New Medicare PPS Changes Will Affect Skilled Nursing Facilities’ Revenues
| Abbreviations Key |
| CMS: Centers for Medicare & Medicaid Services |
| MDS: minimum data set |
| OMRA: other Medicare required assessment |
| PPACA: Patient Protection and Affordable Care Act (health care reform law) |
| PPS: prospective payment system |
| RUG: resource utilization group |
| SNF: skilled nursing facility |
CMS released the
final rule for skilled nursing facilities’ prospective payment system and consolidated billing on August 8, 2011. It contains changes that will likely affect your SNF’s Medicare revenue and therapy contracts in any number of ways. These adjustments are scheduled for October 1, 2011.
CMS projects an 11.1 percent reduction in Medicare revenues, which is the impetus for the final rule’s requirements. The transition from RUG-III to RUG-IV last year was not actually budget-neutral for SNFs, as it had projected, but rather had a positive impact on most facilities’ revenues.
“As in the past, when actual revenues exceed CMS’s forecasts, we can expect changes,” says Debbie Elsey, health care principal with LarsonAllen. “The final rule does just that.”
The published rule affects:
- Recalibration of the nursing case mix index
- Delivery of therapy services
- Management and accurate completion of additional MDS assessments:
- Assessment reference date windows and grace days
- End of therapy (EOT) OMRA
- Change of therapy (COT) OMRA
- Start of therapy (SOT) OMRA
- End of therapy-resumption (EOT-R) OMRA
Delivery of therapy services could affect SNF Medicare payments
Your SNF’s staff has been and remains critical to the accurate completion of the MDS, which is used to determine your Medicare payments. In many states, it also helps calculate Medicaid payments.
Since the implementation of RUG IV, CMS analysis indicates that group therapy accounted for 8 percent, and individual therapy for 91 percent, of all therapy services in the first half of fiscal year 2011. CMS did not anticipate that the use of concurrent therapy would be discontinued.
“It is imperative that your organization understands your therapists’ philosophies—both employed and contracted—and how their services are managed,” says Elsey. As therapy time declines, either because of patient improvement or inability to participate, the Medicare RUG payments may decline with them. “The adjustments in the delivery of therapy services could ultimately change how your organization contracts for services.”
How we can help
The final rule’s changes are complex and will impact your revenues. LarsonAllen can assist you in applying the updates and estimating their financial impact on your facility.
Debbie Elsey, Health Care Principal
delsey@larsonallen.com or 612-376-4642
View our health care principals.