Hospitals and insurers are fuming over the Trump administration's latest idea to lower healthcare costs by changing how CMS calculates Medicare severity DRG payments.
Under the proposed Inpatient Prospective Payment System rule, CMS would force hospitals to report for each MS-DRG the median payer-specific negotiated rates for all Medicare Advantage organizations and third-party payers beginning in 2021. Regulators say hospitals should be able to calculate the charges since they will have to pull together and publish most of the data under the disputed price transparency rule, which is making its way through the courts.
The agency is thinking about using the information to adjust inpatient prospective payments starting in 2024, speculating the change could help rein in healthcare spending.
But in comments on the proposed rule, providers and payers signaled they may sue the federal government if it moves forward with the changes, arguing that regulators don't have the power to do either.
"CMS lacks any authority to adopt a 'market-based' MS-DRG weighting methodology because Congress has explicitly instructed CMS to weight MS-DRGs based on 'relative hospital resources used with respect to discharges' for each MS-DRG," the Federation of American Hospitals wrote in a comment letter.
CMS multiplies a hospital's payment rate per case by the relative weight of a DRG to determine how much to pay for a specific case. According to the agency, the weighting is currently based on "the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs." Under the proposal, CMS would base it on payer-specific negotiated charges.
Hospitals and payers have fought nearly every price transparency effort by the Trump administration, arguing that Congress didn't give regulators the power to make them disclose their rates. Doing so would be difficult and wouldn't help consumers, they say. But a number of experts think price transparency could reduce healthcare costs in the long term by increasing competition among providers, even if there's a short-term uptick.
Providers also took issue with CMS' attempt to change and clarify policies related to so-called Medicare bad-debt claims, especially the agency's desire to apply such changes retroactively. Most notably, CMS emphasized in the proposed rule that providers must put forth a similar effort to collect unpaid debts from non-indigent patients regardless of payer. The agency is worried that providers won't try as hard to collect debts from non-indigent Medicare patients if they think the federal government will pay instead.
"CMS must make clear that implicit price concessions are considered bad debt and should be included on the Medicare cost report," the Association of American Medical Colleges said in its comments on the proposed rule.
Hospitals supported changes that would hold providers harmless if they try to comply with CMS' so-called "must-bill" policy for dual-eligibles and states refuse to process their Medicaid claim.
