CMS Finalizes Fiscal Year 2018 Medicare Payment and Policy Changes for Skilled Nursing Facilities

September 27, 2018

The Centers for Medicare & Medicaid Services (CMS) issued a final rule [CMS-1679-F] outlining Fiscal Year (FY) 2018 Medicare payment rates and quality programs for skilled nursing facilities (SNFs).

Policies in the final rule continue to build on CMS' commitment to shift Medicare payments from volume to value, with continued implementation of the SNF Value-based Purchasing (VBP) program. This final rule replaces the existing case-mix classification methodology, the Resource Utilization Groups, Version IV (RUG-IV) model, with a revised case-mix methodology called the Patient-Driven Payment Model (PDPM) effective October 1, 2019. This rule also finalizes updates to the Skilled Nursing Facility Quality Reporting Program (SNF QRP) and Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP).

Effective Date: This final rule is effective October 1, 2018.

Implementation Date:  The implementation date of the new PPS Rates is October 1, 2018 and for revised case-mix methodology, PDPM, and associated policies is October 1, 2019.

Changes to Payment Rates under the SNF Prospective Payment System (PPS)
The final FY 2019 SNF prospective payment system (PPS) rule increases payments rates to SNFs in the aggregate by $820 million. Below is a link to the Mueller Prost Rate PPS Rate Calculator. This calculator accounts for the CMS Final 2.4% market basket update, the SNF QRP adjustment (for affected facilities), the SNF VBP incentive payment multiplier, and sequester adjustment.

Click here to download the RUGs 2018-19 Calculator (.xlsx)

SNF Quality Reporting Program (QRP)
Under the SNF QRP, SNFs that fail to submit the required quality data to CMS will be subject to a 2% point reduction to the otherwise applicable annual market basket percentage update with respect to that fiscal year.

SNF Value-Based Purchasing Program (VBP) )
The SNF VBP Program has adopted scoring and operational policies for its first year (FY 2019) and has specified measures and program features as required by statute. The FY 2018 SNF PPS final rule includes additional Program proposals, including an exchange function approach to implement value-based incentive payment adjustments beginning October 1, 2018.

Patient-Driven Payment Model (PDPM))
The PDPM statute specifies that the adjustment is to be based on both a resident classification system that accounts for the relative resource use of different resident types, as well as resident assessment.The new system will adjust five different case-mix components for the varied needs and characteristics of a resident's care, and then combine these with the non-case-mix component to form the full SNF PPS per diem rate for that resident.

NOTE: Mueller Prost will be hosting a webinar with detailed training on PDPM. Please look out for this webinar coming in November! If you want specific one on one training onsite at your organization, please contact Tiffany Karlin:

Detailed Info:
The final rule displayed on July 31, 2017, at the Federal Register's at:

Additional information is available at:

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