Effective for cost reporting periods ending on or after January 1, 2026, IPPS hospitals must report the weighted median of the payer-specific negotiated charges the hospital has negotiated with each Medicare Advantage Organization (MAO) for each MS-DRG with discharges during the cost reporting period. CMS estimates it will take 20 hours to collect this data to include on the cost report each year. CMS intends to use the information to set MS-DRG weights beginning in FY 2029, which will redistribute payments across MS-DRGs.
To calculate the weighted median, the following steps must be taken for each MS-DRG with inpatient discharges during the cost reporting period:
- The most recent Machine-Readable File (MRF) as of the cost report filing date is used to identify each MAO payer-specific negotiated charge. https://www.cms.gov/files/document/mln7215754-hospital-price-transparency.pdf
- The CMS Grouper and associated definitions manual can be used to crosswalk codes or classify discharges to an MS-DRG code. https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software
- Hospitals must substitute a dollar amount for each charge based on a percentage or algorithm, but any discharges paid on a capitated basis should be excluded.
- Each MAO payer-specific negotiated charge will be listed once for each inpatient discharge that occurred during the cost reporting period for that MAO.
- Compute the median by first ordering the list from the lowest to the highest MAO payer-specific negotiated charge. The median is the middle value when the list contains an odd number of charges or the mean of the two middle values when the list contains an even number of charges.
For more information or assistance, please contact our Albany office at (229) 883-7878 or our Atlanta office at (404) 220-8494.
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