1 GAO/HEHS-00-177R Medicare and Managed Care

United States General Accounting Office

Washington, DC 20548

Health, Education, and

Human Services Division

B-283429

September 1, 2000

The Honorable Pete Stark

Ranking Minority Member

Subcommittee on Health

Committee on Ways and Means

House of Representatives

Subject: Medicare and Managed Care Plans: Payments and Costs for

Selected Hospitals

Dear Mr. Stark:

Hospitals have reported financial difficulties they attribute to Medicare’s payment policies

since the implementation of several provisions of the Balanced Budget Act of 1997 (BBA),

which were intended to slow the growth in Medicare payments to hospitals. Yet Medicare

Payment Advisory Commission (MedPAC) and American Hospital Association (AHA)

analyses show that even after the BBA, Medicare hospital inpatient payments will, on

average, more than cover the costs of treating Medicare beneficiaries.1 At the same time, in

the face of rising health care costs, private payers have increasingly turned to managed care

plans to control their health care costs by negotiating provider payments and managing

enrollee utilization. In fact, recent MedPAC analyses indicate that between 1997 and 1998,

pressures exerted by private payers had a greater effect on hospital financial performance

than the slower growth in Medicare payments.2 This has raised congressional concerns that

hospital complaints about Medicare payments are driven, in part, by overall fiscal pressures

placed on hospitals by managed care plans.

In this context, you asked us to collect data on Medicare and managed care plan hospital

costs and payments. Because information on managed care plan payments and costs is not

available from public sources and it is difficult to collect those data, this letter provides

information from a group of hospitals that were able and willing to respond to our data

1

MedPAC, Report to Congress: Medicare Payment Policy (Washington, D.C.: MedPAC,

June 2000), p. 180, and the AHA-commissioned study by The Lewin Group, The Impact of

the Medicare Balanced Budget Refinement Act on Medicare Payments to Hospitals (Falls

Church, Va.: Feb. 2000), p. 5.

2

MedPAC, p. xviii.
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2 GAO/HEHS-00-177R Medicare and Managed Care

request.3 These hospitals, however, are not representative of the industry, and it is important

to remember that the experience of the responding hospitals is likely to differ from that of

other hospitals. We have summarized this information according to your areas of interest:

(1) the relationship between Medicare and managed care plan payments and costs, (2)

managed care plan payments and the relative importance of managed care business, and (3)

Medicare and managed care plan payments and costs by hospital teaching status.

We contacted over 100 hospitals that had sophisticated cost accounting systems that could

provide us with fiscal year 1998 detailed cost and payment information by payer and type of

case. The hospitals we contacted tended to be larger, urban hospitals, which were more

likely to have a teaching program than the average hospital. Had all these hospitals

responded, the data would still not be representative of all hospitals. Despite our repeated

attempts to improve the response rate, fewer than half of the hospitals we contacted provided

us with complete information. In addition to collecting hospital data, we interviewed

industry analysts about hospital and managed care plan contracting strategies. We did not

independently verify the data submissions from the responding hospitals. With this

exception, our work was completed in accordance with generally accepted government

auditing standards between June 1999 and August 2000. (For a detailed discussion of our

scope and methodology, see encl. I.)

In brief, for the average hospital responding to our survey, payments from both managed care

plans and Medicare covered their respective costs for all types of cases, although there was

considerable variation across hospitals in the relationship between payments and costs.

Average managed care plan payments per case for inpatient services were lower than average

Medicare payments for the types of cases we examined. However, average managed care

plan costs per case were also lower than Medicare’s. The relationship between managed care

plan payments and costs appeared to be associated with the level of managed care enrollment

in the responding hospital’s market area and the hospital’s relative share of inpatient

revenues from this payer. Responding hospitals in areas with low managed care plan

enrollment or responding hospitals with more managed care plan business were more likely

to have higher plan payments, relative to their costs, than other responding hospitals. The

average hospital with a large teaching program reported losses from its managed care

business, but Medicare payments were well above its costs. Managed care plan payments

were more generous than Medicare’s to the average responding hospital with a smaller

teaching program, although Medicare payments still on average covered its costs.

