[Federal Register: August 11, 2009 (Volume 74, Number 153)]
[Rules and Regulations]
[Page 40287-40395]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11au09-16]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 483
Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities for FY 2010; Minimum Data Set, Version
3.0 for Skilled Nursing Facilities and Medicaid Nursing Facilities;
Final Rule
[[Page 40288]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 483
[CMS-1410-F]
RIN 0938-AP46
Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities for FY 2010; Minimum Data Set,
Version 3.0 for Skilled Nursing Facilities and Medicaid Nursing
Facilities
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule updates the payment rates used under the
prospective payment system (PPS) for skilled nursing facilities (SNFs),
for fiscal year (FY) 2010. In addition, it recalibrates the case-mix
indexes so that they more accurately reflect parity in expenditures
related to the implementation of case-mix refinements in January 2006.
It also discusses the results of our ongoing analysis of nursing home
staff time measurement data collected in the Staff Time and Resource
Intensity Verification project, as well as a new Resource Utilization
Groups, version 4 case-mix classification model for FY 2011 that will
use the updated Minimum Data Set 3.0 resident assessment for case-mix
classification. In addition, this final rule discusses the public
comments that we have received on these and other issues, including a
possible requirement for the quarterly reporting of nursing home
staffing data, as well as on applying the quality monitoring mechanism
in place for all other SNF PPS facilities to rural swing-bed hospitals.
Finally, this final rule revises the regulations to incorporate certain
technical corrections.
DATES: Effective Date: This final rule becomes effective on October 1,
2009.
FOR FURTHER INFORMATION CONTACT: Ellen Berry, (410) 786-4528 (for
information related to clinical issues). Trish Brooks, (410) 786-4561
(for information related to Resident Assessment Protocols (RAPs) under
the Minimum Data Set (MDS)). Jeanette Kranacs, (410) 786-9385 (for
information related to the development of the payment rates and case-
mix indexes). Abby Ryan, (410) 786-4343 (for information related to the
STRIVE project). Jean Scott, (410) 786-6327 (for information related to
the request for comment on the possible quarterly reporting of nursing
home staffing data). Bill Ullman, (410) 786-5667 (for information
related to level of care determinations, consolidated billing, and
general information).
SUPPLEMENTARY INFORMATION: To assist readers in referencing sections
contained in this document, we are providing the following Table of
Contents.
Table of Contents
I. Background
A. Current System for Payment of SNF Services Under Part A of
the Medicare Program
B. Requirements of the Balanced Budget Act of 1997 (BBA) for
Updating the Prospective Payment System for Skilled Nursing
Facilities
C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999 (BBRA)
D. The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA)
E. The Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA)
F. Skilled Nursing Facility Prospective Payment--General
Overview
1. Payment Provisions--Federal Rate
2. FY 2010 Rate Updates Using the Skilled Nursing Facility
Market Basket Index
II. Summary of the Provisions of the FY 2010 Proposed Rule
III. Analysis of and Responses to Public Comments on the FY 2010
Proposed Rule
A. General Comments on the FY 2010 Proposed Rule
B. Annual Update of Payment Rates Under the Prospective Payment
System for Skilled Nursing Facilities
1. Federal Prospective Payment System
a. Costs and Services Covered by the Federal Rates
b. Methodology Used for the Calculation of the Federal Rates
2. Case-Mix Adjustments
a. Background
b. Development of the Case-Mix Indexes
3. Wage Index Adjustment to Federal Rates
4. Updates to Federal Rates
5. Relationship of RUG-III Classification System to Existing
Skilled Nursing Facility Level-of-Care Criteria
6. Example of Computation of Adjusted PPS Rates and SNF Payment
C. Resource Utilization Groups, Version 4 (RUG-IV)
1. Staff Time and Resource Intensity Verification (STRIVE)
Project
a. Data Collection
b. Developing the Analytical Database
i. Concurrent Therapy
ii. Adjustments to STRIVE Therapy Minutes
iii. ADL Adjustments
iv. ``Look-Back'' Period
v. Organizing the Nursing and Therapy Minutes
vi. Data Dissemination
2. The RUG-IV Classification System
3. Development of the FY 2011 Case-Mix Indexes
4. Relationship of RUG-IV Classification System to Existing
Skilled Nursing Facility Level-of-Care Criteria
5. Prospective Payment for SNF Nontherapy Ancillary Costs
D. Minimum Data Set, Version 3.0 (MDS 3.0)
1. Description of the MDS 3.0
2. MDS Elements, Common Definitions, and Resident Assessment
Protocols (RAPs) Used Under the MDS
3. Data Submission Requirements Under the MDS 3.0
4. Proposed Change to Section T of the Resident Assessment
Instrument (RAI) Under the MDS 3.0
E. Other Issues
1. Invitation of Comments on Possible Quarterly Reporting of
Nursing Home Staffing Data
2. Miscellaneous Technical Corrections and Clarifications
F. The Skilled Nursing Facility Market Basket Index
1. Use of the Skilled Nursing Facility Market Basket Percentage
2. Market Basket Forecast Error Adjustment
3. Federal Rate Update Factor
G. Consolidated Billing
H. Application of the SNF PPS to SNF Services Furnished by
Swing-Bed Hospitals; Quality Monitoring of Swing-Bed Hospitals
IV. Provisions of the Final Rule
V. Collection of Information Requirements
VI. Regulatory Impact Analysis
A. Overall Impact
B. Anticipated Effects
C. Alternatives Considered
D. Accounting Statement
E. Conclusion
Regulation Text
Addendum: FY 2010 CBSA-Based Wage Index Tables (Tables A & B) RUG-
III to RUG-IV Comparison (Table C)
Abbreviations
In addition, because of the many terms to which we refer by
abbreviation in this final rule, we are listing these abbreviations and
their corresponding terms in alphabetical order below:
ADLs Activities of Daily Living
AIDS Acquired Immune Deficiency Syndrome
AOTA American Occupational Therapy Association
APTA American Physical Therapy Association
ARD Assessment Reference Date
ASHA American Speech-Language-Hearing Association
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999, Public Law 106-113
BIMS Brief Interview for Mental Status
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Public Law 106-554
CAA Care Area Assessment
CAH Critical Access Hospital
[[Page 40289]]
CAM Confusion Assessment Method
CARE Continuity Assessment Record and Evaluation
CAT Care Area Trigger
CBSA Core-Based Statistical Area
CFR Code of Federal Regulations
CMI Case-Mix Index
CMS Centers for Medicare & Medicaid Services
CMSO Center for Medicaid and State Operations
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSM-IV Diagnostic and Statistical Manual of Mental Disorders, 4th
Revision
FQHC Federally Qualified Health Center
FR Federal Register
FY Fiscal Year
GAO Government Accountability Office
HCPCS Healthcare Common Procedure Coding System
HHA Home Health Agency
HIPPS Health Insurance Prospective Payment System
HIT Health Information Technology
HIV Human Immunodeficiency Virus
IFC Interim Final Rule with Comment Period
IPPS Hospital Inpatient Prospective Payment System
IRF Inpatient Rehabilitation Facility
LTCH Long-Term Care Hospital
MAC Medicare Administrative Contractor
MMACS Medicare/Medicaid Automated Certification System
MDS Minimum Data Set
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public
Law 110-173
MSA Metropolitan Statistical Area
MS-DRG Medicare Severity Diagnosis-Related Group
NCQA National Committee for Quality Assurance
NF Nursing Facility
NRST Non-Resident Specific Time
NTA Non-Therapy Ancillary
OIG Office of the Inspector General
OMB Office of Management and Budget
OMRA Other Medicare Required Assessment
OSCAR Online Survey Certification and Reporting System
PAC Post-Acute Care
PHQ-9 9-Item Patient Health Questionnaire
PPS Prospective Payment System
QM Quality Measure
RAI Resident Assessment Instrument
RAND RAND Corporation
RAP Resident Assessment Protocol
RAVEN Resident Assessment Validation Entry
RFA Regulatory Flexibility Act, Public Law 96-354
RHC Rural Health Clinic
RIA Regulatory Impact Analysis
RST Resident Specific Time
RUG-III Resource Utilization Groups, Version 3
RUG-IV Resource Utilization Groups, Version 4
RUG-53 Refined 53-Group RUG-III Case-Mix Classification System
SCHIP State Children's Health Insurance Program
SNF Skilled Nursing Facility
SOM State Operations Manual
STM Staff Time Measurement
STRIVE Staff Time and Resource Intensity Verification
TEP Technical Expert Panel
UMRA Unfunded Mandates Reform Act, Public Law 104-4
I. Background
On May 12, 2009, we published a proposed rule (74 FR 22208) in the
Federal Register (hereafter referred to as the FY 2010 proposed rule),
setting forth updates to the payment rates used under the prospective
payment system (PPS) for skilled nursing facilities (SNFs), for fiscal
year (FY) 2010. Annual updates to the PPS rates for SNFs are required
by section 1888(e) of the Social Security Act (the Act), as added by
section 4432 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33,
enacted on August 5, 1997), and amended by the Medicare, Medicaid, and
State Children's Health Insurance Program (SCHIP) Balanced Budget
Refinement Act of 1999 (BBRA) (Pub. L. 106-113, enacted on November 29,
1999), the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA) (Pub. L. 106-554, enacted on December 21,
2000), and the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on December
8, 2003). Our most recent annual update occurred in a final rule (73 FR
46416, August 8, 2008) that set forth updates to the SNF PPS payment
rates for FY 2009. We subsequently published a correction notice (73 FR
56998, October 1, 2008) with respect to those payment rate updates.
A. Current System for Payment of Skilled Nursing Facility Services
Under Part A of the Medicare Program
Section 4432 of the BBA amended section 1888 of the Act to provide
for the implementation of a per diem PPS for SNFs, covering all costs
(routine, ancillary, and capital-related) of covered SNF services
furnished to beneficiaries under Part A of the Medicare program,
effective for cost reporting periods beginning on or after July 1,
1998. In this final rule, we are updating the per diem payment rates
for SNFs for FY 2010. Major elements of the SNF PPS include:
Rates. As discussed in section I.F.1 of this final rule,
we established per diem Federal rates for urban and rural areas using
allowable costs from FY 1995 cost reports. These rates also included a
``Part B add-on'' (an estimate of the cost of those services that,
before July 1, 1998, were paid under Part B but furnished to Medicare
beneficiaries in a SNF during a Part A covered stay). We adjust the
rates annually using a SNF market basket index, and we adjust them by
the hospital inpatient wage index to account for geographic variation
in wages. We also apply a case-mix adjustment to account for the
relative resource utilization of different patient types. This
adjustment utilizes a refined, 53-group version of the Resource
Utilization Groups, version 3 (RUG-III) case-mix classification system,
based on information obtained from the required resident assessments
using the Minimum Data Set (MDS) 2.0. Additionally, as noted in the
final rule for FY 2006 (70 FR 45028, August 4, 2005), the payment rates
at various times have also reflected specific legislative provisions,
including section 101 of the BBRA, sections 311, 312, and 314 of the
BIPA, and section 511 of the MMA.
Transition. Under sections 1888(e)(1)(A) and (e)(11) of
the Act, the SNF PPS included an initial, three-phase transition that
blended a facility-specific rate (reflecting the individual facility's
historical cost experience) with the Federal case-mix adjusted rate.
The transition extended through the facility's first three cost
reporting periods under the PPS, up to and including the one that began
in FY 2001. Thus, the SNF PPS is no longer operating under the
transition, as all facilities have been paid at the full Federal rate
effective with cost reporting periods beginning in FY 2002. As we now
base payments entirely on the adjusted Federal per diem rates, we no
longer include adjustment factors related to facility-specific rates
for the coming FY.
Coverage. The establishment of the SNF PPS did not change
Medicare's fundamental requirements for SNF coverage. However, because
the RUG-III classification is based, in part, on the beneficiary's need
for skilled nursing care and therapy, we have attempted, where
possible, to coordinate claims review procedures with the existing
resident assessment process and case-mix classification system. This
approach includes an administrative presumption that utilizes a
beneficiary's initial classification in one of the upper 35 RUGs of the
refined 53-group system to assist in making certain SNF level of care
determinations. In the July 30, 1999 final rule (64 FR 41670), we
indicated that we would announce any changes to the guidelines for
Medicare level of care determinations related to modifications
[[Page 40290]]
in the RUG-III classification structure (see section III.B.5 of this
final rule for a discussion of the relationship between the current
case-mix classification system and SNF level of care determinations,
and section III.C.4 for a discussion of this process in the context of
the upcoming conversion to version 4 of the RUGs (RUG-IV)).
Consolidated Billing. The SNF PPS includes a consolidated
billing provision that requires a SNF to submit consolidated Medicare
bills to its fiscal intermediary or Medicare Administrative Contractor
for almost all of the services that its residents receive during the
course of a covered Part A stay. In addition, this provision places
with the SNF the Medicare billing responsibility for physical,
occupational, and speech-language therapy that the resident receives
during a noncovered stay. The statute excludes a small list of services
from the consolidated billing provision (primarily those of physicians
and certain other types of practitioners), which remain separately
billable under Part B when furnished to a SNF's Part A resident. A more
detailed discussion of this provision appears in section III.G of this
final rule.
Application of the SNF PPS to SNF services furnished by
swing-bed hospitals. Section 1883 of the Act permits certain small,
rural hospitals to enter into a Medicare swing-bed agreement, under
which the hospital can use its beds to provide either acute or SNF
care, as needed. For critical access hospitals (CAHs), Part A pays on a
reasonable cost basis for SNF services furnished under a swing-bed
agreement. However, in accordance with section 1888(e)(7) of the Act,
these services furnished by non-CAH rural hospitals are paid under the
SNF PPS, effective with cost reporting periods beginning on or after
July 1, 2002. A more detailed discussion of this provision appears in
section III.H of this final rule.
B. Requirements of the Balanced Budget Act of 1997 (BBA) for Updating
the Prospective Payment System for Skilled Nursing Facilities
Section 1888(e)(4)(H) of the Act requires that we provide for
publication annually in the Federal Register:
1. The unadjusted Federal per diem rates to be applied to days of
covered SNF services furnished during the upcoming FY.
2. The case-mix classification system to be applied with respect to
these services during the upcoming FY.
3. The factors to be applied in making the area wage adjustment
with respect to these services.
Along with other revisions discussed later in this preamble, this
final rule provides these required annual updates to the Federal rates.
C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA)
There were several provisions in the BBRA that resulted in
adjustments to the SNF PPS. We described these provisions in detail in
the SNF PPS final rule for FY 2001 (65 FR 46770, July 31, 2000). In
particular, section 101(a) of the BBRA provided for a temporary 20
percent increase in the per diem adjusted payment rates for 15
specified RUG-III groups. In accordance with section 101(c)(2) of the
BBRA, this temporary payment adjustment expired on January 1, 2006,
upon the implementation of case-mix refinements (see section I.F.1. of
this final rule). We included further information on BBRA provisions
that affected the SNF PPS in Program Memorandums A-99-53 and A-99-61
(December 1999).
Also, section 103 of the BBRA designated certain additional
services for exclusion from the consolidated billing requirement, as
discussed in greater detail in section III.G of this final rule.
Further, for swing-bed hospitals with more than 49 (but less than 100)
beds, section 408 of the BBRA provided for the repeal of certain
statutory restrictions on length of stay and aggregate payment for
patient days, effective with the end of the SNF PPS transition period
described in section 1888(e)(2)(E) of the Act. In the final rule for FY
2002 (66 FR 39562, July 31, 2001), we made conforming changes to the
regulations at Sec. 413.114(d), effective for services furnished in
cost reporting periods beginning on or after July 1, 2002, to reflect
section 408 of the BBRA.
D. The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA)
The BIPA also included several provisions that resulted in
adjustments to the SNF PPS. We described these provisions in detail in
the final rule for FY 2002 (66 FR 39562, July 31, 2001). In particular:
Section 203 of the BIPA exempted CAH swing-beds from the
SNF PPS. We included further information on this provision in Program
Memorandum A-01-09 (Change Request 1509), issued January 16,
2001, which is available online at http://www.cms.hhs.gov/transmittals/
downloads/a0109.pdf.
Section 311 of the BIPA revised the statutory update
formula for the SNF market basket, and also directed us to conduct a
study of alternative case-mix classification systems for the SNF PPS.
In 2006, we submitted a report to the Congress on this study, which is
available online at http://www.cms.hhs.gov/SNFPPS/Downloads/RC_2006_
PC-PPSSNF.pdf.
Section 312 of the BIPA provided for a temporary increase
of 16.66 percent in the nursing component of the case-mix adjusted
Federal rate for services furnished on or after April 1, 2001, and
before October 1, 2002; accordingly, this add-on is no longer in
effect. This section also directed the Government Accountability Office
(GAO) to conduct an audit of SNF nursing staff ratios and submit a
report to the Congress on whether the temporary increase in the nursing
component should be continued. The report (GAO-03-176), which GAO
issued in November 2002, is available online at http://www.gao.gov/
new.items/d03176.pdf.
Section 313 of the BIPA repealed the consolidated billing
requirement for services (other than physical, occupational, and
speech-language therapy) furnished to SNF residents during noncovered
stays, effective January 1, 2001.
Section 314 of the BIPA corrected an anomaly involving
three of the RUGs that section 101(a) of the BBRA had designated to
receive the temporary payment adjustment discussed above in section
I.C. of this final rule. (As noted previously, in accordance with
section 101(c)(2) of the BBRA, this temporary payment adjustment
expired upon the implementation of case-mix refinements on January 1,
2006.)
Section 315 of the BIPA authorized us to establish a
geographic reclassification procedure that is specific to SNFs, but
only after collecting the data necessary to establish a SNF wage index
that is based on wage data from nursing homes. To date, this has proven
to be infeasible due to the volatility of existing SNF wage data and
the significant amount of resources that would be required to improve
the quality of that data.
We included further information on several of the BIPA provisions
in Program Memorandum A-01-08 (Change Request 1510), issued
January 16, 2001, which is available online at http://www.cms.hhs.gov/
transmittals/downloads/a0108.pdf.
E. The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA)
The MMA included a provision that results in a further adjustment
to the SNF PPS. Specifically, section 511 of the MMA amended section
1888(e)(12)
[[Page 40291]]
of the Act, to provide for a temporary increase of 128 percent in the
PPS per diem payment for any SNF residents with Acquired Immune
Deficiency Syndrome (AIDS), effective with services furnished on or
after October 1, 2004. This special AIDS add-on was to remain in effect
until ``* * * the Secretary certifies that there is an appropriate
adjustment in the case mix * * * to compensate for the increased costs
associated with [such] residents * * *.'' The AIDS add-on is also
discussed in Program Transmittal 160 (Change Request
3291), issued on April 30, 2004, which is available online at
http://www.cms.hhs.gov/transmittals/downloads/r160cp.pdf. As discussed
in the SNF PPS final rule for FY 2006 (70 FR 45028, August 4, 2005), we
did not address the certification of the AIDS add-on in that final
rule's implementation of the case-mix refinements, thus allowing the
temporary add-on payment created by section 511 of the MMA to remain in
effect.
For the limited number of SNF residents that qualify for the AIDS
add-on, implementation of this provision results in a significant
increase in payment. For example, using FY 2007 data, we identified
slightly more than 2,700 SNF residents with a diagnosis code of 042
(Human Immunodeficiency Virus (HIV) Infection). For FY 2010, an urban
facility with a resident with AIDS in RUG group ``SSA'' would have a
case-mix adjusted payment of $252.95 (see Table 4) before the
application of the MMA adjustment. After an increase of 128 percent,
this urban facility would receive a case-mix adjusted payment of
approximately $576.73. A further discussion of the AIDS add-on in the
context of research conducted during the recent STRIVE study appears in
section III.C.5 of this final rule.
In addition, section 410 of the MMA contained a provision that
excluded from consolidated billing certain practitioner and other
services furnished to SNF residents by rural health clinics (RHCs) and
Federally Qualified Health Centers (FQHCs), as discussed in section
III.G of this final rule.
F. Skilled Nursing Facility Prospective Payment--General Overview
We implemented the Medicare SNF PPS effective with cost reporting
periods beginning on or after July 1, 1998. This PPS pays SNFs through
prospective, case-mix adjusted per diem payment rates applicable to all
covered SNF services. These payment rates cover all costs of furnishing
covered SNF services (routine, ancillary, and capital-related costs)
other than costs associated with approved educational activities.
Covered SNF services include post-hospital services for which benefits
are provided under Part A, as well as those items and services (other
than physician and certain other services specifically excluded under
the BBA) which, before July 1, 1998, had been paid under Part B but
furnished to Medicare beneficiaries in a SNF during a covered Part A
stay. A comprehensive discussion of these provisions appears in the May
12, 1998 interim final rule (63 FR 26252).
1. Payment Provisions--Federal Rate
The PPS uses per diem Federal payment rates based on mean SNF costs
in a base year (FY 1995) updated for inflation to the first effective
period of the PPS. We developed the Federal payment rates using
allowable costs from hospital-based and freestanding SNF cost reports
for reporting periods beginning in FY 1995. As discussed previously in
section I.A of this final rule, the data used in developing the Federal
rates also incorporated a ``Part B add-on,'' an estimate of the amounts
that would be payable under Part B in the base year for covered SNF
services furnished to individuals during the course of a covered Part A
SNF stay.
In developing the rates for the initial period, we updated costs to
the first effective year of the PPS (the 15-month period beginning July
1, 1998) using a SNF market basket index, and then standardized for the
costs of facility differences in case-mix and for geographic variations
in wages. In compiling the database used to compute the Federal payment
rates, we excluded those providers that received new provider
exemptions from the routine cost limits, as well as costs related to
payments for exceptions to the routine cost limits. Using the formula
that the BBA prescribed, we set the Federal rates at a level equal to
the weighted mean of freestanding costs plus 50 percent of the
difference between the freestanding mean and weighted mean of all SNF
costs (hospital-based and freestanding) combined. We computed and
applied separately the payment rates for facilities located in urban
and rural areas. In addition, we adjusted the portion of the Federal
rate attributable to wage-related costs by a wage index.
The Federal rate also incorporates adjustments to account for
facility case-mix, using a classification system that accounts for the
relative resource utilization of different patient types. The RUG-III
classification system uses beneficiary assessment data from the Minimum
Data Set (MDS) completed by SNFs to assign beneficiaries to one of 53
RUG-III groups. The original RUG-III case-mix classification system
included 44 groups. However, under incremental refinements that became
effective on January 1, 2006, we added nine new groups--comprising a
new Rehabilitation plus Extensive Services category--at the top of the
RUG hierarchy. The May 12, 1998 interim final rule (63 FR 26252)
included a detailed description of the original 44-group RUG-III case-
mix classification system. A comprehensive description of the refined
53-group RUG-III case-mix classification system (RUG-53) appeared in
the proposed and final rules for FY 2006 (70 FR 29070, May 19, 2005,
and 70 FR 45026, August 4, 2005).
Further, in accordance with section 1888(e)(4)(E)(ii)(IV) of the
Act, the Federal rates in this final rule reflect an update to the
rates that we published in the final rule for FY 2009 (73 FR 46416,
August 8, 2008) and the associated correction notice (73 FR 56998,
October 1, 2008), equal to the full change in the SNF market basket
index. A more detailed discussion of the SNF market basket index and
related issues appears in sections I.F.2 and III.F of this final rule.
2. FY 2010 Rate Updates Using the Skilled Nursing Facility Market
Basket Index
Section 1888(e)(5) of the Act requires us to establish a SNF market
basket index that reflects changes over time in the prices of an
appropriate mix of goods and services included in covered SNF services.
We use the SNF market basket index to update the Federal rates on an
annual basis. In the SNF PPS final rule for FY 2008 (72 FR 43425
through 43430, August 3, 2007), we revised and rebased the market
basket, which included updating the base year from FY 1997 to FY 2004.
The FY 2010 market basket increase is 2.2 percent, which is based on
IHS Global Insight, Inc. second quarter 2009 forecast with historical
data through the first quarter 2009.
In addition, as explained in the final rule for FY 2004 (66 FR
46058, August 4, 2003) and in section III.F.2 of this final rule, the
annual update of the payment rates includes, as appropriate, an
adjustment to account for market basket forecast error. As described in
the final rule for FY 2008, the threshold percentage that serves to
trigger an adjustment to account for market basket forecast error is
0.5 percentage point effective for FY 2008 and subsequent years. This
adjustment takes into account the forecast error from the most recently
available FY for which there is
[[Page 40292]]
final data, and applies whenever the difference between the forecasted
and actual change in the market basket exceeds a 0.5 percentage point
threshold. For FY 2008 (the most recently available FY for which there
is final data), the estimated increase in the market basket index was
3.3 percentage points, while the actual increase was 3.6 percentage
points, resulting in a difference of 0.3 percentage point. Accordingly,
as the difference between the estimated and actual amount of change
does not exceed the 0.5 percentage point threshold, the payment rates
for FY 2010 do not include a forecast error adjustment. Table 1 shows
the forecasted and actual market basket amounts for FY 2008.
Table 1--Difference Between the Forecasted and Actual Market Basket Increases for FY 2008
----------------------------------------------------------------------------------------------------------------
Forecasted FY 2008 Actual FY 2008 FY 2008 difference
Index increase * increase ** ***
----------------------------------------------------------------------------------------------------------------
SNF........................................ 3.3 3.6 0.3
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2007 IHS Global Insight Inc. forecast (2004-based
index).
** Based on the second quarter 2009 IHS Global Insight forecast (2004-based index).
*** The FY 2008 forecast error correction for the PPS Operating portion will be applied to the FY 2010 PPS
update recommendations. Any forecast error less than 0.5 percentage points will not be reflected in the update
recommendation.
II. Summary of the Provisions of the FY 2010 Proposed Rule
In the FY 2010 proposed rule (74 FR 22208), we proposed to update
the payment rates used under the SNF PPS for FY 2010. We also proposed
to recalibrate the case-mix indexes so that they more accurately
reflect parity in expenditures related to the implementation of case-
mix refinements in January 2006. We also discussed the results of our
ongoing analysis of nursing home staff time measurement (STM) data
collected in the Staff Time and Resource Intensity Verification
(STRIVE) project, and proposed a new RUG-IV case-mix classification
model that would use the updated Minimum Data Set (MDS) 3.0 resident
assessment for case-mix classification effective FY 2011. In addition,
we requested public comment on a possible requirement for the quarterly
reporting of nursing home staffing data, and also on applying the
quality monitoring mechanism in place for all other SNF PPS facilities
to rural swing-bed hospitals. Finally, we proposed to revise the
regulations to incorporate certain technical corrections.
III. Analysis and Response to Public Comments on the FY 2010 Proposed
Rule
In response to the publication of the FY 2010 proposed rule, we
received over 112 timely items of correspondence from the public. The
comments originated primarily from various trade associations and major
organizations, but also from individual providers, corporations,
government agencies, and private citizens.
Brief summaries of each proposed provision, a summary of the public
comments that we received, and our responses to the comments appear
below.
A. General Comments on the FY 2010 Proposed Rule
In addition to the comments that we received on the proposed rule's
discussion of specific aspects of the SNF PPS (which we address later
in this final rule), commenters also submitted the following, more
general observations on the payment system.
Comment: Some commenters noted that while the proposed rule's SNF
PPS rate updates would be effective for FY 2010, its proposed
conversion of the Resource Utilization Groups (RUGs) from version 3
(RUG-III) to version 4 (RUG-IV) would not take effect until FY 2011.
The commenters argued that it is unprecedented to publish such a
proposal so far in advance of its anticipated effective date, and that
the 60-day public comment period would not afford sufficient time to
analyze and comment meaningfully on it. The commenters then suggested
that we withdraw the current RUG conversion proposal and reissue it at
a later date with a ``more reasonable'' comment period.
Response: While it is true that the RUG conversion proposal would
not become effective until FY 2011, our decision to include a
discussion of it in the FY 2010 proposed rule and to propose to
finalize it well in advance of its actual implementation date
represents a response to specific requests from the nursing home
industry for us to provide as much advance notification as possible of
the nature of the proposed RUG-IV revisions, and to provide adequate
time for system updates and training necessary to implement any
proposed changes that are finalized. Thus, rather than arbitrarily
deferring our discussion of this proposal until the FY 2011 rulemaking
cycle (which, in any event, would have provided for exactly the same
60-day duration for the public comment period), we decided to include
the discussion in the current proposed rule, in order to ensure that
providers, States, and other stakeholders and interested parties would
have the maximum time available to familiarize themselves with the
broad outlines of the new model and to prepare for its implementation.
Moreover, even after the close of the FY 2010 proposed rule's public
comment period, we fully intend to continue our analysis of the
proposed changes that are finalized in this rule, in order to consider
the most current data as it becomes available. As an essential part of
this ongoing analysis, we will, of course, also continue to welcome
input from the various stakeholders and interested parties as we move
closer to actual implementation.
Comment: We received comments similar to those discussed previously
in the August 3, 2007 SNF PPS final rule for FY 2008 (72 FR 43415
through 43416) regarding the need to address certain perceived
inadequacies in payment for non-therapy ancillary (NTA) services,
including those services relating to the provision of ventilator care
in SNFs. We also received comments recommending that we continue to
monitor ongoing research, and that we consider alternative case-mix
methodologies such as the recent MedPAC proposal that appears on the
MedPAC Web site (see http://www.MedPAC.gov).
Response: As we noted in the proposed rule for FY 2010, we are
conducting the analyses preparatory to developing a separate
classification method for NTAs. For these analyses, we are using data
developed through STRIVE, as well as alternative models such as the
conceptual design released first by the Urban Institute and then by
MedPAC. However, as noted in our December 2006 Report to Congress
(available online at http://
[[Page 40293]]
www.cms.hhs.gov/SNFPPS/Downloads/RC_2006_PC-PPSSNF.pdf), our analysis
of NTA utilization has been hindered by a lack of data. Almost all
other Medicare institutional providers submit more detailed billing
than SNFs on the ancillary services furnished during a Medicare-covered
stay. SNFs may currently submit summary data that shows total dollar
amounts for each ancillary service category, such as radiology and
pharmacy, but are not required to submit more detailed data on drugs
and biologicals, the most costly NTA expense category. As we examine
the NTA analyses discussed in detail in the FY 2010 proposed rule, we
will re-evaluate whether our current data requirements are sufficient
to move forward with additional program enhancements. We will also
consider whether collecting more detailed claims information on a
regular basis will allow us to establish more accurate payment rates
for NTA services.
We also believe it is important to monitor ongoing research
activities, and work with all stakeholders, including MedPAC, to
identify opportunities for future program enhancements. At the same
time, we note that the SNF PPS reimbursement structure will be
completely examined as part of the Post Acute Care Payment Reform
Demonstration (PAC-PRD) project. Under this major CMS initiative, we
intend to analyze the costs and outcomes across all post-acute care
providers, and the data collected in this demonstration will enable us
to evaluate the possibility of establishing an integrated payment model
centered on beneficiary needs and service utilization (including the
use of non-therapy ancillaries) across settings. In considering future
changes to the SNF PPS, it will be important to evaluate how shorter
term enhancements contribute to our integrated post acute care
strategy.
A discussion of the public comments that we received on the STRIVE
project itself appears in section III.C.1 of this final rule.
B. Annual Update of Payment Rates Under the Prospective Payment System
for Skilled Nursing Facilities
1. Federal Prospective Payment System
This final rule sets forth a schedule of Federal prospective
payment rates applicable to Medicare Part A SNF services beginning
October 1, 2010. The schedule incorporates per diem Federal rates that
provide Part A payment for almost all costs of services furnished to a
beneficiary in a SNF during a Medicare-covered stay.
a. Costs and Services Covered by the Federal Rates
In accordance with section 1888(e)(2)(B) of the Act, the Federal
rates apply to all costs (routine, ancillary, and capital-related) of
covered SNF services other than costs associated with approved
educational activities as defined in Sec. 413.85. Under section
1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital
SNF services for which benefits are provided under Part A (the hospital
insurance program), as well as all items and services (other than those
services excluded by statute) that, before July 1, 1998, were paid
under Part B (the supplementary medical insurance program) but
furnished to Medicare beneficiaries in a SNF during a Part A covered
stay. (These excluded service categories are discussed in greater
detail in section V.B.2 of the May 12, 1998 interim final rule (63 FR
26295 through 26297)).
b. Methodology Used for the Calculation of the Federal Rates
The FY 2010 rates reflect an update using the full amount of the
latest market basket index. The FY 2010 market basket increase factor
is 2.2 percent. A complete description of the multi-step process used
to calculate Federal rates initially appeared in the May 12, 1998
interim final rule (63 FR 26252), as further revised in subsequent
rules. We note that in accordance with section 101(c)(2) of the BBRA,
the previous temporary increases in the per diem adjusted payment rates
for certain designated RUGs, as specified in section 101(a) of the BBRA
and section 314 of the BIPA, are no longer in effect due to the
implementation of case-mix refinements as of January 1, 2006. However,
the temporary increase of 128 percent in the per diem adjusted payment
rates for SNF residents with AIDS, enacted by section 511 of the MMA
(and discussed previously in section I.E of this final rule), remains
in effect.
We used the SNF market basket to adjust each per diem component of
the Federal rates forward to reflect cost increases occurring between
the midpoint of the Federal FY beginning October 1, 2008, and ending
September 30, 2009, and the midpoint of the Federal FY beginning
October 1, 2009, and ending September 30, 2010, to which the payment
rates apply. In accordance with section 1888(e)(4)(E)(ii)(IV) of the
Act, we would update the payment rates for FY 2010 by a factor equal to
the full market basket index percentage increase. We further adjust the
rates by a wage index budget neutrality factor, described later in this
section. Tables 2 and 3 reflect the updated components of the
unadjusted Federal rates for FY 2010.
Table 2--FY 2010 Unadjusted Federal Rate Per Diem Urban
----------------------------------------------------------------------------------------------------------------
Nursing-- case- Therapy-- case- Therapy-- non-
Rate Component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount..................... $155.23 $116.93 $15.40 $79.22
----------------------------------------------------------------------------------------------------------------
Table 3--FY 2010 Unadjusted Federal Rate Per Diem Rural
----------------------------------------------------------------------------------------------------------------
Nursing-- case- Therapy-- case- Therapy-- non-
Rate component mix mix case-mix Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per Diem Amount..................... $148.31 $134.83 $16.45 $80.69
----------------------------------------------------------------------------------------------------------------
2. Case-Mix Adjustments
a. Background
Section 1888(e)(4)(G)(i) of the Act requires the Secretary to make
an adjustment to account for case-mix. The statute specifies that the
adjustment is to reflect both a resident classification system that the
Secretary establishes to account for the relative resource use of
different patient types, as well as resident assessment and other data
that the Secretary considers appropriate. In first implementing the SNF
PPS (63 FR 26252, May 12, 1998), we developed the
[[Page 40294]]
RUG-III case-mix classification system, which tied the amount of
payment to resident resource use in combination with resident
characteristic information. The STM studies conducted in 1990, 1995,
and 1997 provided information on resource use (time spent by staff
members on residents) and resident characteristics that enabled us not
only to establish RUG-III, but also to create case-mix indexes.
Although the establishment of the SNF PPS did not change Medicare's
fundamental requirements for SNF coverage, there is a correlation
between level of care and provider payment. One of the elements
affecting the SNF PPS per diem rates is the RUG-III case-mix adjustment
classification system based on beneficiary assessments using the MDS
2.0. RUG-III classification is based, in part, on the beneficiary's
need for skilled nursing care and therapy. As discussed previously in
section I.F.1 of this final rule, the SNF PPS final rule for FY 2006
(70 FR 45026, August 4, 2005) refined the case-mix classification
system effective January 1, 2006, by adding nine new Rehabilitation
Plus Extensive Services RUGs at the top of the original, 44-group
system, for a total of 53 groups. This nine-group addition was designed
to better account for the higher costs of beneficiaries requiring both
rehabilitation and certain high intensity medical services. When we
developed the refined RUG-53 system, we constructed new case-mix
indexes, using the STM study data that was collected during the 1990s
and originally used in creating the SNF PPS case-mix classification
system and case-mix indexes. In addition, the RUG-III system was
standardized with the intent of ensuring parity in payments under the
44-group and 53-group models. In section III.B.2.b of this final rule,
we discuss further adjustments to those new case-mix indexes.
The RUG-III case-mix classification system uses clinical data from
the MDS 2.0, and wage-adjusted STM data, to assign a case-mix group to
each patient record that is then used to calculate a per diem payment
under the SNF PPS. The existing RUG-III grouper logic was based on
clinical data collected in 1990, 1995, and 1997. As discussed in
section III.C.1, we have recently completed a multi-year data
collection and analysis under the STRIVE project to update the RUG-III
case-mix classification system for FY 2011. As discussed later in this
preamble, we are introducing a revised case-mix classification system,
the RUG-IV, based on the data collected in 2006-2007 during the STRIVE
project. At the same time, we plan to introduce an updated new resident
assessment instrument, the MDS 3.0, to collect the clinical data that
will be used for case-mix classification under RUG-IV. We believe that
the coordinated introduction of the RUG-IV and MDS 3.0 reflects current
medical practice and resource use in SNFs across the country, and will
enhance the accuracy of the SNF PPS. Further, we plan to defer
implementation of the RUG-IV and MDS 3.0 until October 1, 2010, to
allow all stakeholders adequate time for the systems updates and staff
training needed to assure a smooth transition. We discuss the RUG-IV
methodology, the MDS 3.0, and the stakeholder comments in greater
detail in sections III.C and III.D, respectively.
Under the BBA, each update of the SNF PPS payment rates must
include the case-mix classification methodology applicable for the
coming Federal FY. As indicated in section I.F.1 of this final rule,
the FY 2010 payment rates set forth herein reflect the use of the
refined RUG-53 system that we discussed in detail in the proposed and
final rules for FY 2006.
b. Development of the Case-Mix Indexes
In the FY 2010 proposed rule (74 FR 22208, 22214, May 12, 2009), we
discussed the incremental refinements to the case-mix classification
system that we introduced effective January 1, 2006. We also discussed
the accompanying adjustment that was intended to ensure that estimated
total payments under the refined 53-group model would be equal to those
payments that would have been made under the 44-group model that it
replaced. We then explained that actual utilization patterns under the
refined case-mix system differed significantly from the initial
projections, and as a consequence, rather than simply achieving parity,
this adjustment inadvertently triggered a significant increase in
overall payment levels under the refined model, representing
substantial overpayments to SNFs. Accordingly, the FY 2010 proposed
rule included a proposal to recalibrate the parity adjustment in order
to restore the intended parity to the 2006 case-mix refinements on a
prospective basis. The comments that we received on this proposal, and
our responses, appear below.
Comment: Most commenters opposed our proposal to recalibrate the
case-mix weights put into place for the refined RUG-53 system. Some
commenters expressed the belief that we have overstated the amount of
the proposed parity adjustment, by incorrectly identifying increased
payments related to treatment of higher case-mix patients with an
overpayment related to the use of an incorrect budget neutrality
adjustment factor applied in January 2006. They believed that the
recalibration proposal should be either withdrawn or significantly
reduced to eliminate the effect of real acuity changes. One commenter
conducted a detailed analysis of MDS clinical data that included
changes in reported activities of daily living (ADLs), infections,
falls, medication use, and other clinical conditions to support their
conclusions that patient acuity has increased since the start of the
SNF PPS and that our recalibration proposal incorrectly ignored the
impact of these changes. Another commenter believed that the proposed
recalibration could be more accurately calculated using either 2005
data or a combination of 2005 and 2006 data.
Response: We agree that, on average, the case-mix indexes for
current SNF patients are higher than they were in 2001. In fact, our
primary reason for implementing the STRIVE project was to identify
changes in patient characteristics, and to adjust the RUG case-mix
classification system to reflect the staff time and resource costs
needed to reimburse fairly for the type of patients currently being
treated in nursing homes. Moreover, in the STRIVE study, we collected
2006-2007 patient and facility staff data in order to update the case-
mix classification system. As indicated in detail in the proposed rule,
STRIVE data also show significant changes in patient characteristics
and facility practice patterns that need to be incorporated into the
case-mix methodology to reimburse facilities more accurately.
However, we do not agree that changes in patient acuity levels
skewed the results of our recalibration analysis. When we introduced
nine new Rehabilitation Plus Extensive Care groups to create the RUG-53
model in January 2006, we made a small, focused adjustment to the case-
mix classification of patients receiving both Extensive Care and
Rehabilitation services. Under RUG-44, patients receiving both services
would be classified into the highest paying group for which they
qualified--either Extensive Care or Rehabilitation. Under RUG-53, we
created a separate category for this subgroup of patients. As explained
in the FY 2006 proposed rule (70 FR 29070, 29077, May 19, 2005), we
took the nursing minutes used to create the original RUG-III system,
and resorted the records to create three hierarchy categories
(Rehabilitation, Extensive Care, and Rehabilitation Plus Extensive)
from the two categories that were used
[[Page 40295]]
in the RUG-44 model. In making these changes, we did not change any
other part of the case-mix classification model. Thus, patient clinical
characteristics including ADL scores (used to assign a Rehabilitation
RUG group) calculated under the RUG-53 model would be exactly the same
as the patient characteristics, including ADL scores, calculated under
the RUG-44 model. As we used the same 2006 data set to test for budget
neutrality between the two models, ADLs and other components of the
case-mix model reflected the same 2006 level of acuity.
In addition, we believe this concern may erroneously equate the
introduction of a new classification model with the regular SNF PPS
annual update process. Normally, changes in case mix are accommodated
as the classification model identifies changes in case mix and assigns
the appropriate RUG group. Actual payments will typically vary from
projections since case-mix changes, which occur for a variety of
reasons, cannot be anticipated in an impact analysis.
However, in January 2006, we did not just update the payment rates,
but introduced a new classification model, the RUG-53 case-mix system.
As discussed above, the purpose of this refined model was to
redistribute payments across the 53 groups while maintaining the same
total expenditure level that we would have incurred had we retained the
original 44-group RUG model.
In testing the two models, we used 2001 data because it was the
best data we had available, and found that using the raw weights
calculated for the RUG-53 model, we could expect aggregate payments to
decrease as a result of introducing the refinement. To prevent this
expected reduction in overall Medicare expenditures, we applied an
adjustment to the RUG-53 case-mix weights as described earlier in this
section. Later analysis using actual 2006 data showed that, rather than
achieving budget neutrality between the two models, expenditures under
the RUG-53 model were significantly higher than intended. For FY 2010,
we estimate expenditures to be $1.05 billion higher than intended.
As noted previously, we do not agree that updating our analysis
using CY 2006 data captured payments related to increased case mix
rather than establishing budget neutrality between the two models.
First, by using 2006 data to estimate expenditures under both models,
we incorporate the same case-mix changes into the estimated expenditure
levels for RUG-44 as well as for RUG-53. Second, we believe it is
appropriate to standardize the new model for the time period in which
it is being introduced. The only reason we used 2001 data in the
original calculation is that it was the best data available at the
time. The CY 2006 data allowed us to calibrate the RUG-53 model more
precisely for its first year of operation.
One commenter recommended using alternative time periods in
calculating the budget neutrality adjustment. However, while it might
be possible to use some or all of CY 2005 rather than CY 2006 data,
using CY 2005 data still requires us to use a projection of the
distributional shift to the nine new groups in the RUG-53 group model.
We believe that using actual instead of projected data is the most
appropriate approach. We also looked at a second recommended
alternative, which involved averaging data periods directly before and
after implementation of the RUG-53 model; 2005 for the RUG-44 model and
2006 for the RUG-53 model. Again, we believe that using actual
utilization data for CY 2006 is more accurate, as actual case mix
during the calibration year is the basis for computing the case-mix
adjustment. We have determined that using the 2006 data instead of the
suggested alternatives is the most appropriate data to adopt.
Comment: A few commenters stated that CMS failed to make public all
information needed to provide sufficient explanation of the basis for
the recalibration. The commenters indicated that the negative $1.05
billion impact of the recalibration should be similar to that proposed
in the 2009 proposed rule, and questioned the reasons for the change.
Further, the commenters suggested that CMS has failed to provide the
public with the aggregate baseline spending values that CMS used in
making the initial FY 2006 ``parity'' adjustment and the one that is
currently being used in the FY 2010 proposed rule.
Response: In the FY 2009 rule, actual data were used to compare
payments in 2006 under RUG-44 and RUG-53. At that time it was decided
that an adjustment was necessary to recalibrate the CMIs because the
adjustments in place since FY 2006, which were supposed to be budget
neutral, actually resulted in a 3.3 percent overpayment to SNFs. It was
also determined that the adjustment necessary to attain the appropriate
3.3 percent reduction in payments was a 9.68 percent increase to the
unadjusted RUG-53 case-mix indexes (73 FR 46422, August 8, 2008), to
replace the 17.90 percent adjustment that was in place since 2006. To
determine the dollar impact ($780 million) for the FY 2009 rule, the
3.3 percent was applied to the estimated Medicare reimbursement to SNFs
in FY 2008, which is net of beneficiary cost-sharing. For the FY 2010
rule, the same data and methodology were used as in the FY 2009 rule,
which determined that an overpayment of 3.3 percent has been in place
since 2006, requiring an adjustment to the nursing case-mix indexes of
9.68 percent (74 FR 22214, May 12, 2009) to replace the 17.90 percent
adjustment. However, we believe that the presentation of the dollar
impact would be more accurately reflected by applying the overpayment
percentage to total SNF payments, including beneficiary cost-sharing
amounts. The reason for using these higher payments to determine the
dollar impact is because this is how the impact will play out in actual
practice. Specifically, the revised 9.68 percent adjustment to the
nursing CMIs is used to calculate total payments to SNFs, which reflect
a combination of reimbursement from Medicare along with beneficiary
cost-sharing. However, as the daily coinsurance amount for days 21-100
in the SNF is set by law (in section 1813(a)(3) of the Act) at one-
eighth of the current calendar year's inpatient hospital deductible
amount, the beneficiary cost-sharing is unaffected by the change in
payments resulting from the recalibration. This point is best
illustrated by way of an example: Total payments to SNFs in FY 2009 are
estimated at approximately $31.3 billion, consisting of $25.9 billion
in Medicare reimbursement and $5.4 billion in beneficiary cost-sharing.
The impact of the recalibration lowers total payments to SNFs by
approximately $1 billion (or 3.3 percent), to about $30.3 billion. Of
this $30.3 billion, beneficiary cost-sharing (as determined by the
statutory formula) remains unchanged at $5.4 billion, while Medicare
reimbursement is reduced to $24.8 billion. Thus, although the
determination of the total dollar impact changed, the methodology used
to determine the need to recalibrate the CMIs did not change from FY
2009 to FY 2010. The total payments to SNFs that are used to determine
the dollar impacts are not explicitly published anywhere, but can be
easily estimated by dividing the dollar impacts by the percentage
impact. These results can be confirmed by contacting the CMS Office of
the Actuary.
Comment: Some commenters believed that CMS failed to provide
sufficient information for a third party to reproduce CMS's conclusions
with regard to the recalibrated parity
[[Page 40296]]
adjustment, noting the following specific elements: The baseline used
for FY 2010, the CY 2006 days of service for both the RUG-44 and RUG-53
systems, and the separate values for the recalibrated parity adjustment
factor and the NTA cost adjustment factor for FY 2010.
Response: We do not agree with the commenters' assertion. The
methodology used to establish the case-mix adjustments is the same as
that described in detail in the FY 2006 SNF PPS proposed rule (70 FR
29077 through 29079, May 19, 2005), the FY 2009 SNF PPS proposed rule
(73 FR 25923, May 7, 2008) and the FY 2009 SNF PPS final rule (73 FR
46421-22, August 8, 2008). In addition, the data used to calculate the
adjustments are publicly available on the CMS Web site, as explained
below. We used the CY 2006 days of service (available in the Downloads
section of our Web site at http://www.cms.hhs.gov/SNFPPS/02_
Spotlight.asp) for both the RUG-44 and RUG-53 systems. We multiplied
the CY 2006 days of service by the FY 2008 unadjusted Federal per diem
payment rate components (72 FR 43416, August 3, 2007) multiplied by the
unadjusted case-mix indexes (available in the Downloads section of our
Web site at http://www.cms.hhs.gov/SNFPPS/09_RUGRefinement.asp) to
establish expenditures under the RUG-44 and RUG-53 systems. The budget
neutrality adjustment was determined as the percentage increase
necessary for the nursing CMIs to generate estimated expenditure levels
under the RUG-53 system that were equal to estimated expenditure levels
under the RUG-44 system. We then calculated a second adjustment factor
to increase the baseline by an amount that served to offset the
variability in NTA utilization.
