Schumer Questions Wage Index Changes For Hospital Payments

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WASHINGTON – Claiming that proposed changes to the Medicare area wage index will hurt all New York hospitals, Senate Minority Leader Chuck Schumer and the entire New York Congressional delegation today expressed their serious concerns, charging that numerous New York hospitals stand to lose funding, but not a single one of New York’s rural hospitals stands to gain funding.

Schumer and others today expressed 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. While numerous New York hospitals – including those in urban, suburban and Upstate areas – stand to lose funding, not a single one of New York’s rural hospitals stands to gain funding, Schumer charged.

“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 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.”

While CMS argues the proposed changes to the Medicare AWI would seek to help rural hospitals, the representatives pointed out that not a single one of New York’s rural hospitals, who face the exact same challenges as other rural hospitals across the country, would see a benefit from the policy. In fact, it is estimated that the proposed policy would reduce Medicare inpatient and outpatient funding to New York’s hospitals, both rural and urban, which would stand to lose roughly $53 million each year because of the changes. When factoring in Medicare payments for patients with private Medicare Advantage coverage, the potential losses jump to an estimated $83 million annually.

“We are writing to you regarding the Centers for Medicare and Medicaid Services (CMS) proposed changes to the Medicare area wage index (AWI). Specifically, we urge CMS not to finalize its proposal to artificially increase the AWI for hospitals that fall in the lowest 25th percentile of wage areas at the expense of hospitals that are above the top 75th percentile of wages across the nation. This misguided policy is disproportionately harmful to the State of New York,” a letterto the CMS states.

“If finalized, this proposal would threaten the financial viability of hospitals in New York, while doing nothing to address fundamental problems with the current AWI system. We therefore ask that CMS not finalize these changes, and instead use its existing authority to find a practicable solution to issues in the current AWI system, rather than a proposal that harms hospitals in our communities and the patients they serve.” the letter said.

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