Vol. 80 Monday, 

No. 75 April 20, 2015 

Part IV 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Part 483 

Medicare Program; Prospective Payment System and Consolidated Billing 

for Skilled Nursing Facilities (SNFs) for FY 2016, SNF Value-Based 

Purchasing Program, SNF Quality Reporting Program, and Staffing Data 

Collection; Proposed Rule 

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22044 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 483 

[CMS–1622–P] 

RIN 0938–AS44 

Medicare Program; Prospective 

Payment System and Consolidated 

Billing for Skilled Nursing Facilities 

(SNFs) for FY 2016, SNF Value-Based 

Purchasing Program, SNF Quality 

Reporting Program, and Staffing Data 

Collection 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the payment rates used under 

the prospective payment system (PPS) 

for skilled nursing facilities (SNFs) for 

fiscal year (FY) 2016. In addition, it 

includes a proposal to specify a SNF allcause all-condition hospital readmission 

measure, as well as a proposal to adopt 

that measure for a new SNF ValueBased Purchasing (VBP) Program and a 

discussion of SNF VBP Program policies 

we are considering for future 

rulemaking to promote higher quality 

and more efficient health care for 

Medicare beneficiaries. Additionally, 

this proposed rule proposes to 

implement a new quality reporting 

program for SNFs as specified in the 

Improving Medicare Post-Acute Care 

Transformation Act of 2014 (IMPACT 

Act). It also would amend the 

requirements that a long-term care (LTC) 

facility must meet to qualify to 

participate as a skilled nursing facility 

(SNF) in the Medicare program, or a 

nursing facility (NF) in the Medicaid 

program. These requirements 

implement the provision in the 

Affordable Care Act regarding the 

submission of staffing information based 

on payroll data. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on June 19, 2015. 

ADDRESSES: In commenting, please refer 

to file code CMS–1622–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Within 

the search bar, enter the Regulation 

Identifier Number associated with this 

regulation, 0938–AS44, and then click 

on the ‘‘Comment Now’’ box 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1622–P, P.O. Box 8016, Baltimore, 

MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1622–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal Government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

7195 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Penny Gershman, (410) 786–6643, for 

information related to SNF PPS clinical 

issues (excluding any issues raised in 

Section V of this proposed rule). 

John Kane, (410) 786–0557, for 

information related to the development 

of the payment rates and case-mix 

indexes. 

Kia Sidbury, (410) 786–7816, for 

information related to the wage index. 

Bill Ullman, (410) 786–5667, for 

information related to level of care 

determinations, consolidated billing, 

and general information. 

Shannon Kerr, (410) 786–0666, for 

information related to skilled nursing 

facility value-based purchasing. 

Camillus Ezeike, (410) 786–8614, for 

information related to skilled nursing 

facility quality reporting. 

Lorelei Chapman, (410) 786–9254, for 

information related to staffing data 

collection. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Availability of Certain Tables 

Exclusively Through the Internet on the 

CMS Web Site 

As discussed in the FY 2015 SNF PPS 

final rule (79 FR 45628), 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 Web site. The wage 

index tables for this proposed rule can 

be accessed on the SNF PPS Wage Index 

home page, at http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/WageIndex.html. 

Readers who experience any problems 

accessing any of these online SNF PPS 

wage index tables should contact Kia 

Sidbury at (410) 786–7816. 

To assist readers in referencing 

sections contained in this document, we 

are providing the following Table of 

Contents. 

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Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 22045 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of Major Provisions 

C. Summary of Cost and Benefits 

II. Background on SNF PPS 

A. Statutory Basis and Scope 

B. Initial Transition for the SNF PPS 

C. Required Annual Rate Updates 

III. SNF PPS Rate Setting Methodology and 

FY 2016 Update 

A. Federal Base Rates 

B. SNF Market Basket Update 

1. SNF Market Basket Index 

2. Use of the SNF Market Basket Percentage 

3. Forecast Error Adjustment 

4. Multifactor Productivity Adjustment 

a. Incorporating the Multifactor 

Productivity Adjustment Into the Market 

Basket Update 

5. Market Basket Update Factor for FY 

2016 

C. Case-Mix Adjustment 

D. Wage Index Adjustment 

E. Adjusted Rate Computation Example 

IV. Additional Aspects of the SNF PPS 

A. SNF Level of Care—Administrative 

Presumption 

B. Consolidated Billing 

C. Payment for SNF-Level Swing-Bed 

Services 

V. Other Issues 

A. Skilled Nursing Facility Value-Based 

Purchasing Program (SNF VBP) 

1. Background 

a. Overview 

b. SNF VBP Report to Congress 

2. Statutory Basis for the SNF VBP Program 

3. Skilled Nursing Facility 30-Day AllCause Readmission Measure (SNFRM) 

a. Overview 

b. Measure Calculation 

c. Exclusions 

d. Eligible Readmissions 

e. Risk Adjustment 

f. Measurement Period 

g. Stakeholder/MAP Input 

h. Feedback Reports to SNFs 

4. Performance Standards 

a. Background 

i. Hospital Value Based Purchasing 

Program 

ii. Hospital-Acquired Conditions 

Reduction Program 

iii. Hospital Readmissions Reduction 

Program (HRRP) 

iv. End-Stage Renal Disease Quality 

Incentive Program (ESRD QIP) 

b. Measuring Improvement 

i. Improvement Points 

ii. Measure Rate Increases 

iii. Ranking Increases 

iv. Performance Score Increases 

5. FY 2019 Performance Period and 

Baseline Period Considerations 

a. Performance Period 

b. Baseline Period 

6. SNF Performance Scoring 

a. Considerations 

i. Hospital Value-Based Purchasing 

ii. Hospital-Acquired Conditions 

Reduction Program 

iii. Other Considerations 

b. Notification Procedures 

c. Exchange Function 

7. SNF Value-Based Incentive Payments 

8. SNF VBP Public Reporting 

a. SNF-specific Performance Information 

b. Aggregate Performance Information 

B. Advancing Health Information Exchange 

C. Skilled Nursing Facility (SNF) Quality 

Reporting Program (QRP) 

1. Background and Statutory Authority 

2. General Considerations Used for 

Selection of Quality Measures for the 

SNF QRP 

3. Policy for Retaining SNF QRP Measures 

for Future Payment Determinations 

4. Proposed Process for Adoption of 

Changes to SNF QRP Program Measures 

5. Proposed New Quality Measures for FY 

2018 and Subsequent Payment 

Determinations 

a. Quality Measure Addressing the Domain 

of Skin Integrity and Changes in Skin 

Integrity 

b. Quality Measure Addressing the Domain 

of the Incidence of Major Falls 

c. Quality Measure Addressing the Domain 

of Functional Status, Cognitive Function, 

and Changes in Function and Cognitive 

Function 

6. SNF QRP Quality Measures and Under 

Consideration for Future Years 

7. Form, Manner, and Timing of Quality 

Data Submission 

a. Participation/Timing for New SNFs 

b. Data Collection Timelines and 

Requirements for FY 2018 Payment 

Determination and Subsequent Years 

8. SNF QRP Data Completion Thresholds 

for FY 2018 Payment Determination and 

Subsequent Years 

9. SNF QRP Data Validation Requirements 

for the FY 2018 Payment Determination 

and Subsequent Years 

10. SNF QRP Submission Exception and 

Extension Requirements for the FY 2018 

Payment Determination and Subsequent 

Years 

11. SNF QRP Reconsideration and Appeals 

Procedures for the FY 2018 Payment 

Determination and Subsequent Years 

12. Public Display of Quality Measure Data 

for the SNF QRP 

13. Mechanism for Providing Feedback 

Reports to SNFs 

D. Staffing Data Collection 

1. Background and Statutory Authority 

2. Consultation on Specifications 

3. Provisions of the Proposed Rule 

a. Submission Requirements 

b. Distinguishing Employee From Agency 

and Contract Staff 

c. Data Format 

d. Submission Schedule 

4. Compliance and Enforcement 

5. Conclusion 

VI. Collection of Information Requirements 

VII. Response to Comments 

VIII. Economic Analyses 

Regulation Text 

Acronyms 

In addition, because of the many 

terms to which we refer by acronym in 

this proposed rule, we are listing these 

abbreviations and their corresponding 

terms in alphabetical order below: 

AIDS Acquired Immune Deficiency 

Syndrome 

ARD Assessment reference date 

BBA Balanced Budget Act of 1997, Pub. L. 

105–33 

BBRA Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 1999, 

Pub. L. 106–113 

BIPA Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection Act 

of 2000, Pub. L. 106–554 

CAH Critical access hospital 

CASPER Certification and Survey Provider 

Enhanced Reports 

CBSA Core-based statistical area 

CCN CMS Certification Number 

CFR Code of Federal Regulations 

CMI Case-mix index 

CMS Centers for Medicare & Medicaid 

Services 

COT Change of therapy 

ECI Employment Cost Index 

EHR Electronic health record 

EOT End of therapy 

EOT–R End of therapy—resumption 

ESRD–QIP End-Stage Renal Disease Quality 

Incentive Program 

FAQ Frequently Asked Questions 

FFS Fee-for-service 

FR Federal Register 

FY Fiscal year 

GAO Government Accountability Office 

HAC Hospital-Acquired Conditions 

HACRP Hospital-Acquired Condition 

Reduction Program 

HCPCS Healthcare Common Procedure 

Coding System 

HIQR Hospital Inpatient Quality Reporting 

HOQR Hospital Outpatient Quality 

Reporting 

HRRP Hospital Readmissions Reduction 

Program 

HVBP Hospital Value-Based Purchasing 

ICR Information Collection Requirements 

IGI IHS (Information Handling Services) 

Global Insight, Inc. 

IMPACT Improving Medicare Post-Acute 

Care Transformation Act of 2014 

IPPS Inpatient prospective payment system 

IRF Inpatient Rehabilitation Facility 

LTC Long-term care 

LTCH Long-term care hospital 

MAP Measures Application Partnership 

MDS Minimum data set 

MFP Multifactor productivity 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003, Pub. L. 108–173 

MSA Metropolitan statistical area 

NAICS North American Industrial 

Classification System 

NF Nursing facility 

NH Nursing Homes 

NQF National Quality Forum 

OMB Office of Management and Budget 

OMRA Other Medicare Required 

Assessment 

PAC Post-acute care 

PAMA Protecting Access to Medicare Act of 

2014, Pub. L 113–93 

PPS Prospective Payment System 

PQRS Physician Quality Reporting System 

QIES Quality Improvement Evaluation 

System 

QIES ASAP Quality Improvement and 

Evaluation System Assessment Submission 

and Processing 

QRP Quality Reporting Program 

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22046 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 

RAI Resident assessment instrument 

RAVEN Resident assessment validation 

entry 

RFA Regulatory Flexibility Act, Pub. L. 96– 

354 

RIA Regulatory impact analysis 

RUG–III Resource Utilization Groups, 

Version 3 

RUG–IV Resource Utilization Groups, 

Version 4 

RUG–53 Refined 53-Group RUG–III CaseMix Classification System 

SCHIP State Children’s Health Insurance 

Program 

sDTI Suspected deep tissue injuries 

SNF Skilled nursing facility 

SNFRM Skilled Nursing Facility 30-Day 

All-Cause Readmission Measure 

STM Staff time measurement 

STRIVE Staff time and resource intensity 

verification 

TEP Technical expert panel 

UMRA Unfunded Mandates Reform Act, 

Pub. L. 104–4 

VBP Value-based purchasing 

I. Executive Summary 

A. Purpose 

This proposed rule would update the 

SNF prospective payment rates for FY 

2016 as required under section 

1888(e)(4)(E) of the Social Security Act 

(the Act). It would also respond to 

section 1888(e)(4)(H) of the Act, which 

requires the Secretary to provide for 

publication in the Federal Register 

before the August 1 that precedes the 

start of each fiscal year, certain specified 

information relating to the payment 

update (see section II.C.). In addition, it 

proposes to implement a new quality 

reporting program for SNFs under 

section 1888(e)(6) of the Act. 

Furthermore, this proposed rule would 

establish new regulatory reporting 

requirements for SNFs and NFs to 

implement the statutory obligation to 

submit staffing information based on 

payroll data under section 1128I(g) of 

the Act, specify a SNF all-cause allcondition hospital readmission measure 

under section 1888(g)(1) of the Act and 

adopt that measure for a new SNF 

value-based purchasing (VBP) program 

under section 1888(h) of the Act. The 

proposed rule also seeks comment on 

other policies under consideration for a 

SNF VBP Program, under which valuebased incentive payments will be made 

in a fiscal year to SNFs beginning with 

payment for services furnished on or 

after October 1, 2018. 

B. Summary of Major Provisions 

In accordance with sections 

1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of 

the Act, the federal rates in this 

proposed rule would reflect an update 

to the rates that we published in the 

SNF PPS final rule for FY 2015 (79 FR 

45628) which reflects the SNF market 

basket index, as adjusted by the 

applicable forecast error correction and 

by the multifactor productivity 

adjustment for FY 2016. We also 

propose to specify a SNF all-cause allcondition hospital readmission measure 

under section 1888(g) of the Act, as well 

as adopt that measure for a new SNF 

Value-Based Purchasing (VBP) Program 

under section 1888(h) of the Act. We 

also seek comment on other policies for 

the SNF VBP Program that we are 

considering for adoption in future 

rulemaking to promote higher quality 

and more efficient health care for 

Medicare beneficiaries. We are also 

proposing to implement a new quality 

reporting program for SNFs under 

section 1888(e)(6) of the Act, which was 

added by section 2(c)(4) of the IMPACT 

Act of 2014 (Pub. L. 113–85). 

For payment determinations 

beginning with FY 2018, we propose to 

adopt measures meeting three quality 

domains specified in section 

1899B(c)(1) of the Act: Functional 

status, skin integrity, and incidence of 

major falls. 

In addition, we propose adding new 

language at 42 CFR part 483 to 

implement section 1128I(g) of the Act. 

Specifically, we propose that, beginning 

on July 1, 2016, LTC facilities that 

participate in Medicare or Medicaid will 

be required to electronically submit 

direct care staffing information 

(including information for agency and 

contract staff) based on payroll and 

other verifiable and auditable data in a 

uniform format. We invite public 

comment on CMS’ proposed changes to 

42 CFR part 483 to ensure compliance 

with this requirement. 

C. Summary of Cost and Benefits 

Provision description Total transfers 

Proposed FY 2016 SNF PPS payment rate update.The overall economic impact of this proposed rule would be an estimated increase of $500 

million in aggregate payments to SNFs during FY 2016. 

II. Background on SNF PPS 

A. Statutory Basis and Scope 

As amended by section 4432 of the 

Balanced Budget Act of 1997 (BBA, Pub. 

L. 105–33, enacted on August 5, 1997), 

section 1888(e) of the Act provides for 

the implementation of a PPS for SNFs. 

This methodology uses prospective, 

case-mix adjusted per diem payment 

rates applicable to all covered SNF 

services defined in section 1888(e)(2)(A) 

of the Act. The SNF PPS is effective for 

cost reporting periods beginning on or 

after July 1, 1998, and covers all costs 

of furnishing covered SNF services 

(routine, ancillary, and capital-related 

costs) other than costs associated with 

approved educational activities and bad 

debts. Under section 1888(e)(2)(A)(i) of 

the Act, covered SNF services include 

post-hospital extended care services for 

which benefits are provided under Part 

A, as well as those items and services 

(other than a small number of excluded 

services, such as physician services) for 

which payment may otherwise be made 

under Part B and which are furnished to 

Medicare beneficiaries who are 

residents in a SNF during a covered Part 

A stay. A comprehensive discussion of 

these provisions appears in the May 12, 

1998 interim final rule (63 FR 26252). In 

addition, a detailed discussion of the 

legislative history of the SNF PPS is 

available online at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/

Legislative_History_07302013.pdf. 

Section 215(a) of PAMA added 

section 1888(g) to the Act requiring the 

Secretary to specify certain quality 

measures for the skilled nursing facility 

setting. Additionally, section 215(b) of 

PAMA added section 1888(h) to the Act 

requiring the Secretary to implement a 

value-based purchasing program for 

skilled nursing facilities. Finally, 

section 2(a) of the IMPACT Act added 

section 1899B to the Act that, among 

other things, requires SNFs to report 

standardized data for measures in 

specified quality and resource use 

domains. In addition, the IMPACT Act 

added section 1888(e)(6) to the Act, 

which requires the Secretary to 

implement a quality reporting program 

for SNFs, which includes a requirement 

that SNFs report certain data to receive 

their full payment under the SNF PPS. 

B. Initial Transition for the SNF PPS 

Under sections 1888(e)(1)(A) and 

1888(e)(11) of the Act, the SNF PPS 

included an initial, three-phase 

transition that blended a facility-specific 

rate (reflecting the individual facility’s 

historical cost experience) with the 

federal case-mix adjusted rate. The 

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Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 22047 

transition extended through the 

facility’s first three cost reporting 

periods under the PPS, up to and 

including the one that began in FY 

2001. Thus, the SNF PPS is no longer 

operating under the transition, as all 

facilities have been paid at the full 

federal rate effective with cost reporting 

periods beginning in FY 2002. As we 

now base payments for SNFs entirely on 

the adjusted federal per diem rates, we 

no longer include adjustment factors 

under the transition related to facilityspecific rates for the upcoming FY. 

C. Required Annual Rate Updates 

Section 1888(e)(4)(E) of the Act 

requires the SNF PPS payment rates to 

be updated annually. The most recent 

annual update occurred in a final rule 

that set forth updates to the SNF PPS 

payment rates for FY 2015 (79 FR 

45628, August 5, 2014). 

Section 1888(e)(4)(H) of the Act 

specifies that we provide for publication 

annually in the Federal Register of the 

following: 

• The unadjusted federal per diem 

rates to be applied to days of covered 

SNF services furnished during the 

upcoming FY. 

• The case-mix classification system 

to be applied for these services during 

the upcoming FY. 

• The factors to be applied in making 

the area wage adjustment for these 

services. 

Along with other revisions discussed 

later in this preamble, this proposed 

rule would provide the required annual 

updates to the per diem payment rates 

for SNFs for FY 2016. 

III. SNF PPS Rate Setting Methodology 

and FY 2016 Update 

A. Federal Base Rates 

Under section 1888(e)(4) of the Act, 

the SNF PPS uses per diem federal 

payment rates based on mean SNF costs 

in a base year (FY 1995) updated for 

inflation to the first effective period of 

the PPS. We developed the federal 

payment rates using allowable costs 

from hospital-based and freestanding 

SNF cost reports for reporting periods 

beginning in FY 1995. The data used in 

developing the federal rates also 

incorporated a Part B add-on, which is 

an estimate of the amounts that, prior to 

the SNF PPS, would have been payable 

under Part B for covered SNF services 

furnished to individuals during the 

course of a covered Part A stay in a SNF. 

In developing the rates for the initial 

period, we updated costs to the first 

effective year of the PPS (the 15-month 

period beginning July 1, 1998) using a 

SNF market basket index, and then 

standardized for geographic variations 

in wages and for the costs of facility 

differences in case mix. In compiling 

the database used to compute the 

federal payment rates, we excluded 

those providers that received new 

provider exemptions from the routine 

cost limits, as well as costs related to 

payments for exceptions to the routine 

cost limits. Using the formula that the 

BBA prescribed, we set the federal rates 

at a level equal to the weighted mean of 

freestanding costs plus 50 percent of the 

difference between the freestanding 

mean and weighted mean of all SNF 

costs (hospital-based and freestanding) 

combined. We computed and applied 

separately the payment rates for 

facilities located in urban and rural 

areas, and adjusted the portion of the 

federal rate attributable to wage-related 

costs by a wage index to reflect 

geographic variations in wages. 

B. SNF Market Basket Update 

1. SNF Market Basket Index 

Section 1888(e)(5)(A) of the Act 

requires us to establish a SNF market 

basket index that reflects changes over 

time in the prices of an appropriate mix 

of goods and services included in 

covered SNF services. Accordingly, we 

have developed a SNF market basket 

index that encompasses the most 

commonly used cost categories for SNF 

routine services, ancillary services, and 

capital-related expenses. We use the 

SNF market basket index, adjusted in 

the manner described below, to update 

the federal rates on an annual basis. In 

the SNF PPS final rule for FY 2014 (78 

FR 47939 through 47946), we revised 

and rebased the market basket, which 

included updating the base year from 

FY 2004 to FY 2010. 

For the FY 2016 proposed rule, the FY 

2010-based SNF market basket growth 

rate is estimated to be 2.6 percent, 

which is based on the IHS Global 

Insight, Inc. (IGI) first quarter 2015 

forecast with historical data through 

fourth quarter 2014. In section III.B.5. of 

this proposed rule, we discuss the 

specific application of this adjustment 

to the forthcoming annual update of the 

SNF PPS payment rates. 

2. Use of the SNF Market Basket 

Percentage 

Section 1888(e)(5)(B) of the Act 

defines the SNF market basket 

percentage as the percentage change in 

the SNF market basket index from the 

midpoint of the previous FY to the 

midpoint of the current FY. For the 

federal rates set forth in this proposed 

rule, we use the percentage change in 

the SNF market basket index to compute 

the update factor for FY 2016. This is 

based on the IGI first quarter 2015 

forecast (with historical data through 

the fourth quarter 2014) of the FY 2016 

percentage increase in the FY 2010- 

based SNF market basket index for 

routine, ancillary, and capital-related 

expenses, which is used to compute the 

update factor in this proposed rule. As 

discussed in sections III.B.3. and III.B.4. 

of this proposed rule, this market basket 

percentage change would be reduced by 

the applicable forecast error correction 

(as described in § 413.337(d)(2)) and by 

the multifactor productivity adjustment 

as required by section 1888(e)(5)(B)(ii) 

of the Act. Finally, as discussed in 

section II.B. of this proposed rule, we no 

longer compute update factors to adjust 

a facility-specific portion of the SNF 

PPS rates, because the initial threephase transition period from facilityspecific to full federal rates that started 

with cost reporting periods beginning in 

July 1998 has expired. 

3. Forecast Error Adjustment 

As discussed in the June 10, 2003 

supplemental proposed rule (68 FR 

34768) and finalized in the August 4, 

2003, final rule (68 FR 46057 through 

46059), the regulations at 

§ 413.337(d)(2) provide for an 

adjustment to account for market basket 

forecast error. The initial adjustment for 

market basket forecast error applied to 

the update of the FY 2003 rate for FY 

2004, and took into account the 

cumulative forecast error for the period 

from FY 2000 through FY 2002, 

resulting in an increase of 3.26 percent 

to the FY 2004 update. Subsequent 

adjustments in succeeding FYs take into 

account the forecast error from the most 

recently available FY for which there is 

final data, and apply the difference 

between the forecasted and actual 

change in the market basket when the 

difference exceeds a specified threshold. 

We originally used a 0.25 percentage 

point threshold for this purpose; 

however, for the reasons specified in the 

FY 2008 SNF PPS final rule (72 FR 

43425, August 3, 2007), we adopted a 

0.5 percentage point threshold effective 

for FY 2008 and subsequent fiscal years. 

As we stated in the final rule for FY 

2004 that first issued the market basket 

forecast error adjustment (68 FR 46058, 

August 4, 2003), the adjustment will 

reflect both upward and downward 

adjustments, as appropriate. 

For FY 2014 (the most recently 

available FY for which there is final 

data), the estimated increase in the 

market basket index was 2.3 percentage 

points, while the actual increase for FY 

2014 was 1.7 percentage points, 

resulting in the actual increase being 0.6 

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22048 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 

percentage point lower than the 

estimated increase. Accordingly, as the 

difference between the estimated and 

actual amount of change in the market 

basket index exceeds the 0.5 percentage 

point threshold and because the 

estimated amount of change exceeded 

the actual amount of change, the FY 

2016 market basket percentage change 

of 2.6 percent would be adjusted 

downward by the forecast error 

correction of 0.6 percentage point, 

resulting in a SNF market basket 

increase of 2.0 percent, before 

application of the productivity 

adjustment discussed in this section. 

Table 1 shows the forecasted and actual 

market basket amounts for FY 2014. 

TABLE 1—DIFFERENCE BETWEEN THE

FORECASTED AND ACTUAL MARKET

BASKET INCREASES FOR FY 2014 

Index 

Forecasted 

FY 2014 

increase * 

Actual 

FY 2014 

increase ** 

FY 2014 

difference 

SNF ........... 2.3 1.7 ¥0.6 

* Published in Federal Register; based on second 

quarter 2013 IGI forecast (2010-based index). 

** Based on the first quarter 2015 IGI forecast, with 

historical data through the fourth quarter 2014 (2010- 

based index). 

4. Multifactor Productivity Adjustment 

Section 3401(b) of the Affordable Care 

Act requires that, in FY 2012 (and in 

subsequent FYs), the market basket 

percentage under the SNF payment 

system as described in section 

1888(e)(5)(B)(i) of the Act is to be 

reduced annually by the productivity 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act. Section 

1886(b)(3)(B)(xi)(II) of the Act, added by 

section 3401(a) of the Affordable Care 

Act, sets forth the definition of this 

productivity adjustment. The statute 

defines the productivity adjustment to 

be equal to the 10-year moving average 

of changes in annual economy-wide 

private nonfarm business multi-factor 

productivity (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost-reporting period, or other annual 

period) (the MFP adjustment). The 

Bureau of Labor Statistics (BLS) is the 

agency that publishes the official 

measure of private nonfarm business 

multifactor productivity (MFP). We refer 

readers to the BLS Web site at http://

www.bls.gov/mfp for the BLS historical 

published MFP data. 

MFP is derived by subtracting the 

contribution of labor and capital inputs 

growth from output growth. The 

projections of the components of MFP 

are currently produced by IGI, a 

nationally recognized economic 

forecasting firm with which CMS 

contracts to forecast the components of 

the market baskets and MFP. To 

generate a forecast of MFP, IGI 

replicates the MFP measure calculated 

by the BLS, using a series of proxy 

variables derived from IGI’s U.S. 

macroeconomic models. In section 

III.F.3. of the FY 2012 SNF PPS final 

rule (76 FR 48527 through 48529), we 

identified each of the major MFP 

component series employed by the BLS 

to measure MFP as well as provided the 

corresponding concepts determined to 

be the best available proxies for the BLS 

series. 

Beginning with the FY 2016 

rulemaking cycle, the MFP adjustment 

is calculated using a revised series 

developed by IGI to proxy the aggregate 

capital inputs. Specifically, IGI has 

replaced the Real Effective Capital Stock 

used for Full Employment GDP with a 

forecast of BLS aggregate capital inputs 

recently developed by IGI using a 

regression model. This series provides a 

better fit to the BLS capital inputs as 

measured by the differences between 

the actual BLS capital input growth 

rates and the estimated model growth 

rates over the historical time period. 

Therefore, we are using IGI’s most 

recent forecast of the BLS capital inputs 

series in the MFP calculations beginning 

with the FY 2016 rulemaking cycle. A 

complete description of the MFP 

projection methodology is available on 

our Web site at http://www.cms.gov/

Research-Statistics-Data-and-Systems/

Statistics-Trends-and-Reports/

MedicareProgramRatesStats/

MarketBasketResearch.html. Although 

we discuss the IGI changes to the MFP 

proxy series in this proposed rule, in the 

future, when IGI makes changes to the 

MFP methodology, we will announce 

them on our Web site rather than in the 

annual rulemaking. 

a. Incorporating the Multifactor 

Productivity Adjustment Into the 

Market Basket Update 

According to section 1888(e)(5)(A) of 

the Act, the Secretary shall establish a 

skilled nursing facility market basket 

index that reflects changes over time in 

the prices of an appropriate mix of 

goods and services included in covered 

skilled nursing facility services. Section 

1888(e)(5)(B)(ii) of the Act, added by 

section 3401(b) of the Affordable Care 

Act, requires that for FY 2012 and each 

subsequent FY, after determining the 

market basket percentage described in 

section 1888(e)(5)(B)(i) of the Act, the 

Secretary shall reduce such percentage 

by the productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

(which we refer to as the MFP 

adjustment). Section 1888(e)(5)(B)(ii) of 

the Act further states that the reduction 

of the market basket percentage by the 

MFP adjustment may result in the 

market basket percentage being less than 

zero for a FY, and may result in 

payment rates under section 1888(e) of 

the Act for a FY being less than such 

payment rates for the preceding FY. 

Thus, if the application of the MFP 

adjustment to the market basket 

percentage calculated under section 

1888(e)(5)(B)(i) of the Act results in an 

MFP-adjusted market basket percentage 

that is less than zero, then the annual 

update to the unadjusted federal per 

diem rates under section 

1888(e)(4)(E)(ii) of the Act would be 

negative, and such rates would decrease 

relative to the prior FY. 

For the FY 2016 update, the MFP 

adjustment is calculated as the 10-year 

moving average of changes in MFP for 

the period ending September 30, 2016, 

which is 0.6 percent. Consistent with 

section 1888(e)(5)(B)(i) of the Act and 

§ 413.337(d)(2) of the regulations, the 

market basket percentage for FY 2016 

for the SNF PPS is based on IGI’s first 

quarter 2015 forecast of the SNF market 

basket update (2.6 percent) as adjusted 

by the forecast error adjustment (0.6 

percentage point), and is estimated to be 

2.0 percent. In accordance with section 

1888(e)(5)(B)(ii) of the Act (as added by 

section 3401(b) of the Affordable Care 

Act) and § 413.337(d)(3), this market 

basket percentage is then reduced by the 

MFP adjustment (the 10-year moving 

average of changes in MFP for the 

period ending September 30, 2016) of 

0.6 percent, which is calculated as 

described above and based on IGI’s first 

quarter 2015 forecast. The resulting 

MFP-adjusted SNF market basket 

update is equal to 1.4 percent, or 2.0 

percent less 0.6 percentage point. 

5. Market Basket Update Factor for FY 

2016 

Sections 1888(e)(4)(E)(ii)(IV) and 

1888(e)(5)(i) of the Act require that the 

update factor used to establish the FY 

2016 unadjusted federal rates be at a 

level equal to the market basket index 

percentage change. Accordingly, we 

determined the total growth from the 

average market basket level for the 

period of October 1, 2014 through 

September 30, 2015 to the average 

market basket level for the period of 

October 1, 2015 through September 30, 

2016. This process yields a percentage 

change in the market basket of 2.6 

percent. 

As further explained in section III.B.3. 

of this proposed rule, as applicable, we 

adjust the market basket percentage 

change by the forecast error from the 

most recently available FY for which 

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there is final data and apply this 

adjustment whenever the difference 

between the forecasted and actual 

percentage change in the market basket 

exceeds a 0.5 percentage point 

threshold. Since the forecasted FY 2014 

SNF market basket percentage change 

exceeded the actual FY 2014 SNF 

market basket percentage change (FY 

2014 is the most recently available FY 

for which there is historical data) by 

more than 0.5 percentage point, the FY 

2016 market basket percentage change 

of 2.6 percent would be adjusted 

downward by the applicable difference, 

which for FY 2014 is 0.6 percent. 

In addition, for FY 2016, section 

1888(e)(5)(B)(ii) of the Act requires us to 

reduce the market basket percentage 

change by the MFP adjustment (the 10- 

year moving average of changes in MFP 

for the period ending September 30, 

2016) of 0.6 percent, as described in 

section III.B.4. of this proposed rule. 

The resulting net SNF market basket 

update would equal 1.4 percent, or 2.6 

percent less the 0.6 percentage point 

forecast error adjustment, less the 0.6 

percentage point MFP adjustment. We 

propose that if more recent data become 

available (for example, a more recent 

estimate of the FY 2010-based SNF 

market basket and/or MFP adjustment), 

we would use such data, if appropriate, 

to determine the FY 2016 SNF market 

basket percentage change, labor-related 

share relative importance, forecast error 

adjustment, and MFP adjustment in the 

FY 2016 SNF PPS final rule. 

We used the SNF market basket, 

adjusted as described above, to adjust 

each per diem component of the federal 

rates forward to reflect the change in the 

average prices for FY 2016 from average 

prices for FY 2015. We would further 

adjust the rates by a wage index budget 

neutrality factor, described later in this 

section. Tables 2 and 3 reflect the 

updated components of the unadjusted 

federal rates for FY 2016, prior to 

adjustment for case-mix. 

TABLE 2—FY 2016 UNADJUSTED FEDERAL RATE PER DIEM URBAN

Rate component Nursing—case-mix Therapy—case-mix Therapy—noncase-mix Non-case-mix 

Per Diem Amount ............................................................ $171.46 $129.15 $17.01 $87.50 

TABLE 3—FY 2016 UNADJUSTED FEDERAL RATE PER DIEM RURAL

Rate component Nursing—case-mix Therapy—case-mix Therapy—noncase-mix Non-case-mix 

Per Diem Amount ............................................................ $163.80 $148.91 $18.17 $89.12 

C. Case-Mix Adjustment 

Under section 1888(e)(4)(G)(i) of the 

Act, the federal rate also incorporates an 

adjustment to account for facility casemix, using a classification system that 

accounts for the relative resource 

utilization of different patient types. 

