• Medicare spends approximately 14% more for Medicare Advantage beneficiaries than for comparable fee-for-service beneficiaries, resulting in approximately $76 billion in additional Medicare spending in 2026.
• National health care spending reached $5.3 trillion, or 18% of the gross domestic product, in 2024, while Medicare spending totaled approximately $1.1 trillion.
• Since 2009, spending on Part B clinician-administered drugs in nonfacilities has grown the fastest.
• Assertions were made that consolidation leads to higher payment rates and spending. 

Hospitals interested in subscribing to the HIDI Premier Report Package available on HIDI Advantage Analytics^® should review the package information. Current subscribers with questions about downloading files should contact HIDI.

MHA previously published an analysis of the preliminary data from the May 22 release. This analysis is based on the July 16 release.

This is the only opportunity to request revisions to your data. Subsequent requests for revisions are limited to mishandling of the data. The files are available for review to authorized users of HIDI Advantage^®.

The financial implications include effects of the CY 2027 updates to the market basket, the productivity adjustment reduction mandated by the Affordable Care Act, changes to the Home Health Resource Group case-mix budget neutrality and changes to the wage index.

The effect of the proposed home health rule will increase payments in Missouri by an estimated 1.35%. Although footnoted, the analysis does not include the effect of the 2% sequestration. Hospitals have until Monday, Aug. 31, to review their hospital-specific data and submit comments.

Hospitals in Missouri are projected to receive an estimated payment decrease of 3.76% for services provided under the OPPS. Although footnoted, the analysis does not reflect the effects of the 2% sequestration. Hospitals have until Monday, Aug. 31, to review their hospital-specific data and submit comments regarding the proposed rule.

The new model will require 340B providers to send a claim to participating manufacturers for purchases of 340B drugs included as selected pilot program drugs. Then the manufacturer will issue rebates to the 340B provider. When a claim is filed, manufacturers will not be permitted to deny a rebate based on suspected instances of diversion, duplicate discounts between 340B and Medicaid, eligible issues with the provider or insufficient purchases of a drug at full price. Such issues remain subject to agency review, manufacturer audits and 340B Administrative Dispute Resolution processes.

IPPS

• Includes market basket increase of 2.3% (3.2% less 0.9% productivity adjustment)
• Estimates a net IPPS payment increase of $2.1 billion, up from $1.4 billion as proposed
• Finalizes new policy requiring that approved medical residency training programs not discriminate, or promote or encourage discrimination, on the basis of race, color, national origin, gender, age, disability or religion
• Updates IPPS quality reporting program
• Updates Medicare Promoting Interoperability Program
• Updates Medicare mandatory pay-for-program
• Expands the current mandatory CJR model into a new mandatory model, known as CJR-X
  • Most hospitals paid under the IPPS would be mandatory participants except hospitals participating in the Transforming Episode Accountability Model (TEAM) or those hospitals not paid under both the IPPS and Outpatient PPS

LTCH PPS

• Includes market basket increase of 2.3% (3.2% less 0.9% productivity adjustment)
• Estimates a net LTCH PPS payment increase of $54 million, a decrease from the proposed $55 million
• Updates LTCH quality reporting program

MHA soon will publish an issue brief with additional details.

IRF PPS

• Market basket increase of 2.3% (3.2% less 0.9% productivity adjustment)
• CMS estimates a net IRF payment increase of $340 million
• IRF quality reporting program updates
• Changes to Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program

IPF PPS

• Market basket increase of 2.3% (3.2% less 0.9% productivity adjustment)
• CMS estimates a net IPF payment increase of $60 million
• IPF quality reporting program updates

SNF PPS

• Market basket increase of 2.4% (3.3% less 0.9% productivity adjustment)
• CMS estimates a net SNF payment increase of $882.74 million
• CMS estimates reductions in payments due to the SNF value-based purchasing programs will be $203.6 million
• SNF quality reporting program updates
• Updated SNF value-based purchasing program performance standards

Hospice

• Market basket increase of 2.3% (3.2% less 0.9% productivity adjustment)
• CMS estimates a net IPF payment increase of $755 million
• Due to fraud, waste and abuse within the hospice programs, CMS developed the service and spending variation index to identify inappropriate utilization, quality of care or compliance concerns
• Hospice Election Statement Addendum mandatory for all hospice elections and not just upon request
• Updates to the Hospice Quality Reporting Program

The Missouri Hospital Association published issue briefs with additional details.

