Three case-type classifications: suitability for use in reimbursing hospitals

This study compared three case-type classifications--the cross-classification of the Commission on Professional and Hospital Activities, Diagnosis-Related Groups (DRGs) and Staging--with respect to per cent of variance in total patient charges accounted for. The purpose was to assess the relative usefulness of the classifications for application in hospital reimbursement schemes. The sample consisted of 50 hospitals. A nested analysis of variance was performed with case type nested within hospital. Per cent of variance accounted for was calculated for each of three data sets: the full data set, a truncated version of that set and a logarithmically transformed version. Results support the contention that none of the currently available classifications accounts for enough variance to permit straightforward use of case-type standard costs in a reimbursement mechanism. New developments in case-type classification may result in a classification that is more suitable for this use.