The separate recalibrated parity adjustment factor and the NTA cost
adjustment factor were considered in the calculation of the combined
parity adjustment factor of 9.68 in the FY 2009 SNF PPS proposed rule
(73 FR 25923, May 7, 2008), the FY 2009 SNF PPS final rule (73 FR
46421-22, August 8, 2008), and the FY 2010 SNF PPS proposed rule (74 FR
22214, May 12, 2009). We presented the total adjustment to the nursing
case-mix indexes of 9.68 percent because this reflects all changes to
the payment system with respect to the recalibration. The percentage
adjustment to the nursing CMIs to maintain parity between the 44-group
and 53-group models is a 2.43 percent increase. The adjustment to
account for the variability in the non-therapy ancillary utilization is
a 7.08 percent increase. The separate adjustments represent interim
steps in the calculations, and the final result of 9.68 percent
represents the complete change to aggregate payments.
Although the SNF baseline is not explicitly published, the baseline
used can be determined by dividing the dollar impacts by the percentage
impact. Many commenters used this approach to conduct their own
analyses. Some of the commenters contacted CMS to confirm the baseline
in use, and this information was provided or verified.
Comment: A few commenters believe that CMS failed to explain fully
the evaluation done since the FY 2009 final rule to support the
decision to proceed with the recalibration for FY 2010.
Response: The analytic methodology and calculations were explained
in detail in the FY 2009 proposed and final rules. In the final rule,
we explained that we were deferring rather than withdrawing the
recalibration proposal. After the publication of the FY 2009 final
rule, we worked with CMS staff and contractors, and reviewed the entire
methodology with our actuaries. We reviewed the recalibration approach
with the CMS actuaries, asked for an independent review by one of our
contractors, and met with an industry representative to discuss the
methodology. The calculations were determined to be mathematically
correct. The approach was reconsidered along with alternative
approaches that we presented in our FY 2009 final rule (73 FR 46423,
46439-40) and those offered by industry. Based on our results from
these steps, we determined that our methodology was appropriate and
reissued the proposal for FY 2010. In addition, we further considered
the effects of the recalibration on beneficiaries, SNF clinical staff,
and quality of care, and as explained in the FY 2010 proposed rule (74
FR 22214), we determined that it is appropriate to proceed with the
recalibration in FY 2010. As we explained in the FY 2010 proposed rule
(74 FR 22214), by recalibrating the CMIs under the 53-group model, we
expect to restore SNF payments to their appropriate level by correcting
an inadvertent increase in overall payments. Because the recalibration
would simply remove an unintended overpayment rather than decrease an
otherwise appropriate payment amount, we do not believe that the
recalibration should negatively affect beneficiaries, clinical staff,
or quality of care, or create an undue hardship on providers. The
purpose of the FY 2006 refinements was to reallocate payments so that
they more accurately reflect resources used, not to increase or
decrease overall expenditures. Thus, we believe that it is appropriate
to proceed with the recalibration in order to ensure that we correctly
accomplish the purpose of the FY 2006 case-mix refinements and restore
payments to their appropriate level.
Comment: Several commenters stated that the need for the
recalibration arose because CMS initial projections of utilization
under the refined case-mix system proved to be inaccurate once actual
utilization data became available. They then asserted that in view of
this, the proposed recalibration represents a ``forecast error
adjustment'' that is not covered under the statutory authority to
provide for an appropriate adjustment to account for case mix (section
1888(e)(4)(G)(i) of the Act).
Response: It would be incorrect to characterize the proposed
recalibration as a ``forecast error adjustment,'' as that term refers
solely to an adjustment that compensates for an inaccurate forecast of
the annual inflation factor in the SNF market basket, as described in
section III.F.2 of this final rule (see 42 CFR 413.337(d)(2)). By
contrast, the proposed recalibration would serve to ensure that the
2006 case-mix refinements are implemented as intended. As such, it
would be integral to the process of providing ``* * * for an
appropriate adjustment to account for case mix'' that is based upon
appropriate data in accordance with section 1888(e)(4)(G)(i) of the
Act.
Comment: A number of comments included references to the discussion
of the 2006 case-mix refinements in the SNF PPS proposed rule for FY
2006 (70 FR 29079, May 19, 2005), in which we explained that we were
``* * * advancing these proposed changes under our authority in section
101(a) of the BBRA to establish case-mix refinements, and that the
changes we are hereby proposing will represent the final adjustments
made under this authority'' (emphasis added). The commenters stated
that this earlier description of the 2006 case-mix refinements as
``final'' effectively precludes CMS from proceeding with a
recalibration, which they characterized as representing a further
refinement. Similarly, several commenters also questioned our authority
to recalibrate the case-mix system prior to the completion of the
STRIVE STM project. In addition, several commenters questioned whether
CMS has the authority to impose a budget neutrality requirement on the
introduction of a new classification model.
Response: We wish to clarify that the actual ``refinement'' that we
proposed and implemented in the FY 2006
[[Page 40297]]
rulemaking cycle consisted of our introduction of the 9 new
Rehabilitation plus Extensive Services groups at the top of the
previous, 44-group RUG hierarchy, along with the adjustment recognizing
the variability of NTA use, which together fulfilled the provisions of
section 101(a) of the BBRA. The accompanying adjustment to the case-mix
indexes (CMIs) was merely a vehicle through which we implemented that
refinement. Rather than representing a new or further ``refinement'' in
itself, the proposed recalibration merely serves to ensure that we
correctly accomplish a revision to the CMIs that accompanied the FY
2006 case-mix refinements.
In the FY 2006 final rule (70 FR 45033, August 4, 2005), we
addressed the introduction of the refinements within the broader
context of ensuring payment accuracy and beneficiary access to care. We
pointed out that
* * * this incremental change is part of this ongoing process that
will also include update activities such as the upcoming STM study
and investigation of potential alternatives to the RUG system
itself. However, the commitment to long term analysis and refinement
should not preclude the introduction of more immediate
methodological and policy updates.
Finally, the budget neutrality factor was applied to the unadjusted
RUG-53 case-mix weights that were introduced in January 2006. As stated
above, our initial analyses indicated that payments would be lower
under the RUG-53 model. As the purpose of the refinement was to
reallocate payments, and not to reduce expenditures, we believe that
increasing the case-mix weights to equalize payments under the two
models is an appropriate exercise of our broad authority to establish
an appropriate case-mix system. We further note that the FY 2006
refinement to the case-mix classification system using adjusted CMIs
was implemented through the rulemaking process, and we received no
comments on the use of a budget neutrality adjustment at that time.
Comment: Some commenters argued against implementing the proposed
recalibration by asserting that it is important to maintain Medicare
SNF payments at their current levels in order to cross-subsidize what
they characterized as inadequate payment rates for nursing facilities
under the Medicaid program. Other commenters urged CMS to reconsider
the recalibration in light of the potential national impact in a weak
economy. A few commenters asserted that the recalibration would have
the same impact as the original implementation of the SNF PPS, which
they asserted had pushed providers into bankruptcy.
Response: We wish to clarify that it is not the appropriate role of
the Medicare SNF benefit to cross-subsidize nursing home payments made
under the Medicaid program. We note that MedPAC has indicated that it
is inappropriate for the Medicare program's SNF payments to cross-
subsidize Medicaid nursing facility rates in this manner. Specifically,
on page 152 of its March 2008 Report to the Congress on Medicare
Payment Policy (which is available online at http://medpac.gov/
documents/Mar08_EntireReport.pdf), MedPAC stated:
There are several reasons why Medicare cross-subsidization is
not advisable policy for the Medicare program. On average, Medicare
payments accounted for 21 percent of revenues to freestanding SNFs
in 2006. As a result, the policy would use a minority of Medicare
payments to subsidize a majority of Medicaid payments. If Medicare
were to pay still higher rates, facilities with high shares of
Medicare payments--presumably the facilities that need revenues the
least--would receive the most in subsidies from the higher Medicare
payments. In other words, the subsidy would be poorly targeted.
Given the variation among States in the level and method of nursing
home payments, the impact of the subsidy would be highly variable;
in States where Medicaid payments were adequate, it would have no
positive impact. In addition, increasing Medicare's payment rates
could encourage States to reduce Medicaid payments further and, in
turn, result in pressure to again raise Medicare rates. It could
also encourage providers to select patients based on payer source or
to rehospitalize dual-eligible patients so that they qualified for a
Medicare-covered, and higher payment, stay.
We agree with MedPAC and, therefore, do not agree with the
commenters that cited cross-subsidizing Medicaid as a justification for
maintaining Medicare SNF payments at any specific level.
We are also aware of the concerns that reductions in payment levels
can have a negative impact on SNFs and the quality of care furnished to
nursing home patients across the country. However, in this particular
case, we have proposed to correct, on a prospective basis, an
overpayment situation that has been in effect since January 2006. To
avoid possible negative consequences, we have decided not to go back
and recoup the excess expenditures made to SNFs ever since January
2006. Instead, we are limiting the scope of the recalibration to
restoring the intended SNF PPS payment levels on a prospective basis
only, effective October 1, 2010.
We have also considered the concerns raised by industry
representatives that restoring the intended payment levels will result
in job losses and add significant burden to health care workers and
State governments. CMS cost report and Online Survey Certification and
Reporting System (OSCAR) data show that, for the majority of SNFs that
operate as freestanding facilities or as parts of chains, there has
been little change in staffing or in facility costs since 2006.
Therefore, as data do not indicate that the overpayment was used to
increase staffing during this time, we do not believe that restoring
payments to their intended and appropriate levels should necessarily
result in job losses or add significant burden to health care workers
and State governments. Further, in its March 2009 Report to the
Congress (available online at http://www.medpac.gov/documents/Mar09_
EntireReport.pdf), MedPAC reports that average Medicare margins have
increased for freestanding SNFs since 2005. In 2007, the aggregate
Medicare margin for freestanding SNFs was 14.5 percent, up from 13.3
percent in 2006.
A few commenters expressed concern that the recalibration would
have the same impact as the original implementation of the SNF PPS in
the late 1990s, which they asserted had pushed providers into
bankruptcy. However, studies have indicated multiple factors for those
nursing home closures. Castle et al studied the rate of nursing home
closures for 7 years (1999-2005).\1\ Those reasons for bankruptcy
included internal factors such as quality, organizational factors such
as chain membership, and external factors such as competition. Nursing
homes most likely to close included those with higher rates of
deficiency citations, hospital-based facilities, chain members, small
bed size, and facilities located in markets with high levels of
competition. A recent study examined nursing homes terminated from the
Medicare and Medicaid programs.\2\ The study found that the
introduction of the prospective case-mix system was not the sole cause
of the fiscal instabilities that led these providers to terminate their
participation in Medicare. The authors state that some of the fiscal
instability was self-inflicted, due to investment
[[Page 40298]]
decisions made in an uncertain market and misreading the changing
reimbursement environment.
---------------------------------------------------------------------------
\1\ Castle NG, Engberg J, Lave J, Fisher A. Factors Associated
with Increasing Nursing Home Closures, Health Services Research 44:
(3) June 2009, pp. 1088-1109.
\2\ Zinn J, Mor V, Feng Z, Intrator O. Determinants of
performance failure in the nursing home industry, Social Science &
Medicine 68: (5), March, 2009, pp. 933-940.
---------------------------------------------------------------------------
A similar finding had been reported in the March 2002 MedPAC
report.\3\ MedPAC noted that the ability to service debt was the same
under PPS as under cost-based payments. Finally, a 2000 GAO report
stated that the bankruptcies resulted from heavy business investments
in ancillary service lines and high capital-related costs such as
depreciation, interest, and rent.\4\
---------------------------------------------------------------------------
\3\ Report to the Congress: Medicare Payment Policy, ``Section
2D: Skilled nursing facility,'' March 2002, pp. 85-90.
\4\ General Accounting Office. Nursing homes: aggregate Medicare
payments are adequate despite bankruptcies. No T-HEHS-00-192.
Washington (DC), GAO. September 2000.
---------------------------------------------------------------------------
Research fails to indicate that case-mix reimbursement is a
significant contributor to nursing home bankruptcy. Thus, we do not
agree with the commenters who asserted that the recalibration of
Medicare CMIs to restore budget neutrality on a prospective basis will
force providers into bankruptcy, or create the type of fiscal pressure
that would negatively affect facility staffing or the quality of care
furnished to Medicare beneficiaries. As regards the comment that CMS
should reconsider the recalibration in light of the potential impact on
a weak economy, we do not believe that a weak economy justifies
perpetuating an overpayment.
Comment: Several commenters asserted that a shift in patients from
Inpatient Rehabilitation Facilities (IRFs) to SNFs results in savings
to the Medicare Trust Fund and that the current SNF spending levels are
needed to treat higher acuity patients that are now being treated in
SNFs rather than IRFs. They asserted that the recalibration adjustment
should not be made because SNFs used the money to expand their
infrastructures to handle more seriously ill patients who were
previously treated in IRFs, and that their actions actually saved
Medicare dollars. Specifically, these commenters asserted that a shift
of patients from IRFs to SNFs resulted in savings to the Medicare Trust
Fund, and that SNFs need to maintain current SNF spending levels to
treat this new type of patients. Underlying these comments is the
assumption that SNFs are providing care for the same type of patients
who would otherwise qualify for the higher IRF payments.
Response: We note that a basic principle of the SNF PPS is to pay
appropriately for the services provided. CMS data are consistent with
the commenters' assertions that many patients formerly being treated in
IRFs are now being treated in SNFs or Home Health Agencies (HHAs). In
fact, our data show that a portion of patients needing rehabilitation
have always been treated at SNFs and HHAs. The CY 2006 distribution
used to recalibrate the case-mix adjustments reflects an increase in
rehabilitation patients, and probably includes patients who might have
been admitted to the higher-paying IRFs prior to CMS enforcement of IRF
facility compliance criteria and more intensive medical review of IRF
claims. However, we do not agree that these patients represent a higher
level of acuity than the type of patients historically treated in SNFs.
In fact, the decrease in the number of patients admitted to IRFs
reflects that subset of the rehabilitation population that was not
appropriate for IRF care. As such, CMS may have overpaid IRFs for more
routine orthopedic cases, such as single joint knee replacements. For
those former IRF patients who are appropriate for SNF care, we must pay
the appropriate rate for the SNF services provided, and cannot use a
reduction in IRF overpayments as a reason to increase payments under
the SNF PPS. In discussing the proposed recalibration, it is important
to bear in mind that recalibrating CMIs would not change the relative
nature of higher payments for patients using more staff resources and
services.
Accordingly, for the reasons specified in the FY 2010 proposed rule
(74 FR 22214-22215), we are finalizing the recalibration of the parity
adjustment to the RUG-53 case-mix indexes in order to restore the
intended parity in overall payments between the RUG-44 model and the
RUG-53 model, and the factor used to recognize variability in NTA
utilization, using the methodology described in the FY 2009 proposed
and final rules (73 FR 25923, 73 FR 46421-24). Thus, for FY 2010, the
aggregate impact of this recalibration would be the difference between
payments calculated using the original FY 2006 total CMI increase of
17.9 percent and payments calculated using the recalibrated total CMI
increase of 9.68 percent. The total difference is a decrease in
payments of $1.05 billion (on an incurred basis) in payments for FY
2010. We also note that the negative $1.05 billion would be partly
offset by the FY 2010 market basket adjustment factor of 2.2 percent,
or $690 million, with a net result of a negative 1.1 percent update of
$360 million for FY 2010. Again, we want to emphasize that we are
implementing the recalibration on a prospective basis, which is the
strategy that we believe best mitigates the potential impact on
providers. By using CY 2006 claims data (which represent actual RUG-53
utilization), rather than FY 2001 claims data, we believe the SNF PPS
will better reflect resources used, resulting in more accurate payment.
We list the case-mix adjusted payment rates separately for urban
and rural SNFs in Tables 4 and 5, with the corresponding case-mix
values. These tables do not reflect the AIDS add-on enacted by section
511 of the MMA, which we apply only after making all other adjustments
(wage and case-mix).
Table 4--RUG-53--Case-Mix Adjusted Federal Rates and Associated Indexes, Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-III category Nursing index Therapy index component component therapy comp. component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 1.77 2.25 274.76 263.09 .............. 79.22 617.07
RUL..................................... 1.31 2.25 203.35 263.09 .............. 79.22 545.66
RVX..................................... 1.44 1.41 223.53 164.87 .............. 79.22 467.62
RVL..................................... 1.24 1.41 192.49 164.87 .............. 79.22 436.58
RHX..................................... 1.33 0.94 206.46 109.91 .............. 79.22 395.59
RHL..................................... 1.27 0.94 197.14 109.91 .............. 79.22 386.27
RMX..................................... 1.80 0.77 279.41 90.04 .............. 79.22 448.67
RML..................................... 1.57 0.77 243.71 90.04 .............. 79.22 412.97
RLX..................................... 1.22 0.43 189.38 50.28 .............. 79.22 318.88
RUC..................................... 1.20 2.25 186.28 263.09 .............. 79.22 528.59
RUB..................................... 0.92 2.25 142.81 263.09 .............. 79.22 485.12
[[Page 40299]]
RUA..................................... 0.78 2.25 121.08 263.09 .............. 79.22 463.39
RVC..................................... 1.14 1.41 176.96 164.87 .............. 79.22 421.05
RVB..................................... 1.01 1.41 156.78 164.87 .............. 79.22 400.87
RVA..................................... 0.77 1.41 119.53 164.87 .............. 79.22 363.62
RHC..................................... 1.13 0.94 175.41 109.91 .............. 79.22 364.54
RHB..................................... 1.03 0.94 159.89 109.91 .............. 79.22 349.02
RHA..................................... 0.88 0.94 136.60 109.91 .............. 79.22 325.73
RMC..................................... 1.07 0.77 166.10 90.04 .............. 79.22 335.36
RMB..................................... 1.01 0.77 156.78 90.04 .............. 79.22 326.04
RMA..................................... 0.97 0.77 150.57 90.04 .............. 79.22 319.83
RLB..................................... 1.06 0.43 164.54 50.28 .............. 79.22 294.04
RLA..................................... 0.79 0.43 122.63 50.28 .............. 79.22 252.13
SE3..................................... 1.72 .............. 267.00 .............. 15.40 79.22 361.62
SE2..................................... 1.38 .............. 214.22 .............. 15.40 79.22 308.84
SE1..................................... 1.17 .............. 181.62 .............. 15.40 79.22 276.24
SSC..................................... 1.14 .............. 176.96 .............. 15.40 79.22 271.58
SSB..................................... 1.05 .............. 162.99 .............. 15.40 79.22 257.61
SSA..................................... 1.02 .............. 158.33 .............. 15.40 79.22 252.95
CC2..................................... 1.13 .............. 175.41 .............. 15.40 79.22 270.03
CC1..................................... 0.99 .............. 153.68 .............. 15.40 79.22 248.30
CB2..................................... 0.91 .............. 141.26 .............. 15.40 79.22 235.88
CB1..................................... 0.84 .............. 130.39 .............. 15.40 79.22 225.01
CA2..................................... 0.83 .............. 128.84 .............. 15.40 79.22 223.46
CA1..................................... 0.75 .............. 116.42 .............. 15.40 79.22 211.04
IB2..................................... 0.69 .............. 107.11 .............. 15.40 79.22 201.73
IB1..................................... 0.67 .............. 104.00 .............. 15.40 79.22 198.62
IA2..................................... 0.57 .............. 88.48 .............. 15.40 79.22 183.10
IA1..................................... 0.53 .............. 82.27 .............. 15.40 79.22 176.89
BB2..................................... 0.68 .............. 105.56 .............. 15.40 79.22 200.18
BB1..................................... 0.65 .............. 100.90 .............. 15.40 79.22 195.52
BA2..................................... 0.56 .............. 86.93 .............. 15.40 79.22 181.55
BA1..................................... 0.48 .............. 74.51 .............. 15.40 79.22 169.13
PE2..................................... 0.79 .............. 122.63 .............. 15.40 79.22 217.25
PE1..................................... 0.77 .............. 119.53 .............. 15.40 79.22 214.15
PD2..................................... 0.72 .............. 111.77 .............. 15.40 79.22 206.39
PD1..................................... 0.70 .............. 108.66 .............. 15.40 79.22 203.28
PC2..................................... 0.66 .............. 102.45 .............. 15.40 79.22 197.07
PC1..................................... 0.65 .............. 100.90 .............. 15.40 79.22 195.52
PB2..................................... 0.52 .............. 80.72 .............. 15.40 79.22 175.34
PB1..................................... 0.50 .............. 77.62 .............. 15.40 79.22 172.24
PA2..................................... 0.49 .............. 76.06 .............. 15.40 79.22 170.68
PA1..................................... 0.46 .............. 71.41 .............. 15.40 79.22 166.03
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 5--RUG-53--Case-Mix Adjusted Federal Rates and Associated Indexes, Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Therapy Non-case mix Non-case mix
RUG-III category Nursing index Therapy index component component therapy comp. component Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX..................................... 1.77 2.25 262.51 303.37 .............. 80.69 646.57
RUL..................................... 1.31 2.25 194.29 303.37 .............. 80.69 578.35
RVX..................................... 1.44 1.41 213.57 190.11 .............. 80.69 484.37
RVL..................................... 1.24 1.41 183.90 190.11 .............. 80.69 454.70
RHX..................................... 1.33 0.94 197.25 126.74 .............. 80.69 404.68
RHL..................................... 1.27 0.94 188.35 126.74 .............. 80.69 395.78
RMX..................................... 1.80 0.77 266.96 103.82 .............. 80.69 451.47
RML..................................... 1.57 0.77 232.85 103.82 .............. 80.69 417.36
RLX..................................... 1.22 0.43 180.94 57.98 .............. 80.69 319.61
RUC..................................... 1.20 2.25 177.97 303.37 .............. 80.69 562.03
RUB..................................... 0.92 2.25 136.45 303.37 .............. 80.69 520.51
RUA..................................... 0.78 2.25 115.68 303.37 .............. 80.69 499.74
RVC..................................... 1.14 1.41 169.07 190.11 .............. 80.69 439.87
RVB..................................... 1.01 1.41 149.79 190.11 .............. 80.69 420.59
RVA..................................... 0.77 1.41 114.20 190.11 .............. 80.69 385.00
RHC..................................... 1.13 0.94 167.59 126.74 .............. 80.69 375.02
RHB..................................... 1.03 0.94 152.76 126.74 .............. 80.69 360.19
RHA..................................... 0.88 0.94 130.51 126.74 .............. 80.69 337.94
RMC..................................... 1.07 0.77 158.69 103.82 .............. 80.69 343.20
RMB..................................... 1.01 0.77 149.79 103.82 .............. 80.69 334.30
RMA..................................... 0.97 0.77 143.86 103.82 .............. 80.69 328.37
RLB..................................... 1.06 0.43 157.21 57.98 .............. 80.69 295.88
[[Page 40300]]
RLA..................................... 0.79 0.43 117.16 57.98 .............. 80.69 255.83
SE3..................................... 1.72 .............. 255.09 .............. 16.45 80.69 352.23
SE2..................................... 1.38 .............. 204.67 .............. 16.45 80.69 301.81
SE1..................................... 1.17 .............. 173.52 .............. 16.45 80.69 270.66
SSC..................................... 1.14 .............. 169.07 .............. 16.45 80.69 266.21
SSB..................................... 1.05 .............. 155.73 .............. 16.45 80.69 252.87
SSA..................................... 1.02 .............. 151.28 .............. 16.45 80.69 248.42
CC2..................................... 1.13 .............. 167.59 .............. 16.45 80.69 264.73
CC1..................................... 0.99 .............. 146.83 .............. 16.45 80.69 243.97
CB2..................................... 0.91 .............. 134.96 .............. 16.45 80.69 232.10
CB1..................................... 0.84 .............. 124.58 .............. 16.45 80.69 221.72
CA2..................................... 0.83 .............. 123.10 .............. 16.45 80.69 220.24
CA1..................................... 0.75 .............. 111.23 .............. 16.45 80.69 208.37
IB2..................................... 0.69 .............. 102.33 .............. 16.45 80.69 199.47
IB1..................................... 0.67 .............. 99.37 .............. 16.45 80.69 196.51
IA2..................................... 0.57 .............. 84.54 .............. 16.45 80.69 181.68
IA1..................................... 0.53 .............. 78.60 .............. 16.45 80.69 175.74
BB2..................................... 0.68 .............. 100.85 .............. 16.45 80.69 197.99
BB1..................................... 0.65 .............. 96.40 .............. 16.45 80.69 193.54
BA2..................................... 0.56 .............. 83.05 .............. 16.45 80.69 180.19
BA1..................................... 0.48 .............. 71.19 .............. 16.45 80.69 168.33
PE2..................................... 0.79 .............. 117.16 .............. 16.45 80.69 214.30
PE1..................................... 0.77 .............. 114.20 .............. 16.45 80.69 211.34
PD2..................................... 0.72 .............. 106.78 .............. 16.45 80.69 203.92
PD1..................................... 0.70 .............. 103.82 .............. 16.45 80.69 200.96
PC2..................................... 0.66 .............. 97.88 .............. 16.45 80.69 195.02
PC1..................................... 0.65 .............. 96.40 .............. 16.45 80.69 193.54
PB2..................................... 0.52 .............. 77.12 .............. 16.45 80.69 174.26
PB1..................................... 0.50 .............. 74.16 .............. 16.45 80.69 171.30
PA2..................................... 0.49 .............. 72.67 .............. 16.45 80.69 169.81
PA1..................................... 0.46 .............. 68.22 .............. 16.45 80.69 165.36
--------------------------------------------------------------------------------------------------------------------------------------------------------
3. Wage Index Adjustment to Federal Rates
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
Federal rates to account for differences in area wage levels, using a
wage index that we find appropriate. Since the inception of a PPS for
SNFs, we have used hospital wage data in developing a wage index to be
applied to SNFs.
In the FY 2010 proposed rule, we proposed to continue that
practice, as we continue to believe that in the absence of SNF-specific
wage data, using the hospital inpatient wage index is appropriate and
reasonable for the SNF PPS. As explained in the update notice for FY
2005 (69 FR 45786, July 30, 2004), the SNF PPS does not use the
hospital area wage index's occupational mix adjustment, as this
adjustment serves specifically to define the occupational categories
more clearly in a hospital setting; moreover, the collection of the
occupational wage data also excludes any wage data related to SNFs.
Therefore, we believe that using the updated wage data exclusive of the
occupational mix adjustment continues to be appropriate for SNF
payments.
In the FY 2010 proposed rule, we also proposed to continue using
the same methodology discussed in the SNF PPS final rule for FY 2008
(72 FR 43423) to address those geographic areas in which there are no
hospitals and, thus, no hospital wage index data on which to base the
calculation of the FY 2010 SNF PPS wage index. For rural geographic
areas that do not have hospitals and, therefore, lack hospital wage
data on which to base an area wage adjustment, we proposed to use the
average wage index from all contiguous CBSAs as a reasonable proxy.
This methodology is used to construct the wage index for rural
Massachusetts. However, we indicated that we would not apply this
methodology to rural Puerto Rico due to the distinct economic
circumstances that exist there, but instead would continue using the
most recent wage index previously available for that area. For urban
areas without specific hospital wage index data, we proposed to use the
average wage indexes of all of the urban areas within the State to
serve as a reasonable proxy for the wage index of that urban CBSA. The
only urban area without wage index data available is CBSA (25980)
Hinesville-Fort Stewart, GA.
The comments that we received on the wage index adjustment to the
Federal rates, and our responses to those comments, appear below.
Comment: A commenter requested that CMS develop a method of
gathering wage data information that would directly reflect the wages
earned in both rural and urban SNF settings.
Response: As described above, hospital wage data are used in
developing a wage index to be applied to SNFs. All hospitals, both
rural and urban, are used to establish the hospital wage data used to
construct the SNF PPS wage index. Therefore, we believe that the SNF
PPS wage index adequately captures earned wages across both urban and
rural settings. Further, as discussed in greater detail below, we have
been unable to develop a SNF-specific wage index due to ``* * * the
volatility of existing SNF wage data and the significant amount of
resources that would be required to improve the quality of that data''
(73 FR 46426, August 8, 2008).
Comment: Several commenters asked CMS to consider adopting certain
wage index policies in use under the acute IPPS, such as
reclassification, because SNFs compete in a similar labor pool as acute
care hospitals. In addition, a few commenters recommended that CMS
develop a SNF-specific wage index. One commenter requested that we
revisit the use of CBSA labor market areas and
[[Page 40301]]
develop an alternative that better captures Statewide labor market
trends.
Response: The regulations that govern the SNF PPS currently do not
provide a mechanism for allowing providers to seek geographic
reclassification. Moreover, as we have explained in the past (most
recently, in the SNF PPS final rule for FY 2009 (73 FR 46416, 46426,
August 8, 2008), while section 315 of the Benefits Improvement and
Protection Act of 2000 (BIPA, Pub. L. 106-554) does authorize us to
establish such a reclassification methodology under the SNF PPS, it
additionally stipulates that such reclassification cannot be
implemented until we have collected the data necessary to establish a
SNF-specific wage index. This, in turn, has proven to be infeasible due
to ``* * * the volatility of existing SNF wage data and the significant
amount of resources that would be required to improve the quality of
that data'' (73 FR 46426, August 8, 2008). We continue to believe that
these factors make it unlikely for such an approach to yield meaningful
improvements in our ability to determine facility payments, or to
justify the significant increase in administrative resources as well as
burden on providers what this type of data collection would involve.
In addition, we reviewed the Medicare Payment Advisory Commission's
(MedPAC) wage index recommendations as discussed in MedPAC's June 2007
report entitled, ``Report to Congress: Promoting Greater Efficiency in
Medicare.'' Although some commenters recommend that we adopt the IPPS
wage index policies such as reclassification and floor policies, we
note that MedPAC's June 2007 report to Congress recommends that
Congress ``repeal the existing hospital wage index statute, including
reclassification and exceptions, and give the Secretary authority to
establish new wage index systems.'' We believe that adopting the IPPS
wage index policies (such as reclassification or floor) would not be
prudent at this time, because MedPAC suggests that the reclassification
and exception policies in the IPPS wage index alters the wage index
values for one-third of IPPS hospitals. In addition, MedPAC found that
the exceptions may lead to anomalies in the wage index. By adopting the
IPPS reclassification and exceptions at this time, the SNF PPS wage
index could become vulnerable to problems similar to those that MedPAC
identified in their June 2007 Report to Congress. However, we will
continue to review and consider MedPAC's recommendations on a refined
or alternative wage index methodology for the SNF PPS in future years.
We also note that section 106(b)(2) of the Medicare Improvements
and Extension Act (MIEA) of 2006 (which is Division B of the Tax Relief
and Health Care Act (TRHCA) of 2006, Public Law 109-432, collectively
referred to as ``MIEA-TRHCA'') required the Secretary of Health and
Human Services, taking into account MedPAC's recommendations on the
Medicare wage index classification system, to include in the FY 2009
IPPS proposed rule one or more proposals to revise the wage index
adjustment applied under section 1886(d)(3)(E) of the Act for purposes
of the IPPS. To assist CMS in meeting the requirements of section
106(b)(2) of MIEA-TRHCA, in February 2008, CMS awarded a Task Order
under its Expedited Research and Demonstration Contract, to Acumen,
LLC. Acumen, LLC conducted a study of both the current methodology used
to construct the Medicare wage index and the recommendations reported
to Congress by MedPAC. Part One of Acumen's final report, which
analyzes the strengths and weaknesses of the data sources used to
construct the CMS and MedPAC indexes, is available online at http://
www.acumenllc.com/reports/cms. MedPAC's recommendations are presented
in the FY 2009 IPPS final rule (http://edocket.access.gpo.gov/2008/pdf/
E8-17914.pdf). We plan to continue monitoring wage index research
efforts and the impact or influence they may have for the SNF PPS wage
index.
Moreover, in light of all of the pending research and review of
wage index issues in general, we believe that it would be premature at
this time to initiate revisiting the use of CBSA labor market areas and
review of a SNF-specific wage index.
Therefore, in this final rule, we will continue to use hospital
wage data exclusive of the occupational mix adjustment to calculate the
SNF PPS wage index adjustment, and we are finalizing the wage index and
associated policies as proposed in the SNF PPS proposed rule for FY
2010 (74 FR 22217-22219, May 12, 2009).
To calculate the SNF PPS wage index adjustment, we apply the wage
index adjustment to the labor-related portion of the Federal rate,
which is 69.840 percent of the total rate. This percentage reflects the
labor-related relative importance for FY 2010, using the revised and
rebased FY 2004-based market basket. The labor-related relative
importance for FY 2009 was 69.783, as shown in Table 16. We calculate
the labor-related relative importance from the SNF market basket, and
it approximates the labor-related portion of the total costs after
taking into account historical and projected price changes between the
base year and FY 2010. The price proxies that move the different cost
categories in the market basket do not necessarily change at the same
rate, and the relative importance captures these changes. Accordingly,
the relative importance figure more closely reflects the cost share
weights for FY 2010 than the base year weights from the SNF market
basket.
We calculate the labor-related relative importance for FY 2010 in
four steps. First, we compute the FY 2010 price index level for the
total market basket and each cost category of the market basket.
Second, we calculate a ratio for each cost category by dividing the FY
2010 price index level for that cost category by the total market
basket price index level. Third, we determine the FY 2010 relative
importance for each cost category by multiplying this ratio by the base
year (FY 2004) weight. Finally, we add the FY 2010 relative importance
for each of the labor-related cost categories (wages and salaries,
employee benefits, non-medical professional fees, labor-intensive
services, and a portion of capital-related expenses) to produce the FY
2010 labor-related relative importance. Tables 6 and 7 show the Federal
rates by labor-related and non-labor-related components.
Table 6--RUG-53--Case-Mix Adjusted Federal Rates for Urban SNFs by Labor and Non-Labor Component
----------------------------------------------------------------------------------------------------------------
Non-labor
RUG-III category Total rate Labor portion portion
----------------------------------------------------------------------------------------------------------------
RUX............................................................. 617.07 430.96 186.11
RUL............................................................. 545.66 381.09 164.57
RVX............................................................. 467.62 326.59 141.03
RVL............................................................. 436.58 304.91 131.67
RHX............................................................. 395.59 276.28 119.31
RHL............................................................. 386.27 269.77 116.50
[[Page 40302]]
RMX............................................................. 448.67 313.35 135.32
RML............................................................. 412.97 288.42 124.55
RLX............................................................. 318.88 222.71 96.17
RUC............................................................. 528.59 369.17 159.42
RUB............................................................. 485.12 338.81 146.31
RUA............................................................. 463.39 323.63 139.76
RVC............................................................. 421.05 294.06 126.99
RVB............................................................. 400.87 279.97 120.90
RVA............................................................. 363.62 253.95 109.67
RHC............................................................. 364.54 254.59 109.95
RHB............................................................. 349.02 243.76 105.26
RHA............................................................. 325.73 227.49 98.24
RMC............................................................. 335.36 234.22 101.14
RMB............................................................. 326.04 227.71 98.33
RMA............................................................. 319.83 223.37 96.46
RLB............................................................. 294.04 205.36 88.68
RLA............................................................. 252.13 176.09 76.04
SE3............................................................. 361.62 252.56 109.06
SE2............................................................. 308.84 215.69 93.15
SE1............................................................. 276.24 192.93 83.31
SSC............................................................. 271.58 189.67 81.91
SSB............................................................. 257.61 179.91 77.70
SSA............................................................. 252.95 176.66 76.29
CC2............................................................. 270.03 188.59 81.44
CC1............................................................. 248.30 173.41 74.89
CB2............................................................. 235.88 164.74 71.14
CB1............................................................. 225.01 157.15 67.86
CA2............................................................. 223.46 156.06 67.40
CA1............................................................. 211.04 147.39 63.65
IB2............................................................. 201.73 140.89 60.84
IB1............................................................. 198.62 138.72 59.90
IA2............................................................. 183.10 127.88 55.22
IA1............................................................. 176.89 123.54 53.35
BB2............................................................. 200.18 139.81 60.37
BB1............................................................. 195.52 136.55 58.97
BA2............................................................. 181.55 126.79 54.76
BA1............................................................. 169.13 118.12 51.01
PE2............................................................. 217.25 151.73 65.52
PE1............................................................. 214.15 149.56 64.59
PD2............................................................. 206.39 144.14 62.25
PD1............................................................. 203.28 141.97 61.31
PC2............................................................. 197.07 137.63 59.44
PC1............................................................. 195.52 136.55 58.97
PB2............................................................. 175.34 122.46 52.88
PB1............................................................. 172.24 120.29 51.95
PA2............................................................. 170.68 119.20 51.48
PA1............................................................. 166.03 115.96 50.07
----------------------------------------------------------------------------------------------------------------
Table 7--RUG-53--Case-Mix Adjusted Federal Rates for Rural SNFs by Labor and Non-Labor Component
----------------------------------------------------------------------------------------------------------------
Non-labor
RUG-III category Total rate Labor portion portion
----------------------------------------------------------------------------------------------------------------
RUX............................................................. 646.57 451.56 195.01
RUL............................................................. 578.35 403.92 174.43
RVX............................................................. 484.37 338.28 146.09
RVL............................................................. 454.70 317.56 137.14
RHX............................................................. 404.68 282.63 122.05
RHL............................................................. 395.78 276.41 119.37
RMX............................................................. 451.47 315.31 136.16
RML............................................................. 417.36 291.48 125.88
RLX............................................................. 319.61 223.22 96.39
RUC............................................................. 562.03 392.52 169.51
RUB............................................................. 520.51 363.52 156.99
RUA............................................................. 499.74 349.02 150.72
RVC............................................................. 439.87 307.21 132.66
RVB............................................................. 420.59 293.74 126.85
RVA............................................................. 385.00 268.88 116.12
RHC............................................................. 375.02 261.91 113.11
[[Page 40303]]
RHB............................................................. 360.19 251.56 108.63
RHA............................................................. 337.94 236.02 101.92
RMC............................................................. 343.20 239.69 103.51
RMB............................................................. 334.30 233.48 100.82
RMA............................................................. 328.37 229.33 99.04
RLB............................................................. 295.88 206.64 89.24
RLA............................................................. 255.83 178.67 77.16
SE3............................................................. 352.23 246.00 106.23
SE2............................................................. 301.81 210.78 91.03
SE1............................................................. 270.66 189.03 81.63
SSC............................................................. 266.21 185.92 80.29
SSB............................................................. 252.87 176.60 76.27
SSA............................................................. 248.42 173.50 74.92
CC2............................................................. 264.73 184.89 79.84
CC1............................................................. 243.97 170.39 73.58
CB2............................................................. 232.10 162.10 70.00
CB1............................................................. 221.72 154.85 66.87
CA2............................................................. 220.24 153.82 66.42
CA1............................................................. 208.37 145.53 62.84
IB2............................................................. 199.47 139.31 60.16
IB1............................................................. 196.51 137.24 59.27
IA2............................................................. 181.68 126.89 54.79
IA1............................................................. 175.74 122.74 53.00
BB2............................................................. 197.99 138.28 59.71
BB1............................................................. 193.54 135.17 58.37
BA2............................................................. 180.19 125.84 54.35
BA1............................................................. 168.33 117.56 50.77
PE2............................................................. 214.30 149.67 64.63
PE1............................................................. 211.34 147.60 63.74
PD2............................................................. 203.92 142.42 61.50
PD1............................................................. 200.96 140.35 60.61
PC2............................................................. 195.02 136.20 58.82
PC1............................................................. 193.54 135.17 58.37
PB2............................................................. 174.26 121.70 52.56
PB1............................................................. 171.30 119.64 51.66
PA2............................................................. 169.81 118.60 51.21
PA1............................................................. 165.36 115.49 49.87
----------------------------------------------------------------------------------------------------------------
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
that are greater or less than would otherwise be made in the absence of
the wage adjustment. For FY 2010 (Federal rates effective October 1,
2009), we apply an adjustment to fulfill the budget neutrality
requirement. We meet this requirement by multiplying each of the
components of the unadjusted Federal rates by a budget neutrality
factor equal to the ratio of the weighted average wage adjustment
factor for FY 2009 to the weighted average wage adjustment factor for
FY 2010. For this calculation, we use the same 2007 claims utilization
data for both the numerator and denominator of this ratio. We define
the wage adjustment factor used in this calculation as the labor share
of the rate component multiplied by the wage index plus the non-labor
share of the rate component. The budget neutrality factor for this year
is 1.0010. The wage index applicable to FY 2010 is set forth in Tables
A and B, which appear in the Addendum of this final rule.
Comment: One commenter estimated SNF reimbursements using both the
FY 2010 SNF wage index in the proposed rule and in the absence of a
wage index using simulation. The commenter found that SNF reimbursement
was about $400 million lower with the wage index adjustment than
without it. The commenter believes that CMS is incorrectly adjusting
for the wage index and that payments during the 2002-2009 timeframe are
more than $2 billion too low.
Response: The intent of the wage index budget neutrality factor is
to make sure that aggregate payments using the updated wage index are
not greater or less than aggregate payments would be using the previous
year's wage index. Because the wage index is based on the pre-floor,
pre-reclassified, no occupational mix hospital wage index, the weighted
average wage index would be equal to 1.0000 for hospitals. However,
there are often multiple SNFs within a wage area with varying
utilization levels. The weighted average wage index across all SNF
providers may not be equal to 1.0000 for any given fiscal year, so
payments could go up or down as a result of their application.
Estimation of payments relies on the combination of the geographic wage
index value for providers along with their distribution of service
days. The change in the wage index values along with the utilization
within each urban or rural area determines the change in aggregate
payments related to the previous year and, therefore, the budget
neutrality factor. The application of the budget neutrality factor
ensures that aggregate payments will not increase or decrease due to
the year-to-year change in the wage index. Therefore, we do not accept
the methodology applied by the commenter, and believe that the 1.0010
budget neutrality factor will ensure equal payments after updating to
the FY 2010 SNF PPS wage index, prior to any other policy changes.
[[Page 40304]]
In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in the Office of Management and
Budget (OMB) Bulletin No. 03-04 (June 6, 2003), available online at
http://www.whitehouse.gov/omb/bulletins/b03-04.html, which announced
revised definitions for Metropolitan Statistical Areas (MSAs), and the
creation of Micropolitan Statistical Areas and Combined Statistical
Areas. In addition, OMB published subsequent bulletins regarding CBSA
changes, including changes in CBSA numbers and titles. As indicated in
the FY 2008 SNF PPS final rule (72 FR 43423, August 3, 2007), this and
all subsequent SNF PPS rules and notices are considered to incorporate
the CBSA changes published in the most recent OMB bulletin that applies
to the hospital wage data used to determine the current SNF PPS wage
index. The OMB bulletins may be accessed online at http://
www.whitehouse.gov/omb/bulletins/index.html.
In adopting the OMB Core-Based Statistical Area (CBSA) geographic
designations, we provided for a 1-year transition with a blended wage
index for all providers. For FY 2006, the wage index for each provider
consisted of a blend of 50 percent of the FY 2006 MSA-based wage index
and 50 percent of the FY 2006 CBSA-based wage index (both using FY 2002
hospital data). We referred to the blended wage index as the FY 2006
SNF PPS transition wage index. As discussed in the SNF PPS final rule
for FY 2006 (70 FR 45041), subsequent to the expiration of this 1-year
transition on September 30, 2006, we used the full CBSA-based wage
index values, as now presented in Tables A and B in the Addendum of
this final rule.
4. Updates to the Federal Rates
In accordance with section 1888(e)(4)(E) of the Act, as amended by
section 311 of the BIPA, the payment rates in this final rule reflect
an update equal to the full SNF market basket, estimated at 2.2
percentage points. We continue to disseminate the rates, wage index,
and case-mix classification methodology through the Federal Register
before the August 1 that precedes the start of each succeeding FY.
5. Relationship of RUG-III Classification System to Existing Skilled
Nursing Facility Level-of-Care Criteria
As discussed in Sec. 413.345, we include in each update of the
Federal payment rates in the Federal Register the designation of those
specific RUGs under the classification system that represent the
required SNF level of care, as provided in Sec. 409.30. This
designation reflects an administrative presumption under the refined
RUG-53 system that beneficiaries who are correctly assigned to one of
the upper 35 of the RUG-53 groups on the initial 5-day, Medicare-
required assessment are automatically classified as meeting the SNF
level of care definition up to and including the assessment reference
date on the 5-day Medicare required assessment.
A beneficiary assigned to any of the lower 18 groups is not
automatically classified as either meeting or not meeting the
definition, but instead receives an individual level of care
determination using the existing administrative criteria. This
presumption recognizes the strong likelihood that beneficiaries
assigned to one of the upper 35 groups during the immediate post-
hospital period require a covered level of care, which would be less
likely for those beneficiaries assigned to one of the lower 18 groups.
In this final rule, we are continuing the designation of the upper
35 groups for purposes of this administrative presumption, consisting
of all groups encompassed by the following RUG-53 categories:
Rehabilitation plus Extensive Services;
Ultra High Rehabilitation;
Very High Rehabilitation;
High Rehabilitation;
Medium Rehabilitation;
Low Rehabilitation;
Extensive Services;
Special Care; and,
Clinically Complex.
A discussion of the relationship of the proposed RUG-IV classification
system to existing SNF level of care criteria appears in section
III.C.4 of this final rule.
6. Example of Computation of Adjusted PPS Rates and SNF Payment
Using the hypothetical SNF XYZ described in Table 8, the following
shows the adjustments made to the Federal per diem rate to compute the
provider's actual per diem PPS payment. SNF XYZ's 12-month cost
reporting period begins October 1, 2009. SNF XYZ's total PPS payment
would equal $30,635. We derive the Labor and Non-labor columns from
Table 6 of this final rule.
Table 8--RUG-53--SNF XYZ: Located in Cedar Rapids, IA (Urban CBSA 16300); Wage Index: 0.8984
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Medicare
RUG group Labor Wage index Adj. labor Non-labor Adj. rate adj. days Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVX............................................. $326.59 0.8984 $293.41 $141.03 $434.44 $434.44 14 $6,082.00
RLX............................................. 222.71 0.8984 200.08 96.17 296.25 296.25 30 8,888.00
RHA............................................. 227.49 0.8984 204.38 98.24 302.62 302.62 16 4,842.00
CC2............................................. 188.59 0.8984 169.43 81.44 250.87 *571.98 10 5,720.00
IA2............................................. 127.88 0.8984 114.89 55.22 170.11 170.11 30 5,103.00
-------------------------------------------------------------------------------------------------------
Total....................................... ........... ........... ........... ........... ........... ........... 100 30,635.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects a 128 percent adjustment from section 511 of the MMA.
C. Resource Utilization Groups, Version 4 (RUG-IV)
1. Staff Time and Resource Intensity Verification (STRIVE) Project
In the FY 2010 proposed rule (74 FR 22208, 22220, May 12, 2009), we
noted that the SNF PPS uses the Resource Utilization Group (RUG) to
which a resident is assigned to make a case-mix adjustment to that
resident's payment amount, in order to reflect the relative resource
intensity that would typically be associated with the resident's
clinical condition. In this context, we discussed our STRIVE project,
which we conducted to help ensure that the SNF PPS payment rates
reflect current practices and resource needs. The following sections
discuss the comments that we received on this issue and related topics,
along with our responses.
a. Data Collection
To help ensure that the SNF PPS payment rates reflect current
practices
[[Page 40305]]
and resource needs, CMS sponsored a national nursing home time study,
STRIVE, which began in the Fall of 2005. Information collected in
STRIVE includes the amount of time that staff members spend on
residents and information on residents' physical and clinical status
derived from MDS assessment data. As noted in the FY 2010 proposed rule
(74 FR 22208, 22221, May 12, 2009), identifying the level of staff
resources needed to provide quality care to nursing home patients was a
primary objective. For this reason, nursing homes with poor survey
histories or pending enforcement actions were excluded from the sample.
