fbpx

< Back to Thought Leadership

Proposed Changes to the Wage Index

On April 23, 2019, the Centers for Medicare and Medicaid Services (CMS) released the Proposed Rule for the Hospital Inpatient Prospective Payment System (IPPS) for Acute Care Hospitals. The proposed rule includes several significant changes to the wage index calculation impacting the wage index factors and rural floor calculation. It is important to understand and prepare for these proposed changes to determine how they may impact your hospital’s reimbursement.

Based on feedback from hospitals, CMS is proposing changes to the wage index factors by increasing the factors for hospitals in the lower 25th quartile and decreasing the factors for hospitals in the upper 25th quartile. This would affect hospitals with a wage index lower than .8482 and higher than 1.0351. The increase to the lower 25th quartile would be applied on an individual hospital level after reclassification and outmigration adjustments.

In addition, CMS is proposing changes to the rural floor calculation. Based upon long-standing IPPS regulations, the wage index for urban hospitals cannot be lower than the rural wage index for their state. Currently, the rural floor can be increased by hospitals that reclassify from urban to rural. This was an unintended consequence of the Urban to Rural reclassification. CMS has proposed removing hospitals with an Urban to Rural reclassification from the rural floor calculation. However, data from these hospitals will continue to be included in the wage index for the rural hospital wage index.

Any negative transition to the proposed rules will be limited to 95 percent of the FFY 2019 wage index for FFY 2020 only. This will allow the effects to be phased in over two years.

If you have any questions about the proposed rule and how the changes affect your hospital, please contact one of the following people for more information:

Carolyn Chaplin at cchaplin@blueandco.com
Kyle Smith at kcsmith@blueandco.com

How to Manage Clinical Validation Denials

In the past several years, hospitals have continued to feel the impact on revenue from Clinical Validation Denials (CVD). The need for a robust CDI team to capture support for clinical indicators while the patient is still in house is more imperative than ever. The other overwhelming piece for revenue cycle teams to manage is […]

Learn More

Margin Improvement: Optimizing Financial Performance

Ensuring the long-term financial viability of a health system requires constant attention to the operating statement. This involves assessing the current state of your healthcare organization and critically comparing the current condition to industry and/or internal benchmark standards. Ultimately, this assessment assists management implement an ongoing margin improvement process to increase the likelihood of achieving […]

Learn More

Blue Named One of Kentucky’s Best Places to Work

CARMEL, Ind. (May 3, 2023) – Blue & Co., LLC is honored to be named among the Best Places to Work in Kentucky by the Kentucky Chamber of Commerce, the Kentucky Society for Human Resource Management (KYSHRM) and ClearPath Mutual Insurance Company. This is the 12th year Blue & Co. has made the list as […]

Learn More