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...

This study investigates dynamic incentives to select patients for hospitals that are remunerated according to a prospective payment system of the diagnosis-related group (DRG) type. Using a model with patients differing in severity within a DRG, we show that price dynamics depend on the extent of hospital altruism and the relation between patients' severity and benefit. Upwards and downwards pr...

Ever since the US Congress adopted the diagnosis related group (DRG) system for paying hospitals for Medicare patients in 1983, case payment mechanisms gradually have become the principal means of reimbursing hospitals in most industrialized countries. Nevertheless, the motives underlying the introduction and the development, as well the specific design features of DRG systems, vary greatly acr...

To evaluate the financial effects of diagnosis-related groups, we compared 128 Medicare and 183 non-Medicare cardiac patients aeromedically evacuated to a major referral center for critical care. A significant difference (p less than 0.05) was found between Medicare patients vs non-Medicare patients for age (71 +/- 7 vs 51 +/- 9 years) and mortality (13 percent vs 6 percent). No significant dif...

Background During the last two decades, most countries including developed and developing have experienced a rapid increase in health care expenditures in general, and hospital expenditures in particular. DRG-based reimbursement systems were introduced to control healthcare and hospital expenditure, increase activity levels and standardize care. This paper reviews the theoretical and empirical ...

The implementation of the Medicare prospective payment system has sparked the growth of similar Medicaid systems. Eight State Medicaid agencies now employ a system based on diagnosis-related groups (DRG's), and another four State Medicaid agencies are planning to implement such systems in the near future. The eight DRG-based systems in existence in 1986 are examined in this article. Preliminary...