1. Honesty, Integrity and Results…You Can Depend On! Occupation Mix Survey: Is your hospital ready? Presented by: R-C Healthcare Management K. Michael Webdale, CPA – Senior Vice President Kenneth Webdale, CPA, FHFMA - President Alan P. Arellano – Director, Business Development

2. Honesty, Integrity and Results…You Can Depend On! Agenda General Overview –Occupational Mix Background –Importance of the Occupational Mix –Who has to participate in the Occupational Mix Survey? –Survey due dates Discuss the categories for data input –Gathering the data –Contract Labor How the occupational mix adjustment factor is calculated –Positive & Negative examples The impact on the wage index –New York City CBSA Hospitals What’s Next

3. Honesty, Integrity and Results…You Can Depend On! Occupational Mix Background Section 304(c) of Public Law 106-544 amend section 1886(d)(3)(E) of the Act requires Centers of Medicare and Medicaid (CMS) to collect data every 3 years on the occupational mix of employees for each short- term, acute care hospital participating in the Medicare program. Initial 3 month filing was only to be used at 10% implementation. Bellevue Hospital Center vs. Leavitt forced CMS to implement at 100% with a three year phase in. –Another 3 months of data was required in order to be more reliable.

4. Honesty, Integrity and Results…You Can Depend On! Occupational Mix Background The most recent survey was for periods from 7/1/2007 to 6/30/2008. Impacted FY 2010, 2011 and 2012 so final year of impact begins October 1, 2011

5. Honesty, Integrity and Results…You Can Depend On! Why is Occupational Mix important? The purpose of occupational mix is to control the effect of the hospitals’ employment choices on the wage index. The varying labor cost associated with these choices reflect hospital management decisions rather than geographical differences in the cost of labor. If you decide to staff with higher RN levels your wage index would be higher so Occupational Mix reduces the wage index.

6. Honesty, Integrity and Results…You Can Depend On! Why is Occupational Mix important? Markets with an expensive mix of employees and contract labor have their AHW adjusted downward; those with a cheaper mix of employees and contract labor have their AHW increased. The most important factor is RN hours to total nursing hours. The national percent from the previous survey was 71.4% –RN percentage greater than 71.4%, you received a negative occupational mix adjustment (OMA). –Less than 71.4%, then adjustment was positive.

7. Honesty, Integrity and Results…You Can Depend On! Why is it needed? The Occupational Mix Survey is an integral part of the wage index. –Nursing salaries as a percentage of total salaries are the portion of the wage index adjusted by the Occupational Mix Adjustment Factor (OMAF). The purpose of the data collection is to construct a OMAF that will be applied to the FFY 2013, 2014 and 2015 wage index.

8. Honesty, Integrity and Results…You Can Depend On! Salary Information on the Survey Salaries used to calculate each category AHW. AHW information in Occupational Mix Based on all hospitals - using national AHW within each covered occupation.

9. Honesty, Integrity and Results…You Can Depend On! Who has to participate in the survey? A ny hospital subject to the Inpatient Prospective Payment System (IPPS) or any hospital that would be subject to IPPS if not granted a waiver. –Excluded from the survey Critical Access Hospitals Any hospital which terminated participation in the Medicare program before the calendar year 2010 Non-Compliant Hospitals –No Penalty –Hospitals are assigned the average factor for the CBSA

10. Honesty, Integrity and Results…You Can Depend On! Important Dates This filing is calendar year 2010 (pay periods ending between January 1, 2010 and December 31, 2010). –They are looking for 26 pay periods without any accruals or other adjustments.

11. Honesty, Integrity and Results…You Can Depend On! Important Dates Occupational Mix Survey is due July 1, 2011 and will be applied to the FFY 2013. –Completed occupational mix survey must be submitted to your fiscal intermediaries, on the Excel reporting form. Form CMS – 10079 OMS –The Excel version of the occupational mix survey can be downloaded from CMS website www.cms.gov/AcuteInpatientPPS/WIFN/list.asp

12. Honesty, Integrity and Results…You Can Depend On! Occupational Categories The occupational categories derive directly from the BLS standard occupational categories. Include employees, directly hired and acquired under contract. –Registered Nurses –Licensed Practical Nurses and Surgical Technologists –Nursing Aids, Orderlies, and Attendants –Medical Assistants –All Other Occupations

13. Honesty, Integrity and Results…You Can Depend On! Occupational Categories

14. Honesty, Integrity and Results…You Can Depend On! Cost Centers to be used for Occupational Categories – from Worksheet A

15. Honesty, Integrity and Results…You Can Depend On! Gathering the Data Use Worksheet S-3 Rules Paid Salaries –Regular, overtime, vacation, holiday, sick, lunch, other paid time off, severance and bonuses. Paid Hours –Regular, overtime, vacation, paid holiday, sick, lunch, other paid time-off and severance hours. –Overtime hours paid at time and a half should be recorded as one hour. –Salaried employees paid a fixed rate should be 40 hours per week or hours actually worked. –Do not include non-paid lunch periods, and on-call hours in the total paid hours. –No hours are required for bonus pay.

