CMS recently a proposed rule that would overhaul its Medicare Part A (hospital care) prospective pricing system. According to the HHS press release,

The payment reforms include a proposal to restructure the inpatient diagnosis related groups (DRGs) to account more fully for the severity of the patient’s condition. In addition, the proposed rule includes provisions to ensure that Medicare no longer pays hospitals for their additional costs of hospital-acquired conditions (including infections), and includes an expanded list of publicly reported quality measures. The proposed rule would also reduce payment for a DRG involving the implantation of a device, when a hospital replaces a device and the replacement is supplied to the hospital at no or reduced cost.

The proposed rule also would provide “additional incentives for hospitals to engage in quality improvement efforts.” The new rule, once finalized, will apply to hospital discharges that occur on or after October 1, 2007. HHS is accepting public comments on the proposed rule until June 12, 2007.

FEHBP fee for service plans use the Medicare prospective payment system to pay claims on annuitant members who are not eligible for Medicare Part A (5 U.S.C. § 8904(b)).