Medicare Compliance & Reimbursement

Software snags may drag down nursing homes' per diems.

Without naming names, the Centers for Medicare & Medicaid Services confirmed at a March 16 Open Door Forum that not all software vendors serving nursing homes are accurately assigning Resource Utilization Groups for Medicare payment.

Some software is missing out on an absolute essential to appropriate reimbursement under the RUG-53 system: If a resident qualifies for more than one RUG, the application should assign the resident the higher paying group for payment purposes.

Some software has been failing to assign the highest paying groups within the top nine new RUGs.

Most notably, Rehab High Plus Extensive Services categories (RHX and RHL) pay less than the Rehab Medium Plus Extensive Services (RMX and RML)--and some software is assigning the lower paying groups for billing purposes.

In devising the new payment system, CMS assigned each RUG a case-mix index value. Typically, the higher the RUG is on the list, the higher its associated payment rate will be. But with the new RUG-53 system, that's not always the case. Rather, the RUGs with the highest case-mix index value pay the most--regardless of their order in the hierarchical RUG list.

Each RUG's payment rate is based on a case-mix index that the feds developed following staff-time measurement studies for nursing and therapy, explains Peter Arbuthnot, regulatory industry analyst with American HealthTech Inc. in Jackson, MS.

A RUG with a higher case-mix value will pay more even if it is lower in the RUG hierarchy. When a resident's MDS qualifies him for more than one RUG, the software should select the assignable category that pays the highest rate, CMS officials stress.

If a nursing home's software fails to select the higher paying RUG of two possible groups, however, Medicare won't point out the error. Rather, the program will reimburse the facility based on the lower paying rate its software assigned, cautions Arbuthnot.