Wage Index the Focus of Subcommittee
Hearing
July 26, 2002 - During a July 23 House Ways and Means
Health Subcommittee hearing,
representatives from the Medicare Payment Advisory Commission
(MedPAC) and General Accounting Office (GAO) identified key
flaws within Medicare's geographic cost adjustments to hospital
and physician payments.
With their testimony focused primarily on hospital payments,
MedPAC Chairman Glenn Hackbarth and GAO Health Care Issues
Director William Scanlon argued that using aggregate wages
and hours (i.e., failing to address the occupational mix)
distorts the wage index and could have "substantial effects"
on payment accuracy. In addition, they felt that Metropolitan
Statistical Areas (MSAs) and state-wide rural areas are often
too large and fail to reflect wage variations within particular
regions. Mr. Hackbarth and Mr. Scanlon also expressed concern
that CMS might be using data that is too old and that the
"labor-share" estimate might be too high.
During introductory remarks, Ranking Minority Member Pete
Stark (D-Calif.) charged that some providers had wrongly inflated
the negative impact of the labor cost adjustment on their
institutions' financial viability. When Rep. Stark referred
to data that failed to demonstrate a correlation between the
wage index and declining margins at rural hospitals, Rep.
Jim Nussle (R-Iowa) raised his voice in strong disagreement.
Rep. Nussle was among nearly twenty Members of Congress who
testified on the wage index issue and the financial problems
it has triggered among providers in their districts.
Information:
Christiane Mitchell, Senior Legislative Affairs Manager
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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