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

Hendrik Jürges1, Juliane Köberlein1

  • 1Schumpeter School of Business and Economics, University of Wuppertal, Rainer-Gruenter-Str. 21 (FN), 42119 Wuppertal, Germany.

Journal of Health Economics
|June 27, 2015
PubMed

Insights

Financial incentives in German neonatology led to significant upcoding of preterm infants under diagnosis-related groups (DRGs). Hospitals gained over €100 million by altering birth weight classifications, prioritizing higher reimbursement over patient health outcomes.

Area of Science:

  • Health Economics
  • Medical Economics
  • Neonatal Care

Background:

  • Diagnosis-Related Groups (DRGs) were introduced in German neonatology in 2003.
  • Reimbursement is partly based on birth weight, creating financial incentives at specific thresholds.

Purpose of the Study:

  • To investigate the determinants of upcoding in German neonatology post-DRG implementation.
  • To quantify the financial impact and identify factors influencing upcoding behavior.

Main Methods:

  • Analysis of German birth statistics (1996-2010) and hospital data (2006-2011).
  • Examination of upcoding rates in relation to reimbursement thresholds and newborn health status.

Main Results:

  • Over 12,000 preterm infants were upcoded, generating over €100 million in additional reimbursement.
  • Upcoding rates correlated with reimbursement hike sizes and hospital-specific gains.
  • Upcoding decisions considered newborn health, with financial incentives influencing classification.

Conclusions:

  • Financial incentives within the DRG system significantly drive upcoding practices in neonatology.
  • Upcoding behavior is strategically linked to reimbursement structures and patient characteristics.
  • The study highlights potential conflicts between financial incentives and optimal patient care in healthcare systems.

Keywords:
DRG upcodingHospitalsNeonatal carePreterm infantsReimbursement

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