14.04.22 | Noreen Hiltsley

CMS Releases FY 2023 Proposed Rule


The Centers for Medicare and Medicaid Services (CMS) are legally required to update the Medicare payment rates and quality programs on an annual basis. Each April, CMS publishes a proposed rule for the upcoming fiscal year (FY) and opens a comment period for stakeholders to review and provide comments to CMS before releasing the final rule.


On April 11th CMS issued proposed rule CMS-1765-P for FY 2023. This proposed rule contains many areas of importance and significance for SNF providers specifically as it relates to payment, quality, staffing, and more.

Preferred Therapy Solutions is thoroughly reviewing the proposed rule and has planned an in-depth webinar for May 17th, which has already received program approval from the National Association of Long Term Care Administrators Board (NAB).

Key elements of the proposed rule include:

    CMS estimates the aggregate impact of payment policies would result in a decrease of approximately $320 million in Medicare Part A payments to SNFs in FY 2023
  • The actual payment update for FY 2023 is a 3.9% increase based on SNF market basket and forecast error adjustments but this increase is offset by a 4.6% decrease in SNF PPS rates as a result of a proposed recalibrated parity adjustment
  • An additional $186 million in reductions is estimated based on the SNF VBP program



  •  Recalibrating the PDPM Parity Adjustment
    • The purpose of the parity adjustment is to ensure budget neutrality between RUG-IV and PDPM
    • In last year’s proposed and final rules, CMS shared that the transition from RUG-IV to PDPM was not budget neutral with a 5% increase in Medicare Part A payments to SNFs under PDPM. They sought feedback from stakeholders regarding how and when to recalibrate the PDPM parity adjustment, but never proposed an actual parity adjustment
    • In this year’s proposed rule, CMS improved its methodology to determine the necessary parity adjustment and is proposing a 4.6% decrease in PDPM payments
    • CMS is proposing to accomplish the parity adjustment by recalibrating all PDPM CMI’s equally (PT, OT, SLP, Nursing, and NTA)
    • CMS is proposing to implement the entire recalibration all at once, without delay or phase-in
  • CMS is proposing several changes to the PDPM ICD-10 code mappings and lists


  • CMS is proposing to adopt one new quality measure to become part of the SNF QRP for FY 2025: Influenza Vaccination Coverage among Healthcare Personnel (HCP) measure
  • CMS is proposing to revise the compliance dates for specific SNF QRP requirements
  • CMS is seeking comments on 3 subjects
    • Future measures for SNF QRP
    • Overarching principles for measuring equity and healthcare disparities
    • Inclusion of CoreQ: Short Stay Discharge Measure in the SNF QRP


  • CMS is proposing to suppress the SNF 30-day All-Cause Readmission Measure for the FY 2023 SNF VBP due to the COVID-19 PHE
    • In order to maintain compliance with the statutory requirements of the SNF VBP program, CMS is proposing to do the same process implemented last year as it relates to the SNF VBP
      • CMS will continue to withhold 2% of Medicare Part A FFS payments per statute
      • CMS will “award” SNF’s 60% of the withhold, resulting in a 1.2% payback
      • The proposal will result in 0.8% decrease in Medicare Part A FFS payments for all SNF’s except those that are subject to the Low Volume Adjustment policy
  • CMS is proposing to add two new measures to the FY 2026 SNF VBP and one new measure to the FY 2027 SNF VBP
    • FY 2026: addition of SNF Healthcare-Associated Infections Requiring Hospitalization and Total Nursing Hours per Resident Day measures
    • FY 2027: addition of Discharge to Community – Post-Acute Care Measure for SNFs
  • CMS is seeking feedback on the following for the SNF VBP
    • Implementing a Nursing Home Staff Turnover measure
    • Scoring methodology and how it converts to incentive payments
    • Incorporating adjustments related to health equity

Finally, Preferred Therapy Solutions will be submitting comments and feedback to CMS to advocate for therapy services, SNF providers, and most importantly, the residents we are privileged to serve. We encourage all providers to do the same!

Join our webinar on May 17th to learn more about the proposed rule and how to advocate for our industry and patients. Details and links to join this webinar will be provided at a later date.

Preferred Therapy Solutions continues to provide vital information that may impact rehabilitation management, reimbursement policies, and clinical programs, supported by compliance and regulatory requirements that are necessary for a thorough understanding of practices and procedures. If you have any questions, please contact Matt Nash, Vice President of Strategy and Business Development: mnash@preftherapy.com