Medicare Skilled Nursing Facility PPS Wage Index
Guidance for SNFs on adjustments to the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Federal rates, using a wage index that CMS deems appropriate.
Issued by: Centers for Medicare & Medicaid Services (CMS)
Issue Date: July 31, 2020
Section 1888(e)(4)(G)(ii) of the Social Security Act requires that the Secretary adjust the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Federal rates to account for differences in area wage levels, using a wage index that we find appropriate. Since the inception of a PPS for SNFs, we have used hospital wage data in developing a wage index to be applied to SNFs. The SNF PPS wage index values for any fiscal year are calculated from the same data used to compute that fiscal year's acute care hospital inpatient wage index data. For example, both the FY 2008 SNF PPS wage index and the FY 2008 Acute Inpatient PPS wage index are generated from FY 2004 cost report data. However, the SNF PPS wage index does not take into account geographic reclassification under sections 1886(d)(8) and 1886(d)(10) of the Act and does not apply the "rural floor" under section 4410 of the Balanced Budget Act of 1997. Finally, the SNF PPS wage index does not include the hospital area wage index's occupational mix adjustment.
Permanent Cap on Wage Index Decreases
The FY 2023 SNF PPS final rule establishes a permanent 5% cap on annual wage index decreases to smooth the impact of year-to-year changes in SNF payments related to changes in the SNF wage index. The wage index files below are not capped. However, the annual SNF Pricer Change Request (CR) provides the methodology that MACs are instructed to use to calculate the capped wage index - Medicare Part A Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Pricer Update Fiscal Year (FY) 2023.
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