HJAR May/Jun 2022

The Medicare hospital inpatient and outpatient prospective payment systems (PPS) are designed to pay hospitals for services provided to Medicare beneficiaries based on a national average payment amount, adjusted for two factors that affect hospitals’ costs: 1) the patient’s condition and related treatment strategy and 2) market conditions in the hospital’s location. One of the significant adjustments in the systems is an adjustment for market conditions known as the area wage index (AWI). The AWI is intended to measure differences in hospital wage rates among labor markets; it compares the average hourly wage for hospital workers in each metropolitan statistical area (MSA) or statewide rural area to the nationwide average. by Bo Ryall, President & CEO Arkansas Hospital Association STOP THE BLEEDING Is It Time to Nix the Medicare Hospital Wage Index? HEALTHCARE JOURNAL OF ARKANSAS I  MAY / JUN 2022 9