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

49 Pages Posted: 18 Sep 2013

See all articles by Hendrik Jürges

Hendrik Jürges

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA); German Institute for Economic Research (DIW Berlin)

Juliane Köberlein-Neu

University of Wuppertal - Department of Health Economics and Health Care Management; International Health Economics Association (iHEA)

Date Written: July 1, 2013

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.

Keywords: Neonatal care, DRG upcoding

JEL Classification: I11, I18, D20

Suggested Citation

Jürges, Hendrik and Köberlein-Neu, Juliane, First Do No Harm - Then Do Not Cheat: DRG Upcoding in German Neonatology (July 1, 2013). DIW Berlin Discussion Paper No. 1314, Available at SSRN: https://ssrn.com/abstract=2307495 or http://dx.doi.org/10.2139/ssrn.2307495

Hendrik Jürges (Contact Author)

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA) ( email )

D-68131 Mannheim
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Juliane Köberlein-Neu

University of Wuppertal - Department of Health Economics and Health Care Management ( email )

Rainer-Gruenter-Str. 21
FN.01
Wuppertal, 42119
Germany

International Health Economics Association (iHEA)

435 East Durham Street
Philadelphia, PA 19119
United States

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