Part 2, Responding to PPS. Development and interpretation of the diagnosis-related groups (DRGs)

As they are now, defined, the DRGs form a manageable, clinically coherent set of patient classes that relate a hospital's case mix to the resource demands and associated costs experienced by the hospital. DRGs are defined based on the principal diagnosis, secondary diagnoses, surgical procedures, age and discharge status of the patients treated. Through DRGs, hospitals can gain an understanding of the patients being treated, the costs incurred and within reasonable limits, the services expected to be required. The classification of patients into DRGs is a constantly evolving process. As coding schemes change, as more comprehensive data is collected or as medical technology or practice changes, the DRG definitions will need to be reviewed and revised.