FY 2023 SNF PPS Final Rule: CMS Increases Reimbursement for Nursing Homes

In a surprising turn of events, the Centers for Medicare and Medicaid Services issued the FY 2023 Skilled Nursing Facility Prospective Payment System (SNF PPS) Final Rule which contains a 2.7% increase in Medicare rates to nursing homes. When the proposed payment rule was published in April, the agency had proposed cutting Medicare Part A payments by $320 million, spurring outcry from the sector that has arguably faced more challenges due to the COVID-19 pandemic than any other, setting aside hospitals and state agencies.

The proposed cut was attributed to the introduction of the Patient-Driven Payment Model (PDPM) in 2019 which inadvertently led to a 5% increase for nursing homes in 2020, which necessitated a decrease in payments the following year, according to draft regulation. The new rule rectifies the regulation by stating that it will phase in the payment correction over two years in order to circumvent the burden that would be placed on providers struggling with the ramifications of the ongoing COVID-19 pandemic, according to Modern Healthcare.

Skilled Nursing News spoke to relieved providers who characterized the move as meeting nursing home operators “more than halfway.” Operators like Wesley Rogers, CEO of Brickyard Healthcare, was surprised by the CMS change of course but attributed the move to the work of advocacy organizations like the American Health Care Association (AHCA):

Advocacy in our industry, especially with the federal agencies, lies with helping them understand the dynamics of our business. It’s more critical at this point than it even has been. We continue to devote a lot of time and resources in those efforts.

AHCA President and CEO Mark Parkinson believes the rule will assist providers at a crucial moment:

We greatly appreciate an overall increase to the Medicare program this coming fiscal year to help stabilize the profession and ensure our vulnerable residents have access to necessary, quality care.

While the industry overall has expressed gratitude that CMS listened to their concerns, not everyone is thrilled with the rate increase. Some stakeholders expressed concern that a 2.7% bump could not fix the issues caused by the ongoing pandemic, and more support from CMS and the federal government would be required to right the ship. According to McKnight’s Senior Living, LeadingAge President and CEO Katie Smith Sloan was disappointed that the agency is choosing to enforce the parity adjustment at all, albeit over an extended time frame.

We warned CMS that this is not the time to cut payments. Spreading the impact of the adjustment over two years (2.3% in FY 2023 and 2.3% in FY 2024) is helpful, but the end result adds to the chronic financial neglect of our nations’ nursing homes — in a time of real crisis.

CMS FY 2023 Skilled Nursing Facility Prospective Payment System Final Rule Fact Sheet