Sorry, you need to enable JavaScript to visit this website.

Title: Section 86-1.19 - Wage Equalization Factor (WEF)

Effective Date


86-1.19 Wage Equalization Factor (WEF).

(a) The statewide base price per discharge shall be adjusted by a facility-specific wage equalization factor (WEF) to reflect differences in labor costs between hospitals. Such WEF adjustment shall be used to adjust for the level of wage and fringe benefit costs for each hospital in accordance with the following:

(1) The WEF shall be based on each hospital's occupational mix and wages for registered nurses, licensed practical nurses, surgical technologists, nursing aides, orderlies, attendants and medical assistants as reported and approved by the federal Medicare program, and the hospital's proportion of salaries and fringe benefit costs to total operating costs as reported to the Institutional Cost Report. The WEF shall be computed as follows:

(i) For each occupation described in this paragraph, a statewide average salary shall be calculated by dividing the statewide sum of hospitals' total dollars paid by the statewide sum of hospitals' hours paid; and

(ii) For each hospital an actual weighted average salary shall be calculated by dividing the total dollars paid for such occupations by the total hours paid for such occupations; and

(iii) An initial WEF shall be calculated for each hospital by dividing the hospital-specific actual weighted average salary as calculated pursuant to subparagraph (ii) of this paragraph by the statewide average salary calculated pursuant to subparagraph (i) of this paragraph; and

(iv) The final WEF shall be calculated using the following formula:

(1 / ((Labor Share/initial WEF) + Non-Labor Share))

where "Labor Share" is calculated by dividing the hospital's total salary cost plus the hospital's total fringe benefits by the hospital's total operating costs as reported in the institutional cost report for the same calendar year used to calculate the statewide base price for the applicable rate period. The "Non-Labor Share" equals total operating costs less the "Labor Share" of costs.

(2) A hospital may submit updated occupational service data as approved by the federal Department of Health and Human Services prior to January 1 of a rate year for use in calculating the WEF in accordance with this section.

(3) For those hospitals that are in bankruptcy proceedings in the base year and that have subrogated their labor contracts, the commissioner shall use the higher of the hospital-specific or regional average WEF. These regions will be consistent with those used in the development of the exempt unit cost ceilings.


VOLUME A-2 (Title 10)