What DRG audits find in hospital bills

What is a DRG?

A DRG, or diagnosis-related group, is how Medicare and many insurers pay for a hospital stay. Instead of paying for each item on the bill, the payer assigns the stay to one group based on the diagnoses and procedures, and pays a set amount for that group. The itemized charges still appear on the bill, but the DRG decides the payment. Choose the wrong DRG, and the payment is wrong, sometimes by tens of thousands of dollars.

What audits did I run?

I designed DRG audit programs for Medicare Advantage, Medicaid and commercial plans, ran the DRG audit line at Concentra, and my company ran Medicare recovery audits in Region A.

How often did the audits find errors?

Of the cases we audited, roughly 30 percent or more turned up significant errors in the payer's favor, meaning the hospital had been paid more than the correct DRG allowed. That figure is from my own audit work, not a published study, and it describes cases picked for audit. It is not an error rate for hospital bills in general.

Does this still hold today?

Not in the same form. The DRG system has been reworked since my audit years. What has not changed is the underlying lesson: a hospital bill is a claim made up of codes, and the codes can be wrong in either direction.

Why this matters in litigation

In an injury case, a hospital stay is often the largest bill in the file. Whether the stay was paid by DRG or billed line by line changes how its reasonable value should be analyzed, and an opinion that ignores how the bill was actually coded can be taken apart on cross-examination.

For a case where that went badly wrong, read the $90,000 hospital bill that should never have been sent. To retain me, send the bills.