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2023 Medicare Wage Index Project Averts $10M loss, Results in $1.3M Gain for Northeast Ohio

The 2023 Northeast Ohio hospital Medicare wage index project, led by The Center for Health Affairs, will result in approximately $11.3 million more in reimbursement for the region’s hospitals compared to what they would have received absent the initiative.

Based upon the review by the fiscal intermediary of hospital cost report data, the region stood to lose $10 million in reimbursement in the year ahead. This is because the review resulted in a decrease in the wage index to 0.8673, compared to 0.8772 as filed. Upon completion of an appeal of this determination, the final wage index of 0.8785 was established, and hospitals are now expected to experience a gain of $1.3 million.

2019 Ohio Wages Below National Average

The 2023 wage index is based on 2019 data and reflects a 2.7% increase in the national average hourly wage, compared to a 1.6% increase in the Northeast Ohio region. Because 2019 wages in Northeast Ohio are below the national average, the region’s 2023 wage index of 0.8785 is significantly less than the 2022 wage-index of 0.8860.

When compared to 2022 reimbursement levels, the results of this year’s wage index project are even greater. Without the work performed in the project, the region’s hospitals would have experienced an estimated $34.7 million reduction in reimbursement in 2023 compared to 2022, assuming a stable utilization of Medicare services.

About the Wage Index

The Center’s annual Medicare wage index project over the years has helped the region’s hospitals capture many millions of dollars in Medicare revenue that would otherwise have been forgone. Over just the last five years, the project has returned $51.8 million in increased reimbursement.

Consultants at Reimbursement Alliance Group work with participating 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. The gains from the project far exceed the cost, which this year was $148,000 across the participating hospitals and included a discount negotiated by The Center for Health Affairs.

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

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