DRG, or diagnosis-related group, is a system to classify hospital inpatient cases into one of approximately 500 groups, also referred to as DRGs, expected to have similar hospital resource use. DRG groupings are based on diagnoses, procedures, age, sex, and the presence of complications or comorbidities. DRGs have been used since 1983 to determine how much Medicare pays the hospital. Other payers may also use DRG payment systems.
What are average charges?The average charge shown for each procedure reflects the average charge by the hospital during the 2008 fiscal year. Physicians' professional fees are typically billed separately by the physicians and are not reflected in the charges shown on this website. Charges for a procedure vary from hospital to hospital. Charges may also differ for patients at the same hospital based on the nature of the patient's treatment and care.
Why are charges different at each hospital?Charges differ from hospital to hospital due to a number of factors, including, for example, the type and intensity of services and technology available, whether the hospital is an academic medical center, regional variations in employee salaries and other costs, and the number of uninsured, Medicare and Medicaid patients treated. Numerous other factors also contribute to variations in charges among hospitals for the same procedure.
Why are hospitals paid less than their charges?Hospitals are paid for their services at rates that are substantially lower than their charges. Government payers, such as Medicare and Medicaid, unilaterally determine what they will pay hospitals. Medicare and Medicaid pay hospitals even less than their costs of treatment. Commercial insurers and employers that provide self-insured health plans for their employees negotiate with hospitals for discounts off of charges or other reimbursement rates.