CMS Releases Medicare Wage Index Information

The Centers for Medicare & Medicaid Services (CMS) recently released the timetable and preliminary hospital data that will be used to develop the Medicare wage index for fiscal year (FY) 2025, which begins Oct. 1, 2024. The wage index is used to adjust Medicare fee-for-service payments for geographic variations in labor costs and adjusts up to 68% of the inpatient payment rate and 60% of the outpatient payment rate. The hospital wage index is also used to adjust post-acute care payments. Hospitals have until Sept. 1, 2023, to review their data and submit requests for changes to the Medicare Administrative Contractor (MAC), along with supporting documentation.

The MHA is hosting an educational webinar at 10 a.m. June 29 to assist hospitals with data reporting. The webinar is free of charge, but registration is required. The MHA will provide hospitals with comparative data from the latest CMS public use file within the next few weeks. Contract labor will have a significant impact on the FY 2025 wage index due to the workforce shortage and heavy reliance on agency staffing during the pandemic. Hospitals are encouraged to begin reviewing agency staffing invoices for cost reporting periods beginning in federal FY 2021 to ensure the information required for the MAC review process is available.

All prospective payment system hospitals are also required to submit a completed occupational mix survey to the MAC by June 30, with survey results used to adjust the wage index for FYs 2025, 2026 and 2027. The CMS is scheduled to release the preliminary survey results July 12, 2023. Resources on completing the occupational mix survey are available upon request.

Members with questions should contact Vickie Kunz at the MHA.