Medicare Occupational Mix: The small survey with a mighty impact

On the face of it, the survey appears very basic. You group your staff and contract labor into five categories and report total dollars and hours into a few input fields. It’s called a “survey,” but beware, it has a direct impact on the rates Medicare sets for your organization and can impact your ability to take advantage of opportunities such as wage reclassifications. If optimized, the survey can materially increase your hospital’s Medicare reimbursement; if not, it can result in significant lost revenue.

Background

The survey, completed every three years, is designed to adjust for your organization’s employment choices for patient care — i.e., the relative mix of various levels of nursing personnel in comparison to national averages (the occupational mix).

The nursing components of direct patient care include registered nurses (RNs), licensed practical nurses (LPNs), surgical technicians, nursing assistants, and medical assistants for specified cost centers. The percentage of total nursing hours reported for each of these categories is compared to national averages — the key driver in the calculation of the occupational mix factor. The factor calculated is then applied to the percentage of total nursing salaries as a percent of total salaries for the hospital.

To illustrate the potential impact of occupational mix, if your reported RN hours as a percentage of total nursing hours are greater than the national average, the occupational mix factor will be unfavorable at less than one. Conversely, if your LPN, surgical technicians, nursing assistant, and medical assistant hours as a percentage of total nursing hours are greater than the national average, the occupational mix factor will be favorable at greater than one. Essentially, two hospitals with comparable employee compensation rates can have considerably different Medicare IPPS reimbursement simply because of the occupational mix adjustment.

What to watch for

Given the importance of the labor mix, it’s important to approach the survey strategically by examining how often certain services are performed and the impact they have. For example, one potential pitfall when completing the survey is to include every person who has “RN” in their title in the RN category. On the face of it, that seems reasonable. But what if an RN is performing only nursing administration-related services and not patient-facing tasks? That staff member should fall into the “all other” category for proper survey treatment. 

Failure to properly examine and categorize patient care personnel in the survey can harm your organization financially — especially since the results of the survey have been in place for three years. It’s crucial that the people completing the survey have a thorough understanding of Medicare reimbursement and can estimate the financial impact prior to survey submission.

How will your organization be impacted?

To help you understand the impact the survey will have on your organization, consider these questions:

• Has your organization experienced more volatility in nursing personnel over the past year? If you have, the survey will be especially important this year — particularly if your organization is reporting large increases in contract nursing.
• Do you have the necessary resources available to complete the survey? Within the survey instructions, CMS estimates it will take most organizations up to 480 hours to complete the survey. There are no shortcuts, as the survey requires a significant amount of labor-related data that needs to be accumulated, mapped, reviewed, and analyzed.
• Does your organization have the necessary skills? There may be uncertainty in your organization concerning who has the skills to complete the survey. Successful completion of the survey requires collaboration of individuals with Medicare reimbursement expertise and an understanding of the organization’s labor and operational structure.

The upcoming survey captures pay periods during the 2022 calendar year and the completed survey is due July 1, 2023. Given the potential financial impact and timing challenges around payroll completion a solid strategy is essential.

Connect with us to learn more about the survey and how it impacts your organization!