Josh Pickus

RCS-1 is a complete rewrite of therapy reimbursement rules, and will require therapy providers to make significant operational changes in order to maintain healthy businesses.

While the RCS-1 language is still in draft form as a notice of proposed rulemaking, the Centers for Medicare & Medicaid Services (CMS) has indicated that it plans to implement this new classification system as early as October 2018. Among therapy providers, there has been much discussion of the challenges that would arise if CMS made the rule effective in 2018, but CMS has not indicated that it plans any delay in the rule.

Therapy providers must start laying the preparatory groundwork immediately, as CMS’ timeline doesn’t offer the luxury of waiting until RCS-1 is finalized to plan for the necessary changes. To this end, here are four steps you can take now.

  • Develop a strategy for adjusting plans of care

    Therapy services will continue to be a critical aspect of skilled nursing facility (SNF) care under RCS-1. However, therapy providers will need to manage the volume of therapy and mode of treatment carefully to deliver high-quality outcomes for residents and also achieve desirable financial results.

    In the current RUG-IV system, management of patient care has been relatively simplistic due to the linear relationship between the amount of therapy provided and the associated reimbursement for those services.

    Because reimbursement for physical therapy, occupational therapy, and speech language pathologyservices under RCS-1 is based on the resident classification – not the amount of therapy provided – over-delivery of therapy on a regular basis will lead to financial challenges for the provider.

    On the other hand, delivering too little therapy based on a resident’s needs will be detrimental to the resident, and potentially send red flags to CMS. Those flags could lead to audits and significant give-backs for the reimbursement that was provided based on the expected level of therapy. Therefore, establishing and carrying out a plan of care that fits each resident’s clinical needs must be balanced with the costs. This will require strong collaboration between therapy providers, SNF operators and therapy software partners, who must provide the technology and tools to do this efficiently and consistently across the entire organization.

  • Establish strong clinical protocols for resident classifications

    Under RCS-1, therapy providers must establish clinical protocols for each resident classification based on substantial clinical evidence. This evidence can be derived from historical patient outcomes data, and should evolve over time so providers can effectively manage costs as reimbursement changes under the new payment methodology.

    Even though the exact types of resident classifications could change as CMS finalizes RCS-1, therapy providers can take steps now to establish clinical protocols. These protocols should include the mix of treatment modes under RCS-1—individual, concurrent and group—as well as the specific treatment approaches used within those modes. And while CMS has heavily weighted the patient’s primary diagnosis in determining the amount of therapy needed, providers should also consider comorbidities in order to accurately address individual needs. 

  • Broaden referral networks by demonstrating high quality outcomes

    Under RCS-1, the amount of therapy delivered to SNF residents will decline substantially. Contract therapy companies should consider the benefits of expanding into other business lines, including outpatient clinics and home health therapy, and expanding their referral networks. While these settings present their own challenges, they provide an important opportunity for business diversification. This can help to protect therapy providers from catastrophic financial impact when one setting is impacted by significant regulatory changes.

    As therapy providers expand their businesses and engage with additional referral sources, it will be increasingly important for them to demonstrate their value with clinical outcomes data.  This means not just delivering great care but being able to demonstrate that they have done so with robust, defensible and easy-to-understand data.

  • Leverage technology to succeed under RCS-1

    None of these recommendations can be implemented effectively without the right supporting technology. It’s imperative that therapy providers partner with their EMR vendor to help support the transition to RCS-1.

    For instance, EMR software should be able to provide advanced data analysis, including P&L modeling to help providers understand the overall financial viability of their business under the proposed model. It should also allow them to compare the minutes provided under RUG-IV to the corresponding reimbursement under RCS-1. With greater understanding of their businesses under RCS-1, providers can develop a clear transition plan well ahead of the actual implementation. Planning should be driven by these insights to identify staffing needs, the ideal mix of therapists versus assistants for each discipline and compensation levels.

    Therapy providers should also ask EMR vendors about their plans to build tools for guiding treatment by resident classification. When RCS-1 is implemented, EMR software should be able to suggest customizable treatment protocols, so providers can continue to put the resident’s needs first, while reaching the appropriate financial outcome. It’s also worth noting that EMR software that provides clearly defined protocols and meaningful outcomes data under RCS-1 will help protect the provider in the event of a future audit questioning the motives behind clinical decision making.

Finally, therapy providers should start thinking about how they will bill for services and discuss these changes with customers well in advance of RCS-1. EMR software should have the flexibility to adapt to new billing methods, and help facilitate their conversations through reports that clearly demonstrate how RCS-1 will impact reimbursement – and the bottom line.

While we are still a year away from the proposed implementation date, therapy providers who take steps now to lay a solid business foundation will be able to move quickly once RCS-1 is finalized.

Josh Pickus is the CEO of Optima Healthcare Solutions.