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Rule2023-16249

Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program and Value-Based Purchasing Program for Federal Fiscal Year 2024

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Published

August 7, 2023

Effective

October 1, 2023

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This final rule updates payment rates, including implementing the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration. This final rule also updates the diagnosis code mappings used under PDPM, the SNF Quality Reporting Program (QRP), and the SNF Value-Based Purchasing (VBP) Program. We are also eliminating the requirement for facilities to actively waive their right to a hearing in writing, treating as a constructive waiver when the facility does not submit a request for hearing.

Full Text

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[Federal Register Volume 88, Number 150 (Monday, August 7, 2023)]
[Rules and Regulations]
[Pages 53200-53347]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-16249]

[[Page 53199]]

Vol. 88

Monday,

No. 150

August 7, 2023

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 411, 413, 488, et al.

Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities; Updates to the Quality Reporting
Program and Value-Based Purchasing Program for Federal Fiscal Year
2024; Final Rule

Federal Register / Vol. 88 , No. 150 / Monday, August 7, 2023 / Rules
and Regulations

[[Page 53200]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 411, 413, 488, and 489

[CMS-1779-F]
RIN 0938-AV02

Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities; Updates to the Quality
Reporting Program and Value-Based Purchasing Program for Federal Fiscal
Year 2024

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule updates payment rates, including implementing
the second phase of the Patient Driven Payment Model (PDPM) parity
adjustment recalibration. This final rule also updates the diagnosis
code mappings used under PDPM, the SNF Quality Reporting Program (QRP),
and the SNF Value-Based Purchasing (VBP) Program. We are also
eliminating the requirement for facilities to actively waive their
right to a hearing in writing, treating as a constructive waiver when
the facility does not submit a request for hearing.

DATES: These regulations are effective October 1, 2023, except for the
amendments to Sec. Sec. 411.15 and 489.20 in instructions 2 and 11,
which are effective January 1, 2024.

FOR FURTHER INFORMATION CONTACT: <a href="/cdn-cgi/l/email-protection#b7e7f3e7faf7d4dac499dfdfc499d0d8c1">[email&#160;protected]</a> for issues related to
the SNF PPS.
Heidi Magladry, (410) 786-6034, for information related to the
skilled nursing facility quality reporting program.
Alexandre Laberge, (410) 786-8625, for information related to the
skilled nursing facility value-based purchasing program.
Lorelei Kahn, (443) 803-8643, for information related to the Civil
Money Penalties Waiver of Hearing.

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 <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html</a>.
Readers who experience any problems accessing any of these online
SNF PPS wage index tables should contact Kia Burwell 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 2024 SNF
PPS Proposed Rule
A. General Comments on the FY 2024 SNF PPS Proposed Rule
IV. SNF PPS Rate Setting Methodology and FY 2024 Update
A. Federal Base Rates
B. SNF Market Basket Update
C. Case-Mix Adjustment
D. Wage Index Adjustment
E. SNF Value-Based Purchasing Program
F. Adjusted Rate Computation Example
V. Additional Aspects of the SNF PPS
A. SNF Level of Care--Administrative Presumption
B. Consolidated Billing
C. Payment for SNF-Level Swing-Bed Services
D. Revisions to the Regulation Text
VI. Other SNF PPS Issues
A. Technical Updates to PDPM ICD-10 Mappings
VII. Skilled Nursing Facility Quality Reporting Program (SNF QRP)
A. Background and Statutory Authority
B. General Considerations Used for the Selection of Measures for
the SNF QRP
C. SNF QRP Quality Measures
D. Principles for Selecting and Prioritizing SNF QRP Quality
Measures and Concepts Under Consideration for Future Years: Request
for Information (RFI)
E. Health Equity Update
F. Form, Manner, and Timing of Data Submission Under the SNF QRP
G. Policies Regarding Public Display of Measure Data for the SNF
QRP
VIII. Skilled Nursing Facility Value-Based Purchasing Program (SNF
VBP)
A. Statutory Background
B. SNF VBP Program Measures
C. SNF VBP Performance Period and Baseline Periods
D. SNF VBP Performance Standards
E. SNF VBP Performance Scoring Methodology
F. Updates to the Extraordinary Circumstances Exception Policy
Regulation Text
G. Updates to the Validation Process for the SNF VBP Program
H. SNF Value-Based Incentive Payments for FY 2024
I. Public Reporting on the Provider Data Catalog website
IX. Civil Money Penalties: Waiver of Hearing, Automatic Reduction of
Penalty Amount
X. Waiver of Proposed Rulemaking
XI. Collection of Information Requirements
XII. Economic Analyses
A. Regulatory Impact Analysis
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act Analysis
D. Federalism Analysis
E. Regulatory Review Costs

I. Executive Summary

A. Purpose

This final rule updates the SNF prospective payment rates for
fiscal year (FY) 2024, 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 the FY 2024 SNF PPS proposed rule) in the
Federal Register before the August 1 that precedes the start of each
FY. In addition, this final rule includes requirements for the Skilled
Nursing Facility Quality Reporting Program (SNF QRP) for the FY 2025
and FY 2026 program years. This final rule will add two new measures to
the SNF QRP, remove three measures from the SNF QRP, and modify one
measure in the SNF QRP. This final rule will also make policy changes
to the SNF QRP, and begin public reporting of four measures. In
addition, this final rule includes a summary of comments received in
response to our request for information on principles we will use to
select and prioritize SNF QRP quality measures in future years and on
the update on our health equity efforts. Finally, this final rule
includes requirements for the Skilled Nursing Facility Value-Based
Purchasing (SNF VBP) Program, including adopting new quality measures
for the SNF VBP Program, finalizing several updates to the Program's
scoring methodology, including a Health Equity Adjustment, and
finalizing new processes to validate SNF VBP data. We are also changing
the current long-term care (LTC) facility requirements that will
simplify and streamline the current requirements and thereby increase
provider flexibility and reduce unnecessary administrative burden,
while also allowing facilities to focus on providing healthcare to

[[Page 53201]]

residents to meet their needs. This proposal was previously proposed
and published in the July 18, 2019 Federal Register in the proposed
rule entitled, ``Medicare and Medicaid Programs; Requirements for Long-
Term Care Facilities: Regulatory Provisions to Promote Efficiency, and
Transparency'' (84 FR 34718). We are finalizing this revision for a
facility to waive its hearing rights and receive a reduction in civil
money penalties. This change to the current LTC requirements will
simplify and streamline the current requirements and thereby increase
provider flexibility and reduce excessively burdensome regulations,
while also allowing facilities to focus on providing high-quality
healthcare to their residents.

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 update the annual rates that
we published in the SNF PPS final rule for FY 2023 (87 FR 47502, August
3, 2022). In addition, this final rule includes a forecast error
adjustment for FY 2024 and includes the second phase of the PDPM parity
adjustment recalibration. This final rule also updates the diagnosis
code mappings used under the PDPM.
Beginning with the FY 2025 SNF QRP, we are modifying the COVID-19
Vaccination Coverage among Healthcare Personnel measure, adopting the
Discharge Function Score measure, and removing the (1) Application of
Percent of Long-Term Care Hospital Patients with an Admission and
Discharge Functional Assessment and a Care Plan That Addresses Function
measure, (2) the Application of IRF Functional Outcome Measure: Change
in Self-Care Score for Medical Rehabilitation Patients measure, and (3)
the Application of IRF Functional Outcome Measure: Change in Mobility
Score for Medical Rehabilitation Patients measure. Beginning with the
FY 2026 SNF QRP, we are adopting the COVID-19 Vaccine: Percent of
Patients/Residents Who Are Up to Date measure. We are also changing the
SNF QRP data completion thresholds for the Minimum Data Set (MDS) data
items beginning with the FY 2026 SNF QRP and making certain revisions
to regulation text at Sec. 413.360. This final rule also contains
updates pertaining to the public reporting of the (1) Transfer of
Health Information to the Patient-Post-Acute Care (PAC) measure, (2)
the Transfer of Health Information to the Provider-PAC measure, (3) the
Discharge Function Score measure, and (4) the COVID-19 Vaccine: Percent
of Patients/Residents Who Are Up to Date measure. In addition, we
summarize comments received in response to the Request for Information
(RFI) on principles for selecting and prioritizing SNF QRP quality
measures and concepts and the update on our continued efforts to close
the health equity gap, including under the SNF QRP.
We are finalizing several updates for the SNF VBP Program. We are
adopting a Health Equity Adjustment that rewards top tier performing
SNFs that serve higher proportions of SNF residents with dual
eligibility status, effective with the FY 2027 program year and
adopting a variable payback percentage to maintain an estimated payback
percentage for all SNFs of no less than 60 percent. We are adopting
four new quality measures to the SNF VBP Program, one taking effect
beginning with the FY 2026 program year and three taking effect
beginning with the FY 2027 program year. We are also refining the
Skilled Nursing Facility 30-Day Potentially Preventable Readmission
(SNFPPR) measure specifications and updating the name to the Skilled
Nursing Facility Within-Stay Potentially Preventable Readmission (SNF
WS PPR) measure effective with the FY 2028 program year. We are
adopting new processes to validate SNF VBP program data.
In addition, we are finalizing our proposal to eliminate the
requirement for facilities facing a civil money penalty to actively
waive their right to a hearing in writing in order to receive a penalty
reduction. We are creating, in its place, a constructive waiver process
that will operate by default when CMS has not received a timely request
for a hearing. The accompanying 35 percent penalty reduction will
remain. This will streamline and reduce the administrative burden for
CMS, and result in lower administrative costs for most LTC facilities
facing civil money penalties (CMPs). The accompanying 35 percent
penalty reduction will remain for now, although we plan to revisit this
in a future rulemaking. The move to a constructive waiver process in
this rule purely reflects the need to reduce costs and paperwork burden
for CMS in order to prioritize current limited Survey and Certification
resources for enforcement actions, and we continue to consider whether
the existing penalty reduction is appropriate given this final policy.
The operational change finalized here will streamline and reduce the
administrative burden for CMS.

C. Summary of Cost and Benefits

Table 1--Cost and Benefits
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Provision description Total transfers/costs
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FY 2024 SNF PPS payment rate The overall economic impact of this
update. final rule is an estimated increase
of $1.4 billion in aggregate
payments to SNFs during FY 2024.
FY 2025 SNF QRP changes........... The overall economic impact of this
final rule to SNFs is an estimated
benefit of $1,037,261 to SNFs
during FY 2025.
FY 2026 SNF QRP changes........... The overall economic impact of this
final rule to SNFs is an estimated
increase in aggregate cost from FY
2025 of $778,591.
FY 2024 SNF VBP changes........... The overall economic impact of the
SNF VBP Program is an estimated
reduction of $184.85 million in
aggregate payments to SNFs during
FY 2024.
FY 2026 SNF VBP changes........... The overall economic impact of the
SNF VBP Program is an estimated
reduction of $196.50 million in
aggregate payments to SNFs during
FY 2026.
FY 2027 SNF VBP changes........... The overall economic impact of the
SNF VBP Program is an estimated
reduction of $166.86 million in
aggregate payments to SNFs during
FY 2027.
FY 2028 SNF VBP changes........... The overall economic impact of the
SNF VBP Program is an estimated
reduction of $170.98 million in
aggregate payments to SNFs during
FY 2028.
FY 2024 Enforcement Provisions for The overall impact of this
LTC Facilities Requirements regulatory change is an estimated
Changes. administrative cost savings of
$2,299,716 to LTC facilities and
$772,044 to the Federal Government
during FY 2024.
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[[Page 53202]]