The statute specifies that the adjustment 

is to reflect both a resident classification 

system that the Secretary establishes to 

account for the relative resource use of 

different patient types, as well as 

resident assessment data and other data 

that the Secretary considers appropriate. 

In the interim final rule with comment 

period that initially implemented the 

SNF PPS (63 FR 26252, May 12, 1998), 

we developed the RUG–III case-mix 

classification system, which tied the 

amount of payment to resident resource 

use in combination with resident 

characteristic information. Staff time 

measurement (STM) studies conducted 

in 1990, 1995, and 1997 provided 

information on resource use (time spent 

by staff members on residents) and 

resident characteristics that enabled us 

not only to establish RUG–III, but also 

to create case-mix indexes (CMIs). The 

original RUG–III grouper logic was 

based on clinical data collected in 1990, 

1995, and 1997. As discussed in the 

SNF PPS proposed rule for FY 2010 (74 

FR 22208), we subsequently conducted 

a multi-year data collection and analysis 

under the Staff Time and Resource 

Intensity Verification (STRIVE) project 

to update the case-mix classification 

system for FY 2011. The resulting 

Resource Utilization Groups, Version 4 

(RUG–IV) case-mix classification system 

reflected the data collected in 2006– 

2007 during the STRIVE project, and 

was finalized in the FY 2010 SNF PPS 

final rule (74 FR 40288) to take effect in 

FY 2011 concurrently with an updated 

new resident assessment instrument, 

version 3.0 of the Minimum Data Set 

(MDS 3.0), which collects the clinical 

data used for case-mix classification 

under RUG–IV. 

We note that case-mix classification is 

based, in part, on the beneficiary’s need 

for skilled nursing care and therapy 

services. The case-mix classification 

system uses clinical data from the MDS 

to assign a case-mix group to each 

patient that is then used to calculate a 

per diem payment under the SNF PPS. 

As discussed in section IV.A. of this 

proposed rule, the clinical orientation of 

the case-mix classification system 

supports the SNF PPS’s use of an 

administrative presumption that 

considers a beneficiary’s initial case-mix 

classification to assist in making certain 

SNF level of care determinations. 

Further, because the MDS is used as a 

basis for payment, as well as a clinical 

assessment, we have provided extensive 

training on proper coding and the time 

frames for MDS completion in our 

Resident Assessment Instrument (RAI) 

Manual. For an MDS to be considered 

valid for use in determining payment, 

the MDS assessment must be completed 

in compliance with the instructions in 

the RAI Manual in effect at the time the 

assessment is completed. For payment 

and quality monitoring purposes, the 

RAI Manual consists of both the Manual 

instructions and the interpretive 

guidance and policy clarifications 

posted on the appropriate MDS Web site 

at http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

MDS30RAIManual.html. 

In addition, we note that section 511 

of the Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA, Pub. L. 108–173) amended 

section 1888(e)(12) of the Act to provide 

for a temporary increase of 128 percent 

in the PPS per diem payment for any 

SNF residents with Acquired Immune 

Deficiency Syndrome (AIDS), effective 

with services furnished on or after 

October 1, 2004. This special add-on for 

SNF residents with AIDS was to remain 

in effect until the Secretary certifies that 

there is an appropriate adjustment in 

the case mix to compensate for the 

increased costs associated with such 

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residents. The add-on for SNF residents 

with AIDS is also discussed in Program 

Transmittal #160 (Change Request 

#3291), issued on April 30, 2004, which 

is available online at www.cms.gov/

transmittals/downloads/r160cp.pdf. In 

the SNF PPS final rule for FY 2010 (74 

FR 40288), we did not address the 

certification of the add-on for SNF 

residents with AIDS in that final rule’s 

implementation of the case-mix 

refinements for RUG–IV, thus allowing 

the add-on payment required by section 

511 of the MMA to remain in effect. For 

the limited number of SNF residents 

that qualify for this add-on, there is a 

significant increase in payments. For 

example, using FY 2013 data, we 

identified fewer than 4,800 SNF 

residents with a diagnosis code of 042 

(Human Immunodeficiency Virus (HIV) 

Infection). For FY 2016, an urban 

facility with a resident with AIDS in 

RUG–IV group ‘‘HC2’’ would have a 

case-mix adjusted per diem payment of 

$428.57 (see Table 4) before the 

application of the MMA adjustment. 

After an increase of 128 percent, this 

urban facility would receive a case-mix 

adjusted per diem payment of 

approximately $977.14. 

Currently, we use the International 

Classification of Diseases, 9th revision, 

Clinical Modification (ICD–9–CM) code 

042 to identify those residents for whom 

it is appropriate to apply the AIDS addon established by section 511 of the 

MMA. In this context, we note that the 

Department published a final rule in the 

September 5, 2012 Federal Register (77 

FR 54664) which requires us to stop 

using ICD–9–CM on September 30, 

2014, and begin using the International 

Classification of Diseases, 10th revision, 

Clinical Modification (ICD–10–CM), on 

October 1, 2014. Regarding the abovereferenced ICD–9–CM diagnosis code of 

042, in the FY 2014 SNF PPS proposed 

rule (78 FR 26444, May 6, 2013), we 

proposed to transition to the equivalent 

ICD–10–CM diagnosis code of B20 upon 

the overall conversion to ICD–10–CM on 

October 1, 2014, and we subsequently 

finalized that proposal in the FY 2014 

SNF PPS final rule (78 FR 47951 

through 47952). 

However, on April 1, 2014, the 

Protecting Access to Medicare Act of 

2014 (PAMA) (Pub. L. 113–93) was 

enacted. Section 212 of PAMA, titled 

‘‘Delay in Transition from ICD–9 to 

ICD–10 Code Sets,’’ provides that the 

Secretary of Health and Human Services 

may not, prior to October 1, 2015, adopt 

ICD–10 code sets as the standard for 

code sets under section 1173(c) of the 

Act (42 U.S.C. 1320d–2(c)) and section 

162.1002 of title 45, Code of Federal 

Regulations. In the FY 2015 SNF PPS 

final rule (79 FR 45633), we stated that 

the Department expected to release an 

interim final rule in the near future that 

would include a new compliance date 

that would require the use of ICD–10 

beginning October 1, 2015. In light of 

this, in the FY 2015 SNF PPS final rule, 

we stated that the effective date of the 

change from ICD–9–CM code 042 to 

ICD–10–CM code B20 for purposes of 

applying the AIDS add-on is October 1, 

2015, and that until that time we would 

continue to use the ICD–9–CM code 042 

for this purpose. On August 4, 2014, the 

U.S. Department of Health and Human 

Services released a final rule in the 

Federal Register (79 FR 45128 through 

45134) that included a new compliance 

date that requires the use of ICD–10 

beginning October 1, 2015. The August 

4, 2014 final rule is available for 

viewing on the Internet at http://

www.gpo.gov/fdsys/pkg/FR-2014-08-04/

pdf/2014-18347.pdf. That final rule also 

requires HIPAA covered entities to 

continue to use ICD–9–CM through 

September 30, 2015. Thus, as we 

finalized in the FY 2015 SNF PPS final 

rule, the effective date of the change 

from ICD–9–CM code 042 to ICD–10– 

CM code B20 for the purpose of 

applying the AIDS add-on enacted by 

section 511 of the MMA is October 1, 

2015. 

Under section 1888(e)(4)(H), each 

update of the payment rates must 

include the case-mix classification 

methodology applicable for the 

upcoming FY. The payment rates set 

forth in this proposed rule reflect the 

use of the RUG–IV case-mix 

classification system from October 1, 

2015, through September 30, 2016. We 

list the proposed case-mix adjusted 

RUG–IV payment rates, provided 

separately for urban and rural SNFs, in 

Tables 4 and 5 with corresponding casemix values. We use the revised OMB 

delineations adopted in the FY 2015 

SNF PPS final rule (79 FR 45632, 45634) 

to identify a facility’s urban or rural 

status for the purpose of determining 

which set of rate tables would apply to 

the facility. These tables do not reflect 

the add-on for SNF residents with AIDS 

enacted by section 511 of the MMA, 

which we apply only after making all 

other adjustments (such as wage index 

and case-mix). 

TABLE 4—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES

URBAN 

RUG–IV Category Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case 

mix therapy 

comp 

Non-case 

mix component Total rate 

RUX .......................................................... 2.67 1.87 $457.80 $241.51 .................... $87.50 $786.81 

RUL .......................................................... 2.57 1.87 440.65 241.51 .................... 87.50 769.66 

RVX .......................................................... 2.61 1.28 447.51 165.31 .................... 87.50 700.32 

RVL .......................................................... 2.19 1.28 375.50 165.31 .................... 87.50 628.31 

RHX .......................................................... 2.55 0.85 437.22 109.78 .................... 87.50 634.50 

RHL .......................................................... 2.15 0.85 368.64 109.78 .................... 87.50 565.92 

RMX ......................................................... 2.47 0.55 423.51 71.03 .................... 87.50 582.04 

RML .......................................................... 2.19 0.55 375.50 71.03 .................... 87.50 534.03 

RLX .......................................................... 2.26 0.28 387.50 36.16 .................... 87.50 511.16 

RUC ......................................................... 1.56 1.87 267.48 241.51 .................... 87.50 596.49 

RUB .......................................................... 1.56 1.87 267.48 241.51 .................... 87.50 596.49 

RUA .......................................................... 0.99 1.87 169.75 241.51 .................... 87.50 498.76 

RVC .......................................................... 1.51 1.28 258.90 165.31 .................... 87.50 511.71 

RVB .......................................................... 1.11 1.28 190.32 165.31 .................... 87.50 443.13 

RVA .......................................................... 1.10 1.28 188.61 165.31 .................... 87.50 441.42 

RHC ......................................................... 1.45 0.85 248.62 109.78 .................... 87.50 445.90 

RHB .......................................................... 1.19 0.85 204.04 109.78 .................... 87.50 401.32 

RHA .......................................................... 0.91 0.85 156.03 109.78 .................... 87.50 353.31 

RMC ......................................................... 1.36 0.55 233.19 71.03 .................... 87.50 391.72 

RMB ......................................................... 1.22 0.55 209.18 71.03 .................... 87.50 367.71 

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TABLE 4—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—Continued 

URBAN 

RUG–IV Category Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case 

mix therapy 

comp 

Non-case 

mix component Total rate 

RMA ......................................................... 0.84 0.55 144.03 71.03 .................... 87.50 302.56 

RLB .......................................................... 1.50 0.28 257.19 36.16 .................... 87.50 380.85 

RLA .......................................................... 0.71 0.28 121.74 36.16 .................... 87.50 245.40 

ES3 .......................................................... 3.58 .................... 613.83 .................... 17.01 87.50 718.34 

ES2 .......................................................... 2.67 .................... 457.80 .................... 17.01 87.50 562.31 

ES1 .......................................................... 2.32 .................... 397.79 .................... 17.01 87.50 502.30 

HE2 .......................................................... 2.22 .................... 380.64 .................... 17.01 87.50 485.15 

HE1 .......................................................... 1.74 .................... 298.34 .................... 17.01 87.50 402.85 

HD2 .......................................................... 2.04 .................... 349.78 .................... 17.01 87.50 454.29 

HD1 .......................................................... 1.60 .................... 274.34 .................... 17.01 87.50 378.85 

HC2 .......................................................... 1.89 .................... 324.06 .................... 17.01 87.50 428.57 

HC1 .......................................................... 1.48 .................... 253.76 .................... 17.01 87.50 358.27 

HB2 .......................................................... 1.86 .................... 318.92 .................... 17.01 87.50 423.43 

HB1 .......................................................... 1.46 .................... 250.33 .................... 17.01 87.50 354.84 

LE2 ........................................................... 1.96 .................... 336.06 .................... 17.01 87.50 440.57 

LE1 ........................................................... 1.54 .................... 264.05 .................... 17.01 87.50 368.56 

LD2 ........................................................... 1.86 .................... 318.92 .................... 17.01 87.50 423.43 

LD1 ........................................................... 1.46 .................... 250.33 .................... 17.01 87.50 354.84 

LC2 ........................................................... 1.56 .................... 267.48 .................... 17.01 87.50 371.99 

LC1 ........................................................... 1.22 .................... 209.18 .................... 17.01 87.50 313.69 

LB2 ........................................................... 1.45 .................... 248.62 .................... 17.01 87.50 353.13 

LB1 ........................................................... 1.14 .................... 195.46 .................... 17.01 87.50 299.97 

CE2 .......................................................... 1.68 .................... 288.05 .................... 17.01 87.50 392.56 

CE1 .......................................................... 1.50 .................... 257.19 .................... 17.01 87.50 361.70 

CD2 .......................................................... 1.56 .................... 267.48 .................... 17.01 87.50 371.99 

CD1 .......................................................... 1.38 .................... 236.61 .................... 17.01 87.50 341.12 

CC2 .......................................................... 1.29 .................... 221.18 .................... 17.01 87.50 325.69 

CC1 .......................................................... 1.15 .................... 197.18 .................... 17.01 87.50 301.69 

CB2 .......................................................... 1.15 .................... 197.18 .................... 17.01 87.50 301.69 

CB1 .......................................................... 1.02 .................... 174.89 .................... 17.01 87.50 279.40 

CA2 .......................................................... 0.88 .................... 150.88 .................... 17.01 87.50 255.39 

CA1 .......................................................... 0.78 .................... 133.74 .................... 17.01 87.50 238.25 

BB2 .......................................................... 0.97 .................... 166.32 .................... 17.01 87.50 270.83 

BB1 .......................................................... 0.90 .................... 154.31 .................... 17.01 87.50 258.82 

BA2 .......................................................... 0.70 .................... 120.02 .................... 17.01 87.50 224.53 

BA1 .......................................................... 0.64 .................... 109.73 .................... 17.01 87.50 214.24 

PE2 .......................................................... 1.50 .................... 257.19 .................... 17.01 87.50 361.70 

PE1 .......................................................... 1.40 .................... 240.04 .................... 17.01 87.50 344.55 

PD2 .......................................................... 1.38 .................... 236.61 .................... 17.01 87.50 341.12 

PD1 .......................................................... 1.28 .................... 219.47 .................... 17.01 87.50 323.98 

PC2 .......................................................... 1.10 .................... 188.61 .................... 17.01 87.50 293.12 

PC1 .......................................................... 1.02 .................... 174.89 .................... 17.01 87.50 279.40 

PB2 .......................................................... 0.84 .................... 144.03 .................... 17.01 87.50 248.54 

PB1 .......................................................... 0.78 .................... 133.74 .................... 17.01 87.50 238.25 

PA2 .......................................................... 0.59 .................... 101.16 .................... 17.01 87.50 205.67 

PA1 .......................................................... 0.54 .................... 92.59 .................... 17.01 87.50 197.10 

TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES

RURAL 

RUG–IV Category Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case 

mix therapy 

comp 

Non-case 

mix component Total rate 

RUX .......................................................... 2.67 1.87 $437.35 $278.46 .................... $89.12 $804.93 

RUL .......................................................... 2.57 1.87 420.97 278.46 .................... 89.12 788.55 

RVX .......................................................... 2.61 1.28 427.52 190.60 .................... 89.12 707.24 

RVL .......................................................... 2.19 1.28 358.72 190.60 .................... 89.12 638.44 

RHX .......................................................... 2.55 0.85 417.69 126.57 .................... 89.12 633.38 

RHL .......................................................... 2.15 0.85 352.17 126.57 .................... 89.12 567.86 

RMX ......................................................... 2.47 0.55 404.59 81.90 .................... 89.12 575.61 

RML .......................................................... 2.19 0.55 358.72 81.90 .................... 89.12 529.74 

RLX .......................................................... 2.26 0.28 370.19 41.69 .................... 89.12 501.00 

RUC ......................................................... 1.56 1.87 255.53 278.46 .................... 89.12 623.11 

RUB .......................................................... 1.56 1.87 255.53 278.46 .................... 89.12 623.11 

RUA .......................................................... 0.99 1.87 162.16 278.46 .................... 89.12 529.74 

RVC .......................................................... 1.51 1.28 247.34 190.60 .................... 89.12 527.06 

RVB .......................................................... 1.11 1.28 181.82 190.60 .................... 89.12 461.54 

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TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—Continued 

RURAL 

RUG–IV Category Nursing 

index 

Therapy 

index 

Nursing 

component 

Therapy 

component 

Non-case 

mix therapy 

comp 

Non-case 

mix component Total rate 

RVA .......................................................... 1.10 1.28 180.18 190.60 .................... 89.12 459.90 

RHC ......................................................... 1.45 0.85 237.51 126.57 .................... 89.12 453.20 

RHB .......................................................... 1.19 0.85 194.92 126.57 .................... 89.12 410.61 

RHA .......................................................... 0.91 0.85 149.06 126.57 .................... 89.12 364.75 

RMC ......................................................... 1.36 0.55 222.77 81.90 .................... 89.12 393.79 

RMB ......................................................... 1.22 0.55 199.84 81.90 .................... 89.12 370.86 

RMA ......................................................... 0.84 0.55 137.59 81.90 .................... 89.12 308.61 

RLB .......................................................... 1.50 0.28 245.70 41.69 .................... 89.12 376.51 

RLA .......................................................... 0.71 0.28 116.30 41.69 .................... 89.12 247.11 

ES3 .......................................................... 3.58 .................... 586.40 .................... $18.17 89.12 693.69 

ES2 .......................................................... 2.67 .................... 437.35 .................... 18.17 89.12 544.64 

ES1 .......................................................... 2.32 .................... 380.02 .................... 18.17 89.12 487.31 

HE2 .......................................................... 2.22 .................... 363.64 .................... 18.17 89.12 470.93 

HE1 .......................................................... 1.74 .................... 285.01 .................... 18.17 89.12 392.30 

HD2 .......................................................... 2.04 .................... 334.15 .................... 18.17 89.12 441.44 

HD1 .......................................................... 1.60 .................... 262.08 .................... 18.17 89.12 369.37 

HC2 .......................................................... 1.89 .................... 309.58 .................... 18.17 89.12 416.87 

HC1 .......................................................... 1.48 .................... 242.42 .................... 18.17 89.12 349.71 

HB2 .......................................................... 1.86 .................... 304.67 .................... 18.17 89.12 411.96 

HB1 .......................................................... 1.46 .................... 239.15 .................... 18.17 89.12 346.44 

LE2 ........................................................... 1.96 .................... 321.05 .................... 18.17 89.12 428.34 

LE1 ........................................................... 1.54 .................... 252.25 .................... 18.17 89.12 359.54 

LD2 ........................................................... 1.86 .................... 304.67 .................... 18.17 89.12 411.96 

LD1 ........................................................... 1.46 .................... 239.15 .................... 18.17 89.12 346.44 

LC2 ........................................................... 1.56 .................... 255.53 .................... 18.17 89.12 362.82 

LC1 ........................................................... 1.22 .................... 199.84 .................... 18.17 89.12 307.13 

LB2 ........................................................... 1.45 .................... 237.51 .................... 18.17 89.12 344.80 

LB1 ........................................................... 1.14 .................... 186.73 .................... 18.17 89.12 294.02 

CE2 .......................................................... 1.68 .................... 275.18 .................... 18.17 89.12 382.47 

CE1 .......................................................... 1.50 .................... 245.70 .................... 18.17 89.12 352.99 

CD2 .......................................................... 1.56 .................... 255.53 .................... 18.17 89.12 362.82 

CD1 .......................................................... 1.38 .................... 226.04 .................... 18.17 89.12 333.33 

CC2 .......................................................... 1.29 .................... 211.30 .................... 18.17 89.12 318.59 

CC1 .......................................................... 1.15 .................... 188.37 .................... 18.17 89.12 295.66 

CB2 .......................................................... 1.15 .................... 188.37 .................... 18.17 89.12 295.66 

CB1 .......................................................... 1.02 .................... 167.08 .................... 18.17 89.12 274.37 

CA2 .......................................................... 0.88 .................... 144.14 .................... 18.17 89.12 251.43 

CA1 .......................................................... 0.78 .................... 127.76 .................... 18.17 89.12 235.05 

BB2 .......................................................... 0.97 .................... 158.89 .................... 18.17 89.12 266.18 

BB1 .......................................................... 0.90 .................... 147.42 .................... 18.17 89.12 254.71 

BA2 .......................................................... 0.70 .................... 114.66 .................... 18.17 89.12 221.95 

BA1 .......................................................... 0.64 .................... 104.83 .................... 18.17 89.12 212.12 

PE2 .......................................................... 1.50 .................... 245.70 .................... 18.17 89.12 352.99 

PE1 .......................................................... 1.40 .................... 229.32 .................... 18.17 89.12 336.61 

PD2 .......................................................... 1.38 .................... 226.04 .................... 18.17 89.12 333.33 

PD1 .......................................................... 1.28 .................... 209.66 .................... 18.17 89.12 316.95 

PC2 .......................................................... 1.10 .................... 180.18 .................... 18.17 89.12 287.47 

PC1 .......................................................... 1.02 .................... 167.08 .................... 18.17 89.12 274.37 

PB2 .......................................................... 0.84 .................... 137.59 .................... 18.17 89.12 244.88 

PB1 .......................................................... 0.78 .................... 127.76 .................... 18.17 89.12 235.05 

PA2 .......................................................... 0.59 .................... 96.64 .................... 18.17 89.12 203.93 

PA1 .......................................................... 0.54 .................... 88.45 .................... 18.17 89.12 195.74 

D. Wage Index Adjustment 

Section 1888(e)(4)(G)(ii) of the Act 

requires that we adjust the federal rates 

to account for differences in area wage 

levels, using a wage index that the 

Secretary determines appropriate. Since 

the inception of the SNF PPS, we have 

used hospital inpatient wage data in 

developing a wage index to be applied 

to SNFs. We propose to continue this 

practice for FY 2016, as we continue to 

believe that in the absence of SNFspecific wage data, using the hospital 

inpatient wage index data is appropriate 

and reasonable for the SNF PPS. As 

explained in the update notice for FY 

2005 (69 FR 45786), the SNF PPS does 

not use the hospital area wage index’s 

occupational mix adjustment, as this 

adjustment serves specifically to define 

the occupational categories more clearly 

in a hospital setting; moreover, the 

collection of the occupational wage data 

also excludes any wage data related to 

SNFs. Therefore, we believe that using 

the updated wage data exclusive of the 

occupational mix adjustment continues 

to be appropriate for SNF payments. For 

FY 2016, the updated wage data are for 

hospital cost reporting periods 

beginning on or after October 1, 2011 

and before October 1, 2012 (FY 2012 

cost report data). 

We note that section 315 of the 

Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection 

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Act of 2000 (BIPA, Pub. L. 106–554, 

enacted on December 21, 2000) 

authorized us to establish a geographic 

reclassification procedure that is 

specific to SNFs, but only after 

collecting the data necessary to establish 

a SNF wage index that is based on wage 

data from nursing homes. However, to 

date, this has proven to be unfeasible 

due to the volatility of existing SNF 

wage data and the significant amount of 

resources that would be required to 

improve the quality of that data. 

In addition, we propose to continue to 

use the same methodology discussed in 

the SNF PPS final rule for FY 2008 (72 

FR 43423) to address those geographic 

areas in which there are no hospitals, 

and thus, no hospital wage index data 

on which to base the calculation of the 

FY 2016 SNF PPS wage index. For rural 

geographic areas that do not have 

hospitals, and therefore, lack hospital 

wage data on which to base an area 

wage adjustment, we would use the 

average wage index from all contiguous 

Core-Based Statistical Areas (CBSAs) as 

a reasonable proxy. For FY 2016, there 

are no rural geographic areas that do not 

have hospitals, and thus, this 

methodology would not be applied. For 

rural Puerto Rico, we would not apply 

this methodology due to the distinct 

economic circumstances that exist there 

(for example, due to the close proximity 

to one another of almost all of Puerto 

Rico’s various urban and non-urban 

areas, this methodology would produce 

a wage index for rural Puerto Rico that 

is higher than that in half of its urban 

areas); instead, we would continue to 

use the most recent wage index 

previously available for that area. For 

urban areas without specific hospital 

wage index data, we would use the 

average wage indexes of all of the urban 

areas within the state to serve as a 

reasonable proxy for the wage index of 

that urban CBSA. For FY 2016, the only 

urban area without wage index data 

available is CBSA 25980, HinesvilleFort Stewart, GA. The proposed wage 

index applicable to FY 2016 is set forth 

in Table A available on the CMS Web 

site at http://cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

SNFPPS/WageIndex.html. 

Once calculated, we would apply the 

wage index adjustment to the laborrelated portion of the federal rate. Each 

year, we calculate a revised laborrelated share, based on the relative 

importance of labor-related cost 

categories (that is, those cost categories 

that are labor-intensive and vary with 

the local labor market) in the input price 

index. In the SNF PPS final rule for FY 

2014 (78 FR 47944 through 47946), we 

finalized a proposal to revise the laborrelated share to reflect the relative 

importance of the revised FY 2010- 

based SNF market basket cost weights 

for the following cost categories: Wages 

and salaries; employee benefits; the 

labor-related portion of nonmedical 

professional fees; administrative and 

facilities support services; all other— 

labor-related services; and a proportion 

of capital-related expenses. 

We calculate the labor-related relative 

importance from the SNF market basket, 

and it approximates the labor-related 

portion of the total costs after taking 

into account historical and projected 

price changes between the base year and 

FY 2016. The price proxies that move 

the different cost categories in the 

market basket do not necessarily change 

at the same rate, and the relative 

importance captures these changes. 

Accordingly, the relative importance 

figure more closely reflects the cost 

share weights for FY 2016 than the base 

year weights from the SNF market 

basket. 

We calculate the labor-related relative 

importance for FY 2016 in four steps. 

First, we compute the FY 2016 price 

index level for the total market basket 

and each cost category of the market 

basket. Second, we calculate a ratio for 

each cost category by dividing the FY 

2016 price index level for that cost 

category by the total market basket price 

index level. Third, we determine the FY 

2016 relative importance for each cost 

category by multiplying this ratio by the 

base year (FY 2010) weight. Finally, we 

add the FY 2016 relative importance for 

each of the labor-related cost categories 

(wages and salaries, employee benefits, 

the labor-related portion of non-medical 

professional fees, administrative and 

facilities support services, all other: 

labor-related services, and a portion of 

capital-related expenses) to produce the 

FY 2016 labor-related relative 

importance. Table 6 summarizes the 

proposed updated labor-related share 

for FY 2016, compared to the laborrelated share that was used for the FY 

2015 SNF PPS final rule. 

We are proposing for FY 2016 and 

subsequent fiscal years, to report and 

apply the SNF PPS labor-related share at 

a tenth of a percentage point (rather 

than at a thousandth of a percentage 

point) consistent with the manner in 

which we report and apply the market 

basket update percentage under the SNF 

PPS and the IPPS and the manner in 

which we report and apply the IPPS 

labor-related share. The level of 

precision specified for the IPPS laborrelated share is three decimal places or 

a tenth of a percentage point (0.696 or 

69.6 percent), which we believe 

provides a reasonable level of precision. 

We believe it is appropriate to maintain 

such consistency across all payment 

systems so that the level of precision 

specified is both reasonable and similar 

for all providers. We invite public 

comments on this proposal. 

TABLE 6—LABOR-RELATED RELATIVE IMPORTANCE, FY 2015 AND FY 2016 

Relative importance, 

labor-related, FY 2015 

14:2 forecast 1

Relative importance, 

labor-related, FY 2016 

15:1 forecast 2

Wages and salaries ................................................................................................................. 48.816 48.9 

Employee benefits ................................................................................................................... 11.365 11.4 

Nonmedical Professional fees: labor-related ........................................................................... 3.450 3.4

Administrative and facilities support services .......................................................................... 0.502 0.5 

All Other: Labor-related services ............................................................................................. 2.276 2.3 

Capital-related (.391) ............................................................................................................... 2.771 2.7 

Total .................................................................................................................................. 69.180 69.2 

1Published in the Federal Register; based on second quarter 2014 IGI forecast. 2Based on first quarter 2015 IGI forecast, with historical data through fourth quarter 2014. 

Tables 7 and 8 show the RUG–IV 

case-mix adjusted federal rates by laborrelated and non-labor-related components. 

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22054 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 

TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN SNFS BY LABOR AND NON-LABOR COMPONENT

RUG–IV category Total rate Labor portion Non-labor portion 

RUX ........................................................................................................................... 786.81 $544.47 $242.34 

RUL ............................................................................................................................ 769.66 532.60 237.06 

RVX ............................................................................................................................ 700.32 484.62 215.70 

RVL ............................................................................................................................ 628.31 434.79 193.52 

RHX ........................................................................................................................... 634.50 439.07 195.43 

RHL ............................................................................................................................ 565.92 391.62 174.30 

RMX ........................................................................................................................... 582.04 402.77 179.27 

RML ........................................................................................................................... 534.03 369.55 164.48 

RLX ............................................................................................................................ 511.16 353.72 157.44 

RUC ........................................................................................................................... 596.49 412.77 183.72 

RUB ........................................................................................................................... 596.49 412.77 183.72 

RUA ........................................................................................................................... 498.76 345.14 153.62 

RVC ........................................................................................................................... 511.71 354.10 157.61 

RVB ............................................................................................................................ 443.13 306.65 136.48 

RVA ............................................................................................................................ 441.42 305.46 135.96 

RHC ........................................................................................................................... 445.90 308.56 137.34 

RHB ........................................................................................................................... 401.32 277.71 123.61 

RHA ........................................................................................................................... 353.31 244.49 108.82 

RMC ........................................................................................................................... 391.72 271.07 120.65 

RMB ........................................................................................................................... 367.71 254.46 113.25 

RMA ........................................................................................................................... 302.56 209.37 93.19 

RLB ............................................................................................................................ 380.85 263.55 117.30 

RLA ............................................................................................................................ 245.40 169.82 75.58 

ES3 ............................................................................................................................ 718.34 497.09 221.25 

ES2 ............................................................................................................................ 562.31 389.12 173.19 

ES1 ............................................................................................................................ 502.30 347.59 154.71 

HE2 ............................................................................................................................ 485.15 335.72 149.43 

HE1 ............................................................................................................................ 402.85 278.77 124.08 

HD2 ............................................................................................................................ 454.29 314.37 139.92 

HD1 ............................................................................................................................ 378.85 262.16 116.69 

HC2 ............................................................................................................................ 428.57 296.57 132.00 

HC1 ............................................................................................................................ 358.27 247.92 110.35 

HB2 ............................................................................................................................ 423.43 293.01 130.42 

HB1 ............................................................................................................................ 354.84 245.55 109.29 

LE2 ............................................................................................................................. 440.57 304.87 135.70 

LE1 ............................................................................................................................. 368.56 255.04 113.52 

LD2 ............................................................................................................................ 423.43 293.01 130.42 

LD1 ............................................................................................................................ 354.84 245.55 109.29 

LC2 ............................................................................................................................ 371.99 257.42 114.57 

LC1 ............................................................................................................................ 313.69 217.07 96.62 

LB2 ............................................................................................................................. 353.13 244.37 108.76 

LB1 ............................................................................................................................. 299.97 207.58 92.39 

CE2 ............................................................................................................................ 392.56 271.65 120.91 

CE1 ............................................................................................................................ 361.70 250.30 111.40 

CD2 ............................................................................................................................ 371.99 257.42 114.57 

CD1 ............................................................................................................................ 341.12 236.06 105.06 

CC2 ............................................................................................................................ 325.69 225.38 100.31 

CC1 ............................................................................................................................ 301.69 208.77 92.92 

CB2 ............................................................................................................................ 301.69 208.77 92.92 

CB1 ............................................................................................................................ 279.40 193.34 86.06 

CA2 ............................................................................................................................ 255.39 176.73 78.66 

CA1 ............................................................................................................................ 238.25 164.87 73.38 

BB2 ............................................................................................................................ 270.83 187.41 83.42 

BB1 ............................................................................................................................ 258.82 179.10 79.72 

BA2 ............................................................................................................................ 224.53 155.37 69.16 

BA1 ............................................................................................................................ 214.24 148.25 65.99 

PE2 ............................................................................................................................ 361.70 250.30 111.40 

PE1 ............................................................................................................................ 344.55 238.43 106.12 

PD2 ............................................................................................................................ 341.12 236.06 105.06 

PD1 ............................................................................................................................ 323.98 224.19 99.79 

PC2 ............................................................................................................................ 293.12 202.84 90.28 

PC1 ............................................................................................................................ 279.40 193.34 86.06 

PB2 ............................................................................................................................ 248.54 171.99 76.55 

PB1 ............................................................................................................................ 238.25 164.87 73.38 

PA2 ............................................................................................................................ 205.67 142.32 63.35 

PA1 ............................................................................................................................ 197.10 136.39 60.71 

TABLE 8—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL SNFS BY LABOR AND NON-LABOR COMPONENT

RUG–IV category Total rate Labor portion Non-labor portion 

RUX ........................................................................................................................... 804.93 $557.01 $247.92 

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TABLE 8—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL SNFS BY LABOR AND NON-LABOR COMPONENT— 

Continued 

RUG–IV category Total rate Labor portion Non-labor portion 

RUL ............................................................................................................................ 788.55 545.68 242.87 

RVX ............................................................................................................................ 707.24 489.41 217.83 

RVL ............................................................................................................................ 638.44 441.80 196.64 

RHX ........................................................................................................................... 633.38 438.30 195.08 

RHL ............................................................................................................................ 567.86 392.96 174.90 

RMX ........................................................................................................................... 575.61 398.32 177.29 

RML ........................................................................................................................... 529.74 366.58 163.16 

RLX ............................................................................................................................ 501.00 346.69 154.31 

RUC ........................................................................................................................... 623.11 431.19 191.92 

RUB ........................................................................................................................... 623.11 431.19 191.92 

RUA ........................................................................................................................... 529.74 366.58 163.16 

RVC ........................................................................................................................... 527.06 364.73 162.33 

RVB ............................................................................................................................ 461.54 319.39 142.15 

RVA ............................................................................................................................ 459.90 318.25 141.65 

RHC ........................................................................................................................... 453.20 313.61 139.59 

RHB ........................................................................................................................... 410.61 284.14 126.47 

RHA ........................................................................................................................... 364.75 252.41 112.34 

RMC ........................................................................................................................... 393.79 272.50 121.29 

RMB ........................................................................................................................... 370.86 256.64 114.22 

RMA ........................................................................................................................... 308.61 213.56 95.05 

RLB ............................................................................................................................ 376.51 260.54 115.97 

RLA ............................................................................................................................ 247.11 171.00 76.11 

ES3 ............................................................................................................................ 693.69 480.03 213.66 

ES2 ............................................................................................................................ 544.64 376.89 167.75 

ES1 ............................................................................................................................ 487.31 337.22 150.09 

HE2 ............................................................................................................................ 470.93 325.88 145.05 

HE1 ............................................................................................................................ 392.30 271.47 120.83 

HD2 ............................................................................................................................ 441.44 305.48 135.96 

HD1 ............................................................................................................................ 369.37 255.60 113.77 

HC2 ............................................................................................................................ 416.87 288.47 128.40 

HC1 ............................................................................................................................ 349.71 242.00 107.71 

HB2 ............................................................................................................................ 411.96 285.08 126.88 

HB1 ............................................................................................................................ 346.44 239.74 106.70 

LE2 ............................................................................................................................. 428.34 296.41 131.93 

LE1 ............................................................................................................................. 359.54 248.80 110.74 

LD2 ............................................................................................................................ 411.96 285.08 126.88 

LD1 ............................................................................................................................ 346.44 239.74 106.70 

LC2 ............................................................................................................................ 362.82 251.07 111.75 

LC1 ............................................................................................................................ 307.13 212.53 94.60 

LB2 ............................................................................................................................. 344.80 238.60 106.20 

LB1 ............................................................................................................................. 294.02 203.46 90.56 

CE2 ............................................................................................................................ 382.47 264.67 117.80 

CE1 ............................................................................................................................ 352.99 244.27 108.72 

CD2 ............................................................................................................................ 362.82 251.07 111.75 

CD1 ............................................................................................................................ 333.33 230.66 102.67 

CC2 ............................................................................................................................ 318.59 220.46 98.13 

CC1 ............................................................................................................................ 295.66 204.60 91.06 

CB2 ............................................................................................................................ 295.66 204.60 91.06 

CB1 ............................................................................................................................ 274.37 189.86 84.51 

CA2 ............................................................................................................................ 251.43 173.99 77.44 

CA1 ............................................................................................................................ 235.05 162.65 72.40 

BB2 ............................................................................................................................ 266.18 184.20 81.98 

BB1 ............................................................................................................................ 254.71 176.26 78.45 

BA2 ............................................................................................................................ 221.95 153.59 68.36 

BA1 ............................................................................................................................ 212.12 146.79 65.33 

PE2 ............................................................................................................................ 352.99 244.27 108.72 

PE1 ............................................................................................................................ 336.61 232.93 103.68 

PD2 ............................................................................................................................ 333.33 230.66 102.67 

PD1 ............................................................................................................................ 316.95 219.33 97.62 

PC2 ............................................................................................................................ 287.47 198.93 88.54 

PC1 ............................................................................................................................ 274.37 189.86 84.51 

PB2 ............................................................................................................................ 244.88 169.46 75.42 

PB1 ............................................................................................................................ 235.05 162.65 72.40 

PA2 ............................................................................................................................ 203.93 141.12 62.81 

PA1 ............................................................................................................................ 195.74 135.45 60.29 

Section 1888(e)(4)(G)(ii) of the Act 

also requires that we apply this wage 

index in a manner that does not result 

in aggregate payments under the SNF 

PPS that are greater or less than would 

otherwise be made if the wage 

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adjustment had not been made. For FY 

2016 (federal rates effective October 1, 

2014), we would apply an adjustment to 

fulfill the budget neutrality requirement. 

