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Assessing DRG cost accounting with respect to resource allocation and tariff calculation: the case of Germany

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  • Matthias Vogl

Abstract

The purpose of this paper is to analyze the German diagnosis related groups (G-DRG) cost accounting scheme by assessing its resource allocation at hospital level and its tariff calculation at national level. First, the paper reviews and assesses the three steps in the G-DRG resource allocation scheme at hospital level: (1) the groundwork; (2) cost-center accounting; and (3) patient-level costing. Second, the paper reviews and assesses the three steps in G-DRG national tariff calculation: (1) plausibility checks; (2) inlier calculation; and (3) the “one hospital” approach. The assessment is based on the two main goals of G-DRG introduction: improving transparency and efficiency. A further empirical assessment attests high costing quality. The G-DRG cost accounting scheme shows high system quality in resource allocation at hospital level, with limitations concerning a managerially relevant full cost approach and limitations in terms of advanced activity-based costing at patient-level. However, the scheme has serious flaws in national tariff calculation: inlier calculation is normative, and the “one hospital” model causes cost bias, adjustment and representativeness issues. The G-DRG system was designed for reimbursement calculation, but developed to a standard with strategic management implications, generalized by the idea of adapting a hospital’s cost structures to DRG revenues. This combination causes problems in actual hospital financing, although resource allocation is advanced at hospital level. Copyright Vogl; licensee Springer. 2012

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  • Matthias Vogl, 2012. "Assessing DRG cost accounting with respect to resource allocation and tariff calculation: the case of Germany," Health Economics Review, Springer, vol. 2(1), pages 1-12, December.
    • Handle: RePEc:spr:hecrev:v:2:y:2012:i:1:p:1-12:10.1186/2191-1991-2-15
    DOI: 10.1186/2191-1991-2-15
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    1. Isabel C. P. Marques & Maria-Ceu Alves, 2023. "Hospital Costing Methods: Four Decades of Literature Review," JRFM, MDPI, vol. 16(10), pages 1-22, October.
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    3. Rieka von der Warth & Philip Hehn & Jan Wolff & Klaus Kaier, 2020. "Hospital costs associated with post-traumatic stress disorder in somatic patients: a retrospective study," Health Economics Review, Springer, vol. 10(1), pages 1-8, December.
    4. Roland Diel & Albert Nienhaus, 2019. "Cost–Benefit Analysis of Real-Time Influenza Testing for Patients in German Emergency Rooms," IJERPH, MDPI, vol. 16(13), pages 1-16, July.
    5. Christoph Baltin & Florian Kron & Alexander Urbanski & Thomas Zander & Anna Kron & Felix Berlth & Robert Kleinert & Michael Hallek & Arnulf Heinrich Hoelscher & Seung-Hun Chon, 2019. "The economic burden of endoscopic treatment for anastomotic leaks following oncological Ivor Lewis esophagectomy," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-12, August.
    6. Roland Diel & Albert Nienhaus, 2023. "Cost–Benefit of Real-Time Multiplex PCR Testing of SARS-CoV-2 in German Hospitals," IJERPH, MDPI, vol. 20(4), pages 1-12, February.
    7. Klaus Kaier & Martin Wolkewitz & Philip Hehn & Nico T. Mutters & Thomas Heister, 2020. "The impact of hospital-acquired infections on the patient-level reimbursement-cost relationship in a DRG-based hospital payment system," International Journal of Health Economics and Management, Springer, vol. 20(1), pages 1-11, March.
    8. Hendrik Jürges & Juliane Köberlein, 2013. "First Do No Harm. Then Do Not Cheat: DRG Upcoding in German Neonatology," Discussion Papers of DIW Berlin 1314, DIW Berlin, German Institute for Economic Research.
    9. Jürges, Hendrik & Köberlein, Juliane, 2015. "What explains DRG upcoding in neonatology? The roles of financial incentives and infant health," Journal of Health Economics, Elsevier, vol. 43(C), pages 13-26.
    10. Irma Convertino & Stefano Salvadori & Alessandro Pecori & Maria Teresa Galiulo & Sara Ferraro & Maria Parrilli & Tiberio Corona & Giuseppe Turchetti & Corrado Blandizzi & Marco Tuccori, 2019. "Potential Direct Costs of Adverse Drug Events and Possible Cost Savings Achievable by their Prevention in Tuscany, Italy: A Model-Based Analysis," Drug Safety, Springer, vol. 42(3), pages 427-444, March.
    11. repec:mea:meawpa:13272 is not listed on IDEAS
    12. Vogl, Matthias, 2014. "Hospital financing: Calculating inpatient capital costs in Germany with a comparative view on operating costs and the English costing scheme," Health Policy, Elsevier, vol. 115(2), pages 141-151.
    13. Henri Teittinen & Janina Männikkö, 2022. "Case-Mix Accounting System Design in Social and Health Care Sector - The Mechanisms of Hybridization," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2022(3), pages 49-69.
    14. Malgorzata Cyganska & Piotr Cyganski & Chris Pyke, 2019. "Development of clinical value unit method for calculating patient costs," Health Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 971-983, August.
    15. Klaus Kaier & Holger Reinecke & Huseyin Naci & Lutz Frankenstein & Martin Bode & Werner Vach & Philip Hehn & Andreas Zirlik & Manfred Zehender & Jochen Reinöhl, 2018. "The impact of post-procedural complications on reimbursement, length of stay and mechanical ventilation among patients undergoing transcatheter aortic valve implantation in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(2), pages 223-228, March.

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