In order to maintain the financial resources necessary to provide ongoing quality care, it is essential for every facility to take action.

Unprecedented Change

Over the past decade, long term care facilities have demonstrated tremendous proficiency in dealing with change and adapting to new regulations. From PPS and MDS to all the other quality initiatives in between, it’s been a decade of constant change and tremendous progress. What’s unique about this transition is the reality that both MDS 3.0 and RUG-IV are being implemented at the same time. Although RUG-IV was officially delayed by Congress for one year (to Oct. 1, 2011), there is not enough time for CMS to act on it, so beginning Oct. 1, 2010, payments will be made using the RUG-IV system until such time as a Hybrid RUG-III (HR-III) can be developed. At that time, the Centers for Medicare & Medicaid Services (CMS) will determine a method for adjusting payments using the HR-III grouper.
Together, these systems are the backbone of the long term care industry, with far-reaching implications from resident care to reimbursement. That said, it is important to invest the time and resources on the front end to anticipate and minimize potential transition problems.

RUG-IV and MDS 3.0 will introduce pervasive change for all providers of therapy services in skilled nursing facilities. Of primary significance, given its potential impact on reimbursement, is the provision of concurrent therapy. All things being equal, facilities that aggressively use a concurrent therapy model are likely to experience a negative impact on total reimbursement after transitioning to RUG-IV.
Under RUG-III, a facility could realize two, three, or even four or more hours of revenue-generating treatment time for every one hour that a therapist physically treated a resident. However, this is no longer the case under RUG-IV, as CMS’ Staff Time and Resource Intensity Verification study determined that individual and concurrent therapy sessions are not equally resource intensive. To accommodate this change in reimbursement, MDS 3.0 will require the collection and reporting of individual therapy minutes separately from concurrent therapy and group minutes.

Concurrent Versus Group Therapy

As defined by CMS, concurrent therapy is the practice of one professional therapist treating multiple patients at the same time while the residents are performing different activities. After Oct.1, 2010, concurrent therapy will be limited to no more than two residents per therapist, and the RUG-IV category will be based on “adjusted” concurrent therapy minutes.

In the skilled nursing facility Medicare Part A setting, concurrent therapy is distinct from group therapy, where one therapist provides the same or similar services to everyone in the group.
Part A defines a group as two to four residents, regardless of payer source, who are performing the same activity for a therapist who is not supervising any other individuals. Group therapy is limited to 25 percent of total therapy hours.
It is important to understand that while total individual, concurrent, and group therapy minutes will still be recorded on the MDS, those minutes will be adjusted before determining the applicable RUG-IV score for the resident. Providers do not need to burden themselves with the math in RUG-IV as the software will perform the calculation based on allowed minutes.
Beyond the obvious challenges of maintaining adequate reimbursement and managing facility-wide resistance to change, this transition is likely to create logistical challenges as well. Assuming the same total minutes of therapy are still required after Oct. 1, 2010, meeting that demand will require more therapist hours and, possibly, more therapists. 
Click HERE for more information about what providers should do to assess, and possibly beef up, their therapy staffing levels.
Other changes related to therapy include the elimination of Section T, which allowed for the projection of therapy minutes. Under RUG-IV, only therapy minutes actually provided can be used to establish a RUG-level assignment.
Also new is the addition of a Start of Therapy OMRA (Other Medicare Required Assessment), which allows for capture of a rehab RUG group on the first day of therapy. Under RUG-III, the facility would continue with the non-rehab RUG until the next scheduled assessment.
Medicare Short Stay Assessments have been added to allow capture of a rehab RUG group for those residents with a length of stay of seven days or less, and changes were made in the assessment reference date for an End of Therapy OMRA. No longer will facilities wait eight to 10 days after therapy to set the Assessment Reference Date (ARD) of the OMRA.
In MDS 3.0, the ARD of the End of Therapy OMRA must be set one to three days after all therapies are discontinued. This change results in a closer alignment of payment for services on dates received.

Additional MDS Changes

Under the current system, facilities are allowed to “look back” to the acute setting for data on probable acuity, like intravenous medications or fluids, to capture a higher-paying RUG score. With RUG-IV, this look-back provision is modified, except parenteral IV and tube feedings coded in Section K (with a look-back period of seven days).
The modified look-back period for Special Treatments, Procedures, and Programs coded in Section O on the MDS 3.0 remains 14 days but limits the collection of data for items A through Z in column 1, “While NOT a Resident,” and column 2, “While a Resident.”
Furthermore, intravenous medications and fluids will no longer function as qualifiers for extensive services. Instead, extensive service qualifiers will be limited to ventilator care, tracheotomy care, and infectious disease isolation.
The overall goal of revisions to the RUG system is to place residents with like “resource utilization needs” into the same payment group. RUG-IV will be based on eight major classification categories and 66 different payment groups with redefined “inclusion” definitions. Grouping is based on provided therapy minutes and specific conditions or services further classified by splits for ADLs, indications of depression, and restorative nursing services.
While the same four late-loss ADLs of mobility, transfer, eating, and toileting use are still measured, the point values are rebased (the base year was changed for the structure of costs), and a new code for eating support was added.
Under RUG-III, the point index for ADLs ranged from four to 18, and the point system for RUG-IV will range from zero to 16, which increases the sensitivity of this tool.

Learn The System

To align for success, clinical reimbursement managers must learn the new RUG 66 system and understand the realignment of clinical criteria.
From a leadership perspective, it is also important to formulate a prediction of future reimbursement under RUG-IV to act as a baseline from which to measure performance after Oct. 1, 2010.
Predictions can be formulated by looking at key variables and how they will affect future reimbursement.
This fast-approaching transition promises to deliver the greatest challenge ever faced by today’s long term care leadership. Given the magnitude of this change, success will depend on the unfailing support of every manager and every staff person. As such, it’s time to build unity by pulling interdisciplinary teams together, ensuring communication systems, and patching any cracks in the system.
When Oct. 1, 2010, arrives, facilities that have implemented effective operational strategies, educated their staff accordingly, and empowered them to communicate openly with management will be rewarded for their efforts and foresight.
Click HERE for more strategies for a successful to MDS 3.0.
Nancy Augustine, RN, MSN, NHA, Sheila Capitosti, RN-BC, NHA, MHSA, and Cheryl Field, RN, MSN, CRRN, are senior health care specialists at PointRight, based in Lexington, Mass., a company committed to improving the quality of care in long term and post-acute care settings by providing information-based clinical management tools and services to providers, payers, regulators, suppliers, and consumers. For more information, please call (781) 457-5900 or go to