SNF Value-Based Purchasing (SNF VBP)

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The Issue

Hospital readmissions not only have the potential for negative physical, emotional, and psychological impacts on individuals in skilled nursing care, but also cost the Medicare program billions of dollars.

Preventing these events whenever possible is beneficial to patients and has been identified as an opportunity to reduce overall health care system costs by improving quality. The issue has become a top priority for the Centers for Medicare & Medicaid Services (CMS) and managed care programs.

The Program​

The Protecting Access to Medicare Act of 2014 (PAMA) required CMS to implement the Skilled Nursing Facility (SNF) Value-B​ased Purchasing (VBP) Program, an effort that links Medicare Part A payments to a SNF’s rehospitalization rate.

Starting October 1, 2018, all SNFs will 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 fiscal year (FY) thereafter for the next ten years.

The program works by:
  • Calculating the SNFs rehospitalization rate in the prior year and also the amount of improvement from two years before using Medicare Claims for only Medicare Beneficiaries in Fee-For-Service program (e.g. Managed care are excluded).
  • SNFs earning a score based on their rehospitalization rate and amount of improvement.
  • CMS ranking 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.
NOTE: While the exact formula that translates VBP scores into a payment percentage adjustment cannot be finalized until CMS determines the distribution of scores across the nation, AHCA can obtain a reasonable estimate of the financial impact for centers through its LTC Trend Tracker SNF VBP Prediction Tool available to members today.
For more information about the program, visit the CMS website



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 und​erstand 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.​

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