DRG cost weights - getting it right

Inadequate cost weights are a major problem in casemix funding systems. Clinicians should understand the basis for the cost weights underpinning th e hospital payment system in their State and their own hospital. Clinician managers need valid patient costing data if they are to benchmark and improve cost-effectiveness while maintaining and enhancing quality. The cost model approach for determining cost weights has inherent limitatio ns, and, the alternative, detailed patient costing, requires efficient hosp ital information technology systems. A simplified approach to patient costs , which uses existing hospital data systems, may be useful for smaller hosp itals. A better classification system and funding formulas incorporating reliable cost weights derived from patient costing should overcome many of the defic iencies in the current casemix payments systems.