Cover: Evaluation of Severity-Adjusted DRG Systems

Evaluation of Severity-Adjusted DRG Systems

Interim Report

Published Apr 21, 2007

by Barbara O. Wynn, Megan K. Beckett, Lee H. Hilborne, Molly M. Scott, Benjamin Bahney

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The Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for administering the Medicare program, is considering major refinements in the methodologies used to account for differences in patient mix in its prospective payment system (PPS) for acute-care inpatient hospital services. CMS asked the RAND Corporation to evaluate alternative systems that might be used by the PPS to classify discharges into severity-adjusted diagnosis-related groups. This interim report presents the preliminary results of analyses that address three questions: (1) How well does each classification system explain variation in resource usage? (2) How would the classification system affect a hospital’s patient mix? (3) Are the groupings manageable, administratively feasible, and understandable?

The research described in this report was prepared For the Centers for Medicare and Medicaid Services and performed under the auspices of RAND Health.

This report is part of the RAND working paper series. RAND working papers are intended to share researchers' latest findings and to solicit informal peer review. They have been approved for circulation by RAND but may not have been formally edited or peer reviewed.

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