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September 03, 2014 Article 2 min read

On Aug. 5, 2014, the Department of Health and Human Services (DHHS) issued the Federal Register applicable to the prospective payment system (PPS) for skilled nursing facilities. Each year the Federal Register summarizes the rules utilized to form Medicare Part A payment rates. View a spreadsheet of the payment rates: Alaska through Mississippi or Montana through Wyoming. Below is a summary of the FY 2015 rates that should be in effect for the period of Oct. 1, 2014 through Sept. 30, 2015:

  • Estimated Medicare payments to skilled nursing facilities are expected to increase by $750 million during FY 2015.
  • The difference between the forecasted and actual market basket increase related to FY 2013 was 0.3 percent. If the difference between the prior year estimation and the actual market basket increase does not exceed 0.5 percent, there will be no adjustment on current year rates. As a result, there will be no forecast error adjustment of the FY 2015 rates to correct the FY 2013 estimation.
  • The FY 2015 market basket increase is 2.5 percent. However, section 1888(e)(5)(B)(ii) of the Affordable Care Act requires a reduction in the market basket percentage by the MFP adjustment of 0.5 percentage point. As a result, the SNF market basket update for FY 2015 is equal to 2 percent.
  • There are significant variances in wage indices from the prior year. These differences are due to the adoption of the most recent the Office of Management and Budget (OMB) statistical area delineations to identify a facility’s urban or rural status. To minimize the effect of these changes on the wage indices, DHHS will implement a one-year transition using a blended FY 2015 wage index for all providers. View a summary of the wages indices for MI, OH, IN, IL and KY. Our reimbursement team will provide an analysis for wage index changes and changes in CBSAs for any state upon request.  
  • CMS revised the Change of Therapy (COT) Other Medicare Required Assessment (OMRA) policy to address issues that would permit providers to use the COT OMRA to reclassify a resident into a therapy RUG from a non-therapy RUG, but only in certain limited circumstances.
  • Lastly, the final rule provides clarification of statutory requirements under Section 1819(h)(2)(B)(ii) of the Social Security Act (as amended by 6111 of the Affordable Care Act) regarding the approval and use of Civil Money Penalties (CMPs) imposed by CMS against nursing facilities. CMS clarified that states may use federal CMP funds only after obtaining prior approval from CMS, and may not use these funds if CMS has disapproved their intended use. CMS also requires that states provide increased public transparency on the projects that have been funded by CMP funds.
  • Please note that current DHHS rule did not address the issue of sequestration. Medicare sequestration remains and could even be extended two more years beyond 2021.
  • We also wanted to remind you that for dual eligible swing-bed services and dual eligibles in skilled nursing facilities, allowable bad debt for cost reporting periods beginning during FY 2014 is 76 percent; for cost reporting periods beginning during FY 2015 and subsequent years it will be 65 percent.