Medicaid recipients can choose to receive long-term care services in a variety of settings, including at home, in adult day centers, adult family homes, assisted living facilities, or skilled nursing facilities (SNFs).  Skilled nursing facilities are regulated by the Department of Social and Health Services (DSHS) and provide a range of services such as 24-hour nursing care, personal care, therapy, nutrition management, and more for residents requiring significant medical and personal attention.

The Medicaid payment rates for SNFs in Washington are determined by the DSHS on an individual facility basis, reflecting the care needs of the facility's residents.  The methodology for calculating these rates includes components for direct care, indirect care, capital costs, and a quality incentive.  Notably, the direct care component, which covers nursing and related services, is updated biannually to ensure it aligns with the care requirements of residents with more complex health conditions.

A key factor in setting these payment rates is the case mix system, which assesses the care intensity needed by each resident.  This system categorizes residents based on their health conditions and care requirements, influencing the adjustment of direct care payment rates for facilities to match the diversity in resident needs.

Until recently, the Resource Utilization Group (RUG) scores from the Centers for Medicare and Medicaid Services (CMS) were used by the State of Washington and the DSHS for determining nursing facility rates.  These scores were based on the amount of therapy and services provided to residents.

In 2019 the CMS began transitioning to the Patient-Driven Payment Model (PDPM), a different approach that considers the individual characteristics and needs of residents rather than the volume of services they receive.  This model was fully implemented by September 30, 2023, marking a shift from RUG scores to the PDPM for calculating nursing facility payments.  The transition reflects a change in methodology with the intention of aligning payment more closely with resident needs, although it represents a significant adjustment in how care requirements are assessed and funded.

Starting July 1, 2024, the DSHS must implement a new case mix method informed by CMS data to adjust facility rates.  A new case mix adjustment method will be created upon discontinuation of Resource Utilization Group scores, using the patient-driven payment model.  Preliminary and final reports are due by December 1, 2024, and December 1, 2026, respectively, to outline the implementation plan and assess impact.  Case weights will be based on finalized case mix weights published by the CMS.

(In support) It is important to implement the Patient-Driven Payment Model (PDPM) this year.  The state needs to shift its policy towards reimbursing based on the severity of patients' conditions and aligning with updates from the federal government.  There is a need for flexibility in the statute to set nursing facility rates by July 1, 2024.  This would require seeking authority again next year to move away from outdated Resource Utilization Group (RUG) data.  The implications of the striking amendment on future budgets are unknown.

(Opposed) None.

Peter Graham, Department of Social and Health Services Aging and Long-Term Support Administration; and Jeff Gombosky, Washington Health Care Association.