Washington Wage Index Improvement Strategy Services

Report
Washington Wage Index
Improvement Strategy Services
2013 WSHA Project Report
January 28, 2014
Meeting Roadmap
2
 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?
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2013 Project Goals
3
 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
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Scope of Work – 9 Months of Collaboration
4
 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
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HFS Worked in Multiple Geographic Areas
5
 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
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Who Participated in Seattle-Bellevue-Everett?
6










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
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Who Participated in Tacoma?
7
 MultiCare Health System
 Tacoma General Allenmore Hospital
 Good Samaritan Hospital
 MultiCare represent 55% of the CBSA wages
 Franciscan Health System – St. Joseph Medical Center
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Who Participated in Spokane?
8
 Providence Health & Services
 Providence Sacred Heart Medical Center
 Providence Holy Family Hospital
 These two hospitals represent 71% of the CBSA wages
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Who Participated in Rural Washington?
9
 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
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Net Findings and Projected Impact
10
Findings
to CBSA
AHW
Estimated Impact
to Inpatient
Medicare FFS
Revenue
$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)
Core Based Statistical Area (CBSA)
Seattle-Bellevue-Everett, WA (Seattle)
Net Impact to Washington Hospitals
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$4,046,000
11
Key Findings
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Summary of Findings
12
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)
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Hours Related to Paid Salaries
13
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
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Hours Related to Paid Salaries
14
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
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Hours Related to Paid Salaries
15
 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
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Contract Labor
16
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
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Contract Labor
17
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).
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Wage Related Costs
18
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
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Wage Related Costs
19
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
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2013 WIISS Next Steps
20
 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
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21
Future Wage Reporting Issues
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What does HFS see in Your Future?
22
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
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Purpose of the Occupational Mix Adjustment
23
 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
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How does Occupational Mix work?
24
a
Provider OMA Categories
RN Staff & RN Management
LPNs and Surgical Technologists
Nursing Aides, Orderlies, & Attendants
Medical Assistants
Wages
$90,000,000
$3,000,000
$5,000,000
$100,000
Hours
2,000,000
100,000
300,000
10,000
Total Nurse Salaries and Hours
$98,100,000 2,410,000
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%
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b
c = a*b
d
e = d/sum of c
Provider National
Nurse Occ
% by Sub- AHWs by Provider National
Mix
Category
SubAdjusted Nurse Adjustment
(Hours) Category
AHW
AHW
Factor
82.99%
$36.07
$29.94
4.15%
$20.87
$0.87
12.45%
$14.62
$1.82
0.41%
$16.48
$0.07
100.00%
$32.69 $30.47
0.9322
How does Occupational Mix work?
25
Description
Cost Report Salaries and Hours Before OMA*
Key
Salaries, Wage
Related Costs,
Contract Labor
A
$200,000,000
Hours
AHW
5,600,000
$35.71
5,600,000
$34.42
Occupational Mix Adjustment:
Nursing Portion of Total Salaries (Calculated from Survey)
Total Salaries Related to Nursing
Occupational Mix Factor (Calculated from Survey)
Nursing Salaries Adjusted for Occ Mix
All Other Portion of Total Salaries
All Other Salaries
Total Adjusted Salaries and Hours (Final Rule Table 2)
Occupational Mix Impact to AHW
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B
C = A*B
D
E = (C*D)
F
53.58%
$107,154,560
0.9322
$99,889,348
46.42%
G = A*F
$92,845,440
H = E+G $192,734,787
I=H-A
($1.30)
Impact of the OMS on Washington
26
OMS Impact – Calendar Year 2010
10 out of 11 CBSAs in WA were negatively impacted
CBSA Name
Olympia, WA
Bellingham, WA
Kennewick-Pasco-Richland, WA
Rural Washington
Yakima, WA
Mount Vernon-Anacortes, WA
Wenatchee-East Wenatchee, WA
Spokane, WA
Seattle-Bellevue-Everett, WA
Bremerton-Silverdale, WA
Tacoma, WA
Total Net Impact to Washington Hospitals
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Impact of Occ Mix to AHW
($2.39)
($0.80)
($0.72)
($0.50)
($0.42)
($0.34)
($0.33)
($0.27)
($0.17)
($0.05)
$0.62
Estimated Impact to IP
Medicare Revenue*
($3,716,000)
($711,000)
($817,000)
($734,000)
($547,000)
($210,000)
($286,000)
($945,000)
($1,980,000)
($59,000)
$2,309,000
($7,696,000)
Tips for Preparing the OMS
27
Review Payroll and
Contract Labor
Records
Research the Job
Descriptions of Core
Nursing Personnel
Record Paid Wages
and Hours for Core
Nursing and All
Other Personnel
• Identify all possible
core nursing personnel
• Remaining personnel is
denoted as “all other”
• Sort by job code
• Account for personnel
with the same job
code and varying
responsibilities
• Account for WS A-6
Reclassifications
• Apply Excluded Unit
Overhead
Calculation
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Knowledge Sharing
28
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
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FYE 2013/2014
Knowledge Sharing
29
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
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Thank You – WSHA and HFS Contacts
30
Katie Holmes
Claudia Sanders
Senior VP, Operations and Membership
Senior VP, Policy Development
(206) 216-2506
(206) 216-2508
[email protected]
[email protected]
Eric Schulz – Manager
Ryan Sader – Senior Consultant
HFS – Government Programs
HFS – Government Programs
(503) 765-5442
(714) 656-4485
[email protected]
[email protected]
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Questions / Discussion
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