Diagnosis-Related Group Payment Systems and Hospital Efficiency, Quality, and Coding Behavior: A Systematic Review...

Diagnosis-related group (DRG)-based payment systems are used globally to incentivize hospital efficiency, yet their impact on clinical quality and documentation behavior remains variable. As Saudi Arabia implements the Australian Refined DRGs (AR-DRG) framework under Vision 2030, a synthesis of international evidence is required to inform sustainable rollout. This review examined the effects of DRG-based payment on hospital efficiency, quality, and coding behavior in studies published between 2010 and 2025. We searched PubMed, Scopus, Web of Science, Google Scholar, and the Saudi Digital Library for English-language reports published between January 1, 2010, and July 31, 2025. Only primary comparative or quasi-experimental studies were eligible for the evidence synthesis; systematic reviews and meta-analyses were used only for contextual comparison. Two reviewers independently performed screening, risk-of-bias assessment (Risk Of Bias In Non-randomized Studies of Interventions (ROBINS-I) for difference-in-differences and other quasi-experimental designs; Cochrane Effective Practice and Organisation of Care criteria for interrupted time series), and data extraction; findings were synthesized narratively because of heterogeneity. Six primary comparative studies from Germany, the United States, England, and China met the eligibility criteria. DRG-based payment was associated with a shorter average length of stay (LOS) in most but not all settings, with reductions reported in England and China, whereas the German national reform showed no systematic country-level reduction. Cost per case generally fell in regional pilot studies, with significant reductions observed in specific urban settings. Quality outcomes were mixed: 30-day readmission rates remained stable or decreased in specific pilot implementations, while mortality signals were inconsistent across settings. Strategic coding behavior was evident in some mature systems, where upcoding accounted for a substantial portion of the growth in high-intensity discharge categories, whereas coding-related incentives were associated with reduced provision of low-value services in other settings. Using Grading of Recommendations Assessment, Development, and Evaluations (GRADE), certainty was Moderate for the reduction in LOS and Very Low for readmission; other outcomes were not formally assessed. DRG-based payment is associated with reductions in average LOS in many settings, but its effects on clinical quality are heterogeneous and context-dependent. Robust quality monitoring and coding-audit frameworks should be considered and prospectively evaluated alongside any DRG implementation. For Saudi Arabia, prospective evaluation of the AR-DRG framework and the Saudi Billing System rollout, using pre-specified efficiency and quality indicators, is needed before conclusions can be drawn about local outcomes.