RUGS IV 57-Group is here. Are you ready?

In November 2015, the State of Ohio approved the RUGS IV 57-group model for Medicaid reimbursements. The new model will affect Medicaid reimbursement calculations beginning July 1, 2016, using calculations data from the fourth quarter 2015 and the first quarter 2016.

  • The RUGS IV 57-Group Model is the same as the RUGS IV 66-Group Model, except the Rehabilitation and plus Extensive Services groups have been removed.
  • The category precedence for hierarchical classification is the Rehabilitation category (14 groups), the Extensive Services Category (3 groups), the Special Care High category (8 groups), the Special Care Low category (8 groups), the Clinically Complex category (10 groups), the Behavioral Symptoms and Cognitive Performance category (4 groups), and the Reduced Physical Functions category (10 groups).

It’s free! Richter Healthcare Consultants offers a helpful, downloadable free guideline to “beginning the crosswalk process” by recalculating ADL scores in line with significant changes in scoring process such as this:

  •   In RUGS III, the maximum ADL score was 18 and the 4 Late Loss ADLs were unequally weighted.
  • In RUGS IV, the maximum ADL score is 16 and the 4 Late Loss ADLs are equally weighted.

Words we can live with: In terms more understandable to the layman, we suggest referring to the blog of Reginald M. Hislop III, a healthcare executive, consultant, and author.

“I’ve been fielding lots of questions regarding the transition from RUGs III to RUGs IV. I’ve settled on an overview or ‘summary,’ the core of what SNFs need to know or if nothing else, get up to speed on quickly,” Hislop writes.  The following is paraphrased from his blog:

How we got from RUGs III to RUGs IV

Put simply, the major difference applies to therapy at the expense of nursing or clinical care needs. The Centers for Medicare and Medicaid Services became concerned that changes in the Skilled Nursing Facility population and patient needs altered industry practices and the allocation of resources, principally away from clinical nursing to rehabilitation therapy. CMS completed a time study to analyze the required resources provided to patients versus the clinical needs of patients.  The end result was an update to RUGs III known as RUGs IV.

RUGs IV consists of 66 groups divided into 16 categories (two were added) versus 53 under RUGs III.  CMS also revised the standardized assessment tool known as the MDS to version 3.0 in order to utilize the RUGs IV groups for payment. The final implementation rule published by CMS includes assurance that the goal of payment parity is maintained in calculating RUGs IV --in other words, the historical distribution of total payments to SNFs, based on 2007 claims data applied to RUGs IV, creates the same level of total PPS expenditure for SNFs as would occur under RUGs III. This is not an assurance to any particular SNF that revenues under RUGs IV will be equal or greater than revenues received under RUGs III. CMS calculates that the average rate under RUGs IV will be $431.71 compared to $420.42 under RUGs III.

Financial Impacts: Winners and losers – there will be both. Losers under RUGS IV, in terms of financial impact, will be those facilities that have run high levels of non-clinically complex rehab patients, treating on a concurrent therapy model. Clearly, the bias under RUGs IV is for facilities to provide one-to-one therapy.

Another clear category of losers is facilities that took significant advantage of the hospital look-back provisions under RUGs III to establish diagnoses, rehab and clinical care plans. RUGs IV and MDS 3.0 eliminate this provision entirely (ventilator patients being the exception).

The clear winners under RUGs IV will be those facilities that care for clinically complex patients and patients that are more ADL dependent – for example, SNFs that provide ventilator care, tracheostomy care, care for infectious diseases, etc., plus provide rehab.   Higher ADL dependency scores increase payments rather rapidly.

RUGs IV increases the nursing index weights at the expense of rehab. Essentially, facilities that typically bill below average rehab utilization (days) under RUGs III stand to come out ahead under RUGs IV, provided their clinical complexity is average or higher. Fundamentally, facilities that provide more clinical nursing care to a population with higher ADL deficits, cognitive impairments, and maintain an average rehab profile as expressed through utilization, will fare better under RUGs IV than RUGs III.


Read the complete blog at: need-to-know/