Executive Summary

CMS proposes April 13 to adjust hospital inpatient payment weights based on patients' degree of illness beginning Oct. 1. The proposed system, which adds 207 payment levels to the current system, uses the existing 538 diagnosis related groups (DRGs) as a starting point and incorporates the complexity of procedures into payment calculations. Overall, DRGs for the most severely ill patients will be paid an average of $44,219, compared with the $24,538 now paid on average to patients with complicating comorbidities, according to the agency. CMS proposes to offset expected increases in payments related to the change with an across-the-board payment cut in FY 2008 and 2009. The RAND Corporation will continue to evaluate the proposed DRG system and other severity-adjusted systems for a report due Sept. 1 (1"The Gray Sheet" April 2, 2007, p. 22). CMS also explains that it does not plan to adjust payments for charge compression this year as the device industry had hoped because it did not have enough time to evaluate the impact of that change (2"The Gray Sheet" March 26, 2007, p. 11). Public comments on the 3proposal are due June 12...