R.O.I. – What a Leader Needs to Know: Why a MDS Baseline Assessment is so Important
In today’s skilled nursing environment, success depends on more than just delivering great care—it requires accurate data, strategic documentation, and proactive leadership. One of the most powerful tools to achieve all three? A Minimum Data Set (MDS) Baseline Assessment.
This isn’t just a compliance task. It’s a strategic investment with measurable returns across reimbursement, quality, compliance, and clinical outcomes.
Why is the MDS the Foundation of Financial Health?
For the last 10+ years, CMS has implemented numerous data sources and programs to measure outcomes across all sectors of healthcare, including long-term care. This list is large, including the MDS, UB04, PBJ, VBP, QRP, ICD-10, NHSN, QRP, iQIES, 5 Star, and more. These data and reporting programs are now all connected, and leaders can no longer just “wait and see” if these programs are here to stay. All data that long-term care providers collect links to regulatory, clinical, reimbursement, organizational, and financial outcomes. Data accuracy is more important than ever.
As we know, the MDS drives nearly every CMS program that affects your bottom line:
- PDPM (Patient-Driven Payment Model)
- SNF Quality Reporting Program (QRP)
- SNF Value-Based Purchasing (VBP)
- Five-Star Quality Rating System
- State Medicaid Case Mix Reimbursement
- RAC and MAC audits
Even small errors in MDS coding can lead to:
- Underpayment
- Not receiving payment for the level of great care that your facility provides
- Delayed or denied claims
- Survey citations
- Reduced star ratings
- Decreased case mix
- Increased audit risk
- Impact your reputation and community image
- Impact your ability to contract with various payers
- Decrease your ability to partner with organizations or health systems
- Impact your ability to be sustainable and position for strategic growth
The Best ROI – Focusing on MDS Accuracy to Improve Your Outcomes
As leaders, we strive to improve outcomes, finding ways to improve care and reimbursement. Investing in a Pathway R.O.I. MDS Baseline Assessment is an investment with an ROI you cannot live without!
“Our R.O.I. MDS Baseline Assessment found close to $300,000 in missed revenue. We made the changes that were recommended and are seeing the positive outcomes. This assessment was well worth the investment. We now meet with our Pathway Reimbursement Consultant on a routine basis, so we don’t miss out on opportunities.”
~Administrator
Financial ROI: Capture Every Dollar You Deserve
A Pathway Baseline MDS Assessment helps identify:
- Missed reimbursement opportunities (e.g., undercoded diagnoses, functional status errors)
- Inaccurate HIPPS codes affecting PDPM payments
- Gaps in IPA (Interim Payment Assessment) usage
- Missed clinical coding
Changes – PDPM FY 2026 Snapshot:
- CMS proposes a 2.8% increase in SNF PPS rates for FY 2026
- Updates include ICD-10 code mapping changes to improve payment accuracy
- Facilities that identify practice gaps, conduct routine audits of MDS process, have the opportunity to optimize MDS coding, aligning with the RAI requirements. Data indicates they can see 5–10% increases in per-resident reimbursement.
Regulatory ROI: Stay Ahead of Audits and Enforcement
CMS and RAC auditors are targeting:
- Schizophrenia diagnoses
- Inaccurate functional scoring
- Inconsistent documentation across disciplines
RAC Audit Trends:
- CMS has expanded 5-Claim Probe and Educate audits.
- Facilities with repeated MDS errors face payment recoupments and civil monetary penalties.
A MDS baseline assessment ensures your documentation supports your coding—before an auditor comes knocking.
Compliance ROI: Align with CMS Expectations
CMS expects facilities to:
- Submit accurate and timely MDS assessments
- Maintain documentation that supports all coded items
- Demonstrate interdisciplinary collaboration in care planning
A baseline assessment helps you:
- Identify training needs
- Standardize documentation practices
- Strengthen IDT communication
Clinical ROI: Better Data = Better Care
When MDS data is accurate:
- Care plans are more personalized
- Functional decline is detected earlier
- Quality measures improve
- Staff are more confident in their documentation
This leads to better outcomes, higher satisfaction, and stronger Five-Star ratings.
