Part 1: The Basics of Time Studies for Cost Reporting
Each year CMS requires a cost report to reimburse facilities accurately for their utilization and time spent on allowable tasks. Time studies are a key element to justify reimbursement wage allocation for physician and staff salaries; however, many organizations underestimate their impact.
Time studies help estimate the amount of a physician or other staff member’s wages are allocated for activities that are reimbursable. If intermediaries for Centers for Medicare and Medicaid Services (CMS) do not have supporting evidence in the form of time studies, then those wages will be disallowed. The difference between doing them correctly and not doing them can result in millions, even tens of millions, of reimbursement dollars.
This series takes a closer look at the ins and outs of time studies, how they affect your bottom line, and how your organization can make the process more efficient. In this first article, you will gain a deeper understanding of the fundamentals of physician time studies.
How Time Studies Work
Time studies sample a staff member’s weekly hours over multiple periods throughout a year to approximate how their time is being allocated. Hospitals can then use that information to calculate what portion of that staff member’s wages are eligible for reimbursement.
Time studies provide the receipts to get reimbursed for physician time spent on administrative tasks, supervision on nursing staff, teaching, emergency room physician availability, and tasks related to billable procedures.
The general concept works this way: A physician tracks their time across a time period such as a single work week. Over this time, they record 8 hours of reimbursable time spent on administrative tasks related to the hospital’s operation. Doing this multiple times throughout the year provides a statistically valid method to demonstrate how much time a physician spent on reimbursable time.
As in the example above, at 8 hours a week, a physician allocates about 15% of their time, or 310 hours, for that fiscal year. We can calculate based on the physician’s annual salary, how much of their wages fall under this reimbursable category. If the physician’s salary is $300,000 per year, then this would be $45,000 at $145/hour.
Time studies can also benefit organizations in other ways, not just for CMS reimbursement. For example, they can help track operational efficiency by determining whether a service line is using its staff efficiently. Time studies also record time against grant-funded research projects and show how contracted doctors and nurses accrue time against their contract requirements.
CMS Requirements for Time Studies
CMS explains the expectations for time studies in the CMS Provider Reimbursement Manual. However, the CMS intermediaries, Medicare Administrative Contractors (MACs), can have some latitude to allow slight variances with prior approval.
Generally, here are the key components:
A time study must encompass at least one full workweek per month. (Some MACs may allow other schedules, so check with them.)
You cannot use the same week in two consecutive months. If one studies the first week of the first month, then the next should progress to the second week in the second month, and so on.
A week being studied should not include a holiday.
Each time study must be completed within the reporting year.
Each time study must be provider specific. This means that if a system has multiple hospitals, the data supporting the wage allocation for a hospital must be from work conducted in that hospital, not an average from other facilities.
It is common practice to have the submitting staff members attest that their hours are accurate.
A time study usually allocates time into categories in 15-minute increments.
Applications of Time Studies for Cost Reporting
Not all time studies are alike. They are used in different departments tracking different staff members for different reasons. Some focus on physicians, while others include clinical and even administrative team members. We’ll delve into each of these areas in depth, but following are the four primary buckets:
Wage index – Capturing Physician “Part A” time for administrative tasks required to support the overall operations of the hospital.
Transplant Centers – Learning what portion of the center’s staff wages are dedicated to “pre-transplant” activities around organ acquisition.
GME/Paramedical Education – What portion of a teacher’s time is used for teaching interns, residents, and other learners in accredited education programs.
Emergency Room Availability – On-call time is tracked and can be reimbursed, which can be particularly impactful in a rural or critical access hospital.
As mentioned above, time studies are not exclusive to physicians, but “physician time studies” is often used (but is misleading). The first category relating to wage index tracks a range of staff members and factors into reimbursements based on those staff members’ salaries and duties, resulting in an Average Hourly Wage, or AHW, for the facility. Time studies are very influential because physicians are typically the highest wage earners and have an outsized impact on the AHW on your cost report.
The Task of Administering Time Studies
The administrative burden of overseeing time study programs in hospitals is nothing short of daunting. You have to determine who will receive them, develop a time study survey, and then distribute it. That’s the easy part.
Getting the staff to complete them is the challenge, often requiring a lot of follow-up and nagging. To complicate the matter, a vast majority of hospitals use manual processes, which take hours to compile the data and are prone to data entry errors. The pain of a manual process is really felt when it comes time for the annual Cost Report. Calculating all of the wage allocations in vast spreadsheets, especially across multiple teams and facilities, consumes weeks of staff time.
It all makes for a herculean task, but a task that is essential for your hospital’s bottom line. With an efficient process and hospital buy-in, you can see enhanced reimbursement with less staff time.
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