The key measurements in this section are taken from the Medicare Provider Analysis and Review (MedPAR) file and the Impact File that are created by CMS as part of annual rulemaking. The MedPAR file includes billing data for 100% of all Medicare fee-for-service claims (IPPS claims) for discharges during the twelve months ending September 30. The Impact File corresponds to the Final Rule and Correction Notice and contains data elements by provider used in calculating rates and impacts for a federal fiscal year.

Wage Index

The wage index is from the Impact File indicates the relative hospital wage level in a geographic area (i.e. a Core-Based Statistical Area) compared to the national average hospital wage level. A hospital may sometimes be reclassified to a different labor market. The wage index is updated annually and is used in determining payment (i.e. the labor portion of the standardized amounts).

CMI

A hospital's case mix index (CMI) is from the Impact File and is the average relative weight for patient discharges during a period. Each patient is classified into a MS-DRG category based on clinical information and each MS-DRG is assigned a relative weight on the basis of its relative cost of care, as defined annually by CMS. MS-DRGs at lower severity levels cost less to treat and have lower relative weights. MS-DRGs at higher severity levels cost more to treat and have higher relative weights. The CMI thus provides a measure of overall patient severity.

Total IPPS Payment

Total IPPS Payment is calculated from the MedPAR file and is the amount paid to a hospital for prospectively paid Medicare patients. This amount does not include any capital pass-thru amount or organ acquisition amount. It includes payments by Medicare (i.e. base MS-DRG payment, outlier payment, disproportionate share adjustment (DSH), indirect medical expense adjustments (IME), adjustments for certain transfers, etc.) It also includes amounts paid by or on behalf of the patient (e.g. deductibles or coinsurance) and amounts paid by third party insurers.

Average IPPS Payment

The Average IPPS Payment is calculated from the MedPAR file and is the average amount paid to a hospital for prospectively paid Medicare patients. It is the Total IPPS Payment divided by the total number of IPPS discharges.

Outlier Amount

Medicare IPPS patients that incur extraordinarily high costs are eligible for additional payment. Outlier payments are identified in the MedPAR file.

Outlier as % of Total

An Outlier percentage is calculated as the total Outlier Amount divided by Total IPPS Payment.

Medicare Margin

The IPPS Medicare Margin is calculated using the Average IPPS Payment (above) from the MedPAR file and Average Cost per case as calculated for each patient on the basis of ratios of costs to charges for routine services and ancillary areas as determined from the Medicare Cost Report. Click here for cost allocation methodology. The Medicare Margin is the difference between payment and cost reported as a percentage of payment.