Wage Index

FY 2023 Geographic Reclassification Deadlines

Deadline to submit an application for a FY 2023 MGCRB reclassification and a request for cancellation of a withdrawal or termination (reinstatement): September 1, 2021 (15 days after the public display date of the FY 2022 IPPS/LTCH final rule by the Office of the Federal Register). Note: CMS has issued a waiver due to Hurricane Ida and is modifying the September 1, 2021 deadline for applications for FY 2023 reclassifications to be submitted to the MGCRB. CMS has granted an extension to the deadline at § 412.256(a)(2) for the States of Mississippi and Louisiana. Applications for FY 2023 reclassifications from hospitals in these areas must be received by the MGCRB not later than October 4, 2021. For complete details on this waiver, click the link titled “Hurricane Ida Waivers” in the related links section below.

Date of FY 2023 Wage Index Reclassification Determinations Issued by the MGCRB: January 24, 2022

Deadline for Hospitals to appeal FY 2023 MGCRB Wage Index Reclassification Determinations: February 8, 2022 (Per 412.278, 15 days after Determinations Issued by the MGCRB)

Deadline to withdraw an application or terminate an approved 3-year MGCRB reclassification (must be received by the MGCRB with a copy to CMS at wageindex@cms.hhs.gov within 45 days from the date NPRM is issued): June 24, 2022

Deadline to waive Lugar/accept out-migration adjustment or reinstate Lugar/cancel outmigration adjustment (must send written notification to CMS at wageindex@cms.hhs.gov within 45 days from the date of public display of NPRM): June 2, 2022

To ensure proper accounting, we request hospitals to include their CCN, and either “waive Lugar” or “reinstate Lugar”, in the subject line of these requests.

Deadline for hospital to be treated as rural in the FY 2023 wage index and budget neutrality calculations (412.103 lock in, 60 days after NPRM is displayed): June 17, 2022

Deadline for hospitals to cancel 412.103 rural reclassification by submitting a request to the CMS regional office, effective with next FFY: June 2, 2022 (not less than 120 days prior to the end of a Federal fiscal year, and for requests submitted after October 1, 2021, not less than 1 calendar year after the effective date of the rural reclassification).


Note: To view the wage index data files, see the "Wage Index Files" link in the left navigational area of this page or see the "Related Links Inside CMS" section below.

Section 1886(d)(3)(E) of the Social Security Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary must adjust the standardized amounts “for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level.”  This adjustment factor is the wage index.  We currently define hospital geographic areas (labor market areas) based on the definitions of Core-Based Statistical Areas (CBSAs) established by the Office of Management and Budget and announced in December 2003. The wage index also reflects the geographic reclassification of hospitals to another labor market area in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act.

The Act further requires that we update the wage index annually, based on a survey of wages and wage-related costs of short-term, acute care hospitals.  Data included in the wage index derive from the Medicare Cost Report, the Hospital Wage Index Occupational Mix Survey, hospitals' payroll records, contracts, and other wage-related documentation.  In computing the wage index, we derive an average hourly wage for each labor market area (total wage costs divided by total hours for all hospitals in the geographic area) and a national average hourly wage (total wage costs divided by total hours for all hospitals in the nation).  A labor market area's wage index value is the ratio of the area's average hourly wage to the national average hourly wage.  The wage index adjustment factor is applied only to the labor portion of the standardized amounts.

Page Last Modified:
04/25/2022 01:44 PM