Q&A: Reporting MS-DRG charges

Q: Per the 2021 Inpatient Prospective Payment System (IPPS) final rule, what MS-DRG charge information will be required to include on our cost report?

A: In the 2021 IPPS, CMS finalized its proposal to reduce Medicare’s reliance on the hospital chargemaster and to support development of a market-based approach to more appropriate payment for inpatient acute services covered under Part A by requiring hospitals to report certain market-based payment rate information on their cost reports. For cost reporting periods ending on and after January 1, 2021, CMS is requiring hospitals to report on their Medicare cost report the median payer-specific negotiated charges by MS-DRG that the hospital has negotiated with all of its Medicare Advantage (MA) payers. The payer-specific negotiated charges used by hospitals to calculate these medians would be the payer-specific negotiated charges for service packages that hospitals are required to make public under the requirements CMS finalized in the HPT rule that can be cross-walked to an MS-DRG. This information will be considered for the purpose of changing the methodology for calculating IPPS MS-DRG relative weights to more accurately reflect relative market-based pricing.

For more information, see "Note from the instructor: FY 2021 IPPS final rule reflects move toward a more market-based reimbursement strategy," by Judith L. Kares, JD.