This work was supported by grants from the National Institute on Aging (AG10418; AG00412) and the John Hartford Foundation (97299, 2000–0218). Dr. Chuang was supported by the VA National Quality Scholars Fellowship program. Dr. Covinsky was supported in part by an independent investigator award (K02HS00006-01) from the Agency for Healthcare Research and Quality and a Paul Beeson Faculty Scholarship in Aging Research from the American Federation for Aging Research.
Diagnosis-Related Group–Adjusted Hospital Costs Are Higher in Older Medical Patients with Lower Functional Status
Article first published online: 20 NOV 2003
Journal of the American Geriatrics Society
Volume 51, Issue 12, pages 1729–1734, December 2003
How to Cite
Chuang, K. H., Covinsky, K. E., Sands, L. P., Fortinsky, R. H., Palmer, R. M. and Landefeld, C. S. (2003), Diagnosis-Related Group–Adjusted Hospital Costs Are Higher in Older Medical Patients with Lower Functional Status. Journal of the American Geriatrics Society, 51: 1729–1734. doi: 10.1046/j.1532-5415.2003.51556.x
An abstract of this study was presented at the annual meetings of the Society of General Internal Medicine in Atlanta, Georgia, May 3, 2002, and the American Geriatrics Society in Washington, DC, May 10, 2002.
- Issue published online: 20 NOV 2003
- Article first published online: 20 NOV 2003
- diagnosis-related groups; functional status; healthcare costs; Medicare; reimbursement methods
Objectives: To determine whether hospital costs are higher in patients with lower functional status at admission, defined as dependence in one or more activities of daily living (ADLs), after adjustment for Medicare Diagnosis-Related Group (DRG) payments.
Design: Prospective study.
Setting: General medical service at a teaching hospital.
Participants: One thousand six hundred twelve patients aged 70 and older.
Measurements: The hospital cost of care for each patient was determined using a cost management information system, which allocates all hospital costs to individual patients.
Results: Hospital costs were higher in patients dependent in ADLs on admission than in patients independent in ADLs on admission ($5,300 vs $4,060, P<.01). Mean hospital costs remained higher in ADL-dependent patients than in ADL-independent patients in an analysis that adjusted for DRG weight ($5,240 vs $4,140, P<.01), and in multivariate analyses adjusting for age, race, sex, Charlson comorbidity score, acute physiology and chronic health evaluation score, and admission from a nursing home as well as for DRG weight ($5,200 vs $4,220, P<.01). This difference represents a 23% (95% confidence interval=15–32%) higher cost to take care of older dependent patients.
Conclusion: Hospital cost is higher in patients with worse ADL function, even after adjusting for DRG payments. If this finding is true in other hospitals, DRG-based payments provide hospitals a financial incentive to avoid patients dependent in ADLs and disadvantage hospitals with more patients dependent in ADLs.