Part 3. Transplant Center Time Studies Explained
Transplant centers are the epicenters of time studies, in many ways. They are an area of Medicare reimbursement where the time reported results directly in a portion of payment returning to the hospital. Transplant centers spotlight the value of optimizing the wage allocation captured through time studies.
The objective in this case is to reimburse a transplant center for the portion of time its staff spends on organ acquisition, referred to as “pre-transplant” activities. Once that is gathered, then those staff costs, in addition to benefits, and hospital overhead, are reimbursed at the Medicare organ ratio based on organ type.
Transplant center time studies have the highest degree of difficulty by far. Their complexity stems from having a wide range of roles report their time, plus capturing that time by solid organ type. In a center that only has one type, it’s simple; however, when you have four, five, or more, then the calculations get progressively more complex.
Preparing your annual cost report can feel like trying to solve a Rubik's Cube. But, an efficient time study process sets you up to solve the challenge like a champ. Let's examine how time studies can yield more funding – with less effort.
The Increased Audit Risk for Transplant Centers
Transplant center time studies are more challenging not only due to their complexity but also due to their risk of audit. About a quarter of a century ago, the Office of Inspector General for HHS investigated the reimbursement rates for 11 transplant centers nationwide. In 2006, the OIG report was published and the results were shocking: More than 58 percent of the $80 million in organ acquisition costs submitted to Medicare for reimbursement were unsupported by proper documentation. A big culprit was poor time studies.
But what does a 2006 investigation have to do with today? The Centers for Medicare and Medicaid Services (CMS) have a directive to begin auditing transplant centers in 2025. The audits are meant to determine whether administrative and general costs are allowable, reasonable, and according to Medicare requirements.
The outcomes can have major financial impacts for transplant centers.
Time Study Basics for Transplant Centers
CMS reimburses for pre-transplant administrative activities through a formula that accounts for wages and benefits for staff, as well as overhead costs for the center. Periodic time studies are the avenue by which finance professionals can account for salary and wages in the annual Medicare Cost Report. To optimize reimbursement, facilities need to understand and follow the correct process for time studies.
Time studies account for pretransplant administrative activities by those supporting the various transplant programs. Some examples of the roles to include are as follows:
Medical Directors
Surgeons and Physicians
Nurse Coordinators
Social Workers
Dietitians
Living Donor Advocates
Administrators and Financial Coordinators
The activities that fall under the category of “organ acquisition” are also relatively expansive and include:
Candidate screenings
Coordinating with Organ Procurement Organizations (OPOs)
Living donor coordination
Organ harvesting and preparation
Administrative tasks for pre-transplant
All of these people and activities need to be tracked by solid organ type, so it’s easy to imagine the administrative challenge this presents.
Financial Impact of Time Studies
In transplant centers, reimbursement is directly tied to staff members’ full compensation package, which includes salary and benefits. The formula includes the percentage of a staff member's hours, multiplied by their compensation and overhead costs determined by the facility. This figure is then combined with all other organ acquisition costs, and Medicare reimburses its share of this cost based on the Medicare ratio of usable organs by organ type.
Although a range of staff members and care providers complete time studies in a transplant center, achieving a high participation rate from your physicians could lead to additional reimbursement.
How does this translate into real dollars? Let’s look at a hypothetical situation. A physician has an annual salary of $400,000 at a transplant center that only performs kidney transplantation. The physician’s total compensation would be supplemented by an additional percentage for their benefits and hospital overhead, which in this example is 23 percent and 18 percent, respectively. When totaled, the compensation package is $564,000.
Table 1. Example of Calculating Reimbursable Wages for a Kidney Transplant Center Surgeon.
Based on time studies conducted throughout the fiscal year, we learn that they spent 18 percent of their hours on pre-transplant activities, which would equate to $101,500 of compensation for that category of work. The final step is to apply the Medicare ratio at this transplant center for kidney transplants, which is 68.5 percent. After calculation, the Medicare portion of reimbursement is $69,541. Note: This example assumes the physician’s compensation and hours worked are within the CMS Reasonable Compensation Equivalents (RCE) limits.
Now, let’s expand that to the whole transplant center. We have a transplant center with 50 staff members, ranging from social workers to transplant surgeons. Our representative transplant center has an average compensation, including salary, benefits, and overhead of $12.25 million.
Staff spend an average of 24 percent of their time on pre-transplant administrative activities across multiple organ types. The average Medicare ratio for this center is 65.3 percent. To calculate the reimbursement potential for this organization, we multiply these numbers, and the end result is $1,750,000. However, this outcome depends on 100 percent participation in time studies from all staff members. (Table 2)
Table 2. Transplant Center Team Total Reimbursable Wages.
Table 3. Transplant Time Study Compliance Calculator
To contrast that, if this transplant center only achieved 20 percent compliance with time studies, its reimbursement would plummet to only $350,000. In this hypothetical, every additional 10 percent of staff participation in time studies yields an additional $175,000. (Table 3)
Obtaining accurate, consistent time studies from physicians is a challenge. Automating the process with reminders, using simple surveys, and streamlining collection and storage makes the process much easier. You’ll also be prepared if CMS audits your facility. Time Study is here to help. We have educational resources to help you realize what’s possible with time studies and how to make them easier to manage.
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