For the last two years we have been fortunate as an industry to have received the two largest Market basket updates to our SNF PPS rates since the inception of PPS in 1998.
The Market Basket, simply put, is the overall cost of goods and services that contribute to expenditures required to run and maintain a nursing facility. Every year CMS updates SNF PPS rates based on changes in the Market Basket that has been adjusted by a forecast error adjustment and multi-factor productivity adjustment as applicable .
For FY 2024, CMS finalized an update to the Market Basket of 3.0% which was adjusted to 6.4% due to 3.6% forecast error adjustment and a (0.2%) productivity adjustment. 6.4% is the largest increase to PPS rates since 1998.
However, in the FY 2023 final rule, CMS finalized a 4.6% parity adjustment based on the difference in expected expenditures under PDPM vs. RUG IV, producing essentially a 4.6% reduction to the PDPM category CMI phased in over 2 Fiscal Years with a 2.3% reduction in both FY 2023 and FY 2024.
As a result, CMS estimates that the aggregate impact of the provisions in the FY 2024 final rule will result in an estimated net increase in SNF payments of 4.0 %, or approximately $1.4 billion in Part A payments to SNFs in FY 2024. This reflects a $2.2 billion (6.4percent) increase from the market basket update to the payment rates and a $789 million (2.3 percent) decrease as a result of the second phase of the parity adjustment recalibration.
4.0% is a nice increase. Providers should take advantage of the additional dollars that will be available. Taking all other adjustments (sequestration, wage index, SNF QRP, SNF VBP) into consideration, still the industry as a whole will see 4.0% more dollars available in FY 2024.
That’s good news!