Prospective payment for outpatient mental health services: evaluation of diagnosis-related groups

General medical hospitals are applying diagnosis-related groups (DRGs) to define their case mix so as to make possible prospective estimates of costs per case. We apply DRGs to 1000 adults registered through an outpatient clinic. Results, based on 837 patients in eight DRGs, provide no reason to anticipate that DRGs or other selected variables thought to be associated with prognosis will help predict costs of most outpatient mental health care. We explain why these results should not be surprising, and we describe an alternative perspective that may be necessary in order to develop a viable prospective payment system that is based on costs per case.