On Aug. 2, 2012 the U.S. Centers for Medicare and Medicaid Services (CMS) published a notice in the Federal Register setting the Medicare SNF payment rates for Federal Fiscal Year for Skilled Nursing Facilities. CMS chose to publish a notice instead of a rule on this year’s reimbursement rates because it did not make any policy changes. Key items to note related to the FY 2013 rates that should be in effect for the period of Oct. 1, 2012 through Sept. 30, 2013 include:

• The  difference between the forecasted and actual market basket increase related to FY 2011 was 0.1 percent difference. If the difference between the prior year estimation and the actual market basket increase does not exceed 0.5 percent, there will be no adjustment on current year  rates. As a result, there will be no forecast error adjustment of the FY 2013 rates to correct the FY 2011 estimation.
• The FY 2013 market basket increase is 2.5 percent. The market basket increase is then decreased by the Multifactor Productivity Adjustment,  (MFP – required by the Affordable Care Act) which will decrease the market basket increase by 0.7 percent. The net adjustment of the two will increase Medicare rates by 1.8  percent.
• There are significant variances in wage indices from the prior year. Some indices increased while others decreased.
• CMS also stated in the notice that it has “concerns” about SNFs asking patients to sign binding arbitration agreements as a condition of admission and will consider whether action is necessary

Also, legislation signed by President Obama on August 7, 2012 gives the Administration one month to issue a report detailing whether Medicare providers will see 2% across-the-board cuts.  The Sequestration Transparency Act says Congress will enact $1 trillion in federal spending cuts, effective Jan. 1, 2013, if it fails to reach a bipartisan deficit-reduction plan. The $1 trillion reduction, which is often referred to as sequestration cuts, includes a 2% cut in Medicare payments to healthcare providers, including skilled nursing facilities. Medicaid is not affected by the sequestration cuts. The White House must send a report to Congress within 30 days detailing how the administration would carry out the sequestration cuts.  Congress will then have to decide whether it agrees with the president’s plan, or replace it with a plan of its own.