CMS Proposed Changes to PPS - Winners & Losers

CMS has released a proposal to change the way it pays for skilled nursing. They'd like to replace RUG-IV with something new, called Resident Classification System, Version I (RCS-I). While it's just a proposal at this point, let's hit the highlights and then try to identify potential winners and losers. 


  • Four RUGs instead of one. RCS would have a RUG each for PT/OT, SLP, Nursing and non-therapy ancillaries (NTA). Notice that PT & OT are combined. The RUGs are largely set by factors that are identifiable from day 1. 
  • Goodbye BIMS! The BIMS was introduced with RUG-IV. It has two interviews: one for the resident and one for staff. The staff interview is only completed if the resident interview can't be. This happens about 15% of the time according to CMS. Since cognitive impairment drives the new RUGs and we don't want to deal with both interviews, BIMS would be replaced by something called the Cognitive Performance Scale or CPS.
  • Three assessments. Rather than doing periodic assessments, there would be only three: 5 day, significant change and discharge. (Goodbye COT assessment!)
  • Declining Payments for PT/OT & NTA. Payments for PT/OT and NTA decline as the stay goes on. (SLP does not.)
  • Therapy minutes are no longer a basis for payment. ADLs really aren't either. 
  • 3 Late-Loss ADLs - One ADL score is no longer used and the other three get more confusing. (Spoiler alert: Bed Mobility doesn't make the sequel.)
Someone explain this to me. Please. Seriously.

Someone explain this to me. Please. Seriously.

Those are some pretty big changes. You can get a lot more detail here. There are some useful statistics in that paper as well. (If you've ever wanted to know the breakdown for ADL scoring for Medicare Part A, it's on page 26.)


Nursing Homes: The payment would be set based on factors that are largely out of control of the nursing home. There appears to be no outcome tracking either. Nursing homes used to rely on therapy programs to hit the RUGs that caused revenue. With RCS they'll get paid based on the acuity of the patients that arrive at the front door. That means the home gets paid without regard to the therapy service provided. Therapy minutes would still be reported on the discharge assessment but only there. Therapy starts to look like a cost to be managed rather than a key to good reimbursement. 

Software developers: You know that software you use to track therapy, ADL scores, COTs and a lot of other things that most people don't understand? All that software would need to get rewritten to support these new rules. 


Therapy Companies: I can see a time when the SNF has much greater control over the amount of therapy delivered to the patient since they will basically be paying for it. I cannot see a situation where the SNF will ask for more therapy for the average Part A patient. Since payment is not tied to outcomes OR therapy minutes there will be downward pressure on therapy. 

Therapists: Over 60% of Med A residents are in the ultra-high RUG according CMS. 87% are in either UH or VH. There are roughly 2 million stays a year. That's a lot of therapy. (Roughly 17 million hours per week, just in those 2 RUGs, assuming 100 productivity.) Accumen and CMS are not talking about what they expect regarding a drop in therapy. I predict large reductions in the therapy minutes delivered to Part A. (RUGs like UH and VH would go away completely.) This has to have an effect on both employment and wages for therapists, especially PT and OT.

Taxpayers: CMS cites three different reports from OIG suggesting that reimbursement should not be tied to the amount of therapy delivered and that therapy providers provide more therapy than is appropriate. The RCS program would remove the tie between therapy delivered and pay.

Accumen predicts that the number of residents not in therapy would rise from 11.7% to around 17%. (I am skeptical.)  Importantly, Accumen also predicts that this program would be budget neutral relative to RUG-IV. (See page 109.) If the premise of the change is that the industry provides too much therapy and that RCS is going to take away that incentive, the end result should be some type of savings, right? This program seems like it locks the overall payment at a level CMS believes is inflated while removing the people who inflated it. This feels like the worst of both worlds unless you own a nursing home.

Therapy Software Companies: Developers will be getting a lot more work temporarily, but therapy software companies have to pay for it. Also, since you're going to be changing software anyway, you might as well look around and see what's out there right? Also, if the rules really do get simplified, and that may actually happen, some providers may decide they don't need therapy software any more and big providers like PointClickCare might be good enough, especially after they make changes to support RCS. 

We still have a long way to go and changes are likely. CMS has not published any comments on the plan yet. Stay tuned.