The Medicare Wage Index has been an important part of the Medicare inpatient prospective payment system for a long time. However, now, the wage index plays an even larger part in the calculation of Medicare payments made to providers. One of the reasons for this is that Medicare rate increases have been very low due to tight federal budgets. This means that a hospital's wage index change from the previous year can determine whether Medicare reimbursement will increase or decrease. Also, CMS incorporates the wage index into all prospective payment systems including skilled nursing, outpatient services, rehab and home health services. Thus, the wage index has a dramatic impact on Medicare reimbursement across the entire continuum of care.
WHA, for the past several years has contracted with RC Healthcare Management Services to help member hospitals correctly fill out the S-3 worksheets of the Medicare Cost Report. These worksheets are the source of data, which CMS uses to calculate the wage index.