Medicare Wage Index 2013 Occupational Mix Survey

Applicable to FY 2016 Wage Index

Background

Section 304(c) of Public Law 106-544 amended section 1886(d)(3)(E) of the Social Security Act requires Centers for Medicare and Medicaid Services (CMS) to collect data every three years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program. The law requires the application of the 2013 occupational mix adjustment factor (OMAF) to the wage index beginning FFY 2016. The survey requires for the collection of occupational mix data for a 12-month period; that is, from pay periods ending between January 1, 2013 and December 31, 2013. Surveys are required to be submitted on the CMS approved form by July 1, 2014.

The goal of the Occupational Mix Adjustment Factor (OMAF) is to normalize a hospitals' skill-mix across labor markets so the wage index reflects only the fundamental price difference between a geographic location and the national average hourly wage. In essence, the OMAF controls the effect that hospital employment practices have on its market's average hourly wage. For instance, without the effect of the OMAF, a hospital could increase its wage index and Medicare reimbursement by staffing at higher wage levels such as RNs rather than LPNs, nurse aides or surgical technologists.

When a hospital's percent of RN hours to total nursing hours exceeds the national average from the occupational mix data collection period, the hospital receives a negative occupational mix adjustment which reduces the hospital's wage index.

Data Collection

All full-time, part-time, directly hired and contracted employees should be included in the data reported for pay periods ending January 1, 2013 - December 31, 2013. Do not include employees in areas excluded under IPPS, physician Part B services, or interns and residents. Home office and related organization employees are included in the survey. In completing the survey, a hospital should use the same allocation methodology that was used on the cost report Worksheet S-3, Part II, and also omit from the survey overhead wages allocated to excluded areas.

Conclusion

The Occupational Mix Survey is an integral component of a hospital's wage index. Changes in a hospital's Occupational Mix Adjustment Factor can significantly impact future Medicare reimbursement. All hospitals should spend sufficient time in completing the survey to ensure that all data is collected and reported with the highest attention to detail. If you have any questions about your facility's Medicare Wage Index 2013 Occupational Mix Survey, please contact Jade Wanzek or Ryan White.