The Government Accountability Office released two reports specific to hospitals, one praising a proposed CMS change to the inpatient prospective payment system and the other detailing the state of governance controls on executive compensation at large not-for-profit health systems. In the first report, the GAO said the CMS' proposed method for a cost-based weighting of inpatient DRGs "appears promising" and may offer a better alternative than the cost-based weighting method used in the outpatient prospective payment system. The CMS has proposed grouping charges into 10 broad service groups and then converting charges to cost-based weights using national average cost-to-charge ratios derived from hospital data. The approach would "ameliorate the effects that variations in hospital charge and cost allocations can have on DRG weights," the GAO report said. The CMS' final 2007 inpatient regulation is due out Aug. 1. Read the report.
In a second study, conducted at the request of House Ways and Means Committee Chairman Bill Thomas (R-Calif.), the GAO found that large not-for-profit systems typically have in place basic governance controls over executive compensation. Those include written conflict-of-interest policies and eligibility criteria for officers involved in setting compensation. But the GAO said the 65 systems responding to its survey varied in their use of controversial executive perks, such as reimbursement for spousal travel and tickets to sporting events. Chicago-based healthcare tax attorney Michael Peregrine said the survey results suggest that boards have reacted to calls for greater oversight of not-for-profit executive compensation. Read the report. -- by Jennifer Lubell and Melanie Evans