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Wage Index

FY 2019 Geographic Reclassification Deadlines

Deadline to submit an application for a FY 2019 MGCRB reclassification and a request for cancellation of a withdrawal or termination (reinstatement): September 1, 2017; Note (Updated August 16, 2017): CMS annually posts a three year average hourly wage file that is used to make determinations if hospitals meet certain criteria for MGCRB reclassification. CMS posted a file for FY 2019 MGCRB geographic reclassifications that contained incorrect wage data for 5 hospitals located in CBSA 24860 and one hospital in CBSA 40340. Therefore, CMS posted a revised file on 8/16/2017 with the corrected wage data for these 6 hospitals. Hospitals seeking reclassification through the MGCRB for FY 2019 should use the revised file posted by CMS. Click on the link titled "Three Year MGCRB Reclassification Wage Data Web Page" in the related links section below to view and download this revised file.

Extension for hurricane affected areas for applications for FY 2019 MGCRB reclassification and a request for cancellation of a withdrawal or termination (reinstatement): In accordance with Waivers or Modifications of Requirements under Section 1135 of the Social Security Act issued August 26, 2017 and August 28, 2017 by Secretary Price, CMS is modifying the September 1, 2017 deadline for applications for FY 2019 reclassifications to be submitted to the Medicare Geographic Classification Review Board (MGCRB). CMS is currently granting a 31-day extension to the deadline at § 412.256(a)(2) for the States of Texas and Louisiana. Applications for FY 2019 reclassifications from hospitals in these areas must be received by the MGCRB not later than October 2, 2017.

Date of FY 2019 Wage Index Reclassification Determinations Issued by the MGCRB: February 12, 2018

Deadline for Hospitals to appeal FY 2019 MGCRB Wage Index Reclassification Determinations: February 27, 2018 (Per 412.278, 15 days after Determinations Issued by the MGCRB)

Note: The MGCRB is independent of CMS and the deadlines listed on this website are a courtesy only. The MGCRB makes the final decision regarding the date of the deadlines above and whether a request is timely. The public should confirm any deadline above with the MGCRB. 

For complete details on MGCRB reclassification, please click on the link to the MGCRB web page in the Related Links section below.


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.