Identification of drug costs within diagnosis related groups

This study was designed to identify the DRG distribution of discharged Medicare patients during a given period of time in two similar hospital sites. Additionally, drugs costs (both total and average) for each patient in these DRGs were determined and analyzed as to similarity between the two sites as well as significance in terms of percentage of DRG total reimbursement rate. The assumption that DRGs would be homogeneous for drug costs was not found to be true in this study. Percentage of total reimbursement attributed to drug costs for DRG categories studied (less than 4%) was consistent with previously acquired data in established DRG prospective payment programs. Average drug cost was not found to be a reliable indicator for comparison of drug utilization, either within DRGs or between hospital sites. Length of stay emerges as the primary focus for future efforts in drug utilization reviews and cost control programs. A model for future DRG-based drug utilization reviews is proposed.