2025 deadline to file a request for a Medicare geographical reclassification is approaching fast

By Marc Levy August 21, 2025

Prospective Payment System (PPS) hospitals are paid based on a standard federal rate that is adjusted by a wage index factor to reflect the relative wage levels in a geographical area. This wage index is updated annually and is a key factor for Medicare hospital reimbursement rates which in turn have a significant impact on hospital revenue.  

PPS hospitals have an opportunity to submit a request to the Medicare Geographic Classification Review Board (MGCRB) to change their Medicare wage index reimbursable geographical area. Hospitals often submit this request if the proposed new area has a more favorable wage index. Once approved, the reclass is in effect for three years unless the hospital withdraws its request.  

Hospitals should note that the reclassification request only impacts the hospital’s Medicare inpatient and outpatient PPS payments. The request does not benefit any sub-provider units such as rehabilitation and psychology clinics or home health agencies. 

Submitting your request 

The deadline for all geographical reclassification requests related to Federal Fiscal Year (FFY) 2027 (for discharges beginning on October 1, 2026 through September 30, 2027) is Tuesday, September 2, 2025. Requests can only be made electronically via the Centers for Medicare and Medicaid Services (CMS) secure portal. More information about the portal and submitting your request can be found here. The MGCRB historically issues their decisions in February. 

There are certain requirements that hospitals must meet to qualify for a reclass: 

1. The hospital meets certain average hourly wage criteria 
2. The hospital meets certain distance criteria from the area it wants to reclass into 
3. There are certain waivers to (a.) and/or (b.) above depending on the hospital’s status (i.e., Sole Community Hospital, Rural Referral Center, etc.) 

We recommend that any hospitals considering a reclassification request review CMS’s FFY 2027 website closely for further changes and guidance.  

For more information or to discuss  how this may impact your hospital, please contact Marc Levy or your BNN advisor at 800.244.7444. 

Want to learn more? 

The BNN Healthcare Advisory team specializes in cost report and reimbursement across the continuum of care. If your healthcare organization is experiencing challenges with reimbursement, or you are interested in learning more about improving your processes, technology, and strategy, get in touch with our healthcare industry specialists today!

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