Diagnosis-related groups (DRGs) are a patient classification scheme that groups patients according to their principal diagnoses, presence of a surgical procedure, age, presence or absence of significant complications, or discharge status. The DRGs represent the most significant change in US health care since the advent of Medicare. They were originally developed as an alternative system to retrospective cost-based reimbursement at Yale University, New Haven, Conn, in the late 1960s and were revised as a patient classification system in 1975.1 They were first incorporated into a payment plan in New Jersey in 1980 and were introduced into Medicare in 1983. The per-case prospective payment system represents the basis for federal and state plans to control health care costs.2
HOW THE SYSTEM WORKS
The statistical technique used to assign patients to DRGs assumes that the types and quantities of resources consumed during hospitalization vary directly with length of stay. To
Greenberg LW. Diagnosis-Related Groups: Their Potential Impact on Pediatric Resident Training. Am J Dis Child. 1985;139(5):524–526. doi:https://doi.org/10.1001/archpedi.1985.02140070098046
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