Medicare SNF Final Rule: An analytics- based perspective

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Cheryl Field, RN, MSN, CRRN
Cheryl Field, RN, MSN, CRRN

Co-author Nancy Augustine, RN, MSN, NHA

The Centers for Medicare & Medicaid Services' publication of the Final Rule for the skilled nursing facility PPS for Medicare fiscal year 2012 ignited discussions on the impact to the SNF provider community. While the changes have been summarized as a simple number reflecting an overall revenue decrease of 11.1%, there are many details in the rulemaking that result in a disproportionate impact upon individual providers.

The SNF Final Rule, effective Saturday (Oct. 1, 2011), outlines significant changes to the SNF PPS system for FY 2012. Here are some important facts to re-emphasize regarding the SNF Final Rule:

• According to CMS, the payment adjustment was created to balance changes measured in provider practice patterns, namely increased rehabilitation RUG utilization resulting in a 21% increase in spending instead of budget neutrality.

• The Final Rule for FY 2012 RUG recalibration is being conveyed as a parity adjustment of 11.1% comparing FY 2011 to FY 2012, which will certainly impact revenue. How much of an impact depends on the amount of revenue a provider gets from Medicare. For example, if a SNF relies on Medicare for 20% of its revenue, then the 11.1% actually translates to a decrease of approximately 2%.

• Trending the Medicare reimbursement rates over two years, Medicare reimbursement rates for FY2012 are actually 3.4% higher than they were in FY2010.

The greatest concern, however, surrounds the cost to provide services due, allocation of group therapy time and the Change of Therapy (COT) requirement. When revenue increases slightly and costs increase sharply, the margins decrease and cause a great deal of strife for providers.  The good news is that an analytics-based approach can help you understand the direct impact of the rule on your organization.

The power of analytics

Why are analytics important for situations like these? It's similar to the reasons why a ruler is important to a carpenter. For precise decision-making at critical times throughout a project — from estimation to installation to quality control — the right tool is vital for success. The real strength of analytics lies in leveraging knowledge as a tool for influencing other business decisions that drive efficiencies and revenue. Analytics helps you identify market opportunities and direct clinical programming, and when your business faces changes like the Final Rule, you can proactively build programs based on accurate data, and not guesswork if you have solid analytics in place.

Taking a proactive, data-driven approach can mitigate this concerning situation by empowering you to predict what is likely to happen. Below are success strategies based on knowledge gleaned from studies completed at PointRight. The power of predictive analytics lies in transforming data into knowledge to pre-emptively adjust strategies accordingly, well before any policy changes actually take hold.

Proactive strategies for success

The following are strategies that use analytics to reduce the impact of reimbursement system changes specific to the SNF Final Rule. 

Modifications to the ARD windows

What impact will the narrowing of the ARD have on you? Ninety percent of SNF providers used Day 11 for the ARD of the Medicare 14-day assessment. Narrowing the ARD window of the 14-day assessment will force a change in behavior for 90% of providers, who must determine when to complete a comprehensive admission assessment – with the Medicare 5-day assessment, or separately with 14-day assessment and complete the Care Area Assessments in one day.  For sub-acute programs with average length of stay under 13 days, the need for efficiency may outweigh the fear of tardiness, while traditional SNFs are predicted to accept the added paperwork. Our analysis showed that one-third of all future combined scheduled and unscheduled assessments will require two separate assessments, but that less than 5% of all Medicare assessments were combined, so the impact is negligible. Knowing your unit type, scheduling requirements and the workload created by policy changes is very powerful.

SOT to increase payments

In FY 2011, CMS introduced the Start of Therapy OMRA, which allowed for the change from a non-rehab RUG to a rehab RUG, effective with the earliest therapy evaluation. SOT OMRAs make up only 1.9% of all Medicare assessments. The trend, month over month, showed no increase in prevalence of SOT use in FY 2011. Is this a paperwork burden with a missed opportunity? A closer look at your data may reveal opportunities to audit for accurate increase in revenue.


FY 2012 allows for the resumption of therapy within five days, at the same major RUG level, without conducting additional therapy evaluations. The EOT-R is an efficient way for the facility to manage short interruptions in the therapy program but results in less rehabilitation days billed. Analytics can help differentiate EOT-R resulting from illness versus increased use of the EOT-R stemming from therapy scheduling and coordination issues.

COTs for higher RUG

The COT OMRA is new and burdensome to providers, but it can be completed and yield a higher RUG. The FY 2012 rates for many non-rehabilitation RUGs have a higher case mix index than the therapy RUG. Despite providing skilled rehabilitation, the MDS RUG may index maximize to a non-rehabilitation RUG with a higher rate.

The natural course of illness/recovery may include bringing residents into the SNF with therapy at a lower RUG and increasing the intensity of services in parallel with resident recovery, which helps to manage therapy costs more effectively.

Group therapy strategies

If you chose Group, mix it up. Medicare, managed care and Medicaid residents in the right mix may support overall higher revenues, while keeping regular groups full at the required four residents. The future of Group is now in jeopardy, as analysis of past behavior predicts a swing-back to providing 25% to 30% concurrent therapy (with group making up less than 10% of the minutes).

The fiscal impact of group allocation for providers shows that the change from FY 2011 to FY 2012 is known for providers where concurrent and individual minutes drive the RUG. With that knowledge in hand, a clinically and fiscally responsible plan can be put into place.

Use of tracking tools

As with anything, success requires a systematic approach. Talk to your vendors and use what you have. Providers must track the reimbursable therapy minutes (RTMs) and therapy frequencies to determine if a COT OMRA is needed. Default penalties will apply for COT and EOT assessments completed late.

Systems that allow efficient communications between departments are instrumental to cohesive billing and clinical data. Support systems involving IT can be as simple as an excel sheet that populates by entering the first day of the Medicare stay, and highlights ARD windows for scheduled assessments, or more complex. Just remember, the right tool makes the job easy!

The future

What impact can analytics make in your organization's future?

These days everything is moving at lightning speed, so putting a plan in motion to navigate the changes immediately to reduce or eliminate any negative impacts to your organization only makes sense. There is an inordinate amount of information providers must sift through regarding the Medicare Final Rule for SNFs, and a data-driven approach can set you up for success.

Analytics is a tool that turns data into knowledge. With advanced analytics, comprehensive data resources and clinical and research expertise, providers can guide decisions that increase profitability, reduce risk, improve quality of service and operate more effectively in a cost-effective manner – even when CMS changes the rules.

Cheryl Field, RN, MSN, CRRN is Vice President, Healthcare for PointRight and has more than 16 years of experience in professional nursing, specializing in rehabilitation in the acute and sub acute areas, with particular specialization in Medicare management with the onset of PPS.

Nancy Augustine, RN, MSN, NHA is a Senior Healthcare Specialist for PointRight, where she provides account management support and oversees the clinical aspect of healthcare and risk management services.


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