Michelle Carrothers: Good afternoon folks with the Medicare forum, and we'd like to offer this opportunity to you to introduce Kevin Wellen from BKD, who is an expert in the occupational mix area, and we all know that we are in the process of filing that data by September 1st.

And so, we all need little tips and assistance and have questions periodically because of the various little items that pop up in--throughout the year that we may not be aware of 'til we're actually in the midst of preparing this 

 document, and we want to do the best job that we can for our organization to get the best financial benefit possible.

So, with that, I will be interviewing Kevin this afternoon, and hopefully you'll find this helpful on getting some little tips and strategies to prepare your Occupational Mix Survey and actually have potential financial benefit from those tips.

Kevin Wellen will be on the Medicare Payment message boards to answer all of your occupational mix questions.

So, good afternoon, Kevin, and want to welcome you to our forum interview. And I guess I'm going to kick it off by just asking you specifically what areas do you recommend as far as--with the occupational mix, what items do we need to actually follow the wage index rules on pay and hours and want to make sure that we're doing that correctly so we don't have a--any audit type discrepancies?

Mr. Kevin Wellen: Right.

 Basically, all the same rules as far as, like, the types of hours you should be picking up and the types of pay you should be picking up in the occupational mix follow the same rules as preparing your wage index data that you put into your cost reports. So, you want to make sure that you get all your bonuses in there, your severance pay in there, your vacation accruals or any paid time off type accruals.

Same on the hour side. You want to make sure you're excluding your on-call time. If you have a PTO or a paid time off benefit with your staff and you pay that benefit out when that employee terminates, if your payroll system is recording hours for that, you want to remove those hours because it was just a payout of that liability at the end. They never really worked that time. Those are all consistent with regular wage index rules, and we need to apply them to our Occupational Mix Survey data as well.

Michelle Carrothers: Okay. Very good.

 One of the things that we all struggle with, you know, in this--the occupational mix basically relates to nursing, is getting a good understanding as to what the nurse does and making sure that we have a definition on the job title or descriptions. And do you have any suggestions or recommendations as to what we are looking for specifically when we--when we define those job descriptions?

 Mr. Kevin Wellen: Sure.

 In doing this, I know, when we prepare them or when we review them, you know, probably 90 percent of your job titles are going to be obvious whether they fall into--in my experience, whether they fall into those nursing categories they have or whether it should be in the "All Other" category. But, you are going to have--a few instances that we've found, a few hospitals have gotten very creative with job titles or job descriptions that may come up in one of your payroll reports as you're doing this, and it's not always obvious which category this position should be in.

What we've advised clients to do is then either to go back and look at either the job description itself, if there's one printed out there in your policy books, or talk to the person's supervisor or the person directly themselves. Find out, you know, are they providing direct patient care or are they more an administrative or overhead type situation?

 A good example, I had one hospital that we prepare their occupational mix for, one of their job titles was Floor Technician. So, we called and asked them what the Floor Technician was. It actually came out as this was really more a housekeeping position. This person was literally just responsible for cleaning and waxing and polishing the floors and taking out the garbage and doing all of that. There was no patient care that this individual provided. It was truly an overhead, housekeeping type function.

 So, we put that individual's time and hours in the all overhead, or "All Other" occupational category, but it wasn't obvious, you know, when you see Floor Technician, you know, that that would have been a housekeeping-type position.

 Michelle Carrothers: Okay. All right.

Do you have some tips on the Nursing Administration allocation and also Nursing Administration wearing dual hats in some places?

 Mr. Kevin Wellen: Sure.

 Occupational Mix wants you to include your Nursing Administration, which generally is your, like, VP of Nursing, CNO-type position, and with your RNs. But there's a couple of issues that we've noticed kind of come up, depending on the size of your hospital and what kind of services you provide. First one I'll talk about is allocating Nursing Administration.

Nursing Administration is really the only overhead department that is not included in the "All Other" category. They want you to allocate the "All Other" category between your excluded areas and your nursing areas.

