Funding and future diagnosis related group development

Area of Science:

• Health Services Research
• Healthcare Economics
• Medical Informatics

Background:

• Diagnosis Related Groups (DRGs) are a patient classification system used since 1982.
• DRGs link hospital patient casemix to incurred costs.
• The Health Care Financing Administration (HCFA) DRGs are foundational.

Purpose of the Study:

• Provide an overview of future directions for newer DRG systems.
• Outline a framework for understanding DRG use in hospital funding.
• Discuss DRGs for quality improvement and hospital output measurement.

Main Methods:

• Classification of patients into mutually exclusive groups based on principal diagnosis and other information.
• Review of existing DRG systems and their evolution.
• Description of a five-aspect framework for casemix-based budgeting.

Main Results:

• Newer DRG systems incorporate explicit severity of illness adjustments.
• Separate measures for likelihood of mortality are included in updated systems.
• Modern DRGs are more independent of underlying coding systems like ICD-10 and ICD-9-CM.

Conclusions:

• DRG systems are crucial for hospital funding, quality improvement, and output measurement.
• Advancements in DRG systems enhance accuracy in patient classification and cost allocation.
• The described framework supports effective implementation of casemix-based budgeting.