In addition, nursing homes with poor quality indicator (QI) or quality
measure (QM) scores were also excluded, as were nursing homes with low
occupancy rates, large proportions of private pay or pediatric
patients, and nursing homes that were undergoing hardships (such as
fires or floods) that would prevent participation in the study. The
comments that we received on this issue, and our responses, appear
below.
Sampling Methodology
A number of commenters addressed issues regarding the sampling
methodology of the STRIVE project. These comments fell into several
major categories:
Sample size and margin of error.
Random nature of the sample.
Representativeness of the sample and data collection
process.
Sample Size and Margin of Error
Comment: Several commenters recognized CMS's efforts in collecting
significantly more data than that gathered in the 1990 sample used
initially to develop RUG-III, and the 1995/1997 sample used to revise
RUG-III and establish the current CMIs that are the basis for current
Medicare rates. However, a number of comments asserted that the
precision was too low (that is, the margin of error too high) to make
reliable estimates for use in setting payment rates. More specifically,
these commenters stated that the overall margins of error for the
sample that were presented at several TEP meetings appeared
unrealistically low. These commenters recommended that CMS should
abandon the time study methodology, which relies on a sample-based
special study, and develop a methodology that uses population-based
administrative data.
Response: At several TEP meetings, estimates of the overall margin
of error for Medicare and non-Medicare cases were presented. It is
worth noting that these analyses were interim work products and were
developed during the course of our analyses to give stakeholders the
most current information available as early as possible to help them
evaluate the RUG-IV model. To the comment that asserted these estimates
were unrealistically low and that we must have failed to consider
correctly the sample design when they were calculated, we note that
these estimates actually did account for the sample design (both
stratification and clustering), but were adjusted in two ways: (a) We
developed procedures to remove variance associated with case mix, and
(b) we presented a weighted variance estimate that was based upon all
of the individual RUG groups and which weighted more prevalent groups
more heavily than less prevalent groups (since these would be more
often used in making payments). Basically, we attempted to compute the
margin of error for the ``typical'' or ``average'' RUG group after
removing the effect of case mix.
Upon further review, as noted by a few commenters, we found minor
flaws in the methodology, and have updated our analysis. As shown
below, we believe that the simplest and most informative overall
measure of the precision of the sample is the margin of error
associated with the nursing and therapy overall means. Table 9 below
presents relevant values from the STRIVE study and from the prior 1995/
97 time study.
Table 9
----------------------------------------------------------------------------------------------------------------
1995/97 time Percent
Parameter STRIVE study improvement
----------------------------------------------------------------------------------------------------------------
Nursing Time:
Number of cases (weighted).................................. 9,766 3,933
Mean wage-weighted time..................................... 135.2 228.3
Standard error of mean...................................... 3.1 7.2
Coefficient of variation of mean............................ 2.3% 3.2% 26.7
Margin of error (percent of mean)........................... 4.6% minus>6.2%
Therapy Time:
Number of cases (weighted).................................. 1,510 1,133
Mean wage-weighted time..................................... 144.0 86.0
Standard error of mean...................................... 5.5 3.5
Coefficient of variation of mean............................ 3.8% 4.0% 4.6
Margin of error (percent of mean)........................... 7.6% minus>8.0%
----------------------------------------------------------------------------------------------------------------
Note: Coefficient of variation of the mean = (std error of mean)/(mean) * 100.
For each of these studies, the table above presents statistics for
mean nursing time (based upon all residents in the sample) and for
therapy time (based upon all residents who received any therapy time).
For each of these datasets, the table presents the number of cases
(raw, unweighted counts), the mean of the wage-weighted minutes, the
standard error of the mean, the margin of error associated with the
mean, and the margin of error expressed as a percentage of the mean.
We note that for both nursing and therapy time, the methodology
used to wage-weight time differed between the two studies. (A detailed
discussion of the wage-weighting protocols is presented below.)
Therefore, the means, standard errors, and margins of error cannot be
directly compared between the two studies. We have, therefore, computed
the margin of error as a percentage of the mean to allow such
comparison.
It can be seen that in the STRIVE sample, the margin of error for
the nursing time is about 4.6 percent of mean nursing time,
compared with 6.2 percent in the earlier study. This
represents a 26.8 percent improvement in precision over the earlier
study. For therapy time, the STRIVE margin of error is 7.6
percent, a 4.7 percent improvement over the earlier study. With regard
to therapy time, the
[[Page 40306]]
improvement is modest because of the relatively large number of cases
in the 1995/97 time study that had therapy time. We believe this is
because the sample that was used for the earlier study was largely
aimed at identifying and enlisting nursing homes that had Medicare
residents and provided therapy.
Thus, the STRIVE sample is larger and has considerably more
precision for nursing time than the earlier time study. The results of
the earlier study have served as the basis for Medicare and Medicaid
rate setting since 1998 and the new results should, if anything, lead
to more accuracy than the data collected more than 10 years ago. We
believe that the ability to distinguish more precisely and accurately
between patient characteristics and varying degrees of acuity with the
time study methodology outweighs the issues of ease of collection and
analysis of population-based administrative data.
Comment: Some commenters said the sample sizes for some individual
RUG groups were very low. Several commenters focused on sampling error
due either to bias or to small sample sizes that they believed weakened
the STRIVE study. One respondent questioned the small sample size, and
claimed that an overall sample size of 500,000 (compared with STRIVE's
sample of under 10,000) would be necessary to ensure reasonable
precision in all RUG groups. While they also stated that the margins of
error associated with overall mean nursing and therapy times provide a
useful metric for comparing the STRIVE study with the 1995/97 time
study, several comments expressed concerns about the precision of
individual RUG group means as opposed to the means for the entire
sample. They observed that the margin of error for such small RUG
groups was so large as to make the mean staff time estimates unusable
for those groups.
Response: While a sample size of 500,000 might be appropriate for a
large-scale academic research project or medical trial, the STRIVE
project was specifically designed to update the RUG case-mix
classification system to reflect current resource utilization in
nursing homes across the country. As many commenters pointed out,
patient characteristics have changed and patient acuity levels have
increased since the introduction of the SNF PPS in 1998. For STRIVE, as
for many other CMS analytic projects, there is a tradeoff between
timeliness of results, cost, and small cell size. In fact, using the
sample size guideline recommended by the commenter, it is unlikely that
many if not most of the programmatic changes incorporated into the
Medicare program since its inception in 1966 could have been
successfully introduced.
It is true that the sample sizes for some RUG groups are small and
that the margins of errors for these RUG groups means are large.
However, there are several reasons why we believe that the precision is
sufficient for rate setting:
Some comments appeared to suggest that only Medicare cases
were used to produce the group means and CMIs that were used for rate
setting. Because Medicare residents comprised only about 14 percent of
the total weighted STRIVE sample, this would have exacerbated problems
with small sample sizes. In fact, however, we used the entire sample of
valid cases (that is, all cases that passed our accuracy edits), not
just Medicare cases, to produce these group means and CMIs. Thus, the
RUG group sample sizes were considerably larger than some comments
suggested.
Therapy CMIs are based upon mean therapy times for the
therapy categories, not the means for individual therapy groups. That
is, mean therapy times are calculated for the RU, RV, RH, RM, and RL
categories and therapy CMIs are computed based upon these category
means. The therapy CMI for a category is then used to calculate the
therapy payment rate applied to all of that category's subgroups. For
example, the RU therapy CMI and corresponding rate are applied across
the RUX, RUL, RUC, RUB, and RUA groups. Because the therapy CMIs and
therapy rate components are computed at the category level, the sample
sizes are considerably larger than some comments suggest.
We recognized that the nursing time sample sizes were
quite small for some individual RUG groups, especially those with
tertiary splits (based on nursing rehabilitation and depression) and
for the ``Rehabilitation plus Extensive'' groups. To address this
problem, we used regression-based estimation procedures to develop
group means and CMIs for these groups. For example, the individual
combined Rehabilitation-Extensive Services RUG-IV groups (for example,
RUX) had very small sample sizes, with weighted sample sizes varying
from less than 1 to 12 cases. Clearly, this was an insufficient number
of cases in these individual groups to obtain reliable individual group
means or reliable CMIs based on individual group means. Therefore, we
developed a regression model to estimate the overall average increase
in nursing time for providing extensive services to residents receiving
rehabilitation, controlling for level of therapy and ADL dependence.
The estimated average increase due to extensive services was based on
comparison of all Rehabilitation-Extensive Services residents (49
sample weighted cases) versus all Rehabilitation-only residents (1,261
sample weighted cases). The nursing time estimate for each
Rehabilitation-Extensive Services group was then calculated as the
nursing time mean for Rehabilitation-only residents with the same level
of rehabilitation and ADL dependence plus the estimated average
increase due to extensive services. For example, the nursing time
estimate for RUX was calculated as the mean for RUC plus the average
extensive services increase. This estimate is based on much larger
sample sizes and is, therefore, much more reliable than individual
Rehabilitation-Extensive Services group means. Similar models and
adjustments were made for the depression and restorative therapy
splits.
The RUG-IV model, like previous RUG models, is structured
and contains implicit assumptions about the ordering of group means.
One assumption is that within a category, payment rates will increase
as the ADL score (and ADL dependence) increases. A second assumption is
that within a corridor of ADL scores, payment rates will decrease as
one moves down the hierarchy. Exceptions to these constraints are
called rate inversions and are to be avoided because of the perverse
incentives they can create (for example, when a resident qualifies for
more than one group and would produce a higher payment in a lower group
with fewer services being provided). A considerable effort was made to
examine the individual group means, CMIs, and rates for possible
inversions, and to make adjustments where necessary to fix these
inversions. Inversions were fixed employing the regression models
described above and by smoothing techniques (for example, computing the
weighted mean of two groups that had a small inversion and using that
weighted mean as the basis for computing the rate for those two
groups). Some of the observed inversions were in groups with small
sample sizes and may have been the result of imprecise estimates of the
group means. The smoothing and estimation procedures described above
produced payment rates that, with a few exceptions, conformed with the
RUG model's hierarchical constraints. Most exceptions where rate
inversions remained involved the following rare groups (with sample
weighted number
[[Page 40307]]
of cases in parenthesis): RHL (8 cases), RML (10 cases), RLX (0 cases),
RLB (21 cases), and RLA (24 cases)). The only inversions involving
larger groups were LD1 and CD1 versus PD2. Because the means, CMIs, and
rates were constrained as discussed above, and were adjusted where
necessary to conform with these constraints, the impact of any
statistical imprecision due to small sample sizes was mitigated.
Finally, regarding those comments which stated that the
lack of sampling precision associated with some RUG groups meant that
the STRIVE results were too imprecise to be used with confidence for
rate setting, we note that the logic of PPS models is that they
successfully predict cost, and that payment rates that are based on
those models will be accurately aligned with actual cost. The net
result will be that providers will be paid in proportion to the cost of
providing care to their residents. Nevertheless, PPS models do not
perfectly predict cost, and there is error inherent in using such PPS
models. This is true of the diagnosis-related group (DRG) model used
for acute hospitals, the case-mix group (CMG) model used for inpatient
rehabilitation hospitals, and the home health resource group (HHRG)
model used for home health care. It has been recognized since the late
1980s that these models are not perfect predictors of cost. In fact, in
2002, a Report to Congress (``Prospective Payment System for Inpatient
Services in Psychiatric Hospitals and Exempt Units,'' available online
at http://www.cms.hhs.gov/InpatientPsychFacilPPS/downloads/
rptcongress.pdf) discussed the historical limitations of PPS systems
generally in terms of predicting resource use, and a June, 2008 MedPAC
report (available online at http://www.medpac.gov/documents/Jun08_
EntireReport.pdf) noted that PPS models do not perfectly predict cost.
Thus, all of the Medicare PPS models account for only a portion of the
variance associated with cost. Our analysis shows that, with sampling
weights applied and using the full sample, the RUG-IV model accounts
for 41.5 percent of the variance in nursing time. This statement does
not mean that the RUG-IV model should not be used for rate setting. In
fact, using the STRIVE sample, the RUG-IV variance explanation is
higher than the 29.1 percent variance calculated for RUG-III.
As discussed above, there will always be a certain amount of error
associated with payment rates. For the SNF PPS, much of this inaccuracy
is ``averaged out'' when payment is made to a facility for a large
number of days and for multiple residents. That small sample sizes and
some degree of sampling error may contribute to this overall estimation
error does not mean that rate setting cannot be performed with an
acceptable level of accuracy.
Random Nature of the STRIVE Sample
Comment: Several commenters argued that the STRIVE sample is not
random, making it unreliable for projecting patient acuity in the
development of the new RUG-IV system. One commenter suggested that,
while there is insufficient information to make a conclusive finding on
this point, the potential exists that the STRIVE sample is fatally
flawed due to the presence of bias.
A few commenters noted that at the last stage of the design,
facilities had to be sub-sampled if the facilities were too large to be
observed in their entirety. Due to a lack of PDAs and data monitors,
data collection was limited to a portion of the facility, be it one or
more floors, or one or more units. The subsample was selected by the
project staff in consultation with facility management. The commenters
stated that the subsampling was not conducted using any randomization
method, and may have introduced bias to the sample and data collection.
Generally, several commenters argued that because the STRIVE
sampling plan relied upon voluntary participation, sample selection was
not random and may have introduced sampling biases.
Response: Selection of the STRIVE sample involved a number of
steps, and we have acknowledged in public documentation and at several
TEP meetings that non-random selection was used, by necessity, at
several steps in this process. Specifically, States volunteered for
selection and were not selected randomly. Nursing homes volunteered to
participate and were, therefore, not selected randomly. Finally, in
larger facilities where the entire nursing home could not be studied,
nursing units within the nursing home were selected based upon a pre-
determined protocol, rather than using a random procedure.
While we sought to utilize random processes where possible (for
example, the list of facilities that were invited to participate in the
study in each State was generated using a random procedure), the nature
of this study precluded the use of strictly random selection. Because
CMS did not have the authority to compel any State or nursing home to
participate in the study, it was impossible to use a strictly random
procedure for selecting States or nursing homes. Further, in larger
nursing homes where all nursing units could not be included in the
study, it was not possible to select nursing units randomly for
inclusion in the study, because this could have introduced difficult
logistical problems for data monitors if the selected nursing units
were located on different floors of a building or different buildings
on a campus.
It was, therefore, apparent from the outset of the study that the
sampling design would have to accommodate non-random selection
procedures. Potential problems that could be introduced by the use of
non-random selection were addressed in several ways.
First, random procedures were used whenever possible, such as for
generating lists of facilities that were invited to participate in the
study. Second, where random processes were not feasible, we developed
protocols that described exactly how selection was to occur. For
example, we used a detailed decision tree to select nursing units in
larger facilities. This protocol was uniform across nursing homes and
applied by the project staff who managed the study. Use of these
protocols eliminated important types of bias (for example, selecting a
nursing unit because it was deemed more efficient or of better
quality). Third, we directly assessed the study's sampling error and
quantified its precision statistically. Fourth, we developed sampling
weights based on the sample design that adjust the sample for over- or
under-sampling and produced sample estimates that were not biased by
the design itself. A number of analyses were performed comparing the
STRIVE sample with national OSCAR and MDS databases to determine the
degree to which the sample was representative (that is, the degree to
which the sample resembled the population on important variables). The
results of these analyses are described later in this final rule.
Sample Representativeness
Comment: Some commenters questioned the overall representativeness
of the STRIVE sample, stating it was biased due to a number of factors.
Commenters stated that CMS had not made sufficient information
available to show that the sample can be relied upon to generalize
nationally. Commenters also questioned whether the actual sample being
smaller than the original project goal affected the sample
representativeness, and questioned whether the sample methodology had
taken these differences from the planned design into account. In
addition, a commenter
[[Page 40308]]
asserted that CMS has not presented any evaluation or validation of the
study in the publicly available documents.
Another bias factor mentioned by commenters was geographic
location. Specifically, the commenters indicated that the STRIVE sample
size was too small to be nationally representative, that important
States were omitted from the sample, and that the 15 States that were
included in the sample were not representative of the nation. It was
also noted that in four States, we drew facilities from only a portion
of the State and that this could have introduced additional geographic
bias. In order to demonstrate the potential biases introduced by these
geographic selections, several comments included analyses showing
statistically significant differences in claims, OSCAR, and MDS data
between the 15 States that were included in the sample and the
remaining States in the nation. Commenters were concerned that no data
were collected from the Mid-Atlantic or New England regions, California
and Oregon, or in the area the commenter characterized as the ``entire
mid-section'' of the country. One commenter noted that the initial
STRIVE collection methodology was tested in one center in Maryland and
that none of the preliminary data from that center were considered.
Some commenters argued that there is greater relative resource use
with significantly higher costs in those missing States than in the
STRIVE States, as well as the nation overall. The commenters indicated
that the operating characteristics of the facilities in the STRIVE
States do not appear to be representative of the characteristics of the
facilities in the other States.
Another commenter questioned CMS's reference to Canadian data,
given the significant differences in the health systems between the two
countries. The commenter asked CMS to explain how and why Canadian data
were used, and how such data can be considered representative of New
England States, the Mid-Atlantic States, the Southeastern States, and
California.
One commenter asserted that the participating States were not
representative of SNFs nationwide, and that the STRIVE sample likely
may be weighted in a manner that reflects care patterns in rural areas
and facilities more than in urban facilities. The commenter argued that
the STRIVE sample only included 2 of the 7 States with a high urban
ratio (the District of Columbia, and 4 Florida facilities) where more
than 90 percent of facilities are in an urban region. The commenter
believed that selecting the majority of the participating States from
the remaining 44 States (where the urban-to-rural ratio is about 70
percent to 30 percent) biased the sample.
One commenter submitted a regression analysis suggesting that the
RUG costs, both overall and by RUG-53 category, are different in STRIVE
States when compared to non-STRIVE States, indicating that the STRIVE
relative weight structure could be non-representative. The commenter
believed that the perceived lack of representativeness calls into
question the validity and appropriateness of the updated weights and
the re-categorization of residents who were key to the STRIVE project
and critical to the design of RUG-IV. In addition, several commenters
asserted patients evaluated in the STRIVE sample may not be
representative of the actual acuity of most SNF residents nationwide.
Finally, a commenter claimed that CMS failed to make publicly
available sufficient information to allow for an external evaluation of
the impact. As a result, the commenter concluded that it is not known
how much bias might have been added to the estimators of the mean staff
time due to these nonsampling errors. The commenter recommended
performing further analysis of the current sample before implementing
the RUG-IV model, in order to determine whether and to what extent the
sample might have been affected by these potential biases.
Response: In response to these comments, we note first that it
would have been best to base the sample on either a random selection of
States or on all States in the nation. However, as noted above, this
was not possible given the study's resources and the voluntary nature
of the study. We note also that the sample included both populous and
small States, predominantly urban and predominantly rural States, and
States that were spread geographically across the country. Thus, we
disagree with commenters that believe the study's sample size and
geographic scope were insufficient or led to undue bias.
Of course, in any sample that includes less than all of the States
(or indeed, less than all facilities throughout the country), it is
always possible to question whether the sample is sufficiently
representative of the nation as a whole. While some commenters
suggested that selecting facilities in only 2 of the 7 States with the
highest urban-to-rural ratios might have understated STRIVE acuity
levels, it is equally possible that oversampling the States with
atypical population distributions could have resulted in the opposite
effect. However, whether the STRIVE sample is representative can be and
was tested by comparing data from STRIVE with national data to
determine the degree to which the sample statistics match with national
statistics. Some commenters noted that the data and analyses that were
previously presented were insufficient to judge the degree of sampling
bias that was present. We have, therefore, performed supplemental
analysis which will be presented later in this section.
It is true, as some commenters noted, that our actual sample size
of 205 nursing homes was smaller than the goal of 238 nursing homes
that was set at the beginning of the study. While it is always
preferable to have a larger sample size, we were unable, given
available time and resources, to achieve the initial goal. During the
planning phase of the study, we projected the expected margins of error
using various sample sizes, including the size that was actually
achieved. All things being equal, precision is always better when the
sample size is larger, but we determined that the incremental precision
that would have been achieved with 238 facilities was small and that
the sample size that was actually achieved was sufficient to meet the
analytic goals of the study.
Regarding the comment that questioned CMS's reference to Canadian
data, we note that in fact, the Canadian data were not merged with the
STRIVE sample at all. Instead, we worked with Canadian officials who
were developing their own STM study based on our efforts: CAN-STRIVE.
We have shared data and discussed findings as a way of testing the
accuracy of our own findings. For example, patients with similar
characteristics and care needs required similar staff resources for
treatment. In addition, the CAN-STRIVE project reports that applying
our RUG-IV model to their data results in a variance explanation of
weighted nursing time of 35.4 percent. This represents an independent
and highly successful validation of the RUG-IV model. Far from being an
inappropriate misuse of data, we believe that this inter-governmental
collaboration actually serves to further the interests of both Canada
and the United States. Similarly, data from 2 facilities, including 1
in Maryland, that were used to pilot test the data collection process,
were used to determine facility training needs and to finalize data
collection procedures. These pilot facilities were crucial in testing
protocols and, as a result of honest and open staff feedback, in
modifying some of our original data collection methods. Since the data
collection process was still under
[[Page 40309]]
development, we did not include the staff time data in the STRIVE data.
Finally, in response to the commenters' concerns about our
evaluation and validation of the study, a validation methodology was
built into the STRIVE study. With the large sample size obtained, we
reserved one third (3,253 observations) for validation: We did not use
these reserved observations at all in the derivation of the RUG-IV
classification. After the RUG-IV system was fully developed, we then
tested it on the validation sample. Such a cross-validation procedure
is standard statistical practice to ensure that a statistical model is
not ``over-fitted,'' meaning that some of the relationships that appear
to be statistically significant are merely noise. Cross-validation
allows us to verify that the model will perform well in practice, will
replicate well, and will have reasonably accurate predictive ability.
The results showed that the derived system described in the proposed
rule was robust. For example, the variance explanation of nursing time
(sample weighted) of the RUG-IV system fitted to the derivation sample
was 41.8 percent, while in the validation sample, the same statistic
was 41.4 percent. Because the results have been cross-validated within
the original STRIVE sample, we do not consider a separate validation
study to be necessary, nor was a separate study part of the original
STRIVE design. Further, the results of the CAN-STRIVE project, reported
above, serve as a second type of model validation.
Comment: Some commenters asserted the sample was biased due to
voluntary self-selection of nursing homes that agreed or refused to
participate in the study. Commenters questioned the selection of
facilities based on the number of facilities the data monitors were
able to visit, indicating the sample size within the State was driven
by resource constraints on how many facilities could be visited, which
could introduce bias.
Another voluntary sampling issue raised by the commenters was the
selection of facilities until enough facilities agreed to participate.
Bias could be introduced here when such factors as resources or staff
availability could influence the decision of a facility to agree or not
agree to participate.
A few commenters questioned the high non-response rate. The
commenters noted that of the 837 sampled facilities, 100 were dropped
by State agencies or CMS regional offices. Of the 737 eligible
facilities, 523 were invited to participate, 214 (about 40 percent)
agreed to participate, and 205 (about 39 percent) actually participated
in the study. The STRIVE sample survey literature indicates that
voluntary response samples are biased, as people with strong opinions
or atypical institutions tend to respond.
Response: As with geographic selection, we would have preferred a
design where self-selection was not a factor. However, as noted above,
CMS did not have the authority to require participation in the study if
a facility was randomly selected for inclusion. As discussed in
published documentation, only 40.9 percent of the facilities invited to
participate in STRIVE agreed to be part of the study. This acceptance
rate is not surprising considering participation required a fairly
large commitment of time and resources on the part of the nursing home.
Like those who commented on this issue, we were concerned that this
self-selection might have introduced biases. In particular, we were
concerned that only those facilities with better staffing levels might
agree to participate because of the time involved in being part of the
study.
We tested this possibility using OSCAR staffing data. Staffing data
were cleaned using standard CMS algorithms to remove erroneous data,
and were matched to the STRIVE data. For each nursing home in the
database, both STRIVE and non-STRIVE, we computed the number of staff
minutes per resident day for RNs, LVNs, and aides separately. Table 10
shows the mean minutes per resident day by staff type for the following
groups of STRIVE nursing homes in the first 3 rows: (1) STRIVE nursing
homes that were eliminated from consideration by State and Regional
staff, (2) STRIVE nursing homes that were invited but declined to
participate, and (3) STRIVE nursing homes that participated in the
study. We also show three national groups of nursing homes: (4) All
nursing homes nationally that passed the QI/QM and survey deficiency
quality data screens, (5) all nursing homes nationally that failed the
quality data screens, and (6) all nursing homes nationally. Note that
the number of facilities shown in Rows 1, 2, and 3 of the table are
slightly lower than those in previously published documentation,
because not all STRIVE facilities could be matched to OSCAR data.
Table 10
----------------------------------------------------------------------------------------------------------------
Mean minutes per resident day
Row Group -------------------------------------------------------------------------------
Nursing homes RNs LVNs Aides Total
----------------------------------------------------------------------------------------------------------------
STRIVE Nursing Homes
----------------------------------------------------------------------------------------------------------------
1............. Eliminated by 90 32.2 49.3 144.9 226.4
States and
regions.
2............. Declined to 287 37.4 46.8 * 136.5 * 220.7
participate.
3............. Participated.... \1\ 198 34.4 54.7 146.7 235.9
----------------------------------------------------------------------------------------------------------------
National Nursing Homes
----------------------------------------------------------------------------------------------------------------
4............. Passed quality 13,419 38.2 47.4 141.3 226.9
data screens.
5............. Excluded by 1,149 38.1 51.8 138.6 228.6
quality data
screens.
6............. All facilities.. 14,636 38.2 47.8 141.1 227.1
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ There were 205 nursing homes that participated in the STRIVE study, but only 198 could be matched to OSCAR
data.
*Asterisks indicate statistically significant differences between the values in Rows 1, 2, or 3 compared with
corresponding values in Row 4.
The proper basis for comparison between the STRIVE sample groups
and the nation is Row 4: Facilities that passed the quality data
screens. As part of the design, we excluded about 8 percent of all
nursing homes nationally from the sampling frame that had very poor QI,
QM, or survey deficiency histories (Row 5). Since these nursing
[[Page 40310]]
homes were not in the sampling frame, we would not necessarily expect
the staffing levels of STRIVE nursing homes to match their staffing
levels. Therefore, statistical comparisons were made between
corresponding values in Rows 1, 2, and 3 and the values in Row 4.
Asterisks indicate values that are significantly different (p < 0.05)
from the values in Row 4.
The three groups of STRIVE nursing homes matched the national
statistics in Row 4 fairly well. Nursing homes that declined to
participate (Row 2) had significantly lower aide and total time, but
the staff times for nursing homes that completed the study were not
significantly different from the nation. Therefore, we conclude that
the factors related to self-selection did not create a sample that was
biased (upwards) in staff time.
We do not agree with the comment that resource constraints on the
number of facilities that data monitors could visit may have introduced
another source of bias. When a State agreed to participate in the
study, an evaluation was made of the number of facilities that the data
monitors would be able to visit. The sample size for the State was
agreed upon before the sample was drawn. These resource constraints,
therefore, could not have produced a sample bias.
Comment: A few commenters expressed concern that the STRIVE project
did not specifically address short-stay patients. They were concerned
that, when collecting data, we excluded short-stay patients from the
study and only used data for patients with lengths of stay of 7 or more
days. They indicated that short-stay patients, especially those with
hospital readmission, tend to be unstable and have higher acuity and
resource utilization.
Response: The purpose of the STRIVE project was to update the
existing RUG-III case-mix classification system that was introduced on
July 1, 1998. While the RUG-III model does not include a separate
classification structure for short-stay patients, short-stay patients
were included in the original study. Similarly, when collecting the
STRIVE data, we included a variety of patients from new admissions to
longer-term or chronic patients. For each unit in the test sample, we
included patients who were admitted prior to or on the study start
date, and who remained in the facility for the two days on which we
collected nursing staff time data. The nursing staff time for these
patients was included in the STRIVE data. The confusion may have arisen
because we limited the collection of therapy data to patients who were
nursing home patients for the entire 7 days when therapy data were
collected.
During the past few years, we have been conducting analyses on
episodes of care (that are separate from STRIVE) and are concerned that
episodes of care increasingly show repeated transfers between acute and
post acute care. We agree with the commenters that these short-stay
admissions appear to be more costly, but we have not yet determined the
reasons for these transfers. It is not clear whether the primary
reasons for frequent readmission to an acute care setting reflect
hospital discharge patterns, SNF care practices, or a combination of
both. Until more research is available, we do not believe it would be
appropriate to establish a separate payment structure for short-term
patients. In the future, we hope to include an analysis of short-stay
patients as part of other post-acute health care reform initiatives. In
this way, we can make appropriate adjustments as we develop the next
generation of post acute care payment systems.
Comment: A few other commenters who questioned the omission of
short-stay patients suggested that the omission of this sizable and
expensive population would likely skew both nursing time and the
nursing index, while raising questions about the appropriateness of the
reclassification of SNF residents within the RUG hierarchy. These
commenters submitted data that they believed showed the following:
This short-stay SNF resident population has substantially
higher acuity and substantially higher resource utilization.
Very short stay SNF residents account for over 21.0
percent of SNF stays.
The omission of this critical population may well have
underestimated and skewed the reclassification of SNF residents and the
nursing and therapy weights that underlie the proposed RUG-IV system.
Given that these very short stay, higher acuity residents
generally would not be captured in the STRIVE data, the conclusion of
the STRIVE project concerning resource utilization of SNF residents who
received extensive services in the hospital may be wrong.
Response: It is true that some patients with very short stays
(discharge within two days of admission) were not included in the final
STRIVE results. This occurred because residents were excluded unless
complete nursing time was available for both days of the nursing time
study in a facility. If a resident was admitted or discharged on a
nursing time study day, then only incomplete nursing time data were
available for that day, and inclusion of the resident would have
resulted in an underestimation of nursing time. This led to exclusion
of residents with a length of stay of 2 days or less (as well as any
other residents seen in the first or last 2 days of their longer stay).
However, we do not believe that excluding patients with stays of 2
days or less skewed the nursing time and nursing case-mix weights. The
STRIVE methodology only excluded nursing facility stays with lengths of
stay of 1 or 2 days. Other short SNF stays (for example, length of stay
of 3 days) were included in all analyses.
We note that the results submitted by one commenter indicating that
short-stay SNF residents have higher acuity were based on the MS-DRG
CMIs for the cost of hospital care preceding the SNF stay rather than
on the cost of the SNF stay itself, and that using the hospital cost as
a proxy for the SNF cost might not be accurate. Further, the hospital
CMIs do not show ``substantially higher resource utilization'' for
short stays excluded by STRIVE (1 to 2 days) versus short stays
included by STRIVE (for example, 3 to 7 days). The MS-DRG CMI decrease
for 3- to 7-day stays versus 1- to 2-day stays is 2.9 percent for
short-stay SNF patients readmitted to the hospital, 4.1 percent for
short-stay SNF patients who die in the SNF after a short stay, and 3.0
percent for short-stay SNF patients who are discharged to another
setting. While the hospital acuity for the very short 1- to 2-day stays
is somewhat higher than 3- to 7-day stays, it certainly is not
``substantially higher.''
Again, we were very concerned by the assertion that very short
stays involving 21 percent of all SNF stays were excluded, and after
reviewing the data carefully, we found the claim to be at least
partially inaccurate. The 21 percent of stays refers to stays involving
1 to 7 days. STRIVE only excluded 1- to 2-day stays, and this comprises
only 5.4 percent of all SNF stays. Even this 5.4 percent of stays
greatly overestimates the actual impact of the excluded stays. The
excluded very short stays of 1 to 2 days represent only 0.2 percent of
all SNF paid days of service for a year. We do not believe that
excluding these stays has much impact at all on (a) patterns of
resident classification, (b) the nursing and therapy weights underlying
RUG-IV, or (c) the resulting payments to providers. However, we do
believe that additional research is needed to determine the reasons for
the high
[[Page 40311]]
volume of discharges within the first 7 days of SNF admission.
Finally, exclusion of very short 1- to 2-day stays does not
invalidate STRIVE project results concerning resource utilization of
SNF residents who received extensive services in the hospital. Pre-
admission hospital services were captured for residents who were
admitted 1 to 6 days before the nursing staff time study, as long as
they were not discharged during that 2-day study. The STRIVE results
included over 500 residents who were assessed for extensive services
received in the hospital within 7 days prior to SNF admission. Thus,
the exclusion of very short 1- to 2-day stays did not preclude valid
analysis of pre-admission extensive services.
Comment: A few commenters stated that we should have stratified by
the type of assessment for each resident (5-, 14-, 30-, 60-, 90-day,
quarterly, annual, etc.), and indicated that not doing so could have
introduced biases. One commenter referenced MedPAC's analysis that
resource use and case-mix can frequently vary by provider type, noting
that in California, hospital-based SNFs tend to provide more medically-
intensive services to a more acutely ill and injured patient population
than do freestanding SNFs. The commenter indicated that in the proposed
rule, it is unclear that CMS measured STRIVE data differences between
hospital-based and freestanding SNFs, and argued that if these
differences remain unmeasured and unaccounted for, they will ultimately
lead to less accurate payment under RUG-IV and perpetuate the
persistent decline of hospital-based SNFs.
Response: We note that it would not have been possible to perform
such stratification given our study design. Once a nursing home and its
nursing units were selected for inclusion in the study, all residents
within those nursing units were included in the study regardless of any
other characteristic, including the type of assessment that was due
next. Because the sample-weighted STRIVE sample represents a cross-
section of nursing home residents nationally, we believe that the
sample should approximate the national distribution with regard to the
type of assessment that is due next for each resident.
Moreover, while we recognize that hospital-based, proprietary, and
nonprofit SNFs have some different facility characteristics, CMS does
not have the authority to create separate classification models by
provider type. During the STRIVE project, we did collect data on all 3
provider types for future analysis. In this way, we can continue to
monitor the accuracy of our payment system and adjust for changes in
patient acuity and staff resource needs.
Comment: Some commenters alleged that the sample under-represented
Medicare residents, specifically those in a Medicare Part A stay. They
asserted that the number of weighted Medicare cases in the STRIVE
sample represented only 14.1 percent of the sample, while Medicare
cases comprise 35 percent of national MDS data.
Response: This statistic apparently was derived from an analysis of
the national MDS database in which each assessment was classified as
PPS or non-PPS and in which the percent of assessments that were PPS
was considered to be identical to the percent of residents who are
Medicare residents. However, we believe this 35 percent figure is
misleading for two reasons. First, we have performed work where we have
matched Medicare Part A claims with MDS data, and have observed that a
fairly large proportion of assessments that have a PPS reason for
assessment are not actually linked with a SNF stay. Thus, depending
upon MDS PPS assessments to identify Medicare residents leads to an
overestimate of the number of those residents. Second, if the comment
was based upon an analysis of a longitudinal data set, for example, a
year's worth of MDS data, rather than a cross-section, the Medicare
percentage will be further inflated. One reason for this is that
Medicare residents have shorter lengths of stay and higher turnover
than non-Medicare residents and, therefore, are over-represented when
data are analyzed longitudinally. In addition, Medicare residents have
more assessments per resident than non-Medicare residents, because PPS
assessments must be completed more frequently than OBRA assessments.
Therefore, the longitudinal approach will over-represent the number of
Medicare residents present on any given day.
In order to produce counts that can be validly compared with the
STRIVE data, an MDS snapshot must be produced that represents the
latest assessment for each resident who is active on a given day. As
part of our sampling process, we built a snapshot file for March 1,
2006 and matched Part A claims with this file. Based upon this
analysis, we estimated that about 13.5 percent of nursing home
residents are in SNF stays, which closely matches the national estimate
from the STRIVE sample (14.1 percent).
Comment: One commenter presented a series of tables that compared
STRIVE statistics on a number of MDS variables with corresponding
statistics from the MDS national database. These tables broke down both
the STRIVE sample and the national statistics by Medicare versus non-
Medicare, and purported to show not only that Medicare distributions
were different from non-Medicare distributions, but that the STRIVE
distributions were different from the national distributions, thereby
demonstrating significant bias in the STRIVE sample.
The commenter stated that unlike the change from RUG-44 to RUG-53,
the estimate of distribution of days under the proposed RUG-IV is not
directly calculated based on a linked MDS/claims data file, but rather,
inferred using the STRIVE data to estimate the distribution of paid
days in each of the RUG-66 groups. The commenter questioned the
accuracy of the payment impact analysis based on these estimated
distributions.
Response: For the reasons described previously, we believe that the
commenter's analyses are flawed in how they classified the national
data as Medicare/non-Medicare. While we acknowledge that there are
clinical differences between Medicare and non-Medicare residents, these
analyses appeared to reflect the premise that all STRIVE analyses were
based upon Medicare residents only and that the results are, therefore,
misleading when applied to the nation, stating, ``STRIVE uses the
Medicare portion of the sample to refine the existing Resource
Utilization Group (RUG) classification system.'' However, this
statement is incorrect. STRIVE RUG development used both Medicare and
non-Medicare cases, relying upon a \2/3\ development sample and a \1/3\
validation sample that included both types of cases. Furthermore, the
calculation of mean nursing and therapy times that served as the basis
for CMI calculation was based upon all valid cases. The only time that
we limited analysis to Medicare cases was in producing the transition
matrix used in estimating RUG-IV Medicare days of service from actual
RUG-III paid days of service. All other development and rate setting
analyses used both Medicare and non-Medicare cases.
It is true, as noted in the comments, that the fiscal estimates
hinge upon the Medicare transition matrix. Ideally, fiscal estimates
would be based upon an existing national assessment database. However,
RUG-IV classifications cannot be performed on existing MDS 2.0 data,
and MDS 3.0 will not be implemented for over a year, so the only way to
make financial projections based on currently
[[Page 40312]]
available data is with the transition matrix.
We do not agree, however, that this is a critically flawed
methodology. While there may be instances in which estimates for
individual RUG-IV groups are not precisely accurate, any estimation
errors should be random, with estimates for some groups being too high
and others being too low compared with actual values. When estimates
are made across all groups, however, these random estimation errors
will tend to offset each other, and the overall estimates will have
much greater precision.
Further, the fiscal impact estimates have other sources of error
(for example, changes in provider behavior, changes in the cost of
specific services, etc.) that cannot be remedied even if a national MDS
3.0 database were available. Estimation error due to the STRIVE
transition matrix is likely to be a relatively small portion of the
total error. Therefore, we believe that the overall fiscal estimates
are as precise as possible, given the uncertainties associated with
implementing a new payment model.
Finally, we recognize the difficulty of implementing changes to a
payment system that cannot be verified by a review of historical data.
In this case, we estimated changes to the distribution of paid days
across the RUG-IV model, because the RUG-IV grouper utilizes clinical
data that will not be collected until we introduce the MDS 3.0. In
adopting this methodology, we recognize that there is a tradeoff
between timely updating of the case-mix system to ensure more accurate
distribution of SNF PPS payments and the potential weakness of using
estimated data. For this reason, we have committed to post-
implementation monitoring of the accuracy of the system calibration. We
will, if needed, recalibrate the CMIs in the RUG-IV model using actual
data if our analyses indicate that an adjustment is needed.
Comment: A number of commenters expressed concern about overall
sample bias, specifically questioning how accurately the STRIVE sample
represents residents nationally. One commenter stated the patient mix
in the STRIVE sample is not representative of the national SNF Medicare
cases, and thus, is not reliable in developing the RUG-IV system. The
commenter asserted that based on the information available, it is
readily apparent that the STRIVE sample is not representative and
cannot be used as a basis for redefining the RUG system. The commenter
argued that comparisons of behavioral and activity-level responses
between STRIVE Medicare cases and Minimum Data Set 2.0 (``MDS'')
Medicare cases reveal a significant disparity, and offered the
following as examples:
The activities of daily living (``ADL'') Index component
for Self-Performance item G1aa (Bed Mobility Self-Performance) reveals
a significant difference between the STRIVE Medicare cases and MDS
Medicare cases for the Extensive Assistance category.
Similarly, the ADL Index component for Self-Performance
item G1ba (Transfer Self-Performance) shows a significant difference
between the STRIVE Medicare cases and MDS Medicare cases for the
Extensive Assistance categories.
The ADL Index component for Self-Performance item G1ha
(Eating Self-Performance) shows a significant difference between the
STRIVE Medicare cases and MDS Medicare cases for the Extensive
Assistance category.
Finally, the ADL Index component for Self-Performance item
G1ia (Toilet Use Self-Performance) shows a significant difference
between the STRIVE Medicare cases and MDS Medicare cases for the
Extensive Assistance category.
Thus, the commenter stated that the comparison of behavioral and
activity-level responses between STRIVE Medicare cases and MDS Medicare
cases provides additional support for the commenter's conclusion that
there are serious issues with the representativeness of the STRIVE
sample.
Response: As discussed above, we acknowledge that there were
factors in the sampling procedures which, though unavoidable, may have
introduced sampling bias. To test this, we assembled a snapshot
database of MDS data and compared the results with the STRIVE sample on
selected variables.
Table 11 compares STRIVE statistics for the entire sample with
national MDS statistics. For these comparisons, a cross-section of MDS
data was selected, which contained the latest assessment for every
resident who was active in a nursing home on a given date. March 1,
2006 was selected for this analysis, so that the data would be as
contemporaneous as possible with the STRIVE data. Variables important
to case-mix determination were selected for analysis. Chi-square tests
were performed to determine whether the distribution of scores on each
variable deviated significantly from the national distribution. The
columns in Table 11 show the MDS variable, the number and percent of
cases for each value of the variable for the nation and for STRIVE, and
an indicator of whether or not the chi-square test showed the STRIVE
distribution to be significantly different from the national
distribution.
Table 11
----------------------------------------------------------------------------------------------------------------
MDS national snapshot STRIVE: sample weighted
MDS variable Value ---------------------------------------------------- Signif diff
Freq Pcnt Freq Pcnt (p < 0.05)
----------------------------------------------------------------------------------------------------------------
G1AA (bed mobility self- 0. Independent. 393,296 28.4% 2,724 27.9% Yes.
performance).
1. Supervision. 86,778 6.3 612 6.3
2. Limited 241,342 17.4 1,638 16.8
assist.
3. Extens 438,795 31.7 2,871 29.4
assist.
4. Total depend 224,203 16.2 1,918 19.6
8. Did not 634 0.0 2 0.0
occur.
----------------------------------------------------
Total......... 1,385,048 100.0 9,766 100.0
====================================================
G1BA (transferring self- 0. Independent. 271,891 19.6 1,600 16.4 Yes.
performance).
1. Supervision. 96,985 7.0 602 6.2
2. Limited 258,049 18.6 1,946 19.9
assist.
3. Extens 432,545 31.2 3,115 31.9
assist.
4. Total depend 313,808 22.7 2,410 24.7
8. Did not 11,817 0.9 93 0.9
occur.
----------------------------------------------------
[[Page 40313]]
Total......... 1,385,095 100.0 9,766 100.0
====================================================
G1HA (eating self- 0. Independent. 599,025 43.2 3,556 36.4 Yes.
performance).
1. Supervision. 327,129 23.6 2,448 25.1
2. Limited 128,760 9.3 1,046 10.7
assist.
3. Extens 123,645 8.9 1,019 10.4
assist.
4. Total depend 206,050 14.9 1,696 17.4
8. Did not 478 0.0 1 0.0
occur.
----------------------------------------------------
Total......... 1,385,087 100.0 9,766 100.0
====================================================
G1IA (toileting self- 0. Independent. 206,103 14.9 1,048 10.7 Yes.
performance).
1. Supervision. 79,396 5.7 450 4.6
2. Limited 215,647 15.6 1,548 15.9
assist.
3. Extens 451,917 32.6 3,338 34.2
assist.
4. Total depend 427,881 30.9 3,181 32.6
8. Did not 4,154 0.3 200 2.1
occur.
----------------------------------------------------
Total......... 1,385,098 100.0 9,766 100.0
====================================================
Verbal/physical abuse....... No............. 1,373,940 99.2 9,737 99.3 No.
Yes............ 11,173 0.8 66 0.7
----------------------------------------------------
Total......... 1,385,113 100.0 9,802 100.0
====================================================
K5A (perenteral/IV)......... No............. 1,343,588 98.3 9,634 98.3 No.
Yes............ 22,972 1.7 163 1.7
----------------------------------------------------
Total......... 1,366,560 100.0 9,798 100.0
====================================================
K5B (feeding tube).......... No............. 1,295,170 93.7 9,036 92.2 Yes.
Yes............ 87,738 6.3 762 7.8
----------------------------------------------------
Total......... 1,382,908 100.0 9,798 100.0
====================================================
P1AC (IV medication)........ No............. 1,255,886 91.7 9,138 93.3 Yes.
Yes............ 113,052 8.3 661 6.7
----------------------------------------------------
Total......... 1,368,938 100.0 9,799 100.0
====================================================
P1AG (oxygen therapy)....... No............. 1,198,577 87.6 8,656 88.3 Yes.
Yes............ 170,392 12.4 1,143 11.7
----------------------------------------------------
Total......... 1,368,969 100.0 9,799 100.0
====================================================
P1AI (suctioning)........... No............. 1,354,628 99.0 9,595 97.9 Yes.
Yes............ 14,356 1.0 203 2.1
----------------------------------------------------
Total......... 1,368,984 100.0 9,799 100.0
====================================================
P1AJ (tracheostomy care).... No............. 1,355,834 99.0 9,618 98.2 Yes.
Yes............ 13,150 1.0 181 1.8
----------------------------------------------------
Total......... 1,368,984 100.0 9,799 100.0
====================================================
I1A (diabetes mellitus)..... No............. 971,074 71.0 6,824 69.6 Yes.
Yes............ 397,044 29.0 2,975 30.4
----------------------------------------------------
Total......... 1,368,118 100.0 9,799 100.0
====================================================
I1V (hemiplegia/hemiparesis) No............. 1,231,378 90.0 8,807 89.9 No.
Yes............ 137,410 10.0 993 10.1
----------------------------------------------------
Total......... 1,368,788 100.0 9,799 100.0
====================================================
I1Z (quadriplegia).......... No............. 1,358,262 99.2 9,722 99.2 No.
Yes............ 10,531 0.8 77 0.8
----------------------------------------------------
Total......... 1,368,793 100.0 9,799 100.0
====================================================
M2A (stage 3 or 4 pressure No............. 1,346,209 97.2 9,419 96.4 Yes.
ulcer).
[[Page 40314]]
Yes............ 38,827 2.8 348 3.6
----------------------------------------------------
Total......... 1,385,036 100.0 9,767 100.0
----------------------------------------------------------------------------------------------------------------
While several of the variables that were analyzed showed no
significant difference, there were significant differences between the
sample and the nation on a number of other variables. On the ADLs, for
example, there was a consistent trend for residents in the sample to
show slightly more dependence than residents nationally. On each of the
ADLs, the percent of STRIVE cases in the ``total dependence'' category
exceeded the national percentage by between 1.7 and 3.4 percentage
points. Conversely, the percent of residents in the ``independent''
category was lower for the STRIVE sample by between 0.5 and 6.8
percentage points. The picture was mixed on the services items that
displayed significant differences. Among these items, the STRIVE
residents were slightly more likely to receive feeding tubes,
suctioning, and tracheostomy care, but less likely to receive IV
medications or oxygen therapy. Slightly more STRIVE residents had
diabetes mellitus and Stage 3 or 4 pressure ulcers than was seen
nationally.
