From downcoding to upcoding: DRG based payment in hospitals

A prospective disease group-based payment is a reimbursement rule used in a wide array of countries. It turns to be the hospital’s payment rule to imply. The secret of this payment is a fee payment as well as a hospital’s activity based payment. There is a consensus to consider this rule of payment as the least likely to be manipulated by the actors. However, the defined fee per group depends on recorded information that is then processed using complex algorithms. What if the data itself can be manipulated? The result would be a fee per group based on manipulated factors that would lead to an inefficient budget allocation between hospitals. Using a unique French longitudinal database with 145 million stays, I unambiguously demonstrate that the implementation of a finer classification led to an upcoding-learning effect. The end result has been a budget transfer from public non-research hospitals to for-profit hospitals. The 2009 policy lead to upcoding disconnected from any changes in the trend of production of care.