AHIMA Comments on Proposed Changes to the Medicare Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) for fiscal year 2006

July 8, 2005

Mark McClellan, MD, PhD
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-1282-P
PO Box 8016
Baltimore, Maryland 21244-8016

Dear Dr. McClellan:

The purpose of this letter is to comment on the Centers for Medicare & Medicaid Services' (CMS') proposed changes to the Medicare Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) for fiscal year 2006, as published in the May 19, 2005 Federal Register. The American Health Information Management Association (AHIMA) is a professional association representing 50,000 educated health information management (HIM) professionals who work throughout the healthcare industry. HIM professionals serve the healthcare industry and the public by managing, analyzing, and utilizing data and records vital for patient care and making it accessible to healthcare providers and appropriate researchers when it is needed most.

Managing the records for health care has been a role for HIM professionals for over seventy-five years, and AHIMA members are now working diligently to ensure that we soon have standard, interoperable electronic health records to improve the quality and safety of patient care. Currently we are working on a variety of projects with the Health Level Seven (HL7), the Office of the Coordinator for Health Information Technology (ONCHIT), and other groups to ensure that in the future electronic health records (EHRs) will provide the same complete and accurate record, only in an environment that will permit better health and safety than in the paper environment.

II-B: Case-Mix Adjustment and Other Clinical Issues

II-B-2b: Constructing the New RUG-III Groups (70FR29077)

AHIMA supports the creation of nine RUG-III groups to capture individuals who qualify for both the Extensive Services category and the Rehabilitation Therapy category. We recommend that additional detail be added in Table 3a (page 29077) to describe the composition of the new RUG-III groups, similar to the 44-RUGs group documentation found on page 26262 of the May 12, 1998 Interim Final Rule.

II-B-3: Proposed Refinements to the Case-Mix Classification System (70FR29078)

We are concerned that elimination of the 14-day "look-back" period will adversely affect clinical data accuracy and have a negative impact on the clinical proxy used for SNF Medicare presumption of coverage. It is important to note that the data analysis that led to a proposal to create the new RUG-III groups utilized claims data based on the "look-back" and grace day provisions being in effect. Currently, MDS Section P1a captures treatments and programs of significant clinical impact irrespective of site of service, such as chemotherapy, dialysis, transfusions, etc. The clinical relevance of the resident receiving these services within the prior 14 days is not diminished by the service occurring prior to admission, and should continue to be reported. In the July 30, 1999 SNF PPS Final Rule, it stated that the occurrence of one of the specified events during the "look-back" period, when taken in combination with the characteristic tendency for a SNF resident's condition to be at its most unstable and intensive state at the outset of the SNF stay, should make this a reliable indicator of the need for skilled care upon SNF admission in virtually all instances.

On page 29080 of the proposed rule, it states that the use of the look-back provision has caused a significant number of residents to classify to the Extensive Services category based solely on services (such as intravenous medications) that were furnished exclusively during the period before SNF admission. Presumably, a portion of this significant number of residents only received skilled benefits because of the "presumption of coverage" provisions. The July 30, 1999 SNF PPS Final Rule indicated that residents classified as skilled as a result of the look-back provision may need the types of services formerly listed in ยง 409.33(a) of the regulations. However, often facilities are reluctant to use subjective services, such as assessment and care planning, to classify residents as needing skilled care because of the increased risk of denial by the fiscal intermediary.

AHIMA opposes changes to the grace day periods, as we feel the rationale for their use, as described in the RAI Manual and in the July 30, 1999 SNF PPS Final Rule, is still valid. We also oppose the elimination of the projection of anticipated therapy services. A change in this policy could potentially result in inappropriate RUG-III classification of beneficiaries receiving therapy services. The quality of patient care could be adversely impacted, as therapists may decide to start therapy too soon or delay the start of therapy because of reimbursement implications. Elimination of provisions for projecting anticipated therapy removes the ability to accurately reflect the intensity of Rehabilitation service delivery for short stay residents. For example, a resident in a SNF for four days, who receives therapy on all days, would not group appropriately to the Rehabilitation category without the provision for projecting service delivery.

We fully support CMS' efforts to promote and improve the continuity and quality of healthcare through the use of interoperable electronic health record (EHR) systems and standardized data. Moving from paper-based records and systems to electronic health records and systems offers significant benefits to the healthcare consumer, provider and payer such as reduction in medical errors, improved use of resources, accelerated diffusion of knowledge, and increased consumer involvement in their care. Long term care providers, like the rest of the health care community, face significant challenges in moving towards an EHR. In addition to the daunting challenges posed by technical obstacles, fiscal resources and staff capacity to implement and maintain fully electronic health records are huge hurdles in an industry known for reimbursement and staffing issues. In addition to using electronic information exchange to improve communication between hospitals and SNFs, we believe it is also important to include physician practices in this process. Federal incentives are needed to accelerate the adoption of interoperable electronic health records and achieve the goals of improved quality, safety, and coordination among healthcare providers.

