April 21, 2021 | Jessica Zeff

3 Minute Read

Focus on the Future: The FY 2022 SNF PPS Proposed Rule

On April 8, 2021, the Centers for Medicare and Medicaid Services (CMS) released the Fiscal Year (FY) 2022 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Proposed Rule and gave us a glimpse into what the future might hold for SNFs.

Sure, it’s full of the expected adjustments to rates and indexes, and it boasts an additional payout of an estimated $444 million to SNFs for FY 2022, but take a deeper look into the proposed rule and you’ll find numerous requests for feedback and comment focused on expanding SNF quality programs and even more importantly, future plans for the Patient Driven Payment Model (PDPM) reimbursement adjustment. While all the updates to those rates and indexes are important, it’s also necessary to understand future considerations, because you have an opportunity to make an impact.

SNF Quality Programs 

The SNF quality programs, Quality Reporting Program (QRP) and Value-Based Purchasing (VBP), appear to be headed toward expansion.  CMS is proposing to add two new measures to the FY 2023 SNF QRP.  The SNF Healthcare Associated Infections (HAI) Requiring Hospitalization Measure would use claims data to estimate the risk-standardized rate of HAIs that are acquired during SNF care and result in hospitalization.  The goal of this outcome measure is to improve both patient safety and transparency of the quality of care in SNFs.  The second measure they propose to add is the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) Measure.  This process measure would require SNFs to report employee vaccination data to the CDC for at least one week out of each month.  CMS feels it is important to use this data to assess the efforts being made to limit the spread of COVID-19 among HCPs and facilities.

Not only are new measures are being added, CMS has requested input on future measures and measure concepts that may include:

  • Frailty
  • Patient reported outcomes
  • Shared decision-making processes
  • Appropriate pain assessment and pain management processes
  • Health equity

The SNF VBP Program has a single measure, the Skilled Nursing Facility 30-Day All-Cause Readmission Measure.  Due to the PHE, there is a proposal to suppress the use of this measure for scoring and payment adjustment until the end of the PHE.  If this proposal becomes finalized, all participating SNFs would receive an identical performance score and incentive payment that results in an estimated 1.2% payback.  SNFs subject to the Low-Volume Adjustment would receive the full 2% payback.  Outside of measure suppression, CMS now has the authority to add up to nine additional measures to this program which may include measures of functional status, patient safety, care coordination, or patient experience.  Stakeholders are asked to comment on which measures should be considered for the future of this program.

Expansion of measures is not the only thing open for discussion. Feedback is requested related to efforts to align with other quality programs that are moving toward use of Digital Quality Measures (dQMs) and enhanced interoperability with measure submission.  This move could allow the use of data outside of the quality programs and includes proposals to use Fast Healthcare Interoperability Resources (FHIR) standards as a means of sharing that information.  Although there isn’t a lot that has been proposed for FY 2020 in this rule, you’ll need to be ready for future changes related to interoperability and information sharing. While participation in SNF quality programs may provide opportunity for incentives and reimbursement increases, it’s not likely that the future PDPM payouts will be so generous.

Patient-Driven Payment Model Recalibration

The movement from the Resource Utilization Group (RUG-IV) to PDPM was meant to be budget neutral and CMS made it clear that they would continue to monitor data during the transition. In this proposed rule, they show they have stayed true to their word.  In FY 2020, SNFs received an estimated increase in payments of 5% or $1.7 billion, and CMS uses this proposed rule to explain why.

Data analysis indicates that therapy utilization has dropped significantly since the start of PDPM. CMS references that while daily therapy minutes dropped over 30% on average, metrics related to health outcomes, falls with injury, pressure ulcers, and inpatient readmissions have remained relatively unchanged.  In addition, concurrent and group therapy utilization increased from 1% combined to 32% and 29% respectively.  This was followed by a sharp drop to 8% for concurrent and 4% for group therapy utilization at the start of the PHE.  Even with COVID-19 as a consideration, they reason that the increase in payouts was related to other factors. CMS feels the PDPM parity adjustment in FY 2020 may have “inadvertently triggered a significant increase in overall payment levels under the SNF PPS.” Now, they are looking to make an adjustment soon to achieve their budget-neutral status.

CMS notes in the proposed rule that their data shows slight decreases in the average case-mix index (CMI) for the PT and OT rate components during FY 2020.  On the other hand, they also found significant increases in the average CMI for SLP, Nursing and NTA components that they indicate may be primarily responsible for the increased PDPM spending; however, the model for PDPM parity recalibration presented in this proposed rule outlines an adjustment across all case-mix components equally to achieve an overall 5% reduction in SNF spending.  Budget neutrality is non-negotiable, but CMS is looking for feedback on how to best implement a recalibration.

The good news?  Many of these changes are not proposed, but rather, open for discussion. The comment period on the proposed rule is open until June 7, 2021. Now is the time to be heard.


The information contained in this article is a summary and intended for educational purposes only. Interpretation of final rules and any guidance should be reviewed with your legal and compliance teams for applicability to your practice or organization.


FY 2022 SNF PPS Proposed Rule CMS Fact Sheet

FY 2022 SNF PPS Proposed Rule (CMS 1746-P)

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