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2013 WSHA Project Report
Washington Wage Index Improvement Strategy Services
January 28, 2014
2
Meeting Roadmap
HFS Consultants | www.hfsconsultants.com
Goal of the 2013 WIISS
Scope of Work What has HFS been doing with WA hospitals the last 6 months?
Results of This Year’s Work What does our work together mean for Washington?
Key Findings
Next Steps and Timeline What can WA hospitals expect from HFS in the next few months?
Future Needs What’s coming up in 2014?
3
2013 Project Goals
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Increase Wage Index Reporting Compliance Normalizing average hourly wage data
Improving Accuracy of Average Hourly Wage Data Frequently findings mean positive adjustments to the average hourly
wage
Knowledge Transfer Transparency of average hourly wage findings
Best practices for future average hourly wage data reporting
4
Scope of Work – 9 Months of Collaboration
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Discovery Collection of the necessary wage and financial data from hospital staff
Analysis HFS’s specialized analysis and “dig deeper” approach of the wage index data
identifies items that do not meet CMS guidance and areas of opportunity to
enhance average hourly wage reporting
Revision HFS proposes revised wage index data, and with hospital approval, submits
proposed revisions to MAC corresponding with its deadline
MAC Audits
5
HFS Worked in Multiple Geographic Areas
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2013 Wage Index Improvement Strategy Services Seattle-Bellevue-Everett CBSA
Tacoma CBSA
Spokane CBSA
Rural Washington CBSA
44 hospitals in Washington either participated or are impacted by the work
6
Who Participated in Seattle-Bellevue-Everett?
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Providence Health & Services
University of Washington
Virginia Mason Medical Center
Overlake Hospital Medical Center
Central Washington Hospital
Evergreen Hospital Medical Center
Skagit Valley Hospital
Auburn Medical Center
Island Hospital
Cascade Valley Hospital
These participants represent 93% of the CBSA wages
7
Who Participated in Tacoma?
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MultiCare Health System Tacoma General Allenmore Hospital
Good Samaritan Hospital
MultiCare represent 55% of the CBSA wages
Franciscan Health System – St. Joseph Medical Center
8
Who Participated in Spokane?
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Providence Health & Services Providence Sacred Heart Medical Center
Providence Holy Family Hospital
These two hospitals represent 71% of the CBSA wages
9
Who Participated in Rural Washington?
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PeaceHealth St. Joseph Medical Center
Gray’s Harbor Community Hospital
Providence St. Mary Medical Center
Providence Centralia Hospital
Samaritan Hospital
Walla Walla General Hospital
Wenatchee Valley Medical Center
Olympic Medical Center
These members represent 100% of the CBSA wages
10
Net Findings and Projected Impact
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Core Based Statistical Area (CBSA)Findings to CBSA
AHW
Estimated Impact to Inpatient
Medicare FFS Revenue
Seattle-Bellevue-Everett, WA (Seattle) $0.39 $5,041,000
Spokane, WA ($0.30) ($1,055,000)
Tacoma, WA $0.06 $393,000
Rural Washington ($0.10) ($91,000)
Yakima, WA (Rural Floor Recipient) ($0.10) ($129,000)
Kennewick-Pasco-Richland, WA (Rural Floor Recipient) ($0.10) ($113,000)
Net Impact to Washington Hospitals $4,046,000
Key Findings
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12
Summary of Findings
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Key CBSA Findings Seattle Spokane Tacoma Rural WA
Revision to Salaries ($0.01) $0.04 $0.00 ($0.01)
Revisions to Physicians, Interns and Residents ($0.09) $0.00 $0.00 $0.02
Revisions to Patient Care and Overhead Contract Labor $0.15 $0.11 $0.01 $0.13
Revisions to Home Office $0.01 $0.00 $0.00 ($0.01)
Revisions to Hours Related to Paid Salaries $0.14 ($0.48) $0.00 ($0.12)
Revisions to Hours Related to Paid Salaries – Severance $0.00 ($0.12) $0.00 ($0.12)
Revisions to Wage Related Costs $0.12 ($0.01) $0.03 ($0.04)
Revisions to Wage Related Costs – Pension $0.18 $0.16 $0.02 $0.09
Improper AHW Reporting – Compliance ($0.03) $0.00 $0.00 ($0.04)
Client Proposed Revisions ($0.08) $0.00 $0.00 $0.00
Net Impact to CBSA AHW $0.39 ($0.30) $0.06 ($0.10)
13
Hours Related to Paid Salaries
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The following hours should be removed from the payroll file for accurate wage index reporting: Hours associated with accrued, not paid, salaries
