What explains DRG upcoding in neonatology? The roles of financial incentives and infant health

Hendrik Jürges and Juliane Köberlein
Authors registered in the RePEc Author Service: Hendrik Juerges

Journal of Health Economics, 2015, vol. 43, issue C, 13-26

Abstract: We use the introduction of diagnosis related groups (DRGs) in German neonatology to study the determinants of upcoding. Since 2003, reimbursement is based inter alia on birth weight, with substantial discontinuities at eight thresholds. These discontinuities create incentives to upcode preterm infants into classes of lower birth weight. Using data from the German birth statistics 1996–2010 and German hospital data from 2006 to 2011, we show that (1) since the introduction of DRGs, hospitals have upcoded at least 12,000 preterm infants and gained additional reimbursement in excess of 100 million Euro; (2) upcoding rates are systematically higher at thresholds with larger reimbursement hikes and in hospitals that subsequently treat preterm infants, i.e. where the gains accrue; (3) upcoding is systematically linked with newborn health conditional on birth weight. Doctors and midwives respond to financial incentives by not upcoding newborns with low survival probabilities, and by upcoding infants with higher expected treatment costs.

Keywords: Hospitals; Reimbursement; DRG upcoding; Neonatal care; Preterm infants (search for similar items in EconPapers)
JEL-codes: D20 I11 I18 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:43:y:2015:i:c:p:13-26

DOI: 10.1016/j.jhealeco.2015.06.001

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