MS-DRG Base Rate Detection

Detect if a provider + payer has a consistent base rate structure. If so, impute missing DRGs using the detected base rate.

Why Base Rates

Many hospital contracts are structured as a single base rate multiplied by the CMS relative weight per DRG. For example: if a hospital's base rate is $10,000 and CMS assigns MS-DRG 470 (Major Joint Replacement) a relative weight of 2.04, the expected negotiated rate is $20,400.

Clear Rates uses two separate methods to detect base rates — they differ in what the MRF actually reports and where the detection happens.

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Method 1: MS-DRG Base Rate (from CMS Weights)

Source: imputations_msdrg_base_rates.sql → tmp_int_msdrg_base_rates

This method handles the standard case: the payer's MRF reports distinct dollar rates per DRG, and those rates are proportional to CMS relative weights.

For each observed rate, the implied base is computed as:

implied_base = ROUND(rate / CMS_weight, -1)   -- rounded to nearest $10

The most common implied base per (payer, network, provider, fiscal_year) is the detected base rate. It activates if:

Requirement	Value
Min observed DRG codes	> 10
Convergence	> 90% of observed DRGs share the same implied base

CMS weights are tested across all fiscal years (2015–2025) and the best-fitting year is selected.

Hospital X, UHC PPO

Observed rate — MS-DRG 470: CMS weight 2.04, reported rate = \$20,400 → implied base = \$10,000

Observed rate — MS-DRG 392: CMS weight 1.12, reported rate = \$11,200 → implied base = \$10,000

Observed rate — MS-DRG 291: CMS weight 0.89, reported rate = \$8,900 → implied base = \$10,000

Convergence check: 45 of 50 observed DRGs → implied base = \$10,000. 45 > 10 and 45/50 = 90% → activated.

Impute missing MS-DRG 871: CMS weight 3.50. Imputed rate = \$10,000 × 3.50 = \$35,000.

Detected base rate = $10,000 | MS-DRG 871 imputed at $35,000 | from tmp_int_msdrg_base_rates

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Method 2: MS-DRG Base Rate in MRF

Source: imputations_derived.sql → msdrg_base_rates_mrf CTE

This method handles a different contract pattern: the hospital MRF reports the same flat dollar amount for many DRG codes, rather than distinct rates scaled to CMS weights. The repeated flat amount is itself the base rate — payer then applies CMS weights to derive code-level payments.

The pipeline finds the most frequently occurring rate across all Inpatient MS-DRG codes for a (payer, network, provider):

imputed_rate = mrf_flat_rate × CMS_weight

Activation conditions:

• The flat rate appears for > 100 distinct MS-DRG codes
• The flat rate matches an existing raw rate in the BRIT table, or no raw/transformed rate exists for the ROID
• Obstetrics/nursery DRGs are excluded

Hospital Z, Cigna PPO

MRF pattern: 130 of 180 Inpatient MS-DRG entries in the hospital MRF report a flat rate of \$8,500 — regardless of DRG.

Frequency check: 130 > 100 → activated. Flat base = \$8,500.

Impute missing MS-DRG 291: CMS weight 0.89. Imputed rate = \$8,500 × 0.89 = \$7,565.

Detected MRF base rate = $8,500 | MS-DRG 291 imputed at $7,565 | from msdrg_base_rates_mrf in imputations_derived

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Summary

	Method 1	Method 2
MRF pattern	Distinct rates per DRG, proportional to CMS weights	Same flat rate repeated across many DRGs
What is detected	Implied base = rate ÷ CMS weight	Most common flat rate in MRF
Imputation formula	base × CMS weight	flat rate × CMS weight
Activation threshold	freq > 10 and convergence > 90%	freq > 100
Source table	tmp_int_msdrg_base_rates	CTE in imputations_derived.sql