• Article

Patient casemix classification for medicare psychiatric prospective payment

OBJECTIVE: For a proposed Medicare prospective payment system for inpatient psychiatric facility treatment, the authors developed a casemix classification to capture differences in patients' real daily resource use. METHOD: Primary data on patient characteristics and daily time spent in various activities were collected in a survey of 696 patients from 40 inpatient psychiatric facilities. Survey data were combined with Medicare claims data to estimate intensity-adjusted daily cost. Classification and Regression Trees (CART) analysis of average daily routine and ancillary costs yielded several hierarchical classification groupings. Regression analysis was used to control for facility and day-of-stay effects in order to compare hierarchical models with models based on the recently proposed payment system of the Centers for Medicare & Medicaid Services. RESULTS: CART analysis identified a small set of patient characteristics strongly associated with higher daily costs, including age, psychiatric diagnosis, deficits in daily living activities, and detox or ECT use. A parsimonious, 16-group, fully interactive model that used five major DSM-IV categories and stratified by age, illness severity, deficits in daily living activities, dangerousness, and use of ECT explained 40% (out of a possible 76%) of daily cost variation not attributable to idiosyncratic daily changes within patients. A noninteractive model based on diagnosis-related groups, age, and medical comorbidity had explanatory power of only 32%. CONCLUSIONS: A regression model with 16 casemix groups restricted to using 'appropriate' payment variables (i.e., those with clinical face validity and low administrative burden that are easily validated and provide proper care incentives) produced more efficient and equitable payments than did a noninteractive system based on diagnosis-related groups


Drozd, E., Cromwell, J., Gage, B., Maier, J., Greenwald, L., & Goldman, H. H. (2006). Patient casemix classification for medicare psychiatric prospective payment. American Journal of Psychiatry, 163(4), 724-732. DOI: 10.1176/appi.ajp.163.4.724