An analysis of hospital case mix, cost, and payment differences for Medicare, Medicaid, and Blue Cross Plan patients using DRGs

Abstract

To increase our understanding of case mix as a major contributor to variability in hospital costs, we examined the relationship among case mix, resource consumption, and payments for all Medicare, Medicaid, and Blue Cross Plan patients discharged from 28 hospitals in New York State. Case mix differences among the three payers were found to contribute to differences in overall average cost per case, although residual differences in costs existed at the DRG level. Medicare and Medicaid payments more often covered the actual costs of their patients than did Blue Cross Plan payments. Our results indicate the importance of payer-specific data in the design of effective and equitable reimbursement and cost containment strategies.