Wage Index Reviews

One of the biggest challenges in the health care industry is the hospital wage index. Because this index drives hospitals’ diagnosis-related group (DRG) and ambulatory payment classification (APC) payments and reimbursement, it must be as complete as possible and in compliance with regulations and manual instructions.

Medicare Administrative Contractors (MACs) annually review each acute care hospital’s wage index survey, which is submitted with the hospital’s annual cost report filing. The burden is on the hospital to ensure and even prove to the MAC that the wage index survey is completed accurately. Yet often the MAC requests information in such a short time frame that pulling the information to prove accuracy can be overwhelming, particularly since many hospitals find it difficult to internally sustain the level of expertise required to respond to such documentation requests.

We can help you prepare your wage index survey and determine whether it’s inclusive of all possible components of payroll costs and appropriately handles excluded payroll, contract labor, and other salary items such as home office, physicians, and interns and residents. This includes:

  • Verifying that the wage indexes used to set rates for the labor portion of the prospective payments are accurate and reflective of your hospital’s actual labor-related costs
  • Working with your hospital to see that all costs for contract labor, including physicians and related hours, have been captured in the wage index costs
  • Helping you include all costs considered payroll and benefit costs, since these can be spread out among departments
  • Making inquiries and conducting detailed reviews to identify misclassified payroll-related costs that should be included in the wage index survey
  • Verifying that paid hours are reported accurately
  • Helping you with the occupational-mix surveys submitted every three years to your MAC to verify the information is complete, accurate, and in compliance with regulations
  • Determining whether your hospital is eligible for reclassification to receive the wage index of a higher labor market and then, where appropriate, preparing your reclassification application to be submitted to the Medicare Geographic Classification Review Board in a timely and accurate manner
  • Determining whether your hospital qualifies for its own wage index rather than using the index for that area

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