Implementation of a prospective payment system (PPS) for Medicare skilled nursing facility(SNF) care began in July 1998. The case mix adjustment uses the Resource Utilization Group Version III (RUG-III) resident classification system. The primary purpose of this study is to develop potential RUG-III refinements that improve the system’s ability to explain non-therapy ancillary costs while incorporating clinical and incentive-related criteria. The process of identifying possible refinements involved a broad and systematic search of all MDS items to identify the subset that are associated with cost differences. Analytic results pointed to the use of regression-derived index models of multiple items, which allow a large number of items to be considered simultaneously in determining payment rates. Items associated with cost differences included a variety of measures of resident acuity and treatments received, including measures of cognitive patterns, functional status, disease diagnoses, health conditions, and special treatments and procedures. Based on clinical review, several items were dropped from the model or combined with other “qualifier” items. The most statistically powerful model achieved rather modest predictive power, explaining less than 14 percent of the variance in ancillary charges and less than 20 percent of the variance in total costs. While we were unable to do better, two types of RUG-III refinements improved statistical performance . First is new categories for residents who qualify for extensive services and a rehabilitation category. Second is the use of an index model to create new splits within existing RUG-III categories or as a separate ancillary “add-on.”
Learning Objectives: At the conclusion of the session, the participant in this session will be able to:
Keywords: Long-Term Care, Medicare
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: Study was financed by the Health Care Financing Administration
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.