Inpatient Definitions and Methodology

All information in this report is taken from the Medicare Provider Analysis and Review (MedPAR) file which is updated annually by CMS based on the federal fiscal year.  The file includes billing data for 100% of all Medicare fee-for-service claims (IPPS claims) for discharges during the twelve months ending September 30.  The report is based on the most recent periods available and is consistent with CMS Data Release policies. Please note that a new MS-DRG patient classification system was introduced in FY 2008. The new MS-DRGs replace prior DRG definitions and MS-DRGs are not compatible with the prior DRGs.

The twenty base MS-DRGs with the highest numbers of discharges are ranked by volume and the remaining MS-DRGs are summarized:

• Base MS-DRGs - The Medicare Severity - Diagnosis Related Groups (MS-DRGs) provide up to three levels of severity for a particular condition. A "Base" MS-DRG combines all levels of severity into a single category. The MS-DRG numbers listed are the individual MS-DRGs that have been combined into a Base MS-DRG for reporting.
• Base MS-DRG Description - Individual MS-DRGs within a Base MS-DRG are differentiated according to the presence of a complication (CC) or a major complication (MCC). The descriptors of these CC/MCCs are removed when describing the Base MS-DRG.
• IPPS Cases - total number of IPPS claims for the Base MS-DRG. IPPS claims are Medicare fee-for-service inpatient claims paid under the Inpatient Prospective Payment System.
• ALOS - The Average Length of Stay is calculated as total patient days for the Base MS-DRG divided by its number of discharges.
• Average Charges - The Average Charge is calculated as total gross charges for the Base MS-DRG divided by its number of discharges. Gross charges are amounts billed by the hospitals but are not necessarily the amounts paid by Medicare or other payers.
• Average Payment - The Average Payment is the amount paid to the hospital for the Base MS-DRG. This amount does not include any capital pass-thru amount or organ acquisition amount. It includes payments by Medicare (i.e. base MS-DRG payment, outlier payment, disproportionate share adjustment (DSH), indirect medical expense adjustments (IME), adjustments for certain transfers, etc.) It also includes amounts paid by or on behalf of the patient (e.g. deductibles or coinsurance) and amounts paid by third party insurers. The average reported for a Base MS-DRG is the total payment divided by its number of discharges.
• Average Cost - Costs are calculated for each patient on the basis of ratios of costs to charges for routine services and ancillary areas. Click here for cost allocation methodology.  The average reported for a Base MS-DRG is total allocated cost divided by its number of discharges.
• Case Mix Index (CMI) - The CMI is the average relative weight for all cases reported in a Base MS-DRG. MS-DRGs at lower severity levels have lower relative weights and MS-DRGs at higher severity levels have higher relative weights. The CMI provides an index of patient mix among levels of severity within a Base MS-DRG.
• CC/MCC Rate - measures the incidence of CCs or MCCs within Base MS-DRGs that are effected by the presence of either or both types of complications (i.e. complications or major complications). The numerator is the number of cases in MS-DRGs effected defined by the presence of a CC or MCC. The denominator is the total number of cases in the Base MS-DRG. (Some MS-DRGs may not be effected by the presence of CCs or MCCs and consequently will not have rates calculated.)
• MCC Rate - measures the incidence of MCCs within Base MS-DRGs that are effected by the presence of a major complication. The numerator is the number of cases in an MS-DRGs defined by the presence of an MCC. The denominator is the total number of cases in its Base MS-DRG. (Some MS-DRGs may not be effected by the presence an MCC and consequently will not have a rate calculated.)

A brief description of the Medicare Prospective Payment System is provided to explain the system, MS-DRGs, the case mix index, etc.