Refinements to the diagnosis-related group system, among others.


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In more than 1,000 pages published in the August 22, 2007, Federal Register, the Centers for Medicare and Medicaid Services describes the significant Medicare policy changes under the new rule, some of which have already been implemented.3 Important changes include


* refining the diagnosis-related group (DRG) system to reflect case complexity, based on the severity of illness and resources used. These modifications are in the process of being phased in for discharges that occurred since October 1, 2007, and will result in the replacement of 538 DRGs with 745 new Medicare Severity DRGs, or MS-DRGs. Hospitals that serve sicker patients will be paid more as a result of this rule change.


* expanding the number of quality measures required for the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program. Among other things, this program reduces Medicare payments to hospitals that fail to collect and report data on quality.


* developing new RHQDAPU-required measures to monitor 30-day mortality rates for pneumonia and the quality of care in surgical cases. This is part of a long-range plan to convert RHQDAPU to a pay-for-performance program that includes incentive payments for hospitals delivering high-quality care. Under a separate proposed rule (CMS-1390-P), four "nursing-sensitive" measures endorsed by the National Quality Forum have been proposed for inclusion in the RHQDAPU program.


* making it easier for hospitals that treat unusually complex patients to qualify for supplemental ("outlier") payments in addition to the standard DRG reimbursement.


* reducing payment for medical devices in cases in which the devices are recalled or replaced by the manufacturer at no or reduced cost to the hospital.


* establishing requirements for physician-owned hospitals to publicly disclose ownership status and emergency care arrangements if there is no physician present.