FY 2015 IPPS Final Rule - Wage Index
Office of Management and Budget (OMB) Delineations

In FY 2015, CMS is revising the wage index labor market areas to correspond with the Office of Management and Budget (OMB) Core-Based Statistical Area (CBSA) which are based on 2010 Census data. This will move some urban hospitals to rural CBSAs and some rural hospitals to urban CBSAs. For those hospitals moving from an urban CBSA to a rural CBSA, CMS is adopting a three-year transition period. Specifically, for hospitals that are currently located in an urban CBSA that became rural under the new OMB delineations, and have no form of wage index reclassification or re-designation in place for FY 2015, CMS will assign them the urban wage index value of the CBSA in which they are physically located for FY 2014. This will extend for a period of three fiscal years (with applicable floors and neutrality adjustments applied).

It should also be noted that applications for FY2016 reclassifications are due to the Medicare Geographic Classification Review Board (MGCRB) by September 2, 2014 (the first working day of September 2014). Applications and other information about MGCRB reclassifications may be obtained via the Internet on the CMS website at: http://www.cms.hhs.gov/Regulations-and-Guidance/Review-Boards/MGCRB/index.html, or by calling the MGCRB at 410.786.1174. The mailing address of the MGCRB is: 2520 Lord Baltimore Drive, Suite L, Baltimore, MD 21244.

The new OMB delineations will also move some hospitals from a rural CBSA to an urban CBSA. Of particular concern here is the Critical Access Hospitals (CAH) that must have a rural designation for CAH status. In these circumstances, CMS is affording the CAH a two-year grace period to take the necessary actions to obtain a rural reclassification. In other words, for those CAHs impacted by the FY 2015 change in the OMB delineations from rural to urban, the CAH will have until September 30, 2016, to obtain the necessary rural reclassification before CMS will take any actions against the CAH status.

Finally, the OMB delineations will also move some urban hospitals to new urban CBSAs with lower wage index values. In these cases, CMS is adopting a one-year, 50/50 blend of the new CBSA wage index and the old CBSA wage index to mitigate the impact of the lower wage index on the hospital.

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