Research Alert: May 10, 2019

Rural/Urban and Regional Variation in the 2019 CMS Hospital Wage Index

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 describes the geographic variation of the 2019 CMS hospital wage index by rural/urban definition, census region, Frontier and Remote Area (FAR) codes and state. Results show rural hospitals' medial wage index is lower than the median urban hospital index; rural hospital wage index medians are lower than urban hospital wage index medians in every Census region – lowest in the South Census region; and lower for hospitals in more remote and less populated areas.

Contact Information:

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

Additional Resources of Interest: