Illinois Medicaid is scheduled to move to a new payment system

Joan McCarthy

Illinois Medicaid is scheduled to move to a new payment system in January 2014 or before. The new methodology uses a 48 RUG grouper system. The 48 Medicaid RUG categories fall into seven major groupings.

  1. Rehabilitation: This is a new category for long term care that requires a minimum of skilled therapy days and minutes with the option of also providing Nursing Restorative Programs with the skilled therapy.
  2. Extensive Services: Follows the 3.0 definition and includes Tracheostomy Care, Ventilator or Respiratory Care or Infection Isolation.
  3. Special Care High: Also follows the 3.0 definition and includes Comatose, Diabetes, Quadriplegia, COPD, Fever, Parenteral/IV or Respiratory therapy.
  4. Special Care Low: Follows the 3.0 definition and includes other diagnoses, skin conditions, Feeding Tube, Radiation or Dialysis.
  5. Clinically Complex: Follows the 3.0 definitions and here is also where the IV medications are found.
  6. Behavioral Symptoms and Cognitive Performance Problems: Like some of the other categories this category has end splits for ADL scores, Depression and Nursing Restorative Services.
  7. Physical Function: This category also has end splits of ADLs scores, Depression and there is also the end split of Nursing Restorative Services.

Within each group the assignment of a RUG category is based on activities of daily living (ADLs) associated with the patient (45 of the 48 groups’ use the ADL split) and the documented presence of depression (for 3 of the groups). ADL scores are based only on the four late loss ADLs; bed mobility, transfers, eating and toilet use. The Illinois method uses index maximization. Each RUG category has a case mix number that has a specific “weight” assigned to it. Payment will be based on case mix totals for each resident in the facility for a particular period of time. The coding of the various MDS items follows the criteria in the RAI Manual Version 3.0. Restorative Programs will again play an important role in determining the Medicaid rate. These programs also follow the RAI Manual definitions. An added RUG category is “Rehabilitation” that includes the services of licensed therapists. Facilities should start now to understand these changes:

  • Review the ADL scoring and Restorative Programming definitions.
  • Monitor your Medicaid population to ensure proper coding on the MDSs including diagnosis codes and other clinical information.
  • Determine possibilities for skilled therapy provision (as defined in the new payment methodology).

Feel free to contact Joan McCarthy, our reimbursement and operations specialist, for help and advice with this change.


  • Jim Farrell says:

    Hi Joan, thanks for alerting us! It notes in section 5 – “Clinically Complex” – that IV Drugs are included. Do you know what changes we can expect specific to physician administered drugs?

  • Lisa Blanton says:

    I would love to know that answer as well.

  • […] to implement the Medicare-Medicaid Alignment Demonstration to serve individuals eligible for both Medicare and Medicaid. This Federal/State partnership includes contracting with “Demonstration […]

    • Joan Mccarthy says:

      Many of the payment details are unknown at this time owing primarily to the change to Managed Care. Basically, It appears that the Managed Care entities will be responsible for all coverage including drugs. If you would like to discuss this further please feel free to email me directly at

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