The implementation of the Medicare Severity DRGs, (MS DRGs) took place in October 2007. 

745 new severity-adjusted DRGs were developed to replace the current 538 DRGs.  The existing DRGs were consolidated into 335 base DRGs.  Of these, 106 were split into two sub groups and 152 were split into three subgroups.  These subgroups were determined based on the presence of complications or comorbidies (CCs) or major CCs (MCCs).   77 DRGs were classified with no complication or comorbidity (non-CCs).  The MS-DRGs are assigned based on the presence or absence of specific ICD-9CM diagnosis codes indicating the MCCs (highest level of severity), CCs (lowest level of severity) or non-CCs. 

The MS-DRGs are intended to provide for a substantial improvement in the recognition of severity of illness and resource consumption, compensating healthcare organizations based on the severity of a patient’s condition.  Medicare believes that payment to institutions will be better aligned to their cost of care thus eliminating any incentives for them to selectively treat patients within the lowest cost severity levels. 

The table on the following pages demonstrates how the old MCD-5 DRGs were split into the new MS-DRGs.                    

 List of changes