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FAQs for Reporting Median Payer-Specific Negotiated Charges

The Centers for Medicare & Medicaid Services (CMS) released an FAQ document discussing market-based Medicare Severity Diagnosis Related Group (MS-DRG) relative weight data collection. The document also reviews the change in methodology, finalized in the fiscal year (FY) 2021 Medicare Inpatient Prospective Payment System (IPPS) rule, for calculating the MS-DRG relative weights.

Specifically, hospitals must report median payer-specific negotiated inpatient services charges for Medicare Advantage organizations by MS-DRG. In addition, beginning in FY 2024, CMS will use these data in a new market-based methodology to set the MS-DRG relative weights, which are used in determining Medicare payment rates for inpatient hospital stays.

These FAQs provide acceptable approaches to calculate and report median payer-specific negotiated charges by MS-DRG for reporting periods ending on or after Jan. 1, 2021.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Maryellen Guinan is a principal policy analyst at America's Essential Hospitals.

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