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This text-based course is a written transcript of the live event, "Prospective Payment System (PPS) 2012", presented by Gary Mertz on February 2, 2012.
>> Amy Natho: Hi, everyone. I would like to welcome you to today's SpeechPathology.com e‑learning expert seminar entitled “PPS 2012.” My name is Amy Natho and I'll be your moderator today for this online course. It is a pleasure to introduce Gary Mertz to you today. Gary Mertz has been working in the field for almost 16 years. He graduated from West Virginia University. He first worked as a staff clinician in the long‑term care industry but has also worked in settings including hospital, home health and pediatric services. He steadily moved into management, serving roles as Facility Rehab Director and Regional Manager. He now functions as the Director of Corporate Compliance and Quality Improvement for Flagship and Anchor Rehabilitation, still treats patients when needed and also functions as a clinical fellow supervisor. So, Gary, thank you very much for being here today. We're eager to hear what you have to tell us about PPS 2012.
Gary Mertz: Well, thank you as always for the kind introduction. I try to keep things lighthearted. We know regulations in general are kind of boring, but I'm going to try to interject a little humor into the presentation so you don't give up on it, or fall asleep.
What we're going to do is talk about PPS 2012, which is the Prospective Payment System that came into play in 1999. It has been regularly updated since that time. 2011 really saw a giant leap forward in the regulations when we went from MDS 2.0 to MDS 3.0 and we went from the RUG-3 (Resource Utilization Group) classification into the RUG-4 classification system. PPS 2012 showed a refinement of some of those regulations that are particularly geared towards the financial aspect of long‑term care. So let’s go ahead and get started.
What Happened?
We want to talk about what happened that caused another revision of the system. Basically, what happened is that when CMS, Centers for Medicare & Medicaid Services, came out in 2011 and made these radical changes, they did an analysis and saw that they had an unexpected expenditure of $2.1 billion, or 16% above what they thought they were going to be spending. Their reaction to this was, “This is a lot of cash going out our door to the providers that we did not anticipate spending.”
CMS Response: Reimbursement
What happened is that CMS looked at the data, realized that they were bleeding out financially, and decided to make some changes. So the response was to change reimbursement. They were attempting to reach parity or equality with the reimbursement level that they saw in PPS 2010. In order to get to that point, CMS instituted a massive cut of 11.1% across the nursing component of the reimbursement. (Just as a quick sidebar, understand that each RUG level or classification category into which residents in long‑term care are placed have two components—the therapy component and the nursing component.) They radically slashed the nursing component, which will yield a $3.8 billion decrease in reimbursement for the current fiscal year. That is a huge, huge number.
