Tag Archives: Rod Martin

CMS final rule for skilled nursing facilities and value-based care: Is your organization ready?

On July 31, 2018, the Centers for Medicare and Medicaid Services (CMS) released a final rule that outlined the 2019 fiscal year payment updates and quality program changes for skilled nursing facilities (SNFs). This rule continues the drive for change from fee-for-service to value-based reimbursement and reduces the burden on providers consistent with the Patients Over Paperwork and Meaningful Measures initiatives. Below are the three changes introduced by the final rule and how each change affects SNFs. CMS estimates that the new rule will result in an additional $820 million in Medicare reimbursements to SNFs for the 2019 fiscal year due to the 2.4% increase in payment rates.

Changes to the case-mix classification system

The final rule creates a new Patient-Driven Payment Model (PDPM) for reimbursement that will replace the Resource Utilization Group, Version IV case-mix reimbursement model. This new model focuses on treatment of the whole patient rather than on volume of services. This will decrease paperwork and reduce the overall complexity compared to the old model.

The new PDPM goes into effect for fiscal year 2020, which begins on October 1, 2019, and focuses on clinically relevant factors to determine payment using diagnosis codes. The new model will encourage more contact between healthcare professionals and patients.

PDPM decreases the number of payment group combinations by 80%. It essentially focuses on payments based on the complexity of the patient needs and condition, instead of the volume of hours needed to provide care. Finally, CMS suggests that the new model will reduce the amount of documentation for patient assessments and significantly reduce reporting burdens, saving providers approximately $2 billion over 10 years.

To succeed with this new reimbursement model, SNFs will have to assess the types of patients they treat and may have to adjust treatment plans, including the level of care during stays, and realign their operations accordingly. SNFs will also have to assess their documentation procedures and ensure that patient characteristics and needs are accurately captured.

SNF Quality Reporting Program (QRP)

Also in the final rule, CMS removed measures that were not consistent with the Meaningful Measures initiative. The updated measure set focuses on making care safer, strengthening personal and family engagement, promoting coordination of care, promoting effective prevention and treatment, and making care affordable. There were no new measures suggested or initiated.

SNFs can also educate and engage healthcare professionals and review the new documentation formats for each quality measure. The success in meeting a measure is dependent on the engagement of staff and providers, so that the appropriate coding and documentation meet the quality measure specifications. SNFs can also begin looking at appropriate analytical data, which can help with specific performance needs.

SNF Value-Based Purchasing (VBP) program

The SNF VBP program will begin on October 1, 2018, and will add a positive or negative incentive payment for services rendered by facilities based on the result of their readmission measures. This final rule will reward providers that takes steps to limit 30-day readmissions of their patients to hospitals. SNFs can begin preparations for the VBP program by reviewing their financial, operational, and clinical policies and procedures.


There are several steps that SNFs need to begin to implement now to be ready for the October 1, 2018, implementation of the Value-Based Purchasing program. SNFs are an important part of many Value-Based Purchasing programs and are now being incentivized to provide quality of care to patients. They will be rewarded for looking at the needs of the patient instead of how much time a therapist or caregiver spends with a patient. This new program will allow patients and caregivers to pick facilities that cater to their personal needs for care or rehabilitation.

Maximizing value-based care program performance

Over the past few years, there has been a proliferation of value-based care programs offered by health plans and government payers. These programs, including accountable care organizations, bundled payment programs, and quality incentive programs, often include a multitude of measures related to costs, quality, patient experience, and outcomes, along with various methodologies to determine success.

As the use of value-based reimbursement programs and the associated financial impact increases, it is important for providers to learn the program’s intricacies as well as the analytical, operational, and clinical requirements to ensure its success. In this paper, Milliman consultants Rod Martin and Laurie Lingefelt discuss how success with these programs is possible.