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RUGs, SNFs and PPS Positioning Your Facility fo



RUGs, SNFs and PPS

Positioning Your Facility for Success

By Karen K. Heist, RN, MS

s skilled nursing facilities now implement the Medicare Prospective Payment System, many struggle with the finer points of this new payment methodology. This article highlights key elements of the RUGs system as it relates to rehab, emphasizing points that are often misunderstood.

PPS radically changes the methodology of payment for Part A patients in skilled nursing facilities. SNF providers receive an all-inclusive per diem payment, including routine, therapy, ancillary and capital costs, based on each patient's classification into one of 44 resource utilization groups (RUGs).

For most SNFs, the federal rates are significantly lower than Medicare reimbursement of the past. This is particularly true of hospital-based SNFs and freestanding SNFs that serve subacute patients. The transition into PPS will require a paradigm shift to reduce costs associated with rehab services.

To determine your reimbursement level, all members of the SNF leadership team should understand how skilled care patients are sorted into RUG categories. Although this function is completed electronically for each MDS assessment through RUGs grouper software, you may need to predict or determine a RUG level for pre-admission, and at other times during care management, when the data is not processed electronically. To bridge clinical practice and reimbursement, make the RUG system part of the clinical team's language.

Using Rehab RUG Levels

Fourteen of the 44 RUG levels reflect the patient's need for rehabilitation. The therapy team will have the most influence on skilled cases that meet criteria for the rehabilitation RUG levels, described in the table. Therapists should monitor the following factors that qualify patients for any of the rehabilitation RUGs, among them:

* number of therapy disciplines treating the patient (PT, OT, SLP)

* number of treatment days by each discipline in the seven days counting back from the assessment reference date. (Only therapy services provided in the SNF can be counted.)

* total number of therapy minutes provided in the seven days counting back from the assessment reference date

* delivery of rehab nursing care (this applies to the RUGs category "Rehab Low." See specific criteria in regulations.)

The amount of therapy provided should be driven by the patient's ability to benefit from treatment. Each RUG level allows for a minimum level of therapy time. To manage costs, you should try to deliver therapy services as close as possible to the parameters in each RUG level.

To effectively manage therapy services within LTC the RUG level, you need to predict the amount of therapy to be delivered over the first 15 days of the patient's stay. Then you must track actual therapy delivered by each discipline. In essence, the therapy department needs to develop a "budget" of therapy time. Therefore, the three therapy disciplines must communicate regularly to do the following: plan the amount of treatment each discipline will provide, and reallocate budgeted time as the needs of the patient change or as treatments take more or less than the expected time.

Some of the most effective therapy departments use a written therapy time plan for each patient--often a worksheet with a one- or two-week schedule of therapy treatments. Update this plan daily and share it with all therapy team members.

Prediction of Treatment

Section T of the MDS includes data, which project the number of days and minutes of therapy that's expected to occur in the first 15 days of the patient's stay in the SNF. A therapy time worksheet detailing a daily projection of minutes by discipline provides a clear basis for the prediction of therapy time required in Section T for the first Medicare assessment. Patients who meet criteria for minimum minutes of actual and projected therapy treatment can qualify for a "Low," "Medium" or "High" rehabilitation RUG, even if the patient hasn't received five days of treatment during the first five days since admission. This is particularly useful for SNFs that don't offer seven-day-per-week therapy or that admit patients late in the day.

For example, if a patient is admitted Friday afternoon, he could be evaluated and treated on Monday and Tuesday. If at least 65 minutes of therapy are delivered in those two days, and the 15 day projection in Section T reflects a minimum of eight days and 520 minutes of treatment, the patient qualifies for rehabilitation "High," even though only two days of therapy treatment were actually delivered during the first assessment window. Without section T, the patient could not qualify for any rehabilitation RUG level.

A recent question and answer session, published by the Health Care Financing Administration, clarified how Section T predictions should be handled if the patient is discharged:

"Q: Should I estimate the days/minutes for the Medicare patient based on 15 days, even if I expect him to be discharged earlier than that?

A: Yes. The RUG-III group to which the patient is classified is based on the minutes already received (Section P) and those expected to be provided (Section T). In order to accurately group the patient, the form must be filled out according to the directions. If the patient is discharged before the end of two weeks, the facility will bill at the RUG-III group to which he classified for only the days he stayed in the nursing home."

