Medicare wage index may hurt NY hospitals by $53M annually

WASHINGTON — Led by Senate Minority Leader Charles E. Schumer and U.S. Representatives Lee Zeldin (NY-1) and Brian Higgins (NY-26), the entire New York Congressional delegation have expressed their serious concerns over recent Centers for Medicare and Medicaid Services (CMS) proposed changes to the Medicare area wage index (AWI), arguing that it would disproportionately harm hospitals across New York State.

The Medicare Wage Index aims to ensure that Medicare payments adjust for markets with the highest costs of living, in which hospitals must pay employees more than they would in lower-wage areas. CMS proposed a change that would significantly reduce wage index payments for hospitals in the top quarter of the most expensive hospital markets in the country, while sending the money to hospitals in the lowest quarter. Under the plan no New York hospital would gain funding, but many would lose out.

“New York hospitals never cease to provide innovative, world-class treatment to our communities, but they are often forced to do so on a razor-thin budget margin. New York can be an expensive place to live and do business, and so we need to ensure that hospitals have the funding they need to attract world-class doctors and health care providers,” said Senator Schumer. “That’s why I, along with the entirety of New York’s Congressional delegation, am urging CMS to reverse course on this deeply misguided rule. The struggles faced by New York’s hospitals are no different from the struggles faced by the countless others across the nation, they must not be allowed to suffer as a result of their zip code.”

“The area wage index proposal is a direct attack on New York that seeks to redistribute precious Medicare resources from New York to other states,” said HANYS President Bea Grause, RN, JD. “HANYS applauds Sen. Schumer (D-NY) and Reps. Zeldin (R-NY) and Higgins (D-NY) for leading the bipartisan New York delegation in the effort to stop this proposal in its tracks. HANYS thanks the entire Congressional delegation for standing together to protect New York’s hospitals and the patients they serve.”

The representatives argued that the proposed changes from CMS would ignore the core intent of AWI: to account for real differences in wages in each labor market. Instead, the representatives stated, CMS’ proposal would arbitrarily reweight AWI, and unfairly redistribute funds across states without a sound policy rationale.

It is estimated that the proposed policy would reduce Medicare inpatient and outpatient funding to New York’s hospitals by $53 million each year. When factoring in Medicare payments for patients with private Medicare Advantage coverage, the potential losses jump to an estimated $83 million annually.