 However, they don't really address allocating Nursing Administration. And we feel--and we've done this back in the 2006 survey, and we're doing it now in this one--is, if your hospital has excluded units, such as maybe a skilled nursing unit, a rehab or a psych, maybe you have home health or just some physician private offices--if Nursing Administration has some oversight over that and we go back to the cost report and look at, you know, what departments was Nursing Administration being allocated to.

 If they were allocated to any of those excluded areas, we've then been taking pretty much the same percentage that your cost report would have done as far as an allocation down to those excluded areas and carving a small part of the salaries and hours out of Nursing Admin to go to the excluded areas, because we feel that's more appropriate.

And in occupational mix, obviously you want to minimize your RNs because they're the highest paid. And, you know, your--generally the folks in Nursing Administration are the highest paid of all your nurses.

 Michelle Carrothers: Okay.

Mr. Kevin Wellen: On the flip side, for some of your smaller hospitals, sometimes what we see is the person in Nursing Administration sometimes wears dual hats. And they may have multiple accounts in their TB for this, but sometimes they all roll up under, say, the same department in Nursing Administration, but that individual may also be in charge of, say, infection control or case management, utilization review or quality assurance.

Well, with the exception of Nursing Administration, most of those other roles generally fall within CMS's definition of all other administrative, and you want to make sure that, if they do have those multiple roles and it's easily identifiable, or if you're reclassifying it on your cost report that you don't include that "All Other" time in Nursing Administration, that you push that down to your "All Other" occupations.

Michelle Carrothers: Okay.

 You know, vacation and paid time off not in salary accounts is always a interesting issue for us in cost reporting. So, with the occupational mix, what--how would you recommend to handle that?

 Mr. Kevin Wellen: Basically, you know, it's kind of the same with wage index.

 If you're accruing that--and generally what I see is more--it's like the monthly accruals or year-end accruals for your, you know, benefit time off may not be necessarily flagged in what's a salary account on your trial balance and may not necessarily end up in the salary column on your cost report. Kind of the same situation here with occupational mix, you know? If that liability or that, you know, pay is out there, you kind of want to make sure that the salaries you're picking up in occupational mix are going to kind of materially reconcile and tie back with your trial balance for the time period and that you've got those dollars included, and you're not missing them because they're not going into "a salary account" or something.

Michelle Carrothers: Okay.

 In relationship to that, you know, with A6 reclassifications in the cost report, would--do we need to reflect those with--in occupational mix data? What's your recommendation?

 Mr. Kevin Wellen: It will vary hospital to hospital, but yes.

 Some hospitals do have some A6 reclassifications within their cost report. And when you think about it, those get reflected in your wage index data, but, when you do occupational mix, we don't have the benefit of having that lovely cost report form to do it for us. So, it is possible that you may have some nursing categories or time that may be on your cost report you re-class somewhere else, like maybe to an excluded unit or something. So--or vice versa. Maybe you pull something out of a other ancillary department, and it gets moved up into one of the nursing cost centers that get rolled up into occupational mix.

 So, I would advise going through your last cost report, seeing what A6 reclassifications are applicable to your facility, and do--if any of those are salary related, do those need to be then reflected in your occupational mix data so that you're appropriately reflecting that when you report it to CMS.

 Michelle Carrothers: Okay.

 Also, with the B1 stepdowns, what about overhead allocation strategies? How would you approach that?

 Mr. Kevin Wellen: That one's really interesting.

 I know in the instructions that came out that the FIs have forwarded to everyone in the form letters, along with the little worksheet that they provided, that it says to allocate it the same as on the wage index schedule, which basically just is a--using hours to hours and kind of coming up with a ratio.

However, I have seen other hospitals allocate that a little differently and I have seen FIs buy off on it, and it's something you may want to look at. And that is, if you just use the wage index percent of excluded hours to total hours, you may be over-allocating overhead to those excluded departments.