In this situation, the RUG is calculated to reflect the intensity of rehab services for the days the patient was in the SNF. These are the only days the SNF can be reimbursed by Medicare.

Assessment Schedule

Medicare requires MDS assessments for Part A skilled patients on a specific time schedule--5, 14, 30, 60 and 90 days. Two unscheduled assessments also may be used: the "Significant Change in Status Assessment" and the "Other Medicare Required Assessment." Detail parameters for each type of assessment are published in the SNF PPS Interim Rule (Federal Register) and MDS instructions. Each assessment determines the RUG level and the per diem rate appropriate for a specified number of days. To document the RUG level that best represents resource utilization, you need to clearly understand the timing of these assessments.

Although each assessment is given a specific name--for example "Day 5"--scheduled assessments have a range of days that can be used to define the window of time included in the assessment. This is referred to as the assessment reference date. The clinical team must use the same assessment reference date, otherwise they'll be looking at different clinical data. The end result could affect the accuracy of the MDS, as well as reimbursement.

Selecting an assessment reference date is a strategic process. The MDS coordinator should lead the clinical team to pick the assessment reference date that best depicts the intensity of services delivered. For most patients receiving rehabilitation, the first assessment reference date is likely to be Day 5. This will allow adequate time to initiate a pattern of rehabilitation treatment. Flag "Rehab Very High" and "Ultra High" cases to the attention of the MDS coordinator, who should review the choice of the assessment reference date. Grace days may be in the best interest of the case.

Grace days are assessment reference dates that are considered late, but carry no financial penalty. Three grace days are allowed on the Day 5 assessment, five for each of the 14, 30 and 60 days; two days are allowed for the Day 90 assessment. (Grace days apply only to Medicare assessments, not to OBRA-required assessments.)

PPS regulations don't specify acceptable rationale to use grace days. But they should be in the best interests of the patient. One example would be a patient who is admitted late in the day and is expected to need either a "Very High" or "Ultra High" level of rehabilitation. It's not in the best interest of a fatigued patient to provide a therapy treatment the evening of admission just to meet the RUG criteria of five days of therapy treatment in the first five days (as required for "Rehab Very High" and "Ultra High" RUG categories). Using grace days for the assessment reference date would extend the window of time to capture five actual days of therapy treatment at the appropriate intensity.

Documenting Therapy Time

Document therapy time daily to justify the answers to Section P of the MDS, reflecting days and minutes of therapy treatment already received. This daily documentation should be part of the patient's medical record. HCFA requires that information provided on the Medicare invoice related to therapy treatment must be described in "15 minute treatment units." Either the therapy department or the billing office can do this calculation and tracking. Transcribe actual treatment minutes into "units," using a predetermined policy for rounding up and down into units. The total of actual minutes and total of the "units" will not always be equal because of rounding. Until HCFA publishes specific methodology, each SNF should establish a policy to transcribe treatment time.

When dealing with PPS, people most often are confused about specific components of the PPS and RUG system. As department leaders, educate, clarify and re-educate your therapists on the finer points of this legislation.

New information is revealed about PPS continually. Therefore, obtain updates from HCFA and seek clarification about unresolved issues. SNFs that foster a proactive team approach will be positioned for success under PPS.*


Karen K. Heist, RN, MS, is project director for SubAcute Care of America, a San Diego-based national management and consulting firm specializing in the post-acute continuum of care. She has more than 20 years of health care experience, with an interest in strategically linking clinical and financial systems to benefit patients and organizations. Her recent projects include assisting hospital-based and freestanding SNFs to re-engineer clinical, financial and operational systems for survival and success under PPS.


During the 7 day assessment period, does the same discipline (OT, PT, Speech) have to see the patient for 5 days or must the patient be seen 5 days by any of the disciplines example: 2 days by PT, 2 by OT and 1 day by speech to equal the 5 days.

Tammy Shiplet,  PTA,  HospitalOctober 18, 2016
Vernon, TX

Isn't unethical to treat a patient who is independent in the facility in an ultra high category?

Jeanne Clapsaddle,  PTAApril 08, 2014

can you please clarify WHO can set the rug levels. I was under the impression that it is the evaluating therapists however today I was told that the rehab manager will do this. Is there a rule on this? thank you

kim emery,  otr/lSeptember 17, 2013
dyersburg, TN


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