We would meet this requirement by 

multiplying each of the components of 

the unadjusted federal rates by a budget 

neutrality factor equal to the ratio of the 

weighted average wage adjustment 

factor for FY 2015 to the weighted 

average wage adjustment factor for FY 

2016. For this calculation, we use the 

same FY 2014 claims utilization data for 

both the numerator and denominator of 

this ratio. We define the wage 

adjustment factor used in this 

calculation as the labor share of the rate 

component multiplied by the wage 

index plus the non-labor share of the 

rate component. The budget neutrality 

factor for FY 2016 would be 0.9989. 

In the SNF PPS final rule for FY 2006 

(70 FR 45026, August 4, 2005), we 

adopted the changes discussed in the 

OMB Bulletin No. 03–04 (June 6, 2003), 

available online at 

www.whitehouse.gov/omb/bulletins/

b03-04.html, which announced revised 

definitions for MSAs and the creation of 

micropolitan statistical areas and 

combined statistical areas. 

In adopting the CBSA geographic 

designations, we provided for a one-year 

transition in FY 2006 with a blended 

wage index for all providers. For FY 

2006, the wage index for each provider 

consisted of a blend of 50 percent of the 

FY 2006 MSA-based wage index and 50 

percent of the FY 2006 CBSA-based 

wage index (both using FY 2002 

hospital data). We referred to the 

blended wage index as the FY 2006 SNF 

PPS transition wage index. As discussed 

in the SNF PPS final rule for FY 2006 

(70 FR 45041), since the expiration of 

this one-year transition on September 

30, 2006, we have used the full CBSAbased wage index values. 

On February 28, 2013, OMB issued 

OMB Bulletin No. 13–01, announcing 

revisions to the delineation of MSAs, 

Micropolitan Statistical Areas, and 

Combined Statistical Areas, and 

guidance on uses of the delineation of 

these areas. A copy of this bulletin is 

available online at http://

www.whitehouse.gov/sites/default/files/

omb/bulletins/2013/b-13-01.pdf. This 

bulletin states that it provides the 

delineations of all Metropolitan 

Statistical Areas, Metropolitan 

Divisions, Micropolitan Statistical 

Areas, Combined Statistical Areas, and 

New England City and Town Areas in 

the United States and Puerto Rico based 

on the standards published on June 28, 

2010, in the Federal Register (75 FR 

37246–37252) and Census Bureau data. 

While the revisions OMB published 

on February 28, 2013 are not as 

sweeping as the changes made when we 

adopted the CBSA geographic 

designations for FY 2006, the February 

28, 2013 bulletin does contain a number 

of significant changes. For example, 

there are new CBSAs, urban counties 

that became rural, rural counties that 

became urban, and existing CBSAs that 

were split apart. 

In the FY 2015 SNF PPS final rule (79 

FR 45644 through 45646), we finalized 

changes to the SNF PPS wage index 

based on the newest OMB delineations, 

as described in OMB Bulletin No. 13– 

01, beginning in FY 2015, including a 1- 

year transition with a blended wage 

index for FY 2015. Because the 1-year 

transition period expires at the end of 

FY 2015, the proposed SNF PPS wage 

index for FY 2016 is fully based on the 

revised OMB delineations adopted in 

FY 2015. As noted above, the proposed 

wage index applicable to FY 2016 is set 

forth in Table A available on the CMS 

Web site at http://cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

SNFPPS/WageIndex.html. 

E. Adjusted Rate Computation Example 

Using the hypothetical SNF XYZ 

described below, Table 9 shows the 

adjustments made to the federal per 

diem rates to compute the provider’s 

actual per diem PPS payment. We 

derive the Labor and Non-labor columns 

from Table 7. The wage index used in 

this example is based on the proposed 

wage index, which may be found in 

Table A as referenced above. As 

illustrated in Table 9, SNF XYZ’s total 

PPS payment would equal $45,462.10. 

TABLE 9—ADJUSTED RATE COMPUTATION EXAMPLE

SNF XYZ: LOCATED IN FREDERICK, MD (URBAN CBSA 43524) 

WAGE INDEX: 0.9681 

[See Proposed Wage Index in Table A] 1

RUG–IV Group Labor Wage index Adjusted 

labor Non-labor Adjusted rate 

Percent 

adjustment 

Medicare 

days Payment 

RVX .................................. $484.62 0.9681 $469.16 $215.70 $684.86 $684.86 14 $9,588.04 

ES2 .................................. 389.12 0.9681 376.71 173.19 549.90 549.90 30 16,497.00 

RHA .................................. 244.49 0.9681 236.69 108.82 345.51 345.51 16 5,528.16 

CC2* ................................. 225.38 0.9681 218.19 100.31 318.50 726.18 10 7,261.80 

BA2 .................................. 155.37 0.9681 150.41 69.16 219.57 219.57 30 6,587.10 

100 45,462.10 

* Reflects a 128 percent adjustment from section 511 of the MMA. 

1Available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html. 

IV. Additional Aspects of the SNF PPS 

A. SNF Level of Care—Administrative 

Presumption 

The establishment of the SNF PPS did 

not change Medicare’s fundamental 

requirements for SNF coverage. 

However, because the case-mix 

classification is based, in part, on the 

beneficiary’s need for skilled nursing 

care and therapy, we have attempted, 

where possible, to coordinate claims 

review procedures with the existing 

resident assessment process and casemix classification system discussed in 

section III.C. of this proposed rule. This 

approach includes an administrative 

presumption that utilizes a beneficiary’s 

initial classification in one of the upper 

52 RUGs of the 66-group RUG–IV casemix classification system to assist in 

making certain SNF level of care 

determinations. 

In accordance with section 

1888(e)(4)(H)(ii) of the Act and the 

regulations at § 413.345, we include in 

each update of the federal payment rates 

in the Federal Register the designation 

of those specific RUGs under the 

classification system that represent the 

required SNF level of care, as provided 

in § 409.30. As set forth in the FY 2011 

SNF PPS update notice (75 FR 42910), 

this designation reflects an 

administrative presumption under the 

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66-group RUG–IV system that 

beneficiaries who are correctly assigned 

to one of the upper 52 RUG–IV groups 

on the initial five-day, Medicarerequired assessment are automatically 

classified as meeting the SNF level of 

care definition up to and including the 

assessment reference date on the fiveday Medicare-required assessment. 

A beneficiary assigned to any of the 

lower 14 RUG–IV groups is not 

automatically classified as either 

meeting or not meeting the definition, 

but instead receives an individual level 

of care determination using the existing 

administrative criteria. This 

presumption recognizes the strong 

likelihood that beneficiaries assigned to 

one of the upper 52 RUG–IV groups 

during the immediate post-hospital 

period require a covered level of care, 

which would be less likely for those 

beneficiaries assigned to one of the 

lower 14 RUG–IV groups. 

In the July 30, 1999 final rule (64 FR 

41670), we indicated that we would 

announce any changes to the guidelines 

for Medicare level of care 

determinations related to modifications 

in the case-mix classification structure. 

In this proposed rule, we would 

continue to designate the upper 52 

RUG–IV groups for purposes of this 

administrative presumption, consisting 

of all groups encompassed by the 

following RUG–IV categories: 

• Rehabilitation plus Extensive 

Services. 

• Ultra High Rehabilitation. 

• Very High Rehabilitation. 

• High Rehabilitation. 

• Medium Rehabilitation. 

• Low Rehabilitation. 

• Extensive Services. 

• Special Care High. 

• Special Care Low. 

• Clinically Complex. 

However, we note that this 

administrative presumption policy does 

not supersede the SNF’s responsibility 

to ensure that its decisions relating to 

level of care are appropriate and timely, 

including a review to confirm that the 

services prompting the beneficiary’s 

assignment to one of the upper 52 RUG– 

IV groups (which, in turn, serves to 

trigger the administrative presumption) 

are themselves medically necessary. As 

we explained in the FY 2000 SNF PPS 

final rule (64 FR 41667), the 

administrative presumption: 

. . . is itself rebuttable in those individual 

cases in which the services actually received 

by the resident do not meet the basic 

statutory criterion of being reasonable and 

necessary to diagnose or treat a beneficiary’s 

condition (according to section 1862(a)(1) of 

the Act). Accordingly, the presumption 

would not apply, for example, in those 

situations in which a resident’s assignment to 

one of the upper . . . groups is itself based 

on the receipt of services that are 

subsequently determined to be not 

reasonable and necessary. 

Moreover, we want to stress the 

importance of careful monitoring for 

changes in each patient’s condition to 

determine the continuing need for Part 

A SNF benefits after the assessment 

reference date of the 5-day assessment. 

B. Consolidated Billing 

Sections 1842(b)(6)(E) and 1862(a)(18) 

of the Act (as added by section 4432(b) 

of the BBA) require a SNF to submit 

consolidated Medicare bills to its 

Medicare Administrative Contractor for 

almost all of the services that its 

residents receive during the course of a 

covered Part A stay. In addition, section 

1862(a)(18) places the responsibility 

with the SNF for billing Medicare for 

physical therapy, occupational therapy, 

and speech-language pathology services 

that the resident receives during a 

noncovered stay. Section 1888(e)(2)(A) 

of the Act excludes a small list of 

services from the consolidated billing 

provision (primarily those services 

furnished by physicians and certain 

other types of practitioners), which 

remain separately billable under Part B 

when furnished to a SNF’s Part A 

resident. These excluded service 

categories are discussed in greater detail 

in section V.B.2. of the May 12, 1998 

interim final rule (63 FR 26295 through 

26297). 

A detailed discussion of the 

legislative history of the consolidated 

billing provision is available on the SNF 

PPS Web site at http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/

Legislative_History_07302013.pdf. In 

particular, section 103 of the Medicare, 

Medicaid, and SCHIP Balanced Budget 

Refinement Act of 1999 (BBRA) (Pub. L. 

106–113, enacted on November 29, 

1999) amended section 1888(e)(2)(A) of 

the Act by further excluding a number 

of individual high-cost, low probability 

services, identified by Healthcare 

Common Procedure Coding System 

(HCPCS) codes, within several broader 

categories (chemotherapy items, 

chemotherapy administration services, 

radioisotope services, and customized 

prosthetic devices) that otherwise 

remained subject to the provision. We 

discuss this BBRA amendment in 

greater detail in the SNF PPS proposed 

and final rules for FY 2001 (65 FR 19231 

through 19232, April 10, 2000, and 65 

FR 46790 through 46795, July 31, 2000), 

as well as in Program Memorandum 

AB–00–18 (Change Request #1070), 

issued March 2000, which is available 

online at www.cms.gov/transmittals/

downloads/ab001860.pdf. 

As explained in the FY 2001 proposed 

rule (65 FR 19232), the amendments 

enacted in section 103 of the BBRA not 

only identified for exclusion from this 

provision a number of particular service 

codes within four specified categories 

(that is, chemotherapy items, 

chemotherapy administration services, 

radioisotope services, and customized 

prosthetic devices), but also gave the 

Secretary the authority to designate 

additional, individual services for 

exclusion within each of the specified 

service categories. In the proposed rule 

for FY 2001, we also noted that the 

BBRA Conference report (H.R. Rep. No. 

106–479 at 854 (1999) (Conf. Rep.)) 

characterizes the individual services 

that this legislation targets for exclusion 

as high-cost, low probability events that 

could have devastating financial 

impacts because their costs far exceed 

the payment SNFs receive under the 

prospective payment system. According 

to the conferees, section 103(a) of the 

BBRA is an attempt to exclude from the 

PPS certain services and costly items 

that are provided infrequently in SNFs. 

By contrast, we noted that the Congress 

declined to designate for exclusion any 

of the remaining services within those 

four categories (thus, leaving all of those 

services subject to SNF consolidated 

billing), because they are relatively 

inexpensive and are furnished routinely 

in SNFs. 

As we further explained in the final 

rule for FY 2001 (65 FR 46790), and as 

our longstanding policy, any additional 

service codes that we might designate 

for exclusion under our discretionary 

authority must meet the same statutory 

criteria used in identifying the original 

codes excluded from consolidated 

billing under section 103(a) of the 

BBRA: They must fall within one of the 

four service categories specified in the 

BBRA; and they also must meet the 

same standards of high cost and low 

probability in the SNF setting, as 

discussed in the BBRA Conference 

report. Accordingly, we characterized 

this statutory authority to identify 

additional service codes for exclusion as 

essentially affording the flexibility to 

revise the list of excluded codes in 

response to changes of major 

significance that may occur over time 

(for example, the development of new 

medical technologies or other advances 

in the state of medical practice) (65 FR 

46791). In this proposed rule, we 

specifically invite public comments 

identifying HCPCS codes in any of these 

four service categories (chemotherapy 

items, chemotherapy administration 

services, radioisotope services, and 

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customized prosthetic devices) 

representing recent medical advances 

that might meet our criteria for 

exclusion from SNF consolidated 

billing. We may consider excluding a 

particular service if it meets our criteria 

for exclusion as specified above. 

Commenters should identify in their 

comments the specific HCPCS code that 

is associated with the service in 

question, as well as their rationale for 

requesting that the identified HCPCS 

code(s) be excluded. 

We note that the original BBRA 

amendment (as well as the 

implementing regulations) identified a 

set of excluded services by means of 

specifying HCPCS codes that were in 

effect as of a particular date (in that 

case, as of July 1, 1999). Identifying the 

excluded services in this manner made 

it possible for us to utilize program 

issuances as the vehicle for 

accomplishing routine updates of the 

excluded codes, to reflect any minor 

revisions that might subsequently occur 

in the coding system itself (for example, 

the assignment of a different code 

number to the same service). 

Accordingly, in the event that we 

identify through the current rulemaking 

cycle any new services that would 

actually represent a substantive change 

in the scope of the exclusions from SNF 

consolidated billing, we would identify 

these additional excluded services by 

means of the HCPCS codes that are in 

effect as of a specific date (in this case, 

as of October 1, 2015). By making any 

new exclusions in this manner, we 

could similarly accomplish routine 

future updates of these additional codes 

through the issuance of program 

instructions. 

C. Payment for SNF-Level Swing-Bed 

Services 

Section 1883 of the Act permits 

certain small, rural hospitals to enter 

into a Medicare swing-bed agreement, 

under which the hospital can use its 

beds to provide either acute- or SNFlevel care, as needed. For critical access 

hospitals (CAHs), Part A pays on a 

reasonable cost basis for SNF-level 

services furnished under a swing-bed 

agreement. However, in accordance 

with section 1888(e)(7) of the Act, these 

services furnished by non-CAH rural 

hospitals are paid under the SNF PPS, 

effective with cost reporting periods 

beginning on or after July 1, 2002. As 

explained in the FY 2002 final rule (66 

FR 39562), this effective date is 

consistent with the statutory provision 

to integrate swing-bed rural hospitals 

into the SNF PPS by the end of the 

transition period, June 30, 2002. 

Accordingly, all non-CAH swing-bed 

rural hospitals have now come under 

the SNF PPS. Therefore, all rates and 

wage indexes outlined in earlier 

sections of this proposed rule for the 

SNF PPS also apply to all non-CAH 

swing-bed rural hospitals. A complete 

discussion of assessment schedules, the 

MDS, and the transmission software 

(RAVEN–SB for Swing Beds) appears in 

the FY 2002 final rule (66 FR 39562) 

and in the FY 2010 final rule (74 FR 

40288). As finalized in the FY 2010 SNF 

PPS final rule (74 FR 40356–57), 

effective October 1, 2010, non-CAH 

swing-bed rural hospitals are required to 

complete an MDS 3.0 swing-bed 

assessment which is limited to the 

required demographic, payment, and 

quality items. The latest changes in the 

MDS for swing-bed rural hospitals 

appear on the SNF PPS Web site at 

http://www.cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

SNFPPS/index.html. 

V. Other Issues 

A. Skilled Nursing Facility Value-Based 

Purchasing Program (SNF VBP Program) 

1. Background 

a. Overview 

In recent years, we have undertaken a 

number of initiatives to promote higher 

quality and more efficient health care 

for Medicare beneficiaries. These 

initiatives, which include 

demonstration projects, quality 

reporting programs, and value-based 

purchasing programs, have been 

implemented in various health care 

settings, including physician offices, 

ambulatory surgical centers (ASCs), 

hospitals, nursing homes, home health 

agencies (HHAs), and dialysis facilities. 

Many of these programs link a portion 

of Medicare payments to provider 

reporting or performance on quality 

measures. The overarching goal of these 

initiatives is to transform Medicare from 

a passive payer of claims to an active 

purchaser of quality health care for its 

beneficiaries. 

We view value-based purchasing as 

an important step toward revamping 

how care is paid for, moving 

increasingly toward rewarding better 

value, outcomes, and innovations 

instead of merely volume. 

b. SNF VBP Report to Congress 

Section 3006(a) of the Affordable Care 

Act required the Secretary to develop a 

plan to implement a value-based 

purchasing program under the Medicare 

program for SNFs (as defined in section 

1819(a) of the Act) and to submit that 

plan to Congress. In developing the 

plan, this section required the Secretary 

to consider several issues, including the 

ongoing development, selection, and 

modification process for measures, the 

reporting, collection, and validation of 

quality data, the structure of valuebased payment adjustments, methods 

for public disclosure of SNF 

performance, and any other issues 

determined appropriate by the 

Secretary. The Secretary was also 

required to consult with relevant 

affected parties and consider experience 

with demonstrations relevant to the SNF 

VBP Program. 

HHS submitted the Report to Congress 

required under section 3006 of the 

Affordable Care Act in March 2012. The 

report explains that a significant 

number of elderly Americans receive 

care in SNFs/NFs, either as short-term 

post-acute care or as long-term custodial 

care, and that quality of care is a 

significant concern for a subset of SNFs/ 

NFs. The report also states that the SNF 

PPS does not strongly incentivize SNFs 

to furnish high quality care to this very 

fragile patient population. The report 

concludes that if HHS harnesses the 

significant and growing purchasing 

power of Medicare in this sector, it can 

incentivize SNFs to improve the quality 

of care for their patients. 

In the report, we explained our belief 

that the implementation of a SNF VBP 

Program is a central step in revamping 

Medicare’s payments for health care 

services to reward better value, 

outcome, and innovations, rather than 

the volume of care. We also explained 

our belief that a SNF VBP Program 

should promote the development and 

use of robust quality measures, 

including measures that assess 

functional status, to promote timely, 

safe, and high-quality care for Medicare 

beneficiaries. We noted that the creation 

of a SNF VBP Program would align with 

numerous HHS and CMS efforts to 

improve care coordination, and would 

be consistent with the National Quality 

Strategy and its aims of Better Care, 

Healthy People and Communities, and 

Affordable Care. 

The full report is available on our 

Web site at http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/SNFVBP-RTC.pdf. 

2. Statutory Basis for the SNF VBP 

Program 

Section 215 of PAMA added sections 

1888(g) and (h) to the Act. Section 

1888(g)(1) of the Act requires the 

Secretary to specify a skilled nursing 

facility all-cause all-condition hospital 

readmission measure (or any successor 

to such a measure) not later than 

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1 Gwadry-Sridhar FH, Flintoft V, Lee DS, Lee H, 

Guyatt GH: A systematic review and meta-analysis 

of studies comparing readmission rates and 

mortality rates in patients with heart failure. Arch 

Intern Med. 2004;164(21):2315–2320. 

2McAlister FA, Lawson FM, Teo KK, Armstrong 

PW.: A systematic review of randomized trials of 

disease management programs in heart failure. 

AmJMed. 2001;110(5):378–384. 

3 Krumholz HM, Amatruda J, Smith GL, et al.: 

Randomized trial of an education and support 

intervention to prevent readmission of patients with 

heart failure. J Am Coll Cardiol. 2002;39(1):83–89. 

October 1, 2015. Section 1888(g)(2) of 

the Act requires the Secretary to specify 

an all-condition risk-adjusted 

potentially preventable hospital 

readmission rate for SNFs not later than 

October 1, 2016. Section 1888(g)(3) of 

the Act directs the Secretary to develop 

a methodology to achieve high 

reliability and validity for these 

measures, especially for SNFs with a 

low volume of readmissions. Section 

1888(g)(4) of the Act makes the prerulemaking Measure Applications 

Partnership process of Section 1890A of 

the Act optional for these measures. 

Under section 1888(g)(5) of the Act, the 

Secretary is directed to provide 

quarterly confidential feedback reports 

to SNFs on their performance on the 

readmission or resource use measure 

beginning on October 1, 2016. Under 

section 1888(g)(6) of the Act, not later 

than October 1, 2017, the Secretary must 

establish procedures for making 

performance data on readmission and 

resource use measures public on 

Nursing Home Compare or a successor 

Web site. That paragraph also requires 

that the procedures ensure that a SNF 

has the opportunity to review and 

submit corrections to the information 

that is to be made public for it before 

that information is made public. 

Section 1888(h)(1)(A) of the Act 

requires the Secretary to establish a SNF 

value-based purchasing program under 

which value-based incentive payments 

are made in a fiscal year to SNFs, and 

section 1888(h)(1)(B) of the Act requires 

that the Program apply to payments for 

services furnished on or after October 1, 

2018. Under section 1888(h)(2)(A) of the 

Act, the Secretary must apply the 

readmission measure specified under 

section 1888(g)(1) of the Act for 

purposes of the Program, and section 

1888(h)(1)(B) of the Act requires the 

Secretary to apply the resource use 

measure specified under section 

1888(g)(2) of the Act instead of the 

readmission measure specified under 

section 1888(g)(1) as soon as practicable. 

Sections 1888(h)(3)(A) and (B) of the 

Act require the Secretary to establish 

performance standards for the measure 

applied under section 1888(h)(2) of the 

Act for a performance period for a fiscal 

year and that those performance 

standards include levels of achievement 

and improvement. In addition, in 

calculating the SNF performance score 

for the measure under the Program, 

section 1888(h)(3)(B) of the Act requires 

the Secretary to use the higher of 

achievement or improvement scores. 

Further, the performance standards 

established under section 1888(h)(3) of 

the Act must, under section 

1888(h)(3)(C), be established and 

announced by the Secretary not later 

than 60 days prior to the beginning of 

the performance period for the fiscal 

year involved. 

Section 1888(h)(4) of the Act directs 

the Secretary to develop a methodology 

to assess each SNF’s total performance 

based on the performance standards for 

the applicable measure for each 

performance period. Under section 

1888(h)(4)(B) of the Act, SNF 

performance scores for the performance 

period for each fiscal year must be 

ranked from low to high. 

Section 1888(h)(5) of the Act outlines 

several requirements for value-based 

incentive payments under the SNF VBP 

Program. Under section 1888(h)(5)(A) of 

the Act, the Secretary is directed to 

increase the adjusted federal per diem 

rate determined under section 

1888(e)(4)(G) for services furnished by a 

skilled nursing facility by the valuebased incentive payment amount 

determined under section 1888(h)(5)(B). 

This section also directs that the valuebased incentive payment amount be 

equal to the product of the adjusted 

federal per diem rate and the valuebased incentive payment percentage 

specified under section 1888(h)(5)(C) of 

the Act for the SNF for the fiscal year. 

Section 1888(h)(5)(C) requires the 

Secretary to specify a value-based 

incentive payment percentage for a SNF 

for a fiscal year, which may include a 

zero percentage. The Secretary is further 

directed under section 1888(h)(5)(C) to 

ensure that such percentage is based on 

the SNF performance score for the 

performance period for the fiscal year, 

that the application of all such 

percentages in a fiscal year results in an 

appropriate distribution of value-based 

incentive payments, and that the total 

amount of value-based incentive 

payments for all SNFs for a fiscal year 

be greater than or equal to 50 percent, 

but not greater than 70 percent, of the 

total amount of the reductions to 

payments for the fiscal year under 

section 1888(h)(6), as estimated by the 

Secretary. 

Section 1888(h)(6) of the Act requires 

the Secretary to reduce the adjusted 

federal per diem rate for SNFs otherwise 

applicable to each SNF for services 

furnished by that SNF during the 

applicable fiscal year by the applicable 

percent, which is defined in paragraph 

(b) as two percent for FY 2019 and 

subsequent years. Section 1888(h)(7) of 

the Act requires the Secretary to inform 

each SNF of its payment adjustments 

under the Program not later than 60 

days prior to the fiscal year involved, 

and under section 1888(h)(8) of the Act, 

the value-based incentive payments 

calculated for a fiscal year apply only 

for that fiscal year. 

Section 1888(h)(9)(A) of the Act 

requires the Secretary to publish SNFspecific performance information on the 

Nursing Home Compare Web site or a 

successor Web site, including SNF 

performance scores and rankings. 

Section 1888(h)(9)(B) of the Act requires 

the Secretary to post aggregate 

information on the SNF VBP Program, 

including the range of SNF performance 

scores and the number of SNFs 

receiving value-based incentive 

payments and the range and total 

amount of those payments. 

3. Skilled Nursing Facility 30-Day AllCause Readmission Measure (SNFRM) 

(NQF #2510; Measure Steward: CMS) 

a. Overview 

Reducing hospital readmissions is 

important for quality of care and patient 

safety. Readmission to a hospital may be 

an adverse event for patients and in 

many cases imposes a financial burden 

on the health care system. Successful 

efforts to reduce preventable 

readmission rates will improve the 

quality of care furnished to beneficiaries 

while simultaneously decreasing the 

cost of that care. Hospitals and other 

health care providers can work with 

their communities to lower readmission 

rates and improve patient care in a 

number of ways, such as by ensuring 

that patients are clinically ready to be 

discharged, reducing infection risk, 

reconciling medications, improving 

communication with community 

providers responsible for post-discharge 

patient care, improving care transitions, 

and ensuring that patients understand 

their care plans upon discharge. 

Many studies have demonstrated the 

effectiveness of these types of inhospital and post-discharge 

interventions in reducing the risk of 

readmission, confirming that hospitals 

and their partners have the ability to 

lower readmission rates.123 These types 

of efforts during and after a 

hospitalization have been shown to be 

effective in reducing readmission rates 

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4Coleman EA, Parry C, Chalmers S, Min SJ.: The 

care transitions intervention: Results of a 

randomized controlled trial. Arch Intern Med. 

2006;166:1822–8. 

5Naylor MD, Brooten D, Campbell R, Jacobsen 

BS, Mezey MD, Pauly MV, Schwartz JS.: 

Comprehensive discharge planning and home 

follow-up of hospitalized elders: A randomized 

clinical trial. JAMA. 1999;281:613–20. 186 

6Coleman EA.: 2005. Background Paper on 

Transitional Care Performance Measurement. 

Appendix I. In: Institute of Medicine, Performance 

Measurement: Accelerating Improvement. 

Washington, DC: National Academy Press. 

7Medicare Payment Advisory Commission 

(MedPAC). Report to Congress: Promoting Greater 

Efficiency in Medicare; 2007. Available at http://

www.medpac.gov/documents/Jun07_

EntireReport.pdf. Accessed January 10, 2011. 

8Wilson, N. U.S. Department of Health and 

Human Services, Agency for Healthcare Research 

and Quality. (2014). National quality strategy: 

Overview. 

9Adopted for the Hospital IQR Program in the FY 

2013 IPPS/LTCH PPS Final Rule (77 FR 53521 

through 53528). 

10Available on the Nursing Home Quality 

Initiative Web site at https://www.cms.gov/

Medicare/Quality-nitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

index.html?redirect=/nursinghomequalityinits/. 

in geriatric populations generally,4 5 as 

well as for multiple specific conditions. 

Moreover, such interventions can result 

in cost saving. Financial incentives to 

reduce readmissions will in turn 

promote improvement in care 

transitions and care coordination, as 

these are important means of reducing 

preventable readmissions.6 In its 2007 

Report to Congress on Promoting Better 

Efficiency in Medicare,7 MedPAC noted 

the potential benefit to patients of 

lowering readmissions and suggested 

payment strategies that would 

incentivize hospitals to reduce these 

rates. Readmission rates are important 

markers of quality of care, particularly 

of the care of a patient in transition from 

an acute care setting to a non-acute care 

setting, and improving readmissions can 

positively influence patient outcomes 

and the cost of care. 