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 digital health information.
To further interoperability in post-acute care settings, CMS and
the Office of the National Coordinator for Health Information
Technology (ONC) participate in the Post-Acute Care Interoperability
Workgroup (PACIO) to facilitate collaboration with interested parties
to develop Health Level Seven International[supreg] (HL7) Fast
Healthcare Interoperability Resource[supreg] (FHIR) standards. These
standards could support the exchange and reuse of patient assessment
data derived from the post-acute care (PAC) setting assessment tools,
such as the minimum data set (MDS), inpatient rehabilitation facility -
patient assessment instrument (IRF-PAI), Long-Term Care Hospital (LTCH)
continuity assessment record and evaluation (CARE) Data Set (LCDS),
outcome and assessment information set (OASIS), and other
sources.1 2 The PACIO Project has focused on HL7 FHIR
implementation guides for: functional status, cognitive status and new
use cases on advance directives, re-assessment timepoints, and Speech,
language, swallowing, cognitive communication and hearing (SPLASCH)
pathology.\3\ We encourage PAC provider and health IT vendor
participation as the efforts advance.
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\1\ HL7 FHIR Release 4. Available at <a href="https://www.hl7.org/fhir/">https://www.hl7.org/fhir/</a>.
\2\ HL7 FHIR. PACIO Functional Status Implementation Guide.
Available at <a href="https://paciowg.github.io/functional-status-ig/">https://paciowg.github.io/functional-status-ig/</a>.
\3\ PACIO Project. Available at <a href="http://pacioproject.org/about/">http://pacioproject.org/about/</a>.
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The CMS Data Element Library (DEL) continues to be updated and
serves as a resource for PAC assessment data elements and their
associated mappings to health IT standards such as Logical Observation
Identifiers Names and Codes (LOINC) and Systematized Nomenclature of
Medicine Clinical Terms (SNOMED).\4\ The DEL furthers CMS' goal of data
standardization and interoperability. Standards in the DEL can be
referenced on the CMS website and in the ONC Interoperability Standards
Advisory (ISA). The 2023 ISA is available at <a href="https://www.healthit.gov/sites/isa/files/inline-files/2023%20Reference%20Edition_ISA_508.pdf">https://www.healthit.gov/sites/isa/files/inline-files/2023%20Reference%20Edition_ISA_508.pdf</a>.
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\4\ Centers for Medicare & Medicaid Services. Newsroom. Fact
sheet: CMS Data Element Library Fact Sheet. June 21, 2018. Available
at <a href="https://www.cms.gov/newsroom/fact-sheets/cms-data-element-library-fact-sheet">https://www.cms.gov/newsroom/fact-sheets/cms-data-element-library-fact-sheet</a>.
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We are also working with ONC to advance the United States Core Data
for Interoperability (USCDI), a standardized set of health data classes
and constituent data elements for nationwide, interoperable health
information exchange.\5\ We are collaborating with ONC and other
Federal agencies to define and prioritize additional data
standardization needs and develop consensus on recommendations for
future versions of the USCDI. We are also directly collaborating with
ONC to build requirements to support data standardization and alignment
with requirements for quality measurement. ONC has launched the USCDI+
initiative to support the identification and establishment of domain
specific datasets that build on the core USCDI foundation.\6\ The
USCDI+ quality measurement domain currently being developed aims to
support defining additional data specifications for quality measurement
that harmonize, where possible, with other Federal agency data needs
and inform supplemental standards necessary to support quality
measurement, including the needs of programs supporting quality
measurement for long-term and post-acute care.
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\5\ USCDI. Available at <a href="https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi">https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi</a>.
\6\ USCDI+. Available at <a href="https://www.healthit.gov/topic/interoperability/uscdi-plus">https://www.healthit.gov/topic/interoperability/uscdi-plus</a>.
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The 21st Century Cures Act (Cures Act) (Pub. L. 114-255, enacted
December 13, 2016) required HHS and ONC to take steps to promote
adoption and use of electronic health record (EHR) technology.
Specifically, section 4003(b) of the Cures Act required ONC to take
steps to advance interoperability through the development of a Trusted
Exchange Framework and Common Agreement aimed at establishing full
network-to network exchange of health information nationally. On
January 18, 2022, ONC announced a significant milestone by releasing
the Trusted Exchange Framework \7\ and Common Agreement Version 1.\8\
The Trusted Exchange Framework is a set of non-binding principles for
health information exchange, and the Common Agreement is a contract
that advances those principles. The Common Agreement and the Qualified
Health Information Network Technical Framework Version 1 (incorporated
by reference into the Common Agreement) establish the technical
infrastructure model and governing approach for different health
information networks and their users to securely share clinical
information with each other, all under commonly agreed to terms. The
technical and policy architecture of how exchange occurs under the
Common Agreement follows a network-of-networks structure, which allows
for connections at different levels and is inclusive of many different
types of entities at those different levels, such as health information
networks, healthcare practices, hospitals, public health agencies, and
Individual Access Services (IAS) Providers.\9\ On February 13, 2023,
HHS marked a new milestone during an event at HHS headquarters,\10\
which recognized the first set of applicants accepted for onboarding to
the Common Agreement as Qualified Health Information Networks (QHINs).
QHINs will be entities that will connect directly to each other to
serve as the core for nationwide interoperability.\11\ For more
information, we refer readers to <a href="https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement">https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement</a>.
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\7\ The Trusted Exchange Framework (TEF): Principles for Trusted
Exchange (Jan. 2022). Available at <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Trusted_Exchange_Framework_0122.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Trusted_Exchange_Framework_0122.pdf</a>.
\8\ Common Agreement for Nationwide Health Information
Interoperability Version 1 (Jan. 2022). Available at <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf</a>.
\9\ The Common Agreement defines Individual Access Services
(IAS) as ``with respect to the Exchange Purposes definition, the
services provided utilizing the Connectivity Services, to the extent
consistent with Applicable Law, to an Individual with whom the QHIN,
Participant, or Subparticipant has a Direct Relationship to satisfy
that Individual's ability to access, inspect, or obtain a copy of
that Individual's Required Information that is then maintained by or
for any QHIN, Participant, or Subparticipant.'' The Common Agreement
defines ``IAS Provider'' as: ``Each QHIN, Participant, and
Subparticipant that offers Individual Access Services.'' See Common
Agreement for Nationwide Health Information Interoperability Version
1, at 7 (Jan. 2022), <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf</a>.
\10\ ``Building TEFCA,'' Micky Tripathi and Mariann Yeager,
Health IT Buzz Blog. February 13, 2023. <a href="https://www.healthit.gov/buzz-blog/electronic-health-and-medical-records/interoperability-electronic-health-and-medical-records/building-tefca">https://www.healthit.gov/buzz-blog/electronic-health-and-medical-records/interoperability-electronic-health-and-medical-records/building-tefca</a>.
\11\ The Common Agreement defines a QHIN as ``to the extent
permitted by applicable SOP(s), a Health Information Network that is
a U.S. Entity that has been Designated by the RCE and is a party to
the Common Agreement countersigned by the RCE.'' See Common
Agreement for Nationwide Health Information Interoperability Version
1, at 10 (Jan. 2022), <a href="https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf">https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf</a>.

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[[Page 53203]]

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 virtually 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 addition, a detailed discussion of the legislative history
of the SNF PPS is available online at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf</a>.
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 Improving Medicare Post-Acute Care
Transformation (IMPACT) Act of 2014 (Pub. L. 113-185, enacted October
6, 2014) 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. Finally, section 111 of the
Consolidated Appropriations Act, 2021 (CAA, 2021) amended section
1888(h) of the Act, authorizing the Secretary to apply up to nine
additional measures to the VBP program for SNFs.

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
2023 (87 FR 47502, August 3, 2022).
Section 1888(e)(4)(H) of the Act specifies that we provide for
publication annually in the Federal Register the following:
<bullet> The unadjusted Federal per diem rates to be applied to
days of covered SNF services furnished during the upcoming FY.
<bullet> The case-mix classification system to be applied for these
services during the upcoming FY.
<bullet> 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 2024.

III. Analysis and Responses to Public Comments on the FY 2024 SNF PPS
Proposed Rule

In response to the publication of the FY 2024 SNF PPS proposed
rule, we received 81 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 2024 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 care generally. A discussion of
these comments, along with our responses, appears below.
Comment: Several commenters raised concerns with therapy treatment
under PDPM, specifically reductions in the amount of therapy furnished
to SNF patients since PDPM was implemented. Some of these commenters
stated that CMS should revise the existing limit on concurrent and
group therapy to provide a financial penalty in cases where the
facility exceeds this limit. These commenters also recommended that CMS
direct its review contractors to examine the practices of facilities
that changed their therapy service provision after PDPM was
implemented. Additionally, commenters want CMS to release the results
of any monitoring efforts around therapy provision. Finally, several
commenters recommended that CMS reinstate a more frequent assessment
schedule to discourage gaming.
Response: We appreciate commenters raising these concerns around
therapy provision under PDPM, as compared the RUG-IV. We agree with
commenters that the amount of therapy that is furnished to patients
under PDPM is less than that delivered under RUG-IV. As we stated in
the FY 2020 SNF PPS final rule, we believe that close, real-time
monitoring is essential to identifying any adverse trends under PDPM.
While we have identified the same reduction in therapy services and
therapy staff, we believe that these findings must be considered within
the context of patient outcomes. To the extent that facilities are able
to maintain or improve patient outcomes, we believe that this
supersedes changes in service provision, whether this be in the amount
of therapy furnished or the mode in which it is furnished. We continue
to monitor all aspects of PDPM and advise our review contractors on any
adverse trends.
With regard to implementing a specific penalty for exceeding the
group and concurrent therapy threshold, based on our current data, we
have not identified any widespread misuse of this limit. Should we
identify such misuse, either at a provider-level or at

[[Page 53204]]

a broader level, we will pursue an appropriate course of action.
Finally, with regard to the recommendation that we reinstate
something akin to the assessment schedule that was in effect under RUG-
IV, given that PDPM does not reimburse on the basis of therapy minutes,
we do not believe that such an increase in administrative burden on
providers would have an impact on therapy provision. That being said,
we strongly encourage interested parties to continue to provide
suggestions on how to ensure that SNF patients receive the care they
need based on their unique characteristics and goals.
Comment: One commenter stated that CMS should undertake an analysis
of the impact of waiving the 3-day stay requirement during the PHE as
compared to the impact on patient cost and outcomes once the
requirement has been reinstated. This commenter requests that CMS
release the results of such an analysis.
Response: We appreciate this suggestion. We have previously
conducted analyses of the associated cost of removing the 3-day stay
requirement and found that it would significantly increase Medicare
outlays. We have not yet been able to perform such an analysis which
would compare the impact of waiving this requirement during the PHE to
the impact of it being re-implemented, but we believe it would likely
lead to the same result.
Comment: One commenter requested that we consider including
recreational therapy time provided to SNF residents by recreational
therapists into the case-mix adjusted therapy component of PDPM, rather
than having it be considered part of the nursing component. This
commenter further suggested that CMS begin collecting data, as part of
a demonstration project, on the utilization of recreational therapy, as
a distinct and separate service, and its impact on patient care cost
and quality.
Response: We appreciate the commenter raising this issue, but we do
not believe there is sufficient evidence at this time regarding the
efficacy of recreational therapy interventions or, more notably, data
which would substantiate a determination of the effect on payment of
such interventions, as such services were not considered separately, as
were physical, occupational and speech-language pathology services,
when the PDPM was being developed. That being said, we would note that
Medicare Part A originally paid for institutional care in various
provider settings, including SNF, on a reasonable cost basis, but now
makes payment using PPS methodologies, such as the SNF PPS. To the
extent that one of these SNFs furnished recreational therapy to its
inpatients under the previous, reasonable cost methodology, the cost of
the services would have been included in the base payments when SNF PPS
payment rates were derived. Under the PPS methodology, Part A makes a
comprehensive payment for the bundled package of items and services
that the facility furnishes during the course of a Medicare-covered
stay. This package encompasses nearly all services that the beneficiary
receives during the course of the stay--including any medically
necessary recreational therapy--and payment for such services is
included within the facility's comprehensive SNF PPS payment for the
covered Part A stay itself. With regard to developing a demonstration
project focused on this particular service, we do not believe that
creating such a project would substantially improve the accuracy of the
SNF PPS payment rates. Moreover, in light of comments discussed above
on the impact of PDPM implementation on therapy provision more
generally, we believe that carving out recreational therapy as a
separate discipline will not have a significant impact on access to
recreational therapy services for SNF patients.
Comment: One commenter raised concerns regarding the perceived lack
of adequate financial reporting and cost report auditing. This
commenter stated that CMS does not do enough to ensure that the funds
paid to providers under the SNF PPS are used appropriately for patient
care. Further, this commenter suggested that CMS impose penalties for
inaccurate, incomplete and fraudulent SNF ownership and cost data.
Finally, this commenter urged CMS to establish a medical-loss ratio for
SNFs to ensure that Medicare funds are used for patient care.
Response: We appreciate the commenter raising these concerns. With
regard to the need for regulation and penalties associated with
incomplete and fraudulent ownership and cost data, we would contend
that there are consequences for providers when they are found to have
incomplete cost reports or if the data they are reporting to CMS is
found to be fraudulent. That being said, we focus on patient outcomes
as the basis for assessing if the care provided to SNF patients is
appropriate, as well as the Medicare funding used as the basis for that
care. Ultimately, it is the responsibility of each SNF provider to
ensure that the care provided to their patients, using the funds
provided under the SNF PPS, is appropriate and sufficient to meet the
unique needs, goals and characteristics of each patient. We encourage
interested parties to provide future recommendations and suggestions
for how to use SNF cost reports and other data sources to improve CMS
auditing and enforcement activities.

IV. SNF PPS Rate Setting Methodology and FY 2024 Update

A. 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, 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 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.

B. SNF Market Basket Update

1. SNF Market Basket
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket 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 that encompasses the
most commonly used

[[Page 53205]]

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 rebased and revised the SNF market basket,
which included updating the base year from FY 2010 to 2014. In the SNF
PPS final rule for FY 2022 (86 FR 42444 through 42463), we rebased and
revised the SNF market basket, which included updating the base year
from 2014 to 2018.
The SNF market basket is used to compute the market basket
percentage increase 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 increase is adjusted by a forecast error
adjustment, 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 IV.B.4. of this final rule.
As outlined in the proposed rule, we proposed a FY 2024 SNF market
basket percentage increase of 2.7 percent based on IHS Global Inc.'s
(IGI's) fourth quarter 2022 forecast of the 2018-based SNF market
basket (before application of the forecast error adjustment and
productivity adjustment). We also proposed that if more recent data
subsequently became available (for example, a more recent estimate of
the market basket and/or the productivity adjustment), we would use
such data, if appropriate, to determine the FY 2024 SNF market basket
percentage increase, labor-related share relative importance, forecast
error adjustment, or productivity adjustment in the SNF PPS final rule.
Since the proposed rule, we have updated the FY 2024 market basket
percentage increase based on IGI's second quarter 2023 forecast with
historical data through the first quarter of 2023. The FY 2024 growth
rate of the 2018-based SNF market basket is estimated to be 3.0
percent.
2. Market Basket Update Factor for FY 2024
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage increase as the percentage change in the SNF market basket
from the midpoint of the previous FY to the midpoint of the current FY.
For the Federal rates outlined in this final rule, we use the
percentage change in the SNF market basket to compute the update factor
for FY 2024. This factor is based on the FY 2024 percentage increase in
the 2018-based SNF market basket reflecting routine, ancillary, and
capital-related expenses. Sections 1888(e)(4)(E)(ii)(IV) and
(e)(5)(B)(i) of the Act require that the update factor used to
establish the FY 2024 unadjusted Federal rates be at a level equal to
the SNF market basket percentage increase. Accordingly, we determined
the total growth from the average market basket level for the period of
October 1, 2022 through September 30, 2023 to the average market basket
level for the period of October 1, 2023 through September 30, 2024. As
outlined in the proposed rule, we proposed a FY 2024 SNF market basket
percentage increase of 2.7 percent. For this final rule, based on IGI's
second quarter 2023 forecast with historical data through the first
quarter of 2023, the FY 2024 growth rate of the 2018-based SNF market
basket is estimated to be 3.0 percent.
As further explained in section IV.B.3. of this final rule, as
applicable, we adjust the percentage increase by the forecast error
adjustment 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 increase in the market basket exceeds
a 0.5 percentage point threshold in absolute terms. Additionally,
section 1888(e)(5)(B)(ii) of the Act requires us to reduce the market
basket percentage increase by the productivity adjustment (the 10-year
moving average of changes in annual economy-wide private nonfarm
business total factor productivity (TFP) for the period ending
September 30, 2024) which is estimated to be 0.2 percentage point, as
described in section IV.B.4. of this final rule.
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
productivity adjustment) and section 1888(e)(5)(B)(iii) of the Act (the
market basket increase). 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 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.
3. 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), Sec. 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 2022 (the most recently available FY for which there is
final data), the forecasted or estimated increase in the SNF market
basket was 2.7 percent, and the actual increase for FY 2022 is 6.3
percent, resulting in the actual increase being 3.6 percentage points
higher than the estimated increase. Accordingly, as the difference
between the estimated and actual amount of change in the market basket
exceeds the 0.5 percentage point threshold, under the policy previously
described (comparing the forecasted and actual market basket percentage
increase), the FY 2024 market basket percentage increase of 3.0 percent
would be adjusted upward to account for the forecast error adjustment
of 3.6 percentage points, resulting in a SNF market basket percentage
increase of 6.6 percent, which is then reduced by the productivity
adjustment of 0.2 percentage point, discussed in section IV.B.4. of
this final rule. This results in a SNF market basket update for FY 2024
of 6.4 percent.

[[Page 53206]]

Table 2 shows the forecasted and actual market basket increases for
FY 2022.

Table 2--Difference Between the Actual and Forecasted Market Basket Increases for FY 2022
----------------------------------------------------------------------------------------------------------------
Forecasted FY 2022 Actual FY 2022
Index increase * increase ** FY 2022 difference
----------------------------------------------------------------------------------------------------------------
SNF........................................ 2.7 6.3 3.6
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2021 IGI forecast (2018-based SNF market basket).
** Based on the second quarter 2023 IGI forecast (2018-based SNF market basket).

