Medicare/DRG Based Pricing – The Future Of Cost Containment

Payments based on PPO discounts and negotiations/repricing based on provider charges are becoming increasingly ineffective cost containment solutions due to escalating healthcare provider charges. Recognizing this, many large insurers are already utilizing Medicare/DRG Based Repricing for reimbursement of some of their clients’ claims.

H.H.C. Group provides Medicare/DRG Based Pricing customized solutions to meet payors’ individual needs. H.H.C. Group utilizes propriety software and the most up to date Medicare fee schedules to accurately determine the provider payments. Additional solution elements include provider contracting, plan drafting assistance, appeals advocacy services, member educational materials, negotiation/repricing of claims for services not covered under Medicare and more.  

Unlike PPO discounts and charge based negotiations and repricing, Medicare/DRG Based Pricing is transparent, fair, rational, defensible and consistent. Medicare bases its prices on the combination of type of service, illness complexity, geographic location, and inpatient stays for hospital care information gathered nationwide and updated on a regular basis for all case types. Payments are based on documented costs and a reasonable profit margin. Finally, Medicare applies the same criteria and logic to every claim providing consistency across all providers.

 Payors using Medicare/DRG-Based Pricing instead of PPO discounts and negotiations/repricing based on billed charges can significantly reduce their medical claims costs. They can also command lower Stop Loss rates, enjoy operating efficiencies and no longer have to deal with repricing reversals or with PPO network and contract issues. They pay the same or similar amounts for the same services regardless of the provider.

  Medicare Based Pricing Savings Chart *

 Medicare     Percentage Reduction      Medicare    Percentage Reduction

Multiplier          in Claims Payments*    Multiplier    in Claims Payments*

   1.00                           74.9%                    1.30                   67.3% 

   1.10                           72.3%                    1.40                    64.8%

   1.20                           69.8%                    1.50                    62.2%

   1.25                           68.5%                    2.00                    49.7%

*Based on a review of 660  H.H.C. Group clients’ in-patient hospital claims



  • Leveraged Provider Contracting
  • Plan Document Recommendations
  • Medicare/DRG Based Repricing of In-Network, Out-of Network or all claims
  • Non-Medicare Covered Services Claims Handling
  • Medicare Non-Participating Provider Claim Handling
  • Plan Member Educational Materials
  • Appeal Advocacy Services


  Electronic Payment Processing, Provider Accounts Receivable Eliminators, MGU/Carrier Selection Consulting, Legal Appeal Advocacy Referrals

 To learn more about H.H.C. Group put Medicare/DRG Based Pricing solutions contact Joe Michaud, Executive Vice President of Sales, at 301-963-0762 ext. 110 or via e-mail at .