The Denominator: A Critical Factor in Calculating Average Hourly Wage

school conceptDo you remember learning about denominators in math class at school years ago? You’ll be glad you did for our topic today.

Wage Index is one of the key adjustments Medicare makes to your payments. They adjust your payments based on the cost of staffing in your geographic area. In addition, they determine an Average Hourly Wage (AHW) and then compare that to the National AHW to determine your payment factor. One of the most important components in calculating AHW is the hours used in the denominator. The misreporting of hours can have a significant impact on your Wage Index adjustment.

Tip #11:

Ensure hours for wage index are adjusted to reflect A-6 wage reclassifications (Pub 15-2, §4005.2).

Whenever you have a salary adjustment there should be a corresponding hours reclassification.

Further guidance on the types of dollars and hours that should be included on S-3, part II can be found on the Centers for Medicare and Medicaid Services (CMS) website:

Provider Reimbursement Manual 15-2

Questions? Please contact Marie White at 612.253.6546 or mewhite@eidebailly.com.

 

 

Provider or Professional? Identifying Allowable Expenses

Advances in clinical care, along with the changing health care delivery environment, have created new opportunities for physicians. Organizations are looking for physicians to advise on issues, such as population health, infection control or electronic health records to name just a few. If your organization has added these things—or is considering it—you need to be cognizant of how those costs will be disclosed on the Medicare cost report.

Physician expense—whether employed or contracted—is considered non-allowable on the Medicare cost report except in very limited circumstances. It is important to identify and differentiate expenses that are “Provider” or “Professional” in nature. CMS defines these as:

  • Provider – services that are administrative in nature and benefit the hospital in general or which represent availability services in a hospital emergency room under specified conditions
  • Professional – services to individual patients

Provider services can be included on the cost report and are subject to further limitation.

Tip #10:

Review your physician contracts and expense to identify all potentially allowable amounts (Pub 15-2, §4108)

Further guidance is available on the Centers for Medicare and Medicaid Services (CMS) website:

Provider Reimbursement Manual 15-2

Questions? Please contact Marie White at 612.253.6546 or mewhite@eidebailly.com.