Medicare Part A SNF Payment System Reform: Introduction to Resident Classification System - I

Medicare Part A SNF Payment System Reform: Introduction to Resident Classification System - I

Introduction to the Resident Classification System - I Concepts Structure Implications

RCS is NOT the Unified Post-Acute Payment System IMPACT Act mandated MedPAC to outline a unified payment system that would replace the four current post-acute care Medicare payment systems (SNF, HHA, IRF, LTCH) Objective is to base payment on patient characteristics rather than setting or amount of therapy furnished (significant redistribution of PAC dollars) IMPACT Timeline: Propose system by 2023, then implement MedPAC demonstrated that the system is highly feasible & accurate; recommends implementation in 2021 with 3-year optional phase-in See June 2017 MedPAC Report to Congress, chapter 1 for details

About RCS-I Advanced Notice of Proposed Rulemaking (5/4/17; CMS-1686) Public comment period extended from June 26 to August 25, 2017 Based on extensive research and TEPs (revisions are likely) Target date is October 1, 2018 Likelihood of implementation? Budget Neutrality assumed (Parity adjustments) No mention of phase-in Improvement over RUGs? Shift from Volume to Patient Characteristics as $ driver

About RCS-I No change in Medicare clinical or technical eligibility requirements Focus on reducing administrative burden for providers MDS remains basis for rate setting, but the 5-day locks the composite score for the entire benefit period (assuming no discharges or sig. changes) Current assessment schedule is eliminated, including COTOs Sets up benchmarking mechanism from admission discharge Recognizes disproportionate costs during first days of stay Frequency / Amount of therapy does not impact reimbursement Therapy is just another component of the care plan Nursing acuities and Diagnosis coding drive revenue

RCS Structure RUG-IV contains 3 rate components: Therapy, Nursing (including NTAs) and Overhead Blended into one of 66 distinct per diem rates RCS includes 5 distinct, variable rate components: PT/OT (30 categories) SLP (18 categories) Nursing (43 RUGs) Non-Therapy Ancillaries (6 levels) Overhead / Non-Case Mix Adjusted (1 rate) 1 N O T Per Diem RUG 1 of 30 Composite 1 of 43 1 of 6 1 of 18

Possible RCS Rate Combinations PT/OT: 30 SLP: 18 Nursing: 43 NTA: 6 Overhead: 1 While there are technically 139,320 possible composite combinations, a large percentage are mutually exclusive 139,320

PT/OT 30 categories SLP 18 categories RCS: Where Do We Start? Nrsng NTA OH 43 RUGs 6 groups 1 CBSA RCS Score One step at a time Each component has its own grouping process using different variables and scoring methodologies

Why is the Patient Here? 10 Clinical Categories capture the range of general resident types found in SNFs MDS Section I8000: ICD-10 code Primary reason for SNF stay Major Joint Rep. or Spinal Surgery Non- Orthopedic Surgery Acute Neurologic Non-Surgical Orthopedic/ Musculoskeletal Orthopedic Surgery (Except Major Joint) Cancer Acute Infections Pulmonary Cardiovascular & Coagulations Medical Management

The 10 categories are collapsed into 5 for PT/OT Major Joint Rep. or Spinal Surgery Non- Orthopedic Surgery Acute Neurologic Other Orthopedic Medical Management Major Joint Rep. or Spinal Surgery Non- Orthopedic Surgery Acute Neurologic Non-Surgical Orthopedic/ Musculoskeletal Cancer Orthopedic Surgery (Except Major Joint) Acute Infections 2 for SLP Acute Neurologic Non- Neurologic Medical Management Pulmonary Cardiovascular & Coagulations ZIMMET HEALTHCARE 2017

Physical / Occupational Component Calculation Clinical Category (5) Functional Score (3) Cognitive Impairment (2) Major Joint Rep. or Spinal Surgery Other Orthopedic Non-Orthopedic Surgery Acute Neurologic Medical Management 14 18 8 13 0 7 Intact or Mildly Impaired Moderately or Severely Impaired Clinical: MDS Section I8000 Primary reason for SNF stay (ICD-10) Functional: G Trans, Eating, Toileting: Self Perf only Cognitive: C Cognitive Function Scale All patients score in one PT/OT group no matter if they receive therapy (or how much) ZIMMET HEALTHCARE 2017

PT/OT Functional Score RCS PT/OT scoring differs from RUG-IV ADL system Transfers, Eating and Toileting Self-Performance scores only Each ADL scored on a 0 6 scale; (v. 4 in RUG-IV) 0 18 point range Higher point totals increase reimbursement but are not linearly correlated with functional performance changes Points assigned to each response mirror the inverse U-shape of the dependence-cost curve for the transfer and toileting items and the monotonic decrease in costs associated with increasing dependence on the eating item.

