Implementing patient-based costing to derive robust DRG weights for national reimbursement and hospital pathway management
Introduction Diagnosis-Related Group (DRG) payment systems depend on relative weights that approximate the average resource intensity of clinically coherent inpatient groups. When weights are weak - because costing is inconsistent, feeds are incomplete, or coding is unreliable - national tariffs can misprice care, destabilize provider incentives, and reduce confidence in performance analytics. In this essay I try to synthesize established approaches to patient-level costing (PLICS/ABC/TDABC) and DRG tariff setting, drawing on documented national programs (e.g., England’s National Cost Collection, Australia’s AHPCS/NEP process, and Germany’s InEK cost accounting scheme), and propose an implementable framework to (1) produce reliable national reimbursement weights, (2) embed auditability via a practical controls checklist (General Ledger (GL) reconciliation, feed completeness, allocation governance, coding QA/QC), and (3) operationalize patient-level costs for internal hospita...