New Jersey has had many calls from outside the State from agencies and individuals concerned about DRGs and Medicare.

The level of knowledge ranged from some familiarity to total ignorance of even simple data requirements.

The second issue is the importance of monitoring quality of

care.

Quality of care is very difficult to measure.

Can quality

be measured by a criterion such as outcome

alive/dead?

In New Jersey, we believe that peer review is an important component in monitoring quality of care, and the PSROs serve this

function.

The value of an independent organization to monitor

the utilization of hospital care cannot be refuted.

c.

NEW TECHNOLOGY

It is important to note that while the problems of rising

hospital costs may be similar nationally, a prospective payment system may not have identical results in Idaho as in Pennsylvania.

In those instances where a state can implement their own system, designed to meet the federal objective, then flexibility or waivers

for state initiatives should be allowed.

SUMMARY

In conclusion, we in New Jersey have been working with DRGS since 1976. We feel very strongly that DRGs have a great benefit

in terms of allowing hospitals to use available resources wisely and to help contain health care costs for payers and consumers.

Now that all New Jersey acute care general hospitals are

finally billing by DRGs, we should be in a position to see exactly

how much of an impact DRGs can have on a state's health care

expenditures and clinical management.

Richard S. Schweiker

Secretary
Department of Health and Human Services

LANK

1

10

12 13

15 16 17 10

20

22 23

26 27 28 29 30

149.67
123.12
111.88
111.71
109.36
108.14
107.54
104.99
100.13
17.30
*.97
*.18
*.06
95.23

.37
93.22
2.37
90.70
$0.13
$0.00
89.81
89.34
18.20
80.04
87.93
87.73
86.57
85.14
W.SZ
4.48
$3.95
0.92
43.80
23.62
2.60
2.02
0.69
10.69
18.02
77.90
7.49
16.91
76,47
72.41
60.22
67.56
67.42
67.23
63.91
63.14
51.62