CMS Paperwork Change Could Have Significant Impact on Nursing Home Medicaid Payments

A proposed paperwork change could have a major impact on nursing homes’ ability to bill for Medicaid services.

The decision to eliminate Section G from the Minimum Data Set (MDS), a move by the Centers of Medicare & Medicaid Services (CMS) set for October 1, is being met with apprehension and confusion in the industry — as it could potentially result in unintended financial and administrative consequences for Medicaid providers who rely on G to receive proper reimbursements.

But outside of the Medicaid issue, removing Section G — which many states use to calculate nursing home reimbursements — could end up helping providers better coordinate care across the continuum.


A few days before the holidays, CMS published its latest MDS draft update, indicating plans to remove Section G as of October 1, 2020 — and the winds of confusion began swirling, leaving owners and operators wondering:

  • How will nursing homes be reimbursed for their Medicaid residents without G in the MDS?
  • Will there be more guidance before the October 1 deadline?
  • Will this shift result in decreased Medicaid reimbursements?
  • Will there be additional administrative burdens?

Some industry experts suggest that state Medicaid programs will transition from the MDS to the Optional State Assessment (OSA) for coding and reimbursement, likely adding additional administrative burdens.

“Since [the OSA] is a standalone, it may create some additional work for MDS coordinators, because they’re still going to be required to complete those other assessments — but those other assessments, unlike the OSA, are not going to include Section G,” Robert Lane, a director at consulting firm BKD, said.


The OSA serves another important Medicaid adaptive role, bridging a major gap caused by the recent overhaul to Medicare skilled nursing reimbursements. Many states use the old Medicare reimbursement system — the Resource Utilization Group (RUG) model — to determine Medicaid rates, but the RUG system was phased out last October in favor of the new Patient-Driven Payment Model (PDPM). The OSA allows states to continue using the RUG model for Medicaid payments, and CMS last year elected to scrap a planned sunset date for the OSA in order to ease the RUG-to-PDPM transition.

Under PDPM, operators gained efficiencies through the reduction of assessment frequency, a move that in theory would free up frontline caregivers to provide more direct services — and spend less time on paperwork.

But the removal of Section G could have nursing homes feeling like they’re taking a step forward and then a step back.

“Some of the efficiencies gained from PDPM’s [Patient Driven Payment Model] reduction of assessments will be reduced because of this action, should it occur,” Lane said — stressing that the timeline for the October 1 transition may be unrealistic.

Kris Mastrangelo, president and CEO of consulting firm Harmony Healthcare International, said that taking out Section G “could be a mechanism to nudge states to transition to a PDPM Medicaid system” nationwide, suggesting the change will eventually be a good one — helping to streamline coding and care across nursing homes and post-acute care sites.

Removing G will pave the way for parity between Medicare and Medicaid residents, she said.

“If I am a therapist, and I say this with kindness, there’s a possibility that I’m going to treat the patient differently because of the reimbursement, and there could be some inadvertent discrimination going on,” Mastrangelo said. “I think the intent is that if it’s all one payer system, then all patients will be treated equally.”

Maintaining state autonomy when it comes to Medicaid reimbursements is also part of CMS’s plan in removing G, Mastrangelo said.

“New York will be different than New Hampshire, which will be different from Maine, which is different from Texas,” she said. “So some of them use RUGs-II, while others use RUGs-IV, so that’s good, because the states want their autonomy.”

Although she believes this change will be a positive one when ironed out, as an auditor for nursing home records, Mastrangelo pointed to the current confusion when coding a patient’s usual status in both G and GG.

“It’s harder for a clinician to use the two different systems,” Mastrangelo said.

In fact, some nursing homes are still adjusting to GG coding to determine a patient’s usual status under PDPM. As G and GG are two different systems, there are some duplicated entries with opposite scaling methods, adding to the confusion.

GG alone has been a complex adjustment because determining a patient’s “usual” in the first three days of stay can be tricky business, especially with shift changes and concerns around pushing a patient to perform functions earlier than he or she might be ready to perform on their own.

“The problem was that the reimbursement system needed Section G in order to have the resulting RUGs level,” Mastrangelo said.

Cynthia Morton, executive vice president of the National Association for the Support of Long-Term Care (NASL), also expressed concern about the future of state Medicaid programs currently dependent on Section G for reimbursements.

Section GG has some overlap with Section G, but makes it easier for clinicians to compare data captured at various points along the care continuum, from inpatient rehabilitation facilities to home health agencies, Morton said.

But for facilitating Medicaid reimbursements, states are sticking with G at the moment.

“It’s hard to tell. You know, every state is a little different, and how quickly they adapt — that’s why this is a problem,” Morton said.

Jodi Eyigor, director of nursing home quality and policy at trade group LeadingAge, confirmed there are still many questions about CMS’s announcement to take out Section G.

“It didn’t seem very clear. When you look at the actual draft, it does seem to indicate that GG will be used for all residents, regardless of payer type and regardless of their stay, but we’ve reached out to CMS to confirm that, and we haven’t received confirmation yet,” Eyigor said.

Some of the same concerns coming out now also arose when PDPM was implemented last year, she added, pointing to the questions about how the states’ reimbursement for Medicaid will be affected.

“So there were questions that came out earlier in the fall (that still were not answered,” she added.

In addition to certain states still using RUGs for Medicaid reimbursement, other states base payments on quality measures — “and some of those quality measures are based on Section G,” Eyigor said.

“And so that’s another thing that we’re trying to clarify with CMS is how long-stay and short-stay quality measures will be calculated for those that previously relied on Section G, and whether or not Section GG will take the place of that in the quality measure calculation,” she said.

Janine Finck-Boyle, vice president of regulatory affairs at LeadingAge, confirmed that her team is trying to connect the dots across multiple CMS divisions: PDPM represents the work of one group within CMS, Finck-Boyle said, while a separate department handles survey and certification.

“So there’s a lot of moving pieces And so, right now, we don’t really have a full treasure chest of answers,” Finck-Boyle said.

In the absence of firm federal guidance, it’s up to the states to come up with solutions on their own.

“They’re leaving it up to the states to figure out how they’re going to do their Medicaid reimbursement. But all the pieces are in place. We have 38 state affiliates, and I would say a good portion of them are working with their state health care finance or Medicaid departments to see what is going to happen within the next year — so that their reimbursement is done accurately, and that they have a system in place, that they have a calculation.”

Mark Besch, chief clinical officer at Aegis Therapies, said that most of the industry found GG to be productive.

While section G is no longer used to determine case-mix groups under PDPM, there are still a few sections in G that are not included in GG — meaning that it cannot fully replace G at this time, regardless of the Medicaid’s fluctuating reimbursement problems.

“There are some questions related to a patient’s balance while doing certain activities,” Besch said, adding that G also includes a response that indicates whether the patient has a restriction in range of motion or whole movement of any of their extremities.

Besch believes that there will be an extended timeframe for removing Section G.

“Hopefully CMS will solicit feedback, and I think it would give the providers like ourselves an opportunity to comment. Personally, I think that it would be easy to modify Section GG to include those missing areas, and then simply eliminate Section G,” he said.

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