General Information
Background (Federal Register dated August 22, 2007)
Section 1886(d)(3)(E) of the Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary must adjust the standardized amounts for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level.
The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. In accordance with the broad discretion under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we define hospital labor market areas based on the Core-Based Statistical Areas (CBSAs) established by OMB and announced in December 2003 (69 FR 49027).
Beginning October 1, 1993, section 1886(d)(3)(E) of the Act requires that we update the wage index annually. Furthermore, this section provides that the Secretary base the update on a survey of wages and wage-related costs of short-term, acute care hospitals.
Hospital Wage Index is used to adjust payments to hospitals under the prospective payment system. Therefore, it is strongly recommended that each hospital timely submits the wage related information to the fiscal intermediary when requested.
WPS Medicare Audit and Reimbursement will issue a letter on an annual basis to all of our PPS hospitals that fall within the wage index development period for that fiscal period. The cost report under review for wage index data is based upon the cost report beginning on or after a specified Federal Fiscal Period (October 1, YYYY through September 30, YYYY). Our letter will include the provider name, number and outline key information needed to perform the review. It is very important to ensure the wage index data relates to this period.
If you do not receive this letter, please contact an Audit Supervisor at 1-866-734-9444. Also refer to our Contacts page for names and telephone numbers/extensions.
Should you have any other questions regarding the wage index process that were not covered on this page, please feel free to contact the Audit Supervisor assigned to your provider at 1-866-734-99. Also refer to our Contacts page for names and telephone numbers/extensions.
Page Last Updated: Tuesday, 15-Jul-2008 10:37:31 CDT
