American Hospital Association: Alternative to RUG Payment System on the Right Track, But Issues Remain

​A potential alternative to the Centers for Medicare and Medicaid Service's (CMS) resource utilization group (RUG) payment system for skilled nursing facilities (SNFs) is a general improvement, but key elements must still be addressed, according to an August 25, 2017, letter from the American Hospital Association (AHA). CMS's proposed alternative, the resident classification system (RCS-1), would improve payment accuracy, the letter said. But while the AHA “supports the broad direction of RCS-1," it encouraged CMS to address several key elements that require further development. The RCS-1 model is far more complex than the RUG model, the letter said, and it thus provides a broader scope of skilled nursing services. To address this, the AHA said, it would be helpful if CMS could discuss how beneficiaries' access to care would be protected under the various services SNFs provide, including nursing, therapy services, nontherapy ancillary services, and other services. The letter also expressed concern that the rule does not explain how “change of status" assessments will impact payment classification as the needs of a patient evolve.