to exclude from the PPS certain services and costly items that
are provided infrequently in SNFs. By contrast, the amendments enacted
in section 103 of the BBRA do not designate for exclusion any of the
remaining services within those four categories (thus, leaving all of
those services subject to SNF consolidated billing), because they are
relatively inexpensive and are furnished routinely in SNFs.
As we further explained in the final rule for FY 2001 (65 FR
46790), and as is consistent with our longstanding policy, any
additional service codes that we might designate for exclusion under
our discretionary authority must meet the same statutory criteria used
in identifying the original codes excluded from consolidated billing
under section 103(a) of the BBRA: They must fall within one of the four
service categories specified in the BBRA; and they also must meet the
same standards of high cost and low probability in the SNF setting, as
discussed in the BBRA Conference report. Accordingly, we characterized
this statutory authority to identify additional service codes for
exclusion as essentially affording the flexibility to revise the list
of excluded codes in response to changes of major
[[Page 47609]]
significance that may occur over time (for example, the development of
new medical technologies or other advances in the state of medical
practice) (65 FR 46791).
In the proposed rule, we specifically invited public comments
identifying HCPCS codes in any of these four service categories
(chemotherapy items, chemotherapy administration services, radioisotope
services, and customized prosthetic devices) representing recent
medical advances that might meet our criteria for exclusion from SNF
consolidated billing. We stated in the proposed rule that we may
consider excluding a particular service if it meets our criteria for
exclusion as specified previously. We requested that commenters
identify in their comments the specific HCPCS code that is associated
with the service in question, as well as their rationale for requesting
that the identified HCPCS code(s) be excluded.
We note that the original BBRA amendment (as well as the
implementing regulations) identified a set of excluded services by
means of specifying HCPCS codes that were in effect as of a particular
date (in that case, July 1, 1999). Identifying the excluded services in
this manner made it possible for us to utilize program issuances as the
vehicle for accomplishing routine updates of the excluded codes, to
reflect any minor revisions that might subsequently occur in the coding
system itself (for example, the assignment of a different code number
to the same service). Accordingly, we stated in the proposed rule that,
in the event that we identify through the current rulemaking cycle any
new services that would actually represent a substantive change in the
scope of the exclusions from SNF consolidated billing, we would
identify these additional excluded services by means of the HCPCS codes
that are in effect as of a specific date (in this case, October 1,
2020). By making any new exclusions in this manner, we could similarly
accomplish routine future updates of these additional codes through the
issuance of program instructions.
A discussion of the comments we received regarding SNF consolidated
billing, along with our responses, appears below.
Comment: Several commenters cited the COVID-19 Public Health
Emergency (PHE) as justification for excluding services from
consolidated billing that would not otherwise qualify for such
exclusion.
Response: We appreciate these concerns and recognize the unique
circumstances of the COVID-19 PHE. However, excluding services from SNF
consolidated billing that would not otherwise meet the statutory
conditions for exclusion would require congressional action.
Comment: A commenter requested that CMS consider whether
application of 42 CFR 411.8(b)(4), (Services paid for by a Government
entity) ``would enable payment for COVID-19 testing under Medicare Part
B for patients currently covered in a Medicare Part A stay.''
Response: We are not sure we understand what the commenter is
asking, however, we note that Sec. 411.8(b)(4) does not address
exceptions to the SNF consolidated billing requirement.
Comment: Some commenters suggested that CMS should consider
removing antiviral, antibiotic, and other expensive non-chemotherapy
medications from consolidated billing and allowing such services to be
separately billable. A commenter stated these medications are
oftentimes more expensive than the already excluded chemotherapy
medications. Another commenter stated that the high cost of newer
pharmaceutical agents is a barrier in allowing patients to access their
Part A SNF benefits, suggesting that SNF facilities may be hesitant to
accept eligible patients if these patients will require high cost
medications. The commenter requested that CMS add these agents,
including their administration costs, to the excluded list under
Consolidated Billing. Examples of such medications include:
Dalbavancin; Daptomycin; Ceftolozane-tazobactam; and Oritavancin.
Response: We have responded to similar recommendations in past
rulemaking cycles. The issue of establishing a broader exclusion that
would encompass expensive non-chemotherapy drugs was addressed in the
SNF PPS final rule for FY 2017 (81 FR 51985, August 5, 2016), and again
in the final rule for FY 2019 (83 FR 39180, August 8, 2018), which
explained that existing law does not provide for such an expansion.
Comment: Some commenters reiterated recommendations made in
previous rulemaking cycles for exclusions from consolidated billing of
certain Part-D-only oral chemotherapy drugs.
Response: We note that such drugs have been recommended for
exclusion during previous rulemaking cycles. For the reasons discussed
previously in prior rulemaking, the particular drugs cited in these
comments remain subject to consolidated billing. In the FY 2020 SNF PPS
final rule (84 FR 38743 through 38744), we stated that because the
particular drugs at issue here would not be covered under Part B, the
applicable provisions at section 1888(e)(2)(A) of the Act do not
provide a basis for excluding them from consolidated billing. Moreover,
as noted in the FY 2006 SNF PPS final rule (70 FR 45049) and the FY
2020 SNF PPS final rule (84 FR 38744), expanding the existing statutory
drug coverage available under Part B to include such drugs is not
within our authority.
Comment: A commenter requested that CMS consider excluding the
chemotherapy medications Alkeran (Melphalan) and Bicnu (Carmustine)
from consolidated billing, due to the high cost of daily treatments.
Response: Both Melphalan and Carmustine already appear on the SNF
PPS exclusion list in Major Category III.A (Chemotherapy), under codes
J9245 and J9050, respectively.
Comment: A commenter suggested that CMS should ``conduct a broad
review of new chemotherapy drugs and their costs to determine whether
any additions should be made to the exclusion list, as new drugs are
being added regularly and do not always have their own HCPCS code.''
Response: We routinely review a list of upcoming HCPCS code
revisions (additions, modifications, and deletions) for the coming
calendar year to determine whether additions should be made in the
consolidated billing exclusion list. As discussed in the FY 2015 SNF
PPS final rule (79 FR 45642, August 5, 2014), the approach that
Congress adopted to identify the individual chemotherapy drugs being
designated for exclusion consisted of listing them by HCPCS code in the
statute itself (section 1888(e)(2)(A)(iii)(II) of the Act). Thus, a
chemotherapy drug's assignment to its own specific code has always
served as the mechanism of designating it for exclusion, as well as the
means by which the claims processing system is able to recognize that
exclusion. Accordingly, the assignment of a chemotherapy drug to its
own code is a necessary prerequisite to consider that service for
exclusion from consolidated billing under the SNF PPS.
Comment: A commenter suggested that CMS exclude portable X-ray
services from Skilled Nursing Facility Consolidated Billing (SNF CB).
Response: As explained in the final rule for FY 2001 (65 FR 46790),
we have the statutory authority to designate additional service codes
for exclusion only when they fall within one of the four categories
originally specified in the BBRA and set forth at section
[[Page 47610]]
1888(e)(2)(A)(iii) of the Act: That is, chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices. We do not have statutory authority to
create a new category of excluded items, such as for diagnostic imaging
services. Excluding portable x-ray services from SNF CB would require
congressional action, as existing law does not provide for such an
exclusion.
3. Payment for SNF-Level Swing-Bed Services
Section 1883 of the Act permits certain small, rural hospitals to
enter into a Medicare swing-bed agreement, under which the hospital can
use its beds to provide either acute- or SNF-level care, as needed. For
critical access hospitals (CAHs), Part A pays on a reasonable cost
basis for SNF-level services furnished under a swing-bed agreement.
However, in accordance with section 1888(e)(7) of the Act, SNF-level
services furnished by non-CAH rural hospitals are paid under the SNF
PPS, effective with cost reporting periods beginning on or after July
1, 2002. As explained in the FY 2002 final rule (66 FR 39562), this
effective date is consistent with the statutory provision to integrate
swing-bed rural hospitals into the SNF PPS by the end of the transition
period, June 30, 2002.
Accordingly, all non-CAH swing-bed rural hospitals have now come
under the SNF PPS. Therefore, all rates and wage indexes outlined in
earlier sections of this final rule for the SNF PPS also apply to all
non-CAH swing-bed rural hospitals. As finalized in the FY 2010 SNF PPS
final rule (74 FR 40356 through 40357), effective October 1, 2010, non-
CAH swing-bed rural hospitals are required to complete an MDS 3.0
swing-bed assessment which is limited to the required demographic,
payment, and quality items. As discussed in the FY 2019 SNF PPS final
rule (83 FR 39235), revisions were made to the swing bed assessment to
support implementation of PDPM, effective October 1, 2019. A discussion
of the assessment schedule and the MDS effective beginning FY 2020
appears in the FY 2019 SNF PPS final rule (83 FR 39229 through 39237).
The latest changes in the MDS for swing-bed rural hospitals appear on
the SNF PPS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html.
A commenter submitted the following comment related to the proposed
rule's discussion of payment for SNF-level swing-bed services. A
discussion of that comment, along with our response, appears below.
Comment: One commenter suggested that exempting the swing-bed
services of CAHs from the SNF PPS creates a discrepancy in payment for
comparable services between the CAH and any area SNFs which are not so
exempted, to the SNF's disadvantage. The commenter urged CMS to seek
statutory authority either to pay for CAH swing-bed services under the
SNF PPS, or to adjust Medicare payments for those rural SNFs located in
the same geographic area as a swing-bed CAH.
Response: As we noted previously in the final rule for FY 2020 (84
FR 38745, August 7, 2019) in response to a similar comment, as
originally enacted in section 4432 of the BBA 1997, the SNF PPS applied
uniformly to all providers of extended care services under Part A,
including SNFs themselves along with swing-bed CAHs as well as rural
(non-CAH) swing-bed hospitals. However, the Congress subsequently
enacted legislation in section 203 of the BIPA that specifically
excluded swing-bed CAHs from the SNF PPS (see section 1888)(e)(7)(C) of
the Act), thus establishing that swing-bed CAHs are to be exempted from
the SNF PPS while leaving this payment methodology in place for the
other facilities, including rural SNFs. Accordingly, we cannot adjust
Medicare payments for rural SNFs located in the same geographic area as
a swing-bed CAH to provide for similar payments.
4. Revisions to the Regulation Text
We proposed to make certain revisions in the regulation text
itself. Specifically, we proposed to update the example used in
illustrating the application of the SNF level of care's ``practical
matter'' criterion that appears at 42 CFR 409.35(a), as well as to
correct an erroneous cross-reference that appears in the swing-bed
payment regulations at 42 CFR 413.114(c)(2), as discussed further
below.
The statutory SNF level of care definition set forth in section
1814(a)(2)(B) of the Act provides that the beneficiary must need and
receive skilled services on a daily basis which, as a practical matter,
can only be provided in a SNF on an inpatient basis.
Section 409.35(a) provides that in making a ``practical matter''
determination, consideration must be given to the patient's condition
and to the availability and feasibility of using more economical
alternative facilities and services. In this context, in evaluating
whether a given non-inpatient alternative is more economical than
inpatient SNF care, the regulation provides that the availability of
Medicare payment for those services may not be a factor.
In illustrating this point, the existing regulation text at Sec.
409.35(a) uses as an example the previous annual caps on Part B payment
for outpatient therapy services. It indicates that Medicare's
nonpayment for services that exceed the cap would not, in itself, serve
as a basis for determining that needed care can only be provided in a
SNF. To reflect the recent repeal of the Part B therapy caps in section
50202 of the BBA 2018, we proposed to revise the regulation text by
rewording the example used to illustrate this point in a manner that
omits its reference to the repealed therapy cap provision.
Specifically, we proposed to revise the regulation text on this point
to provide as an example that the unavailability of Medicare payment
for outpatient therapy due to the beneficiary's nonenrollment in Part B
cannot serve as a basis for finding that the needed care can only be
provided on an inpatient basis in a SNF.
In addition, we proposed to make a minor technical correction to
the regulation text in Sec. 413.114(c), which discusses historical
swing-bed payment policies that were in effect for cost reporting
periods beginning prior to July 1, 2002. Specifically, we proposed to
revise Sec. 413.114(c)(2) to remove an erroneous cross-reference to a
non-existent Sec. 413.55(a)(1), and to substitute in its place the
correct cross-reference to the regulations on reasonable cost
reimbursement at Sec. 413.53(a)(1).
We received one comment supporting our proposed revisions to the
regulation text. We appreciate this comment and after considering the
comment received, for the reasons set forth in this final rule and in
the FY 2021 SNF PPS proposed rule, we are finalizing our proposed
revisions to the regulation text without modification.
D. Other Issues
1. Changes to SNF PPS Wage Index
a. Core-Based Statistical Areas (CBSAs) for the FY 2021 SNF PPS Wage
Index
(1) Background
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
federal rates to account for differences in area wage levels, using a
wage index that the Secretary determines appropriate. Since the
inception of the SNF PPS, we have used hospital inpatient wage data in
developing a wage index to be applied to SNFs. We proposed to continue
this practice for FY 2021, as we continue to believe that in the
absence of SNF-specific wage data, using the hospital inpatient wage
index data is appropriate
[[Page 47611]]
and reasonable for the SNF PPS. As explained in the update notice for
FY 2005 (69 FR 45786), the SNF PPS does not use the hospital area wage
index's occupational mix adjustment, as this adjustment serves
specifically to define the occupational categories more clearly in a
hospital setting; moreover, the collection of the occupational wage
data under the IPPS also excludes any wage data related to SNFs.
Therefore, we believe that using the updated wage data exclusive of the
occupational mix adjustment continues to be appropriate for SNF
payments. As in previous years, we proposed to continue to use, as the
basis for the SNF PPS wage index, the IPPS hospital wage data,
unadjusted for occupational mix, without taking into account geographic
reclassifications under section 1886(d)(8) and (d)(10) of the Act, and
without applying the rural floor under section 4410 of the BBA 1997 and
the outmigration adjustment under section 1886(d)(13) of the Act. For
FY 2021, the updated wage data are for hospital cost reporting periods
beginning on or after October 1, 2016 and before October 1, 2017 (FY
2017 cost report data).
