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Overview: Skilled Nursing Value-Based Purchasing Program

September 02, 2019
Reimbursement By Rodney Farley, Director

The Skilled Nursing Facility (SNF) Value-Based Purchasing (VBP) Program rewards SNFs with incentive payments based on the quality of care they provide to Medicare beneficiaries, as measured by a hospital readmissions measure.




The table below contains definitions for the SNF VBP program, under Title 42 of the Code of Federal Regulations §413.338:


Term Definition
Achievement threshold (or achievement performance standard) The 25th percentile of SNF performance on the SNF readmission measure during the baseline period for a Fiscal Year (FY)
Adjusted Federal per diem rate The payment made to SNFs under the skilled nursing facility prospective payment system (as described under section 1888(e)(4)(G) of the Act)
Applicable percent For FY 2019 and subsequent fiscal years, 2.0 percent
Baseline period The time period used to calculate the achievement threshold, benchmark and improvement threshold that apply for a FY
Benchmark For a FY, the arithmetic mean of the top decile of SNF performance on the SNF readmission measure during the baseline period for that FY
Logistic exchange function The function used to translate a SNF's performance score on the SNF readmission measure during the applicable baseline period
Improvement threshold (or improvement performance standard)

An individual SNF's performance on the SNF readmission measure during the applicable baseline period

Performance period The time period during which performance on the SNF readmission measure is calculated for a FY
Performance standards The levels of performance that SNFs must meet or exceed to earn points under the SNF VBP Program for a FY and are announced no later than 60 ays prior to the start of the performance period that applies to the SNF readmission measure for that FY
Rankings The ordering of SFs based on each SNF's performance score under the SNF VBP Program for a FY
SNF readmission measure For a FY, the all-cause all-condition hospital readmission measure (SNFRM) or the all-condition risk-adjusted potentially preventable hospital readmission rate (SNFPPR) specified by the Centers for Medicare and Medicaid services(CMS) for application in the SNF Value-Based Purchasing Program
Performance scores The numeric score ranging from 0 to 100 awarded to each SNF based on its performance under the SNF VBP Program for a FY
SNF Value-Based Purchasing (VBP) Program The program required under section 1888(h) of the Social Security Act
Value-based incentive payment amount The portion of a SNF's adjusted Federal per diem rate that is attributable to the SNF VBP Program
Value-based incentive payment adjustment factor The number that will be multiplied by the adjusted Federal per diem rate for services furnished by a SNF during a fiscal year, based on its performance score for that fiscal year, and after such rate is reduced by the applicable percent
Low-volume SNF A SNF with fewer than 25 eligible stays included in the SNF readmission measure denominator during the performance period for a fiscal year
Eligible stay For purposed of the SNF readmission measure, an index SNF admission that would be included in the denominator of that measure


How SNF VBP Payment Adjustments are Calculated

Beginning October 1, 2018, all SNFs started to receive a payment adjustment to their SNF Medicare Part A claims ranging from a 2 percent cut to potentially a 1.5​ percent increase based on rehospitalization rates in prior years. CMS will recalculate the payment adjustment annually every FY thereafter for the next ten years. 

The program:

  • Calculates the SNFs rehospitalization rate in the prior year and includes the amount of improvement from previous two years using Medicare claims.
  • SNFs earn a score based on their rehospitalization rate and amount of improvement.
  • CMS ranks all SNFs based on their score. Top-ranked SNFs may receive an increase in Medicare payments while the lowest ranked SNFs will receive a 2 percent cut.

Improve Your Rehospitalization Rate, Improve Your Score

Data collected for the first year of the program, which impacted payments starting October 1, 2018, has already been collected by CMS.  However, there are many reasons providers should continue to focus on the program and their SNF rehospitalization rates: 

CMS posts Quarterly Confidential Feedback reports via the Quality Improvement Evaluation System (QIES) and the CASPER reporting application. Providers are encouraged to review these reports and alert CMS to any potential errors pertaining to their SNF rates.

In August of 2018, CMS will be posting Annual Confidential Feedback reports that contain SNF RM rates for Calendar Year (CY) 2017 and the corresponding performance scores. Providers have 30 days from the posting of their annual report on the QIES reporting application to alert CMS of any issues.

While the performance window for the first year of SNF VBP has passed, now is the time to improve rehospitalization rates that will impact payments going.  Providers should know how they are trending and put plans in place to improve their scores by:

  • Reviewing confidential feedback quarterly reports using the CMS QIES System
  • Tracking quality metrics to understand their performance
  • Comparing rates to state and national benchmarks to have a better understanding of performance relative to others
  • Improving performance through implementation of quality improvement programs


Find success under value-based purchasing with the help of LW Consulting, Inc.

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