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Proposed Fiscal Year 2016 Payment and Policies Changes for Medicare Skilled Nursing Homes

May 12, 2015

George Thomas, CPA

The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule on April 15, 2015 describing the proposed fiscal year 2016 Medicare payment rates for skilled nursing facilities (SNF). This proposed rule also continues the commitment to shift Medicare payment from volume to value.  

Proposed Changes to Payment Rate under the SNF Prospective Payment System (PPS)

CMS projects that aggregate payments nationally to SNFs will increase by $500 Million or 1.4% from payments in 2015. This increase is based upon a 2.6% Market Basket increase reduced by 1.2% of forecast payment error and productivity adjustments. This proposed increase is a national inflation increase and only a component of the overall rate change, along with a geographic labor factor which will also be applied to each facility. The final 2016 increase will be announced in September and will be effective on October 1, 2016. 

Proposed SNF Quality Reporting Program

Beginning in federal fiscal year 2018, all skilled nursing facilities will be required to provide CMS with three quality reporting measures. The initial three required measures will be: 

  1. Skin Integrity and Changes in Skin Integrity, which will be the percentage of residents with new or worsened pressure ulcers since admission.
  2. Incidents of Major Falls, which will be the percentage of residents experiencing one or more falls with a major injury.
  3. Functional and Cognitive Status Changes, which will be the percentage of residents with an admission and discharge functional assessment and a care plan that addresses function.

Any facility which does not provide this information to CMS will have their annual rate updates reduced by 2%.

Proposed Staffing Data Collections

Beginning on July 1, 2016, all SNF and Nursing Facilities (NF) will be required to electronically submit to CMS complete and accurate direct care staffing information. The specific direct care information that will be required to be submitted quarterly will include: 

  1. Hours worked by person whether employee or contracted service staff by type of service such as registered, licensed or nurse’s aide provided.
  2. Notation if the individual providing direct care services is an employee or contracted service staff.
  3. Each direct care employee start date of employment and end date of employment, if applicable.
  4. This data will be submitted in a format similar to the current annual information filing in CMS staffing forms 671 and 672.

CMS will consider this submission of data a requirement of participation of the SNF in the Medicare program and the NF in the Medicaid program.

Skilled Nursing Home Value-Based Purchasing Program

An SNF value-based purchasing program will begin in federal fiscal year 2019. The initial value-based measurement for SNFs will be based on a 30-day all-cause readmission measure. This measure will be based on unplanned hospital readmissions of non-cancer diagnosed residents occurring after the day of discharge from the acute care hospital which occur within 30 days of the initial acute-care hospital discharge.


These items are the key elements included in this proposed rule for 2016. For the full rule please see the link to the April 15, 2015 Federal Register.

If you would like to comment on the rule, a 60-day comment period is provided before a final rule is published later this summer. We will provide updates when the final rule is completed.

If you have additional questions, please contact George Thomas at


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