QRP & VBP: The MDS Quality-Reimbursement Connection
SNF Quality Reporting Program (QRP)
- Requires submission of standardized quality data.
- Failure to report = 2% reduction in the Annual Payment Update
- FY 2026 includes new measures like discharge function scores and health equity metrics.
NEW – New and Emphasized SNF QRP Measures for FY 2026
1. Discharge Function Score (MDS)
- Measures the functional status of residents at discharge.
- Based on Section GG of the MDS.
- Aims to assess improvement in mobility and self-care from admission to discharge.
2. Healthcare-Associated Infections (HAIs) (NHSN)
- Tracks infections acquired during the SNF stay.
- Data submitted via the CDC’s National Healthcare Safety Network (NHSN).
- Includes infections like C. difficile, UTIs, and bloodstream infections.
3. Total Nurse Staffing Hours per Resident Day (PBJ)
- Measures the average number of total nursing hours (RN, LPN, CNA) provided per resident per day.
- Derived from Payroll-Based Journal (PBJ) data.
- Affects both QRP and Five-Star staffing ratings.
4. Nursing Staff Turnover (PBJ)
- Tracks the percentage of nursing staff who leave the facility over a 12-month period.
- High turnover is associated with lower quality of care and resident outcomes.
“During our R.O.I. MDS Baseline Assessment, the Pathway Reimbursement Consultant demonstrated how to use the data that is now available in iQIES so that I can regularly monitor outcomes and work with my team to keep on the right track. Our case-mix has improved and our course our overall reimbursement has improved. My team’s knowledge has increased which has impacted financial and clinical outcomes.”
SNF Value-Based Purchasing (VBP)
- While in the past, CMS would reward or penalize facilities based on hospital readmission rates. Now, leaders need to understand that in FY 2026 is the first year CMS will assess four quality measures:
- 30-Day All-Cause Readmission
- Healthcare-Associated Infections (HAIs)
- Total Nurse Staffing Hours per Resident Day
- Total Nursing Staff Turnover
- CMS estimates $196.5 million in payment reductions under VBP for FY 2026
A baseline MDS assessment helps ensure your data is accurate, timely, and aligned with these programs—protecting your revenue and reputation.
Medicaid Case Mix Reimbursement: Why MDS Accuracy Matters
Many states use the MDS to calculate Medicaid case mix reimbursement, which determines how much a facility is paid based on resident acuity.
Why a Baseline Audit Matters:
- Ensures accurate acuity scoring for Medicaid residents
- Identifies undercoded conditions that reduce case mix index (CMI)
- Helps facilities maximize allowable reimbursement under state-specific models
Example: A facility in a case mix state that corrected MDS coding for ADL dependencies and comorbidities saw a 7% increase in Medicaid reimbursement.
Leadership Considerations
- Champion MDS accuracy as a strategic priority
- Invest in third-party baseline assessments to benchmark performance
- Monitor trends in PDPM reimbursement, audit activity, and QRP/VBP metrics
- Ensure nursing documentation supports MDS coding
- Facilitate cross-training with therapy, dietary, and social services
- Use MDS data to drive QAPI initiatives
Final Thought: Don’t Wait for a Denial to Act
A proactive MDS baseline assessment is not a cost—it’s an investment. It protects your revenue, strengthens your compliance posture, and improves resident care.
Reimbursement Optimization Improvement (ROI) starts with knowing where you stand. And that starts with your MDS. Contact us NOW to learn more!
Pathway Health Resources
Access helpful tools and resources to help you and your team navigate any reimbursement questions you may have.
- Reimbursement Resources: From training modules to complimentary checklists and tools, we have numerous resources to help your facility succeed. Learn more.
- MDS Baseline Assessment: Receive the support of one of our MDS expert consultants to obtain support with identifying training needs, standardizing documentation practices, strengthening IDT communication and more. For more information, connect with our team here.
Register for a Complimentary Webinar on R.O.I.
Register for an upcoming complimentary CE session on 7/8/2025, “What Every Leader Needs to Know About R.O.I. (Reimbursement Optimization Improvement)”.
This session will provide leaders with keen insight into missed reimbursement opportunities, what leaders need to know, and resources leaders can use to stay on top of all of the changes impacting their financial outcomes.
