In 1988 Spencer Johnson, M.D., published an allegorical tale (or was it tail?) about how four characters respond to change. One of the characters (a mouse) was called Sniff. Well, Sniff, start sniffing!  

Currently, Medicare pays for services provided by skilled nursing facilities (SNFs) under the Medicare Part A SNF PPS benefit on a per diem using the RUG-IV grouper.

The most significant driver of this reimbursement model is the amount of therapy (days and minutes) provided to a Medicare patient, regardless of their specific needs or outcomes achieved. Through the years, many impressive governmental and independent advisory groups — whose acronyms rival a can of alphabet soup — have voiced concerns about inappropriate incentives in the current reimbursement system.

Caregivers also shared some of these same concerns. Therapists have also complained about a system that “de-incentivizes” an individualized approach to therapy treatment. Nurses felt their patients’ care was usurped by a system that didn’t look at their overarching needs.

Enter RCS-1.

CMS contracted with Acumen LLC to study and present alternatives to the existing payment structure. Its technical report coupled with CMS’s Advance Notice of Proposed Rulemaking make for fascinating reading. (CMS welcomes comments on this proposed RUG-IV replacement until Friday.) It’s impressive how they approached this challenge and presented an alternative that translates patient characteristics into a reimbursement system.

The clinical and technical eligibility requirements are unchanged; therapy may be an intervention listed in the care plan, and the MDS PPS assessment schedule is reduced significantly to the 5-day, Significant Change, and Discharge assessments (if needed).  OBRA MDS assessments do not change.

RCS-1 is 100% about Medicare Fee for Service.

So, imagine my surprise when several people came bearing the shocking news that “the MDS will not matter anymore” and that RCS-1 is “the end of the MDS.” Wait, what?

Not on your life! Aside from still driving the care for your long and short-stay population, Five-Star, Survey, and Medicaid reimbursement in many states, RCS-1 payment is almost exclusively being driven by resident characteristics data from the MDS. Now more than ever, the MDS is the care, quality and reimbursement driver for SNFs!

RCS-1 starts by first identifying why the patient is with you. (I choose the word “patient” vs. “resident” even though RCS-1 stands for “Resident Classification System”. Fair is fair: These are patients during this part of their stay.)

These “ten reasons for being a patient in a SNF” come from MDS I8000 and correspond to an ICD-10 code. They are: Major Joint Replacement or Spinal Surgery, Non-Surgical Orthopedic/Musculoskeletal, Orthopedic Surgery (Except Major Joint), Acute Infections, Medical Management, Cancer, Pulmonary, Cardiovascular and Coagulations, Acute Neurologic, and Non-Orthopedic Surgery.

In addition, other MDS sections, scales and individual items play a key role in ultimately determining reimbursement. For example: cognitive state, level of dependency in three ADLs, the presence of a swallowing disorder, mechanically-altered diet, CVA, Traumatic Brain Injury, aphasia, apraxia, dysphagia, or slurred speech, along with MDS-identified services and conditions — all influence final reimbursement.

In the RUG-IV system, less was less, more was more, and longer was better. Increased ADL dependency, for example, most often meant increased reimbursement. Not so in RCS-1.

Now these MDS elements sometimes translate into additional payment, but other times not. Similar relationships exist in this new system with the presence of cognitive impairment. Greater impairment doesn’t always mean higher payment — but again, sometimes it does.

How can you possibly keep it all straight? I’d suggest that you don’t even try. Instead, focus on accurate assessment and meaningful care plan. This has always been — and always will be — a winning strategy.  

There is so much more to come as the details around RCS-1 are made known, final decisions are made, and CMS reveals its intentions for implementation.

But in the game of “Who moved the cheese?” this is the biggest one I’ve seen yet. In fact, it’s moving so far, I wonder if Sniff will find it!

Steven Littlehale is a gerontological clinical nurse specialist, and executive vice president and chief clinical officer at PointRight Inc.