CMS Payroll Based Journal (PBJ) Pilot Audits:

Lisa Volk and Nancy Leveille in Clinical & Quality

NYSHFA has recently been notified that CMS is conducting PBJ pilot audits in other states. NYSHFA has received some further details about one of the audits conducted, which focused on key questions upon entrance. The on-site audits are being announced beforehand so the facility know the auditors will be coming. The facility was provided a letter regarding the pilot. NYSHFA recommends that providers look at their policies related to meal breaks, hours reported, time keeping, interface between systems, as well as categorizing corporate and agency staff. Below is some of the feedback we received from the facility regarding the audit results, take a look at exit conference notes for further details and for auditor’s comments in each of these areas.

Entrance Conference Notes: 

Entrance meeting with the 2 auditors.

The auditor presented a letter that stated this is a pilot audit and there will be no resulting liabilities from the audit.

Introductions were made and they provided their overview of time necessary completing the audit with an exit meeting estimated to last approximately 30 minutes depending upon their findings. 

These questions were presented during the entrance meeting: 

  • How are employee IDs assigned?
  • Please provide a brief explanation of the payroll process
  • Are there any Corporate Shared Employees and explain the process.
  • Are there any non-nursing beds such as assisted living, hospital, etc.? 
  • How are Exempt Salaried employees time recorded?  They are recorded as standard work week hours.
  • What are the standard shift times? 
  • Do you follow the midnight cutoff for recording PBJ Hours by day.
  • Can you provide the reconciliation of Timekeeping to payroll.
  • Do you Exclude meal time from PBJ reporting?
  • What is the minimum break time given on a daily basis beyond the meal break. 
  • Is offsite training hours included in PBJ hours?
  • Do you have nursing staff that has secondary positions such as a CNA with a secondary position of housekeeping?
  • Do you have outside staff?
  • What is your pay period and pay date?
  • Do you have timekeeping rounding rules? 

An additional question was asked on the corporate employees why they were considered “Contracted” employees versus “Employees”. It was explained that the Time and Attendance software company provided the recording mechanism for the corporate employees as contracted employees.

Exit Conference Notes

Exit Conference held with auditors from Meyers & Stauffer to review their findings as follows:

  • Meal Breaks – they maintain that CMS requires a 30-minute meal break per shift (longer than 6 hours) that will not be included in PBJ Hours. The auditors stated this is a CMS requirement.  We explained to the auditor that when an employee punches out at the end of the day, our time and attendance system asks the employee if the employee has taken a meal break and the employee is required to respond yes or no. If the employee answers “NO” meaning the employee worked through their meal break time we should be allowed to count those hours.  The auditor responded “NO.” CMS requires a 30-minute meal break per shift and that time regardless of the employee’s response will not count towards PBJ Hours.
  • Hours reported on PBJ by week did not match to what was paid – Auditors selected 25 employees and found 26 discrepancies on 7 employees over the course of the reporting period. We analyzed the discrepancies. One was due to an adjustment entered in payroll but not recorded in timekeeping. The rest of the discrepancies were due to the methodology of how PBJ days are split. PBJ pay period ends at midnight on the last day of the pay period, payroll ends at the end of the night shift at 7:00 am. PBJ records 11:00 PM to midnight in the current week and midnight to 7:00 AM is included in next pay period. Payroll includes 11:00 PM to 7:00 AM in current pay week.
  • Time Keeping Rounding Rules – We utilize a 7-minute rounding rule that the Auditor from, Myers & Stauffer informed us that we could be losing time that could be credited towards PBJ Hours. Example an hourly non-exempt employee punches in at 6:53 AM and punched out at 3:03 PM the rounding rule will identify start time for payroll as 7:00 AM and out time as 3:00 PM. The auditor stated; “If you pay on actual time you would include another 10 minutes.” We explained that It is also true that if the employee punches in at 6:52 AM and punched out at 3:08 PM the rounding rule will identify start time as 6:45AM and out time as 3:15 PM. Auditors Response – No action is needed.
  • Our corporate employees when spending time in our facilities doing PBJ reportable tasks are entered into our time and attendance system as consultants. The auditor wanted them entered as employees. We disagreed with their findings as it is a management company providing paid services to the facility and has no ownership of the facility. They disagreed with our statement and want the corporate staff recorded as employees.
  • Agency Hours – difficulty matching the hours submitted to the invoices and have not provided the auditors with the full documentation. Agency bill pay weeks do not always match facility pay weeks and some of the agency bills contained hours from prior weeks (if an agency employee did not turn in their time sheet etc.). Time cards are locked once a pay week is closed. Manual entry into the payroll system for PBJ purposes was conducted for consultants (medical director, pharmacist etc.). The system at present does not allow us to reference the source document. In order to assist in future audits, we are requesting a modification to allow a comment field on the entry so that the source document can be referenced. While we provided bills for consultants and agency staff we provided as backup, auditors also requested documentation showing the bills had been paid.
  • The auditors strongly advised an interface between the system of record and out time an attendance system. They understood the complexity of developing/implementing an interface but strongly recommended it.


Lisa Volk, RN, B.P.S., LNHA
Director, Clinical & Quality Services
518-462-4800 x15

Nancy Leveille, RN, MS
Executive Director
518-462-4800 x20