Diagnosis-related group

Diagnosis-related group (DRG) is a system to classify hospital cases into one of originally 467 groups, with the intent of identifying the products that a hospital provides. DRGs are assigned by a "grouper" program based on International Classification of Diseases diagnoses, procedures, age, sex, discharge status, and the presence of complications or comorbidities. DRGs have been used since 1983 to determine how much Medicare pays the hospital for each "product", since patients within each category are similar clinically and in terms of the resources they use.

Overview

DRGs are part of a broader category known as case-mix index, which is used in healthcare to describe the diversity of the patient population and the complexity of their needs. The DRG system is a means of categorizing patients into groups that are clinically coherent and homogeneous in terms of costs. This system allows for a fixed reimbursement for patient care, encouraging efficiency in the use of hospital resources.

History

The concept of Diagnosis-related groups (DRG) was developed in the late 1960s by researchers at Yale University. The system was implemented nationally by Medicare in 1983. The adoption of the DRG system marked a significant change in how hospitals were reimbursed for inpatient care, moving from a cost-based system to a fixed payment system.

Classification Process

The classification into a DRG depends on several factors:

• The principal diagnosis
• Secondary diagnoses (comorbidities or complications)
• Surgical procedures performed
• Patient's age and sex
• Discharge status

This information is abstracted from the patient's medical record and is used by the grouper software to assign each case to a DRG.

Impact

The DRG system has had a profound impact on hospital behavior and finances. It has encouraged hospitals to reduce the average length of stay and to discharge patients as soon as it is safe to do so. It has also led to an increase in outpatient services, as hospitals seek to avoid admissions that might not be reimbursed adequately under the DRG system.

Criticism

Critics of the DRG system argue that it may incentivize hospitals to underserve patients or to discharge them prematurely. There is also concern that the system does not adequately adjust for the severity of a patient's condition, potentially leading to underfunding of care for sicker patients.

Future Directions

The DRG system continues to evolve, with modifications to the classification system and the reimbursement formula. There is ongoing research into ways to improve the accuracy of the DRG classification and to ensure that it more accurately reflects the costs of care.

See Also

• Healthcare reimbursement
• Case-mix index
• International Classification of Diseases
• Medicare (United States)