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2-07-2007
A “Perfect Storm” is Approaching for Skilled Nursing Providers
The healthcare regulatory environment is defined by continuous change and subsequent provider adaptation. Nevertheless, New York and New Jersey skilled nursing facility (“SNF”) providers are facing a potential watershed moment in reimbursement and compliance.
Specifically, January 1, 2009 is the target implementation date of the new acuity-based Medicaid payment system for both States. In addition, recent comments by the Centers for Medicare and Medicaid Services (“CMS”) imply that the Medicare Part A program will effectuate significant “RUG Refinements” on that same day. These changes, layered upon newly minted compliance guidelines, heightened fraud and abuse scrutiny, and the ongoing saga surrounding Part B “therapy caps” may create the most burdensome administrative era the industry has ever encountered: The “Perfect Compliance and Reimbursement Storm.”
By far the biggest issue will be the Medicaid change in case-mix adjustment (in NY, from Patient Review Instrument to the Minimum Data Set; in NJ, from “cost-based” to MDS). The good news is that the Medicare and Medicaid payment systems will finally be aligned, as both will be driven by the MDS.
How to Prepare
As with any difficult transition, luck will favor the prepared. The primary challenge of transitioning to MDS-based case-mix payment will be to ensure that assessments completed for long-term care residents accurately reflect patient acuity. Because these assessments were never tied to payment, they often contain errors or do not reflect the residents at their most dependent state.
Upon implementation, many of the strategies employed for Medicare Part A MDS “capture” must be applied to the Medicaid population. While the skill sets may already exist in the facility, staff will need to apply these concepts on a far larger scale.
SNFs should consider strategies for ensuring overall MDS accuracy. A quick audit of current assessments will clearly measure how much preparation is required prior to the new system’s implementation.
Unfortunately, assessment accuracy is only half the battle. The assessments must also be timed appropriately to capture residents at their most acute (i.e. immediately following the start of a new service such as IV antibiotics or skilled therapy) in order to receive proper reimbursement.
The biggest unknown at this time relates to how resident acuity will translate to payment. Depending on the MDS “grouper” and “index weights” used by the States, certain acuities will be relatively less “valuable” than others in relation to cost. This may cause providers to rethink their business strategies to ensure their programs are financially sustainable.
While January 1, 2009 may seem as far off as clouds gathering on the distant horizon, it may allow just enough time needed to prepare for the storm.
----- This is the first of a series of articles on the transition to MDS-based Medicaid payment. Check back often for updates as regulations are published by the States.
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