Medicare wage index boost proposed for low-pay hospitals

What does this do?

This bill changes how Medicare calculates payments to hospitals in lower-wage areas. Hospitals with a wage index score below the 25th percentile would have that score raised halfway toward the 25th percentile, increasing their Medicare payments. The change applies retroactively starting October 1, 2019, and total Medicare spending stays the same overall.

Who does it affect?

This primarily affects hospitals in lower-wage areas, which are often rural or underserved communities. Other hospitals, particularly higher-wage ones, may see small reductions to offset the increases, though guardrails limit how steep those cuts can be.

Why does it matter?

Hospitals below the 75th percentile cannot have their scores reduced to fund the adjustment, and no hospital's score can fall below 95% of its prior-year level. This means lower-wage hospitals receive more Medicare funding while most other hospitals are largely protected from significant cuts.

What does it cost, and who pays?

The bill is designed to be budget neutral, meaning total Medicare spending does not change. Increases for lower-wage hospitals are offset by small reductions to some higher-wage hospitals.

Where does it stand?