February 26, 2023 - Charleston, WV – Last week, U.S. Senators Joe Manchin (D-WV) and Shelley Moore Capito (R-WV) led 14 bipartisan Senators in urging the Centers for Medicare & 
Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure to authorize a four-year extension of the Low Wage Index Hospital Policy. The extension would allow hospitals in rural areas to compete for, and retain, high-quality staff by increasing reimbursements to hospitals in rural areas with lower overall wages. Without action, Medicare payments to these hospitals will reduce after September 30, 2023.
John C. Fremont Hospital in Mariposa County
“In August 2019, the CMS first included a four-year AWI adjustment to bottom quartile hospitals as part of the FY2020 IPPS (CMS-1716-F). At the time, CMS stated that the policy ‘reflected a common concern that the current wage index system perpetuates and exacerbates the disparities between high and low wage index hospitals,’” the Senators wrote in part. “To address this concern, CMS increased the wage index for hospitals with a wage index value below the 25th percentile. The additional assistance has been a valuable lifeline for more than 800 hospitals in 23 states throughout FY2020, FY2021, FY2022, and now FY2023.”
“Unfortunately, due to disruptions in the marketplace caused by the COVID-19 pandemic, we have not had the opportunity to see the true impact of the Low Wage Index Hospital Policy envisioned by CMS. Extending the Low Wage Index Hospital Policy for four additional years will allow hospitals and the agency to better understand the policy’s true impact in a more normal environment,” the Senators continued. “The continuation of this critical policy will allow hospitals to recruit and retain health care staff and protect access to care for millions of Americans.”
The full letter is available below or here.
Dear Administrator Brooks-LaSure:
Thank you for your continued commitment to ensuring all health care providers have the resources they critically need to provide quality health care to Medicare beneficiaries. We write to you regarding the Medicare hospital area wage index (AWI) in the Inpatient Prospective Payment System (IPPS). Specifically, we urge you to include a four-year extension of the Low Wage Index Hospital Policy, also known as the Lowest Quartile Adjustment (LQA) policy, in the upcoming Fiscal Year (FY) 2024 IPPS rule.
In August 2019, the Centers for Medicare and Medicaid Services (CMS) first included a four-year AWI adjustment to bottom quartile hospitals as part of the FY2020 IPPS (CMS-1716-F). At the time, CMS stated that the policy “reflected a common concern that the current wage index system perpetuates and exacerbates the disparities between high and low wage index hospitals.”[1] To address this concern, CMS increased the wage index for hospitals with a wage index value below the 25th percentile. The additional assistance has been a valuable lifeline for more than 800 hospitals in 23 states throughout FY2020, FY2021, FY2022, and now FY2023.
Unfortunately, due to disruptions in the marketplace caused by the COVID-19 pandemic, we have not had the opportunity to see the true impact of the Low Wage Index Hospital Policy envisioned by CMS. Extending the Low Wage Index Hospital Policy for four additional years will allow hospitals and the agency to better understand the policy’s true impact in a more normal environment. In its original August 2019 rule, CMS appeared to acknowledge that more time may be needed to implement the policy when it stated, “this policy will be effective for at least 4 years.” We applaud CMS for that foresight and encourage it to extend the policy for four additional years.
The continuation of this critical policy will allow hospitals to recruit and retain health care staff and protect access to care for millions of Americans.
Source: Senator Joe Manchin
