CMS Issues New Hospital Price Transparency Requirements in FY 2021 IPPS Proposed Rule

Thoughtware Alert Published: Jul 07, 2020
Healthcare worker wearing mask and providing care

On May 11, 2020, CMS issued the Fiscal Year 2021 Hospital Inpatient Prospective Payment System (IPPS) proposed rule. Included in the proposed rule are reporting requirements that could be used in a potential change to the methodology for calculating the IPPS MS-DRG relative weights.

As the administration looks to advance the goals of promoting healthcare choice, increasing market competition and price transparency, and ultimately driving down the cost of healthcare services, the proposed rule supports the development of a market-based approach to payment under traditional, or fee-for-service (FFS), Medicare.  

The proposed rule would require hospitals to disclose to Medicare, through the Medicare cost report, median commercial health plan rates negotiated with insurers, both Medicare Advantage and third-party payors, for inpatient services. The payor-specific negotiated charges used by hospitals to calculate the medians would be the payor-specific negotiated charges for service packages that hospitals are required to make public, effective January 1, 2021, under the Hospital Price Transparency Final Rule (84 FR 65524). 

The proposed requirement would apply to cost reporting periods ending January 1, 2021, or later. Beginning 2024, CMS could potentially use the median private negotiated rates and other pricing information collected on the cost report to calculate IPPS MS-DRG relative weights that reflect relative market-based pricing. 

CMS is seeking comments on the proposed rule through July 10, 2020. 

For more information, reach out to your BKD Health Care Performance Advisory Services trusted advisor or use the Contact Us form below.

Kate & Ben — How can we help you? Contact Us!

How can we help you?