The Centers for Medicare and Medicaid Services has awarded a one-year contract to study methods of improving estimates of the cost of Medicare inpatient hospital discharges used in constructing the diagnosis-related group relative weights. The contract will focus on methods of improving the accuracy of the adjustment of charges to cost to account for charge compression. The study will also examine how charge compression interacts with other potential variables in the construction of the DRG relative weights, such as the number of cost centers included and whether hospital-specific relative values are used.
CMS also awarded a contract to evaluate alternative severity-adjusted DRG classification systems. The study will assess the variation in the level of resource use and the resulting improvement in homogeneity within DRGs; how each system can be modified to capture new technologies and merge them into the basic DRG structure as needed; and the availability of each system’s clinical logic in the public domain. Although the evaluation contract is for one year, CMS expects the contractors’ work to inform deliberations about the FY08 proposed IPPS rule. Read the announcement.
