Price Comparison across DRG Systems: How Much Will You Pay at the Neighbour's?

Jana Votapkova (Prochazkova), Anna Rehakova, Anne Spranger and Tomas Pavlik
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Anna Rehakova: Faculty of Social Sciences, Charles University, Opletalova 26, 110 00 Prague, Czech Republic
Anne Spranger: Faculty of Social Sciences, Charles University, Opletalova 26, 110 00 Prague, Czech Republic
Tomas Pavlik: Institute of Health Information and Statistics of the Czech Republic (UZIS CR)

No 2026/30, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: International comparisons of inpatient reimbursements are complicated by differences in national Diagnosis-Related Group (DRG) classification and reimbursement systems. Although DRGs are designed to group hospitalizations according to clinical and resource-use similarities, differences in classification rules, group definitions, and reimbursement structures limit direct comparisons across countries. This paper develops an empirical benchmarking framework that enables relative reimbursement comparisons across non-harmonized DRG systems without requiring one-to-one correspondence between national DRG groups. We demonstrate its application using approximately 300,000 inpatient episodes from Czechia and Germany within Major Diagnostic Category 14 (MDC 14) - Pregnancy, Childbirth and the Puerperium. Hospitalizations are mapped into eight clinically comparable categories that di er in their degree of homogeneity. Group-specific Poisson pseudo-maximum likelihood (PPML) models are estimated, allowing reimbursement differences to vary with country-specific relative weights (RW). After adjusting for observed case characteristics, German reimbursements are estimated to be approximately 36% higher for C-sections and 40% higher for vaginal births than their Czech equivalents. For clinically homogeneous categories, the estimated reimbursement differences do not vary significantly across complexity levels, allowing a single relative reimbursement benchmark to be translated into an equivalent reimbursement level while retaining the DRG classification of the country of treatment. In several more heterogeneous categories, reimbursement differences vary significantly with RW, potentially re ecting both differences in national reimbursement structures and residual case heterogeneity. Since these mechanisms cannot be separated, the framework for heterogenous groups provides an indicative range of model-based reimbursement benchmarks. The proposed methodology enables reimbursement comparisons without requiring identical DRG classiffcations and provides an empirical basis for cross-border price negotiations between health insurance funds and healthcare providers, particularly in border regions where access to domestic healthcare services may be limited.

Keywords: Cross-border healthcare; Diagnosis-Related Groups (DRGs); Hospital reimbursement; International price comparison; Poisson pseudo-maximum likelihood (PPML); Reimbursement benchmarking (search for similar items in EconPapers)
JEL-codes: C21 C51 I11 I13 I18 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2026-10, Revised 2026-10
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