The Center for Medicare & Medicaid Services (CMS) released the Final Rule for SNF PPS and consolidated billing for fiscal year (FY) 2012 on Friday, July 29. An important provision included in this rule would reduce Medicare SNF PPS payments in FY 2012 by $3.87 billion, or 11.1% lower than payments for FY 2011. CMS states that the reason for this rate reduction is to correct for an unintended spike in payment levels and better align Medicare payments with costs.
CMS is committed to providing high quality care to those in skilled nursing facilities and to pay those facilities properly for that care, said CMS Administrator Donald M. Berwick, MD, in the CMS press release. The adjustments to the payment rates for next year reflect that policy.
CMS is blaming the spike in payment levels, which they are now trying to correct with lower payments in 2012, on a forecast error that occurred with the transition from RUG-III to RUG-IV. According to the CMS press release, the parity adjustment made in FY 2011, which was intended to ensure that the new RUG-IV system would not change overall spending levels from the prior year, instead resulted in a significant increase in Medicare expenditures. This increase was mainly due to shifts in the utilization of therapy modes under RUG-IV differing significantly from the projections on which the parity adjustment was based.
Facilities that are primarily focused on rehab will experience the hardest hit due to these rate cuts, says Diane L. Brown, BA, regulatory specialist and Boot Camp instructor at HCPro, Inc., in Danvers, MA. "But those facilities that have a more traditional case mix that balances residents in therapy and residents spread across the clinical RUG categories won't feel the effects of a full 11.1% decrease."