BACKGROUND

Hospitals derive their patient revenues from many different payers, including Medicare and

state Medicaid programs in the public sector and a number of third-party insurers and

managed care plans as well as individual patients in the private sector. Payment rates for

Medicare and many Medicaid programs are prospectively established: hospitals are paid a

3

MedPAC contracted for a study of provider payments for various services by Medicare and

other payers. That contract, however, was recently canceled because many providers were

unwilling to complete the survey or unable to provide detailed, accurate data.
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3 GAO/HEHS-00-177R Medicare and Managed Care

basic rate that is adjusted for patient- or hospital-specific factors, regardless of the actual cost

of treating a patient.4 Payment rates from private payers and managed care plans are

generally negotiated and vary depending on a number of factors, such as hospital or market

characteristics. Although any given managed care plan may constitute a small share of a

hospital’s inpatient business, collectively these plans may account for a substantial portion of

a hospital’s revenues.

Because Medicare is the largest single payer for inpatient care, its payments greatly affect the

financial performance of many hospitals. Yet the financial health of most hospitals is not

determined by Medicare payment rates alone, but rather by a number of other factors,

including the extent to which payments from other payers cover a hospital’s costs of

providing inpatient care and the share of patients covered by each payer.

Medicare Payments to Hospitals

In 1983, Medicare implemented a prospective payment system (PPS) to slow the growth in

Medicare spending for acute hospital inpatient services. Hospitals receive a prospectively

determined payment that covers all the required hospital services provided during a Medicare

beneficiary’s stay. This per-case payment varies depending on the beneficiary’s diagnosisrelated group (DRG), which is based on factors predictive of expected resource use,

including the principal diagnosis or reason for the admission, whether surgery is performed,

and whether the patient has certain other illnesses or complications. Payments to a hospital

are also adjusted to reflect variation in local wage rates. Other hospital-specific payment

adjustments account for the higher costs incurred by facilities with teaching programs 5 and

compensate certain hospitals with a disproportionate share of low-income patients (termed

the disproportionate share hospital—or DSH—adjustment).

The PPS was intended to provide hospitals with financial incentives to deliver care more

efficiently, and hospitals appear to have responded to those incentives. Since 1989, the

growth in hospital costs for treating Medicare patients has generally been declining (see fig.

1). By 1992, cost growth fell below payment increases, which contributed to steady

improvements in the Medicare inpatient margin—a measure that compares Medicare

payments with the costs of treating its beneficiaries.6 By 1998, the last year for which actual

data are available, the aggregate inpatient Medicare margin was 14.4 percent.7

4

Medicaid payment methods vary by state.

5

Medicare provides additional payments to teaching hospitals to account for their costs of

operating a teaching program, such as the salaries of residents and their supervising faculty.

6

The inpatient PPS margin is the difference between PPS payments and Medicare-allowed

inpatient costs, as a percentage of PPS payments.

7

MedPAC, p. 180.
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4 GAO/HEHS-00-177R Medicare and Managed Care

Figure 1: Percentage Change in Inpatient PPS Payments and Costs Per Case, 1984-

97

17.8

11.1

3.9

5.4 5.3

6.8

6.1 6.1 6.1

3.5 3.3

4.7 5.0

1.8

-5.0

0

5.0

10.0

15.0

20.0

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Percentage Change

Payments per Case

Costs per Case

Yeara

2.5

11.6

9.8

8.9 8.8

9.4

8.3

7.0

4.7

1.2

-1.0 -1.2

-0.6 -0.3

a

Data for each year correspond to a hospital’s fiscal year beginning in the federal fiscal year.

Source: Unpublished data from Stuart Guterman (Washington, D.C.: The Urban Institute,

Feb. 24, 2000).

The BBA included several changes to Medicare hospital payments intended to slow spending

over the 5-year period from 1998 through 2002. The BBA-related changes were estimated

by AHA to reduce total Medicare inpatient PPS payments by 9.5 percent over this period,

resulting in expected inpatient margins of about 10 percent in 2002.8 The Medicare,

Medicaid, and State Children’s Health Insurance Program Balanced Budget Refinement Act

of 1999 (BBRA) tempered certain BBA-mandated reductions by adding an estimated $1.2

billion to hospital inpatient payments from 2000 to 2004, which was estimated to have a

small impact on the aggregate PPS inpatient margin for 2002.9

8

See MedPAC, p. 180, and The Lewin Group, section II, p. 2.

