Calculate the estimated hospital reimbursement for a specific Diagnosis-Related Group (DRG) based on base rates, relative weights, and geographic wage adjustments.
The hospital's standardized base amount per case.
Assigned weight based on diagnosis severity.
Portion of base rate adjusted by wage index.
Geographic adjustment factor for labor costs.
IME, DSH, or Outlier payments.
Labor Portion (Adjusted):$0.00
Non-Labor Portion:$0.00
Adjusted Base Rate:$0.00
DRG Payment (Pre-addons):$0.00
Add-on Payments:$0.00
Total Reimbursement: $0.00
Understanding DRG Reimbursement
The Diagnosis-Related Group (DRG) system is the framework used by Medicare and many private payers to classify hospital cases into groups that are expected to have similar hospital resource use. This calculator helps hospital finance teams, medical coders, and revenue cycle managers estimate the expected payment for inpatient stays.
How the DRG Formula Works
The calculation of a DRG payment involves several specific components that standardize costs while accounting for geographic economic differences and patient severity. The core formula used in this calculator is:
Base Rate: This is the standardized amount the hospital receives per case before specific adjustments. It includes operating and capital rates.
DRG Relative Weight: A multiplier assigned to each specific DRG code (e.g., MS-DRG 470 for Joint Replacement) reflecting the average resources required to treat that condition compared to the average patient.
Wage Index: Hospitals in areas with higher labor costs receive higher payments. This index adjusts the labor portion of the base rate.
Labor Share: Typically, about 60% to 70% of the base rate is considered labor-related and is subject to the wage index adjustment.
Additional Payment Adjustments
Hospitals often receive payments above the standard DRG rate based on specific facility characteristics or case outliers:
DSH (Disproportionate Share Hospital): Additional funding for hospitals serving a significantly disproportionate number of low-income patients.
IME (Indirect Medical Education): Adjustments for approved teaching hospitals.
Outlier Payments: Extra reimbursement for extremely high-cost cases to protect hospitals from significant financial losses.
Why Accurate DRG Calculation Matters
For healthcare providers, accurate DRG forecasting is essential for:
Revenue Cycle Management: Validating that payers are reimbursing at the contracted or statutory rates.
Budgeting: Forecasting revenue based on case mix index (CMI) trends.
Contract Negotiation: Understanding the financial impact of base rate changes during payer contract renewals.
function calculateDRG() {
// Get Input Values
var baseRate = document.getElementById('baseRate').value;
var drgWeight = document.getElementById('drgWeight').value;
var laborShare = document.getElementById('laborShare').value;
var wageIndex = document.getElementById('wageIndex').value;
var adjustments = document.getElementById('adjustments').value;
// Parse Values (Default to 0 if empty)
var base = baseRate ? parseFloat(baseRate) : 0;
var weight = drgWeight ? parseFloat(drgWeight) : 0;
var laborPct = laborShare ? parseFloat(laborShare) / 100 : 0.68; // Default 68%
var wageIdx = wageIndex ? parseFloat(wageIndex) : 1.0;
var adds = adjustments ? parseFloat(adjustments) : 0;
// Validation
if (base <= 0 || weight <= 0) {
alert("Please enter valid positive numbers for Base Rate and DRG Weight.");
return;
}
// Calculation Logic
// 1. Calculate the Labor Portion adjusted by Wage Index
var laborAmount = base * laborPct * wageIdx;
// 2. Calculate the Non-Labor Portion
var nonLaborPct = 1 – laborPct;
var nonLaborAmount = base * nonLaborPct;
// 3. Adjusted Base Rate for this specific hospital location
var adjustedBase = laborAmount + nonLaborAmount;
// 4. Multiply by DRG Weight (Case Mix)
var preAddonPayment = adjustedBase * weight;
// 5. Total Payment including Add-ons
var totalPayment = preAddonPayment + adds;
// Display Results
document.getElementById('laborResult').innerHTML = formatCurrency(laborAmount);
document.getElementById('nonLaborResult').innerHTML = formatCurrency(nonLaborAmount);
document.getElementById('adjustedBaseResult').innerHTML = formatCurrency(adjustedBase);
document.getElementById('preAddonResult').innerHTML = formatCurrency(preAddonPayment);
document.getElementById('addonsResult').innerHTML = formatCurrency(adds);
document.getElementById('totalResult').innerHTML = formatCurrency(totalPayment);
// Show Result Box
document.getElementById('resultBox').style.display = 'block';
}
function formatCurrency(num) {
return '$' + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}