Earlier this year, CMS released a notice of proposed rulemaking to create a new case mix system for Medicare SNF payments that would replace RUGs. The notice goes into significant detail in describing the work that CMS has done to develop the new Resident Classification System, Version 1 (RCS-1) and how it would work if implemented.
RCS-1 differs from RUGs in a couple of key ways. One is that the case mix adjustment is based on resident characteristics, and does not vary with the amount of therapy provided. The other major difference is that RCS-1 uses four case-mix adjusted factors — nursing, non-therapy ancillaries, physical/occupational therapy, and speech language pathology — instead of the two (nursing and therapy) used under RUGs.
Due to the expanded use of case-mix factors, the number of potential rates that could be paid for a SNF client would grow exponentially under the new system. CMS believe this new system does a better job of tying payment to actual resident needs, while reducing the incentive to overprovide therapy.
CMS recently completed an analysis of the impact of the RCS-1 system compared to RUGs for every Skilled Nursing Facility in the nation. The analysis is based on a revenue neutral transition to the new system based on residents from the 2014 federal fiscal year, and makes no assumptions about changes in resident needs since that time or changes in services due to the new system.
The earliest the new system would be implemented is Oct. 1, 2018, and CMS is currently accepting comments on the proposal and will likely make changes before it is implemented.
Members with suggestions or questions about the new system should share them with Aaron Tripp, who be taking the lead nationally on comments to CMS about the new rate system.
