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September 29, 2020

The Center’s Wage Index Project to Bring Hospitals Millions in Additional Medicare Revenue in 2021



Northeast Ohio hospitals will receive an estimated $9.63 million in additional Medicare revenue in federal fiscal year 2021 as a result of The Center for Health Affairs’ Medicare wage index project. Under the hospital inpatient prospective payment system final rules, released Sept. 2, the final wage index for the Cleveland core-based statistical area (CBSA) is 0.8814. This is up from 0.8788, the index based on the data initially submitted by hospitals before the work of Reimbursement Alliance Group (RAG).

The Center’s Medicare wage index project is an annual initiative that over the years has helped the region’s hospitals capture many millions of dollars in Medicare revenue that would otherwise have been forgone. Consultants RAG work with hospitals to ensure the final data being submitted to the Centers for Medicare and Medicaid Services (CMS) through Medicare cost reports is accurate and comprehensive.

Wage Index Graph

What is the wage index?

The wage index is a factor used by CMS to account for regional differences in the cost of wages in the Medicare reimbursement formula. The wage index assigned to a region by CMS has a significant impact on the level of reimbursement the region receives for Medicare patients. And in fact, other payers often factor in what Medicare pays when determining their own reimbursement level, which means the wage index project results can ripple throughout hospital payments.

A key factor in the success of the project is the participation of every hospital in the Cleveland CBSA. The wage index is calculated based on the data reported by all hospitals in a region. This means each individual hospital can influence the reimbursement of all hospitals in the CBSA. The commitment of hospitals in the region to the project has enabled them to achieve gains each year.

2022 Project Underway

Although the final 2021 wage index was just announced this month, The Center is already at work on the fiscal year 2022 project. Currently consultants RAG have completed an initial analysis and are working with hospitals to discuss their findings before finalizing and delivering the revision package to the Medicare Administrative Contractor (MAC) for consideration. In the coming months, initial results will be estimated but the final outcome will not be known until the final 2022 inpatient rule is published by CMS late next summer.

MORE: For more on The Center’s wage index project and its impact on Medicare revenue, contact us.

TWEETABLE: Northeast Ohio hospitals will receive an estimated $9.63 million in additional Medicare revenue in 2021 as a result of The Center’s wage index project.



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