We are proposing to specify the 

Skilled Nursing Facility 30-Day AllCause Readmission Measure (SNFRM) 

(NQF #2510) as the skilled nursing 

facility all-cause, all-condition hospital 

readmission measure under section 

1888(g)(1) of the Act. This measure 

assesses the risk-standardized rate of allcause, all-condition, unplanned 

inpatient hospital readmissions of 

Medicare fee-for-service (FFS) SNF 

patients within 30 days of discharge 

from an admission to an inpatient 

prospective payment system (IPPS) 

hospital, critical access hospital (CAH), 

or psychiatric hospital. This measure is 

claims-based, requiring no additional 

data collection or submission burden for 

SNFs. 

We are also proposing to apply this 

measure for purposes of the SNF VBP 

Program under section 1888(h)(2)(A) of 

the Act. We believe that this measure 

will (1) incentivize SNFs to make 

quality improvements that result in 

successful transitions of care for 

patients discharged from the hospital 

(IPPS, CAH or psychiatric hospital) 

setting to a SNF, and subsequently to 

the community or to another post-acute 

care setting, (2) reduce unplanned 

readmission rates of these patients to 

hospitals; and (3) align the SNF VBP 

Program with the National Quality 

Strategy priorities of safer, better 

coordinated care and lower costs.8

We developed this measure based 

upon the NQF-endorsed Hospital-Wide 

All-Cause Unplanned Readmission 

Measure (HWR) (NQF #1789) (http://

www.qualityforum.org/QPS/1789) 9

implemented in the Hospital Inpatient 

Quality Reporting Program. To the 

extent methodologically and clinically 

appropriate, we harmonized the SNFRM 

with the HWR measure specifications. 

b. Measure Calculation 

The SNFRM estimates the riskstandardized rate of all-cause, 

unplanned, hospital readmissions for 

SNF Medicare FFS beneficiaries within 

30 days of discharge from their prior 

proximal acute hospitalization. The SNF 

admission must have occurred within 

one day after discharge from the prior 

proximal hospitalization. The prior 

proximal hospitalization is defined as 

an inpatient admission to an IPPS, CAH, 

or a psychiatric hospital. Because the 

measure denominator is based on SNF 

admissions, each Medicare beneficiary 

may be included in the measure 

multiple times within a given year if 

they have more than one SNF stay 

meeting all measure inclusion criteria 

including a prior proximal 

hospitalization. 

Patient readmissions included in the 

measure are identified by examining 

Medicare claims data for readmissions 

of SNF Medicare FFS beneficiaries to an 

IPPS hospital or CAH occurring within 

30 days of discharge from the prior 

proximal hospitalization. If the patient 

was admitted to the SNF within 1 day 

of discharge from the prior proximal 

hospitalization and the hospital 

readmission occurred within the 30-day 

risk window, it is counted in the 

numerator regardless of whether the 

patient is readmitted directly from the 

SNF or has been discharged from the 

SNF. Because patients differ in 

complexity and morbidity, the measure 

is risk-adjusted for patient case-mix. 

The measure also excludes planned 

readmissions, because these are not 

considered to be indicative of poor 

quality of care by the SNF. Details 

regarding how readmissions are 

identified are available in our SNFRM 

Technical Report.10

The SNFRM (NQF # 2510) assesses 

readmission rates while accounting for 

patient demographics, principal 

diagnosis in the prior hospitalization, 

comorbidities, and other patient factors. 

While estimating the predictive power 

of patient characteristics, the model also 

estimates a facility-specific effect 

common to patients treated at that SNF. 

The SNFRM is calculated based on 

the ratio, for each SNF, of the number 

of risk-adjusted all-cause, unplanned 

readmissions to an IPPS hospital or 

CAH that occurred within 30 days of 

discharge from the prior proximal 

hospitalization, including the estimated 

facility effect, to the estimated number 

of risk-adjusted predicted unplanned 

inpatient hospital readmissions for the 

same patients treated at the average 

SNF. A ratio above 1.0 indicates a 

higher than expected readmission rate, 

or lower level of quality, while a ratio 

below 1.0 indicates a lower than 

expected readmission rate, or higher 

level of quality. This ratio is referred to 

as the standardized risk ratio or SRR. 

The SRR is then multiplied by the 

overall national raw readmission rate for 

all SNF stays. The resulting rate is the 

risk-standardized readmission rate 

(RSRR). The full methodology is 

detailed in the SNFRM Technical 

Report. 

The patient population includes SNF 

patients who: 

• Had a prior hospital discharge 

(IPPS, CAH or psychiatric hospital) 

within one day of their admission to a 

SNF. 

• Had at least 12 months of Medicare 

Part A, FFS coverage prior to their 

discharge date from the prior proximal 

hospitalization. 

• Had Medicare Part A, FFS coverage 

during the 30 days (the 30-day risk 

window) following their discharge date 

from the prior proximal hospitalization. 

c. Exclusions 

Patients whose prior proximal 

hospitalization was for the medical 

treatment for cancer are excluded. 

Analyses of this population during 

measure development showed them to 

have a different trajectory of illness and 

mortality than other patient 

populations, which is consistent with 

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11National Quality Forum. ‘‘Patient Outcomes: 

All-Cause Readmissions Expedited Review 2011’’. 

July 2012. pp12. 

12National Quality Forum. Measure Applications 

Partnership Pre-Rulemaking Report: 2013 

Recommendations of Measures Under 

Consideration by HHS: February 2013. Available at 

http://www.qualityforum.org/WorkArea/linkit.aspx?

LinkIdentifier=id&ItemID=72738. 

findings in studies in other patient 

populations.11

SNF stays excluded from the measure 

are: 

• SNF stays where the patient had 

one or more intervening post-acute care 

(PAC) admissions (inpatient 

rehabilitation facility (IRF), long-term 

care hospital (LTCH), or another SNF) 

which occurred either between the prior 

proximal hospital discharge and SNF 

admission (from which the patient was 

readmitted) or after the SNF discharge 

but before the readmission, within the 

30-day risk window. 

• SNF stays with a gap of greater than 

1 day between discharge from the prior 

proximal hospitalization and the SNF 

admission. 

• SNF stays in which the patient was 

discharged from the SNF against 

medical advice (AMA). 

• SNF stays in which the principal 

diagnosis for the prior proximal 

hospitalization was for rehabilitation 

care; fitting of prostheses and for the 

adjustment of devices. 

• SNF stays in which the prior 

proximal hospitalization was for 

pregnancy. 

• SNF stays in which data were 

missing on any variable used in the 

SNFRM construction. 

Readmissions within the 30-day risk 

window that are usually considered 

planned due to the nature of the 

procedures and principal diagnoses of 

the readmission are also excluded from 

the measure. In addition to the list of 

planned procedures is a list of diagnoses 

(provided in the SNFRM Technical 

Report), which, if found as the principal 

diagnosis on the readmission claim, 

would indicate that the usually planned 

procedure occurred during an 

unplanned acute readmission. In 

addition to the HWR Planned 

Readmission Algorithm, the SNFRM 

incorporates procedures that are 

considered planned in post-acute care 

settings as identified in consultation 

with technical expert panels. Full 

details on the planned readmissions 

criteria used, including the additional 

procedures considered planned for postacute care may be found in the SNFRM 

Technical Report. Details regarding the 

TEP proceedings can be found in the 

SNFRM TEP Report. 

d. Eligible Readmissions 

An eligible SNF admission is 

considered to be in the 30-day risk 

window from the date of discharge from 

the proximal acute hospitalization until: 

(1) The 30-day period ends; or (2) the 

patient is readmitted to an IPPS hospital 

or CAH. If the readmission is 

unplanned, it is counted as a 

readmission in the numerator of the 

measure. If the readmission is planned, 

the readmission is not counted in the 

numerator of the measure. The 

occurrence of a planned readmission 

ends further tracking for readmissions 

in the 30-day risk window. 

e. Risk Adjustment 

Readmission rates are risk-adjusted 

for patient case-mix characteristics, 

independent of quality. The risk 

adjustment modeling estimates the 

effects of patient characteristics, 

comorbidities, and select health status 

variables on the probability of 

readmission. More specifically, the riskadjustment model for SNFs accounts for 

demographic characteristics (age and 

sex), principal diagnosis during the 

prior proximal hospitalization, 

comorbidities based on the secondary 

medical diagnoses listed on the patient’s 

prior proximal hospital claim and 

diagnoses from prior hospitalizations 

that occurred in the previous 365 days, 

length of stay during the patient’s prior 

proximal hospitalization, length of stay 

in the intensive care unit (ICU), body 

system specific surgical indicators, endstage renal disease status, whether the 

patient was disabled, and the number of 

prior hospitalizations in the previous 

365 days. 

f. Measurement Period 

The SNFRM utilizes 1 year of data to 

calculate the measure rate. Given that 

there are more than 2 million Medicare 

FFS SNF admissions per year in more 

than 15,000 SNFs, 1 year of data is 

sufficient to calculate this measure with 

a model in which the risk adjusters have 

sufficient sample size to have good 

precision. The relevant reliability 

testing may be found in the SNFRM 

Technical Report. 

g. Stakeholder/MAP Input 

Our measure development contractor 

convened a technical expert panel (TEP) 

which provided input on the technical 

specifications of this quality measure. 

The TEP was supportive of the design 

of this measure. We also solicited 

stakeholder feedback on the 

development of this measure through a 

public comment process from July 15th 

to 29th, 2013. In December 2014, the 

NQF endorsed the Skilled Nursing 

Facility 30-Day All-Cause Readmission 

Measure (NQF #2510). 

We also considered input from the 

Measures Application Partnership 

(MAP) when selecting measures under 

the CMS SNF VBP Program. The MAP 

is composed of multi-stakeholder 

groups convened by the NQF, our 

current contractor under section 1890(a) 

of the Act. The MAP has noted the need 

for care transition measures in PAC/

Long term care (LTC) performance 

measurement programs and stated that 

setting-specific admission and 

readmission measures under 

consideration would address this 

need.12 We included the SNFRM on the 

December 1, 2014 List of Measures 

under Consideration (MUC List), and 

the MAP supported the measure. A 

spreadsheet of MAP’s 2015 Final 

Recommendations is available at NQF’s 

Web site at http://

www.qualityforum.org/WorkArea/

linkit.aspx?LinkIdentifier=id&

ItemID=78711. 

We invite public comment on our 

proposal to adopt the Skilled Nursing 

Facility 30-Day All-Cause Readmission 

Measure (SNFRM) (NQF #2510) for use 

in the SNF VBP Program. 

h. Feedback Reports to SNFs 

Section 1888(g)(5) of the Act requires 

that beginning October 1, 2016, SNFs be 

provided quarterly confidential 

feedback reports on their performance 

on measures specified under sections 

1888(g)(1) or (2) of the Act. 

We intend to address this topic in 

future rulemaking. However, we request 

public comment on the best means by 

which to communicate these reports to 

SNFs. For example, we could consider 

providing confidential, downloadable 

feedback reports to SNFs through a 

secure portal, such as QualityNet. We 

also seek comment on the level of detail 

that would be most helpful to SNFs in 

understanding their performance on the 

new quality measures. 

4. Performance Standards 

a. Background 

Section 1888(h)(3) of the Act requires 

the Secretary to establish performance 

standards for the SNF VBP Program. 

The performance standards must 

include levels of achievement and 

improvement, and must be established 

and announced not later than 60 days 

prior to the beginning of the 

performance period for the fiscal year 

involved. To assist us in developing our 

proposals to establish performance 

standards for the SNF VBP program, we 

reviewed a number of innovative health 

care programs and demonstration 

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projects, both public and private, to 

discover if any could serve as a 

prototype for the SNF VBP program. 

One methodology of important note that 

provides us an analogous framework for 

implementation of performance 

standards is the Performance 

Assessment Model, implemented for our 

Hospital VBP program. We also 

reviewed the Hospital Acquired 

Conditions Reduction Program, as well 

as the Hospital Readmissions Reduction 

Program and the End-Stage Renal 

Disease Quality Incentive Program 

(ESRD QIP). We seek comment on 

several potential approaches for 

calculating performance standards 

under the SNF VBP Program. 

i. Hospital Value-Based Purchasing 

Program 

Under the Hospital VBP Program, a 

hospital’s Total Performance Score is 

determined by aggregating and 

weighting domain scores, which are 

calculated based on hospital 

performance on measures within each 

domain. The domain scores are then 

weighted to calculate a TPS that ranges 

between 0 and 100 points. At this time, 

we do not anticipate proposing to adopt 

quality measurement domains akin to 

other CMS quality programs under the 

SNF VBP Program due to fact that this 

program is based on only one measure. 

To calculate HVBP measure scores, 

hospital performance on specified 

quality measures is compared to 

performance standards established by 

the Secretary. These performance 

standards include levels of achievement 

and improvement and enable us to 

award between 0 and 10 points to each 

hospital based on its performance on 

each measure during the performance 

period. An achievement threshold, 

generally defined as the median of all 

hospital performance on most measures 

during a specified baseline period, is the 

minimum level of performance required 

to receive achievement points. The 

benchmark, generally defined as the 

mean of the top decile of all hospital 

performance on a measure during the 

baseline period, is the performance level 

required for receiving the maximum 

number of points on a given measure. 

The Program also establishes an 

improvement threshold for each 

measure, set at each individual 

hospital’s performance on the measure 

during the baseline period, to award 

points for improvement over time. 

We believe that the Hospital VBP 

Program’s performance standards 

methodology is a well-understood 

methodology under which health care 

providers and suppliers can be 

rewarded both for providing highquality care and for improving their 

performance over time. The statutory 

authority for the Hospital VBP Program 

is structured similarly to the statutory 

authority for the SNF VBP Program, and 

we are considering adoption of a similar 

methodology for establishing 

performance standards under the SNF 

VBP Program. We also seek to align our 

pay-for-performance and quality 

reporting programs as much as possible. 

Specifically, we could consider 

adopting performance standards based 

on all SNF performance during the 

baseline period on the measure 

specified under section 1888(g)(1) or (2) 

of the Act in the form of the 

achievement threshold—median of all 

SNF performance during a baseline 

period—and the benchmark—mean of 

the top decile of all SNF performance 

during a baseline period. We could then 

consider awarding points along a 

continuum relative to those 

performance levels. 

ii. Hospital-Acquired Conditions 

Reduction Program 

We also considered whether we 

should adopt any components of the 

scoring methodology that we have 

finalized for the HAC Reduction 

Program under the SNF VBP Program. 

The HAC Reduction Program requires 

the Secretary to reduce eligible 

hospitals’ Medicare payments to 99 

percent of what would otherwise have 

been paid for discharges when hospitals 

rank in the worst performing quartile for 

risk-adjusted HAC quality measures. 

These quality measures comprise efforts 

to promote quality of care by reducing 

the number of HACs in the acute 

inpatient hospital setting. 

We determine a hospital’s Total HAC 

Score by first assigning each hospital a 

score of between 1 and 10 for each 

measure based on the hospital’s relative 

performance ranking in 10 groups (or 

deciles) for that measure. Second, the 

measure score is used to calculate the 

domain score. We discuss other details 

of the HAC Reduction Program’s scoring 

methodology in further detail below. 

Although the HACRP statutory 

authority is not structured the same as 

the SNF VBP statutory authority, we 

view the HACRP’s use of decile-based 

performance standards as one 

conceptual possibility for constructing 

performance standards under the SNF 

VBP Program. Specifically, we could 

consider setting performance standards 

based on SNFs’ ranked performance on 

the measures specified under sections 

1888(g)(1) or (2) of the Act during the 

performance period. We could divide 

SNFs’ performance on the measures into 

deciles and award between 1 and 10 

points to all SNFs within each decile. 

While this type of performance 

standards calculation would measure 

and reward achievement, we are 

concerned that it would not incorporate 

improvement, and we seek comment on 

the best means by which we could 

include improvement in this type of 

calculation. 

iii. Hospital Readmissions Reduction 

Program (HRRP) 

We also considered aspects of the 

Hospital Readmissions Reduction 

Program (HRRP) for adaptation under 

the SNF VBP Program. HRRP reduces 

Medicare payments to hospitals with a 

higher number of readmissions for 

applicable conditions over a specified 

time period. 

Hospital readmissions are defined as 

Medicare patients that are readmitted to 

the same or another hospital within 30 

days of a discharge from the same or 

another hospital, which includes shortterm inpatient acute care hospitals. The 

initial hospital inpatient admission (the 

discharge from which starts the 30-day 

potential penalty clock) is termed the 

index admission. The hospital inpatient 

readmission (which can be used to 

determine application of a penalty if the 

readmission occurs within 30 days of 

the index inpatient admission stay) can 

be for any cause, that is, it does not have 

to be for the same cause as the index 

admission. 

Using historical data, we determine 

whether eligible IPPS hospitals have 

readmission rates that are higher than 

expected, given the hospital’s case mix, 

while accounting for the patient risk 

factors, including age, and chronic 

medical conditions identified from 

inpatient and outpatient claims for the 

12 months prior to the hospitalization. 

A hospital’s excess readmission ratio for 

each condition is a measure of a 

hospital’s readmission performance 

compared to the national average for the 

hospital’s set of patients with that 

applicable condition. If the hospital’s 

actual readmission rate, based on the 

hospital’s actual performance, for the 

year is greater than its CMS-expected 

readmission rate, the hospital incurs a 

penalty up to the maximum cap. If a 

hospital performs better than an average 

hospital that admitted similar patients, 

the hospital will not be subjected to a 

payment reduction. If a hospital 

performs worse than average (below a 

1.000 score), the poorer performance 

triggers a payment reduction. For FY 

2013, the reduction was capped at 1 

percent, for FY 2014 at 2 percent, and 

at 3 percent for FY 2015 and for 

subsequent years. 

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We view the Hospital Readmissions 

Reduction Program as a potential model 

for the SNF VBP Program because that 

program does not weight scores based 

on domains. That is, under the HRRP, 

hospitals’ risk-adjusted readmissions 

ratios form the basis for Medicare 

payment adjustments. Under SNF VBP 

(and as discussed further in this 

section), the Program’s statute requires 

us to select only one measure to form 

the basis for the SNF Performance 

Score. We believe that this conceptual 

similarity stands distinct from certain 

other CMS quality programs that 

incorporate quality measurement 

domains and domain weighting into the 

scoring calculations. However, the 

HRRP sets an effective performance 

standard based on the average 

readmissions adjustment factor of 1.000. 

We seek comment on whether or not we 

should adopt a similar form of 

performance standard under the SNF 

VBP Program. This performance 

standard could take the form of the 

median or mean performance on the 

specified quality measure during the 

performance period. However, we 

believe we would also need to consider 

more granular delineations in SNF 

scoring to ensure an appropriate 

distribution of value-based incentive 

payments under the Program, and we 

seek comment on what additional 

policies we should consider adopting in 

this topic area. 

iv. End-Stage Renal Disease Quality 

Incentive Program (ESRD QIP) 

The End-Stage Renal Disease Quality 

Incentive Program (ESRD QIP) is 

authorized by section 1881(h) of the 

Act. The program promotes patient 

health by providing a financial 

incentive for renal dialysis facilities to 

deliver high-quality care to their 

patients. 

Section 1881(h)(3)(A)(i) of the Act 

requires the Secretary to develop a 

methodology for assessing the total 

performance of each provider and 

facility based on performance standards. 

For each clinical measure adopted 

under the ESRD QIP, we assess 

performance on both achievement and 

improvement. For the achievement 

score, facility performance on a measure 

during a performance period is 

compared against national facility 

performance on that measure during a 

specified baseline period. To calculate 

the improvement score, we compare a 

facility’s performance during the 

performance period to its performance 

during a specified baseline period. In 

determining a clinical measure score for 

each measure, we take the higher of the 

improvement or achievement score. 

For each reporting measure, we assess 

performance based on whether the 

facility completed the reporting for that 

measure as specified. If a facility reports 

data according to the specifications we 

have adopted, then the facility earns the 

maximum number of points on the 

measure. If the facility partially reports 

data according to the specifications we 

have adopted, the hospital earns some 

points on the measure, but less than the 

maximum. 

We believe that the ESRD QIP 

performance standards methodology is a 

well-understood methodology under 

which health care providers and 

suppliers can be rewarded both for 

providing high-quality care and for 

improving their performance over time. 

The scoring methodology rewards 

achievement and improvement, and is 

generally aligned with other pay-forperformance and quality reporting 

programs. Like the Hospital VBP 

Program statutory language, the ESRD 

QIP statutory language is structured 

similar to the SNF VBP Program 

statutory language, and we are 

considering adoption of a similar 

methodology for calculating 

performance standards under the SNF 

VBP Program. Specifically, we could 

consider adopting performance 

standards based on all SNF performance 

during the baseline period on the 

measure specified under sections 

1888(g)(1) or (2) of the Act in the forms 

of the achievement threshold—median 

of all SNF performance—and the 

benchmark—mean of the top decile of 

all SNF performance. We could then 

consider awarding points for those 

performance levels. 

b. Measuring Improvement 

We are considering several 

methodologies for improvement scoring 

under the SNF VBP Program, and we 

welcome public comments on these 

options or others that we should 

consider as we develop our SNF VBP 

Program policies for future rulemaking. 

Section 1888(h)(4)(B) of the Act 

specifically requires us to construct a 

ranking of SNF performance scores. 

While we view such a ranking system as 

fairly straightforward when based on 

achievement scoring—for example, 

ranking SNFs based on their 

performance on a measure during the 

performance period could be achieved 

by ordering SNF performance rates on 

the measure specified for the Program 

year—we are considering several 

approaches for including improvement 

in the SNF scoring methodology 

because we are limited to one measure 

for each SNF Program year. These 

approaches include: 

• Improvement points, awarded using 

a similar methodology as the one we use 

to award improvement points in the 

Hospital VBP Program. 

• Measure rate increases, in which a 

SNF’s performance rate on a measure 

would be increased as a result of its 

improvement over time. 

• Ranking increases, in which a 

SNF’s ranking relative to other SNFs 

would be increased as a result of 

improvement. 

• Performance score increases, in 

which a SNF’s performance score would 

be increased as a result of improvement. 

We discuss each of these options in 

further detail below. 

i. Improvement Points 

The Hospital VBP Program calculates 

both achievement and improvement 

points for participating hospitals with 

sufficient data on each measure adopted 

under the Program, and the score a 

hospital receives on a measure is the 

higher of the achievement and 

improvement score. We could consider 

adopting a similar methodology under 

the SNF VBP Program, in which points 

would be calculated for SNFs for both 

achievement (in comparison to all SNFs 

during the performance period) and for 

improvement (in comparison to that 

individual SNF’s performance during 

the baseline period). Points awarded 

could be, similar to the HVBP Program, 

between 0 and 10 points, or we could 

consider awarding points on a broader 

range, such as from 0 to 50, or 0 to 100. 

We believe that adapting the Hospital 

VBP Program’s performance standards 

methodology presents certain 

advantages, in that it is well understood 

by the public and reflects a fair means 

to fulfill the statutory requirement at 

section 1888(h)(3)(B) of the Act to 

include both achievement and 

improvement. However, since there is 

only one measure in the SNF VBP 

Program, such a policy could result in 

significant differences in SNF valuebased incentive payments between 

SNFs with relatively small differences 

in measured performance. We seek 

comment on whether or not we should 

adopt improvement points in a similar 

form to that which we have adopted for 

the Hospital VBP Program. 

ii. Measure Rate Increases 

Given the limited number of measures 

that we may select for the SNF VBP 

Program, we are considering whether 

we should include improvement in the 

program by way of increasing a SNF’s 

performance rate on the Program’s 

measure by a certain amount. Such a 

measure rate increase could take several 

forms, and could rely on any number of 

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qualifying criteria. For example, an 

increase of 10 percent of measured 

performance could be awarded to any 

SNF’s measure rate that rises between 

the baseline and performance periods. 

We could also consider limiting this 

increase to SNFs whose improvement 

on the Program’s measure placed them 

in the top 50 percent of improving SNFs 

between the baseline and performance 

period. Additionally, we could consider 

incorporating a penalty into the scoring 

methodology if a SNF’s performance on 

the measure selected under the Program 

should decline significantly, and we 

seek comment on whether or not we 

should consider such a policy. 

However, we are concerned about the 

methodological implications to quality 

measurement of awarding increases in 

measured performance rates to 

recognize improvement. We understand 

that quality measures are developed 

with robust considerations for the 

clinical topic covered, the 

recommended care provided, and in 

many cases, for the health of the 

underlying patient population, and we 

seek comment on whether such an 

adjustment would be methodologically 

sound. 

iii. Ranking Increases 

Another possibility for rewarding 

improvement is to adopt certain 

elements of the Hospital VBP Program’s 

scoring methodology—that is, 0 to 10 

points for measured performance—and 

increase a SNF’s relative placement as a 

result of improvement. Under this type 

of scenario, SNF performance would be 

rank-ordered, and each SNF would be 

placed in a cohort numbered from 0 to 

10, which would correspond to the 

points that would be awarded to that 

SNF for achievement along a 0 to 10 

point scale of SNF performance scores 

based on their measured performance. 

Once SNF performance has been ranked 

from 0 to 10, we could consider 

increasing SNFs’ ranking, and basing 

value-based incentive payments under 

the program on the resulting adjusted 

ranking. For example, a SNF whose 

performance on a measure resulted in a 

score of 3 on the 0 to 10 point scale, but 

whose performance improved, could 

have its score increased to 4. We could 

also consider limiting this increase to 

only those SNFs whose improvement 

places them in the top 50 percent of 

improving SNFs between the baseline 

and performance period. 

However, we are concerned that this 

type of ranking may not provide us with 

enough granularity to meaningfully 

differentiate performance between 

groups of SNFs, and may result in 

substantial differences in value-based 

incentive payments between SNFs with 

relatively small differences in measured 

performance. We are also concerned 

about comparability once this type of 

ranking increase has been performed, 

because comparing two SNFs that both 

ended at a given point on the 0 to 10 

scale may not be meaningful if one of 

them reached that point via 

improvement. Because we are limited in 

the number of measures that we may 

adopt, we believe that we may need to 

consider adopting a scoring 

methodology that allows additional 

granularity to capture improvement 

appropriately. We seek comment on this 

issue. 

iv. Performance Score Increases 

This option is a variation on the 

HVBP improvement points scenario 

described further above. Under this 

option, we would construct SNF 

performance scores based on measured 

performance during the performance 

period, and would award an increased 

performance score to SNFs whose 

measured performance rose between the 

baseline and performance periods. This 

option could take the form of a 

percentage-based increase—such as a 25 

percent increase to a SNF performance 

score if the SNF improved over time— 

and could also be limited to top 

improvers, as described above in 

reference to other options. 

This option would not result in direct 

adjustments to quality measure rates. 

We would instead be adjusting the SNF 

performance score, and given the broad 

authority that the SNF VBP statute 

provides us in calculating the SNF 

performance score, we believe this 

option be to operationally feasible. 

However, we remain concerned about 

the challenges associated with 

comparability between SNFs with 

different performance rates on the 

measure but the same SNF performance 

score. We specifically seek comment on 

how, if at all, we should differentiate 

SNFs’ performance scores when based 

on achievement or improvement to 

address this issue. 

5. FY 2019 Performance Period and 

Baseline Period Considerations 

a. Performance Period 

We intend to specify a performance 

period for a payment year with an end 

date as close as feasibly possible to the 

payment year’s start date. We strive to 

link performance furnished by SNFs as 

closely as possible to the payment year 

to ensure clear connections between 

quality measurement and value-based 

payment. We also strive to measure 

performance using a sufficiently reliable 

population of patients that broadly 

represent the total care provided by 

SNFs. As such, we anticipate that our 

annual performance period end date 

must provide sufficient time for SNFs to 

submit claims for the patients included 

in our measure population. In other 

programs, such as HRRP and the 

Hospital Inpatient Quality Reporting 

Program (HIQR), this time lag between 

care delivered to patients who are 

included in the readmission measures 

and application of a payment 

consequence linked to reporting or 

performance on those measures has 

historically been close to one year. We 

also recognize that other factors 

contribute to this time lag, including the 

processing time we need to calculate 

measure rates using multiple sources of 

claims needed for statistical modeling, 

time for providers to review their 

measure rates and included patients, 

and processing time we need to 

determine whether a payment 

adjustment needs to be made to a 

provider’s reimbursement rate under the 

applicable PPS based on its reporting or 

performance on measures. 

For the FY 2019 SNF VBP Program’s 

performance period, we are also 

considering the necessary timeline we 

need to complete measure scoring to 

announce the net result of the Program’s 

adjustments to Medicare payments not 

later than 60 days prior to the fiscal 

year, in accordance with section 

1888(h)(7) of the Act. We are also 

considering the number of SNF stays 

typically covered by Medicare each 

year. As discussed previously, Medicare 

typically covers more than two million 

Medicare Part A stays per year in more 

than 15,000 SNFs, and we therefore 

believe that one year of SNFRM data is 

sufficient to ensure that the measure 

rates are statistically reliable. 

We intend to propose a performance 

period for the FY 2019 SNF VBP 

Program in future rulemaking. However, 

we seek public comment on the most 

appropriate performance period length. 

b. Baseline Period 

As described previously, in other 

Medicare quality programs such as the 

Hospital Value-Based Purchasing 

Program and the End-Stage Renal 

Disease Quality Incentive Program, we 

generally adopt a baseline period that 

occurs prior to the performance period 

for a fiscal year to measure 

improvement and establish performance 

standards. 

We view the SNF VBP Program as 

necessitating a similarly-adopted 

baseline period for each fiscal year to 

measure improvement (as required by 

section 1888(h)(3)(B) of the Act) and to 

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enable us to calculate performance 

standards that we must establish and 

announce prior to the performance 

period (as required by section 

1888(h)(3)(A) of the Act). As with the 

Hospital VBP Program, we intend to 

adopt baseline periods that are as close 

as possible in duration as the 

performance period specified for a fiscal 

year. However, we may occasionally 

need to adopt a baseline period that is 

shorter than the performance period to 

meet operational timelines. We also 

intend to adopt baseline periods that are 

seasonally aligned with the performance 

periods to avoid any effects on quality 

measurement that may result from 

tracking SNF performance during 

different times of the calendar year. 

We intend to propose a baseline 

period for purposes of calculating 

performance standards and measuring 

improvement in future rulemaking. We 

seek public comment on the most 

appropriate baseline period for the FY 

2019 Program, including what 

considerations we should take into 

account when developing this policy for 

future rulemaking. 

6. SNF Performance Scoring 

a. Considerations 

As with our performance standards 

policy considerations described above, 

we considered how other Medicare 

quality programs score eligible facilities. 

Specifically, we considered how the 

Hospital Value-Based Purchasing 

Program and the Hospital-Acquired 

Conditions Reduction Program score 

eligible hospitals. We discussed the 

Hospital Readmissions Reduction 

Program’s scoring above in relation to 

performance standards. 

i. Hospital Value-Based Purchasing 

A Hospital VBP domain score is 

calculated by combining the measure 

scores within that domain, weighting 

each measure equally. The domain score 

reflects the number of points the 

hospital has earned based on its 

performance on the measures within 

that domain for which it is eligible to 

receive a score. After summing the 

weighted domain scores, the TPS is 

translated using a linear exchange 

function into the percentage multiplier 

to be applied to each Medicare 

discharge claim submitted by the 

hospital during the applicable fiscal 

year. (We discuss the Exchange 

Function in further detail below). 

Unlike the Hospital VBP Program, the 

SNF VBP program focuses on a single 

readmission measure, one that will be 

replaced by a single resource use 

measure as soon as is practicable. As 

described above, we do not anticipate 

adopting quality measure domains akin 

to other CMS quality programs under 

the SNF VBP Program. We therefore 

seek comment on how, if at all, we 

should adapt the HVBP Program’s 

scoring methodology to accommodate 

both the smaller number of measures 

and the ranking required under the SNF 

VBP Program. 

ii. Hospital-Acquired Conditions 

Reduction Program 

The Hospital-Acquired Conditions 

(HAC) Reduction Program scores 

measures that have been categorized 

into domains, in a manner that is 

similar to the HVBP Program’s domain 

structure. For Domain 1, the points 

awarded to the single assigned measure 

yield the Domain 1 score, since Domain 

1 only contains one measure. For 

Domain 2, the points awarded for the 

domain measures are averaged to yield 

a Domain 2 score. A hospital’s Total 

HAC Score is determined by the sum of 

weighted Domain 1 and Domain 2 

scores. Higher scores indicate worse 

performance relative to the performance 

of all other eligible hospitals. Hospitals 

with a Total HAC Score above the 75th 

percentile of the Total HAC Score 

distribution are subject to a payment 

reduction. 

Unlike the Hospital VBP program, 

referenced above, there is no 

requirement in the HAC Reduction 

Program that measures or performance 

standards must incorporate 

improvement and achievement scores. 

