HFMA VIEWS

Richard L. Gundling, FHFMA
Vice President, Product Development, HFMA

CMS's proposal to rebase DRG payments using cost versus charges, and adjusting for patient severity, will have far-reaching implications for providers. Everyone agrees that the Medicare DRG payments are distorted, which results in Medicare paying much more for some types of patients (notably surgical patients) and too little for others (namely medical patients). These payment distortions and the resulting gains and losses reward or penalize individual hospitals more on the mix of patients rather hospitals' efficiency and quality of treatment. The impetus behind this proposed rule is the controversy over physician-owned specialty hospitals and CMS' efforts to close incentives to "cherry pick" less medically-complicated patients.
 
All hospital finance managers should analyze the impact based on your own patient mix and then submit comments to CMS on the proposed rule.