Skilled Nursing Providers in Limbo with States Slow to Act on Looming MDS Changes

Preparations for Minimum Data Set (MDS) changes vary from state to state, raising questions about how Medicaid reimbursements will be determined as the clock ticks down to the Oct. 1 start date.

The key issue is the removal of Section G, which is used to measure the functional status of residents, from the nursing home MDS. The move to replace it with a similar Section GG has states scrambling to figure out how to best implement the change. There are various issues to address, including the fact that ​​Section GG pulls rehabilitation services into a separate case mix component, while resource utilization groups (RUGs) incorporated it into the case mix with the rest of clinical conditions.

To his knowledge, only Wisconsin, Ohio and Illinois have taken clear steps toward resolving the issue, Broad River Rehab EVP Post-Acute Care Regulatory Affairs and Education Joel VanEaton said on a recent episode of SNN’s Transform podcast.


“They still haven’t given us any definitive word as to what’s going to happen here in Tennessee,” he said.

Such uncertainty has providers on edge across the country, as they await further guidance from the Centers for Medicare & Medicaid Services (CMS) on the MDS changes, and contemplate various options for how states will adjust to the removal of Section G — bracing the potential of increased workloads and general confusion as the transition takes place.

Behind the switch

CMS, as part of the move to the Patient-Driven Payment Model (PDPM) and in an effort to streamline reimbursement requirements along the care continuum, opted to remove Section G and put in Section GG.


The two sections are “not totally different, but different to some degree” from each other, Pete Van Runkle, executive director of the Ohio Health Care Association (OHCA), told SNN.

CMS decided to make the change mostly to find a “common language” among different types of health care settings and their reimbursement structures, said Lorie Morris, executive vice president of assessment coordination at Prestige Healthcare Management.

For instance, comparing SNFs with inpatient rehabilitation facilities (IRFs) has been difficult because items in the IRF patient assessment instrument (PAI) and items in the MDS are “like apples to oranges,” she said.

So, statistically, Congress and CMS couldn’t compare what was measured under the MDS with what was measured under the PAI. The IMPACT Act from 2014 sought to standardize patient assessment data elements and create a unified payment system that would apply to each post-acute care destination.

“The [IMPACT] law said, fix that. Come up with a core set of new items. So CMS spent a bundle of money with a lot of consultants, and it was grueling work. That’s where Section GG came from,” said Cynthia Morton, executive vice president of Advion, an association representing ancillary service providers.

Section G helps providers determine the amount of function a resident has, or the maximum amount of help somebody needs, and that determines the rates and is part of case mix methodology, Morris said.

“It’s connected to rehab therapy, because therapists of the various disciplines, it’s their job, their profession, their expertise, to help a patient with function,” added Cynthia Morton, executive vice president of Advion, an association representing ancillary service providers.

Activities of daily living (ADLs), altered gait and balance and decreased range of motion are all assessed under Section G.

From a therapy perspective, Section GG only covers self care and mobility, Morton said. There’s nothing in the new section on a person’s ability to communicate, anything in the area of speech language pathology.

“That’s a big hole that nobody’s really talking about that we really do need to assess,” she said.

Section G, along with other data elements, have been used to calculate RUG scores for both Medicare and Medicaid in a number of states. So, with Section G going away, and Section GG not an exact replacement, states are facing a dilemma that does not have a single clear-cut solution.

States in transition

Policymakers in Ohio, for one, are proposing a change in state law to account for the new reimbursement formula, with a legislative session due to conclude this summer.

“Section GG is going to have to be used, that’s fundamental. Going beyond that, [Ohio] has proposed to use the nursing CMIs from the PDPM,” said Van Runkle.

Operators in Ohio will have to wait to see what the shift from Section G to GG will mean for therapy services, and in turn reimbursement amounts.

Ohio’s direct care costs include therapy – the big question right now is, should the state limit the shift to nursing CMI, or should there be a role for therapy CMIs, as many Medicaid residents in the state are getting therapy, Van Runkle said.

Put another way, the current case mix under RUGs in Ohio is essentially a hierarchy system, Morris said, with the highest paid categories being rehab and nursing being lower on the “tree.” Under PDPM, Ohio will be using the nursing component with therapy separated out.

“Ohio has not said what it is going to pay for rehab yet. If you look at the nursing case mix as part of PDPM, there’s no rehab calculation in that,” noted Morris.

