Comparing in‐patient classification systems: A problem of non‐nested regression models

Since 1983, hospitals in the United States have been receiving prospective payment for their in-hospital patient admissions covered under Medicare. Under such schemes each patient is placed in a group by a classification system, known as the Diagnosis Related Groups (DRG), and the hospital is reimbursed by the Health Care Financing Administration according to some predetermined group average, adjusted for hospital level characteristics, such as …