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

The Facilities for Medicare and Medicaid Services’ healthcare facility wage index method just isn’t executing sufficient to support facilities in the bottom quartile, precisely those in rural destinations, according to an audit done by the Department of Health and Human Companies Workplace of Inspector Common.

OIG’s audit discovered that of the hospitals in the bottom quartile of the region wage index for the federal fiscal year 2020, fifty three{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654} were being in rural regions. These hospitals also tended to be smaller and reduce-quantity facilities, according to the report.

For the reason that of these results, the watchdog agency urges CMS to emphasis its bottom quartile wage index adjustment on hospitals with lower or detrimental profit margins fairly than the types with better, optimistic profit margins.

It more prompt that CMS glimpse into why some hospitals in a particular region could spend better wages than other hospitals in the very same region, even before the use of the bottom quartile wage index adjustment.

What is THE Influence

The bottom quartile was produced up of 866 hospitals across 24 states and Puerto Rico. There were being 6 that accounted for forty one{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654} of the bottom quartile hospitals – Puerto Rico, Alabama, Louisiana, Mississippi, Arkansas and West Virginia. Each and every of these had more than ninety{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654} of their complete hospitals in the bottom quartile.

Extra than half of the hospitals in the least expensive quartile are in states that did not develop Medicaid below the provisions of the Inexpensive Treatment Act. In concept, growing Medicaid can make improvements to healthcare facility revenues simply because formerly uninsured individuals could grow to be insured below Medicaid and request treatment, resulting in better volumes, according to OIG.

States that had hospitals in the least expensive quartile also had the least expensive minimum wages, with most states that present the federal minimum wage ($seven.25) slipping into the bottom quartile.

The audit also discovered that healthcare facility profit margins within just the last quartile assorted noticeably. For example, the margins ranged from -133{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654} to 47{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654} for 2016. Of the 783 hospitals for which knowledge was gathered, 303 had detrimental profit margins that year.

THE Greater Development

CMS employs region wage indexes to modify Medicare standard payments to hospitals in the inpatient and outpatient future payment methods to mirror the rates hospitals experience in their regional labor markets.

It employs wage knowledge from four yrs prior in the calculations, which raises considerations about how it could prevent some hospitals from raising wages.

To make up for that, starting in 2020, CMS started adjusting the healthcare facility wage index to carry the hospitals in the bottom quartile nearer to those in better quartiles. CMS designs to continue this tactic for at minimum four yrs with the hope that hospitals in the bottom quartile will use the prospect afforded by better Medicare payments to elevate wages.

CMS has also developed a new value-dependent payment model for rural health care providers, called the Local community Health Access and Rural Transformation (CHART) Model. It gives support by way of new seed funding and payment structures, operational and regulatory flexibilities and complex and learning support.

Moreover, CMS elevated Medicare payment premiums for inpatient psychiatric facilities, proficient nursing facilities and hospices by two.two{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654}, two.two{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654}, and two.four{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654}, respectively.

ON THE File

“We identify that CMS’s initiative to minimize healthcare facility burden for the duration of the pandemic could make it complicated for CMS to emphasis on new initiatives,” OIG reported in the audit. “Nonetheless, when put up-pandemic ailments permit for new initiatives, CMS could consider focusing the bottom quartile wage index adjustment more exactly toward the hospitals that are the minimum equipped to elevate wages without the need of that adjustment.”

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