Diagnosis related group prospective payment: implications for health care and medical technology

This paper reviews the major features of the new DRG prospective payment system which was introduced for the payment of hospitals under the Medicare program October 1, 1983 in the United States. It explores its general implications for the health sector, and then examines its specific implications for the development, diffusion, and utilization of medical technology. It concludes with some of the research questions that require investigation to provide an informed basis for modification to the payment system that will ensure that quality health care will be provided at an affordable cost.