Jul 29, 2007
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?
Overview of DRG Classification Systems
Comparative Performance of DRG Systems in Explaining Cost Variation
Differences in DRG Grouping Logic
Changes in Relative Weights and Case Mix
Other Issues, Summary of Findings, and Discussion