A federal judge, in a split decision favoring New Jersey hospitals, quashed an effort by the Greater New York Hospital Association to reverse the addition of three New Jersey counties to a New York wage-index area used to adjust Medicare reimbursement for area wage differences. Susan Waltman, senior vice president and general council at the GNYHA, said the association was considering an appeal. U.S. District Judge Lawrence McKenna in New York City ruled the CMS had broad discretion to adopt new metropolitan service areas as a proxy for the labor market, Waltman said. McKenna, however, sided with the association on occupational-mix adjustments, an issue worth approximately $200 million to New York hospitals over the next 10 years.
The new wage-index area, which took effect Oct. 1, 2004, will cost New York hospitals $53 million in federal fiscal 2005 and $980 million over the next 10 years, the GNYHA said. Waltman noted that the CMS had the authority to redefine its wage-index areas sooner than 10 years from now. "We would be hopeful over time that (CMS) would look to refine those labor markets just as the (Government Accountability Office) told them to do," she said. The New Jersey Hospital Association declined to comment until its officials could read the ruling. -- by Cinda Becker