The overall picture from these comparisons is that the STRIVE
sample has somewhat higher acuity than the nation. This could have been
due to the last stage in the sample selection process, where nursing
units within larger nursing homes were selected for inclusion in the
study. In selecting units for inclusion, the protocol used by data
monitors tended to favor SNF units and other specialty units that
likely had higher acuity. Because of a lack of data that would have
allowed for correction of this bias, it is possible that a greater
proportion of higher-acuity residents were included in the sample, and
that the sample weights did not correct for this.
However, the impact of this bias should be small. First, while
those differences displayed above were statistically significant due to
the large sample sizes involved, they were not substantial. Second, the
RUG-III and RUG-IV classification models are designed specifically to
classify residents into groups with similar acuity levels; for example,
ADL scores are used explicitly to subdivide residents falling into each
of the major hierarchical groups. While the impact of this bias might
have been to place slightly more residents into heavier care nursing
groups, this bias should have been corrected when using national days
of service (from claims data) to standardize the RUG-IV distribution.
We note that even if the STRIVE sample's RUG distribution exactly
matched the national cross-sectional distribution, this cross-sectional
distribution must be standardized against the national days of service
distribution, which accumulates paid days over an entire year. To the
extent that the distribution of residents, even if perfectly
representative of the nation, does not match the distribution of paid
days, this standardization step is necessary. Thus, standardizing the
RUG distribution to paid days should remove the relatively small amount
of bias that was observed above.
Data Collection Process
Comment: Some commenters noted the process for collecting therapy
data from the participating sites resulted in several problems,
highlighting inconsistencies in training, data-collection methods, and
oversight for the therapists submitting data that they asserted
affected the accuracy of the study. Commenters were concerned that the
assessment instrument and accompanying ``instruction manual'' used in
STRIVE was changed during the study. The implication was that any
changes that were made could have weakened or invalidated the study.
Response: The STRIVE data collection effort spanned approximately
18 months. During that period, we updated our training materials based
on feedback from participating facility staff. Updating and fine tuning
the training materials and project protocols is a standard method used
to ensure the collection of the most accurate data possible. We do not
believe these changes weakened the effectiveness of the study. In fact,
we would be more concerned about the reliability of any study where the
project staff made no effort to enhance their training efforts over
such a long collection period.
As stated in our discussion of the collection and adjustment of
therapy minutes, our analysis indicated that therapy minutes were
underreported. When the therapists reported staff time data, we found
it to be reasonably accurate. The problem was that therapists did not
consistently report the services that they provided to patients. The
omissions in the data collection process do not appear to be related to
changes in the training process. We provided training and technical
assistance to all therapists who participated in the study. STRIVE
staff were available either onsite or by phone during the entire study,
and the facility staff received copies of the training materials. While
direct oversight of therapists' data collection for the entire 7-day
time study period was not feasible, ample training and resource
materials were available to guide them. However, some therapists simply
did not submit data for the entire 7-day time study period. Again, we
do not believe the underreporting can be associated with changes in the
training manuals or in the data collection procedures.
Comment: One commenter noticed that the proposed rule does not list
physical therapist assistants as a SNF staff participant in the STRIVE
project. The commenter asked us for clarification in the final rule
confirming the inclusion of physical therapist assistants in the STRIVE
project.
Response: In the proposed rule, we inadvertently neglected to list
physical therapy assistants and occupational therapy assistants as
participating in the STRIVE study. We noted this error on our Web site
at http://www.cms.hhs.gov/SNFPPS/02_Spotlight.asp. Physical therapy
assistants and occupational therapy assistants did, in fact,
participate in the STRIVE study, which included their resource times.
MDS 3.0 Data
Comment: A few commenters questioned our ability to assess the
impact of the proposed RUG-IV model, as national claims data are not
available for either the RUG-IV grouper or the MDS 3.0. Similarly, they
were concerned that stakeholders could not
[[Page 40315]]
fully assess the impact of the proposed changes. These commenters
recommended delaying the implementation of RUG-IV for 2 years, allowing
for the collection of actual MDS 3.0 data to undertake a detailed
impact analysis, and appropriately adjust the SNF PPS so that the
transition from RUG-III to RUG-IV is budget neutral.
Response: We recognize the difficulty of precisely calibrating a
new case-mix model using estimated data. However, by waiting for actual
data to become available, we risk perpetuating systems that become
progressively less able to target payments accurately to acuity levels.
In this instance, we worked closely with our MDS development team
to integrate payment needs into the structure of the MDS 3.0
assessment. We also made available a RUG-IV grouper and our estimates
on the distribution of patient days to allow stakeholders to assess the
impact of the new case-mix model.
Finally, we have made provision for correcting discrepancies in the
estimates used to introduce the RUG-IV model. In this final rule, we
have committed to monitoring the accuracy of our projections and, when
actual data becomes available, to recalibrate the system to ensure that
the conversion to RUG-IV was budget neutral. This recalibration would
be data driven, and could result in either payment increases or
decreases. Therefore, we do not agree that the introduction of the RUG-
IV case-mix system should be delayed beyond October 1, 2010.
b. Developing the Analytical Database
In the FY 2010 proposed rule (74 FR 22208, 22221, May 12, 2009), we
noted that information acquired through the STRIVE research pointed to
the need for modifications to the RUG-IV model in a number of specific
areas, which we discuss in the following sections.
i. Concurrent Therapy
Concurrent therapy is the practice of one professional therapist
treating multiple patients at the same time while the patients are
performing different activities. In the SNF Part A setting, concurrent
therapy is distinct from group therapy, where one therapist provides
the same services to everyone in the group. In a concurrent model, the
therapist works with multiple patients at the same time, each of whom
can be receiving different therapy treatments. For concurrent therapy,
there are currently no MDS coding restrictions regarding either the
number of patients that may be treated concurrently, or the amount or
percentage of concurrent therapy time that can be included on the MDS,
whereas with group therapy there are limitations, as discussed in the
July 30, 1999 SNF PPS final rule (64 FR 41662).
In the FY 2010 proposed rule (74 FR 22208, 22222, May 12, 2009), we
noted a significant shift in the provision of therapy from individual
one-on-one treatment to a concurrent basis. We stated that given that
Medicare and Medicaid patients are among the frailest and most
vulnerable populations in nursing homes, we believed that the most
appropriate mode of providing therapy would usually be individual, and
not concurrent therapy. We indicated that concurrent therapy should
never be the sole mode of delivering therapy to a SNF patient; rather,
it should be used as an adjunct to individual therapy when clinically
appropriate. Further, we expressed concern that the current method for
reporting concurrent therapy on the MDS creates an inappropriate
payment incentive to perform concurrent therapy in place of individual
therapy, because the current method permits concurrent therapy time
provided to a patient to be counted in the same manner as individual
therapy time. Accordingly, we proposed that, effective with the
introduction of RUG-IV, concurrent therapy time provided in a Part A
SNF setting would no longer be counted as individual therapy time for
each of the patients involved; rather, for each discipline, we would
require allocating concurrent therapy minutes among the individual
patients receiving it before reporting total therapy minutes on the MDS
3.0. The comments that we received on this issue, and our responses,
appear below.
Comment: Several commenters stated that the data reported in the
proposed rule showing concurrent therapy as representing a majority of
the delivery of all therapy services are inconsistent with industry
data. Some stated they were not able to replicate the STRIVE findings
that two-thirds of therapy provided is concurrent. A few reported that
when they ``polled'' their rehabilitation staff, the estimates they
received were that approximately 33 percent of therapy is delivered
concurrently.
Response: In order to determine whether the STRIVE results may have
overstated the amount of concurrent therapy, we re-examined the raw
data and methodology we used to distinguish between individual and
concurrent therapy. We determined that the amount of concurrent therapy
that we reported in the March 2009 TEP and later cited in the proposed
rule was overstated, and that the amount of concurrent therapy based on
the ``time-slice'' method discussed later in this section of the final
rule is actually 28.26 percent. Nevertheless, we continue to believe
that concurrent therapy should be allocated when assigning a RUG-IV
classification. The SNF PPS is based on resource utilization and costs.
When a therapist treats two patients concurrently for an hour, it does
not cost the SNF twice the amount (or 2 hours of the therapist's
salary) to provide those services. The therapist would appropriately
receive one hour's salary for the hour of therapy provided, regardless
of whether the therapist treated one patient individually or two
patients concurrently for that hour. Therefore, as proposed, we will
utilize allocated concurrent therapy minutes to establish the RUG-IV
group to which patients are assigned. In addition, we will require the
therapist to track and report the three different delivery modes of
therapy (individual, concurrent, and group) on the MDS 3.0, as
explained later in this section.
Comment: Most commenters agreed with CMS that concurrent therapy is
a legitimate mode of delivering therapy services, based on individual
care needs as determined by the therapist's professional judgment. Many
commenters stated that when used appropriately, concurrent therapy
produces positive patient outcomes and does not result in poor quality
of care, while others reported there are no studies to support that
concurrent therapy is inferior to individual. Several commenters stated
that the patients are fully engaged throughout the entire concurrent
therapy session with the therapist directly supervising both patients,
and some reported that rest periods are a necessary part of treatment
and concurrent therapy allows the therapist to be more efficient.
However, there were others who reported that the therapist is not
always directly supervising with the patient in line-of-sight, and in
fact, some commenters reported that therapists would leave the
treatment area to conduct other tasks or treatments and that patients
are not always engaged.
Response: We did not propose to eliminate concurrent therapy. We
agree that the there are times when patients may interact with one
another during a concurrent session, and that these interactions may be
beneficial. However, as noted by some commenters, this may not always
be the case. We are concerned that some commenters reported that
therapists do not always have the patient in line-of-
[[Page 40316]]
sight (and may actually leave the treatment area). In fact, some
commenters reported that the patient is not always engaged during the
entire concurrent time, and that there are potentially instances when
treatment decisions are influenced by facility or provider productivity
requirements. We agree that the delivery of therapy services should be
based on the therapist's professional and clinical judgment solely
according to the individual needs of each patient. Considering the
potential for inappropriate care, and that in some cases, patients may
not be fully interacting with each other or the therapist throughout
the concurrent therapy session, we believe that allocating concurrent
therapy minutes is appropriate.
Comment: Several commenters stated that CMS does not have the
authority to dictate the practice of therapy and, therefore, cannot
instruct therapists to allocate concurrent therapy.
Response: We agree that CMS does not have the authority to dictate
clinical practice. However, we do have the authority and the
responsibility to determine coverage and payment policy, that is, the
scope of services that will be paid for by the Medicare program under
the SNF PPS and the manner in which those services will be reported and
paid. We again acknowledge that concurrent therapy may be an
appropriate mode to provide therapy services under certain
circumstances, but we also note that the SNF PPS is based on resource
utilization and costs. When a therapist treats two patients
concurrently for an hour, it does not cost the SNF twice the amount (or
2 hours of the therapist's salary) to provide those services. The
therapist would appropriately receive one hour's salary for the hour of
therapy provided, regardless of whether the therapist treated one
patient individually or two patients concurrently for that hour.
Therefore, as proposed, we will use allocated concurrent therapy
minutes to establish the RUG-IV group to which the patient is assigned.
In addition, we will require the therapist to report concurrent therapy
minutes on the MDS 3.0, as discussed later in this section.
Comment: We received a large number of comments on the potential
effects of the proposed allocation of concurrent therapy. Many of the
commenters agreed that therapy time should be allocated, and offered a
variety of justifications, such as: Abuse of therapy being reported;
therapists being coerced to maximize minutes (and, therefore,
reimbursement); lack of existing research to support the efficacy of
concurrent therapy; and, the need to use Medicare funds appropriately
and as intended. In fact, one commenter requested that allocation of
concurrent therapy begin in FY 2010, prior to implementation of RUG-IV.
Another commenter believed that an increased use of individual therapy
would have a positive impact on their SNFs by raising the SNF case mix
and, therefore, attracting patients with more advanced therapy needs to
their facilities. Many commenters believed that concurrent therapy,
when provided appropriately, is a valid method for providing therapy
that has many benefits (for example, psychosocial and educational), and
that patients motivate and learn from each other. Additionally, many
commenters agreed that concurrent therapy should be an adjunct to
individual therapy.
Many other commenters opposed any allocation whatsoever for
concurrent therapy. Some of those commenters argued that allocation
would, in effect, reduce the therapy provided to patients. Others
expressed concern that some patients would not receive therapy at all
in parts of the country (particularly rural areas) where therapists are
scarce. Some believed that by allocating therapy, CMS would actually
incur a greater cost to the Medicare program, as there would be a
greater rate of re-hospitalizations. Others stated that allocating
concurrent therapy would increase labor costs to SNFs and, thus, would
``force'' contract therapy providers to increase their charges to SNFs.
Response: As stated in the proposed rule, we believe that
concurrent therapy can represent a legitimate mode of delivering
therapy services when used properly based on individual care needs as
determined by the therapist's professional judgment; should be an
adjunct to individual therapy, not the primary mode of delivering care;
and should represent an exception rather than the standard of care. As
noted previously, we did not propose to eliminate concurrent therapy
altogether. Rather, we proposed to allocate the minutes of the
therapist's time when providing concurrent therapy among the patients
to accurately reflect the therapist's time treating patients.
We do not agree that allocating concurrent therapy minutes means
that patients will not receive needed therapy. Assuming that concurrent
therapy is being used appropriately, the allocation requirements do not
change the actual provision of services. The only change is in the way
the therapist records the time he or she spends with each patient. In
fact, we believe therapists will continue to provide therapy services
in a combination of individual, concurrent, and group as appropriate
based on the therapist's professional judgment of the individual's
needs and in accordance with Medicare coverage requirements. Similarly,
the requirement to track concurrent therapy does not, in and of itself,
increase labor costs to SNFs. We are aware, however, that by allocating
concurrent therapy minutes to assign the RUG-IV category, the total
number of therapist staff minutes may not be sufficient to keep a
patient in the same therapy group for payment purposes. For example,
under RUG-III, a patient receiving a combination of 325 individual and
(unallocated) concurrent therapy minutes would be assigned to a RUG-III
High Rehabilitation group. Under RUG-IV, the patient might be
classified into a lower-paying therapy group if the adjusted therapist
time falls below the 325-minute threshold needed to qualify for High
Rehabilitation. We regard it as likely that providers will ask
therapists to modify their treatment plans to make sure that patients
qualify for the higher therapy groups. However, this type of behavioral
adjustment, even if it increases labor cost, may not be reflective of
actual patient need. We also see no imperative in this reporting change
that would ``force'' contract therapy providers to increase their
charges to SNFs. However, the specific details of contractual
arrangements between SNFs and therapy contractors are essentially
private business arrangements that are outside the scope of this rule.
Finally, we are extremely concerned that some commenters believe that
allocating therapy minutes will result in poor patient outcomes, such
as underutilization and rehospitalizations. While we believe these
negative outcomes are unlikely, we intend to alert our Survey and
Quality Monitoring staff to the possibility so that we can monitor
facility practices to ensure quality care for all SNF residents.
Comment: A few commenters requested CMS to provide specific
guidelines on when concurrent therapy may occur, such as limiting the
number of patients that can be seen concurrently. Of those commenters
that favored setting a numerical limit, a majority recommended allowing
the therapist to treat no more than two patients concurrently. A few
suggested a maximum of three or four patients for concurrent therapy,
while others stated that treating three or four patients at the same
time should instead constitute group therapy. Some suggested that we
apply a cap similar to the one that
[[Page 40317]]
already exists for group therapy (in which we limit the number of
individuals and the amount to be coded on the MDS). One commenter
stated that if the requirements set forth in the Medicare Benefit
Policy Manual (Pub. L. 100-2), chapter 8, section 30.4.1.1 are met,
then the therapy services are skilled and the mode of therapy delivered
does not matter (individual, concurrent, or group). On the other hand,
some requested that CMS work with the professional and industry
associations and stakeholders to develop criteria and guidelines. One
commenter stated that concurrent therapy is neither individual nor
group therapy and, therefore, should not be allowed.
Response: As we explained in the proposed rule (74 FR 22222),
concurrent therapy can represent a legitimate mode of delivering
therapy services when used properly based on individual care needs as
determined by the therapist's professional judgment; should be an
adjunct to individual therapy, not the primary mode of delivering care;
and should represent an exception rather than the standard of care.
We agreed with those commenters who supported placing some limits
on concurrent therapy. Commenters who supported concurrent therapy
almost unanimously stated that when concurrent therapy is properly
delivered, patients are fully engaged during the entire treatment time
and that the therapist is able to direct the entire treatment session
for each participant. We believe that in order for the therapist to be
able to direct the entire treatment session and ensure that the
patients are fully engaged, the number of participants should be
limited to two. We agree with the commenters who pointed out that, once
a clinician has to divide his/her time between three or more patients,
the therapist's ability to direct the entire treatment session for each
individual and ensure that the patients are fully engaged can become
problematic. In addition, in order for a therapist to direct the entire
treatment session of both participants and ensure that they are fully
engaged, the therapist must have line-of-sight of both patients. Both
the American Physical Therapy Association (APTA) and the American
Occupational Therapy Association (AOTA) recommended limiting concurrent
therapy to two patients. In fact, the AOTA reports in their comment on
the FY 2010 SNF PPS proposed rule, and on their Web site at http://
www.aota.org/Practitioners/Reimb/Pay/Medicare/FactSheets/37784.aspx,
that they have been advising their members to limit the provision of
concurrent therapy in this manner for some time: ``For a number of
years, AOTA has been informally advising members that the number of
patients should be limited to 2 as a best practice standard.'' We
believe the clinical knowledge and expertise of the therapy
associations is a proper benchmark for determining the allowable number
of patients during a concurrent session, and we agree that a therapist
(or assistant) should treat no more than two patients concurrently. At
this time, we do not agree that CMS should impose a specific cap,
similar to the one for group therapy, on the amount of concurrent
therapy to be coded on the MDS. However, we are revising the MDS, as
noted later in this section, to capture therapy data by mode of
therapy. We will then be able to analyze the data on therapy, including
the delivery mode, and will be able to better understand the rates of
provision and develop other requirements as deemed appropriate,
including but not limited to a cap on concurrent therapy. Therefore,
under RUG-IV, in order to code minutes on the MDS, the following
criteria must be met:
Individual therapy; or
Concurrent therapy consisting of no more than 2 patients
(regardless of payer source), both of whom must be in line-of-sight of
the treating therapist (or assistant); or
Group therapy consisting of 2 to 4 patients (regardless of
payer source), who are performing similar activities, and are
supervised by a therapist (or assistant) who is not supervising any
other individuals.
In instances that involve a therapist treating 3 or more patients
that do not meet the definition of group therapy, that is, similar
activities are not being performed by the participants, then for
purposes of MDS reporting, the definition of concurrent therapy is not
met and, thus, those therapy minutes may not be coded.
We agree that requirements set forth in the Medicare Benefit Policy
Manual (Pub. L. 100-2), chapter 8, section 30.4.1.1 should be met for
medical review purposes. However, as stated previously, from a payment
perspective, the SNF PPS is based on resource utilization and costs.
When a therapist treats two patients concurrently for an hour, it does
not cost the SNF twice the amount (or 2 hours of the therapist's
salary) to provide those services. The therapist would appropriately
receive one hour's salary for the hour of therapy provided, regardless
of whether the therapist treated one patient individually or two
patients concurrently for that hour. Therefore, Medicare should pay for
the one hour of the therapist's time.
Furthermore, the criteria set forth in section 30 for skilled
nursing facility level of care must be met in order for a beneficiary
to meet the requirements for a SNF Part A stay. These requirements are:
The patient requires skilled nursing services or skilled
rehabilitation services, that is, services that must be performed by or
under the supervision of professional or technical personnel (see
Sec. Sec. 30.2-30.4); are ordered by a physician and the services are
rendered for a condition for which the patient received inpatient
hospital services or for a condition that arose while receiving care in
a SNF for a condition for which he received inpatient hospital
services;
The patient requires these skilled services on a daily
basis (see Sec. 30.6);
As a practical matter, considering economy and efficiency,
the daily skilled services can be provided only on an inpatient basis
in a SNF (see Sec. 30.7.); and
The services must be reasonable and necessary for the
treatment of a patient's illness or injury, that is, be consistent with
the nature and severity of the individual's illness or injury, the
individual's particular medical needs, and accepted standards of
medical practice. The services must also be reasonable in terms of
duration and quantity.
We also believe that, when appropriate, therapy services should be
treated uniformly across the PAC settings and under Parts A and B. We
intend to work with the professional organizations and within the
various CMS components to analyze and explore the various issues that
affect therapy services in the various provider types and payment
systems.
We realize that establishing guidelines, requirements, and criteria
for therapy services is a complex matter regardless of setting. For
instance, we must be cognizant of multiple issues that may affect the
delivery of therapy services to patients, such as:
Patient rights (patient preference for a particular
treatment method (for example, individually and not with others, either
concurrently or in a group setting), and whether this preference is
honored);
Infection precautions (whether therapists follow standard
infection control practices when treating more than one patient at
time);
Facility layout (logistical feasibility of treating
multiple patients and maintaining proper and adequate supervision).
[[Page 40318]]
Comment: A few commenters stated that when the RUG-III model was
developed, all modes of therapy were being provided, and the minutes
and staff time were weighted to reflect concurrent therapy. Some
commenters reported that concurrent therapy became the norm after the
inception of the SNF PPS, and that individual therapy was previously
the primary mode of therapy being delivered.
Response: We do not disagree that the different modes of therapy
were being provided prior to SNF PPS. For the purpose of this final
rule, we are considering how the current distribution of therapy time
affects the accuracy of the payments that will be made under the RUG-IV
model. For RUG-IV, we are using the therapist's time (individual
minutes, concurrent therapy minutes allocated, and the group therapy
minutes unallocated with 25 percent cap) to establish the minimum
therapy minutes for each of the rehabilitation categories. We do not
believe that Medicare payments should exceed the cost of the services
rendered. As stated previously, when a therapist provides concurrent
therapy services for an hour, no matter how many patients he or she
treats, the therapist is only providing and being paid for an hour of
time. Payments made to the SNF under the SNF PPS should reflect that
same principle. As we did not propose to change the method in which
group therapy minutes are used in RUG-IV classification and the amount
of group therapy being provided is low, therapists will still be
allowed to count the entire group session for each patient (as long as
they maintain the patient limitation and supervision requirements) in
accordance with the 25 percent cap. However, we will monitor therapy
provided in the group setting, analyze data associated with group
therapy, and, if needed, address any issues at a later time.
Comment: Some commenters suggested updating the MDS 3.0 in order to
record the three modes of therapy: individual, concurrent, and group.
Some believed that this would allow a method to track and analyze the
amount of concurrent therapy being provided. One commenter suggested
developing a ``take back'' if concurrent therapy exceeded 50 percent of
the therapy time. One commenter urged CMS to consider a documentation
method that would not be burdensome. Another commenter stated that
tracking concurrent therapy would be tedious. Another commenter stated
that providers would be vulnerable to post-payment audits and denials
if CMS did not develop documentation instructions. Lastly, one
commenter stated that reporting the therapist time and not the resident
time would alter the ``patient-centric'' intent of the MDS.
Response: Under Medicare Part B therapy services, CMS has issued
documentation requirements. When these requirements were developed, CMS
worked closely with the Medicare contractors, professional therapy
associations, and multiple components within CMS. We intend to address
therapy documentation issues for SNF PPS in a similar fashion to
determine the most appropriate documentation requirements. We will
update the MDS 3.0 so that the assessor codes the actual total patient
minutes associated with the three modes of delivering therapy services
(individual, concurrent, and group) and, thereby, reports them
separately (thus keeping the MDS patient-centric). We believe that
requiring providers to report total therapy time by mode of therapy on
the MDS 3.0 will not pose a significant burden for providers, as
providers will not be required to allocate concurrent therapy minutes
before recording them on the MDS, but instead will only be required to
identify those minutes as concurrent. This method of reporting will
allow us to track and analyze the amount of each type of therapy being
provided and determine appropriate reimbursement. Under RUG-IV, the
recording of therapy minutes on the MDS will be as follows:
Individual--Report entire amount of individual therapy.
Concurrent--Report the entire unallocated minutes of
concurrent therapy.
Group--Report the entire unallocated minutes of group
therapy (as long as the patient limitation is not exceeded and the
supervision requirement is maintained).
This method for recording therapy minutes will reflect the resident's
entire time receiving therapy. However, as stated earlier, we will
assign the RUG-IV category based on allocated concurrent therapy
minutes and maintain the 25 percent cap on group therapy. The RUG-IV
data specifications will account for these requirements.
We do not agree with the suggestion to implement a ``take back''
policy at this time. However, as the MDS 3.0 will require the therapist
to code the minutes for each mode of therapy being delivered, we will
be able to analyze the data and, if need be, address any issues in the
future. Thus, we will update our policy based on data, not on a pre-
defined limit. In addition, we will need to conduct further analysis to
determine an appropriate amount of allowed concurrent therapy, as well
as the appropriate fiscal penalty if we were to implement a ``take
back'' policy.
Comment: Several commenters argued that allocating concurrent
minutes to the RUG-IV model and then also applying CMIs represents a
``double hit.'' Others characterized concurrent therapy allocation as a
method of cost control.
Response: As stated in the proposed rule (74 FR 22222-23), and as
discussed above, allocating concurrent therapy time reflects resource
use more accurately for this type of therapy. Patients are classified
into RUGs based on average resource use, and allocating therapy minutes
allows for better measurement of resource use, more accurate RUG
classification, and application of more appropriate CMIs. For example,
when a therapist treats 2 patients concurrently for an hour, a full
hour of therapy time is counted for each of the 2 patients under
existing procedures. However, the therapist is not actually providing 2
hours of his/her time to treat the patients; rather, the therapist is
providing a total 1 hour of therapy time. Thus, rather than
representing a ``double hit'' or a method of cost control, allocating
concurrent therapy minutes to the RUG-IV model results in more accurate
payment under the SNF PPS, and allows for a more appropriate reflection
of resources used. Further, as stated in the proposed rule, we
maintained budget neutrality with the implementation of RUG-IV, which
also serves to refute the characterization of allocating concurrent
therapy as a cost control method.
Comment: One commenter agreed that the role of therapy aides is to
provide support services to the therapists and, thus, disagreed with
our concern that placing limits on concurrent therapy could result in
an inappropriate substitution of therapy aides for therapists and
assistants and that the RAI manual should be updated. In addition, a
commenter requested that we maintain the policy that therapy provided
by therapy students should continue to be counted on the MDS.
Response: We would also like to reiterate that therapy aides are
expected to provide support services to the therapists and cannot be
used to provide skilled therapy services. As we stated in the proposed
rule, based on the STRIVE data, it appears therapy aides are being used
appropriately. However, as we stated, we intend to monitor the use of
therapy aides, and if necessary, propose changes to MDS reporting
requirements in the future. Further, we agree that, as set forth
previously in the correction
[[Page 40319]]
notice for the FY 2000 SNF PPS final rule (64 FR 60122, November 4,
1999), providers should record minutes of skilled therapy provided by a
therapy student on the MDS when the student is in the therapist's line-
of-sight.
Therefore, as we proposed in the FY 2010 proposed rule, effective
with RUG-IV, we will use allocated concurrent therapy minutes to
establish the RUG-IV group to which the patient is assigned. In
addition, as discussed above, a therapist (or assistant) will be
permitted to treat no more than two patients concurrently. In addition,
we will require the therapist to report the three different delivery
modes of therapy (individual, concurrent, and group) on the MDS 3.0 in
the manner discussed above.
ii. Adjustments to STRIVE Therapy Minutes
Under the SNF PPS, while nursing services are fully reimbursed
using a prospective case-mix adjusted algorithm, payment for therapy
services is more closely linked to the amount of therapy actually
received at a particular time. In the FY 2010 proposed rule (74 FR
22208, 22223, May 12, 2009), we noted that the STRIVE analysis included
an examination of therapy services reimbursed under RUG-III, and we
included a detailed explanation of the STRIVE therapy data collection
methodology. The comments that we received on this subject, and our
responses, appear below.
Comment: Several commenters questioned the collection and the
analysis of therapy time, including the utilization of the unsupervised
recording of therapy times during the collection of data on weekends.
Response: During the STRIVE study, we made every effort to train
staff and provide data monitors to assist staff when questions or
problems arose. However, very few onsite facility studies, including
STRIVE, can provide monitoring on a 24-hour, 7-days-a-week basis. In
general, the staff at the participating facilities worked hard to
collect the staff time accurately, especially for the days where data
were collected on an automated basis. It is apparent from our analysis
that the therapy data were partially compromised by incomplete
recording of therapy times during the days where the data were
collected manually on paper forms. We believe we have provided
sufficient information in both the proposed rule (74 FR 22223-25) and
the TEP slides (available online at http://www.cms.hhs.gov/SNFPPS/10_
TimeStudy.asp), and especially at the TEP meeting on March 11, 2009, on
how we have identified this potential problem, and have adjusted the
therapy time used in our analysis to address it. Information provided
at the TEP meeting demonstrated that these adjustments had little
impact on the RUG-IV case-mix indexes, and corresponded with the
results in STRIVE facilities that had more complete therapy data
collection. At the same time, the adjustments appeared to adjust
therapy time successfully in more problematic facilities (where therapy
time was much lower and appeared to be incomplete on days where staff
used the paper tool versus days using PDAs), so that residents were
distributed among therapy groups more consistently with the national
pattern from Medicare claims than they would have been if unadjusted
data were used.
We do recognize from the comments that one of the statistics
provided in the proposed rule and in Slide 33 of the March 11
TEP presentation was incorrect: the percentage of all time collected
that was concurrent therapy. Our contractor located a mistake made in
the computation for this statistic alone that substantially inflated
this percentage. As noted previously, the correct percentage of
concurrent time is 28.26 percent. This error only affected the
calculations performed to produce this one slide; the numbers used in
all other analyses, the allocation of concurrent time, the derivation
of RUG-IV, and the released public database were correct.
After this error was found, all calculations concerning concurrent
therapy were reviewed. Our initial method of allocating concurrent time
was to combine all resident time records for a staff member where there
was any continuous overlap among the residents. These records were then
used to calculate the time in therapy for each resident involved and
the unduplicated staff time involved. The staff time was then allocated
to each resident in proportion to resident time in therapy, yielding
the allocated concurrent time for each resident. This method led to
minor inaccuracies when a resident left an ongoing concurrent therapy
group or a new resident entered an ongoing concurrent therapy group.
Based on the comments that we received, we reviewed our allocation
method described above, and developed a more sensitive method based on
a ``time slice'' approach. A staff member's time was divided into 1-
minute ``time slices.'' When there was only one resident in a 1-minute
time slice, the entire minute was assigned to that resident as
individual therapy time. If there were multiple residents, the minute
was divided equally among the residents as concurrent therapy time. All
current time for a specific resident under the treatment of a specific
staff member was then accumulated, separately as individual and
concurrent time. This more accurate allocation caused only minor
changes for individual residents, and had very little impact on
aggregate results. The results referenced in this final rule
incorporate these changes.
The two methods are contrasted in the following example. Assume
that the therapist has a session of 30 minutes involving three
residents. The first resident (``A'') arrives at the beginning of the
session and stays for the entire 30 minutes. The second resident
(``B'') arrives 10 minutes after the session begins and stays until the
end (that is, 20 minutes). The third resident (``C'') arrives 20
minutes after the session begins and also stays until the session's end
(that is, 10 minutes). The original research used a proportional
method, in which each resident's time was considered as a percentage of
the total person-minutes. This can be seen in Table 12. ``Resident A''
received 30 minutes of therapy, Resident B 20 minutes, and Resident C
10 minutes, for a total of 60 person-minutes. The proportional method
would thus compute Resident A as having 30/60 (that is, 50 percent) of
the 30-minute session time, or 15 minutes. The other two residents'
times would be calculated similarly.
Table 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proportional method Time slice method
---------------------------------------------------------------------------------------------------------------
Resident Resident time Proportion of
in therapy resident time Allocated time Slice 1 Slice 2 Slice 3 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
A....................................... 30 50.00% 15.00 10.00 5.00 3.33 18.33
B....................................... 20 33.33 10.00 0.00 5.00 3.33 8.33
[[Page 40320]]
C....................................... 10 16.67 5.00 0.00 0.00 3.33 3.33
Total................................... 60 100.00 30.00 .............. .............. .............. 30.00
Session length.......................... 30 .............. .............. 10.00 10.00 10.00 ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
We now determined that a more accurate approach would be to divide
the session into ``slices,'' beginning when a resident joins or leaves
the session. The minutes in each time slice are divided equally among
all the residents receiving therapy during that time slice. In the
example above, the first slice would consist of the first 10 minutes of
the session, the second slice is minutes 11-20 of the session, and the
third slice is minutes 21 to 30. As only one person is receiving
therapy in the first slice, Resident A is credited with all 10 minutes
of that slice (which is now reported as ``individual'' therapy time).
In the second slice, there are two residents, so both Resident A and B
each receive half of the 10 minutes in that slice, or 5 minutes each.
Finally, in the third slice, there are three residents receiving
therapy, so each receives a third of 10 minutes, or 3.33 minutes each.
Summing across all three slices, Resident A is credited with 10 + 5 +
3.33 minutes, or 18.33 minutes of time. This example demonstrates that
the improved methodology does make minor differences in time
allocation, although the total allocated therapy time is not affected.
Moreover, the two methods will provide identical results when all
individuals receive therapy for the full session. Thus, the
recomputation of therapy sessions using the time slice methodology,
while more accurate, made only minor changes for individual residents.
Comment: Several commenters questioned the adjustment performed on
therapy minutes, raising two issues: The first relates to ``forcing the
data to approximate existing distributions of therapy times across RUG-
53 categories,'' by which nothing new is learned. The second regards
the paper survey data as part of the calculation of therapy weights and
the commenters' opinion that it should be considered invalid and should
not be used. While acknowledging the need to adjust the therapy minutes
data, the commenter added that the proposed retroactive therapy data
adjustments bring into question the accuracy and usefulness of the
STRIVE data, especially in light of the small sample size. The
commenter believed that these issues also affect the reorganization of
residents within the RUG hierarchy, and invalidate the therapy and
nursing weights and the subsequent budget neutrality adjustment. In
addition, the commenter observed that retroactively adjusting the
therapy minutes collected directly from therapists treating SNF
patients appears contrary to the purpose and design of the time study,
which was real-time, bedside measurement of the resources provided to
SNF patients.
Response: While we are confident that the analyses conducted during
the study are sufficient to adjust the therapy data for use in the RUG-
IV model, we understand the commenters' concerns. As we have described
in detail, the process used to adjust the therapy minutes (imputation
of data elements that are missing or incorrect) is a standard
statistical practice, with many methods available; thus, we do not
believe it is contrary to the purpose and design of the time study. In
STRIVE, changes in therapy minutes had little effect on the therapy
CMIs of therapy groups as, once in a group, any statistical average
will be relatively stable. However, revising the therapy times did have
a substantial effect on the classification of individual residents.
This was significant, as only those not meeting the RUG-IV therapy
criteria would be eligible for the non-therapy categories from
Extensive Services down through Reduced Physical Function, and the
research to determine which characteristics differentiated the nursing
time of these individuals would be properly focused. Alternately
stated, while adjusting the therapy time did not substantially affect
the CMI of the rehabilitation groups, it did change the classification
of individual residents and was critical to proper analysis. Contrary
to the assertions of these commenters, we believe that failure to
adjust the therapy minutes would have had a negative impact on the
classification of residents requiring complex medical care. Without the
adjustment, we believe the therapy minutes would have been
underreported, resulting in inaccurate classification of residents,
with some residents inappropriately classified in lower-level RUGs.
Thus, we are confident that our efforts to adjust for underreporting of
therapy minutes actually increased the accuracy of the RUG-IV case-mix
classification model.
Our approach to adjusting therapy addressed our concern that, in
some facilities, therapists under-reported resident therapy time on
weekends and other ``non-PDA'' days, including days where there was no
supervision, either by STRIVE data monitors or by staff at the
participating facility, of the data collection. However, at least a
quarter of the facilities did report patterns of therapy time that
appeared reasonable. We took care to include these times, even if paper
based, when they seemed appropriate.
We found that the data obtained from facilities where the data
collection had been most complete, closely matched the therapy time
extrapolated to the entire week from the 3-day period where data had
been collected electronically. A final comparison was made to verify
the therapy minutes reported on the MDS that was completed during the
time study. Again, the reported minutes were consistent with the
extrapolation procedure we used. In addition, the RUG distribution,
after the adjustment of therapy time, more closely matches the expected
therapy RUG national distribution. This comparison was aimed solely at
validating the accuracy of our adjustment procedures by comparing our
study's RUG-III distribution with the known national distribution. It
did not constrain in any way our ability to test alternative approaches
to RUG classification. Thus, we are confident that the procedures we
used to adjust for data collection were appropriate, and that the
therapy analyses conducted during STRIVE accurately reflect therapy
utilization overall. Accordingly, we do not believe that it is
necessary to discard the paper surveys as the commenter suggested.
However, we are also cognizant of the importance of therapy services in
the RUG model, and plan to continue our analyses as part of our
implementation and post-utilization monitoring of the RUG-IV system.
[[Page 40321]]
Comment: One commenter observed that no adjustments were made for
variation in State practice laws with respect to supervision of
physical therapy assistants, occupational therapy assistants and aides,
and that due to an acute shortage of therapists in many rural
communities, there is a tendency to use more therapy assistants under
therapist supervision to the extent that State law allows such
practices.
Response: While the commenter is correct that we did not examine
State practice acts, we did collect data on the use of therapy
assistants in nursing homes. To the best of our knowledge, all States
recognize and license or certify therapy assistants. We found that the
use of therapy assistants has increased significantly since the 1995/
1997 time studies. We consider the use of therapy assistants to be
appropriate to deliver therapy services when under the supervision of a
therapist and within the scope of practice allowed by State law. We
presume that the increasing use of therapy assistants is partially
related to a current labor shortage for therapists, and partially
related to payment incentives rewarding efficient delivery of care. The
applicable State regulations governing aides are more heterogeneous.
However, in the STRIVE study, we found that aides are being
appropriately utilized to furnish support services to the licensed/
certified therapists, a role that would be allowed in most if not all
States.
Comment: One commenter expressed concern about extrapolating 3 days
of therapy to 7. The commenter stated that it is inappropriate because
weekend days and weekdays are not similar, and that Mondays and Fridays
differ from mid-week (Tuesdays through Thursdays) due to admissions and
meetings.
Response: We agree that it would have been inappropriate to
directly extrapolate 3 days of therapy to 7, because 2 of those days
(Saturday and Sunday) generally have very low amounts of therapy.
However, we did not take the approach described by the commenter. Our
adjustment procedure made use only of those weekend days that were
actually reported; we never imputed a weekend therapy session. The only
adjustment that we made to weekend sessions was to assume that the
duration of those sessions matched the average duration of weekday
sessions reported for the resident.
Generally, most participating SNFs provide therapy 5 days a week,
and only a small subset provide therapy on weekends. Therefore, we
agree with the commenter that weekend days and weekdays differ in the
amount of therapy provided. However, the STRIVE study took this into
account and gave credit only for weekend therapy when it was reported
on the paper data collection tool. We did not extrapolate weekday
therapy time to the weekend days, and agree with the commenter that
such a practice would be inappropriate.
Although we noticed a significant reduction in therapy time when
data were collected with the paper tool, we believe this is due to the
data collection method and does not indicate a consistent pattern of
significantly less therapy being delivered on Mondays or Fridays due to
admissions and meetings. In several facilities, PDA data collection was
used on Wednesday through Friday rather than Tuesday through Thursday.
When the PDA was used on Friday, 21 percent of all therapy time was
recorded for Friday. This is close to the 23 percent of time reported
for Thursday. When paper data collection was used on Friday, only 12
percent of all therapy time was recorded, indicating a loss of data
with the paper collection. If admissions and meetings were the cause of
a significant decrease in therapy time, we would expect to see this
pattern for all Fridays. Therefore, we believe that our adjustment
methodology is a more accurate reflection of the services actually
provided during the study.
iii. ADL Adjustments
RUG-IV, like RUG-III, uses a scale measuring Activities of Daily
Living (ADLs) to identify residents with similar levels of physical
function. This scale is used to sub-divide (``split'') each of the
major hierarchical categories except Extensive Services. It is also
used as part of the qualification criteria for many of the RUG-IV
hierarchical categories (Extensive Services, Special High, Special Low,
and Cognitive Performance and Behavioral Symptoms), and is used as part
of the specific criteria for classifying patients to RUGs within
certain categories. In the FY 2010 proposed rule (74 FR 22208, 22225-
26, May 12, 2009), we proposed revisions to the RUG-IV ADL Index that
reflect both clinical and statistical considerations, with the aim of
scoring similarly those residents with similar function. The comments
that we received on this issue, and our responses, appear below.
Comment: Many commenters agreed with the ADL adjustments, stating
that the scale is more sensitive to functional status and allows for a
finer analysis of changes in functional status over time. In addition,
they agreed with standardizing the ADL index across the various levels
of the RUG hierarchy.
Some commenters stated that the ADL scale does not capture provider
burden as only 4 ADL areas are used in the calculation, and suggested
that other ADL activities such as dressing and bathing should be
included. A few commenters were concerned that by starting the ADL
score at `0,' some providers may perceive a `0' as requiring no staff
time, and that this may cause providers to discharge patients early,
refuse to admit certain patients, or not provide the needed supervision
or assistance. One commenter stated ``The staff time required to
provide `limited' assistance with bed mobility, transferring,
toileting, and/or eating does not vary significantly enough from the
staff time required to provide `extensive' assistance for the same ADL
activities.'' One commenter stated that changing the coding of
``Activity Did Not Occur During the Entire 7 Day Period'' from a code
of (8) to a code of (0) for both self-performance and staff support was
logical because the activity did not occur and, therefore, no resources
were used to support the activity. However, one commenter expressed
concern regarding the ADL score of ``0'' when the component ADL
activity did not occur during the entire 7-day period, and suggested
that it should be modified to take into consideration end-of-life
situations. For patients in these situations, the commenter stated the
ADL score may be low, but the level of resources to care for the
resident may be significant, which would not be reflected in their ADL
score.
Response: We agree that the new ADL scale is more sensitive and
that standardization of the ADL index across all RUG hierarchies will
improve our ability to measure functional status accurately. We did
include other ADL areas during our analysis of STRIVE data including,
but not limited to, bathing, dressing, and ambulation, as we did with
the original analyses that established the RUG-III case-mix
methodology. In both studies, we found that eating, bed mobility,
transfers, and toileting were the strongest predictors of resource use,
and included these four ADLs in the case-mix system. However, the
resource time associated with all ADLs is captured in the nursing
minutes assigned to each time study resident, and is reflected in
payments under the SNF PPS. In addition, we do not believe that a
change in the MDS coding requirements will result in premature
discharge of patients or that a score of ``0'' will be incorrectly
interpreted as indicating no need for care. First, we will provide
instructions on the
[[Page 40322]]
meaning of the ADL codes in the MDS manual. Second and more
importantly, a decision that a patient is able to be discharged should
be based on clinical judgment, and should follow standardized facility
operating protocols rather than be determined by an ADL index score
recorded on an MDS.
Thus, we do not agree with the commenter's conclusion that the
change in coding ADLs will have a negative impact on the care provided
to patients in nursing homes. However, we will incorporate training on
the new ADL index in our upcoming ``train-the-trainer'' sessions to
mitigate concerns on the new scale and interpretation of its purpose.
We do not agree with the commenter who stated that there is no
significant difference in staff resource time when providing limited
assistance compared to extensive assistance. STRIVE data demonstrate a
difference in staff resources among the various levels of assistance
that are provided to nursing home residents. We do, however, agree that
if resources are not provided for an ADL, then the ADL index should not
reflect that care was rendered. It is important to note that the ADL
index is based on the 4 late-loss ADL areas and, therefore, while one
ADL activity (for example, transferring) may not have occurred during
the entire 7-day look-back period, the other ADLs are usually occurring
and would be included in the ADL index. We agree with the commenter
that the ADL index may not fully reflect care needs for patients
nearing the end of life. However, we note that the ADL index is only
one factor used to determine resource use. The intensity of nursing
staff time and resources for these individuals is reflected more
completely in the STRIVE minutes and categorical classification.
Comment: Comments about the proposed ADL eating component changes
were mixed, expressing both support and concern. A few commenters were
pleased that we proposed to use both the Self-Performance and Support
Provided items for eating, indicating that adding the ``support
provided'' factor to the ADL eating component score is logical and in
correlation with the other late-loss ADLs. One commenter was pleased to
have Parenteral/IV and feeding tube items removed from the eating ADL,
as they have been concerned that this may have been an incentive for
providers to use feeding tubes rather than providing assistance to
those residents who are able to eat through oral means. One commenter
was concerned that the removal of feeding tubes from the ADL score for
eating would not take into account the resources required to care for
residents who must rely on tube feedings for nutrition, and that they
would not be adequately reimbursed.
One commenter cited the statement, ``In the STRIVE analysis, we
found that patients receiving One Person Physical Assist or more needed
comparable staff resources to patients who were being fed by artificial
means * * * the RUG-IV ADL component score does not use Parenteral/IV
or feeding tube items.'' The commenter believed that the statement
about comparable staff resources is inaccurate, as parenteral/IV or
feeding tube assistance can only be done by a licensed nurse, while one
person physical assist is most often that of a certified nurse
assistant; thus, these are not comparable staff resources.
Response: The data from the STRIVE project indicate that using both
the Self-Performance and Support Provided items for the eating ADL for
all residents achieves a better categorization of residents who require
assistance. In RUG-III, a person who receives nutrition via a feeding
tube or parenteral/IV is assigned a ``3'' (the most dependent score for
eating) regardless of the coding in section G, Physical Functioning and
Structural Problems, specifically item G1Ah (eating, self-performance).
In RUG-IV, instead of this person being automatically assigned the most
dependent score for eating, the score will be based on both the Self-
Performance and Support Provided codes. For the MDS 2.0 and the MDS
3.0, the assessor is to code how the resident eats and drinks,
including nutritional intake via artificial means; for example, tube
feeding, total parenteral nutrition. The assessor is expected to enter
codes for eating when a person receives nutrition orally or through a
feeding tube or other means. Therefore, the resources to care for a
patient with tube feeding are captured on the MDS and in the ADL index
and, thus, in reimbursement. We would like to clarify that when we
discuss staff resources, we are using wage-weighted minutes. For
example, when the licensed nurse provides nutrition to a resident via a
feeding tube, the cost is more per hour but the time it takes is less
relative to a situation in which an aide feeds a resident who requires
total assistance. When an aide feeds a resident who requires total
assistance, the cost per hour is less but the time required is greater.
Therefore, the wage-weighted resource time is comparable. This was
validated by the STRIVE study data.
In this final rule, we are finalizing the revisions to the RUG-IV
ADL index as proposed in the FY 2010 proposed rule (74 FR 22225-27).
iv. ``Look-Back'' Period
In the RUG-III case-mix classification system, we identified five
services that the data showed to require the highest levels of staff
time use: Ventilator/respirator, tracheostomy, suctioning, IV
medications, and transfusions. The instructions for coding these items
in the MDS 2.0 specified that the item should be coded if it was
furnished within the prior 14 days, even if the services were provided
to the resident prior to admission to the SNF. In this way, the MDS 2.0
would collect data that should be considered during the patient care
planning process. When the RUG-III system was developed, we retained
the MDS 2.0 coding procedure regarding these 5 items, based on a
clinical analysis suggesting that they would serve as a proxy for
medical complexity and higher resource use after admission to the SNF.
