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RCS-I, We Hardly Knew You

May 11, 2018

George W. Thomas, CPA, CHFP

Just one short year ago the skilled nursing home industry was abuzz with excitement over the announcement by the Center for Medicare and Medicaid Services (CMS) that a new Medicare reimbursement system called Resident Classification System Version 1 (RCS-I )was likely to be initiated for October 1, 2018. This system would be the first significant change to skilled nursing Medicare reimbursement in almost 20 years.

The intent of this new system was to reduce the importance of therapy services in determining the reimbursement for Medicare services. Webinars and seminars on the new system were numerous, as the industry tried to be prepared for this significant change to reimbursement. But in late March, on a CMS conference call it was mentioned that RCS-I most likely would not go into effect on October 1,2018. On April 27, 2018, CMS announced that RCS-I was gone, never to be heard from again. So, what happened?

What happened is a new administration in the White House and at CMS, who are looking for a less complex and complicated regulatory world, and RCS-I was not their system that had received poor reviews based on comments to CMS. After attending both seminars and webinars on RCS I, it seemed to me to be a very comprehensive system that would account for the entire needs of the patient and then appropriately reimburse for those services. The problem was it was too detailed, so detailed that over 150,000 possible rate combinations existed within the system. I can just see your MDS Coordinators fleeing the building now.

So welcome in Patient Driven Payment Model (PDPM), which CMS will implement on October 1, 2019 to replace the current Resident Utilization Group (RUG’s) reimbursement system. On first review, it looks a bit like diet RCS-I, continuing to reduce the importance on therapy services to validate reimbursement, taking a more holistic approach to the needs of the patient while providing appropriate reimbursement for those services but without the RCS-1 complexity.

Some highlights of PDPM as proposed are as follows:

  • The current therapy component of the reimbursement rate will be split out into individual components for physical therapy, occupational therapy and speech therapy-SLP. For a facility in an urban area this split will be approximately 43%, 40% and 16 % per corresponding type of therapy.
  • Therapy patients will be grouped into 16 case mix groupings for physical/occupational therapy (Table 21 on page 98 of the Federal Register) and 12 case mix groupings for speech language pathology (Table 23 on page 103 of the Federal Register).
  • Rates for the physical and occupational therapy will decrease after the 20th day of service at various intervals by 2%.
  • The current nursing component of the reimbursement rate will be split into a 57% nursing component with 25 potential categories (Table 26 on page 115 of the Federal Register) and 43% non-therapy ancillary component based on proposed conditions and extensive services (Table 27 on page 126 of the Federal Register).
  • The non-therapy ancillary component will be 3 times higher for the 1st 3 days of the stay.
  • The Minimum Data Set (MDS) system will remain important in the calculation but will be fortified by the inclusion of International Classification of Diseases version 10 (ICD-10) codes. 10 clinical categories based on ICD-10 codes will be grouped into four components- 1) Joint Replacement, 2) Medical Management, Acute Infections, Cancer, Pulmonary and Cardiovascular, 3) Orthopedic Surgery and Non-Surgical Orthopedic and 4) Neurologic and Non-Orthopedic Surgical.
  • Inclusion of a cognitive function scale, which will combine the brief interview for mental status and cognitive performance scale.
  • Changes to timing recording of MDS scores.
  • Revisions to standards for group therapy.
  • An increase on standard reimbursement of 18% for patients with HIV or AIDS.

The lowlight of the new system is that it will be budget neutral, so it will just be an adjustment of the winners and losers of Medicare reimbursement.

In the short term, as we wait for this new system to go into place, a national increase of 2.4% will take place on October 1, 2018, bringing an additional $850 million into the skilling nursing industry.

For those looking to read the entire Federal Register on this topic, click here for the attachment >>



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