Ask the Payment Expert about ... the RCS-1 payment system

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Ask the payment expert ... about the observation stay loophole
Ask the payment expert ... about the observation stay loophole

What is the new RCS-1 payment system all about?

The Centers for Medicare & Medicaid Services has proposed a new payment system to replace RUGs IV. It was written as a proposed rule in 2017 and the comment period is closed.

According to CMS, the need for a new system was to eliminate incentives to increased payment based on higher therapy usage in the industry. In addition, CMS information indicates that the new RCS-1 system would more appropriately reimburse facilities for nursing care and non-therapy ancillary cost.

That is an issue that has plagued providers since the inception of the RUGs system — inadequate reimbursement for high-cost items such as IV antibiotic therapy.

The RCS-1 payment system would break down payment based on case- mix scores in four different areas: PT/ OT, SLP, Nursing and Non-therapy ancillary services. Each component would be calculated based on diagnoses, clinical factors and other criteria.

Non-therapy ancillary services would reflect high cost services such as HIV/AIDS, Parenteral/IV feedings, infections and other high-cost comorbidities.

In addition to these categories, there will be variable payment for both PT/ OT and non-therapy ancillaries, thereby reducing reimbursements based on length of stay.

Overall, it will be a more complex system but one that will reflect resource utilization in a different way. It's anticipated that the RCS-1 rule will roll out for fiscal 2019, which begins Oct. 1, 2018.

The best suggestion now is to keep up to date on when CMS publishes the final rule, and then educate appropriate staff in the system. Stay tuned!

Please send your payment-related questions to Patricia Boyer at ltcnews@mcknights.com.