4. 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 productivity 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 productivity adjustment to be equal to the
10-year moving average of changes in annual economy-wide, private
nonfarm business multifactor productivity (MFP) (as projected by the
Secretary for the 10-year period ending with the applicable FY, year,
cost-reporting period, or other annual period).
The U.S. Department of Labor's Bureau of Labor Statistics (BLS)
publishes the official measure of productivity for the U.S. We note
that previously the productivity measure referenced at section
1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private
nonfarm business multifactor productivity. Beginning with the November
18, 2021 release of productivity data, BLS replaced the term MFP with
TFP. BLS noted that this is a change in terminology only and will not
affect the data or methodology. As a result of the BLS name change, the
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the
Act is now published by BLS as private nonfarm business total factor
productivity. We refer readers to the BLS website at <a href="http://www.bls.gov">www.bls.gov</a> for
the BLS historical published TFP data. A complete description of the
TFP projection methodology is available on our website at <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch">https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch</a>. In addition, in
the FY 2022 SNF final rule (86 FR 42429) we noted that, effective with
FY 2022 and forward, we changed the name of this adjustment to refer to
it as the ``productivity adjustment,'' rather than the ``MFP
adjustment.''
Per section 1888(e)(5)(A) of the Act, the Secretary shall establish
a SNF market basket 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. Section 1888(e)(5)(B)(ii) of the Act
further states that the reduction of the market basket percentage by
the productivity 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 productivity
adjustment to the market basket percentage calculated under section
1888(e)(5)(B)(i) of the Act results in a productivity-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.
Based on the data available for the FY 2024 SNF PPS proposed rule,
the proposed productivity adjustment (the 10-year moving average of
changes in annual economy-wide private nonfarm business TFP for the
period ending September 30, 2024) was projected to be 0.2 percentage
point. We note that, as we typically do, we have updated our data
between the FY 2024 SNF PPS proposed rule and this final rule. Based on
IGI's second quarter 2023 forecast, the estimated 10-year moving
average of changes in annual economy-wide private nonfarm business TFP
for the period ending September 30, 2024 is estimated to be 0.2
percentage point.
Consistent with section 1888(e)(5)(B)(i) of the Act and Sec.
413.337(d)(2), and as discussed previously in section IV.B.1. of this
final rule, the market basket percentage for FY 2024 for the SNF PPS is
based on IGI's second quarter 2023 forecast of the SNF market basket
percentage increase, which is estimated to be 3.0 percent. This market
basket update is then increased by 3.6 percentage points, due to
application of the forecast error adjustment discussed earlier in
section IV.B.3. of this final rule. Finally, as discussed earlier in
section IV.B.4. of this final rule, we are applying a 0.2 percentage
point productivity adjustment to the FY 2024 SNF market basket
percentage increase. Therefore, the resulting productivity-adjusted FY
2024 SNF market basket update is equal to 6.4 percent, which reflects a
market basket percentage increase of 3.0 percent, plus the 3.6
percentage points forecast error adjustment, and less the 0.2
percentage point productivity adjustment. Thus, we apply a net SNF
market basket update factor of 6.4 percent in our determination of the
FY 2024 SNF PPS unadjusted Federal per diem rates.
A discussion of the public comments received on the FY 2024 SNF
market basket percentage increase to the SNF PPS rates, along with our
responses, can be found below.
Comment: One commenter suggested CMS consider allowing SNFs to use
different labor percentages for geographic areas with wage indexes less
than or greater than 1, similar to IPPS hospitals. They believe this
methodological change would allow for the wage index adjustment to
match more closely with the provider's costs.
Response: We continue to believe it is technically appropriate and
consistent with our interpretation of the statute to use the market
basket cost weights, reflecting the national average of SNF costs, to
determine the labor-related share applicable for all SNFs. In addition,
our analysis of the 2018 SNF Medicare cost report data used to
determine the 2018-based SNF market

[[Page 53207]]

basket cost weights, shows that the compensation cost weights for urban
(accounting for about 70 percent of freestanding SNF costs) and rural
SNFs, in aggregate, are both 60 percent--consistent with the 2018-based
SNF market basket compensation cost weight.
Comment: One commenter requested that CMS work with interested
parties to explore updates to the SNF market basket methodology,
potentially with new proxies or alternative data. One commenter
identified a few detailed methodological issues for CMS to consider
regarding the SNF market basket.
Response: We welcome commenters' input on the SNF market basket and
appreciate the suggestions provided. We will consider them for future
rulemaking when we propose to rebase and revise the SNF market basket.
Comment: One commenter appreciated the forecast error adjustments
during the last two rulemaking cycles but stated that the current
methodology may not capture impacts such as the entirety of the cost
changes during times of high healthcare resource utilization (for
example, during COVID-19 pandemic). The commenter further noted that
applying the forecast error adjustment to future payments does not
account for inflation that can alter the time-value of money. The
commenter requested that CMS consider ways to evaluate the impact of
addressing these potential shortcomings of the forecast error
adjustment. One commenter recommended that CMS strongly consider
including additional labor and cost data into the market basket updates
prospectively, rather than retroactively, to adjust for the market
basket projections' inability to accurately project rate increases
during high inflation periods. One commenter (MedPAC) noted that CMS is
not required by statute to make automatic forecast error corrections
and in this instance the forecast error correction results in making a
larger payment increase in addition to the statutory increases for FY
2024.
Response: The SNF market basket is a price index that measures the
change in price, over time, of the same mix of goods and services
purchased in the base period. As noted by the commenter, due to the
availability of data and rates being set by CMS on a prospective basis,
there is a 2-year lag between the forecast error adjustment and its
application to the payment rate. For example, as stated in section
IV.B.3. of this final rule, the FY 2024 SNF PPS payment rate update
includes an adjustment for the FY 2022 market basket forecast error.
Subsequent to the initial cumulative adjustment implemented in FY
2004, the forecast error adjustment has been based on the forecast
error from the most recently available FY for which there is final
data, and the difference between the forecasted and actual change in
the market basket is applied when the difference exceeds a specified
threshold. The forecast error adjustment (when it exceeds the threshold
of 0.5 percentage point (in absolute terms)) is intended to adjust for
when historical price changes differ substantially from the forecasted
price changes in order to appropriately pay providers for services
provided, rather than typical minor variances that are inherent in
statistical measurements. The forecast error adjustment is specifically
defined to only account for errors in price forecasts and would
appropriately not take into account differences in non-price factors
affecting costs.
Therefore, we disagree with the commenter that the CMS forecast
error adjustment is inadequate or that it should reflect other factors
(such as changes in utilization due to case mix or other non-price
factors or the time value of money). We use the most complete and
available data for purposes of determining the market basket forecast,
forecast error adjustment, and productivity adjustment as well as the
most recent claims data when determining the SNF PPS payment rates. We
do not forecast changes in the case-mix index.
Comment: Several commenters supported the net payment update of 3.7
percent reflecting a 2.7 percent market basket update. Numerous
commenters also recommended that CMS use the most recently available
data when determining the market basket update for the final rule.
Several commenters stated that the proposed 3.7 percent net payment
update is inadequate when considering the financial hardship and
increased costs many health care providers are facing as a result of
the PHE and labor shortages. They recommended that CMS use data that
better reflects the input price inflation that SNFs have experienced
and are projected to experience in 2024. They believe CMS should
reassess market basket data and how it weighs wage and benefits data,
as they do not believe the updates to the market basket data reasonably
reflect the reality of these associated costs. Similarly, one commenter
stated that they believe the 2018-based SNF market basket alone no
longer serves as an appropriate price proxy due to the growing
expenditures in labor, which has driven a recent disproportionate
increase in the labor share portion of the market basket. They
recommended that CMS use more recent and supplemental labor cost data
to accurately reflect a recent increase of the market basket's labor.
One commenter cited a report stating that the average hourly
nursing wage increased over 17 percent from 2019 to 2022 as reported on
the Medicare cost reports. They stated that the Medicare market basket
update had only increased per-stay payments by less than 6 percent
during that same time period. The commenter acknowledged that CMS will
refresh the market basket update in the final rule with more recent
data but expressed concern that the revised update will still be
insufficient relative to input cost inflation as illustrated by the
discrepancy between input costs and the market basket update in FY
2022.
Several commenters requested CMS exercise its existing authority or
conditional funding opportunities to revise the proposed update to
annual rates (either though an updated market basket or other allowable
means) to account for the rapid rise of costs.
Response: We recognize the various comments on the proposed net
payment update of 3.7 percent. Section 1888(e)(5)(A) of the Act states
the Secretary shall establish a skilled nursing facility market basket
index that reflects changes over time in the prices of an appropriate
mix of goods and services included in covered skilled nursing facility
services. The 2018-based SNF market basket is a fixed-weight,
Laspeyres-type price index that measures the change in price, over
time, of the same mix of goods and services purchased in the base
period. Any changes in the quantity or mix of goods and services (that
is, intensity) purchased over time relative to a base period that would
determine change in costs are not measured. For the compensation cost
weight in the 2018-based SNF market basket (which includes salaried and
contract labor employees), we use the Employment Cost Indexes (ECIs)
for wages and salaries and benefits for private industry workers in
nursing care facilities to proxy the price increase of SNF labor. The
ECI (published by the Bureau of Labor Statistics, or BLS) measures the
change in the hourly labor cost to employers, independent of the
influence of employment shifts among occupations and industry
categories. Therefore, we believe the ECI for private industry workers
in nursing care facilities, which only reflects the price

[[Page 53208]]

change associated with the labor used to provide SNF care and
appropriately does not reflect other factors that might affect labor
costs, is an appropriate measure to use in the SNF market basket.
We disagree with the commenter's statement that the 2018-based SNF
market basket is not adequately reflecting growing expenditures in
labor, which has driven a recent disproportionate increase in the labor
share portion of the market basket. Our preliminary analysis of the
2021 Medicare cost report data shows the compensation cost weight for
freestanding SNFs is 59.9 percent--relatively unchanged from 2018 with
60.2 percent as increases in the contract labor cost weight were
accompanied by decreasing wages and salaries and benefit cost weights.
We will continue to analyze more recent freestanding skilled nursing
Medicare cost report data to assess whether the SNF market basket
should be rebased and revised. Any changes to the SNF market basket
will be proposed in future rulemaking.
While the forecasted productivity-adjusted market basket update was
2.4 percent in FY 2020, 2.2 percent in FY 2021, and 2.0 percent in FY
2022, the increases in FY 2023 and FY 2024 reflect additional increases
from forecast errors over this period (CMS provided a forecast error
adjustment for FY 2021 of 1.5 percentage points in the FY 2023 SNF net
payment update and a forecast error adjustment for FY 2022 of 3.6
percentage points, which is being applied to the FY 2024 SNF net
payment update in this final rule).
While the average hourly wage for nursing from the reported SNF
Medicare cost report data increased roughly 17 percent from 2019 to
2021 (the most complete data available), the hourly wages of nearly all
other medical occupational categories, which make up approximately 15
percent of wages and salaries, have not increased by nearly as much. We
found that the combined average wage for all other medical occupational
categories, weighted by each occupation's percentage of total Adjusted
Salaries as indicated on Worksheet S-3, Part V, Column 3 of the
Medicare cost report, increased by less than 1 percent over the same
time period. The compensation price proxy used in the SNF market basket
would reflect trends in all occupations combined, which would partly
explain why the ECI for wages and salaries for private industry workers
in nursing care facilities has not increased at the pace of nursing
wages alone.
As proposed, for this final rule, we are updating the SNF market
basket percentage increase to reflect more recent data. Based on IGI's
second quarter 2023 forecast with historical data through the first
quarter of 2023, we are finalizing a 2018-based SNF market basket
percentage increase of 3.0 percent which reflects a projected increase
in compensation prices of 3.4 percent. This is faster projected price
growth compared to the proposed FY 2024 market basket increase of 2.7
percent, which reflected a 3.0 percent compensation price growth. Both
of the final FY 2024 increases are faster than the 10-year historical
average price growth (2.6 percent for the 2018-based SNF market basket,
with compensation prices increasing 2.7 percent).
As noted previously, 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. 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. Section 1888(e)(5)(A) of the Act
does not provide the Secretary with the authority to apply a different
update factor to SNF PPS payment rates for FY 2024. Additionally,
MedPAC annually conducts an analysis of payment adequacy for SNF
providers. In its March 2023 Report to Congress (<a href="https://www.medpac.gov/document/march-2023-report-to-the-congress-medicare-payment-policy/">https://www.medpac.gov/document/march-2023-report-to-the-congress-medicare-payment-policy/</a>) MedPAC noted the combination of Federal relief
policies and the implementation of the new case-mix system resulted in
overall improved financial performance for SNFs and recommended a 3
percent reduction to the SNF base payment rates.
Comment: Given that CMS is required by statute to implement a
productivity adjustment to the market basket update, several commenters
urged CMS to closely monitor the impact of such productivity
adjustments and requested that the agency work with Congress to
permanently eliminate or offset this reduction to SNF payments.
Further, they requested that CMS use its exceptions authority under
section 1888(e)(3)(A) of the Act to remove the productivity adjustment
for any fiscal year that was covered under PHE determination (that is,
2020 (0.4 percent), 2021 (0.0 percent), 2022 (0.7 percent), and 2023
(0.3 percent)) from the calculation of the market basket for FY 2024
and any year thereafter.
Response: Section 1888(e)(5)(B)(ii) of the Act requires the
application of the productivity adjustment described in section
1886(b)(3)(xi)(II) of the Act to the SNF PPS market basket increase
factor. As required by statute, the FY 2024 productivity adjustment is
derived based on the 10-year moving average growth in economy-wide
productivity for the period ending in FY 2024. We recognize the
concerns of the commenters regarding the appropriateness of the
productivity adjustment; however, we are required pursuant to section
1888(e)(5)(B)(ii) of the Act to apply the specific productivity
adjustment described here.
Comment: MedPAC commented that while they understand that CMS is
required to implement the statutory payment update, the combination of
Federal relief policies and the implementation of the new case-mix
system resulted in overall improved financial performance for SNFs.
Thus, they recommended a 3 percent reduction to the SNF base payment
rates.
Response: We thank the commenter for their recommendation. However,
we are required to update SNF PPS payments by the market basket
percentage increase, as directed by section 1888(e)(4)(E)(ii)(IV) of
the Act. This market basket percentage increase 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.
Comment: While many commenters were appreciative of the forecast
error adjustment, one commenter noted that the application of the
forecast error correction results in making a larger payment increase
in addition to the statutory increase for FY 2024, even though the
aggregate Medicare margin for SNFs is already high.
Response: As most recently discussed in the FY 2023 SNF PPS final
rule (87 FR 47502), forecast error adjustments for the SNF market
basket were introduced in the FY 2004 SNF PPS final rule (68 FR 46035),
with the intended goal ``to pay the appropriate amount, to the correct
provider, for the proper service, at the right time''. We note that
since implementation, forecast errors have generally been relatively
small and clustered near zero and that for FY 2008 and subsequent
years, we increased the threshold at which adjustments are triggered
from 0.25 to 0.5 percentage

[[Page 53209]]

point. Our intent in raising the threshold was to distinguish typical
statistical variances from more major unanticipated impacts and
unforeseen disruptions of the economy (such as the recent PHE), or
unexpected inflationary patterns (either at lower or higher than
anticipated rates).
Comment: One commenter suggested that the forecast error adjustment
be adopted and utilized across every CMS payment program.
Response: We appreciate the commenter's suggestion and will share
this recommendation with our colleagues in other settings.
5. Unadjusted Federal Per Diem Rates for FY 2024
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.1. of that final rule (83 FR 39189), 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
existed under the previous RUG-IV model. We proposed to use the SNF
market basket, adjusted as described previously in sections IV.B.1.
through IV.B.4. of this final rule, to adjust each per diem component
of the Federal rates forward to reflect the change in the average
prices for FY 2024 from the average prices for FY 2023. We also
proposed to further adjust the rates by a wage index budget neutrality
factor, described in section IV.D. of this final rule.
Further, in the past, we used the revised Office of Management and
Budget (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 and final rules,
we adopted the revised OMB delineations identified in OMB Bulletin No.
18-04 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>) to identify a facility's urban or rural status
effective beginning with FY 2021.
Tables 3 and 4 reflect the updated unadjusted Federal rates for FY
2024, prior to adjustment for case-mix.

