Use of Risk Adjustment Models for Provider Reimbursements

In this chapter, we will focus on the use of patient severity indices to determine the reimbursement to healthcare providers. In order to do this, we must first examine the standard practice of reimbursing hospitals for specific DRG codes, and for reimbursing other providers based upon a point system that designates the level of service. We especially want to investigate the problem of upcoding, or “gaming” in more detail to determine if it can be detected and corrected, so that providers are reimbursed based upon the actual level of care, and not upon better coding practices.