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Contract Services: Impact on Wage Index

In the past several years, hospitals have continued to feel the impact of increased utilization of contract nursing and other contract services. Although these services have developed into a major expense line item, it is important for hospitals understand how expenses related to contracted services can impact the wage index factor for Medicare reimbursement.

Contract Services can Increase Wage Index Factor

If a hospital’s contract labor is identified and reported correctly, it could raise its wage index factor significantly.

Contract labor related to the following personnel can be included in the wage index data:

  • Direct patient care personnel related to nursing, diagnostic, therapeutic, rehabilitation and pharmacy
  • Top level management related to CEO, COO, CFO, or nursing administrator
  • Administrative physicians related to Medical Director, Chief of Medical Staff, or physicians in administrative activities
  • Administrative and general personnel related to legal, data processing, tax preparation and other administrative functions

Contact Us about Your Organization’s Wage Index Survey

Blue & Co.’s Wage Index team has significant experience in identifying contract labor for reporting on the Wage Index Survey. Our team of professionals can answer questions about how CMS uses the Wage Index Survey and its impact on Medicare reimbursement. Blue & Co. will work with your hospital to help ensure compliance with CMS regulations and assist in appropriately capturing all of the information required.

Please reach out to your local Blue & Co. Advisor or contact one of our experts listed below if your organization needs more information about the Wage Index Survey or how contract services can impact your wage index.

Kyle Smith, CPA, 340B ACE, Director

Carolyn Chaplin, CPA, Senior Manager

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