On August 1, 2007, the Centers for Medicare & Medicaid Services (CMS) announced its final rule updating the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2008. The updated rates provide for full market-basket adjustments of 3.3%, which are projected to increase annual Medicare payments by $690 million nationally.  Members should note that this increase could be reduced or eliminated by Congressional action, and that legislation currently under consideration (H.R. 3162) contains a proposed freeze in Medicare payments for nursing homes and home health agencies.         

The PPS also revises and rebases the components of the market basket. Such revisions will include updated costs and more appropriate price proxies. The market basket, which currently reflects data from FY 1997, will be rebased to reflect data from 2004. Further, CMS is raising the threshold for triggering a forecast error adjustment under the SNF PPS from the current 0.25 percentage point to 0.5 percentage point, effective FY 2008.