Regulatory Update:

CMS Posts SNF Fiscal Year 2019 Proposed Rule

Issued April 30, 2018


On 04/27/18, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule titled: Medicare Program: Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program. The document will be published in the Federal Register on 5/8/18. The CMS Fact Sheet is available here.


The proposed rule regarding fiscal year (FY) 2019 addresses the following topics:

  • A market basket increase of 2.4% effective 10/1/18
  • SNF Quality Reporting Program – no new measures proposed for adoption
  • SNF Value-Based Purchasing Program – updates to policies, adjustments to the scoring methodology and Extraordinary Circumstances Exception (ECE) policy
  • A new payment system to replace the current system of the Resource Utilization Groups IV (RUGs IV). It is a modified version of the 2017 Advanced Notice of Proposed Rulemaking Resident Classification System Version I (RCS-1). The proposed date for implementation of this system is October 1, 2019.


CMS is proposing payment reform for SNF care via replacement of the current RUGs IV system with the Patient-Driven Payment Model (PDPM). CMS proposes this new system to continue to move Medicare toward a more value-based, unified post-acute care payment system. Highlights of the proposed changes as compared with the current payment system include:

  • PDPM will be driven by a patient’s characteristics (e.g. medical conditions and function) versus the volume of services (i.e. therapy minutes)
  • There are five case-mix adjusted payment components rather than four. They include:
    • Physical Therapy (PT), Occupational Therapy (OT), Speech Language Pathology (SLP), Nursing and Non-Therapy Ancillary Services (NTAs) such as drugs, lab services, respiratory therapy and medical supplies
    • This includes 16 case-mix groups each for PT and OT; 12 for SLP, 25 for Nursing and 6 for NTAs
  • Concurrent and group therapy together (i.e. the therapy time received by the patient) would be capped at 25% per discipline and therapy minutes would only be documented on the Part A MDS Discharge Assessment. (Note: there will be no allocation of therapy minutes with the PDPM)
  • There will be a variable per diem adjustment in reimbursement for PT and OT services as well as NTAs
    • A 2% decrease in the PT and OT case-mix component every 7 days after day 20
  • ADL data would be collected through Section GG (versus the current use of Section G information)
  • MDS assessments would be streamlined to include only the initial 5 day MDS and the Part A MDS Discharge Assessment in addition to a new Interim Payment Assessment (IPA)
    • There would be the elimination of the 14, 30, 60 and 90 day MDSs; the Start of Therapy Other Medicare Required Assessment (OMRA); End of Therapy OMRA and Change of Therapy OMRA.

Genesis Rehab Services is working with professional and industry associations to review and assess the impact of the SNF proposed rule as well as the PDPM. The deadline for comment submission is 5 p.m. on June 26, 2018. Release of the SNF PPS final rule is anticipated for August 2018.