Michigan Association of Health Plans

MAHP Commentary on New Medicare IPPS and LTCH Rules

On August 2, the Centers for Medicare & Medicaid Services (CMS) issued its Final Rule for Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Prospective Payment System. (We’ll minimize the acronyms for this post. There’s a lot of jargon in healthcare.) This Final Rule had some positives and negatives for transparency in the Healthcare field. This is one of the documents released on an annual basis that truly can impact how healthcare operates. I’ve included some quick, non-jargon, commentary below.

One of MAHPs broad goals is to increase transparency in the healthcare space. The Final Rule here requires hospitals to post online their “standard charges” in a machine readable format and to update it annually. This is a small step in cost transparency. Although “standard charges” are somewhat misleading, as insurers generally pay much less than the “charge.” Your insurer negotiates a rate, the “in-network” rate, for these procedures. These are commonly re-negotiated every few years. Generally, the only patient that pays the charged rate are the uninsured. Another reason to get insured! We do applaud the requirement to post the “standard charge” publically. Perhaps the next step is to scale by posting a few more meaningful amounts:

  • Hospitals’ “Standard” charge
  • The Medicare Rate
  • The Medicaid Rate
  • The average In-Network Rate for this hospital


Unfortunately, CMS also removed some meaningful quality metric reporting. CMS indicated these metrics were “duplicative of another” or the “costs outweighed the benefits.” Many of these were collected electronically via web-tools or Electronic Health Record use. While we support lowering administrative burden, provided is lowers cost, healthcare cannot afford to lose sight of increasing quality reporting. Some important metrics removed were related to infections from central lines, mortality rates related to heart patients, several re-admission metrics, Safe Surgery Checklist use, flu vaccine, and use of an ECG within 1 hour of a heart-related ER visit. These are very important measures. So important, in fact, the Institute for Health Improvement made these and similar efforts part of their Protecting 5,000,000 lives from Harm Campaign. Eliminating these metrics is a step back away from goals.

If we could make a concerted effort to utilize both highly transparent cost and quality measures healthcare could be delivered in a more cost-efficient and higher quality way. However, both of these need improvement. We need to know how hospitals are charging and, if they’re charging a higher rate, are they getting better outcomes? Consumers are willing to pay more to get more. But let’s make it transparent and easy to find and understand. More, not less.

On balance, the Final Rule doesn’t provide the step forward healthcare needs. Reporting meaningful information is crucial to fixing our system. Healthcare can be the same simple value judgment we all make in other areas like cell phones and cable providers. Less jargon filled, cost-efficient, and better healthcare can be delivered.