The applicable SNF PPS wage index value is assigned to a SNF on the
basis of the labor market area in which the SNF is geographically
located. In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in OMB Bulletin No. 03-04 (June
6, 2003), which announced revised definitions for Metropolitan
Statistical Area (MSA) and the creation of micropolitan statistical
areas and combined statistical areas. In adopting the Core-Based
Statistical Areas (CBSA) geographic designations, we provided for a 1-
year transition in FY 2006 with a blended wage index for all providers.
For FY 2006, the wage index for each provider consisted of a blend of
50 percent of the FY 2006 MSA-based wage index and 50 percent of the FY
2006 CBSA-based wage index (both using FY 2002 hospital data). We
referred to the blended wage index as the FY 2006 SNF PPS transition
wage index. As discussed in the SNF PPS final rule for FY 2006 (70 FR
45041), since the expiration of this 1-year transition on September 30,
2006, we have used the full CBSA-based wage index values.
In the FY 2015 SNF PPS final rule (79 FR 45644 through 45646), we
finalized changes to the SNF PPS wage index based on the newest OMB
delineations, as described in OMB Bulletin No. 13-01, beginning in FY
2015, including a 1-year transition with a blended wage index for FY
2015. OMB Bulletin No. 13-01 established revised delineations for MSAs,
Micropolitan Statistical Areas, and Combined Statistical Areas in the
United States and Puerto Rico based on the 2010 Census, and provided
guidance on the use of the delineations of these statistical areas
using standards published in the June 28, 2010 Federal Register (75 FR
37246 through 37252). Subsequently, on July 15, 2015, OMB issued OMB
Bulletin No. 15-01, which provided minor updates to and superseded OMB
Bulletin No. 13-01 that was issued on February 28, 2013. The attachment
to OMB Bulletin No. 15-01 provided detailed information on the update
to statistical areas since February 28, 2013. The updates provided in
OMB Bulletin No. 15-01 were based on the application of the 2010
Standards for Delineating Metropolitan and Micropolitan Statistical
Areas to Census Bureau population estimates for July 1, 2012 and July
1, 2013. In addition, on August 15, 2017, OMB issued Bulletin No. 17-01
which announced a new urban CBSA, Twin Falls, Idaho (CBSA 46300). As we
previously stated in the FY 2008 SNF PPS proposed and final rules (72
FR 25538 through 25539, and 72 FR 43423), and as we noted in the
proposed rule, this and all subsequent SNF PPS rules and notices are
considered to incorporate any updates and revisions set forth in the
most recent OMB bulletin that applies to the hospital wage data used to
determine the current SNF PPS wage index.
On April 10, 2018, OMB issued OMB Bulletin No. 18-03 which
superseded the August 15, 2017 OMB Bulletin No. 17-01. Subsequently, on
September 14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded
the April 10, 2018 OMB Bulletin No. 18-03. These bulletins established
revised delineations for MSAs, Micropolitan Statistical Areas, and
Combined Statistical Areas, and provided guidance on the use of the
delineations of these statistical areas. A copy of OMB Bulletin No. 18-
04 may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf. (We note that on March 6, 2020, OMB issued
OMB Bulletin 20-01 (available on the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf)), which, as discussed
later in this section, was not issued in time for development of the FY
2021 SNF PPS proposed rule.) As we discussed in the proposed rule (85
FR 20928), while OMB Bulletin No. 18-04 is not based on new census
data, it includes some material changes to the OMB statistical area
delineations, including some new CBSAs, urban counties that would
become rural, rural counties that would become urban, and existing
CBSAs that would be split apart. In the FY 2021 SNF PPS proposed rule,
we proposed to adopt the updates to the OMB delineations announced in
OMB Bulletin No. 18-04 effective beginning in FY 2021 under the SNF
PPS. As noted previously, the March 6, 2020 OMB Bulletin 20-01 was not
issued in time for development of the FY 2021 SNF PPS proposed rule. We
intend to propose any updates from this bulletin in the FY 2022 SNF PPS
proposed rule.
As we stated in the proposed rule, to implement these changes for
the SNF PPS beginning in FY 2021, it is necessary to identify the
revised labor market area delineation for each affected county and
provider in the country. We further stated that the revisions OMB
published on September 14, 2018 contain a number of significant
changes. For example, we stated that under the revised OMB
delineations, there would be new CBSAs, urban counties that would
become rural, rural counties that would become urban, and existing
CBSAs that would split apart. We discuss these changes in more detail
later in this final rule.
b. Implementation of Revised Labor Market Area Delineations
We typically delay implementing revised OMB labor market area
delineations to allow for sufficient time to assess the new changes.
For example, as discussed in the FY 2014 SNF PPS proposed rule (78 FR
26448) and final rule (78 FR 47952), we delayed implementing the
revised OMB statistical area delineations described in OMB Bulletin No.
13-01 to allow for sufficient time to assess the new changes. In the
proposed rule (85 FR 20929), we stated that we believe it is important
for the SNF PPS to use the latest labor market area delineations
available as soon as is reasonably possible to maintain a more accurate
and up-to-date payment system that reflects the reality of population
shifts and labor market conditions. We also stated in the proposed rule
that we further believe that using the delineations reflected in OMB
Bulletin No. 18-04 will increase the integrity of the SNF PPS wage
index system by creating a more accurate representation of geographic
variations in wage levels. As we stated in the proposed rule, we have
reviewed our findings and impacts relating to the revised OMB
delineations set forth in OMB Bulletin No. 18-04, and find no
compelling reason to further delay implementation. As we explained in
the proposed rule, because we believe we have broad authority under
section
[[Page 47612]]
1888(e)(4)(G)(ii) of the Act to determine the labor market areas used
for the SNF PPS wage index, and because we believe the delineations
reflected in OMB Bulletin No. 18-04 better reflect the local economies
and wage levels of the areas in which hospitals are currently located,
we proposed to implement the revised OMB delineations as described in
the September 14, 2018 OMB Bulletin No. 18-04, for the SNF PPS wage
index effective beginning in FY 2021. In addition, we proposed to
implement a 1-year transition policy under which we would apply a 5
percent cap in FY 2021 on any decrease in a hospital's wage index
compared to its wage index for the prior fiscal year (FY 2020) to
assist providers in adapting to the revised OMB delineations (if we
were to finalize the implementation of such delineations for the SNF
PPS wage index beginning in FY 2021). This transition is discussed in
more detail later in this final rule.
(a) Micropolitan Statistical Areas
As discussed in the FY 2006 SNF PPS proposed rule (70 FR 29093
through 29094) and final rule (70 FR 45041), we considered how to use
the Micropolitan Statistical Area definitions in the calculation of the
wage index. OMB defines a ``Micropolitan Statistical Area'' as a CBSA
``associated with at least one urban cluster that has a population of
at least 10,000, but less than 50,000'' (75 FR 37252). We refer to
these as Micropolitan Areas. After extensive impact analysis,
consistent with the treatment of these areas under the IPPS as
discussed in the FY 2005 IPPS final rule (69 FR 49029 through 49032),
we determined the best course of action would be to treat Micropolitan
Areas as ``rural'' and include them in the calculation of each state's
SNF PPS rural wage index (see 70 FR 29094 and 70 FR 45040 through
45041).
Thus, the SNF PPS statewide rural wage index is determined using
IPPS hospital data from hospitals located in non-MSA areas, and the
statewide rural wage index is assigned to SNFs located in those areas.
Because Micropolitan Areas tend to encompass smaller population centers
and contain fewer hospitals than MSAs, we determined that if
Micropolitan Areas were to be treated as separate labor market areas,
the SNF PPS wage index would have included significantly more single-
provider labor market areas. As we explained in the FY 2006 SNF PPS
proposed rule (70 FR 29094), recognizing Micropolitan Areas as
independent labor markets would generally increase the potential for
dramatic shifts in year-to-year wage index values because a single
hospital (or group of hospitals) could have a disproportionate effect
on the wage index of an area. Dramatic shifts in an area's wage index
from year-to-year are problematic and create instability in the payment
levels from year-to-year, which could make fiscal planning for SNFs
difficult if we adopted this approach. For these reasons, we adopted a
policy to include Micropolitan Areas in the state's rural wage area for
purposes of the SNF PPS wage index, and have continued this policy
through the present.
We stated in the proposed rule (85 FR 20929) that we believe the
best course of action would be to continue the policy established in
the FY 2006 SNF PPS final rule and include Micropolitan Areas in each
state's rural wage index. These areas continue to be defined as having
relatively small urban cores (populations of 10,000 to 49,999). As
discussed in the proposed rule, we do not believe it would be
appropriate to calculate a separate wage index for areas that typically
may include only a few hospitals for the reasons discussed in the FY
2006 SNF PPS proposed rule, and as discussed earlier in this final
rule. Therefore, in conjunction with our proposal to implement the
revised OMB labor market delineations beginning in FY 2021 and
consistent with the treatment of Micropolitan Areas under the IPPS, we
proposed to continue to treat Micropolitan Areas as ``rural'' and to
include Micropolitan Areas in the calculation of the state's rural wage
index.
(b) Urban Counties That Will Become Rural Under the Revised OMB
Delineations
As previously discussed, we proposed to implement the revised OMB
statistical area delineations based upon OMB Bulletin No. 18-04
beginning in FY 2021. In the FY 2021 SNF PPS proposed rule (85 FR
20929), we indicated that a total of 34 counties (and county
equivalents) that are currently considered part of an urban CBSA would
be considered to be located in a rural area, beginning in FY 2021, if
we adopted these revised OMB delineations. In the proposed rule, we
listed the 34 urban counties, as set forth in Table 11, that would be
rural if we finalized our proposal to implement the revised OMB
delineations.
[[Page 47613]]
[GRAPHIC] [TIFF OMITTED] TR05AU20.009
We proposed that, for purposes of determining the wage index under
the SNF PPS, the wage data for all hospitals located in the counties
listed in Table 11 would be considered rural when calculating their
respective state's rural wage index under the SNF PPS. We stated in the
proposed rule that we recognize that rural areas typically have lower
area wage index values than urban areas, and SNFs located in these
counties may experience a negative impact in their SNF PPS payment due
to the proposed adoption of the revised OMB delineations. A discussion
of the proposed wage index transition policy appears later in this
final rule. Furthermore, we stated in the proposed rule that for SNF
providers currently located in an urban county that would be considered
rural should this proposal be finalized, we would utilize the rural
unadjusted per diem rates, found in Table 4 of the proposed rule, as
the basis for determining payment rates for these facilities beginning
on October 1, 2020.
(c) Rural Counties That Will Become Urban Under the Revised OMB
Delineations
As previously discussed, we proposed to implement the revised OMB
statistical area delineations based upon OMB Bulletin No. 18-04
beginning in FY 2021. In the proposed rule (85 FR 20931), we indicated
that analysis of these OMB statistical area delineations shows that a
total of 47 counties (and county equivalents) that are currently
located in rural areas would be located in urban areas if we finalize
our proposal to implement the revised OMB delineations. In the proposed
rule (85 FR 20932), we listed the 47 rural counties that would be
urban, as set forth in Table 12, if we finalize our proposal to
implement the revised OMB delineations.
BILLING CODE 4120-01-P
[[Page 47614]]
[GRAPHIC] [TIFF OMITTED] TR05AU20.010
BILLING CODE 4120-01-C
We proposed that, for purposes of calculating the area wage index
under the SNF PPS, the wage data for hospitals located in the counties
listed in Table 12 would be included in their new respective urban
CBSAs. As we explained in the proposed rule (85 FR 20933), typically,
SNFs located in an urban area would receive a wage index value higher
than or equal to SNFs located in their state's rural area. A discussion
of the proposed wage index transition policy appears later in this
final rule. Furthermore, we stated that
[[Page 47615]]
for SNFs currently located in a rural county that would be considered
urban should this proposal be finalized, we would utilize the urban
unadjusted per diem rates found in Table 3 of the proposed rule, as the
basis for determining the payment rates for these facilities beginning
October 1, 2020.
(d) Urban Counties That Will Move to a Different Urban CBSA Under the
Revised OMB Delineations
As we stated in the FY 2021 SNF PPS proposed rule (85 FR 20933), in
addition to rural counties becoming urban and urban counties becoming
rural, some urban counties would shift from one urban CBSA to another
urban CBSA under our proposal to adopt the revised OMB delineations.
Further, we stated that in other cases, adopting the revised OMB
delineations would involve a change only in CBSA name and/or number,
while the CBSA continues to encompass the same constituent counties.
For example, we noted that CBSA 19380 (Dayton, OH) would experience
both a change to its number and its name, and become CBSA 19430
(Dayton-Kettering, OH), while all of its three constituent counties
would remain the same. We stated that we would consider these proposed
changes (where only the CBSA name and/or number would change) to be
inconsequential changes with respect to the SNF PPS wage index. In the
proposed rule, we listed the CBSAs where there would be a change in
CBSA name and/or number only, as set forth in Table 13, if we adopt the
revised OMB delineations.
[GRAPHIC] [TIFF OMITTED] TR05AU20.011
However, we stated in the proposed rule (85 FR 20934) that in other
cases, if we adopted the revised OMB delineations, counties would shift
between existing and new urban CBSAs, changing the constituent makeup
of the CBSAs. We explained that, in one type of change, CBSAs would
split into multiple new CBSAs. For example, we noted that CBSA 35614
(New York Jersey City White Plains, NY NJ) has counties splitting off
into new CBSAs, such as CBSA 35154 (New Brunswick Lakewood, NJ).
Further, we explained that in other cases, a CBSA would lose one or
more counties to another urban CBSA. For example, we noted that Kendall
County, IL, that is currently in CBSA 16974 (Chicago Naperville
Arlington Heights, IL) is moving to CBSA 20994 (Elgin, IL).
[[Page 47616]]
In the proposed rule (85 FR 20936), we listed the urban counties
that would move from one urban CBSA to another newly proposed or
modified CBSA, as set forth in Table 14, if we adopt the revised OMB
delineations.
[GRAPHIC] [TIFF OMITTED] TR05AU20.012
We stated in the proposed rule that if SNFs located in these
counties move from one CBSA to another under the revised OMB
delineations, there may be impacts, both negative and positive, upon
their specific wage index values. A discussion of the wage index
transition policy appears later in this final rule.
