RUG-IV Medicare SNF PPS Rates Effective 10/1/10 for FY 2011

CMS Issues FY 2011 RUG-IV Medicare SNF PPS Rates Effective October 1, 2010

The Centers for Medicare & Medicaid Services (CMS) published a notice in the Federal Register today with the RUG-IV Medicare SNF PPS rates for fiscal year (FY) 2011, October 1, 2010 through September 30, 2011. The notice provides for a 1.7% market basket increase to the Federal Rates over the FY 2010 rates. The increase was actually calculated at 2.3%, but was automatically reduced by .6% to reflect overpayments that were made in FY 2009. This adjustment is calculated annually to correct for assumptions made in previous fiscal years. The net increase results in approximately $542 million in additional payments to skilled nursing facilities in FY 2011.

While the implementation of RUG-IV was delayed by the health reform bill passed in March, we anticipate that the delay will be reversed and the RUG-IV rates will become effective October 1, 2010. The RUG-IV system includes an expansion to 66 groupings from the 53 included in RUG-III. There are also a number of changes to how patients are classified into the groupings and to how concurrent therapy and the look back period are considered. Because the look back period is no longer considered in most cases, we expect that very few residents will be classified in the “super RUGs” (Rehab plus Extensive Services).

In the event the RUG-IV delay is not reversed, a hybrid system of rates is required. This is because MDS 3.0, which was not delayed by the health reform bill, does not crosswalk to RUG-III, which is based upon the MDS 2.0. Therefore, the CMS notice also includes the rates to be paid under a hybrid system created to make payments under RUG-III utilizing MDS 3.0. Although the notice provides the hybrid system rates the hybrid system infrastructure does not currently exist. Therefore, the RUG-IV rates will be paid effective October 1, 2010 regardless, with a retroactive change to the hybrid rates, if necessary. We have not calculated the rates under the hybrid system as it is expected that Congress will reverse the delay to RUG-IV. The national provider associations have lobbied Congress to reverse the delay as they see no reason to postpone RUG-IV if MDS 3.0 is not delayed. At this time, the House of Representatives has passed the legislation to do so, but the Senate has not acted on the bill. We anticipate that the bill reversing the delay of RUG-IV will become law prior to October 1, 2010 and no hybrid system will be necessary.

Many providers expected to see significant decreases in their rates due to the changes to the concurrent therapy and look back provisions. Based upon the Urban Federal Rates (under both the RUG-III and RUG-IV payment systems, a CMS comparison of the FY 2008 days paid under RUG-III, and an estimate of how those days would group into RUG-IV), it appears as though the average Medicare rates will not be affected significantly although extensive redistribution among categories is expected to occur.  Please note that individual facility results will vary based on actual distribution of RUG-IV days. Unfortunately, there is no easy way to predict how an individual facility’s rate will be affected.

• Comparison RUG-IV Urban Estimated Rates vs. RUG- III

The RUG-IV rates for all Ohio CBSAs effective 10/1/2010 are available in the links below:

• Ohio CBSA PPS Rates FY11
• Ohio CBSA PPS Rates FY11 AIDS

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.

• Crosswalk between Ohio Counties and CBSA names

DETAILED CALCULATIONS BY OHIO CBSA NAME

• Akron
• Canton-Massillon
• Cincinnati-Middleton
• Cleveland-Elyria-Mentor
• Columbus
• Dayton
• Huntington-Ashland (Lawrence City, OH)
• Lima
• Mansfield
• Parkersburg-Marietta
• Rural Ohio
• Sandusky
• Springfield
• Toledo
• Steubenville-Weirton (Jefferson City, OH)
• Wheeling, WV (Belmont City, OH)
• Youngstown-Warren-Boardman

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.

If you would like the rate calculations for a CBSA in any other state, please feel free to contact any of our HW Healthcare Advisors or Contact us.