RUGs revision eases worries

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Providers fearing the worst from Medicare payment refinements were almost pleasantly surprised when they were officially released last month.

New resource utilization group (RUG) pay rates will take about $1.4 billion out of the system. But the delay of the reductions until Jan. 1, plus a full 3% marketbasket update to payments next fiscal year, will help put just about the same amount back into providers' pockets.
"I've moved from a state of panic and gross concern to one of [being] cautiously optimistic," said Stephen Guillard, chairman of the Alliance for Quality Nursing Home Care.

Companies are hopeful, cautious
Many stakeholders adopted a hopeful "wait and see" approach at press time regarding the federal government's complex new resource utilization group (RUG) refinements.
One aspect of the May 13 unveiling that will take some time for them to fully grasp is the expansion of RUGs categories from 44 to 53, provider company officials said.
The nine new categories will be a combination of rehab and extensive services. Pay rates for this group will be higher than that for patients currently receiving either rehabilitation or extensive services alone.
A key nursing case-mix adjustment also will be increased, by 8.4%, giving another reason for optimism, providers said. That will add about $510 million to reimbursement coffers for fiscal 2006, about the same dollar amount as the 3% inflationary adjustment, the Centers for Medicare & Medicaid Services announced the same day.
In the days after the CMS announcement, however, it was still "too soon for us to determine the total impact," said Mary Ousley, executive vice president of SunBridge Healthcare Corp.