ZIMMET HEALTHCARE 2017

RCS: PT/OT Functional Score v. RUG-IV: Self-Performance Scale RCS-I Scoring ZIMMET HEALTHCARE 2017

PT/OT Cognitive Function New cognitive measure: Cognitive Function Scale (CFS) Combines Brief Interview for Mental Status (BIMS) and Cognitive Performance Score (CPS) into one scale

PT/OT Case-Mix Classification Groups

Speech Language Pathology Component Calculation Clinical Category (2) Swallowing Disorder or Mechanically- Altered Diet (3) SLP Related Comorbidity or Mod. to Severe Cog Imp (3) Acute Neurologic Non- Neurologic Both Either Neither Both Either Neither MDS Section Clinical: I8000 Sw Dis: K0100Z MA Diet: K0510C2 Comorb: Misc. Cognitive: C (CFS) All patients score in one SLP group no matter if they receive therapy (or how much) ZIMMET HEALTHCARE 2017

SLP Related Comorbidities

SLP Case-Mix Classification Groups

Nursing Case-Mix Classification 43 nursing RUGs RUG-IV Reimbursement drivers, ADL scoring & splits and hierarchy remain intact Minus Rehab RUGs Reweighted indices 19% HIV/AIDS rate enhancement only applies to this component Triggered by ICD-10 code B20 on the UB-04

NTA Group Classification Non-Therapy Ancillaries Based on the number of services and conditions: When did it occur? Crosswalk considered for conditions & services where the source is indicated as MDS item I8000 to the ICD-10-CM codes

ZIMMET HEALTHCARE 2017

RCS Rate Composite Calculation 5-day MDS (ARD 1 8) establishes Composite for the entire benefit period with limited exceptions Significant Change / Readmissions Each component has a Base Rate adjusted by CBSA Multiply each Base Rate by respective CMI weight Variable Per Diem Adjustment Factors PT/OT and NTA components decrease as the benefit period progresses (see handout for detail on Base Rates & VPDA)

Significant Change Assessments / Readmissions SCSA would change the resident s RCS-I classification but NOT reset Variable per diem adjustment schedule Interrupted Stay Policy: Resident discharged from SNF and returns to same SNF within 3 calendar days: Stay is treated as a continuation for purposes of RCS classification and VPDA Resident readmitted to the same SNF more than 3 calendar days after discharge, or in any case where resident is readmitted to a different SNF: Resident receives a new 5-day; RCS and VPDA are reset to Day 1 PPS Discharge Assessment required (CMS to add items to track therapy minutes over the course of a resident s stay)

Possible RCS Audit Scope No therapy levels to audit cannot be excessive Rationing therapy (too little?) Nursing RUG drivers and end splits Lock & Drop patterns ADL scoring NTA drivers Medical necessity, method of administration, supporting documentation Justification for Significant Change assessments Technical Eligibility (OIG: 3-day stay within 30 days of SNF admit) DRG ICD-10 assignment ( Mapping )

DRG Mapping 757 active MS-DRGs in 2017 Medicare Severity Diagnosis Related Group: The system of clinically classifying a Medicare patient s hospital stay into groups in order to set payment Diagnoses drive variable RCS components Link to MDS: ICD-10 Coding Section I8000: Primary reason for SNF stay Secondary & Tertiary codes DRG ICD-10

RCS Operations Implications Admissions decisions Profitability profiles change Target length of stay Billing and corrections; time limitations? Financial modeling / revenue projections Revenue allocations Impact on managed care contracts / rates Hospital-based resurgence? Assessment burden MDS staffing & qualifications No margin for error on 5-day

Therapy Implications No treatment minimums, but ANPRM specifies limits of 25% each for Concurrent and Group of whatever formal therapy is provided No RUG / COTO management Department staffing requirements and ratios Therapists, Assistants, Techs Development of therapy-centric programs under the direction of licensed staff (Activities, Restorative Nursing) Alternative modalities (Acupuncture, Therapeutic Massage, Chiropractic) Outsource v. In-House management considerations: Pricing therapy component: no direct link to reimbursement may incentivize over/underutilization depending on contract structure Reconciling Dx to need, inverse ADL / Cognitive revenue issues

RCS Reimbursement Implications Facility-specific revenue transition analysis: Budget neutral redistribution creates Winners & Losers Comparison to RUG-IV transition projections Changes in Provider behavior Parity adjustment / Recalibration risk Relative values among rate components Realizable value of non-therapy payment drivers Reimbursement-sensitivity & documentation requirements Diagnosis mapping & coding Understanding NET revenue impact of ADL coding Timing of NTA drivers ZIMMET HEALTHCARE 2017

Simplified examples using 2017 NYC rates RCS rate simulator available at zhealthcare.com Non-medically complex post-knee replacement Moderate ADL assistance No co-morbidities or NTA services 2 hours of therapy per day, 6 days per week RUG-IV score = RUB $730.96 Dialysis Moderate ADL assistance Wound, IV meds, Transfusion 65 minutes of therapy per day, 5x per week RUG-IV score = RHB $491.79 ZIMMET HEALTHCARE 2017