CMS Payment Standardization Overview

Purpose

The purpose of this article is to provide an overview of the Centers for Medicare & Medicaid Services' (CMS') payment standardization process, as well as provide methodological documentation that explains how the standardized claim payment amounts for Medicare Part A, Part B, and Part D claims are calculated.

Current Version Date:
12/20/2023
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CMS Payment Standardization Overview

Payment standardization is the process of calculating standardized claim payment amounts that allow for the measurement and analysis of provider resource use by CMS and researchers. For example, standardized payment amounts may be used in a variety of CMS performance programs to evaluate and compare provider resource use for services covered by Medicare Part A, Part B, and Part D programs.

Medicare Part A and Part B Payment Standardization

Medicare Part A and Part B payment standardization allows for the evaluation of costs for all services covered under both programs. Payment standardization for Part A and Part B claims ensures that the same services are assigned comparable amounts, regardless of provider type and geographic area.

The Part A and Part B standardization methodology documentation can be found in the 'Attachments' section below, including one document with a basic overview of the methodology and a separate document outlining the technical details of the standardization methodology for those looking to replicate the standardized allowed amount calculation.

Medicare Part D Payment Standardization

Part D payment standardization allows for the evaluation of costs for prescription drugs covered under the Medicare Part D program. Part D standardization ensures that drugs with the same clinical characteristics (i.e., active ingredient, strength, dosage form, and route of administration) and brand/generic status have the same unit price, regardless of drug manufacturer, plan, or distributing pharmacy.

More Information

Please direct all questions and comments regarding payment standardization to CMS-PaymentStandardizationSupport@cms.hhs.gov.

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Article Information

Level:
Introduction
Topic:
Analytic Guidance
Program:
Medicare
Category:
Medicare Fee-For-Service Claims, Part D
Attachment:
CMS Parts A and Part B Payment Standardization - Basics (updated May 2022).pdf, CMS Parts A and B Payment Standardization - Detailed Methods (updated August 2024).pdf, CMS Part D Payment Standardization Methodology (updated December 2023).pdf
Disclaimer:
The process and materials mentioned as part of this KnowledgeBase article are current, as of the publication date on the article, to the best of our knowledge. The examples provided are correct in the aggregate but may not apply to every subgroup or circumstance that a researcher may wish to study. It is up to the researcher to conduct analysis and confirm that the patterns described in this KnowledgeBase article apply to his/her particular study. If your research findings appear to contradict the advice provided, please contact ResDAC at resdac@umn.edu.