NY Rural Hospitals to Lose Under Hospital Wage Index Changes
New York’s entire Congressional delegation urged CMS to abandon proposed changes to the hospital wage index after finding no rural hospital in the state would benefit.
Source: Thinkstock
By - A proposal to adjust the hospital wage index used to determine Medicare reimbursement would disproportionately harm rural hospitals in New York, the state’s entire Congressional delegation recently told CMS.
Led by Senate Minority Leader Charles E. Schumer and Representatives Lee Zeldin (NY-1) and Brian Higgins (NY-26), the delegation sent a letter to CMS Administrator Seema Verma calling for her to abandon a proposal that would reduce Medicare reimbursement to a significant number of New York hospitals without benefiting any of the state’s rural hospitals as the proposal intended.
“New York hospitals never cease to provide innovative, world-class treatment to our communities, but they are often forced to do so on a razor-thin budget margin. New York can be an expensive place to live and do business, and so we need to ensure that hospitals have the funding they need to attract world-class doctors and health care providers,” Senator Schumer stated in an announcement.
“That’s why I, along with the entirety of New York’s Congressional delegation, am urging CMS to reverse course on this deeply misguided rule. The struggles faced by New York’s hospitals are no different from the struggles faced by the countless others across the nation, they must not be allowed to suffer as a result of their zip code.”
CMS proposed changes to how the hospital wage index is used to determine Medicare reimbursement rates in April. As part of the proposed Inpatient Prospective Payment System (IPPS) rule, the agency suggested decreasing the wage index payments for hospitals in the most expensive hospital markets and redistributing the funds to hospitals in low-income areas.
The proposed rule would primarily impact rural hospitals, which typically receive lower reimbursement amounts because of their area’s income status, CMS stated. For example, currently, a hospital in a rural community could receive a Medicare payment of about $4,000 for treating a beneficiary admitted for pneumonia, while another hospital in a high wage area may receive almost $6,000 for the same patient because of the higher wage index adjustment.
The agency explained that the current methodology for wage index adjustment is creating and exacerbating disparities between high and low wage index hospitals. Hospitals in the most expensive hospital markets receive higher Medicare reimbursements, enabling the facilities to pay their staff more and continue operating as high-index hospitals, while hospitals in low-income areas remain stuck as a low-wage index hospital because of their inability to pay their staff more.
“The Trump Administration is committed to addressing inequities in healthcare, which is why we are proposing historic Medicare payment changes that will help bring stability to rural hospitals and improve patients’ access to quality healthcare,” CMS Administrator Verma said when announcing proposed changes to the hospital wage index.
Rural hospitals in New York, however, would not receive the level of support promised in the proposed rule, policymakers argued. Changes in the proposed rule fail to address the original intent of the hospital wage index, which is to account for the actual differences in wages in each labor market, they said.
“Instead, CMS’ proposal would arbitrarily reweight AWI [area wage index] and unfairly redistribute funds across states without a sound policy rationale,” the letter stated.
Moreover, if finalized, changes to the hospital wage index would reduce Medicare reimbursement to New York hospitals by about $53 million each year. And in reality, financial losses would be closer to $83 million annually after factoring in private Medicare Advantage coverage, Senator Schumer reported.
“While New York has long been home to some of the world’s best hospitals, our communities face unique challenges not experienced in most other parts of our country, which have drastically increased costs,” said Congressman Zeldin. “As stated in our letter from the entire New York Congressional delegation, CMS’ shortsighted rule does not help, because it fails to take into account cost of living when considering wages. CMS must immediately reverse course and take action that helps our communities’ hospitals instead of crippling them.”
The policymakers urged CMS to not finalize changes hospital wage index payments. The federal agency has yet to release a final rule.
