The American Hospital Association has released a chart pack analysis of Medicare area wage indices, which alters hospital inpatient and outpatient payments based on differing wage rates across geographic regions, according to an AHA News Now report.
CMS utilizes hospitals' CMS cost reports to determine average hourly wage. In turn, that average is used to calculate the area wage index, based on the national average hourly wage. Wage indices are calculated every four fiscal years. However, hospitals can apply for seven reclassifications and exceptions for a higher wage index area.
AHA plans to use this chart pack during discussions to reform wage indices. HHS has until the end of this year to recommend a plan for those reforms to the federal government. The chart pack was developed using a variety of CMS data, principally the fiscal year 2012 IPPS final rule.
According to AHA's chart pack analysis, hospital payments can differ significantly based on the wage index. For example, based on the fiscal year 2012 base rate of $5,209.74, hospitals in the highest and lowest wage indices would ultimately be paid $7,717.32 and $4,330.20, respectively.
Other notable findings from AHA's chart pack include the following:
• More than one-third of hospitals have an exception or reclassification for a higher wage index.
• The nationwide average hourly wage has increased from fiscal year 2005 ($26.63) to fiscal year 2012 ($36.72).
• Despite an incremental increase in average hourly wage over the last seven years, approximately one-third of hospitals faced decreasing area wage indices.
• Hospitals saw the highest average percent gain (16 percent) in wage index through the "frontier" wage index floor reclassification/exception.
• For fiscal year 2012, a record low of 599 hospitals was used to calculate the rural floor, compared to 1,805 hospitals in fiscal year 2000.
CMS utilizes hospitals' CMS cost reports to determine average hourly wage. In turn, that average is used to calculate the area wage index, based on the national average hourly wage. Wage indices are calculated every four fiscal years. However, hospitals can apply for seven reclassifications and exceptions for a higher wage index area.
AHA plans to use this chart pack during discussions to reform wage indices. HHS has until the end of this year to recommend a plan for those reforms to the federal government. The chart pack was developed using a variety of CMS data, principally the fiscal year 2012 IPPS final rule.
According to AHA's chart pack analysis, hospital payments can differ significantly based on the wage index. For example, based on the fiscal year 2012 base rate of $5,209.74, hospitals in the highest and lowest wage indices would ultimately be paid $7,717.32 and $4,330.20, respectively.
Other notable findings from AHA's chart pack include the following:
• More than one-third of hospitals have an exception or reclassification for a higher wage index.
• The nationwide average hourly wage has increased from fiscal year 2005 ($26.63) to fiscal year 2012 ($36.72).
• Despite an incremental increase in average hourly wage over the last seven years, approximately one-third of hospitals faced decreasing area wage indices.
• Hospitals saw the highest average percent gain (16 percent) in wage index through the "frontier" wage index floor reclassification/exception.
• For fiscal year 2012, a record low of 599 hospitals was used to calculate the rural floor, compared to 1,805 hospitals in fiscal year 2000.
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