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Market-Based MS-DRG Data Required in 2021

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President Trump has issued a series of Executive Orders with the stated goal of “facilitating the development and operation of a healthcare system that provides high-quality care at affordable prices for the American people”. These Executive Orders have led the Centers for Medicare & Medicaid Services (CMS) to take several recent actions, including establishing requirements for all hospitals to make available to the public a list of standard charges for all items and services they provide beginning on January 1, 2021. Hospitals are scrambling to comply with the new regulations following a decision by the D.C. Court of Appeals which ruled in favor of the Trump Administration on June 24, 2020.

CMS is continuing their push to comply with what they see as the critical goals of President Trump’s Executive Orders by building on the hospital price transparency requirements. CMS has recently finalized new reporting requirements, published in the Fiscal Year 2021 Inpatient Prospective Payment System (IPPS) Final Rule on September 18, 2020. The new requirements are aimed at reducing the Medicare program’s reliance on hospital chargemaster prices and at supporting the development of a market-based approach to reimbursement.

The first step in this process will require hospitals to report the median payer-specific negotiated charge for all of the hospitals' Medicare Advantage organizations by MS-DRG. This information must be submitted on each hospital's Medicare cost report on or after January 1, 2021.

The first step in this process will require hospitals to report the median payer-specific negotiated charge for all of the hospitals' Medicare Advantage organizations by MS-DRG. This information must be submitted on each hospital’s Medicare cost report on or after January 1, 2021. Vitalware Hospital Price Index clients will receive this data as part of that solution and service.

CMS plans to use the provided information to change the way in which inpatient reimbursement is calculated, beginning in Fiscal Year 2024. Failure to provide the required information may result in loss of Medicare payments for hospitals, as the cost report will be considered incomplete if submitted without the required reimbursement information.

Median payer-specific negotiated charges should be calculated for each MS-DRG by listing each discharge in the hospital’s cost reporting period that was paid for by a Medicare Advantage organization along with the corresponding negotiated payment for each discharge. The median negotiated payment rate for each MS-DRG must be reported on the hospital’s submitted cost report.

Within the IPPS Final Rule, CMS has outlined its proposed methodology for recalculation of IPPS reimbursement utilizing the provided information. CMS believes this will inject market pricing into Medicare Fee-for-Service reimbursement and provide more accurate cost information.

The American Hospital Association (AHA) released a statement expressing their disappointment with the ruling and vowing to continue their legal challenge, believing that CMS lacks the authority to compel hospitals to reveal privately-negotiated reimbursement amounts.

Although we can’t predict the ultimate outcome of the legal challenges to the CMS requirements, it’s apparent that pricing transparency isn’t going away any time soon. In order to avoid civil monetary penalties or the potential loss of all Medicare payments, hospitals must comply with all final rule requirements.

If your hospitals are unsure of how to post your service packages, shoppable items, or MS-DRG data, please reach out. Vitalware has a complete solution to accomplish all requirements in a single solution.

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