Case-Mix Adjustment

Nursing Home Example

The Medicare resource utilization group (RUG) models used in nursing homes are examples of case-mix classification systems used for reimbursement. The steps in the development of the RUG models are the same as those that might be used in any healthcare setting. First, a sample of [Page 130]nursing homes (i.e., healthcare providers) is selected for participation in the development of the classification model. The sample must meet minimum quality criteria. Second, researchers conduct a time study in the chosen nursing homes, in which each staff member or caregiver records how they spend all their time over a 1- to 3-day period. The care time provided by each type of staff member (e.g., registered nurse, nurse aide) will eventually be weighted by his or her relative salary level. Third, at roughly the same time, each resident in the selected nursing homes is assessed using a multidimensional assessment tool that evaluates his or her need for care. Fourth, statistical analyses are performed on the data concerning roughly half to two thirds of the residents. These analyses result in the identification of groups of residents who received roughly the same amount of wage-weighted care time and had relatively similar health problems or levels of impairment. The degree to which these groups explain the statistical variation in weighted care time is an important criterion for choosing among potential classification models. In nursing homes, for example, these models usually explained between 50% and 70% of the statistical variance in weighted care time. Fifth, the chosen patient classification model is validated on data from the remaining residents. Sixth, one group of residents is chosen to serve as the index group and given a case-mix index of 1.0. Every other group of residents is assigned a case-mix index that reflects the relative average weighted care time provided to that group compared with the average weighted care time provided to the index group. Seventh, in some instances (RUG-III), case-mix indexes are adjusted, based on clinical judgments. Finally, the case-mix index for the group into which a patient falls can then be used to adjust all, or a portion of, the payment for that provider's services to that patient.

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