Federal Grant Award Summary

The National Institute on Aging (NIA) awarded the Regents of the University of Michigan a $680,301 Project Grant (CFDA 93.866: Aging Research) to conduct a comprehensive research study examining the effects of Medicare's hospital wage index on patient access and hospital care quality for older Medicare beneficiaries. The award, issued on May 15, 2026, with a completion date of March 31, 2031, supports econometric analyses utilizing 100% Medicare claims data and wage index information to assess the financial, staffing, quality, health outcome, and access implications of wage index exceptions and budget neutrality offsets across approximately 3,500 acute care hospitals. This research addresses a critical gap in the literature, as the wage index—which distributes nearly $350 billion in annual Medicare spending—has received limited empirical scrutiny despite affecting $2 billion in additional hospital payments through exceptions.

The research will deliver novel insights into how wage index exceptions and corresponding payment offsets influence hospital staffing capacity, quality of care delivery, health outcomes for vulnerable populations, and the composition of hospital services provided. The study specifically investigates whether these payment mechanisms create regressive outcomes that disproportionately harm sicker and poorer patient populations by eroding some hospitals' ability to maintain service breadth and quality, while enabling other hospitals to shift service mix toward higher-paying services. These research deliverables will provide evidence-based analysis to inform Medicare payment policy reform and strengthen understanding of how administrative technicalities in federal healthcare reimbursement affect the delivery and accessibility of hospital care to older Medicare beneficiaries.