CMS held an Open Door Forum (ODF) on 3/8/18 leaving providers doubtful that RCS-1 would impact SNF’s this October.

A bit if history on this, RCS-1 was initially outlined in a Notice of Proposed Rule Making in May of 2017. The proposal was based on a study CMS had contracted with Acumen to investigate, and ultimately develop, possible alternatives to the existing SNF case mix methodology for reimbursement that would eventually replace the current RUG IV system.

While some were shocked and others jumped for joy, CMS informed providers on the ODF that they had not yet moved beyond reviewing and analyzing comments on the proposed system and that no established time line for potential adoption of RCS-1 has been finalized. However, CMS did acknowledge the impact on all stakeholders and recognized the time needed to prepare.

So, what does all this mean? CMS did not suggest that payment reform is off the table, nor that providers should stop educating themselves in anticipation of a changing environment.

Under the current RUG IV system, the vast majority of SNF residents receive therapy and their case mix group is determined by the number of therapy minutes they receive. Higher payments are tied to increased therapy minutes. This current model, based on allocation of therapy minutes, does not adequately account for the varied clinical characteristics that impact the relative cost of caring for SNF residents. Two key reforms that were outlined in the Acumen study should be considered:

1. Eliminate payment based on the allocation of  therapy minutes and implement a new payment model where reimbursement is tied to differences in clinical characteristics.

2. Create separate payment component for Non Therapy Ancillary services- thus, expanding beyond allocation of therapy minutes.

The RCS-1 model would base case mix reimbursement on four determinants. Residents would be classified based on MDS data and diagnostic criteria in four categories: 1) PT/OT, 2) SLP, 3) Nursing, and 4) Non Therapy Ancillary (NTA).

While the thought of learning an entirely new payment system can be exhausting, this type of reform can bring advantages to providers such as:

• the removal of therapy minutes as the basis for payment,
• the establishment of separate case mix adjustment components for non therapy ancillary services, improving the recognition of resources for medically complex resident care,
• enhancing payment for nursing services,
• providing additional resources for facilities treating vulnerable populations, and
• promoting consistency with other post-acute payment settings.

What are providers to do now?

Although CMS has not yet given a specific timeline for implementation, providers should be taking action to be prepared because payment reform is somewhat inevitable. Discuss with staff the advantages of a revised system and consider continuing to:

• educate staff,
• focus on being responsible with allocation of resources,
• implement targeted clinical competencies in anticipation of remaining viable in an environment of payment reform that will no longer solely reward the allocation of therapy minutes as the basis for reimbursement.

Now is the time to ensure your staff are preparing for reform that will potentially have a significant impact on SNF reimbursement. Many of our clients are actively setting the groundwork for this changing atmosphere as they look forward to a system that compensates SNF’s based on clinical complexity and the amount of resources needed to provide this care. You can access CMS’s resources on SNF Payment Model Research, or feel free to contact us at any time.

Sarah Ragone, MSPT, RAC-CT