In my very first interview for a full-time Medical Director position at a skilled nursing facility, the CEO asked me how many PAs I had in my current facility where I worked as a part-time Medical Director. I quickly answered that there were none and the facility was staffed by physicians only. The interview ended abruptly two minutes later and I realized that I had given a very incorrect answer. When I returned to my current facility and discussed the interview with one of my nursing colleagues, I received a crash course in the Resource Utilization Group (RUGs) classification system. I then understood that in order to be a successful Medical Director that I not only had to have good clinical and management skills but also needed to have a baseline understanding of reimbursement methodologies in order to best help the facility manage their overall patient population.
The current reimbursement model is Resource Utilization Group IV (RUG IV) which has been in use since 2011/2012. Under this model, patients are stratified according the number of therapy minutes they receive from speech, occupational and physical therapy, adjusted somewhat by activities of daily living scores (ADL) taken from the Minimum Data Set (MDS). The more minutes of therapy, the greater the amount of the daily Prospective Payment System (PPS) rate from the Centers for Medicare & Medicaid services (CMS). It has been suspected by CMS that some providers are giving more minutes of therapy than needed in order to drive up RUG scores and PPS payments.
The proposed Resident Classification System (RCS-1) shifts the reimbursement methodology from a therapy centric model to a more blended model which also takes into account the admitting diagnosis of the patient, functional status, cognitive function, presence of depression and non-therapy ancillary care such as intravenous medications, feeding tubes, wound care, dialysis, etc. Therapy minutes are not counted at all. Briefly, the components of the RCS-1 formula are as follows:
Admitting diagnosis (10 categories) – Major Joint or Spinal, Non-Orthopedic, Acute Neurologic, Non-surgical orthopedic/ Musculoskeletal, Orthopedic Surgery (Except Major Joint), Cancer, Acute Infections, Pulmonary, Cardiovascular and Coagulation, Medical Management
Functional status of the patient- Higher functioning/less dependent = higher score/payment (presumably the patient will participate better in therapy and have better discharge potential)
Cognitive function of the patient – Higher cognition = higher score/payment (as above)
Presence of Depression – Depressed patients = higher score/payment (greater care needs, staff time)
Non-therapy ancillary treatments – Intravenous medications, wound care, respiratory care = higher score/payment
While at first glance, this new reimbursement model drastically alters long established systems and workflows, I would propose that RCS-1 takes into account the clinical condition of the patient as a whole. We have all been faced with numerous cases of extremely ill patients who are only able to participate in therapy at a minimal level if at all but require significant other nursing and medical care. It appears that RCS-1 will accommodate a wider spectrum of patient illnesses and appropriately reimburse nursing facilities and healthcare providers for the work that they do caring for frail und vulnerable patients. As Medical Directors, we can assist our facilities in the appropriate assessment and treatment plans for those patients who fall outside of the traditional therapy envelope. If enacted, RCS-1 would become effective October 1, 2018 for fiscal year 2019.