The Medicare wage index is an essential component of every Acute Care Prospective Payment System hospital’s MS-DRG base payment. A hospital may seek reclassification to a higher wage index by applying to the Medicare Geographic Classification Review Board (“MGCRB”) which permits hospitals to apply for reclassification from rural to urban, rural to another rural area, or from urban to another urban area.
Generally, a rural hospital seeking an urban redesignation must have an average hourly rate that is 106% of its current designation and also is at least 82% of the average hourly rate of the requested Core Based Statistical Areas (“CBSA”). An urban hospital must meet similar average hourly wage criteria with a threshold of 108% of its current designation and 84% of the requested CBSA. If a hospital meets these average wage criteria, it must also meet the “proximity” criteria which require urban hospitals to be located within 15 miles (35 miles for rural hospitals) of the requested area’s nearest county line.
Applications are due to the MGCRB by September 4, 2012, and approved applications will be effective for a three-year span for Federal Fiscal Years 2014 through 2016. If you have any questions about the information above or would like to schedule a review of your MGCRB qualifications, please contact the experts listed below at PYA, (800) 270-9629.
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