In this episode, Scott Besler, Senior Manager in our Reimbursement Integrity team at BESLER, reviews the Medicare Occupational Mix Survey and some of the things that hospitals should consider as they approach the July 1st filing deadline.
Resources related to this episode:
- [DOWNLOAD] Medicare Wage Index: What it is, how it works, and why it is important
- CMS Website – Occupational Mix Survey
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast.
Today, I’m joined by Scott Besler. Scott is a Senior Manager in our Reimbursement Integrity Team here at Besler. And it’s that time again when hospitals complete their Medicare Occupational Mix Survey. And Scott is here to talk to us about that survey and some of the things that hospitals should consider as they approach the July 1st deadline.
So Scott, welcome to the program.
Scott Besler: Hi, Mike. Thank you.
Mike: So, first off, why don’t you just give us a quick background, Scott, about what the Medicare Occupational Mix Survey is.
Scott: Sure! The Medicare Occupational Mix Survey is a result of section 304 of Public Law 106-544. That was an amended section from the original Social Security Act that required CMS to collect data every three years for a hospital’s occupational mix of employees for each short-term acute care hospital that participates in the Medicare program.
The purpose was for the survey to adjust the average hourly wage for accounting for differences in management choices of staffing.
So the occupational mix was originally used and currently used to level the playing field and exclude management decisions on staffing.
Mike: Scott, what do you mean by differences in management choices of staffing?
Scott: Well, good question. As you know, not every state is similar. So there are states that have mandated nursing staffing ratios. So if these states have mandated staffing ratios, they will have an artificially increased percentage of RN’s. That drives the factor, therefore it will help to drive the payment or reduce the payment. So that’s what I meant by the choices. Not every state has the choice.
Mike: Got it! Why is the Medicare Occupational Mix Survey important?
Scott: Well, it’s an important part of the hospital’s, and subsequently, their labor market’s average hourly wage. So the survey is very important in that its impact lasts for three years. As you have said, it’s that time again to complete the survey which hospitals are required and mandated in law to complete every three years.
So, for the previous survey (which was completed in 2014), that survey was in effect for federal fiscal years 2016 and 2017 (which we’re currently in); and this October, when we begin in 2018, it will impact that as well. So it has a lasting effect on a hospital’s average hourly wage.
Providers with a higher mix of lower paid personnel—so medical assistants and nursing aides—they would, by basis of the calculation, receive a higher occupational mix factor. Subsequently, markets with a more expensive mix of employees and contracted labor would have reduced average hourly wage because their occupational mix factor would be below one because their RN percentage would be so great.
And the most important factor is the RN hour to total nursing hours. The national percent for federal fiscal year ’17—and again, ’16 was very similar, as is ’18—for ’17, it was 71.52%. So if a hospital’s RN percentage was greater than 71.52, they would have a negative occupational mix factor.
If the hospital’s RN percentage was less than the 71.52, they would have a positive occupational mix factor which would be applied to their average hourly wage or their wage index. And the positive would increase their wage index, the negative would decrease their wage index.
Mike: And when exactly is the new survey due?
Scott: The new survey is due July 3rd. That’s a Monday. It’s usually due on July 1st. But because it’s a Saturday, it’s going to revert to the next business day.
So, July 3rd, it’s due. It’s similar to the previous year. So this is really nothing new to hospitals. The form is in Excel format. And it must be submitted to the MAC by that deadline.
Mike: Scott, what are the years of data that hospitals should utilize for the completion of the survey?
Scott: Well, the current survey that’s in effect utilizes data from calendar year 2013. So regardless of your hospital’s fiscal year, you still need to use a January through December calendar year data.
The current survey will use 2016 data from the calendar year January 1, 2016 through December 31st 2016. And it will be in effect for federal fiscal years ’19, ’20 and ’21.
Mike: Scott, who has to complete the survey?
Scott: All IPPS hospitals that participate in the Medicare program should complete the survey. Now, that excludes critical access hospitals, those hospitals with a waiver, also providers with low or no Medicare volume, and also, any hospital that was closed as of January 1st 2016 would not be required to complete the survey because they’re not included in the wage index.
And the survey can be found on the CMS website. I do caution, when you go to the website and you’re just going to find the survey, if you want to look for instructions, I would dig a little deeper into the website, but the instructions really haven’t changed over the past several surveys.
Mike: And we’ll include a link to that survey in our show notes.
Scott, do all of the hospitals that have to complete the survey actually complete the survey?