Commenters submitted the following comments related to the proposed
changes discussed above that would result from adopting the revised OMB
delineations. A discussion of these comments, along with our responses,
appears below.
Comment: Most commenters concurred with adopting the revised OMB
delineations. However, several commenters suggested that CMS delay
adopting the revised OMB delineations until after the public health
emergency related to COVID-19 has ended.
Response: We appreciate the comments concurring with the proposed
adoption of the revised OMB delineations. As we stated in the proposed
rule (85 FR 20929), we believe that the updated OMB delineations
increase the integrity of the SNF PPS wage index by creating a more
accurate representation of variations in area wage levels. As such, we
believe that the revised OMB delineations would help ensure more
accurate and appropriate payments as compared to the current OMB
delineations. With regard to the comments that would seek a delay in
adopting the revised delineations until after the COVID-19 related
public health emergency is over, given that the revised OMB
delineations would help ensure more accurate payments than under the
current OMB delineations, we believe it is important to adopt the
revised delineations as soon as possible. Nothing about the COVID-19
related emergency would diminish the importance of ensuring that
payments are as accurate as possible. Moreover,
[[Page 47617]]
for providers that would experience an increase in payment under the
revised OMB delineations, this means that they are currently being
underpaid relative to the reported wage data in their geographic area.
Ensuring that providers are not underpaid may even be of greater
importance during this type of emergency situation. Therefore, we do
not believe that a delay in implementation would be appropriate.
Comment: One commenter suggested that the adoption of the New
Brunswick-Lakewood, NJ CBSA would result in a reduction in
reimbursement for the four New Jersey counties that would make up the
new CBSA and recommended that CMS delay finalizing the proposal to
implement the new OMB delineations.
Response: We appreciate the detailed concerns sent in by the
commenter regarding the impact of implementing the New Brunswick-
Lakewood, NJ CBSA designation on their specific counties. While, we
understand the commenter's concern regarding the potential financial
impact, we believe that implementing the revised OMB delineations will
create more accurate representations of labor market areas and result
in SNF wage index values being more representative of the actual costs
of labor in a given area. Moreover, we believe that providers located
in labor market areas that will experience a decline in wage index
under the revised OMB delineations currently are being paid in excess
of what the reported wage and labor data for their area would suggest
is appropriate. We believe that the OMB standards for delineating
Metropolitan and Micropolitan Statistical Areas are appropriate for
determining area wage differences and that the values computed under
the revised delineations will result in more appropriate payments to
providers by more accurately accounting for and reflecting the
differences in area wage levels. Furthermore, as explained in section
III.D.1.c. of this final rule, we are implementing a wage index
transition for FY 2021 under which we will apply a 5 percent cap on any
decrease in a hospital's wage index compared to its wage index for FY
2020 to assist providers in adapting to the revised OMB delineations.
For these reasons, we do not believe that a delay in implementation
would be appropriate.
Comment: One commenter recommended that CMS take this time, during
which we are already making and contemplating changes to the SNF PPS
more broadly and to the wage index more specifically, to consider
creating a SNF-specific wage index, as opposed to continuing to rely on
hospital data as the basis for the SNF wage index.
Response: We appreciate the commenter's suggestion as to the
development of a SNF specific wage index. However, to date, the
development of a SNF-specific wage index has proven to be unfeasible
due to the volatility of existing SNF wage data and the significant
amount of resources that would be required to improve the quality of
that data. More specifically, auditing all SNF cost reports, similar to
the process used to audit inpatient hospital cost reports for purposes
of the IPPS wage index, would place a burden on providers in terms of
recordkeeping and completion of the cost report worksheet. In addition,
adopting such an approach would require a significant commitment of
resources by CMS and the Medicare Administrative Contractors,
potentially far in excess of those required under the IPPS given that
there are nearly five times as many SNFs as there are inpatient
hospitals. Therefore, while we continue to believe that the development
of such an audit process could improve SNF cost reports in such a
manner as to permit us to establish a SNF-specific wage index, we do
not believe this undertaking is feasible at this time. While we
continue to review all available data and contemplate potential
methodological approaches for a SNF-specific wage index in the future,
we continue to believe that in the absence of the appropriate SNF-
specific wage data, using the pre-reclassified, pre-rural floor
hospital inpatient wage data (without the occupational mix adjustment)
is appropriate and reasonable for the SNF PPS.
After considering the comments received, for the reasons set forth
in this final rule and in the FY 2021 SNF PPS proposed rule, we are
finalizing our proposal to adopt the revised OMB delineations contained
in OMB Bulletin 18-04 as proposed, without modification.
c. Transition Policy for FY 2021 Wage Index Changes
As discussed in the FY 2021 SNF PPS proposed rule (85 FR 20936), we
believe that adopting the revised OMB delineations would result in SNF
PPS wage index values being more representative of the actual costs of
labor in a given area. However, we stated that we also recognize that
some SNFs (42 percent) would experience decreases in their area wage
index values as a result of this proposal, though just over 2 percent
of providers would experience a significant decrease (that is, greater
than 5 percent) in their area wage index value. We further stated that
we also realize that many SNFs (54 percent) would have higher area wage
index values after adopting the revised OMB delineations.
To mitigate the potential impacts, we have in the past provided for
transition periods when adopting revised OMB delineations. For example,
we proposed and finalized budget neutral transition policies to help
mitigate negative impacts on SNFs following the adoption of the new
CBSA delineations based on the 2010 decennial census data in the FY
2015 SNF PPS final rule (79 FR 45644 through 45646). Specifically, we
implemented a 1-year 50/50 blended wage index for all SNFs due to our
adoption of the revised delineations. This required calculating and
comparing two wage indexes for each SNF since that blended wage index
was computed as the sum of 50 percent of the FY 2015 SNF PPS wage index
values under the FY 2014 CBSA delineations and 50 percent of the FY
2015 SNF PPS wage index values under the FY 2015 new OMB delineations.
While we believed that using the new OMB delineations would create a
more accurate payment adjustment for differences in area wage levels,
we also recognized that adopting such changes may cause some short-term
instability in SNF PPS payments. In the FY 2021 SNF PPS proposed rule
(85 FR 20937), we recognized that similar instability may result from
the proposed adoption of the revised OMB delineations discussed in the
proposed rule. For example, we noted that SNFs currently located in
CBSA 35614 (New York-Jersey City-White Plains, NY-NJ) that would be
located in new CBSA 35154 (New Brunswick-Lakewood, NJ) under the
proposed changes to the CBSA-based labor market area delineations would
experience a nearly 17 percent decrease in the wage index as a result
of that the proposed change. Therefore, consistent with past practice,
we proposed a transition policy to help mitigate any significant
negative impacts that SNFs may experience if we were to adopt the
revised OMB delineations for FY 2021. Specifically, for FY 2021, as a
transition, we proposed to apply a 5-percent cap on any decrease in an
SNF's wage index from the SNF's wage index from the prior fiscal year.
We stated that this transition would allow the effects of adopting the
revised OMB delineations to be phased in over 2 years, where the
estimated reduction in an SNF's wage index would be capped at 5 percent
in FY 2021 (that is, no cap would be applied to any reductions in the
wage index for the second year (FY 2022)).
[[Page 47618]]
We considered using a 50/50 blend for the transition, similar to
the transition we finalized in the FY 2015 SNF PPS final rule, as
described previously in this final rule. However, we stated in the
proposed rule (85 FR 20937) that, given that a majority of SNFs would
experience an increase in their area wage index values as a result of
the revised OMB delineations, and given that a blended option would
affect all SNF providers, we believe it would be more appropriate to
allow SNFs that would experience an increase in wage index values to
receive the full benefit of their increased wage index value (which is
intended to reflect accurately the higher labor costs in that area),
while mitigating any significant negative wage index impacts that may
be experienced by a minority of SNFs. We explained that by utilizing a
cap on negative impacts, this restricts the transition to only those
with negative impacts and allows providers who would experience
positive impacts to receive the full amount of their wage index
increase. Thus, we stated that we believe a 5 percent cap on the
overall decrease in an SNF's wage index value would be an appropriate
transition for FY 2021. We further stated that we believe 5 percent is
a reasonable level for the cap because it would effectively mitigate
any significant decreases in an SNF's wage index for FY 2021, while
balancing the importance of ensuring that area wage index values
accurately reflect relative differences in area wage levels.
Additionally, we noted that a cap on significant wage index decreases
provides a certain degree of predictability in payment changes for
providers and allows providers time to adjust to any significant
decreases they may face in FY 2022, after the transition period has
ended.
Furthermore, consistent with the requirement at section
1888(e)(4)(G)(ii) of the Act that wage index adjustments must be made
in a budget neutral manner, we proposed that this 5 percent cap on the
decrease in an SNF's wage index would not result in any change in
estimated aggregate SNF PPS payments by applying a budget neutrality
factor to the unadjusted federal per diem rates. Our methodology for
calculating the budget neutrality factor is discussed further in
section III.D.1.d. of this final rule.
In the proposed rule, we stated that this transition policy would
be for a 1-year period, going into effect October 1, 2020, and
continuing through September 30, 2021. That is, we stated that no cap
would be applied to any reductions in the wage index for FY 2022.
Commenters submitted the following comments related to the proposed
transition methodology. A discussion of these comments, along with our
responses, appears below.
Comment: Many commenters supported the proposed transition
methodology. A few commenters including MedPAC suggested alternatives
to the 5 percent cap transition policy. MedPAC suggested that the 5
percent cap limit should apply to both increases and decreases in the
wage index so that no provider would have its wage index value increase
or decrease by more than 5 percent for FY 2021. Finally, several
commenters recommended that CMS consider implementing a 5 percent cap,
similar to that which we proposed for FY 2021, for years beyond the
implementation of the revised OMB delineations, either until no
providers experience more than a 5 percent decline in any given year,
or by permanently imposing a 5 percent cap on wage index declines.
Response: We appreciate the comments supporting this proposed
transition methodology. Further, we appreciate MedPAC's suggestion that
the 5 percent cap should also be applied to increases in the wage
index. However, as we discussed in the proposed rule, the purpose of
the proposed transition policy, as well as those we have implemented in
the past, is to help mitigate the significant negative impacts of
certain wage index changes, not to curtail the positive impacts of such
changes, and thus we do not believe it would be appropriate to apply
the 5 percent cap on wage index increases as well. To the extent that a
provider's wage index would increase under the revised OMB
delineations, this means that the provider is currently being paid less
than their reported wage data suggests is appropriate. We believe the
proposed transition would help ensure these providers do not receive a
wage index adjustment that is lower than appropriate and that payments
are as accurate as possible. Finally, with regard to the comments
recommending that we consider implementing this type of transition in
future years, either on a permanent basis or only until providers no
longer experience more than a 5 percent decline in any given year, we
believe that this would undermine the goal of the wage index, which is
to improve the accuracy of SNF payments. Applying such a cap each year
would only serve to further delay improving the accuracy of SNF
payments by continuing to pay certain providers more than their wage
data suggest is appropriate. Therefore, while we believe that a
transition is necessary to help mitigate some initial significant
negative impacts from the revised OMB delineations, we also believe
this mitigation must be balanced against the importance of ensuring
accurate payments.
After considering the comments received, for the reasons set forth
in this final rule and in the FY 2021 SNF PPS proposed rule, we are
finalizing, without modification, the proposed transition methodology,
which places a 5 percent cap on any decrease in a SNF's FY 2021 wage
index, from its FY 2020 wage index. The wage index applicable to FY
2021 is set forth in Table A available on the CMS website at http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. Table A provides a crosswalk between the FY 2021 wage
index for a provider using the current OMB delineations in effect in FY
2020 and the FY 2021 wage index using the revised OMB delineations, as
well as the transition wage index values.
d. Budget Neutrality Adjustments for Changes to the SNF PPS Wage Index
Section 1888(e)(4)(G)(ii) of the Act requires that we apply the
wage index adjustment in a budget neutral manner such that aggregate
SNF PPS payments will be neither greater than nor less than aggregate
SNF PPS payments without the wage index adjustment. Under this
provision, we determine a wage index adjustment budget neutrality
factor that is applied to the federal per diem rates to ensure that any
changes to the area wage index values would not result in any change
(increase or decrease) in estimated aggregate SNF PPS payments.
Accordingly, we proposed to apply a wage index budget neutrality factor
in determining the federal per diem rates, and we also proposed a
methodology for calculating this budget neutrality factor.
For FY 2021, we proposed to adjust the SNF PPS unadjusted federal
per diem rates to account for the estimated effect of the wage index
adjustments discussed in the proposed rule on estimated aggregate SNF
PPS payments. As we stated in the proposed rule (85 FR 20937), under
our established methodology, we have historically applied a single
budget neutrality factor to ensure that any changes to the wage index
are budget neutral. We explained that, in general, annual changes to
the wage index include updates to the wage index values based on
updated hospital wage data, labor-related share, and geographic labor-
market area (that is, CBSA) designations, as applicable. For FY 2021,
as discussed in the proposed
[[Page 47619]]
rule, we proposed to adopt revised OMB delineations and proposed to
apply a 5 percent cap on any decrease in a SNF's wage index. Therefore,
for purposes of the wage index budget neutrality requirement under
section 1888(e)(4)(G)(ii) of the Act, in determining the SNF PPS
federal per diem rates, we proposed a budget neutrality factor for FY
2021, described later in this section of the preamble, that accounts
for all of these proposed changes to the SNF PPS wage index. We discuss
below the methodology we proposed for calculating and applying the wage
index budget neutrality factor for determining the FY 2021 federal per
diem rates.
In the FY 2021 SNF PPS proposed rule (85 FR 20937 through 29038),
we proposed to apply a budget neutrality factor to adjust the FY 2021
SNF PPS federal per diem rates to account for the estimated effect of
the proposed changes to the wage index values based on updated hospital
wage data and the adoption of the revised OMB delineations, and
accounting for the proposed 5 percent cap on any decreases in a
provider's area wage index value, on estimated aggregate SNF PPS
payments using a methodology that is consistent with the methodology we
have used in prior years (most recently, in the FY 2020 SNF PPS final
rule (84 FR 38738)).
