Article: Assessing the RUG-III resident classification system for skilled nursing facilities.

INTRODUCTION

As mandated by the Balanced Budget Act of 1997, the Health Care Financing Administration on July 1, 1998 began phasing in a prospective payment system (PPS) for Medicare-covered stays in SNFs. The prospective payment is meant to cover nearly all costs of providing care, including routine service, ancillary and capital-related costs, with only a few exceptions such as physician services. The Balanced Budget Act of 1997 requires that payments be adjusted for case mix using a "resident classification system, established by the Secretary [of Health and Human Services], that accounts for the relative resource utilization of different patient types" (U.S. ...

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