CMS publishes FAQs on market-based MS-DRG data collection

CMS recently released FAQs clarifying how it will collect data on market-based MS-DRG relative weights and changes to its methodology for calculating MS-DRG relative weights. Both policies were finalized in the 2021 Inpatient Prospective Payment System (IPPS) final rule.

Under the 2021 IPPS final rule, hospitals are required to calculate and report median payer-specific negotiated charges by MS-DRG on the Medicare cost report for cost reporting periods ending on or after January 1. The FAQs aim to help hospitals understand acceptable approaches to meeting the requirements and provide further explanation of the requirements.

Topics addressed in the FAQs include:

• Accounting for contract changes over the course of a cost reporting period
• Calculating the median if there is an even number of payer-specific negotiated charges by discharges for a specific MS-DRG
• Consequences of noncompliance
• Methods for calculating the median payer-specific negotiated charge for Medicare Advantage Organizations for a given MS-DRG on a per diem or percentage of charge basis

Hospitals should review the requirements in the 2021 IPPS final rule and ensure that their cost reports will be compliant.