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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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    4. Jürges, Hendrik & Köberlein, Juliane, 2013. "First do no harm. Then do not cheat: DRG upcoding in German neonatology," MEA discussion paper series 201307, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
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