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Medicare agency ups payments for nursing homes, psych facilities for FY'20

The Centers for Medicare and Medicaid Services will increase Medicare payments to skilled nursing facilities for fiscal year 2020 by $851 million, or 2.4%, according to a July 30 finalized rule.

The finalized rule also states that the patient driven payment model, a completely new payment system for nursing homes, will take effect Oct. 1. The finalized payment rate is slightly below the $887 million, or 2.5%, increase CMS proposed in April.

CMS has been eyeing a payment model change for several years, with a finalized rule issued in 2018.

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The new payment model is focused on patients' conditions and treating people according to their specific needs as opposed to the previous method, called Resource Utilization Group Version IV, which focused on the total volume of care that a patient received, according to CMS. The changes came after reports of facilities taking advantage of the fee-for-service model and providing unneeded care to hit higher payment thresholds.

While payments are expected to increase by about $851 million, CMS noted in the finalized rule that this figure does not include payment reductions from cuts to value-based payments. The agency estimates that value-based payment cuts will total about $527.4 million in fiscal year 2020.

The value based payments program is a separate Medicare payment model that gives facilities incentive payments for the quality of treatment provided to patients. The program currently provides payments according to what the rule calls an "all-cause measure of readmissions," which is meant to hold facilities accountable for readmissions 30 days after patients have been discharged, according to the agency.

Skilled nursing facilities will now be rated according to a metric called "potentially preventable readmissions," a standard that keeps the 30-day parameter and measures any "unplanned, potentially preventable hospital readmissions," according to the rule.

Value payments for skilled nursing facilities will be reduced across the board by 2% and then 60% of that total will be redistributed as incentive payments, according to CMS.

1.5% increase for psychiatric facilities

CMS will also increase Medicare payments in fiscal year 2020 for inpatient psychiatric facilities by $65 million, or 1.5%, according to a separate July 30 finalized rule. The rule will take effect Oct. 1 and will impact approximately 1,581 facilities, according to the agency. The finalized payment rate is slightly lower than the $75 million, or 1.7%, increase the agency proposed in April.

Cowen Analyst Rick Weissenstein said that the proposed rule could impact for-profit psychiatric facilities owned by companies like Universal Health Services Inc. and Acadia Healthcare Co. Inc.