An inpatient or hospital classification system used to pay a hospital or other provider for their services and to categorize illness by diagnosis and treatment. A classification scheme used by Medicare that clusters patients into 468 categories on the basis of patients' illnesses, diseases and medical problems. Groupings of diagnostic categories drawn from the International Classification of Diseases and modified by the presence of a surgical procedure, patient age, presence or absence of significant comorbidities or complications, and other relevant criteria. System involving classification of medical cases and payment to hospitals on the basis of diagnosis. Used under Medicare's prospective payment system to reimburse inpatient hospitals, regardless of the cost to the hospital to provide services.
Health benefit payments to hospitals under Medicare, Part A, are now based upon a prospective payment system that utilizes a predetermined rate per case or type of discharge. Rates are adjusted annually and to reflect regional and wage differences. DRGs are based upon the patient's diagnosis, age and sex, treatment procedure, and discharge status.
A system by which hospital procedures are rated in terms of cost and taking into account the intensity of services delivered. A standard flat rate per procedure is derived from this scale, which is paid by Medicare under the Prospective Payment System (PPS), regardless of the cost to the hospital for providing that service. Back to the top of the page