OIG audit: CMS should improve hospital wage index adjustments for rural hospitals

The Centers for Medicare and Medicaid Services’ healthcare facility wage index technique is just not undertaking sufficient to aid amenities in the bottom quartile, exclusively people in rural areas, in accordance to an audit carried out by the Division of Wellness and Human Products and services Place of work of Inspector Standard.

OIG’s audit located that of the hospitals in the bottom quartile of the region wage index for the federal fiscal 12 months 2020, 53% had been in rural spots. These hospitals also tended to be lesser and decreased-quantity amenities, in accordance to the report.

Mainly because of these conclusions, the watchdog company urges CMS to aim its bottom quartile wage index adjustment on hospitals with low or negative revenue margins instead than the ones with bigger, positive revenue margins.

It even more proposed that CMS search into why some hospitals in a certain region could spend bigger wages than other hospitals in the very same region, even in advance of the use of the bottom quartile wage index adjustment.

What’s THE Impression

The bottom quartile was produced up of 866 hospitals across 24 states and Puerto Rico. There had been six that accounted for forty one% of the bottom quartile hospitals – Puerto Rico, Alabama, Louisiana, Mississippi, Arkansas and West Virginia. Every of these had extra than 90% of their whole hospitals in the bottom quartile.

Extra than 50 percent of the hospitals in the lowest quartile are in states that did not extend Medicaid under the provisions of the Inexpensive Care Act. In concept, increasing Medicaid can strengthen healthcare facility revenues mainly because formerly uninsured individuals could develop into insured under Medicaid and seek treatment method, ensuing in bigger volumes, in accordance to OIG.

States that had hospitals in the lowest quartile also had the lowest minimal wages, with most states that give the federal minimal wage ($7.twenty five) falling into the bottom quartile.

The audit also located that healthcare facility revenue margins inside the past quartile different noticeably. For example, the margins ranged from -133% to 47% for 2016. Of the 783 hospitals for which info was collected, 303 had negative revenue margins that 12 months.

THE Larger Trend

CMS utilizes region wage indexes to change Medicare standard payments to hospitals in the inpatient and outpatient potential payment systems to replicate the selling prices hospitals face in their regional labor markets.

It utilizes wage info from four decades prior in the calculations, which raises considerations about how it could prevent some hospitals from raising wages.

To make up for that, beginning in 2020, CMS began modifying the healthcare facility wage index to carry the hospitals in the bottom quartile nearer to people in bigger quartiles. CMS strategies to proceed this tactic for at the very least four decades with the hope that hospitals in the bottom quartile will use the chance afforded by bigger Medicare payments to increase wages.

CMS has also produced a new benefit-centered payment design for rural healthcare providers, named the Neighborhood Wellness Access and Rural Transformation (CHART) Design. It offers aid by means of new seed funding and payment constructions, operational and regulatory flexibilities and complex and learning aid.

On top of that, CMS elevated Medicare payment rates for inpatient psychiatric amenities, proficient nursing amenities and hospices by two.two%, two.two%, and two.four%, respectively.


“We realize that CMS’s initiative to limit healthcare facility stress through the pandemic could make it hard for CMS to aim on new initiatives,” OIG said in the audit. “Having said that, when publish-pandemic circumstances allow for new initiatives, CMS could think about focusing the bottom quartile wage index adjustment extra specifically towards the hospitals that are the the very least in a position to increase wages devoid of that adjustment.”

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