Proposed PPS SNF Rates FY2012   

On April 28, 2011 CMS released  the Proposed Rule for updates to the SNF PPS system for FY 2012. The complete document can be accessed at the following link:

CMS is currently weighing the benefits of two very different options for rate adjustments to be implemented in FY 2012.  CMS has used data collected during the first three months of FY2011 to analyze payments made for SNF PPS.  The results indicate a significant increase in the number of RUG scores billed in the upper Rehab categories.  CMS is seeking comments from the industry as to the preferred approach to manage this unanticipated increase:

Option 1 - Recalibration of the Parity Adjustment: CMS would reduce the nursing component weights for those RUGs that had the largest variance from the original parity estimate, i.e. the nursing component of the RUG-IV therapy groups. This recalibration would significantly reduce the weights for those RUG-IV groups.  Although CMS will continue to analyze claims data, the agency is considering making a prospective adjustment to case mix weights to "restore overall payments to their intended levels," which would cut rates by $4.47 billion. While this amount would be partly offset by the 1.5% update, this option would still result in a net payment decrease of $3.94 billion (-11.3%).

Option 2 - No Recalibration for FY 2012: CMS would apply the standard rate update methodology, which would increase rates by 1.5% ($530 million) as a result of a 2.7% market basket update reduced by a 1.2 percentage point "Multifactor Productivity Adjustment".  CMS would hold off on recalibrating the RUG-IV weights until more data could be compiled and analyzed. It is possible that the redistribution of cases during the first 3 months of FY 2011 is not indicative of the full year's trend. It is also possible that the distribution of cases in FY 2012 will again reflect a change, as CMS is proposing a change to the guidelines for billing and documenting group therapy.