PPS Rate Update 10/1/10

RUG-IV Delay Triggers Confusion

October 1, 2010 is here and the MDS 3.0 is now in effect. However, RUG-IV was delayed by Health Care Reform. This has caused much confusion to the industry since the MDS 3.0 works in conjunction with the RUG-IV payment rates. We want to make sure that you understand how you will be affected.

Even though all interested parties were on board, including AHCA, AAHSA and CMS, the most recent session of the Senate has now come and gone with no action on H.R. 5712, which would have repealed the one-year delay of RUG-IV. As a result, effective 10/1/10, MDS 3.0 will be in effect, but RUG-IV will not. CMS does not currently have a mechanism to pay RUG-III claims from MDS 3.0 submissions.

So for the time being, CMS will pay all claims submitted using MDS 3.0 assessments under the RUG-IV payment system. When the hybrid MDS 3.0/RUG-III system becomes available to CMS, which could be months from now since the infrastructure does not currently exist, claims will be retroactively adjusted to the proper hybrid RUG-III payment amounts. If the RUG-IV delay is ultimately reversed, then no adjustment will be necessary. At this point, we are recommending that providers record their Medicare revenue using the RUG-IV rates that we published back in July.

Still confused? Don’t worry, you are not alone! We have developed a list of frequently asked questions below to help. 

Frequently Asked Questions:

1. Is MDS 3.0 currently in effect?
   Yes.
2. Is RUG-IV currently in effect?
   No. It was delayed until 10/1/11 by Healthcare Reform. 
3. How will CMS pay me since the MDS 3.0 is mapped to the RUG-IV (66 group) payment rates and does not crosswalk to the RUG-III (53 group) rates?
   They will eventually pay on a hybrid RUG-III system; however, the infrastructure does not currently exist to pay those rates so they will initially pay RUG-IV rates.   A retroactive adjustment will be made to the hybrid rates at a future date.
4. Let me be sure I have this straight. For claims on or after 10/1/10, I will be paid RUG-IV rates but they are not the final rates?
   That is correct. You will initially receive RUG-IV rates but they are temporary and will be retroactively adjusted to the hybrid RUG-III rates after CMS develops the infrastructure.  Unless of course the delay of RUG-IV is repealed, then no retroactive adjustment will occur. 
5. What rates do I load in my software system?
   You will load the RUG-IV rates. 

We will keep you posted with any updates regarding MDS 3.0 and RUG-IV.