DRGs and hospital case records: implications for Medicare case mix accuracy

As Medicare moves to DRG-based prospective payment, it is not clear whether the federal government has adequate data upon which to formulate DRG prices and assess hospital case mix. This study compares the Medicare case mix of Minneapolis-St. Paul hospitals based on the historical information submitted for billing purposes on the Medicare claim with the actual case mix of hospitals as described in the medical record chart. It was found that for the same patients, the DRG based on the claim matched the DRG on the medical record approximately half of the time. These "mismatches" resulted in a statistically significant understatement of hospitals' case mix, and have obvious implications for the setting of DRG prices and equitable hospital reimbursement.