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Understanding UCR Inpatient Fees used on DRGs

Christine Woolstenhulme, QMC QCC CMCS CPC CMRS

Find-A-Code uses Usual, Customary, and Reasonable (UCR) fees to help determine the amount paid for a medical service based on a certain geographic area. This article will address the information and pricing for Hospital and Inpatient fees based on Diagnosis Related Groups (DRGs). The UCR fees and information come directly from a trusted data source, the Veterans Administration (VA). Understanding UCR fees used by the VA can be a complicated process, but we have gathered information to help clarify how these fees are used and where they come from, including some of our customers' questions, with answers from the VA.   

VA Methodology

The VA Reasonable Charges methodology used by the VA to develop the charges are explained in 38 CFR 17.101(b):  https://www.law.cornell.edu/cfr/text/38/17.101

The data sources used to develop the charges are shown in the link below under “Reasonable Charges Data Sources”: https://www.va.gov/communitycare/revenue_ops/payer_rates.asp.

FAQs/Questions asked by Customers to the VA

  1. Are the Ancillary charges in addition to the per diem rates? If the VA is basing the cost off MS-DRGs then are they following the LoS rules? 

The VA utilizes Medpar (Medicare Provider Analysis and Review file) and Commercial data sources to establish 3 separate per-diem rates for Room and Board (R&B), ICU R&B, and Ancillary Services.  We start with a per admit amount based on our data sources which are then converted to a per diem amount based on the Medpar LoS and Commercial LoS.   

  1. DRG 469 has 4.7 Geometric Mean LoS and 6 Arithmetic Mean LoS, so is the per diem based on per day or the DRG LoS 4.7?  

We do not use CMS LoS to establish our per-diems. We utilize the LoS associated with our data sources to develop our per diem rate per MS-DRGs. 

  1. RE: the ancillary fees, is this only a onetime charge per stay? Based on the LoS (and not daily room and ancillary services)? We are using V3.26 Inpatient. 

The Ancillary charge is a per-diem rate that is used on a per-day base, this is not a per admit charge.

Ancillary Services

Ancillary services are support services of other departments for care received while in the hospital, other than room and board, used to diagnose or treat a medical condition. 

According to the VA, these services include:

  • Audiology (hearing)
  • Blind and Vision Rehabilitation
  • Chiropractic Services
  • Dental
  • Diagnostic Laboratory
  • Nutrition and Food Service
  • Nuclear Medicine (imaging)
  • Occupational Therapy
  • Pharmacy
  • Physical Therapy
  • Prosthetics (artificial limbs, equipment, devices)
  • Radiology (x-rays and imaging)
  • Radiation Oncology (cancer care)
  • Recreation and Creative Arts Therapies (music, art, dance and drama)
  • Respiratory Therapy
  • Social Work (housing, discharge planning, family support)
  • Speech/Language Pathology (speech, language, voice, fluency, cognition, and swallowing)
  • Traumatic Brain Injury


Per-Diems are a flat rate paid for the hospitalization or time the patient resides in an SNF, made on the basis of prospectively determined rates, and applied on a per discharge basis using DRGs with the exception of ancillary fees with is a daily per diem. DRGs are a fixed amount for a patient stay in a standard room, ICU, SNF, or partial hospitalization.