RUGs and "Medi-Cal" systems for classifying nursing home patients

Medicare and most state Medicaid programs currently use indirect case-mix measures to determine reimbursement for nursing home care. In the future, however, they probably will incorporate more direct case-mix measures into their payment systems. Care must be exercised in designing a case-based prospective payment system to ensure that its financial incentives motivate providers to expedite recovery, prevent deterioration, and admit heavy-care patients. For example, although use of a services-rendered approach helps guarantee that care will be provided when needed, it also offers providers an incentive to furnish a service regardless of whether it is in the patient's best interest. Consideration must be given to the frequency with which patients are reassessed. The implications of the timing of reassessments for quality of care also must be studied. Ideally, quality would be measured on an outcome basis--that is, payment would depend on whether targeted goals for individual patients are reached--rather than on structural or process measures alone. Two recent classification systems--Resource Utilization Groups and Medi-Cal groups--may serve as models for case-based prospective payment systems. Each method classifies patients into distinct, meaningful categories based on activities of daily living and services received.