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CMS releases FY 2010 SNF PPS final rule, RUG-IV payment system

MDS 3.0 Update, August 10, 2009

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CMS released the final rule for fiscal year (FY) 2010 payment updates to SNFs on July 28, leaving many industry leaders concerned about the future of long-term care.

A major component of the final rule is the recalibration of the case-mix indexes (CMI), which will reduce Medicare payments to SNFs by $1.05 billion, or 3.3 percent. The CMI recalibration will correct a FY 2006 projection error, which resulted in an unexpected increase in Medicare payments, and will better align reimbursement with the resources used to care for a resident. Fortunately, this significant cut in Medicare payments will be partially offset by the SNF market basket update for FY 2010, which will result in a $690 million, or 2.2 percent, increase. Thanks to the market basket update, the total reduction in Medicare payment to SNFs in FY 2010 will be $360 million, or 1.1 percent lower than FY 2009 payments.

“Although the payment cuts included in the proposed rule are significant and come at a time when many SNFs are already struggling with tight budgets, CMS believes that the cuts should not affect the quality of care provided,” says Diane Brown, a regulatory specialist and Boot Camp instructor at HCPro.

Another important component of the final rule is the finalization of the Resource Utilization Group, Version Four (RUG-IV) for implementation in FY 2011. In the final rule, CMS addressed many comments they received about RUG-IV and provided responses and explanations. Ultimately, CMS plans to implement RUG-IV as it appeared in the proposed rule, with a few minor modifications, such as:

• Fever with feeding tube will be added to the Special Care High category
• CMS clarified that dehydration has been deleted as a qualifier in any category, including the Special Care and Clinically Complex categories
• Respiratory failure in combination with oxygen therapy while a SNF resident will be added to the Special Care Low category
• Oxygen therapy while a SNF resident will be moved to the Clinically Complex category
• A patient will also qualify in the Special Care Low category if one of the following is present along with two or more skin treatments: 
  • Two or more venous/arterial ulcers; or
  • One Stage 2 pressure ulcer and one venous/arterial ulcer

“The simultaneous implementation of the MDS 3.0 and RUG-IV will be a major challenge for facilities but CMS is giving us plenty of time to prepare,” Brown says. “To ensure that the transition is as smooth and successful as possible, SNFs should really begin training their staff and adapting their facility processes now.”

To view the FY 2010 SNF final rule and a comparison of the FY 2010 and FY 2009 rates, visit the Resources page on MDSCentral.

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