As the Senate is set this week to take a vote on the American Jobs and Closing Tax Loopholes Act (see my related posts), a key provision within the legislation having to do with implementation of the SNF payment system known as RUGs-IV remains in limbo. The PPACA (health care reform bill) required implementation of a new standard resident assessment instrument known as MDS 3.0, effective October 1. Under Medicare, the resident assessment triggers the PPS payment category corollary to Resource Utilization Group or RUG for short. A provision within the American Jobs and Closing Tax Loopholes Act would require CMS to implement an updated PPS payment system, RUGs-IV concurrent with the changeover to the new assessment instrument, effective October 1.
The difficulty that occurs without simultaneous implementation of RUGs-IV is that CMS has to create a “bridge” payment methodology, ultimately phasing-in the new payment system. This bridge payment system effectively changes in certain provisions unique to RUGs-IV such as concurrent therapy and look-back periods to model a hybrid payment for MDS 3.0. As the Senate has not yet acted on the Jobs and Closing Tax Loopholes Act, CMS is preparing for an interim period and thus, a bridge payment strategy. The full-phase in of RUGs-IV would not occur potentially until October of 2011. During the interim year under the bridge payment, CMS will use modified payments and then, re-process claims once RUGs-IV is implemented. The modified payments are effectively RUGs-IV payments that are processed using the RUGs-III system, as modified under the PPACA. Of course the peril for SNFs during this interim period lies in the possibility of carrying a receivable to Medicare (payments are less than what they actually would be under RUGs-IV) that ultimately is re-processed correctly, without interest. Alternatively, a facility could have a balance due once re-processing occurred but this situation is less likely.
At this point, the “ball” is in the court of the House and the Senate. CMS has indicated that it might take as long as six months to establish a hybrid payment system that correlates RUGs-IV categories to an interim payment system suitable for use under MDS 3.0. The alternative of course is to have Congress legislate the full implementation of RUGs-IV by October 1. Oddly enough, it was Congress that caused this confusion by delaying the implementation of RUGs-IV for a full year under the PPACA.
CMS is holding a series of three national conference calls regarding MDS 3.0 transitions and the RUGs-IV/RUGs-III interim payment issues. The first is set for June 24th at 1:30 P.M. Eastern time. Feel free to e-mail me for registration information.