However, in the SNF PPS final rule for FY 2000 (64 FR 41668-69, July
30, 1999), we reserved the right to reconsider this policy in the
future ``* * * if it should become evident in actual practice that this
is not the case.'' In the FY 2010 proposed rule (74 FR 22208, 22227,
May 12, 2009), we noted that we analyzed the STRIVE data to test the
effectiveness of including services furnished during the prior hospital
stay in the classification system. We found that, for these five
services, utilization during the prior hospital stay does not, in fact,
provide an effective proxy for medical complexity for SNF residents,
and instead results in payments that are inappropriately high in many
cases. Accordingly, we proposed to modify the look-back period under
RUG-IV for items in section P1a, Special Treatments and Procedures, of
the MDS 2.0, to include only those services that are provided after
admission (or readmission) to the SNF. The comments that we received on
this issue, and our responses, appear below.
Comment: Many commenters agreed that the look-back to the prior
hospital stay should be changed so that only services furnished during
the SNF stay are reflected in the SNF case-mix classification. In
particular, in States that have rate equalization (that is, the
private-pay resident must pay the rate established by the case-mix
system), private-pay residents would now pay only for services received
while a SNF resident. Several commenters believed that the SNF staff
need to be aware of services provided to the resident during the acute
stay, in order to develop an appropriate plan of care and ensure that
[[Page 40323]]
adequate services are provided during the SNF stay. However, some
believed that this information does not need to be collected on the
MDS, and recommended removing the first column for the Special
Treatments, Procedures, and Programs (Section O) draft MDS 3.0 or
making that column optional. Others disagreed with CMS changing the
look-back into the hospital stay. Many argued that such a change would
fail to account for the severity of the patient's condition upon
arrival at the SNF. Others believed that eliminating the look-back
would negatively affect quality of care provided to SNF residents and
could result in increased readmissions back to the acute setting.
Finally, one commenter stated ``limiting the look-back in section P1a
to exclude hospital services would unfairly punish SNFs that provide
valuable services to high-acuity rehabilitation patients whose care is
more costly to provide.''
Response: As we stated in the proposed rule, we specifically
collected staff time data on special treatments that are often provided
in a hospital but are not often provided in a SNF after hospital
discharge. Analysis of the STRIVE data shows that: (1) The ``look-
back'' period does, in fact, capture services that are provided solely
prior to admission to the SNF; and (2) there is a much lower
utilization of staff resources for individuals who received certain
treatments solely prior to the SNF stay compared to those who received
those services while a resident of the SNF. In fact, the resources
provided to patients who received treatments provided only prior to
admission are similar to patients who never received those treatments
in either setting. Again, the look-back does not provide an effective
proxy for medical complexity and, thus, has resulted in payments that
are inappropriately high for many cases. However, we do believe that
for care planning purposes, the SNF staff should be aware of the
services that were provided during the acute stay and, thus, we did not
propose to eliminate the look-back from the assessment tool for these
Special Treatments and Procedures. Instead, we proposed to expand the
MDS 3.0 for these items to two columns. The first column allows
providers to code those services that were provided prior to admission
for care planning purposes.
We are concerned that commenters believe that eliminating the look-
back to the hospital stay from the payment system will result in poor
quality of care provided to SNF residents. The SNF is expected to
provide the care required to achieve and/or maintain the resident's
highest practicable level of well-being. However, as this concern was
raised by several commenters, we will monitor the re-admission rates to
hospitals and other proxies that may indicate poor care outcomes, such
as QMs. In addition, we will work with the other CMS components to
ensure that facilities are adhering to survey and certification
requirements, including providing appropriate care to residents.
Further, we do not believe that limiting the look-back period for
P1a services would unfairly punish SNFs that provide services to high-
acuity patients. As stated above, the STRIVE data do not support the
premise that services provided only during the hospital stay to SNF
residents result in higher costs to the SNF. Limiting the look-back
period helps to ensure that adequate and appropriate payments are made
for services received during the SNF stay, while eliminating
inappropriately high reimbursement for services that are provided
solely prior to admission. Thus, if a patient receives high-acuity
services during the SNF stay, those services should be adequately
reimbursed. Therefore, we will eliminate the look-back period into the
hospital stay for those specific services in section P1a on MDS 2.0,
but we will maintain the ability for the provider to code those
services provided prior to admission to the SNF on the MDS 3.0 by
expanding the MDS 3.0 for these items to 2 columns. We believe that
coding for these pre-admission services on the MDS 3.0 will allow
providers to effectively capture these services for care planning
purposes.
Comment: One commenter pointed out that the study for MDS 3.0
conducted by the RAND Corporation (RAND), a non-partisan economic and
social policy research group, showed ``look-back periods were
highlighted as a significant issue across the assessment (MDS 2.0)
tool.'' The commenter further stated that CMS did not consider the
findings on the STRIVE project with those of the RAND MDS 3.0
validation study. A few commenters were concerned that the changes to
the look-back period made after the conclusion of the RAND analysis
resulted in added burden in completing the MDS. They suggested that,
prior to introducing the MDS 3.0, a new study should be done to
validate the estimated time needed to complete the MDS 3.0.
Response: We do not agree with the assertion that we did not
consider the RAND data when developing RUG-IV and establishing look-
back periods for the various items used in payment. We concur with the
RAND study that having multiple look-back periods on the assessment
tool (for example, 7 days for some items, 30 days for others; some
requiring look-back prior to admission to the SNF, while others only
since admission to the SNF; and other look-back differences among the
different items of the MDS) may lead to more opportunities for errors
in coding, increase record review time and, thus, increase assessment
burden. In making the final decisions on the look-back periods that
would be applied to each MDS 3.0 item, we worked to balance three
concerns: Data collection burden to the provider, consistency of look-
back periods across items, and the sufficiency of the data points (that
is, days of care) to assign an accurate case-mix classification for
payment. Several of the look-back periods recommended by RAND were
adjusted later by CMS to maximize their utility for payment and quality
monitoring. In fact, RAND also reconsidered the 5-day therapy look-back
period used in their study. They concluded that the 5-day look-back was
too short to capture the therapy staff utilization and, thus, SNFs
would be substantially underpaid if we adopted a shorter look-back.
Therefore, both RAND and CMS favored changes to the look-back periods
to enhance the accuracy of the MDS 3.0 responses. Finally, we do not
believe a validation study is needed to estimate the time needed to
complete the MDS 3.0, as none of the changes to the MDS 3.0 look-back
periods extend the amount of data to be collected beyond the current
MDS 2.0 collection period, and do not represent an additional burden to
providers.
Comment: One commenter stated that the STRIVE analysis on look-back
to services rendered solely in the hospital is flawed as only 5
treatments were used as the basis for this decision, and that some of
these modalities are not widely available in the SNF setting. Another
commenter stated that if our analysis on the items in section P1a of
the MDS 2.0 assessment is accurate (specifically, that the staff
resources involved when services were furnished solely during the
hospital stay are significantly lower than when those services are
furnished during the SNF stay), then MDS coding for Parenteral/IV
feedings (K5a) should also specify that these services should only be
coded when provided during the SNF stay, and not during the hospital
stay.
Response: We do not agree that the change to the look-back period
is based on a flawed analysis. The change to the look-back period
affects only a small subset of the items reported on the MDS. Of these,
we collected data on 6
[[Page 40324]]
of the 9 Special Treatment and Procedures that are currently used in
the RUG-III classification system on the STRIVE Addendum (we
inadvertently did not list oxygen therapy in the proposed rule as one
of the special treatments and procedures on which we collected pre- and
post-admission data; therefore, in response to this comment, we are now
clarifying that we also collected data on oxygen therapy on the STRIVE
Addendum). We considered a 7-day look-back period for services rendered
prior to admission and after admission to the SNF on the STRIVE
Addendum. We believe that we looked at a sufficient number of P1a
services used in the RUG-III model to conclude appropriately that
utilization of P1a services during the prior hospital stay is not an
effective proxy for medical complexity during the SNF stay. The
frequency of the services coded on the MDS based on the MDS Active
Resident Information Report (found at http://www.cms.hhs.gov/
MDSPubQIandResRep.asp) for the treatments we targeted on the STRIVE
Addendum are as follows (first quarter 2006, STRIVE data collection
began June 2006):
P1ac IV medications 9.5 percent
P1ag Oxygen 13.3 percent
P1ai Suctioning 1.2 percent
P1aj Tracheostomy care 1.1 percent
P1ak Transfusions 1.0 percent
P1al Ventilator or respirator .5 percent
For the 3 P1a services used in the RUG-III model for which we did
not collect extra data on the STRIVE Addendum, the frequencies for
coding for the same time frame are:
P1aa Chemotherapy .5 percent
P1ab Dialysis 1.5 percent
P1ah Radiation .1 percent
Of these, all 3 services are furnished to a small volume of SNF
patients. Moreover, the actual service may sometimes be performed
outside the SNF, and at least some of the individual services within
each of these 3 categories are excluded from SNF consolidated billing
and paid separately under Part B, outside of the bundled SNF PPS rate.
Therefore, we believe it was appropriate to focus on the 6 P1a services
listed above.
As noted above, we focused on certain services that, while they are
frequently provided in a hospital, are furnished less frequently after
the admission to the SNF. One of the main purposes of including P1a
services on the STRIVE Addendum was to gather data to determine if
utilization of these treatments in the hospital serves as a proxy for
medical complexity for a SNF patient, as well as a predictor of SNF
staff resource utilization. In fact, we collected data on all of the
items used as qualifiers for the RUG-III Extensive Services category,
as well as oxygen therapy, a Clinically Complex treatment coded
frequently on the MDS 2.0. As discussed above, our analysis of 6 of the
9 look-back items listed above clearly indicated that utilization
during a prior hospital stay is not an effective proxy for medical
complexity for a SNF patient. Based on this, we believe that it is
appropriate to eliminate the look-back period to the prior hospital
stay for all P1a Special Treatments and Procedures to ensure that
accurate and appropriate payments are made based on resources used
during the SNF stay.
Finally, one commenter asked us to limit the look-back period for
Parenteral/IV feedings (K5a) so that these services are coded on the
MDS only when provided during the SNF stay, and not during the hospital
stay.
We did include 2 items on the STRIVE Addendum for parenteral
feedings. The first item asked the assessor to report the number of
days that the parenteral feeding was administered in the facility over
the last 7 days, while the second asked for the date on which the
parenteral feeding was last administered. However, we were not able to
use this information to determine with absolute certainty when the
patient received the service in the SNF. When the data indicated a
higher probability that the feeding was provided during the SNF stay as
opposed to solely during the hospital stay, the resources were similar
to when the data indicated that the feeding was provided exclusively in
the hospital. In other words, for this particular treatment, the staff
resources to care for a patient who received parenteral feeding only
during the hospital stay and the staff resources to care for a patient
who received the parenteral feeding in the SNF appeared to be
comparable and, thus, indistinguishable. Therefore, based on the
limited nature of the information we have available at this time, we do
not believe that it would be appropriate to limit the look-back period
for Parenteral/IV feedings (K5a) so that these services are coded on
the MDS only when provided during the SNF stay (and not during the
hospital stay). Thus, we will maintain our current MDS instructions for
coding Parenteral/IV feedings (K5a), such that patients may be coded as
receiving parenteral/IV feedings, regardless of whether they receive
them before or after admission to the SNF.
Comment: One commenter stated that SNFs are admitting more complex
patients and, thus, by eliminating the look-back into the hospital
stay, CMS is ``reinforcing a compartmental approach towards assessing a
patient's care needs.''
Response: We do not agree. As stated earlier, we will continue to
have providers code services that are provided during the acute
hospital stay on the MDS 3.0 for care planning purposes. Therefore, we
continue to encourage the sharing of information between settings, and
believe that the SNF will still be able to properly assess and develop
an appropriate care plan based on services provided prior to SNF
admission.
Comment: One commenter characterized the elimination of the look-
back period into the hospital stay as a ``rate cutting measure.''
Response: Neither the MDS 3.0 nor the RUG-IV were designed as or
function as ``rate-cutting measures.'' As discussed above, limiting the
look-back period for P1a Special Treatments and Procedures ensures that
adequate and appropriate payments are made for patients that actually
receive these services during a SNF stay, while eliminating
inappropriately high reimbursement for services that are provided
solely prior to admission. Furthermore, by introducing the RUG-IV
classification system in a budget neutral manner, we ensure that parity
is maintained between aggregate payments to SNFs under RUG-III and RUG-
IV. For FY 2011, the system is being designed so that overall payments
under RUG-IV will be at the same level as what overall payments would
have been under RUG-III if we had not changed to the new model.
Although aggregate payments do not change, the distribution of payments
does change, which is why the payment rates for the complex medical
groups (that is, Extensive Care, Special Care, and Clinically Complex)
will increase significantly.
As proposed in the FY 2010 proposed rule (74 FR 22227-28), we are
modifying the look-back period under RUG-IV for the Special Treatment
and Procedures currently listed in section P1a of the MDS 2.0, to
include only those services that are provided after admission (or
readmission) to the SNF. In addition, we will expand the MDS 3.0 for
these items to 2 columns. The first column will allow providers to code
services that were provided prior to SNF admission for care planning
purposes.
[[Page 40325]]
v. Organizing the Nursing and Therapy Minutes
In the FY 2010 proposed rule (74 FR 22208, 22228, May 12, 2009), we
discussed the proposed organization of nursing and therapy minutes
under the RUG-IV model. The comments that we received on this subject
have been addressed in detail in section III.C.1.b.ii of this final
rule.
vi. Data Dissemination
Comment: One commenter stated lack of access to data limited the
ability to determine whether or not the sample can be relied upon to
generalize nationally. Another commenter said that the STRIVE data
disseminated to date provided little information about the study's
findings on resource utilization by provider type, size, and case mix.
Response: We do not agree with the comments indicating that we have
provided insufficient data to evaluate this effort. Rather, from its
very inception, we have taken every opportunity to seek input on and
share available information about the progress of our research, not
only through the rulemaking process, but also in Open Door Forums, at
numerous Technical Expert Panels and other meetings, and on our Web
site. In fact, we regard the exceptionally detailed and varied nature
of the commenters' critiques of our supporting data as at least in part
a direct reflection of the unusually large amount of data that we have
made available to the public throughout this process. We note that even
after the issuance of the FY 2010 SNF PPS proposed rule, we continued
to respond to requests for technical assistance. We took questions on a
daily basis, and posted additional technical materials on our Web sites
so that all stakeholders could have access to the technical questions
that we received. In addition, we note that in section III.C.1 of this
final rule, we have addressed comments regarding the representativeness
of the STRIVE sample.
We also wish to note that one of the large provider groups
submitted a detailed report by an independent contractor, stating that
the lack of available data precluded ruling out the possibility that
the study was seriously flawed. While we appreciate the concerns raised
in this report, we have no way of knowing what data were provided to
the researcher in order to conduct the analysis, as we did not receive
any requests for technical information or clarification. Thus, in
section III.C.1 of this final rule, we have provided detailed responses
to the independent researcher's report, but cannot accept the
researcher's more global conclusions on methodological flaws and the
validity of the study.
Finally, a few commenters expressed their concern that CMS has not
provided them with the raw data used in the study, and cited the
unavailability of raw data as the reason they could not adequately
evaluate the RUG-IV model. CMS does not typically release analytic data
files that contain data on participating facilities, participating
employees, or on individual patients whose data are HIPAA-protected. We
did, however, eliminate the personally identifiable data, and made a
detailed analytic file available to all stakeholders. We believe that
this file, in conjunction with the RUG-IV grouper, data on the
anticipated redistribution of patient days under the RUG-IV, and the
CMIs calculated for use in the RUG-IV model, provided more than
sufficient data to evaluate the impact of the conversion to RUG-IV.
Thus, we do not agree with the commenters who claimed that we failed to
provide adequate data for the evaluation of the RUG-IV model.
Comment: One commenter requested CMS to provide the public with
additional information about how occupational therapists were asked to
record their time and interventions with residents using HCPCS codes
through personal data assistants (PDAs) and a paper-based tool. The
commenter expressed concern that therapists unfamiliar with HCPCS codes
would be confused reconciling Medicare Part B HCPCS coding policies
(CCI edits, 8 minute rule, etc.) with the ``click on/click off''
mentality of the STRIVE data collection PDA tool. The commenter was
concerned that the inexperience of occupational therapists with these
HCPCS codes could have skewed the study results.
Response: As part of the STRIVE study preparation, we worked with
the therapists at the participating facilities, and trained them on
study procedures. The therapists were not required to use HCPCS codes
to report the modalities provided to each patient. Instead, the
description of the services was included in the PDA by name, and the
HCPCS code was listed next to it to assist those therapists who were
more familiar with the codes than with the modality descriptions. We
did not receive any complaints from the participating therapists that
they were either unfamiliar with or did not know how to use HCPCS codes
within the context of the STRIVE data collection.
Comment: A few commenters indicated that using an ``unvalidated
RUG-IV grouper'' with a new MDS 3.0 assessment instrument is
inconsistent with CMS's policies in developing the PPS for other
Medicare providers, and does not meet OMB standards that regulatory
analysis should be transparent and the results must be reproducible. In
addition, a commenter noted that, in the interest of full disclosure
and transparency, CMS has an obligation to disclose project limitations
and uncertainties, and should consider additional research prior to
rulemaking to evaluate such limitations.
Response: We do not agree with the commenters' assertions that we
are proposing an ``unvalidated RUG-IV grouper.'' The methodology used
to develop the RUG-IV grouper applies the same analytical procedures to
the STRIVE data as were used to create the original RUG-III grouper.
The validation process used to update the case-mix classification
system to RUG-IV is described in detail in section III.C.1 of this
final rule. In addition, we conducted detailed comparisons of the MDS
2.0 and MDS 3.0 to develop crosswalks, and tested these crosswalks to
ensure that the RUG-IV grouper classified residents to the same groups
using either the MDS 2.0 or MDS 3.0. These crosswalks have been posted
on the CMS Web site at http://www.cms.hhs.gov/nursinghomequalityinits/
25_nhqimds30.asp.
In addition, as evidenced by the detailed discussion in section
III.C.1 of this final rule, we are confident that we have met OMB's
requirements for regulatory analysis and full disclosure. Moreover, we
evaluated the STRIVE findings at every stage of our research over the
past 3\1/2\ years, and conducted additional analyses to test our
findings and strengthen the validity of the RUG-IV model. As the
evaluation of project findings was built into the project plan, we do
not accept the assertion that additional research is needed before
introducing the RUG-IV case-mix model for FY 2011.
2. The RUG-IV Classification System
In the FY 2010 proposed rule (74 FR 22208, 22229, May 12, 2009), we
discussed the various features of the proposed RUG-IV model, and
compared the proposed model to the existing RUG-III model that is
currently in use. The comments that we received on this subject, and
our responses, appear below.
General Comments
Comment: We received a variety of comments regarding the Medicare
RUG-IV model, with some commenters expressing support and others
[[Page 40326]]
expressing concern over the proposed changes. One commenter
characterized it as an improvement over the current Medicare RUG-III
model that better represents the clinical needs and resource
utilization of nursing home residents. Another commenter noted that,
while a Medicaid model of RUG-IV has yet to be published, if the
changes parallel the Medicare model, the result will be a more
appropriate case-mix reimbursement system that fairly classifies
residents. Commenters from a major industry organization commended CMS
on its efforts to expand RUG-IV classifications accounting for the
relative resource utilization of different case-mix groups. They
believe the modification of the eight levels of hierarchy and the
increase in the number of case-mix groups from 53 to 66 is a step in
the right direction for allowing SNFs and therapists to define and
document the patient's needs and resources more accurately, thus
improving the quality of care. They encourage CMS's continued efforts
in this area.
Other commenters questioned the accuracy of the RUG-IV model in
capturing changes in acuity, such as the higher nursing complexity for
patients in rehabilitation groups. While several commenters appreciated
the added levels for extremely complex patients with ventilators and/or
isolation, they were concerned that the RUG-IV model did not adequately
recognize patients that had high-cost IV medication and pharmaceutical
needs.
Response: The RUG-IV model was derived from the STRIVE data, and we
believe that it reflects current practice and resource use in SNFs.
However, we recognize that, no matter how accurately we identify
typical practices and resource needs, there are atypical cases. In the
FY 2010 SNF PPS proposed rule, we discussed our efforts to develop a
separate method to reimburse for non-therapy ancillaries (NTAs), such
as the IV medications and pharmaceuticals discussed by these
commenters. We are committed to developing an NTA classification system
as quickly as possible to recognize these higher costs.
Extensive Category
Comment: Several commenters supported the proposed changes in the
Extensive Services Category in the RUG-IV model. A few commenters
expressed concern over the removal of suctioning, noting if that if it
is removed, Medicare will provide little reimbursement or incentive for
SNFs to admit respiratory patients. One commenter noted that the
frequent suctioning required by far utilizes increased nursing and
respiratory therapist resources, even more so than trachesotomy care.
The commenter stated that the proposal to move suctioning from the
Extensive Care Category to a lower RUG category would significantly
decrease their reimbursement.
Response: In the vast majority of cases, the STRIVE data showed
that suctioning was highly correlated with the tracheostomy or
ventilator services. Even in the absence of these two Extensive Care
services, suctioning was associated with other respiratory conditions
that are included in RUG-IV Special Care categories. We did find a
small number of cases where suctioning was recorded on the MDS in the
absence of any other respiratory condition or service. The data show
that the staff resource time captured for this subset of suctioning
patients was significantly lower than for patients reporting both
suctioning and respiratory conditions. Eliminating suctioning as a RUG-
IV qualifier only affects this smaller group where the service appears
unrelated to respiratory conditions. Thus, we do not believe that the
removal of suctioning as an independent qualifier will reduce the
incentive for SNFs to admit respiratory patients or decrease
reimbursement.
Special Care High and Special Care Low Categories
Comment: Several commenters supported the RUG-IV expansion and
splitting of the RUG-III Special Care Categories into the Special Care
High and Special Care Low Categories. These commenters also stated that
while the addition of several new case-mix groups adds complexity to
the model, the splitting of Special Care into a High and Low category
adds finer distinctions of resource utilization and, thus, payment
rates.
Response: CMS acknowledges the support of the commenters and
concurs with the point of finer distinctions of resource utilization
and payment rates by implementing a split of RUG-III Special Care
Category into Special Care High and Special Care Low Categories in RUG-
IV.
Fever with Dehydration
Comment: One commenter questioned the inclusion of dehydration as a
qualifier with accompanying fever in the Special Care High Category
versus the removal of dehydration alone as a qualifier in the
Clinically Complex Category. To the commenter, the proposed rule
appeared to indicate that dehydration as a qualifier has been removed
from ``any'' category, implying that dehydration, even in combination
with fever, would not contribute as a qualifying element to any RUG
classification. The commenter questioned whether it was CMS's intention
to leave dehydration as a qualifier in the Special Care High Category,
in combination with fever; if so, then CMS should clarify the statement
about dehydration in the proposed rule.
Response: As discussed in the FY 2010 proposed rule (74 FR 22231-
34), dehydration was dropped as a qualifier in any category based on a
finding by the American Medical Association (AMA) that there is no
standard definition of dehydration among providers (see Faes, MC,
``Dehydration in Geriatrics,'' Geriatric Aging, 2007: 10(9): 590-596,
available online at http://www.medscape.com/viewarticle/567678). We
further stated that based on our MDS review, we believe that this
qualifier is subject to a wide range of interpretation and, therefore,
is unreliable as a standard for RUG classification. The inclusion of
dehydration in conjunction with fever was inadvertent. In dropping
dehydration as a qualifier in any category, for the reasons set forth
above, dehydration should have been dropped as a qualifier accompanying
fever. Thus, in response to the comment, we are clarifying that in RUG-
IV, we are dropping dehydration as a qualifier accompanying fever in
the Special Care High category. However, we are clarifying that fever
in combination with pneumonia, vomiting, or weight loss are still
qualifiers in the Special Care High category under RUG-IV.
Comment: One commenter indicated that the amount of nursing
resources is directly correlated with the number of wounds a patient
has, and that patients with multiple wounds would be better reflected
in the Special Care High RUG category. For example, Patient A requires
skilled treatment for two stage 2 wounds. The nurse is able to complete
the wound care independently. Patient B requires skilled treatment for
two stage 2, one stage 3, and two stage 4 wounds on various locations
of the body; the nurse is able to complete the wound care
independently, but it may take a significant amount of time to care for
the wounds. The commenter believed that the more wounds a patient has,
the more resources they will require.
Another commenter believed that Stage 2 pressure ulcers should be
in Special Care Low, and that Stage 3 and 4 should be in Special Care
High, because they require more nursing time and treatments than Stage
2 ulcers. One commenter was concerned that venous
[[Page 40327]]
and arterial ulcers may be misclassified, and that definitions should
be available for the different types of ulcers.
Response: Based on these comments, we conducted numerous reviews of
the STRIVE data regarding staff resources used to treat ulcers, and
have determined that the research supports that we classify venous and
arterial ulcers for payment purposes with pressure ulcers; however, it
does not support separating wound care into 2 separate categories. We
will maintain the policy outlined in the proposed rule and keep
pressure ulcers in the Special Care Low category based on resource use
associated with these conditions. As proposed, the patient will qualify
for this category if 1 of the following is present along with 2 or more
skin treatments:
2 or more Stage 2 pressure ulcers; or
1 or more Stage 3 or Stage 4 pressure ulcers.
In addition, based on our review of the STRIVE data, the patient will
also qualify in the Special Care Low category if 1 of the following is
present along with 2 or more skin treatments:
2 or more venous/arterial ulcers; or
1 Stage 2 pressure ulcer and 1 venous/arterial ulcer.
We will define the different types of ulcers in the RAI manual as the
commenter suggested.
Comment: A few commenters questioned the elimination of several
Special Care qualifiers. These included fever with tube feeding, and
aphasia with tube feeding. While the commenters understood that CMS has
proposed these changes as a result of the data derived from the STRIVE
time study, they regarded the conclusion as counterintuitive to what is
known to be in practice: For example, in the case of both fever and
aphasia, it is clear that these conditions seriously complicate the
course of treatment and result in significant added resources of both
staff time and medical supplies. While the commenters commended the
statistical analysis and modeling that went into these decisions, they
asked that CMS reserve final judgment on these issues for review prior
to finalization of RUG-IV.
Response: We believe that the STRIVE data accurately reflect wage-
weighted staff time resources for aphasia with tube feeding. As
discussed in the proposed rule (74 FR 22231), we are dropping aphasia
based on the average staff resource time associated with that
condition. As discussed in the FY 2010 proposed rule, we dropped the
aphasia requirement because, based on the results of the STRIVE
analysis, aphasia no longer correlated with tube feeding. Thus, we are
retaining tube feeding as a Special Care Low qualifier, but are
dropping aphasia. The mechanism of placement in a specific RUG group is
such that a patient qualifying for the particular group had no other
qualifiers for placement in a higher group. Had that been the case,
then the patient would have been included in the higher group
reflecting more resource utilization. Patients with aphasia frequently
qualify for a higher Rehabilitation Category, because aphasia is often
accompanied by another condition that warrants such a RUG
classification. All of these medical factors blend into the overall
resource utilization statistical mosaic for the RUG-IV system.
Based on the comments received, we reviewed the data on the staff
resources required to treat patients with feeding tubes. We found that
fever was a complicating factor and that the resources needed to treat
a patient with both fever and a feeding tube were significantly higher
than for a feeding tube alone. Thus, we will keep fever with tube
feeding as a qualifier in the Special Care High category. Again, tube
feeding alone remains as a Special Care Low item.
Clinically Complex Category
Comment: A few commenters responded positively to the expansion in
the number of groups from 6 to 10 in the RUG-IV Clinically Complex
Category. They noted that the expansion is due to increasing the number
of ADL score breaks, particularly for moderate and more independent
functioning residents.
Response: CMS acknowledges the support of the commenters and
believes the expansion will capture a more accurate reflection of
resource utilization in the SNF.
Pneumonia and Oxygen Therapy
Comment: One commenter stated that there appeared to be better
reimbursement for pneumonia and oxygen therapy and was pleased that it
would help with the care of these patients. Another commenter expressed
concerns regarding oxygen therapy, stating this item can be gamed very
easily. They recommended that CMS define what oxygen therapy is and
specify a minimum amount of time/days for classification in the
Clinically Complex Category. They pointed out that currently, SNFs can
code this item if there is oxygen available on a PRN (``as needed'')
basis, and that the resident needs to use it only once to qualify for
the category.
Response: CMS has considered the suggestion of the commenters and
reviewed the STRIVE data. In doing so, we have determined that, based
on average resource use, oxygen therapy with respiratory failure,
rather than oxygen therapy alone, should qualify for the Special Care
Low Category, as the average resource time for oxygen therapy with
respiratory failure is more consistent with the average resource use
associated with the Special Care Low category. Oxygen therapy alone,
based on average resource time, will qualify for the Clinically Complex
Category. Regarding the suggestion for defined oxygen therapy regimens
for classification in the Clinically Complex category, we note that the
patient must require skilled services, and under the regulations at 42
CFR 409.33(b)(8), services that qualify as skilled nursing services
include the initial phases of a regimen involving the administration of
medical gases. Because the initial phases of an oxygen therapy regimen
qualify as SNF services, we are not going to require a minimum number
of days or amount of time for classification, and will maintain the MDS
2.0 coding instructions for oxygen therapy for use in the RUG-IV model.
Physician Orders
Comment: One commenter supported dropping physician orders as a
qualifier due to lack of specificity and the variable nature of this
qualifier, making it an unreliable predictor of resource use. Another
commenter expressed confusion about the physician order qualifier, and
whether it was CMS's intention to remove all physician orders as
qualifiers in any category. A few commenters disagreed with the
statement about physician orders being an unreliable predictor of
resource use. One commenter with a background in nursing noted that it
does not make sense to say that it does not take significant time to
review new orders, carry them out, order medications from the pharmacy,
order labs, etc., and that this is one of the major reasons sub-acute
units are busier than long-term care units. Another commenter stated
that physician order changes are a good way to capture instability, and
that the care of unstable residents can be more costly due to their
increased use of lab tests, new medications, and nursing time.
Response: While the RUG-III model has used physician order changes
as a proxy for instability, analysis of the STRIVE data did not support
its continued use because of its lack of
[[Page 40328]]
specificity and variable nature. In an effort to achieve greater
clarity and prevent misinterpretation, as we proposed, we are
eliminating the physician orders qualifier from the Clinically Complex
Category in RUG-IV. However, we are clarifying that we are retaining
physician order changes in association with diabetes (that is,
requiring daily insulin injections and physician insulin order changes
on 2 or more days) in the Special Care High category because the STRIVE
data show that physician orders in combination with diabetes with
injections is a reliable predictor of resource use. The MDS 3.0 is
being modified to collect physician order changes specifically related
to the patient's diabetic condition.
Internal Bleeding
Comment: One commenter noted that as a result of the STRIVE study,
internal bleeding was dropped as a qualifier. While the commenter
understood that CMS has proposed these changes as a result of the data
derived from the study, the commenter regarded the conclusion as
counterintuitive to what is known to be in practice: This condition
seriously complicates the course of treatment and the result is
significant added resources of both staff time and medical supplies.
Another commenter pointed out that transfusion services are costly to
SNFs, and favored their inclusion as an indicator for RUG payment
calculation, not simply for care planning purposes.
Response: CMS recognizes that internal bleeding can be a serious
medical condition requiring an unusual amount of staff resources and
supplies to control. However, the resource minutes derived from the
STRIVE study were significantly lower than other conditions classified
into the Clinically Complex category. These results suggest a high
degree of variation in the conditions coded as internal bleeding that
makes the item unreliable for use in a case-mix classification model.
We wish to note that transfusions have been retained as a Clinically
Complex qualifier in the RUG-IV model.
Dehydration
Comment: There were several comments about the removal of the
dehydration qualifier for the Clinically Complex Category. Comments
from a major industry organization agreed with CMS regarding the lack
of a standard definition of dehydration, and that the signs and
symptoms of dehydration may be vague and even absent in older adults.
Commenters believed that continuing to use dehydration as a qualifier
could result in inaccuracy in RUG classification. The commenters did
not minimize the potentially serious nature of dehydration and the need
for prompt medical attention in some cases, but rather, supported
dropping it as a qualifier in order to improve coding accuracy.
Another commenter cited the American Medical Directors
Association's (AMDA's) newly revised clinical practice guideline,
``Dehydration and Fluid Maintenance in the Long-Term Care Setting''
(see http://www.cpgnews.org/DF/index.cfm). Specifically, the commenter
cited the AMDA as concluding that the confusion over the definition of
the nonspecific, generic term dehydration results in confusion about
the clinical diagnosis of dehydration in the long-term care (LTC)
setting. According to the commenter, AMDA has concluded that
dehydration is an unreliable quality of care indicator.
A number of commenters stated that while dehydration may be
difficult to quantify (as stated in the proposed rule), the requirement
to assess, plan, intervene, evaluate, and revise care plans for the
patient at high risk of dehydration remains a significant clinical
issue. The commenters further stated that instances whereby facilities
fail to complete such assessment and documentation is not a valid
reason to eliminate appropriate reimbursement for facilities that do
provide the necessary standard of care.
Response: CMS agrees with the commenters stating that continuing
use of dehydration as a qualifier could result in inaccuracy in RUG
classification. As demonstrated by the wage-weighted staff time
resource utilization, dehydration is an unreliable indicator of
resource use. Therefore, dehydration has been removed as a qualifier
from the Clinically Complex category of RUG-IV, and has also been
removed as a qualifier accompanying fever in the Special Care High
category. However, we would like to emphasize that we agree with the
commenters regarding the severity of dehydration and the requirement
for prompt medical attention. We expect that dehydration is seen in
association with other services and conditions that are used as RUG-IV
qualifiers. Thus, we do not expect that this change will discourage
appropriate care or eliminate reimbursement for Medicare patients with
skilled care needs.
IV Medications
Comment: Some commenters did not support the movement of the IV
medications qualifier from the Extensive Services Category to the
Clinically Complex category. The commenters indicated that IV
medications drive high cost to the SNF, and this downward movement of
IV medication will not cover the cost of purchasing most IV
medications. The commenters recommended further study of the type of
residents seen in the SNF setting, and reviewing the cost of providing
that care in relationship to IV medications. If the shift to the
Clinical Complex category would occur, the commenters recommended
excluding the High cost IV medications from SNF consolidated billing.
Some commenters believed the inclusion of IV medications as an
Extensive Services qualifier, as it is in the RUG-III classification
system, appropriately captures the cost of providing the critical
treatment these therapies offer to ill and injured patients.
Response: Although certain medications may have high costs, the
STRIVE study data show that the average resource times related to IV
medications are more reflective of conditions in the Clinically Complex
category than the Extensive Services category. CMS recognizes the
impact of high-cost medications on SNFs and is presently developing a
protocol to assess the impact of non-therapy ancillaries, as discussed
in the FY 2010 proposed rule (74 FR 22238-41). However, as discussed
further in section III.G of this final rule, we currently do not have
the statutory authority to exclude items such as IV medications from
consolidated billing.
Look-Back Period for IV Medications
Comment: Some commenters expressed concern that the proposed RUG-IV
model will eliminate all services provided in the acute setting, such
as IV medications, as a qualifier for higher RUG categories. The
commenters stated this eliminates the ``presumption of coverage'' that
we clarified in the SNF PPS final rule of July 30, 1999 (64 FR 41666-
41670), which allows a beneficiary who was in the acute setting for
pneumonia, septicemia, and infectious diseases to be considered
``skilled'' through the first assessment reference date. The commenters
stated that the removal of the IV fluid ``14-day hospital look-back''
qualifier for the SNF Extensive Services Category in RUG-IV fails to
recognize the high risk of relapsing conditions with this patient
population. The commenters believe this should be a consideration in
skilled nursing assessment during the initial five-day assessment
period, and that such care should be appropriately reimbursed, as it is
in the current RUG
[[Page 40329]]
structure. These commenters stated that removal of this qualifier will
lower the payment to SNFs, and that when IV medication does qualify,
moving from Extensive Services to Clinically Complex will also result
in lower payment. The commenters believed the nursing care of
administering the IV will no longer count as a key factor in obtaining
a refinement RUG and will essentially eliminate the refinement RUGs in
most if not all Medicare stays. In addition, they believed that the
reimbursement will not be enough to pay for the cost of the IV, let
alone the cost of providing the nursing care required to administer the
IV.
Several commenters believed the appropriate and necessary
monitoring of the patient to prevent recurrence or exacerbation of the
condition for which the IV medication was provided is a reason for
inclusion in the Extensive Services category, and that it has not been
considered in the removal of IV medication in the look-back period.
Some commenters noted that the STRIVE data analysis of the 14-day
``look back'' period for IV medication and 7-day ``look back'' period
for IV fluids did not demonstrate a statistically significant
difference in nursing time. The commenters suggested that CMS look at
the nursing time spent monitoring when a resident has had an IV
medication administered within the last 7 days, and factor it into the
nursing component. The commenters believed that residents receiving IV
medication in this time frame require a significant amount of nursing
time to monitor side effects of the medications, as well as disease
exacerbations. The commenters referenced literature indicating that
SNFs have a lower rate of return to the hospital than other post acute
settings; therefore, the time spent monitoring residents, notifying
physicians of condition changes, and implementing care plan changes
must be taken into consideration when making changes in the RUG system.
The commenters recommended shortening the window as opposed to removing
the provision altogether, that is, a 7-day look-back to capture IV
meds. The commenters requested alternatives be considered before the
proposed rule is implemented.
Response: CMS recognizes the concern of the nursing home community
regarding levels of reimbursement. However, as discussed above in
section III.C.1.b.iv of this final rule and in the proposed rule (74 FR
22228), our analysis of the STRIVE data supported the conclusion that
the capture of certain preadmission services by the look-back does not
provide an effective proxy for medical complexity in the SNF, and thus
is not an effective predictor of subsequent resource intensity during
the SNF stay. Therefore, we believe it is appropriate to eliminate the
look-back to the hospital stay for P1a services, rather than adopt a
shorter look-back period. However, we noted in the proposed rule that
it is still important that the SNF consider preadmission services for
care planning purposes and we have designed the MDS 3.0 accordingly.
Regarding the IV medications qualifier, as discussed above, the STRIVE
data showed that the average resource times related to IV medications
are more reflective of conditions in the Clinically Complex category.
Therefore, we believe that under RUG-IV, facilities will be
appropriately reimbursed according to the wage-weighted resource staff
time associated with a patient's condition. As discussed above, CMS
recognizes the impact of high-cost IV medications on SNFs, and is
developing a protocol to assess the impact of non-therapy ancillaries,
as discussed in the FY 2010 proposed rule (74 FR 22238-41). Finally, we
do not agree that eliminating the look-back period to the hospital stay
eliminates the presumption of coverage, because even in the absence of
the look-back, it remains possible for a resident to be assigned on the
initial 5-day, Medicare-required assessment to one of the RUGs that we
have designated as qualifying the resident for the presumption.
Patient Acuity and RN Care
Comment: Several commenters noted that the residents requiring IV
medications are sick, as evidenced by the infection causing the need
for IV antibiotics, and require extra nursing observation in addition
to the RN time for IV starts, IV ordering, and IV administration. The
commenters supported not coding the IVs that were given in the
hospital, but questioned whether we are adequately accounting for the
amount of care provided to residents receiving rehabilitation and in-
house IVs, noting that there is no longer a provision for them to get a
higher RUG rate. These commenters did not support dropping the IV
medications and fluids to a lower RUG group, arguing that this is a
situation requiring the presence, vigilance, and assessment skills of a
RN. In addition, these commenters asserted that the complex nature of
the residents of some SNFs can involve co-morbidities, non-verbal
status with varying communication methods, various levels of cognitive
abilities, and difficult feeding strategies that can best be treated
within a specific type of facility, and that the patients are
discharged from acute care much earlier than the typical geriatric
resident.
Response: CMS appreciates the support of the recommendation not to
include a 14-day IV look-back as a qualifier for the RUG-IV
classification. We recognize and value the presence, vigilance, and
assessment skills of an RN. However, all of the elements mentioned in
the comment, including nursing observation time, IV starts, IV
ordering, and IV administration, were captured in all of the nursing
homes participating in the STRIVE time study. The STRIVE data did not
reflect a statistically significant increase in wage-weighted staff
time resource utilization for the patient population receiving IV
medications, and the average staff resource time for these patients was
more reflective of the Clinically Complex category.
Non-Patient Nursing Time
Comment: Some commenters objected to moving the IV medication
qualifier to the Clinically Complex category and stated that the RUG-IV
nursing case-mix index assigned to IV medications does not account for
the additional expended nurse resources. They noted that those
resources are affiliated with the increase in documentation associated
with IV medication administration, and the specific nurse training
required for effective administration and management of patients
receiving IV medications; for example, when caring for a patient
receiving IV medications, the nurse's time requirements go beyond the
time he/she spends directly with the patient, and include completing
detailed IV assessment flow sheets, preparing the IV medication,
reviewing lab work and consulting with the pharmacist, and becoming IV
certified.
Response: Administrative documentation and other non-patient
nursing time were incorporated into the STRIVE time study. In addition,
the costs of training and administrative documentation were captured in
the 1995 base year for the SNF PPS's bundled rate; any bedside training
and administrative documentation performed during the time study would
have been captured. Further, as discussed above, the STRIVE results
supported moving the IV medications qualifier to the Clinically Complex
category.
Financial Hardship
Comment: Several commenters believed that dropping IV medications
from the Rehabilitation/Extensive Services category and the Extensive
[[Page 40330]]
Services category will cause financial hardship to long-term care
facilities, and undue stress to the residents. The commenters cited the
following reasons:
They are very expensive, which may be a factor for
consideration in determining potential admissions to long-term care
facilities. It is hard enough now not to lose money on patients
requiring expensive IV medications.
They are used for very ill residents who require more
nursing hours than any of the conditions included in any of the
Extensive Care or Special Care categories.
The commenters did not question the general findings of the STRIVE
project, but expressed concern about the specific implications of those
findings for IV medications used in the facilities.
One commenter requested that data analyses be performed to compare
nursing home residents admitted with IV therapy to those admitted
without IV therapy, both for their facilities' residents and for a
benchmark of nursing home residents nationwide. The commenter presented
the results of one such study. The national benchmark was constructed
using MDS data for all clients from a specific organization and its
members and includes more than 2,700 facilities nationwide with more
than 400,000 MDS assessments. Two MDS variables were used in this
analysis: (1) Item P1ac (IV medications), and (2) item K5a (IV fluids).
The commenter's analysis of data from the specific facilities and from
the national data showed statistically significant differences between
the group with IV therapy and the group without IV therapy, with the
former group having a higher level of acuity and a greater need for
skilled nursing resources. The commenters questioned the validity of
the STRIVE study, which demonstrated no time difference between giving
a patient an oral antibiotic versus administering an IV antibiotic.
The commenters stated that most of the patients receiving IV
therapy are elderly and have suffered a major illness or
hospitalization and, thus, require the IV therapy they are receiving.
These commenters questioned the incentive for SNFs to continue to
provide IV therapy services if the RUG-IV system is implemented as
proposed.
Another commenter pointed out that IV medications and IV fluids
provided in a SNF require the presence of an RN in most States, and
that facilities must employ RNs specifically to provide the residents
with IV services, which can be costly in rural areas where there are
shortages of healthcare professionals. The commenter asserted that
prior to the RUG-53 refinement to the SNF PPS, residents requiring IV
medications or fluids were frequently rejected by SNFs because of the
expense and difficulty in finding nurses to provide care. The commenter
expressed concern that bumping the IV medications down to the
Clinically Complex category will again adversely affect resident
admissions to nursing homes.
Response: The STRIVE study captured, and the data reflects,
resource time expended by all staff levels. As discussed above, the
STRIVE study indicated that the average resource times associated with
IV medications are more reflective of conditions in the Clinically
Complex category.
Thus, we believe that classification and reimbursement under the
Clinically Complex category for IV medications is appropriate, and
should not result in financial hardship. Under RUG-IV, reimbursement
for patients with complex nursing needs such as IV therapy will
increase significantly, and should be sufficient to cover the cost
associated with these patients. We will, of course, continue to monitor
utilization practices to determine whether there is any impact on
access to or quality of care.
Still, as the payment under RUG-IV reflects the nursing resources
and patient complexity associated with the provision of IV medications,
we do not believe that access to care will be adversely affected. As
discussed above, CMS recognizes the impact of high-cost medications on
SNFs and is presently developing a protocol to assess the impact of
non-therapy ancillaries as discussed in the FY 2010 proposed rule (74
FR 22238-41).
Behavioral Symptoms and Cognitive Performance Category
Comment: One commenter supported the combined Behavior Symptoms and
Cognitive Performance Category in the RUG-IV model. This category
combines the two separate categories of Impaired Cognition and Behavior
Problems in RUG-III into the single new category with a combined total
of 4 RUG groups as opposed to 4 in Impaired Cognition and another 4 in
Behavior Problems.
One commenter noted that while patients would classify in this
group when they display only behavioral symptoms, or when they display
only issues of cognition, they also remain in this group even when they
have both conditions. The commenter added that many residents have
issues with both dementia and behavioral problems and probably require
more resources or staff time to deal with both issues. The commenter
believes that there needs to be an additional category with a higher
CMI that recognizes the combination of both issues.
Response: During the meeting of the Technical Expert Panel in
Spring 2009, this issue was discussed at some length. Unlike the
results from other countries, the United States STRIVE time study
analysis did not indicate that there was an increased wage-weighted
staff time resource utilization with patients exhibiting both
behavioral and cognitive issues. Reasons for this may include
effective, monitored medication, and specialized, well-equipped nursing
facility settings in this country. In addition, we need to consider
whether the needs of individuals with cognitive impairment or serious
behavior problems are addressed through specialized State programs
similar to the Intermediate Care Facilities for the Mentally Retarded
(ICFs/MR) for targeted populations.
Reduced Physical Function Category
Comment: One commenter supported the increased case-mix
classification assigned to patients receiving restorative therapy in
the Reduced Physical Function Category. The commenter believes this
will better reflect the amount of nursing resources needed to implement
an effective and efficient restorative program. A few commenters
responded to CMS's request for comments on the tertiary split for
restorative nursing in the RUG-IV model. Specifically, they noted a
discrepancy between the reported service and the nursing minutes; in
approximately half the Reduced Physical Function groups, the nursing
minutes were lower for patients where restorative nursing was reported
on the MDS than for patients who were not receiving the service.
Commenters suggested most of the nursing rehabilitation may be provided
by individuals under the direction of nursing staff who are not
classified as nursing personnel, such as nurse aides on the floor,
therapy aides, and recreation therapy aides. This, coupled with the
facilities limiting the time these residents might have received from
licensed nurses, could yield the results seen. Commenters suggested
that it might be helpful to see whether licensed nurse time has been
reduced for these residents inappropriately or if an additional use of
aides has appropriately reduced the level of licensed nurse need.
Regardless, the commenters believed that the retention of this split is
crucial, as it encourages continued help for residents to maintain
their highest physical functioning. Another commenter concurred with
the
[[Page 40331]]
proposed rule's position that restorative nursing programs benefit all
residents, and cited the findings of a Federal grant that studied
nursing facilities in Colorado having good restorative nursing
programs, including:
Decrease in the number of acquired pressure ulcers.
Increase in the number of residents ambulating
independently.
Increase in the number of residents feeding themselves.
Decrease in the number of incontinent residents.
Decrease in the number of Foley catheters.
Decrease in the number of physical constraints.
Increase in the number of residents involved in sensory
stimulation, exercise, and grooming classes.
Decrease in the number of contractures.
Decrease in the number of accidents.
Increase in the individual's mental stature and awareness.
Response: We appreciate the possible explanations of the reduced
nursing minutes for patients receiving restorative nursing. It is
plausible that much of the nursing rehabilitation may now be provided
by aides and that the wage-weighted staff time resource utilization for
the licensed nurses is now less than the time attributed to the various
types of aides and assistants. As we proposed, we are retaining the
tertiary split for restorative nursing in RUG-IV, as we believe that it
benefits all patients. As the commenter suggested, we will consider
monitoring restorative nursing to see whether licensed nurse time has
been reduced for these residents inappropriately or if an additional
use of aides has appropriately reduced the level of licensed nurse
need.
