Methodology - Charge Analysis

Exclusions to Analysis

The charge analysis includes all inpatient records for all 15 selected DRGs with the following exceptions:

Construction of Reference Database

The reference database for charge is indexed by DRG and region. The methods used to construct this comparative database were similar to those employed in contructing the comparative database for in-hospital mortality.

Trim Methodology

Trimming methodology, similar to that performed for length of stay, was used to remove outlier charge values from the study population. Identification of outliers is imperative for the elimination of extreme scores that have a significant and unrepresentative impact on the mean (average). For the 1998 Hospital Performance Report the mean is the primary descriptive measure for charge. As described in the "Trim Methodology" section under "Length of Stay Analysis", outlier charges were trimmed after all other exclusions were satisfied; the "+/- 3.0 interquartile range" methodology was again utilized.

Since charges vary dramatically among regions for the same DRG, upper and lower trim points were calculated at the regional level. There are nine regions, therefore, nine different sets of upper and lower trim points were used for each DRG. Hospitals were consolidated into three "wide-area" regions after the trimming of outlier charges was performed.

Case-Mix Adjustment of Average Charge for Medical Heart Attack

For the 1998 Hospital Performance Report, average charges are reported for each of the fifteen DRGs. Using case-mix adjustment, a composite average charge was developed for the combined DRGs representing medical heart attack. The charges associated with DRGs 121, 122, and 123 are adjusted according to the number of patients and the relative cost associated with treating patients in each of those three DRGs.

First, regional relative weights for each of the three DRGs (121, 122, and 123) were determined using the reference database for charge. After all exclusions were satisfied and outlier trimming was performed, the relative weight for each of the three DRGs within each of the nine regions was calculated using the formula:

Relative Weight =

Average Charge for each DRG (either 121, 122, or 123)

Average Charge for DRGs 121, 122, 123 (combined)

Next, each hospital's case-mix index for medical heart attack was calculated.

A Hospital's Case-mix Index =

wpeB.jpg (760 bytes)(ni x RWi)

wpeC.jpg (760 bytes) ni

where, for a hospital located in a particular region

RWi = the regional relative weights (corresponding to DRGs 121, 122, 123)

ni = the number of cases (corresponding to DRGs 121, 122, 123)

and wpeD.jpgni = the total number of cases for the hospital for medical heart attack

Finally, for each hospital the trimmed and case-mix adjusted average charge for medical heart attack (DRGs 121, 122, and 123) is calculated.

Trimmed and Adjusted Charge =

Avg Charge for DRGs 121, 122, 123 (combined)

Case-Mix Index