DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid ...

This document is scheduled to be published in the Federal Register on 08/04/2021 and available online at

d/2021-16309, and on govinfo.go[vBilling Code: 4120-01-P]

DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 411, 413, 483, and 489 [CMS-1746-F] RIN 0938-AU36 Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program and Value-Based Purchasing Program for Federal Fiscal Year 2022; and Technical Correction to Long-Term Care Facilities Physical Environment Requirements AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: This final rule updates the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2022. In addition, the final rule includes a forecast error adjustment for FY 2022, updates the diagnosis code mappings used under the Patient Driven Payment Model (PDPM), rebases and revises the SNF market basket, implements a recently-enacted SNF consolidated billing exclusion along with the required proportional reduction in the SNF PPS base rates, and includes a discussion of a PDPM parity adjustment. In addition, the final rule includes updates for the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program, including a policy to suppress the use of the SNF readmission measure for scoring and payment adjustment purposes in the FY 2022 SNF VBP Program because we have determined that circumstances caused by the public health emergency for COVID-19 have significantly affected the validity and reliability of the measure and resulting performance scores. We are also finalizing a technical correction to the physical environment requirements that Long-Term Care facilities must meet in order to participate in the Medicare and Medicaid programs.

DATES: These regulations are effective on October 1, 2021. FOR FURTHER INFORMATION CONTACT: Penny Gershman, (410) 786-6643, for information related to SNF PPS clinical issues. Anthony Hodge, (410) 786-6645, for information related to consolidated billing, and payment for SNF-level swing-bed services. John Kane, (410) 786-0557, for information related to the development of the payment rates and case-mix indexes, and general information. Kia Burwell, (410) 786-7816, for information related to the wage index. Heidi Magladry, (410) 786-6034, for information related to the skilled nursing facility quality reporting program. Lang Le, (410) 786-5693, for information related to the skilled nursing facility value-based purchasing program. Kristin Shifflett, (410) 786-4133, for information related to the long-term care conditions of participation. SUPPLEMENTARY INFORMATION: Availability of Certain Tables Exclusively Through the Internet on the CMS Website

As discussed in the FY 2014 SNF PPS final rule (78 FR 47936), tables setting forth the Wage Index for Urban Areas Based on CBSA Labor Market Areas and the Wage Index Based on CBSA Labor Market Areas for Rural Areas are no longer published in the Federal Register. Instead, these tables are available exclusively through the Internet on the CMS website. The wage index tables for this final rule can be accessed on the SNF PPS Wage Index home page, at .

Readers who experience any problems accessing any of these online SNF PPS wage index tables should contact Kia Burwell at (410) 786-7816.

To assist readers in referencing sections contained in this document, we are providing the following Table of Contents.

Table of Contents I. Executive Summary

A. Purpose B. Summary of Major Provisions C. Summary of Cost and Benefits D. Advancing Health Information Exchange II. Background on SNF PPS A. Statutory Basis and Scope B. Initial Transition for the SNF PPS C. Required Annual Rate Updates III. Analysis and Responses to Public Comments on the FY 2022 SNF PPS Proposed Rule A. General Comments on the FY 2022 SNF PPS Proposed Rule IV. SNF PPS Rate Setting Methodology and FY 2022 Update A. Federal Base Rates B. SNF Market Basket Update C. Case-Mix Adjustment D. Wage Index Adjustment E. SNF Value-Based Purchasing Program F. Adjusted Rate Computation Example V. Additional Aspects of the SNF PPS A. SNF Level of Care--Administrative Presumption B. Consolidated Billing C. Payment for SNF-Level Swing-Bed Services D. Revisions to the Regulation Text VI. Other SNF PPS Issues

A. Changes to SNF PPS Wage Index B. Technical Updates to PDPM ICD-10 Mappings C. Recalibrating the PDPM Parity Adjustment VII. Skilled Nursing Facility (SNF) Quality Reporting Program (QRP) VIII. Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP) IX. Long-Term Care Facilities: Physical Environment Requirements X. Collection of Information Requirements XI. Economic Analyses A. Regulatory Impact Analysis B. Regulatory Flexibility Act Analysis C. Unfunded Mandates Reform Act Analysis D. Federalism Analysis E. Reducing Regulation and Controlling Regulatory Costs F. Congressional Review Act G. Regulatory Review Costs I. Executive Summary A. Purpose This final rule updates the SNF prospective payment rates for fiscal year (FY) 2022 as required under section 1888(e)(4)(E) of the Social Security Act (the Act). It also responds to section 1888(e)(4)(H) of the Act, which requires the Secretary to provide for publication of certain specified information relating to the payment update (see section II.C. of this final rule) in the Federal Register, before the August 1 that precedes the start of each FY. As discussed in section VI.A. of this final rule, it will also rebase and revise the SNF market basket index, including updating the base year from 2014 to 2018. As discussed in section V.D. of this final rule, it also makes revisions in the regulation text to exclude from SNF consolidated billing certain blood clotting factors and items and services related to the furnishing of such factors

effective for items and services furnished on or after October 1, 2021, as required by the Consolidated Appropriations Act, 2021 (Pub. L. 116-260, enacted December 27, 2020), as well as certain other conforming revisions. In addition, as required under section 1888(e)(4)(G)(iii) of the Act, as added by section 103(b) of the BBRA 1999, we provide for a proportional reduction in the Part A SNF PPS base rates to account for this exclusion, as described in section IV.B.6. of this final rule. We also make changes to the code mappings used under the SNF PPS for classifying patients into case-mix groups. Additionally, this final rule includes a forecast error adjustment for FY 2022. This final rule also includes a discussion of a PDPM parity adjustment. Finally, this final rule also updates requirements for the Skilled Nursing Facility Quality Reporting Program (SNF QRP) and the Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP), including a policy to suppress the use of the SNF readmission measure for scoring and payment adjustment purposes in the FY 2022 SNF VBP Program because we have determined that circumstances caused by the public health emergency for COVID-19 have significantly affected the validity and reliability of the measure and resulting performance scores. B. Summary of Major Provisions

In accordance with sections 1888(e)(4)(E)(ii)(IV) and (e)(5) of the Act, the Federal rates in this final rule reflect an update to the rates that we published in the SNF PPS final rule for FY 2021 (85 FR 47594, August 5, 2020). We are also rebasing and revising the SNF market basket index, including updating the base year from 2014 to 2018. This final rule includes revisions to the regulation text to exclude from SNF consolidated billing certain blood clotting factors and items and services related to the furnishing of such factors effective for items and services furnished on or after October 1, 2021, as required by the Consolidated Appropriations Act, 2021, as well as certain conforming revisions. We are also making a required reduction in the SNF PPS base rates to account for this new exclusion. This final rule includes revisions to the International Classification of Diseases, Version 10 (ICD-10) code mappings used under

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