Why do Medicare payments to hospitals vary for the same DRG?

September 20, 2009 by admin

A hospital can get a higher payment for any or all of the following reasons:

• It is classified as a teaching hospital
• It treats a high percentage of low-income patients (disproportionate share)
• It may treat unusually expensive cases (outlier payments)
• It pays its employees more compared to the national average because the hospital is in a high-cost area (wage index).Note: The hospital's wage index is calculated using hospitals' payroll records, contracts and other wage related documentation.