Hospital Bill Could Resrict Specialty Hospitals Change DRG's

The hospital industry is cautiously eyeing legislation introduced yesterday by Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) that would place considerable restrictions on the burgeoning specialty-hospital sector while altering Medicare payments to all hospitals. A moratorium on new specialty hospitals was established by the Medicare Modernization Act of 2003 in response to concerns that facilities providing specialized care — such as heart or orthopedic surgery — were siphoning off patients from community hospitals. The moratorium is slated to expire June 8. Although a new moratorium would represent a victory for large hospitals, the sector may not be enthusiastic about the changes to components of the payment system called “diagnosis-related groups,” or DRGs, that determine how much a hospital is paid for each service performed. The bill would update the DRGs every five years and base them on individual hospital charges rather than the national average. Supporters of changing the payment system contend that the current formula inequitably reimburses for medical services, creating incentives for the creation of hospitals that only provide higher-paying services. This part of the Grassley-Baucus bill is based on the recommendations of MedPAC.

Long-awaited hospital bill unveiled

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