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Proposed Rule FY 2023 for Skilled Nursing Facilities

It is that time of year again!

The Center for Medicare and Medicaid Services (CMS) has issued the proposed rule that would update Medicare payment policies and rates for the fiscal year (FY) 2023’s Skilled Nursing Facility (SNF) Prospective Payment System (PPS).

The Patient Driven Payment Model (PDPM) was implemented on October 1, 2019. This new model was intended to not only make SNF’s drivers patient center, but to create a budget neutral system. According to CMS’ data analysis FY 2020 there was an unintended increase in payment of approximately 5% or $1.7 billion dollars.

Proposed Rule FY 2023 for Skilled Nursing Facilities

The SNF industry has waited to find out how CMS proposes to recalibrate to return to a budget neutral system and the wait it over. The CMS is proposing a PDPM parity adjustment. Because all of the stakeholder comments expressed the unfair data analysis related to FY 2020 and FY 2021’s COVID-19 pandemic. The CMS recalibrated this time removing from the data on patients that were in the SNF on the Public Health Emergency (PHE) related wavier and/or had a COVID-19 diagnosis. The results, the CMS is proposing a parity adjustment that would instant 4.6% decrease across the board of the PDPM case mix indexes.

The annual payment update for 2023 will be 3.9% which includes the market basket update and other adjustments..

Urban FY 2023 Unadjusted Federal Rate Per Diem


Rural FY 2023 Unadjusted Federal Rate Per Diem


Changes in CMI Rates from FY 2022 to FY 2023


Other Items in the Proposed Rule FY 2023

Wage Index

The CMS is also proposing a permanent cap on the Wage Index decreases to “mitigate instability.” This cap would be a permanent 5% cap to the annual wage index to soften the changes from year to year.

PDPM ICD-10 Changes

Changes to the PDPM ICD-10 mapping will include several codes being reassigned to “Return to Provider” due to the CMS are requesting more specific codes.

Coding Infection Isolation

After the COVID-19 pandemic and the increase cost and inability to capture residents in isolation on the Minimum Data Set MDS due to cohorting, stakeholders requested changes of the criteria to code infection isolation. As a result, CMS is seeking comments on the extent to which the existing criteria should be expanded.

Staffing Requirements for Long Term Care (LTC) Facilities

CMS is requesting input on determining minimum staffing requirements for LTC facilities.

Skilled Nursing Facility Quality Reporting Program (SNF QRP)

  1. CMS is proposing adopting a new measure, Influenza Vaccination Coverage Among Healthcare Personnel (HCP). This measure is proposed for FY 2025, and the CMS believes this measure has the protentional to increase influenza vaccination numbers and promotes transparency of qualify care in the SNF. If implemented, the initial data submission period would be from October 1, 2022 through March 31, 2023.
  2. CMS seeks to modify the compliance date for certain SNF QRP reporting requirements for the Transfer of Health Information measure, and certain standardized patient assessment data elements to October 1, 2023.
  3. CMS is suggesting to make some revisions to regulation content to include a new paragraph to reflect all the data completion thresholds required for SNFs to meet the compliance threshold for the annual payment update.
  4. For the SNF QRP quality measures under consideration for future years, CMS is seeking input in two future measures.
    1. Functional outcome measure that includes both self-care and mobility items.
    2. COVID-19 vaccine coverage measure that assess if the SNF residents’ vaccine is up to date.
  5. CMS is also requesting feedback from stakeholders on the development and inclusion of health equality measure for the SNF QRP.
  6. CoreQ survey is a tool to evaluate the level of satisfaction among SNF patients. Feedback is requested on a future Short Stay Discharge measure using the feedback for the CoreQ survey.

Skilled Nursing Facility Value- Based Purchasing (SNF VBP)

Due to the effects of COVID during the Public Health Emergency (PHE), the CMS proposed suppressing the Skilled Nursing Facility 30- Day All-Cause Readmission Measure (SNFRM) for FY 2023.

CMS proposes assigning all SNFs a performance score of zero to alleviate the effect of public health emergency related measures on final score. In addition, proposes to decrease the federal per diem rate for all SNF by 2% and give SNFs 60% of that withhold, resulting in a 1.2% payback.

SNF VBP Expansion

There is also a proposal for 3 new measures for the SNF VBP program, 2 claims-based measure and 1 using payroll-based journal.

  1. For FY 2026 Skilled Nursing Facility Healthcare Associated Infections (HAI) Requiring Hospitalization (claims based) and Total Nursing Hours per Resident Day measures. (Payroll based Journal)
  2. For FY 2027 -Discharge to Community (DTC) -Post Acute Care Measure for SNF

The proposed rule also includes several Request For Information (RFI) on payment, policies, and additional proposed measures. Please see the CMS Fact Sheet for more details.

Stakeholders must submit comments to CMS by June 10, 2022

Contact Us

Want to know what your reimbursement would look like with the 2023 FY rates? Contact your local Blue & Co. Advisor or a member of our Post-Acute Care team, and we can assist you with projections and help you identify areas of missed opportunities.

Landon Hackett, Director

Stephanie Fitzgerald, Manager

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