An evaluation of pediatric-modified diagnosis-related groups

Pediatric-modified diagnosis-related groups (PM-DRGs) were designed to describe more accurately than DRGs differences in severity of illness and charges across pediatric patients. We report on an evaluation of PM-DRGs for use in prospective payment systems (PPSs). Data on pediatric discharges (i.e., patients 17 years of age or under) from 5 States and a national sample of 43 hospitals were used. PM-DRGs explained substantially more variation in resource use at the discharge level and hospital level. PM-DRGs improved classification of neonatal discharges by concentrating them into fewer categories and measuring birth weight more precisely.