Diagnosis related groups (DRGs) were originally developed to provide product definitions for the output of hospitals. They can serve as a basis for budgeting, cost control, and quality control in hospitals. They were adopted by Medicare in 1983 to serve as a basis for a prospective payment system (PPS) for US hospitals. This system has resulted in savings of more than $50 billion in Medicare hospital payments through 1990 and extended the solvency of the Medicare Hospital Trust Fund well into the next century. Many other payers for hospital care have adopted DRG systems, including state Medicaid programs and private insurers, such as Blue Cross. More than 20 countries are currently developing or have adopted DRG-based systems for managing and financing hospital care.

No abstract

No abstract

No abstract

This paper approaches the design of a regional or statewide hospital rate-setting system as the underpinning of a larger system which permits a regulatory agency to satisfy the requirements of various public laws now on the books or in process. It aims to generate valid interinstitutional monitoring on the three parameters of cost, utilization, and quality review. Such an approach requires the extension of the usual departmental cost and budgeting system to include consideration of the mix of patients treated and the utilization of various resources, including patient days, in the treatment of these patients. A sampling framework for the application of process-based quality studies and the generation of selected performance measurements is also included.

No abstract

The idea of using casemix classification to manage hospital services is not new, but has been limited by available technology. It was not until after the introduction of Medicare in the United States in 1965 that serious attempts were made to measure hospital production in order to contain spiralling costs. This resulted in a system of casemix classification known as diagnosis related groups (DRGs). This paper traces the development of DRGs and their evolution from the initial version to the All Patient Refined DRGs developed in 1991.

No abstract