9

AHA estimated that BBRA changes would raise the estimated PPS margin in 2002 by 0.1

percent. The Lewin Group, section II, p. 6.
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5 GAO/HEHS-00-177R Medicare and Managed Care

Managed Care Plan

Payments to Hospitals

In contrast to Medicare’s prospectively set national rates, payments from private payers and

managed care plans are individually negotiated with hospitals. The payments can depend in

part on the volume of business brought to the hospital, the competition from other hospitals,

and other market characteristics. Historically, private insurers paid hospitals on the basis of

billed charges and had little involvement in the actual delivery or management of services.

With limited control over the level of charges or the utilization of hospital services, the

insurer merely passed on the rising costs of health care to employers or enrollees through

higher premiums. In the face of increasing demands from employers and other insurance

purchasers for greater controls on health care costs, private payers began to develop managed

care plans.

Managed care plans attempt to control the delivery and cost of covered health care services

for their enrolled members. Depending upon the structure of the plans, they may direct their

members to selected providers, manage the utilization of covered services, negotiate payment

rates with providers, administer payment for the services, or perform some combination of

these functions.10 An important factor in rate negotiations can be a plan’s ability to direct

patients to a particular hospital—generally, the higher the volume and the more competition

among hospitals, the stronger the negotiating position of the plan.

From the hospital’s perspective, negotiations with managed care plans focus primarily on

securing plan business and obtaining payment rates that cover the facility’s costs. Factors

influencing the payment rates that the hospital ultimately accepts include its occupancy rate,

the loss of patient volume and revenue if it did not contract with a plan, and the amount of

hospital competition in the area.11 A hospital may sometimes accept prevailing “market”

rates for certain specialty services regardless of its own costs of providing that service rather

than lose the business to another hospital.12 Finally, a hospital may accept lower rates on

selected inpatient services or types of cases if the plan’s payment rates are profitable overall

or if the payments for other services, such as outpatient and physician services, are attractive.

10Larry Levitt, Janet Lundy, and Srija Srinivasan, “Trends and Indicators in the Changing

Health Care Marketplace,” The Kaiser Changing Health Care Marketplace Project (Menlo

Park, Calif.: The Henry J. Kaiser Family Foundation, Aug. 1998).

11Peter R. Kongstvedt, “Negotiating and Contracting with Hospitals and Institutions,” The

Managed Health Care Handbook (Gaithersburg, Md.: Aspen Publishers, 1996), pp. 202-205.

12For example, managed care plans often negotiate rates for cardiac bypass or cardiac

catheterization services, which then become the market rate, regardless of an individual

hospital’s actual cost of providing those services.
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6 GAO/HEHS-00-177R Medicare and Managed Care

AVERAGE MANAGED CARE

PLAN AND MEDICARE

PAYMENTS AND COSTS

FOR RESPONDING HOSPITALS

Managed care plan payments were lower than Medicare payments, but the costs of managed

care plan enrollees were also lower than Medicare beneficiary costs. 13 On average, managed

care plan payments were 7 percent higher than its enrollee costs, and Medicare payments

were 9 percent higher than beneficiary costs. However, these averages masked considerable

variation across the responding hospitals, particularly for managed care plan payments

relative to enrollee costs.

Average per-case managed care plan payments were considerably lower than Medicare

payments for over half the hospitals responding to our survey (see fig. 2). Managed care plan

payments per case were 14 percent lower than Medicare payments across the 15 types of

cases, averaging $4,721, compared with $5,459 from Medicare.14 The same pattern was

evident across the individual types of cases. Average managed care plan payments to

responding hospitals were lower than average Medicare payments for 11 of the 15 types of

cases examined (see encl. II).

13In this study, managed care is defined broadly to include health maintenance organizations

(HMO), preferred provider organizations, and point of service plans. Medicare includes only

fee-for-service patients. Medicare managed care was grouped into the “other” payer

category because its share of revenue was small for most hospitals.

14We examined more detailed payment and cost data for 15 types of cases, defined by DRGs

that represented a range of medical and surgical cases, complex and routine cases, and acute

and chronic conditions.
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7 GAO/HEHS-00-177R Medicare and Managed Care

Figure 2: Difference Between Average Managed Care Plan and Medicare Payments per

Case for Responding

Hospitals

-$4,500 -$3,500 -$2,500 -$1,500 -$500 $500 $1,500 $2,500

Managed care

plan payment

lower than

Medicare

payment

Managed care

plan payment

higher than

Medicare payment

Managed Care Plan Payment Minus Medicare Payment

Individual Hospitals

Source: GAO analysis of fiscal year 1998 revenue data for 51 hospitals.

