Porsche vs. Honda: Spend Less to Get More!

When it comes to purchasing a car, most people budget for features they want in a vehicle, such as automatic transmission, air bags and power door locks/windows. There might be additional upgrades available, but they aren’t necessary for you to get around. As long as the vehicle enables you to get from point A to B, you’re good to go. A similar situation exists for Medicare hospitals in regards to nursing personnel. CMS wants you to employ the appropriate level of nursing staff for the care to be provided.

Every three years, a Prospective Payment Hospital (PPS) hospital is required to submit a survey that identifies the wages and hours of its employees by certain job categories. CMS then uses this data to come up with a factor that either increases or decreases the wage index. An increase can occur if a hospital uses lower wage LPNs and aides, rather than RNs. CMS does this to equalize the wages paid as a hospital should not be “rewarded” for using all RNs when a lower professional level is appropriate.

The survey is due to your MAC by July 1, 2017.

Tip #23:

Start reviewing your wages and hours by job category early to ensure you have the most accurate data to submit for Occupational Mix.

Further guidance should be available on the website of the Medicare Administrative Contractor (MAC) you are assigned to.

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

Wage Index: Defining It and Understanding Yours

Most everyone knows the saying, “Keep your friends close and your enemies closer.” In the world of health care, we don’t really have enemies per se, but we definitely have competitors. It is important to stay in touch with competitors for various reasons, such as:

  • You may benefit from understanding their perspective and/or ideas on a subject
  • You may need to work together someday
  • You may have shared interests if you dig deep enough

A practical application of this concept is the wage index. The index is an adjustment for differences in hospital wage rates among labor markets. It is computed using individual hospital data that is then compared to metropolitan statistical area (MSA) or statewide rural area to the nationwide average.

Since the inception of a Prospective Payment System (PPS) for Skilled Nursing Facilities (SNF), hospital wage data has been used to develop a wage index to be applied to SNFs. The SNF PPS wage index values for any fiscal year are calculated from the same data used to compute that fiscal year’s acute care hospital inpatient wage index data.

Tip #8:

Educate yourself on what your own wage index ratio is and how it compares to your marketplace, your state and the national average.

You should also consider establishing a task force among the hospitals and SNFs in your area to analyze how each other are reporting their wage data and if there are ways you can enact change that would result in an improved index.

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

Medicare Wage Index home page

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