CMS Finalizes Rule on 2016 Medicare Payments for Skilled Nursing Facilities

The CMS has issued the final rule on 2016 Medicare payments for Skilled Nursing Facilities outlining changes to payment rates and policies. The final rule follows the shift of rates to be based on value and quality of care, rather than volume with an eye on the entire health care system.

Important changes include:


  • Final rate setting for Medicare SNF payments;

  • The addition of an all-condition hospital readmission quality measure and adoption of the SNF Value-Based Purchasing (VBP) Program; and

  • Implementation of new regulatory reporting requirement.


SNF PaymentsAccording to the CMS, the aggregate payments to SNFs during fiscal year 2016 will rise by 1.2 percent or $430 million compared to 2015. This increase is qualified to a 2.3 percent market basket increase, reduced by a 0.6 percent point forecast error adjustment and further reduced by a 0.5 percentage point, a multifactor productivity adjustment required by law.

CMS projects that there are approximately 1,420 Medicare SNF facilities in the Pacific region that will experience a 1.8 percent total increase in payments in FY 2016. On the other hand, the 103 rural SNF facilities in the same region are projected to see an increase of 1.4 percent. Hence, the impact of the changes varies by location.

Three New Quality Measures for 2018

In 2018, three new quality measures will be added with the aim of adding more standardized measures in the future. The new quality measures are:

  • Skin Integrity and Changes in Skin Integrity
  • Incidence of Major Falls
  • Functional Status, Cognitive Function

The finalized rule also implements the all-cause, all-condition readmission measure for SNF Medicare beneficiaries within 30 days of their discharge. Failing to report required quality data by 2018 will result in reduction of market basket by two percent.

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