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Medicare Wage Index Project Brings Millions in Additional Reimbursement to Hospitals

The final rules are out, and Cleveland-area hospitals are expected to benefit from this year’s Medicare wage index project to the tune of $7.7 million.

Based on historical data, this is a conservative estimate of payments rendered to Medicare fee-for-service inpatients by the hospitals participating in The Center for Health Affairs’ Medicare wage index project. It does not include the impact on Medicare outpatient services or other insurers, such as managed care payers, that base their payments on Medicare rates.

Under the final rules for the federal fiscal year 2020 Medicare inpatient perspective payment system, published this month by the Centers for Medicare and Medicaid Services (CMS), the Cleveland-area wage index is 0.8819, up from 0.8732 as reported at the beginning of the project. In April, the final wage index was anticipated to come in higher, at 0.8827. However, a change in the final rule resulted in a slight decrease.

This occurred because in April, CMS proposed to increase the wage index for areas in the lowest 25th percentile of indices, funded by a decrease in the areas where the wage index was above the 75th percentile. The Cleveland area’s wage index was not expected to be impacted by this proposal, as it does not fall within either of these quartiles. However, in the final rule CMS ultimately decided to fund the increase for the 25th percentile by spreading the impact across all other hospitals. The resulting impact for Cleveland-area hospitals is a decrease of about $700,000 compared to the April calculation.

Each year for The Center’s Medicare wage index project, expert consultants Reimbursement Alliance Group are engaged to assist hospitals in ensuring the completeness and accuracy of their cost report data. The project typically brings millions of dollars back to the region that would otherwise have been left on the table.

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

TWEETABLE: Great news for Cleveland-area hospitals. @neohospitals' #Medicare wage index project will bring approximately $7.7 million in additional reimbursement to Northeast Ohio hospitals in 2020.