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CMS urged to improve flawed payment system

Case Management Weekly, February 22, 2006

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The Senate Finance Committee recently requested changes in the Medicare payment system to improve the accuracy of Medicare payments to hospitals.

In a letter to the Centers for Medicare & Medicaid Services (CMS) Administrator Mark McClellan, the committee said they wanted "to ensure that CMS is moving forward with significant refinements to the hospital inpatient prospective payment system for fiscal year 2007. These refinements are needed to improve the accuracy of Medicare payments to hospitals."

The committee specifically pointed to findings of the Medicare Payment Advisory Commission (MedPAC) that there were large differences in relative profitability across and within the diagnosis related groups (DRGs) that comprise Medicare's inpatient prospective payment system. MedPAC said that these disparities wrongly encouraged hospitals to specialize in treating patients in profitable DRGs, as well as to select low-cost patients within a DRG.

Source: Bureau of National Affairs

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