What is the basic formula for calculating each Medicare Severity-Diagnosis Related Group (MS-DRG) hospital payments?

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Asked by Melodey, Last updated: Apr 06, 2024

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4 Answers

J.Spencer, Knowledge enthusiast, Tokyo

Answered Nov 19, 2018

Hospital payment = DRG relative weight x hospital base rate

DRG Relative weight: The DRG relative weight is set by the CMS and depends on the Medicare that a particular diagnosis will require. Treatment that requires a higher amount of medical care will have a higher DRG rate and hence hospital payment will be pushed up.

Hospital base rate: The hospital base rate is different for different hospitals and it depends on the services and treatments they provide.

H. Martin, Content Writer, Charlotte

Answered Jul 17, 2018

There are several formulas that allow payment transfers and calculations according to several groups. The basic formula is to multiply the DRG relative weight to the hospital base rate. This will give you the ultimate hospital payment. The Medicare severity-diagnosis related group has crafted the payment scheme. The hospital payment is then crafted keeping things into account to create an ultimate cost.

Management needs to account for different things to ensure multiple departments are accounted for when coming up with payment plans. Like different businesses hospitals have determined their cost plans to ensure adequate finances and support to ensure profit and sustenance.