American Hospital Association Criticizes Provision in CMS’ Inpatient Prospective Payment Systems Final Rule

Anthony Huber, Class of 2021, Belmont Law

On September 2, 2020 the Centers for Medicare and Medicaid Services (“CMS”) filed an unpublished version of the upcoming Inpatient Prospective Payment Systems (“IPPS”) Final Rule for 2021.  According to CMS, the finalized policies in the IPPS Final Rule support its key priorities such as, strengthening Medicare and fostering innovation.  CMS also claims that the policies will “help ensure that Americans continue to have access to a world-class healthcare system with access to potentially life-saving diagnosis and therapies by unleashing innovation in medical technology and removing barriers to competition.”

The final rule incorporates several important policies related to:

  • Price transparency and use of private-sector negotiated charge data in calibrating Medicare Severity-Diagnostic Related Group (“MS-DRG”) payment weights;
  • Payment rates;
  • New or revised MS-DRGs;
  • Uncompensated Care Payments; and
  • Wage index

For a summary of these policies, click here.

All provisions within the IPPS Final Rule are not without controversy, however.  Perhaps the most controversial provision is related to the price transparency and changes to MS-DRG payment weights. An MS-DRG is a classification system through which hospitals are paid for patient hospital stays.  This controversial provision, which will be in effect for cost reporting periods ending January 1, 2021 or later, would require hospitals to report on their Medicare cost report the median payer-specific negotiated rates for inpatient services by MS-DRGs for Medicare Advantage organizations.

The American Hospital Association (“AHA”) is one of the critics of this new provision.  According to a statement made by Ashley Thompson, AHA Senior Vice President for Public Policy Analysis and Development, “the AHA remains deeply disappointed that CMS continues to require hospitals and health systems to disclose privately negotiated contract terms with payers.”   Ashley Thompson further stated that “by continuing to focus on negotiated rates rather than expanding access to a patient’s out-of-pocket costs, [CMS] fails to meet the goal it set for itself—assisting consumers in becoming more prudent purchasers of health care.” As a result, Ms. Thompson opined that “[the policy] will require hospitals to divert critically needed resources during [the] pandemic to administrative tasks that will not benefit patients.

On the other hand, CMS argues that “the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals” because the payer-specific negotiated charges used by hospitals to calculate these medians are payer-specific negotiated charges for service packages that hospitals are already required to publicize under the Hospital Price Transparency Final Rule.

 

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