Research Alert: May 3, 2019

2019 Wage Index Differences and Selected Characteristics of Rural and Urban Hospitals

The Medicare Hospital Inpatient Prospective Payment System is designed to pay hospitals for services provided to Medicare beneficiaries based on a national standardized amount adjusted for the patient's condition and related treatment. Further, Social Security Act Section 1886(d)(3)(E) requires that the standardized amount be adjusted for differences in hospital wage levels among labor markets, which the Centers for Medicare & Medicaid Services (CMS) implemented through the wage index system.

This brief characterizes rural/urban disparities in the 2019 CMS hospital wage index by describing and comparing the wage indices of rural and urban hospitals by the number of beds, the amount of net patient revenue, and Medicare payment classification. Results show small rural hospitals have the lowest hospital wage indices in the nation, the highest wage indices are found among urban hospitals; and there is substantial variation in the wage index among hospitals with different Medicare payment classifications.

Contact Information:

George H. Pink, PhD
North Carolina Rural Health Research and Policy Analysis Center
Phone: 919.843.2728

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