Scott: Well, that’s a good question. The answer is sadly no. This has caused CMS and the MACs some concern over the years because what is the incentive if you’re not going to penalize a hospital to complete the survey?
As I said, a hospital completes this survey on an individual basis. They will know whether or not they are a major driver in their labor market. So, if I’m a major driver in my labor market, and I know that the completion of my survey will be a negative, it will be a reduced number, is there incentive for me not to file because the way CMS works now is they just average everyone out and bring you up to that labor markets average?
I don’t think that’s really being done. But CMS hasn’t found a way to penalize hospitals because if they penalize one hospital, they really are penalizing all the hospitals in that labor market. The only way it would truly work is that if they found a labor market with only one hospital. They could penalize that one hospital.
But CMS hasn’t really had much of a concern since the initial surveys were filed. The response percentage is always in the high 90’s if you look at the states. So there’s really nothing that CMS is concerned about at this point. But hospitals should still complete it because it is the more accurate portrayal of the data.
Mike: Scott, you mentioned penalties. Has CMS ever given out penalties or maybe contemplated penalties going into the future for not completing the survey?
Scott: That’s another good question… no. But each year, CMS produces the proposed rule and final rules, and CMS mentions that they are looking at ways to increase the full participation. And as I said, it’s difficult to penalize one hospital without hurting the entire group. So that’s probably what led CMS to refrain from any penalties. Also the high participation percentages have also helped.
So, hospitals are helping themselves. It’s just we’re not at a hundred percent unfortunately in every state.
Mike: So, we’re right in the timeframe where hospitals should be completing their survey. What should hospitals be focusing on while they’re in the midst of doing that?
Scott: Hospitals should focus on their RN and also the other nursing categories. Anyone that knows the survey, there are four categories—RN, LPN, nursing assistants and nursing aides, surgical techs and medical assistants.
And when I look at occupational mix surveys, hospitals should also not overlook the other category.
Also, hospitals should know their nursing staff and the categories. This is a little different than when you do your wage index. You’re going to get your job codes, but I would concentrate on the several areas that CMS—the cost centers. CMS wants you to make sure that you add the nursing hours and dollars from those cost centers to the survey.
So, an RN, that’s any RN in those cost centers—and CMS has that list—that are direct patient care types of RN’s. So you really want to remove the administrative group if you can.
LPN’s, again, they care for patients—so anyone that’s an LPN. We’ve seen that number reduce in certain states over the years. But still, many hospitals have that category.
The surgical techs, they assist in patient care. So if you’re seeing a common theme in the occupational mix, CMS wants everything in the nursing bucket—those four buckets above to include anyone that has any contact with the patient.
Then “all other,” it’s just the reverse. It’s all those that are not involved with any type of patient care. It will be mostly administrative.
So, a tip that we like to say is that all categories that are excluded from the wage index don’t get reported on the survey. So on the survey itself, you’ll have nursing and all other with the excluded removed—which is a little different than the wage index because the excluded is still a little bit a part of that calculation.
We also tell hospitals to not forget your overhead, to carve out the overhead piece of that, and also, contracted labor. And if you have a home office, be leery of your home office calculation to make sure that you’re doing that allocation correctly.
Mike: Scott, when you look at data from previous surveys, does anything jump out at you?
Scott: Yeah, the first thing that jumps out at me is everyone looks at their wage index. They want to see how does their wage index compare to previous years. And you also want to know where are the highest wage indexes in the country.
So, one of the things we looked at is we saw the top 11 wage index values that are a direct correlation to that survey, all of the top wage index values, all have negative occupational mix factors, and they’re all in the state of California which has mandated nursing staffing ratios. So those wage index values would be greater had California probably not had mandated staffing ratios. So, it is something that’s of interest.
Also, when I look at the top 11 CBSA’s or labor markets that had the highest increase to their Medicare occupational mix, not one of the labor markets in the top 11 that I saw had a labor market that contained more than three hospitals—and most of them were one- and two-hospital labor markets.
So it does take some effort to move that needle when you’re looking at your occupational mix.
Hospitals, when they look at the data—this is one time where I think hospitals should work together. Yes, you’re competing with your neighbors. But when you look at occupational mix, it can be a positive benefit for everyone involved if you work together.
Now again, the mandated staffing ratios do hurt states like California and other states that have similar mandates. But going forward, if your state does not have those mandates, you should be attempting to calculate an occupational mix that’s favorable for your hospital, but also, could benefit the CBSA.