Specifically, we proposed to determine a budget neutrality factor
for all updates to the wage index that would be applied to the SNF PPS
federal per diem rate for FY 2021 using the following methodology:
Step 1--Simulate estimated aggregate SNF PPS
payments using the FY 2020 wage index values and FY 2019 SNF PPS claims
utilization data.
Step 2--Simulate estimated aggregate SNF PPS
payments using the FY 2019 SNF PPS claims utilization data and the
proposed FY 2021 wage index values based on updated hospital wage data
and the proposed revised OMB delineations, assuming a 5 percent cap on
any decreases in an area wage index (that is, in cases where a
provider's FY 2021 area wage index value would be less than 95 percent
of the provider's FY 2020 wage index value, we set the provider's FY
2021 wage index value to equal 95 percent of the provider's FY 2020
wage index value.)
Step 3--Calculate the ratio of these estimated
aggregate SNF PPS payments by dividing the estimated aggregate SNF PPS
payments using the FY 2020 wage index values (calculated in Step 1) by
the estimated aggregate SNF PPS payments using the proposed FY 2021
wage index values (calculated in Step 2) to determine the proposed
budget neutrality factor for updates to the wage index that would be
applied to the unadjusted federal per diem rates for FY 2021.
For the proposed rule (85 FR 20938), using the steps in the
methodology previously described, we determined a proposed FY 2021 SNF
PPS budget neutrality factor of 0.9982.
Accordingly, in section III.B. of the proposed rule, to determine
the proposed FY 2021 SNF PPS federal per diem payment rates, we applied
the proposed budget neutrality factor of 0.9982.
Commenters submitted the following comments related to the proposed
wage index budget neutrality calculation. A discussion of these
comments, along with our responses, appears below.
Comment: Several commenters requested that CMS consider waiving the
portion of the wage index budget neutrality adjustment calculation
accounting for changes to the wage index resulting from the proposed
adoption of the revised OMB delineations, citing the current public
health emergency as the basis for this request.
Response: We appreciate this comment and its relation to the
current public health emergency. However, section 1888(e)(4)(G)(ii) of
the Act requires that the wage index adjustment be done in such a
manner as to not result in a change in aggregate payments. As such, we
believe it is necessary and appropriate to calculate a budget
neutrality factor that accounts for all wage index changes.
After considering the comments received, for the reasons set forth
in this final rule and in the FY 2021 SNF PPS proposed rule, we are
finalizing, without modification, our proposed policies related to the
SNF PPS wage index, including the proposed budget neutrality adjustment
methodology. However, we note that in the FY 2021 SNF PPS proposed
rule, the budget neutrality factor calculation was based on the wage
and cost data available at the time of the proposed rule. The proposed
FY 2021 budget neutrality factor was 0.9982. Based on more recent
hospital cost report data available for this FY 2021 SNF PPS Final
Rule, the final FY 2021 budget neutrality factor, which was used in
calculating the final unadjusted FY 2021 federal per diem rates, is
0.9992.
2. Technical Updates to PDPM ICD-10 Mappings
In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the
implementation of the Patient Driven Payment Model (PDPM), effective
October 1, 2019. The PDPM utilizes International Classification of
Diseases, Version 10 (ICD-10) codes in several ways, including to
assign patients to clinical categories used for categorization under
several PDPM components, specifically the PT, OT, SLP and NTA
components. The ICD-10 code mappings and lists used under PDPM are
available on the PDPM website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM.
Each year, the ICD-10 Coordination and Maintenance Committee, a
federal interdepartmental committee that is chaired by representatives
from the National Center for Health Statistics (NCHS) and by
representatives from CMS, meets biannually and publishes updates to the
ICD-10 medical code data sets in June of each year. These changes
become effective October 1 of the year in which these updates are
issued by the committee. The ICD-10 Coordination and Maintenance
Committee also has the ability to make changes to the ICD-10 medical
code data sets effective on April 1.
In the FY 2020 SNF PPS final rule (84 FR 38750), we outlined the
process by which we maintain and update the ICD-10 code mappings and
lists associated with the PDPM, as well as the SNF GROUPER software and
other such products related to patient classification and billing, so
as to ensure that they reflect the most up to date codes possible.
Beginning with the updates for FY 2020, we apply nonsubstantive changes
to the ICD-10 codes included on the PDPM code mappings and lists
through a subregulatory process consisting of posting updated code
mappings and lists on the PDPM website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM. Such nonsubstantive
changes are limited to those specific changes that are necessary to
maintain consistency with the most current ICD-10 medical code data
set. On the other hand, substantive changes, or those that go beyond
the intention of maintaining consistency with the most current ICD-10
medical code data set, will be proposed through notice and comment
rulemaking. For instance, changes to the assignment of a code to a
comorbidity list or other changes that amount to changes in policy are
considered substantive changes that require notice and comment
rulemaking.
We proposed several changes to the PDPM ICD-10 code mappings and
lists. The proposed updated mappings and
[[Page 47620]]
lists were posted online at the SNF PDPM website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM. Our
proposed changes are as follows.
Under the PDPM, we classify patients in clinical categories based
on the primary SNF diagnosis. The clinical classification may change
based on whether the patient had a major procedure during the prior
inpatient stay that impacts the plan of care as captured in items J2100
through J5000 on the MDS. In the current ICD-10 to clinical category
mapping being used in FY 2020, ICD-10 codes associated with certain
cancers that could require a major procedure (specifically, C15 through
C26.9, C33 through C39.9, C40.01 through C40.02, C40.11 through C40.12,
C40.21 through C40.22, C40.31 through C40.32, C40.81 through C40.82,
C40.91 through C41.9, C45.0 through C45.9, C46.3 through C46.9, C47.0,
C47.11 through C47.12, C47.21 through C47.22, C47.3 through C48.8,
C49.0, C49.11 through C49.12, C49.21 through C49.A9, C50.011 through
C50.012, C50.021 through C50.022, C50.111 through C50.112, C50.121
through C50.122, C50.211 through C50.212, C50.221 through C50.222,
C50.311 through C50.312, C50.321 through C50.322, C50.411 through
C50.412, C50.421 through C50.422, C50.511 through C50.512, C50.521
through C50.522, C50.611 through C50.612, C50.621 through C50.622,
C50.811 through C50.812, C50.821 through C50.822, C50.911 through
C50.912, C50.921 through C50.922, C51.0 through C61, C62.01 through
C62.02, C62.11 through C62.12, C62.91 through C68.9, C70.0 through
C76.3, C76.41 through C76.42, C76.51 through C80.1, D37.09 through
D39.9, D3A.00 through D3A.8, D40.0, D40.11 through D44.9, D48.3 through
D48.4, D48.61 through D48.7, D49.0 through D49.7) do not include the
option of a major procedure in the prior inpatient stay that may impact
the plan of care. We proposed to add the surgical clinical category
options of ``May be Eligible for the Non-Orthopedic Surgery Category''
or ``May be Eligible for One of the Two Orthopedic Surgery Categories''
to the clinical category mapping of the following diagnoses when a
major procedure, as described previously, is identified on the MDS: C15
through C26.9, C33 through C39.9, C40.01 through C40.02, C40.11 through
C40.12, C40.21 through C40.22, C40.31 through C40.32, C40.81 through
C40.82, C40.91 through C41.9, C45.0 through C45.9, C46.3 through C46.9,
C47.0, C47.11 through C47.12, C47.21 through C47.22, C47.3 through
C48.8, C49.0, C49.11 through C49.12, C49.21 through C49.A9, C50.011
through C50.012, C50.021 through C50.022, C50.111 through C50.112,
C50.121 through C50.122, C50.211 through C50.212, C50.221 through
C50.222, C50.311 through C50.312, C50.321 through C50.322, C50.411
through C50.412, C50.421 through C50.422, C50.511 through C50.512,
C50.521 through C50.522, C50.611 through C50.612, C50.621 through
C50.622, C50.811 through C50.812, C50.821 through C50.822, C50.911
through C50.912, C50.921 through C50.922, C51.0 through C61, C62.01
through C62.02, C62.11 through C62.12, C62.91 through C68.9, C70.0
through C76.3, C76.41 through C76.42, C76.51 through C80.1, D37.09
through D39.9, D3A.00 through D3A.8, D40.0, D40.11 through D44.9, D48.3
through D48.4, D48.61 through D48.7, D49.0 through D49.7. We proposed
to include one of the surgical clinical category options specified
previously in this section for these codes because a major procedure
for these codes in a prior inpatient stay could affect the plan of
care. These proposed changes are outlined more specifically later in
this section.
We proposed to include the surgical clinical category option ``May
be Eligible for the Non-Orthopedic Surgery Category'' for cancer codes
C15.3 through C26.9 which correspond to J2910 of the MDS and address
cancers involving the gastrointestinal tract.
We proposed to include the surgical clinical category option ``May
be Eligible for the Non-Orthopedic Surgery Category'' for cancer codes
C33 through C39.9, which correspond to J2710 of the MDS and that
address cancers involving the respiratory system.
We proposed to include the ``May be Eligible for One of the Two
Orthopedic Surgery Categories'' option for codes C40.01 through C41.9
(with the exception of C410 Malignant neoplasm of bones of skull and
face) for cancers involving the bones. We proposed to include the ``May
be Eligible for the Non-Orthopedic Surgery Category'' option for code
C410 Malignant neoplasm of bones of skull and face because this type of
cancer is more likely to be treated by non-orthopedic than orthopedic
surgery.
We proposed to include the ``May be Eligible for the Non-Orthopedic
Surgery Category'' option for codes C46.3 through C46.9 for Kaposi's
sarcoma because the cancers associated with those codes could require a
major surgical procedure.
We proposed to include the ``May be Eligible for the Non-Orthopedic
Surgery Category'' option for certain codes relating to neoplasms,
specifically D37.09 through D39.9, D3A.00 through D3A.8, D40.0, D40.11
through D44.9, D48.3 through D48.4, D48.61 through D48.7, and D49.0
through D49.7, because these conditions sometimes require surgery.
In the FY 2020 ICD-10 to clinical category mapping, the ICD-10 code
D75.A ``Glucose-6-phosphate dehydrogenase (G6PD) deficiency without
anemia'' is assigned to the default clinical category of
``Cardiovascular and Coagulations'' to align with the other D75 codes.
However, G6PD deficiency without anemia is generally asymptomatic and
detected by testing. Compared to other blood diseases in the D75 code
family, D75.A is very minor and likely asymptomatic. For this reason,
we proposed to change the assignment of D75.A to ``Medical
Management''.
Stakeholders have pointed out that in the FY 2020 ICD-10 clinical
category mappings, certain fracture codes map to the surgical default
clinical categories such as ``Orthopedic Surgery (Except Major Joint
Replacement or Spinal Surgery)'' or ``Major Joint Replacement or Spinal
Surgery'' even if no surgery was performed. The specific codes
mentioned were S32.031D, S32.19XD, S82.001D, and S82.002D through
S82.002J. Given the concern raised by stakeholders, we proposed to
change the default clinical category to ``Non-Surgical Orthopedic'',
with the surgical option of ``May be Eligible for One of the Two
Orthopedic Surgery Categories'', for the following codes mentioned by
stakeholders: S32.031D, S32.19XD, S82.001D, and S82.002D through
S82.002J. We will continue to address changes to the mapping of
fracture codes on a case-by-case basis as they are raised by
stakeholders. We further proposed to change the default clinical
category of the following fracture codes to ``Return to Provider''
because these codes are unspecific and lack the level of detail
provided by more specific codes as to whether the condition is on the
right or left side of the body: S82.009A, S82.013A, S82.016A, S82.023A,
S82.026A, S82.033A, S82.036A, and S82.099A.
A stakeholder pointed out that in the FY 2020 ICD-10 to clinical
category mapping, the M48.00 through M48.08 spinal stenosis codes have
a default clinical category mapping of ``Non-Surgical Orthopedic/
Musculoskeletal'' and no surgical option, which does not allow for
coding in cases where patients have spinal stenosis and spinal
laminectomy surgery. For this reason, we proposed to add the surgical
option of ``May be Eligible for One of the Two
[[Page 47621]]
Orthopedic Surgery Categories'' to M48.00 through M48.08 spinal
stenosis codes.
In the FY 2020 ICD-10 to clinical category mapping, Z48 surgery
aftercare codes map to the default clinical categories of ``Return to
Provider'' or ``Medical Management'' even if a surgical procedure was
indicated in J2100 of the MDS. Although Z48 codes are not very
specific, we acknowledge that aftercare of some major non-orthopedic
surgeries is coded through Z48 codes. Therefore, we proposed to add the
surgical option of ``May be Eligible for the Non-Orthopedic Surgery
Category'' to the following surgery aftercare codes: Z48.21, Z48.22,
Z48.23, Z48.24, Z48.280, Z48.288, Z48.290, Z48.298, Z48.3, Z48.811,
Z48.812, Z48.813, Z48.815, Z48.816, and Z48.29, to promote more
accurate clinical category assignment.
With regard to the NTA comorbidity to ICD-10 code mappings, in the
FY 2020 NTA comorbidity mapping, ICD-10 codes T82.310A through T85.89XA
for initial encounter codes map to the NTA comorbidity CC176
``Complications of Specified Implanted Device or Graft''. This mapping
is based on the Part C risk adjustment model condition category
mapping, which only included ICD-10 codes for acute encounters for
complications of internal devices. Stakeholder have requested that we
add to the mappings the ICD-10 codes in this range with the seventh
digit of D (subsequent encounter) or S (sequela) for subsequent care.
We proposed to add codes in this range with the seventh digit of D (but
not the seventh digit of S, because sequela can be coded years after
the event and are likely not a reason for SNF treatment) for use in the
ICD-10 code mapping to the NTA comorbidity CC176 ``Complications of
Specified Implanted Device or Graft'' on the NTA conditions and
extensive services list for the purpose of calculating the PDPM NTA
score.
We invited comments on the proposed substantive changes to the ICD-
10 code mappings discussed previously, as well as sought comments on
additional substantive and non-substantive changes that stakeholders
believe are necessary. A discussion of these comments, along with our
responses, appears below.
