Information regarding labor-based adjustments to IPPS payments are contained
in the CMS Impact File. This file corresponds to the Final Rule and Correction
Notice and contains data elements by provider used in calculating rates and
impacts for a federal fiscal year.
- Geographic Labor Market Area
- A hospital's Core Based Statistical Area (CBSA) designation. It is based
on where the hospital is physically located based on its Social Security
Administration (SSA) state and county information. Rural areas are designated
by 2-digit SSA state codes.
- Pre-Reclassification Labor Market Area
- This indicates a hospital's labor market area (CBSA) based on its
geographic location. In FY2015 IPPS hospitals were allowed to apply for
reclassification into a different labor market area for the purpose of
designating its wage index for a 3-year period, FY2017 through 2019.
Generally, in order to request a reclassification a rural hospital must be in
the proximity of the new CBSA and its average hourly wage must be 6% higher
than the average for its area and at least 82% of the average in the new area.
(An urban hospital must be 8% higher than its area and at least 84% higher than
the new area.)
- Post Reclassification Labor Market Area
- This is a hospital's labor market area (CBSA) as reclassified for the
purpose of designating its wage index for FY2017-19. (see above)
- Social Security Administration (SSA) state county code indicates the county
in which a hospital is located. The first two digits represent the state code
and the last 4 digits represent the county code.
- Wage Index
- The methodology for determining prospective payments to hospitals includes
an adjustment to standardized amounts to account for area differences in
hospital wage levels by a factor known as the wage index. It reflects the
relative hospital wage level in a labor market area to the national average
hospital wage level. A hospitals wage index also reflects any geographic
reclassification to another labor market area. The wage index is updated
- Section 505 Adjustment
- Section 505 of the Medicare Modernization Act of 2003 (MMA) introduced a
new type of wage index adjustment that is based primarily on commuting
patterns. It provides for wage index changes for qualifying hospitals located
in qualifying counties where at least 10 percent of resident hospital workers
are commuting to hospitals located in other MSAs with a higher wage index. The
adjusted index is a weighted average of the wage index for the home (or
resident) county and the indexes for the work area counties.
- Section 401
- Section 401 of the Medicare Modernization Act of 2003 equalizes the
national adjusted operating standardized amounts for hospitals in large urban
and other areas. In addition, it increases the large urban and other area
national adjusted amounts for Puerto Rico and equalizes the Puerto
Rico-specific urban and other area rates.