Unbiased Analysis of Today's Healthcare Issues

Do more capable workers get better working conditions?

More capable workers typically do have the best working conditions.  The theory of compensating differentials, however, says that workers should be compensated in the form of higher wages for job amenities.  So why is this the case empirically? Today, I review the Hanbook of Labor Economics chapter by Sherwin Rosen titled “The Theory of Equalizing […]

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How Massachusetts hospitals increased Medicare reimbursement rates by 20 percent

The answer is by using exceptions/loopholes to payment rules.  The Medicare Wage Index adjusts payments to hospitals based on hospital worker wages wages in the hospital’s labor market.  Payment exceptions, in this case the rural floor, causes payments to hospitals in Massachusetts to increase by 16.4 percent simply by having one hospital reclassify.  Here is […]

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New Legislation affecting Medicare Hospital Payments

Recent Legislation CMS completed its implementation of Medicare severity–diagnosis related groups (MS–DRGs) and cost-based relative weights in FY 2009. TMA, Abstinence Education, and QI Programs Extension Act of 2007 (TMA), the Congress mandated payment reductions of 0.6 percent in 2008 and an additional 0.9 percent in 2009 to offset the effects of documentation and coding […]

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Measuring Variation in Labor Costs for the NHS

The cost of running a hospital in New York City is much higher than running a hospital in Bozeman, Montana.  To take into account these cost differences, the Centers for Medicare and Medicaid Services (CMS) has created a wage index to adjust the inpatient prospective payment system (IPPS) for differences in labor costs. However, the […]

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An evaluation of MedPAC’s hospital wage index revisions

Some press on a report I worked on at Acumen, LLC. “The hospital wage index used to adjust Medicare inpatient prospective payment system (IPPS) payments to reflect the geographic differences in labor costs has created payment problems through its use of metropolitan statistical areas (MSAs) and “rest of state” areas to define hospital labor markets. […]

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