Skilled nursing providers looking to capture the best available pay rates must act quickly as more states finalize their transitions to case-mix adjusted payment systems, experts with Zimmet Healthcare Services Group warn.
Some 35 states have now switched systems or announced a coming change ahead of an October 2025 deadline. That’s when the federal government will discontinue use of the Minimum Data Set’s Optional State Assessment, a tool many states have continued to use to determine a facility’s reimbursement rate.
Some providers have taken to calling the current reimbursement era “The Great Confusion.”
“Since last October, we’ve had a ton of transition on the Medicaid side,” said Michael Sciacca, chief operating officer for Zimmet, at its annual reimbursement conference in Connecticut last week. “Medicaid is obviously one of our most important payers, and there’s a lot going in in a lot of different states.”
Learning how to navigate those changes, and quickly, will be critical to benefitting from new metrics quickly, added Vincent Fedele, partner and director of analytics at Zimmet. He noted that 35 states are now operating or committed to operating with a case-mix index system similar to Medicare’s Patient Driven Payment Model. Another four states are adopting an alternative or hybrid system, while final plans are unknown for the remaining 11.
Still, early adopters are offering some lessons for states yet-to-transition and providers learning new ropes after many, many years working in a therapy-dependent RUGS system at the state level. While the change may ultimately be good news, Fedele warned some providers might not realize the new opportunities will likely be short-lived without additional state funding to match new priorities.
“Whenever there’s a change on the Medicaid side, or the Medicare side for that matter, there’s a misconception that the pizza pie is getting larger, that there’s an opportunity to capitalize on,” he told the 1,300 hundred attendees. “The reality is … the pie doesn’t get any larger at all. What happens is, the size of everyone’s slices change.”
‘Jump all over’ transition for early wins
The early redistribution will serve well those who “jump all over” the payment system transition and work to understand the nuances and teach those to their MDS teams. Those who fail to grasp the key details or report all of the data that feeds into payment determinations, however, will take longer to reap rewards.
And once they do, and the average case-mix floats too high, states will work to reset overall payments be recalibrating the metrics or adjusting their budgets — just like providers saw with the Medicare’s clawback of unexpected PDPM spending.
Both before and after those resets occur, providers must work to make sure they’re getting all the Medicaid reimbursement to which they’re entitled, Sciacca said.
He described three critical functionalities as changovers occur: understanding how the state case-mix index works and what it prioritizes; equipping MDS teams with tools to identify and capture appropriate codes and monitoring their success; and building or improving clinical proficiencies.
Clinical prowess, state details matter most
Given that most states are developing case-mix systems that rely largely on a nursing category that mirrors the one in PDPM, that clinical emphasis will make even more sense in years to come, Sciacca added.
“It’s essentially doing more in-house, those IVs we’re talking about in-house, the respiratory therapy, the clinical programs that are deemed reimbursement sensitive under a PDPM system as the things we think are going to become more prevalent as more statutes transition,” he said. “If you’re not thinking about it now, you probably should.”
Still, he cautioned, details are even more critical at the state level, where officials may have more stringent documentation guidance or other requirements to use codes for specific diagnosis, such as isolation.
And while some providers may be keen to judge their performance against how well they did under RUGS, Fedele and Sciacca encouraged them to compare themselves against their peers working in the same state.
Using proprietary tools, Zimmet has found an average 60-point divide between the top fourth of performers in case-mix systems and those in the bottom fourth. In many states, that equates to a $60 per day difference, per patient, Fidele said.