Emergency rules 13 CSR 70-3.300 and 13 CSR 70-3.310 rescind language regarding removal of complementary health and alternative therapies for chronic pain management and chiropractic services as MO HealthNet covered services.

Emergency rule 13 CSR 70-15.015 removes the definition of state-deemed critical access hospitals and updates the language related to the stop-loss payment, which will allow for annual adjustments. It also adds language recognizing the governor’s budget withholds on psychiatric adjustment payments and clarifies Graduate Medical Education payments are to be made to in-state hospitals.

Emergency rule 13 CSR 70-15.160 updates all documents incorporated by reference and used to create the outpatient simplified fee schedule, and updates the language for the outpatient rate adjustment.

The Medicare Trustees Report further projects that Medicare unfunded obligations over the next 75 years now are projected to increase from $60.3 trillion to $65.3 trillion. Although the trustees project that the Hospital Insurance trust fund will become insolvent by 2033, incoming revenues are projected to be sufficient to cover approximately 89% of scheduled Part A expenditures.

The CSR report includes an overview of Medicare financing and financial status, describes the structure of Medicare including sources of financing for the HI and Supplemental Medicare Insurance trust funds, and summarizes Medicare spending and trust fund operations in 2025.

Physician Fee Schedule

• After accounting for the expiration of a 2.5% CY 2026 payment increase under the One Big Beautiful Bill Act, the proposed CY 2027 qualifying Alternative Payment Model conversion factor of $33.17 represents a projected decrease of 40 cents or 1.19% from the current conversion factor of $33.57.
• The proposed nonqualifying APM conversion factor of $32.84 represents a projected decrease of 56 cents or 1.68% from the current conversion factor of $33.40.
• Evaluation and management services that occur during a global period would be reimbursed at 100% for the most expensive services and at 50% for all other services.
• The methodology used to calculate practice expense Relative Value Units would move away from older specialty-specific data to a mixture of input data and a “PE stabilizer” designed to minimize volatility in RVU values.
• Diabetes services now would be included as preventive services for Rural Health Clinics to align such payments with those in Federally Qualified Health Centers and physician offices.

Medicare Shared Savings Program

• Shared savings for Basic track Level E would be raised from 50% to 60%.
• Maximum weight used for calculating regional adjustments under the Enhanced track would be reduced from 50% to 35%.
• The prior savings adjustment scaling factor would increase from 50% to 75% to reduce the so-called “ratchet effect” for Accountable Care Organizations.

Comments are due by Monday, Sept. 14. The Missouri Hospital Association published an issue brief with additional information.

According to MHD, beginning with state fiscal year 2024, uncompensated care costs will be calculated based on the most favorable option of:

• Medicaid primary and uninsured or

• Medicaid primary, Medicaid duals (Title 18 and applicable plans primary) and uninsured

For those hospitals who qualify for the 97th percentile exception, the calculation for SFY 2024 can consider the best outcome among:

• Medicaid primary and uninsured

• Medicaid primary, Medicaid duals (Title 18 and applicable plans primary) and uninsured or

• All Medicaid eligibles and uninsured

No hospital will face a penalty under the new UCC methodology as overpayments cannot increase. However, some overpaid hospitals may benefit by seeing a reduction in their overpayment amounts. 

This change may reduce potential Disproportionate Share Hospital liabilities and allow hospitals to release reserves as part of SFY 2026 year-end calculations.

An MHD bulletin containing this information will be shared with membership as soon as it becomes available.

While MHD filed the rule based on its original FRA calculations, it does not intend to operationalize the 4.7% trend factor as it assesses the SFY 2027 tax. The Missouri Hospital Association submitted a comment letter formally requesting removal of the 4.7% outpatient trend factor.

Also included in the July 15 issue of the Missouri Register is the final order amendment for the Inpatient Hospital Services Reimbursement Methodology, which was proposed in the April 1 issue.   

