Abstract

ABSTRACT: The federal Medicare DRG (diagnosis-related group) system is entering its sixth year. The hospital industry contends that DRGs are under-reimbursing for the hospital care provided. Our analysis by outcome (ie, survival vs death) of 3,329 patients with insulin-dependent or non-insulin-dependent diabetes mellitus showed that the 242 diabetes-related deaths were associated with a much more intense use of hospital resources and a substantial financial risk under DRG pricing schemes, compared with the 3,087 diabetic survivors. Only deaths within one week of admission to the hospital were profitable under DRGs. Patients who died after a hospital stay of more than 60 days generated a loss of $28,377 per patient. Diabetic patients who died after emergency admission tended to have a shorter hospitalization and to pose less financial risk under DRGs than those who died after nonemergency admission. Those who died after referral from other clinical services tended to have greater use of resources and to pose greater financial risk under DRGs than those not referred. These data suggest significant inequities in the current Medicare DRG prospective payment system vis-ã-vis deaths from diabetes. Long hospitalization, nonemergency admission, and referral from another clinical service were shown to be good predictors of greater use of hospital resources for diabetic patients who died. However, since hospitals are not compensated for the increased utilization, diabetic patients may suffer a decline in quality of and/or access to medical care in the future.