Average per-case managed care plan costs were also lower than average per-case

Medicare costs for the majority of the responding hospitals. Managed care plan

costs per case were 11 percent lower than Medicare costs across the 15 types of cases,

averaging $4,421 compared with $4,923 from Medicare. Only 6 of the 51 hospitals (12

percent) had average managed care plan per-case costs that were higher than Medicare’s.

There were similar results across most of the individual types of cases: the average cost per

case of managed care patients was lower than Medicare’s for 13 of the 15 types of cases (see

encl. II).

Managed care plan payments exceeded their enrollee costs by 7 percent for the average

responding hospital, and Medicare payments averaged 9 percent higher than its beneficiary

costs.15 However, there was considerable variation across the hospitals because of the range

15The Medicare payment-to-cost ratio for our sample translates into a 9.6 percent aggregate

margin. This is lower than the 14.4 percent aggregate margin reported by MedPAC for all
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8 GAO/HEHS-00-177R Medicare and Managed Care

in payments and differences in costs (see table 1). Many responding hospitals (21) lost

money on their managed care business, and 6 hospitals had payments that were at least 20

percent below their costs. However, 17 hospitals had managed care payments that were at

least 20 percent higher than their costs. For Medicare, the extremes were narrower. While

12 hospitals lost money on Medicare, only 2 hospitals had payments that were at least 20

percent lower than their costs, and 12 hospitals had payments that were at least 20 percent

higher than their costs.

Table 1: Distribution of Managed Care Plan and Medicare Payments Relative

to Their Respective Costs for Responding Hospitals

Managed care plan Medicare

Payment-to-cost

ratioa

Number of

hospitals

Average

payment-tocost ratioNumber of

hospitals

Average

payment-tocost ratio

Less than 0.8 6 0.68 2 0.77

0.80 - 0.99 15 0.93 10 0.92

1.00 - 1.09 7 1.04 16 1.06

1.10 - 1.19 6 1.14 11 1.13

1.2 and above 17 1.31 12 1.27

All hospitals 51 1.07 51 1.09

a

A payment-to-cost ratio compares payments with costs. A value greater than 1.0 indicates

that payments exceeded costs; a value less than 1.0 indicates that costs exceeded payments.

Source: GAO analysis of fiscal year 1998 cost and revenue data for 51 hospitals.

hospitals in 1998. Several factors could account for this difference. MedPAC data reflect

the universe of PPS hospitals. Payments and costs for resident salaries and their supervising

physicians are excluded from the MedPAC estimate. Further, MedPAC measures only

Medicare-allowed costs, while our data included both allowed and nonallowed costs, which

depress the reported margin. See MedPAC, p. 180.
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9 GAO/HEHS-00-177R Medicare and Managed Care

VARIATION IN MANAGED CARE

PLAN PAYMENTS AND COSTS

Managed care plan payments relative to enrollee costs were higher for responding hospitals

in areas with low managed care plan enrollment than for responding hospitals in areas with

high enrollment.16 Managed care plan payments were, on average, 18 percent higher than

their costs for responding hospitals in areas with low managed care enrollment, compared

with 7 higher percent for hospitals in areas with high enrollment. This is consistent with

industry research that showed that as managed care plan enrollment in a market increases,

hospital gains from managed care plans decline.17

The responding hospitals were more likely to lose money on managed care plans when they

had less business from this payer. Of the 13 hospitals with a small share of their revenues

from managed care plans, 10 reported losses (see table 2). Further, hospitals that lost on their

managed care business were also more likely to be high-cost facilities than hospitals that

gained on their managed care business.18 Of the 11 high-cost hospitals, 8 hospitals had

losses on their managed care business.

Table 2: Hospital Managed Care Plan Performance, by Hospital Characteristics

for Selected Hospitals

Managed care performance

Hospital characteristics

Hospitals

with losses

Hospitals

with gains Total

Low managed care share of revenuea 10 3 13

High-cost hospitalsb 8 3 11

All responding hospitals 21 30 51

a

The 25 percent of responding hospitals with the lowest managed care plan shares of

inpatient revenues.

b

Hospitals with average managed care plan per-case costs of $5,000 or more.

