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June 19, 2015 (Cleveland, Ohio)

FY 2016 Wage Index Results Announced: $19.4 Million Expected

Reimbursement Forum members were presented with the FY 2016 wage index results at their June 16 meeting where they learned that Northeast Ohio hospitals can expect $19.4 million in additional fee-for-service Medicare reimbursement thanks to The Center for Health Affairs' Medicare wage index project. For months, The Center and its contracted wage index professionals from the Reimbursement Alliance Group have been working with the region’s hospitals on a project to maximize wage index; preliminary results suggest these efforts have truly paid off. 

As a result of this year’s project, wage index factor is expected to increase, rising from 0.9127 in FFY 2015 to 0.9301 in FFY 2016. This increase places the greater Cleveland region’s wage index higher than every other region in the state, with the exception of Columbus. Most other regions in Ohio have seen their wage index factors either remain stable or decline over the last several years, while the greater Cleveland area has trended upward.

“The Center’s member hospitals have worked collaboratively on wage index for years, which is really crucial. When we lose ground on wage index, the dollars we would have received flow to other regions and do not benefit Northeast Ohioans,” explained Bill Keckan, executive director of regional operations at the Cleveland Clinic. “The increase in wage index in Northeast Ohio is a big win for the region.”

In addition to the increased inpatient and outpatient reimbursement expected from the FY 2016 wage index results, hospitals in Northeast Ohio can look forward to increased revenue for commercial business that is tied to Medicare rates, such as that through Medicare managed care plans. In FY 2016, the managed care impact is expected to be close to $7.8 million additional dollars.

Wage index is a factor used by the Centers for Medicare and Medicaid Services (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 can have a significant impact on the level of reimbursement that region receives for Medicare patients, which is why it is so important for Northeast Ohio hospitals to regularly review the data used to derive the wage index and present it to CMS as advantageously as possible. 

For more information on the FY 2016 wage index results please contact Lisa Anderson at 216.255.3660 or via email or George Jeney at 216.255.3666 or via email.