The Medicare Payment Advisory Commission (MedPAC) on March 9 discussed a draft recommendation that would make changes to how the wage index is calculated. The draft recommendation would direct the Centers for Medicare & Medicaid Services to compute the hospital wage index using wage data collected by the Bureau of Labor Statistics from all employers instead of the current process of collecting wages from hospitals.
The index methodology also would be modified by using Census wage data to calculate county-level wage index values and would reduce differences between neighboring counties to no more than 10%. Congress has instructed MedPAC to make recommendations on the area wage index by June 30 for consideration by CMS in the fiscal year 2009 inpatient prospective payment system proposed rule.
Earlier this month, the American Hospital Association sent a letter to MedPAC raising questions about its proposal, including the use of BLS versus hospital-specific data. Danielle Lloyd, AHA senior associate director of policy, noted during the public comment period that AHA has convened a working group comprised of state, regional and metropolitan association executives to examine area wage index reform, and that the group believes three of the biggest problems with the current system are its volatility, unrealistic labor market definitions and the "cliffs" that can occur when neighboring hospitals have dramatically different wage indices.
Lloyd asked MedPAC to provide further analysis and information on the aspects of the proposal that address these issues. The commission is scheduled to vote on its draft recommendation in April.
[ via AHA News Now ]