Bonus hours
On-Call hours
Shift Differential hours
PTO paid out at employee termination
Buy/Sell back PTO
Paid hours associated with capitalized labor costs
Missed meal and missed break pay
14
Hours Related to Paid Salaries
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The following hours should be removed from the payroll file for accurate wage index reporting (cont’d):
Unpaid Family Medical Leave
Unpaid Disability
Unpaid Leave of Absence
Baylor Plan Example: Employees work 36 hours, but get paid for 40 hours – remove 4 hour
difference
Seasonal Plan Example: Employees work certain months of the year, but get paid for 52 weeks –
remove the time not actually employed
15
Hours Related to Paid Salaries
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Severance Hours General Rule: If severance is booked a "salary" expense then include hours; if
severance is booked as a non-salary expense than do not include hours
Disability Hours General Rule: If disability hours are reduced on the payroll report they need
to gross up to 100%
Holiday Pay for Nurses Example: May be paid regular pay + holiday pay + overtime; ensure that
hours are not being double- counted
16
Contract Labor
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Patient Care
Remove wages and hours from excluded and non-allowable cost centers
Remove non-patient care wages and hours related to: Non-professional fees (i.e. travel, miscellaneous overhead)
Non-patient care and overhead services (i.e. transcription)
Report additional amounts related to: Dialysis
Perfusion
Other temporary patient care staff not reported as “Registry”
Patient care staff reported from the home office
17
Contract Labor
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Overhead Contract Labor
Report additional Administrative & General (A&G, e.g. legal and consulting services), dietary, and housekeeping contract labor identified from a thorough review of trial balance and accounts payable detail
Report additional A&G contract labor from the corporate and regional home office
Remove non-allowable overhead amounts (i.e. security).
18
Wage Related Costs
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Defined Benefit Pension Plans For wage index purposes, allowable pension costs will be calculated
as the average cash contributions paid over a 3-year period
The 3-year period used is the current cost report period and the periods immediately preceding and following it
CMS states that the 3-year average is allowable even if it exceeds the current period contribution
There is no requirement to demonstrate that the amount satisfies a liability under ERISA or any other actuarial basis
19
Wage Related Costs
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For Defined Benefit Pension Plans, hospitals will need to: Obtain contribution data from the pension trustee, insurance carrier,
Schedule B or SB of IRS Form 5500 and, if applicable, from accounting records documenting allocations among providers
Retain and make available support for the 3-year average, the prefunding balance and the prefunding installment, where applicable
High scrutiny from MAC auditors
20
2013 WIISS Next Steps
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HFS monitors and supports the wage index revisions through MAC audit and Final Rule January – August 2014
Review February 2014 PUF to ensure revisions are accepted and
properly reflected in HCRIS data
HFS will provide a final report in March with final impact estimates
Future Wage Reporting Issues
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What does HFS see in Your Future?
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2014 Occupational Mix Survey (OMS) CMS estimates it takes about 400 hours to complete
Similar to wage index reporting, the OMS is deceptively complex and difficult to
report accurately
OMS has a material impact on wage index and Medicare reimbursement OMS can reduce the AHW of a hospital and CBSA significantly reducing Medicare
reimbursement
Due by July 1, 2014 Short turn around and infrequency of the survey can make it difficult to complete
the survey accurately
23
Purpose of the Occupational Mix Adjustment
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Control the effect of hospitals’ employment choices on the wage index
Hospitals may choose to employ different combinations of nursing personnel
The varying labor costs associated with these choices reflect hospital management decisions rather than geographic differences in the costs of labor
Using the CMS methodology, we can measure the impact of the most recent OMS (CY10) on hospitals in Washington
24
How does Occupational Mix work?