Table 3--FY 2024 Unadjusted Federal Rate Per Diem--URBAN
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component PT OT SLP Nursing NTA Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $70.27 $65.41 $26.23 $122.48 $92.41 $109.69
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 4--FY 2024 Unadjusted Federal Rate Per Diem--RURAL
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component PT OT SLP Nursing NTA Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $80.10 $73.56 $33.05 $117.03 $88.29 $111.72
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. 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
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.
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 V.A. 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 <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html</a>.
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 2024 payment rates set forth in this final
rule reflect the use of the PDPM case-mix classification system from
October 1, 2023, through September 30, 2024. The case-mix adjusted PDPM
payment rates for FY 2024 are listed separately for urban and rural
SNFs, in Tables 5 and 6 with corresponding case-mix values.
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

[[Page 53210]]

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
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 do not reflect adjustments which may be made to the
SNF PPS rates as a result of the SNF VBP Program, discussed in section
VII. 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 the FY 2021 SNF PPS final rule (85 FR 47594), we adopted
the revised OMB delineations identified in OMB Bulletin No. 18-04
(available at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>) to identify a facility's urban or rural status
effective beginning with FY 2021.
In the FY 2023 SNF PPS final rule (87 FR 47502), we finalized a
proposal to recalibrate the PDPM parity adjustment over 2 years
starting in FY 2023, which means that, for each of the PDPM case-mix
adjusted components, we lowered the PDPM parity adjustment factor from
46 percent to 42 percent in FY 2023 and we will further lower the PDPM
parity adjustment factor from 42 percent to 38 percent in FY 2024.
Following this methodology, which is further described in the FY 2023
SNF PPS final rule (87 FR 47525 through 47534), Tables 5 and 6
incorporate the second phase of the PDPM parity adjustment
recalibration.

Table 5--PDPM Case-Mix Adjusted Federal Rates and Associated Indexes--URBAN (Including the Parity Adjustment Recalibration)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Nursing Nursing
PDPM group PT CMI PT rate OT CMI OT rate SLP CMI SLP rate CMG CMI rate NTA CMI NTA rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
A.............................. 1.45 $101.89 1.41 $92.23 0.64 $16.79 ES3 3.84 $470.32 3.06 $282.77
B.............................. 1.61 113.13 1.54 100.73 1.72 45.12 ES2 2.90 355.19 2.39 220.86
C.............................. 1.78 125.08 1.60 104.66 2.52 66.10 ES1 2.77 339.27 1.74 160.79
D.............................. 1.81 127.19 1.45 94.84 1.38 36.20 HDE2 2.27 278.03 1.26 116.44
E.............................. 1.34 94.16 1.33 87.00 2.21 57.97 HDE1 1.88 230.26 0.91 84.09
F.............................. 1.52 106.81 1.51 98.77 2.82 73.97 HBC2 2.12 259.66 0.68 62.84
G.............................. 1.58 111.03 1.55 101.39 1.93 50.62 HBC1 1.76 215.56 ......... .........
H.............................. 1.10 77.30 1.09 71.30 2.7 70.82 LDE2 1.97 241.29 ......... .........
I.............................. 1.07 75.19 1.12 73.26 3.34 87.61 LDE1 1.64 200.87 ......... .........
J.............................. 1.34 94.16 1.37 89.61 2.83 74.23 LBC2 1.63 199.64 ......... .........
K.............................. 1.44 101.19 1.46 95.50 3.5 91.81 LBC1 1.35 165.35 ......... .........
L.............................. 1.03 72.38 1.05 68.68 3.98 104.40 CDE2 1.77 216.79 ......... .........
M.............................. 1.20 84.32 1.23 80.45 ......... ......... CDE1 1.53 187.39 ......... .........
N.............................. 1.40 98.38 1.42 92.88 ......... ......... CBC2 1.47 180.05 ......... .........
O.............................. 1.47 103.30 1.47 96.15 ......... ......... CA2 1.03 126.15 ......... .........
P.............................. 1.02 71.68 1.03 67.37 ......... ......... CBC1 1.27 155.55 ......... .........
Q.............................. ......... ......... ......... ......... ......... ......... CA1 0.89 109.01 ......... .........
R.............................. ......... ......... ......... ......... ......... ......... BAB2 0.98 120.03 ......... .........
S.............................. ......... ......... ......... ......... ......... ......... BAB1 0.94 115.13 ......... .........
T.............................. ......... ......... ......... ......... ......... ......... PDE2 1.48 181.27 ......... .........
U.............................. ......... ......... ......... ......... ......... ......... PDE1 1.39 170.25 ......... .........
V.............................. ......... ......... ......... ......... ......... ......... PBC2 1.15 140.85 ......... .........
W.............................. ......... ......... ......... ......... ......... ......... PA2 0.67 82.06 ......... .........
X.............................. ......... ......... ......... ......... ......... ......... PBC1 1.07 131.05 ......... .........
Y.............................. ......... ......... ......... ......... ......... ......... PA1 0.62 75.94 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 53211]]

Table 6--PDPM Case-Mix Adjusted Federal Rates and Associated Indexes--RURAL (Including the Parity Adjustment Recalibration)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Nursing Nursing
PDPM group PT CMI PT rate OT CMI OT rate SLP CMI SLP rate CMG CMI rate NTA CMI NTA rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
A.............................. 1.45 $116.15 1.41 $103.72 0.64 $21.15 ES3 3.84 $449.40 3.06 $270.17
B.............................. 1.61 128.96 1.54 113.28 1.72 56.85 ES2 2.90 339.39 2.39 211.01
C.............................. 1.78 142.58 1.60 117.70 2.52 83.29 ES1 2.77 324.17 1.74 153.62
D.............................. 1.81 144.98 1.45 106.66 1.38 45.61 HDE2 2.27 265.66 1.26 111.25
E.............................. 1.34 107.33 1.33 97.83 2.21 73.04 HDE1 1.88 220.02 0.91 80.34
F.............................. 1.52 121.75 1.51 111.08 2.82 93.20 HBC2 2.12 248.10 0.68 60.04
G.............................. 1.58 126.56 1.55 114.02 1.93 63.79 HBC1 1.76 205.97 ......... .........
H.............................. 1.10 88.11 1.09 80.18 2.7 89.24 LDE2 1.97 230.55 ......... .........
I.............................. 1.07 85.71 1.12 82.39 3.34 110.39 LDE1 1.64 191.93 ......... .........
J.............................. 1.34 107.33 1.37 100.78 2.83 93.53 LBC2 1.63 190.76 ......... .........
K.............................. 1.44 115.34 1.46 107.40 3.5 115.68 LBC1 1.35 157.99 ......... .........
L.............................. 1.03 82.50 1.05 77.24 3.98 131.54 CDE2 1.77 207.14 ......... .........
M.............................. 1.20 96.12 1.23 90.48 ......... ......... CDE1 1.53 179.06 ......... .........
N.............................. 1.40 112.14 1.42 104.46 ......... ......... CBC2 1.47 172.03 ......... .........
O.............................. 1.47 117.75 1.47 108.13 ......... ......... CA2 1.03 120.54 ......... .........
P.............................. 1.02 81.70 1.03 75.77 ......... ......... CBC1 1.27 148.63 ......... .........
Q.............................. ......... ......... ......... ......... ......... ......... CA1 0.89 104.16 ......... .........
R.............................. ......... ......... ......... ......... ......... ......... BAB2 0.98 114.69 ......... .........
S.............................. ......... ......... ......... ......... ......... ......... BAB1 0.94 110.01 ......... .........
T.............................. ......... ......... ......... ......... ......... ......... PDE2 1.48 173.20 ......... .........
U.............................. ......... ......... ......... ......... ......... ......... PDE1 1.39 162.67 ......... .........
V.............................. ......... ......... ......... ......... ......... ......... PBC2 1.15 134.58 ......... .........
W.............................. ......... ......... ......... ......... ......... ......... PA2 0.67 78.41 ......... .........
X.............................. ......... ......... ......... ......... ......... ......... PBC1 1.07 125.22 ......... .........
Y.............................. ......... ......... ......... ......... ......... ......... PA1 0.62 72.56 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

Commenters submitted the following comments related to the proposed
Federal per diem rates for FY 2024. A discussion of these comments,
along with our responses, appears below.
Comment: One commenter stated that the case-mix adjusted rates for
PT, OT, SLP, and nursing categories are higher in urban areas than in
rural areas, which exacerbate inequalities between rural and urban
SNFs.
Response: We disagree with the commenter's statement that the case-
mix adjusted rates for the PT, OT and SLP components are higher in
urban than rural areas as shown in Tables 5 and 6. As most recently
noted in the FY 2023 SNF PPS final rule (87 FR 47502), the Federal per
diem rates were established separately for urban and rural areas using
allowable costs from FY 1995 cost reports, and therefore, account for
and reflect the relative costs differences between urban and rural
facilities. We note that the SNF PPS payment rates are updated annually
by an increase factor that reflects changes over time in the prices of
an appropriate mix of goods and services included in the covered SNF
services and a portion of these rates are further adjusted by a wage
index to reflect geographic variations in wages. We will continue to
monitor our SNF payment policies to ensure they reflect as accurately
as possible the current costs of care in the SNF setting.
Comment: One commenter was appreciative of the increase in payment
for FY 2024 and encouraged CMS to maximize support for rural SNFs.
Response: We thank the commenter for their support of the payment
rate update for FY 2024 and note that rural SNFs are expected to
experience, on average, a 3.3 percent increase in payments compared
with FY 2023.
Comment: Commenters encouraged CMS to continue to monitor the
impact of the PDPM on beneficiaries' access to appropriate SNF
services, including therapy services to address any emerging problems
affecting SNF residents.
Response: We thank the commenter for their suggestion. We will
continue to monitor the impact of the PDPM implementation on patient
outcomes and other metrics to identify any adverse trends accompanying
the revisions to the PPS.
Comment: Commenters generally expressed appreciation that the
parity adjustment was phased in over 2 years but expressed concern that
there would be a reduction to the SNF payment rates for FY 2024 due to
this adjustment. A few commenters requested that the PDPM parity
adjustment be delayed, reduced, cancelled or be phased in over an
additional 2 years. One commenter indicated that they support
implementing the remainder of the recalibrated parity adjustment in FY
2024 to prevent continued SNF payments in excess of the intended budget
neutral implementation of the PDPM.
Response: We thank the commenters for their support of the phase in
of the parity adjustment. We believe the 2-year phase-in was sufficient
to mitigate adverse payment impacts while also ensuring that payment
rates for all SNFs are set accurately and appropriately. As such, we do
not believe it would be appropriate to expand the phase-in period
beyond than what was finalized in the FY 2023 SNF PPS final rule. We
refer readers to the FY 2023 SNF PPS final rule (87 FR 47502), for a
full discussion of the rationale related to the implementation of this
policy.

D. 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. We will continue this
practice for FY 2024, 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

[[Page 53212]]

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 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 2024, the updated wage data are for hospital cost reporting periods
beginning on or after October 1, 2019 and before October 1, 2020 (FY
2020 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) gave the Secretary the discretion to
establish a geographic reclassification procedure 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. 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 the 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. Adopting such an approach would require a significant
commitment of resources by CMS and the Medicare Administrative
Contractors (MACs), 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. While we continue to believe that the
development of such an audit process could improve SNF cost reports,
which is determined to be adequately accurate for cost development
purposes, in such a manner as to permit us to establish a SNF-specific
wage index, we do not believe this undertaking is feasible.
In addition, we will 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 2022 SNF PPS
wage index. For rural geographic areas that do not have hospitals and,
therefore, lack hospital wage data on which to base an area wage
adjustment, we will continue using the average wage index from all
contiguous Core-Based Statistical Areas (CBSAs) as a reasonable proxy.
For FY 2024, there are no rural geographic areas that do not have
hospitals, and thus, this methodology will not be applied. For rural
Puerto Rico, we will not apply this methodology due to the distinct
economic circumstances there; due to the close proximity of almost all
of Puerto Rico's various urban and non-urban areas, this methodology
will produce a wage index for rural Puerto Rico that is higher than
that in half of its urban areas. Instead, we will continue using the
most recent wage index previously available for that area. For urban
areas without specific hospital wage index data, we will continue using
the average wage indexes of all urban areas within the State to serve
as a reasonable proxy for the wage index of that urban CBSA. For FY
2024, the only urban area without wage index data available is CBSA
25980, Hinesville-Fort Stewart, GA.
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 and were
adopted under the SNF PPS in the FY 2017 SNF PPS final rule (81 FR
51983, August 5, 2016). In addition, on August 15, 2017, OMB issued
Bulletin No. 17-01 which announced a new urban CBSA, Twin Falls, Idaho
(CBSA 46300) which was adopted in the SNF PPS final rule for FY 2019
(83 FR 39173, August 8, 2018).
As discussed in the FY 2021 SNF PPS final rule (85 FR 47594), we
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>) beginning October 1, 2020, including a 1-year
transition for FY 2021 under which we applied 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). The updated OMB delineations more
accurately reflect the contemporary urban and rural nature of areas
across the country, and the use of such delineations allows us to
determine more accurately the appropriate wage index and rate tables to
apply under the SNF PPS.
In the FY 2023 SNF PPS final rule (87 FR 47521 through 47525), we
finalized a policy to apply a permanent 5 percent cap on any decreases
to a provider's wage index from its wage index in the prior year,
regardless of the circumstances causing the decline. Additionally, we
finalized a policy that a new SNF would be paid the wage index for the
area in which it is geographically located for its first full or
partial FY with no cap applied because a new SNF would not have a wage
index in the prior FY. We amended the SNF PPS regulations at 42 CFR
413.337(b)(4)(ii) to reflect this permanent cap on wage index
decreases. A full discussion of the adoption of this policy is found in
the FY 2023 SNF PPS final rule.
As we previously stated in the FY 2008 SNF PPS proposed and final
rules (72 FR 25538 through 25539, and 72 FR

[[Page 53213]]

43423), 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. OMB issued further revised
CBSA delineations in OMB Bulletin No. 20-01, on March 6, 2020
(available on the web at <a href="https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf</a>). However, we determined that the changes in
OMB Bulletin No. 20-01 do not impact the CBSA-based labor market area
delineations adopted in FY 2021. Therefore, we did not propose to adopt
the revised OMB delineations identified in OMB Bulletin No. 20 01 for
FY 2022 or 2023, and for these reasons we are likewise not making such
a requirement for FY 2024. The wage index applicable to FY 2024 is set
forth in Tables A and B available on the CMS website at <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html</a>.
Once calculated, we will apply the wage index adjustment to the
labor-related portion of the Federal rate. Each year, we calculate a
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 2022 (86 FR 42437), we
finalized a proposal to revise the labor-related share to reflect the
relative importance of the 2018-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. The methodology for calculating the labor-
related portion beginning in FY 2022 is discussed in detail in the FY
2022 SNF PPS final rule (86 FR 42461 through 42463).
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 2024. 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 2024 than the base year weights
from the SNF market basket. We calculate the labor-related relative
importance for FY 2024 in four steps. First, we compute the FY 2024
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 2024 price index level for that cost category by the
total market basket price index level. Third, we determine the FY 2024
relative importance for each cost category by multiplying this ratio by
the base year (2018) weight. Finally, we add the FY 2024 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 2024
labor-related relative importance.
For the proposed rule, the labor-related share for FY 2024 was
based on IGI's fourth quarter 2022 forecast of the 2018-based SNF
market basket with historical data through the third quarter of 2022.
As outlined in the proposed rule, we noted that if more recent data
became available (for example, a more recent estimate of the labor-
related share relative importance) we would use such data, if
appropriate, for the SNF final rule. For this final rule, we base the
labor-related share for FY 2024 on IGI's second quarter 2023 forecast,
with historical data through the first quarter of 2023 of the 2018-
based SNF market basket.
Table 7 summarizes the labor-related share for FY 2024, based on
IGI's second quarter 2023 forecast of the 2018-based SNF market basket,
compared to the labor-related share that was used for the FY 2023 SNF
PPS final rule.

