In the United States, a prospective payment method used in the Medicare Program, in which payment is not based on the number and kinds of medical services that a patient receives, but instead is based on the diagnosis of each patient.----------[ Back

Classification system developed at Yale University using 383 major diagnostic categories based on the ICD-9 codes. A system for determining case mix, used for payment under Medicare's PPS and by some other payers. The DRG system classifies patients into groups based on the principal diagnosis, type of surgical procedure, presence or absence of significant comorbidities or complications, and other relevant criteria. DRGs are intended to categorize patients into groups that are clinically meaningful and homogeneous with respect to resource use. Medicare's PPS currently uses 490 mutually exclusive DRGs, each of which is assigned a relative weight that compares its costliness to the average for all DRGs.

The system the Medicare program uses to determine payments to hospitals. Medicare pays a certain amount of money depending on the diagnosed illness.