Some good news—and just in time for the holidays. Nursing home providers can ring in 2011 knowing that residents will not be denied Medicare Part B outpatient therapy and the RUG-IV system won’t change.

Congress’s recent passage of the Medicare Extenders Act of 2010 represented, you might say, a triple play for Medicare providers. It extended the therapy caps exceptions process through the end of 2011. It also suspended a nearly 25% Medicare physician pay cut for a year. Perhaps most significantly, it overturned the delay in the RUG-IV classification system.

This repeal means that the Centers for Medicare & Medicaid Services will not have to create a temporary RUG-III hybrid system this year to tide over the agency and providers until 2011.

The agency was pleased to deliver this news to 600 people during its Skilled Nursing Facility (SNF)/Long Term Care (LTC) Open Door Forum call on Thursday.

“It’s nice to be able to give good news as an announcement,” an upbeat Sheila Lambowitz, director of the Division of Institutional Post Acute Care at CMS, told the crowd.

The road to RUG-IV

The MDS 3.0/RUG-IV snag has not made life easy for CMS or providers over the last year. As you may recall, the trouble began when the healthcare reform law, the Patient Protection and Affordable Care Act, unbundled the start dates for MDS 3.0 and RUG-IV. While MDS started on Oct. 1, 2010, under the bill, RUG-IV was not slated to start until Oct. 1, 2011. Not an easy position for CMS or providers, given that the two tools were designed to work together. 

So what exactly transpired to create this mess? (Given that’s it’s the end of the year, I think some reflecting is in order.) The story goes a little something like this: Providers actually initially wanted a delay of RUG-IV because it modified the look-back period. (Under the RUG-IV look-back, only those services provided while the person is a resident of the SNF will be included in RUG classification. That marks a change from RUG-III.) Providers also wanted time to adjust to a change to concurrent therapy rules.

While they wanted both MDS 3.0 and RUG-IV postponed, at the 11th hour, the Senate agreed to delay only the RUG-IV system because of the cost impact. The bill was released with the split start dates and the RUG-IV/RUG-III hybrid fix was born.   

The mix-up likely already has cost CMS a lot of time and money—as it has been working on a hybrid system. Since early this year, providers have been pressing Congress to change its mind and restore the original start date of RUG-IV to 2010.

Well, it’s finally happened. I’d say that’s grounds for celebrating a little earlier this year.