Bundled Payment Methodology

When determining which items and services should be included in an MRF, hospitals start with their CDM, supply, and pharmacy files. These files are straightforward to build into an MRF because they have assigned gross charges and billing codes in line with the final rule requirements.

However, additional services are also required within MRFs: specifically those described by CMS as bundled services or service packages. These bundles include billing codes such as MS-DRGs, APR-DRGs, EAPGs, and soft-coded CPTs. Such codes are not found in CDM files but must be included when the hospital has negotiated rates for these bundled payment codes.

For example, if a hospital does not have any contracts based on APR-DRG, APR-DRG services would not be added to the MRF. There is also nuance regarding which specific MS-DRGs to include. For instance, if a hospital does not provide transplant services, transplant MS-DRGs may be excluded. Similarly, if a hospital lacks a neonatal ICU, NICU MS-DRGs might not be included.

Our approach is to include all MS-DRGs for which there are negotiated rates, such as those with a Medicare Advantage contract or a contract based on singular MS-DRG base rate * CMS weight. However, as stated above, if specific DRGs are not utilized by a hospital, they are not included in the final MRF. This approach ensures that the MRFs are comprehensive and reflect the bundled services the hospital utilizes and has negotiated rates for. This approach prevents unnecessary MRF rows by acknowledging the specific services a hospital does not offer.