The report is based on information released on the Centers for Medicare & Medicaid Services’ Hospital Compare website for reporting periods 2022 through 2024. Policy and analytic studies, prepared for distribution by the Hospital Industry Data Institute, are available for download to authorized users of HIDI Advantage^®. 

OPPS

• Increases the OPPS payment rates by 2.4%, based on a 3.2% market basket update, less a 0.8% productivity adjustment
• Reduces off-campus provider-based department payments for imaging without contrast services. CMS estimates this will “reduce Medicare Part B expenditures by approximately $260 million in the first year, including approximately $190 million in Part B savings and $70 million in reduced beneficiary premiums.”
• Updates payment rates for drugs purchased under the 340B Drug Pricing Program to better reflect what hospitals pay for such drugs. “This proposal would save Original Medicare a collective estimated $4.55 billion in drug expenditures, for total reduced drugs spending of approximately $5.7 billion in 2027 alone.”
• Continues phasing out the inpatient-only list over a three-year period beginning with the elimination of 638 procedures
• Issues request for information about strengthening hospital price transparency rules
• Updates the Medicare payment rates for Intensive Outpatient Program services and Partial Hospitalization Program services
• Revises the Hospital Outpatient Quality Reporting Program
• Proposes requiring prior authorization for eight additional botulinum toxin injection codes

ASC

• Increases ASC rates by 2.4%, based on the IPPS market basket increase of 3.8%, less the 0.8% productivity adjustment
• Updates the ASC Quality Reporting Program

Comments are due by Monday, Aug. 31. The Missouri Hospital Association published an issue brief with additional information.

CMS also is proposing changes to the provider enrollment system, the HH Quality Reporting Program, expansion to the HH value-based purchasing program and changes to the durable medical equipment program. Comments about the proposed rule will be due by 4 p.m. Monday, Aug. 31. The Missouri Hospital Association published an issue brief with additional details.

CMS also is proposing changes to low-volume payment adjustments, adjustments for pediatric patients and updates to the ESRD quality incentive program. Comments will be due 60 days from the date of filing for public inspection in the Federal Register. The Missouri Hospital Association published an issue brief with additional details.

Hospitals are required to complete the new calendar year 2025 occupational mix survey for the FFY 2028 wage index. Hospitals have until Tuesday, June 30, 2026, to submit to their MACs. The survey can be found here.

This is the only opportunity to request revisions to your data. Subsequent requests for revisions are limited to mishandling of the data. The files are available for review to authorized users of HIDI Advantage^®.

The source for the financial information is the first-quarter 2026 Healthcare Cost Report Information System database, which includes the Medicare cost report data. MHA posted these files to HIDI Advantage^® for review.

CMS will accept comments until 5 p.m. 60 days after the publication in the Federal Register. The Missouri Hospital Association published an issue brief with additional details.

The survey is open through Friday, June 19, to hospitals, federally qualified health centers, primary care and specialty practices, and other providers with APM experience. Topics include prior experience with APMs, challenges and benefits of APMs, and the capacity to implement these models. 

The survey should be filled out once per organization or practice, not per individual provider. Materials to support providers in filling out the survey are available.

Provider responses may help inform future MO HealthNet APM efforts and opportunities for ongoing engagement. The survey is being funded through the Rural Health Transformation Program. Questions may be directed to DSS.RHTP@dss.mo.gov.

“When understood and used effectively, cost report data can reveal service line performance, identify reimbursement opportunities and risks, and show how much cost incurred is nonreimbursable or nonallowable,” said Andrew Wheeler, vice president of federal advocacy and finance for the Missouri Hospital Association.

At its core, the Medicare cost report is how the Centers for Medicare & Medicaid Services evaluates hospitals, according to Wheeler. Each year, hospitals are required to submit a cost report after the close of their fiscal year, typically within five months. It is filed electronically with their Medicare Administrative Contractor, which reviews and audits the submission on behalf of CMS.

What does a cost report include?

Cost reports provide a comprehensive view of an organization’s costs, operations and patient mix. The report captures a wide range of information, including the following.

