Prospective payment for psychiatry--feasibility and impact

Although 15 diagnosis-related groups (DRGs) have been proposed for psychiatric hospital patients, psychiatric hospitals are currently exempt from the DRG prospective payment system. We investigated the ability of the psychiatric DRGs to predict the hospital length of stay and costs by retrospectively analyzing the charts of 8816 randomly selected patients from 32 psychiatric hospitals throughout the United States. In addition, we developed other grouping systems to see whether they would have been better predictors of length of stay. We found that grouping the patients in the 15 psychiatric DRGs reduced the total variance in length of stay by only 3.9 percent. Furthermore, our best alternative grouping--based on major diagnostic categories, whether the patient was transferred from another facility, age, and psychiatric complications and comorbidities--reduced the variance by only 7.8 percent. We conclude that DRGs do not adequately predict length of stay or costs in psychiatric hospitals. We identified factors other than diagnosis that predicted the length of stay better, but all the models we tested would create large financial "winners" and "losers" and thus introduce inappropriate incentives into the care of patients in psychiatric hospitals.