Finally, we note that it was brought to our attention during the
comment period that there were certain inconsistencies in our FY 2010
proposed rule. We noted these inconsistencies on our Web site, at
http://www.cms.hhs.gov/snfpps/02_spotlight.asp. First, we identified
some inconsistencies between the preamble text at 74 FR 22231 and the
tables in the proposed rule (Table 14 and Table C in the Addendum)
regarding the qualifying conditions for the Special Care High, Special
Care Low, and Clinically Complex categories. We are clarifying that the
information in the tables was accurate, with the correction noted
below. In addition, we identified a necessary technical correction to
Table C in the Addendum of the FY 2010 proposed rule. The Special Care
High, Special Care Low, and Clinically Complex categories for RUG-IV
stated in the Notes section, ``Signs of depression used for end splits;
PHQ score <= 9 or CPS >=3.'' This should have read, ``Signs of
depression used for end splits consisted of PHQ score >=9.5.''
Accordingly, we are finalizing the RUG-IV classification system as
proposed in the FY 2010 proposed rule (74 FR 22229-36) for
implementation in FY 2011, with the corrections noted above and with
the following modifications:
Fever with feeding tube has been added to Special Care
High;
We are clarifying that dehydration has been deleted as a
qualifier in any category, including the Special Care and Clinically
Complex categories;
Respiratory failure in combination with oxygen therapy
while a resident is added to Special Care Low;
Oxygen therapy alone while a resident is moved to
Clinically Complex; and
A patient will also qualify in the Special Care Low
category if 1 of the following is present along with 2 or more skin
treatments:
[cir] 2 or more venous/arterial ulcers; or
[cir] 1 Stage 2 pressure ulcer and 1 venous/arterial ulcer.
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Billing for Skilled Nursing Facilities for FY 2010; Minimum Data Set,
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BILLING CODE 4120-01-C
3. Development of the FY 2011 Case-Mix Indexes
Section 1888(e)(4)(G)(i) of the Act requires that the Federal rates
be adjusted for case mix. Pursuant to the statute, such adjustment must
be based on a resident classification system, established by the
Secretary, that accounts for the relative resource utilization of
different patient types. The case-mix adjustment must be based on
resident assessment data and other data the Secretary considers
appropriate.
As discussed in the previous section, we are finalizing the RUG-IV
model to be implemented in FY 2011. The RUG-IV update uses data
collected in 2006-2007 during the STRIVE project, and reflects current
medical practice and resource use in SNFs across the country. Our
description of the proposed RUG-IV model in the FY 2010 proposed rule
included a discussion of the development of the case-mix indexes to be
used under this model (74 FR 22208, 22236-22238, May 12, 2009).
The case-mix indexes will be applied to the unadjusted rates
resulting in 66 separate rates, each corresponding with one of the 66
RUG-IV classification groups. To determine the appropriate payment
rate, SNFs will classify each of their patients into a RUG-IV group
based on assessment data from the MDS 3.0.
Our intent in implementing RUG-IV is to allocate payments more
accurately based on current medical practice and updated staff resource
data obtained during the STRIVE study, and not to decrease or increase
overall expenditures. Thus, consistent with the policy in place when we
transitioned to the RUG-III 53-group model in FY 2006 (as discussed in
section III.B.2.b of this final rule), we believe that overall
expenditures under the RUG-IV model should maintain parity with overall
expenditures under the RUG-III 53-group model. Therefore, we simulated
payments under the RUG-III 53-group model and the RUG-IV 66-group model
to ensure that the change in classification systems did not result in
greater or lesser aggregate payments.
We used the resource minute data collected from STRIVE to create a
new set of unadjusted relative weights, or case-mix indexes (CMIs), for
the RUG-IV model as described in the proposed rule (74 FR 22208, 22236-
22238, May 12, 2009). We then compared the CMIs for the RUG-53 and RUG-
66 models in a way that is intended to ensure that estimated total
payments under the 66-group RUG-IV model would be equal to those
payments that would have been made under the 53-group RUG-III model. In
the FY 2010 proposed rule, we stated that we used STRIVE data with
sample weights applied and FY 2007 claims data (the most recent final
claims data available at the time) to compare the distribution of
payment days by RUG category in the 53-group model with the anticipated
payments by RUG category in the new 66-group RUG-IV model. However,
after the
[[Page 40339]]
proposed rule was published, final FY 2008 claims data became
available. As we stated in the proposed rule, in the absence of actual
RUG-IV utilization, we believe that the most recent final claims data
are the best source available, as they are closest to the FY 2011
timeframe. Because our intent, as expressed in the FY 2010 proposed
rule, was to use the most recent data available, we updated our
analysis using FY 2008 final claims data to enhance the accuracy of our
calculation of the adjustment necessary to achieve parity between the
RUG-53 model and RUG-IV. Our projections of future utilization patterns
under the new case-mix system indicated that the 66-group RUG-IV model
would produce lower overall payments than under the original RUG-III
53-group model. Therefore, consistent with the policy in place when we
transitioned to the RUG-III 53-group model in FY 2006 (as discussed in
section III.B.2.b of this final rule), we proposed to provide for an
adjustment to the nursing CMIs that would achieve ``parity'' between
the old and new models (that is, would not cause any change in overall
payment levels). Based on our analysis using FY 2008 claims data, the
adjustment to the nursing weights necessary to achieve ``parity'' is an
upward adjustment of 59.4 percent.
The parity adjustment relies on projecting the utilization for a
new classification system, RUG-IV, based on a new assessment
instrument, MDS 3.0. Our calculation of the parity adjustment uses the
most recent data available to estimate RUG-IV utilization for FY 2011.
In the absence of actual RUG-IV utilization data for this timeframe, we
believe the most recent data are the best source available, as they are
closest to the FY 2011 timeframe. As actual data for RUG-IV utilization
become available, we intend to assess the effectiveness of the parity
adjustment in maintaining budget neutrality and, if necessary, to
recalibrate the adjustment in future years.
We intend to actively monitor the changes in beneficiary access and
utilization patterns as a response to the implementation of RUG-IV. For
example, we anticipate that the changes to the Extensive Services
category could result in increased beneficiary access for patients with
severe respiratory conditions. In addition, we intend to monitor
utilization for any potential coding changes that could occur as a
result of the changes to the SNF PPS. If, in future years, evidence
becomes available that indicates that a change in aggregate payments
are a result of changes in the coding or classification of residents
that do not reflect real changes in case mix, CMS will consider the
authority given to the Secretary under Section 1888(e)(4)(F) of the Act
to provide for an adjustment to the unadjusted Federal per diem rates
so as to eliminate the effect of such coding and classification
changes.
We are finalizing the RUG-IV CMIs utilizing the methodology
discussed. The final RUG-IV CMIs reflecting the parity adjustment are
displayed in Table 14 and, as discussed in the previous section, we
will implement these CMIs with the RUG-IV system beginning in FY 2011.
Table 14--RUG-IV Case-Mix Indexes
------------------------------------------------------------------------
RUG Nursing index Therapy index
------------------------------------------------------------------------
RUX..................................... 3.55 1.87
RUL..................................... 3.41 1.87
RVX..................................... 3.48 1.28
RVL..................................... 2.92 1.28
RHX..................................... 3.40 0.85
RHL..................................... 2.86 0.85
RMX..................................... 3.28 0.55
RML..................................... 2.92 0.55
RLX..................................... 3.01 0.28
RUC..................................... 2.08 1.87
RUB..................................... 2.08 1.87
RUA..................................... 1.32 1.87
RVC..................................... 2.00 1.28
RVB..................................... 1.48 1.28
RVA..................................... 1.47 1.28
RHC..................................... 1.92 0.85
RHB..................................... 1.59 0.85
RHA..................................... 1.22 0.85
RMC..................................... 1.81 0.55
RMB..................................... 1.62 0.55
RMA..................................... 1.12 0.55
RLB..................................... 1.99 0.28
RLA..................................... 0.94 0.28
ES3..................................... 3.55 ..............
ES2..................................... 2.65 ..............
ES1..................................... 2.29 ..............
HE2..................................... 2.20 ..............
HE1..................................... 1.72 ..............
HD2..................................... 2.02 ..............
HD1..................................... 1.58 ..............
HC2..................................... 1.87 ..............
HC1..................................... 1.47 ..............
HB2..................................... 1.84 ..............
HB1..................................... 1.45 ..............
LE2..................................... 1.94 ..............
LE1..................................... 1.52 ..............
LD2..................................... 1.84 ..............
LD1..................................... 1.45 ..............
LC2..................................... 1.54 ..............
LC1..................................... 1.21 ..............
LB2..................................... 1.44 ..............
LB1..................................... 1.13 ..............
CE2..................................... 1.66 ..............
CE1..................................... 1.49 ..............
CD2..................................... 1.54 ..............
CD1..................................... 1.37 ..............
CC2..................................... 1.28 ..............
CC1..................................... 1.14 ..............
CB2..................................... 1.14 ..............
CB1..................................... 1.01 ..............
CA2..................................... 0.87 ..............
CA1..................................... 0.77 ..............
BB2..................................... 0.96 ..............
BB1..................................... 0.89 ..............
BA2..................................... 0.69 ..............
BA1..................................... 0.64 ..............
PE2..................................... 1.49 ..............
PE1..................................... 1.39 ..............
PD2..................................... 1.37 ..............
PD1..................................... 1.27 ..............
PC2..................................... 1.09 ..............
PC1..................................... 1.01 ..............
PB2..................................... 0.83 ..............
PB1..................................... 0.77 ..............
PA2..................................... 0.58 ..............
PA1..................................... 0.54 ..............
------------------------------------------------------------------------
The comments that we received on this subject, and our responses,
appear below.
Comment: Several commenters questioned our use of Bureau of Labor
Statistics data to determine the wage-weighted staff time. Some
suggested that we should have used industry sources instead. One
commenter believed that the BLS data we used (2006) should be updated
to 2008. A few commenters said that we did not include enough
information about how the wage weights were calculated.
Response: In the STRIVE study, wage-weighted nursing and
rehabilitation staff times were computed at the resident level by
multiplying the number of minutes of care that were provided by each
staff type by a wage weight for that staff type, and then summing over
all staff types.
We believe we included sufficient information regarding how the
wage weights were calculated in the FY 2010 proposed rule (74 FR
22237). To establish wage weights for each staff type, the STRIVE study
obtained national median wage values for staff types from the May 2006
Bureau of Labor Statistics/Occupational Employment Statistics (BLS/
OES). Next, we computed the ratio of median salaries for the different
nursing and rehabilitation therapy staff to the median salary of a
certified nurse aide. These ratios were used as salary weights for each
staff category. The BLS/OES provides national data by staff type for
Nursing Care Facilities and is publicly available. We considered many
other sources of wage data, such as the BLS National Compensation
Survey Employer Cost for Employee Compensation product; however, this
product does not provide national averages and is not very specific to
nursing homes. We also considered survey data collected by the
industry. We found that these data were less
[[Page 40340]]
nationally representative, as they were collected for a smaller number
of facilities and for specific types of nursing homes. In addition,
they were more limited in the staff types collected. BLS/OES data
contained nearly all of the staff types we encountered during the
STRIVE data collection.
The STRIVE study allowed facilities to select from a wide range of
staff type categories. For example, there were 11 different categories
for non-licensed aide staff, as follows:
Certified Medication Aide.
Certified Nursing Assistant (CNA).
Geriatric Nursing Assistant.
Resident Care Technician.
Restorative Aide.
Feeding Aide.
Transportation.
Bath Aide.
Non-certified care tech.
Clinical Associate.
Psychological Therapy Aide.
When one of these staff categories appeared in the BLS/OES, then
the corresponding median hourly wage for that category was used by the
STRIVE study. The participating facilities used a variety of titles for
staff with similar job duties; for example, different kinds of
certified nurse assistants (CNAs) or aides. When a staff category did
not appear in the BLS/OES, a decision was made to set the wage for
STRIVE computations to a value relative to most comparable staff
category available in BLS/OES. The relative value used was based on an
assessment of the functions performed by the staff in relation to the
functions performed by the most comparable staff category available in
BLS/OES. For example, ``restorative aide'' did not occur in BLS/OES and
the wage for restorative aide was set to the 75th percentile of CNA
wage. ``Geriatric nursing assistant'' did not appear in the BLS/OES and
the wage for this staff type was set to the median CNA wage. ``Bath
aide'' was not listed in the BLS/OES and the wage for this staff type
was set to the 25th percentile of CNA wage, as aides in this staffing
category were restricted to a single function. Generally, the few staff
categories that were not available in the BLS/OES reported very few
resident-specific time minutes.
BLS/OES is widely used as a source for average salary information.
In fact, both MedPAC (``Report to Congress: Promoting Greater
Efficiency in Medicare'', June 2007) and Acumen, LLC (http://
www.acumenllc.com/reports/cms) have considered the BLS data for use in
an alternative method to compute the wage index. Considering all of the
alternatives, we believe that the BLS/OES represents the best source of
data to establish the STRIVE wage weights.
The following table presents the STRIVE study wages and
corresponding wage weights. Wage weights were standardized so that the
CNA value equaled 1.00. This allowed an interpretation of a wage-
weighted time as ``CNA equivalent minutes.''
Table 15--STRIVE Study Wages and Corresponding Wage Weights
----------------------------------------------------------------------------------------------------------------
Median hourly
Job title Decision * wage (2006$) Wage weight
----------------------------------------------------------------------------------------------------------------
Nursing Staff
----------------------------------------------------------------------------------------------------------------
Registered Nurse........................... Use BLS median..................... $27.54 2.58
Nurse Practitioner......................... Use median RN wage................. 27.54 2.58
Licensed Practical Nurse................... Use BLS median..................... 17.57 1.65
Licensed Vocational Nurse.................. Use median Licensed Practical Nurse 17.57 1.65
wage.
Certified Medication Aide.................. Use median CNA wage................ 10.67 1.00
Certified Nursing Assistant (CNA).......... Use BLS median..................... 10.67 1.00
Geriatric Nursing Assistant................ Use median CNA wage................ 10.67 1.00
Resident Care Technician................... Use median CNA wage................ 10.67 1.00
Restorative Aide........................... Use 75th percentile CNA wage....... 12.80 1.20
Feeding Aide............................... Use 25th percentile CNA wage....... 9.09 0.85
Transportation............................. Use 25th percentile CNA wage....... 9.09 0.85
Bath Aide.................................. Use 25th percentile CNA wage....... 9.09 0.85
Non-certified care tech.................... Use 25th percentile CNA wage....... 9.09 0.85
Clinical Associate......................... Use median CNA wage................ 10.67 1.00
Respiratory Therapist...................... Use BLS median..................... 22.80 2.14
Respiratory Therapy Assistant.............. Use BLS median..................... 18.81 1.76
Psychological Therapy Aide................. Use BLS median..................... 11.49 1.08
----------------------------------------------------------------------------------------------------------------
Therapy Staff
----------------------------------------------------------------------------------------------------------------
Physical Therapist......................... Use BLS median..................... 31.83 2.98
Physical Therapy Assistant................. Use BLS median..................... 19.88 1.86
Physical Therapy Aide...................... Use BLS median..................... 10.61 0.99
Occupational Therapist..................... Use BLS median..................... 29.07 2.72
Occupational Therapy Assistant............. Use BLS median..................... 20.22 1.90
Occupational Therapy Aide.................. Use BLS median..................... 12.03 1.13
Speech Language Pathologist................ Use BLS median..................... 27.74 2.60
Audiologist................................ Use BLS median..................... 27.46 2.57
Therapy Aide............................... Use the average of PT & OT aides... 11.32 1.06
Therapy Transport.......................... Use the average of PT & OT aides... 11.32 1.06
----------------------------------------------------------------------------------------------------------------
We note that staff types not included in this table were not
considered in calculating nursing time in the STRIVE study. Some staff
types (for example, nurse practitioner and dialysis technician) were
excluded because there was little or no time for this staff type in the
STRIVE study. Others were excluded because their services are not
covered under Medicare Part A (for example, acupuncturist) or their
services are not included in the Medicare Part A nursing rate component
(for example, dietitian).
[[Page 40341]]
Finally, we used 2006 BLS/OES data to construct the wage weights,
and although more recent data are available, we believe that the 2006
data represent the wages related to the staffing patterns in use during
a period of time when the STRIVE data were collected. Although the
absolute wages change over time, we have evaluated the differences in
the wage weights from 2006-2008 and find that wage weights for most
staff types over this period are stable. In other words, although the
absolute wages change, the relative wages between staff types are not
changing significantly. Therefore, we are finalizing our decision to
use the 2006 BLS/OES data to calculate the wage weights used to
construct the case-mix indexes.
Comment: Some commenters suggested that the parity adjustment be
applied to both the nursing and therapy indexes.
Response: We considered this as an alternative to applying the
parity adjustment entirely to the nursing CMIs. However, we believe it
is most appropriate to apply the parity adjustment to the nursing CMIs.
The parity adjustment accounts for the difference in payments between
the RUG-III and RUG-IV systems accumulated across all RUGs. The nursing
CMIs are applied to each of the 66 RUGs in the RUG-IV payment system
and, therefore, we believe it is most appropriate to apply that
adjustment to all RUGs. When applying a portion of the parity
adjustment to the therapy CMIs, aggregate payment rates for therapy
RUGs do not uniformly increase compared to aggregate payment rates for
therapy RUGs if calculated by applying the entire parity adjustment to
the nursing CMIs. The nursing component, even for most therapy groups,
is usually the largest contributor to the aggregate payment rate.
Comment: One commenter noted RUB and RUC, and RVA and RVB have the
same case-mix index for RUG-IV. For RUG-III, ``B'' ADL pays more than
``A,'' and ``C'' pays more than ``B.'' The commenter stated that this
does not account for the increased resources used when providing care
for a patient with ``B'' ADLs versus ``C'' ADLs, or ``A'' ADLs versus
``B'' ADLs.
Response: The RUG-IV CMIs are based on the time resource data from
the STRIVE project. In the situations that the commenter cites, the
STRIVE data indicated less nursing time for RUC than RUB and the
resulting CMI for RUC would be less than that for RUB. A situation
where the time resource use for groups within a category does not
increase with increasing ADL scores is often referred to as an ``ADL
inversion.'' The STRIVE data produced a few of these types of
inversions, and they have existed in previous time studies as well.
Previous time studies have adjusted for most of these inversions before
calculating final CMIs. We believe it is appropriate to adjust these
inversions so that the CMIs reflect higher resource use for more
dependent patients and eliminate payment incentives that may cause
practice patterns to be altered. Therefore, using the method described
in section III.C.1.a of this final rule, we decided to ``smooth'' the
inversion by combining a pair of groups and assigning the weighted
average across the 2 groups as the mean resource time for each group.
This is why the final means, and therefore the CMIs, for RUB and RUC
are equal. We believe this is preferable to allowing the reimbursement
for less dependent patients to be higher than the reimbursement for
patients that are more dependent. We note that the CMI for RVB is
slightly higher than the CMI for RVA using the final database.
4. Relationship of RUG-IV Classification System to Existing Skilled
Nursing Facility Level-of-Care Criteria
As discussed previously in section III.B.5 of this final rule, the
existing level of care presumption currently applies to the upper 35
groups of the refined 53-group RUG-III model. In the FY 2010 proposed
rule (74 FR 22208, 22238, May 12, 2009), we proposed that under the new
66-group RUG-IV model, this presumption would apply to the upper 52
groups, as encompassed by the following categories: Rehabilitation Plus
Extensive Services; Ultra High Rehabilitation; Very High
Rehabilitation; High Rehabilitation; Medium Rehabilitation; Low
Rehabilitation; Extensive Services; Special Care High; Special Care
Low; and, Clinically Complex. We received no comments on this proposal,
and in this final rule, we are implementing this provision as proposed.
5. Prospective Payment for SNF Nontherapy Ancillary Costs
The FY 2010 proposed rule discussed the issue of payment for
nontherapy ancillary costs under the SNF PPS (74 FR 22208, 22238-22241,
May 12, 2009). This discussion described the previous research that has
been conducted in this area as well as current policy and analysis, and
also specifically examined this issue as it relates to the temporary
AIDS add-on payment established by section 511 of the MMA (see section
I.E of this final rule). The comments that we received on this subject,
and our responses, appear below.
Comment: A commenter stated that payments for ventilator services
are inadequate to prevent ventilator patients from experiencing access
barriers in SNFs. The commenter urged CMS to consider MedPAC's proposal
to adjust payments to account specifically for nontherapy ancillary
services, of which non-nursing ventilator services are a part. Several
commenters also stated that CMS should provide for a rate adjustment
specific to providers of ventilator services to compensate them for
ventilator-related costs not covered under the PPS as currently
configured or as proposed to be modified in the proposed rule. Further,
commenters proposed that an outlier payment or add-on similar to the
AIDS add-on be adopted for ventilator patients as an interim measure.
Response: Ventilator patients are addressed in our proposal for a
redefined Extensive Services group. Our proposal does not make any
changes in the method of paying for NTA costs; all such payments
continue to be proportional to the nursing costs paid in the relevant
case-mix group. Because the nursing component weight for Extensive
Services will rise substantially under our refinements, payments for
NTA costs associated with these patients will also rise substantially.
However, we recognize the need for further research to revise the
payment methodology for NTA costs, as described in our approach to the
analysis in the proposed rule (74 FR 22238). We are reviewing MedPAC's
NTA cost predictors as part of this work. The suggestion of an outlier
payment or add-on payment cannot be implemented under current law, as
we have no statutory authority to make such a change.
Comment: A commenter stated that the criteria we described for a
system to adjust payments for NTA services by case mix appear
reasonable, but went on to emphasize that CMS has not been able to
identify appropriate case-mix adjustments for NTA in multiple prior
efforts. The commenter further looks forward to seeing whether the new
criteria produce a methodology that explains more than 20 percent of
the variation in NTA needs of patients.
Response: We acknowledge that past efforts have not been uniformly
successful and resulted in no implementable proposals. We have not
targeted any specific level of ``goodness of fit'' for a future
methodology. However, we note that the quality of the data available to
conduct this research could significantly affect the explanatory power
of any model that we may develop.
[[Page 40342]]
Comment: Several commenters recommended that we consider an outlier
payment for NTA services or specifically, for intravenous medications.
One commenter cited facilities that are losing money due to the high
cost of the IV medications. Another commenter stated that under our
proposal, bariatric, wound care, and certain chemotherapy patients,
among others, incur unaccounted-for equipment and/or drug costs,
resulting in restricted access for these patients. The commenter
suggested that an outlier payment structure would remedy this
situation.
Response: As we note elsewhere in this final rule, we have no
statutory authority at this time to implement an outlier policy for NTA
services. We welcome information about the incidence of high-cost IV
medication days, bariatric patient days requiring special equipment,
and other incidence information which could inform future efforts to
design an outlier policy, if it is authorized.
Comment: A commenter stated that a payment add-on for non-therapy
ancillary costs would be worth exploring.
Response: As discussed above, we do not have statutory authority to
implement an outlier or add-on payment for NTA services. However, we
discussed the possibility of implementing a case-mix adjustment for NTA
services in the proposed rule. We believe that we currently have
authority to create a separate NTA component of the Federal per diem
rate, which would be carved out of the existing nursing component. Such
a proposal would be contingent on developing a workable methodology for
predicting NTA costs per day. The discussion in the proposed rule
described the criteria that we envision for such a system. At the
inception of the SNF PPS, average daily NTA costs were included in the
nursing component. Any new, carved-out component would, in effect,
recover the original costs from the nursing component and adjust them
separately for case mix, using information that better predicts NTA
costs than does the RUG methodology. However, this does not mean that
overall expenditures under the SNF PPS would increase as a result of
the creation of this NTA component and index.
Comment: A commenter criticized the RUG-IV proposal for removing IV
patients from the Extensive Services group on the basis that staff time
caring for such patients is not sufficiently large, noting that the
actual drug costs for IV patients were not included in the staff time
data.
Response: We recognize that the RUG-IV proposal did not take drug
costs directly into account. The STRIVE study showed that collecting
accurate and complete primary data on drug costs was not feasible. We
anticipate that future work on paying for NTA costs, of which IV drugs
are a part, will rely on administrative data resources. Under RUG-III,
nursing weights for IV patients ranged from 1.17 to 1.72. However, the
changes we are implementing to the case-mix classification system
reallocated to the nursing component of the SNF PPS payment savings
derived from more accurate accounting for therapy time. As a result,
nursing weights for IV therapy patients range from .73 to 3.43,
depending on whether IV therapy co-occurs with other qualifying
conditions, such as infection isolation, septicemia, etc.
Comment: A commenter stated that ventilator-dependent patients
should have their own classification.
Response: The revised Extensive Services group includes only three
types of patients: Tracheostomy, ventilator/respirator, and infection
isolation. Analysis of the STRIVE time study data suggested that these
patients had similarly high nursing costs. Thus, it is likely that
subdividing this group to classify ventilator patients separately would
needlessly complicate the SNF PPS.
Comment: A number of commenters, while urging us to maintain the
existing AIDS add-on until an alternate payment methodology can be
developed, also indicated that we should consider creating a similar
add-on payment mechanism for anti-rejection drugs, low molecular weight
heparin, appetite stimulating agents, and erythropoiesis stimulating
agents.
Response: We note that in contrast to the AIDS add-on (which was
specifically created by section 511 of the MMA), the law contains no
similar add-on payment authority for the other services mentioned.
D. Minimum Data Set, Version 3.0 (MDS 3.0)
Sections 1819(f)(6)(A)-(B) and 1919(f)(6)(A)-(B) of the Act, as
amended by the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987),
require the Secretary to specify a Minimum Data Set (MDS) of core
elements and common definitions for use by nursing homes in conducting
assessments of their residents, and to designate one or more
instruments which are consistent with these specifications. As stated
in regulations at Sec. 483.20, Medicare- and Medicaid-participating
nursing homes must conduct initially and periodically ``a
comprehensive, accurate, standardized, reproducible assessment'' of
each nursing home resident's functional capacity. The FY 2010 proposed
rule included an examination of various aspects of a new version of the
MDS, MDS 3.0 (74 FR 22208, 22241, May 12, 2009), as discussed in the
following sections.
1. Description of the MDS 3.0
The FY 2010 proposed rule described the major features of the MDS
3.0 (74 FR 22241). We determined that including information on the MDS
3.0 would be beneficial to stakeholders, as RUG-IV and MDS 3.0 will be
introduced at the same time, as requested by virtually all stakeholders
last year. Even though we included a discussion of the MDS 3.0 in the
SNF PPS proposed rule, the instrument itself was not proposed. However,
we did receive many comments on the MDS 3.0, which we summarize below.
Comment: Some of the general comments regarding the MDS 3.0
conveyed support, while others raised concerns about burden and the
amount of testing that has been performed on the instrument. There were
many comments that sought clarification or offered suggestions for
items included in the draft MDS 3.0 item set posted at http://
www.cms.hhs.gov/NursingHomeQualityInits/Downloads/
MDS30DraftItemSetv26.pdf.
Response: We chose to use the SNF PPS rule to announce the upcoming
October 2010 scheduled implementation of the MDS 3.0 and appreciates
the comments in support of it. Concerning the comments about the
possibility of increased burden and the need for additional testing of
the instrument before implementation, findings from the pilot testing
of MDS 3.0 in 2008 did not suggest that the MDS 3.0 was overly
burdensome. We believe that any more recent changes made to the MDS 3.0
are minor and not substantive and, thus, that additional testing is not
necessary.
Concerning the comments seeking clarification of the draft MDS 3.0
item set, CMS believes that these issues will be addressed with the MDS
3.0 RAI Manual and MDS 3.0 Final Item Set that are scheduled to be
published on the CMS Web site, http://www.cms.hhs.gov, in October 2010.
The specific recommendations for new or revised items for the MDS 3.0
instrument have been forwarded to the MDS 3.0 development team at CMS
for review and consideration. The MDS 3.0 RAI Manual, Data Set, and
Data Specifications are scheduled to be
[[Page 40343]]
published in October 2009 with subsequent implementation of the MDS 3.0
in October 2010. This time frame provides for an entire year for CMS,
its contractors, and SNFs to prepare and train in anticipation of the
October 1, 2010 implementation date.
Comment: Some comments discussed the MDS 3.0 item set content and
format of the ``paper'' tool. Among the issues raised were: Maintaining
the MDS 2.0 section G, ADL items, and DAVE discrepancy rates; the order
of section A being problematic for the paper version when reviewing the
assessment; adopting the OASIS diagnosis format; providing greater
resident involvement by implementing interview tools; the need for
pressure ulcer items to be more clinically based; suggestions for
adding specific diagnoses to section I; and concerns that section Q may
affect State agency staff resources. One commenter suggested that CMS
simply address the specific problem areas with MDS 2.0, such as
pressure ulcers, and not change any other aspects of it. Another
commenter requested that the RAI manual be made available by August 1,
2009.
Response: We will take into consideration the suggestions submitted
in response to the SNF PPS proposed rule. We agree that the MDS 3.0
provides a greater resident involvement in care and that the items
being surveyed are more clinically based than the existing MDS 2.0.
However, given the current specifications of the MDS 2.0, we are unable
to adopt the commenter's suggestion of simply revising certain
problematic items, due to limitations in the data string.
We understand the concern of maintaining the MDS 2.0 scoring system
for ADLs. We have revised the ADL-Self-performance response codes to
address a care planning concern raised by stakeholders. While we agree
that the Data Assessment and Verification (DAVE) findings on
discrepancy rates for the ADL items are high, the DAVE contractor did
not, as part of its analysis, factor into account the degree or
severity of the discrepancy. For example, in a situation where one
assessor coded a resident as supervision, the DAVE project did not
consider whether the second assessor coded the same person as limited
assistance, extensive assistance, or total dependence, but simply
determined whether the codes were the same. We are currently working
with stakeholders to ensure that the MDS 3.0 RAI manual provides clear
guidance.
While we want to ensure that a paper version of the MDS 3.0 is
user-friendly, we encourage providers and users to move toward an
electronic model. We will take into consideration the concerns provided
to us on the record layout.
Comment: One commenter stated that CMS has ``tinkered'' with the
assessment tool, which creates confusion and jeopardizes timely
rollout. Another asserted that MDS 3.0 does not meet the criteria CMS
set out to accomplish. One commenter requested CMS to ``batch''
revisions to the MDS 3.0 and implement in a systematic fashion. Another
suggested that CMS provide a ``journal'' of all changes in a central
location that is available to all users and assessors. One commenter
remarked that the data gathered during the STRIVE project is not valid
for evaluating the effectiveness of the proposed MDS 3.0 assessment.
Response: Our goals for updating the assessment instrument used in
nursing homes were to introduce advances in assessment measurement,
increase relevance of items, improve accuracy and validity of the tool,
and increase our knowledge of residents' experience of care by
introducing more resident interview items. We believe we have achieved
these goals, as evidenced by features such as the following:
Addition of pressure ulcer items where the clinician
reports the actual stage of the ulcer, not the appearance;
Use of resident interview items for mood and other areas;
Use of valid and reliable assessment tools, such as the
Brief Interview for Mental Status; and
Improvement of pain assessment items.
Therefore, we do not agree with the assertion that we did not
accomplish what we had intended.
We have stated from the outset of releasing version 3.0 of the MDS
that it was in draft form, and that providers and users should not
consider the draft version final. We have built upon RAND's study to
improve the assessment further and ensure that it meets, as much as
possible, the needs of multiple users, such as Medicaid State Agencies
for payment purposes and return-to-the-community initiatives. Lastly,
the STRIVE project did not ``evaluate'' the effectiveness of the MDS
3.0. RAND's responsibility was to improve the clinical effectiveness of
the instrument. They were not required to ensure that quality measures
and indicators or the RUG classification systems were kept fully
``intact.'' RAND was aware of the other purposes of the MDS and did
take this into consideration during their study and analysis. We did
not approach the issue with the belief that a single project would meet
the needs of all users, and have actually incorporated lessons learned
from other CMS projects, such as the CARE tool. The STRIVE project did
not evaluate the effectiveness of the MDS 3.0. In fact, the STRIVE
study was conducted at the same time the RAND staff were testing the
pilot MDS 3.0 instrument. The STRIVE contractor did conduct analysis to
ensure that payment systems and quality measures were not negatively
affected based on data collected under the MDS 3.0 project.
Currently, we post updates to the MDS 2.0 on the CMS Web site so
that all users and assessors are able to access the changes. Our
expectation is that the MDS 3.0 instrument and RAI manual will not
require updates for some time. However, the format, that is, the item
numbering and layout, as well as the specifications, will provide us
with the ability to update the tool in a simple and quick method when
the need arises. Finally, we will take into consideration the comment
on ``batching'' updates, and will work with stakeholders to ensure that
they have access to the updates in a timely fashion.
Comment: A few recommendations were received on the MDS 3.0's
relationship to Health Information Technology (HIT) standards. The
recommendations include:
Increasing efforts in Federally-mandated initiatives to
adopt cost-effective use of information technology in healthcare
settings;
Consider present and future data use and exchange
requirements to format and exchange MDS 3.0 data;
Incorporate all standardized terminology approved by
Consolidated Health Informatics (CHI), Office of the National
Coordinator for Health Information Technology (ONC), National Institute
of Standards and Technology (NIST), or American National Standards
Institute (ANSI) in all HIT projects; and
Consider incorporating all available approved terminology
and exchange standards for use in all Health Information Exchange or
HIT projects.
Contained in the comments was the suggestion that if CMS were
unable to carry out the approach outlined in the bullets above for MDS
3.0, then CMS should consider placing efforts on the CARE tool.
Response: CMS appreciates the comments that were submitted with
regard to HIT standards and will consider these comments as the MDS 3.0
is implemented.
[[Page 40344]]
2. MDS Elements, Common Definitions, and Resident Assessment Protocols
(RAPs) Used under the MDS
The FY 2010 proposed rule included a discussion of the MDS 3.0's
MDS elements, common definitions, and RAPs (74 FR 22243). The comments
that we received on this subject, and our responses, appear below.
Comment: One commenter expressed concern about our proposal to
remove language identifying MDS domains and common definitions at
Sec. Sec. 483.315(e)(1) through (18) and instead reference the domain
requirements at Sec. 483.20(b)(1)(i) through (xviii) and use the RAI
manual for specific details regarding the MDS domains and common
definitions. Although the commenter acknowledged the need for us to
make timely MDS changes, the commenter stated that removing the MDS
domains and common definitions could affect assessment reliability,
consistency, accuracy, validity, and reimbursement, and could deny the
public a meaningful voice in challenging proposed changes or offering
official recommendations.
Response: Rapid changes in clinical practice make it imperative for
us to have the flexibility to change or add to the MDS domains and
common definitions quickly in order to protect the health and safety of
nursing home patients.
For example, the CDC Advisory Committee on Immunization Practices
(ACIP) has recommended vaccination against the varicella zoster virus
(VZV, that is, chicken pox) for individuals over age 60. VZV can
reactivate clinically decades after initial infection to cause herpes
zoster (that is, shingles), a localized and generally painful cutaneous
eruption that occurs most frequently among older adults and affects
approximately 1 million individuals in the United States every year. A
common complication of zoster is post-herpetic neuralgia (PHN), a
chronic pain condition that can last months or even years.
Complications include involvement of the eye that can threaten sight,
bacterial super infections, and disfiguring facial scarring. Another
example is the annual CDC ACIP recommendations regarding the provision
of influenza vaccinations in relation to the timing and duration of the
influenza season. Based on recommendations such as these, we need the
flexibility to add or change vaccinations promptly to the MDS domains.
In a December 23, 1997 final rule (62 FR 67174), we removed the MDS
and its instructions from the regulation text that was inserted in the
December 28, 1992 proposed rule (57 FR 61414). In that final rule, we
noted this was necessary in order to allow us to easily modify the MDS
so that it requires collection of information that is clinically
relevant and meets evaluative needs as clinical practice evolves (62 FR
67174, 67203). These notations still continue to reflect our current
view.
In the past, as we have proposed changes to the MDS domains and
common definitions, we have given the public ample opportunity to
comment through the use of CMS Open Door Forums and Town Hall meetings;
dedicated mailboxes for comments; CMS Web site postings; and meetings
with stakeholder organizations. We believe that in directly discussing
and negotiating with affected parties, it will be possible to maintain
an MDS assessment process that is clinically relevant while also
obtaining public comment. We will continue to use these venues to
solicit public comments on proposed changes, and we believe they are
sufficient to allow robust public input and address the commenter's
concerns. Therefore, we are not accepting the comment. Accordingly,
this final rule removes the language identifying MDS domains and common
definitions at Sec. Sec. 483.315(e)(1) through (18), and instead
references the domain requirements at Sec. 483.20(b)(1)(i) through
(xviii). We will use the RAI Manual for specific details regarding the
MDS domains and common definitions.
Comment: One commenter expressed concern that the proposed rule did
not specify when an MDS is considered to be complete, noting that this
information is currently available for the MDS 2.0 in the RAI User's
Manual.
Response: Federal regulations at 42 CFR 483.20(i)(1) and (2)
require the RN assessment coordinator to sign and certify that the
assessment is complete. This completion attestation is made when the
MDS assessment is considered complete; the timing varies depending on
the assessment type. Federal regulations at 42 CFR 483.20(b)(2) and (c)
specify the timeframes for conducting the various assessment types. As
the commenter noted, this specific information is currently available
for MDS 2.0 in the RAI User's Manual. As this information will continue
to be provided for MDS 3.0 in the RAI User's Manual and is already
covered in the regulations text, we believe that this information is
adequately provided.
Comment: Although commenters expressed various concerns, several
were supportive of the proposed changes to the MDS 3.0 RAPs.
Response: We were pleased with the support expressed through the
comments. While it is true that the structure of the proposed changes
to the MDS 3.0 RAPs process was not fully specified in the proposed
rule, CMS is aware of most of the issues raised in the comments, and
has been actively working on them. We have provided responses to
specific comments in the following paragraphs.
Comment: We received a few comments requesting us to clarify that,
while RAPs are no longer mandatory, it is CMS's intent that facilities
must continue to use care area triggers (CATs) from the MDS and
current, evidence-based clinical guidance or resources to assist them
in the care planning process.
Response: CMS values the opinions and insights provided by our
stakeholders, and we plan to clarify that this is, in fact, our intent.
As the planning for the RAI process instructions moves forward, we
fully intend to clarify our instructions in this area and will continue
to involve our stakeholders.
Comment: Several commenters expressed concern about the level of
burden that might be imposed by no longer mandating the use of the RAPs
and, therefore, leaving the determination of what clinical guidance/
practice tools will be used in the care planning decision process to
the discretion of the facilities. The commenters indicated that such a
system would create inefficiencies and inequalities in the care
delivery system, and also expressed concern about how CATs and outside
resources will be utilized for guidance in the future.
Response: When the RAPs were originally developed, facilities
lacked easy access to Internet resources, which is no longer the case.
A great many clinical practice guidelines have been developed by
professional organizations and government agencies, many of which are
available at no cost. The RAPs were limited in the number of topics
they covered and, due to ongoing changes in clinical practice, they
would need to be regularly updated by CMS, necessitating changes to the
requirements. We believe this is no longer necessary or efficient, as
the relevant information is now widely available from a variety of
authoritative sources. At this phase in the planning effort, CMS has
developed a set of tools (formerly known as RAPs) that will be
available for facility use via the MDS manual; however, they will not
be mandatory. We are also publishing in the manual a list of other
resources that practitioners can use, most of which are available at no
cost. The facility's
[[Page 40345]]
clinical team can use these resources or any others that they deem
appropriate. We found the comments very helpful, and expect that these
resources will minimize any burden as much as possible.
Comment: We received a few comments pointing out the need for CMS
to partner with its stakeholders and nursing home industry experts to
design care planning practices, including development of a Technical
Expert Panel. Commenters suggested including clarification in the RAI
manual regarding the use of an interdisciplinary team approach.
Response: We have reported on our work and progress regarding the
care areas and care planning as part of the RAI process in stakeholder
meetings and on Open Door Forum calls. As the planning for the RAI
process instructions moves forward, we will continue to involve our
stakeholders.
Comment: Several commenters pointed out the need for CMS to
reconsider the use of CATs in relation to the care planning process.
Response: While it is true that the structure of the proposed
changes to the MDS 3.0 RAPs process was not fully specified in the
proposed rule, we agree that the proposed rule's language regarding the
use of CATs did not adequately convey the proposed changes. We also
acknowledge that CATs represent only one part of a dynamic process and
may also cause industry confusion. Accordingly, the final rule includes
the term ``Care Area Assessment'' (CAA) to denote the process that was
formerly known as the RAPs process. However, CMS will continue to use
the CATs terminology to represent the triggers from the MDS for a
particular care area problem or issue. Of course, we plan to continue
to involve our stakeholders as the planning for the RAI process
instructions moves forward, and we will continue to work to clarify the
care planning process.
Comment: A few commenters questioned how the State Survey Agencies
(SSAs) would handle their nursing home surveys without the direction of
the RAPs.
Response: The specific issues that were raised about the design of
the nursing home survey program are beyond the scope of this final
rule. However, it is important to note that CMS is fully aware of this
issue and is working to provide direction to the SSAs about the full
range of guidance or resources they may encounter, including
instructions that are provided to facilities through the RAI manual. We
appreciate the careful consideration that this comment reflected, and
will bring it to the attention of appropriate CMS staff.
Comment: In addition to the comments that we received on the
proposed change to the RAPs, several commenters provided discussion of
specific issues involving prescriptive care planning and the use of
electronic RAPs for nursing homes.
Response: The specific issues that were raised about the design of
care planning and the use of electronic RAPs for nursing homes are
beyond the scope of this final rule. However, we appreciate the careful
consideration that these comments reflected, and will bring them to the
attention of appropriate CMS staff.
3. Data Submission Requirements under the MDS 3.0
The FY 2010 proposed rule included a discussion of data submission
requirements under the MDS 3.0 (74 FR 22243). The comments that we
received on this subject, and our responses, appear below.
Comment: One commenter voiced concerns regarding whether the
proposal for SNFs to submit resident assessment data to the national
CMS system rather than to the States will require a change in
electronic software programs at the facility level to accommodate
reporting directly to the Federal level. The commenter also stated
that, if this is the case, adequate time should be provided for this
transition software.
Response: There is no software program change required, as the MDS
data will be collected centrally at the Federal level rather than from
each State. However, there will be a new software program required to
implement the new MDS 3.0 data and file specifications. CMS believes
that adequate time is being provided for this development.
Comment: One commenter noted that the proposed 14-day timeframe for
transmission of MDS data will shorten the current time period by 2
weeks. The commenter also observed that in some States, this
requirement (or even a shorter time period) has already been imposed at
the State level for a number of years. The commenter pointed out that
the State of Washington, where submissions must be within 10 days of
completion for the MDS to be considered timely, finds that this
requirement has improved the quality of MDS submissions, with fewer
submissions ``falling through the cracks.'' Another commenter remarked
that State agencies will be able to better track those residents who
would like to return to the community. A few commenters opposed
shortening the submission requirement to 14 days, stating that this
would pose a hardship on nurses who have ``other responsibilities,''
may be difficult in small nursing homes, and would increase the
pressure to complete assessments.
Response: We appreciate the comment informing CMS that some States
currently have stricter submission requirements than the one we
proposed. We are pleased to learn that a submission timeframe of 14
days or less is working well in those States that already have such a
requirement in place. We anticipate that there will be an equally
smooth transition for facilities in the remaining States. Further,
swing-bed facilities have been required to submit their MDS assessments
within 14 days of completion since 2002. These facilities tend to have
fewer SNF patients than most nursing homes and also tend to have
shorter lengths of stay. In fact, swing-bed facilities do not appear to
have difficulty meeting this requirement. Therefore, we do not agree
that shortening the submission time frame to 14 days will be
problematic or cause hardship on facilities. In fact, almost 75 percent
of the MDS assessments are submitted by nursing homes within 14 days of
completion. We are concerned with the comment that shortening the
submission time frame will create pressure to complete assessments. We
have outlined the requirements for completing MDS assessments in the
RAI manual. The submission time frame is based on the completion date
of the assessment. Thus, the submission time frame does not drive the
completion of assessments; rather, the reverse is true--the completion
of the assessment determines the submission date. Lastly, as noted by
commenters' remarks on obtaining quality measures on swing beds as
discussed below in section III.H of this final rule, we are simply
holding both types of providers to the same standards.
Comment: Several commenters expressed concern and confusion over
the requirement that facilities have 7 days after completing a
resident's assessment to be capable of transmitting that assessment
data. They also questioned what the term ``capable'' meant, and whether
this requirement re-instituted the ``locking'' concept that has been
inactive for several years.
Response: The regulations at 42 CFR 483.20(f)(2) regarding facility
capability to transmit a resident's assessment data within 7 days of
completing the assessment is not new, nor did we
[[Page 40346]]
propose it through this rule. What we did propose was changing the
language to note that facilities must be capable of transmitting to the
CMS System instead of to the State. It is not our intent to re-
institute the ``locking'' concept. The term ``capable'' as used in the
regulations text here means that the facility has encoded the MDS
assessment information and put that data into a format that conforms to
standard record layouts and data dictionaries defined by CMS and the
State.
Comment: One commenter expressed confusion over the requirements
regarding State responsibilities with respect to MDS 3.0 data.
Specifically, the commenter questioned State responsibilities regarding
supporting and maintaining the MDS State system and database, the
receipt of facility data from CMS, and the resolution of all errors.
The commenter noted that the States are not in a position to ensure
that all errors are resolved, as some (such as a late submission)
cannot be resolved.
Response: The provision at 42 CFR 483.315(h) regarding the
requirements for the State to maintain an MDS database and ensure that
a facility resolves errors upon receipt of data is not new, nor did we
propose it through this rule. What we did propose was changing the
language to note that States must continue to maintain an MDS database
for receipt of facility data from CMS. We also added the term
``support'' to the regulations at 42 CFR 483.315(h)(1) to note that
each State is still responsible for supporting all their users and uses
of the MDS 3.0 data. It is our intent for the regulation text regarding
facility data at 42 CFR 483.315(h)(3) to denote that MDS 3.0 data are
received by the States from the CMS system. We agree with the commenter
that some facility data errors, such as a late submission, may not be
able to be resolved completely. Our intent through this language was
simply to retain the requirement for States to work with their
respective facilities to resolve errors. However, after further
consideration of this issue, we are retracting our proposal to include
the term ``all'' in the regulation text at 42 CFR 483.315(h)(3). In
addition, as it has come to our attention that the regulation text at
42 CFR 483.315(h) did not adequately convey who in the State had the
responsibilities regarding the State MDS database, we have added the
term ``agency,'' in order to indicate that these are responsibilities
of the State Survey Agency.
4. Proposed Change to Section T of the Resident Assessment Instrument
(RAI) under the MDS 3.0
In the context of the MDS 3.0 discussion, the FY 2010 proposed rule
proposed certain revisions to the reporting of therapy services
effective October 1, 2010 (74 FR 22244). First, we proposed to
eliminate Section T of the RAI. In addition, we proposed (a) to revise
the therapy reporting procedures related to short-stay patients so that
the appropriate therapy level is calculated using items that will be
reported on the MDS 3.0 (using the procedures set forth in the proposed
rule); (b) to provide SNFs with the option to use the Other Medicare
Required Assessment (OMRA) to signal the start of therapy; and (c) to
require SNFs to complete an OMRA with an ARD that is set 1 to 3 days
(rather than 8 to 10 days) from the last day therapy services were
provided. A more detailed description of the proposals appears in the
SNF PPS proposed rule for FY 2010 (74 FR 22244). The comments that we
received on these proposed revisions, and our responses, appear below.
