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Connecting the dots

August 1, 2010
by Gail E. Amor Rader, RN, C, MSN, CALA
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Reimbursement, rehabilitation, and individualized care


It is critical that facility administration make sure every discipline involved in assessment and care planning understand the new MDS 3.0 coding requirements, rules and timeframes for additional assessments, how to support coding with proper documentation, and most important, the need for individualized interdisciplinary care plans to assure the provision of high quality care and services for every resident.

MDS 3.0 will have a dramatic impact on the way nursing facilities provide and are reimbursed for the provision of skilled nursing and therapy services under Medicare Part A, and in some instances for those states with Medicaid case-mix reimbursement systems. MDS data also drives quality indicators, survey focus, and publically reported quality measures used in the Centers for Medicare & Medicaid Services' (CMS) Five-Star Quality Rating System on the Nursing Home Compare Web site.

From a clinical perspective, MDS 3.0 assessment provides clinicians with both potential and actual care areas requiring critical analysis when formulating individualized interdisciplinary care plan interventions to address skilled nursing and rehab needs of each resident and support reimbursement. Since all of the above processes are so integrally related, it is critical administrators and clinicians truly understand the impact of what may appear to facility staff as simple coding of items on an assessment tool. It is imperative facility administration teach clinical staff the financial impact of this assessment tool, as well as the proper coding conventions.

Focusing on rehab

The MDS 3.0 assessment instrument captures the provision of skilled nursing and therapy services for reimbursement purposes as well as the provision of care. Changes in the area of rehabilitation may directly affect a skilled nursing facility's (SNF) Medicare Part A reimbursement. Skilled therapy definitions and coding conventions and the calculation of RUG (Resource Utilization Group) assignment have been modified and are effective October 1, 2010, with the implementation of MDS 3.0 and RUG-IV.

Modes of skilled therapy services

Skilled therapy services can be provided in the following modes: individual, concurrent, and group. Assignment to a RUG for reimbursement is dependent on the minutes of therapy by service delivery modality during the seven-day look-back period from the assessment reference date (ARD).

The number of minutes and days of service as well as therapy start and stop dates for speech-language pathology and audiology services (ST), physical therapy services (PT), and occupational therapy (OT) services must be properly recorded. The Resident Assessment Manual (RAI, June 10, 2010) defines the modes of therapy as:

  • Individual therapy-“One therapist or assistant providing treatment to one resident at a time.”

  • Concurrent therapy-“Treatment of two residents at the same time, when the residents are not performing the same or similar activities, regardless of payer source, both of whom must be in line-of-sight of the treating therapist or assistant for Medicare Part A.”

  • Group therapy-“Treatment of two to four residents, regardless of payer source, who are performing similar activities, and are supervised by a therapist or an assistant who is not supervising any other individuals.”1

Reimbursement considerations

The major change from a reimbursement perspective is the calculation of the minutes of therapy in relationship to RUG code assignment. Under MDS 3.0, the actual total of minutes of therapy provided by each discipline are recorded on the MDS 3.0 form in Section 00400 by the mode of delivery: individual, concurrent, and/or group.

The grouper software then applies a limitation on the total number of minutes when assigning a RUG-IV 66 group classification: “All minutes of individual therapy are applied, one-half of the minutes of concurrent therapy minutes are applied, and all minutes in group therapy are applied with a limitation that the group minutes cannot exceed a 25% cap of the total minutes of therapy provided.”2 The net effect of these limitations can result in residents being assigned to lower RUG codes thereby lowering the reimbursement for therapy services.

Calculating skilled therapy minutes

Resident Smith qualifies for Medicare Part A coverage for skilled therapy services due to a recent cerebrovascular accident with left-sided hemiparesis. The following example demonstrates how the proper RUG code is assigned.

  • ST: Individual minutes (I) = 100, concurrent minutes (C) = 100, group minutes (G) = 100.

  • OT: Individual minutes = 80, concurrent minutes = 80, group minutes = 80.

  • PT: Individual minutes = 90, concurrent minutes = 90, group minutes = 90.

Calculation of the reimbursable ST minutes is: 100(C) + 100/2(I) + 100(G) = 250. The group adjustment factor of 1.33 must be applied since group minutes (100/250 = .40) are greater than the allowable 25% cap for Medicare Part A. The final total of 199.5 minutes of SLP minutes is then used in RUG code assignment [(100 + 50) x 1.33)]. Applying the same formula as above, the number of OT minutes used is 159.6 and the number of PT minutes is 179.55.

Impact on reimbursement

The final total of therapy minutes used by the software grouper to assign the RUG code is 538.65.

Combining all three therapy services provides the total number of minutes that will be used to assign the rehabilitation RUG code. Assuming no extensive services needs, Resident Smith would be assigned into a Rehab Very High RUG category.