PPS Rate Changes Take Effect 10/1/17; Comments Pour In Over Proposed Overhaul of RUG-IV Case Mix Methodology
Back in May 2017, CMS simultaneously released its proposed updates to SNF PPS rates and policies for FY 2018, and concurrently solicited comments on its proposed rule to replace RUG-IV. Since then, a final rule has been issued to incorporate a 1% increase to SNF PPS rates for FY 2018 which begins October 1, 2017. CMS estimates that the final rule will increase overall payments to SNFs by $370 million compared to FY 2017 levels. Note that a 2% reduction is applied to the update for SNFs that fail to submit required quality measures data.
Beyond the 1% rate change, CMS has been contemplating far more significant reforms to the SNF PPS RUG-IV case-mix classification methodology. Since 2008, CMS and the OIG have been concerned with how to provide therapy based on patients’ needs and not financial goals. CMS has now proposed a new model, the Resident Classification System (RCS-1), to replace the Resource Utilization Groups, Version 4 (RUG-IV). Among the many proposed changes, the RCS model would:
- Separate therapy minutes from payment. Minutes of therapy provided to patients would no longer classify the patient in a RUG category for payment purposes. Additionally, the model imposes a 25% limit on group therapy plus a 25% limit on concurrent therapy, so patients are ensured to receive at least 50% of their therapy on an individual basis.
- Classify each resident into four case-mix adjusted components (PT, OT, SLP, and non-therapy ancillaries (NTA)).
- Incorporate variable per-diem payment adjustments which would reduce payments associated with PT/OT and NTA over time.
As you can imagine, comments from long term and post-acute providers poured in on the proposed PPS – RCS change.
While the RCS is intended to simplify reimbursements for SNF operators, the American Health Care Association (AHCA) stated that RCS would do the opposite. A spokesperson for AHCA said, “In short, we do not view the current proposal as an improvement over the existing PPS other than addressing a single, but important issue—therapy utilization. Other than creating incentives to decrease therapy utilization, RCS simply would create more issues than improvements for beneficiaries, providers, and the Medicare program.”
AHCA is most concerned that the CMS data and related analytics meant to support the new payment model are insufficient. Moreover, AHCA also said the omission of “critical policy initiatives in the proposed payment framework,” like the Improving Medicare Post-Acute Care Transformation Act of 2014 and the Requirements of Participation, are “very troubling.”
You can read the entire report from AHCA here. CMS will decide what to do next with RCS – they may do nothing or they may release a proposed rule to advance RCS.
