A new system that pays hospitals for inpatient procedures based on the severity of a patients condition hasnt resulted in any drastic cuts or soaring increases to reimbursement. Yet, the industry is feeling a pinch in adjusting to the new Medicare severity-adjusted diagnosis-related groups, or MS-DRGs, which went into effect about nine months ago.
The MS-DRGs were first unveiled in the proposed hospital inpatient prospective payment rule in April 2007 and went into effect last Oct. 1. The new system replaced 538 DRGs with 745 new ones.
The CMS, in an effort to do its homework on revamping the hospital payment system, sought assistance from third-party researchers such as RAND Health and RTI International to compare its MS-DRGs against other alternatives. In a report issued last year, RAND concluded that the new MS-DRGs would be easier and more cost-effective to implement than other severity-based DRG systems. The research showed MS-DRGs have two important advantages over the other systems: They reflect current Medicare data and wouldnt be hard to adopt because the systems classification logic was in the public domain, according to the findings.
Yet, their implementation has taken some work. All hospitals have had to retrain staff on how to code the more complex payment system, and for many this has come at a significant cost. Others have reaped some modest returns from the new systems focus on severity of illness, although in some cases those increases have been offset by a CMS provision that anticipated upcoding from hospitals, as a result of implementation of the new DRGs.