Significant Medicare dollars may move around the country next fiscal year when the CMS begins using recently collected employment data to help even out payments.
The CMS' so-called occupational mix survey, which hospitals recently filled out and returned to the agency, will be used for the first time next year to adjust Medicare payments based on hospitals' unique staffing mix and associated costs.
The highly technical payment tool, known as the Medicare occupational mix adjustment, or MOMA, will have the effect of redistributing program dollars from certain regions and hospitals to others.
The adjustment could affect as much as $1.9 billion in Medicare payments, according to one consultant's analysis of preliminary survey data the CMS collected from hospitals over the past several months and posted in a public use file on its Web site last month. In addition, the consultant has concluded, money may not move in planned or expected ways.
The survey will "not work the way it was supposed to work," predicted Dale Baker, president of Indianapolis-based Baker Healthcare Consulting, arguing that in particular, rural hospitals that were supposed to benefit may not get help in the end because the occupational mix adjustment may not accurately reflect various regions' and hospitals' staffing conditions.
Roughly 85% of the nation's hospitals had completed a survey by the original due date of Feb. 16, Baker said. CMS officials declined to comment on the survey or its potential effect on payments, citing a restriction against discussion of pending regulations.
The occupational mix survey requires hospitals to place their full-time clinical workers in one of 19 employment categories spanning dietary, medical and clinical laboratory, nursing, pharmacy and therapy departments.
Mandated by the Benefits Improvement and Protection Act of 2000, the adjustment goes into effect for the first time in fiscal 2005 as part of Medicare's wage-index adjustment that tweaks payments based on area labor prices. By incorporating the occupational mix data into the wage index, policymakers hoped to help rural hospitals whose average wages are depressed by the low numbers of registered nurses and laboratory technicians they employ.
By attempting to even the playing field and pay all hospitals based on an average staffing level, MOMA could hurt hospitals with a greater proportion of high-paid workers, especially teaching hospitals, Baker and others argue.
The American Hospital Association has not conducted its own analysis of the survey data, saying that such calculations are difficult without knowing which formulas to apply. Still, officials said, payments may not change in ways lawmakers intended when they added the MOMA adjustment to the payment formula.
Later this month or in early May, the CMS will propose inpatient prospective payment regulations for 2005. In those regulations, the CMS will reveal how it intends to apply the occupational mix data it received from hospitals to set next year's adjustment.
Hospitals will have an opportunity to comment on the CMS approach, under which some will win and others will lose-no matter how the numbers are crunched.
"This will certainly move money around," said Carmela Coyle, the AHA's senior vice president of policy. "Does it move it around in ways that are intended and in ways that are equitable? That's the real issue at stake here."
According to Baker's analysis, hospitals in at least 19 rural areas have staffing levels higher than the national average, or appear to employ a larger share of nurses and other skilled workers than their urban counterparts.
"It doesn't make sense, but that's what the data shows," Baker said, predicting that areas likely to be hard hit by the adjustment include Corpus Christi, Texas; Davenport, Iowa; and Missoula, Mont. Montana is the home of Democratic Sen. Max Baucus, the ranking member of the Senate Finance Committee who played a central role in negotiating last year's Medicare reform law that favored rural hospitals to the tune of almost $25 billion.
"Anytime there's something that's supposed to correct a disparity and doesn't, we're definitely concerned about it," a Baucus aide said of the survey last month, adding that until the CMS publicizes its methodology, it is impossible to gauge the impact the survey results will have.
Many hospitals contacted about their occupational mix survey did not return requests for comment. In Texas, more than 100 hospitals did not file a survey by the CMS' original due date of Feb. 16. When the CMS postponed the deadline to March 22, the Texas Hospital Association encouraged its members to complete a survey so that results for the state could be as accurate as possible.
The CMS issued an instruction, which does not carry the legal weight of a regulation, asking hospitals to submit the survey data. AHA officials said many hospitals did not have the guidance or time they needed from the CMS to fill out the complicated form.
Ultimately, all but about 20 of Texas' 500 hospitals completed a survey, said Ernie Schmid, the Texas association's senior healthcare policy analyst. Schmid declined to estimate how Texas hospitals would be affected by the survey results, saying any such analysis would be premature.
Separate from MOMA, the Medicare law sets aside $900 million over three years to allow hospitals to apply for geographic reclassification, which moves them into a service area where payments can be higher. It is unclear when the CMS will announce which hospitals qualify for increased payments.