Hospice Reimbursement and CMS Wage Index
The Centers for Medicare & Medicaid Services (“CMS”) wage index is a tool used to adjust Medicare hospital payments based on differences in labor costs across geographic areas. This rate is applied as a multiplier to CMS reimbursement rates to arrive at a county-specific reimbursement. Fluctuations in wage index values represent a direct increase or reduction in top line revenue, without any correlating increase or reduction in related costs. Since the year ended September 30, 2023, the wage index has decreased annually for fiscal years 2024 and 2025 by -3.1% and -5.0%, respectively, for a cumulative 8.1% decrease. Hospices are working hard to decrease costs, increase efficiency, and negotiate higher reimbursement commercial payor contracts to help offset the impact of wage index decreases.