Table 7--Labor-Related Share, FY 2023 and FY 2024
----------------------------------------------------------------------------------------------------------------
Relative importance, Relative importance,
labor-related share, FY labor-related share, FY
2023 22:2 forecast \1\ 2024 23:2 forecast \2\
----------------------------------------------------------------------------------------------------------------
Wages and salaries............................................ 51.9 52.5
Employee benefits............................................. 9.5 9.3
Professional fees: Labor-related.............................. 3.5 3.4
Administrative & facilities support services.................. 0.6 0.6
Installation, maintenance & repair services................... 0.4 0.4
All other: Labor-related services............................. 2.0 2.0
Capital-related (.391)........................................ 2.9 2.9
-------------------------------------------------
Total..................................................... 70.8 71.1
----------------------------------------------------------------------------------------------------------------
\1\ Published in the Federal Register; Based on the second quarter 2022 IHS Global Inc. forecast of the 2018-
based SNF market basket.
\2\ Based on the second quarter 2023 IHS Global Inc. forecast of the 2018-based SNF market basket.

To calculate the labor portion of the case-mix adjusted per diem
rate, we will 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 2024
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 interested parties in understanding the effect of
the wage

[[Page 53214]]

index on the calculation of the SNF per diem rate, we have included a
hypothetical rate calculation in Table 9.
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 2024 (Federal rates
effective October 1, 2023), we apply an adjustment to fulfill the
budget neutrality requirement. We meet this requirement by multiplying
each of the components of the unadjusted Federal rates by a budget
neutrality factor, equal to the ratio of the weighted average wage
adjustment factor for FY 2023 to the weighted average wage adjustment
factor for FY 2024. For this calculation, we will use the same FY 2022
claims utilization data for both the numerator and denominator of this
ratio. We define the wage adjustment factor used in this calculation as
the labor portion of the rate component multiplied by the wage index
plus the non-labor portion of the rate component. The finalized budget
neutrality factor for FY 2024 is 0.9997.
We note that if more recent data become available (for example,
revised wage data), we would use such data, as appropriate, to
determine the wage index budget neutrality factor in the SNF PPS final
rule.
We solicited public comment on the proposed SNF wage adjustment for
FY 2024. The following is a summary of the comments we received and our
responses.
Comment: One commenter did not support any increases in the labor-
related share as any facility that has a wage index less than 1.0 will
suffer financially from a rise in the labor-related share. They stated
that across the country, there is a growing disparity between the high-
wage and low-wage States.
Response: We appreciate the commenter's concern. However, each year
we calculate a labor-related share based on the relative importance of
labor-related cost categories, to account historical and projected
price changes between the base year and the payment year (FY 2024 in
this rule). 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. As shown in Table 7,
the slight increase in the labor-related share is due to an increase in
the wages and salaries relative importance cost weight, reflecting the
faster wage prices compared to other nonwage prices in the SNF market
basket. This increase is consistent with comments we have received
during this rulemaking about faster wage prices.
As discussed above, based on IGI's second quarter 2023 forecast
with historical data through the first quarter of 2023, we are
finalizing the FY 2024 labor-related share of 71.1 percent based on the
relative importance of each of the labor-related cost categories in the
2018-based SNF market basket.
Comment: Commenters stated support of the permanent 5-percent cap
on wage index decreases. One commenter encouraged CMS to implement
these caps in a non-budget neutral manner to stabilize provider
reimbursement and avoid further unexpected reductions for other
providers.
Response: We appreciate the commenters' support of the permanent
cap on wage index decreases. As for budget neutrality, we do not
believe that the permanent 5-percent cap policy for the SNF wage index
should be applied in a non-budget-neutral manner. The statute at
section 1888(e)(4)(G)(ii) of the Act requires that adjustments for
geographic variations in labor costs for a FY are made in a budget-
neutral. We refer readers to the FY 2023 SNF PPS final rule (87 FR
47521 through 47523) for a detailed discussion and for responses to
these and other comments relating to the wage index cap policy.
Comment: While commenters support the current wage index
methodology for FY 2024, including not requiring the commitment of
resources needed to do audits on cost reports at this time, others
encourage CMS to continue to reform the wage index policies (for
example, SNF-specific wage index utilizing SNF audited cost report and
nursing wage data).
Response: We appreciate the commenters' support of the proposed
wage index policies for FY 2024. In the absence of a SNF-specific wage
index, we believe the use of the pre-reclassified and pre-floor
hospital wage data (without the occupational mix adjustment) continue
to be an appropriate and reasonable proxy for the SNF PPS. For a
detailed discussion of the rationale for our current wage index
policies and for responses to these recurring comments, we refer
readers to the FY 2023 SNF PPS final rule (87 FR 47513 through 47516)
and the FY 2016 SNF PPS final rule (80 FR 46401 through 46402).
Comment: One commenter recommended that CMS should, as a matter of
policy, require that SNFs provide wages on parity with hospitals for
nursing staff. This commenter stated that, given that the SNF wage
index is based on hospital wages, CMS should require that SNFs pay the
same wages as the hospitals for nursing staff.
Response: We appreciate the commenter's suggestion. While we
continue to believe that the pre-reclassified and pre-floor hospital
wage index serves as an appropriate proxy for the SNF PPS, we do not
believe that it would be appropriate for us to require SNFs to pay a
certain amount to their staff. How a SNF chooses to reimburse their
staff is a private financial arrangement between the facility and its
staff, which means that we believe it would be inappropriate to
establish regulations that govern this matter since there is no
statutory authority present.
After consideration of public comments, we are finalizing our
proposal regarding the wage index adjustment for FY 2024.

E. 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 VIII. of this final rule for further discussion
of the updates we are finalizing for the SNF VBP Program.

F. Adjusted Rate Computation Example

Tables 8 through 10 provide examples generally illustrating payment
calculations during FY 2024 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 and
taking into account the second phase of the parity adjustment
recalibration discussed in section IV.C. of this final rule) to compute
the provider's case-mix adjusted per diem rate for FY 2024, based on
the patient's PDPM classification, as well as how the variable per diem
(VPD) adjustment

[[Page 53215]]

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 2024 SNF PPS wage
index that appears in Table A available on the CMS website at <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html</a>. 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 $21,717.98.

Table 8--PDPM Case-Mix Adjusted Rate Computation Example
----------------------------------------------------------------------------------------------------------------
Per diem rate calculation
-----------------------------------------------------------------------------------------------------------------
Component VPD adjustment
Component group Component rate factor VPD adj. rate
----------------------------------------------------------------------------------------------------------------
PT.............................................. N $98.38 1.00 $98.38
OT.............................................. N 92.88 1.00 92.88
SLP............................................. H 70.82 1.00 70.82
Nursing......................................... N 180.05 1.00 180.05
NTA............................................. C 160.79 3.00 482.37
Non-Case-Mix.................................... .............. 109.69 .............. 109.69
---------------------------------------------------------------
Total PDPM Case-Mix Adj. Per Diem........... .............. .............. .............. 1,034.19
----------------------------------------------------------------------------------------------------------------

Table 9--Wage Index Adjusted Rate Computation Example
--------------------------------------------------------------------------------------------------------------------------------------------------------
PDPM wage index adjustment calculation
---------------------------------------------------------------------------------------------------------------------------------------------------------
PDPM case-mix Total case mix
HIPPS code adjusted per Labor portion Wage index Wage index Non-labor and wage index
diem adjusted rate portion adj. rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
NHNC1............................................. $1,034.19 $735.31 0.9637 $708.62 $298.88 $1,007.50
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 10--Adjusted Rate Computation Example
----------------------------------------------------------------------------------------------------------------
Case mix and
NTA VPD PT/OT VPD wage Index
Day of stay adjustment adjustment adjusted per
factor factor diem rate
----------------------------------------------------------------------------------------------------------------
1............................................................... 3.0 1.0 $1,007.50
2............................................................... 3.0 1.0 1,007.50
3............................................................... 3.0 1.0 1,007.50
4............................................................... 1.0 1.0 694.22
5............................................................... 1.0 1.0 694.22
6............................................................... 1.0 1.0 694.22
7............................................................... 1.0 1.0 694.22
8............................................................... 1.0 1.0 694.22
9............................................................... 1.0 1.0 694.22
10.............................................................. 1.0 1.0 694.22
11.............................................................. 1.0 1.0 694.22
12.............................................................. 1.0 1.0 694.22
13.............................................................. 1.0 1.0 694.22
14.............................................................. 1.0 1.0 694.22
15.............................................................. 1.0 1.0 694.22
16.............................................................. 1.0 1.0 694.22
17.............................................................. 1.0 1.0 694.22
18.............................................................. 1.0 1.0 694.22
19.............................................................. 1.0 1.0 694.22
20.............................................................. 1.0 1.0 694.22
21.............................................................. 1.0 0.98 690.49
22.............................................................. 1.0 0.98 690.49
23.............................................................. 1.0 0.98 690.49
24.............................................................. 1.0 0.98 690.49
25.............................................................. 1.0 0.98 690.49
26.............................................................. 1.0 0.98 690.49
27.............................................................. 1.0 0.98 690.49
28.............................................................. 1.0 0.96 686.77
29.............................................................. 1.0 0.96 686.77

[[Page 53216]]

30.............................................................. 1.0 0.96 686.77
-----------------------------------------------
Total Payment............................................... .............. .............. 21,717.98
----------------------------------------------------------------------------------------------------------------

V. Additional Aspects of the SNF PPS

A. 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.C. of the FY 2024 SNF PPS proposed 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 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
correctly 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 <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html</a> (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
(<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html</a>), 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.

B. 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).
Effective with services furnished on or after January 1, 2024,
section 4121(a)(4) of the CAA, 2023 added marriage and family
therapists and mental health counselors to the list of practitioners at
section 1888(e)(2)(A)(ii) of the Act whose services are excluded from
the consolidated billing provision. We note that there are no rate
adjustments required to the per diem to offset these exclusions, as
payments for services made under section 1888(e)(2)(A)(ii) of the Act
are not specified under the requirement at section 1888(e)(4)(G)(iii)
of the Act as services for which the Secretary must ``provide for an
appropriate proportional reduction . . .equal to the aggregate increase
in payments attributable to the exclusion''. See section IV.D. of the
FY 2024 SNF PPS

[[Page 53217]]

proposed rule for a discussion of the proposed regulatory updates
implementing this change.
A detailed discussion of the legislative history of the
consolidated billing provision is available on the SNF PPS website at
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf</a>. In particular, section
103 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
of 1999 (BBRA 1999) (Pub. L. 106-113, enacted November 29, 1999)
amended section 1888(e)(2)(A)(iii) of the Act by further excluding a
number of individual high-cost, low probability services, identified by
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 1999 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 <a href="http://www.cms.gov/transmittals/downloads/ab001860.pdf">www.cms.gov/transmittals/downloads/ab001860.pdf</a>.
As explained in the FY 2001 proposed rule (65 FR 19232), the
amendments enacted in section 103 of the BBRA 1999 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 1999 Conference report
(H.R. Conf. Rep. No. 106-479 at 854 (1999)) 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 1999 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 1999 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 1999: they must fall within one of the
four service categories specified in the BBRA 1999; and they also must
meet the same standards of high cost and low probability in the SNF
setting, as discussed in the BBRA 1999 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
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).
Effective with items and services furnished on or after October 1,
2021, section 134 in Division CC of the CAA, 2021 established an
additional category of excluded codes in section 1888(e)(2)(A)(iii)(VI)
of the Act, for certain blood clotting factors for the treatment of
patients with hemophilia and other bleeding disorders along with items
and services related to the furnishing of such factors under section
1842(o)(5)(C) of the Act. Like the provisions enacted in the BBRA 1999,
section 1888(e)(2)(A)(iii)(VI) of the Act gives the Secretary the
authority to designate additional items and services for exclusion
within the category of items and services related to blood clotting
factors, as described in that section. Finally, as noted previously in
this final rule, section 4121(a)(4) of Division FF of CAA, 2023 amended
section 1888(e)(2)(A)(ii) of the Act to exclude marriage and family
therapist services and mental health counselor services from
consolidated billing effective January 1, 2024.
In the proposed rule, we specifically solicited public comments
identifying HCPCS codes in any of these five service categories
(chemotherapy items, chemotherapy administration services, radioisotope
services, customized prosthetic devices, and blood clotting factors)
representing recent medical advances that might meet our criteria for
exclusion from SNF consolidated billing. 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 and the CAA, 2021
identified a set of excluded items and services by means of specifying
individual HCPCS codes within the designated categories that were in
effect as of a particular date (in the case of the BBRA 1999, July 1,
1999, and in the case of the CAA, 2021, July 1, 2020), as subsequently
modified by the Secretary. In addition, as noted in this section of the
preamble, the statute (sections 1888(e)(2)(A)(iii)(II) through (VI) of
the Act) gives the Secretary authority to identify additional items and
services for exclusion within the five specified categories of items
and services described in the statute, which are also designated by
HCPCS code. Designating the excluded services in this manner makes it
possible for us to utilize program issuances as the vehicle for
accomplishing routine updates to the excluded codes to reflect any
minor revisions that might subsequently occur in the coding system
itself, such as the assignment of a different code number to a service
already designated as excluded, or the creation of a new code for a
type of service that falls within one of the established exclusion
categories and meets our criteria for exclusion.
Accordingly, in the event that we identify through the current
rulemaking cycle any new services that will actually represent a
substantive change in the scope of the exclusions from SNF consolidated
billing, we will 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, 2023). By making any new exclusions in this manner, we
can similarly accomplish routine future updates of these additional
codes through the issuance of program instructions. The latest list of
excluded codes can be found on the SNF Consolidated Billing website at
<a href="https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling">https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling</a>.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters requested that CMS create a new
exclusion category that excludes expensive items and services based on
a price threshold. Another commenter requested that CMS review the
statute and change the statute to provide equal access and payment for
DME items for residents in a SNF. Some commenters