Comment: A commenter requested an explanation as to how CMS plans
to address new annual ICD-10-CM codes in the PDPM payment group
mappings, stating that CMS described some changes to the mappings for
2020 ICD-10-CM codes, but did not describe how it plans to address 2021
codes or annual changes to ICD-10-CM codes. The commenter requested
that CMS explain the process for mapping new codes, and state whether
these will be available for comment through annual rule making.
Response: We described in the proposed rule the process by which we
maintain and update the ICD-10 code mappings and lists associated with
the PDPM. Specifically, we apply nonsubstantive changes to the ICD-10
codes included on the PDPM code mappings and lists through a
subregulatory process consisting of posting updated code mappings and
lists on the PDPM website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM. Such nonsubstantive changes are
limited to those specific changes that are necessary to maintain
consistency with the most current ICD-10 medical code data set. On the
other hand, substantive changes, or those that go beyond the intention
of maintaining consistency with the most current ICD-10 medical code
data set, will be proposed through notice and comment rulemaking. For
instance, changes to the assignment of a code to a comorbidity list or
other changes that amount to changes in policy are considered
substantive changes that require notice and comment rulemaking. This
process is described in more detail in the portions of the FY 2020 SNF
PPS final rule (84 FR 38750) pertaining to updates to the ICD-10 code
mappings and lists.
Comment: A commenter noted that the list of Z48 surgery aftercare
codes to which CMS proposes adding the surgical option of ``May be
Eligible for the Non-Orthopedic Surgery Category'' in the proposed rule
(Z48.21, Z48.22, Z48.23, Z48.24, Z48.280, Z48.288, Z48.290, Z48.298,
Z48.3, Z48.811, Z48.812, Z48.813, Z48.815, Z48.816, and Z48.29),
contains seemingly duplicative references to code ``Z48.290'' and
``Z48.29''. The commenter inquired as to whether the duplicative
``Z48.29'' entry was erroneous and was supposed to be Z48.89,
``encounter for other specified surgical aftercare''.
Response: We note that Z48.29 is not duplicative of Z48.290;
Z48.290, ``aftercare following bone marrow transplant'' is in fact a
separate code under the heading of Z48.29, ``aftercare following other
organ transplant.'' However, in the proposed rule, we inadvertently
included both Z48.29 and Z48.290, as well as Z48.3 for aftercare
following surgery for neoplasm, on the list of Z48 surgery aftercare
codes to which we proposed to add the surgical option of ``May be
Eligible for the Non-Orthopedic Surgery Category.'' Z48.29 is not a
valid code because it requires a sixth character. According to ICD 10
coding guidance, ``Diagnosis codes are to be used and reported at their
highest number of characters available. ICD-10-CM diagnosis codes are
composed of codes with 3, 4, 5, 6 or 7 characters. A code is invalid if
it has not been coded to the full number of characters required for
that code, including the 7th character, if applicable'' (https://www.cms.gov/Medicare/Coding/ICD10/Downloads/2020-Coding-Guidelines.pdf
pg. 14). The code Z48.29, ``encounter for aftercare following other
organ transplant,'' is further subdivided into more specific codes. One
of those codes is Z48.298, which is also aftercare following other
organ transplant. Since the ICD-10 guidelines state that ``codes are to
be used and reported at their highest number of characters available''
and the codes are duplicative in meaning, we are removing Z48.29 and
keeping Z48.298. Code Z48.290 is for aftercare following a bone marrow
transplant. Bone marrow transplants can be performed to treat patients
with a variety of cancer and non-cancer indications. A bone marrow
transplant is considered to be a medical procedure and therefore would
not have the non-orthopedic surgery option. Bone marrow transplants
involve injecting cells into a recipient rather than open surgery to
replace an organ. Thus, bone marrow transplants differ from the other
transplant codes involving open surgical procedures, so it would not be
appropriate to include code Z48.290 in the category of non-orthopedic
surgery which describes the provision of open surgical procedures and
the care for patients after open surgical procedures. Finally, Z48.3
involves the aftercare of patients for neoplasm. There are specific
codes for specific types of neoplasm. Z48.3 does not specify that the
neoplasm is malignant. Furthermore, many of the most common neoplasms
removed surgically are on the skin and do not require the same level of
aftercare as open surgical procedures. Cancer aftercare can be coded
more specifically using the C and D codes that we included in our
proposal, which will ensure more appropriate payment. Thus, we are not
including the Non-orthopedic surgery option for Z48.3. Therefore, the
correct list of Z48 surgery aftercare codes to which we are adding the
surgical option of ``May be Eligible for the Non-Orthopedic Surgery
Category'' is as follows: Z48.21, Z48.22, Z48.23, Z48.24, Z48.280,
Z48.288, Z48.298, Z48.811, Z48.812, Z48.813, Z48.815, and Z48.816. This
is consistent with the proposed updated mappings
[[Page 47622]]
and lists that were posted online at the SNF PDPM website at https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/PDPM
coincident with the release of the proposed rule. Finally, in response
to the comment addressing code Z48.89 (the code that the commenter
thought we might have meant instead of Z48.29), we note that we are not
adding the surgical option of ``May be Eligible for the Non-Orthopedic
Surgery Category'' to code Z48.89, which is ``encounter for other
specified surgical aftercare''. This code provides inadequate
information about the type of surgery, the illness that required
surgery, and the type of aftercare. There are other codes that describe
why the surgical aftercare is needed, for example Z48.21, ``aftercare
following a heart transplant''. In order to obtain sufficient
information to place a patient in the proper category, code Z48.89 is
designated as Return to Provider, since other coding options exist to
provide the needed information.
Comment: A commenter responded to CMS's proposal for codes C33
through C39.9 to include the surgical clinical category option, ``May
be Eligible for the Non-Orthopedic Surgery Category'' which corresponds
to J2710 on the MDS for cancers involving the respiratory system. The
commenter encouraged CMS to consider allowing ICD-10 codes C38.0-C38.8,
cancers of the heart, to map from J2700, Cardiopulmonary surgery
(involving the heart or major blood vessels), as these codes may have a
surgical procedure that would only be coded under J2700. The commenter
also suggested CMS allow ICD-10 C37 to map from either J2710 or J2920,
stating that ``C37 code should be allowed to map to the non-orthopedic
surgery code when J2710 (Major surgery involving the respiratory
system) has been correctly coded.'' In addition, the commenter stated
that C37 is coded for cancer of the thymus, which may also need to map
to a non-orthopedic surgery category based on the MDS coding of J2920,
surgeries involving the endocrine organs.
Response: We would like to clarify that ``May be Eligible for the
Non-Orthopedic Surgery Category'' does not correspond to J2710 only. As
stated in the MDS RAI Manual Chapter 6, J2600, J2610, J2620, J2700,
J2710, J2800, J2810, J2900, J2910, J2920, J2930, and J2940 are all
considered non-orthopedic surgery categories. Furthermore, the codes
C37, C38.0--C38.8 have the option of being eligible for the non-
orthopedic surgery category. Codes C38.0, C38.4 and C38.8 could map
from J2700, cardiopulmonary surgery. C38.1, C38.2, C38.3 are too
nonspecific as there are multiple malignancies that could form in these
spaces and there are usually more specific codes for those
malignancies. For example, C38.1 malignant neoplasm of anterior
mediastinum includes the thymus and there is a more specific code, C37,
malignancy of the thymus. Code C37 malignancy of the thymus could map
from J2920. On the rare instance where a more specific code did not
exist, codes C38.1, C38.2, and C38.3 could still map from J5000.
Comment: A commenter disagreed with the exclusion of ICD-10 code
C410, ``Malignant neoplasm of the bones of skull and face,'' from the
orthopedic surgery mappings, stating that cancers of the skull and face
may require orthopedic surgery and should map to one of the two
orthopedic surgery categories when a corresponding surgery is coded.
Response: Upon clinical investigation, we agree with the commenter
that it is appropriate to include the ``May be Eligible for One of the
Two Orthopedic Surgery Categories'' option for code C410, ``Malignant
neoplasm of bones of skull and face,'' consistent with similar codes
concerning neoplasms of bones in the face, such as C41.1, ``Malignant
neoplasm of mandible.'' Based on clinician feedback, both orthopedic
and non-orthopedic surgeries are possible in cases involving neoplasms
of bones in the face, and non-orthopedic surgery is more common.
However, the current PDPM grouper design only allows a code to be
either orthopedic or non-orthopedic, and classification in the
orthopedic surgery group results in a higher per diem rate than the
non-orthopedic group. We anticipate that the need for orthopedic
surgery and therapy should be rare but acknowledge that it is possible
in such cases, and will monitor the use of the surgical option.
Therefore, we will map code C410 to ``May be Eligible for One of the
Two Orthopedic Surgery Categories'' with the rest of the codes in the
range of C40.01 through C41.9.
Comment: A commenter suggested that codes related to malignant
secondary (metastatic) cancer sites should be included in the list of
ICD-10 cancer codes to which CMS is adding surgical clinical category
options. The commenter suggested CMS consider including the following
malignant secondary codes to the list of codes to which CMS should add
surgical clinical category options and as SLP-related comorbidities:
C78.39, secondary malignant neoplasm of other respiratory organs, which
is used to code cancers that have metastasized to the laryngeal area
(C32.0, C32.1, C32.2, C32.3, C32.9); and C79.89, secondary malignant
neoplasm of other specified sites which is used to code cancers that
have metastasized to oral cancers (C00.0, C00.1, C00.2, C00.3, C00.4,
C00.5, C00.6, C00.9, C01, C02.0, C02.1, C02.2, C02.3, C02.4, C02.8,
C02.9, C03.0, C03.1, C03.9, C04.0, C04.1, C04.9, C09.9, C09.0, C09.1,
C10.0, C10.1, C10.2, C10.3, C10.4, C10.9, C14.0, C14.2, C06.0 C05.0,
C05.1, C05.2, C05.9, C06.2, C06.9).
Response: We included ``C76.51 through C80.1'' in the list of
clinical category to ICD-10 code mappings to which we proposed adding
the surgical clinical category options of ``May be Eligible for the
Non-Orthopedic Surgery Category''' or ``May be Eligible for One of the
Two Orthopedic Surgery Categories''; therefore, both C78.39,
``secondary malignancy of other respiratory organs,'' and C79.89,
``secondary malignancy of other digestive organs,'' are included in the
proposed changes to the clinical category mappings. However, we decline
to add these codes to the SLP comorbidities list. SLP treatment can
help patients get used to the changes in their mouth after surgery,
chemotherapy, or radiation. Codes C78.39 and C79.89 lack specificity
and concern respiratory and digestive organs that do not generally
indicate the need for SLP treatment. The oral cancer codes mentioned
(for example, C00) are included instead, as they specify the location
of the neoplasm (tonsil, gum, tongue, etc.) in organs that are closely
associated with the need for SLP treatment.
Comment: Several commenters suggested additional changes to the
ICD-10 code mappings and comorbidity lists that were outside the scope
of this rulemaking. Multiple commenters suggested that CMS include the
surgical option for several ``subsequent encounter'' ICD-10 codes that
better describe the admission status of the SNF beneficiary than the
currently permitted ``initial encounter'' ICD-10 codes; specifically,
commenters identified several additional ``D'' seventh digit codes, as
well as ``G, K, and P'' seventh digit codes that should include the
surgical option. A commenter recommended that ICD-10 code G93.1,
``Anoxic brain damage,'' should map to the Neurologic category instead
of Return to Provider. Another commenter stated that patients may need
SNF care due to cytokine release syndrome related to chimeric antigen
receptor T-cell therapy, which is receiving new codes in 2021 in the
D89.831 to D89.839 range, and the commenter questioned how CMS proposes
to map such codes. Finally, a commenter recommended that
[[Page 47623]]
CMS should add the H90.0 to H90.A32 hearing loss range of ICD-10 codes
to the SLP comorbidities list; add the following neurodegenerative
diagnoses to the SLP comorbidities list: Alzheimer's disease,
Friedrich's ataxia, Huntington's disease, Lewy body disease,
Parkinson's disease, spinal muscular atrophy; and add the following
mild cognitive impairment code to the SLP comorbidities list: Mild
cognitive impairment, so stated (mild neurocognitive disorder) G31.84.
Response: We note that such changes are outside the scope of this
rulemaking, and will not be addressed in this rule. We will further
consider the suggested changes to the ICD-10 code mappings and
comorbidity lists and may implement them in the future as appropriate.
To the extent that such changes are non-substantive, we may issue them
in a future subregulatory update if appropriate; however, if such
changes are substantive changes, in accordance with the update process
established in the FY 2020 SNF PPS final rule, such changes must
undergo full notice and comment rulemaking, and thus may be included in
future rulemaking. See the discussion of the update process for the
ICD-10 code mappings and lists in the FY 2020 SNF PPS final rule (84 FR
38750) for more information.
Comment: A commenter suggested that CMS implement an ``increased
payment modifier for ICD-10 diagnoses that can be attributed to COVID-
19 and its symptomology through the use of PDPM groupings that reflect
the extraordinary costs to provide care during the pandemic.'' A
commenter also encouraged CMS to add the COVID-19 diagnosis code,
U07.01, to the NTA comorbidities mapping list, stating that while this
code currently maps to the medical management clinical category when
used as a primary reason for the SNF stay, it does not have
reimbursement equivalent to the high associated costs for the care and
management of this disease. Multiple commenters requested that CMS
evaluate the cost of PPE, staff time, and resources associated with
caring for COVID-19 residents and appropriately weigh the ICD-10 code
in establishing ``points'' toward the cumulative patient totals under
the NTA component of PDPM. One commenter recommended 5 points, citing
the experience of their association members and expert panel members.
Furthermore, to allow for adequate reimbursement in the future,
commenters requested that CMS consider adding an NTA category for
pandemic/epidemic type infection that would allow for timely
reimbursement and allow CMS to add new ICD-10-CM codes to the mapping
as needed. Another commenter suggested that the use of ICD-10 code
U07.2 should be permitted on the MDS as an alternative method to
document a patient is being treated for COVID-19, to eliminate delays
in treatment where testing is limited, and that this U07.2 code should
be mapped the same as the COVID-19 diagnosis code U07.1, stating that
this will allow for better tracking of resource utilization by patients
that are being treated for COVID-19 but had a false-negative test or
patients that have encountered other issues or limited testing.
