Entire New York Delegation Sends Letter to CMS on Misguided Wage Index Proposal

July 2, 2019

The entire New York Congressional delegation has sent a letter to Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma about CMS’s proposed changes to the area wage index (AWI) formula.

We are extremely grateful to Senate Minority Leader Chuck Schumer (D-NY) and Representatives Brian Higgins (D-NY) and Lee Zeldin (R-NY) for circulating this letter. GNYHA President Kenneth E. Raske provided the following statement on the letter:

“This misguided proposal fails to address its stated goal and will cause harm to urban safety net hospitals by arbitrarily reducing their payments. Greater New York Hospital Association supports the goal of increasing payments to rural hospitals, but not at the expense of other providers. I thank Senate Minority Leader Schumer and Representatives Brian Higgins and Lee Zeldin for circulating this vital letter, supported by the entire New York Congressional delegation, on the Centers for Medicare & Medicaid Services’ harmful proposed changes to the area wage index.”

The AWI changes are part of CMS’s fiscal year 2020 inpatient prospective payment system proposed rule. This budget-neutral proposal would reduce the wage index for hospitals in areas above the 75th percentile and increase it for those in the 25th percentile or below. If implemented, the policy would unfairly and arbitrarily redistribute wage index funding. No GNYHA members in New York, New Jersey, Connecticut, and Rhode Island would benefit, and most would be negatively impacted.

The delegation’s letter notes that while CMS’s proposal is meant to help rural hospitals, not a single rural hospital in New York State would benefit. The policy disregards the market forces that are a significant contributing factor to elevated wages in states like New York, and it would force hospitals in higher-wage areas “to transfer hundreds of millions in Medicare funding to a small handful of states.” The letter requests that CMS not finalize this harmful wage index proposal.

More information on the CMS proposal can be found here. We will keep our members apprised of any developments related to this proposed change.

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