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GAO evaluated the Health Care Financing Administration's (HCFA) diagnosis-related groups (DRG) classification system's effectiveness as a means of grouping patients for Medicare payment purposes.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services 1. The Secretary of Health and Human Services should direct the Administrator, HCFA, to review DRG that GAO identified as having wide variations in patient resource requirements and change the DRG classification system to reduce the variations within DRG.
Closed - Implemented
The Department of Health and Human Services (HHS) stated that it did not plan to take any special action in response to this recommendation. HHS has revised some DRG and added some DRG, which should reduce variation in selected DRG. HHS says it plans to continue refining DRG.

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