[[Page 53218]]

suggested that CMS exclude expensive antibiotics. Finally, some
commenters requested that CMS add clinical social workers to the SNF
exclusion list.
Response: As we noted in the proposed rule, sections
1888(e)(2)(A)(iii)(II) through (VI) of the Act give the Secretary
authority to identify additional items and services for exclusion only
within the categories of items and services described in the statute.
Accordingly, it is beyond the statutory authority of CMS to exclude
services that do not fit these categories, or to create additional
categories of excluded services. The changes requested by these
commenters are beyond the scope of CMS authority and would require
Congressional action.
Comment: A commenter requested that CMS add Altuviio, a new class
of factor VIII therapy for adults and children with hemophilia A, the
list of blood clotting factor exclusions. Altuviio is currently billed
using the miscellaneous J code--J 7199, Hemophilia Clotting Factor, not
otherwise classified, and has not been assigned its own J code.
Response: As we noted in the proposed rule, we are only able to add
services to the exclusion list once they have actually been assigned a
HCPCS code. The approach that Congress adopted to identify the
individual blood clotting factor drugs being designated for exclusion
consisted of listing them by HCPCS code in the statute itself (section
1888(e)(2)(A)(iii)(VI) of the Act). Thus, a blood clotting factor
drug's assignment to its own specific code serves 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 blood clotting factor drug to its own code is a
necessary prerequisite to consider that service for exclusion from
consolidated billing under the SNF PPS. We cannot add a miscellaneous
non-descriptive code such as J7199. When the code is assigned, we will
review it as part of our standard review of new HCPCS codes for
exclusion.
Comment: Several commenters named specific suggestions of drugs for
exclusion in the chemotherapy category, including: Tecvayli; Denosumab,
Leuprolide, and Keytruda; Ponatinib, Gilteritinib, Idhifa, Onureg,
Midostaurin, Sprycel, Venetoclax, Promacta, Fulphila, Neulasta, Zarxio,
Udenyca; Imatinib, Dasatinib, Nilotinib, Cabozantinib, Sunitinib, and
Lenalidomide.
Response: For the reasons discussed previously in this final rule
as well as prior rulemaking, the particular drugs cited in these
comments remain subject to consolidated billing.
In the case of leuprolide acetate and denosumab, we have addressed
these when suggested in past rulemaking cycles, most recently in the
SNF PPS final rules for FY 2023 (87 FR 47502, August 3, 2022). In those
rules, we explained that these drugs are unlikely to meet the criterion
of ``low probability'' specified in the BBRA.
With regard to all other specific drugs mentioned, these are not
actually chemotherapy drugs, but rather either immunotherapy or other
non-chemotherapy treatments for cancer, or non-chemotherapy services
related to or used in conjunction with chemotherapy or in treatment of
chemotherapy symptoms. As such, these services do not fit the
chemotherapy category or any existing exclusion categories. As we noted
in the proposed rule, sections 1888(e)(2)(A)(iii)(II) through (VI) of
the Act give the Secretary authority to identify additional items and
services for exclusion only within the categories of items and services
described in the statute. Accordingly, it is beyond the statutory
authority of CMS to exclude services that do not fit these categories,
or to create additional categories of excluded services. Such changes
would require Congressional action. Additionally, some of these drugs
do not have unique HCPCS codes assigned, which as we explained in the
preceding comment, is a necessary prerequisite to consider that service
for exclusion from consolidated billing under the SNF PPS.
Comment: A commenter noted that CMS website and manual materials
contain out of date material with regard to the exclusion of blood
clotting factors enacted in the Consolidated Appropriations Act (CAA)
of 2021 and implemented by the FY 2022 SNF Final Rule (86 FR 42442).
Response: We appreciate the commenter bringing this to our
attention and will update our online materials accordingly.
Comment: One commenter requested a copy of the consolidated billing
exclusion list or instructions on how to find it. The statutory
language specifying exclusion categories is set out in sections
1888(e)(2)(A)(ii) and (iii) of the Act.
Response: The consolidated billing exclusion list is available
online at: <a href="https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling">https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling</a>.

C. 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 <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html</a>.

D. Revisions to the Regulation Text

We proposed to make the following revisions in the regulation text.
Section 4121(a)(4) of Division FF of the CAA, 2023 requires Medicare to
exclude marriage and family therapist (MFT) services and mental health
counselor services (MHC) from SNF consolidated billing for services
furnished on or after January 1, 2024. Exclusion from consolidated
billing allows these services to be billed separately by the performing
clinician rather than being included in the SNF payment. To reflect the
recently-enacted exclusion of MFT services and MHC services from SNF
consolidated billing at section 1888(e)(2)(A)(ii) of the Act (as
discussed in section V.B of the proposed rule), we proposed to
redesignate current Sec. 411.15(p)(2)(vi) through (xviii) as Sec.
411.15(p)(2)(viii) through (xx),

[[Page 53219]]

respectively. In addition, we proposed to redesignate Sec.
489.20(s)(6) through (18) as Sec. 489.20(s)(8) through (20),
respectively. We also proposed to add new regulation text at Sec. Sec.
411.15(p)(2)(vi) and (vii) and 489.20(s)(6) and (7). Specifically,
proposed new Sec. Sec. 411.15(p)(2)(vi) and 489.20(s)(6) would reflect
the exclusion of services performed by an MFT, as defined in section
1861(lll)(2) of the Act. Proposed new Sec. Sec. 411.15(p)(2)(vii) and
489.20(s)(7) would reflect the exclusion of services performed by an
MHC, as defined in section 1861(lll)(4) of the Act.
Subsequently, we identified the need for additional conforming
changes to the regulatory text. In addition to adding the two new
exclusions themselves to the regulation text as set forth in the
proposed rule, the existing exclusion for certain telehealth services
will need to be revised as well, because it cross-refers to
subparagraphs that are now being renumbered as a result of adding the
new exclusions. Specifically, a conforming change is needed in the
consolidated billing exclusion provision on telehealth services at
existing Sec. 411.15(p)(2)(xii) (which, as a result of the other
regulation text changes finalized in this rule, will be redesignated
Sec. 411.15(p)(2)(xiv)) and in the parallel provider agreement
provision on telehealth services at existing Sec. 489.20(s)(12)
(which, as a result of the other regulation text changes finalized in
this rule, will be redesignated Sec. 489.20(s)(14)). As these
additional conforming edits serve to ensure effective implementation of
this new exclusion, and because these new conforming edits additionally
serve to expand access to telehealth services, we are confident in
making these additional changes in this final rule.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Commenters agreed and appreciated the new exclusion of MFT
and MHC services. A few commenters stated that, in light of the
exclusion of MFT and MHC services, CMS should consider also excluding
services furnished by clinical social workers (CSW). One commenter
cited a recent nursing home study which recommended that nursing homes
should retain more clinical social workers and CMS should allow for
Medicare reimbursement for services furnished by these practitioners.
Response: We appreciate the support that we received in relation to
the proposed regulatory text changes. With regard to the additional
exclusion of CSW services, we would note that unlike the services of
certain other types of practitioners (such as physicians and clinical
psychologists), CSW services do not appear in the list of services that
the law specifies in section 1888(e)(2)(A)(ii) through (iv) of the Act
as being excluded from the consolidated billing requirement. Adding CSW
services to the statutory list of services that are excluded from SNF
consolidated billing would require legislation by Congress to amend the
law itself.
In light of the comments received on this issue, we are finalizing
the additions as proposed, with the additional conforming edits that we
identified during the comment period.

VI. Other SNF PPS Issues

A. Technical Updates to the PDPM ICD-10 Mappings

1. Background
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 the International Classification of
Diseases, 10th Revision, Clinical Modification (ICD-10-CM, hereafter
referred to as ICD-10) codes in several ways, including using the
patient's primary diagnosis to assign patients to clinical categories
under several PDPM components, specifically the PT, OT, SLP, and NTA
components. While other ICD-10 codes may be reported as secondary
diagnoses and designated as additional comorbidities, the PDPM does not
use secondary diagnoses to assign patients to clinical categories. The
PDPM ICD-10 code to clinical category mapping, ICD-10 code to SLP
comorbidity mapping, and ICD-10 code to NTA comorbidity mapping
(hereafter collectively referred to as the PDPM ICD-10 code mappings)
are available on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>.
In the FY 2020 SNF PPS final rule (84 FR 38750), we outlined the
process by which we maintain and update the PDPM ICD-10 code mappings,
as well as the SNF Grouper software and other such products related to
patient classification and billing, to ensure that they reflect the
most up to date codes. Beginning with the updates for FY 2020, we apply
nonsubstantive changes to the PDPM ICD-10 code mappings through a
subregulatory process consisting of posting the updated PDPM ICD-10
code mappings on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>. Such nonsubstantive
changes are limited to those specific changes that are necessary to
maintain consistency with the most current PDPM ICD-10 code mappings.
On the other hand, substantive changes that go beyond the intention
of maintaining consistency with the most current PDPM ICD-10 code
mappings, such as changes to the assignment of a code to a clinical
category or comorbidity list, would be through notice and comment
rulemaking because they are changes that affect policy. We note that,
in the case of any diagnoses that are either currently mapped to Return
to Provider or that we are finalizing to classify into this category,
this is not intended to reflect any judgment on the importance of
recognizing and treating these conditions. Rather, we believe that
there are more specific or appropriate diagnoses that would better
serve as the primary diagnosis for a Part-A covered SNF stay.
2. Clinical Category Changes for New ICD-10 Codes for FY 2023
Each year, we review the clinical category assigned to new ICD-10
diagnosis codes and propose changing the assignment to another clinical
category if warranted. This year, we proposed changing the clinical
category assignment for the following five new ICD-10 codes that were
effective on October 1, 2022:
<bullet> D75.84 Other platelet-activating anti-platelet factor 4
(PF4) disorders was mapped to the clinical category of Return to
Provider. Patients with anti-PF4 disorders have blood clotting
disorders. Examples of disorders to be classified with D75.84 are
spontaneous heparin-induced thrombocytopenia (without heparin
exposure), thrombosis with thrombocytopenia syndrome, and vaccine-
induced thrombotic thrombocytopenia. Due to the similarity of this code
to other anti-PF4 disorders, we proposed changing the assignment to
Medical Management.
<bullet> F43.81 Prolonged grief disorder and F43.89 Other reactions
to severe stress were mapped to the clinical category of Medical
Management. However, while we believe that SNFs serve an important role
in providing services to those beneficiaries suffering from mental
illness, the SNF setting is not the setting that would be most
beneficial to treat a patient for whom these diagnoses are coded as the
patient's primary diagnosis. For this reason, we proposed changing the
clinical category of both codes to Return to Provider. We would
encourage providers to continue reporting these codes as secondary
diagnoses, to ensure that we are able to

[[Page 53220]]

identify these patients and that they are receiving appropriate care.
<bullet> G90.A Postural orthostatic tachycardia syndrome (POTS) was
mapped to the clinical category of Acute Neurologic. POTS is a type of
orthostatic intolerance that causes the heart to beat faster than
normal when transitioning from sitting or lying down to standing up,
causing changes in blood pressure, increase in heart rate, and
lightheadedness. The treatment for POTS involves hydration, physical
therapy, and vasoconstrictor medications, which are also treatments for
codes such as E86.0 Dehydration and E86.1 Hypovolemia that are mapped
to the Medical Management category. Since the medical interventions are
similar, we proposed changing the assignment for POTS to Medical
Management.
<bullet> K76.82 Hepatic encephalopathy was mapped to the clinical
category of Return to Provider. Hepatic encephalopathy is a condition
resulting from severe liver disease, where toxins build up in the blood
that can affect brain function and lead to a change in medical status.
Prior to the development of this code, multiple codes were used to
characterize this condition such as K76.6 Portal hypertension, K76.7
Hepatorenal syndrome, and K76.89 Other unspecified diseases of liver,
which are mapped to the Medical Management category. Since these codes
describe similar liver conditions, we proposed changing the assignment
to Medical Management.
We solicited comments on the proposed substantive changes to the
PDPM ICD-10 code mappings discussed in this section, as well as
comments on additional substantive and nonsubstantive changes that
commenters believe are necessary.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters stated that they appreciate the ongoing
refinements to the PDPM ICD-10 code mappings and the opportunity to
provide input to the proposals. Some commenters stated that they would
like CMS to identify effective dates on the PDPM website along with
educational materials and resources.
Response: We appreciate the positive comments that we received
supporting our efforts to map diagnoses more accurately under the PDPM.
We also appreciate the suggestion to develop additional educational
materials and resources, which we will consider as we update the CMS
website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>.
Comment: Some commenters did not support the proposal to change the
assignment of F43.81 Prolonged grief disorder and F43.89 Other
reactions to severe stress to Return to Provider instead of Medical
Management. Their rationale was that a subset of SNFs that specialize
in behavioral and mental health treatment may require use of these two
new diagnosis codes as the primary diagnosis codes to meet beneficiary
needs.
Response: We believe that even in such cases as the commenters
described, there are many other behavioral and mental health diagnoses
available that would serve as a more appropriate primary diagnosis for
a SNF stay and, therefore, assigning these two codes to Return to
Provider would not impede access to care for beneficiaries.
Comment: Several commenters suggested additional changes to the
PDPM ICD-10 code mappings that were outside the scope of this
rulemaking. Specifically, they requested that we consider changing
M62.81 Muscle weakness (generalized) from Return to Provider to the
Non-surgical orthopedic/musculoskeletal clinical category; adding
several dysphasia codes to the SLP comorbidity mapping (namely, R13.14
Dysphagia, pharyngoesophageal phase, R13.11 Dysphagia, oral phase,
R13.12 Dysphagia, oropharyngeal phase, R13.13 Dysphagia, pharyngeal
phase, and R13.19 Other dysphagia); and adding a range of ICD-10 codes
from J00 Acute nasopharyngitis [common cold] to J06.9 Acute upper
respiratory infection, unspecified to the SLP comorbidity mapping.
Response: We note that the changes suggested by these commenters
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 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 in the FY 2020 SNF PPS final rule (84 FR 38750)
for more information.
After consideration of public comments, we are finalizing the
changes as proposed.
3. Clinical Category Changes for Unspecified Substance Use Disorder
Codes
Effective with stays beginning on and after October 1, 2022, ICD-10
diagnosis codes F10.90 Alcohol use, unspecified, uncomplicated, F10.91
Alcohol use, unspecified, in remission, F11.91 Opioid use, unspecified,
in remission, F12.91 Cannabis use, unspecified, in remission, F13.91
Sedative, hypnotic or anxiolytic use, unspecified, in remission, and
F14.91 Cocaine use, unspecified, in remission went into effect and were
mapped to the clinical category of Medical Management. We reviewed
these 6 new substance use disorder (SUD) codes and changed the
assignment from Medical Management to Return to Provider because the
codes are not specific as to if they refer to abuse or dependence, and
there are other specific codes available for each of these conditions
that would be more appropriate as a primary diagnosis for a SNF stay.
For example, diagnosis code F10.90 Alcohol use, unspecified,
uncomplicated is not specific as to whether the patient has alcohol
abuse or alcohol dependence. There are more specific codes that could
be used instead, such as F10.10 Alcohol abuse, uncomplicated or F10.20
Alcohol dependence, uncomplicated, that may serve as the primary
diagnosis for a SNF stay and are appropriately mapped to the clinical
category of Medical Management.
Moreover, we believe that increased accuracy of coding a patient's
primary diagnosis aligns with CMS' broader efforts to ensure better
quality of care. Therefore, we reviewed all 458 ICD-10 SUD codes from
code categories F10 to F19 and finalized reassigning 162 additional
unspecified SUD codes to Return to Provider from Medical Management
because the codes are not specific as to if they refer to abuse or
dependence. We would note that this policy change would not affect a
large number of SNF stays. Our data from FY 2021 show that the 162
unspecified SUD codes were used as primary diagnoses for only 323 SNF
stays (0.02 percent) and as secondary diagnoses for 9,537 SNF stays
(0.54 percent). The purpose of enacting this policy is to continue an
ongoing effort to refine the PDPM ICD-10 code mappings each year to
ensure more accurate coding of primary diagnoses. We would encourage
providers to continue reporting these codes as secondary diagnoses, to
ensure that we are able to identify these patients and that they are
receiving appropriate care.

