Medicaid Resource Utilization Group (RUG) rates are a method used by some states to determine reimbursement for nursing facility services. The RUG system is based on a patient's care needs, as assessed through the Minimum Data Set (MDS), and assigns them to a specific group, which then determines the payment rate.
How RUG Rates Work:
MDS Assessment:
Nursing facilities use the MDS to collect data on a resident's condition, including their functional abilities, medical needs, and need for various therapies.
RUG Assignment:
Based on the MDS data, a RUG score is assigned, classifying the resident into a specific RUG group.
Payment Determination: The RUG group dictates the daily payment rate for the resident's care, including nursing services and therapies.
RUG-IV:
The current version of the RUG system used by many states is RUG-IV.
Transition to Patient-Driven Payment Model (PDPM):
- Many states are transitioning from RUG-based payment systems to the PDPM.
- North Carolina's Transition: While North Carolina has not yet finalized a date for its transition from RUGs to PDPM, the deadline is no later than October 1, 2025, according to NC Medicaid.
- Optional State Assessment (OSA): States transitioning to PDPM may need to use an OSA through September 30, 2025, to collect data for their RUG-based systems.
Factors Affecting RUG Rates:
Resident Acuity:
Higher RUG scores (indicating more complex care needs) result in higher payment rates.
State Medicaid Program:
Each state's Medicaid program sets its own RUG rates, which can vary based on factors like cost of living and staffing levels.
Facility Type:
Some facilities serving a higher proportion of Medicaid-covered residents may have lower rates but also lower costs