Finally, a commenter expressed concern that the new COVID-19 code
cannot be applied to dates prior to April 1, 2020 and suggested that
CMS allow a placeholder primary reason for SNF stay/comorbidity
checkboxes on the MDS.
Response: We appreciate these concerns and recognize the unique
circumstances of the coronavirus public health emergency. However, with
regard to the use of the U07.2 code, this code has not yet been adopted
by the CDC and is not allowed to be used per CDC guidance. With regard
to the COVID-19 code, U07.1, being inapplicable to dates prior to April
1, the CDC has provided coding guidelines for COVID-19 cases before
April 1, 2020. With regard to weighting the costs of COVID-19 in the
NTA component, we note that we do not currently have enough post-April
data at this time to estimate the cost, and may consider this in future
rulemaking. Finally, we note that the commenters' suggestions to create
additional NTA categories, add code U7.01 to the NTA comorbidities
mapping, and other substantive changes to the ICD-10 code mappings and
lists, as well as suggestions for ``an increased payment modifier'' are
outside the scope of this rulemaking. We will continue to consider
these comments and may address them in future rulemaking. We refer
readers to our previous discussion regarding our established process
for considering changes to the ICD-10 code mappings and lists (see FY
2020 SNF PPS final rule (84 FR 38750)).
Comment: A commenter expressed concern that CMS had not yet taken
action to expand the list of conditions on the NTA comorbidity list to
include several additional conditions such as Parkinson's disease and
serious mental illness such as schizophrenia. The commenter suggested
that CMS consider potential updates to the NTA comorbidity list on an
annual basis.
Response: We will consider potential updates to the NTA comorbidity
list on an ongoing basis consistent with our established process for
considering changes to the ICD-10 code mappings and lists (see FY 2020
SNF PPS final rule (84 FR 38750)). We note that Parkinson's (MDS I5300)
and schizophrenia (HCC 57) were both considered for inclusion in the
NTA comorbidity list that has assigned points for each condition which
would contribute to NTA score calculation, but were eventually excluded
from the comorbidity list due to small coefficient estimates, meaning
that they did not represent an apparent significant increase in
relative resource utilization as compared to other conditions found on
the NTA comorbidity list.
Comment: Multiple commenters noted support for the proposed changes
to the ICD-10 code mappings in general. Specifically, commenters noted
support for the CMS proposals to: Add certain ICD-10 codes with the
subsequent encounter ``D'' seventh digit for use in the ICD-code
mapping to the NTA comorbidity CC176; move certain ICD-10 fracture
codes which do not identify whether the condition is on the right or
left side to ``Return to Provider''; and add the surgical option of
``May be Eligible for One of the Two Orthopedic Surgery Categories'' to
ICD-10 codes M48.00 to M48.08. One commenter stated appreciation for
CMS reviewing ICD-10 mapping in correlation with MDS Section J2100 to
J5000 and ``urge(d) the agency to correct prior total joint and surgery
mapping to facilitate the appropriate assignment of the primary reason
for SNF stay.''
Response: We thank commenters for their support of our proposed
changes. Regarding the comment concerning correcting prior total joint
and surgery mapping, we will consider this change in the future
consistent with the established process for considering changes to the
ICD-10 code mappings and lists (see FY 2020 SNF PPS final rule (84 FR
38750)).
After considering the comments received, for the reasons set forth
in this final rule and in the FY 2021 SNF PPS proposed rule, we are
finalizing our proposed changes to the ICD-10 code mappings and lists
with the modifications discussed above. As we previously stated, any
substantive and non-substantive changes requested by commenters that
are outside the scope of this rulemaking will be taken under
consideration for potential future implementation consistent with the
update process for the ICD-10 code mappings and lists established in
the FY 2020 SNF PPS final rule (84 FR 38750).
[[Page 47624]]
3. Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program
a. Background
Section 215(b) of the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93) authorized the SNF VBP Program (the
``Program'') by adding section 1888(h) to the Act. As a prerequisite to
implementing the SNF VBP Program, in the FY 2016 SNF PPS final rule (80
FR 46409 through 46426), we adopted an all-cause, all-condition
hospital readmission measure, as required by section 1888(g)(1) of the
Act, and discussed other policies to implement the Program such as
performance standards, the performance period and baseline period, and
scoring. In the FY 2017 SNF PPS final rule (81 FR 51986 through 52009),
we adopted an all-condition, risk-adjusted potentially preventable
hospital readmission measure for SNFs, as required by section
1888(g)(2) of the Act, adopted policies on performance standards,
performance scoring, and sought comment on an exchange function
methodology to translate SNF performance scores into value-based
incentive payments, among other topics. In the FY 2018 SNF PPS final
rule (82 FR 36608 through 36623), we adopted additional policies for
the Program, including an exchange function methodology for disbursing
value-based incentive payments. Additionally, in the FY 2019 SNF PPS
final rule (83 FR 39272 through 39282), we adopted more policies for
the Program, including a scoring adjustment for low-volume facilities.
In the FY 2020 SNF PPS final rule (84 FR 38820 through 38825), we also
adopted additional policies for the Program, including a change to our
public reporting policy and an update to the deadline for the Phase One
Review and Correction process.
The SNF VBP Program applies to freestanding SNFs, SNFs affiliated
with acute care facilities, and all non-CAH swing-bed rural hospitals.
Section 1888(h)(1)(B) of the Act requires that the SNF VBP Program
apply to payments for services furnished on or after October 1, 2018.
We believe the implementation of the SNF VBP Program is an important
step towards transforming how care is paid for, moving increasingly
towards rewarding better value, outcomes, and innovations instead of
merely rewarding volume.
For additional background information on the SNF VBP Program,
including an overview of the SNF VBP Report to Congress and a summary
of the Program's statutory requirements, we refer readers to the FY
2016 SNF PPS final rule (80 FR 46409 through 46426); the FY 2017 SNF
PPS final rule (81 FR 51986 through 52009); the FY 2018 SNF PPS final
rule (82 FR 36608 through 36623); the FY 2019 SNF PPS final rule (83 FR
39272 through 39282); and the FY 2020 SNF PPS final rule (84 FR 38820
through 38825).
b. Measures
(1) Background and Update of the the SNF VBP Program Measure Name in
Our Regulations
For background on the measures we have adopted for the SNF VBP
Program, we refer readers to the FY 2016 SNF PPS final rule (80 FR
46419), where we finalized the Skilled Nursing Facility 30-Day All-
Cause Readmission Measure (SNFRM) (NQF #2510) that we are currently
using for the SNF VBP Program. We also refer readers to the FY 2017 SNF
PPS final rule (81 FR 51987 through 51995), where we finalized the
Skilled Nursing Facility 30-Day Potentially Preventable Readmission
Measure (SNFPPR) that we will use for the SNF VBP Program instead of
the SNFRM as soon as practicable, as required by statute. We intend to
submit the measure for NQF endorsement review during the Fall 2021
cycle, and to assess transition timing of the SNFPPR measure to the SNF
VBP Program after NQF endorsement review is complete.
In the FY 2020 SNF PPS final rule (84 FR 38821 through 38822), we
adopted a policy changing the name of the SNFPPR to Skilled Nursing
Facility Potentially Preventable Readmissions after Hospital Discharge.
We adopted this change to differentiate the SNF VBP Program's measure
of potentially preventable hospital readmissions from a similar measure
specified for use in the SNF QRP, which uses a 30-day post-SNF
discharge readmission window. We did not propose any updates to this
measure policy in the FY 2021 SNF PPS proposed rule.
However, consistent with this finalized policy, we proposed to
amend the definition of ``SNF Readmission Measure'' under 42 CFR
413.338(a)(11) to reflect the updated Skilled Nursing Facility
Potentially Preventable Readmissions after Hospital Discharge measure
name.
We welcomed public comments on this proposal to amend the
regulation text to reflect the updated measure name.
Comment: Several commenters supported the proposal to amend the
regulation text to reflect the updated Skilled Nursing Facility
Potentially Preventable Readmissions after Hospital Discharge measure
name. One commenter stated that this change will help the public
differentiate this measure from a similar measure under the SNF QRP,
which uses a 30-day post-SNF discharge readmission period.
Response: We thank the commenters for their support.
After consideration of the comments, we are finalizing our proposal
to amend the definition of ``SNF Readmission Measure'' under 42 CFR
413.338(a)(11) to reflect the updated Skilled Nursing Facility
Potentially Preventable Readmissions after Hospital Discharge measure
name as proposed.
c. SNF VBP Performance Period and Baseline Period
We refer readers to the FY 2016 SNF PPS final rule (80 FR 46422)
for a discussion of our considerations for determining performance
periods under the SNF VBP Program. In the FY 2019 SNF PPS final rule
(83 FR 39277 through 39278), we adopted a policy whereby we will
automatically adopt the performance period and baseline period for a
SNF VBP program year by advancing the performance period and baseline
period by 1 year from the previous program year. Under this policy, the
FY 2023 performance period will be FY 2021, and the baseline period
will be FY 2019. We did not propose any changes to this policy in the
FY 2021 SNF PPS proposed rule.
d. Performance Standards
(1) Background
We refer readers to the FY 2017 SNF PPS final rule (81 FR 51995
through 51998) for a summary of the statutory provisions governing
performance standards under the SNF VBP Program and our finalized
performance standards policy, as well as the numerical values for the
achievement threshold and benchmark for the FY 2019 program year. We
published the final numerical values for the performance standards for
the FY 2020 SNF VBP Program year in the FY 2018 SNF PPS final rule (82
FR 36613) and published the final numerical values for the performance
standards for the FY 2021 SNF VBP Program year in the FY 2019 SNF PPS
final rule (83 FR 39276). We also adopted a policy allowing us to
correct the numerical values of the performance standards in the FY
2019 SNF PPS final rule (83 FR 39276 through 39277). We did not propose
any changes to these policies in the FY 2021 SNF PPS proposed rule.
[[Page 47625]]
(2) Codification of the SNF VBP Performance Standards Correction Policy
In the FY 2019 SNF PPS final rule (83 FR 39276 through 39277), we
finalized a policy to correct numerical values of performance standards
for a program year in cases of errors. We also finalized that we will
only update the numerical values for a program year one time, even if
we identify a second error, because we believe that a one-time
correction will allow us to incorporate new information into the
calculations without subjecting SNFs to multiple updates. We stated
that any update we make to the numerical values based on a calculation
error will be announced via the CMS website, listservs, and other
available channels to ensure that SNFs are made fully aware of the
update. We did not propose any changes to these policies in the FY 2021
SNF PPS proposed rule.
We proposed to amend the definition of ``Performance standards'' at
Sec. 413.338(a)(9) of our regulations, consistent with these policies
finalized in the FY 2019 SNF PPS final rule, to reflect our ability to
update the numerical values of performance standards if we determine
there is an error that affects the achievement threshold or benchmark.
We welcomed public comments on this proposal to codify the
performance standards correction policy finalized in the FY 2019 SNF
PPS final rule (83 FR 39276 through 39277).
Comment: Several commenters supported the proposal to codify the
amended definition of ``Performance standards'', consistent with the
policies finalized in the FY 2019 SNF PPS final rule, to reflect CMS'
ability to update the numerical values of performance standards if it
determines there is an error that affects the achievement threshold or
benchmark.
Response: We thank the commenters for their support.
After consideration of the comments, we are finalizing the
amendment to the definition of ``Performance standards'' at Sec.
413.338(a)(9) of our regulations as proposed.
(3) Performance Standards for the FY 2023 Program Year
Based on the baseline period of FY 2019 for the FY 2023 program
year, we estimated in the proposed rule that the performance standards
would have the numerical values noted in Table 15 (85 FR 20941). We
stated that these values represented estimates based on the most
recently-available data, and that we would update the numerical values
in this final rule.
The final FY 2023 SNF VBP Program year performance standards have
the numerical values noted in Table 15.
[GRAPHIC] [TIFF OMITTED] TR05AU20.013
e. SNF VBP Performance Scoring
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52000
through 52005) for a detailed discussion of the scoring methodology
that we have finalized for the Program. We also refer readers to the FY
2018 SNF PPS final rule (82 FR 36614 through 36616) for discussion of
the rounding policy we adopted. We also refer readers to the FY 2019
SNF PPS final rule (83 FR 39278 through 39281), where we adopted: (1) A
scoring policy for SNFs without sufficient baseline period data, (2) a
scoring adjustment for low-volume SNFs, and (3) an extraordinary
circumstances exception policy.
We did not propose any updates to SNF VBP scoring policies in the
FY 2021 SNF PPS proposed rule.
f. SNF Value-Based Incentive Payments
We refer readers to the FY 2018 SNF PPS final rule (82 FR 36616
through 36621) for discussion of the exchange function methodology that
we have adopted for the Program, as well as the specific form of the
exchange function (logistic, or S-shaped curve) that we finalized, and
the payback percentage of 60 percent. We adopted these policies for FY
2019 and subsequent fiscal years.
We also discussed the process that we undertake for reducing SNFs'
adjusted federal per diem rates under the Medicare SNF PPS and awarding
value-based incentive payments in the FY 2019 SNF PPS final rule (83 FR
39281 through 39282).
For estimates of FY 2021 SNF VBP Program incentive payment
multipliers, we encourage SNFs to refer to FY 2020 SNF VBP Program
performance information, available at https://data.medicare.gov/Nursing-HomeCompare/SNF-VBP-Facility-LevelDataset/284v-j9fz. Our
previous analysis of historical SNF VBP data shows that the Program's
incentive payment multipliers appear to be relatively consistent over
time. As a result, we believe that the FY 2020 payment results
represent our best estimate of FY 2021 performance at this time.