[[Page 53221]]

Table 1, Proposed Clinical Category Changes for Unspecified
Substance Use Disorder Codes, which lists all 168 codes included in
this proposal, was posted on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>. We solicited
comments on the proposed substantive changes to the PDPM ICD-10 code
mappings discussed in this section, as well as comments on additional
substantive and nonsubstantive changes that commenters believe are
necessary.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Commenters supported the PDPM clinical category changes
for unspecified SUD codes as proposed. However, several commenters did
not agree with the use of F10.10 Alcohol abuse, uncomplicated or F10.20
Alcohol dependence, uncomplicated, as these examples do not align with
the ICD-10-CM Official Guidelines for Coding and Reporting and the SNF
provider would not be able to assign a code such as F10.10 or F10.20
without physician documentation to support that alcohol abuse or
dependence was present.
Response: We appreciate the positive comments that we received
supporting our efforts to map SUD diagnoses more accurately under the
PDPM. We would note that the examples provided for alcohol abuse and
dependence diagnosis were not intended to be diagnostic guidance, and
the facility should assess the patient to identify the specific primary
diagnosis that requires daily skilled care.
Comment: Some commenters opposed the PDPM clinical category changes
for unspecified SUD codes due to concerns about administrative burden.
While they acknowledged that there are more appropriate codes that can
be used to indicate whether the patient has substance abuse or
dependence, they believe that it is the responsibility of the referring
physician to code at the highest level of specificity, and query rules
make it complex for SNFs to recommend more specific codes to the
physician.
Response: We appreciate that commenters agree there are more
appropriate codes that can be used to indicate whether the patient has
substance abuse or dependence. We continue to believe that appropriate
treatment requires specificity in the coding of the diagnoses, which
aligns with CMS' broader efforts to ensure better quality of care.
Moreover, we believe that the plan of care for a patient should not
only depend upon the diagnoses of the referring physician, but also on
the assessment of the SNF care team, which includes the clinicians
caring for the patient at the facility.
After consideration of public comments, we are finalizing the
changes as proposed.
4. Clinical Category Changes for Certain Subcategory Fracture Codes
Each year, we solicit comments on additional substantive and
nonsubstantive changes that commenters believe are necessary to the
PDPM ICD-10 code mappings. In the FY 2023 final rule (87 FR 47524), we
described how one commenter recommended that CMS consider revising the
PDPM ICD-10 code mappings to reclassify certain subcategory S42.2--
humeral fracture codes. The commenter highlighted that certain
encounter codes for humeral fractures, such as those ending in the 7th
character of A for an initial encounter for fracture, are permitted the
option to be mapped to a surgical clinical category, denoted on the
PDPM ICD-10 code mappings as May be Eligible for One of the Two
Orthopedic Surgery Categories (that is, major joint replacement or
spinal surgery, or orthopedic surgery) if the patient had a major
procedure during the prior inpatient stay that impacts the SNF care
plan. However, the commenter noted that other encounter codes within
the same code family, such as those ending in the 7th character of D
for subsequent encounter for fracture with routine healing, are mapped
to the Non-Surgical Orthopedic/Musculoskeletal without the surgical
option. The commenter requested that we review all subcategory S42.2--
fracture codes to ensure that the appropriate surgical clinical
category could be selected for joint aftercare. Since then, the
commenter has also contacted CMS with a similar suggestion for M84.552D
Pathological fracture in neoplastic disease, left femur, subsequent
encounter for fracture with routine healing.
We have since reviewed the suggested code subcategories to
determine the most efficient manner for addressing this discrepancy. We
proposed adding the surgical option that allows 45 subcategory S42.2--
codes for displaced fractures to be eligible for one of two orthopedic
surgery categories. However, we noted that this does not extend to
subcategory S42.2--codes for nondisplaced fractures, which typically do
not require surgery. We also proposed adding the surgical option to
subcategory 46 M84.5--codes for pathological fractures to certain major
weight-bearing bones to be eligible for one of two orthopedic surgery
categories.
Table 2, Proposed Clinical Category Changes for S42.2 and M84.5
Fracture Codes, which lists all 91 codes included in this proposal, was
posted on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>. We solicited comments on the proposed
substantive changes to the PDPM ICD-10 code mappings discussed in this
section, as well as comments on additional substantive and
nonsubstantive changes that commenters believe are necessary.
We did not receive public comments on this provision, and
therefore, we are finalizing the changes as proposed.
5. Clinical Category Changes for Unacceptable Principal Diagnosis Codes
In the FY 2023 final rule (87 FR 47525), we described how several
commenters referred to instances when SNF claims were denied for
including a primary diagnosis code that was listed on the PDPM ICD-10
code mappings as a valid code, but was not accepted by some Medicare
Administrative Contractors (MACs) that use the Hospital Inpatient
Prospective Payment System (IPPS) Medicare Code Editor (MCE) lists when
evaluating the primary diagnosis codes listed on SNF claims. In the
IPPS, a patient's diagnosis is entered into the Medicare claims
processing systems and subjected to a series of automated screens
called the MCE. The MCE lists are designed to identify cases that
require further review before classification into an MS-DRG. We noted
that all codes on the MCE lists are able to be reported; however, a
code edit may be triggered that the MAC may either choose to bypass or
return to the provider to resubmit. Updates to the MCE lists are
proposed on an annual basis and discussed through IPPS rulemaking when
new codes or policies involving existing codes are introduced.
Commenters recommended that CMS seek to align the PDPM ICD-10 code
mappings with the MCE in treating diagnoses that are Return to
Provider, specifically referring to the Unacceptable Principal
Diagnosis edit code list in the Definition of Medicare Code Edits,
which was posted on the CMS website at <a href="https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps/ms-drg-classifications-and-software">https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps/ms-drg-classifications-and-software</a>. The Unacceptable Principal Diagnosis edit
code list contains selected codes that describe a circumstance that
influences an individual's health status but not a current illness or
injury, or codes that are not specific manifestations but may be due to
an underlying cause, and

[[Page 53222]]

which are considered unacceptable as a principal diagnosis.
We identified 95 codes from the MCE Unacceptable Principal
Diagnosis edit code list that were mapped to a valid clinical category
on the PDPM ICD-10 code mappings, and that were coded as primary
diagnoses for 14,808 SNF stays (0.84 percent) in FY 2021. Table 3,
Proposed Clinical Category Changes for Unacceptable Principal Diagnosis
Codes, which lists all 95 codes included in this proposal, was posted
on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>. As stated previously in this section of
this final rule, we note that reporting these codes as a primary
diagnosis for a SNF stay may trigger an edit that the MAC may either
choose to bypass or return to the provider to resubmit, and therefore
not all of these 14,808 stays were denied by the MACs.
After clinical review, we concurred that the 95 codes listed in
Table 3 on the CMS website should be assigned to Return to Provider.
For the diagnosis codes listed in Table 3 on the CMS website that are
from the category B95 to B97 range and contain the suffix ``as the
cause of diseases classified elsewhere'', the ICD-10 coding convention
for such etiology and manifestation codes, where certain conditions
have both an underlying etiology and multiple body system
manifestations due to the underlying etiology, dictates that the
underlying condition should be sequenced first, followed by the
manifestation. The ICD-10 coding guidelines also state that codes from
subcategory G92.0--Immune effector cell-associated neurotoxicity
syndrome, subcategory R40.2--Coma scale, and subcategory S06.A--
Traumatic brain injury should only be reported as secondary diagnoses,
as there are more specific codes that should be sequenced first.
Additionally, the ICD-10 coding guidelines state that diagnosis codes
in categories Z90 and Z98 are status codes, indicating that a patient
is either a carrier of a disease or has the sequelae or residual of a
past disease or condition, and are not reasons for a patient to be
admitted to a SNF. Lastly, our clinicians determined that diagnosis
code Z43.9 Encounter for attention to unspecified artificial opening
should be assigned to the clinical category Return to Provider because
there are more specific codes that identify the site for the artificial
opening.
Therefore, we proposed to reassign the 95 codes listed in Table 3
on the CMS website from the current default clinical category on the
PDPM ICD-10 code mappings to Return to Provider. We also proposed to
make future updates to align the PDPM ICD-10 code mappings with the MCE
Unacceptable Principal Diagnosis edit code list on a subregulatory
basis going forward. Moreover, we solicited comment on aligning with
the MCE Manifestation codes not allowed as principal diagnosis edit
code list, which contains diagnosis codes that are the manifestation of
an underlying disease, not the disease itself, and therefore should not
be used as a principal diagnosis, and the Questionable admission codes
edit code list, which contains diagnoses codes that are not usually
sufficient justification for admission to an acute care hospital. While
these MCE lists were not mentioned by commenters, we believed that some
MACs may be applying these edit lists to SNF claims and this could
cause continued differences between the PDPM ICD-10 code mappings and
the IPPS MCE. Finally, we proposed to make future updates to align the
PDPM ICD-10 code mappings with the MCE Manifestation codes not allowed
as principal diagnosis edit code list and the Questionable admission
codes edit code list on a subregulatory basis going forward.
We solicited comments on the proposed substantive changes to the
PDPM ICD-10 code mappings discussed in this section, as well as
comments on additional substantive and nonsubstantive changes that
commenters believe are necessary. We did not receive public comments on
this provision, and therefore, we are finalizing as proposed.

VII. Skilled Nursing Facility Quality Reporting Program (SNF QRP)

A. Background and Statutory Authority

The Skilled Nursing Facility Quality Reporting Program (SNF QRP) is
authorized by section 1888(e)(6) of the Act, and it applies to
freestanding SNFs, SNFs affiliated with acute care facilities, and all
non-critical access hospital (CAH) swing-bed rural hospitals. Section
1888(e)(6)(A)(i) of the Act requires the Secretary to reduce by 2
percentage points the annual market basket percentage increase
described in section 1888(e)(5)(B)(i) of the Act applicable to a SNF
for a fiscal year (FY), after application of section 1888(e)(5)(B)(ii)
of the Act (the productivity adjustment) and section 1888(e)(5)(B)(iii)
of the Act, in the case of a SNF that does not submit data in
accordance with sections 1888(e)(6)(B)(i)(II) and (III) of the Act for
that FY. Section 1890A of the Act requires that the Secretary establish
and follow a pre-rulemaking process, in coordination with the
consensus-based entity (CBE) with a contract under section 1890(a) of
the Act, to solicit input from certain groups regarding the selection
of quality and efficiency measures for the SNF QRP. We have codified
our program requirements in our regulations at 42 CFR part 413.
In the proposed rule, we proposed to adopt three new measures,
remove three existing measures, and modify one existing measure.
Second, we sought information on principles we could use to select and
prioritize SNF QRP quality measures in future years. Third, we provided
an update on our health equity efforts. Fourth, we proposed several
administrative changes, including a change to the SNF QRP data
completion thresholds and a new data submission method for the proposed
CoreQ: Short Stay Discharge questionnaire. Finally, we proposed to
begin the public reporting of four measures.

B. General Considerations Used for the Selection of Measures for the
SNF QRP

For a detailed discussion of the considerations we use for the
selection of SNF QRP quality, resource use, or other measures, we refer
readers to the FY 2016 SNF PPS final rule (80 FR 46429 through 46431).
1. Quality Measures Currently Adopted for the FY 2024 SNF QRP
The SNF QRP currently has 16 measures for the FY 2024 SNF QRP,
which are listed in Table C1. For a discussion of the factors used to
evaluate whether a measure should be removed from the SNF QRP, we refer
readers to Sec. 413.360(b)(2).

Table 11--Quality Measures Currently Adopted for the FY 2024 SNF QRP
------------------------------------------------------------------------
Short name Measure name & data source
------------------------------------------------------------------------
Resident Assessment Instrument Minimum Data Set (Assessment-Based)
------------------------------------------------------------------------
Pressure Ulcer/Injury.................. Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/
Injury.
Application of Falls................... Application of Percent of
Residents Experiencing One or
More Falls with Major Injury
(Long Stay).
Application of Functional Assessment/ Application of Percent of Long-
Care Plan. Term Care Hospital (LTCH)
Patients with an Admission and
Discharge Functional
Assessment and a Care Plan
That Addresses Function.

