Glass Jacobson

Tax Planning for BusinessesMedicare/Medicaid Proposes New (More Complex) RUGs Classification System

August 16, 2010 —

Effective October 1, 2010 Medicare will implement the Resource Utilization Groups (RUGS) IV classification system. The classification system will expand from 53 RUGs codes to 66 RUGs codes. Centers for Medicare and Medicaid Services (CMS) has updated their system to reimburse providers based on RUGs IV. The new classification system will redistribute funds throughout all 66 RUGs codes.

However, this is where the simplicity ends and the confusion begins. It appears that the new classification system may be temporary. CMS has developed a RUGs III Modified Hybrid that may replace RUGs IV. According to CMS the RUGs IV classification system was to be delayed for one year.  If CMS decides to rescind the RUGs IV classification system after October 1, 2010, facilities will have to retroactively adjust all paid claims to accommodate the RUGs III Modified Hybrid system.

Glass Jacobson recommends that facilities maintain a tracking log of proposed payments under the RUGs III Hybrid versus the actual payments under RUGs IV. The tracking log will determine the financial impact for facilities if the modified RUGs III classification system is retroactively approved.

Our Reimbursement and Business Office specialists can help ensure your tracking system is accurate.  You will want a clear picture of the potential financial impact.

Questions?

carolyn.cunningham@glassjacobson.com

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