Source: GAO analysis of fiscal year 1998 cost and revenue data for 51 hospitals.

16In this analysis, a hospital market is defined as the metropolitan statistical area (MSA) in

which it is located.

17Ernest Valente and Keven G. Serrin, “Managed Care and the Financial Condition of

Academic Medical Center Hospitals, 1992 – 1995,” Implications for Policy, Delivery and

Practice (Washington, D.C.: Health Services Research, June 1998).

18High-cost hospitals were defined as hospitals with an average managed care plan per-case

cost of $5,000 or more, after adjusting for differences in the mix of cases and variations in

local wage rates.
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10 GAO/HEHS-00-177R Medicare and Managed Care

MEDICARE AND MANAGED CARE

PLAN PAYMENTS COMPARED WITH

SIZE OF TEACHING PROGRAM

The average responding teaching hospital had payments from both payers that covered their

respective costs, although there was considerable variation in this relationship for both payers

across the hospitals. Responding hospitals with large teaching programs were more likely to

fare better from Medicare than from managed care plans, while the opposite was true for

responding hospitals with smaller or no teaching programs (see table 3).

Responding hospitals with large teaching programs were likely to lose on their managed care

business, but their Medicare payments were substantially higher (22 percent ) than

beneficiary costs. Of the 15 hospitals with large teaching programs, 12 reported managed

care plan payments that were below enrollee costs, yet all of them received Medicare

payments above their costs.

The picture is different for responding hospitals with smaller teaching programs.

Responding hospitals were likely to fare better from managed care plans than from Medicare.

Managed care plan payments averaged 14 percent higher than enrollee costs, while Medicare

payments averaged 5 percent higher than beneficiary costs. Of the 20 hospitals in this

category, 15 hospitals had positive managed care plan margins, and 14 hospitals had positive

Medicare margins.

The experience of large teaching and other teaching hospitals is dissimilar because their costs

as well as their Medicare and managed care plan payments are different. The costs of

managed care plan patients were, on average, 37 percent higher at the 15 large teaching

hospitals than at the 20 hospitals with smaller programs, yet their payments were only 17

percent higher.19 While Medicare costs per case at large teaching hospitals were on average

32 percent higher than at hospitals with smaller teaching programs, its payments were even

higher (41 percent).

19The average costs and payments per case reported are for the 15 types of cases examined.
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11 GAO/HEHS-00-177R Medicare and Managed Care

Table 3: Average Managed Care Plan and Medicare Inpatient Payment-to-Cost Ratios, by

Teaching Status of Responding Hospitals

Teaching hospitals

Payer Large

teachinga

Other

teachingb

All

teaching

Nonteaching

hospitals All

hospitals

Managed care plan 0.98 1.14 1.07 1.07 1.07

Medicare 1.22 1.05 1.12 1.01 1.09

a

Hospitals with more than 25 residents per 100 hospital beds.

b

Hospitals with 25 or fewer residents per 100 hospital beds.

Source: GAO analysis of fiscal year 1998 cost and revenue data for 51 hospitals.

For the average responding nonteaching hospital, managed care plan payments were 7

percent higher than costs compared with 1 percent higher for Medicare. Of the 16

nonteaching hospitals, 12 hospitals had managed care plan payments that were higher than

enrollee costs, compared to 10 hospitals with Medicare payments higher than beneficiary

costs.

AGENCY AND OUTSIDE

REVIEWER COMMENTS

We sent a copy this letter to the Health Care Financing Administration, which elected not to

provide any comments. We also sent a copy of this letter to an outside reviewer who agreed

with its content, and provided technical comments, which we have incorporated where

appropriate.

-----

We are sending copies of this letter to the Honorable Nancy-Ann Min DeParle, Administrator

of the Health Care Financing Administration; appropriate congressional committees; and

others who are interested.
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12 GAO/HEHS-00-177R Medicare and Managed Care

If you or your staff have any questions, please call me at (202) 512-7119 or Carol Carter at

(312) 220-7711. Other major contributors include Iola A. D’Souza, Jennifer M. Dulac, and

Daniel K. Lee.

