The big news last week in SNF-land was the release of CMS’ 2024 Medicare SNF Proposed Rule. While the industry awaits guidance on (arbitrary and poorly targeted) staffing mandates, providers cheered a 3.7% reimbursement increase that adds about $24/day to the average facility’s Medicare Part A rate (we should be outraged, but I’ll cover that in August). That sentence was difficult for me to write, not only because every facility and county is different, but because the Market Basket adjustment is only one part of the annual equation; Area Wage Index (“AWI”) is the other.
Broad strokes: AWI is a federal market-specific adjustment that reflects relative labor cost differences across the nation. Some markets become relatively more expensive, some less. In other words, inflation is not evenly distributed. SNF stakeholders expecting a 3.7% rate increase may be caught off guard when the first check comes higher/lower than budgeted. This happens every year; I call it the “October Surprise” because new rates are effective for Service Dates on/after October 1st.
