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CMS increases Medicare payment for three types of providers


In a final rule, the Centers for Medicare and Medicaid Services has announced increased Medicare payment rates for inpatient psychiatric facilities, skilled nursing facilities and hospices.


CMS is finalizing a 2.2{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} payment rate update, an estimated $95 million, for the inpatient psychiatric facilities prospective payment system for 2021. 

It is also finalizing its proposal to adopt revised Office of Management and Budget statistical area delineations resulting in wage index values being more representative of the actual costs of labor in a given area. 

The updates will allow advanced practice providers, including physician assistants, nurse practitioners, psychologists and clinical nurse specialists, to operate within the scope of practice allowed by state law by documenting progress notes in the medical record of patients for whom they are responsible, receiving services in psychiatric hospitals.

The current regulation is inconsistent with other recent changes finalized throughout the hospital conditions of participation and unnecessarily imposes regulatory burden on psychiatric hospitals, CMS said.


CMS projects aggregate payments to skilled nursing facilities will increase by $750 million, or 2.2{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}, for 2021, compared to 2020.

Skilled nursing facilities are getting routine technical rate-setting updates to their payment rates. The rule also finalizes the adoption of the most recent Office of Management and Budget statistical area delineations and applies a 5{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} cap on wage index decreases from 2020 to 2021. 

In response to stakeholder feedback, CMS is also finalizing changes to the ICD-10 code mappings, effective beginning in FY 2021.

The ICD-10 code mapping relates to the Medicare Patient-Driven Payment Model, which pays for care based on patient characteristics, rather than volume. It classifies patients in a covered Medicare Part A skilled nursing facility into case-mix groups using ICD-10 codes. 

Each year, CMS considers recommendations from stakeholders on changes to the ICD-10 code mappings used. This year in response to recommendations, CMS is finalizing changes to the ICD-10 code mappings effective October 1.

Stakeholders may continue to provide feedback.


For FY 2021, hospice payment rates are updated by the market basket percentage increase of 2.4{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}, which is $540 million. 
Hospices that fail to meet quality reporting requirements will receive a 2{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} reduction to the annual market basket percentage increase for the year. 

The hospice payment system includes a statutory aggregate cap. The aggregate cap limits the overall payments made to a hospice annually. The final hospice cap amount for FY 2021 is $30,683.93, which is equal to the 2020 cap amount of $29,964.78, updated by the final FY 2021 hospice payment update percentage of 2.4{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}.


The skilled nursing facility value-based program scores facilities on their performance on a single claims-based, all-cause, all-condition hospital readmission measure. 

To fund value-based incentive payments, the law requires CMS to reduce the adjusted federal per diem rate otherwise applicable to each skilled nursing facility by 2{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}, and then to redistribute between 50{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} and 70{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of that total reduction as incentive payments based on performance. 

Because of this legislative requirement, the program results in Medicare savings.

Twitter: @SusanJMorse
Email the writer: [email protected]


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