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  • Title: DRG-based per diem payment system matches costs more accurately.
    Author: Brannen TJ.
    Journal: Healthc Financ Manage; 1999 Apr; 53(4):42-6. PubMed ID: 10557978.
    Abstract:
    Some managed care organizations use the DRG hospital payment method developed for Medicare to set case rates. Unfortunately, when such a method is used in a risk-sharing arrangement, hospital and physician incentives are misaligned. Hospitals and payers would benefit from using a hospital reimbursement model that calculates inpatient per diem payments for medical and surgical cases by classifying DRGs in tiers and ranking the tiers according to how resource-intensive they are. DRGs provide the means for a rational classification system of per diem rates that recognizes cases where the expected resources are going to be higher or lower than the average per diem amount. If payers use per diem rates that are weighted according to a DRG classification, hospital payments can correlate closely with the actual costs per day for a specific case, rather than an average for all surgical or medical admissions.
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