Changes in the Minimum Data Set (MDS) are scheduled for final implementation on October first of this year. These changes are not new or unanticipated as they are based on the 2019 CMS adoption of the Patient Driven Payment Model (PDPM) that was intended for full implementation in October of 2020 but was delayed by the COVID-19 pandemic. None the less, most states and providers are still ill-prepared for this substantial change.

Coming Changes

Section G

PDPM is now familiar to skilled nursing facilities, as some changes were implemented earlier, including a much-reduced assessment workload, which eliminated the MDS 14-day, 30-day, 60-day, 90-day, and OMRA assessments in favor of the five-day. With this final implementation, ten sections of the MDS have changes with Section G completely eliminated. While portions of Section G have been added to section GG, there is no question that the change in the data collected and the structure of that collection has a larger impact. Specifically, Section G provides the data needed to calculate portions of the quality measures and the formulation of aspects of the five-star quality ratings. Section G also triggers several of the care area assessments, or CAAs, required for comprehensive care plans.

Most importantly, Section G provides the data that drives the RUGS III and RUGS IV acuity measurements, which are used in 36 out of 50 states to determine state level Medicaid payment rates. With the decision of CMS not to support the RUGS system after October 1, states that rely on this system are forced to determine how they will calculate Medicaid payment rates for nursing home care going forward.

State Involvement

Of the affected states, Wisconsin and Illinois have completed their transitions to PDPM as the basis for payments; the rest of the states are working through their solutions. North Carolina recently announced that they will usher in PDPM over a two-year period. Meanwhile, CMS has released an Optional State Assessment Item Set, an add-on assessment which provides the data needed to continue the RUGS process while states, like North Carolina, and providers make their changes. During the transition, all but 14 states intend to continue collecting PDPM data. One remains undecided. For those states, for which transitions will be pending on October 1, 2023, the use of the new Optional State Assessment Item Set will be required to fill the data gap, allowing for continued access to the important data.

Without exception, the change is a serious headache at the state and provider levels. Despite the simplified version of the MDS assessment requirements, change is hard. Many will struggle to avoid it.

Getting Prepared

As you prepare for the coming changes, Health Dimensions Group recommends you do the following:

  • Talk with your state’s Medicaid office or your state’s health care association to learn what is in the works. If your state is planning to transition to PDPM, it is important to anticipate at least temporary use of the OSAs. If not, you may have even more work to do to determine what system will be used.
  • Talk with your Electronic Medical Record (EMR) provider to find out what their plan is. How do they intend to include the OSA? How will CNAs record resident care activities of daily living (ADL) data? Will data move smoothly between the assessment and the MDS, or will providers need to incorporate manual measures?
  • Decisions will need to be made about who will do what and on what timetable:
    • There are form changes, policy changes, changes in care planning, decisions about how ADLs living will be collected and recorded, and lots of training to be completed.
    • What system will be used to monitor compliance with ADL collection requirements?
    • Will your current scrubber assist in determining errors and potential areas to review prior to submission? If you do not know the answer to this, you will need to speak with them.
    • How will you check the OSA and five-day assessments? Are care plans complete and accurate?
    • Who will be responsible for double-checking, and at what points?
    • Who will build the training plan? Who will complete the training? On what schedule?
    • Can you create a trial period to assure all systems are in place ahead of October 1?
  • For facilities in states which have converted to PDPM, Wisconsin provides a good working example. You will want to review the standard in detail, paying close attention to your most recent cost report to ensure it is complete and accurate. It should be of interest to see the areas in which incentives and opportunities are included. This will help us target our training to be certain to note those important details.
    • Providers will receive a rate notification letter from their Medicaid auditor, which will include adjustments to their most recent cost report and explanations. Thoroughly review this notice. You have a 30-day rate review period to approve these rates and request changes.
    • Review the “Direct Care Allowance,” which is based on PDPM using two separate case mix indices: the All Resident Nursing CMI, based on averaged resident acuity of all residents during the cost reporting period; and the PDPM Nursing Payment Group (NPG), which considers each individual resident who received care during the rate year.
    • Consider eligibility for provider incentives, including the Exceptional Medicaid Utilization Incentive (EMUI), the Private Room Incentive (PRI), the Innovative Area Incentive (IAI), the Bariatric Equipment Incentive, and the Behavioral/Cognitive Impairment Incentive (Beh/CI). These are per patient add-ons to the base rates of the Direct Care Allowance.
    • Consider any patients who are ventilator-dependent or have traumatic brain injury for the all-encompassing rate specific to that diagnosis
      • At this time Wisconsin has set the ventilator dependent rate at $726.00 and the rate at $947.00 in lieu of the normal daily rate.
    • Record patient days of isolation rates; record all patient COVID-19 vaccine administrations. These, too, will be added to base rates.
    • Note add-ons for Specialized Psychiatric Rehabilitation Series (SPRS), medical transportation, and out-of-state nursing facilities.
    • Note any relocation services provided, which were at the direction of the department.
    • Note services provided to residents during a temporary evacuation and for all bed-hold days.
    • Of course, there are caveats to each—adjustments are made based on occupancy rates, for example.

The Takeaways

Complicated? Yes. But the total system seems to confirm that this basis for payment will be an accurate reflection of the care needs and acuity of the population each facility serves while incentivizing facilities to take on more complex patients.

Keep in mind that Wisconsin is one example, and each state will make their own determination about specifics. We know that South Dakota is prepared to transition prior to October 1. Other states, like Pennsylvania and North Carolina, have announced their intention but without a firm schedule. Multiple states—Massachusetts, Vermont, New Hampshire, Maryland, Washington D.C., Connecticut, and Rhode Island—use the RUGS IV 48 classification system with a hierarchical assignment of groups. Again, conversion to PDPM with the RUGS IV 66 grouper will simplify the work for providers and states but is not immediately scheduled to occur.

Needless to say, there is much to be done. This is a good time to be fully informed about current status and to stay alert to the media, your state associations, and your state survey agency for changes as they occur.

Helping Your Team Succeed

At Health Dimensions Group (HDG), our senior services policy experts are ready to help you adjust to MDS challenges. For more information on our services and what we can do for your organization, please contact us at or 763.537.5700.