JAMA : the journal of the American Medical Association
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To determine whether basing payments on diagnosis related groups (DRGs) results in mispayment for certain classes of patients, we examined the relation between total Medicare charges per hospitalization and eight beneficiary characteristics (including admission from a nursing home, extreme age, Medicaid enrollment, and disability). We controlled for the hospital in which care was given and the DRG to which the discharge was assigned. ⋯ Because these differences are very small compared with the average variation within DRGs, we conclude that using these beneficiary characteristics in the DRG classification system would only slightly improve DRGs. Medicare's DRG-based payments seem to be substantially equitable with regard to these beneficiary characteristics.