A Diagnosis-Related Group (DRG) is a classification system used in the U.S. healthcare system to categorize hospital inpatient stays based on diagnoses, procedures, patient demographics, and resource utilization. DRGs help standardize hospital payments by grouping patients with similar clinical conditions and expected treatment costs.
Medicare and many private insurers use DRGs to determine fixed reimbursement rates for hospital services, rather than paying for each individual service provided. This system encourages hospitals to operate efficiently while ensuring patients receive appropriate care based on their diagnosis and medical needs.
Example of Diagnosis-Related Group (DRG) are:
DRGs play a crucial role in healthcare cost control and hospital reimbursement, ensuring predictable payments for inpatient care. By standardizing payments, DRGs incentivize hospitals to manage resources efficiently while maintaining quality care for patients.
For healthcare providers, understanding DRGs is essential for medical coding, billing, and financial planning. Accurate DRG classification helps hospitals receive appropriate compensation, while improper coding can lead to reimbursement delays or audits. Additionally, DRGs contribute to health policy and cost analysis, helping policymakers assess hospital performance and control Medicare expenditures.