CMS proposes Medicare payment rules for SNFs, 3 others

SNFs to see 2.4% boost in Medicare payments

According to the FY 2027 Skilled Nursing Facility Prospective Payment System Proposed Rule, SNFs are expected to see a 2.4% increase in aggregate payments next year. That equates to about $888 million more Part A payments to SNFs in FY 2027.

The total increase in payments is based on a 3.2% market basket update and a 0.8 percentage-point decrease for productivity. However, it does not reflect payment adjustments through the SNF Value-Based Purchasing (VBP) Program, which CMS estimated to total $208.4 million next year.

For the SNF VBP Program, CMS also provided in the proposed rule estimated performance standards for the FY 2029 and FY 2030 program years and an updated "snapshot date" for two measures calculated using minimum data set (MDS) assessment data.

Additionally, CMS proposed updates to the SNF Quality Reporting Program (QRP), including removing two COVID-19 measures and adding a new MDS submission requirement for all SNF residents receiving covered skilled care, regardless of payer. SNFs could also face a new data submission deadline, moving from 4.5 months to 45 days, beginning with FY 2029.

CMS also included two requests for information (RFIs) in the proposed rule. First, the agency is seeking public feedback on how to address observed case-mix upcoding under the Patient Driven Payment Model. The agency also wants more information on an advanced care planning measure topic for SNF quality reporting.

CMS seeks stronger oversight of hospices

The FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements Proposed Rule would inject an additional $785 million in payments to hospices. With overall payments increasing, CMS proposed an updated hospice cap of $36,210.11.

Additionally, CMS is seeking greater federal oversight of hospice billing and care delivery practices.

The proposed rule would create and assign each hospice a score based on its patients' non-hospice spending to address growing spending in this category for terminally ill patients. The new score, called the service and spending variation index, or SSVI, would also take into account patients discharged with a length of stay of 180 days or more, average minutes per routine home care day and patients who return to the same hospice within a week of discharge.

CMS said the metrics used to inform the SSVI are not direct indicators of fraud, waste or abuse. However, a high SSVI score would "represent a potential higher level of concern," signaling possible inappropriate utilization or program integrity risks. Hospices with high scores could be subject to additional compliance reviews.

The agency plans to post each facility's SSVI and provider-level data on its Hospice Center webpage.

To further combat non-hospice spending, CMS proposed to require hospices to provide a hospice election statement addendum that informs patients, in plain language, which services, items, drugs and conditions are not related to a patient's terminal illness and may not be covered by Medicare. Hospices currently only have to provide this upon request.

If finalized, CMS would also create a new icon on the Medicare.gov Care Compare site to identify hospices that did not meet Hospice QRP requirements.

Inpatient rehab facilities get highest payment boost

The proposed rule for the FY 2027 IRF Prospective Payment System would provide a 2.8% boost to Medicare payments to the facilities next year. The update would include a 3.2% market basket update, reduced by a 0.8 percentage point productivity adjustment.

CMS would also update the outlier threshold, reducing it slightly to increase IRF payments by 0.4 percentage points next year.

In total, CMS estimated these technical rate-setting changes to increase Medicare payments to IRFs by $355 million compared to the current fiscal year.

Further, the proposed rule includes changes and clarifications to IRF coverage rules, including that all therapies must be initiated within 36 hours of admission, that the current functional status must be documented at admission, and that the initial interdisciplinary team meeting must occur on or before the fourth day of admission.

For the IRF QRP, CMS also proposed revising the data submission timeline from 4.5 months to 45 days, beginning with FY 2029 IRF QRP. CMS said the shortened period would "reduce the lag in public reporting by up to three months," giving the public and IRFs more timely quality data.

Finally, CMS included two RFIs in the proposed rule, including one seeking feedback on potential enhancements to the IRF Prospective Payment System, including how primary diagnoses and comorbidities are used to classify patients by case mix.

The agency is also soliciting public comment on adding advanced care planning as a measure topic in future years of the IRF QRP.

CMS proposes $50M increase for inpatient psych facilities

Facilities paid under the IPF Prospective Payment System would get an additional $50 million in FY 2027 under a new proposed rule.

The proposed rule included a 2.3% increase to payment rates based on a 3.1% market basket increase, less than a 0.8 percentage point adjustment for productivity. It would also update the outlier threshold  estimated outlier payments at 2.0% of total payments.

CMS explained that the outlier threshold has recently increased significantly, creating access concerns among IPFs. The agency proposed capping outlier payments at the provider level to minimize the impact of high-cost facilities that are raising the outlier threshold.

For the IPF QRP, the proposed rule would remove two measures around alcohol and tobacco use for the 2026 reporting period. If finalized as is, CMS would also implement a standardized IPF patient assessment instrument that leverages Health Level Seven's Fast Healthcare Interoperability Resources (FHIR) standard.

This would mark the first CMS statutory quality reporting program to use FHIR to support patient assessment data submission.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.