How recalibration method, pricing, and coding affect DRG weights

G. M. Carter, Jeannette Rogowski

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

We compared diagnosis-related group (DRG) weights calculated using the hospital-specific relative-value (HSRV) methodology with those calculated using the standard methodology for each year from 1985 through 1989 and analyzed differences between the two methods in detail for 1989. We provide evidence suggesting that classification error and subsidies of higher weighted cases by lower weighted cases caused compression in the weights used for payment as late as the fifth year of the prospective payment system. However, later weights calculated by the standard method are not compressed because a statistical correlation between high markups and high case-mix indexes offsets the cross-subsidization. HSRV weights from the same files are compressed because this methodology is more sensitive to cross-subsidies. However, both sets of weights produce equally good estimates of hospital- level costs net of those expenses that are paid by outlier payments. The greater compression of the HSRV weights is counterbalanced by the fact that more high-weight cases qualify as outliers.

Original languageEnglish (US)
Pages (from-to)83-96
Number of pages14
JournalHealth Care Financing Review
Volume14
Issue number2
StatePublished - Dec 1 1992

Fingerprint

Diagnosis-Related Groups
pricing
coding
Weights and Measures
Costs and Cost Analysis
subsidy
methodology
Group
Values
Prospective Payment System
Hospital Costs
costs
evidence

All Science Journal Classification (ASJC) codes

  • Nursing(all)
  • Health(social science)
  • Health Professions(all)

Cite this

@article{0c76474ccdb44f39b67a973ff8b63a4e,
title = "How recalibration method, pricing, and coding affect DRG weights",
abstract = "We compared diagnosis-related group (DRG) weights calculated using the hospital-specific relative-value (HSRV) methodology with those calculated using the standard methodology for each year from 1985 through 1989 and analyzed differences between the two methods in detail for 1989. We provide evidence suggesting that classification error and subsidies of higher weighted cases by lower weighted cases caused compression in the weights used for payment as late as the fifth year of the prospective payment system. However, later weights calculated by the standard method are not compressed because a statistical correlation between high markups and high case-mix indexes offsets the cross-subsidization. HSRV weights from the same files are compressed because this methodology is more sensitive to cross-subsidies. However, both sets of weights produce equally good estimates of hospital- level costs net of those expenses that are paid by outlier payments. The greater compression of the HSRV weights is counterbalanced by the fact that more high-weight cases qualify as outliers.",
author = "Carter, {G. M.} and Jeannette Rogowski",
year = "1992",
month = "12",
day = "1",
language = "English (US)",
volume = "14",
pages = "83--96",
journal = "Health Care Financing Review",
issn = "0195-8631",
publisher = "Health Care Financing Administration",
number = "2",

}

How recalibration method, pricing, and coding affect DRG weights. / Carter, G. M.; Rogowski, Jeannette.

In: Health Care Financing Review, Vol. 14, No. 2, 01.12.1992, p. 83-96.

Research output: Contribution to journalArticle

TY - JOUR

T1 - How recalibration method, pricing, and coding affect DRG weights

AU - Carter, G. M.

AU - Rogowski, Jeannette

PY - 1992/12/1

Y1 - 1992/12/1

N2 - We compared diagnosis-related group (DRG) weights calculated using the hospital-specific relative-value (HSRV) methodology with those calculated using the standard methodology for each year from 1985 through 1989 and analyzed differences between the two methods in detail for 1989. We provide evidence suggesting that classification error and subsidies of higher weighted cases by lower weighted cases caused compression in the weights used for payment as late as the fifth year of the prospective payment system. However, later weights calculated by the standard method are not compressed because a statistical correlation between high markups and high case-mix indexes offsets the cross-subsidization. HSRV weights from the same files are compressed because this methodology is more sensitive to cross-subsidies. However, both sets of weights produce equally good estimates of hospital- level costs net of those expenses that are paid by outlier payments. The greater compression of the HSRV weights is counterbalanced by the fact that more high-weight cases qualify as outliers.

AB - We compared diagnosis-related group (DRG) weights calculated using the hospital-specific relative-value (HSRV) methodology with those calculated using the standard methodology for each year from 1985 through 1989 and analyzed differences between the two methods in detail for 1989. We provide evidence suggesting that classification error and subsidies of higher weighted cases by lower weighted cases caused compression in the weights used for payment as late as the fifth year of the prospective payment system. However, later weights calculated by the standard method are not compressed because a statistical correlation between high markups and high case-mix indexes offsets the cross-subsidization. HSRV weights from the same files are compressed because this methodology is more sensitive to cross-subsidies. However, both sets of weights produce equally good estimates of hospital- level costs net of those expenses that are paid by outlier payments. The greater compression of the HSRV weights is counterbalanced by the fact that more high-weight cases qualify as outliers.

UR - http://www.scopus.com/inward/record.url?scp=0026996762&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0026996762&partnerID=8YFLogxK

M3 - Article

C2 - 10127456

AN - SCOPUS:0026996762

VL - 14

SP - 83

EP - 96

JO - Health Care Financing Review

JF - Health Care Financing Review

SN - 0195-8631

IS - 2

ER -