From downcoding to upcoding: DRG based payment in hospitals

DRG-type hospital payment in Germany: The G-DRG system

In Germany, there are about 2100 hospitals providing care for about 17 million inpatient cases per year.3 Hospitals are financed through a system of ‘dual financing’, which means that they receive funds from two different sources: infrastructure investments are covered directly by tax-funded state budgets, whereas operating costs are paid mostly by sickness funds and private health insurers.4 T...

Understanding DRGs and DRG-based hospital payment in Europe

Upcoding in a NHS∗

Evidence from the US pointed out, over the years, to the existence of upcoding in management practices. Upcoding is defined as classifying patients in DRG codes associated with larger payments. The incentive for upcoding is not particular to private providers of care. Conceptually, any patient classification system that is used for payment purposes may be vulnerable to this sort of strategic be...

DRG-based hospital payment: Intended and unintended consequences

What explains DRG upcoding in neonatology? The roles of financial incentives and infant health.

We use the introduction of diagnosis related groups (DRGs) in German neonatology to study the determinants of upcoding. Since 2003, reimbursement is based inter alia on birth weight, with substantial discontinuities at eight thresholds. These discontinuities create incentives to upcode preterm infants into classes of lower birth weight. Using data from the German birth statistics 1996-2010 and ...