PDPM Calculator & Wage Indexing

Since we launched our PDPM Calculator, it’s become one of the most popular things on our site. It’s even the second (and third) result on Google for “PDPM calculator”. One request we’ve heard a few times is to add wage indexing so you can see what the rates look like where you live.

There are a couple of problems with that:

  1. CMS has released wage index data for FY 2019, but not for PDPM. That’s because…

  2. It isn’t clear how the wage index will work under PDPM. There are at least two problems:

FY 2019 Rates

1. CMS is required to use them but doesn’t have good data from the SNFs regarding wages, so they use hospital data instead. This isn’t a big problem per-se, it’s how we’ve been doing it for a long time. It would require a huge effort to do the auditing since there are a lot more SNFs than hospitals. (see final rule here)

2. The traditional way wage indexing is applied to RUGs simply won’t work under PDPM. Traditionally each RUG gets a Labor Portion and Non-Labor Portion. (See table for FY 2019 here) We multiply the Labor Portion by the Wage Index and then add in the Non-Labor Portion. With PDPM we will have 5 case-indexed categories. We have no data to split between Labor and Non-Labor.

CMS has not offered any clues on how the wage index is going to be used. (We’ve checked the final rule, the proposed rule, the technical report, and the calculation worksheet.)

SO, with all that in mind, we had a discussion around the office about the most logical way to apply a wage index we don’t even have yet. We also discussed what is most likely to happen. (These really are the types of discussions we have. Don’t judge.) We decided in the absence of official guidance we would add wage indexing to the calculator but give you the option to turn it off.

If you leave wage indexing turned on, it will be multiplied by the PT, OT, SLP and Nursing pay ONLY. We decided against scaling the NTA with the wage index because the largest component of the NTA is drugs and not labor.

I hope this decision strikes a good balance between providing the best tool we can while alerting you to potential short-comings and giving you the option to decide for yourself. Obviously we will update the calculator when CMS clarifies how this is going to work.

Comments welcome.


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