Back to Top Skip to main content

Health.mil: the official website of the Military Health System (MHS) and the Defense Health Agency (DHA)

Utility Navigation Links

TRICARE Reimbursement Manual 6010.61-M, April 1, 2015
Diagnosis Related Groups (DRGs)
Chapter 6
Section 6
Hospital Reimbursement - TRICARE Diagnosis Related Group (DRG)-Based Payment System (DRG Weighting Factors)
Issue Date:  October 6, 1987
Authority:  32 CFR 199.14(a)(1)
Revision:  
1.0  APPLICABILITY
This policy is mandatory for reimbursement of services provided by either network or non-network providers. However, alternative network reimbursement methodologies are permitted when approved by the Defense Health Agency (DHA) and specifically included in the network provider agreement.
2.0  ISSUE
What is the purpose of DRG weighting factors under the TRICARE DRG-based payment system, and how will they be calculated, used, and updated?
3.0  POLICY
3.1  DRG Weighting Factors. The DRG weights reflect the relative resource consumption associated with each DRG. That is, the weight reflects the average resources required by all hospitals to treat a case classified as a specific DRG relative to the resources required to treat cases in each of the other DRGs. All weights are standardized to a theoretical average weight of 1.0 which is the average weight of all TRICARE claims in the data base. (This is the relative weight of the national average charge per discharge.)
3.2  Calculation of DRG weights. The TRICARE weights are derived from charges. They will not reflect standardization for capital or direct medical education expenses, but the charges on which they are based are standardized for Indirect Medical Education (IDME) differences. The TRICARE DRG weights will be discharge-weighted. Specifically, the denominator used to calculate each weight represents the national average charge per discharge for the average patient. In order to calculate the DRG relative weights the following procedures will be followed.
3.2.1  Grouping of charges. All discharge records in the database will be grouped by DRG using the current TRICARE grouper program.
3.2.2  Remove DRGs that represent discharges with invalid data or diagnoses insufficient for DRG assignment purposes. Therefore, these records are removed from the database.
3.2.3  IDME standardization. To standardize the charges for the cost effects of IDME factors, each teaching hospital’s charges will be divided by 1.0 plus the following ratio on a hospital-specific basis:
•  For admissions occurring during Fiscal Year (FY) 2016, the above formula applies.
3.2.4  Calculation of DRG average charges. After the standardization for IDME, an average charge for each DRG category will be computed by summing charges in a DRG and dividing that sum by the number of records in the DRG.
3.2.5  Calculation of national average charge per discharge. A national average charge per discharge will be calculated by summing all charges and dividing that sum by the total number of records from all DRG categories.
3.2.6  DRG relative weights. DRG relative weights will be calculated for each DRG category by dividing each DRG average charge by the national average charge.
3.3  Empty and low-volume DRGs. For any DRG with less than 10 occurrences in the TRICARE database, the Director, DHA, or designee, has the authority to consider alternative methods for estimating TRICARE weights in these low-volume DRG categories.
3.4  Updating DRG weights. Medicare is required to adjust the DRG relative weights under the Prospective Payment System annually to ensure that the weights reflect the use of new technologies and other practice pattern changes that affect the relative use of hospital resources among DRG categories. Likewise, every year during the annual DRG update DHA will recalculate all DRG weights using TRICARE charge data and the methodology described above.
- END -

Utility Navigation Links

DoD Seal

tricare.mil is the offical website of the Defense Health Agency (DHA) a component of the Military Health System

TRICARE is a registered trademark of the Department of Defense (DoD), DHA. All rights reserved.

CPT only © 2006 American Medical Association (or such other date of publication of CPT). All Rights Reserved.

If you have a question regarding TRICARE benefits, please go to the TRICARE Contact Us page page.
If you need help with technical/operational issues, please go to the TRICARE Manuals Online Help Resources page.

The appearance of hyperlinks to external websites does not constitute endorsement by the DHA of these websites or the information, products or services contained therein. For other than authorized government activities, the DHA does not exercise any editorial control over the information you may find at other locations. Such links are provided consistent with the stated purpose of this DoD website.

v4.5.7082.22297

DHA Address: 7700 Arlington Boulevard | Suite 5101 | Falls Church, VA | 22042-5101

Some documents are presented in Portable Document Format (PDF). A PDF reader is required for viewing. Download a PDF Reader or learn more about PDFs.