As with the HVBP Program above, we 

seek public comments on the extent to 

which, if at all, we should adopt 

components of the HAC Reduction 

Program’s scoring methodology for 

purposes of the SNF VBP Program. We 

specifically seek comment on whether 

or not we should set an absolute level 

of performance that must be reached to 

receive a positive SNF value-based 

incentive payment. 

iii. Other Considerations 

We intend to consider several 

additional factors when developing the 

performance scoring methodology. We 

believe that it is important to ensure 

that the performance scoring 

methodology is straightforward and 

transparent to SNFs, patients, and other 

stakeholders. SNFs must be able to 

clearly understand performance scoring 

methods and performance expectations 

to maximize their quality improvement 

efforts. The public must understand the 

scoring methodology to make the best 

use of the publicly reported information 

when choosing a SNF. We also believe 

that scoring methodologies for all 

Medicare value-based purchasing 

programs should be aligned as 

appropriate given their specific 

statutory requirements. This alignment 

will facilitate the public’s 

understanding of quality information 

disseminated in these programs and 

foster more informed consumer decision 

making about health care. We believe 

that differences in performance scores 

must reflect true differences in 

performance. To ensure that these 

beliefs are appropriately reflected in the 

SNF VBP Program, we intend to assess 

the quantitative characteristics of the 

measures specified under sections 

1888(g)(1) and (2) of the Act, including 

the current state of measure 

development, to ensure an appropriate 

distribution of value-based incentive 

payments as required by the SNF VBP 

statute. 

We seek public comment on what 

other considerations we should take 

into account when developing our 

proposed scoring methodology for the 

SNF VBP Program in future rulemaking. 

b. Notification Procedures 

As described above, we intend to 

address the topic of quarterly feedback 

reports to SNFs related to measures 

specified under sections 1888(g)(1) and 

(2) of the Act in future rulemaking. We 

also intend to address how to notify 

SNFs of the adjustments to their PPS 

payments based on their performance 

scores and ranking under the SNF VBP 

Program, in accordance with the 

requirement in section 1888(h)(7) of the 

Act, in future rulemaking. 

However, we seek public comment on 

the best means by which to so notify 

SNFs. 

c. Exchange Function 

As described above in reference to the 

Hospital VBP Program’s scoring 

methodology, we use a linear exchange 

function to translate a hospital’s Total 

Performance Score under that Program 

into the percentage multiplier to be 

applied to each Medicare discharge 

claim submitted by the hospital during 

the applicable fiscal year. We refer 

readers to the Hospital Inpatient VBP 

Program Final Rule (76 FR 26531 

through 26534) for detailed discussion 

of the Hospital VBP Program’s Exchange 

Function, as well as responses to public 

comments on this issue. 

We believe we could consider 

adopting a similar exchange function 

methodology to translate SNF 

performance scores into value-based 

incentive payments under the SNF VBP 

Program, and we seek comment on 

whether or not we should do so. 

However, as we did for the Hospital 

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VBP Program, we believe we would 

need to consider the appropriate form 

and slope of the exchange function to 

determine how best to reward high 

performance and encourage SNFs to 

improve the quality of care provided to 

Medicare beneficiaries. As illustrated in 

figure 1, we could consider the 

following four mathematical exchange 

function options: Straight line (linear); 

concave curve (cube root function); 

convex curve (cube function); and Sshape (logistic function), and we seek 

comment on what form of the exchange 

function we should consider 

implementing if we adopt such a 

function under the SNF VBP Program. 

We also seek comment on what 

considerations we should take into 

account when determining the 

appropriate form of the exchange 

function under the SNF VBP Program. 

We intend to consider how such options 

would distribute the value-based 

incentive payments among SNFs, the 

potential differences between the valuebased incentive payment amounts for 

SNFs that perform poorly and SNFs that 

perform very well, the different 

marginal incentives created by the 

different exchange function slopes, and 

the relative importance of having the 

exchange function be as simple and 

straightforward as possible. We request 

public comments on what additional 

considerations, if any, we should take 

into account. 

7. SNF Value-Based Incentive Payments 

Sections 1888(h)(5) and (6) of the Act 

outline several requirements for valuebased incentive payments under the 

SNF VBP Program, including the valuebased incentive payment percentage 

that must be determined for each SNF 

and the funding available for valuebased incentive payments. 

We intend to address this topic in 

future rulemaking. 

8. SNF VBP Public Reporting 

a. SNF-Specific Performance 

Information 

Section 1888(h)(9)(A) of the Act 

requires the Secretary to post 

information on the performance of 

individual SNFs under the SNF VBP 

Program on the Nursing Home Compare 

Web site or its successor. This 

information is to include the SNF 

performance score for the facility for the 

applicable fiscal year and the SNF’s 

ranking for the performance period for 

such fiscal year. 

We intend to address this topic in 

future rulemaking. However, we seek 

public comment on how we should 

display this SNF-specific performance 

information, whether or not we should 

allow SNFs an opportunity to review 

and correct the SNF-specific 

performance information that we will 

post on Nursing Home Compare, and 

how such a review and correction 

process should operate. 

b. Aggregate Performance Information 

Section 1888(h)(9)(B) of the Act 

requires the Secretary to post aggregate 

information on the SNF VBP Program 

on the Nursing Home Compare Web 

site, or a successor Web site, to include 

the range of SNF performance scores 

and the number of SNFs that received 

value-based incentive payments and the 

range and total amount of such valuebased incentive payments. 

We intend to address this topic in 

future rulemaking. However, we seek 

public comment on the most 

appropriate form for posting this 


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13Section 1812(a)(2) and (b)(2) of the Social 

Security Act; 42 CFR 409.61; http://

www.medicare.gov/Pubs/pdf/10153.pdf. 

aggregate information to make such 

information easily understandable for 

the public. 

B. Advancing Health Information 

Exchange 

HHS has a number of initiatives 

designed to encourage and support the 

adoption of health information 

technology and to promote nationwide 

health information exchange to improve 

health care. As discussed in the August 

2013 Statement ‘‘Principles and 

Strategies for Accelerating Health 

Information Exchange’’ (available at 

http://www.healthit.gov/sites/default/

files/acceleratinghieprinciples_

strategy.pdf), HHS believes that all 

individuals, their families, their 

healthcare and social service providers, 

and payers should have consistent and 

timely access to health information in a 

standardized format that can be securely 

exchanged between the patient, 

providers, and others involved in the 

individual’s care. Health IT that 

facilitates the secure, efficient and 

effective sharing and use of healthrelated information when and where it 

is needed is an important tool for 

settings across the continuum of care, 

including SNFs and NFs. While these 

facilities are not eligible for the 

Medicare and Medicaid EHR Incentive 

Programs, effective adoption and use of 

health information exchange and health 

IT tools will be essential as these 

settings seek to improve quality and 

lower costs through initiatives such as 

value-based purchasing. 

The Office of the National 

Coordinator for Health Information 

Technology (ONC) has released a 

document entitled ‘‘Connecting Health 

and Care for the Nation: A Shared 

Nationwide Interoperability Roadmap 

Draft Version 1.0 (draft Roadmap) 

(available at http://www.healthit.gov/

sites/default/files/nationwideinteroperability-roadmap-draft-version1.0.pdf) which describes barriers to 

interoperability across the current 

health IT landscape, the desired future 

state that the industry believes will be 

necessary to enable a learning health 

system, and a suggested path for moving 

from the current state to the desired 

future state. In the near term, the draft 

Roadmap focuses on actions that will 

enable a majority of individuals and 

providers across the care continuum to 

send, receive, find and use a common 

set of electronic clinical information at 

the nationwide level by the end of 2017. 

The Roadmap’s goals also align with the 

IMPACT Act of 2014 which requires 

assessment data to be standardized and 

interoperable to allow for exchange of 

the data. Moreover, the vision described 

in the draft Roadmap significantly 

expands the types of electronic health 

information, information sources and 

information users well beyond clinical 

information derived from electronic 

health records (EHRs). This shared 

strategy is intended to reflect important 

actions that both public and private 

sector stakeholders can take to enable 

nationwide interoperability of electronic 

health information such as: (1) 

Establishing a coordinated governance 

framework and process for nationwide 

health IT interoperability; (2) improving 

technical standards and implementation 

guidance for sharing and using a 

common clinical data set; (3) enhancing 

incentives for sharing electronic health 

information according to common 

technical standards, starting with a 

common clinical data set; and (4) 

clarifying privacy and security 

requirements that enable 

interoperability. 

In addition, ONC has released the 

draft version of the 2015 Interoperability 

Standards Advisory (available at http:// 

www.healthit.gov/standards-advisory), 

which provides a list of the best 

available standards and implementation 

specifications to enable priority health 

information exchange functions. 

Providers, payers, and vendors are 

encouraged to take these ‘‘best available 

standards’’ into account as they 

implement interoperable health 

information exchange across the 

continuum of care, including care 

settings such as behavioral health, longterm and post-acute care, and home and 

community-based service providers. 

We encourage stakeholders to utilize 

health information exchange and 

certified health IT to effectively and 

efficiently help providers improve 

internal care delivery practices, support 

management of care across the 

continuum, enable the reporting of 

electronically specified clinical quality 

measures (eCQMs), and improve 

efficiencies and reduce unnecessary 

costs. As adoption of certified health IT 

increases and interoperability standards 

continue to mature, HHS will seek to 

reinforce standards through relevant 

policies and programs. 

C. Skilled Nursing Facility (SNF) 

Quality Reporting Program (QRP) 

1. Background and Statutory Authority 

We seek to promote higher quality 

and more efficient health care for 

Medicare beneficiaries, and our efforts 

are furthered by quality reporting 

programs coupled with public reporting 

of that information. Such quality 

reporting programs already exist for 

various settings such as the Hospital 

Inpatient Quality Reporting (HIQR) 

Program, the Hospital Outpatient 

Quality Reporting (HOQR) Program, the 

Physician Quality Reporting System, the 

Long-Term Care Hospital (LTCH) 

Quality Reporting Program (QRP), the 

Inpatient Rehabilitation Facility (IRF) 

Quality Reporting Program (QRP), the 

Home Health Quality Reporting Program 

(HHQRP), and the Hospice Quality 

Reporting Program (HQRP). We have 

also implemented quality reporting 

programs for home health agencies 

(HHAs) that are based on conditions of 

participation, and an End-Stage Renal 

Disease (ESRD) Quality Incentive 

Program (QIP) and a Hospital ValueBased Purchasing (HVBP) Program that 

link payment to performance. 

SNFs are providers that meet 

conditions of participation for Medicare. 

Some SNFs are also certified under 

Medicaid as nursing facilities, and these 

types of long-term care facilities furnish 

services to both Medicare beneficiaries 

and Medicaid enrollees. SNFs provide 

short-term skilled nursing services, 

including but not limited to 

rehabilitative therapy, physical therapy, 

occupational therapy, and speechlanguage pathology services. Such 

services are provided to beneficiaries 

who are recovering from surgical 

procedures, such as hip and knee 

replacements, or from medical 

conditions, such as stroke and 

pneumonia. SNF services are provided 

when needed to maintain or improve a 

beneficiary’s current condition, or to 

prevent a condition from worsening. 

The care provided in a SNF (as a freestanding facility or part of a hospital), is 

aimed at enabling the beneficiary to 

maintain or improve his/her health and 

to function independently. SNF care is 

a benefit under Medicare Part A and 

such care is covered for up to 100 days 

in a benefit period if all coverage 

requirements are met.13 In 2014, 2.6 

million covered stays occurred within 

15,421 SNFs. 

Section 1888(e)(6)(B)(i)(II) of the Act 

requires that each SNF submit, for fiscal 

years (FYs) beginning on or after the 

specified application date (as defined in 

section 1899B(a)(2)(E) of the Act), data 

on quality measures specified under 

section 1899B(c)(1) of the Act and data 

on resource use and other measures 

specified under section 1899B(d)(1) of 

the Act in a manner and within the 

timeframes specified by the Secretary. 

In addition, section 1888(e)(6)(B)(i)(III) 

of the Act requires, for FYs beginning on 

or after October 1, 2018, that each SNF 

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submit standardized patient assessment 

data required under section 1899B(b)(1) 

of the Act in a manner and within the 

timeframes specified by the Secretary. 

Section 1888(e)(6)(A)(i) of the Act 

requires that, for FYs beginning with FY 

2018, if a SNF does not submit data, as 

applicable, on quality and resource use 

and other measures in accordance with 

section 1888(e)(6)(B)(i)(II) of the Act and 

standardized patient assessment in 

accordance with section 

1888(e)(6)(B)(i)(III) of the Act for such 

FY, the Secretary reduce the market 

basket percentage described in section 

1888(e)(5)(B)(ii) of the Act by 2 

percentage points. 

The IMPACT Act adds section 1899B 

to the Act that imposes new data 

reporting requirements for certain PAC 

providers, including SNFs. Sections 

1899B(c)(1) and 1899B(d)(1) of the Act 

collectively require that the Secretary 

specify quality measures and resource 

use and other measures with respect to 

certain domains not later than the 

specified application date that applies 

to each measure domain and PAC 

provider setting. Section 1899B(a)(2)(E) 

of the Act delineates the specified 

application dates for each measure 

domain and PAC provider. The IMPACT 

Act also added section 1886(e)(6) to the 

Act, to require the Secretary to reduce 

the otherwise applicable PPS payment 

to a SNF that does not report the new 

data in a form and manner, and at a 

time, specified by the Secretary. For 

SNFs, new section 1886(e)(6)(A)(i) of 

the Act would require the Secretary to 

reduce the payment update for any SNF 

that does not satisfactorily submit the 

new required data. 

Under the SNF QRP, we are proposing 

that the general timeline and sequencing 

of measure implementation would occur 

as follows: Specification of measures; 

proposal and finalization of measures 

through notice-and-comment 

rulemaking; SNF submission of data on 

the adopted measures; analysis and 

processing of the submitted data; 

notification to SNFs regarding their 

quality reporting compliance with 

respect to a particular fiscal year; 

consideration of any reconsideration 

requests; and imposition of a payment 

reduction in a particular fiscal year for 

failure to satisfactorily submit data with 

respect to that fiscal year. We are also 

proposing that any payment reductions 

that are taken with respect to a fiscal 

would year begin approximately one 

year after the end of the data submission 

period for that fiscal year and 

approximately two years after we first 

adopt the measure. 

This timeline, which is followed in 

the other quality reporting programs, 

reflects operational and other practical 

constraints, including the time needed 

to specify and adopt valid and reliable 

measures, collect the data, and 

determine whether a SNF has complied 

with our quality reporting requirements. 

It also takes into consideration our 

desire to give SNFs enough notice of 

new data reporting obligations so that 

they are prepared to timely start 

reporting the data. Therefore, we intend 

to follow the same timing and sequence 

of events for measures specified under 

section 1899B(c)(1) and (d)(1) of the Act 

that we currently follow for the other 

quality reporting programs. We intend 

to specify each of these measures no 

later than the specified application 

dates set forth in section 1899B(a)(2)(E) 

of the Act and propose to adopt them 

consistent with the requirements in the 

Act and Administrative Procedure Act. 

To the extent that we finalize a proposal 

to adopt a measure for the SNF QRP that 

satisfies an IMPACT Act measure 

domain, we intend to require SNFs to 

report data on the measure for the fiscal 

year that begins 2 years after the 

specified application date for that 

measure. Likewise, we intend to require 

SNFs to begin reporting any other data 

specifically required under the IMPACT 

Act for the fiscal year that begins 2 years 

after we adopt requirements that would 

govern the submission of that data. 

As provided at section 

1888(e)(6)(A)(ii) of the Act, depending 

on the market basket percentage for a 

particular year, the 2 percentage point 

reduction under section 1888(e)(6)(A)(i) 

of the Act may result in this percentage, 

after application of the productivity 

adjustment under section 

1888(e)(5)(B)(ii) of the Act, being less 

than 0.0 percent for a FY and may result 

in payment rates under the SNF PPS 

being less than payment rates for the 

preceding FY. In addition, as set forth 

at section 1888(e)(6)(A)(iii) of the Act, 

any reduction based on failure to 

comply with the SNF QRP reporting 

requirements applies only to the 

particular FY involved, and any such 

reduction must not be taken into 

account in computing the SNF PPS 

payment rates for subsequent FYs. 

For purposes of meeting the reporting 

requirements under the SNF QRP, 

section 1888(e)(6)(B)(ii) of the Act states 

that SNFs (or other facilities described 

in section 1888(e)(7)(B) of the Act, other 

than a CAH) may submit the resident 

assessment data required under section 

1819(b)(3) of the Act using the standard 

instrument designated by the state 

under section 1819(e)(5) of the Act. 

Currently, the resident assessment 

instrument is titled the MDS 3.0. To the 

extent data required for submission 

under subclause (II) or (III) of section 

1888(e)(6)(B)(i) of the Act duplicates 

other data required to be submitted 

under clause (i)(I), section 

1888(e)(6)(B)(iii) provides that the 

submission of data under subclause (II) 

or (III) is to be in lieu of the submission 

of such data under clause (I), unless the 

Secretary makes a determination that 

such duplication is necessary to avoid 

delay in the implementation of section 

1899B of the Act taking into account the 

different specified application dates 

under section 1899B(a)(2)(E) of the Act. 

In addition to requiring a quality 

reporting program for SNFs under new 

section 1888(e)(6), the IMPACT Act 

requires feedback to SNFs and public 

reporting of their performance. More 

specifically, section 1899B(f)(1) of the 

Act requires the Secretary to provide 

confidential feedback reports to SNFs 

on their performance on the quality 

measures and resource use and other 

measures specified under that section. 

The Secretary must make such 

confidential feedback reports available 

to SNFs beginning one year after the 

specified application date that applies 

to the measures in that section and, to 

the extent feasible, no less frequently 

than on a quarterly basis, except in the 

case of measures reported on an annual 

basis, as to which the confidential 

feedback reports may be made available 

annually. 

Section 1899B(g)(1) of the Act 

requires the Secretary to provide for the 

public reporting of SNF performance on 

the quality measures specified under 

section 1899B(c)(1) of the Act and the 

resource use and other measures 

specified under section 1899B(d)(1) of 

the Act by establishing procedures for 

making the performance data available 

to the public. Such procedures must 

ensure, including through a process 

consistent with the process applied 

under section 1886(b)(3)(B)(viii)(VII) of 

the Act, that SNFs have the opportunity 

to review and submit corrections to the 

data and other information before it is 

made public as required by section 

1899B(g)(2) of the Act. Section 

1899B(g)(3) of the Act requires that the 

data and information is made publicly 

available beginning no later than two 

years after the specified application date 

applicable to such a measure and SNFs. 

Finally, section 1899B(g)(4)(B) of the 

Act requires that such procedures must 

provide that the data and information 

described in section 1899B(g)(1) of the 

Act with respect to quality and resource 

use measures be made publicly 

available consistent with sections 

1819(i) and 1919(i) of the Act. 

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14http://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/

QualityInitiativesGenInfo/CMS-QualityStrategy.html 

15http://www.ahrq.gov/workingforquality/nqs/

nqs2011annlrpt.htm 

16 . Ad-hoc Review: Expansion of Settings. (n.d.). 

Retrieved March 5, 2015, from http://

www.qualityforum.org/Projects/a-b/Ad_Hoc_

Reviews/CMS/Ad_Hoc_Reviews-CMS.aspx 

2. General Considerations Used for 

Selection of Quality Measures for the 

SNF QRP 

We strive to promote high quality and 

efficiency in the delivery of health care 

to the beneficiaries we serve. 

Performance improvement leading to 

the highest quality health care requires 

continuous evaluation to identify and 

address performance gaps and reduce 

the unintended consequences that may 

arise in treating a large, vulnerable, and 

aging population. Quality reporting 

programs, coupled with public reporting 

of quality information, are critical to the 

advancement of health care quality 

improvement efforts. 

Valid, reliable, relevant quality 

measures are fundamental to the 

effectiveness of our quality reporting 

programs. Therefore, selection of quality 

measures is a priority for CMS in all of 

its quality reporting programs. 

We are proposing to adopt for the SNF 

QRP three measures that we are 

specifying under section 1899(B)(c)(1) of 

the Act for purposes of meeting the 

following three domains: Functional 

status, cognitive function, and changes 

in function and cognitive function; skin 

integrity and changes in skin integrity; 

and incidence of major falls. These 

measures align with the CMS Quality 

Strategy,14 which incorporates the three 

broad aims of the National Quality 

Strategy: 15

• Better Care: Improve the overall 

quality of care by making healthcare 

more patient-centered, reliable, 

accessible, and safe. 

• Healthy People, Healthy 

Communities: Improve the health of the 

U.S. population by supporting proven 

interventions to address behavioral, 

social, and environmental determinants 

of health in addition to delivering 

higher-quality care. 

• Affordable Care: Reduce the cost of 

quality healthcare for individuals, 

families, employers, and government. 

In deciding to propose these 

measures, we also took into account 

national priorities, including those 

established by the National Priorities 

Partnership (http://

www.qualityforum.org/Setting_

Priorities/NPP/National_Priorities_

Partnership.aspx), and the HHS 

Strategic Plan (http://www.hhs.gov/

secretary/about/priorities/

priorities.html). 

These measures also incorporate 

common standards and definitions that 

can be used across post-acute care 

settings to allow for the exchange of 

data among post-acute care providers, to 

provide access to longitudinal 

information for such providers to 

facilitate coordinated and improved 

outcomes, and to enable comparison of 

such assessment data across all such 

providers as required by section 

1899B(a) of the Act. 

We initiated an Ad Hoc MAP process 

to obtain input on the measures that we 

are proposing to adopt in this proposed 

rule. On February 5th, 2015, we made 

publicly available a list of Measures 

Under Consideration (called the ‘‘List of 

Ad Hoc Measures Under Consideration 

for the Improving Medicare Post-Acute 

Care Transformation (IMPACT) Act of 

2014’’) (MUC list) as part of an Ad Hoc 

Measures Application Partnership 

(MAP) convened by the National 

Quality Forum (NQF). The MAP PostAcute Care/Long-Term Care Workgroup 

convened on February 9, 2015 to 

‘‘review the measures technical 

properties as they are adapted for use in 

new settings and whether the new 

settings impact the measures’ adherence 

to the NQF Scientific Acceptability 

criterion.’’ 16 The NQF published the 

MUC list on our behalf for public 

comment from February 11, 2015 

through February 19, 2015 on its Web 

site. The MAP Coordinating Committee 

convened on February 27, 2015 to 

discuss the public comments received, 

and those public comments are listed 

here http://public.qualityforum.org/

MAP/

MAP%20Coordinating%20Committee/

MAP_CC%20Feb%2027_Discussion_

Guide.html#agenda. 

The MAP issued a pre-rulemaking 

report on March 6, 2015 Pre-Rulemaking 

Report, which is available for download 

at http://www.qualityforum.org/Project_

Pages/MAP_Post-Acute_CareLongTerm_Care_Workgroup.aspx. The 

MAP’s input for each of the proposed 

measures is discussed in this section. 

Section 1899B(j) of the Act requires 

that we allow for stakeholder input as 

part of the pre-rulemaking process. 

Therefore, we sought stakeholder input 

on the measures we are proposing to 

adopt in this proposed rule as follows: 

We convened a technical expert panel 

that included stakeholder experts and 

patient representatives on February 3, 

2015; we sought public input during the 

February 2015 ad hoc MAP process; and 

we implemented a public mail box for 

the submission of comments in January 

2015, PACQualityInitiative@

cms.hhs.gov which is located on our 

post-acute care quality initiatives Web 

site at http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014-andCross-Setting-Measures.html. In 

addition, we held a National 

Stakeholder Special Open Door Forum 

on February 25, 2015 for the purpose of 

seeking input on these measures. Lastly, 

we held two separate listening sessions 

on February 10 and March 24, 2015, 

respectively. 

3. Policy for Retaining SNF QRP 

Measures for Future Payment 

Determinations 

For the SNF QRP, for the purpose of 

streamlining the rulemaking process, we 

are proposing that when we adopt a 

measure for the SNF QRP for a payment 

determination, this measure would be 

automatically retained for all 

subsequent payment determinations 

unless we propose to remove, suspend, 

or replace the measure. 

Section 1899B(h)(1) of the Act 

provides that the Secretary may remove, 

suspend or add a quality measure or 

resource use or other measure specified 

under section 1899B(c)(1) or (d)(1) of 

the Act so long as the Secretary 

publishes a justification for the action in 

the Federal Register with a notice and 

comment period. Consistent with the 

policies of other quality reporting 

programs including the HIQR Program, 

the HOQR Program, LTCH QRP, and the 

IRF QRP, we are proposing that quality 

measures would be considered for 

removal if: (1) Measure performance 

among SNFs is so high and unvarying 

that meaningful distinctions in 

improvements in performance can no 

longer be made in which case the 

measure may be removed or suspended; 

(2) performance or improvement on a 

measure does not result in better 

resident outcomes; (3) a measure does 

not align with current clinical 

guidelines or practice; (4) a more 

broadly applicable measure (across 

settings, populations, or conditions) for 

the particular topic is available; (5) a 

measure that is more proximal in time 

to desired resident outcomes for the 

particular topic is available; (6) a 

measure that is more strongly associated 

with desired resident outcomes for the 

particular topic is available; or (7) 

collection or public reporting of a 

measure leads to negative unintended 

consequences other than resident harm. 

We also note that under section 

1899B(h)(2) of the Act, in the case of a 

quality measure or resource use or other 

measure for which there is a reason to 

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believe that the continued collection 

raises possible safety concerns or would 

cause other unintended consequences, 

the Secretary may promptly suspend or 

remove the measure and publish the 

justification for the suspension or 

removal in the Federal Register during 

the next rulemaking cycle. 

For any measure that meets this 

criteria (that is, a measure that raises 

safety concerns), we will take 

immediate action to remove the measure 

from SNF QRP, and, in addition to 

publishing a justification in the next 

rulemaking cycle, will immediately 

notify SNFs and the public through the 

usual communication channels, 

including listening session, memos, 

email notification, and web postings. 

We are inviting public comment on 

these proposals and policies. 

4. Proposed Process for Adoption of 

Changes to SNF QRP Program Measures 

Quality measures selected for the SNF 

QRP must be endorsed by the NQF 

unless they meet the statutory criteria 

for exception. The NQF is a voluntary 

consensus standard-setting organization 

with a diverse representation of 

consumer, purchaser, provider, 

academic, clinical, and other healthcare 

stakeholder organizations. The NQF was 

established to standardize healthcare 

quality measurement and reporting 

through its consensus development 

process (http://www.qualityforum.org/

About_NQF/Mission_and_Vision.aspx). 

The NQF undertakes review of: (a) New 

quality measures and national 

consensus standards for measuring and 

publicly reporting on performance, (b) 

regular maintenance processes for 

endorsed quality measures, (c) measures 

with time-limited endorsement for 

consideration of full endorsement, and 

(d) ad hoc review of endorsed quality 

measures, practices, consensus 

standards, or events with adequate 

justification to substantiate the review 

(http://www.qualityforum.org/

Measuring_Performance/Ad_Hoc_

Reviews/Ad_Hoc_Review.aspx). 

The NQF solicits information from 

measure stewards for annual reviews 

and in order to review measures for 

continued endorsement in a specific 3- 

year cycle. In this measure maintenance 

process, the measure steward is 

responsible for updating and 

maintaining the currency and relevance 

of the measure and for confirming 

existing specifications to the NQF on an 

annual basis. As part of the ad hoc 

review process, the ad hoc review 

requester and the measure steward are 

responsible for submitting evidence for 

review by a NQF Technical Expert panel 

which, in turn, provides input to the 

Consensus Standards Approval 

Committee which then makes a decision 

on endorsement status and/or 

specification changes for the measure, 

practice, or event. 

The NQF regularly maintains its 

endorsed measures through annual and 

triennial reviews, which may result in 

the NQF making updates to the 

measures. We believe that it is 

important to have in place a 

subregulatory process to incorporate 

nonsubstantive updates made by the 

NQF into the measure specifications as 

we have adopted for the Hospital IQR 

Program so that these measures remain 

up-to-date. We also recognize that some 

changes the NQF might make to its 

endorsed measures are substantive in 

nature and might not be appropriate for 

adoption using a subregulatory process. 

Therefore, in the FY 2013 IPPS/LTCH 

PPS final rule (77 FR 53504 through 

53505), we finalized a policy under 

which we use a subregulatory process to 

make nonsubstantive updates to 

measures used for the Hospital IQR 

Program. For what constitutes 

substantive versus nonsubstantive 

changes, we expect to make this 

determination on a case-by-case basis. 

Examples of nonsubstantive changes to 

measures might include updated 

diagnosis or procedure codes, 

medication updates for categories of 

medications, broadening of age ranges, 

and exclusions for a measure (such as 

the addition of a hospice exclusion to 

the 30-day mortality measures). We 

believe that nonsubstantive changes 

may include updates to NQF-endorsed 

measures based upon changes to 

guidelines upon which the measures are 

based. 

Therefore, we propose to use 

rulemaking to adopt substantive updates 

made to measures as we have for the 

Hospital IQR Program. Examples of 

changes that we might consider to be 

substantive would be those in which the 

changes are so significant that the 

measure is no longer the same measure, 

or when a standard of performance 

assessed by a measure becomes more 

stringent (for example, changes in 

acceptable timing of medication, 

procedure/process, or test 

administration). Another example of a 

substantive change would be where the 

NQF has extended its endorsement of a 

previously endorsed measure to a new 

setting, such as extending a measure 

from the inpatient setting to hospice. 

These policies regarding what is 

considered substantive versus 

nonsubstantive would apply to all 

measures in the SNF QRP. We also note 

that the NQF process incorporates an 

opportunity for public comment and 

engagement in the measure maintenance 

process. 

We believe this policy adequately 

balances our need to incorporate 

updates to the SNF QRP measures in the 

most expeditious manner possible while 

preserving the public’s ability to 

comment on updates that so 

fundamentally change an endorsed 

measure that it is no longer the same 

measure that we originally adopted. 

We are inviting public comment on 

this proposal. 

5. Proposed New Quality Measures for 

FY 2018 and Subsequent Payment 

Determinations 

For the FY 2018 SNF QRP and 

subsequent years, we are proposing to 

adopt three post-acute care (PAC) crosssetting quality measures. These 

measures address the following 

domains: (1) Skin integrity and changes 

in skin integrity; (2) incidence of major 

falls; and (3) functional status, cognitive 

function, and changes in function and 

cognitive function, which are all 

required under section 1899B(c)(1) of 

the Act. The proposed quality measure 

addressing skin integrity and changes in 

skin integrity is the NQF-endorsed 

measure, Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (Short Stay) (NQF 

#0678) (http://www.qualityforum.org/

QPS/0678). The proposed quality 

measure addressing the incidence of 

major falls is an application of the NQFendorsed Percent of Residents 

Experiencing One or More Falls with 

Major Injury (Long Stay) (NQF #0674) 

(http://www.qualityforum.org/QPS/

0674). Finally, the proposed quality 

measure addressing functional status, 

cognitive function, and changes in 

function and cognitive function is an 

application of the Percent of Long-Term 

Care Hospital Patients With an 

Admission and Discharge Functional 

Assessment and a Care Plan that 

Addresses Function (NQF #2631; under 

NQF review) (http://

www.qualityforum.org/QPS/2631). 

The proposed quality measures 

addressing the domains of incidence of 

major falls and functional status, as well 

as cognitive function, and changes in 

function and cognitive function, are not 

currently NQF-endorsed for the SNF 

population. We reviewed the NQF’s 

endorsed measures and were unable to 

identify any NQF-endorsed cross-setting 

quality measures that focused on these 

domains. We are also unaware of any 

other cross-setting quality measures that 

have been endorsed or adopted by 

another consensus organization. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS3

Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 22071 

17Casey, G. (2013). ‘‘Pressure ulcers reflect 

quality of nursing care.’’ Nurs N Z 19(10): 20–24. 

18 Gorzoni, M. L. and S. L. Pires (2011). ‘‘Deaths 

in nursing homes.’’ Rev Assoc Med Bras 57(3): 327– 

331. 

19Thomas, J. M., et al. (2013). ‘‘Systematic 

review: Health-related characteristics of elderly 

hospitalized adults and nursing home residents 

associated with short-term mortality.’’ J Am Geriatr 

Soc 61(6): 902–911. 

20White-Chu, E. F., et al. (2011). ‘‘Pressure ulcers 

in long-term care.’’ Clin Geriatr Med 27(2): 241–258. 

21Bates-Jensen BM. Quality indicators for 

prevention and management of pressure ulcers in 

vulnerable elders. Ann Int Med. 2001;135 (8 Part 2), 

744–51. 

22 Institute for Healthcare Improvement (IHI). 

Relieve the pressure and reduce harm. May 21, 

2007. Available from http://www.ihi.org/IHI/

Topics/PatientSafety/SafetyGeneral/

ImprovementStories/FSRelievethePressureand

ReduceHarm.htm 

23Russo CA, Steiner C, Spector W. 

Hospitalizations related to pressure ulcers among 

adults 18 years and older, 2006 (Healthcare Cost 

and Utilization Project Statistical Brief No. 64). 

December 2008. Available from http://

www.hcupus.ahrq.gov/reports/statbriefs/sb64.pdf. 

24Agency for Healthcare Research and Quality 

(AHRQ). Agency news and notes: pressure ulcers 

are increasing among hospital patients. January 

2009. Available from http://www.ahrq.gov/

research/jan09/0109RA22.htm.= 

25Bates-Jensen BM. Quality indicators for 

prevention and management of pressure ulcers in 

vulnerable elders. Ann Int Med. 2001;135 (8 Part 2), 

744–51. 