The change will be in Ohio’s budget bill, which is being worked on all the way up through the end of June. The desire to maintain budget neutrality amid the shift in reimbursement policies raises concerns about “winners and losers,” Van Runkle said.

“If you make a change, and it’s a zero sum game, there are going to be providers who are benefited by that change and there are going to be providers that are hurt by that change,” he said.

CMS is allowing states to have Section G and GG running at the same time, in what CMS calls an optional state assessment (OSA). Van Runkle says that would just mean more work for providers when the workforce is already running thin.

“It’s designed as a supplement. Essentially, you’re doing twice as much work, or close to it,” he said. “We’re not going to sentence our members to doing double the work.”

Illinois has, since July 1, been slowly introducing PDPM and weaning providers off of the old RUGs system – it’s a blended CMI.

“Early in our discussions, we thought it was important to move Medicaid to a system partially based on PDPM to prevent chaos for when Section G was eliminated,” said Matthew Werner of Werner Consulting, which is contracted to work with LeadingAge Illinois and the Illinois Health Care Association (IHCA).

A transition period allowed providers to adapt to life without Section G over a period of time.

Just under 80% of providers in Illinois are being reimbursed under PDPM, Werner said.

If a state Medicaid program uses RUGs now and doesn’t find a way to transition, the likely answer will be to freeze rates at the last case mix level, or find a way to collect Section G data at a state level.

“Providers have been assessing residents using Section GG for several years now because of Medicaid, so that learning curve shouldn’t pose a challenge,” Werner said. “I think the real challenge for a state Medicaid agency is to make the conversion in a manner that doesn’t create unexpected fiscal pressures.”

Werner echoed Van Runkle’s thoughts on “winners and losers” with the change.

Some states, including South Carolina and Michigan, don’t use MDS case mix at all, opting for their own methodology to calculate Medicaid reimbursement, Morris said. These states are more or less immune from this Section G issue, Van Runkle noted.

These states have a cost report each year, determining average acuity with the help of RUGs system data, according to Morris.

“It’s not actually using the MDS, but the aggregate data is a piece of their calculation,” she said.

For these states, it’s unclear if providers will get reimbursed extra for rehab as part of that aggregate. It will have to be separated out and different, Morris noted.

Far-reaching effects

The MDS section is tied to so many other nursing home processes and tools too, including the five-star rating system and state surveys. Quality measures in Ohio are dependent on Section G.

“No one has said a word about what’s going to happen there. What are they going to do with the quality measures? You won’t be able to measure them anymore,” said Morris.

QMs might need to be paused or frozen, she said, because once Oct. 1 is here, data from Section G will be gone. Morris hopes CMS will address this issue when the quality measures technical manual comes out in the spring.

“The MDS as a whole has a lot of different uses. It’s not just an assessment tool for planning care, it’s not just for reimbursement. It carries over to quality measures,” said Van Runkle. “Specifically, we use decreases in ability to move, and we are proposing to use the decline in ADL performance.”

This issue also is being addressed legislatively.

“We have to deal with that in a budget bill too, because all of this is in the law and statute; how the calculations are done will have to be addressed,” said Van Runkle. “That’s an added bonus for us in Ohio.”

Section G was also part of the STRIVE research project, Morris said – CMS tied this part of the MDS to acuity measurement, and how much staff is needed based on patient level of function.

“Surveyors are looking for that acuity, and G is tied to that,” said Morris.

States like New York, where minimum staffing levels are already being enforced, will have to be reexamined because staffing minimums are tied to acuity, and acuity measurement was based on Section G data.

Too late for a federal solution?

There hasn’t been any indication that CMS will propose a unified federal solution for states, Werner said.

It would have been best for CMS to work with states pre-PDPM to come up with ways to transition states, but it “didn’t happen then and [is] unlikely now,” he said.

The closest CMS has gotten to a unified solution, Van Runkle said, was with the OSA, which acts as a bridge between Section G under RUGs and GG under PDPM. But, there’s no clear timeframe for using the OSA, he said.

States that don’t make changes through state law, like Ohio, or through a gradual increase of PDPM and decrease of RUGs, like Illinois, may be forced to double MDS documentation and submit to different locations, Morris said.

Still, despite all the current worries and complications, providers can focus on the potential longer-term benefits of PDPM and a more unified payment model across different provider types.

“The PDPM system is CMS’ action to move toward more patient-centric care. I think they want states to move the same way; continuing to support Section G only delays that change,” said Werner.

Companies featured in this article:

, , , , , , ,