And again, sometimes the numbers are what they are. Your nursing staffing ratio comes into play and your percent of nursing hours may be over 70. That’s not uncommon. We have, going back to the data, seen where labor markets and also hospitals that are highly urban markets, teaching hospitals, have RN percentages that are below 70 in the mid 60s. So these labor markets have a favorable occupational mix. And they’re urban.
When this first came out, CMS was targeting the urban areas and wanted it to be a benefit to rural hospitals. That really hasn’t happened the way CMS intended it. But it is something of interest and to monitor as the surveys go along in the years.
One thing about occupational mix is that even though you hear changes to wage index going forward in subsequent years, occupational mix, because it’s part of the law—and why I mention that first is it will take an act of law to remove occupational mix from any future calculations in the wage index. So that’s why hospitals, even though wage index may change, occupational mix will still be there in some form or fashion.
Mike: And I think the original stated deadline was July the 1st. But it’s actually July the 3rd, right?
Scott: That’s correct. And the reason I bring that up is hospitals should be encouraged to complete the survey just because it is required by CMS. But also, once you meet that deadline in October or later in the year, when your MAC has had a chance to review the occupational mix surveys that were submitted in July, they may have questions.
If a hospital has subtle changes or corrections or better data, the MAC may be more inclined to listen to the hospital and to accept additional adjustments. I’m not saying they will, but I know for a fact that if you missed that deadline, the MAC has been instructed by CMS not to accept any new data.
So this way, if you meet the deadline, it’s technically not new data. It’s just revised of the day that you submitted.
So, I can’t stress enough, hospitals should really do all they can to meet that deadline.
Mike: It doesn’t sound like there’s any exemptions to that deadline, are there?
Scott: Absolutely not. And again, by virtue of meeting the deadline, hospitals may be permitted by the MAC to submit adjustments.
Mike: So, when this podcast airs, there’ll be just a few weeks left before the July deadline hits. What should hospitals be doing right now?
Scott: Well, when you read CMS’s instructions, they state that the survey should take 480 hours to complete. That’s 12 weeks. So we’re more than 12 weeks from the deadline. We’re close.
Now, I don’t believe it’s going to take 480 hours. But if you did add up all the time it takes to gather the data, give yourself enough time to complete it accurately or to at least complete it. If you have the prior survey, you use that as a gauge, but not as the strict template that you’re going to use. You do have new job codes. You do have new cost centers. Make sure that you’re including all those. So meet the deadline.
You also want to monitor the CMS wage index timetable because that’s going to give you the varying degrees of deadlines that are fast approaching for this data.
Now, again, this data will not go into effect until next October, so federal fiscal year ’19. So you still have time. But when you’re looking at the timetables, you want to look at the federal fiscal year 2019 timetable to make sure that your data is submitted by that time.
Also, one of the things we always tell hospitals is when you receive a new public use file and your data is out there online, review your data. And since you really want to look at your labor market, know the hospitals in your labor market and look at their data too to make sure it’s comparable.
So, again, knowing your labor market and the hospitals that are included I think is imperative. It also helps you identify potential opportunities to obtain a higher wage index value. And that could be through reclassification, out-migration. But you want to recognize where the greatest benefits lie for your hospital.
And then, also, if you do reclassify, knowing the state and knowing the hospitals in your market will help you re-evaluate your need for the reclassification.
CMS, they allow hospitals to reclassify, but it is an administrative burden on them. So it would be better if a hospital, they never had to worry about “I don’t need to reclassify because I’m in the most optimal labor market.” You do that by monitoring your data, making sure your data is optimal, and looking at your neighboring hospitals to make sure they’re doing a good job as well.
And it also helps if you understand the driving factors of both the wage index and the occupational mix.
And also, have a second set of eyes do at least a review. And that could be as easy as just looking at the prior survey because if you’re at 70% and now you’re at 80%, what happened? That probably shouldn’t happen. You should see a gradual increase or maybe a gradual decrease in the different categories. A second set of eyes is extremely helpful.
Mike: And Scott, of course, you are that expert second set of eyes. So if anyone in our listening audience is about to submit their occupational mix survey, and you care to have us take a look at it, that is a service that we offer here at Besler. People can get in touch with Scott at SBesler@Besler.com com if they’d like to reach out and have Scott take a second look at your Occupational Mix Survey.
So, Scott, thanks for coming by and helping us understand more about this cycle and what people need to do when they’re completing their Medicare Occupational Mix Survey.
Scott: Thank you, Mike. Thanks for having me.