CMS Publishes Proposed Rule for Fiscal Year 2021 Skilled Nursing Facility Payments

On April 15, 2020, the Centers for Medicare and Medicaid Services (CMS) published the proposed rule for fiscal year (FY) 2021 Skilled Nursing Facility Prospective Payment System (SNF PPS). The rule affects discharge dates on or after October 1, 2020.

Each year, CMS publishes updates to the regulations for inflation factors, wage index adjustments, and other patient-care related payment adjustments. Below is an overview of the FY 2021 SNF PPS, including proposed changes and other relevant updates.

Proposed Changes to SNF Payments

The proposed rule includes the following key changes:

  • A 2.3% payment increase in payments to SNFs
  • Code mapping classifications for the Patient Driven Payment Model (PDPM) case-mix
  • Updates to the SNF Value-Based Purchasing (VBP) Program

Below are the unadjusted case-mix updates for FY 2021 compared to the prior year and the detailed listing of case-mix adjusted rates for FY 2021 by PDPM group.

FY 2020 Unadjusted Federal Rate Per Diem—Urban



FY 2020 Unadjusted Federal Rate Per Diem—Rural



FY 2021 Unadjusted Federal Rate Per Diem—Urban



FY 2021 Unadjusted Federal Rate Per Diem—Rural



PDPM Case-Mix Adjusted Federal Rates and Associated Indexes—Urban



PDPM Case-Mix Adjusted Federal Rates and Associated Indexes—Rural


Other Notable Updates

Wage Index Updates and Core-Based Statistical Area Designation

The FY 2021 SNF PPS rule proposes to adopt the most recent Office of Management and Budget (OMB) Core-Based Statistical Area (CBSA) delineations and apply a 5% cap on any wage index decreases, compared to FY 2020, in a budget-neutral manner.

The top five increases and decreases for urban and rural CBSAs in the proposed rule are outlined below.

CBSA Changes for Urban Areas



CBSA Changes for Rural Areas



The following classification changes will occur due to the proposed CBSA revisions:

  • 34 counties that are currently classified as urban will become rural.
  • 47 counties that are currently rural will become urban.
  • Some counties will move from one CBSA to another.

Patient Driven Payment Model Clinical Diagnosis Mappings

Through the proposed FY 2021 SNF PPS rule, CMS intends to continue to refine the ICD-10 diagnosis mappings in the PDPM.

When CMS implements sweeping changes, such as the transition from the historical Resource Utilization Grouping (RUG)-IV payment system to the PDPM model, it only has authority to make changes prospectively and will continue to do so annually as claims information validates or disputes assumptions made in its modeling.

Because CMS completed the FY 2021 rulemaking with only three months of claims information under the new PDPM payment system, CMS will continue to rely on historical modeling estimates until it has sufficient claims detail to perform retrospective reviews of actual patient-care information to its baseline assumptions. Once CMS completes these reviews, it will likely take prospective action to true-up activity to maintain budget neutrality. This review should occur during the FY 2022 rulemaking cycle.

SNF Value-Based Purchasing

Other provisions of the proposed rule include updates to the SNF VBP Program that align the requirements more closely with previous policies.

These proposed revisions achieve the following:

  • Apply the 30-day Phase One Review and Correction deadline to the quarterly report of baseline period quality measurements
  • Establish performance periods and performance standards for upcoming program years

In the rule, no changes were proposed to VBP quality measures or scoring. 

Economic Impact

The overall economic impact of this proposed rule is an estimated $784 million in increased payments from the US Federal Government to SNFs during FY 2021.

Public Comments

Public comments can be submitted no later than 5:00 p.m. Eastern Standard Time on June 9, 2020. Reference CMS-1737 P in your comment submission.

Before submitting comments, consult with the rule’s submission instructions so you adhere to the proper method.

We’re Here to Help

For more information about the proposed rule and possible implications for you and your organization, contact your Moss Adams professional.

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