CMS Requires More Hospital Price Transparency as it Plans Payment Overhaul

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service inpatient prospective payment system for fiscal year (FY) 2021, which begins Oct. 1. Key information from the final rule includes:

  • Increasing the standardized operating rate by a net 2.83% for hospitals that successfully participate in the inpatient quality reporting (IQR) program and are meaningful users of electronic health records.
  • Requiring hospitals to report by Medicare Severity Diagnosis-related Group (MS-DRG) the median payer-specific negotiated rates for inpatient services on the Medicare cost report for Medicare Advantage organizations beginning with cost reporting periods ending Jan. 1, 2021 or after. The CMS will use this data to establish the MS-DRG relative weights beginning in FY 2024. The new reporting requirement is in addition to requirements of the November 2019 transparency final rule that mandates hospitals to post charges and negotiated payment rates for all items and services in a machine-readable format, as well as charges and negotiated payment rates for at least 300 “shoppable” services in a searchable format.
  • Using FY 2017 data from Medicare cost report Worksheet S-10 to determine the distribution of uncompensated care (UCC) pool payments. FY 2021 UCC payments are estimated at approximately $8.29 billion, down approximately $60.6 million from FY 2020. The CMS also finalized its proposal to use the most recently available single year of audited Worksheet S-10 uncompensated care data for FY 2022 and subsequent years.
  • Creating new MS-DRG 018 for chimeric antigen receptor (CAR) T-cell immunotherapy with a relative weight of 37.329 to reflect the high cost and discontinuing the new technology add-on payments for the two CAR T products currently available.
  • Increasing the cost outlier threshold by 8.5% from $26,778 to $29,051, which will reduce the number of cases that qualify for an outlier payment.
  • Expanding the existing definition of “displaced resident” for the purpose of transferring Medicare medical residency slots after a teaching hospital or residency program closes.
  • Continuing the low-wage-index hospital policy implemented in the FY 2020 final rule, funded by reducing the standardized operating rate for all hospitals.
  • Maintaining a reporting period of any continuous 90-day period for the calendar year (CY) 2022 Promoting Interoperability Program and retaining the Query of Prescription Drug Monitoring Program measure as an optional measure worth five bonus points in CY 2021.
  • Retaining the current IQR program measure set, but increasing the number of quarters required for electronic clinical quality measure (eCQM) reporting to two self-selected quarters for CY 2021, increasing to all four quarters for CY 2023. In addition, the CMS will start publicly reporting eCQM measure results in late 2022 for CY 2021 data.
  • Making minimal changes to the value-based purchasing, readmissions reduction and the hospital acquired-conditions (HAC) reduction programs, primarily carrying forward existing policies. The CMS refined the validation procedures for healthcare-associated infection data to align with the hospital IQR program
  • Modifying requirements for what can be reported as Medicare bad debt

The MHA will provide a hospital-specific analysis and a summary of the final rule within the next few weeks. Due to the pandemic, the CMS waived the typical timeline that requires release of a final rule by Aug. 1. Members with questions should contact Vickie Kunz at the MHA.