Long-Term Care

Proposed rule calls for PPS rate cuts and future implementation of RUG-IV

Contemporary Long-Term Care Weekly, May 7, 2009

The Centers for Medicare and Medicaid Services (CMS) released its proposed rule for FY 2010 payment updates for skilled nursing facilities (SNF) on May 1. The rule calls for a market basket increase and significant cuts to Medicare payments for FY 2010. CMS also proposes a major change in the SNF Prospective Payment System (PPS) for FY 2011, which would implement the Resource Utilization Group (RUG)-IV in tandem with the MDS 3.0 on October 1, 2010. Public comments on the entire proposed rule will be accepted until June 30.

“CMS is once again proposing to make the parity adjustment correction factor to case-mix indices, which works to correct a budget neutrality forecasting error previously made by CMS,” says Peter Gruhn, director of research at the American Health Care Association in Washington, D.C. CMS estimates that the recalibration of the case-mix indices will reduce payments to SNFs by 3.3%, or $1.05 billion, in FY 2010. “Ultimately, it works out to about a $16 reduction per patient day, which could have fairly significant implications for quality of care and could put facilities under significant financial pressure,” Gruhn says. For a chart comparing the proposed FY 2010 rates to the FY 2009 rates, visit the Resources page on MDSCentral.

The proposed rule also calls to increase the FY 2010 SNF market basket by 2.1%, or approximately $660 million, which officials say could offset the decrease in Medicare payments. “There is some concern that, as part of the healthcare reform efforts, the administration may take the SNF market basket away for one or more years, potentially eliminating this update,” Gruhn says.

In addition to the SNF PPS rate updates for FY 2010, the proposed rule calls to revise the case-mix classification system with a FY 2011 implementation of RUG-IV. RUG-IV will include changes based on the Staff Time and Resource Intensity Verification (STRIVE) project and increase the total number of RUG categories to 66.

“The proposed RUG redistribution for FY 2011 means a dramatic decrease in overall reimbursement for SNFs because a very small percentage of residents will fall into the extensive services and extensive plus rehab RUG-IV categories,” says Ron Orth, RN, NHA, RAC-CT, CPC, president of Clinical Reimbursement Solutions, LLC, in Milwaukee, WI.

For in-depth information about RUG-IV and how the proposed changes will affect your facility, visit MDSCentral.

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