Upcoding in a NHS∗

Evidence from the US pointed out, over the years, to the existence of upcoding in man-agement practices. Upcoding is defined as classifying patients in DRG codes associated with larger payments. The incentive for upcoding is not particular to private providers of care. Conceptually, any patient classification system that is used for payment purposes may be vulnerable to this sort of strategic behavior by providers. We document here that upcoding can also be present in a National Health Service (NHS) where public, Government owned and managed, hospitals have their payment (budget) tied to the classification of treatment episodes. Using DRG data from Portugal we found that upcoding is being used by hospitals to increased their budgets. In sum, upcoding happens in NHS too! ∗Gisele Braun was benefited from the financial support of Fundação para a Ciência e a Tecnologia- FCT