Payroll-Based Journal Audits Are Lurking on the Horizon

July 12, 2017 Tom Jegou

Just when you thought it was safe to go back in the water, the Centers for Medicare & Medicaid Services (CMS) is circling back with a new spin on Payroll-Based Journal: PBJ audits.

With three mandatory reporting periods now behind us, PBJ reporting itself is nothing new. The  reporting date for the fourth period is looming ominously, with a deadline of Aug. 14.

If you’re like most long-term care facilities, you fall into one of three camps:

  1. You’re secretly hoping that PBJ reporting will disappear into the vast waters of governmental bureaucracy.
  2. You’re struggling to just get by, furiously doing the doggy paddle, sweating it out each quarter as you prepare and submit your report.
  3. You’re relieved that things are going swimmingly, thanks to automated processes that pull the report data for you.

We hate to tell you, but there’s no lifeline available if you fall into the first camp. PBJ reporting is here to stay. PBJ will not be affected by either the House-passed American Health Care Act (AHCA) or the Senate-proposed Better Care Reconciliation Act (BCRA). Those of you in the second camp are in need of some PBJ report CPR; it’s crucial that your submissions are accurate and on time. And a word of warning to those in the third camp: Don’t become too complacent. With PBJ audits, CMS will be verifying your submissions so there’s no room for error.

Although LTC facilities are accustomed to a variety of audits, PBJ audits are uncharted waters.

While the actual data that’s submitted is important, how you submit that data is equally important. LTC facilities must dot their I’s and cross their T’s. For facilities without automated processes, manual PBJ reporting is a labor- and time-intensive task, with staffs already stretched paper thin.

CMS Compliance is Key

CMS took a slow and steady approach in introducing PBJ reports. Beginning Oct. 1, 2015, PBJ reporting was optional for LTC facilities. Mandatory reporting began starting July 1, 2016, with the first mandatory report due Nov. 14, 2016.

For LTC facilities where PBJ compliance may not be top on the list of priorities, the prospect of an audit puts compliance in a whole new perspective. The federal government has attempted to make it a priority, with Medicare’s Nursing Home Compare site. Facilities failing to submit PBJ reports literally get a black mark by their name, indicating that:

Facilities failing to submit PBJ reports literally get a black mark by their name

Currently, facilities that fail to submit PBJ reports receive a slap on the hand from CMS. In the near future, if a facility misses two consecutive reports, CMS plans to suppress its 5-Star Quality Rating (based on health inspections, staffing, and quality measures):

In the near future, if a facility misses two consecutive reports, CMS plans to suppress its 5-Star Quality Rating

As CMS becomes more of a stickler with PBJ reporting, it’s easy to see how PBJ audits would be a natural extension of that process. Compliance now can avoid complications later.

Non-profit and For-profit Budgeting

For nonprofit facilities in particular, maintaining compliance can be a slippery slope. They must work to balance spending on labor with the need for compliance.

In that respect, both nonprofit and for-profit facilities can benefit from software that incorporates a budgeting function. In doing so, budget planning will be less of a guessing game and instead based on actual data.

How to Know If You're Receiving a CMS PBJ Audit

How do you know if your facility will be the subject of a PBJ audit? CMS will send an official letter outlining who will conduct the audit (independent third parties) and what they will review.

Here’s an excerpt of the letter:

“The PBJ audit team will examine payroll records and other auditable data along with PBJ submission data to identify if staffing is being reported accurately based on hours staff are paid to work. This may include, but is not limited to, information from payroll, timekeeping systems, invoices for contracted staff, and interviews with staff responsible for PBJ data entry.”

LTC facilities should note that, for now, PBJ audits are a pilot program. As the CMS states in its audit letter: “Any findings from these audits will not result in sanctions or negative actions against the facility.”

Once PBJ audits move past the pilot stage, the CMS could ramp up such penalties. In fact, CMS could very well modify the way it calculates 5-Star Ratings, as early as 2018, basing them on data gleaned from the audits. If so, staying on top of staffing compliance will be crucial.

CMS expects LTC facilities to comply with the requirements set forth in 42 CFR §483.75, according to its specifications. CMS maintains authority to issue enforcement remedies beyond ratings sanctions, such as the imposition of civil monetary penalties (CMPs).

PBJ Audit Information Requested

The information requested for a PBJ audit is extremely detailed, from daily census summaries and time system reports to payroll job codes, invoices and other documentation. Since the inception of PBJ reporting, the CMS has emphasized that data submitted must be verifiable and auditable (hint, hint).

That’s why, as PBJ audits loom menacingly on the horizon, report data must be completely buttoned up. Automated processes can ease the burden and reduce the margin for error. Remember, noncompliance refers to either the failure to report or errors in reporting.

Look for a PBJ software solution that offers reporting on direct care staffing information, including agency and contract staff, and census information. Software should include a scheduling component to tie in expected staffing levels with actual levels, as evidenced by time and attendance records. LTC facilities can then predict staffing needs, based on census data, and optimize their schedules for PBJ-compliant staffing levels.

Because the PBJ reports are run after the fact, using a stand-alone tool to create PBJ submissions does not give facility management many options if they are not happy with the outcome. Utilizing a full-suite solution that includes scheduling, time and attendance, and PBJ reporting allows a facility to identify issues with staffing levels in advance and course correct, before the end of the PBJ reporting period.

You can either sink or swim when it comes to PBJ audits. Treading water is not an option. We’ll continue to monitor and report on the PBJ audit saga. Stay tuned.

About the Author

Tom Jegou

As Compliance Expert at SmartLinx, Tom Jegou oversees SmartLinx innovations in our payroll and compliance systems. Tom is focused on transforming client needs into leading-edge products. Tom leads cross-functional teams from a product's conception through to its launch. Tom led the design of the 1095-C and Payroll-Based Journal reporting features in the WorkLinx<sup style="font-size: 60%;">TM</sup> suite. Since 1996, Tom has worked with every aspect of Human Capital Management Systems. He has defined, supported, implemented and managed Payroll, Time and Labor and HR systems. Tom is a Certified Payroll Professional through American Payroll Association.

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