Medicare area wage index

HHS Chief Derides Medicare Wage Index System

U.S. Department of Health and Human Services Secretary Alex Azar criticized the current Medicare area wage index system during a hearing of the Senate Finance Committee last week. Reminding senators that he told them last year that they need to revise the system and warning that HHS’s ability to change it is limited without legislation, Azar referred to the system as an “absurdity” as individual senators pointed out what they view to be inequities in the system that hurt hospitals in their own states. Medicare’s area wage index system adjusts Medicare payments to hospitals based on geographic differences in the [...]

OIG Cites “Vulnerabilities” in Medicare Wage Index System

The Office of the Inspector General of the U.S. Department of Health and Human Services has “…observed significant vulnerabilities in the [Medicare area] wage index system…” As a result of these vulnerabilities, Medicare has overpaid 272 hospitals by more than $140 million over the past 13 years. The vulnerabilities the OIG identified that contributed to these overpayments are: absent misrepresentation or falsification, CMS lacks the authority to penalize hospitals that submit inaccurate or incomplete wage data; Medicare Administrative Contractors’ limited reviews do not always identify inaccurate wage data; the rural floor decreases wage index accuracy; and hold-harmless provisions in federal [...]