New Jersey's Experiment with DRG-Based Hospital Reimbursement

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Abstract
As pointed out in my previous report1 Congress, in a recent policy edict supported by the Reagan administration, directed the Department of Health and Human Services (DHHS) to develop a new Medicare-payment system, the intent of which was to moderate the growth of government spending for health care and to force hospitals to assume greater financial risk for the care delivered within their institutions. Congress strongly suggested, and the DHHS has now embraced, an approach based on prospective payment per case, a milestone in policy whose roots stem from a federally sponsored demonstration in New Jersey that is beginning to . . .

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