HHS sub­mits plan to re­vamp wage-in­dex sys­tem

Modern Healthcare - - LATE NEWS -

HHS rec­om­mends us­ing com­mut­ing data to es­tab­lish a la­bor mar­ket area and wage-in­dex value for each hospi­tal as a way to re­form the Medi­care wage-in­dex sys­tem, ac­cord­ing to a 66-page re­port that HHS Sec­re­tary Kath­leen Se­be­lius sent to Congress. The 2010 health­care re­form law re­quired HHS to sub­mit a com­pre­hen­sive plan to change the sys­tem, which the health­care in­dus­try ex­pected last De­cem­ber. Many hos­pi­tals have com­plained the cur­rent method­ol­ogy, which is based on la­bor mar­kets es­tab­lished by the Of­fice of Man­age­ment and Bud­get, of­ten doesn’t re­flect the true la­bor costs for in­di­vid­ual hos­pi­tals, par­tic­u­larly ones on the pe­riph­ery of those mar­kets, the re­port said. HHS pro­poses a com­mut­ing-based wage in­dex, a sys­tem it says “would use smaller, more dis­crete la­bor ar­eas and only in­cor­po­rates wage data from hos­pi­tals that ac­tu­ally em­ploy work­ers in that area.” The re­port ad­dresses five is­sues re­lated to im­ple­ment­ing that sys­tem for the Medi­care hospi­tal in­pa­tient prospec­tive pay­ment sys­tem: avail­able and ac­cu­rate com­mut­ing data; the po­ten­tial for hos­pi­tals to change hir­ing pat­terns in re­sponse to change in the wage in­dex; porta­bil­ity to other Medi­care pay­ment sys­tems; the need for ex­cep­tions; and a tran­si­tion. Eric Zim­mer­man, a part­ner with Mcder­mott, Will & Emery in Washington, said the CMS ac­knowl­edges that im­ple­ment­ing a new sys­tem would re­quire statu­tory change. “It’s a po­lit­i­cally thorny is­sue that will be very dif­fi­cult for Congress to em­brace and ad­vance,” he said. “And as such, it is prob­a­bly not go­ing any­where in the short term.”

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