Information for Consumers

What is Medicare Payment and Volume?

Patients that have similar clinical characteristics and similar costs are assigned to an MS-DRG. The MS-DRG will be associated with a fixed payment amount based on the average cost of patients in the group. Patients are assigned to a MS-DRG based on diagnosis, surgical procedures, age and other information. Medicare uses this information that is provided by hospitals on their bill to decide how much they should be paid. Hospital Compare shows information for each hospital on selected MS-DRGs from October 2007 through September 2008. If a MS-DRG has "Complications" or "Comorbidities" in its title, it means the hospital may have treated more complicated patients.

Because MS-DRGs are highly technical, patients and other consumers may need to work with a doctor or other healthcare provider to understand these terms as well as the payment and volume information. ‘CC’ refers to complications or comorbidities. MCC refers to major complications or comorbidities. When Medicare pays a hospital based on the MS-DRG, it takes into account the following (case mix):

• How bad the illness is or if the patient dies (severity of illness)
• How likely it is that the patient will get better or get worse (prognosis)
• What would happen if the patient does not receive immediate or continuing care (need for intervention)
• How much and what type of service the hospital needed to provide, such as lab work, X-rays or physical therapy (resource intensity)

The payment and volume information is for acute care hospitals . "Critical access hospitals (CAH)" and "Children's Hospitals" are not included because they are paid using another method.

Median Medicare Payments

Median Medicare payments for the same MS-DRG can vary. The median payment refers to the midpoint of all payments to the hospital for a particular MS-DRG, that is, half the payments were lower and half the payments were higher than the median payment. A hospital can get a higher payment for any or all of the following reasons:

• It is classified as a teaching hospital
• It treats a high percentage of low-income patients (disproportionate share)
• It may treat unusually expensive cases (outlier payments)
• It pays its employees more compared to the national average because the hospital is in a high-cost area (wage index). Note: The hospital's wage index is calculated using the hospital's payroll records, contracts and other wage related documentation

Range of Payments 25th – 75th Percentile

Hospital Compare lets you compare the hospitals you select with other hospitals in your state and in the nation. The state and national amounts are shown as a range of payments (between the 25th percentile and the 75th percentile). This is the range of payments for the most typical cases treated for the MS-DRG. The information doesn't include unusually low payments for cases, such as when a patient was transferred to another facility before being fully treated. It also doesn't include unusually high payments for cases that are more complex and costly to treat. Only one number appears in this field when the 25th and 75th percentiles are the same.

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