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First Do No Harm. Then Do Not Cheat: DRG Upcoding in German Neonatology

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  • Hendrik Jürges
  • Juliane Köberlein

Abstract

Since 2003 German hospitals are reimbursed according to diagnosis related groups (DRGs). Patient classification in neonatology is based inter alia on birth weight, with substantial discontinuities in reimbursement at eight different thresholds. These discontinuities create strong incentives to upcode preterm infants into classes of lower birth weight. Using data from the German birth statistics 1996 to 2010 and German hospital data from 2006 to 2011, we estimate that since the introduction of DRGs, hospitals have upcoded at least 12,000 preterm infants and gained additional reimbursement in excess of 100 million Euro. The scale of upcoding in German neonatology enables us to study the anatomy of cheating in a profession that otherwise claims to have high ethical standards. We show that upcoding is not only positively linked with the strength of financial incentives but also with expected treatment costs measured by poor newborn health conditional on weight. This suggests that doctors and midwives do not indiscriminately upcode any potential preterm infant as a rational model of crime would predict. Rather, they may find it easier to cheat when this helps aligning the lump-sum reimbursement with the expected actual treatment costs.

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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1314.

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Length: 47 p.
Date of creation: 2013
Date of revision:
Handle: RePEc:diw:diwwpp:dp1314

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Keywords: Neonatal care; DRG upcoding;

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  1. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
  2. Douglas Almond & Joseph J. Doyle, Jr. & Amanda E. Kowalski & Heidi Williams, 2008. "Estimating Marginal Returns to Medical Care: Evidence from At-Risk Newborns," NBER Working Papers 14522, National Bureau of Economic Research, Inc.
  3. Randall P. Ellis & Thomas G. McGuire, 1993. "Supply-Side and Demand-Side Cost Sharing in Health Care," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 135-151, Fall.
  4. Victor R. Fuchs, 1978. "The Supply of Surgeons and the Demand for Operations," NBER Working Papers 0236, National Bureau of Economic Research, Inc.
  5. Alan I. Barreca & Melanie Guldi & Jason M. Lindo & Glen R. Waddell, 2011. "Saving Babies? Revisiting the effect of very low birth weight classification," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 2117-2123.
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  1. #HEJC papers for September 2013
    by academichealtheconomists in The Academic Health Economists' Blog on 2013-08-31 23:01:38

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