FY 2024 Proposed Medicare Reimbursement Changes for Certain Nursing and Inpatient Facilities

On April 3-4, Centers for Medicare & Medicaid Services (CMS) issued a number of proposed rules that would materially impact reimbursement rates for skilled nursing facilities (SNFs), inpatient psychiatric facilities (IPFs) and inpatient rehabilitation facilities (IRFs).  Overall, the reimbursement changes and other new or updated conditions and requirements are designed to incentivize and improve patient/resident safety, access to care and quality of care/performance.

The SNF proposed rules include changes to the Prospective Payment System (PPS), as well as the Quality Reporting Program (QRP) and Value-Based Purchasing Program (VBP), that would result in a roughly 3.7% (about $1.2 billion) net increase in Part A payments to SNFs in FY 2024. In addition, the proposed rules contain, among other things, the following:

  • Multiple new VBP quality measures related to nursing staff turnover, discharge function, hospitalization rates of long-stay residents, potentially preventable readmissions, and resident fall (with major injury) rates;
  • A simplified constructive hearing waiver process (i.e., a constructive hearing waiver is effectuated by not timely requesting a hearing, rather than formally waiving it) for SNF’s facing civil monetary penalties that would also result in a 35% reduction in penalties;
  • Changes to the ICD-10 coding guidelines/mappings related to the Patient Driven Payment Model (PDPM); and 
  • Various modifications to the SNF QRP including addition/deletion of performance measures and Annual Payment Update (APU) reductions for not meeting specified reporting requirements.

The IPF proposed rules would update the PPS rates, wage index and impact analysis while rebasing and revising the IPF market basket, all of which is expected to result in a 1.9% (about $55 million) increase in IPF PPS payments in FY 2024. In addition, the proposed rules contain, among other things, the following:

  • A simplified process for hospitals to open (and receive reimbursement for) excluded IPF units at any time within the cost reporting year;
  • Addition/modification/deletion of various performance measures under the IPF QRP, including new measures associated with patient care experience/survey results, comprehensive health equity measurements and screening for social needs/social drivers of health; 
  • Implementation of a data validation pilot program commencing with data submitted in 2025; and
  • Codification of the IPF QRP requirements under the Code of Federal Regulations (see 42 C.F.R. §412.433).

The IRF proposed rules would change various aspects of IRF PPS reimbursement including payment rates, productivity adjustments, market baskets, outlier thresholds and other weighting, analyses and indices impacting reimbursement. Overall, the changes would result in an approximate 3.7% (about $335 million) increase in IRF PPS reimbursement for FY 2024. In addition, the proposed rules contain, among other things, the following:

  • A 2% penalty reduction in Annual Increase Factor for not meeting QRP reporting requirements;
  • Addition/deletion/modification of multiple QRP measures; and
  • Simplification of the process for hospitals to open (and receive reimbursement for) new IRF units under the excluded unit regulations.

All said, if adopted, the proposed rules would (at least on an aggregate basis) increase potential reimbursement of SNFs, IPFs and IRFs for FY 2024 while modernizing performance measures under the applicable QRPs and VBPs, and seek to incentivize providers to both expand access to care and improve quality and safety.