[[Page 53223]]

Change in Mobility Score............... Application of IRF Functional
Outcome Measure: Change in
Mobility Score for Medical
Rehabilitation Patients.
Discharge Mobility Score............... Application of IRF Functional
Outcome Measure: Discharge
Mobility Score for Medical
Rehabilitation Patients.
Change in Self-Care Score.............. Application of the IRF
Functional Outcome Measure:
Change in Self-Care Score for
Medical Rehabilitation
Patients.
Discharge Self-Care Score.............. Application of IRF Functional
Outcome Measure: Discharge
Self-Care Score for Medical
Rehabilitation Patients.
DRR.................................... Drug Regimen Review Conducted
With Follow-Up for Identified
Issues-Post-Acute Care (PAC)
Skilled Nursing Facility (SNF)
Quality Reporting Program
(QRP).
TOH-Provider *......................... Transfer of Health (TOH)
Information to the Provider
Post[dash]Acute Care (PAC).
TOH-Patient *.......................... Transfer of Health (TOH)
Information to the Patient
Post-Acute Care (PAC).
------------------------------------------------------------------------
Claims-Based
------------------------------------------------------------------------
MSPB SNF............................... Medicare Spending Per
Beneficiary (MSPB)--Post Acute
Care (PAC) Skilled Nursing
Facility (SNF) Quality
Reporting Program (QRP).
DTC.................................... Discharge to Community (DTC)--
Post Acute Care (PAC) Skilled
Nursing Facility (SNF) Quality
Reporting Program (QRP).
PPR.................................... Potentially Preventable 30-Day
Post-Discharge Readmission
Measure for Skilled Nursing
Facility (SNF) Quality
Reporting Program (QRP).
SNF HAI................................ SNF Healthcare-Associated
Infections (HAI) Requiring
Hospitalization.
------------------------------------------------------------------------
NHSN
------------------------------------------------------------------------
HCP COVID-19 Vaccine................... COVID-19 Vaccination Coverage
among Healthcare Personnel
(HCP).
HCP Influenza Vaccine.................. Influenza Vaccination Coverage
among Healthcare Personnel
(HCP).
------------------------------------------------------------------------
* In response to the public health emergency (PHE) for the Coronavirus
Disease 2019 (COVID-19), we released an Interim Final Rule (85 FR
27595 through 27597) which delayed the compliance date for collection
and reporting of the Transfer of Health (TOH) Information measures for
at least 2 full fiscal years after the end of the PHE. The compliance
date for the collection and reporting of the Transfer of Health
Information measures was revised to October 1, 2023 in the FY 2023 SNF
PPS final rule (87 FR 47547 through 47551).

C. SNF QRP Quality Measure Updates

In the proposed rule, we included SNF QRP proposals for the FY 2025
and FY 2026 program years. We proposed to add new measures to the SNF
QRP as well as remove measures from the SNF QRP. Beginning with the FY
2025 SNF QRP, we proposed to (1) modify the COVID-19 Vaccination
Coverage among Healthcare Personnel (HCP) measure, (2) adopt the
Discharge Function Score measure,\12\ which we specified under section
1888(e)(6)(B)(i) of the Act, and (3) remove three current measures: (i)
the Application of Percent of Long-Term Care Hospital (LTCH) Patients
with an Admission and Discharge Functional Assessment and a Care Plan
That Addresses Function measure, (ii) the Application of IRF Functional
Outcome Measure: Change in Self-Care Score for Medical Rehabilitation
Patients measure, and (iii) the Application of IRF Functional Outcome
Measure: Change in Mobility Score for Medical Rehabilitation Patients
measure.
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\12\ This measure was submitted to the Measures Under
Consideration (MUC) List as the Cross-Setting Discharge Function
Score. Subsequent to the MAP Workgroup meetings, the measure
developer modified the name. Discharge Function Score for Skilled
Nursing Facilities (SNFs) Technical Report. <a href="https://www.cms.gov/files/document/snf-discharge-function-score-technical-report-february-2023.pdf">https://www.cms.gov/files/document/snf-discharge-function-score-technical-report-february-2023.pdf</a>.
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We also proposed two new measures beginning with the FY 2026 SNF
QRP: (i) the CoreQ: Short Stay Discharge measure which we are
specifying under section 1899B(d)(1) of the Act, and (ii) the COVID-19
Vaccine: Percent of Patients/Residents Who Are Up to Date measure,
which we are specifying under section 1899B(d)(1) of the Act.
1. SNF QRP Quality Measure Updates Beginning With the FY 2025 SNF QRP
a. Modification of the COVID-19 Vaccination Coverage Among Healthcare
Personnel (HCP) Measure Beginning With the FY 2025 SNF QRP
(1) Background
On January 31, 2020, the Secretary declared a public health
emergency (PHE) for the United States in response to the global
outbreak of SARS-CoV-2, a novel (new) coronavirus that causes a disease
named ``coronavirus disease 2019'' (COVID-19).\13\ Subsequently, in the
FY 2022 SNF PPS final rule (86 FR 42480 through 42489), we adopted the
COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) (HCP
COVID-19 Vaccine) measure for the SNF QRP. The HCP COVID-19 Vaccine
measure requires each SNF to submit data on the percentage of HCP
eligible to work in the SNF for at least one day during the reporting
period, excluding persons with contraindications to FDA-authorized or -
approved COVID-19 vaccines, who have received a complete vaccination
course against SARS-CoV-2. Since that time, COVID-19 has continued to
spread domestically and around the world with more than 103.9 million
cases and 1.13 million deaths in the United States as of June 19,
2023.\14\ In recognition of the ongoing significance and complexity of
COVID-19, the Secretary has renewed the PHE on April 21, 2020, July 23,
2020, October 2, 2020, January 7, 2021, April 15, 2021, July 19, 2021,
October 15, 2021, January 14, 2022, April 12, 2022, July 15, 2022,
October 13, 2022, January 11, 2023, and February 9, 2023.\15\ The
Department of Health and Human Services (HHS) let the PHE expire on May
11, 2023. However, HHS stated that the public health response to COVID-
19 remains a public health priority with a whole of government approach
to combating the virus, including through vaccination efforts.\16\
---------------------------------------------------------------------------

\13\ U.S. Department of Health and Human Services,
Administration for Strategic Preparedness and Response.
Determination that a Public Health Emergency Exists. January 31,
2020. <a href="https://aspr.hhs.gov/legal/PHE/Pages/2019-nCoV.aspx">https://aspr.hhs.gov/legal/PHE/Pages/2019-nCoV.aspx</a>.
\14\ Centers for Disease Control and Prevention. COVID Data
Tracker. June 19, 2023. <a href="https://covid.cdc.gov/covid-data-tracker/#datatracker-home">https://covid.cdc.gov/covid-data-tracker/#datatracker-home</a>.
\15\ U.S. Department of Health and Human Services,
Administration for Strategic for Preparedness and Response. Renewal
of Determination that a Public Health Emergency Exists. February 9,
2023. <a href="https://aspr.hhs.gov/legal/PHE/Pages/COVID19-9Feb2023.aspx">https://aspr.hhs.gov/legal/PHE/Pages/COVID19-9Feb2023.aspx</a>.
\16\ U.S. Department of Health and Human Services. Fact Sheet:
COVID-19 Public Health Emergency Transition Roadmap. February 9,
2023. <a href="https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html">https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html</a>.

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[[Page 53224]]

In the FY 2022 SNF PPS final rule (86 FR 42480 through 42489) and
in the Revised Guidance for Staff Vaccination Requirements,\17\ we
stated that vaccination is a critical part of the nation's strategy to
effectively counter the spread of COVID-19. We continue to believe it
is important to incentivize and track HCP vaccination in SNFs through
quality measurement in order to protect HCP, residents, and caregivers,
and to help sustain the ability of SNFs to continue serving their
communities after the PHE. At the time we issued the FY 2022 SNF PPS
final rule (86 FR 42480 through 42489) where we adopted the HCP COVID-
19 Vaccine measure, the Food and Drug Administration (FDA) had issued
emergency use authorizations (EUAs) for COVID-19 vaccines manufactured
by Pfizer-BioNTech,\18\ Moderna,\19\ and Janssen.\20\ The Pfizer-
BioNTech vaccine was authorized for ages 12 and older and the Moderna
and Janssen vaccines for ages 18 and older. Shortly following the
publication of the FY 2022 SNF PPS final rule, on August 23, 2021, the
FDA issued an approval for the Pfizer-BioNTech vaccine, marketed as
Comirnaty.\21\ The FDA issued approval for the Moderna vaccine,
marketed as Spikevax, on January 31, 2022 \22\ and an EUA for the
Novavax vaccine, on July 13, 2022.\23\ The FDA also issued EUAs for
single booster doses of the then authorized COVID-19 vaccines. As of
November 19, 2021 24 25 26 a single booster dose of each
COVID-19 vaccine was authorized for all eligible individuals 18 years
of age and older. EUAs were subsequently issued for a second booster
dose of the Pfizer-BioNTech and Moderna vaccines in certain populations
in March 2022.\27\ FDA first authorized the use of a booster dose of
bivalent or ``updated'' COVID-19 vaccines from Pfizer-BioNTech and
Moderna in August 2022.\28\
---------------------------------------------------------------------------

\17\ Centers for Medicare & Medicaid Services. Revised Guidance
for Staff Vaccination Requirements QSO-23-02-ALL. October 26, 2022.
<a href="https://www.cms.gov/files/document/qs0-23-02-all.pdf">https://www.cms.gov/files/document/qs0-23-02-all.pdf</a>.
\18\ Food and Drug Administration. FDA Takes Key Action in Fight
Against COVID-19 By Issuing Emergency Use Authorization for First
COVID-19 Vaccine. December 11, 2020. <a href="https://www.fda.gov/news-events/press-announcements/fda-takes-key-action-fight-against-covid-19-issuing-emergency-use-authorization-first-covid-19">https://www.fda.gov/news-events/press-announcements/fda-takes-key-action-fight-against-covid-19-issuing-emergency-use-authorization-first-covid-19</a>.
\19\ Food and Drug Administration. FDA Takes Additional Action
in Fight Against COVID-19 By Issuing Emergency Use Authorization for
Second COVID-19 Vaccine. December 18, 2020. <a href="https://www.fda.gov/news-events/press-announcements/fda-takes-additional-action-fight-against-covid-19-issuing-emergency-use-authorization-second-covid">https://www.fda.gov/news-events/press-announcements/fda-takes-additional-action-fight-against-covid-19-issuing-emergency-use-authorization-second-covid</a>.
\20\ Food and Drug Administration. FDA Issues Emergency Use
Authorization for Third COVID-19 Vaccine. February 27, 2021. <a href="https://www.fda.gov/news-events/press-announcements/fda-issues-emergency-use-authorization-third-covid-19-vaccine">https://www.fda.gov/news-events/press-announcements/fda-issues-emergency-use-authorization-third-covid-19-vaccine</a>.
\21\ Food and Drug Administration. FDA Approves First COVID-19
Vaccine. August 23, 2021. <a href="https://www.fda.gov/news-events/press-announcements/fda-approves-first-covid-19-vaccine">https://www.fda.gov/news-events/press-announcements/fda-approves-first-covid-19-vaccine</a>.
\22\ Food and Drug Administration. Coronavirus (COVID-19)
Update: FDA Takes Key Action by Approving Second COVID-19 Vaccine.
January 31, 2022. <a href="https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-takes-key-action-approving-second-covid-19-vaccine">https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-takes-key-action-approving-second-covid-19-vaccine</a>.
\23\ Food and Drug Administration. Coronavirus (COVID-19)
Update: FDA Authorizes Emergency Use of Novavax COVID-19 Vaccine,
Adjuvanted. July 13, 2022. <a href="https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-emergency-use-novavax-covid-19-vaccine-adjuvanted">https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-emergency-use-novavax-covid-19-vaccine-adjuvanted</a>.
\24\ Food and Drug Administration. FDA Authorizes Booster Dose
of Pfizer-BioNTech COVID-19 Vaccine for Certain Populations.
September 22, 2021. <a href="https://www.fda.gov/news-events/press-announcements/fda-authorizes-booster-dose-pfizer-biontech-covid-19-vaccine-certain-populations">https://www.fda.gov/news-events/press-announcements/fda-authorizes-booster-dose-pfizer-biontech-covid-19-vaccine-certain-populations</a>.
\25\ Food and Drug Administration. Coronavirus (COVID-19)
Update: FDA Takes Additional Actions on the Use of a Booster Dose
for COVID-19 Vaccines. October 20, 2021. <a href="https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-takes-additional-actions-use-booster-dose-covid-19-vaccines">https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-takes-additional-actions-use-booster-dose-covid-19-vaccines</a>.
\26\ Food and Drug Administration. Coronavirus (COVID-19)
Update: FDA Expands Eligibility for COVID-19 Vaccine Boosters.
November 19, 2021. <a href="https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-expands-eligibility-covid-19-vaccine-boosters">https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-expands-eligibility-covid-19-vaccine-boosters</a>.
\27\ Food and Drug Administration. Coronavirus (COVID-19)
Update: FDA Authorizes Second Booster Dose of Two COVID-19 Vaccines
for Older and Immunocompromised Individuals. March 29, 2022. <a href="https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-second-booster-dose-two-covid-19-vaccines-older-and">https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-second-booster-dose-two-covid-19-vaccines-older-and</a>.
\28\ Food and Drug Administration. Coronavirus (COVID-19)
Update: FDA Authorizes Moderna, Pfizer-BioNTech Bivalent COVID-19
Vaccines for Use as a Booster Dose. August 31, 2022. <a href="https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-moderna-pfizer-biontech-bivalent-covid-19-vaccines-use">https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-moderna-pfizer-biontech-bivalent-covid-19-vaccines-use</a>.
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(a) Measure Importance
While the impact of COVID-19 vaccines on asymptomatic infection and
transmission is not yet fully known, there are now robust data
available on COVID-19 vaccine effectiveness across multiple populations
against severe illness, hospitalization, and death. Two-dose COVID-19
vaccines from Pfizer-BioNTech and Moderna were found to be 88 percent
and 93 percent effective against hospitalization for COVID-19,
respectively, over 6 months for adults over age 18 without
immunocompromising conditions.\29\ During a SARS-CoV-2 surge in the
spring and summer of 2021, 92 percent of COVID-19 hospitalizations and
91 percent of COVID-19-associated deaths were reported among persons
not fully vaccinated.\30\ Real-world studies of population-level
vaccine effectiveness indicated similarly high rates of efficacy in
preventing SARS-CoV-2 infection among frontline workers in multiple
industries, with a 90 percent effectiveness in preventing symptomatic
and asymptomatic infection from December 2020 through August 2021.\31\
Vaccines have also been highly effective in real-world conditions at
preventing COVID-19 in HCP with up to 96 percent efficacy for fully
vaccinated HCP, including those at risk for severe infection and those
in racial and ethnic groups disproportionately affected by COVID-
19.\32\ In the presence of high community prevalence of COVID-19,
residents of nursing homes with low staff vaccination coverage had
cases of COVID-19 related deaths 195 percent higher than those among
residents of nursing homes with high staff vaccination coverage.\33\
Overall, data demonstrate that COVID-19 vaccines are effective and
prevent severe disease, hospitalization, and death.
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\29\ Self WH, Tenforde MW, Rhoads JP, et al. Comparative
Effectiveness of Moderna, Pfizer-BioNTech, and Janssen (Johnson &
Johnson) Vaccines in Preventing COVID-19 Hospitalizations Among
Adults Without Immunocompromising Conditions--United States, March-
August 2021. MMW

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