Which factor does the wage index NOT adjust for?

The wage index is designed to adjust Medicare reimbursement rates based on variations in local labor costs to ensure equitable payment across different regions. It takes into consideration regional labor costs, geographic variations in wages, and is indirectly influenced by inflation rates to some extent.

However, hospital size and capacity are not factors that the wage index directly adjusts for. The wage index does not account for differences in the scale or capabilities of a hospital when it establishes reimbursement rates. It focuses primarily on the cost of labor in different geographic areas rather than operational metrics related to the hospital itself. This distinction reinforces why hospital size and capacity are not factored into the wage index in the same way that local economic conditions and wage disparities are.