All of the following statements are true of MS-DRGs (Medicare Severity Diagnosis Related Groups), except:

• A. MS-DRGs help ensure hospitals are reimbursed based on the complexity of care provided.
• B. MS-DRGs take into account the severity of a patient's condition when determining payment.
• C. MS-DRGs are used to classify hospital cases for Medicare reimbursement purposes.
• D. MS-DRGs are primarily used in managerial accounting to track inventory costs.

Answer: (D)

Verified step by step guidance

1. Step 1: Begin by understanding the concept of MS-DRGs (Medicare Severity Diagnosis Related Groups). MS-DRGs are a classification system used in healthcare to group hospital cases for Medicare reimbursement purposes based on the complexity and severity of care provided.
2. Step 2: Analyze each statement provided in the problem. The first three statements describe the purpose and function of MS-DRGs, which include ensuring hospitals are reimbursed based on care complexity, accounting for patient severity, and classifying cases for Medicare reimbursement.
3. Step 3: Evaluate the fourth statement: 'MS-DRGs are primarily used in managerial accounting to track inventory costs.' This statement is incorrect because MS-DRGs are not related to managerial accounting or inventory tracking; they are specifically designed for Medicare reimbursement purposes.
4. Step 4: Confirm that the correct answer is the fourth statement, as it does not align with the actual purpose of MS-DRGs. The other statements accurately describe the role of MS-DRGs in healthcare and Medicare reimbursement.
5. Step 5: Conclude that understanding the purpose of MS-DRGs is essential for distinguishing their role in financial accounting versus other areas like managerial accounting.