Chances are that NO ONE has ever read Hamlet’s famous soliloquy by Shakespeare, “To be or not to be…”  and thought…hmmm… this reminds me of Medicare, CMS and the potential new SNF reimbursement system RCS-1. {Right?}

In all honesty, I have not thought about Hamlet since 9th grade English. But what I remember {from the Cliff Notes} was that Hamlet was contemplating whether it was more noble to suffer life’s troubles or escape by ending his life. Heavy stuff!!  This made me wonder….is CMS thinking the same thing about PPS these days? Are they thinking they can end the troubles that RUG-IV brought with it by killing it off? Maybe.

Rehab companies and those SNF’s that have reaped the benefits of the PPS and Ultra RUG may be hoping “not to be.” However, even though most therapists don’t yet know the ins and outs of what RCS-1 will be, they are ready to take a chance on “to be.”

Therapists in the SNF setting report their clinical judgement is steamrolled over by aggressive reimbursement targets for extending length of stay, questioning therapist recommended discharge dates and having someone other than the primary therapist determine daily treatment minutes to meet financial targets and not clinical needs. Therapists in some settings feel they have become minute robots, providing the # of minutes assigned to them for each resident on their daily schedule, minutes that allow for the achievements of RUG targets that are either exact or pretty close to the RUG minimum {because we wouldn’t want to waste minutes…uggg}. See our article on why “exact RUG minutes are a no-no.”

What is RCS-1?

RCS-1 is a new payment model that sets daily Medicare Part A payment rates on factors other than therapy days and minutes. RCS stands for Resident Classification System, and as the name implies, uses resident data to classify a resident into a category for payment. Data from the MDS, starting with the ICD-10 code and category that supports the SNF Part A stay, are used to classify a resident. Additional MDS data including cognition, function, swallowing disorders and other clinical diagnoses also contribute to classifications. Unlike the RUG-IV classification where each resident is only classified into 1 RUG group based on the MDS, RCS-1 breaks apart therapy and nursing to allow for a separate classification for each.

Nursing is finally “free” from therapy’s grip. With RUG-IV, Rehab RUG’s often trumped Nursing RUG’s. RCS-1 will use the same RUG-IV set up for nursing, minus the Rehab RUG’s. The 66 total RUGs will dwindle to 43.

PT and OT share a category and both function and cognition (from the MDS answers) determine the category, case mix and payment rate. After 14 days, the daily rate for the PT/OT category decreases by 1% every 3 days for the remainder of the 100 days.

Speech is in a category by itself and factors including swallowing disorders, mechanically altered diets, speech co-morbidities and cognition (all from MDS answers) determine the category, case mix and payment rate.

Now remember….minutes don’t matter. In fact, these PT/OT and Speech categories/case-mix is not even impacted by the presence or absence of an active therapy program. Each resident will fall into a PT/OT and SLP case mix group regardless of therapy services. Yes….facilities are paid a daily rate for therapy services even if therapy is not active. If therapy is active, the payment rate does not change with the amount of time spent with the resident. Why? CMS expects the SNF to save payment for when therapy services are necessary.

There is also a case mix category called “Non-Therapy Ancillary” that will use MDS questions from Section I, K, M and O to determine a case mix score. This payment is tripled for the first 3 days of the stay to cover any costs upfront.

In addition to the 4 case mix based categories above, there is also a non-case mix payment (flat rate) for “overhead costs” such as room and board, laundry, capital expenses, dietary, etc.

The payment rate for the above 5 categories will be added up to make the total daily per diem payment rate. So with RUG-IV we had 1 category determining daily payment and now with RCS-1, the eggs are spread into 5 baskets.

What Can Therapists Do To Prepare?

Education is always the best bet. If you are not familiar with the MDS, now is the time to get your feet wet. The MDS tool is and will continue to be the central point for outcomes, Part A reimbursement, Quality Measures, Star Ratings, State case mix and more.

Will SNF Therapy change when “minutes won’t matter?” Technically it shouldn’t. If your facility was providing therapy services based on resident’s need and not financial targets, nothing should change, right? If your facility was not one that provided an excess of Rehab Ultra, you may be looking at a significant increase in reimbursement. However, if your facility was one of those with a super high percentage of Ultra High RUG’s, your facility may see a dip in reimbursement with RCS-1.

CMS put out a comparison tool so facilities could look themselves up to see how reimbursement would change under RCS-1 assuming all other variable stayed the same. Find your facility and see what the difference (+ or -) would be if in FY2014 we used RCS-1 vs RUG-IV. You can also see your facility revenue which may be eye opening for you!

RCS-1 Comparison Tool  (It is an excel file that you can download and search for your facility.)


Don’t fall into the doomsday mode out there!  There is plenty of Medicare Part A dollars that will continue to be available in the system. You just need to find a facility or company that is willing to “share.”

Now is the time to find a facility or company that sees you for your value BEYOND your ability to provide minutes! Robot days are over.

So RCS-1 may be a blessing in disguise for therapists in the SNF setting. Therapists who have been around since pre-PPS {cough} remember what autonomy felt like and remember not only being able to make a difference in each residents life, but the life of the SNF as a whole. Back then, therapists were team players that knew the rules…knew what the DOH was looking for…knew what the big picture looked like . PPS and “managed Rehab departments” took therapists autonomy away to some degree and also did not leave time for anything other than minutes and productivity.

RCS-1 – or ANYTHING but the RUG-IV system we have now that incentivizes all the wrong things – may just the “blessing in disguise” that many therapists were hoping for.

On 3/8/18, CMS held an Open Door Forum call that included a brief discussion on RCS-1. On that call, John Kane from CMS cautiously stated that CMS “has not proposed or finalized any policies.” Kane added that “analysis based on comments received was still in progress” and that CMS did not have a timeline.

RCS-1 is not about IF… but rather, WHEN. That…. is the question.

If you have questions about RCS-1 or anything else SNF related, send them to our Just Ask Q&A Forum and our team will help you out.

In Your Corner,


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