Shelby Praises CMS Proposal to Adjust Medicare Wage Index

WASHINGTON, DC -- U.S. Senator Richard Shelby (R-Ala.) today praised the Centers for Medicare & Medicaid Services (CMS) announcement regarding the Inpatient Prospective Payment System (IPPS) proposed rule that provides relief from the increasing disproportion of reimbursement to hospitals created by the Medicare wage index. While CMS uses wage index data based on regional labor costs to determine Medicare reimbursement levels for hospitals in a particular area, many hospitals -- particularly in Alabama -- have been negatively affected as a result of flawed data.

"The Medicare Wage Index has negatively affected Alabama hospitals for over 20 years," said Senator Shelby. "After two decades of working to address a problem that significantly contributes to heightened hospital closures throughout our state, I am glad to see Administrator Verma and CMS taking steps to solve this dire issue. I look forward to continuing my work with the agency to make sure that this sort of careless imbalance is eliminated moving forward."

In November of 2018, the Office of Inspector General for the Department of Health and Human Services issued a report that outlined concerns with the current wage index calculations, including incorrect or incomplete wage data, insufficient reviews of information, and the inaccuracy of rural floor and hold-harmless provisions. With the lowest wage index in the country, Alabama's urban and rural hospitals have suffered from lower reimbursement levels, while hospitals in heavily populated states have taken advantage of overpayments illustrated in the report.

Last month, Senator Shelby sent a letter, signed by the entire Alabama Congressional delegation, to CMS Administrator Seema Verma encouraging the agency to provide Alabama hospitals relief from the Medicare wage index through the use of its rulemaking process authority. Prior to the letter, Senator Shelby participated in many calls, meetings, and discussions with Administrator Verma and other CMS officials to encourage the proposed adjustment.

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