26Cai, S., et al. (2013). ‘‘Obesity and pressure 

ulcers among nursing home residents.’’ Med Care 

51(6): 478–486. 

27Casey, G. (2013). ‘‘Pressure ulcers reflect 

quality of nursing care.’’ Nurs N Z 19(10): 20–24. 

28Hurd D, Moore T, Radley D, Williams C. 

Pressure ulcer prevalence and incidence across 

post-acute care settings. Home Health Quality 

Measures & Data Analysis Project, Report of 

Findings, prepared for CMS/OCSQ, Baltimore, MD, 

under Contract No. 500–2005–000181 TO 0002. 

2010. 

29MacLean DS. Preventing & managing pressure 

sores. Caring for the Ages. March 2003;4(3):34–7. 

Available from http://www.amda.com/publications/ 

caring/march2003/policies.cfm. 

30Michel, J. M., et al. (2012). ‘‘As of 2012, what 

are the key predictive risk factors for pressure 

ulcers? Developing French guidelines for clinical 

practice.’’ Ann Phys Rehabil Med 55(7): 454–465 

31National Pressure Ulcer Advisory Panel 

(NPUAP) Board of Directors; Cuddigan J, Berlowitz 

DR, Ayello EA (Eds). Pressure ulcers in America: 

Prevalence, incidence, and implications for the 

future. An executive summary of the National 

Pressure Ulcer Advisory Panel Monograph. Adv 

Skin Wound Care. 2001;14(4):208–15 

32Park-Lee E, Caffrey C. Pressure ulcers among 

nursing home residents: United States, 2004 (NCHS 

Data Brief No. 14). Hyattsville, MD: National Center 

for Health Statistics, 2009. Available from http://

www.cdc.gov/nchs/data/databriefs/db14.htm 

33Reddy, M. (2011). ‘‘Pressure ulcers.’’ Clin Evid 

(Online) 2011. 

34Teno, J. M., et al. (2012). ‘‘Feeding tubes and 

the prevention or healing of pressure ulcers.’’ Arch 

Intern Med 172(9): 697–701. 

a. Quality Measure Addressing the 

Domain of Skin Integrity and Changes in 

Skin Integrity: Percent of Residents or 

Patients With Pressure Ulcers That Are 

New or Worsened (Short Stay) (NQF 

#0678) 

We are proposing to adopt for the SNF 

QRP, beginning with the FY 2018 

payment determination, NQF #0678, 

Percent of Residents or Patients with 

Pressure Ulcers that are New or 

Worsened (Short Stay) as a cross-setting 

quality measure that satisfies the skin 

integrity and changes in skin integrity 

domain. This measure assesses the 

percentage of short-stay residents or 

patients in SNFs, IRFs, and LTCHs with 

Stage 2 through 4 pressure ulcers that 

are new or worsened since a prior 

assessment. 

Pressure ulcers are a serious medical 

condition that result in pain, decreased 

quality of life, and increased mortality 

in aging populations.17 18 19 20 Pressure 

ulcers typically are the result of 

prolonged periods of uninterrupted 

pressure on the skin, soft tissue, muscle, 

and bone.21 22 23 Elderly individuals in 

SNFs are prone to a wide range of 

medical conditions that increase their 

risk of developing pressure ulcers. 

These include impaired mobility or 

sensation, malnutrition or 

undernutrition, obesity, stroke, diabetes, 

dementia, cognitive impairments, 

circulatory diseases, dehydration, the 

use of wheelchairs, medical devices, 

and a history of pressure ulcers or a 

pressure ulcer at 

admission.24 25 26 27 28 29 30 31 32 33 34

Section 1899B(a)(1)(B) of the Act 

requires that the data submitted on 

quality measures under section 

1899B(c)(1) of the Act be standardized 

and interoperable across PAC settings, 

and section 1899B(c)(2)(A) of the Act 

requires that the measures be reported 

through the use of a PAC assessment 

instrument. These requirements are in 

line with the NQF Steering Committee 

report, which stated that to understand 

the impact of pressure ulcers across 

settings, quality measures addressing 

prevention, incidence, and prevalence 

of pressure ulcers must be harmonized 

and aligned. This measure has been 

implemented in nursing homes for 

resident population with stays of less 

than 100 days under CMS’s Nursing 

Home Quality Initiative. We also 

adopted the measure for use in the 

LTCH QRP (76 FR 51753 through 51756) 

beginning with the FY 2014 payment 

determination, and for use in the IRF 

QRP (76 FR 24254) beginning with the 

FY 2014 payment determination. We 

have not, to date, adopted the measure 

for the home health setting. More 

information on the NQF endorsed 

measure, the Percent of Residents or 

Patients with Pressure Ulcers That Are 

New or Worsened (Short Stay), is 

available at http://

www.qualityforum.org/QPS/0678. 

A TEP convened by our measure 

development contractor provided input 

on the technical specifications of this 

quality measure, including the 

feasibility of implementing the measure 

across PAC settings. The TEP supported 

the measure’s implementation across 

PAC settings and was also supportive of 

our efforts to standardize the measure 

for cross-setting development. The MAP 

also supported the use of NQF #0678, 

Percent of Residents or Patients with 

Pressure Ulcers that are New or 

Worsened (Short Stay) in the SNF QRP 

as a cross-setting quality measure. 

We are proposing that the data for this 

quality measure would be collected 

using the MDS 3.0, currently submitted 

by SNFs through the Quality 

Improvement and Evaluation System 

(QIES) Assessment Submission and 

Processing (ASAP) system. We believe 

that this data collection method will 

minimize the reporting burden on SNFs 

because SNFs are already required to 

submit MDS data for payment purposes. 

For more information on SNF 

submission using the QIES ASAP 

system, readers are referred to http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

NHQIMDS30TechnicalInformation.

html. 

The data items that we would use to 

calculate the proposed quality measure 

include: M0800A (Worsening in 

Pressure Ulcer Status Since Prior 

Assessment (OBRA or scheduled PPS 

assessment) or Last Admission/Entry or 

Reentry, Stage 2), M0800B (Worsening 

in Pressure Ulcer Status Since Prior 

Assessment (OBRA or scheduled PPS 

assessment) or Last Admission/Entry or 

Reentry, Stage 3), and M0800C 

(Worsening in Pressure Ulcer Status 

Since Prior Assessment (OBRA or 

scheduled PPS assessment) or Last 

Admission/Entry or Reentry, Stage 4). 

This measure would be calculated at 

two points in time, at admission and 

discharge (see Proposed Form, Manner, 

and Timing of Quality Data 

Submission). The specifications and 

data items for the Percent of Residents 

or Patients with Pressure Ulcers that are 

New or Worsened (Short Stay), are 

available in the MDS 3.0 Quality 

Measures User’s Manual available on 

our Web site at http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

NursingHomeQualityInits/NHQIQuality

Measures.html. 

We invite public comment on our 

proposal to adopt NQF #0678 Percent of 

Residents or Patients with Pressure 

Ulcers that are New or Worsened (Short 

Stay) for the SNF QRP for the FY 2018 

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22072 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 

35Schwartz, M., Nguyen, K.H., Swinson Evans, 

T.M., Ignaczak, M.K., Thaker, S., and Bernard, S.L.: 

Development of a Cross-Setting Quality Measure for 

Pressure Ulcers: OY2 Information Gathering, Final 

Report. Centers for Medicare & Medicaid Services, 

November 2013. Available: http://www.cms.gov/

Medicare/Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-Quality-Initiatives/

Downloads/Development-of-a-Cross-SettingQuality-Measure-for-Pressure-Ulcers-InformationGathering-Final-Report.pdf 

36Schwartz, M., Ignaczak, M.K., Swinson Evans, 

T.M., Thaker, S., and Smith, L.: The Development 

of a Cross-Setting Pressure Ulcer Quality Measure: 

Summary Report on November 15, 2013, Technical 

Expert Panel Follow-Up Webinar. Centers for 

Medicare & Medicaid Services, January 2014. 

Available: http://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/PostAcute-Care-Quality-Initiatives/Downloads/

Development-of-a-Cross-Setting-Pressure-UlcerQuality-Measure-Summary-Report-on-November15–2013-Technical-Expert-Pa.pdf. 

37Schwartz, M., Nguyen, K.H., Swinson Evans, 

T.M., Ignaczak, M.K., Thaker, S., and Bernard, S.L.: 

Development of a Cross-Setting Quality Measure for 

Pressure Ulcers: OY2 Information Gathering, Final 

Report. Centers for Medicare & Medicaid Services, 

November 2013. Available: http://www.cms.gov/

Medicare/Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-Quality-Initiatives/

Downloads/Development-of-a-Cross-Setting-Quality

-Measure-for-Pressure-Ulcers-InformationGathering-Final-Report.pdf. 

38Currie LM. Fall and injury prevention. Annu 

Rev Nurs Res. 2006;24:39–74. 

39Fuller GF. Falls in the elderly. Am Fam 

Physician. Apr 1 2000;61(7):2159–2168, 2173–2154. 

40Premier Inc. Causes of Falls. 2013. Available: 

https://www.premierinc.com/quality-safety/

toolsservices/safety/topics/falls/causes_of_falls.jsp. 

41Rubenstein LZ, Josephson KR, Robbins AS. 

Falls in the nursing home. Ann Intern Med. 1994 

Sep 15; 121(6):442–51. 42 Vu MQ, Weintraub N, Rubenstein LZ. Falls in 

the nursing home: are they preventable? J Am Med 

Dir Assoc. 2004 Nov-Dec; 5(6):401–6. Review. 43Tinetti ME, Williams CS. The effect of falls and 

fall injuries on functioning in community-dwelling 

older persons. J Gerontol A Biol Sci Med Sci. 1998 

Mar;53(2):M112–9. 44Sorensen SV, de Lissovoy G, Kunaprayoon D, 

Resnick B, Rupnow MF, Studenski S. A taxonomy 

and economic consequence of nursing home falls. 

Drugs Aging. 2006;23(3):251–62. 45Quigley PA, Campbell RR, Bulat T, Olney RL, 

Buerhaus P, Needleman J. Incidence and cost of 

serious fall-related injuries in nursing homes. Clin 

Nurs Res. Feb 2012;21(1):10–23. 46 Kramer AM, Steiner JF, Schlenker RE, et al. 

Outcomes and costs after hip fracture and stroke: 

a comparison of rehabilitation settings. JAMA. 

1997;277(5):396–404. 

47 Ibid. Ibid.Morse, J. M. (1996). Preventing 

patient falls. Sage. 

48Rothschild JM, Bates DW, Leape LL. 

Preventable medical injuries in older patients. Arch 

Intern Med. 2000 Oct 9; 160(18):2717–28. 

49Morris JN, Moore T, Jones R, et al. Validation 

of long-term and post-acute care quality indicators. 

CMS Contract No: 500–95–0062/T.O. #4. 

Cambridge, MA: Abt Associates, Inc., June 2003. 

50Avidan AY, Fries BE, James ML, Szafara KL, 

Wright GT, Chervin RD. Insomnia and hypnotic 

use, recorded in the minimum data set, as 

predictors of falls and hip fractures in Michigan 

nursing homes. J Am Geriatr Soc. 2005 Jun; 

53(6):955–62. 

51Fonad E, Wahlin TB, Winblad B, Emami A, 

Sandmark H. Falls and fall risk among nursing 

payment determination and subsequent 

years. 

As part of our ongoing measure 

development efforts, we are considering 

a future update to the numerator of the 

quality measure NQF #0678, Percent of 

Residents or Patients with Pressure 

Ulcers that are New or Worsened (Short 

Stay). This update would require PAC 

providers to report the development of 

unstageable pressure ulcers and 

suspected deep tissue injuries (sDTIs). 

Under this potential change we are 

considering, the numerator of the 

quality measure would be updated to 

include unstageable pressure ulcers, 

including sDTIs that are new/developed 

in the facility, as well as Stage 1 or 2 

pressure ulcers that become unstageable 

due to slough or eschar (indicating 

progression to a stage 3 or 4 pressure 

ulcer) after admission. SNFs are already 

required to complete the unstageable 

pressure ulcer items on the MDS 3.0. As 

such, this update would require a 

change in the way the measure is 

calculated but would not increase the 

data collection burden for SNFs. 

A TEP convened by our measure 

development contractor strongly 

recommended that CMS update the 

specifications for the measure to include 

these pressure ulcers in the numerator, 

although it acknowledged that 

unstageable pressure ulcers and sDTIs 

cannot and should not be assigned a 

numeric stage. The TEP also 

recommended that a Stage 1 or 2 

pressure ulcer that becomes unstageable 

due to slough or eschar should be 

considered worsened because the 

presence of slough or eschar indicates a 

full thickness (equivalent to Stage 3 or 

4) wound.35 36 These recommendations 

were supported by technical and 

clinical advisors and the National 

Pressure Ulcer Advisory Panel.37

Additionally, exploratory data analysis 

conducted by our measure development 

contractor suggests that the addition of 

unstageable pressure ulcers, including 

sDTIs, will increase the observed 

incidence of new or worsened pressure 

ulcers at the facility level and may 

improve the ability of the quality 

measure to discriminate between poorand high-performing facilities. 

We invite public comment to inform 

our consideration of the inclusion of 

unstageable pressure ulcers and sDTIs 

in the numerator of the quality measure 

NQF #0678 Percent of Residents or 

Patients with Pressure Ulcers that are 

New or Worsened (Short Stay) as part of 

our future measure development efforts. 

b. Quality Measure Addressing the 

Domain of the Incidence of Major Falls: 

An Application of the Measure Percent 

of Residents Experiencing One or More 

Falls With Major Injury (Long Stay) 

(NQF #0674) 

We are proposing to adopt beginning 

with the FY 2018 SNF QRP an 

application to the SNF setting of the 

Percent of Residents Experiencing One 

or More Falls with Major Injury (Long 

Stay) (NQF #0674) measure that satisfies 

the incidence of major falls domain. 

This outcome measure reports the 

percentage of residents who have 

experienced falls with major injury over 

a 3-month period. This measure was 

developed by CMS and is NQFendorsed for long-stay residents of 

nursing facilities. 

Research indicates that fall-related 

injuries are the most common cause of 

accidental death in people aged 65 and 

older, responsible for approximately 41 

percent of accidental deaths annually.38

Rates increase to 70 percent of 

accidental deaths among individuals 

aged 75 and older.39 In addition to 

death, falls can lead to fracture, soft 

tissue or head injury, fear of falling, 

anxiety, and depression.40 Research also 

indicates that approximately 75 percent 

of nursing facility residents fall at least 

once a year. This is twice the rate of 

their counterparts in the community.41

Further, it is estimated that 10 percent 

to 25 percent of nursing facility resident 

falls result in fractures and/or 

hospitalization.42

Falls also represent a significant cost 

burden to the entire health care system, 

with injurious falls accounting for 6 

percent of medical expenses among 

those age 65 and older.43 In their 2006 

work, Sorensen et al. estimate the costs 

associated with falls of varying severity 

among nursing home residents. Their 

work suggests that acute care costs 

incurred for falls among nursing home 

residents range from $979 for a typical 

case with a simple fracture to $14,716 

for a typical case with multiple 

injuries.44 A similar study of 

hospitalizations of nursing home 

residents due to serious fall-related 

injuries (intracranial bleed, hip fracture, 

other fracture) found an average cost of 

$23,723.45 Among the SNF population, 

the average 6-month cost of a resident 

with a hip fracture was estimated at 

$11,719 in 1996 U.S. dollars.46

According to Morse, 78 percent of 

falls are anticipated physiologic falls, 

which are falls among individuals who 

scored high on a risk assessment scale, 

meaning their risk could have been 

identified in advance of the fall.47 To 

date, studies have identified a number 

of risk factors for falls.48 49 50 51 52 53 54 55 56

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Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Proposed Rules 22073 

home residents. J Clin Nurs. 2008 Jan; 17(1):126– 

34. 

52Currie LM. Fall and injury prevention. Annu 

Rev Nurs Res. 2006;24:39–74. 

53Ellis AA, Trent RB. Do the risks and 

consequences of hospitalized fall injuries among 

older adults in California vary by type of fall? J 

Gerontol A Biol Sci Med Sci. Nov 

2001;56(11):M686–692. 

54Chen XL, Liu YH, Chan DK, Shen Q, Van 

Nguyen H. Chin Med J (Engl). Characteristics 

associated with falls among the elderly within aged 

care wards in a tertiary hospital: a retrospective. 

2010 Jul;123(13):1668–72. 

55Frisina PG, Guellnitz R, Alverzo J. A time series 

analysis of falls and injury in the inpatient 

rehabilitation setting. Rehabil Nurs. 2010 

JulAug;35(4):141–6, 166. 

56Lee JE, Stokic DS. Risk factors for falls during 

inpatient rehabilitant Am J Phys Med Rehabil. 2008 

May;87(5):341–50; quiz 351, 422. 

57American Nurses Association (2014, April 9). 

Falls with injury. Retrieved from http://

www.qualityforum.org/QPS/0202. 

58Subcommittee on Health National Committee 

on Vital and Health Statistics, ‘‘Classifying and 

Reporting Functional Status’’ (2001). 

59Reistetter TA, Graham JE, Granger CV, Deutsch 

A, Ottenbacher KJ. Utility of Functional Status for 

Classifying Community Versus Institutional 

Discharges after Inpatient Rehabilitation for Stroke. 

Archives of Physical Medicine and Rehabilitation, 

2010; 91:345–350. 

60Miller EA, Weissert WG. Predicting Elderly 

People’s Risk for Nursing Home Placement, 

Hospitalization, Functional Impairment, and 

Continued 

The identification of such risk factors 

suggests the potential for health care 

facilities to reduce and prevent the 

incidence of falls. 

The Percent of Residents 

Experiencing One or More Falls with 

Major Injury (Long Stay) (NQF #0674) 

quality measure is NQF-endorsed and 

has been successfully implemented in 

nursing facilities for long-stay residents 

since 2011. In addition, the quality 

measure is currently publicly reported 

on CMS’ Nursing Home Compare Web 

site at http://www.medicare.gov/

nursinghomecompare/search.html. 

Further, an application of the quality 

measure was adopted for use in the 

LTCH QRP in the FY 2015 IPPS/LTCH 

PPS final rule (79 FR 50290). 

Although NQF #0674 is not currently 

endorsed for the SNF setting, we 

reviewed the NQF’s consensus endorsed 

measures and were unable to identify 

any NQF-endorsed cross-setting quality 

measures for that setting that are 

focused on falls with major injury. We 

are aware of one NQF-endorsed 

measure, Falls with Injury (NQF #0202), 

which is a measure designed for adult 

acute inpatient and rehabilitation 

patients capturing ‘‘all documented 

patient falls with an injury level of 

minor or greater on eligible unit types 

in a calendar quarter, reported as injury 

falls per 100 days.’’ 57 NQF #0202 is not 

appropriate to meet the IMPACT Act 

domain as it includes minor injury in 

the numerator definition. Additionally, 

including all falls could result in 

providers limiting the freedom of 

activity for individuals at higher risk for 

falls. We are unaware of any other crosssetting quality measures for falls with 

major injury that have been endorsed or 

adopted by another consensus 

organization for the SNF setting. 

Therefore, we are proposing to adopt 

this measure under the Secretary’s 

authority to specify non-NQF-endorsed 

measures under section 1899B. 

A TEP convened by our measure 

development contractor provided input 

on the technical specifications of this 

quality measure, including the 

feasibility of implementing the measure 

across PAC settings. The TEP was 

supportive of the implementation of this 

measure across PAC settings and was 

also supportive of our efforts to 

standardize this measure for crosssetting development. The MAP 

conditionally supported the use of an 

application of NQF #0674 Percent of 

Residents Experiencing One or More 

Falls with Major Injury (Long Stay) in 

the SNF QRP as a cross-setting quality 

measure. More information about the 

MAP’s recommendations for this 

measure is available in the report 

entitled MAP Off-Cycle Deliberations 

2015: Measures under Considerations to 

Implement Provisions of the IMPACT 

Act, which can be found at http://

www.qualityforum.org/Project_Pages/

MAP_Post-Acute_CareLong-Term_Care_

Workgroup.aspx. 

More information on the NQF 

endorsed measure, the Percent of 

Residents Experiencing One or More 

Falls with Major Injury (Long Stay) is 

available at http://

www.qualityforum.org/QPS/0674. 

We are proposing that data for this 

quality measure will be collected using 

the MDS 3.0, currently submitted by 

SNFs through the QIES ASAP system 

for the reason noted previously. 

The data items that we would use to 

calculate this proposed quality measure 

include: J1800 (Any Falls Since 

Admission/Entry (OBRA or Scheduled 

PPS) or Reentry or Prior Assessment, 

whichever is more recent), and J1900 

(Number of Falls Since Admission/

Entry (OBRA or Scheduled PPS) or 

Reentry or Prior Assessment, whichever 

is more recent). This measure would be 

calculated at the time of discharge (see 

Proposed Form, Manner, and Timing of 

Quality Data Submission). The 

specifications for the application of the 

measure, the Percent of Residents 

Experiencing One or More Falls with 

Major Injury (Long Stay), for the SNF 

population are available on our SNF 

QRP measures and technical Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-Quality-Reporting-ProgramMeasures-and-TechnicalInformation.html. 

We refer readers to the Form, Manner, 

and Timing of Quality Data Submission 

section of this proposed rule for more 

information on the proposed data 

collection and submission timeline for 

this proposed quality measure. 

We invite public comment on our 

proposal to adopt an application of 

Percent of Residents Experiencing One 

or More Falls with Major Injury (Long 

Stay) (NQF #0674) measure for the SNF 

QRP beginning with the FY 2018 

payment determination. 

c. Quality Measure Addressing the 

Domain of Functional Status, Cognitive 

Function, and Changes in Function and 

Cognitive Function: Application of 

Percent of Long-Term Care Hospital 

Patients With an Admission and 

Discharge Functional Assessment and a 

Care Plan That Addresses Function 

(NQF #2631; Under NQF Review) 

We are proposing to adopt beginning 

with the FY 2018 SNF QRP an 

application of the quality measure 

Percent of Long-Term Care Hospital 

Patients with an Admission and 

Discharge Functional Assessment and a 

Care Plan that Addresses Function (NQF 

#2631; under NQF review) as a crosssetting quality measure that satisfies the 

functional status, cognitive function, 

and changes in functional status and 

cognitive function domain. This quality 

measure reports the percent of patients 

or residents with both an admission and 

a discharge functional assessment and 

an activity (self-care or mobility) a goal 

that addresses function. 

The National Committee on Vital and 

Health Statistics’ Subcommittee on 

Health,58 noted that ‘‘information on 

functional status is becoming 

increasingly essential for fostering 

healthy people and a healthy 

population. Achieving optimal health 

and well-being for Americans requires 

an understanding across the life span of 

the effects of people’s health conditions 

on their ability to do basic activities and 

participate in life situations in other 

words, their functional status.’’ This is 

supported by research showing that 

patient and resident functioning is 

associated with important outcomes 

such as discharge destination and length 

of stay in inpatient settings,59 as well as 

the risk of nursing home placement and 

hospitalization of older adults living in 

the community.60

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Mortality: A Synthesis. Medical Care Research and 

Review, 57; 3: 259–297. 

61 Kortebein P, Ferrando A, Lombebeida J, Wolfe 

R, Evans WJ. Effect of 10 days of bed rest on skeletal 

muscle in health adults. JAMA; 297(16):1772–4. 

62Ellenbecker CH, Samia L, Cushman MJ, Alster 

K. Patient safety and quality in home health care. 

Patient Safety and Quality: An Evidence-Based 

Handbook for Nurses. Vol 1. 

63 Kresevic DM. Assessment of physical function. 

In: Boltz M, Capezuti E, Fulmer T, Zwicker D, 

editor(s). Evidence-based geriatric nursing protocols 

for best practice. 4th ed. New York (NY): Springer 

Publishing Company; 2012. p. 89–103. 

64Barbara Gage et al., ‘‘The Development and 

Testing of the Continuity Assessment Record and 

Evaluation (CARE) Item Set: Final Report on the 

Development of the CARE Item Set’’ (RTI 

International, 2012). 

65 Ibid. 

66 Ibid. 

The majority of individuals who 

receive PAC services, including care 

provided by SNFs, HHAs, IRFs, and 

LTCHs, have functional limitations and 

many of these individuals are at risk for 

further decline in function due to 

limited mobility and ambulation.61 The 

patient and resident populations treated 

by SNFs, HHAs, IRFs, and LTCHs vary 

in terms of their functional abilities at 

the time of the PAC admission and their 

goals of care. For IRF patients and many 

SNF residents, treatment goals may 

include fostering the person’s ability to 

manage his or her daily activities so that 

he or she can complete self-care and/or 

mobility activities as independently as 

possible, and if feasible, return to a safe, 

active, and productive life in a 

community-based setting. For home 

health patients, achieving independence 

within the home environment and 

promoting community mobility may be 

the goal of care. For other home care 

patients, the goal of care may be to slow 

the rate of functional decline in order to 

allow the person to remain at home and 

avoid institutionalization.62 Lastly, in 

addition to having complex medical 

care needs for an extended period of 

time, LTCH patients often have 

limitations in functioning because of the 

nature of their conditions, as well as 

deconditioning due to prolonged bed 

rest and treatment requirements (for 

example, ventilator use). The clinical 

practice guideline Assessment of 

Physical Function 63 recommends that 

clinicians document functional status at 

baseline and over time to validate 

capacity, decline, or progress. Therefore, 

assessment of functional status at 

admission and discharge and 

establishing a functional goal for 

discharge as part of the care plan is an 

important aspect of patient or resident 

care in all of these PAC settings. 

Given the variation in patient or 

resident populations across the PAC 

settings, the functional activities that are 

typically assessed by clinicians for each 

type of PAC provider may vary. For 

example, rolling left and right in bed is 

an example of a functional activity that 

may be most relevant for lowfunctioning patients or residents who 

are chronically critically ill. However, 

certain functional activities such as 

eating, oral hygiene, lying to sitting on 

the side of the bed, toilet transfers, and 

walking or wheelchair mobility are 

important activities for patients or 

residents in each PAC setting. 

Although, functional assessment data 

are currently collected by all four PAC 

providers and in NFs, this data 

collection has employed different 

assessment instruments, scales, and 

item definitions. The data cover similar 

topics, but are not standardized across 

PAC settings. The different sets of 

functional assessment items coupled 

with different rating scales makes 

communication about patient and 

resident functioning challenging when 

patients and residents transition from 

one type of setting to another. Collection 

of standardized functional assessment 

data across SNFs, HHAs, IRFs, and 

LTCHs using common data items would 

establish a common language for patient 

and resident functioning, which may 

facilitate communication and care 

coordination as patients and residents 

transition from one type of provider to 

another. The collection of standardized 

functional status data may also help 

improve patient and resident 

functioning during an episode of care by 

ensuring that basic daily activities are 

assessed for all PAC residents at the 

start and end of care and that at least 

one functional goal is established. 

The functional assessment items 

included in the proposed functional 

status quality measure were originally 

developed and tested as part of the PostAcute Care Payment Reform 

Demonstration version of the Continuity 

Assessment Record and Evaluation 

(CARE) Item Set, which was designed to 

standardize the assessment of a person’s 

status, including functional status, 

across acute and post-acute settings 

(SNFs, HHAs, IRFs, and LTCHs). The 

functional status items on the CARE 

Item Set are daily activities that 

clinicians typically assess at the time of 

admission and/or discharge in order to 

determine patient’s or resident’s needs, 

evaluate patient or resident progress, 

and prepare patients, residents, and 

their families for a transition to home or 

to another setting. 

The development of the CARE Item 

Set and a description and rationale for 

each item is described in a report 

entitled ‘‘The Development and Testing 

of the Continuity Assessment Record 

and Evaluation (CARE) Item Set: Final 

Report on the Development of the CARE 

Item Set: Volume 1 of 3.’’ 64 Reliability 

and validity testing were conducted as 

part of CMS’s Post-Acute Care Payment 

Reform Demonstration, and we 

concluded that the functional status 

items have acceptable reliability and 

validity. A description of the testing 

methodology and results are available in 

several reports, including the report 

entitled ‘‘The Development and Testing 

of the Continuity Assessment Record 

And Evaluation (CARE) Item Set: Final 

Report On Reliability Testing: Volume 2 

of 3’’ 65 and the report entitled ‘‘The 

Development and Testing of The 

Continuity Assessment Record And 

Evaluation (CARE) Item Set: Final 

Report on Care Item Set and Current 

Assessment Comparisons: Volume 3 of 

3.’’ 66 These reports are available on our 

Post-Acute Care Quality Initiatives Web 

page at http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/CARE-Item-Set-and-BCARE.html. 

The functional status quality measure 

we are proposing to adopt beginning 

with the FY 2018 SNF QRP is a process 

quality measure that is an application of 

the quality measure, Percent of LongTerm Care Hospital Patients with an 

Admission and Discharge Functional 

Assessment and a Care Plan that 

Addresses Function’’ (NQF #2631; 

under NQF review). This quality 

measure reports the percent of patients 

or residents with both an admission and 

a discharge functional assessment and a 

treatment goal that addresses function. 

This process measure requires the 

collection of admission and discharge 

functional status data by clinicians 

using standardized clinical assessment 

items, or data elements, which assess 

specific functional activities, that is, 

self-care and mobility activities. The 

self-care and mobility function activities 

are coded using a 6-level rating scale 

that indicates the resident’s level of 

independence with the activity at both 

admission and discharge. A higher score 

indicates more independence. 

For this quality measure, there must 

be documentation at the time of 

admission that at least one activity 

performance (function) goal is recorded 

for at least one of the standardized selfcare or mobility function items using 

the 6-level rating scale. This indicates 

that an activity goal(s) has been 

established. Following this initial 

assessment, the clinical best practice 

would be to ensure that the resident’s 

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care plan reflected and included a plan 

to achieve such an activity goal(s). At 

the time of discharge, goal setting and 

establishment of a care plan to achieve 

the goal, is reassessed using the same 6- 

level rating scale, enabling the ability to 

evaluate success in achieving the 

resident’s activity performance goals. 

To the extent that a resident has an 

unplanned discharge, for example, for 

the purpose of being admitted to an 

acute care facility, the collection of 

discharge functional status data might 

not be feasible. Therefore, for patients or 

residents with unplanned discharges, 

admission functional status data and at 

least one treatment goal must be 

reported, but discharge functional status 

data are not required to be reported. 

A TEP convened by the measure 

development contractor for CMS 

provided input on the technical 

specifications of this quality measure, 

including the feasibility of 

implementing the measure across PAC 

settings. The TEP was supportive of the 

implementation of this measure across 

PAC settings and was also supportive of 

our efforts to standardize this measure 

for cross-setting use. Additionally, the 

MAP conditionally supported the use of 

an application of the Percent of LongTerm Care Hospital Patients With an 

Admission and Discharge Functional 

Assessment and a Care Plan that 

Addresses Function (NQF #2631; under 

NQF review) for use in the SNF QRP as 

a cross-setting measure. The MAP noted 

that this functional status measure 

addresses an IMPACT Act domain and 

a MAP PAC/LTC core concept. The 

MAP conditionally supported this 

measure pending NQF-endorsement and 

resolution of concerns about the use of 

two different functional status scales for 

quality reporting and payment 

purposes. Finally, the MAP reiterated its 

support for adding measures addressing 

function, noting the group’s special 

interest in this PAC/LTC core concept. 

More information about the MAP’s 

recommendations for this measure is 

available in the report entitled MAP OffCycle Deliberations 2015: Measures 

under Considerations to Implement 

Provisions of the IMPACT Act, which 

can be found at http://

www.qualityforum.org/Project_Pages/

MAP_Post-Acute_CareLong-Term_Care_

Workgroup.aspx. 

The proposed measure is derived 

from the Percent of Long-Term Care 

Hospital Patients With an Admission 

and Discharge Functional Assessment 

and a Care Plan that Addresses Function 

quality measure, and we intend to 

submit the proposed measure to NQF 

for endorsement. The specifications are 

available for review at the SNF QRP 

measures and technical Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-Quality-Reporting-ProgramMeasures-and-TechnicalInformation.html. 

We reviewed the NQF’s endorsed 

measures and were unable to identify 

any NQF-endorsed cross-setting quality 

measures focused on assessment of 

function for PAC patients and residents. 

We are also unaware of any other crosssetting quality measures for functional 

assessment that have been endorsed or 

adopted by another consensus 

organization. Therefore, we are 

proposing to adopt this function 

measure for use in the SNF QRP for the 

FY 2018 payment determination and 

subsequent years under the Secretary’s 

authority to select non-NQF-endorsed 

measures. 

We are proposing that data for the 

proposed quality measure would be 

collected through the MDS 3.0, which 

SNFs currently submit through the QIES 

ASAP system. We refer readers to 

section V.C.7. of this proposed rule for 

more information on the proposed data 

collection and submission timeline for 

this proposed quality measure. 

