Update on Nursing Home Replacement Case Mix
(May 13, 2025) The implementation of a new nursing home Medicaid rate acuity adjustment methodology in NYS may occur as a two-step process, with the final step targeted for the fall of 2026. That was the message that Department of Health (DOH) staff delivered during a meeting between DOH and associations representing nursing homes that also featured updates from Myers and Stauffer (Myers), a national consulting firm retained by the State to assist in developing a new Medicaid Case Mix Index (CMI). The Patient-Driven Payment Model (PDPM) replaced Resource Utilization Groups (RUGs) as the basis for determining acuity for nursing home Medicare Part A reimbursement rates in 2019. This, along with changes to the Minimum Data Set (MDS) assessment instrument, led the Centers for Medicare and Medicaid Services (CMS) to phase out support for RUGs. This, in turn, meant that states that had relied on RUGs for Medicaid rate adjustment needed to develop alternative approaches. NY chose to move to a PDPM-like model and froze CMI where it was as of July 2023 to allow for the development and implementation of the new methodology.
Data analysis, specifically analysis using MDS data, is a critical part of the development of the replacement CMI. While Myers found sufficient data to analyze how the Nursing and Non-therapy Ancillary (NTA) components of PDPM would play out in a Medicaid population, there was not sufficient data to analyze the therapy components. Members may recall that while most states that have shifted to PDPM for Medicaid rely primarily on the Nursing component as the basis for acuity adjustment, the full Medicare PDPM model is comprised of five components (Nursing, Physical Therapy, Occupational Therapy, Speech/Language Pathology, and NTA). Each has its own set of weight adjustments reflecting the resident’s clinical characteristics. It is the lack of therapy-related data that is behind the potential two-step implementation and also leads to a request from DOH that providers ensure to complete three MDS items that are optional on non-Medicare assessments.
DOH will circulate a request that all nursing homes complete the following MDS items for all of their residents, regardless of payer:
- I-0020 Primary medical condition category;
- J-2100 Recent surgery requiring active SNF care; and
- O-0400D Respiratory therapy.
The hope is to have a full statewide set of data beginning with assessments filed on and after June 1, 2025. While we hope that most members are completing the same items on Medicaid assessments as they do on Medicare assessments, please let us know if there are any impediments, such as vendor software configurations, that would make compliance with such a request by June 1st problematic.
Once Myers has sufficient data, they will complete their analysis on the therapy components, which will, presumably, allow the State and any stakeholders involved in the process to make data-informed decisions on incorporating therapy into the Medicaid CMI. If providers include the requested data on the MDS starting in June, the State estimates that these decisions and the second step of implementation (i.e., potentially incorporating therapy into the CMI adjustment) may be completed by the fall of 2026. Bifurcating the process into two parts would allow for a quicker implementation using an interim CMI, one that would rely on just the Nursing or Nursing and NTA components.
While DOH suggested that implementation of an interim CMI based on PDPM Nursing (or Nursing and NTA components) may be possible by 2026, significant work remains. While the briefing, the first such event DOH has hosted since Myers gained access to MDS data, provided some initial direction, a number of key judgments remain outstanding. These include decisions on phase-in and implementation, reconciliation, the fate of current add-ons, MDS dates, specialty rates, base prices, as well as the ultimate adequacy and accuracy of the methodology once applied to rates.
At this point, Myers will continue to develop the interim model. DOH expressed their intent to convene stakeholders in late summer to review that methodology, which will still require CMS approval as well as regulations. All of this suggests that the timelines that DOH has suggested are ambitious. We will continue to provide input to DOH and Myers and will work with the State toward ending the freeze sooner rather than later. Please reach out with comments or questions.
On a related but separate note, nursing home members should be on the look-out for an announcement that 2024 Medicaid cost report software has been posted. We will let members know when that happens as well as the date that the report will be due.
Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841