Last Updated on:
05/02/08

SNF PPS and Consolidated Billings Update Final Rule 2002
July 31, 2001

The Centers for Medicare and Medicaid Services (CMS) has issued the skilled nursing facility (SNF) prospective payment system (PPS) update final rule: Medicaid Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities  - Update, 66 Federal Register 39562, July 31, 2001.^*

 Summary

• The SNF market basket update factor is 2.8 percent.  This represents the market basket increase of 3.3 percent minus the statutorily mandated negative adjustment of .5 percent.

• Total payments to SNFs will increase by roughly $1.5 billion or 10.3 percent in fiscal year 2002.

• CMS has rebased the current 1992-based market basket (input price index) using 1997 as the new base year and has revised certain categories and weights.

• CMS will apply the SNF PPS to swing-bed hospitals starting July 31, 2002, instead of October 1, 2001 as previously provided in the proposed rule.

The final rates for FY 2002 are provided in Tables 1 through 4 of the Federal Register^*.  These tables include the update factor of 2.8 percent -  the SNF market basket of 3.3 minus .5 percent, and the 16.66 percent nursing component add-on.  They do not reflect the add-ons (the 20 percent, 6.7 percent, and 4 percent) provided for in the BBRA and in BIPA which are applied only after all other adjustment (wage and case-mix) have been made.  The 4 percent and 16.66 percent add-ons are scheduled to terminate, by statute, on September 30, 2002.  The 20 percent and 6.7 percent will terminate upon implementation of RUGs refinements. 

CMS has indicated that it plans to implement the RUG-III refinements for FY 2003.

In the proposed rule, CMS indicated that it is committed to monitor the RUG-III classification system and to pursue refinements in SNF payment and that it is continuing its active efforts with the expectation that it will develop case-mix refinements over the next 12 months.  In the final rule, CMS announces that it has awarded a contract to the Urban Institute for a research that will, in its early stages, address the feasibility of development and implementing such refinements.  CMS plans to review various approaches to determine the most appropriate methodology for the refinements.  This may include further analysis to develop a non-therapy ancillary index, similar to that proposed in the 2001 proposed rule.  CMS indicates that it is also interested in evaluating approaches that take into account proven indicators of resource use in other post acute settings, such as functional status, diagnosis, and comorbidities.

More information on the above Final Rule Update...

Click here^* to view the attachment on "Medicaid Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities - Update, 66 Federal Register 39562, July 31, 2001"

 ^{* Adobe Acrobat Reader is required to view the Portable Document Format (.PDF) file properly.}

Hansen, Hunter & Company, P.C.
8930 SW Gemini Drive, Beaverton, OR 97008 | Office 503-244-2134 | Toll Free 800-547-3159 | Fax 503-244-9754

Copyright © 2000 - 2005  Hansen, Hunter & Company, P.C.  All rights reserved.
Please send comments and suggestions to Web Master
This site is best viewed at a resolution of 1024 x 768 pixels with Microsoft Internet Explorer.