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OCR for page 179
Appendix E
Comparison of the Medicare Payment
Advisory Commission (MedPAC) and
Institute of Medicine (IOM) Proposals for
Alternative Hospital Wage Indexes (HWIs)
TABLE E-1 Comparison of the Medicare Payment Advisory Commission (MedPAC) and
Institute of Medicine (IOM) Proposals for Alternative Hospital Wage Indexes (HWIs)
IOM Recommendations MedPAC Recommendations (June 2007 Report)
Recommendation 2-1: The same labor market MedPAC assumes continued use of the existing
hospital payment localities—MSAs/non-MSAs.
definition should be used for both the hospital wage
Physician payment localities are not addressed.
index and the physician geographic adjustment
factor. Metropolitan statistical areas (MSAs) and
statewide non-MSAs should serve as the basis for
defining these labor markets.
R ecommendation 3-2: The Centers for Medicare MedPAC creates a compensation index which
incorporates wage data from BLS and the Census
& Medicaid Services (CMS) should establish an
Bureau and data on benefits (such as health
ongoing agreement with the Bureau of Labor
insurance and pensions) and mandatory payroll
Statistics (BLS) to use all necessary wage data from
taxes from hospital, skilled nursing facility (SNF),
the Occupational Employment Survey to compute
and home health provider cost reports submitted
the wage index.
to CMS.
Recommendation 3-3: The committee Recommendation 6B: The secretary should
recommends using all occupations as inputs in the establish a hospital compensation index that uses
hospital wage index, each with a fixed national wage data from all employers and industry-specific
weight based on the hours of each occupation occupational weights.
employed in hospitals nationwide.
Recommendation 3-4: CMS should apply the Recommendation 6C: The secretary should use
proposed hospital wage index to non–Inpatient the hospital compensation index described in
Prospective Payment System facilities (non-IPPS recommendation 6B for the home health and skilled
facilities), using nationwide occupation-specific nursing facility prospective payment systems and
weights derived from data for each type of facility. evaluate its use in the other Medicare fee-for-service
prospective payment systems.
continued
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180 GEOGRAPHIC ADJUSTMENT IN MEDICARE PAYMENT
TABLE E-1 Continued
IOM Recommendations MedPAC Recommendations (June 2007 Report)
Recommendation 5-1: The committee R ecommendation 6B: The secretary should
recommends that wage indexes be adjusted using establish a hospital compensation index that is
formulas based on commuting patterns for health adjusted at the county level and smooths large
care workers who reside in a county located in one differences between counties.
labor market but commute to work in a county
located in another labor market.
Recommendation 5-2: The committee’s Recommendation 6A: Congress should repeal
recommendations are intended to replace the system the existing hospital wage index statute, including
of geographic reclassification and exceptions that is reclassifications and exceptions, and give the
currently in place for health care providers. secretary authority to establish new wage index
systems.
