Business Impact of CMS's Final Rule for FY 2012

When talking about CMS’s “final rule” for FY 2012 reimbursement changes, it is difficult to boil it down to a paragraph. There is a great deal of information in the "final rule" published by CMS and most of it is in “government speak”.  We reviewed the rule closely. In this article you’ll get:

 

·         Summary of  the changes

·         Impact on your business that were embedded in this rule

·         What AHT is doing to help adapt to these changes

 

Brief History

 

When RUG-IV and MDS 3.0 were implemented in October of 2010, CMS made some assumptions when setting the rates.  The assumptions CMS made were based upon FY 2009 claims data and Staff Time and Resource Intensity Verification (STRIVE) project data from 2006 and 2007.  From this data CMS applied an upward adjustment of 61 percent to the RUG-IV nursing Case Mix Indexes (CMI) to achieve budget neutrality between the RUG-53 and RUG-IV models. 

 

Unfortunately for those estimating, MDS 3.0 introduced more than just a new payment calculation.  It introduced an entirely new assessment tool with new assessment types and new rules.  These additional changes clouded the picture so to speak as nobody knew exactly what the net effect of all of these changes would be.

 

It was clear to CMS after receiving the first quarter’s worth of claims data after implementation of MDS 3.0 that some of the assumptions were incorrect.  Specifically a significantly higher percentage of patients were qualifying for the upper level therapy RUG classifications.  Before the introduction of MDS 3.0 concurrent therapy was rumored to be in the 75% neighborhood.  After the introduction of MDS 3.0 with the rules reducing the impact of concurrent therapy on the RUG calculation, concurrent therapy has dropped to below 5%.  The rush out of concurrent therapy seems to have resulted in an increase in individual and group therapy at least partially accounting for the higher percentage of patients qualifying for higher level therapy RUGs.

 

Lower Reimbursement Starting October 1, 2011

 

The higher utilization of upper level therapy RUG classifications has led to an estimated overpayment of $4.47 billion.  The final rule published July 29th indicates CMS intends to recoup the $4.47 billion on a prospective basis by altering the rates for FY2012.  The reduction is partly off-set by an unrelated positive market basket adjustment of $600 million.  The net result is an estimated loss of 11.1 percent for FY2012 (or $3.87 billion). Possible impact to you: This loss will result in lower reimbursement as compared to the current fiscal year starting October 1, 2011.  There will be varying degrees of impact on reimbursement depending on your mix of residents and reliance on Medicare.

 

Also as a reminder, in the FY2011 final rule CMS repeated the importance of documenting the need for the level of care provided.  As an industry this is a signal we can expect more scrutiny in the future.  It is more important than ever to ensure decisions impacting the level of care are thoroughly documented.

 

Once again as with the changes for FY2011, the changes for FY2012 are also introducing changes to the MDS 3.0 tool and process in addition to a change to the RUG-IV calculation.

 

Increased Scrutiny

 

In the final rule it was noted that the Office of the Inspector General (OIG) has started an investigation into the increased frequency with which residents are assigned to the highest therapy group.  Also as mentioned in the FY2011 final rule, CMS reminded facilities of the importance of documenting the need for the level of care provided.  As an industry this is a signal we can expect more scrutiny in the future.  It is more important than ever to ensure decisions impacting the level of care are thoroughly documented.

 

Group Minutes Count Less

 

A change to the RUG-IV calculation will only count a quarter of the group minutes towards qualification into a therapy RUG level.  As noted above, when CMS made a similar change to concurrent therapy with the introduction of MDS 3.0 the pattern of care shifted.  Will this change also cause a shift?  Possible impact to  you: If a similar shift occurs you may need to think about negotiations with your contracted therapy companies to use individual minutes more than they have in the past.  If you do not contract out your therapy, how might this shift impact your staffing?

 

New Change of Therapy Assessment Means Added Burden to Facilities

 

CMS introduced a new assessment designed to track the changes to therapy over time.  Rather than qualifying for therapy on one scheduled assessment then re-evaluating at the next scheduled assessment as has been the practice in the past, there is now a rolling 7-day window where changes in therapy must be followed closely and reported on the new Change of Therapy Assessment when those changes impact the therapy category.  Possible impact to you:  This certainly makes our prospective payment system much less prospective but more importantly you should know this will increase the burden on facilities.  Specifically the MDS coordinators and Therapists will have increased responsibilities for keeping a close eye on changes in the therapy being delivered.

 

New Resumption of Therapy

 

CMS has clarified the 3-day rule for reporting the end of therapy.  The confusion over when and how to count weekends has been replaced by a very clear strict 3-day rule.  To help minimize the impact on facilities that do encounter an issue because of the weekend,  CMS has introduced a new Resumption of Therapy ability on the End of Therapy assessment.  The new strict 3-day rule may trigger more EOT assessments, CMS understood this and wanted to provide an easy way to resume therapy at the same RUG level without having to complete a new Start of Therapy assessment or wait for the next scheduled assessment.  Possible impact to you: Again the clarification may put additional burden on your MDS coordinators and therapists to very closely coordinate and communicate these changes.

 

How AHT is helping

 

American HealthTech is on top of the changes in the industry.  We have not only incorporated the changes as mandated by CMS but are providing customers with new tools to help them understand the changes and adapt.   Webinars are planned with information specific to the new tools available within AHT software.  If you’re a current customer, please login to Customer Community for more information.  American HealthTech will continue to monitor industry developments closely and as always will communicate their impact to clients, helping them adapt to the changes as they come.