IDEAS home Printed from https://ideas.repec.org/a/eee/socmed/v366y2025ics0277953624011146.html
   My bibliography  Save this article

Behaviours and drivers of diagnosis-related group upcoding in China: A mixed-methods study

Author

Listed:
  • Zhou, Wuping
  • Xu, Chunchun
  • Zhang, Lanyue
  • Fu, Hongqiao
  • Jian, Weiyan

Abstract

As a highly destructive gaming behaviour in Diagnosis-Related Group (DRG), upcoding has garnered increasing scholarly attention. This study considers the prevalence, types and risk characteristics of upcoding during the pilot implementation of DRG payments in China, and it also explores the drivers of upcoding and provides corresponding policy recommendations for improving the system. Quantitative research data were sourced from the DRG payment audit database in City Z between the dates of June 1, 2019 and May 31, 2020, encompassing audit results comprising 200 medical records randomly selected from 28 hospitals. Qualitative research methods were used, including semi-structured interviews conducted with 10 stakeholders with interests in the DRG payment system, and thematic framework of the consequent data. 5,157 (92.01%) valid records were re-abstracted. 666 (12.91%) evaluated records were found to be upcoded, resulting in an additional payment at a rate of 45.27%. Several factors emerged as shedding light on the probability of upcoding, including cases with comorbidities, those undergoing non-operating room procedures and internal medical treatments, cases in for-profit hospitals and cases in tertiary hospitals. The main drivers of upcoding were found to be financial and administrative pressures, dysfunctional attitudes towards upcoding, technical facilitation and lack of supervision. This paper provides a comprehensive analysis of the behaviours and drivers of DRG upcoding in China, considering the unique hospital management system and incentive mechanisms in place. The results demonstrate that, following the initiation of the DRG payment system, providers have begun to engage in upcoding behaviour under various drivers, leading to additional health care expenditures and undermining the effectiveness of the scheme. In terms of mounting a response to this behaviour, understanding it and what drives it can aid in its prevention. This study suggests implementing intelligent audits to strengthen supervision and supporting hospitals in cost management.

