Nursing Facility Payment Advisory Committee - Provider Finance Department

Nursing Facility Payment
  Advisory Committee
Provider Finance Department

Option 3 Reduced RUG Levels

• Under the current RUG III
  payment model, there are 34
  different RUG levels that
  determine payment.

• Option 3 looks at the possibility of
  collapsing the existing levels into
  a more condensed formula.

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Introduction
• There are currently 7 primary
  categories
• Extensive Services
• Rehabilitation
• Special Care
• Clinically Complex
• Cognitive Impairment
• Behavior Problems
• Reduced Physical Functions

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Introduction cont.
• To each of those categories you will
  figure in the ADL component to
  further drill down each level.
• When you get to the Clinically
  Complex category, Depression scores
  are also figured into those levels.
• Cognitive Impairment, Behavior
  Problems and Reduced Physical
  Function also adds Restorative
  Nursing to their levels.

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Introduction cont.
• Initiating this option would collapse
  the existing levels into a more
  manageable process.
• What the workgroup proposed was
  to combine several of the categories
  reducing their number of
  subcategories.
• For example, you could collapse
  Extensive Services which currently
  has three levels into just one level.
  Or reduce Rehabilitation from 4
  levels in a Low-Medium-High

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Introduction cont.
• Although this sounds very simplistic
  at first glance, the most difficult part
  of this would be to determine how all
  of the current end-splits would be
  figured into each level. For example
  the Depression and Restorative.
  Those two combined with the varying
  ADL needs are what breaks down the
  more comprehensive levels.

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Breakdown of the “RUG”
• Looking at Clinically Complex as an
  example, it currently has 3 ADL
  levels which further breakdown into
  6 payment levels.
• Using a Low-Medium-High concept
  looks easy enough on paper, but we
  would have to determine a way to
  flesh this out to where it covers the
  full spectrum of possibilities.

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Breakdown of the “RUG” cont.
• One of the goals of both CMS and
  Texas HHSC and OIG is to take the
  focus off of the amount of therapy
  provided and address the individual
  person.

• This is where we could decide to
  focus more heavily on the Cognitive
  Ability as well as any mental
  illness/Depression and add this so
  that Clinically Complex.

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Breakdown of the “Rug” cont.

• Another thought was to combine
  Cognitive Impairment with Behavior
  Problems.
• (Recognizing that not all residents
  with CI have behavioral problems.)
• Again the thought was to create a
  Low-Medium-High split with the
  highest levels of impairment being
  the higher reimbursements.

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Breakdown of the “RUG” cont.
• Reduced Physical Functions has the
  higher number of levels with 10 different
  rates.
• This could also be based upon a Low-
  Medium-High concept.
• Those residents that require a higher
  amount of assistance would be
  reimbursed at a higher rate.
• (There could also be an incentive
  payment tied to this category, for
  preventing decline or improving ADLS)
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Pros and Cons
• Pros:
  • Providers have requested a
    reduction in the amount of
    different RUGS. It is difficult
    under the existing system to fully
    determine the payment rates since
    it is so complex and too many
    options. The hope is that there
    would be fewer rate adjustments
    due to the reduced number of
    levels, such as those that might
    occur with a minor change in
    acuity.
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Pros and Cons cont.
• Pro:
  • This could promote stability in
    provider revenue as the rate will
    not change without a major
    change in the residents acuity.
  • A crosswalk would need to be
    developed to flesh out how the
    subcategories would be
    configured. This shouldn’t be
    overly difficult.
  • This would allow the state to use
    existing MDS data.

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Pros and Cons cont.
• Cons:
  • Quality Improvement-HHSC’s goal
    of improving quality, increasing
    person-centeredness and
    addressing acuity would be difficult
    to capture without creating add-
    ons that would be an incentive
    add-on.
  • Higher service costs if the
    payment rate of the revised RUG
    levels exceeds the average rate of
    the current methodology.

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Incentive Add-on
• This payment option would allow
  HHSC to develop and utilize
  incentive payments for areas such as
  quality of care; reducing
  unnecessary hospitalizations, person
  centered assessments and specific
  acuity levels.
• Makes this option both a pro and a
  con as it would require additional
  work to determine those levels and
  could be more costly to the state
  which doesn’t meet the “Budget
  Neutral goal” requested by HHSC.

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Thank you

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