CMS Directs MACs to Scrutinize Time Studies – Are You Ready?
Following the resumption of time studies after a pause for the COVID-19 pandemic, CMS noticed that millions of dollars in physician compensation were being recorded without the corresponding time studies to back it up. They discovered that some Medicare Administration Coordinators (MACs) allowed time studies from previous years as evidence.
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The agency then directed the MACs to audit physician compensation time studies. Since many hospital systems had not fulfilled the minimum requirements because they hadn’t been asked to, the alarm bells sounded. Many had relaxed the requirement on physicians, so hospitals had to either re-engage them or risk forfeiting millions in reimbursement dollars.
CMS’s Clamp Down on Time Studies
The standards tightened, and MACs started pulling time studies to see if there was supporting evidence to back up what was reported. In many cases, that was not happening.
During our recent webinar Time Studies Gone Bad, Mike Polito of TPR Solutions described it this way:
So you can imagine the shockwave that went through the providers that were not compliant with [time studies] because the auditors or the MACs in the past were accepting something “less than.” Now we're back in full swing with periodic time studies under Medicare regulations and being interpreted by the auditors.
On average, Medicare reimbursement comprises 18.9 percent of hospital revenue, so the dollar amounts are massive, thus making the stakes very high. Let’s look into how this happened, what it means, and what your organization needs to do about it.
Case Study: The Nightmare Scenario
Mike Polito recounted the story of one hospital that thought they were free because they had passed the MAC audit. However, CMS ordered the MACs to re-audit the physician time studies. The hospital couldn’t produce the applicable time studies for the period in the cost report.
The impact was severe: the hospital could not include $97 million in physician compensation on Worksheet A-8-2 (“Physician Compensation”). None of that was allowed. The wage index that dictates the reimbursement rate plummeted since the highest earners were excluded.
While we don’t have the precise figures, the hospital lost many millions of dollars in reimbursement that would have been recoverable had the system met the minimum requirements.
What Should You Do?
No surprises here: Do your time studies properly! For far too many hospitals, physician time studies are treated as an afterthought or an obligatory nuisance, when, in fact, they are required. No matter that they were less scrutinized in the past, what is expected today counts.
To provide a summary of the guidelines provided in the CMS Provider Reimbursement Manual (p.40-58.4),
Frequency - Must encompass at least one full week per month of the cost reporting period. For an annual report, that means 12 time studies per physician per year. The weeks studied must be equally dispersed and not include any holidays.
Documentation - Adequate documentation must be maintained to support total hours verifiably and serve as a condition of payment under Part A. (Without a written allocation agreement, the contractor assumes that 100 percent of the physician compensation cost is allocated to Part B services.)
The requirements for time studies are not just in the abovementioned manual; the MAC auditors also determine them. For a complete discussion of requirements, please read Building an Audit-Ready Time Study Program. The following five components let you not only meet but also exceed the auditors’ expectations:
Participation Rates – Build a program that works for your staff to maximize completion rates of time studies quickly and easily can result in participation rates exceeding 90%.
Timeliness – Having the time study filled out in near real-time increases the accuracy and the veracity if shown to an auditor.
Sufficient Detail – Find the balance between the minimum needed and the right level of detail so an auditor can determine how that physician spent their time, even months or years after the fact.
Attestations – Compel time study participants to sign off on their time studies personally, so it pushes the responsibility for accuracy on them.
Comprehensive Audit Trail – More data will always serve you should an audit arise. Hence, keeping records that show timelines of when actions took place and who did them is part of it. Having corroborating data points, such as computer system logs or scheduling system data that validates the time, will also show a rigorous process.
A solid physician time study program is about a consistent process with as much evidence as needed to pass muster with your MAC auditor.
If you are interested in learning how we can assist your organization, please use the Contact Us form or email us at info@timestudy.com.
Resources
Building Audit-Ready Time Study Programs (Vol. 5, July 2024)
HFMA Webinar Transcript: Time Studies Gone Bad (September 2024)
HFMA On-Demand Webinar: Time Studies Gone Bad (July 11, 2024, membership required)
