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Data Brief: Characteristics of Hospitals With Wage Indexes in the Bottom Quartile for the Fiscal Year 2020 Inpatient Prospective Payment System

In the inpatient prospective payment system (IPPS), CMS uses wage indexes when it adjusts Medicare hospital payments annually to reflect labor prices in local labor markets. In the FY 2020 IPPS final rule, CMS stated agreement with the hypothesis that certain wage index policies had created barriers to hospitals with low wage index values from being able to increase employee compensation because of the 4-year lag between when hospitals increase the compensation and when those increases are reflected in the calculation of the wage index. Accordingly, in the FY 2020, CMS is instituting a new policy to raise the IPPS wage indexes of the hospitals in the bottom quartile of wage indexes, giving them the opportunity to raise wages in the relatively near future. In this data brief, we will analyze certain characteristics of the hospitals in that FY 2020 bottom quartile to provide information to CMS and other stakeholders during the roll-out year of CMS's new bottom quartile wage index adjustment.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
February 2020 Centers for Medicare & Medicaid Services Data Brief: Characteristics of Hospitals With Wage Indexes in the Bottom Quartile for the Fiscal Year 2020 Inpatient Prospective Payment System Office of Audit Services W-00-20-35727 2021