A 3-year prospective study was conducted to establish the incidence of traumatic brain injury (TBI) and related characteristics of age, sex, length of stay (LOS), intensive care unit LOS (ICU/LOS), direct hospital charges, and reimbursement using a prospective DRG-based reimbursement system. The study identified TBI patients using ICD-9-Codes. The mean LOS for the two groups of patients with intracranial injury differed (p less than 0.05). Those with such an injury accompanied by a fracture stayed 1.8 days less in the ICU and 6.0 days less overall. Direct hospital charges for all TBI patients were $14,138,036 (mean, $11,645). Using Medicare weights and hospital-specific rates/DRG, the DRG reimbursement was $6,689,293. Thirty-day outliers (those who stayed ten times the geometric mean length of stay) provided an additional $526,389 leaving a total non-reimbursable figure of $6,922,354, or 49% of total charges. Of the 71 DRGs assigned to the study population, 15 reimbursed more than the actual charges. The severity of TBI victims and the complexity of caring for them in a Level I trauma center generates hospital charges of which only half are reimbursed through an all-payor DRG system. Strategies to correct what could be a financial disincentive are: documenting the uniqueness of this population to justify additional reimbursement, calculating a more precise mean LOS for TBI-related DRGs to more accurately identify outliers, and calculating DRG rates for TBI diagnoses derived from a representative sample at varying severity levels and hospitalized in facilities with and without rehabilitation services.