Potential economic impact of applying DRG-based prospective payment categories to inflammatory bowel disease patients

Abstract

New incentives regarding delivery of inpatient care by physicians and administrators have resulted from Medicare's DRG-based prospective reimbursement system. As these payment systems become widely adopted by other third-party payors, implications for adequate hospital reimbursement and quality inpatient care will intensify. This study of inflammatory bowel disease inpatients examines discharge data for 300 patients comprising 507 admissions from 1983 to 1987 at a large tertiary center hospital. While only 10.8% of these discharges were Medicare patients, all discharges were assigned a diagnosis-related-group reimbursement to derive a theoretical monetary loss or gain for the hospital. Overall hospital losses averaged $127.24 per case for this patient population, in which the medical and pediatric cases were adequately reimbursed, and the surgical admissions represented greater losses. The average length of stay for all patients decreased from 11.9 to 7.4 days over the study period, mostly a result of reductions in surgical hospital stays. We conclude that reimbursement for medical and pediatric discharges under DRG 179 appear adequate for this hospital, while surgical inflammatory bowel disease reimbursement is not. These data will be useful for comparison of future trends of inpatient utilization for inflammatory bowel disease patients as prospective reimbursement practices become more widespread.