Revision of Medicare Wage Index

Section 106 of the Tax Relief and Health Care Act of 2006 (TRHCA) required MedPAC to submit a report on revision of the hospital wage index by June 30, 2007, including recommendations on alternatives for computing the wage index. Section 106b requires that CMS take account of MedPAC's recommendations and consider nine specific aspects of the wage index: o the problems associated with the definition of labor markets for purposes of wage index adjustment, o the modification or elimination of geographic reclassifications and other adjustments, o the use of Bureau of Labor Statistics data, or other data or methodologies, to calculate relative wages for each geographic area involved, o minimizing the variations in wage index adjustments between and within Metropolitan Statistical Areas and Statewide rural areas, o the feasibility of applying all components of the proposal to other settings, including home health agencies and skilled nursing facilities, o methods to minimize the volatility of wage index adjustments, while maintaining the principle of budget neutrality in applying such adjustments, o the effect that the implementation of the proposal would have on health care providers and on each region of the country. o methods for implementing the proposal, including methods to phase-in such implementation, o the issues relating to occupational mix, such as staffing practices and any evidence on the effect on quality of care and patient safety and any recommendations for alternative calculations. The purpose of this task order is to assist CMS in evaluating MedPAC's revisions to the hospital wage index and MedPAC's recommendations regarding implementation of the MedPAC hospital compensation index.