Creating a MEDPAR (Medicare provider analysis and review) analog to the RUG-III (Resource Utilization Groups, Version III) classification system.

As Medicare payments for post-acute institutional care continue to rise sharply, policy interest in the clinical characteristics of beneficiaries admitted to nursing homes and their variation across facilities has stimulated research into case mix. Measures of Medicare skilled nursing facility (SNF) case mix are important in relating payments to the care requirements of residents. The Resource Utilization Groups, Version III (RUG-III) classification system uses a new minimum data set that is not currently available nationally. In preparation for a multi-State demonstration, we needed to simulate at least the first-level splits at the national, State, and facility level. Therefore, we developed proxy measures using comparable data available on the National Claims History files. The analog is an easily programmed measure of the acuity/severity of beneficiaries' conditions across a Medicare Part A SNF stay in 75 percent of the SNF providers. This can be a method for estimating changes in case mix over the years, and differences across provider types and States.