A research paradigm for severity of illness: Issues for the diagnosis-related group system

The new Medicare Prospective Payment System has been challenged with regard to its fairness in reimbursing hospitals adequately, given the true resource needs in caring for patients. Most of these criticisms are now labelled as issues about adjustments for severity of illness. Critics point to the large amount of unexplained variation in charges and length of stay within the existing DRG's as indirect support for their contentions about inadequate adjustments. A paradigm is presented which argues that the key questions on the types of severity of illness measures to be utilized in future refinements of DRG's revolve around the extent and type of data which can feasibly be included in any workable reimbursement approach. A paradigm is presented on how these questions about information define a series of research options in the severity of illness arena.