Estimation of Standardized Hospital Costs from Medicare Claims That Reflect Resource Requirements for Care: Impact for Cohort Studies Linked to Medicare Claims
Article first published online: 24 JAN 2014
© Health Research and Educational Trust
Health Services Research
Volume 49, Issue 3, pages 929–949, June 2014
How to Cite
Schousboe, J. T., Paudel, M. L., Taylor, B. C., Mau, L.-W., Virnig, B. A., Ensrud, K. E. and Dowd, B. E. (2014), Estimation of Standardized Hospital Costs from Medicare Claims That Reflect Resource Requirements for Care: Impact for Cohort Studies Linked to Medicare Claims. Health Services Research, 49: 929–949. doi: 10.1111/1475-6773.12151
- Issue published online: 16 MAY 2014
- Article first published online: 24 JAN 2014
- National Institutes of Health
- National Institute on Aging. Grant Numbers: 1 R01 AG38415-01A1, R01 AG005407, R01 AR35582, R01 AR35583, R01 AR35584, R01 AG005394, R01 AG027574, R01 AG027576
- Hospital costs;
- DRG weights;
- Medicare claims;
- Medicare payment;
- cohort-claims linked studies
To compare cost estimates for hospital stays calculated using diagnosis-related group (DRG) weights to actual Medicare payments.
Data Sources/Study Setting
Medicare MedPAR files and DRG tables linked to participant data from the Study of Osteoporotic Fractures (SOF) from 1992 through 2010. Participants were women age 65 and older recruited in three metropolitan and one rural area of the United States.
Costs were estimated using DRG payment weights for 1,397 hospital stays for 795 SOF participants for 1 year following a hip fracture. Medicare cost estimates included Medicare and secondary insurer payments, and copay and deductible amounts.
The mean (SD) of inpatient DRG-based cost estimates per person-year were $16,268 ($10,058) compared with $19,937 ($15,531) for MedPAR payments. The correlation between DRG-based estimates and MedPAR payments was 0.71, and 51 percent of hospital stays were in different quintiles when costs were calculated based on DRG weights compared with MedPAR payments.
DRG-based cost estimates of hospital stays differ significantly from Medicare payments, which are adjusted by Medicare for facility and local geographic characteristics. DRG-based cost estimates may be preferable for analyses when facility and local geographic variation could bias assessment of associations between patient characteristics and costs.