On Friday, July 31, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued three fiscal year 2021 final rules, for Inpatient Psychiatric Facilities (“IPFs”), Skilled Nursing Facilities (“SNFs”), and hospices.

Inpatient Psychiatric Facilities

In the IPF Prospective Payment System (“IPF PPS”) final rule, CMS finalized updates to the IPF PPS by increasing the IPF market basket by 2.2 percent, adjusted by a 0.0 percentage point productivity adjustment. These changes will result in a 2.2 percent payment increase ($95 million) for IPFs from FY 2020 to 2021. Reimbursement will also increase due to an outlier threshold increased by 0.1 percent. The final rule adopts the more recent Office of Management and Budget (“OMB”) core-based statistical area delineations for wage index values. CMS believes that the updated OMB statistical area delineations will create more accurate representations of the work force in a given area and ultimately will result in the IPF wage index “being more representative of the actual costs of labor in a given area.” CMS will implement this change over a two year transition period in an effort to “mitigate any negative effects of wage index changes” on providers and will also apply a 5-percent cap on any wage index decrease from FY 2020 to FY 2021. Finally, CMS provides physician assistants, nurse practitioners, and other advanced practice providers with the authority to document progress notes in psychiatric patients’ medical records if the practitioner acts in compliance with state scope of practice requirements.

The CMS IPF PPS final rule fact sheet is available here.

Skilled Nursing Facilities

The SNF Prospective Payment System (“SNF PPS”) final rule increases the payment rates for SNFs in FY 2021 by increasing the SNF market basket by 2.2 percent. This is further adjusted by a productivity adjustment of 0.0 percent. CMS projects that these changes will result in a 2.2 percent ($750 million) increase in payments for SNFs from FY 2020 to FY 2021. CMS also adopted using the more recent OMB statistical area delineations in the SNF final rule to identify if a provider is an urban or rural facility and will cap any wage index decrease by 5 percent for FY 2021. CMS also updated the ICD-10 code maps and lists associated with the Patient-Driven Payment Model by classifying patients into case-mix groups. For example, CMS finalized including certain surgical clinical category options to the clinical category mapping of specified diagnosis codes.

The CMS SNF PPS final rule fact sheet is available here.


The FY 2021 Hospice Wage Index and Payment Rate Update final rule revises the hospice wage index, payment rates, and cap amount for FY 2021. CMS explains in the final rule that hospice reimbursements for FY 2021 will increase by 2.4 percent ($540 million) based on a market basket increase of 2.4 percent and a 0.0 percent multifactor productivity adjustment. CMS will also use the more current OMB area delineations for hospice wage index values and will use the same 5-percent cap on wage index decreases as the IPF PPS and SNF PPS final rules. On its website, CMS provided examples of a hospice election statement and hospice election statement addendum to reflect the changes that CMS finalizes in this rule.

A CMS Hospice Wage Index and Payment Rate Update final rule fact sheet is available here.

All three of these Medicare payment final rules will become effective on October 1, 2020.