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OSA or PDPM? A State-Level Decision

As of Oct. 1, 2023, the Centers for Medicare & Medicaid Services (CMS) has retired the A0300 Optional State Assessment (OSA) from the federally required MDS 3.0 v1.18.11 that is submitted by nursing facilities. The OSA is now a separate optional MDS assessment that may be completed at the discretion of each state’s government. The OSA is used by State Medicaid Agencies to calculate a case-mix score. States will have the option to utilize the OSA for the collection of resource utilization group (RUG) data pertinent to the calculation of a Case Mix Index Score and SNF Medicaid reimbursement. Most states that utilize a Case Mix Index in their SNF Medicaid reimbursement methodology are opting to use the OSA. (CMS, 2023)

What is the OSA?

The OSA is a 20-page assessment that utilizes RUG-III and RUG-IV case-mix groups. With the updated MDS 3.0 RAI User’s Manual v1.18.11, several sections and items have been removed, including A0300, D0200, D0300, G0110, K0510, O0100, O0450, O0600, O0700, and X0570. (CMS, 2023) These items were used to calculate the RUG-III and -IV case-mix groups.

What does this mean for nursing facilities?

State Medicaid Agencies had to decide their course of action on or before Oct. 1, 2023. Therefore, nursing facilities must now determine which payment system their state chose: (a) the OSA for Medicaid reimbursement or (b) a transition to the Patient Driven Payment Model (PDPM) using the MDS 3.0 v1.18.11 for reimbursement.

Not only have states had to determine the use of the OSA, but also the accompanying OSA requirements of completion. States could, for instance, require that with each federal OBRA MDS completion (such as a comprehensive, quarterly, or significant correction of comprehensive and quarterly assessment), an OSA would need to be completed using the same assessment reference date (ARD).

For example, North Carolina now requires (effective Oct. 1, 2023) the completion of an OSA with each federal OBRA and PPS assessment. OSAs must be completed concurrently with the OBRA and PPS assessments, and not be completed as “stand alone” assessments. The OSA is required to be submitted along with the federal OBRA and/or PPS assessment to the iQIES/ASAP system regardless of payor source (this would not include managed care or insurance). (Snider, 2023)

If the OSA is not set for the same date as the federal OBRA MDS, the assessment may be deemed delinquent. If this is the case, the assessment would be excluded from MDS processing, would not be included in the Case Mix Index, and would not figure into the facility’s Medicaid reimbursement. Once again using North Carolina as an example, if an OSA is submitted without a federally required assessment, the OSA will not be considered for valid reimbursement. (Snider, 2023)

What should nursing facilities do now?

Nursing facilities should stay in contact with their state RAI (Resident Assessment Instrument) coordinator and/or State Medicaid Agency for instructions regarding the changes that went into effect Oct. 1, 2023. They must understand the requirements of completion of an OSA or the transition to PDPM to be compliant for MDS completion and submissions, which can impact their reimbursement.

Nursing facilities need to monitor their software for errors and glitches that can affect MDS completion requirements and coding. The facility should assign a person responsible for contacting the state RAI coordinator (such as the nurse assessment coordinator (NAC)) and stay up to date with monitoring updates from the State Medicaid Agency. The NAC and other members of the interdisciplinary team (IDT) should continue with ongoing education and training within the facility. The nursing facilities should continue to monitor the transition within the facility using a systematic approach through their QAPI/QAA process.

Jessica Stucin, RN, BSN, LNHA, RAC-CT, RAC-CTA
Assistant Director of Education
Minimum Data Set Consultants, LLC

MDS Consultants provides a nurturing educational environment with an intense focus on MDS integrity, regulatory compliance, and reimbursement methodologies. Our per-diem, no long-term contracts have received positive feedback and have been highly looked upon as a solution that has assisted the skilled nursing community in optimizing their quality of care. We are a trusted supporter and can provide the following services:

  • MDS Completion
  • MDS System Management
  • MDS Data Integrity Audits
  • Medicare Documentation Audits
  • Care Plan Audits
  • ICD Coding Reviews    
  • Case-Mix Management Strategies


Centers for Medicare & Medicaid Services (CMS). (August 2023). Final OSA Manual Item Set Change History (zip file) https://www.cms.gov/files/zip/final-osa-manualitem-setchange-historyoctober12023-v2.zip

Snider, L. (August 2023). Slides – Optional State Assessment (OSA) Webinar – August 2023. Myers and Stauffer. https://myersandstauffer.com/documents/NC/Case-Mix%20and%20Related%20Services/Provider%20Training/Reference%20Materials%20from%20Prior%20Events/2023/Optional%20State%20Assessment%20(OSA)%20Webinar%20-%20August%202023/Slides%20-%20Optional%20State%20Assessment%20(OSA)%20Webinar%20-%20August%202023.pdf