Comment: Several commenters supported the elimination of section T
(items T1b, c, d) of the MDS, thereby preventing Medicare from paying
for therapy services that were ordered, but not actually furnished to
patients. They stated that these changes will increase the accuracy of
payments to providers. Other commenters were opposed to the elimination
of section T, indicating that the proposed change reflected a payment
model more akin to fee-for-service than a prospective payment. Some
commenters stated that eliminating section T would result in providers
not being paid for therapy services that they actually provide during
the first 14 days of a SNF stay. They also believed that there would be
financial pressure to provide less care than the beneficiary needs.
Response: As we stated in the proposed rule, the GAO found that
one-quarter of the patients classified using estimated minutes of
therapy did not receive the amount of therapy they were assessed as
needing, while three-quarters eventually did. Further, the GAO found
that in 2001, half of the patients initially categorized in the Medium
and High Rehabilitation groups did not actually receive the minimum
amount of therapy required to be classified in those groups, due in
part to the use of estimated therapy minutes. We agree that by
eliminating section T, there is a risk that the therapy data would not
be captured for some patient days where the service was actually
provided. However, we also proposed to provide for an optional start-
of-therapy OMRA with an ARD that is set 5 to 7 days from the first day
therapy services are provided. Based on this OMRA, payment for the
start of therapy would begin the day that therapy is started. We
proposed that a SNF may complete a start-of-therapy OMRA when therapy
started between MDS observation periods. However, in response to
comments stating that under our proposed revised reporting procedures,
providers may not be paid for therapy services that they actually
provide during the first 14 days, we are allowing SNFs to complete the
optional start-of-therapy OMRA not only when therapy starts in between
assessment windows, but also when therapy has started within the
Medicare-required assessment window. For the second situation, the
optional start-of-therapy OMRA may be completed as a stand-alone
assessment or it may be combined with a scheduled Medicare-required
assessment. For example, the SNF must complete a 5-day Medicare-
required assessment with an ARD between day 1 and day 8. If therapy
begins on day 5 and if the provider chooses day 7 as the 5-day ARD,
then only 3 days of therapy, at most, would have been provided by the
ARD and, thus, a rehabilitation RUG would not have been assigned (or
achieved). The provider may then complete an optional start-of-therapy
OMRA with an ARD of day 9, 10, or 11. If the provider chooses day 11,
then the start-of-therapy OMRA may be combined with the 14-day
Medicare-required assessment (day 11 is in the assessment window of the
14-day Medicare-required assessment). Payment for the rehabilitation
RUG would begin on the day that therapy started, for example, day 5,
and would continue until day 30 as long as the SNF level of care
coverage requirements are met, and/or therapy was not discontinued,
and/or another assessment was not required that resulted in a different
RUG assignment. If the provider chooses day 9 or day 10 as the ARD for
the optional start-of-therapy OMRA, the Rehabilitation RUG would also
begin on the day therapy started, but the provider would also be
required to complete a 14-day Medicare-required assessment as long as
the patient continues to meet SNF level of care requirements and
remains in the facility after day 14. Lastly, if the provider chooses
not to complete the optional start-of-therapy OMRA, either as a stand-
alone or in combination with a Medicare-required assessment, the
rehabilitation RUG would then begin
[[Page 40347]]
with the payment period of the next Medicare-required assessment. As
the provider may complete the optional start-of-therapy OMRA in
situations where therapy has started within the assessment window, but
a rehabilitation RUG was not assigned because the daily requirement had
not been met, we do not believe that eliminating section T will result
in ``financial pressures'' to provide less care than the resident
requires. Therefore, after review of the comments, effective October 1,
2010, we will delete section T (T1b, c, d) from the MDS 3.0 as we
proposed in the FY 2010 SNF PPS proposed rule. In addition, we will
implement the optional start-of-therapy OMRA, which may be completed
not only when therapy starts in between assessment windows, but also
when therapy has started in a Medicare-required assessment window. As
explained above, we believe that the option to use the start-of-therapy
OMRA, regardless of when therapy starts, eliminates the risk that
therapy data would not be captured for some patient days.
Comment: Several commenters stated that eliminating the projection
could result in a mismatch of the therapy plan of care with the
beneficiary's needs or a misallocation of the therapy resources that
the beneficiary requires, because section T assists the therapist in
making clinical projections which, in turn, results in better
coordination of care.
Response: While we are eliminating the projection of therapy
services in section T, we are also providing for a start-of-therapy
OMRA. We rely on the clinician's judgment to make decisions on the need
for and volume and frequency of therapy services. The documentation
currently required in section T under the MDS 2.0 simply shows the
results of the clinical evaluation. We do not believe that a projection
methodology can serve to provide clinical guidance to a therapist and,
thus, we do not expect that the elimination of this particular
documentation requirement will adversely affect patient care.
Comment: Several commenters supported the voluntary start-of-
therapy OMRA so that patients can be assigned to rehabilitation RUGs
based on when therapy services are started, especially when therapy is
started outside the assessment reference window. Many commenters also
supported the change to the end-of-therapy assessment. They stated that
these proposed changes will increase the accuracy of payments to
providers. However, some commenters disagreed with introducing either
the optional start-of-therapy OMRA or the end-of-therapy OMRA, stating
that increasing the number of assessments providers will need to
complete would represent an added burden. A few suggested that CMS
should develop a methodology to compensate facilities for the added
burden of work associated with the OMRAs. One commenter disagreed with
changing the end-of-therapy OMRA ARD from 8-10 days after the
discontinuation of therapy to the proposed 1 to 3 days, as a therapy
RUG might still be assigned. One commenter suggested that requiring
SNFs to complete an OMRA within 1 to 3 days following therapy discharge
could affect the nurse's assessment of the need for skilled nursing
services. These commenters also asserted that the proposed change would
deny patients valuable time in recovery while being closely observed by
nursing for 7 days following the discharge from therapy, and could
potentially cause an inappropriate over-utilization of the OMRA by
triggering additional assessments (which might not have been necessary
if the patient had been maintained in a therapy group). Some commenters
stated that when therapy is not provided for a few days due to an
illness, an end-of-therapy OMRA would be required and then a start-of-
therapy OMRA once the patient is again able to participate in therapy.
They believe this would increase the number of assessments required
and, thus, would represent an added burden.
Response: We agree with the commenters that the changes to provide
for a voluntary start-of-therapy OMRA and a required end-of-therapy
OMRA will result in more accurate payments to providers. Under current
practice, the assessment reference date (ARD) for the OMRA is required
to be set within 8 to 10 days of the end of all therapies. The proposed
change that we are adopting in this final rule would simply require the
ARD for the end-of-therapy OMRA to be set in a shorter time frame, that
is, no more than 3 days following the cessation of all therapies, and
would not increase the number of assessments. Further, the start-of-
therapy OMRA is completely voluntary and is not required and, thus, we
do not believe it is an additional burden. In addition, because the
provider would be able to combine the start-of-therapy OMRA with a
Medicare-required assessment, there would be no additional burden.
However, we are aware that completing the stand-alone voluntary start-
of-therapy OMRA might result in an increase of assessments. Therefore,
in response to concerns expressed by commenters regarding the increase
in the number of assessments, we will provide for an abbreviated OMRA
for the stand-alone start-of-therapy OMRA, which will include only the
required demographic information (needed for all assessment types), the
therapy items, restorative therapy items and bladder and bowel training
items, and the extensive services items. The other clinical payment
items would not be required, as the purpose of the optional start-of-
therapy OMRA is to classify a person in a rehabilitation RUG (including
Rehabilitation plus Extensive Services). In addition, we note that
commenters expressed concern regarding the possibility that our revised
ARD requirement for the end-of-therapy OMRA may increase the number of
assessments needed. Although we do not agree that changing the ARD
requirement for the end-of-therapy OMRA would increase the number of
assessments required, in order to alleviate the commenter's concerns
and because the MDS 3.0 gives us the capability, we will also shorten
the end-of-therapy OMRA so that it consists only of the required
demographic items and all of the payment items (unlike the MPAF, which
includes all of the required demographic items, the payment items, and
many other clinical items). However, as discussed above, we do not
agree that CMS is requiring additional assessments. We note that the
start-of-therapy OMRA is optional, thus making it entirely voluntary
and not required. CMS has no authority to provide for additional
reimbursement for this assessment itself; however, the voluntary start-
of-therapy OMRA would typically be completed when assignment to the new
therapy group would result in higher reimbursement. The end-of-therapy
OMRA is already required and, therefore, the cost of completing the
end-of-therapy OMRA is already included in the payment rates for SNFs.
In reality, we have actually reduced the burden associated with the
end-of-therapy OMRA, by including only the required demographic items
and payment items. As we stated in the proposed rule, we have included
the ability to provide two Medicare RUG classifications. The first will
be the ``therapy'' RUG, which is based on all of the payment items,
including the rehabilitation items. The second RUG is the ``non-
therapy'' RUG. This RUG classification will not consider any of the
rehabilitation items when assigning a RUG. Therefore, when submitting a
claim for days of service after therapy has been discontinued, the
provider would use the ``non-therapy'' RUG. We will provide detailed
MDS coding and
[[Page 40348]]
billing instructions in the Internet-only Manuals and the RAI Manual.
We do not agree that requiring SNFs to complete an OMRA within 1 to
3 days following the discontinuation of therapy would result in
patients being denied valuable recovery time by no longer paying for
therapy services for 7 days after all therapy is discontinued. It is
the responsibility of the professional therapist to determine when a
patient has met the goals established for the patient in the therapy
plan of care, and to avoid discontinuing therapy prematurely. If this
determination is appropriately made by the therapist, we do not believe
requiring an OMRA to be completed within 1 to 3 days after the
discontinuation of therapy should cause inappropriate utilization of
the OMRA triggering additional assessments. Also, we do not believe
that changing the ARD for the end-of-therapy OMRA will affect the
assessment of the need for continued skilled nursing services, as the
nursing needs of a resident should not be affected by whether therapy
is being provided. The SNF should be providing for all of the
resident's needs during the entire SNF stay, regardless of when the ARD
for the end-of-therapy OMRA is required to be set. In addition, if the
patient continues to receive skilled nursing after the therapy has been
discontinued, the patient will continue to be covered under the
Medicare Part A benefit until such time as a skilled level of care is
no longer required. For these reasons, we do not agree that additional
assessments would be needed, or that additional days paid at the
therapy RUG would affect the recovery of the patient or the assessment
of the need for continued skilled nursing services.
We do not agree with the commenters that a brief illness would
increase the number of required assessments. As stated in the ``daily
basis'' criteria at 42 CFR 409.34(b), ``a break of one to two days in
the furnishing of rehabilitation services will not preclude coverage if
discharge would not be practical for the one or two days during which,
for instance, the physician has suspended the therapy sessions because
the patient exhibited extreme fatigue.'' Therefore, according to these
regulations, a brief illness would not necessarily result in the
provider having to complete an end-of-therapy OMRA. Based on the
concerns expressed by these commenters, we would like to take this
opportunity to help ensure that the end-of-therapy OMRA is completed
timely and appropriately. We proposed that the end-of-therapy OMRA be
completed with an ARD of 1 to 3 days after the discontinuation of all
therapies (speech-language pathology services and occupational and
physical therapies). For purposes of the ARD for an end-of-therapy
OMRA, the provider shall consider day 1 the day after all therapies are
discontinued. When a facility provides rehabilitation therapies five
days a week (Monday through Friday), we would like to clarify that day
1 would correspond to the first day, following the cessation of therapy
services, on which therapy services would normally be provided. For
example, if all therapies are discontinued on October 15, 2010 (which
is a Friday), the next day that therapy would normally be provided
would be Monday, October 18, and this day would become day 1 after
therapies were discontinued. The provider would have the ability to
choose the ARD to be set on October 18 (day 1), October 19 (day 2), or
October 20 (day 3). As set forth in 42 CFR 409.34(a)(2), when therapy
services are not available 7 days a week, therapy services must be
needed and provided at least 5 days a week. When a facility only
provides therapy 5 days a week, the therapy department would not be
open on the weekend. Therefore, the weekend days would not be counted
toward the establishment of the ARD for the end-of-therapy OMRA. Again,
as discussed above, we believe the ability to choose the ARD up to 3
days after the discontinuation of all therapies will not lead to over-
utilization of OMRAs.
Comment: Commenters had various understandings of what constitutes
a short stay. In their comments regarding our revisions to section T
and the therapy reporting procedures (that is, therapy reporting
procedures for short-stay patients, implementation of a start-of-
therapy OMRA, and revised ARD for the end-of-therapy OMRA), a few
commenters provided examples of a short-stay resident with different
lengths of stay. Their remarks varied from the first ``few'' days to
the first 5 days of the SNF stay. Comments regarding the STRIVE project
on a short stay often cited 7 days as being a short stay (that is, a
discharge before day 8).
Response: We realize that our discussion in the FY 2010 SNF PPS
proposed rule of the revised reporting of therapy services for short-
stay patients (74 FR 22245) may have caused confusion. When the SNF PPS
was introduced in July 1998, we expanded the collection of MDS data to
include new assessments that were primarily used to determine payment.
These Medicare-required assessments were defined in our May 1998 SNF
rule (63 FR 26252, 26265-69), and processing instructions are included
in the MDS manual.
For SNF PPS purposes, SNFs are required to complete the Medicare-
required 5-day assessment in order to initiate Medicare payment for the
stay. The facility captures clinical data with an ARD from days 1
through 8 of the covered stay on this Medicare-required 5-day
assessment, which is then used to assign the patient to a RUG group.
Generally, the RUG group assigned using the Medicare 5-day assessment
is used to pay for up to 14 days of the covered stay.
Since the inception of the SNF PPS, CMS has allowed providers to
record therapy services based on a projection via section T of the MDS.
This projection can only be made when two criteria are met. First, the
need for therapy must have been established through a therapy
evaluation and a physician's order. Second, therapy could not be
initiated early enough in the beneficiary's stay to capture (on the
Medicare-required 5-day assessment) the 5 days of therapy required to
assign a therapy case-mix group. The projected therapy days and minutes
are used in the calculation of the assigned RUG, thus allowing an SNF
to receive payment for therapy services that it plans to provide to a
beneficiary in the beginning of the stay. Even when patients are
discharged before the Medicare 5-day assessment can be fully completed
(that is, prior to day 8, the last allowed date that can be used to
report the MDS clinical data), providers are still expected to complete
section T as accurately as possible and submit at least a partial
Medicare-required 5-day assessment. Because the Medicare-required 5 day
assessment may be performed until day 8 of the resident's stay, we
believe that it is appropriate to define a short-stay patient as one
who is discharged on day 8 or earlier.
Based on the comments that we received, it appears that our
proposal regarding the revised therapy reporting procedures for short-
stay patients (74 FR 22245) may have caused some confusion among
commenters, as we inadvertently described a short-stay patient as a
patient who is discharged prior to day 14. Therefore, we are clarifying
in this final rule that short-stay patients are patients who are
discharged on day 8 or earlier, and that the revised reporting
procedures for short-stay patients apply to those patients who are
discharged on day 8 or earlier. The RUG-IV group established under this
revised reporting procedure can then be used to reimburse SNFs at the
therapy rate from day 1 to the date of short-stay discharge.
[[Page 40349]]
Comment: A few commenters stated that our proposed methodology for
determining the assigned rehabilitation RUG for short-stay patients did
not account for therapy services that are provided at a higher level
than Medium, even though the SNF may have provided greater amounts of
therapy, such as one of the High rehabilitation groups. They expressed
concern that by only allowing for Rehabilitation Low and Medium
categories, SNFs would not be adequately reimbursed for providing a
more intense level of therapy and, thus, some patients may not receive
the appropriate and adequate amount of therapy in the beginning of the
SNF stay.
Response: We agree that for residents who are discharged early in
the post-hospital stay (day 8 or earlier) and have not been able to
complete 5 days of therapy, and when the SNF has provided therapy at
the intensity of Rehabilitation High or greater, the resident should be
able to be assigned to a rehabilitation RUG greater than Medium. We
also agree that the SNF should be adequately reimbursed for the therapy
services they provided. Thus, when calculating the rehabilitation RUG
for a resident who is discharged early in the post-hospital stay (day 8
or earlier) and when the patient has not been able to report delivery
of 5 days of therapy on the 5-day MDS 3.0, a therapy RUG will be
calculated by using items from the MDS 3.0. As proposed, these items
will include: the actual number of therapy minutes provided, the date
of admission, the date therapy started, the patient's ADL level, and
the ARD. In addition, as stated in the proposed rule, if the average
daily therapy minutes provided are between 15-29 minutes, the record
will be assigned to the Rehabilitation Low category (RLx). In addition,
in response to comments received, the assignment for other
rehabilitation categories will be based on the average daily minutes of
therapy provided, as follows:
Average daily therapy minutes are between 30-64 minutes, a
Rehabilitation Medium category (RMx).
Average daily therapy minutes are between 65-99 minutes, a
Rehabilitation High category (RHx).
Average daily therapy minutes are between 100-143 minutes,
a Rehabilitation Very High category (RVx).
Average daily therapy minutes are 144 or greater, a
Rehabilitation Ultra High category (RUx).
We determined the minutes above for each rehabilitation RUG
category by taking the minimum required minutes for each category and
dividing by 5, which represents the minimum weekly required number of
days of therapy according to the SNF level of care criteria's daily
basis requirement (42 CFR 409.34). Accordingly, we are taking this
opportunity to update the example that we provided in the FY 2010
proposed rule regarding the therapy reporting procedure for short-stay
patients. Physical therapy is started on day 4 and the resident is
discharged on day 7; the resident received 65 minutes of individual
therapy on day 4, 70 minutes of individual therapy on day 5, 73 minutes
of individual therapy on day 6, and 67 minutes of individual therapy on
day 7. The ARD on the assessment is day 7. The total physical therapy
minutes provided are 275. The average number of daily therapy minutes
is 68.75. The rehabilitation RUG assigned will be RHx (the average
daily therapy minutes are between 65-99).
We are reiterating that this policy only applies to the short-stay
resident whose stay is 8 days or less and who received less than 5 days
of therapy. Also, as stated in the proposed rule, the ADL index will be
based on the ADL level reported on the MDS. Together, the ADL index and
the average daily therapy minutes determine the RUG-IV group that will
be assigned. We will provide detailed instructions in the online
Medicare manuals and the MDS 3.0 RAI Manual.
Comment: A few commenters requested that we clarify how the ARD
should be set for the start-of-therapy OMRA. They believe CMS intended
to say that the ARD would be set 4-6 days after the start of therapy,
rather than 5-7.
Response: We understand the confusion that may have arisen from the
use of the phrase ``5-7 days after therapy starts.'' We will,
therefore, take the opportunity to provide an example to clarify the
policy. As we stated above, if therapy starts on day 5 of the stay, the
provider may set the ARD for the optional start-of-therapy OMRA on day
9, 10, or 11. The day that therapy starts is counted as day 1. The
purpose of stating 5-7 days and counting the therapy start date as day
1 was to coincide with the look-back period when completing the MDS.
The look-back for the therapy items for days and minutes on the MDS is
7 days. The concept is for the provider to capture the first day of
therapy when completing the MDS. Therefore, 5 days from the start of
therapy is day 9 (day 5=1, day 6=2, day 7=3, day 8=4, day 9=5). If, on
the other hand, the SNF chooses day 7 after the start of therapy in the
previous example (which would be day 11 of the stay), the day that
therapy started (day 5) would still be captured in the look-back
period. We will work with industry stakeholders to ensure that our
instructions in Medicare manuals and the RAI Manual are clear.
Comment: Several comments stated that changes in discontinuing
therapy at a skilled level may create technical issues with regard to a
resident receiving Part B therapy during a Part A stay.
Response: This comment would appear to reflect a misunderstanding
of the SNF benefit structure, as a resident cannot receive Part B
therapy during a Part A stay. Under the SNF PPS, the Part A payment
represents payment in full for all costs (routine, ancillary, and
capital-related) incurred by the facility to provide care to the
resident, including those services that were previously covered under
Part B.
Comment: Several commenters stated that reporting the dates that
physical and/or occupational therapy and/or speech-language pathology
services start and end on the claim when billing a rehabilitation RUG
will be burdensome.
Response: We are in the process of evaluating our data needs to
support both RUG-IV and a possible separate NTA payment mechanism.
Changes to billing requirements will be introduced through updated
instructions in the claims processing manuals, and will be addressed in
our FY 2011 SNF PPS proposed rule as appropriate.
Therefore, effective October 1, 2010, we will eliminate section T
of the MDS and revise the therapy reporting procedures as proposed in
the FY 2010 proposed rule (74 FR 22244-46) (that is, reporting
procedures for short-stay patients, implementation of an optional
start-of-therapy OMRA, and revised ARD for the end-of-therapy OMRA),
with the modifications and clarifications discussed above.
E. Other Issues
1. Invitation of Comments on Possible Quarterly Reporting of Nursing
Home Staffing Data
Although we did not propose specific regulatory language in this
area under the FY 2010 proposed rule, we did request public comment on
a possible requirement for nursing homes to report nursing staffing
data to CMS on a quarterly basis.
Comment: Although commenters expressed various concerns, most were
supportive of the proposed quarterly payroll-based collection of
staffing data.
Response: We were pleased with the level of support expressed
through the comments. While it is true that the design of the proposed
electronic
[[Page 40350]]
payroll-based nursing home staffing data collection system was not
fully specified in the proposed rule, CMS is aware of most of the
issues raised in the comments, and has been actively working on them.
We provide responses to specific comments in the following paragraphs.
Comment: We received several comments pointing out the need for CMS
to partner with its stakeholders during the design of any new staffing
data collection.
Response: CMS values the opinions and insights provided by our
stakeholders. We have reported on our funded staffing studies and other
efforts to improve the accuracy of nursing home staffing data in
stakeholder meetings and conference calls, and on Open Door Forum
calls. As the planning for a payroll-based data collection system moves
forward, we certainly plan to continue to involve our stakeholders.
Comment: Several commenters expressed concern about the level of
administrative burden that might be imposed by a quarterly payroll-
based reporting system for staffing data. One commenter believed that
such a system would create inefficiencies in the care delivery system.
Response: CMS shares the commenters' concern about the need to
avoid unnecessary administrative burden, and for this reason, we
specifically requested comments in the proposed rule on the level of
burden to nursing homes imposed by a quarterly payroll-based reporting
system for staffing data. We would hope to minimize any burden to the
extent possible, and we found the comments very helpful.
Comment: A few commenters raised the issue of the financial cost to
individual nursing homes of a computerized staffing collection system:
For the cost of software and updates, initial costs for the
introduction of a computerized payroll system, or added costs with
payroll vendors.
Response: The financial cost to nursing homes of providing
quarterly payroll-based staffing data electronically is also an area of
concern to CMS. As with the administrative burden, we would also hope
to design and implement the system in such a way as to minimize any
burden to the extent possible. The comments provided were very helpful
to our planning.
Comment: A few commenters expressed concern about issues of privacy
involved with the use of payroll data.
Response: This data collection effort is currently in a planning
phase, but we want to be clear that it is not our intention to collect
names, social security numbers, or wage data for staff members. CMS is
interested in each staff member's time spent caring for residents, and
in the start and end date of service in the facility. We envision each
staff member's data being identified with a facility-level
identification number and, within the facility data, an individual
staff member identification number.
Comment: One commenter pointed out the need under any new system
for careful and consistent directions for coding of staff categories
and for consistent directions on how to handle non-productive versus
productive time.
Response: We agree that clear, consistent directions for specifying
staff categories and for handling non-productive time are vital to
ensuring accuracy of any data collected.
Comment: Several commenters pointed out the importance of including
data in the proposed system that would allow the calculation of staff
turnover and retention.
Response: We agree that data to address turnover and retention are
important to include in a staffing data collection system. Staff
turnover and staff retention measures were developed as part of the
CMS-funded ``Development of Staffing Quality Measures'' Project (2003-
2008). Both measures were found to be related to the quality of care in
the nursing home.
Comment: Several commenters pointed out the need to carefully
address collection of contract and agency staff data. Specifically, one
commenter was concerned with the burden of potentially having to hand-
sort invoices as a basis for data reporting.
Response: An assessment of the best way to collect staffing data
for contract and agency staff is currently being conducted under a CMS-
funded study. While we currently believe that an auditable source of
data such as invoices would be preferable, we are awaiting the results
of our study. We appreciate the comment, and are conscious of the level
of effort entailed in a system requiring hand-sorting.
Comment: A few commenters discussed the need for a data collection
system to allow a ``complete staffing picture'' by including
therapists, physician extenders, and other staff providing resident
care.
Response: This data collection effort is currently in a planning
phase. At this point it is not entirely clear which staff categories
will be included in the data collection. Being able to see a ``complete
staffing picture'' for a facility would certainly be helpful, and we
will take the comment into account.
Comment: A commenter pointed out the need for any new system to be
sensitive to the staffing patterns of culture change facilities and to
allow the staff to be fairly represented.
Response: We are aware of concerns that the currently used staffing
form (CMS-671) does not well accommodate the broad range of newer
nursing home care staff roles. The staffing patterns of culture change
facilities are good examples of this issue. We will be sensitive to
this concern in developing the definitions for the payroll-based data
collection system.
Comment: We received a few comments urging that any staffing data
collected be standardized for acuity (or case-mix) of residents and for
the facility census.
Response: Facility-level staffing data that are currently posted on
the CMS Nursing Home Compare Web site are expressed as hours of care
per resident per day, so they are, in effect, standardized for the
census of the facility. Although the staffing data used in the Five
Star Quality Rating System calculations are case-mix adjusted using
Resource Utilization Group categories, the case-mix adjusted measures
themselves are not reported. We will give consideration to the comment
as we plan for implementing the payroll-based system.
Comment: Several commenters suggested that any quarterly collection
of staffing data could be most easily accomplished through the use of
the MDS reporting systems.
Response: At this phase in the planning efforts, we are considering
the use of the MDS reporting system, as well as several other options.
Comment: A commenter suggested basing any new system on the
publicly posted staffing information in each facility that is currently
required by CMS. The data include nursing home census and staffing
resources by shift.
Response: We have been funding work concerned with ensuring the
accuracy of nursing home staffing data since 1998, with the beginning
of the Phase I Staffing Study (designed to investigate the
appropriateness of minimum staffing ratios in nursing homes). The
results of both the Phase I and the Phase II Staffing Studies suggested
that using payroll data as a basis for staffing produced more accurate
data than other sources, such as cost reports or the current Online
Survey Certification and Reporting System (OSCAR), which houses the
data collected at the time of survey. A later CMS-funded Study
(Development of
[[Page 40351]]
Staffing Quality Measures (SQM)--2003-2008), following the advice of a
panel of technical experts, provided a further assessment of the use of
payroll data for staffing. This study assembled a database of payroll
data from 1453 nursing homes and, using those data, developed a number
of measures of direct care staffing, including turnover and retention.
A comparison of these data with OSCAR data showed clear differences.
While we have not assessed the relative accuracy of the staffing
data posted publicly in each facility compared to payroll data, the
research base supports the use of payroll data as a more accurate
source for staffing data.
Comment: Several commenters suggested uses of the data that
involved collection of wage data in addition to staffing time data.
Response: The payroll-based staffing data collection, as it is
currently proposed, does not include collection of wage data.
Comment: In addition to the comments that we received on the
proposed quarterly staffing data collection, several commenters
provided discussion of specific issues involving the CMS Five Star
Quality Rating System for Nursing Homes.
Response: The specific issues that were raised about the design of
the Five Star Quality Rating System for Nursing Homes and the
calculations involved in the rating system are beyond the scope of this
final rule. However, we appreciate the careful consideration that these
comments reflected, and we will direct them to the attention of
appropriate staff in CMS.
2. Miscellaneous Technical Corrections and Clarifications
In the FY 2010 proposed rule, we proposed to correct the paragraph
heading in the regulations text at Sec. 483.75(j), by removing the
phrase ``Level B requirement:'' and italicizing the remaining text in
the heading (``Laboratory services''). We received no comments on this
proposal, and in this final rule, we are revising this portion of the
regulations text as proposed.
F. The Skilled Nursing Facility Market Basket Index
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket index (input price index), that reflects changes over
time in the prices of an appropriate mix of goods and services included
in the SNF PPS. In the FY 2010 proposed rule, we stated that the
proposed rule incorporated the latest available projections of the SNF
market basket index. In this final rule, we are updating projections
based on the latest available projections at the time of publication.
Accordingly, we have developed a SNF market basket index that
encompasses the most commonly used cost categories for SNF routine
services, ancillary services, and capital-related expenses.
Comment: One commenter stated that the SNF market basket factor is
defective and continues to understate compensation, pharmacy, and
operating costs, and that current market basket weights do not reflect
changing staffing, higher pharmacy costs, and rising liability
insurance.
Response: The 2004-based SNF market basket is a fixed-weight index
that is intended to measure the price increases associated with the
same mix of goods and services over time. The market basket is not
intended to measure actual costs and, therefore, we do not accept the
commenter's argument that the SNF market basket factor is defective and
continues to understate compensation, pharmacy, and operating costs.
The current FY 2010 market basket update factor of 2.2 percent is based
on the IHS Global Insight (IGI) second quarter 2009 forecast, and
reflects the projected price changes for all cost categories in the
market basket (including those associated with compensation, pharmacy,
and other operating costs). IGI is a nationally recognized economic and
financial forecasting firm that contracts with CMS to forecast the
components of the market baskets.
We also do not agree with the commenter's claim that the market
basket does not reflect changing staffing costs, higher pharmacy costs,
and rising liability insurance. For the FY 2008 final rule (72 FR
43424-43429), we adopted a revised and rebased 2004-based SNF market
basket that reflected the 2004 cost structures of Medicare-
participating SNFs. The previous SNF market basket was based on the
1997 cost structures for Medicare-participating SNFs. The major cost
weights of the 2004-based SNF market basket, which are inclusive of
compensation, pharmacy, and professional liability insurance, were
derived mainly from 2004 Medicare cost reports. During the rebasing
process, we revised our methodology for calculating the pharmacy cost
weight to incorporate an estimate of Medicaid drug expenses (72 FR
43426) incurred by SNFs. The inclusion of these costs resulted in a
pharmacy cost weight for the 2004-based SNF market basket that was
twice as large as that of the 1997-based market basket pharmacy cost
weight. We also explicitly designated a professional liability
insurance cost category (which was not a separate cost category in the
1997-based SNF market basket due to lack of sufficient data). As a
result, we believe the current SNF market basket cost weights reflect
the cost structures of Medicare-participating SNFs.
Each year, we calculate a revised labor-related share based on the
relative importance of labor-related cost categories in the input price
index. Table 16 summarizes the updated labor-related share for FY 2010.
Table 16--Labor-related Relative Importance, FY 2009 and FY 2010
----------------------------------------------------------------------------------------------------------------
Relative importance, labor- Relative importance, labor-
related, FY 2009 08:2 related, FY 2010 09:2
forecast\*\ forecast
----------------------------------------------------------------------------------------------------------------
Wages and salaries.................................. 51.003 51.078
Employee benefits................................... 11.547 11.533
Nonmedical professional fees........................ 1.331 1.323
Labor-intensive services............................ 3.434 3.446
Capital-related (.391).............................. 2.468 2.460
-----------------------------------------------------------
Total........................................... 69.783 69.840
----------------------------------------------------------------------------------------------------------------
\*\Published in the Federal Register (73 FR 46434); based on the second quarter 2009 IHS Global Insight Inc.
revised forecast.
[[Page 40352]]
1. Use of the Skilled Nursing Facility Market Basket Percentage
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage as the percentage change in the SNF market basket index from
the average of the previous FY to the average of the current FY. For
the Federal rates established in this final rule, we use the percentage
increase in the SNF market basket index to compute the update factor
for FY 2010. This is based on the IHS Global Insight, Inc. (formerly
DRI-WEFA) second quarter 2009 forecast (with historical data through
the first quarter 2009) of the FY 2010 percentage increase in the FY
2004-based SNF market basket index for routine, ancillary, and capital-
related expenses, to compute the update factor in this final rule.
Finally, as discussed in section I.A. of this final rule, we no longer
compute update factors to adjust a facility-specific portion of the SNF
PPS rates, because the initial three-phase transition period from
facility-specific to full Federal rates that started with cost
reporting periods beginning in July 1998 has expired.
2. Market Basket Forecast Error Adjustment
As discussed in the FY 2004 supplemental proposed rule (68 FR
34768, June 10, 2003) and finalized in the FY 2004 final rule (68 FR
46067, August 4, 2003), the regulations at Sec. 413.337(d)(2) provide
for an adjustment to account for market basket forecast error. The
initial adjustment applied to the update of the FY 2003 rate for FY
2004, and took into account the cumulative forecast error for the
period from FY 2000 through FY 2002. Subsequent adjustments in
succeeding FYs take into account the forecast error from the most
recently available FY for which there is final data, and apply whenever
the difference between the forecasted and actual change in the market
basket exceeds a specified threshold. We originally used a 0.25
percentage point threshold for this purpose; however, for the reasons
specified in the FY 2008 SNF PPS final rule (72 FR 43425, August 3,
2007), we adopted a 0.5 percentage point threshold effective with FY
2008. As discussed previously in section I.F.2. of this final rule,
because the difference between the estimated and actual amounts of
increase in the market basket index for FY 2008 (the most recently
available FY for which there is final data) does not exceed the 0.5
percentage point threshold, the payment rates for FY 2010 do not
include a forecast error adjustment.
Comment: One commenter suggested that CMS apply a cumulative
forecast error to account for all of the variations in the market
basket forecasts since FY 2004 (that is, as of when CMS implemented the
market basket forecast error correction policy.) The commenter asserted
that the forecast adjustment process did not work as intended, citing
the lack of any annual adjustments in subsequent years as evidence. The
commenter recommended that the policy be modified to provide for an FY
2010 cumulative adjustment of 1.0 percent to restore these ``lost''
dollars to the SNF industry.
Response: For FY 2004, CMS applied a one-time, cumulative forecast
error correction of 3.26 percent (68 FR 46036, August 4, 2003). Since
that time, the forecast errors have been relatively small and clustered
near zero. We believe the forecast error correction should be applied
only when the degree of forecast error in any given year is such that
the SNF PPS base payment rate does not adequately reflect the
historical price changes faced by SNFs. Accordingly, we continue to
believe that the forecast error adjustment mechanism should
appropriately be reserved for the type of major, unexpected change that
initially gave rise to this policy, rather than the minor variances
that are a routine and inherent aspect of this type of statistical
measurement. Further, we note that all of the Medicare prospective
systems use an annual market basket adjustment factor to update rates
to reflect inflation in the prices of goods and services used by
providers.
3. Federal Rate Update Factor
Section 1888(e)(4)(E)(ii)(IV) of the Act requires that the update
factor used to establish the FY 2010 Federal rates be at a level equal
to the full market basket percentage change. Accordingly, to establish
the update factor, we determined the total growth from the average
market basket level for the period of October 1, 2008 through September
30, 2009 to the average market basket level for the period of October
1, 2009 through September 30, 2010. Using this process, the market
basket update factor for FY 2010 SNF PPS Federal rates is 2.2 percent.
We used this update factor to compute the Federal portion of the SNF
PPS rate shown in Tables 2 and 3.
G. Consolidated Billing
Section 4432(b) of the BBA established a consolidated billing
requirement that places the Medicare billing responsibility for
virtually all of the services that the SNF's residents receive with the
SNF, except for a small number of services that the statute
specifically identifies as being excluded from this provision. As noted
previously in section I. of this final rule, subsequent legislation
enacted a number of modifications in the consolidated billing
provision.
Specifically, section 103 of the BBRA amended this provision by
further excluding a number of individual ``high-cost, low-probability''
services, identified by the Healthcare Common Procedure Coding System
(HCPCS) codes, within several broader categories (chemotherapy and its
administration, radioisotope services, and customized prosthetic
devices) that otherwise remained subject to the provision. We discuss
this BBRA amendment in greater detail in the proposed and final rules
for FY 2001 (65 FR 19231-19232, April 10, 2000, and 65 FR 46790-46795,
July 31, 2000), as well as in Program Memorandum AB-00-18 (Change
Request 1070), issued March 2000, which is available online at
http://www.cms.hhs.gov/transmittals/downloads/ab001860.pdf.
Section 313 of the BIPA further amended this provision by repealing
its Part B aspect; that is, its applicability to services furnished to
a resident during a SNF stay that Medicare Part A does not cover.
(However, physical, occupational, and speech-language therapy remain
subject to consolidated billing, regardless of whether the resident who
receives these services is in a covered Part A stay.) We discuss this
BIPA amendment in greater detail in the proposed and final rules for FY
2002 (66 FR 24020-24021, May 10, 2001, and 66 FR 39587-39588, July 31,
2001).
In addition, section 410 of the MMA amended this provision by
excluding certain practitioner and other services furnished to SNF
residents by RHCs and FQHCs. We discuss this MMA amendment in greater
detail in the update notice for FY 2005 (69 FR 45818-45819, July 30,
2004), as well as in Program Transmittal 390 (Change Request
3575), issued December 10, 2004, which is available online at
http://www.cms.hhs.gov/transmittals/downloads/r390cp.pdf.
Further, while not substantively revising the consolidated billing
requirement itself, a related provision was enacted in the Medicare
Improvements for Patients and Providers Act of 2008 (MIPPA, Pub. L.
110-275). Specifically, section 149 of MIPPA amended section
1834(m)(4)(C)(ii) of the Act to create a new subclause (VII), which
adds SNFs (as defined in section 1819(a) of the Act)
[[Page 40353]]
to the list of entities that can serve as a telehealth ``originating
site'' (that is, the location at which an eligible individual can
receive, through the use of a telecommunications system, services
furnished by a physician or other practitioner who is located elsewhere
at a ``distant site'').
As explained in the Medicare Physician Fee Schedule (PFS) final
rule for Calendar Year (CY) 2009 (73 FR 69726, 69879, November 19,
2008), a telehealth originating site receives a facility fee which is
always separately payable under Part B outside of any other payment
methodology. Section 149(b) of MIPPA amended section 1888(e)(2)(A)(ii)
of the Act to exclude telehealth services furnished under section
1834(m)(4)(C)(ii)(VII) of the Act from the definition of ``covered
skilled nursing facility services'' that are paid under the SNF PPS.
Thus, a SNF ``* * * can receive separate payment for a telehealth
originating site facility fee even in those instances where it also
receives a bundled per diem payment under the SNF PPS for a resident's
covered Part A stay'' (73 FR 69881). By contrast, under section
1834(m)(2)(A) of the Act, a telehealth distant site service is payable
under Part B to an eligible physician or practitioner only to the same
extent that it would have been so payable if furnished without the use
of a telecommunications system. Thus, as explained in the CY 2009 PFS
final rule, eligible distant site physicians or practitioners can
receive payment for a telehealth service that they furnish
* * * only if the service is separately payable under the PFS when
furnished in a face-to-face encounter at that location. For example,
we pay distant site physicians or practitioners for furnishing
services via telehealth only if such services are not included in a
bundled payment to the facility that serves as the originating site
(73 FR 69880).
This means that in those situations where a SNF serves as the
telehealth originating site, the distant site professional services
would be separately payable under Part B only to the extent that they
are not already included in the SNF PPS bundled per diem payment and
subject to consolidated billing. Thus, for a type of practitioner whose
services are not otherwise excluded from consolidated billing when
furnished during a face-to-face encounter, the use of a telehealth
distant site would not serve to unbundle those services. In fact,
consolidated billing does exclude the professional services of
physicians, along with those of most of the other types of telehealth
practitioners that the law specifies at section 1842(b)(18)(C) of the
Act, that is, physician assistants, nurse practitioners, clinical nurse
specialists, certified registered nurse anesthetists, certified nurse
midwives, and clinical psychologists (see section 1888(e)(2)(A)(ii) of
the Act and 42 CFR 411.15(p)(2)). However, the services of clinical
social workers, registered dietitians and nutrition professionals
remain subject to consolidated billing when furnished to a SNF's Part A
resident and, thus, cannot qualify for separate Part B payment as
telehealth distant site services in this situation. Additional
information on this provision appears in Program Transmittal
1635 (Change Request 6215), issued November 14, 2008,
which is available online at http://www.cms.hhs.gov/transmittals/
downloads/R1635CP.pdf.
To date, the Congress has enacted no further legislation affecting
the consolidated billing provision. However, as noted above and
explained in the proposed rule for FY 2001 (65 FR 19232, April 10,
2000), the amendments enacted in section 103 of the BBRA not only
identified for exclusion from this provision a number of particular
service codes within four specified categories (that is, chemotherapy
items, chemotherapy administration services, radioisotope services, and
customized prosthetic devices), but also gave the Secretary ``* * * the
authority to designate additional, individual services for exclusion
within each of the specified service categories.'' In the proposed rule
for FY 2001, we also noted that the BBRA Conference report (H.R. Rep.
No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the individual
services that this legislation targets for exclusion as ``* * * high-
cost, low probability events that could have devastating financial
impacts because their costs far exceed the payment [SNFs] receive under
the prospective payment system * * *''. According to the conferees,
section 103(a) ``is an attempt to exclude from the PPS certain services
and costly items that are provided infrequently in SNFs. * * * For
example, * * * specific chemotherapy drugs * * * not typically
administered in a SNF, or * * * requiring special staff expertise to
administer * * *.'' By contrast, the remaining services within those
four categories are not excluded (thus leaving all of those services
subject to SNF consolidated billing), because they are relatively
inexpensive and are furnished routinely in SNFs.
As we further explained in the final rule for FY 2001 (65 FR 46790,
July 31, 2000), and as our longstanding policy, any additional service
codes that we might designate for exclusion under our discretionary
authority must meet the same statutory criteria used in identifying the
original codes excluded from consolidated billing under section 103(a)
of the BBRA: They must fall within one of the four service categories
specified in the BBRA, and they also must meet the same standards of
high cost and low probability in the SNF setting, as discussed in the
BBRA Conference report. Accordingly, we characterized this statutory
authority to identify additional service codes for exclusion ``* * * as
essentially affording the flexibility to revise the list of excluded
codes in response to changes of major significance that may occur over
time (for example, the development of new medical technologies or other
advances in the state of medical practice)'' (65 FR 46791). In the FY
2010 proposed rule, we specifically invited public comments identifying
codes in any of these four service categories (chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices) representing recent medical advances
that might meet our criteria for exclusion from SNF consolidated
billing (74 FR 22208, 22249, May 12, 2009). The comments that we
received on this subject, and our responses, appear below.
Comment: Several commenters submitted additional chemotherapy codes
that they recommended for exclusion from consolidated billing.
Response: A review of the particular chemotherapy codes that
commenters submitted in response to the proposed rule's solicitation
for comment revealed that many of them were codes that had already been
submitted for consideration in past years, and which we had already
decided previously not to exclude. Other codes that commenters
submitted were themselves already in existence as of July 1, 1999, but
did not fall within the specific code ranges statutorily designated for
exclusion in the BBRA. As the statute does not specifically exclude
these already-existing codes (and as further discussed later in this
section of the final rule), we are not adding them to the exclusion
list. Most of the other codes submitted represent services that, for
various reasons, do not meet the statutory criteria for exclusion. For
example, some represent oral medications that can be administered
routinely in SNFs and are not reasonably characterized as ``requiring
special staff expertise to administer'' in accordance with the
previously-cited BBRA Conference report language. Other codes do not
meet the BBRA
[[Page 40354]]
Conference report's threshold criteria of high cost (that is, an item
whose ``* * * costs far exceed the payment [SNFs] receive under the
prospective payment system'') and low probability that the Congress
imposed in enacting this exclusion. Still others represent drugs that
are administered in conjunction with chemotherapy to address side
effects such as nausea; however, as such drugs are not in themselves
inherently chemotherapeutic in nature, they do not fall within the
excluded chemotherapy category designated in the BBRA. Two particular
codes that a commenter offered as possible candidates for the
chemotherapy exclusion actually are not anti-cancer drugs, but rather,
are used in hormone therapy and for the treatment of certain types of
anemia, respectively. Finally, some other codes that were submitted
represent services that, in fact, are already excluded from
consolidated billing under existing instructions.
Comment: Some commenters reiterated previous suggestions on
expanding the existing chemotherapy exclusion to encompass related
drugs that are commonly administered in conjunction with chemotherapy
in order to treat the side effects of the chemotherapy drugs. The
commenters cited examples such as anti-emetics (anti-nausea drugs) and
erythropoietin (EPO).
Response: As we have noted previously in this final rule and in
response to comments on this issue in the past (most recently, in the
August 8, 2008 SNF PPS final rule for FY 2009 (73 FR 46437)), the BBRA
authorizes us to identify additional services for exclusion only within
those particular service categories--chemotherapy and its
administration; radioisotope services; and, customized prosthetic
devices--that it has designated for this purpose, and does not give us
the authority to exclude other services which, though they may be
related, fall outside of the specified service categories themselves.
Thus, while anti-emetics, for example, are commonly administered in
conjunction with chemotherapy, they are not themselves inherently
chemotherapeutic in nature and, consequently, do not fall within the
excluded chemotherapy category designated in the BBRA. We also
explained in the FY 2008 final rule that the existing statutory
exclusion from consolidated billing for EPO is effectively defined by
the scope of coverage under the Part B EPO benefit at section
1861(s)(2)(O) of the Act; that benefit, in turn, specifically limits
EPO coverage to dialysis patients, and does not provide for such
coverage in any other, non-dialysis situations such as chemotherapy (72
FR 43432).
Comment: One comment concerned our longstanding view, most recently
discussed in the SNF PPS final rule for FY 2009 (73 FR 46436, August 8,
2008) and the SNF PPS proposed rule for FY 2010 (74 FR 22249, May 12,
2009), that the authority granted by the BBRA to identify additional
codes for exclusion within the designated categories essentially serves
to confer ``* * * the flexibility to revise the list of excluded codes
in response to changes of major significance that may occur over time
(for example, the development of new medical technologies or other
advances in the state of medical practice)'' (emphasis added). Our
position has always been that this discretionary authority applies
solely to codes that were created subsequent to the enactment of the
BBRA, and not to those codes that were already in existence as of July
1, 1999 (the date that the legislation itself uses as the reference
point for identifying those codes that it designates for exclusion).
Implicit in this position is an assumption that if a particular code
was already in existence as of that date but not designated for
exclusion, this indicated the Congress's intent for that code to remain
within the SNF PPS bundle.
One commenter took exception to this position and cited the
Conference report that accompanied the BBRA (H.R. Rep. No. 106-479 at
854 (1999) (Conf. Rep.)), which gives two examples of potential
problems with the practice of ``* * * excluding services or items from
the [SNF] PPS by specifying codes in legislation'':
Some already-existing items that meet the exclusion
criteria may have inadvertently been left off of the original exclusion
list.
New, extremely costly items may come into use or codes may
change over time.
The commenter then asserted that our discretionary authority to
identify additional codes for exclusion should apply not only to the
latter concern, but also to the former one as well. As a result, the
commenter argued that our periodic review of the codes for possible
additional exclusions from consolidated billing should not be limited
to only new and revised codes, but should also consider the entire set
of codes that were already in existence as of the BBRA legislation's
reference date, July 1, 1999.
Response: In contrast to the new and revised codes that reflect an
ongoing process of change within the coding system, the codes that were
in existence as of the BBRA reference date (July 1, 1999) essentially
comprise a closed code set at this point, one that remains static and
unchanging from year to year. Accordingly, we do not believe that it
would be either necessary or appropriate to conduct recurring reviews
of this particular code set once it has received an initial review.
Moreover, we note that after identifying the two potential problems
with designating exclusions by code as discussed above, the BBRA
Conference report that the commenter cites then goes on to issue two
specific directives: it confers on the Secretary the authority ``* * *
to review periodically and modify, as needed, the list of excluded
services'' (emphasis added), and it also directs the GAO ``* * * to
review the codes of the excluded items and make recommendations on
whether the criteria for their exclusion are appropriate by July 1,
2000'' (emphasis added). Accordingly, we believe it is clear that the
GAO's short-term, one-time-only review of the exclusion codes would
serve to encompass those codes already in existence as of the BBRA
reference date, while the Secretary's ongoing authority to conduct
reviews ``periodically'' was intended to address changes in the coding
system that occur subsequent to that point.
