HJAR Jan/Feb 2025

20 JAN / FEB 2025 I  HEALTHCARE JOURNAL OF ARKANSAS debated whether lower-spending regions like Northwest Arkansas are unfairly penal- ized for their efficient care delivery. At the same time, higher-spending areas, often characterized by inefficient academic medi- cal centers and economically disadvantaged populations, face challenges that drive up their costs. Within larger MSAs, smaller subdivisions called Metropolitan Divisions account for regional healthcare costs and wage differ- ences. Wage index payments, the adjusted rates that Medicare pays healthcare pro- viders, often reflect these geographic dis- tinctions. However, disparities arise when wage indexes fail to account for the actual costs of delivering care, leading to dramati- cally lower provider payments in places like Northwest Arkansas. One example of this discrepancy is in the Medicare wage index system, which adjusts payments based on local wage lev- els. These wage indexes can vary signifi- cantly even within the same state or region. For instance, Northwest Arkansas coun- ties may receive a Medicare wage index of 0.83, whereas nearby places such as Okla- homa City (0.87) or Kansas City (0.93) receive higher indexes. Such discrepancies greatly impact the financial sustainability of healthcare providers and make it harder for regions like Northwest Arkansas to attract and retain qualified healthcare profession- als. Arkansas has among the lowest pay- ment rates, only slightly higher than the neighboring states of Louisiana and Mis- sissippi (see Figure 14). Making matters worse, states like Arkansas that receive the lowest level of federal reimbursement also have the poorest health status and sickest patient population. Figure 15 illustrates how states in the lower Mississippi Delta such as Arkansas, Mississippi, and Louisiana have the greatest health needs. Arkansas had the lowest payments to providers among all states in 2018 based on Medicare fee-for-service rates. This results inArkansas having 31% less reimbursement than the national average. As a result, pro- viders in Northwest Arkansas are at a com- petitive disadvantage compared with neigh- boring states in terms of the amount of money they receive per patient. For exam- ple, a hospital in nearby Oklahoma treating the same patient with the same medical condition would make $5,725 more. This illustrates howmoney for reinvestment and growth is unavailable to hospitals in North- west Arkansas compared to a state only a few miles away (see Figure 17).