II-B-4: Implementation Issues (70FR29081) AHIMA is concerned that January 1, 2006 may be too soon to base payments entirely on the proposed new RUG-53 classification system. Software vendors may not be able to complete system modifications in this time frame. We also recommend that CMS issue guidance on claim submission processes during the transition period. Clarification is necessary regarding issues such as:

  1. Is the Health Insurance Prospective Payment System (HIPPS) code reported on the Medicare claim to reflect the RUG classification based on date of service versus MDS assessment reference date (A3a) or MDS completion date (R2b) (i.e. claims for dates of service through December 2005 reflect the 44-group RUG classification and claims for dates of service on or after January 1, 2005 reflect the 53-group RUG classification)?
  2. For MDS assessments that are used to cover skilled services days in both December 2005 and January 2006 (e.g. a Medicare 30-day assessment covering services dates of December 15, 2005 through January 13, 2006):
    1. Which date triggers the reporting of a 44-group or 53-group RUG classification at MDS item T3a - the service date, MDS assessment reference date (A3a), or MDS completion date (R2b)?
    2. What documentation trails are facilities to maintain regarding the 44-group RUG assignment and 53-group RUG assignment when an MDS is used to cover services in both December and January?
  3. Will the federal MDS edits calculate and accept submission of 44-group RUG classification on MDS correction assessments submitted through April 2006 (covering the 120 day maximum for submitting corrected SNF claims)?

II-B-5: Assessment Timeframes (70FR29082)

The discussion of OMRA assessments on page 29082 is very confusing for readers who are not familiar with the CMS history of equating a Medicare assessment "due date" with the MDS assessment reference date found at item A3a. Language found in the May 12, 1998 Interim Final Rule (page 26266) and the July 30, 1999 Final Rule (page 41656) clearly discuss OMRA assessments in terms of the "assessment reference date". We recommend that the language in the current proposed rule be reconciled with the language in these prior rule issuances and the current RAI Manual.

II-B-6 SNF Certifications and Recertifications Performed by Nurse Practitioners and Clinical Nurse Specialists (70FR29082)

We appreciate CMS' efforts to define "direct" and "indirect" employment relationships. However, the definition of an "indirect" employment relationship is still somewhat confusing and needs further clarification.

VI: Qualifying Three-Day Inpatient Hospital Stay Requirement (70FR29098)

AHIMA fully supports the inclusion of the time spent in observation status toward meeting the SNF benefit's qualifying three-day hospital stay requirement. Analysis of 1997 - 2001 SNF and hospital claims data by the Office of the Inspector General identified 60,047 SNF claims that were potentially reimbursed erroneously due to lack of a qualifying three-day hospital inpatient stay. While this number is significant, it would obviously increase substantially if it included the number of beneficiaries who did not receive SNF Part A benefits due to appropriate recognition of technical ineligibility by SNF providers.

Observation vs. inpatient status is a business decision related to payment policy. A beneficiary's eligibility for SNF benefits should not be jeopardized because his status was classified as observation rather than as inpatient. Patients classified as observation occupy an inpatient bed, and the level and type of services provided are identical to that which would have been provided if he had been admitted as an inpatient.

The three-day inpatient hospital stay requirement was established long before observation status existed, and it seems reasonable to assume that this requirement was intended to include patients who remained hospitalized overnight for a total of three days. At the time Congress enacted this provision, only inpatients stayed in the hospital overnight.

On occasion, a hospital may keep a patient in observation status for three days rather than admitting the patient as an inpatient. This means the patient would have had a three-day hospital stay, but it would not be considered an inpatient stay. We recommend that any three-day hospital stay, regardless of whether it is comprised of inpatient services only, a combination of observation and inpatient services, or observation services only, should be considered as meeting the qualifying hospital stay requirement.


We appreciate the opportunity to comment on the proposed modifications to the Medicare SNF PPS program for fiscal year 2006. If AHIMA can provide any further information, or if there are any questions or concerns with regard to this letter and its recommendations, please contact either Sue Bowman, RHIA, CCS, AHIMA's director of coding policy and compliance at (312) 233-1115 or sue.bowman@ahima.org, or myself at (202) 659-9440 or dan.rode@ahima.org.


Dan Rode, MBA, FHFMA
Vice President, Policy and Government Relations

cc: Sue Bowman, RHIA, CCS