Diagnosis-related groups

Diagnosis-related groups

Diagnosis-related groups (DRGs) are a system to classify hospital cases into one of originally 467 groups, with the purpose of facilitating payment of services. This system was developed in the United States and is used in various forms around the world to determine how much Medicare pays the hospital, since patients within each category are similar clinically and are expected to use the same level of hospital resources.

History

The concept of DRGs was developed in the early 1980s at Yale University by Robert B. Fetter and John D. Thompson. The system was designed to provide a framework for Medicare and other health insurance programs to reimburse hospitals for the care of patients. The goal was to create a more efficient and equitable payment system that would encourage hospitals to reduce costs and improve quality of care.

Structure

DRGs are assigned based on the principal diagnosis, secondary diagnoses, surgical procedures, age, sex, and discharge status of the patient. Each DRG has a "weight" that reflects the average resources used to treat patients in that group. The payment to the hospital is determined by multiplying the DRG weight by a fixed dollar amount, known as the "base rate."

Implementation

The implementation of DRGs has led to significant changes in hospital management and operations. Hospitals are incentivized to reduce unnecessary tests and procedures, shorten hospital stays, and improve efficiency. However, there are concerns that DRGs may lead to "upcoding," where hospitals classify patients into higher-paying DRGs than necessary.

International Use

While DRGs were developed in the United States, many other countries have adopted similar systems. For example, Australia uses the Australian Refined Diagnosis Related Groups (AR-DRGs), and Germany uses the German Diagnosis Related Groups (G-DRGs). Each country adapts the system to fit its own healthcare needs and policies.

Criticisms

Critics of DRGs argue that the system can lead to reduced quality of care, as hospitals may discharge patients prematurely to minimize costs. There is also concern about the administrative burden of coding and classifying patients into DRGs. Additionally, the system may not adequately account for the complexity of certain cases, leading to underpayment for some hospitals.

Also see

• Medicare (United States)
• Healthcare in the United States
• Hospital administration
• Health economics
• Medical coding