Update: FY21 IPPS Final Rule Requirement to Post Median Payment for Medicare Advantage Plans

The FY21 IPPS Final Rule solidified a new requirement for hospitals to post the median payment (called the median “payer specific negotiated charge”) by MSDRG for Medicare Advantage (MA) plans. The plan is to use this information to establish weights for MSDRGs using hospital payments, as opposed to hospital costs via the current cost-to-charge ratio methodology. Per the rule, this transition to payment-based weights would likely begin in FY24.  There are several key points to consider in this new requirement:

  1. Hospitals are required to disclose this information through the Medicare cost report for periods on or ending after January 1, 2021. 
  2. The requirement is ONLY for Medicare Advantage plans and will represent a median across all of those plans – NOT disclosing the payment for individual MA plans separately.  So, if the hospital has three MA plans, the median payment by MSDRG across those three plans will need to be calculated and disclosed through the Medicare cost report.  This does not represent the median reimbursement amount but rather the median payment across patient claims for MA payers.  Through the proposed rule, CMS had considered requiring hospitals to disclose this information separately for all third-party plans but finalized action for a calculated median across MA plans only. 
  3. While this new requirement comes on the heels of the Final Rule on Hospital Price Transparency released in November 2019, this new requirement does not alter those previous requirements.  To be clear, CMS still expects hospitals to report all payer specific negotiated charges for all negotiated payers – including MA plans assuming those have been negotiated – and to post those on the hospital website through the single machine readable file and the consumer friendly shoppable services display. 

For more information, you can find the federal register here.

We will continue to monitor changes to the Final Rule. If you would like to be part of our mailing list, to make sure you don’t miss anything, let us know.

You can find additional resources on price transparency here.

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