Analysis of the Conceptual Structure of the DRG Payments from a Cost-Accounting Point of View

In Germany hospital reimbursement follows the so-called dual financing. While investments are financed via public funds of the Federal States, the operating costs being financed by the health insurance companies. Prices for hospital services are not set in a free market-based pricing system and are rather the result of planned-economy decision. The intention behind the performance-based reimbursement is to provide economic safety for German hospitals and at the same time set incentives for technical efficiency. Basically, payment rates within the DRG system are based on historical full costs. From a cost-accounting point of view historical full costs are neither suitable for calculation purposes nor for technical efficiency. Against this background, the presented paper analyses the appropriateness of the conceptual structure of the DRG payments to achieve their underlying goals.