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News | Medicare Payment and Reimbursement

CMS finalizes requirement for hospitals to report MA plan rates

News | Medicare Payment and Reimbursement

CMS finalizes requirement for hospitals to report MA plan rates

  • CMS will require hospitals to begin reporting median negotiated charges for all Medicare Advantage plans.
  • Medicare IPPS rates will increase by 2.9% for hospitals that meet quality and electronic health record requirements.
  • Uncompensated care payments will decrease by $60 million compared with FY20.

CMS finalized a proposal to require hospitals to report median payer-specific negotiated charges for Medicare Advantage (MA) health plans and will use those in three years to determine Medicare rates.

Issued Sept. 2, the hospital Inpatient Prospective Payment Service (IPPS) final rule finalized controversial new transparency requirements that included:

  • Requiring hospitals to report median payer-specific negotiated charges for MA health plans
  • Requiring the negotiated charge data to be included on Medicare cost reports beginning with cost reporting periods ending Jan. 1, 2021
  • Using the data in FY24 to set the MS-DRG relative weights used to determine Medicare inpatient hospital rates

The new requirements aim to build on the previous year’s requirement that hospitals report rates negotiated with health plans. Hospitals and national advocacy groups continue to challenge those requirements in court. But after a lower court upheld the requirements, they are expected to become effective Jan. 1.

“We believe that because hospitals are already required to publicly report payer-specific negotiated charges, in accordance with the Hospital Price Transparency Final Rule, that the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals,” the new rule states.

The final rule drew objections from hospital advocates.

“By continuing to focus on negotiated rates rather than expanding access to a patient’s out-of-pocket costs, the Administration fails to meet the goal it set for itself — assisting consumers in becoming more prudent purchasers of health care. We once again urge the agency to focus on what is really important to patients — ready access to their out-of-pocket costs,” Ashley Thompson, senior vice president for the American Hospital Association, said in a written statement.

CMS estimated the FY21 requirements will cost the 3,189 affected hospitals $4.3 million in total. But individual health systems told the agency the requirement likely will cost much more.

To speed provisions that are aimed at combating the COVID-19 pandemic, CMS also is waiving the usual 60-day delay in the effective date of the final rule.

Payment provisions in the IPPS rule

Overall, IPPS payments will increase by 2.9% for hospitals that successfully participate in the Inpatient Quality Reporting (IQR) program and meet electronic health record (EHR) requirements.

The rule expands an alternative new-technology add-on payment pathway for FDA-designated Qualified Infectious Disease Products (QIDPs) to include products approved through the FDA’s Limited Population Pathway for Antibacterial and Antifungal Drugs (LAPD).

CMS will conditionally approve new-technology add-on payments for products designated as QIDPs that do not receive FDA approval by July 1, 2021, and for products that do not receive approval through FDA’s LPAD pathway by July 1 but otherwise meet the applicable add-on payment criteria.

CMS will continue changes to the hospital wage index that were incorporated in FY20. The budget-neutral changes increased the wage index values for certain hospitals with low values and are planned to continue through FY23.

CMS tweaked its calculation for Disproportionate Share Hospital payments to include recent unemployment data and will use FY17 data on uncompensated care costs from Worksheet S–10 of Medicare cost reports. For FY22, Medicare will use the most recent available single year of audited Worksheet S-10 data.

Medicare estimated the change will reduce FY21 uncompensated care payments by $60 million compared with FY20.

Site-neutral payment changes will cut FY21 Long-Term Care Hospital Prospective Payment System payments by about $40 million.

Quality-payment programs will see changes

The Hospital Value-Based Purchasing program will adopt “newly established performance standards for certain measures” for FY23 through FY26.

The Hospital-Acquired Condition Reduction (HAC) program will incorporate changes that include:

  • Automatically adopting applicable periods beginning with FY23
  • Refining the process for validation of HAC measure data in alignment with the IQR program measure-validation policies in the new rule
  • Updating the definition of applicable period

The IQR program changed reporting, submission and public-display requirements for electronic clinical quality measures (eCQMs), including progressively increasing the time frame of eCQM data to be reported from one self-selected quarter to four quarters. Specific provisions include:

  • Requiring hospitals to report two quarters of data for the CY21 reporting period/FY23 payment determination
  • Requiring three quarters of data for the CY22 reporting period
  • Requiring four quarters of data beginning with the CY23 reporting period
  • Allowing hospitals to report three self-selected eCQMs and the Safe Use of Opioids eCQM

Beginning public display of eCQM data on Hospital Compare starting with data reported by hospitals for CY21

CMS estimated the various quality-based programs will cut base operating DRG payments for 2,545 hospitals, including a $553 million reduction in FY21 stemming from the Hospital Readmissions Reduction Program.

EHR program changes

Regarding the requirement to use EHR technology that follows 2015 Edition Health IT Certification Criteria, CMS will expand that requirement to encompass data submission for not only the previously finalized Hybrid Hospital-Wide Readmission measure but for all hybrid measures in the Hospital IQR Program.

Changes to the Medicare Promoting Interoperability program include:

  • Requiring EHR reporting for any continuous 90-day period in CY22 for new and returning participants
  • Continuing the Query of Prescription Drug Monitoring Program measure as optional within the Electronic Prescribing objective

Medicare estimated compliance with the Promoting Interoperability Program will cost $1.5 million total in CY21.

About the Author

Rich Daly, HFMA Senior Writer and Editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.

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