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Be a Winner in Medicare RUG-53

June 1, 2006
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A systematic approach to the new RUG groupers can lead to increased reimbursements by Cheryl Field, MSN, RN, CRRN, and Jim Kazmer
Still struggling with the new grouper? A refresher course to bring you up to financial speed January 1, 2006, marked the official start date of RUG-53, adding new groups to the Medicare reimbursement Prospective Payment System (PPS) for the first time since its onset in 1998. This enhancement to PPS results in 9 additional groups within the rehabilitation category, totaling 23 groups that pay for rehabilitation services. Once again, MDS assessment inaccuracies will cost providers accurate reimbursement. Winners in RUG-53 will focus on MDS accuracy, especially on specific payment items.

What's Changed in RUG-53?
CMS made three substantial changes to Medicare reimbursement for FY 2006: (1) the loss of Medicare add-ons; (2) the new RUG-53 grouper, creating 9 higher-paying groups while lowering reimbursement for others; and (3) a transition to new wage indices for the majority of providers, in addition to a change in rural/urban designation for some. For facilities still adjusting to the new system, this article discusses the impact associated with the first two changes.

The RUG-53 model was intended to pay more than before for the complex medical needs that are often coupled with the need for rehabilitation services, while remaining budget-neutral. The RUG PPS did not meet the need of this group, resulting in the Balanced Budget Refinement Act of 1999, which was amended by the Benefits Improvement and Protection Act of 2000. These two pieces of legislation added monies (add-ons) to specific RUG categories until such time as the system could be modified. The addition of the 9 new groups is touted as meeting the regulatory requirement of "implementation of case-mix refinements in the PPS" and, thereby, justifies the removal of the Medicare add-ons.

To achieve this neutral impact, the Case-Mix Indices (CMIs) were realigned, and reimbursement was redistributed across the upper 35 groups. Thus, the 9 new groups pay more, the next 26 groups pay less, and the bottom 18 groups offer a small increase in payment.

Figure 1. How RUG-53 rates compare with RUG-44 rates: To compare RUG-44 with RUG-53, LTCQ created rates for the 9 groups that did not exist in RUG-44. This was done by taking the rates for the RUG-44 rehab groups and, using ADL splits as the basis, blending the 14 rehabilitation groups into 9 new groups. For example, RMA and RMB were combined to create RML. In all cases, the weighted blending of the RUG-44 rates is based on the ADL ranges for the corresponding categories. This analysis is meant as an illustration of the relative change between RUG-44 in FY 2006-Q1 and RUG-53 in FY 2006-Q2, and should not be used for any financial purposes.
Figure 1 illustrates which RUG groups will pay providers more dollars per day, as expressed by a percentage change from the RUG-44 payment rates from FY 2006-Q1. The 9 new groups are a combination of the Rehabilitation and Extensive Services groups. These combination groups generally pay more dollars per day than any Rehab-only or Extensive Services'only groups. This model was designed based on awareness that medically complex residents who also need rehabilitation are more costly for providers.

The CMIs assigned to the 9 new groups are generally higher, beginning with 53 and descending. This was done because RUG-44 offered a financial incentive to delay initiation of rehabilitation services in the early days following admission, which encouraged medical needs to be assessed and routines established before the onset of therapy. As a result, a higher SE RUG was often billed for the first 14 days. RUG-53 removes this financial incentive to delay rehab and reimburses higher when complex medical and skilled rehabilitation services are provided jointly from day 1. This change creates reimbursement groups that better meet the needs of all residents being admitted to SNF settings.

Assignment into one of the 9 new groups requires that rehabilitation services have been provided, or are planned to be provided, during the five-day assessment. The RUG-53 model does not change any of the rehabilitation-minutes requirements for grouper assignment; i.e., Rehab High still requires 325 minutes and one therapy service provided five times a week.

The RUG-53 model defines "medically complex" as those residents whose MDS assessment meets the Extensive Services (SE) criteria. There are five items on the MDS that determine SE group assignment: IV Medications (P1ac), IV Fluids (K5a), Tracheostomy (P1aj), Suctioning (P1ai), or Ventilator/Respirator (P1al). Coding any of these qualifies the assessment for the SE criteria. "Winning" with RUG-53 means reviewing medical documentation during the look-back period for these items and fully understanding their definitions and coding, as presented in the RAI manual. Staff educators should refer to RAI instructions found at

For each MDS assessment that meets the criteria for both Rehabilitation and Extensive Services, the ADL index will determine the last letter of the new RUG grouper. Any RUG with an "L" or an "X" as the last letter indicates that the assessment has qualified for one of the 9 new groups. In all cases, the RUG-53 model requires an ADL score greater than 7 to qualify for the 9 new groups. Depending on the group, the ADL score defining Low "L" and High "X" varies (figure 2).