Indiana Medicaid Presses to Transition to RUGs IV 66 Grouper Effective July 1, 2016

The Indiana Office of Medicaid Policy and Planning (OMPP) recently announced to the IHCA that it plans to transition to the RUGs IV 66 grouper model for the July 1, 2016 rate effective date.  In addition, OMPP indicated that it would also institute a policy that would re-RUG patients at the end of therapy by dropping the therapy weights according to the end date recorded on the MDS and re-grouping the patient into the appropriate clinical category based on the submitted MDS.  OMPP estimates that the transition to RUGs IV 66 grouper will result in an reduction of reimbursement of $13.2 M and that a re-RUG’ing at end of therapy will increase reimbursement by $15.6M, for a net increase to statewide reimbursement of $2.4 M.  The State is not proposing any reductions to offset the $2.4M increase in overall reimbursement.  OMPP distributed a document  concerning the proposal, including the  RUGs IV 48 grouper model that they have rejected.  OMPP also distributed a fiscal impact model that can be accessed here.

IHCA has been advocating for the RUGs IV 48 grouper model as it has a less severe impact on members and is more appropriate for our reimbursement system that is case mix adjusted.  As with any reimbursement change there are winners and losers.  The primary reason for OMPP’s decision on the 66 grouper was, essentially, care practices have changed since the 34 grouper was created resulting in current over-reimbursement to nursing facilities for patients that don’t require the same level of nursing care, but because the grouper bands are so wide under the current 34 grouper a higher CMI was assigned creating higher reimbursement.   OMPP indicated this issue with wide grouper bands resulting in excess reimbursement is also present in the RUGs IV 48 grouper.

IHCA is considering all options to attempt achieving the RUGs IV 48 grouper model.  While we believe the 66 grouper decision is likely final, IHCA is engaged in ongoing discussions with the OMPP and the Administration about this issue.  We will keep IHCA members informed on the final outcome as soon as possible.