We did not propose any updates to SNF VBP payment policies in the
FY 2021 SNF PPS proposed rule.
g. Public Reporting on the Nursing Home Compare Website or a Successor
Website
(1) Background
Section 1888(g)(6) of the Act requires the Secretary to establish
procedures to make SNFs' performance information on SNF VBP Program
measures available to the public on the Nursing Home Compare website or
a successor website, and to provide SNFs an opportunity to review and
submit corrections to that information prior to its publication. We
began publishing SNFs' performance information on the SNFRM in
accordance with this directive and the statutory deadline of October 1,
2017.
Additionally, section 1888(h)(9)(A) of the Act requires the
Secretary to make available to the public certain information on SNFs'
performance under the SNF VBP Program, including SNF performance scores
and their ranking. Section 1888(h)(9)(B) of the Act requires the
Secretary to post aggregate information on the Program, including the
range of SNF performance scores and the number of SNFs receiving value-
based incentive payments, and the range and total amount of those
payments.
In the FY 2017 SNF PPS final rule (81 FR 52009), we discussed the
statutory requirements governing public reporting of SNFs' performance
information under the SNF VBP Program. In the FY 2018 SNF PPS final
rule (82 FR 36622 through 36623), we finalized our policy to publish
SNF measure performance information under the SNF VBP Program on
Nursing Home Compare after SNFs have an opportunity to review and
submit corrections to that
[[Page 47626]]
information under the two-phase Review and Correction process that we
adopted in the FY 2017 SNF PPS final rule (81 FR 52007 through 52009)
and for which we adopted additional requirements in the FY 2018 SNF PPS
final rule. In the FY 2018 SNF PPS final rule, we also adopted
requirements to rank SNFs and adopted data elements that we will
include in the ranking to provide consumers and stakeholders with the
necessary information to evaluate SNFs' performance under the Program
(82 FR 36623).
(2) Codification of the Data Suppression Policy for Low-Volume SNFs
In the FY 2020 SNF PPS final rule (84 FR 38823 through 38824), we
adopted a data suppression policy for low-volume SNF performance
information. Specifically, we finalized our proposal to suppress the
SNF information available to display as follows: (1) If a SNF has fewer
than 25 eligible stays during the baseline period for a program year,
we will not display the baseline risk-standardized readmission rate
(RSRR) or improvement score, though we will still display the
performance period RSRR, achievement score, and total performance score
if the SNF had sufficient data during the performance period; (2) if a
SNF has fewer than 25 eligible stays during the performance period for
a program year and receives an assigned SNF performance score as a
result, we will report the assigned SNF performance score and we will
not display the performance period RSRR, the achievement score, or
improvement score; and (3) if a SNF has zero eligible cases during the
performance period for a program year, we will not display any
information for that SNF. We did not propose any changes to this policy
in the FY 2021 SNF PPS proposed rule.
However, to ensure that SNFs are fully aware of this public
reporting policy, we proposed in the FY 2021 SNF PPS proposed rule (85
FR 20942) to codify it at Sec. 413.338(e)(3)(i), (ii), and (iii) of
our regulations.
We welcomed public comment on this proposal to codify the data
suppression policy for low-volume SNFs policy finalized in the FY 2020
SNF PPS final rule (84 FR 38823 through 38824).
Comment: A commenter supported the proposal to codify language
around the data suppression policy for low-volume SNFs, as finalized in
the FY 2020 SNF PPS final rule (84 FR 38823 through 38824).
Response: We thank the commenter for its support.
After consideration of the comments, we are finalizing our proposal
to codify our data suppression policy at Sec. 413.338(e)(3)(i), (ii),
and (iii) of our regulations as proposed.
(3) Public Reporting of SNF VBP Performance Information on Nursing Home
Compare or a Successor Website
Section 1888(h)(9)(A) of the Act requires that the Secretary make
available to the public on the Nursing Home Compare website or a
successor website information regarding the performance of individual
SNFs for a FY, including the performance score for each SNF for the FY
and each SNF's ranking, as determined under section 1888(h)(4)(B) of
the Act. Additionally, section 1888(h)(9)(B) of the Act requires that
the Secretary periodically post aggregate information on the SNF VBP
Program on the Nursing Home Compare website or a successor website,
including the range of SNF performance scores, and the number of SNFs
receiving value-based incentive payments and the range and total amount
of those payments. In the FY 2018 SNF PPS final rule (82 FR 36622
through 36623), we finalized our policy to publish SNF measure
performance information under the SNF VBP Program on Nursing Home
Compare.
Our SNF VBP Program regulations currently only refer to the Nursing
Home Compare website and do not account for the situation where a
successor website replaces the Nursing Home Compare website. Therefore,
we proposed in the FY 2021 SNF PPS proposed rule (85 FR 20942) to amend
Sec. 413.338(e)(3) of our regulations to reflect that we will publicly
report SNF performance information on the Nursing Home Compare website
or a successor website. CMS announced our website transition on a
public internet blog in January 2020 (https://www.cms.gov/blog/making-it-easier-compare-providers-and-care-settings-medicaregov). We intend
to update SNFs and other stakeholders through the internet and other
widely used communication modes at a later date closer to the targeted
transition date.
We welcomed public comments on this proposal.
Comment: Several commenters supported the proposal to publicly
report SNF VBP performance information on Nursing Home Compare or a
successor website, as current regulations account for displaying
information only on Nursing Home Compare. One commenter noted that
public reporting and accessibility of data is critical for Program
evaluation and understanding quality trends.
Response: We thank the commenters for their support and agree that
public reporting is important for the success of the Program.
After consideration of the comments, we are finalizing our proposal
to amend Sec. 413.338(e)(3) of our regulations to reflect that we will
publicly report SNF performance information on the Nursing Home Compare
website or a successor website as proposed.
h. Update and Codification of the Phase One Review and Correction
Deadline
In the FY 2017 SNF PPS final rule (81 FR 52007 through 52009), we
adopted a two-phase review and corrections process for SNFs' quality
measure data that will be made public under section 1888(g)(6) of the
Act and SNF performance information that will be made public under
section 1888(h)(9) of the Act. We detailed the process for requesting
Phase One corrections and finalized a policy whereby we would accept
Phase One corrections to any quarterly report provided during a
calendar year until the following March 31. In the FY 2020 SNF PPS
final rule (84 FR 38824 through 38835), we updated this policy to
reflect a 30-day Phase One Review and Correction deadline rather than
through March 31st following receipt of the performance period quality
measure quarterly report that we issue in June. In the FY 2021 SNF PPS
proposed rule (85 FR 20942), we stated that we were now proposing to
also apply this 30-day Phase One Review and Correction deadline to the
baseline period quality measure report that we typically issue in
December. We stated that this proposal would align the Phase One Review
and Correction deadlines for the quarterly reports that contain the
underlying claims and measure rate information for the baseline period
or performance period. We stated that under this proposal, SNFs would
have 30 days following issuance of those reports to review the
underlying claims and measure rate information. We stated that should a
SNF believe that any of the information is inaccurate, it may submit a
correction request within 30 days following issuance of the reports. We
also stated that although these reports are typically issued in
December (baseline period information) and June (performance period
information), the issuance dates could vary. We stated that if the
issuance dates of these reports are significantly delayed or need to be
shifted for any reason, we would notify SNFs through routine
communication channels including, but not limited to memos, emails, and
notices on the CMS SNF VBP website.
We also proposed to codify this policy in our regulations by
amending the
[[Page 47627]]
``Confidential feedback reports and public reporting'' paragraph at
Sec. 413.338(e)(1). We welcomed public comments on these proposals.
Comment: A few commenters supported the proposal to apply a 30-day
Phase One Review and Correction deadline to the baseline period quality
measure quarterly reports typically issued in December. One commenter
stated that this proposal aligns this Review and Correction process
with the 30-day deadline that was implemented for the June performance
period quality measure quarterly reports in the FY 2020 SNF PPS final
rule.
Response: We thank the commenters for their support and agree that
this policy aligns with the 30-day Phase Two Review and Correction
deadline under the Program. As stated above in the proposal, SNFs would
have 30 days following issuance of the baseline period quality measure
quarterly reports to review the underlying claims and measure rate
information. Should a SNF believe that any of the information is
inaccurate, it may submit a correction request within 30 days following
issuance of the reports.
Comment: A commenter did not support the proposed 30-day Phase One
Review and Correction deadline for baseline period quality measure
quarterly reports and stated that the time for review and corrections
of these data should be 60-90 days. The commenter was concerned that
the 30-day timeframe is not a long enough time period for many
facilities to review their data for accuracy and submit correction
requests to CMS as necessary.
Response: Our intention with this proposal was to align all Review
and Correction deadlines within the SNF VBP Program and specifically to
set all Review and Correction deadlines to 30 days following the date
we provide the applicable report. The deadline for Review and
Correction submissions for baseline period quality measure quarterly
reports currently differs from other Review and Correction deadlines
within the SNF VBP Program; it currently extends to the March 31st
following the date we provide these reports. All other Review and
Correction deadlines for the SNF VBP Program are 30 days following the
date we provide the applicable report. We believe aligning all Review
and Correction deadlines within the Program would be clearer and easier
for SNFs to track.
Our proposal would not preclude SNFs from submitting correction
requests prior to receipt of their quarterly report if they believe
that an error has occurred, after reviewing data from quarterly reports
delivered prior to the baseline period quality measure quarterly
report. Under current program operations, a particular year of data is
used first as a performance period and later as a baseline period, thus
SNFs have the opportunity to familiarize themselves with the particular
year of data when it is used for the performance period, prior to
receiving baseline period quality measure quarterly reports that
represent the same data collection period.
We also believe that SNFs have accumulated extensive experience
with the SNF VBP Program's quarterly report system, as well as the
finalized Review and Corrections processes. We will continue to conduct
outreach and education to ensure that SNFs are fully aware of the
Program's operational deadlines, and we will be as clear as possible
about the respective Review and Correction deadlines when delivering
each quarterly report to SNFs.
After consideration of the comments, we are finalizing our proposal
to update the Phase One Review and Correction deadline and to codify
that policy in our regulations by amending the ``Confidential feedback
reports and public reporting'' at Sec. 413.338(e)(1) as proposed.
IV. Collection of Information Requirements
This final rule does not impose any new or revised ``collection of
information'' requirements or burden. For the purpose of this section
of the preamble, collection of information is defined under 5 CFR
1320.3(c) of OMB's Paperwork Reduction Act of 1995 (PRA) (44 U.S.C.
3501 et seq.) implementing regulations. Since this rule does not impose
any new or revised collection of information requirements or burden,
the rule is not subject to the requirements of the PRA.
V. Economic Analyses
A. Regulatory Impact Analysis
1. Statement of Need
This final rule updates the FY 2020 SNF prospective payment rates
as required under section 1888(e)(4)(E) of the Act. It also responds to
section 1888(e)(4)(H) of the Act, which requires the Secretary to
provide for publication in the Federal Register before the August 1
that precedes the start of each FY, the unadjusted federal per diem
rates, the case-mix classification system, and the factors to be
applied in making the area wage adjustment. As these statutory
provisions prescribe a detailed methodology for calculating and
disseminating payment rates under the SNF PPS, we do not have the
discretion to adopt an alternative approach on these issues.
2. Introduction
We have examined the impacts of this final rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA,
September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March
22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August
4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive
Order 13771 on Reducing Regulation and Controlling Regulatory Costs
(January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated an economically significant
rule, under section 3(f)(1) of Executive Order 12866. Accordingly, we
have prepared a regulatory impact analysis (RIA) as further discussed
below. Also, the rule has been reviewed by OMB.
3. Overall Impacts
This rule updates the SNF PPS rates contained in the SNF PPS final
rule for FY 2020 (84 FR 38728). We estimate that the aggregate impact
will be an increase of approximately $750 million in payments to SNFs
in FY 2021, resulting from the SNF market basket update to the payment
rates. We note that these impact numbers do not incorporate the SNF VBP
reductions that we estimate will total $199.54 million in FY 2021. We
would note that events may occur to limit the scope or accuracy of our
impact analysis, as this analysis is future-oriented, and thus, very
susceptible to forecasting errors due to events that may occur within
the assessed impact time period.
In accordance with sections 1888(e)(4)(E) and (e)(5) of the Act, we
update the FY 2020 payment rates by a factor equal to the market basket
index percentage change reduced by the MFP
[[Page 47628]]
adjustment to determine the payment rates for FY 2021. The impact to
Medicare is included in the total column of Table 16. In finalizing the
SNF PPS rates for FY 2021, we are finalizing a number of standard
annual revisions and clarifications mentioned elsewhere in this final
rule (for example, the update to the wage and market basket indexes
used for adjusting the federal rates).
The annual update in this rule will apply to SNF PPS payments in FY
2021. Accordingly, the analysis of the impact of the annual update that
follows only describes the impact of this single year. Furthermore, in
accordance with the requirements of the Act, we will publish a rule or
notice for each subsequent FY that will provide for an update to the
payment rates and include an associated impact analysis.
4. Detailed Economic Analysis
The FY 2021 SNF PPS payment impacts appear in Table 16. Using the
most recently available data, in this case FY 2019, we apply the
current FY 2020 wage index and labor-related share value to the number
of payment days to simulate FY 2020 payments. Then, using the same FY
2019 data, we apply the FY 2021 wage index and labor-related share
value to simulate FY 2021 payments. We tabulate the resulting payments
according to the classifications in Table 16 (for example, facility
type, geographic region, facility ownership), and compare the simulated
FY 2020 payments to the simulated FY 2021 payments to determine the
overall impact. The breakdown of the various categories of data Table
16 follows:
The first column shows the breakdown of all SNFs by urban
or rural status, hospital-based or freestanding status, census region,
and ownership.
The first row of figures describes the estimated effects
of the various changes on all facilities. The next six rows show the
effects on facilities split by hospital-based, freestanding, urban, and
rural categories. The next nineteen rows show the effects on facilities
by urban versus rural status by census region. The last three rows show
the effects on facilities by ownership (that is, government, profit,
and non-profit status).
The second column shows the number of facilities in the
impact database.
The third column shows the effect of the annual update to
the wage index. This represents the effect of using the most recent
wage data available. The total impact of this change is 0.0 percent;
however, there are distributional effects of the change.
The fourth column shows the impact on the wage index of
adopting the revised OMB delineations, discussed in section III.D.1.a.
of this final rule. The total impact of this change is 0.0 percent;
however, there are distributional effects of the change.
