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New Rule Increases Medicare Wage Index

Posted on August 29, 2019

I would like to take a moment to share some encouraging news regarding recent changes to the Medicare Wage Index, an important issue facing healthcare across the country and one that is significant to the health and viability of hospitals in our area.

Simply put, the Medicare Wage Index is part of the structure by which hospitals are reimbursed for Medicare payments from the government. On August 1, the Centers for Medicare and Medicaid Services (CMS) issued a new rule that increases the Medicare Wage Index for our hospitals.  In their ruling they stated, “To address the impact of disparities on low wage index hospitals, CMS is finalizing our proposal to increase the wage index for hospitals with a wage index value below the 25th percentile.” As a result, the new rule would increase the Medicare Wage Index in our market (and other states in the lowest 25th percentile).  

What does this change mean for the long-term health of the communities we serve? Since 2012, nine rural hospitals have closed in Tennessee, making it the state with the second-most closures in the U.S. These closures are due in part to lower Medicare reimbursements under the previous wage index. Increasing the wage index will help these hospitals as they continue to face reimbursement challenges in today’s healthcare industry. The agency also said the new change will assist rural and other low-wage hospitals in attracting and maintaining a highly skilled workforce, strengthening competition and leading to greater patient choice.

I want to express my appreciation to the leaders of the Centers for Medicare and Medicaid Services in Washington and to the legislators in Knoxville who helped advocate for this issue. I want to also thank the employees of Covenant Health who helped make this important change possible by producing a majority of all the letters submitted in support of the rule change.  I am proud of the Covenant Health team for their commitment to our health system, to our mission of service and to our Pledge of Excellence; a pledge to put our patients first and strive for excellence in everything we do. We want Covenant Health to be our communities’ first and best choice, and we are privileged to be our patients’ trusted healthcare partner.

Speaking of our workforce, I hope everyone enjoyed the Labor Day weekend.  For many, it is spent with family and friends and signifies the end of summer and the transition to cooler weather and the beautiful fall colors.  For our military men and women, our medical professionals and first responders, we know that the Labor Day weekend is spent protecting, defending and healing the citizens in the communities they serve. I know you join me in offering them our heartfelt gratitude today and every day for their selfless commitment and tireless efforts that ensure the safety and well-being of our city and region.