McKay Consulting Services Wage Index

Wage Index Calulations & Analysis

One of the biggest challenges in the health care industry is the hospital wage index. Because this index drives hospitals’ DRG and ambulatory payment classification (APC) payments and reimbursement, it must be reported as accurately as possible, and in compliance with all regulations and manual instructions.

Medicare Administrative Contractors (MACs) annually review each acute care hospital’s wage index survey, which is submitted with the hospital’s annual cost report filing. The burden is on the hospital to ensure, and even prove to the MAC, that the wage index survey is completed accurately. Yet, often the MAC requests information in such a short time frame that assembling the information to prove accuracy can be overwhelming – particularly since many hospitals find it difficult to internally sustain the level of expertise required to respond to such documentation requests.

McKay Consulting provides analysis and calculations for the wage index and other strategic issues related to wage index. This may include:

  • Verifying that the wage indeces used to set rates for the labor portion of the prospective payments are accurate and reflective of a hospital’s actual labor-related costs.
  • Analytical review of the various components of the wage index, including comparison to the prior year and other hospitals in your CBSA.
  • Working with the hospital to see that contract labor, including physicians and related hours, is captured in the wage index costs.
  • Reviewing the accumulation and allocation of wage related cost.
  • Review and reconciliation of general ledger and cost report salaries.
  • Review and reconciliation of payroll journal hours to those reported on the wage index. This ensures that the hours included on the S-3 match the salaries that have been included.
  • Helping with the occupational-mix surveys submitted every three years to the MAC to verify the information is complete, accurate, and in compliance with regulations.
  • Determining whether the hospital is eligible for reclassification to receive the wage index of a higher labor market and then, where appropriate, preparing the reclassification application to be submitted to the Medicare Geographic Classification Review Board in a timely and accurate manner.

Our goal is, and has always been, to provide our clients with the best finance and reimbursement consulting services in compliance with all applicable laws and regulations, while positioning providers for optimal reimbursement.

Leave a Reply

Your email address will not be published.