Analyzing Medicare Inpatient Hospital Trends (2021–2023): Cost, Utilization, and Reimbursement Insights Using DRG-Based Analysis

Abstract: This analysis explores three years of Medicare inpatient hospital payment trends, focusing on how hospitals are reimbursed for different types of care. By examining data across hundreds of Diagnosis-Related Groups (DRGs), a consistent pattern emerges: hospitals often receive significantly less from Medicare than what they charge—particularly for complex treatments like sepsis care, transplants, and long ICU stays. Even as patient volumes recovered following the COVID-19 peak, the gap between what’s billed and what’s paid has not narrowed. Using a clustering method (KMeans), the study groups DRGs based on financial patterns. One group, in particular, stands out—high-cost services that regularly bring in lower reimbursement. This mismatch between cost and payment raises concerns for hospitals that handle the most intensive care, especially in urban areas where operating costs are already high. The data also suggest that current Medicare payment models may not adjust well for regional differences or rising healthcare expenses. Overall, this study offers practical insights for hospitals and policymakers seeking to better align reimbursement with real-world care and cost. Keywords: inpatient hospital analytics, diagnosisrelated group (DRG), healthcare costs, reimbursement, paymenttocharge ratio, utilization trends, clustering, inflationadjusted revenue, policy implications. Title: Analyzing Medicare Inpatient Hospital Trends (2021–2023): Cost, Utilization, and Reimbursement Insights Using DRG-Based Analysis Author: Rohan Desai International Journal of Novel Research in Computer Science and Software Engineering ISSN 2394-7314 Vol. 12, Issue 3, September 2025 - December 2025 Page No: 1-7 Novelty Journals Website: www.noveltyjournals.com Published Date: 08-September-2025 DOI: https://doi.org/10.5281/zenodo.17077127 Paper Download Link (Source) https://www.noveltyjournals.com/upload/paper/Analyzing%20Medicare%20Inpatient-08092025-3.pdf