10/1/11 PPS Rate Update

Date: 
08/11/2011

CMS Issues FY 2012 RUG-IV Medicare SNF PPS Rates Effective October 1, 2011

 

REIMBURSEMENT UPDATE

The Centers for Medicare & Medicaid Services (CMS) published the final rule for Medicare SNF PPS rates for fiscal year (FY) 2012 in the Federal Register on August 8, 2011. The rates will be effective from October 1, 2011 through September 30, 2012. When the proposed rule was issued, two options had been proposed—one with a normal market basket update and the other with a recalibration factor intended to make RUG-IV budget neutral, which was the initial intention of CMS when RUG-IV was introduced on October 1, 2010. Despite widespread industry concern against the immediate implementation of the second option, CMS proceeded with the proposed recalibration which drastically reduces rehabilitation rates.

The rule provides for a 1.7% market basket increase to the Federal Rates over the FY 2011 rates. The increase was actually calculated at 2.7%, but was automatically reduced by 1.0% to reflect economy-wide operational efficiencies as required by the health care reform bill. However, the rule also provides for a 12.8% reduction due to what CMS called an “unintended spike” in provider payments under RUG-IV. The net decrease results in a reduction of payments to SNFs of approximately $3.87 billion in FY 2012.

In Ohio, SNFs should expect a total reduction of $202.8 million, which translates to an average rate cut of 11.9%, or approximately $59 per day (calculations provided by American Health Care Association). HW&Co.'s analysis of available data holds true to AHCA's estimates as most facilities analyzed will experience an estimated $50-$60 drop in average Medicare rates based on current RUG-IV days distribution.

CMS noted that most of the “spike” was related to therapy, and therefore all Rehabilitation categories will experience a significant rate cut proportional to the ADL for the patient with each category potentially greater than 11%. Facilities with above average utilization in the Very High and Ultra High categories should expect to see the greatest rate cuts. All non-therapy categories will see a slight increase. Please note that the percentage of cuts in each county will vary based on the change in each county's wage index. Those counties that experienced a large decrease in their wage index will see cuts to all RUG-IV categories.

THERAPY PROVISIONS

Besides the rate changes, CMS has also issued new therapy provisions effective beginning in FY 2012 that could further impact Medicare reimbursement.

  • Group Therapy

All group therapy must be scheduled to include four participants. All participants will be credited with one quarter of the group minutes received, regardless if only two or three patients were in attendance due to a patient unexpectedly missing a group therapy session. Please note that the group therapy minutes should be entered at 100% in the MDS 3.0 assessment.  The grouper software will then allocate the correct number of minutes to the patient.

  • End of Therapy OMRA

End of Therapy OMRA assessments will need to be completed if a patient misses therapy sessions for three consecutive calendar days (including weekends). CMS has eliminated the distinction between 5-day and 7-day facilities; all facilities are now considered 7-day facilities. Therefore, if therapy is not generally provided on weekends in your facility, you must ensure that the patient receives therapy on Friday (or Monday, if therapy was received on Friday) in order to avoid an end of therapy OMRA. It is vitally important that you assess your current therapy staffing levels and schedules and make any changes necessary to meet the new requirements. 

  • Change of Therapy OMRA

CMS added yet another layer of assessment complexity by requiring a Change of Therapy OMRA any time a patient’s intensity of therapy changes to the extent that the RUG category will change. CMS' belief is that this will prevent providers from increasing therapy during the assessment period and then reducing therapy once the higher rehabilitation RUG category has been established. No grace days are permitted for Change of Therapy OMRAs.

 

PPS RATES EFFECTIVE 10/1/2011

The RUG-IV rates for all Ohio CBSAs effective 10/1/2011 are available in the links below:

 The links in the list below provide the detailed calculations of the PPS rates, including the breakdown by therapy, nursing, and non-case mix components, for each of the 17 CBSAs in Ohio. Please select the CBSA from the list below in which your county resides to open a printable PDF file. If you are not sure which CBSA to choose, please click the first link to open a crosswalk between the county names and the CBSA names.

 

 

Detailed Calculations by Ohio CBSA Name 

These rates are subject to change based on any Correction Notices that are issued by CMS. If a Correction Notice is issued that affects any Ohio counties, we will update these links with the new rates.

We can help you estimate the impact of the FY 2012 rule on your facility (click here for a sample). If you would like an estimate, please contact Paula Reape or your HW Healthcare Advisor and provide us with your year-to-date RUG-IV days.