CMS Reports Expected Hike in Inpatient Hospital Payments
May 9, 2017
Show all

A Better Understanding of the Medicare Wage Index

One of the many services that we frequently provide for healthcare facilities is review of their Medicare wage index data.  According to section 1886 (d)(3)(E) of the Social Security Act, standardized hospital wage levels (related to services paid for with Medicare and Medicaid services) must be adjusted to factor in the difference in average wages of the geographical area versus the national average.  This is where the Medicare wage index (MWI) comes into play.

This wage index can impact many areas of healthcare offered within the hospital environment.  Acute care hospitals are directly affected, but  rehabilitation, psychiatric, skill nursing, home health,  and hospice care are as well.

Analysis of a hospital’s wage data will include an investigation of the salaries and wages of hospital employees and home office- or related party employees.  Furthermore, payroll will be broken down to reflect hourly wages of these employees.

Another method of increasing a hospital’s reimbursement is through reclassification.  Hospitals can apply for re-designation, however, in order to be considered for this, the medical facility must meet certain criteria.  It isn’t a simple process, but can be very beneficial, which is why this process often begins with an evaluation to determine if it is worth applying for re-designation, and to ensure that the hospital will be able to meet all of the necessary criteria.


TheMWI is regularly evolving. One of the most important factors considered for adjustments to the HWI is the mandatory Occupational Mix Survey, which is required by facilities participating in the Medicare program. This information is used to adjust the average hourly wage.  It is meant to essentially level the playing field, by removing one the variable of staffing differences.

The Occupational Mix Survey is required by CMS every three years to make adjustments to the Medicare wage index and is required of all hospitals subject to IPPS. The salary data examined is for a calendar year and will affect the MWI over a three-year period.

Whether it is review of the data for submission, a reclassification that the medical facility seeks, or just assistance filing the Occupational Mix Survey, there is help to be found at R-C Healthcare Management.

Leave a Reply

Your email address will not be published. Required fields are marked *