Stay up-to-date on skilled nursing regulations along with tips and tricks to improve your medical billing from the experts at MCA.

Posted: Apr 6, 2022

CMS FY 2022 Final Rule for Skilled Nursing Facilities

Annually, the Centers for Medicare and Medicaid Services update regulations to Medicare payment policies for Skilled Nursing Facilities (SNFs). Reviews and updates of the regulations account for patient-care-related payment adjustments, inflation factors, and wage index adjustments.

The CMS FY 2022 final rule included updates for Medicare payment policies and rates, SNF quality reporting, and the SNF Value-Based program. This final rule allows SNFs to continue to focus on their response to the COVID-19 pandemic with streamlined requirements and regulations. 

Many of the changes made in the CMS rule have a minimal impact on many organizations. But, it is important to be aware of any changes that are impacting an organization and its fiscal health. 

Below you will find our key observations from the CMS final rule for skilled nursing facilities. 

Key Observations

  • CMS confirmed payment increases by 1.2% for SNFs. This will result in an estimated $410 million increase in payments compared to last year. 
  • The SNF quality program had minor changes. Changes included the introduction of two new quality measures. 
  • The Patient-Driven Payment Model (PDPM) did not have any changes. 
  • SNF readmission rates will still be calculated but will not be used to score facility performance for the FY 2022 Value-Based Purchasing program. 
  • Introduced Part A billing exemption for blood clotting factors and related services and items.

Need help understanding how the CMS final rule might impact your skilled nursing facility?

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For more detailed information on the Centers for Medicare and Medicaid FY 2022 final rule for skilled nursing facilities, you can download the full rule from the Federal Register. Or, check out the CMS fact sheet.

Overview of the CMS FY 2022 Final Rule for Skilled Nursing Facilities (SNFs)

Market Basket and Payment Update

CMS has set the market basket rate for FY 2022 at 2.7%. This rate update increases payment by 1.2%. Resulting in an estimated increase of $410 million for Medicare Part A payments to SNFs. The rate increase includes a forecast error adjustment of 0.8% and a productivity adjustment of 0.7%. These are subtracted from the market basket percentage.

Consolidated Billing

To account for the exclusion of certain blood clotting factors, CMS finalized a reduction of the Medicare Part A SNF rates. Additionally, the final rule did include added HCPCS codes that were not included in the proposed rule. These codes are billed separately under Part B when associated with a SNFs Part A resident. CMS finalized a $0.02 in the adjusted urban and rural rates to reflect the exclusion of the blood clotting factors.

Find more information about the excluded codes on the SNF Consolidated Billing website under our resource section below.

Patient-Driven Payment Model (PDPM)

CMS determined that the PDPM had paid approximately 5% more in FY 2020 than it would have under the previous payment model. CMS had noted that a recalibration of the PDPM parity adjustment is needed. They proposed various methodologies in the proposed rule. It was determined that no changes to the PDPM will occur for FY 2022. Instead, CMS intends to propose recalibration methods on the FY 2023 SNF PPS Proposed Rule.

SNF Value-Based Purchasing Program

The final rule acknowledges that COVID-19 has impacted the readmission measure and resulting performance scores. Because of this, CMS will continue to suppress the use of SNF readmission measure data for scoring and payment adjustments in the SNF value-based purchasing (VBP) program. 

CMS confirmed that SNF readmission rates will still be calculated. But, the score would not be used to rank SNFs, score facility performance, or calculate the incentive payment. Instead, all SNFs participating in the VBP program will receive a score of zero regardless of their performance. To compensate for suppressing this score, CMS plans to reduce each eligible SNFs adjusted federal per diem rate by 2% and return 60% of the withhold as their incentive payment. This results in a 1.2% payback to the SNFs.

CMS does plan to report the FY 2022 SNF readmission rates noting the data limitations due to the COVID-19 public health emergency.

Quality Reporting

CMS confirmed that the SNF quality reporting program (QRP) will continue as a pay-for-reporting program. Additionally, any SNFs that do not meet the reporting requirements may be subject to a 2% reduction in their annual update. 

CMS finalized the adoption of two no measures for FY 2023.

  • COVID-19 Vaccination Coverage Among Healthcare Personnel Measure –  CMS has determined that it is important to assess whether SNFs are taking steps to reduce COVID-19 transmission. This measure requires facilities to disclose healthcare personnel vaccination data to the CDC and National Healthcare Safety Network. 
  • Skilled Nursing Facilities Healthcare-Associated Infections (HAI) Outcomes Measure – This risk-standardized measure is being implemented to help identify facilities that may see higher rates of infection in the event of another pandemic. This is a claims-based measure so no additional data will be required from the SNFs. 

CMS also finalized updates to the Transfer of Health Information to the Patient – Post-Acute Care Measure. For this measure, the denominator will exclude residents discharged home under the care of an organized home health service or hospice. 

How can we help

We recognize that the CMS final rule changes can have a broad impact on your organization. The information and breakdown of the CMS final rule is our summary. It is our goal to ensure that all our clients remain informed of any changes that may impact the financial health of their organization.

Should you have questions about the CMS final rule, we’re always here to help. But, we also encourage all our clients to review the final rule with their legal and compliance teams. This helps to ensure you’re applying these decisions to your organization appropriately.

At the end of the day, we strive to provide you with information and support. So, if there is anything we can do to help, don’t hesitate to reach out.

Contact MCA


FY 2022 Skilled Nursing Facility PPS Final Rule

FY 2022 Skilled Nursing Facility PPS Final Rule Fact Sheet

Skilled Nursing Facility Quality Reporting Program

Skilled Nursing Facility Value-Based Purchasing Program

Patient Driven Payment Model 
SNF Consolidated Billing