November 23rd, 2009

Reports the Altoona Mirror:

The federal government uses the Medicare wage index as a tool to adjust Medicare payments to hospitals, so they reflect regional variations in the cost of doing business.

Since the Balanced Budget Act of 1997, the federal government has generally kept the total amount of Medicare dollars the same, although changes in the index help redistribute that amount from year to year.

The index for a region is that region’s average hospital wage, as a percentage of the national average.

Applying the index helps ensure Medicare reimbursements are proportional to hospitals’ actual costs.

…

If the hospital’s index were as high as the state average of 0.8976, it would receive about $449,000 more this fiscal year, the hospital said. If the hospital’s index were as high as the national average of 0.9771, it would receive about $2.75 million more.

Asked whether there’s merit to complaints about alleged inequities in the Medicare wage index, Griffith said the Centers for Medicare and Medicaid calculates the index based on information submitted by the hospitals and reviewed and audited by CMS.

Hospitals can challenge their index numbers through a “uniform and comprehensive process,” she said.

Medicare laws and regulations allow adjustments, under certain circumstances, when an area draws much of its work force from a neighboring area, she said. Hospitals also can apply to receive a neighboring area’s index if they believe it more accurately reflects the wages they pay, she said.

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