Draft
Evaluation of Severity-Adjusted DRG Systems: Addendum to the Interim Report
Jul 29, 2007
Evaluation of Severity-Adjusted DRG Systems
Interim Report
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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?
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Table of Contents
Chapter One
Introduction
Chapter Two
Overview of DRG Classification Systems
Chapter Three
Comparative Performance of DRG Systems in Explaining Cost Variation
Chapter Four
Differences in DRG Grouping Logic
Chapter Five
Changes in Relative Weights and Case Mix
Chapter Six
Other Issues, Summary of Findings, and Discussion
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 Corporation 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.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.