Medicare Skilled Nursing Facilities Standards

Resource Utilization Group (RUG) Classifications used in Skilled Nursing

Skilled Nursing PDPM Standards

Skilled Nursing Reimbursement and Resource Utilization Groups

Skilled Nursing Electronic Health Record Forensic Review and Implementation Review

Skilled Nursing Minimum Data Set (MDS) Version 3.0

Skilled Nursing Quality Metrics Reporting and Interpretation


 1443.5. Standards of Competent Performance.

A registered nurse shall be considered to be competent when he/she consistently demonstrates the ability to transfer scientific knowledge from social, biological and physical sciences in applying the nursing process, as follows:

(1) Formulates a nursing diagnosis through observation of the client’s physical condition and behavior, and through interpretation of information obtained from the client and others, including the health team.

(2) Formulates a care plan, in collaboration with the client, which ensures that direct and indirect nursing care services provide for the client’s safety, comfort, hygiene, and protection, and for disease prevention and restorative measures.

(3) Performs skills essential to the kind of nursing action to be taken, explains the health treatment to the client and family and teaches the client and family how to care for the client’s health needs.

(4) Delegates tasks to subordinates based on the legal scopes of practice of the subordinates and on the preparation and capability needed in the tasks to be delegated, and effectively supervises nursing care being given by subordinates.

(5) Evaluates the effectiveness of the care plan through observation of the client’s physical condition and behavior, signs and symptoms of illness, and reactions to treatment and through communication with the client and health team members, and modifies the plan as needed.

(6) Acts as the client’s advocate, as circumstances require, by initiating action to improve health care or to change decisions or activities which are against the interests or wishes of the client, and by giving the client the opportunity to make informed decisions about health care before it is provided.

California Authority cited: Section 2715, Business and Professions Code. Reference: Sections 2725 and 2761, Business and Professions Code.

Using the MDS in the Medicare Prospective Payment System

A key component of the Medicare SNF PPS is the case mix reimbursement methodology used to determine resident care needs. A number of nursing home case mix systems have been developed over the last 20 years. Since the early 1990s, however, the most widely adopted approach to case mix has been the Resource Utilization Groups (RUGs). This classification system uses information from the MDS assessment to classify SNF residents into a series of groups representing the residents’ relative direct care resource requirements.

In 2005, the Centers for Medicare & Medicaid Services (CMS) initiated a national nursing home staff time measurement (STM) study, the Staff Time and Resource Intensity Verification (STRIVE) Project. The STRIVE project represents the first nationwide time study for nursing homes in the United States to be conducted since 1997, and the data collected has been used to update payment systems for Medicare SNFs and Medicaid nursing facilities (NFs). Based on this analysis, CMS has developed the RUG-IV classification system that incorporates the MDS 3.0 items.

Over half of the State Medicaid programs also use the MDS for their case mix payment systems. The RUG-IV system replaces the RUG-III for Medicare in October 2010. However, State Medicaid agencies have the option to continue to use the RUG-III classification systems or adopt the RUG-IV system. CMS also provides the States alternative RUG-IV classification systems with 66, 57, or 48 groups with varying numbers of Rehabilitation groups (similar to the RUG-III 53, 44, and 34 groups). States have the option of selecting the system (RUG-III or RUG-IV) with the number of Rehabilitation groups that better suits their Medicaid long-term care population. State Medicaid programs always have the option to develop nursing home reimbursement systems that meet their specific program goals. The decision to implement a RUG-IV classification system for Medicaid is a State decision. Please contact your State Medicaid agency if you have questions about your State Medicaid reimbursement system.

The MDS assessment data is used to calculate the RUG-IV classification necessary for payment. The MDS contains extensive information on the resident’s nursing needs, ADL impairments, cognitive status, behavioral problems, and medical diagnoses. This information is used to define RUG-IV groups that form a hierarchy from the greatest to the least resources used. Residents with more specialized nursing requirements, licensed therapies, greater ADL dependency, or other conditions will be assigned to higher groups in the RUG-IV hierarchy. Providing care to these residents is more costly and is reimbursed at a higher level.

Resource Utilization Groups Version IV (RUG-IV)

The RUG-IV classification system has eight major classification categories: Rehabilitation Plus Extensive Services, Rehabilitation, Extensive Services, Special Care High, Special Care Low, Clinically Complex, Behavioral Symptoms and Cognitive Performance Problems, and Reduced Physical Function (see Table 1). The categories, except for Extensive Services, are further divided by the intensity of the resident’s ADL needs. The Special Care High, Special Care Low, and Clinically Complex categories are also divided by the presence of depression. Finally, the Behavioral Symptoms and Cognitive Performance Problems and the Reduced Physical Function categories are divided by the provision of restorative nursing services.

CMS created a calculation worksheet was developed in order to provide clinical staff with a better understanding of how the RUG-IV classification system works. The worksheet translates the standard software code into plain language to assist staff in understanding the logic behind the classification system.

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