Changes Coming for RUG-IV Shift Care to Higher Acuity Residents

the one minute takeaway

Each year, the pressure mounts to cover hundreds of billions dollars of living costs that aging Baby Boomers are adding to the system. One solution for skilled care reimbursements by Medicare and Medicaid will be implemented Oct. 1 – a major shift that will substantially up operators’ ante on risk management.

By Gerald Stoll

The mounting pressures of paying skilled nursing home costs for the vast numbers of aging Baby Boomers is within months of implementation. It’s a game-changing new model for Medicare and Medicaid reimbursements. And it’s requiring facilities to double down on risk management.

On Jan. 1, 2011, the oldest Baby Boomers turned 65, followed each day by another 10,000 until 2030, when they all will have passed that threshold. That’s a lot of people who are going to need some level of care across the continuum of senior living options, whether home health or skilled nursing facilities. Medicare and Medicaid are the primary funding sources. That translates into hundreds of billions of dollars in additional pressure.

One solution becomes effective Oct. 1, 2019 when the Centers for Medicare & Medicaid Services (CMS) replaces the current payment model for skilled nursing facilities, Resource Utilization Group Version IV (RUG-IV) with the new Patient Driven Payment Model (PDPM).

Under RUG-IV, the Medicare reimbursement is quantified according to the amount of therapy needed per week. The new model, though, is shifting the reimbursement emphasis away from the recuperative/physical therapy needs of the resident who had, say, a hip replacement toward residents with more acute conditions like multiple sclerosis or Lou Gehrig’s Disease that drive more and sustained revenue.

It’s the complexities of caring for the higher acuity residents that should raise the red flags on risk for management of skilled nursing facilities. While prevention against slips, trips and falls or the common causes of bed sores will always be a primary focus in any long-term care facility, most operations are not prepared to deal with the level of acuity toward which the system is shifting. Now is the time to institute the scope of training that will protect the business and prevent losses over the long term.

Three particular areas should be focused on now in preparation for the Oct. 1 changeover:

Documentation: Done at the facility level, proper documentation is key for offsetting liability. It spans medical records to therapies provided to staff credentialing.
Staff clinical training: Your staff needs to be up to par clinically to handle residents whose needs are more complex, require a higher level of care and more of it and by more professionals. If clinical capabilities are not up to the challenge, you run the risk of residents dying, which only magnifies the importance of proper training.
Communications: As the focus shifts to higher acuity patients, ensuring continuity in the flow of accurate and complete notes on care by staff on one shift to the next is of paramount importance. Expectations and protocols need to be established and incorporated into staff’s training and care routines.

The reality is that the system we have established to cover the costs of caring for aging Americans is now in crisis mode, and as a society, we must find a better, more effective way of sharing risk across the care continuum. The new reimbursement model for skilled nursing facilities, with its emphasis on acute care, may not be the ultimate fix. But it brings us a step closer.

HUB International’s team of long-term care specialists will work with your organization to deliver tailored insurance and risk management solutions.