‘It’s Just Transformative’: MDS Changes Raise Medicaid Payment Questions

The removal of a key section from the Minimum Data Set (MDS) will have massive repercussions, particularly for the future of nursing home reimbursements by states.

The Centers for Medicare & Medicaid Services (CMS) last week released a draft version of the nursing home comprehensive item set version 1.18.11. Among the changes in this item set, the removal of Section G stands out; and overall, the release of the draft version marks another milestone in the march toward a significant MDS overhaul that has already gone through several delays.

“It’s just transformative,” Lorie Morris, SVP of Assessment Coordination at Prestige Healthcare, told Skilled Nursing News.


Massive transition

Planned changes to the MDS were postponed in 2020 in the midst of the Covid-19 crisis, but CMS recently re-started the clock toward implementation and signaled that a draft version of MDS 3.0 v1.18.11 would be released in early 2023.

So, nursing home professionals such as Morris and Joel VanEaton, EVP of PAC Regulatory Affairs and Education at Broad River Rehab, were surprised that the draft item set dropped as early as last week. When VanEaton opened the document, one question was foremost in his mind, he told SNN: “I kept looking to see if Section G was really gone.”

The fate of Section G has been in question since the transition to the Patient-Driven Payment Model (PDPM), which made the section unnecessary from a Medicare reimbursement perspective. State-level Medicaid payments are another matter. Section G is used to calculate RUG scores that many states still use in determining reimbursement rates.


“It’s going to have a tremendous impact on our industry from a state-level reimbursement [perspective],” Gloria Brent, president and CEO of MDS Consultant LLC, told SNN.

Morris and VanEaton echoed this sentiment.

“The states are going to have to do something radical,” VanEaton said. “They’re either going to have to figure out a way to incorporate CMI (case mix index) out of PDPM into their Medicaid direct care portion of their rates — or however they do that in their state — or they’re going to have to require the optional state assessment.”

He anticipates that states will take a variety of approaches, and in fact this is already playing out. Wisconsin has implemented a system utilizing the non-therapy ancillary (NTA) and nursing CMI, while Illinois is moving toward a system incorporating only the nursing CMI. In both states, the rehab CMIs are “completely gone.”

The removal of Section G was previously proposed but put on hold in part to give states time to update their case mix systems, Ronald Orth, Relias’ Director of Curriculum Design – Post Acute Care, noted in an email to SNN.

But despite this forewarning and lead time, Morris is anticipating a potentially prolonged process. 

For example, Ohio might be required to call a special legislative session to make the necessary policy changes, she said. Other states that Prestige operates in, such as South Carolina and Michigan, don’t use CMI in their systems. But Kentucky is operating on a system that is over a decade old already, making the Bluegrass State a big question mark for Morris. Then there is the issue of how private insurance companies will adjust to the new framework.

With so much uncertainty, Morris is largely “on hold” — but she is taking some preparatory steps with the information at hand, including working with Prestige’s PointClickCare and Ability systems to devise and start executing a “large scale plan.”

And she’s prepared for the company to perform extra work, including extra assessments and documentation if states do not expeditiously switch over their systems to align with the new MDS.

For its part, CMS is open to working out new ways of capturing Section G information.

“When CMS institutes updates to patient assessments, we recognize that it may represent change and questions from CMS’ provider and patient communities,” a CMS spokesperson said in an emailed statement to SNN. “CMS is prepared to make the transition from Section G to Section GG as smooth as possible, including considering alternatives to capturing the data previously captured via Section G.”

Section G has many “tentacles,” meaning that its removal will have wide-ranging effects, VanEaton emphasized. For instance, he counts at least four Five Star quality measures will have to be rewritten or reconsidered.

“This is the biggest change since MDS 3.0, and it’s the biggest change because of the way all of these things are going to change because of G,” he said.

A positive change

While Morris, VanEaton and Brent are concerned about the unanswered questions raised by the draft item set — and boggled at the implications of some changes — they all also expressed support for the transition.

Pointing out that Section G coding has long confused staff, Brent praised the decision to eliminate it.

“I believe that this is an excellent move by the federal government to remove Section G from the MDS, I just question how the states are going to handle it,” she said.

Morris went back to CMS’ original 2019 announcement of the MDS changes to “get her bearings,” and was reminded of the intent to create greater uniformity across different parts of the care continuum.

“Common language between … long-term care or post-acute care, hospitals, home care, I think it’ll be a good thing,” she said.

Relias’ Orth made a similar point, observing that several of the MDS changes are similar to new items being added or revised in the home health OASIS-E system, which has an implementation date of Jan. 1, 2023.

“This is in alignment with CMS’ Standardized Patient Assessment Date Elements initiative mandated in the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act),” he noted.

VanEaton also has gone back to earlier documentation that CMS released, such as those related to Transfer of Health Information and Standardized Patient Assessment Data Elements — and he suggested that other skilled nursing professionals do likewise.

The elimination of Section G might be commanding the most attention, but there are numerous other changes to the MDS that also will require education and adjustment, demanding attention from providers.

Just a few of the additional changes that Orth flagged include:

  • Section A: Expansion of Race and Ethnicity Items, addition of Transportation item and several new items related to providing a reconciled list of medications to the resident and/or subsequent provider upon transfer or discharge.
  • Section B: Health literacy item added
  • Section D: CMS will now allow for the completion of the PHQ-2. The responses to these 2 questions will determine if the full PHQ-9 is required. Item related to Social Isolation added.
  • Section J: Several of the Pain items have been revised related to pain effect on Function. Now specifically addresses sleep, therapy activities, and Day-to-Day activities.
  • Section K: The item related to Nutrition approaches also has been modified.
  • Section N: New item added related to High-Risk Drug Classes.
  • Section 0: List of Special Treatment, Procedures, and Programs has been revised along with some coding requirements.

With so many changes on the way, operators are well advised to start the transition process promptly.

“Don’t wait until the RAI manual is published,” VanEaton advised.

And he, Morris and Brent also pointed out that the item set released last week is still a draft version, opening up the possibility for industry feedback.

“We have until next October before this becomes effective, so it may be that that stakeholders are boisterous enough to say, hey, look, it’s too quick to get rid of G — let’s put that off, and let’s have some more time to adjust to that,” VanEaton said.

And CMS also encourages engagement from providers, as a spokesperson told SNN:

“CMS places a great deal of importance on stakeholder feedback and urges stakeholders to engage in assessment field testing, utilize help desk resources, open door forums and other opportunities to provide feedback.”

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