Trauma case mix and hospital payment: the potential for refining DRGs
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E J MacKenzie1, D M Steinwachs, A I Ramzy
1Health Services Research and Development Center, Johns Hopkins School of Hygiene and Public Health, Baltimore, MD 21205.
Abstract:
Uniform hospital discharge abstract data from Maryland were used to examine the homogeneity of trauma-related DRGs with respect to a well-established measure of injury severity, the Injury Severity Score (ISS). Thirty DRGs were identified as including trauma cases with a wide range of severity; for each of these DRGs, ISS explains a significant amount of variation in length of stay. By applying statistical techniques similar to those used to create the original DRG groupings, these 30 DRGs were subdivided by severity and age categories to create a new set of severity-modified DRGs. The potential effects of using DRGs and modified DRGs to pay for inpatient care within the Maryland state regionalized system of trauma care were examined. Payments based on regional averages per DRG and per modified DRG were compared to actual hospital charges regulated by the state's Health Services Cost Review Commission. Using average charges per DRG as a basis of payment, approximately !1.4 million (11 percent of total hospital charges) would be shifted from trauma centers to nontrauma centers. This shift represents an 18 percent loss in revenues to trauma centers and a 30 percent gain in revenues to nontrauma centers. Using a payment system based on severity-modified DRGs, trauma centers would still experience a net loss in revenues and the nontrauma centers a net gain, but the total amount of the shift would be reduced from $11.4 million to $9.8 million. The results argue for the need to explore alternative payment systems not strictly based on current DRGs. Because of DRGs do not adequately reflect severity differences, using them to pay hospitals will create financial incentives that discourage regionalization of trauma care.
Insights
Hospital Diagnosis Related Groups (DRGs) do not accurately reflect patient injury severity. Modifying DRGs could reduce financial disparities in trauma care payments, but alternative systems are needed to support trauma center viability and regionalization.
Area of Science:
- Health Services Research
- Trauma Care Systems
- Health Economics
Background:
- Diagnosis Related Groups (DRGs) are used for hospital reimbursement but may not adequately account for patient injury severity.
- Trauma care systems rely on accurate resource allocation and reimbursement to maintain regionalization.
Purpose of the Study:
- To evaluate the homogeneity of trauma-related DRGs using the Injury Severity Score (ISS).
- To assess the financial impact of using standard DRGs versus severity-modified DRGs (SM-DRGs) for trauma patient reimbursement in Maryland.
- To examine how different payment systems affect revenue distribution between trauma and nontrauma centers.
Main Methods:
- Analysis of uniform hospital discharge abstract data from Maryland.
- Application of statistical techniques to subdivide 30 trauma-related DRGs into severity- and age-modified DRGs.
- Comparison of payments based on DRGs and SM-DRGs against actual hospital charges.
Main Results:
- Standard DRGs showed significant variation in length of stay explained by ISS.
- Using DRGs for payment would shift $11.4 million from trauma to nontrauma centers, representing an 18% revenue loss for trauma centers.
- Using SM-DRGs reduced this shift to $9.8 million, but trauma centers still faced revenue losses.
Conclusions:
- Current DRGs do not adequately capture injury severity, potentially creating financial disincentives for trauma care regionalization.
- Severity modification of DRGs can mitigate, but not eliminate, financial inequities in trauma care reimbursement.
- Alternative payment systems beyond current DRG structures are necessary to ensure the financial stability of trauma centers and support regionalized care.