Area Wage Index of the Medicare Inpatient Hospital Prospective Payment System: Perspectives, Policies, and Choices.

摘要

The Prospective Payment System (PPS) compensates acute care hospitals for operating and capital costs incurred in treating Medicare inpatients based on predetermined rates for each discharge. Payment per discharge is calculated by multiplying the weight of one of 511 diagnosis related groups (DRGs) assigned to the stay by an adjusted standardized amount. The standardized amount is the national average cost per Medicare case. According to the Social Security Act, the standardized amount must be adjusted 'for area differences in hospital wage levels by a factor (established by the Secretary (of Health and Human Services)) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national hospital wage level' (SSA Section 1886(d)(3)(E)). This adjustment factor is referred to as the hospital wage index. A previous RUPRI Policy Brief described how the wage index was calculated and used, and identified the major unresolved issues associated with it. That Policy Brief outlined two primary issues. First, rural health advocates claim that rural hospitals are systematically disadvantaged because of the mix of occupations included in the wage index calculation. Second, they claim that labor market areas are improperly drawn, resulting in too much variation in wages within labor markets and across labor market boundaries. This Policy Paper expands upon that discussion by summarizing the positions of various rural health advocates and recording the actions taken by Congress and the Health Care Financing Administration (HCFA) to improve the wage index. Finally, it outlines the research needed to energize the policy discussion of the uses and methods of calculating the hospital wage index.