The federal fiscal year (FFY) 2023 review period is currently underway. Hospitals should be aware of key dates and begin gathering the necessary data. CMS will release the initial public use files (PUFs) containing wage index data about each hospital in May 2021. Hospitals should review the PUFs carefully to make sure the data is correct. They have until around Sept. 1, 2021, to file any adjustments to the data that is on file with CMS.
The FFY23 assessment period covers hospital data from Medicare cost reports from Oct. 1, 2018, through Sept. 30, 2019. CMS wage index audits occur every year between Sept. 1 and mid-November. Consider the following steps to prepare for the FFY23 audits and assessments.
The effects of the COVID-19 pandemic have touched every area of healthcare, and wage index is no exception. Hospital leaders should pay special attention to the following areas as they gather and report wage index data.
Contract labor. Many hospitals have had to hire additional clinical staff, such as nurses, to help take care of patients during coronavirus surges. Because of this, hospitals may have higher average hourly wages for contract labor versus other types of clinicians during the months when their organizations saw the greatest numbers of COVID-19 patients.
Time off. Hospitals also might have seen an increase in staff time off due to illness or other factors related to COVID-19. Hospitals should be aware that their payroll departments might have used additional pay codes for salaried employees due to time off (for example, leave without pay or leave with pay).
Wage-related costs. These costs include any services the hospital provides to employees at no cost or at a discount. Examples include health services, such as physicals, vaccines, and smoking and weight control programs. These have been included in CMS’ wage index reporting instructions for a long time, but it is a good idea for hospitals to pay additional attention to this area this year, as some organizations might have increased these employee offerings during the pandemic.
At least every three or four years, the Medicare Administrative Contractors (MACs) will provide a detailed wage index audit to every hospital. For the past several years, MACs have focused more intensely on contract labor and physician costs than they did in previous years.
When hospitals receive formal requests for information related to wage index by MAC auditors, they should be aware that sometimes the information requested has already been sent in to CMS by the hospital. In these cases, hospitals should contact their MAC auditors to clarify what is needed and what the hospital already has sent to CMS.
Among requests for information, topics include pension plans (specifically, the difference between defined benefit and defined contribution) and dietary contract labor. Hospitals should be aware of these requests and plan to take action.
Medicare wage index reporting can be complicated, especially as hospitals are facing additional challenges due to the COVID-19 pandemic. Hospitals could benefit from working with third-party specialists in this area to help make sure they are tracking and reporting information accurately.