New report highlights gaps in NASHP’s Hospital Cost Tool

The National Academy for State Health Policy's Hospital Cost Tool "misses the mark in many ways, and its use by payers, purchasers and policymakers could have dire consequences for hospitals' financial well-being, and, ultimately, patients' access to care," according to a report prepared for the AHA by Faegre Drinker Consulting. The tool attempts to use hospital Medicare cost reports to calculate a "break-even" point for state government and commercial insurers to negotiate commercial rates with hospitals. "To the extent payers and policymakers are increasingly leveraging the NASHP HCT and other tools like it to develop their own mechanisms for rate setting, it is important for policymakers to understand the limitations and shortcomings of these tools and be cautious when interpreting their results." This builds on other evidence on the limits of cost reports for this purpose.