Effects of the Medicare Wage Index on Healthcare in Central Appalachia

Medicare Wage Index values have a significant effect on the financial strength of rural hospital, and particularly in Appalachia, who receive lower rates of compensation for same services than urban hospitals. The financial strength of hospitals is closely associated, with more negative outcomes in the community it serves. In Appalachia a confluence of several factors, both cultural and economic have a created a unique situation in which the Central Appalachian region has the highest rates of prevalence and mortality of most common diseases. It also cost more per patient to treat the same disease in Appalachia than elsewhere in the country. The financial strength of hospitals in the United States is generally lower in rural areas than urban, but in Appalachia financial strength of hospitals is consistently poorer, even when all other economic variables are the same. Using tax returns to estimate the amount of lost revenues from the Medicare Inpatient Prospective Payment System wage index, the magnitude of lost revenues is fully shown. Community health education programs in Central Appalachia have been statistically proven to improve the health of their communities and with increased funding from large gaps in Medicare compensation that have resulted from growing economic inequality, rural Appalachian hospitals could begin to combat the unique Appalachian culture elements that hamper healthcare outcomes in the region