Why do payments vary between hospitals for the same procedure or service?
Medicare payments to hospitals vary depending on the Medicare payment policy based on the unique characteristics of the hospital. Wage Index: For both inpatient and outpatient, the national payment amount is adjusted by an area wage index to reflect regional variation in hospital salary and benefit rates. Generally hospitals located in urban areas tend to have high wage index. Graduate Medical Education (GME): Hospitals that have residency programs to train individuals after completion of medical school receive additional payments from Medicare. These payments provide a partial offset to the hospital costs for training these future physicians (salaries and benefits for residents, faculty teaching stipends, administrative cost to operate the residency programs) Hospital residents provide services to all patients, not just Medicare patients. These payments are crucial for ensuring that patients in the future have an adequate supply of physicians to meet their medical needs. Indirect Medi
