Nursing Cost by DRG: Nursing Intensity Weights

Although diagnosis-related group (DRG) reimbursement is used for Medicare and many other payors, nursing—the largest portion of hospital costs—is not specifically identified and quantified in deriving payments in any of the DRG reimbursement systems except that of New York State. In New York, nursing costs are allocated to each DRG in payment rate formulation by means of nursing intensity weights (NIWs)—relative values reflecting the quantity and types of nursing services provided to patients in each DRG. In the absence of charges for nursing services, these NIWs are derived from scores for each DRG provided by a representative panel of nurses through a modified Delphi technique. NIWs have been shown to correlate with hospitals' nursing costs per day. They are used to set cost-based payment weights, thereby avoiding compression caused by using flat cost-to-charge or cost-per-day averages for all acute and intensive care patients.