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

Joseph B. Hash

The Facilities for Medicare and Medicaid Services’ healthcare facility wage index program is not doing adequate to guidance services in the bottom quartile, specifically those in rural locations, according to an audit carried out by the Section of Wellness and Human Products and services Place of work of Inspector Normal. […]

The Facilities for Medicare and Medicaid Services’ healthcare facility wage index program is not doing adequate to guidance services in the bottom quartile, specifically those in rural locations, according to an audit carried out by the Section of Wellness and Human Products and services Place of work of Inspector Normal.

OIG’s audit identified that of the hospitals in the bottom quartile of the region wage index for the federal fiscal year 2020, fifty three% had been in rural spots. These hospitals also tended to be smaller sized and lower-volume services, according to the report.

Simply because of these findings, the watchdog agency urges CMS to concentration its bottom quartile wage index adjustment on hospitals with lower or destructive income margins instead than the kinds with larger, beneficial income margins.

It even more prompt that CMS glance into why some hospitals in a certain region could pay back larger wages than other hospitals in the identical region, even prior to the use of the bottom-quartile wage index adjustment.

What is actually THE Impact?

The bottom quartile was manufactured up of 866 hospitals throughout 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. Each of these had additional than 90% of their whole hospitals in the bottom quartile.

Far more than fifty percent of the hospitals in the lowest quartile are in states that did not expand Medicaid beneath the provisions of the Affordable Care Act. In concept, expanding Medicaid can boost healthcare facility revenues due to the fact earlier uninsured individuals could become insured beneath Medicaid and look for therapy, resulting in larger volumes, according to OIG.

States that had hospitals in the lowest quartile also had the lowest minimum wages, with most states that offer you the federal minimum wage ($7.25) falling into the bottom quartile.

The audit also identified that healthcare facility income margins within just the previous quartile various significantly. For instance, the margins ranged from -133% to 47% for 2016. Of the 783 hospitals for which info was gathered, 303 had destructive income margins that year.

THE Larger Trend

CMS employs region wage indexes to regulate Medicare normal payments to hospitals in the inpatient and outpatient potential payment systems to reflect the prices hospitals facial area in their area labor markets.

It employs wage info from 4 yrs prior in the calculations, which raises issues about how it could reduce some hospitals from increasing wages.

To make up for that, commencing in 2020, CMS started changing the healthcare facility wage index to provide the hospitals in the bottom quartile nearer to those in larger quartiles. CMS plans to continue on this tactic for at the very least 4 yrs with the hope that hospitals in the bottom quartile will use the possibility afforded by larger Medicare payments to increase wages.

CMS has also established a new value-based mostly payment model for rural healthcare vendors, referred to as the Local community Wellness Access and Rural Transformation (CHART) Product. It gives guidance via new seed funding and payment constructions, operational and regulatory flexibilities, and specialized and understanding guidance.

Additionally, CMS increased Medicare payment costs for inpatient psychiatric services, proficient nursing services and hospices by two.two%, two.two% and two.4%, respectively.

ON THE Report

“We identify that CMS’s initiative to reduce healthcare facility stress for the duration of the pandemic could make it difficult for CMS to concentration on new initiatives,” OIG claimed in the audit. “Even so, when publish-pandemic problems let for new initiatives, CMS could think about focusing the bottom quartile wage index adjustment additional specifically towards the hospitals that are the the very least capable to increase wages with out that adjustment.”

Twitter: @HackettMallory
Electronic mail the author: [email protected]

 

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