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In late April 2016, the Centers for Medicare and Medicaid Services (CMS) issued proposed rules for several post-acute settings including inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs) to establish Medicare payment rates and other initiatives effective October 1, 2016 – the start of fiscal year 2017. Each of these proposed rules offer a 60-day period for stakeholders to explicitly respond to any proposed changes, which may influence the final payment rules expected to be issued late July at the earliest. As we did in previous years, Kindred’s policy department and clinical teams will craft comprehensive comments and submit to CMS. Fortunately, each of the rules were generally in line with expectations and none included unanticipated policy changes.

Highlights of the proposed rules:

IRFs

Payment Updates: For FY 2017, CMS is proposing to increase IRF prospective payment system (PPS) rates by a national average of 1.6%, or a $126 million increase as compared to FY 2016. This net increase includes a 2.7% market-basket update; mandatory cuts of 0.5% for a productivity adjustment and an additional 0.75%; and a 0.2% increase for an updated outlier threshold. 

Quality Reporting: CMS proposed a total of five new measures for the IRF Quality Reporting Program– Four 2018 measures (Medicare spending per beneficiary, discharge to community, potentially-preventable 30-day post-discharge readmissions and a “within stay” readmission measure) and one 2020 measure (drug regimen review). 

SNFs

Payment Updates: CMS proposed an overall 2.1% update, or an $800 million increase over FY 2016 payments, which reflects a 2.6% market basket update reduced by the mandatory 0.5% productivity cut. 

Quality Reporting: CMS proposed that the SNF Quality Reporting Program (QRP) be updated by the same measures as proposed in the IRF rule – four in 2018 and one in 2020. 

Value-Based Purchasing (VBP): Within the proposed rule, CMS details the performance standards and a scoring methodology for the mandatory SNF VPB program. This program, effective October 1, 2018, will provide incentive payments for high performance on hospital readmissions and penalties of up to 2% for those lowest performers.  

These payment updates will be finalized by early August at the latest.