Contributions of Case Mix, Intensity, and Technology to Hospital Cost Increases Under Medicare's Prospective Payment System
Jan 1, 1993
The 28 percent change in average Medicare inpatient cost per case between 1984 and 1987 is decomposed into three components: input price inflation, changes in average cost within diagnosis-related groups (DRGs) (intensity), and changes in the distribution of cases across DRGs (case mix). The authors estimate the contributions of technology diffusion and outpatient shifts to within-DRG and across-DRG cost changes. The authors also use California data to estimate the contribution of changes in the quantity of services provided during a stay. The factors examined account for approximately 80 percent of the real increase in average cost per case.