How to Calculate DRG Payments

Diagnosis Related Group (DRG) payments have been an active part of the Medicare reimbursement system since 1983. In theory, the DRG methodology was put into effect to prevent hospitals from billing Medicare for undelivered or unnecessary services, or prolonging inpatient stays to continue billing on them. Much like other Medicare protocols, how DRG is calculated can be somewhat confusing. What follows is a simplified step-by-step method for calculating how a Medicare DRG payment should be calculated.

Things You'll Need

• DRG coding table
• DRG weight table
• Standard Base Rate the hospital charges for any HMO network member

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Instructions

• 1

  Find the group code that applies to the specific medical treatment provided using the DRG coding table. You can obtain coding tables from your local Department of Health and Human Services office.

• 2

  Match the group code with the appropriate weight on the weight table.

• 3

  Multiply the DRG weight by the Standard Base Rate the hospital charges for any HMO network member. The result will be the appropriate amount of the claim. You can obtain a hospital's HMO base rate by phoning the billing department or billing website of the hospital that provided services.