CMS’s revisions to the calculation of the Medicare wage index include a major change in how pension costs are calculated, as well as use of a new occupational mix survey, changes in how multicampus hospitals report their data and the unexpected continuation of the imputed rural floor adjustment. CMS published these revisions as part of the final inpatient prospective payment system rule for FY 2012, in the August 18, 2011 Federal Register. CMS’s preamble in which it discusses the wage index changes is attached here. A short description of some of the highlights is provided below.

Pension Costs

The biggest news in the area of wage index is CMS’s announcement that it is changing how pension costs are reported for purposes of the wage index. CMS acknowledged that it was necessary to have two distinct policies in order to address the different goals of determining a hospital’s pension costs for cost reporting purposes versus wage index purposes.

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