The calculation algorithm of the 

proposed measure is: (1) For each SNF 

stay, records of residents discharged 

during the 12-month target time period 

are identified and counted. This count 

is the denominator; (2) The records of 

residents with complete stays are 

identified and the number of these 

resident stays with complete admission 

functional assessment data and at least 

one self-care or mobility activity goal 

and complete discharge functional 

assessment data is counted; (3) The 

records of residents with incomplete 

stays are identified, and the number of 

these resident records with complete 

admission functional status data and at 

least one self-care or mobility goal is 

counted; (4) The counts from step 2 

(complete SNF stays) and step 3 

(incomplete SNF stays) are summed. 

The sum is the numerator count; and (5) 

the numerator count is divided by the 

denominator count to calculate this 

quality measure. This measure would be 

calculated at two points in time, at 

admission and discharge. 

For purposes of assessment data 

collection, we propose to add new 

functional status items to the MDS 3.0. 

The items would assess specific selfcare and mobility activities, and would 

be based on functional items included 

in the Post-Acute Care Payment Reform 

Demonstration version of the CARE Item 

Set. The items have been developed and 

tested for reliability and validity in 

SNFs, HHAs, IRFs, and LTCHs. More 

information pertaining to item testing is 

available on our Post-Acute Care 

Quality Initiatives Web page at http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/CARE-Item-Set-and-BCARE.html. 

The proposed function items that we 

would add to the MDS for purposes of 

the calculation of this proposed quality 

measure do not duplicate existing items 

currently collected in that assessment 

instrument for other purposes. The 

currently used MDS function items 

evaluate a resident’s greatest 

dependence on three or more occasions, 

whereas the proposed functional items 

would evaluate an individual’s usual 

performance at the time of admission 

and at the time of discharge for goal 

setting purposes. Additionally, there are 

several key differences between the 

existing and new proposed function 

items that may result in variation in the 

resident assessment results including: 

(1) The data collection and associated 

data collection instructions; (2) the 

rating scales used to score a resident’s 

level of independence; and (3) the item 

definitions. A description of these 

differences is provided with the 

measure specifications on our SNF QRP 

measures and technical Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-Quality-Reporting-ProgramMeasures-and-TechnicalInformation.html. 

Because of the differences between 

the current function assessment items 

(section G of the MDS 3.0) and the 

proposed function assessment items that 

we would collect for purposes of 

calculating the proposed measure, we 

would require that SNFs submit data on 

both sets of items. Data collection for 

the new proposed function items do not 

substitute for the data collection under 

the current Section G. 

We invite public comments on our 

proposal to adopt beginning with the FY 

2018 SNF QRP an application of the 

quality measure Percent of Long-Term 

Care Hospital Patients with an 

Admission and Discharge Functional 

Assessment and a care Plan that 

Addresses Function (NQF #2631; under 

review). 

6. SNF QRP Quality Measures Under 

Consideration for Future Years 

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TABLE 10—SNF QRP QUALITY MEASURES AND CONCEPTS UNDER CONSIDERATION FOR FUTURE YEARS

Impact Act Domain ......................... Measures to reflect all-condition risk-adjusted potentially preventable hospital readmission rates. 

Measures ........................................ (NQF #2510): Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM). 

(NQF #2512; NQF #2502): Application of the LTCH/IRF All-Cause Unplanned Readmission Measure for 30 

Days Post Discharge from LTCHs/IRFs. 

Impact Act Domain ......................... Resource Use, including total estimated Medicare spending per beneficiary. 

Measure .......................................... Application of the Payment Standardized Medicare Spending Per Beneficiary (MSPB). 

Impact Act Domain ......................... Discharge to community. 

Measure .......................................... Percentage residents/patients at discharge assessment, who are discharged to a higher level of care or to 

the community. Measure assesses if the patient/resident went to the community and whether they 

stayed there. Ideally, this measure would be paired with the 30-day all-cause readmission measure. 

We invite comment on the measure 

domains and associated measures and 

measure concepts listed in Table 10. In 

addition, in alignment with the 

requirements of the IMPACT Act to 

develop quality measures and 

standardize data for comparative 

purposes, we believe that evaluating 

outcomes across the post-acute settings 

using standardized data is an important 

priority. Therefore, in addition to 

proposing a process-based measure for 

the domain in the IMPACT Act of 

‘‘Functional status, cognitive function, 

and changes in function and cognitive 

function’’, which is included in this 

year’s proposed rule, we also intend to 

develop outcomes-based quality 

measures, including functional status 

and other quality outcome measures to 

further satisfy this domain. These 

measures will be proposed in future 

rulemaking in order to assess functional 

change for each care setting as well as 

across care settings. 

7. Form, Manner, and Timing of Quality 

Data Submission 

a. Participation/Timing for New SNFs 

Beginning with the submission of data 

required for the FY 2018 payment 

determination, we propose that a new 

SNF would be required to begin 

reporting data on any quality measures 

finalized for that program year by no 

later than the first day of the calendar 

quarter subsequent to 30 days after the 

date on its CMS Certification Number 

(CCN) notification letter. For example, 

for FY 2018 payment determinations, if 

a SNF received its CCN on August 28, 

2016, and 30 days are added (for 

example, August 28 + 30 days = 

September 27), the SNF would be 

required to submit data for residents 

who are admitted beginning on October 

1, 2016. 

We invite public comment on this 

proposed timing for new SNFs to begin 

reporting quality data under the SNF 

QRP. 

b. Data Collection Timelines and 

Requirements for the FY 2018 Payment 

Determination and Subsequent Years 

As discussed previously, we are 

proposing that SNFs would submit data 

on the proposed functional status, skin 

integrity, and incidence of major falls 

measures by completing items on the 

MDS and then submitting the MDS to 

CMS through the Quality Improvement 

and Evaluation System (QIES), 

Assessment Submission and Processing 

System (ASAP) system. We seek 

comment on this proposed method of 

data collection. 

Currently, there is no discharge 

assessment required when a resident is 

discharged from the SNF Medicare Part 

A coverage stay but does not leave the 

facility, and we are aware that this 

affects nearly 30 percent of all SNF 

residents. To collect the data at the time 

these beneficiaries are discharged from 

the SNF Part A coverage stay, we 

propose to add an item set in addition 

to the 5-Day PPS Assessment. Further, 

to collect the data elements required to 

calculate the function quality measure 

(an application of Percent of Long-Term 

Care Hospital Patients With an 

Admission and Discharge Functional 

Assessment and a Care Plan that 

Addresses Function [NQF #2631; under 

NQF review]) at the time of a residents 

admission, we also propose to add the 

necessary items to the 5-day PPS 

Assessment. 

A list of the data items that we are 

proposing to add to the SNF PPS Part A 

Discharge and the 5-Day PPS 

Assessments is available on our Web 

site at http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-Quality-Reporting-ProgramMeasures-and-TechnicalInformation.html. We recognize that 

there may be instances where SNFs 

want to combine the SNF PPS Part A 

Discharge Assessment with other 

required assessments, as happens with 

other PPS and OBRA assessments, or 

scenarios in which the end of the Part 

A coverage stay occurs at the same time 

as a scheduled PPS assessment. 

Therefore, we invite comment on any 

situations where assessments may be 

combined or interact, which should be 

considered in implementing the SNF 

PPS Part A Discharge Assessment with 

a view toward addressing any issues 

that we may identify through the public 

comment process as requiring 

additional clarification. 

For the FY 2018 payment 

determination, we are proposing that 

SNFs submit data on the three proposed 

quality measures for residents who are 

admitted to the SNF on and after 

October 1, 2016 and discharged from the 

SNF up to and including December 31, 

2016, using the data submission 

schedule that we are proposing in this 

section. 

We are proposing to collect a single 

quarter of data for FY 2018 to remain 

consistent with the usual October 

release schedule for the MDS, to give 

SNFs a sufficient amount of time to 

update their systems so that they can 

comply with the new data reporting 

requirements, and to give CMS a 

sufficient amount of time to determine 

compliance for the FY 2018 program. 

The proposed use of one quarter of data 

for the initial year of quality reporting 

is consistent with the approach we used 

to implement a number of other quality 

reporting programs, including the 

LTCH, IRF, and Hospice QRPs. 

We also propose that following the 

close of the reporting quarter, October 1, 

2016 through December 31, 2016 for the 

FY 2018 payment determination, SNFs 

would have an additional 51⁄2 months to 

correct and/or submit their quality data. 

Consistent with the IRF QRP, we 

propose that the final deadline for 

submitting data for the FY 2018 

payment determination would be May 

15, 2017. We further propose that for the 

FY 2019 payment determination, we 

would collect data from the 2nd through 

4th quarters of FY 2017 (that is, data for 

residents who are admitted from 

January 1st and discharged up to and 

including September 30th) to determine 

whether a SNF has met its quality 

reporting requirements with respect to 

that fiscal year. Beginning with the FY 

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2020 payment determination, we 

propose to move to a full year of fiscal 

year data collection. We intend to 

propose the FY 2019 payment 

determination quality reporting data 

submission deadlines in future 

rulemaking. 

TABLE 11—PROPOSED MEASURES, DATA COLLECTION SOURCE, DATA COLLECTION PERIOD AND DATA SUBMISSION

DEADLINES AFFECTING THE FY 2018 PAYMENT DETERMINATION

Quality measure Data collection 

source 

Proposed data 

collection period 

Proposed data 

submission 

deadline for FY 

2018 payment 

determination 

NQF #0678: Percent of Patients or Residents with Pressure Ulcers that are New 

or Worsened.

MDS ................. 10/01/16–12/31/16 May 15, 2017. 

NQF #0674: Application of Percent of Residents Experiencing One or More Falls 

with Major Injury (Long Stay).

MDS ................. 10/01/16–12/31/16 May 15, 2017. 

NQF #2631*: Application of Percent of Long-Term Care Hospital Patients with an 

Admission and Discharge Functional Assessment and a Care Plan that Addresses Function.

MDS ................. 10/01/16–12/31/16 May 15, 2017. 

* Status: under review at NQF, please see: http://www.qualityforum.org/ProjectMeasures.aspx?projectID=73867, see NQF #2631. 

We seek public comment on these 

proposals. 

8. SNF QRP Data Completion 

Thresholds for the FY 2018 Payment 

Determination and Subsequent Years 

We are proposing that, beginning with 

the FY 2018 payment determination, 

SNFs must report all of the data 

necessary to calculate the proposed 

quality measures on at least eighty 

percent of the MDS assessments that 

they submit. We are proposing that a 

SNF has reported all of the data 

necessary to calculate the measures if 

the data actually can be used for 

purposes of calculating the quality 

measures, as opposed to, for example, 

the use of a dash [-], to indicate that the 

SNF was unable to perform a pressure 

ulcer assessment. 

We believe that because SNFs have 

long been required to submit MDS 

assessments for other purposes, SNFs 

should easily be able to meet this 

proposed requirement for the SNF QRP. 

Our proposal to set reporting thresholds 

is consistent with policies we have 

adopted for the Long-Term Care 

Hospital (79 FR 50314), InpatientRehabilitation Hospital (79 FR 45923) 

and Home Health (79 FR 66079) Quality 

Reporting Programs. 

Although we are proposing to adopt 

an 80 percent threshold initially, we 

intend to propose to raise the threshold 

level for subsequent program years 

through future rulemaking. 

We are also proposing that for the FY 

2018 SNF QRP, any SNF that does not 

meet the proposed requirement that 80 

percent of all MDS assessments 

submitted contain 100 percent of all 

data items necessary to calculate the 

SNF QRP measures would be subject to 

a reduction of 2 percentage points to its 

FY 2018 market basket percentage. 

We invite comment on the proposed 

SNF QRP data completion requirements. 

9. SNF QRP Data Validation 

Requirements for the FY 2018 Payment 

Determination and Subsequent Years 

To ensure the reliability and accuracy 

of the data submitted under the SNF 

QRP, we intend to propose to adopt 

policies and processes for validating the 

data submitted under the SNF QRP in 

future rulemaking. At this time, we are 

seeking comment on what elements we 

should consider including in such a 

process. 

10. SNF QRP Submission Exception and 

Extension Requirements for the FY 2018 

Payment Determination and Subsequent 

Years 

Our experience with other quality 

reporting programs has shown that there 

are times when providers are unable to 

submit quality data due to extraordinary 

circumstances beyond their control (for 

example, natural, or man-made 

disasters). Other extenuating 

circumstances are reviewed on a caseby-case basis. We have defined a 

‘‘disaster’’ as any natural or man-made 

catastrophe which causes damages of 

sufficient severity and magnitude to 

partially or completely destroy or delay 

access to medical records and associated 

documentation. Natural disasters could 

include events such as hurricanes, 

tornadoes, earthquakes, volcanic 

eruptions, fires, mudslides, snowstorms, 

and tsunamis. Man-made disasters 

could include such events as terrorist 

attacks, bombings, floods caused by 

man-made actions, civil disorders, and 

explosions. A disaster may be 

widespread and impact multiple 

structures or be isolated and impact a 

single site only. 

In certain instances of either natural 

or man-made disasters, a SNF may have 

the ability to conduct a full resident 

assessment, and record and save the 

associated data either during or before 

the occurrence of the extraordinary 

event. In this case, the extraordinary 

event has not caused the facility’s data 

files to be destroyed, but it could hinder 

the SNF’s ability to meet the quality 

reporting program’s data submission 

deadlines. In this scenario, the SNF 

would potentially have the ability to 

report the data at a later date, after the 

emergency has passed. In such cases, a 

temporary extension of the deadlines for 

reporting might be appropriate. 

In other circumstances of natural or 

man-made disaster, a SNF may not have 

had the ability to conduct a full resident 

assessment, or to record and save the 

associated data before the occurrence of 

the extraordinary event. In such a 

scenario, the facility may not have 

complete data to submit to CMS. We 

believe that it may be appropriate, in 

these situations, to grant a full exception 

to the reporting requirements for a 

specific period of time. 

We do not wish to penalize SNFs in 

these circumstances or to unduly 

increase their burden during these 

times. Therefore, we are proposing a 

process for SNFs to request and for us 

to grant exceptions and extensions with 

respect to the quality data reporting 

requirements of the SNF QRP for one or 

more quarters, beginning with the FY 

2018 payment determination, when 

there are certain extraordinary 

circumstances beyond the control of the 

SNF. When an exception or extension is 

granted, we would not reduce the SNF’s 

PPS payment for failure to comply with 

the requirements of the SNF QRP. 

We are proposing that if a SNF seeks 

to request an exception or extension 

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with respect to the SNF QRP, the SNF 

should request an exception or 

extension within 90 days of the date 

that the extraordinary circumstances 

occurred. The SNF may request an 

exception or extension for one or more 

quarters by submitting a written request 

to CMS that contains the information 

noted below, via email to the SNF 

Exception and Extension mailbox at 

SNFQRPReconsiderations@cms.hhs.gov. 

Requests sent to CMS through any other 

channel will not be considered as valid 

requests for an exception or extension 

from the SNF QRP’s reporting 

requirements for any payment 

determination. 

We note that the subject of the email 

must read ‘‘SNF QRP Exception or 

Extension Request’’ and the email must 

contain the following information: 

• SNF CCN; 

• SNF name; 

• CEO or CEO-designated personnel 

contact information including name, 

telephone number, email address, and 

mailing address (the address must be a 

physical address, not a post office box); 

• SNF’s reason for requesting an 

exception or extension; 

• Evidence of the impact of 

extraordinary circumstances, including 

but not limited to photographs, 

newspaper and other media articles; and 

• A date when the SNF believes it 

will be able to again submit SNF QRP 

data and a justification for the proposed 

date. 

We are proposing that exception and 

extension requests be signed by the 

SNF’s CEO or CEO designated 

personnel, and that if the CEO 

designates an individual to sign the 

request, the CEO-designated individual 

has the appropriate authority to submit 

such a request on behalf of the SNF. 

Following receipt of the email, we will: 

(1) Provide a written acknowledgement, 

using the contact information provided 

in the email, to the CEO or CEOdesignated contact notifying them that 

the request has been received; and (2) 

provide a formal response to the CEO or 

any CEO-designated SNF personnel, 

using the contact information provided 

in the email, indicating our decision. 

This proposal does not preclude us 

from granting exceptions or extensions 

to SNFs that have not requested them 

when we determine that an 

extraordinary circumstance, such as an 

act of nature, affects an entire region or 

locale. If we make the determination to 

grant an exception or extension to all 

SNFs in a region or locale, we are 

proposing to communicate this decision 

through routine communication 

channels to SNFs and vendors, 

including, but not limited to, issuing 

memos, emails, and notices on our SNF 

QRP Web site once it is available at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-QR-Reconsideration-andExceptionExtension.html. 

We are also proposing that we may 

grant an exception or extension to SNFs 

if we determine that a systemic problem 

with one of our data collection systems 

directly affected the ability of the SNF 

to submit data. Because we do not 

anticipate that these types of systemic 

errors will happen often, we do not 

anticipate granting an exception or 

extension on this basis frequently. 

If a SNF is granted an exception, we 

will not require that the SNF submit any 

measure data for the period of time 

specified in the exception request 

decision. If we grant an extension to a 

SNF, the SNF will still remain 

responsible for submitting quality data 

collected during the timeframe in 

question, although we will specify a 

revised deadline by which the SNF 

must submit this quality data. 

We also propose that any exception or 

extension requests submitted for 

purposes of the SNF QRP will apply to 

that program only, and not to any other 

program we administer for SNFs such as 

survey and certification. MDS 

requirements, including electronic 

submission, during Declared Public 

Health Emergencies can be found at 

FAQs K–5, K–6 and K–9 on the 

following link: http://www.cms.gov/

Medicare/Provider-Enrollment-andCertification/SurveyCertEmergPrep/

downloads/AllHazardsFAQs.pdf. 

We intend to provide additional 

information pertaining to exceptions 

and extensions for the SNF QRP, 

including any additional guidance, on 

the SNF QRP Web site at http://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-QR-Reconsideration-andExceptionExtension.html. 

We invite public comment on these 

proposals for seeking and being granted 

exceptions and extensions to the quality 

reporting requirements. 

11. SNF QRP Reconsideration and 

Appeals Procedures for the FY 2018 

Payment Determination and Subsequent 

Years 

At the conclusion of the required 

quality data reporting and submission 

period, we will review the data received 

from each SNF during that reporting 

period to determine if the SNF met the 

quality data reporting requirements. 

SNFs that are found to be noncompliant 

with the reporting requirements for the 

applicable fiscal year will receive a 2 

percentage point reduction to their 

market basket percentage update for that 

fiscal year. 

We are aware that some of our other 

quality reporting programs, such as the 

HIQR Program, the LTCHQR Program, 

and the IRF QRP include an opportunity 

for the providers to request a 

reconsideration of our initial noncompliance determination. Therefore, to 

be consistent with other established 

quality reporting programs and to 

provide an opportunity for SNFs to seek 

reconsideration of our initial noncompliance decision, we are proposing 

a process that will enable a SNF to 

request reconsideration of our initial 

non-compliance decision in the event 

that it believes that it was incorrectly 

identified as being non-compliant with 

the SNF QRP reporting requirements for 

a particular fiscal year. 

For the FY 2018 payment 

determination, and that of subsequent 

years, we are proposing that a SNF 

would receive a notification of 

noncompliance if we determine that the 

SNF did not submit data in accordance 

with the data reporting requirements 

with respect to the applicable FY. The 

purpose of this notification is to put the 

SNF on notice of the following: (1) That 

the SNF has been identified as being 

non-compliant with the SNF QRP’s 

reporting requirements for the 

applicable fiscal year; (2) that the SNF 

will be scheduled to receive a reduction 

in the amount of two percentage points 

to its market basket percentage update 

for the applicable fiscal year; (3) that the 

SNF may file a request for 

reconsideration if it believes that the 

finding of noncompliance is erroneous, 

has submitted a request for an extension 

or exception that has not yet been 

decided, or has been granted an 

extension or exception; and (4) that the 

SNF must follow a defined process on 

how to file a request for reconsideration, 

which will be described in the 

notification. We would only consider 

requests for reconsideration after an 

SNF has been found to be 

noncompliant. 

Notifications of noncompliance and 

any subsequent notifications from CMS 

would be sent via a traceable delivery 

method, such as certified U.S. mail or 

registered U.S. mail, or through other 

practicable notification processes, such 

as a report from CMS to the provider as 

a Certification and Survey Provider 

Enhanced Reports (CASPER) report, that 

will provide information pertaining to 

their compliance with the reporting 

requirements for the given reporting 

cycle. To obtain the CASPER report, 

providers should access the CASPER 

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Reporting Application. Information on 

how to access the CASPER Reporting 

Application is available on the Quality 

Improvement Evaluation System (QIES) 

Technical Support Office Web site 

(direct link), https://web.qiesnet.org/

qiestosuccess/. Once access is 

established providers can select 

‘‘CASPER Reports’’ link. The ‘‘CASPER 

Reports’’ link will connect a SNF to the 

QIES National System Login page for 

CASPER Reporting. 

We seek comments on the most 

preferable delivery method for the 

notice of non-compliance, such as U.S. 

Mail, email, CASPER, etc. 

We propose to disseminate 

communications regarding the 

availability of compliance reports in the 

CASPER reports through routine 

channels to SNFs and vendors, 

including, but not limited to issuing 

memos, emails, Medicare Learning 

Network (MLN) announcements, and 

notices on our SNF QRP Web site once 

it is available at http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

NursingHomeQualityInits/SNF-QRReconsideration-andExceptionExtension.html. 

A SNF would have 30 days from the 

date of the initial notification of 

noncompliance to submit to us a request 

for reconsideration. This proposed time 

frame allows us to balance our desire to 

ensure that SNFs have the opportunity 

to request reconsideration with our need 

to complete the process and provide 

SNFs with our reconsideration decision 

in a timely manner. We are proposing 

that a SNF may withdraw its request at 

any time and may file an updated 

request within the proposed 30-day 

deadline. We are also proposing that, in 

very limited circumstances, we may 

grant a request by a SNF to extend the 

proposed deadline for reconsideration 

requests. It would be the responsibility 

of a SNF to request an extension and 

demonstrate that extenuating 

circumstances existed that prevented 

the filing of the reconsideration request 

by the proposed deadline. 

We also are proposing that as part of 

the SNF’s request for reconsideration, 

the SNF would be required to submit all 

supporting documentation and evidence 

demonstrating full compliance with all 

SNF QRP reporting requirements for the 

applicable fiscal year, that the SNF has 

requested an extension or exception for 

which a decision has not yet been made, 

that the SNF has been granted an 

extension or exception, or has 

experienced an extenuating 

circumstance as defined in section 

V.C.10 of this rule but failed to file a 

timely request of exception. We propose 

that we would not review any 

reconsideration request that fails to 

provide the necessary documentation 

and evidence along with the request. 

The documentation and evidence may 

include copies of any communications 

that demonstrate the SNF’s compliance 

with the SNF QRP, as well as any other 

records that support the SNF’s rationale 

for seeking reconsideration, but should 

not include any protected health 

information (PHI). We intend to provide 

a sample list of acceptable supporting 

documentation and evidence, as well as 

instructions for SNFs on how to retrieve 

copies of the data submitted to CMS for 

the appropriate program year in the 

future on our SNF QRP Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-QR-Reconsideration-andExceptionExtension.html. 

We are proposing that a SNF wishing 

to request a reconsideration of our 

initial noncompliance determination 

would be required to do so by 

submitting an email to the following 

email address: 

SNFQRPReconsiderations@cms.hhs.gov. 

Any request for reconsideration 

submitted to us by a SNF would be 

required to follow the guidelines 

outlined on our SNF QRP Web site once 

it is available at http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

NursingHomeQualityInits/SNF-QRReconsideration-andExceptionExtension.html. 

All emails must contain a subject line 

that reads ‘‘SNF QRP Reconsideration 

Request.’’ Electronic email submission 

is the only form of reconsideration 

request submission that will be accepted 

by us. Any reconsideration requests 

communicated through another channel 

including, but not limited to, U.S. Postal 

Service or phone, will not be considered 

as a valid reconsideration request. 

We are proposing that a 

reconsideration request include the 

following information: 

• SNF CMS Certification Number 

(CCN); 

• SNF Business Name; 

• SNF Business Address; 

• The CEO contact information 

including name, email address, 

telephone number and physical mailing 

address; or 

The CEO-designated representative 

contact information including name, 

title, email address, telephone number 

and physical mailing address; and 

• CMS identified reason(s) for noncompliance from the non-compliance 

notification; and 

• The reason(s) for requesting 

reconsideration. 

The request for reconsideration must 

be accompanied by supporting 

documentation demonstrating 

compliance. Following receipt of a 

request for reconsideration, we will 

provide an email acknowledgment, 

using the contact information provided 

in the reconsideration request, to the 

CEO or CEO-designated representative 

that the request has been received. Once 

we have reached a decision regarding 

the reconsideration request, an email 

will be sent to the SNF CEO or CEOdesignated representative, using the 

contact information provided in the 

reconsideration request, notifying the 

SNF of our decision. 

We also propose that the notifications 

of our decision regarding 

reconsideration requests may be made 

available through the use of CASPER 

reports or through a traceable delivery 

method, such as certified U.S. mail or 

registered U.S. mail. If the SNF is 

dissatisfied with the decision rendered 

at the reconsideration level, the SNF 

may appeal the decision to the PRRB 

under 42 CFR 405.1835. We believe this 

proposed process is more efficient and 

less costly for CMS and for SNFs 

because it decreases the number of 

PRRB appeals by resolving issues earlier 

in the process. Additional information 

about the reconsideration process 

including details for submitting a 

reconsideration request will be posted 

in the future to our SNF QRP Web site 

at http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-QR-Reconsideration-andExceptionExtension.html. 

We invite public comment on the 

proposed procedures for reconsideration 

and appeals. 

12. Public Display of Quality Measure 

Data for the SNF QRP 

Section 1899B(g)(1) of the Act 

requires the Secretary to provide for the 

public reporting of SNF provider 

performance on the quality measures 

specified under subsection (c)(1) and 

the resource use and other measures 

specified under subsection (d)(1) by 

establishing procedures for making 

available to the public data and 

information on the performance of 

individual SNFs with respect to the 

measures. Under section 1899B(g)(2) of 

the Act, such procedures must be 

consistent with those under section 

1886(b)(3)(B)(viii)(VII) of the Act and 

also allow SNFs the opportunity to 

review and submit corrections to the 

data and other information before it is 

made public. Section 1899B(g)(3) of the 

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Act requires that the data and 

information be made publicly available 

not later than 2 years after the specified 

application date applicable to such a 

measure and provider. Finally, section 

1899B(g)(4)(B) of the Act requires such 

procedures be consistent with Sections 

1819(i) and 1919(i) of the Act. We 

intend to propose details related to the 

public display of quality measures in 

the future. 

13. Mechanism for Providing Feedback 

Reports to SNFs 

Section 1899B(f) of the Act requires 

the Secretary to provide confidential 

feedback reports to post-acute care 

providers on their performance with 

respect to the measures specified under 

subsections (c)(1) and (d)(1), beginning 

1 year after the specified application 

date that applies to such measures and 

PAC providers. We intend to provide 

detailed procedures to SNFs on how to 

obtain their confidential feedback 

reports on the SNF QRP Web site at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-Quality-Reporting.html. 

D. Staffing Data Collection 

1. Background and Statutory Authority 

Section 1819(d)(1)(A) of the Act for 

SNFs and section 1919(d)(1)(A) of the 

Act for NFs each state that, in general, 

a facility must be administered in a 

manner that enables it to use its 

resources effectively and efficiently to 

attain or maintain the highest 

practicable physical, mental, and 

psychosocial well-being of each 

resident. Sections 1819(d)(4)(B) and 

1919(d)(4)(B) of the Act give the 

Secretary authority to issue rules, for 

SNFs and NFs respectively, relating to 

the health, safety and well-being of 

residents and relating to the physical 

facilities thereof. 

Section 6106 of the Affordable Care 

Act of 2010 (Pub. L. 111–148, March 23, 

2010) added a new section 1128I to the 

Act to promote greater accountability for 

LTC facilities (defined under section 

1128I(a) of the Act as skilled nursing 

facilities and nursing facilities). Section 

1128I(g) pertains to the submission of 

staffing data by LTC facilities, and 

specifies that the Secretary, after 

consulting with state long-term care 

ombudsman programs, consumer 

advocacy groups, provider stakeholder 

groups, employees and their 

representatives and other parties the 

Secretary deems appropriate, shall 

require a facility to electronically 

submit to the Secretary direct care 

staffing information, including 

information for agency and contract 

staff, based on payroll and other 

verifiable and auditable data in a 

uniform format according to 

specifications established by the 

Secretary in consultation with such 

programs, groups, and parties. The 

statute further requires that the 

specifications established by the 

Secretary specify the category of work a 

certified employee performs (such as 

whether the employee is a registered 

nurse, licensed practical nurse, licensed 

vocational nurse, certified nursing 

assistant, therapist, or other medical 

personnel), include resident census data 

and information on resident case mix, 

be reported on a regular schedule, and 

include information on employee 

turnover and tenure and on the hours of 

care provided by each category of 

certified employees per resident per 

day. Section 1128I(g) of the Act 

establishes that the Secretary may 

require submission of information for 

specific categories, such as nursing staff, 

before other categories of certified 

employees, and requires that 

information for agency and contract staff 

be kept separate from information on 

employee staffing. 

2. Consultation on Specifications 

We have adopted a two-pronged 

strategy to comply with section 1128I(g) 

of the Act’s consultation requirement. 

First, through this notice of proposed 

rulemaking, we are soliciting input from 

all interested parties, including, without 

limitation, state long-term care 

ombudsman programs, consumer 

advocacy groups, provider stakeholder 

groups, employees and their 

representatives. Second, we are engaged 

in ongoing consultation with the 

statutorily identified entities regarding 

the sub-regulatory reporting 

specifications that we will establish. For 

example, in 2012, we conducted a 6- 

month pilot in which facilities 

submitted staffing information 

electronically based on payroll data, and 

which allowed participants and other 

stakeholders to provide feedback on the 

computerized system we are 

considering using to collect data. 

Following the pilot, we continue to 

receive feedback on the collection and 

reporting of staffing information from 

stakeholders in anticipation of 

establishing the specifications for the 

required submission by all facilities. 

Over the next few months, we intend to 

increase the level of engagement with 

stakeholders, including industry 

associations, consumer advocacy 

groups, and long-term care facilities, to 

solicit their input on these 

specifications in advance of the 

proposed mandatory submission date. 

We anticipate activities to solicit 

feedback will include Open Door 

Forums, general question and answer 

sessions, and a voluntary submission 

period whereby facilities can submit 

staffing information on a voluntary basis 

to become familiar with the system and 

to provide feedback to CMS on systems 

issues in advance of the mandatory 

submission date. Through this proposed 

rule, we invite public comment on our 

proposed methods for consultation on 

the submission specifications. 

3. Provisions of the Proposed Rule 

We propose to modify current 

regulations applicable to LTC facilities 

that participate in Medicare and 

Medicaid to implement the new 

statutory requirement in section 

1128I(g) of the Act. Specifically, we 

propose to amend the requirements for 

the administration of a LTC facility at 

§ 483.75 by adding a new paragraph (u), 

Mandatory submission of staffing 

information based on payroll data in a 

uniform format. 

The proposed regulation would 

require facilities to electronically submit 

to CMS complete and accurate direct 

care staffing information, including 

information for agency and contract 

staff, based on payroll and other 

verifiable and auditable data, beginning 

on July 1, 2016. 

a. Submission Requirements 

We are proposing to add a new 

§ 483.75(u)(1) to establish the categories 

of information a facility must submit. 

This provision would implement the 

requirements in sections 1128I(g)(1), (2) 

and (4) of the Act, which require that a 

facility’s submission of staffing 

information specify the category of work 

a certified employee performs, include 

resident census data and information on 

resident case mix, and include 

information on employee turnover and 

tenure and on the hours of care 

provided by each category of certified 

employees per resident per day. In 

keeping with Congress’s clear intent, 

CMS is interpreting the statutory terms 

‘‘Certified employee’’ and ‘‘employee’’ 

in section 1128Ig(1) and (4) of the Act 

to include contract and agency staff as 

well as direct employees. 

The proposed rule also adopts certain 

approaches to minimize industry 

burden and duplication and to provide 

clarity for long-term care facilities that 

we believe are consistent with the 

intent, and meet the requirements, of 

the statute. For example, this rule does 

not propose to require the collection of 

resident case mix information as 

specified at section 1128I(g)(2) of the 

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Act because we already collect such 

information under § 483.20, per which 

LTC facilities are required to conduct 

resident assessments by completing the 

Minimum Data Set (MDS) and submit 

the MDS data electronically to CMS. 

Because the MDS data is used to 

calculate a facility’s resident case mix, 

long-term care facilities are already 

required to meet this statutory 

requirement. 

