Nursing homes will be getting a 4.2% Medicare Part A pay raise under the fiscal 2025 final pay rule issued Wednesday. Providers also will be facing a more aggressive fines system, with civil monetary penalties now applicable in more instances.

The Centers for Medicare & Medicaid Services waited until late Wednesday, the last day possible to release the rule after issuing the proposed relatively early at the end of March.

It will add a cumulative $1.4 billion in funding for nursing homes. CMS also will be updating the SNF market basket base year from 2018 to 2022, which providers largely hailed when it was first proposed earlier this year.

They have not been as satisfied with the idea of a new structure for fines.

“In this final rule, CMS revises the regulation to expand the type of CMPs that can be imposed to allow for more per instance and per day CMPs to be imposed, as appropriate,” the agency said in announcing the fiscal 2025 pay rule. “The revisions in this rule will permit both types of penalties to be imposed, providing CMS with greater flexibility to impose penalties …”

The statement described the CMP revisions as an example of “robustly using existing nursing home enforcement authority” in alignment with the Biden administration’s drive to more tightly regulate skilled nursing operators. Statutory daily fine limits still must be observed, CMS emphasized.

The updated system will allow regulators to levy penalties “more commensurate with the identified noncompliance.” “Full use” of CMPs will “encourage faster correction and sustained compliance with health and safety requirements,” officials said.

The agency also is requiring SNFs to collect and submit new social determinants of health items through the MDS, focusing on two food items, living situations and utilities under the Quality Reporting Program. This will kick in for patients admitted Oct. 1, 2025, or later.

In addition, the rule finalizes the proposal to update the SNF PPS wage index using the Core-Based Statistical Areas (CBSAs) defined within a new Office of Management and Budget (OMB) Bulletin. The adjustment will improve the accuracy of wages and wage-related costs for the area in which a facility is located, officials said. 

Changes to the SNF Quality Reporting Program (QRP) are being implemented to take better stock of adverse social conditions that could hinder health or healthcare upon facility discharge, CMS said. 

Operators also will be subject to a policy that is not yet finalized that will require SNF QRP participants to validate data they submit behind with the fiscal 2027 year. Non-reporters in the program can get hit with a 2-percentage point reduction in their annual pay update. Data collection on the Transportation item in the MDS also is being streamlined.

CMS also is finalizing several operational and administrative proposals for the SNF Value-Based Purchasing program. When completed, they will lead to a more efficient metrics gathering process and ultimately contain characteristics that more closely align with policies in place with the SNF QRP program.

A fact sheet on the new SNF PPS rule can be found on the CMS website.

Proposal put all on notice

The new pay hike comes on the heels of a notably high net 4.0% bump a year earlier, which was fueled by recent inflation spikes. 

Before today’s announcement, CMS initially proposed a 4.1% pay increase for nursing homes in fiscal 2025, on March 29, a relatively early date. But it waited until almost the last moment possible to issue the finalized rule, which completed its Office of Management and Budget Friday. 

At the time of the proposal, long-term care leaders characterized it as “modest,” especially with the then still-pending final minimum staffing mandate rule looming.

Some of the biggest news out of the proposed rule was the wish to expand the Civil Monetary Penalty process. Regulators said then they wanted to allow “for more per instance and per day” to be imposed.

Officials explained with the proposed rule that penalties now can be imposed either per-day or per-instance but not both during the same survey. Per-instance penalties also may not be imposed concurrently for the same deficiency.

The proposal also included changes in the Patient-Driven Payment Model ICD-10 Code Mappings and Value-Based Purchasing updates, which remained in the final version.

March’s proposal also called for tweaking the case-mix methodology used as part of the Total Nurse Staffing measure.

Additionally, the agency suggested an update of the Review and Correction policy that it previously finalized, to ensure that SNFs can review and correct Payroll-Based Journal (PBJ) data beginning Oct. 1, 2025, and MDS data beginning Oct. 1, 2026.

In the proposed rule, regulators also asked for comments on potential future updates to the highly watched non-therapy ancillary (NTA) component of PDPM. Stakeholders see this as a good way, after more than four years under PDPM, to add items in the list of NTA comorbidities and the points assigned to each.

CMS issued this fact sheet when it initially proposed the FY 2025 SNF pay rule.

This is a developing story. Please check back for more details.