Skilled nursing, hospice and rehab facilities see payment increases in final rule
Skilled nursing, hospice and rehab facilities see payment increases in final rule

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The Centers for Medicare and Medicaid Services has released final rules that increase payment for skilled nursing facilities, hospice and rehab facilities.


CMS estimates that the impact of the payment policies in the final rule would result in an increase of approximately $410 million in Medicare Part A payments under the Skilled Nursing Facility prospective payment system for FY 2022. 

This estimate reflects at $411 million increase from the update to the payment rates of 1.2% – which is based on a 2.7% skilled nursing facility market basket update, less a 0.8 percentage point forecast error adjustment and a 0.7 percentage point productivity adjustment – and a $1.2 million decrease due to the proposed reduction to rates to account for the recent blood-clotting factors exclusion. 

The law requires that certain specified blood clotting factors used for the treatment of patients with hemophilia and other bleeding disorders and items and related services be excluded from the consolidated billing requirements for items and services furnished on or after October 1.

CMS is finalizing a proportional reduction in the Medicare Part A skilled nursing facility rate to account for this new exclusion. This methodology will result in an estimated decrease of approximately $1.2 million in aggregate Part A skilled nursing facility spending to offset the increase in Part B spending that will occur due to these items and services being excluded from consolidated billing.

These impact figures do not incorporate the skilled nursing facility value-based program reductions that are estimated to be $184.25 million in 2022.

The skilled nursing facility quality reporting program is a pay-for-reporting program. SNFs that do not meet reporting requirements may be subject to a two-percentage point reduction. 

CMS has adopted two new measures and updated the specifications for another measure. In addition, CMS has made a modification to the public reporting of SNF quality measures. 

CMS adopted a new claims-based measure on healthcare-associated infections that result in hospitalization. It also adopted the COVID-19 Vaccination Coverage among Healthcare Personnel Measure beginning with 2023 reporting. This measure will require SNFs to report on COVID-19 vaccinations of their staff to assess whether SNFs are taking steps to limit the spread of COVID-19 among their workforce and to reduce the risk of transmission within their facilities.

Finally, CMS sought comments on the two requests for information on closing the health equity gap and Fast Healthcare Interoperability Resources or FHIR, in support of digital quality measurement in post-acute care quality reporting programs.

More information on the rule is available from the CMS Fact Sheet.


On October 1, 2019, CMS implemented a new case-mix classification model, called the Patient Driven Payment Model that would be budget neutral. Since implementation, there is an unintended increase in payments of approximately 5% or $1.7 billion in 2020. 

CMS acknowledges that the COVID-19 public health emergency could have affected the data. CMS sought comment on a potential methodology for recalibrating the parity adjustment to account for unintended increases in payments. 


The value-based program rewards SNFs with incentive payments based on the quality of care they provide to Medicare beneficiaries, as measured by performance on a single measure of hospital readmissions. All skilled nursing facilities that are paid under Medicare’s prospective payment system are included in the value-based program.

CMS will suppress the Skilled Nursing Facility 30-Day All-Cause Readmission Measure for the 2022 value-based program year because of the public health emergency. As part of a special scoring policy, CMS will assign a performance score of zero to all participating SNFs, irrespective of how they perform using the previously finalized scoring methodology.

The Consolidated Appropriations Act, 2021 included a provision allowing the Department of Health and Human Services to expand the SNF value-based program and apply up to an additional nine measures with respect to payments beginning in 2024, which may include measures of functional status, patient safety, care coordination or patient experience.


CMS will reduce the otherwise applicable federal per diem rate for each SNF by 2% and award SNFs 60% of that withhold, resulting in a 1.2% payback percentage. Finally, SNFs that qualify for the low-volume adjustment will continue to receive 100% of that 2% withhold.


CMS’s hospice final rule gives hospices a 2% increase for an additional $480 million in their payments for 2022. This is a result of the 2.7% market basket percentage increase reduced by a 0.7 percentage point productivity adjustment. Hospices that fail to meet quality reporting requirements receive a 2 percentage point reduction to the annual hospice payment update percentage increase for the year.

The payments also include an update to the statutory aggregate cap amount, which limits the overall payments per patient that are made to a hospice annually. The cap amount for 2022 is $31,297.61, compared to the 2021 cap amount of $30,683.93, an increase of 2%. As a result of the changes mandated by the Consolidated Appropriations Act, 2021, this rule extends the years that the cap amount is updated by the hospice payment update percentage rather than the consumer price index.

In addition, this rule finalizes changes to the Hospice Conditions of Participation and Hospice Quality Reporting Program. 

The final rule also finalizes a Home Health Quality Reporting Program policy that becomes effective on October 1, to prepare for public reporting beginning in January 2022.

For certain claims-based measures, CMS is using three quarters rather than four quarters of data for refreshes between January 2022 and July 2024. 

The rule rebases and revises the labor shares for all four levels of care: routine home care, continuous home care, inpatient respite care and general inpatient care based on the compensation cost weights for each level of care from the 2018 Medicare cost report data for freestanding hospices. 

The final 2022 labor shares are 66% for routine home care, 75.2% for continuous home care, 61% for inpatient respite care and 63.5% for general inpatient care.

As a result of this rule, the quality reporting will contain four quality measures that capture care across the hospice stay, including a new measure called the Hospice Care Index. This measure includes 10 indicators of quality that are calculated from claims data. This claims-based measure will be publicly reported no earlier than May 2022.

This rule also finalizes the addition of the Consumer Assessment of Healthcare Providers and Systems, or CAHPS Hospice Survey Star ratings on Care Compare. 

Additionally, the rule finalizes the addition of the claims-based Hospice Visits in the Last Days of Life measure for public reporting. The claims-based measures will use eight quarters of data to have a larger population for small providers, giving consumers more providers to compare. 

This rule also removes seven individual Hospice Item Set measures because a more broadly applicable measure, the Hospice Comprehensive Assessment Measure is available and already publicly reported. This measure helps to ensure all hospice patients receive a holistic comprehensive assessment. 

Finally, CMS is providing updates regarding its development of a new Hospice Outcome and Patient Evaluation (HOPE) assessment instrument.


The Inpatient Rehabilitation Facility Prospective Payment System payment rates and policies will be effective on October 1. For 20222, CMS is updating the IRF PPS payment rates by 1.9% based on the specific market basket estimate of 2.6%, less a 0.7 percentage point productivity adjustment. 

In addition, the final rule contains an adjustment to the outlier threshold to maintain outlier payments at 3% of total payments. This adjustment will result in a 0.4 percentage point decrease in outlier payments. CMS estimates that the overall IRF payments would increase 1.5%, or by $130 million. 

The IRF QRP is a pay-for-reporting program. IRFs that do not meet reporting requirements are subject to a 2% reduction in their annual increase factor.

CMS is adopting one measure and finalizing its proposal to update the specifications for another measure. In addition, CMS is finalizing its proposal to modify the number of quarters used for public reporting of IRF quality measures due to the public health emergency and sought comments for two requests for information. For more information, see the CMS Fact Sheet.


CMS is finalizing a Medicare Durable Medical Equipment Prosthetics, Orthotics and Supplies payment provision adopted in an interim final rule with comment period issued on May 11, 2018, as well as a provision that was included in a proposed rule published in the Federal Register on November 4, 2020.


Consistent with the Biden Administration’s executive order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, CMS is improving data collection to better measure and analyze disparities across programs and policies.

CMS said it received feedback on ways to attain health equity for all patients through policy solutions that will be valuable in future policy work. 

Twitter: @SusanJMorse
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