August 2, 2007—The Centers for Medicare and Medicaid Services (CMS) yesterday issued a final rule designed to improve the accuracy of Medicare’s payment under the acute care hospital inpatient prospective payment system.

Among other changes, the rule will restructure the inpatient diagnosis-related groups to account more fully for the severity of patients’ conditions; it expands the list of publicly reported quality measures; and it increases payments to all hospitals by an estimated average of 3.5%.

"The good news is that hospitals across the nation, the District of Columbia, and Puerto Rico will see their payments increase under this final rule by nearly $4 billion," said Herb Kuhn, CMS Acting Deputy Administrator. "This three-year effort to reform Medicare’s hospital payment system will ensure predictability, reliability, and fairness of Medicare payments well into the future."

 —Cat Vasko