Sincerely yours,

Laura A. Dummit

Associate Director, Health Financing and

Public Health Issues

Enclosures - 2
ENCLOSURE I ENCLOSURE I

13 GAO/HEHS-00-177R Medicare and Managed Care

OBJECTIVES, SCOPE, AND METHODOLOGY

Managed care plan and cost and payment information at the diagnosis-related group

(DRG) level is not available in Health Care Financing Administration claims data or

Medicare cost reports. To obtain these data, we needed to survey hospitals, and we chose

to focus only on those with cost accounting systems that would allow these hospitals to

provide the detailed information we required. We requested payment and cost

information by payer for 15 DRGs and for all inpatient cases. The DRGs were selected to

represent a mix of medical and surgical cases, more and less complex cases, and acute and

chronic cases.

We sent surveys to 121 hospitals and received responses from 68 hospitals.

Because of data limitations and inconsistencies, we could use the data from only

51 responding hospitals in 28 states. The hospitals in our study are not

representative of the hospital industry. The responding hospitals are generally

larger than the national average, and only one is a rural facility. The majority of

the responding hospitals (35) in our sample are teaching facilities.

We categorized hospital revenues into one of five payer groups (Medicare, managed care,

Medicaid, traditional private insurance, and other) on the basis of discussions with staff

from individual hospitals. We used a broad definition of managed care that included HMO

plans, preferred provider organization plans, and point-of-service plans. The “other”

category included revenues from the Civilian Health and Medical Program of the

Uniformed Services (CHAMPUS), charity, grants, miscellaneous/unknown, self-pay,

workers’ compensation, and the Department of Veterans Affairs. Medicare managed care

revenues were grouped into the “other” category because for most hospitals their share of

revenues was small. Medicaid managed care revenues were included in the Medicaid

category.

In addition to collecting hospital data, we interviewed industry analysts about

hospital and managed care plan contracting strategies.

We used data from the June 1999 InterStudy Competitive Edge Regional Market

Analysis20 to determine the level of managed care plan market enrollment in each

hospital’s MSA. Hospitals were grouped according to the level of HMO enrollment

in their market area, defined as the percentage of the population within the

hospital’s MSA enrolled in an HMO. Low enrollment was defined as less than 16

percent of the population enrolled in an HMO, medium enrollment between 16 and

40 percent, and high enrollment as greater than 40 percent.

20Changes in MSA Enrollment, Subdirectories: Metropolitan Markets, Part III:

Regional Market Analysis, The InterStudy Competitive Edge (St. Paul, Minn.:

InterStudy Publications, June 1999).
ENCLOSURE II 

14 GAO/HEHSMedicare and Managed Care

AVERAGE MEDICARE AND MANAGED CARE PLAN PER-CASE 

PAYMENT RATIOS AND COST RATIOS FOR SELECT

Payments 

DRGa Description

DRG

weigh Medicar

Managed

care plan

Ratio of

managed care

plan payment

to Medicare Medica

Medical cases

014 Cerebrovascular disorders 1.19 $6,398 $6,556 1.02 $6,1079 Respiratory infections with ccb 1.63 8,722 10,148 1.16 8,0088 Chronic obstructive pulmonary disease 0.97 5,007 5,042 1.01 4,6089 Simple pneumonia with cc 1.10 5,762 5,068 0.88 5,2127 Heart failure and shock 1.02 5,301 4,905 0.93 4,9140 Angina pectoris 0.60 3,109 2,941 0.95 2,8294 Diabetes 0.76 4,133 3,893 0.94 4,3

Surgical cases

106 Coronary bypass with cardiac

catheterization

5.58 31,000 24,942 0.80 24,4

112 Percutaneous cardiovascular procedures 2.00 10,853 7,753 0.71 8,8148 Major small and large bowel procedures

with cc

3.39 18,791 15,150 0.81 14,8

209 Joint and limb reattachment procedures of

lower extremity

2.23 11,553 8,704 0.75 10,9

210 Hip and femur procedures excluding major

joint procedures with cc

1.83 9,718 10,311 1.06 9,3

302 Kidney transplant 3.76 41,087 35,493 0.86 48,6306 Prostatectomy with cc 1.22 6,295 4,542 0.72 5,2

481 Bone marrow transplant 11.28 76,271 62,784 0.82 54,1

aDiagnosis-related group.
ENCLOSURE I ENCLOSURE I

bWith complications or comorbidity.Source: GAO analysis of fiscal year 1998 revenue and cost data for 51 hospitals.(101842)