Exhibit 1. Factors Influencing Medicare Provider Payment Rates, by Setting.

Payment components which indicate resource use	Factors to standardize
A. Institutional (i.e., IP, SNF, HH, and HOS claims)—Medicare Part A:
1. The base payment rate for the service	1. The wage index for the provider/facility area
2. A DRG weight for inpatient claims, a Resource Utilization Group (RUG) weight for SNF claims and a HH Resource Group (HHRG) weight for HH claims	2. Additional payments to account for facility factors—teaching hospitals (graduate medical education [GME], indirect medical education [IME], hospitals serving a disproportionate share (DSH) of Medicaid or uninsured patients
3. Additional payments to account for patient/care factors—outlier payment, short stay adjustments, etc.
B. Institutional (i.e., HOP claims)—Medicare Part B:
1. Fee-schedules, primarily: Ambulatory payment classifications (APC) fee schedule Medicare Physician Fee Schedule (MPFS) for physician services Lab fee schedule for lab services	1. Wage index for the provider/facility area
C. Non-Institutional (i.e., Physician/supplier and DME claims)—Medicare Part B:
1. Fee-schedules, which include the conversion factors (similar to a base rate) and relative value units (RVU) to adjust for acuity and care setting. For example: MPFS for physician services Ambulatory surgery center (ASC) schedule Anesthesia schedule Lab fee schedule DME fee schedule	1. Geographic practice cost index for the provider/facility area

SOURCE: See Appendix (CMS/PDAG Standardization Methodology for Allowed Amount V2).