The fifth column shows the effect of all of the changes on
the FY 2021 payments. The update of 2.2 percent is constant for all
providers and, though not shown individually, is included in the total
column. It is projected that aggregate payments will increase by 2.2
percent, assuming facilities do not change their care delivery and
billing practices in response.
As illustrated in Table 16, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, due to changes in this final rule, rural providers will
experience a 2.4 percent increase in FY 2021 total payments.
[[Page 47629]]
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5. Impacts for the SNF VBP Program
The estimated impacts of the FY 2021 SNF VBP Program are based on
historical data and appear in Table 17. We modeled SNF performance in
the Program using SNFRM data from FY 2016 as the baseline period and FY
2018 as the performance period. Additionally, we modeled a logistic
exchange function with a payback percentage of 60 percent, as we
finalized in the FY 2018 SNF PPS final rule (82 FR 36619 through
36621), though we note that the 60 percent payback percentage for FY
2021 will adjust to account for the low-volume scoring adjustment that
we adopted in the FY 2019 SNF PPS final rule (83 FR 39278 through
39280). We estimate that the low-volume scoring adjustment would
increase the 60 percent payback percentage for FY 2021 by approximately
2.25 percentage points (or $11.91 million), resulting in a payback
percentage for FY 2021 that is 62.25 percent of the estimated $528.63
million in withheld funds for that fiscal year. Based on the 60 percent
payback percentage (as modified by the low-volume scoring adjustment),
we estimate that we will redistribute approximately $329.09 million in
value-based incentive payments to SNFs in FY 2021, which means that the
SNF VBP Program is estimated to result in approximately $199.54 million
in savings to the Medicare Program in FY 2021. We refer readers to the
FY 2019 SNF PPS final rule (83 FR 39278 through 39280) for additional
information about payment adjustments for low-volume SNFs in the SNF
VBP Program.
Our detailed analysis of the estimated impacts of the FY 2021 SNF
VBP Program follows in Table 17.
[[Page 47630]]
[GRAPHIC] [TIFF OMITTED] TR05AU20.015
6. Alternatives Considered
As described in this section, we estimated that the aggregate
impact for FY 2021 under the SNF PPS will be an increase of
approximately $750 million in payments to SNFs, resulting from the SNF
market basket update to the payment rates.
Section 1888(e) of the Act establishes the SNF PPS for the payment
of Medicare SNF services for cost reporting periods beginning on or
after July 1, 1998. This section of the statute prescribes a detailed
formula for calculating base payment rates under the SNF PPS, and does
not provide for the use of any alternative methodology. It specifies
that the base year cost data to be used for computing the SNF PPS
payment rates must be from FY 1995 (October 1, 1994, through September
30, 1995). In accordance with the statute, we also incorporated a
number of elements into the SNF PPS (for example, case-mix
classification methodology, a market basket index, a wage index, and
the urban and rural distinction used in the development or adjustment
of the federal rates). Further, section 1888(e)(4)(H) of the Act
specifically requires us to disseminate the payment rates for each new
FY through the Federal Register, and to do so before the August 1 that
precedes the start of the new FY; accordingly, we are not pursuing
alternatives for this process.
With regard to the alternatives considered related to the other
provisions contained in this final rule, such as the adoption of
revised OMB delineations and cap on wage index decreases discussed in
section III.D.1. of this final rule, we discuss any alternatives
considered within those sections.
[[Page 47631]]
7. Accounting Statement
As required by OMB Circular A-4 (available online at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Tables 18 and
19, we have prepared an accounting statement showing the classification
of the expenditures associated with the provisions of this final rule
for FY 2021. Tables 16 and 18 provide our best estimate of the possible
changes in Medicare payments under the SNF PPS as a result of the
policies in this final rule, based on the data for 15,078 SNFs in our
database. Tables 17 and 19 provide our best estimate of the possible
changes in Medicare payments under the SNF VBP as a result of the
policies we have adopted for this program.
[GRAPHIC] [TIFF OMITTED] TR05AU20.016
8. Conclusion
This rule updates the SNF PPS rates contained in the SNF PPS final
rule for FY 2020 (84 FR 38728). Based on the above, we estimate that
the overall payments for SNFs under the SNF PPS in FY 2021 are
projected to increase by approximately $750 million, or 2.2 percent,
compared with those in FY 2020. We estimate that in FY 2021, SNFs in
urban and rural areas will experience, on average, a 2.2 percent
increase and 2.4 percent increase, respectively, in estimated payments
compared with FY 2020. Providers in the urban Middle Atlantic region
will experience the largest estimated increase in payments of
approximately 3.2 percent. Providers in the urban New England region
will experience the smallest estimated increase in payments of 1.0
percent.
B. Regulatory Flexibility Act Analysis
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, non-profit organizations, and small
governmental jurisdictions. Most SNFs and most other providers and
suppliers are small entities, either by reason of their non-profit
status or by having revenues of $30 million or less in any 1 year. We
utilized the revenues of individual SNF providers (from recent Medicare
Cost Reports) to classify a small business, and not the revenue of a
larger firm with which they may be affiliated. As a result, for the
purposes of the RFA, we estimate that almost all SNFs are small
entities as that term is used in the RFA, according to the Small
Business Administration's latest size standards (NAICS 623110), with
total revenues of $30 million or less in any 1 year. (For details, see
the Small Business Administration's website at http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/eligibility-size-standards). In addition, approximately 20 percent of
SNFs classified as small entities are non-profit organizations.
Finally, individuals and states are not included in the definition of a
small entity.
This rule updates the SNF PPS rates contained in the SNF PPS final
rule for FY 2020 (84 FR 38728). Based on the above, we estimate that
the aggregate impact for FY 2021 will be an increase of $750 million in
payments to SNFs, resulting from the SNF market basket update to the
payment rates. While it is projected in Table 16 that all providers
will experience a net increase in payments, we note that some
individual providers within the same region or group may experience
different impacts on payments than others due to the distributional
impact of the FY 2021 wage indexes and the degree of Medicare
utilization.
Guidance issued by the Department of Health and Human Services on
the proper assessment of the impact on small entities in rulemakings,
utilizes a cost or revenue impact of 3 to 5 percent as a significance
threshold under the RFA. In their March 2020 Report to Congress
(available at http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch8_sec.pdf), MedPAC states that Medicare covers
approximately 10 percent of total patient days in freestanding
facilities and 18 percent of facility revenue (March 2020 MedPAC Report
to Congress, 224). As a result, for most facilities, when all payers
are included in the revenue stream, the overall impact on total
revenues should be substantially less than those impacts presented in
Table 16. As indicated in Table 16, the effect on facilities is
projected to be an aggregate positive impact of 2.2 percent for FY
2021. As the overall impact on the industry as a whole, and thus on
small entities
[[Page 47632]]
specifically, is less than the 3 to 5 percent threshold discussed
previously, the Secretary has determined that this final rule will not
have a significant impact on a substantial number of small entities for
FY 2021.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of an MSA and has fewer
than 100 beds. This final rule will affect small rural hospitals that:
(1) Furnish SNF services under a swing-bed agreement or (2) have a
hospital-based SNF. We anticipate that the impact on small rural
hospitals will be a positive impact. Moreover, as noted in previous SNF
PPS final rules (most recently, the one for FY 2020 (84 FR 38728)), the
category of small rural hospitals is included within the analysis of
the impact of this final rule on small entities in general. As
indicated in Table 16, the effect on facilities for FY 2021 is
projected to be an aggregate positive impact of 2.2 percent. As the
overall impact on the industry as a whole is less than the 3 to 5
percent threshold discussed above, the Secretary has determined that
this final rule will not have a significant impact on a substantial
number of small rural hospitals for FY 2021.
C. Unfunded Mandates Reform Act Analysis
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2020, that
threshold is approximately $156 million. This final rule will impose no
mandates on state, local, or tribal governments or on the private
sector.
D. Federalism Analysis
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule (and subsequent final
rule) that imposes substantial direct requirement costs on state and
local governments, preempts state law, or otherwise has federalism
implications. This final rule will have no substantial direct effect on
state and local governments, preempt state law, or otherwise have
federalism implications.
E. Reducing Regulation and Controlling Regulatory Costs
Executive Order 13771, entitled ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017 and
requires that the costs associated with significant new regulations
``shall, to the extent permitted by law, be offset by the elimination
of existing costs associated with at least two prior regulations.'' It
has been determined that this final rule is a transfer rule that does
not impose more than de minimis costs and thus is not a regulatory
action for the purposes of Executive Order 13771.
F. Congressional Review Act
This final regulation is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress
and the Comptroller General for review.
G. Regulatory Review Costs
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this final rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on this year's proposed rule will be the number of reviewers
of this year's final rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed this year's proposed rule in
detail, and it is also possible that some reviewers chose not to
comment on the proposed rule. For these reasons, we thought that the
number of commenters on the proposed rule is a fair estimate of the
number of reviewers of this final rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of the proposed rule, and
therefore, for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule.
Using the wage information from the BLS for medical and health
service managers (Code 11-9111), we estimate that the cost of reviewing
this rule is $110.74 per hour, including overhead and fringe benefits
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average
reading speed, we estimate that it would take approximately 4 hours for
the staff to review half of the proposed rule. For each SNF that
reviews the rule, the estimated cost is $442.96 (4 hours x $110.74).
Therefore, we estimate that the total cost of reviewing this regulation
is $20,819.12 ($442.96 x 47 reviewers).
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 409
Health facilities, Medicare.
42 CFR Part 413
Diseases, Health facilities, Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 409--HOSPITAL INSURANCE BENEFITS
0
1. The authority citation for part 409 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 409.35 is amended by revising paragraph (a) to read as
follows:
Sec. 409.35 Criteria for ``practical matter''.
(a) General considerations. In making a ``practical matter''
determination, as required by Sec. 409.31(b)(3), consideration must be
given to the patient's condition and to the availability and
feasibility of using more economical alternative facilities and
services. However, in making that determination, the availability of
Medicare payment for those services may not be a factor. For example,
if a beneficiary can obtain daily physical therapy services on an
outpatient basis, the unavailability of Medicare payment for those
alternative services due to the beneficiary's non-enrollment in Part B
may not be a basis for finding that the needed care can only be
provided in a SNF.
* * * * *
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS
0
3. The authority citation for part 413 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a),
(i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww.
[[Page 47633]]
Sec. 413.114 [Amended]
0
4. Section 413.114 is amended in paragraph (c)(2) by removing the
reference ``Sec. 413.55(a)(1)'' and adding in its place the reference
``Sec. 413.53(a)(1)''.
0
5. Section 413.338 is amended by revising paragraphs (a)(9) and (11)
and (e)(1) and (3) to read as follows:
Sec. 413.338 Skilled nursing facility value-based purchasing
program.
(a) * * *
(9) Performance standards are the levels of performance that SNFs
must meet or exceed to earn points under the SNF VBP Program for a
fiscal year, and are announced no later than 60 days prior to the start
of the performance period that applies to the SNF readmission measure
for that fiscal year. Beginning with the performance standards that
apply to FY 2021, if CMS discovers an error in the performance standard
calculations subsequent to publishing their numerical values for a
fiscal year, CMS will update the numerical values to correct the error.
If CMS subsequently discovers one or more other errors with respect to
the same fiscal year, CMS will not further update the numerical values
for that fiscal year.
* * * * *
(11) SNF readmission measure means, prior to October 1, 2019, the
all-cause all-condition hospital readmission measure (SNFRM) or the
all-condition risk-adjusted potentially preventable hospital
readmission rate (SNFPPR) specified by CMS for application in the SNF
Value-Based Purchasing Program. Beginning October 1, 2019, the term SNF
readmission measure means the all-cause all-condition hospital
readmission measure (SNFRM) or the all-condition risk-adjusted
potentially preventable hospital readmission rate (Skilled Nursing
Facility Potentially Preventable Readmissions after Hospital Discharge
measure) specified by CMS for application in the SNF Value-Based
Purchasing Program.
* * * * *
(e) * * *
(1) Beginning October 1, 2016, CMS will provide quarterly
confidential feedback reports to SNFs on their performance on the SNF
readmission measure. SNFs will have the opportunity to review and
submit corrections for these data by March 31st following the date that
CMS provides the reports, for reports issued prior to October 1, 2019.
Beginning with the performance period quality measure quarterly report
issued on or after October 1, 2019 that contains the performance period
measure rate and all of the underlying claim information used to
calculate the measure rate that applies for the fiscal year, SNFs will
have 30 days following the date that CMS provides these reports to
review and submit corrections for the data contained in these reports.
Beginning with the baseline period quality measure quarterly report
issued on or after October 1, 2020 that contains the baseline period
measure rate and all of the underlying claim information used to
calculate the measure rate that applies for the fiscal year, SNFs will
have 30 days following the date that CMS provides these reports to
review and submit corrections for the data contained in these reports.
Any such correction requests must be accompanied by appropriate
evidence showing the basis for the correction.
* * * * *
(3) CMS will publicly report the information described in
paragraphs (e)(1) and (2) of this section on the Nursing Home Compare
website or a successor website. Beginning with information publicly
reported on or after October 1, 2019, the following exceptions apply:
(i) If CMS determines that a SNF has fewer than 25 eligible stays
during the baseline period for a fiscal year but has 25 or more
eligible stays during the performance period for that fiscal year, CMS
will not publicly report the SNF's baseline period SNF readmission
measure rate and improvement score for that fiscal year;
(ii) If CMS determines that a SNF is a low-volume SNF with respect
to a fiscal year and assigns a performance score to the SNF under
paragraph (d)(3) of this section, CMS will not publicly report the
SNF's performance period SNF readmission measure rate, achievement
score or improvement score for the fiscal year; and
(iii) If CMS determines that a SNF has zero eligible cases during
the performance period with respect to a fiscal year, CMS will not
publicly report any information for that SNF for that fiscal year.
* * * * *
Dated: July 23, 2020.
Seema Verma
Administrator, Centers for Medicare & Medicaid Services.
Dated: July 29, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-16900 Filed 7-31-20; 4:15 pm]
BILLING CODE 4120-01-P
