CMS has released its final rule to update Medicare skilled nursing facility (SNF) prospective payment system (PPS) rates and policies for FY 2018, which begins October 1, 2017. The final rule incorporates a 1% increase to SNF PPS rates as mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA); in the absence of MACRA, the update would have been 2%.  CMS estimates that the final rule will increase overall payments to SNFs by $370 million compared to FY 2017 levels (note that in the proposed rule, CMS forecast that the 1% increase would result in a $390 million increase, but CMS scaled back its estimate due to an updated baseline spending figure). A 2% reduction is applied to the update for SNFs that fail to submit required quality measures data.

The final rule also addresses a variety of other SNF PPS policies. Among other things, the rule:  revises and rebases the SNF market basket index; revises quality measures and reporting requirements for the SNF Quality Reporting Program (QRP); finalizes requirements for the SNF Value Based Purchasing Program (which applies to services furnished on or after October 1, 2018); and revises the regulatory requirements for survey team composition for the purposes of investigating a complaint and on-site monitoring of compliance.

As previously reported, CMS is contemplating more significant reforms of the SNF PPS methodology (the Resident Classification System or RCS) to begin as early as FY 2019. Those reforms have not yet been formally proposed, and CMS does not substantively discuss the potential RCS framework in the final FY 2018 rule.