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

The Centers for Medicare and Medicaid Services’ hospital wage index system isn’t really performing ample to assistance facilities in the base quartile, specially people in rural spots, according to an audit conducted by the Division of Health and fitness and Human Solutions Place of work of Inspector Normal.

OIG’s audit identified that of the hospitals in the base quartile of the location wage index for the federal fiscal yr 2020, 53% were being in rural regions. These hospitals also tended to be lesser and reduce-volume facilities, according to the report.

Simply because of these conclusions, the watchdog company urges CMS to focus its base quartile wage index adjustment on hospitals with reduced or negative financial gain margins somewhat than the kinds with higher, favourable financial gain margins.

It even further recommended that CMS appear into why some hospitals in a certain location could pay back higher wages than other hospitals in the identical location, even in advance of the use of the base quartile wage index adjustment.

What is THE Influence

The base quartile was designed up of 866 hospitals across 24 states and Puerto Rico. There were being 6 that accounted for forty one% of the base quartile hospitals – Puerto Rico, Alabama, Louisiana, Mississippi, Arkansas and West Virginia. Each individual of these had a lot more than ninety% of their overall hospitals in the base quartile.

Additional than 50 percent of the hospitals in the cheapest quartile are in states that did not develop Medicaid beneath the provisions of the Reasonably priced Treatment Act. In concept, expanding Medicaid can enhance hospital revenues mainly because earlier uninsured people could turn out to be insured beneath Medicaid and find treatment method, ensuing in higher volumes, according to OIG.

States that had hospitals in the cheapest quartile also had the cheapest minimum amount wages, with most states that offer you the federal minimum amount wage ($seven.25) falling into the base quartile.

The audit also identified that hospital financial gain margins in just the previous quartile assorted appreciably. For example, the margins ranged from -133% to forty seven% for 2016. Of the 783 hospitals for which info was collected, 303 had negative financial gain margins that yr.

THE Larger Pattern

CMS uses location wage indexes to alter Medicare normal payments to hospitals in the inpatient and outpatient possible payment units to mirror the price ranges hospitals encounter in their regional labor marketplaces.

It uses wage info from four years prior in the calculations, which raises fears about how it could protect against some hospitals from increasing wages.

To make up for that, beginning in 2020, CMS started altering the hospital wage index to deliver the hospitals in the base quartile closer to people in higher quartiles. CMS plans to keep on this tactic for at minimum four years with the hope that hospitals in the base quartile will use the possibility afforded by higher Medicare payments to increase wages.

CMS has also developed a new price-dependent payment design for rural health care companies, named the Neighborhood Health and fitness Accessibility and Rural Transformation (CHART) Design. It gives assistance by way of new seed funding and payment structures, operational and regulatory flexibilities and technological and learning assistance.

Also, CMS elevated Medicare payment fees for inpatient psychiatric facilities, competent nursing facilities and hospices by 2.2%, 2.2%, and 2.4%, respectively.

ON THE Document

“We figure out that CMS’s initiative to reduce hospital load all through the pandemic could make it hard for CMS to focus on new initiatives,” OIG mentioned in the audit. “On the other hand, when put up-pandemic circumstances allow for for new initiatives, CMS could think about concentrating the base quartile wage index adjustment a lot more exactly towards the hospitals that are the minimum equipped to increase wages without that adjustment.”

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