• utilization statistics (including days and discharges) across Medicare, Medicaid and other payers
• patient revenue and expenses
• wage data, including salary and benefits
• departmental costs and charges
• graduate medical education information
• bad debt and uncompensated care data
• capital costs and depreciation
• overhead allocations and statistics
• physician allowable and nonallowable costs

Within the report, certain sections cover critical data.

• Worksheet S-3: Medicare utilization
• Worksheet E series: final reimbursement calculations
• Worksheet S-10: uncompensated care and charity care reporting
• Worksheet A, A-6 and A-8: cost center expenses and adjustments
• Worksheet C: cost-to-charge ratios
• Graduate Medical Education and Indirect Medical Education worksheets
• Worksheet S-3 Parts II, III and IV: wage data used to establish the hospital wage index
• Worksheet G series: hospital financial statement information

Why is a cost report important?

The Medicare cost report is a powerful tool for hospital leaders.

Cost reports help leaders benchmark against peer hospitals, track trends in uncompensated care, evaluate eligibility for various payment programs, and inform advocacy and policy discussions. These reports also offer insight into labor and wage competitiveness and support more informed capital improvement planning decisions.

Additionally, the importance of cost reports extends beyond individual hospitals, Wheeler said.

“Aggregated cost report data help demonstrate the financial realities hospitals face across Missouri, including workforce pressures, uncompensated care burdens and rural access challenges,” he said. “These reports also help support fair wage index calculations and provide data used in state and federal policy development.”

MHA and its data company, the Hospital Industry Data Institute, publish Medicare cost report comparisons annually and share supporting reports used for the Medicare wage index determinations based on CMS wage index reporting and review deadlines.

Where does the data come from?

While finance departments typically lead the process of developing these reports, it requires coordinated input from across an organization, Wheeler said. Revenue cycle and patient financial services teams provide billing and payer data. HR contributes wage and benefits information, while clinical departments supply utilization statistics.

To ensure the cost reports are accurate, hospitals typically use the following.

• accounting and general ledger reports
• patient accounting and billing systems
• payroll and HR systems
• Medicare remittance advice and claims data
• fixed asset systems
• data from electronic medical/health records and other sources

“Although the Medicare cost report is straightforward, optimizing each worksheet and dataset is extremely complex and challenging due to a number of reasons,” Wheeler said.

Hospitals must navigate frequent Medicare policy changes, and there is increasing scrutiny around worksheet S-10 and wage index data. Gathering and coordinating data from across multiple systems as well as departments can be difficult, too. Maintaining consistency between audited financial statements and reported costs also can be a challenge.

Wheeler noted there is a persistent misconception that the Medicare cost report is becoming less relevant and may no longer be used. In reality, the data that cost reports contain continue to drive payment policy, regulatory decisions and more.

Hospital leaders who invest time in understanding their cost report gain a clearer view of their organization’s financial performance and strategic position, Wheeler said.

The current “batching” of IDR claims also is being updated to include items and services that are furnished to a single patient on the same or consecutive dates of service and billed on the same claim form; items and services that are furnished to one or more patients and are billed under the same service code or comparable code under a different procedural code system; and anesthesiology, radiology, pathology, and laboratory items and services that are furnished to one or more patients under service codes belonging to the same Category I Current Procedural Terminology code section.

The Missouri Hospital Association published an issue brief with additional details.

Hospitals can review their hospital-specific data and submit correction requests to CMS and the Medicare Administrative Contractor through Friday, May 29. Corrections can only be made if it can be shown that CMS or the MAC mishandled the final wage data posted in the April 30 public use files. May 29 also is the deadline to dispute data corrections made by CMS of which the hospital was notified between March 21 and May 15.

The analysis includes financial effects of market basket updates, market basket reductions mandated by the Affordable Care Act, budget neutrality adjustments, wage index updates, MS-LTC-DRG updates and effects of the site-neutral payment reductions.

Results are illustrated in national, Missouri, health system and individual hospital groupings. In aggregate, the state will see an estimated increase of 3.16% for services paid under the LTCH PPS. Although footnoted, the effects of the Medicare sequestration are not included.