A good example would be on the cost report, you know? Those excluded departments may or may not be offsite, you know? A lot of hospitals have now moved home health, or certain clinics may be somewhere else in town or maybe down the road a few miles, so they may not necessarily use--may not necessarily utilize all the overhead functions at the hospital location itself, like housekeeping or cafeteria, or maybe even Nursing Administration or laundry.

Yet, if you do the percent of total method that they recommend for wage index, then you'd be over-allocating to those areas. So, we've been advising clients to look at--look at your B1 allocations on your cost report. It may be to your benefit or not to look at that and say, "Is that a better way to allocate the overhead from the "All Other" occupations category down to excluded areas and be more reflective of your operations?"

Michelle Carrothers: With some of these additional tips and before I move on here, do you have any other strategies or thoughts that you might want to share with the folks to improve financially or benefit that--in which would benefit them financially in relationship to the occupational mix?

Mr. Kevin Wellen: Yeah.

 Best advice I could give--and it kind of goes back to, you know, the same as doing the wage index improvement processes. When you pull your report, because lots of times this gets summarized from a payroll report, as far as, like, the hours and the dollars, make sure you understand for your entity and for your payroll system, if you're picking up a certain hours number, like if you're picking up paid hours or worked hours and then you modify it from there, make sure you understand what rolls up in there.

You know, you don't want to--if you're system requires you to input a number or a unit for to pay differentials or a unit to pay additional overtime or additional holiday pay or things like that, or you have to put a unit in to trigger a bonus payment, you want to make sure all of those are being excluded. And it doesn't hurt to go back and spend a little time--you know, if the reimbursement person's doing occupational mix, it doesn't hurt for them to spend a little time with the payroll people and take a small department and test it out. Make sure you know exactly what's rolling up in there and what doesn't. Because like with anything, payroll systems aren't stagnant. They change over time, and you want to make sure that you're keeping up with what you should be including or excluding from your hours and pay.

Michelle Carrothers: I know last time, when occupational mix came out and the instructions were somewhat limited, it had a huge bearing on some facilities' wage index if it wasn't completed correctly. So--and I think people have become more proficient in completing the Occupational Mix Survey, but we always can improve.

So, with that being said, if you make a small improvement on an occupational mix, how much could that potentially benefit your wage index? Do you have an approximation, or--?

Mr. Kevin Wellen: --Oooh--.

Michelle Carrothers: --And I didn't mean to cut you--cut--I mean, is it--it probably varies by location, but it could be significant, couldn't it? I mean--and maybe we don't want to put numbers on it because it varies by market, but--.

Mr. Kevin Wellen: --Yeah. It kind of varies by market and kind of by your operations, too, but I wouldn't blow it off or underestimate it. I think we all know, you know, a small change in your wage index can be huge dollars on an annual basis. Same with occupational mix. I think, if you just do the numbers and not kind of follow some of these little tips, you know, it could be the difference of you getting an occupational mix hit versus being then a winner or getting a benefit out of it.

Michelle Carrothers: Right.

Mr. Kevin Wellen: You know, it could be just enough to swing you from a hit to a miss. And I think we'd all much rather be getting a benefit out of it than being hurt in the long run.

 Michelle Carrothers: Okay.

So, with that being said, we want to take this seriously, and I think most folks that would be listening to this interview would be taking it very seriously. So--but just as a reminder that you want to make sure you have your ducks in a row, so to speak. And you--.

Mr. Kevin Wellen: --Absolutely--.

 Michelle Carrothers: Anything else, Kevin, that you'd like to share with the group?

Mr. Kevin Wellen: One thing that just kind of wanted to point out, I think on most of the form letters and instructions that went out, it did say the due date was September 1st. If you was to look at your calendar, September 1st is actually Labor Day, and CMS here in the final inpatient PPS rule that's going to be published later this month, but they've got the advanced copy out on their website. They kind of realized, I think, that they made a slight boo-boo there and, in those final.

More on Occ Mix...

Listen to the audio of the interview
Read Kevin Wellen's bio

Publication Date: Friday, August 22, 2008