Will HCFA sweep rehab payments under the RUG?
Will HCFA sweep rehab payments under the RUG?
Providers urged to hedge their bets
Many people in the rehabilitation industry believe that when the Health Care Financing Administration (HCFA) announces a prospective payment system (PPS) for rehab, it will be based on function related groups (FRGs).
"Many believe that the FRG system is what HCFA is going to use because the RAND Corporation has tested it and refined it. But the law does not specify that HCFA use FRGs, and there is no guarantee what they will use," warns Malcolm Morrison, PhD, president of Morrison Informatics, a consulting firm with headquarters in Mechanicsburg, PA.
One alternative choice may be the Resource Utilization Group (RUG), which will be instituted next year as reimbursement system for skilled nursing facilities.
Some HCFA officials have stated publicly that a single reimbursement system for post-acute services would be preferable to different systems for rehabilitation and skilled nursing facilities.
By the time the deadline for a rehab PPS rolls around, HCFA will have several years of experience with RUG under its belt and could try to adapt it for rehab. On the other hand, the UDSMR system is heavily used in the rehab industry, and it would be difficult for HCFA to mandate another system.
RUG is based on the Minimum Data Set (MDS) system used in nursing homes by law. Unlike the FRG system, which pays per discharge, RUG pays per diem. It bases reimbursement on resource use and limited functional status.
"If a RUG-based system is adapted, it would essentially say that there is no difference in a rehabilitation hospital and a skilled nursing facility and would mean the end of rehabilitation as we know it," asserts Sam Fleming, research analyst with Joe W. Fleming II PC, a Washington, DC, law firm specializing in rehabilitation reimbursement issues.
Although RUG has been used by skilled nursing facilities for some time and meets legal requirements, it hasn’t been used for rehab hospitals, and HCFA has no data on rehabilitation patients, Fleming points out.
"People have been working on FRGs since 1990, and we have just gotten a model for a payment system developed. If they wanted to go to a RUG-based PPS, they wouldn’t have any data," he adds.
Morrison urges rehab providers to look at how their patients would be distributed under the RUG system as well as under the FRG system.
"A balanced and sensible reaction would be to take a hard look at the RUG system before assuming that the FRG system is going to be the method of classification," Morrison says.
Ironically, if the dispute with the UDSMR (for details, see cover story) causes HCFA to choose the RUG system for reimbursement, that could have dire effects on the UDSMR because rehab providers would be forced to use the MDS to track their patients and might not also use the FIM.
FRGs were developed by Margaret Stineman, MD, at the University of Pennsylvania, using variables included the UDSMR Functional Information Measure (FIM). The mid-1980s study, funded by American Rehab (then known as the National Association of Rehabilitation Facilities), was to develop a patient classification system that could account for resource use.
The FRGs include 18 impairment groups, which are divided into subcategories based on severity and age of the patients. Three sets of FRGs have been developed: the original ones, which were based on data from 125 facilities that subscribed to the UDSMR; the FRG-II, introduced in 1995 and based on data from 400 facilities from 1992-1994; and the FRG-Cs, developed by the RAND Corporation in Santa Monica, CA, which take co-morbidities into account.
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