Cost Estimate Methodology - Overview
To estimate cost from hospital charge data, we used the cost-to-charge ratio (CCR) files available to the Agency of Healthcare Research and Quality’s (AHRQ) Healthcare Cost and Utilization Project partners.  The files provide ratios that allow the conversion of charge data to cost estimates.  They are constructed using all-payer, inpatient cost, and charge information from the detailed cost reports by hospitals to the Centers for Medicare and Medicaid Services and accounting files from the American Hospital Association.  These files provide an estimate of all-payer inpatient cost-to-charge for hospitals in states that participate in the Cost-to-Charge Central Distributor, of which Hawaii is a participant. To account for differences in utilization of services and cost at the APR-DRG level, an adjustment factor (AF) (available from the AHRQ) was also applied to the Hawaii inpatient data. 

 

To compute estimated cost the following formula was used:

(Hospital Charges * CCR * AF) = Estimated cost