On April 11, 2012, as required by the Affordable Care Act, the Secretary of Health and Human Services (HHS) submitted a proposal to Congress to reform Medicare’s wage index. After considering the studies and recommendations executed by the Medicare Payment Advisory Commission (MedPAC) and Acumen LLC, DHHS is proposing to implement a Commuting Based Wage Index (CBWI) system.

The CBWI is a provider specific wage index which accounts for a hospital’s cost of labor using commuting patterns. The commuting patterns represent a hospital’s labor market by the number of workers that commute from home to work. This information can be collected from Census results and the Bureau of Labor Statistics (BLS); however HHS believes the most accurate reflection of commuting data derives from hospital records (e.g. payroll). Therefore, the CBWI would likely create a new data collection process, whereby providers would submit employee information by geographic unit (e.g. zip codes, census tracts). (more…)