Suggested Citation

  • Zhou, Wuping & Xu, Chunchun & Zhang, Lanyue & Fu, Hongqiao & Jian, Weiyan, 2025. "Behaviours and drivers of diagnosis-related group upcoding in China: A mixed-methods study," Social Science & Medicine, Elsevier, vol. 366(C).
    • Handle: RePEc:eee:socmed:v:366:y:2025:i:c:s0277953624011146
    DOI: 10.1016/j.socscimed.2024.117660
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0277953624011146
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.socscimed.2024.117660?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Carine Milcent, 2021. "From downcoding to upcoding: DRG based payment in hospitals," International Journal of Health Economics and Management, Springer, vol. 21(1), pages 1-26, March.
    2. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
    3. Carine Milcent, 2021. "From downcoding to upcoding: DRG based payment in hospitals," PSE-Ecole d'économie de Paris (Postprint) halshs-03094679, HAL.
    4. Michael Moor & Oishi Banerjee & Zahra Shakeri Hossein Abad & Harlan M. Krumholz & Jure Leskovec & Eric J. Topol & Pranav Rajpurkar, 2023. "Foundation models for generalist medical artificial intelligence," Nature, Nature, vol. 616(7956), pages 259-265, April.
    5. Steinbusch, Paul J.M. & Oostenbrink, Jan B. & Zuurbier, Joost J. & Schaepkens, Frans J.M., 2007. "The risk of upcoding in casemix systems: A comparative study," Health Policy, Elsevier, vol. 81(2-3), pages 289-299, May.
    6. Kjartan Sarheim Anthun, 2022. "Predicting diagnostic coding in hospitals: individual level effects of price incentives," International Journal of Health Economics and Management, Springer, vol. 22(2), pages 129-146, June.
    7. Carine Milcent, 2021. "From downcoding to upcoding: DRG based payment in hospitals," Post-Print halshs-03094679, HAL.
    8. Victoria Perez & Coady Wing, 2019. "Should We Do More to Police Medicaid Fraud? Evidence on the Intended and Unintended Consequences of Expanded Enforcement," American Journal of Health Economics, MIT Press, vol. 5(4), pages 481-508, Fall.
    9. Georgescu, Irène & Hartmann, Frank G.H., 2013. "Sources of financial pressure and up coding behavior in French public hospitals," Health Policy, Elsevier, vol. 110(2), pages 156-163.
    10. Milstein, Ricarda & Schreyögg, Jonas, 2024. "The end of an era? Activity-based funding based on diagnosis-related groups: A review of payment reforms in the inpatient sector in 10 high-income countries," Health Policy, Elsevier, vol. 141(C).
    11. Keith A. Joiner & Jianjing Lin & Juan Pantano, 2024. "Upcoding in medicare: where does it matter most?," Health Economics Review, Springer, vol. 14(1), pages 1-9, December.
    12. Pedro Barros & Gisele Braun, 2017. "Upcoding in a National Health Service: the evidence from Portugal," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 600-618, May.
    13. Zenga, Mariangela & Mazzoleni, Marcella & Mariani, Paolo & Marletta, Andrea, 2021. "The risk of inappropriateness: An analysis of the hospitalisations in the Italian geriatric wards," Socio-Economic Planning Sciences, Elsevier, vol. 73(C).
    14. Irène Georgescu & Frank G.H. Hartmann, 2013. "Sources of financial pressure and up coding behavior in French public hospitals," Post-Print hal-02100570, HAL.
    15. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    16. Bayerstadler, Andreas & van Dijk, Linda & Winter, Fabian, 2016. "Bayesian multinomial latent variable modeling for fraud and abuse detection in health insurance," Insurance: Mathematics and Economics, Elsevier, vol. 71(C), pages 244-252.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carine Milcent, 2021. "From downcoding to upcoding: DRG based payment in hospitals," International Journal of Health Economics and Management, Springer, vol. 21(1), pages 1-26, March.
    2. François Maréchal & Lionel Thomas, 2021. "The impact of medical complications on optimal hospital payment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1144-1173, December.
    3. Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals," Working Papers halshs-02317416, HAL.
    4. András Kiss & Norbert Kiss & Balázs Váradi, 2023. "Do budget constraints limit access to health care? Evidence from PCI treatments in Hungary," International Journal of Health Economics and Management, Springer, vol. 23(2), pages 281-302, June.
    5. Kjartan Sarheim Anthun, 2022. "Predicting diagnostic coding in hospitals: individual level effects of price incentives," International Journal of Health Economics and Management, Springer, vol. 22(2), pages 129-146, June.
    6. Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals," PSE Working Papers halshs-02317416, HAL.
    7. Carine Milcent, 2016. "Upcoding and heterogeneity in hospitals’ response: A Natural Experiment," PSE Working Papers halshs-01340557, HAL.
    8. Buczak-Stec, Elżbieta & Goryński, Paweł & Nitsch-Osuch, Aneta & Kanecki, Krzysztof & Tyszko, Piotr, 2017. "The impact of introducing a new hospital financing system (DRGs) in Poland on hospitalisations for atherosclerosis: An interrupted time series analysis (2004–2012)," Health Policy, Elsevier, vol. 121(11), pages 1186-1193.
    9. Cook, Amanda & Averett, Susan, 2020. "Do hospitals respond to changing incentive structures? Evidence from Medicare’s 2007 DRG restructuring," Journal of Health Economics, Elsevier, vol. 73(C).
    10. Reif, Simon & Wichert, Sebastian & Wuppermann, Amelie, 2018. "Is it good to be too light? Birth weight thresholds in hospital reimbursement systems," Journal of Health Economics, Elsevier, vol. 59(C), pages 1-25.
    11. Heike Hennig‐Schmidt & Hendrik Jürges & Daniel Wiesen, 2019. "Dishonesty in health care practice: A behavioral experiment on upcoding in neonatology," Health Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 319-338, March.
    12. Atul Gupta & Ambar La Forgia & Adam Sacarny, 2024. "Turbocharging Profits? Contract Gaming and Revenue Allocation in Healthcare," NBER Working Papers 32564, National Bureau of Economic Research, Inc.
    13. Giuseppe Moscelli & Rowena Jacobs & Nils Gutacker & Maria Jose Aragón & Martin Chalkley & Anne Mason & Jan Böhnke, 2019. "Prospective payment systems and discretionary coding—Evidence from English mental health providers," Health Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 387-402, March.
    14. Bogut, Martina & Voncina, Luka & Yeh, Ethan, 2012. "Impact of hospital provider payment reforms in Croatia," Policy Research Working Paper Series 5992, The World Bank.
    15. Lai, Yi & Fu, Hongqiao & Li, Ling & Yip, Winnie, 2022. "Hospital response to a case-based payment scheme under regional global budget: The case of Guangzhou in China," Social Science & Medicine, Elsevier, vol. 292(C).
    16. A. James O'Malley & Thomas A. Bubolz & Jonathan S. Skinner, 2021. "The Diffusion of Health Care Fraud: A Network Analysis," NBER Working Papers 28560, National Bureau of Economic Research, Inc.
    17. Eunhae Shin, 2019. "Hospital responses to price shocks under the prospective payment system," Health Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 245-260, February.
    18. Melberg, Hans Olav & Pedersen, Kine, 2015. "Do changes in reimbursement fees affect hospital prioritization?," HERO Online Working Paper Series 2015:1, University of Oslo, Health Economics Research Programme.
    19. Pedro Barros & Gisele Braun, 2017. "Upcoding in a National Health Service: the evidence from Portugal," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 600-618, May.
    20. Kjartan Sarheim Anthun & Johan Håkon Bjørngaard & Jon Magnussen, 2017. "Economic incentives and diagnostic coding in a public health care system," International Journal of Health Economics and Management, Springer, vol. 17(1), pages 83-101, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:socmed:v:366:y:2025:i:c:s0277953624011146. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.