How to Calculate a DRG Reimbursement

The diagnosis-related group (DRG), was designed for Medicare to separate hospital patient cases into groups based on age, sex, what procedure was done and whether there were complications. Calculating Medicare reimbursements from the DRG depends on three factors: the amount of resources used to treat the condition (the weight), the standard base rate the hospital charges for the procedure and the category of the ailment or condition that was diagnosed (the grouper) are instrumental in figuring out how much Medicare should reimburse for treatment.

Things You'll Need

• Calculator
• Standard base rate for procedure
• DRG weight system

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Instructions

• 1

  Find the hospital standard base rate for the procedure. A simple treatment of a deep cut on the hand differs from the complicated treatment a heart attack might present. Each hospital charges a standard rate for one procedure. Once this is in hand, you will be able to calculate DRG reimbursement based on the group for the procedure and the resources used. Gender, age, surgical procedure -- if any -- and diagnosis, factor into the equation.

• 2

  Determine the DRG group for the procedure done. Each procedure has a DRG number attached to it, from 1 for a craniotomy on a person over 17 up to 999 for ungroupable cases. As of this publication, the last major change to this list took place in October 2009, but the numbering system is the same

• 3

  Determine the weight for the procedure. A specific weight is assigned, even if the procedure uses a greater amount of resources, both in physical labor and in medicines or equipment used. The higher the weight, the more likely multiple resources were employed. An extensive-burns case has a DRG weight of 14.7971, as of this publication, while poisoning and toxic effects is 1.4386. These are only two examples of medical cases where different weights are employed.

• 4

  Multiply the standard base rate for the medical procedure by the weight assigned. The hospital's base rate differs from facility to facility, but the equation is the same. The end result is the amount billed for Medicare DRG reimbursement. The hospital will add everything up at the end to factor in for length of hospital stay and treatment given.