CMS Proposes 1.4% Payment Boost for SNFs in 2016

Skilled nursing facilities stand to see Medicare reimbursements increase by 1.4% in fiscal year 2016, under the proposed payment rate announced today by the Centers for Medicare & Medicaid Services.

That would be an overall $500 million increase from fiscal year 2015, CMS noted.

The 1.4% figure comes from a market basket increase of 2.6%, which would be reduced under certain routine adjustments, such as a “multifactor productivity adjustment” mandated by law. The market basket represents the costs of goods and services needed to provide skilled nursing care, taking inflation into account. 


The proposed 2016 payment increase is not as substantial as the $750 million boost that came this year. It matches the 1.4% increase for fiscal year 2014.

The payment rate update comes on the same day that President Obama is expected to sign historic legislation changing the way Medicare calculates doctor payments. To help offset the cost of the changes, SNF market basket updates will be limited to 1% for fiscal year 2018. 

That year also will mark the beginning of a SNF Quality Reporting Program called for by the Improving Medicare Post-Acute Care Transformation Act of 2014, which became law in October. SNFs that fail to submit mandated quarterly quality data to CMS could see their annual payment update docked by 2 percentage points.


Also in the proposed rule released Wednesday, CMS laid out policies related to that Quality Reporting Program.

The IMPACT Act calls for standardized quality measures across various post-acute settings, such as skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. The idea is that by having apples-to-apples quality comparisons, the Medicare payment system can be updated to better incentivize good outcomes.

CMS is proposing three measures addressing domains specified in the IMPACT Act: skin integrity and changes in skin integrity; incidence of major falls; and functional status, cognitive function, and changes in function and cognitive function.

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The agency also is calling for comments related to the creation of a SNF value-based purchasing program, which will tie payments in part to SNFs’ 30-day all-cause hospital readmission measure. Stakeholders are invited to submit comments on topics including measuring improvement, appropriate baseline and performance periods, and public reporting of performance information.

Written by Tim Mullaney

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