Additionally, for purposes of 

implementing the statutory reporting 

requirements in section 1128I(g)(4) of 

the Act, we proposed text for the new 

§ 483.75(u)(1)(iii) to specify that the 

staffing information a facility would 

need to submit must include each 

individual’s start date, end date (if 

applicable) and hours worked. Although 

the statute does not specifically require 

reporting each individual’s start and 

end dates, we believe that requiring 

submission of these data elements is 

necessary to satisfy section 1128I(g)(4) 

of the Act’s requirement that facilities 

submit information on turnover and 

retention. 

Finally, although the proposed text 

for the new § 483.75(u)(1)(iii) would 

require facilities to submit each 

individual’s hours worked, we note that 

section 1128I(g)(4) of the Act requires 

LTC facilities to report on the hours of 

care provided by each category of 

certified employees per resident per 

day. We believe the obligation to submit 

information on ‘‘hours of care’’ is 

satisfied by requiring facilities to submit 

hours worked by staff. In contrast with 

the statutory reference to ‘‘direct care 

staffing information,’’ which we believe 

is intended to establish that information 

must be submitted for the categories of 

individuals who render direct care, we 

believe Congress’s intent in referring to 

‘‘hours of care’’ was to require 

submission of information regarding the 

hours worked by individuals in those 

categories of staff providing direct care 

services. One of the primary objectives 

of the statute is for facilities to submit 

staffing information that is based on 

payroll and other verifiable and 

auditable data. We believe that most 

payroll or employee time and 

attendance systems capture the hours 

worked by individuals, and do not 

typically distinguish between hours 

spent doing different tasks (unless the 

tasks require different levels of pay). If 

we were to assume that ‘‘hours or care’’ 

was a subset of the hours worked by 

individuals, we would not be able to 

verify or audit the data submitted. As 

such, we believe that requiring facilities 

to report data on hours worked will 

yield the information Congress intended 

regarding ‘‘hours of care provided.’’ 

b. Distinguishing Employees From 

Agency and Contract Staff 

Under section 1128I(g) of the Act’s 

requirement that information for agency 

and contract staff be kept separate from 

information on employee staffing, we 

are proposing to add a new 

§ 483.75(u)(2) to establish that, when 

reporting direct care staffing 

information for an individual, a facility 

must specify whether the individual is 

an employee of the facility or is engaged 

by the facility as contract or agency 

staff. We believe the statute’s intent is 

to require LTC facilities to submit 

staffing information in a manner that 

can enable us to distinguish those staff 

that are employed by the facility from 

those that are engaged by the facility 

under a contract or through an agency. 

We do not believe the statute requires 

such data to be submitted at separate 

times or through separate systems, 

which would merely engender 

unnecessary costs and burden, so we 

intend to collect all facility staffing 

information at the same time and 

through the same system, employing a 

mechanism by which LTC facilities will 

clearly specify whether staff members 

are employees of the facility, or engaged 

under contract or through an agency. 

c. Data Format 

We are proposing to add a new 

§ 483.75(u)(3) to establish that a facility 

must submit direct care staffing 

information in the format specified by 

CMS. This provision would implement 

the requirement in section 1128I(g) of 

the Act that facilities submit direct care 

staffing information in a uniform format. 

As noted, we are consulting with 

stakeholders on potential format 

specifications. The data that we propose 

be required to be submitted are similar 

to those already submitted by LTC 

facilities to CMS on the forms CMS–671 

and CMS–672 (we intend for this 

proposed new information collection to 

eventually supplant the data collections 

via the CMS–671 and CMS–672). In 

advance of the proposed July 1, 2016 

implementation date, we will publicize 

the established format specifications 

and will offer training to help facilities 

and other interested parties (for 

example, payroll vendors) prepare to 

meet the requirement. 

d. Submission Schedule 

Section 1128I(g)(3) of the Act requires 

that facilities submit direct care staffing 

information on a regular reporting 

schedule. LTC facilities now submit 

staffing information to CMS about once 

a year. Because staffing levels may 

change throughout the course of a year 

(based on, among other things, a 

facility’s census and residents’ needs), 

to have a more continuous and accurate 

reflection of facility staffing, we believe 

it is preferable for facilities to submit 

staffing information quarterly. 

Therefore, the proposed new 

§ 483.75(u)(4) would establish that a 

facility must submit direct care staffing 

information on the schedule specified 

by CMS, but no less frequently than 

quarterly. 

4. Compliance and Enforcement 

This proposed new § 483.75(u) would 

implement the provisions of section 

1128I(g) of the Act as requirements a 

LTC facility must meet to qualify to 

participate as a SNF in the Medicare 

program or a NF in the Medicaid 

program. As such, we plan to enforce 

the requirements under this new 

regulation through 42 CFR part 488. 

Should a facility fail to meet the 

reporting requirements of, or report 

inaccurate information under, the 

proposed § 483.75(u), CMS or the state 

may impose one or more remedies 

available to address noncompliance 

with the requirements for LTC facilities. 

5. Conclusion 

This proposed rule would implement 

the new requirements regarding the 

submission of staffing information based 

on payroll and other verifiable and 

auditable data by establishing that such 

submissions are requirements that a 

LTC facility must meet to qualify to 

participate as a SNF in the Medicare 

program or a NF in the Medicaid 

program. While section 1128I(g) of the 

Act does not make explicit that 

submission of staffing information based 

on these data is a condition of 

participation for Medicare or Medicaid, 

we believe that it is implicitly 

authorized by the terms of section 6106 

of the Affordable Care Act. Moreover, it 

is explicitly permitted by the general 

rulemaking authority of sections 

1819(d)(4)(B) and 1919(d)(4)(B) of the 

Act, which permit the Secretary to issue 

rules relating to the health, safety and 

well-being of residents. It is critical for 

both CMS and consumers to have access 

to accurate LTC staffing information to 

evaluate the quality of care rendered by 

such facilities. Several studies have 

looked at the relationship between 

staffing and the quality of care delivered 

by long term care facilities, and it is 

clear that staffing has an impact on the 

quality of care received by residents. 

This new collection and reporting of 

staffing data should enable us to have 

greater insight on the relationship 

between staffing and quality, and can be 

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used to inform future programs or 

policies. 

VI. Collection of Information 

Requirements 

As indicated below, this rule only 

proposes information collection 

requirements that are exempt from the 

Paperwork Reduction Act of 1995 (PRA) 

(44 U.S.C. 3501 et seq.). 

Specifically, section V.D. of this 

preamble proposes to add § 483.75(u) to 

implement the provisions of section 

1128I(g) of the Act as requirements a 

LTC facility must meet in order to 

qualify to participate as a SNF in the 

Medicare program or a NF in the 

Medicaid program. As such, nursing 

homes would be required to 

electronically submit direct care staffing 

information (including information with 

respect to agency and contract staff) 

based on payroll and other verifiable 

and auditable data. This requirement is 

exempt from the Paperwork Reduction 

Act (PRA) in accordance with the 1987 

Omnibus Budget Reconciliation Act 

(OBRA) for SNF and NF information 

collection activities (Pub. L. 100–203, 

section 4204(b) and section 4214(d)). 

Under sections 4204(b) and 4214(d) of 

OBRA 1987, requirements related to the 

submission and retention of resident 

assessment data are not subject to the 

Paperwork Reduction Act (PRA). 

Section V.C.5. of this preamble 

proposes the following three new 

quality measures for the SNF QRP 

beginning with the FY 2018 program 

year: Percent of Residents or Patients 

with Pressure Ulcers That Are New or 

Worsened (Short Stay) (NQF #0678), 

NQF-endorsed Percent of Residents 

Experiencing One or More Falls with 

Major Injury (Long Stay) (NQF #0674), 

and an application of the Percent of 

Long-Term Care Hospital Patients With 

an Admission and Discharge Functional 

Assessment and a Care Plan that 

Addresses Function (NQF #2631; under 

NQF review). 

While the reporting of quality 

measures is an information collection, 

the requirement is exempt from the PRA 

in accordance with the IMPACT Act 

2014. More specifically, section 

1899B(m) and section 1899B(a)(2)(B) of 

the Act, exempt modifications that are 

intended to achieve the standardization 

of patient assessment data. 

With regard to quality reporting 

during extraordinary circumstances, 

section V.C.10. of this rule proposes that 

SNFs may request an exception or 

extension from the FY 2018 payment 

determination and that of subsequent 

payment determinations. The request 

must be submitted by email within 90 

days from the date that the 

extraordinary circumstances occurred. 

While the preparation and submission 

of the request is an information 

collection, the requirement is exempt 

from the PRA in accordance with the 

IMPACT Act 2014. More specifically, 

section 1899B(m) of the Act and the 

sections referenced in section 

1899B(a)(2)(B) of the Act, as added by 

the IMPACT Act 2014, exempt 

modifications that are intended to 

achieve the standardization of patient 

assessment data. 

In section V.C.7.b. of this preamble 

we propose to require the collection of 

data—by means of a SNF PPS Part A 

Discharge Assessment—at the time of 

transition from a SNF PPS Part A stay; 

specifically, when the resident has not 

physically been discharged from the 

facility. Under this section we also 

propose to add data items to the 

scheduled Medicare required PPS 

Admission/Entry Assessment (5-day). 

While the reporting of quality 

measures is an information collection, 

the requirements are exempt from the 

PRA in accordance with the IMPACT 

Act 2014. More specifically, section 

1899B(m) of the Act and the sections 

referenced in subsection 1899B(a)(2)(B) 

of the Act, as added by the IMPACT Act 

2014, exempt modifications that are 

intended to achieve the standardization 

of patient assessment data. 

As discussed in section V.C.11. of this 

preamble, this rule proposes a process 

that will enable SNFs to request 

reconsideration of our initial noncompliance decision if the SNF believes 

that it was incorrectly identified as not 

having met its reporting requirements 

for the applicable fiscal year. Because 

the reconsideration and appeals 

requirements are associated with an 

administrative action (5 CFR 

1320.4(a)(2) and (c)), they are exempt 

from the requirements of the PRA. 

If you wish to comment on any of the 

aforementioned assumptions, please 

submit your comments as specified 

under the DATES and ADDRESSES

captions of this proposed rule. 

VII. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

VIII. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We have examined the impacts of this 

proposed rule as required by Executive 

Order 12866 on Regulatory Planning 

and Review (September 30, 1993), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (RFA, September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA, 

March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999), and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated an economically 

significant rule, under section 3(f)(1) of 

Executive Order 12866. Accordingly, we 

have prepared a regulatory impact 

analysis (RIA) as further discussed 

below. Also, the rule has been reviewed 

by OMB. 

2. Statement of Need 

This proposed rule would update the 

SNF prospective payment rates for FY 

2015 as required under section 

1888(e)(4)(E) of the Act. It also responds 

to section 1888(e)(4)(H) of the Act, 

which requires the Secretary to provide 

for publication in the Federal Register 

before the August 1 that precedes the 

start of each fiscal year, the unadjusted 

federal per diem rates, the case-mix 

classification system, and the factors to 

be applied in making the area wage 

adjustment. As these statutory 

provisions prescribe a detailed 

methodology for calculating and 

disseminating payment rates under the 

SNF PPS, we do not have the discretion 

to adopt an alternative approach. 

3. Overall Impacts 

This proposed rule sets forth 

proposed updates of the SNF PPS rates 

contained in the SNF PPS final rule for 

FY 2015 (79 FR 45628). Based on the 

above, we estimate that the aggregate 

impact would be an increase of $500 

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million in payments to SNFs, resulting 

from the SNF market basket update to 

the payment rates, as adjusted by the 

applicable forecast error adjustment and 

by the MFP adjustment. The impact 

analysis of this proposed rule represents 

the projected effects of the changes in 

the SNF PPS from FY 2015 to FY 2016. 

Although the best data available are 

utilized, there is no attempt to predict 

behavioral responses to these changes, 

or to make adjustments for future 

changes in such variables as days or 

case-mix. 

Certain events may occur to limit the 

scope or accuracy of our impact 

analysis, as this analysis is futureoriented and, thus, very susceptible to 

forecasting errors due to certain events 

that may occur within the assessed 

impact time period. Some examples of 

possible events may include newlylegislated general Medicare program 

funding changes by the Congress, or 

changes specifically related to SNFs. In 

addition, changes to the Medicare 

program may continue to be made as a 

result of previously-enacted legislation, 

or new statutory provisions. Although 

these changes may not be specific to the 

SNF PPS, the nature of the Medicare 

program is such that the changes may 

interact and, thus, the complexity of the 

interaction of these changes could make 

it difficult to predict accurately the full 

scope of the impact upon SNFs. 

In accordance with sections 

1888(e)(4)(E) and 1888(e)(5) of the Act, 

we update the FY 2015 payment rates 

by a factor equal to the market basket 

index percentage change adjusted by the 

FY 2014 forecast error and the MFP 

adjustment to determine the payment 

rates for FY 2016. As discussed 

previously, for FY 2012 and each 

subsequent FY, as required by section 

1888(e)(5)(B) of the Act as amended by 

section 3401(b) of the Affordable Care 

Act, the market basket percentage is 

reduced by the MFP adjustment. The 

special AIDS add-on established by 

section 511 of the MMA remains in 

effect until such date as the Secretary 

certifies that there is an appropriate 

adjustment in the case mix. We have not 

provided a separate impact analysis for 

the MMA provision. Our latest estimates 

indicate that there are fewer than 4,800 

beneficiaries who qualify for the add-on 

payment for residents with AIDS. The 

impact to Medicare is included in the 

total column of Table 12. In updating 

the SNF PPS rates for FY 2016, we made 

a number of standard annual revisions 

and clarifications mentioned elsewhere 

in this proposed rule (for example, the 

update to the wage and market basket 

indexes used for adjusting the federal 

rates). 

The annual update set forth in this 

proposed rule applies to SNF PPS 

payments in FY 2016. Accordingly, the 

analysis that follows only describes the 

impact of this single year. In accordance 

with the requirements of the Act, we 

will publish a notice or rule for each 

subsequent FY that will provide for an 

update to the SNF PPS payment rates 

and include an associated impact 

analysis. 

In accordance with sections 1888(g) 

and (h)(2)(A) of the Act, we are 

proposing to specify a Skilled Nursing 

Facility 30-Day All-Cause Readmission 

Measure (SNFRM) and adopt that 

measure for the SNF VBP Program. 

Because this proposed measure is 

claims-based, its adoption under the 

SNF VBP Program would not result in 

any increased costs to SNFs. 

However, we do not yet have 

preliminary data with which we could 

project economic impacts associated 

with the measure. We intend to make 

additional proposals for the SNF VBP 

Program in future rulemaking, and we 

will assess the impacts of the SNFRM 

and any associated SNF VBP Program 

proposals at that time. 

We believe that the burden associated 

with the SNF QRP is the time and effort 

associated with data collection and 

reporting. In this proposed rule, we 

propose three quality measures to meet 

the requirements of section 

1888(e)(6)(B)(II) of the Act. 

Our burden calculations take into 

account all ‘‘new’’ items required on the 

MDS 3.0 to support data collection and 

reporting for these three proposed 

measures. New items will be included 

on the following assessments: SNF PPS 

5-Day, Swing Bed PPS 5-Day, OMRA— 

Start of Therapy Discharge, OMRA— 

Other Discharge, OBRA Discharge, 

Swing Bed OMRA—Start of Therapy 

Discharge, Swing Bed OMRA—Other 

Discharge, and Swing Bed Discharge on 

the MDS 3.0. The SNF QRP also 

requires the addition of a SNF PPS Part 

A Discharge Assessment which will also 

include new items. New items include 

data elements required to identify 

whether pressure ulcers were present on 

admission, to inform future 

development of the Percent of Residents 

or Patients with Pressure Ulcers That 

Are New or Worsened (Short Stay) (NQF 

#0678), as well as changes in function 

and occurrence of falls with major 

injury. To the extent applicable, we will 

use standardized items to collect data 

for the three measures. For a copy of the 

data collection instrument, please visit: 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/

SNF-Quality-Reporting-ProgramMeasures-and-TechnicalInformation.html. 

We estimate a total additional burden 

of $27.47 per Medicare-covered SNF 

stay, based on the most recent data 

available, in this case FY 2014, that 

15,421 SNFs had a total of 2,599,656 

Medicare-covered stays for fee-forservice beneficiaries. This would equate 

to 1,012,566.13 total added hours or 66 

hours per SNF annually. 

We believe that the additional MDS 

items we are proposing will be 

completed by Registered Nurses (RN), 

Occupational Therapists (OT), and/or 

Physical Therapists (PT), depending on 

the item. We identified the staff type per 

item based on past LTCH and IRF 

burden calculations in conjunction with 

expert opinion. Our assumptions for 

staff type was based on the categories 

generally necessary to perform 

assessment: Registered Nurse (RN), 

Occupational Therapy (OT), and 

Physical Therapy (PT). Individual 

providers determine the staffing 

resources necessary, therefore, we 

averaged the national average for these 

labor types and established a composite 

cost estimate. We obtained mean hourly 

wages for these staff from the U.S. 

Bureau of Labor Statistics’ May 2013 

National Occupational Employment and 

Wage Estimates (http://www.bls.gov/

oes/current/oes_nat.htm), and to 

account for overhead and fringe 

benefits, we have doubled the mean 

hourly wage. The mean hourly wage for 

an RN is $33.13, doubled to $66.26 to 

account for overhead and fringe 

benefits. The mean hourly wage for an 

OT is $37.45, doubled to $74.90 to 

account for overhead and fringe 

benefits. The mean hourly wage for a PT 

is $39.51, doubled to $79.02 to account 

for overhead and fringe benefits. 

To calculate the added burden, we 

first identified the total number of new 

items to be added into assessment 

instruments. We assume that each new 

item accounts for 0.5 minutes of nursing 

facility staff time. This assumption is 

consistent with burden calculations in 

past IRF and LTCH federal regulations. 

For each staff type, we then multiply the 

added burden in minutes with the 

number of times we believe that each 

item will be completed annually. To 

identify the number of times an item 

would be completed annually, we noted 

the number of total SNF FFS Medicarecovered stays in FY 2014, the most 

recent data available to us. We assume 

that if an item was added to all 

discharge assessments that that item 

would be completed at least one time 

per SNF FFS Medicare-covered stay. For 

example, the time it takes to complete 

an item added to all discharge 

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assessments (0.5 minutes) would be 

multiplied by the number of SNF FFS 

Medicare-covered stays in FY 2014 to 

identify the total added burden in 

minutes associated with that item. Items 

added only to the SNF PPS Part A 

Discharge were weighted to reflect the 

proportion of SNF stays for residents 

who switch payers, but are not 

physically discharged from the facility. 

Added burden in minutes per staff type 

was then converted to hours and 

multiplied by the doubled hourly wage 

to identify the annual cost per staff type. 

Given these wages and time estimates, 

the total cost related to the SNF PPS 

Part A Discharge Assessment and SNF 

QRP measures is estimated at $4,630.20 

per SNF annually, or $71,402,283.86 for 

all SNFs annually. 

4. Detailed Economic Analysis 

The FY 2016 SNF PPS payment 

impacts appear in Table 12. Using the 

most recently available data, in this case 

FY 2014, we apply the current FY 2015 

wage index and labor-related share 

value to the number of payment days to 

simulate FY 2015 payments. Then, 

using the same FY 2014 data, we apply 

the proposed FY 2016 wage index and 

labor-related share value to simulate FY 

2015 payments. We tabulate the 

resulting payments according to the 

classifications in Table 12 (for example, 

facility type, geographic region, facility 

ownership), and compare the difference 

between current and proposed 

payments to determine the overall 

impact. The breakdown of the various 

categories of data in the table follows. 

The first column shows the 

breakdown of all SNFs by urban or rural 

status, hospital-based or freestanding 

status, census region, and ownership. 

The first row of figures describes the 

estimated effects of the various changes 

on all facilities. The next six rows show 

the effects on facilities split by hospitalbased, freestanding, urban, and rural 

categories. The next nineteen rows show 

the effects on facilities by urban versus 

rural status by census region. The last 

three rows show the effects on facilities 

by ownership (that is, government, 

profit, and non-profit status). 

The second column shows the 

number of facilities in the impact 

database. 

The third column shows the effect of 

the annual update to the wage index. 

This represents the effect of using the 

most recent wage data available. The 

total impact of this change is zero 

percent; however, there are 

distributional effects of the change. 

The fourth column shows the effect of 

all of the changes on the FY 2016 

payments. The update of 1.4 percent 

(consisting of the market basket increase 

of 2.6 percentage points, reduced by the 

0.6 percentage point forecast error 

adjustment and further reduced by the 

0.6 percentage point MFP adjustment) is 

constant for all providers and, though 

not shown individually, is included in 

the total column. It is projected that 

aggregate payments will increase by 1.4 

percent, assuming facilities do not 

change their care delivery and billing 

practices in response. 

As illustrated in Table 12, the 

combined effects of all of the changes 

vary by specific types of providers and 

by location. For example, due to 

changes proposed in this rule, providers 

in the rural Pacific region would 

experience a 1.6 percent increase in FY 

2016 total payments. 

TABLE 12—PROJECTED IMPACT TO THE SNF PPS FOR FY 2016 

Number of 

facilities 

FY 2016 

Update wage data 

(%) 

Total change 

(%) 

Group: 

Total .................................................................................................................... 15,421 0.0 1.4 

Urban .................................................................................................................. 10,887 0.1 1.5 

Rural ................................................................................................................... 4,534 ¥0.5 0.8 

Hospital based urban ......................................................................................... 546 0.1 1.5 

Freestanding urban ............................................................................................ 10,341 0.1 1.5 

Hospital based rural ........................................................................................... 626 ¥0.6 0.8 

Freestanding rural .............................................................................................. 3,908 ¥0.5 0.9 

Urban by region: 

New England ...................................................................................................... 801 0.7 2.1 

Middle Atlantic .................................................................................................... 1,485 0.7 2.1 

South Atlantic ..................................................................................................... 1,853 ¥0.1 1.3 

East North Central .............................................................................................. 2,068 ¥0.2 1.2 

East South Central ............................................................................................. 543 0.0 1.4 

West North Central ............................................................................................. 899 ¥0.4 1.0 

West South Central ............................................................................................ 1,310 ¥0.1 1.3 

Mountain ............................................................................................................. 501 ¥0.1 1.3 

Pacific ................................................................................................................. 1,420 0.2 1.6 

Outlying ............................................................................................................... 7 ¥1.5 ¥0.1 

Rural by region: 

New England ...................................................................................................... 142 ¥0.7 0.7 

Middle Atlantic .................................................................................................... 222 ¥1.2 0.2 

South Atlantic ..................................................................................................... 510 ¥0.1 1.3 

East North Central .............................................................................................. 937 ¥0.2 1.2 

East South Central ............................................................................................. 535 ¥0.7 0.7 

West North Central ............................................................................................. 1,089 ¥0.7 0.7 

West South Central ............................................................................................ 764 ¥1.1 0.3 

Mountain ............................................................................................................. 232 ¥0.6 0.8 

Pacific ................................................................................................................. 103 0.2 1.6 

Ownership: 

Government ........................................................................................................ 881 0.1 1.5 

Profit ................................................................................................................... 10,862 0.0 1.4 

Non-profit ............................................................................................................ 3,678 0.0 1.4 

Note: The Total column includes the 2.6 percent market basket increase, reduced by the 0.6 percentage point forecast error adjustment and 

further reduced by the 0.6 percentage point MFP adjustment. Additionally, we found no SNFs in rural outlying areas. 

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5. Alternatives Considered 

As described in this section, we 

estimate that the aggregate impact for 

FY 2016 would be an increase of $500 

million in payments to SNFs, resulting 

from the SNF market basket update to 

the payment rates, as adjusted by the 

applicable forecast error adjustment and 

by the MFP adjustment. 

Section 1888(e) of the Act establishes 

the SNF PPS for the payment of 

Medicare SNF services for cost reporting 

periods beginning on or after July 1, 

1998. This section of the statute 

prescribes a detailed formula for 

calculating payment rates under the 

SNF PPS, and does not provide for the 

use of any alternative methodology. It 

specifies that the base year cost data to 

be used for computing the SNF PPS 

payment rates must be from FY 1995 

(October 1, 1994, through September 30, 

1995). In accordance with the statute, 

we also incorporated a number of 

elements into the SNF PPS (for example, 

case-mix classification methodology, a 

market basket index, a wage index, and 

the urban and rural distinction used in 

the development or adjustment of the 

federal rates). Further, section 

1888(e)(4)(H) of the Act specifically 

requires us to disseminate the payment 

rates for each new FY through the 

Federal Register, and to do so before the 

August 1 that precedes the start of the 

new FY. Accordingly, we are not 

pursuing alternatives for the payment 

methodology as discussed previously. 

6. Accounting Statement 

As required by OMB Circular A–4 

(available online at 

www.whitehouse.gov/sites/default/files/

omb/assets/regulatory_matters_pdf/a4.pdf), in Table 13, we have prepared an 

accounting statement showing the 

classification of the expenditures 

associated with the provisions of this 

proposed rule. Table 13 provides our 

best estimate of the possible changes in 

Medicare payments under the SNF PPS 

as a result of the policies in this 

proposed rule, based on the data for 

15,421 SNFs in our database. All 

expenditures are classified as transfers 

to Medicare providers (that is, SNFs). 

TABLE 13—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2015 SNF 

PPS FISCAL YEAR TO THE 2016 

SNF PPS FISCAL YEAR

Category Transfers 

Annualized Monetized 

Transfers.

$500 million.* 

TABLE 13—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2015 SNF 

PPS FISCAL YEAR TO THE 2016 

SNF PPS FISCAL YEAR—Continued 

Category Transfers 

From Whom To 

Whom? 

Federal Government 

to SNF Medicare 

Providers. 

* The net increase of $500 million in transfer 

payments is a result of the forecast error and 

MFP adjusted market basket increase of $500 

million. 

7. Conclusion 

This proposed rule sets forth updates 

of the SNF PPS rates contained in the 

SNF PPS final rule for FY 2015 (79 FR 

45628). Based on the above, we estimate 

the overall estimated payments for SNFs 

in FY 2016 are projected to increase by 

$500 million, or 1.4 percent, compared 

with those in FY 2015. We estimate that 

in FY 2016 under RUG–IV, SNFs in 

urban and rural areas would experience, 

on average, a 1.5 and 0.8 percent 

increase, respectively, in estimated 

payments compared with FY 2015. 

Providers in the urban New England 

and Middle Atlantic regions would 

experience the largest estimated 

increase in payments of approximately 

2.1 percent. Providers in the urban 

Outlying region would experience a 

small decrease in payments of 0.1 

percent. 

B. Regulatory Flexibility Act Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, nonprofit organizations, and small 

governmental jurisdictions. Most SNFs 

and most other providers and suppliers 

are small entities, either by reason of 

their non-profit status or by having 

revenues of $27.5 million or less in any 

1 year. We utilized the revenues of 

individual SNF providers (from recent 

Medicare Cost Reports) to classify a 

small business, and not the revenue of 

a larger firm with which they may be 

affiliated. As a result, we estimate 

approximately 91 percent of SNFs are 

considered small businesses according 

to the Small Business Administration’s 

latest size standards (NAICS 623110), 

with total revenues of $27.5 million or 

less in any 1 year. (For details, see the 

Small Business Administration’s Web 

site at http://www.sba.gov/category/

navigation-structure/contracting/

contracting-officials/eligibility-sizestandards). In addition, approximately 

25 percent of SNFs classified as small 

entities are non-profit organizations. 

Finally, individuals and states are not 

included in the definition of a small 

entity. 

This proposed rule sets forth updates 

of the SNF PPS rates contained in the 

SNF PPS final rule for FY 2015 (79 FR 

45628). Based on the above, we estimate 

that the aggregate impact would be an 

increase of $500 million in payments to 

SNFs, resulting from the SNF market 

basket update to the payment rates, as 

adjusted by the MFP adjustment and 

forecast error adjustment. While it is 

projected in Table 12 that most 

providers would experience a net 

increase in payments, we note that some 

individual providers within the same 

region or group may experience 

different impacts on payments than 

others due to the distributional impact 

of the FY 2016 wage indexes and the 

degree of Medicare utilization. 

Guidance issued by the Department of 

Health and Human Services on the 

proper assessment of the impact on 

small entities in rulemakings, utilizes a 

cost or revenue impact of 3 to 5 percent 

as a significance threshold under the 

RFA. According to MedPAC, Medicare 

covers approximately 12 percent of total 

patient days in freestanding facilities 

and 22 percent of facility revenue 

(Report to the Congress: Medicare 

Payment Policy, March 2015, available 

at http://medpac.gov/documents/

reports/chapter-8-skilled-nursingfacility-services-(march-2015- 

report).pdf). However, it is worth noting 

that the distribution of days and 

payments is highly variable. That is, the 

majority of SNFs have significantly 

lower Medicare utilization (Report to 

the Congress: Medicare Payment Policy, 

March 2015, available at http://

medpac.gov/documents/reports/

chapter-8-skilled-nursing-facilityservices-(march-2015-report).pdf). As a 

result, for most facilities, when all 

payers are included in the revenue 

stream, the overall impact on total 

revenues should be substantially less 

than those impacts presented in Table 

12. As indicated in Table 12, the effect 

on facilities is projected to be an 

aggregate positive impact of 1.4 percent. 

As the overall impact on the industry as 

a whole, and thus on small entities 

specifically, is less than the 3 to 5 

percent threshold discussed previously, 

the Secretary has determined that this 

proposed rule would not have a 

significant impact on a substantial 

number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

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a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. This proposed rule 

would affect small rural hospitals that 

(1) furnish SNF services under a swingbed agreement or (2) have a hospitalbased SNF. We anticipate that the 

impact on small rural hospitals would 

be similar to the impact on SNF 

providers overall. Moreover, as noted in 

previous SNF PPS final rules (most 

recently the one for FY 2014 (78 FR 

47968)), the category of small rural 

hospitals would be included within the 

analysis of the impact of this proposed 

rule on small entities in general. As 

indicated in Table 12, the effect on 

facilities is projected to be an aggregate 

positive impact of 1.4 percent. As the 

overall impact on the industry as a 

whole is less than the 3 to 5 percent 

threshold discussed above, the Secretary 

has determined that this proposed rule 

would not have a significant impact on 

a substantial number of small rural 

hospitals. 

C. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2015, that 

threshold is approximately $144 

million. This proposed rule would not 

impose spending costs on state, local, or 

tribal governments in the aggregate, or 

by the private sector, of $144 million. 

D. Federalism Analysis 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it issues a proposed 

rule (and subsequent final rule) that 

imposes substantial direct requirement 

costs on state and local governments, 

preempts state law, or otherwise has 

federalism implications. This proposed 

rule would have no substantial direct 

effect on state and local governments, 

preempt state law, or otherwise have 

federalism implications. 

E. Congressional Review Act 

This proposed regulation is subject to 

the Congressional Review Act 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.) and has been 

transmitted to the Congress and the 

Comptroller General for review. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 483 

Grant programs—health, Health 

facilities, Health professions, Health 

records, Medicaid, Medicare, Nursing 

homes, Nutrition, Reporting and 

recordkeeping requirements, Safety. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 483—REQUIREMENTS FOR 

STATES AND LONG TERM CARE 

FACILITIES 

■ 1. The authority citation for part 483 

is revised to read as follows: 

Authority: Secs. 1102, 1128I, 1819, 1871 

and 1919 of the Social Security Act, (42 

U.S.C. 1302, 1320a–7, 1395i, 1395hh and 

1396r). 

■ 2. Section 483.75 is amended by 

adding paragraph (u) to read as follows: 

§ 483.75 Administration. 

* * * * * 

(u) Mandatory submission of staffing 

information based on payroll data in a 

uniform format. Long-term care 

facilities must electronically submit to 

CMS complete and accurate direct care 

staffing information, including 

information for agency and contract 

staff, based on payroll and other 

verifiable and auditable data in a 

uniform format according to 

specifications established by CMS. 

(1) Submission requirements. The 

facility must electronically submit to 

CMS complete and accurate direct care 

staffing information, including the 

following: 

(i) The category of work for each 

individual that performs direct care 

(including, but not limited to, whether 

the individual is a registered nurse, 

licensed practical nurse, licensed 

vocational nurse, certified nursing 

assistant, therapist, or other type of 

medical personnel as specified by CMS); 

(ii) Resident census data; and 

(iii) Information on staff turnover and 

tenure, and on the hours of care 

provided by each category of staff per 

resident per day (including, but not 

limited to, start date, end date (as 

applicable), and hours worked for each 

individual). 

(2) Distinguishing employee from 

agency and contract staff. When 

reporting direct care staffing 

information for an individual, the 

facility must specify whether the 

individual is an employee of the facility, 

or is engaged by the facility under 

contract or through an agency. 

(3) Data format. The facility must 

submit direct care staffing information 

in the format specified by CMS. 

(4) Submission schedule. The facility 

must submit direct care staffing 

information on the schedule specified 

by CMS, but no less frequently then 

quarterly. 

Dated: April 7, 2015. 

Andrew M. Slavitt, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Dated: April 13, 2015. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2015–08944 Filed 4–15–15; 4:15 pm] 

BILLING CODE 4120–01–P 

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