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a b c = a*b d e = d/sum of c
Provider OMA Categories Wages Hours
Provider % by Sub-Category (Hours)
National AHWs by
Sub-Category
Provider Adjusted
AHW
National Nurse AHW
Nurse Occ Mix
Adjustment Factor
RN Staff & RN Management $90,000,000 2,000,000 82.99% $36.07 $29.94LPNs and Surgical Technologists $3,000,000 100,000 4.15% $20.87 $0.87Nursing Aides, Orderlies, & Attendants $5,000,000 300,000 12.45% $14.62 $1.82Medical Assistants $100,000 10,000 0.41% $16.48 $0.07
Total Nurse Salaries and Hours $98,100,000 2,410,000 100.00% $32.69 $30.47 0.9322
All Other Salaries and Hours $85,000,000 3,000,000
Total $183,100,000 5,410,000
Nurse Salaries as a % of Total 53.58%
All Other Salaries as a % of Total 46.42%
Check = 100% 100.00%
25
How does Occupational Mix work?
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Description Key
Salaries, Wage Related Costs, Contract Labor Hours AHW
Cost Report Salaries and Hours Before OMA* A $200,000,000 5,600,000 $35.71
Occupational Mix Adjustment:
Nursing Portion of Total Salaries (Calculated from Survey) B 53.58%
Total Salaries Related to Nursing C = A*B $107,154,560
Occupational Mix Factor (Calculated from Survey) D 0.9322
Nursing Salaries Adjusted for Occ Mix E = (C*D) $99,889,348
All Other Portion of Total Salaries F 46.42%
All Other Salaries G = A*F $92,845,440Total Adjusted Salaries and Hours (Final Rule Table 2) H = E+G $192,734,787 5,600,000 $34.42
Occupational Mix Impact to AHW I = H - A ($1.30)
26
Impact of the OMS on Washington
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OMS Impact – Calendar Year 201010 out of 11 CBSAs in WA were negatively impacted
CBSA Name Impact of Occ Mix to AHWEstimated Impact to IP
Medicare Revenue*
Olympia, WA ($2.39) ($3,716,000)
Bellingham, WA ($0.80) ($711,000)
Kennewick-Pasco-Richland, WA ($0.72) ($817,000)
Rural Washington ($0.50) ($734,000)
Yakima, WA ($0.42) ($547,000)
Mount Vernon-Anacortes, WA ($0.34) ($210,000)
Wenatchee-East Wenatchee, WA ($0.33) ($286,000)
Spokane, WA ($0.27) ($945,000)
Seattle-Bellevue-Everett, WA ($0.17) ($1,980,000)
Bremerton-Silverdale, WA ($0.05) ($59,000)
Tacoma, WA $0.62 $2,309,000
Total Net Impact to Washington Hospitals ($7,696,000)
27
Tips for Preparing the OMS
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Review Payroll and Contract Labor Records
• Identify all possible core nursing personnel
• Remaining personnel is denoted as “all other”
Research the Job Descriptions of Core Nursing Personnel
• Sort by job code• Account for
personnel with the same job code and varying responsibilities
Record Paid Wages and Hours for Core Nursing and All Other Personnel
• Account for WS A-6 Reclassifications
• Apply Excluded Unit Overhead Calculation
28
Knowledge Sharing
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Knowledge Sharing and Future Wage Index Support
Carry findings forward into FFY 2016 FYE 2012/2013 cost reports likely contain the same wage index
corrections that were revised during this year’s work
FYE 2011/2012 FYE 2012/2013 FYE 2013/2014
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Knowledge Sharing
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Knowledge Sharing and Future Wage Index Support
Further study to correct compliance findings from this year’s work
HFS recommends targeted studies in Washington to address specific recommendations found during the 2013 work
30
Thank You – WSHA and HFS Contacts
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Eric Schulz – Manager Ryan Sader – Senior Consultant
HFS – Government Programs HFS – Government Programs
(503) 765-5442 (714) 656-4485
[email protected] [email protected]
Katie Holmes Claudia Sanders
Senior VP, Operations and Membership Senior VP, Policy Development
(206) 216-2506 (206) 216-2508
Questions / Discussion
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