Diagnosis-related group assignment in laparoscopic and open colectomy: Financial implications for payer and provider

PURPOSE: In carefully matched patients, the length of hospital stay after laparoscopic colectomy is shorter than after open surgery. Higher operating room costs for laparoscopic surgery are offset by lower costs for hospitalization because of less utilization of pharmacy, laboratory, and nursing services. Clinical outcome is comparable. We examined the effect of the surgical approach for colectomy (open vs. laparoscopic) regarding the reasons for disease-related group assignment to disease-related group 148, and institutional cost under Part A of the U.S. Medicare system. METHODS: Colectomy patients were assigned to either disease-related group 148 (colorectal resection with complications) or disease-related group 149 (colorectal resection without complications) with significant institutional reimbursement implications (disease-related group 149, $8,3 10; disease-related group 148, $20,291). A total of 100 consecutive disease-related group 148 patients undergoing laparoscopic colectomy from July 2000 to September 2002 were identified from a prospective database and case-matched with 100 patients undergoing open colectomy. Patients were matched for gender, age, operative procedure, and pathology. A certified coder determined the reason(s) for disease-related group 148 assignment, which were grouped into: preoperative comorbidity, a combination of preoperative comorbidity/postopcrative complications, or postoperative complications alone. RESULTS: Significantly more lapararoscopy, patients were assigned to disease-related group 148 solely because of preoperative comorbidities (62 percent vs. 21 percent; P < 0.0001). Significantly more patients in the open surgery group were classified as disease-related group 148 solely because of postoperative complications (22 percent vs. 42 percent; P < 0.0001). An additional group of patients were assigned to the disease-related group 148 category based on a combination of preoperative and postoperative diagnoses (16 percent vs. 37 percent). The mean direct hospital costs were significantly less for laparoscopy, patients ($3971 vs. $5997; P = 0.0095). Increased cost to Part A of Medicare for 20 open surgery patients who "migrated" to discase-related group 148 because of postoperative complications was $239,620. CONCLUSIONS: Our data are the first to demonstrate that disease related group assignment can change solely because of a differential rate of postoperative complications for two competing operative techniques. This change occurred at twice the rate for open colectomy and resulted in significantly increascd cost to the insurer tinder a prospective payment program. The savings to the institution Coupled with the shortened length of stay offset the potential loss in revenue to the institution.