Comment: Although the FY 2010 SNF PPS proposed rule specifically
invited comments on possible exclusions within the particular service
categories identified in the BBRA legislation, a number of commenters
took this opportunity to reiterate concerns about other aspects of
consolidated billing. For example, some commenters reiterated past
comments made on previous rules, urging CMS to unbundle additional
service categories. The commenters identified services such as
hyperbaric oxygen treatments, observation services, and blood
transfusions as appropriate candidates for exclusion. They also
repeated previous calls to expand the existing exclusion for certain
high-intensity outpatient hospital services to encompass services
furnished in other, nonhospital settings, arguing that such nonhospital
services may be cheaper and more accessible in certain localities (such
as rural settings) than those furnished by hospitals. Some commenters
expressed support for expanding the existing, partial exclusion of
ambulance services from consolidated billing to encompass all ambulance
services, but they also acknowledged that creating such an exclusion of
an entire service category would require legislation by the
[[Page 40355]]
Congress. Another commenter recommended conducting a comprehensive
overhaul of the entire set of existing consolidated billing exclusions,
in a way that would streamline and simplify the current complex set of
exclusion rules and make it easier to administer.
Response: As we have consistently stated (most recently, in the
August 8, 2008 SNF PPS final rule for FY 2009 (73 FR 46436)), the BBRA
authorizes us to identify additional services for exclusion only within
those particular service categories--chemotherapy and its
administration; radioisotope services; and, customized prosthetic
devices--that it has designated for this purpose, and does not give us
the authority to carve out entire service categories beyond those
specified in the law. Accordingly, as the particular services that
these commenters recommended for exclusion do not fall within one of
the specific service categories designated for this purpose in the
statute itself, these services remain subject to consolidated billing.
We have also included in a number of previous rules an explanation
of the setting-specific nature of the exclusion for certain high-
intensity outpatient hospital services--most recently, in the FY 2009
SNF PPS final rule (73 FR 46436, August 8, 2008):
We believe the comments that reflect previous suggestions for
expanding this administrative exclusion to encompass services
furnished in non-hospital settings indicate a continued
misunderstanding of the underlying purpose of this provision. As we
have consistently noted in response to comments on this issue in
previous years * * * and as also explained in Medicare Learning
Network (MLN) Matters article SE0432 (available online at http://
www.cms.hhs.gov/MLNMattersArticles/downloads/SE0432.pdf), the
rationale for establishing this exclusion was to address those types
of services that are so far beyond the normal scope of SNF care that
they require the intensity of the hospital setting in order to be
furnished safely and effectively.
Moreover, we note that when the Congress enacted the
consolidated billing exclusion for certain RHC and FQHC services in
section 410 of the MMA, the accompanying legislative history's
description of present law acknowledged that the existing exclusions
for exceptionally intensive outpatient services are specifically
limited to ``* * * certain outpatient services from a Medicare-
participating hospital or critical access hospital * * *'' (emphasis
added). (See the House Ways and Means Committee Report (H. Rep. No.
108-178, Part 2 at 209), and the Conference Report (H. Conf. Rep.
No. 108-391 at 641).) Therefore, these services are excluded from
SNF consolidated billing only when furnished in the outpatient
hospital or CAH setting, and not when furnished in other,
freestanding (non-hospital or non-CAH) settings.
Further, the authority for us to establish a categorical exclusion
for these services that would apply irrespective of the setting in
which they are furnished does not exist in current law. In addition,
with regard to the relative availability of such services in hospital
versus nonhospital settings, we have also noted previously that:
* * * to the extent that advances in medical practice over time may
make it feasible to perform such a service more widely in a less
intensive, nonhospital setting, this would not argue in favor of
excluding the nonhospital performance of the service from
consolidated billing under these regulations, but rather, would call
into question whether the service should continue to be excluded
from consolidated billing at all, even when performed in the
hospital setting (70 FR 45049, August 4, 2005).
Regarding the comment on ambulance services, we agree with the
commenters that carving out an entire service category from
consolidated billing would require legislation by the Congress, and
cannot be accomplished administratively. Finally, with reference to the
suggestion for a comprehensive overhaul of the existing consolidated
billing rules, while the commenter's interest in promoting improved
ease of administration is understandable, we note that current law
contains no authority to adopt the suggested approach.
Comment: Some comments cited ongoing concerns about the SNF PPS's
ability to account accurately for the cost of NTAs, and suggested that
we create additional consolidated billing exclusions for certain
exceptionally high-cost drugs as a means of addressing those concerns.
Response: We note that, as mentioned previously in section III.C.2
of this final rule, we are continuing to conduct research relating to
the treatment of NTAs under the SNF PPS, including the exploration of
possible modifications in the case-mix classification system that might
further improve its accuracy in accounting for these costs. However, as
we indicated in the SNF PPS final rule for FY 2002 (66 FR 39588, July
31, 2001), and again in the SNF PPS final rule for FY 2004 (68 FR
46062, August 4, 2003), ``* * * we do not share the view * * * that the
creation of additional exclusions from consolidated billing could
serve, in effect, as an interim substitute for [such] refinements.''
Rather, we believe ``* * * that payment adjustments relating to case-
mix would best be accomplished directly through refinements in the
case-mix classification system'' itself.
Comment: In contrast to the preceding comments that advocated
expanding the existing exclusion of certain exceptionally intensive
outpatient services to encompass freestanding (nonhospital) settings,
one commenter specifically acknowledged this exclusion's restriction to
the hospital setting, and then proceeded to recommend a particular
drug, natalizumab (Tysabri[supreg], HCPCS code J2323) for exclusion on
this basis. Natalizumab is an intravenous infusion drug used for
treating multiple sclerosis in cases where alternative therapies are
not feasible. The commenter indicated that natalizumab not only meets
the general criteria of high cost, low probability, and inelastic
demand (that is, the service is unlikely to be overprovided even if
separate payment under Part B becomes available for it) that
characterize services under the exclusion, but also has a number of
specific characteristics that could reasonably be viewed as requiring
the intensity of the hospital setting for its safe and effective
administration. The commenter noted that under the terms of this drug's
approval by the Food and Drug Administration (FDA), natalizumab is
subject to a complex risk minimization action plan (RiskMAP) protocol
that requires highly specialized expertise in its administration. The
commenter also cited an FDA notice in the Federal Register (73 FR
16313, March 27, 2008), including natalizumab in a list of drugs that
are deemed to have in effect an approved risk evaluation and mitigation
strategy (REMS). (The REMS is designed to address certain drugs that,
while providing an important benefit to patients, can be especially
dangerous if not used properly.) The FDA notice also indicated that
such drugs have in effect a number of elements to assure safe use,
including their being ``* * * dispensed to patients only in certain
health care settings, such as hospitals . * * *'' Accordingly, the
commenter also suggested that we consider similarly excluding the other
drugs identified in the FDA notice (which, like natalizumab, are deemed
to have an approved REMS in effect).
Response: We believe that the commenter's observations merit
further study to determine whether drugs of this type might, in fact,
meet the outpatient hospital services exclusion's longstanding
threshold (most recently discussed, as noted previously, in the FY 2009
SNF PPS final rule (74 FR 46436, August 8, 2008)) of being ``* * * so
far beyond the normal scope of SNF care that they require the intensity
of
[[Page 40356]]
the hospital setting in order to be furnished safely and effectively.''
Accordingly, we plan to examine the appropriateness of designating one
or more of these drugs as exceptionally intensive outpatient hospital
services for purposes of exclusion from consolidated billing. As we
noted in the discussion of the outpatient hospital exclusion in the SNF
PPS final rule for FY 2000 (64 FR 41676, July 30, 1999), while any
broad refinements in the outpatient hospital exclusion's underlying
policy itself (which might be necessitated by the development of the
outpatient hospital PPS) ``* * * would be made through future
rulemaking,'' modifying the list of individual services encompassed by
the exclusion would occur ``* * * in future instructions.''
Accordingly, we would use program instructions as the vehicle for
specifying any additional services that we may decide to designate as
qualifying for exclusion on this basis.
H. Application of the SNF PPS to SNF Services Furnished by Swing-Bed
Hospitals; Quality Monitoring of Swing-Bed Hospitals
In accordance with section 1888(e)(7) of the Act, as amended by
section 203 of the BIPA, Part A pays CAHs on a reasonable cost basis
for SNF services furnished under a swing-bed agreement. However,
effective with cost reporting periods beginning on or after July 1,
2002, the swing-bed services of non-CAH rural hospitals are paid under
the SNF PPS. As explained in the final rule for FY 2002 (66 FR 39562,
July 31, 2001), we selected this effective date consistent with the
statutory provision to integrate swing-bed rural hospitals into the SNF
PPS by the end of the SNF transition period, June 30, 2002.
Accordingly, all non-CAH swing-bed rural hospitals have come under
the SNF PPS as of June 30, 2003. Therefore, all rates and wage indexes
outlined in earlier sections of this final rule for the SNF PPS also
apply to all non-CAH swing-bed rural hospitals. A complete discussion
of assessment schedules, the MDS and the transmission software (RAVEN-
SB for Swing Beds) appears in the final rule for FY 2002 (66 FR 39562,
July 31, 2001). The latest changes in the MDS for swing-bed rural
hospitals appear on the SNF PPS Web site, http://www.cms.hhs.gov/
snfpps. It is our intention to include rural hospital swing beds in the
transition to the MDS 3.0 effective October 1, 2010, and to adopt the
RUG-IV classification for swing-bed facilities on that same date. Under
the RUG-III payment model, swing-bed hospitals have not been
comprehensively monitored for quality of care, but have been required
to submit four types of abbreviated MDS assessments: The abbreviated
Medicare Assessments submitted on days 5, 14, 30, 60, and 90 used to
determine payment under the SNF PPS, entry and discharge tracking
assessments, the clinical change assessments, and the Other Medicare
Required Assessments (OMRAs). The limited use of the MDS for quality
monitoring was established because we believed that swing-bed units, as
parts of rural hospitals, were already subject to the hospital quality
review process. In addition, our analyses showed that the average
length of stay in swing-bed facilities was significantly lower than in
either hospital-based or freestanding SNFs, and that our existing
quality measures might be unable to evaluate short-stay patient care
accurately. Thus, in the FY 2002 final rule referenced above (65 FR
39590), we decided that we would not ``require swing-bed facilities to
perform the care planning and quality monitoring components included in
the full MDS * * *'' at that point. At the same time, we explained our
intention of including ``* * * an analysis of swing-bed requirements in
our comprehensive reevaluation of all post-acute data needs, and in the
design of any future assessment and data collection tools.''
Since that time, we have expanded our quality analysis in a variety
of settings, and have made SNF information publicly available through
Nursing Home Compare and other initiatives. While developing ways to
monitor and compare quality across swing-bed facilities and between
swing-bed facilities and other SNFs would increase swing-bed facility
data collection and transmission requirements, it would also increase
the information available to patients, families, and oversight agencies
for making placement decisions and evaluating the quality of care
furnished by swing-bed facilities. For these reasons, in the FY 2010
proposed rule (74 FR 22208, 22250, May 12, 2009), we stated that we
were considering a change in the swing-bed MDS (SB-MDS) reporting
requirements that would go into effect with the introduction of the MDS
3.0. Since the current SB-MDS does not include the items needed to
evaluate quality in the same way as for other nursing facilities, we
proposed to eliminate the SB-MDS, and replace it with the MDS 3.0
equivalent of the Medicare Payment Assessment Form (MPAF) that captures
all of the items used in determining quality measures. Accordingly, in
the FY 2010 proposed rule (74 FR 22208, 22250, May 12, 2009), we
solicited comments on expanding swing-bed MDS reporting requirements to
apply the quality monitoring mechanism in place for all other SNF PPS
facilities to rural swing-bed hospitals. The comments that we received
on this subject, and our responses, appear below.
Comment: Some commenters supported the quality monitoring of swing-
bed services, while others opposed it. Those who opposed quality
monitoring of swing-bed services asserted that the existing hospital
quality review process is sufficient, and that the short length of
stays for swing-bed patients would not result in reliable measures. The
commenters were also concerned with the burden associated with
additional paperwork. A few commenters stated that this would impose a
burden on CAHs. Those who supported quality monitoring of swing-bed
services argued that it would help achieve greater consistency between
the swing-bed and SNF settings, and would allow consumers to make the
same quality comparisons and evaluations for swing beds as for SNFs.
Response: When the Congress enacted the swing-bed program, it
described swing-bed services as ``* * * services of the type which, if
furnished by a skilled nursing facility, would constitute extended care
services'' (section 1883(a)(1) of the Act). Therefore, we believe it is
appropriate and in the best interest of beneficiaries to monitor the
quality of care provided in swing-bed hospitals similar to the manner
in which we monitor quality of care for SNFs, and to be able to inform
consumers of the various choices they have for post acute care services
in their community. We are cognizant of the short length of stays in
swing beds and realize that the current CMS quality measures may not be
applicable in many instances for swing-bed providers. However, we will
not be able to make a sound decision unless we first gather the data to
determine the best avenue for measuring quality similar to SNFs. Based
on comments received, we will limit the items to be collected in the
MDS 3.0 swing-bed assessment to the required demographic, payment, and
quality items. The MDS 3.0 swing-bed assessment will be similar to the
MDS 3.0 MPAF; however, it will contain fewer items, as the MPAF
includes clinical items that are not required for payment or quality
measures. We will begin collecting the data from swing-bed facilities
starting October 1, 2010, and then, once sufficient information is
obtained, we will conduct an analysis
[[Page 40357]]
that includes (but is not limited to) the following: (1) Whether the
length of stay in swing beds is adequate to measure changes (or
outcomes) in patient care; (2) Whether these changes are measurable and
attainable; and (3) Which quality measures are appropriate. We will
also determine the best venue to share quality data on swing beds with
consumers. Because CAHs are not subject to SNF PPS and MDS requirements
at this time, they will not be required to complete the MDS 3.0 and,
thus, are not affected by the policy to collect quality data from swing
beds based on MDS data.
IV. Provisions of the Final Rule
This final rule incorporates the provisions of the regulations text
of the proposed rule (74 FR 22208), as herein modified. We have adopted
the proposed changes from the above captioned proposed rule with regard
to the Resident Assessment Instrument under the MDS 3.0 (including an
implementation schedule) provision that will be introduced in
conjunction with the RUG-IV classification system.
In Sec. 483.315(h), we have removed the term ``survey'' and
replaced it with ``agency''.
In Sec. 483.315(h)(3), we have removed the word ``all''.
V. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
Section 483.20 Resident Assessment
Section 483.20(b) requires the facility to make a comprehensive
assessment of a resident's needs using the resident assessment
instrument (RAI) provided by the State.
Section 483.20(f)(3) requires upon completion of the RAI for the
facility to electronically transmit encoded, accurate, complete MDS
data to the CMS system.
While there is burden associated with the requirements found under
Section 483.20, they are currently approved under OMB 0938-
0739.
Section 483.315 Specification of Resident Assessment Instrument
Section 483.315(h) requires the facility to support and maintain
the CMS State system and database and analyze data and generate and
transmit reports as specified by CMS.
While there is burden associated with this requirement, we believe
this requirement is exempt from the PRA as stated in sections 4204(b)
and 4214(d) of the Omnibus Budget Reconciliation Act of 1987 (OBRA
1987, Pub. L. 100-203), which specifically waive PRA requirements with
respect to the revised requirements for participation introduced by the
nursing home reform legislation.
In the FY 2002 SNF PPS proposed rule (66 FR 24026-28, May 10, 2001)
and final rule (66 FR 39594-96, July 31, 2001), we invited and
discussed public comments on the information collection aspects of
establishing the existing, abbreviated MDS completion requirements that
apply to rural swing-bed hospitals paid under the SNF PPS (CMS-10064,
OMB 0938-0872, 73 FR 30105, May 23, 2008). Similarly, in the
FY 2010 proposed rule (74 FR 22208, 22250, May 12, 2009), we invited
public comment with respect to the expansion of MDS reporting
requirements so that the quality measures currently in place for all
other SNF PPS facilities can be applied to swing-bed hospitals, as
discussed previously in section III.H of this final rule. Specifically,
we proposed to replace the SB-MDS with the MDS 3.0 version of the MPAF.
If you comment on these information collection and recordkeeping
requirements, please submit your comments to the Office of Information
and Regulatory Affairs, Office of Management and Budget,
Attention: CMS Desk Officer, [1410-F].
Fax: (202) 395-6974; or
E-mail: OIRA_submission@omb.eop.gov.
VI. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (September 19, 1980, RFA, Pub. L. 96-354),
section 1102(b) of the Social Security Act (the Act), the Unfunded
Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4), Executive Order
13132 on Federalism, and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This final
rule is an economically significant rule under Executive Order 12866,
because we estimate the FY 2010 impact reflects a $690 million increase
from the update to the payment rates and a $1.05 billion reduction (on
an incurred basis) from the recalibration of the case-mix adjustment,
thereby yielding a net decrease of $360 million in payments to SNFs.
For FY 2011, we estimate that there will be no aggregate impact on
payments as a result of the implementation of the RUG-IV model, which
will be introduced on a budget neutral basis. The final FY 2011 impacts
will be issued prior to August 1, 2010, and will include the FY 2011
market basket update, FY 2011 wage index, and any further FY 2011
policy changes. Furthermore, we are also considering this a major rule
as defined in the Congressional Review Act (5 U.S.C. 804(2)).
The update set forth in this final rule would apply to payments in
FY 2010. In addition, we include a preliminary estimate of the impact
of the introduction of the RUG-IV model on FY 2011 payments. In
accordance with the requirements of the Act, we will publish a notice
for each subsequent FY that will provide for an update to the payment
rates and include an associated impact analysis. Therefore, final
estimates for FY 2011 will be published prior to August 1, 2010.
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small businesses or other small entities. For
[[Page 40358]]
purposes of the RFA, small entities include small businesses, nonprofit
organizations, and small government jurisdictions. Most SNFs and most
other providers and suppliers are small entities, either by their
nonprofit status or by having revenues of $13.5 million or less in any
1 year. For purposes of the RFA, approximately 51 percent of SNFs are
considered small businesses according to the Small Business
Administration's latest size standards, with total revenues of $13.5
million or less in any 1 year (for further information, see http://
www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_
tablepdf.pdf). Individuals and States are not included in the
definition of a small entity. In addition, approximately 29 percent of
SNFs are nonprofit organizations.
This final rule updates the SNF PPS rates published in the final
rule for FY 2009 (73 FR 46416, August 8, 2008) and the associated
correction notice (73 FR 56998, October 1, 2008), thereby decreasing
net payments by an estimated $360 million. As indicated in Table 17a,
the effect on facilities will be a net negative impact of 1.1 percent.
The total impact reflects a $1.05 billion reduction from the
recalibration of the case-mix adjustment, offset by a $690 million
increase from the update to the payment rates. We also note that the
percent decrease will vary due to the distributional impact of the FY
2010 wage indexes and the degree of Medicare utilization. For FY 2011,
we estimate that there will be no aggregate impact on payments due to
the introduction of the RUG-IV model. However, we estimate that there
will be distributional impacts that vary from slight increases to
slight decreases due to the case-mix distribution of individual
providers.
Guidance issued by the Department of Health and Human Services, on
the proper assessment of the impact on small entities in rulemakings,
utilizes a revenue impact of 3 to 5 percent as a significance threshold
under the RFA. While this final rule is considered economically
significant, its relative impact on SNFs overall is small because
Medicare is a relatively minor payer source for nursing home care. We
estimate that Medicare covers approximately 10 percent of service days,
and approximately 20 percent of payments. However, the distribution of
days and payments is highly variable, with the majority of SNFs having
significantly lower Medicare utilization. As a result, for most
facilities, the impact to total facility revenues, considering all
payers, should be substantially less than those shown in Table 17a.
Therefore, the Secretary has determined that this final rule would not
have a significant impact on a substantial number of small entities.
However, in view of the potential economic impact on small entities, we
have considered alternatives as described in section III.K.3 of this
final rule.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. This final rule will
affect small rural hospitals that (a) furnish SNF services under a
swing-bed agreement or (b) have a hospital-based SNF. We anticipate
that the impact on small rural hospitals will be similar to the impact
on SNF providers overall. Therefore, the Secretary has determined that
this final rule will not have a significant impact on the operations of
a substantial number of small rural hospitals.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates regulations that impose
substantial direct requirement costs on State and local governments,
preempts State law, or otherwise has Federalism implications. This
final rule would have no substantial direct effect on State and local
governments, preempt State law, or otherwise have Federalism
implications. Further, while we realize that there is an impact on the
Federal portion of the Medicaid payment, we have not yet determined the
specific amount of that impact. However, we are working closely with
State survey and Medicaid agencies to gain a better understanding of
the impact from the transition to MDS 3.0 and the RUG-IV model.
Section 202 of UMRA also requires that agencies assess anticipated
costs and benefits before issuing any rule whose mandates require
spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. In 2009, that threshold is approximately $133
million. This final rule would not impose spending costs on State,
local, or Tribal governments in the aggregate, or by the private
sector, of $133 million.
B. Anticipated Effects
This final rule sets forth updates of the SNF PPS rates contained
in the final rule for FY 2009 (73 FR 46416, August 8, 2008) and the
associated correction notice (73 FR 56998, October 1, 2008). Based on
the above, we estimate the FY 2010 impact would be a net decrease of
$360 million in payments to SNFs (this reflects a $1.05 billion
reduction from the recalibration of the case-mix adjustment, offset by
a $690 million increase from the update to the payment rates). The
impact analysis of this final rule represents the projected effects of
the changes in the SNF PPS from FY 2009 to FY 2010. We assess the
effects by estimating payments while holding all other payment-related
variables constant. Although the best data available is utilized, there
is no attempt to predict behavioral responses to these changes, or to
make adjustments for future changes in such variables as days or case-
mix. In addition, we provide an impact analysis projecting the changes
for FY 2011 due to the introduction of the RUG-IV model.
Certain events may occur to limit the scope or accuracy of our
impact analysis, as this analysis is future-oriented and, thus, very
susceptible to forecasting errors due to certain events that may occur
within the assessed impact time period. Some examples of possible
events may include newly legislated general Medicare program funding
changes by the Congress, or changes specifically related to SNFs. In
addition, changes to the Medicare program may continue to be made as a
result of previously enacted legislation, or new statutory provisions.
Although these changes may not be specific to the SNF PPS, the nature
of the Medicare program is that the changes may interact and, thus, the
complexity of the interaction of these changes could make it difficult
to predict accurately the full scope of the impact upon SNFs.
In accordance with section 1888(e)(4)(E) of the Act, we update the
payment rates for FY 2009 by a factor equal to the full market basket
index percentage increase plus the FY 2008 forecast error adjustment to
determine the payment rates for FY 2010. The special AIDS add-on
established by section 511 of the MMA remains in effect until ``* * *
such date as the Secretary certifies that there is an appropriate
adjustment in the case mix * * *.'' We have not provided a separate
impact analysis for the MMA provision. Our latest estimates indicate
that there are slightly more than 2,700 beneficiaries who qualify for
the AIDS add-on payment. The impact to Medicare is included in the
``total'' column of Table 17a. In updating the rates for FY 2010, we
make a number of standard annual revisions and clarifications mentioned
elsewhere in
[[Page 40359]]
this final rule (for example, the update to the wage and market basket
indexes used for adjusting the Federal rates). These revisions increase
payments to SNFs by approximately $690 million.
We estimate the net decrease in payments associated with this final
rule to be $360 million for FY 2010. The decrease of $1.05 billion due
to the recalibration of the case-mix adjustment, together with the
market basket increase of $690 million, results in a net decrease of
$360 million.
The FY 2010 impacts appear in Table 17a. The breakdown of the
various categories of data in the table follows.
The first column shows the breakdown of all SNFs by urban or rural
status, hospital-based or freestanding status, and census region.
The first row of figures in the first column describes the
estimated effects of the various changes on all facilities. The next
six rows show the effects on facilities split by hospital-based,
freestanding, urban, and rural categories. The urban and rural
designations are based on the location of the facility under the CBSA
designation. The next twenty-two rows show the effects on urban versus
rural status by census region.
The second column in the table shows the number of facilities in
the impact database.
The third column of the table shows the effect of the annual update
to the wage index. This represents the effect of using the most recent
wage data available. The total impact of this change is zero percent;
however, there are distributional effects of the change.
The fourth column shows the effect of recalibrating the case-mix
adjustment to the nursing CMIs. As explained previously in section
II.B.2 of this final rule, we are proposing this recalibration so that
the CMIs more accurately reflect parity in expenditures under the
refined, 53-group RUG system introduced in 2006 relative to payments
made under the original, 44-group RUG system, and in order to keep the
NTA component at the appropriate level specified in the FY 2006 SNF PPS
final rule. The total impact of this change is a decrease of 3.3
percent. We note that some individual providers may experience larger
decreases in payments than others due to case-mix utilization.
The fifth column shows the effect of all of the changes on the FY
2010 payments. The market basket increase of 2.2 percentage points is
constant for all providers and, though not shown individually, is
included in the total column. It is projected that aggregate payments
will decrease by 1.1 percent, assuming facilities do not change their
care delivery and billing practices in response.
As can be seen from Table 17a, the combined effects of all of the
changes vary by specific types of providers and by location. For
example, though nearly all facilities would experience payment
decreases, providers in the rural Mountain region would show a slight
increase of 0.1 percent for FY 2010 total payments. Of those facilities
showing decreases, facilities in the urban New England and urban
Mountain areas of the country show the smallest decreases.
Table 17a--Projected Impact to the SNF PPS for FY 2010
----------------------------------------------------------------------------------------------------------------
Update wage Revised Total FY
Number of data CMIs 2010 change
facilities (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Total....................................................... 15,307 0.0 -3.3 -1.1
Urban....................................................... 10,586 0.1 -3.3 -1.1
Rural....................................................... 4,721 -0.3 -3.1 -1.3
Hospital based urban........................................ 1,675 -0.1 -3.4 -1.4
Freestanding urban.......................................... 8,911 0.1 -3.3 -1.1
Hospital based rural........................................ 1,065 -0.2 -3.3 -1.4
Freestanding rural.......................................... 3,656 -0.3 -3.1 -1.3
Urban by region:
New England............................................. 832 0.8 -3.4 -0.5
Middle Atlantic......................................... 1,489 -0.1 -3.5 -1.4
South Atlantic.......................................... 1,742 0.0 -3.2 -1.1
East North Central...................................... 2,024 -0.2 -3.2 -1.3
East South Central...................................... 539 -0.4 -3.3 -1.5
West North Central...................................... 874 0.3 -3.3 -0.9
West South Central...................................... 1,200 -0.4 -3.2 -1.5
Mountain................................................ 478 0.8 -3.2 -0.3
Pacific................................................. 1,402 0.4 -3.3 -0.8
Outlying................................................ 6 -0.1 -3.6 -1.5
Rural by region:
New England............................................. 148 -0.8 -3.1 -1.8
Middle Atlantic......................................... 254 0.0 -3.3 -1.2
South Atlantic.......................................... 593 0.0 -3.1 -1.0
East North Central...................................... 930 -0.5 -3.1 -1.5
East South Central...................................... 533 -0.2 -3.1 -1.2
West North Central...................................... 1,092 -0.5 -3.3 -1.6
West South Central...................................... 788 -0.5 -3.1 -1.4
Mountain................................................ 247 1.2 -3.2 0.1
Pacific................................................. 134 -0.3 -3.2 -1.3
Outlying................................................ 2 1.1 -3.9 -0.7
Ownership:
Government.............................................. 652 -0.2 -3.5 -1.5
Proprietary............................................. 11,302 0.0 -3.2 -1.1
Voluntary............................................... 3,353 0.1 -3.4 -1.1
----------------------------------------------------------------------------------------------------------------
Note: The Total column includes the 2.2 percent market basket increase.
[[Page 40360]]
Table 17b shows the estimated effects for the FY 2011
distributional changes due to the proposed RUG-IV classification
system. Though the aggregate impact shows no change in total payments,
it is estimated that some facilities will experience payment increases
while others experience payment decreases due to the Medicare
utilization under RUG-IV. For example, providers in the urban New
England and urban Middle Atlantic regions show increases of 1.3
percent, while providers in the rural East North Central region show a
decrease of 1.5 percent. In addition, voluntary providers show an
increase of 0.2 percent, while there is no change for proprietary
facilities in aggregate.
Table 17b--Projected Impact of RUG-IV for FY 2011
------------------------------------------------------------------------
Number of RUG-IV
facilities (percent)
------------------------------------------------------------------------
Total................................... 15,443 0.0
Urban................................... 10,516 0.3
Rural................................... 4,927 -0.8
Hospital based urban.................... 609 -1.4
Freestanding urban...................... 9,907 0.4
Hospital based rural.................... 426 -0.8
Freestanding rural...................... 4,501 -0.8
Urban by region:
New England......................... 833 1.3
Middle Atlantic..................... 1,479 1.3
South Atlantic...................... 1,724 -0.6
East North Central.................. 2,018 0.0
East South Central.................. 523 1.2
West North Central.................. 864 0.1
West South Central.................. 1,169 0.9
Mountain............................ 472 -0.5
Pacific............................. 1,427 0.2
Outlying............................ 7 0.5
Rural by region:
New England......................... 155 -1.3
Middle Atlantic..................... 270 0.6
South Atlantic...................... 622 -0.9
East North Central.................. 945 -1.5
East South Central.................. 557 -0.1
West North Central.................. 1,123 -0.2
West South Central.................. 846 -1.2
Mountain............................ 265 -0.9
Pacific............................. 144 -1.1
Outlying............................ 0 0.0
Ownership:
Government.......................... 840 1.4
Proprietary......................... 10,539 0.0
Voluntary........................... 4,064 0.2
------------------------------------------------------------------------
Note: The wage index column is not included for FY 2011, as the FY 2011
wage index is unknown. In addition, the Total column is not included
for FY 2011, as the market basket is unknown.
Comment: Several commenters expressed concern that the proposed
RUG-IV case-mix classification system would adversely affect them from
a fiscal standpoint. One commenter specifically cited the proposal to
allocate concurrent therapy and the change in the method to calculate
the ADL index.
Response: The aggregate impact of the RUG-IV case-mix
classification is budget neutral. We caution providers on determining
the fiscal impact of RUG-IV based on only one or two areas of the
entire system. Although we are making changes to the ADL index and
allocation of concurrent therapy, the total payment rate is based on
the combination of the nursing and therapy components. Total payment
rates for therapy groups are not projected to decrease. Even after we
consider that many patients will fall into lower rehabilitation RUGs
under the allocation of concurrent therapy, because of the increase to
the nursing CMIs to adjust for parity, total payment rates may actually
be higher under RUG-IV for some comparable patients. We realize that
there are distributional effects determined by an individual provider's
case-mix utilization and some providers will be negatively affected. In
examining the impacts presented in the table above for FY 2011, there
are subsets of providers that are positively affected and other subsets
that are negatively affected. However, in looking at large subsets such
as the ownership type, proprietary owners are expected to be budget
neutral, whereas voluntary providers are expected to see a slight
increase in payments (0.2 percent) compared to RUG-III.
Another effect of the introduction of the RUG-IV model is a re-
distribution of dollars between payment groups that focus on
rehabilitation in contrast to those focused primarily on nursing
services. In order to further understand the changes to specific
provider types and case-mix, we evaluated the individual effect on the
nursing and therapy portion of total payments. Table 18 shows the
nursing and therapy percentage change as a portion of total payments by
comparing the nursing and therapy rate components using the RUG-III
CMIs and RUG-IV CMIs. As shown in Table 18, although hospital-based
facilities do not show as large an increase in the nursing portion of
total payments, they also show a slightly smaller decrease in the
therapy portion of their payments. We expect that facilities providing
more intensive
[[Page 40361]]
nursing services will show increases in payments under the proposed
RUG-IV model.
Table 18--Percentage Change in Payment for the Nursing and Therapy
Components
------------------------------------------------------------------------
Urban Rural
Rate component (percent) (percent)
------------------------------------------------------------------------
Nursing CMIs--Freestanding...................... 21.8 20.7
Nursing CMIs--Hospital-Based.................... 11.0 11.6
Therapy CMIs--Freestanding...................... -41.5 -41.2
Therapy CMIs--Hospital-Based.................... -41.1 -40.7
------------------------------------------------------------------------
We further note that while this analysis is focused primarily on
the anticipated impact to the Medicare program, we understand that
States are also concerned about potential systems needs to address the
transition to the MDS 3.0 and the RUG-IV case-mix system. Although our
systems analysis showed that the transition to a national CMS data
collection system would retain all existing functionality, we have been
working closely with the State Agencies (SAs) to verify that the
transition will be as seamless as possible. Starting in the Fall of
2008, we initiated monthly conference calls between CMS staff and
representatives from the State Survey and Medicaid agencies to make
sure that we have taken all State systems needs into account, and to
develop strategies to support the SAs. Our progress has been hampered
by three factors. First, many States have developed MDS-based
applications to support a variety of State functions beyond the typical
survey and payment operations. We are developing a comprehensive list
of all affected State functions currently using the MDS so we can
develop ways for the States to access the data once we adopt the MDS
3.0 format. Second, most States have customized their Medicaid payment
systems, which means that potential CMS data solutions cannot utilize a
``one size fits all'' approach.
The third issue is that the majority of the States have not yet
reached a final decision on the payment system changes they will
implement in October 2010. Some States will maintain their existing
RUG-III payment systems and will simply need support to convert MDS 3.0
data into an MDS 2.0 format to continue calculating their Medicaid
payments. Other States are considering adopting all or part of the RUG-
IV model, and will need more extensive support.
We recently conducted a survey asking each State to identify their
likely transition scenarios and system costs and are beginning to
analyze the information provided. We will continue to work with
individual States and will develop a comprehensive transition plan that
will include an analysis of the systems costs likely to be incurred
under each transition approach; that is, maintaining a standard RUG-III
payment structure, maintaining a customized RUG-III structure, and
adopting all or part of RUG-IV.
For those States that will maintain their existing RUG-III based
payment models, we have already started work on support systems that
will allow States to convert or crosswalk the MDS 3.0 data to the
current MDS 2.0 structure. The data specifications for these crosswalks
are expected to be released by October 2010. We plan to work closely
with the States to ensure a smooth transition.
State Medicaid agencies are not required to adopt the RUG-IV model
and will only do so after careful consideration of the cost and benefit
of such a change on an individual State-by-State basis. For those
States choosing to adopt the RUG-IV model, CMS provides detailed
program specifications free of charge, which will mitigate State
program design costs associated with converting from RUG-III to RUG-IV.
We intend to continue to work closely with State Medicaid agencies
during the next year to assist them in evaluating the RUG-IV model for
Medicaid use.
C. Alternatives Considered
We have determined that this final rule is an economically
significant rule under Executive Order 12866. As described above, we
estimate the FY 2010 impact will be a net decrease of $360 million in
payments to SNFs, resulting from a $690 million increase from the
update to the payment rates and a $1.05 billion reduction from the
recalibration of the case-mix adjustment. In view of the potential
economic impact, we considered the alternatives described below.
Section 1888(e) of the Act establishes the SNF PPS for the payment
of Medicare SNF services for cost reporting periods beginning on or
after July 1, 1998. This section of the statute prescribes a detailed
formula for calculating payment rates under the SNF PPS, and does not
provide for the use of any alternative methodology. It specifies that
the base year cost data to be used for computing the SNF PPS payment
rates must be from FY 1995 (October 1, 1994, through September 30,
1995). In accordance with the statute, we also incorporated a number of
elements into the SNF PPS (for example, case-mix classification
methodology, the MDS assessment schedule, a market basket index, a wage
index, and the urban and rural distinction used in the development or
adjustment of the Federal rates). Furthermore, section 1888(e)(4)(H) of
the Act specifically requires us to disseminate the payment rates for
each new FY through the Federal Register, and to do so before the
August 1 that precedes the start of the new FY. Accordingly, we are not
pursuing alternatives with respect to the payment methodology as
discussed above. However, in view of the potential economic impact on
small entities, we have voluntarily considered alternative approaches
to the recalibration of the case-mix adjustments.
Using our authority to establish an appropriate adjustment for case
mix under section 1888(e)(4)(G)(i) of the Act, this final rule
recalibrates the adjustment to the nursing case-mix indexes based on
actual CY 2006 data instead of FY 2001 data. In the SNF PPS final rule
for FY 2006 (70 FR 45031, August 4, 2005), we committed to monitoring
the accuracy and effectiveness of the case-mix indexes used in the 53-
group model. We believe that using the CY 2006 actual claims data to
perform the recalibration analysis results in case-mix weights that
reflect the resources used, produces more accurate payment, and
represents an appropriate case-mix adjustment. Using the CY 2006 data
is consistent with our intent to make the change from the 44-group RUG
model to the refined 53-group model in a budget-neutral manner, as
described in section III.B.2.b of this final rule and in the SNF PPS
[[Page 40362]]
final rule for FY 2006 (70 FR 45031, August 4, 2005).
We investigated using alternative time periods in calculating the
case-mix adjustments. One possibility was to use CY 2005 rather than CY
2006 data. However, using CY 2005 data still requires us to use a
projection of the distributional shift to the nine new groups in the
RUG-53 group model. We also looked at a second alternative, which
involved comparing quarterly data periods directly before and after
implementation of the RUG-53 model; for example, October through
December 2005 for the RUG-44 model and January through March 2006 for
the RUG-53 model. This approach uses a combination of projected and
actual data for only a 6-month time period. However, we believe that
using actual utilization data for the entire CY 2006 is more accurate,
as actual case mix during the calibration year is the basis for
computing the case-mix adjustment. Accordingly, we have determined that
performing the recalibration using the CY 2006 data is the most
appropriate methodology.
We considered various options for implementing the recalibrated
case-mix adjustment. For example, we considered implementing partial
adjustments to the case-mix indexes over multiple years until parity
was achieved. However, we believe that these options would continue to
reimburse in amounts that significantly exceed our intended policy.
Moreover, as we move forward with programs designed to enhance and
restructure our post-acute care payment systems, we believe that
payments under the SNF PPS should be established at their intended and
most appropriate levels. Stabilizing the baseline is a necessary first
step toward implementing the RUG-IV classification methodology. As
discussed in section III.C.2 of this final rule, RUG-IV will more
accurately identify differences in patient acuity and will more closely
tie reimbursement to the relative cost of goods and services needed to
provide high quality care.
We believe the introduction of the RUG-IV classification system
better targets payments for beneficiaries with greater care needs,
improving the accuracy of Medicare payment. In addition, RUG-IV changes
such as eliminating the ``look-back'' period for preadmission services
correct for existing vulnerabilities in the RUG-53 system. Therefore,
we believe it would be prudent to move to RUG-IV as quickly as
possible. However, we also recognize the need to allow sufficient lead
time to ensure an orderly and successful transition. Accordingly, while
we initially considered implementing the RUG-IV model for FY 2010, we
are instead implementing the system for FY 2011. Many of the
refinements of the RUG-IV model are integrated into the MDS 3.0
resident assessment instrument. The transition to both the MDS 3.0 and
the RUG-IV case-mix system requires careful planning, as it will affect
multiple Medicare and Medicaid quality monitoring and production
systems, including Medicaid PPS systems used by more than half the
State agencies. In addition, State agencies, providers, and software
vendors would benefit by receiving adequate time to prepare for a
smooth transition. Therefore, we plan to implement RUG-IV for FY 2011.
Comment: One commenter expressed concern that hierarchical
maximization, instead of index maximization, was used to estimate the
distribution of RUG-IV days.
Response: We agree with the commenter that an index maximization
approach provides the best estimation of the RUG-IV days of service
distribution. The reason for this is that when RUG-IV is implemented
for payment, an index maximizing approach will be used. However, use of
RUG-IV hierarchical classification rather than index maximizing
classification has very little impact on the fiscal estimates and
simplified the work that was required to make those estimates.
The final fiscal estimates are based on the distribution of RUG-IV
days obtained by applying the STRIVE transition matrix that cross-
tabulated RUG-III classifications with RUG-IV classifications for
STRIVE Medicare Part A residents. The RUG-III classification used index
maximizing, but the RUG-IV classification used a hierarchical approach.
Grouper code allowing RUG-IV index maximizing classification has not
yet been developed and tested and, therefore, it was not possible to
use the index maximizing approach for RUG-IV at this time.
When making fiscal estimates, it is absolutely critical that index
maximizing be used for RUG-III. Index maximizing causes major shifts in
the days of service for RUG-III. Most importantly, with index
maximizing, some residents in RVL and all residents in RHX and RHL
shift to either RMX or RML. In contrast, the use of index maximizing
RUG-IV classification has very little impact on the fiscal estimates,
because fewer residents will shift into other groups after index
maximizing. With RUG-IV, index maximizing will only affect rare groups,
and not all residents in a group will shift to another group. Analyses
indicate that the maximum possible impact of RUG-IV index maximizing
would be a 0.23 percent increase in total estimated RUG-IV payments.
The actual impact is likely to be much less, probably 0.1 percent or
less.
Comment: Several commenters expressed concern that the proposed
rule's regulatory impact analysis significantly underestimated the
total economic impact of the proposed policy changes, citing secondary
effects such as indirect job losses and loss of tax revenue to the
States.
Response: As indicated in the impact analysis, the changes due to
the recalibration of the CMIs are expected to result in a net decrease
in Medicare payments to SNFs of about 3.3 percent. This estimate
represents the direct impact on SNFs and does not include any of the
``indirect,'' ``induced,'' or ``ripple'' effects that are raised by the
commenters. Such secondary effects are extremely difficult to model and
are highly uncertain as a result. Based on this uncertainty and the
relatively small percentage of aggregate SNF revenues (from all payers)
affected by this reduction, we cannot conclude with confidence that
there will be significant impacts beyond those that are already
described in the rule. Additionally, because these types of secondary
effects are occurring within a dynamic, market-based economy, it is our
expectation that the market will properly adjust its economic resources
in reaction to the appropriately recalibrated SNF PPS payments. For
these reasons, we believe that the regulatory impact analysis
adequately estimates the proposed rule's economic impact.
Comment: A few commenters said that they could not fully evaluate
the impact of RUG-IV because CMS failed to provide the FY 2011 market
basket and wage index.
Response: Although the FY 2011 market basket and wage index are
required to set the final FY 2011 payment rates, they are not necessary
to evaluate the impact of RUG-IV. As discussed previously in this
section, impacts are evaluated by determining the effect on payments of
each policy change while holding all other payment-related variables
constant. The market basket for FY 2011 will have the same impact for
all providers. The FY 2011 wage index will produce the same
distributional effect due to changes in wage data, regardless of the
classification system. Thus, the market basket and wage index have no
effect on the RUG-IV policy.
[[Page 40363]]
D. Accounting Statement
As required by OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 19, we have
prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this final rule. This
table provides our best estimate of the change in Medicare payments
under the SNF PPS as a result of the policies in this final rule based
on the data for 15,307 SNFs in our database. All expenditures are
classified as transfers from Medicare providers (that is, SNFs).
Table 19--Accounting Statement: Classification of Estimated
Expenditures, From the 2009 SNF PPS Fiscal Year to the 2010 SNF PPS
Fiscal Year
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers... -$360 million. *
From Whom To Whom?............... Federal Government to SNF Medicare
Providers.
------------------------------------------------------------------------
* The net decrease of $360 million in transfer payments is a result of
the decrease of $1.05 billion due to the recalibration of the case-mix
adjustment, together with the market basket increase of $690 million.
E. Conclusion
Overall estimated payments for SNFs in FY 2010 are projected to
decrease by $360 million, or 1.1 percent, compared with those in FY
2009. We estimate that SNFs in urban areas would experience a 1.1
percent decrease in estimated payments compared with FY 2009. We
estimate that SNFs in rural areas would experience a 1.3 percent
decrease in estimated payments compared with FY 2009. Providers in the
rural New England region would show decreases in payments of 1.8
percent, the highest decreases for any region. This area shows the
largest decrease in payments due to the wage index.
Though the FY 2011 aggregate impact due to the introduction of the
RUG-IV model shows no change in payments, there are distributional
effects for providers due to Medicare utilization. These effects range
from a decrease of 1.5 percent for Rural East North Central facilities
to an increase of 1.4 percent for Government facilities.
Finally, in accordance with the provisions of Executive Order
12866, this regulation was reviewed by the Office of Management and
Budget.
List of Subjects in 42 CFR Part 483
Grants programs--health, Health facilities, Health professions,
Health records, Medicaid, Medicare, Nursing homes, Nutrition, Reporting
and recordkeeping requirements, Safety.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 483--REQUIREMENTS FOR STATES AND LONG TERM CARE FACILITIES
0
1. The authority citation for part 483 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart B--Requirements for Long Term Care Facilities
0
2. Amend Sec. 483.20 by--
0
A. Republishing paragraph (b)(1) introductory text.
0
B. Revising paragraph (b)(1)(xvii).
0
C. Revising paragraph (f)(2).
0
D. Revising paragraph (f)(3) introductory text.
The revisions read as follows:
Sec. 483.20 Resident assessment.
* * * * *
(b) Comprehensive assessment--(1) Resident assessment instrument. A
facility must make a comprehensive assessment of a resident's needs,
using the resident assessment instrument (RAI) specified by the State.
The assessment must include at least the following:
* * * * *
(xvii) Documentation of summary information regarding the
additional assessment performed on the care areas triggered by the
completion of the Minimum Data Set (MDS).
* * * * *
(f) * * *
(2) Transmitting data. Within 7 days after a facility completes a
resident's assessment, a facility must be capable of transmitting to
the CMS System information for each resident contained in the MDS in a
format that conforms to standard record layouts and data dictionaries,
and that passes standardized edits defined by CMS and the State.
(3) Transmittal requirements. Within 14 days after a facility
completes a resident's assessment, a facility must electronically
transmit encoded, accurate, and complete MDS data to the CMS System,
including the following:
* * * * *
0
3. Amend Sec. 483.75 by revising the heading of paragraph (j) to read
as follows:
Sec. 483.75 Administration.
* * * * *
(j) Laboratory services. * * *
* * * * *
Subpart F--Requirements that Must be Met by States and State
Agencies, Resident Assessment
0
4. Amend Sec. 483.315 by--
0
A. Revising paragraph (d)(2).
0
B. Revising paragraph (e).
0
C. Removing and reserving paragraph (f).
0
D. Revising paragraph (h).
0
E. Revising paragraph (i) introductory text.
0
F. Revising paragraph (i)(2).
The revisions read as follows:
Sec. 483.315 Specification of resident assessment instrument.
* * * * *
(d) * * *
(2) Care area assessment (CAA) guidelines and care area triggers
(CATs) that are necessary to accurately assess residents, established
by CMS.
* * * * *
(e) Minimum data set (MDS). The MDS includes assessment in the
areas specified in Sec. 483.20(b)(i) through (xviii) of this chapter,
and as defined in the RAI manual published in the State Operations
Manual issued by CMS (CMS Pub. 100-07).
* * * * *
(h) State MDS system and database requirements. As part of facility
agency responsibilities, the State Survey Agency must:
(1) Support and maintain the CMS State system and database.
(2) Specify to a facility the method of transmission of data, and
instruct the facility on this method.
[[Page 40364]]
(3) Upon receipt of facility data from CMS, ensure that a facility
resolves errors.
(4) Analyze data and generate reports, as specified by CMS.
(i) State identification of agency that receives RAI data. The
State must identify the component agency that receives RAI data, and
ensure that this agency restricts access to the data except for the
following:
* * * * *
(2) Transmission of reports to CMS.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: July 23, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: July 29, 2009.
Kathleen Sebelius,
Secretary.
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From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 40387-40395]] Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities for FY 2010; Minimum Data Set,
Version 3.0 for Skilled Nursing Facilities and Medicaid Nursing
Facilities
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[FR Doc. E9-18662 Filed 7-31-09; 4:15 pm]
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