The effect of case-mix adjustment on admission-based reimbursement

This paper addresses two questions: (1) Does adjusting for case mix have any effect on prospective admission-based reimbursement? and (2) How does the way in which case type is defined (DRG, ICD9CM, Age, etc) affect reimbursement systems? Data from 20 Maryland hospitals provided the basis for analysis, and the results illustrate how hospital reimbursement is affected under alternative definitions of case type (including no case type), showing highly significant variation. Implications for cost control and existing and proposed prospective reimbursement systems are discussed.