diagnosis related groups

Here’s a discussion  in HealthAffairs of why Medicare’s hip- and knee-replacement payment system may not be the answer for other payers and buyers.

Among the problems:

• “The Medicare proposal is hospital-centric.”
• “While the proposed model provides financial incentives for hospitals to avoid-post-surgery complications, it does not vary payments to those hospitals with the severity of the patient’s condition.”
• “The diagnosis related groups (DRGs) targeted by the program are too broad and include procedures unrelated to replacing a hip or knee. This could contribute to higher total costs of care and result in hospitals being penalized unjustly for those unrelated procedures.”
• “The provider payments would not be reconciled until the end of the year, which means that providers are paid as usual and any rewards or penalties are not proximate to their performance.”