16. Honesty, Integrity and Results…You Can Depend On! Where to assign the Data Director of Nursing or anyone handling those functions should be in the “All Other” category. Transportation for surgery –Include in LPN’s and Surgical Technologists per the instructions. Techs reported in “All Other” Advanced Practice Nurses –Exclude if billed under Part B –“All Other” if included on S-3.

17. Honesty, Integrity and Results…You Can Depend On! Contract Labor Include all contract labor included on Worksheet S-3. –Lines 9, 22.01, 26.01 and 27.01 –Use amounts paid in Calendar Year 2010

18. Honesty, Integrity and Results…You Can Depend On! What is not included Employees in areas excluded from IPPS. –Skilled-nursing facilities, psychiatric, or rehabilitation units Worksheet S-3, Part II, Lines 8 and 8.01 –Part A Teaching Physician, Physician Part B, and CRNAs Worksheet S-3, Part II, Lines 3, 4.01, 5, & 5.01 –Interns and Residents Worksheet S-3, Part II, Lines 6

19. Honesty, Integrity and Results…You Can Depend On! Occupational Mix Adjustment Factor Calculating the OMAF –Step 1 - Determine % of each subcategory by hours –Step 2 - Multiply each subcategory by National AHW –Step 3 - Determines AHW by subcategory –Step 4 - Sum for Hospital Nursing AHW –Step 5 - Compare Hospital Nursing AHW to National –Step 6 - Calculates Nurse Occ Mix factor –Step 7 - Multiply this by Nursing % to total –Step 8 - Add to “All Other” % –Equals Occupational Mix Adjustment

20. Honesty, Integrity and Results…You Can Depend On! Occupational Mix Adjustment Factor Or use CMS calculator at CMS Website –www.cms.gov/AcuteInpatientPPS/WIFN/list.aspwww.cms.gov/AcuteInpatientPPS/WIFN/list.asp –Then click on the FY 2011 Wage Index Home Page –Now look for FY 2011 Final Ruling AHW calculator

21. Honesty, Integrity and Results…You Can Depend On! OMA Calculator

22. Honesty, Integrity and Results…You Can Depend On! Occupational Mix Adjustment Factor OMA calculated and applied: –Hospitals with a nursing % lower than the national % will have a OMAF > 1 –Hospitals with a nursing % greater than the national % will have OMAF < 1

23. Honesty, Integrity and Results…You Can Depend On! Positive Occupational Mix Adjustment

24. Honesty, Integrity and Results…You Can Depend On! Negative Occupational Mix Adjustment

25. Honesty, Integrity and Results…You Can Depend On! Past Impact on Wage Index for New York City CBSA Hospitals New York City CBSA Wage Index increased by approximately 1.9 percentage points due to Occupational Mix. Approximately $44 million in reimbursement increase in New York City CBSA per year.

26. Honesty, Integrity and Results…You Can Depend On! Past Impact on Wage Index for Buffalo CBSA Hospitals Buffalo CBSA Wage Index increased by approximately.9 percentage points due to Occupational Mix. Approximately $2.2 million in reimbursement increase in Buffalo CBSA per year.

27. Honesty, Integrity and Results…You Can Depend On! What’s next? Start today – July 1, 2011 is 2 months away –Who is preparing the form? Collecting your data –Pay Periods ending between January 1, 2010 – December 31, 2010 –Contract labor hours –Home office –Related organization Have your survey reviewed before submitting to the FI

28. Honesty, Integrity and Results…You Can Depend On! Questions K. Michael Webdale, CPA – Senior Vice President –mwebdale@rcmgmt.commwebdale@rcmgmt.com Kenneth Webdale, CPA, FHFMA – President –kwebdale@rcmgmt.com Alan P. Arellano – Director, Business Development –aarellano@rcmgmt.comaarellano@rcmgmt.com (602) 995-9420 or (800) 862-5368