Diagnosis-Related Groups (DRGs)

DRGs may not be familiar to many practice administrators as they are a payment method for hospitals.  Applied to all U.S. hospitals as a Medicare reimbursement method in 1983, DRGs are groups of hospital services clustered around diagnoses.

The theory of DRGs is that this reimbursement system would require hospital administrators to alter the behavior of the physicians and surgeons comprising their medical staffs.  (Are you thinking what I’m thinking about physician behavior?)

A defining moment in healthcare reimbursement was MS-DRG Grouper version 26.  It took effect October 1, 2008 with one main change: implementation of Hospital Acquired Conditions (HAC). Certain conditions are no longer considered complications if they were not present on admission (POA), which will cause reduced reimbursement from Medicare for conditions apparently caused by the hospital.

MS-DRG Grouper version 27 (pdf here) took effect as of October 1, 2009 and predominant changes are relatedhanges involved are mainly related to Influenza A virus subtype H1N1.

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