Inpatient Facility Coding & Compliance Alert

Question: Our facility receives patients from a nearby area and the wage index is quite high up there. How can we apply for a geographical reclassification?

Texas Subscriber

Answer: If you desire to apply for a geographic reclassification, CMS has laid down specific criteria for all hospitals that come under Medicare Fee-For-Service-Program. Your facility must meet both the following criteria:

1. Proximity: The distance from the hospital to the new designation area is: 

• 35 miles for hospitals in rural areas and 15 miles for hospitals in urban areas; or
• At least 50 percent of hospital employees reside in the requested area. 

(This condition is waived for rural referral centers (RRCs) and sole community hospitals (SCHs) that are applying to the nearest urban or rural area.

2. Average Hourly Wage (AHW) Data Comparison for FY 2011 and following years:

a) Wages must be greater than a percentage of the AHW in the current area (waived for RRCs):

• 106 percent for hospitals in rural areas. 
• 108 percent for hospitals in urban areas. 

b) Wages must be no less than a percentage of the AHW in the requested area:

• 82 percent for hospitals in rural areas.
• 84 percent for hospitals in urban areas.

The Medicare Geographic Classification Review Board (MGCRB) and CMS must receive a completed application no later than 13 months prior to the start of the federal financial year in which the reclassification is to be effective. For example, for a geographic reclassification that is to take effect on Oct. 1, 2016, the MGCRB and CMS must receive a completed application by the first business day of September 2015. After reviewing comments and testimony from you and CMS, the MGCRB will make its decision within 180 days.