Weighted activity unit effect: evaluating the cost of diagnosis-related group coding.

Background: Activity-based funding (ABF) is a means of healthcare reimbursement, where hospitals are allocated funding based on the number and mix of clinical activity. The ABF model is based solely on Australian refined diagnosis-related group (AR-DRG) classifications of hospital encounters. Each AR-DRG is allocated a weighted activity unit (WAU) translating to cost value to determine ongoing funding allocations for each hospital annually.