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Comparative Study
. 2002 Fall;24(1):155-75.

Rural hospital wages and the area wage index

Kathleen Dalton  1 , Rebecca T Slifkin, Hilda A Howard
Affiliations
Comparative Study

Rural hospital wages and the area wage index

Kathleen Dalton et al. Health Care Financ Rev. 2002 Fall.

Abstract

We examined data on hospital hourly wages and the prospective payment system (PPS) wage index from 1990 to 1997, to determine if incremental changes to the index have improved its precision and equity as a regional cost adjuster. The differential between average rural and urban PPS hourly wages has declined by almost one-fourth over the 8-year study period. Nearly one-half of the decrease is attributable to regulatory and reporting changes in the annual hospital wage survey. Patterns of within-market wage variation across rural-urban continuum codes identify three separate sub-markets within the State-level aggregates defining rural labor markets. Geographic reclassification decisions appear to eliminate one of the three. Remaining systematic within-market rural wage differences work to the reimbursement advantage of hospitals in the smaller and more isolated communities.

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Figures

Figure 1
Figure 1. Prospective Payment System Inpatient Hospital Payment Rate Computations
Figure 2
Figure 2. Distribution of Prospective Payment System Hourly Wage: Fiscal Year 1997
Figure 3
Figure 3. Trends in Relative Wages, by Size of Urbanized Population Within County: Fiscal Years 1990-1997
Figure 4
Figure 4. Trends in Rural Relative Wages for Prospective Payment System Hourly Wages Compared to Raw Hourly Pay: Fiscal Years 1990-1997
Figure 5
Figure 5. Trends in Rural Relative Wages, by Hospital Bed-Size Categories: Fiscal Years 1990-1997
Figure 6
Figure 6. Within-Market Wage Deviation Averaged Across Hospitals, by RUCC: FY 1997
Figure 7
Figure 7. Rural Within-Market Wage Deviation, by RUCC Before and After Geographic Reclassification: FY 1997
See this image and copyright information in PMC

References

    1. Butler MA, Beale CA. Rural-Urban Continuum for Metropolitan and Non-Metropolitan Counties. Agriculture and Rural Economy Division, Economic Research Service, U.S. Department of Agriculture; Washington, DC.: 1994.
    1. Cromwell J, Hendricks A, Pope GC. Report on Geographic (Urban-Rural) Refinements to PPS Payment Adjustment. 1986. Report prepared for Health Care Financing Administration, Contract Number 500-85-0015.
    1. Dalton K. Hearing on Rural Health Care in Medicare. Washington DC.: Jun, 2001. Testimony before Committee on Ways and Means, Subcommittee on Health, U.S. House of Representatives.
    1. De Lew N Geographic Classification of Hospitals. Alternative Labor Market Areas. Health Care Financing Review. 1992 Winter;14(2):49–58. - PMC - PubMed
    1. Federal Register: Medicare Program: Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 1992 Rates; Proposed Rule. Sep 1, 1992. 57 FR 39746. - PubMed

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