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The Diagnosis-Related Group (DRG) system was created as a means of classifying medical conditions or hospital cases into an estimated 500 groups, based on a criteria that integrates elements like hospital resource use
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File: MH11_MHDRGHCFA.rtf
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Please contact mike@paperstore.net or call and confirm the dates for the completion of your additional pages. History/Background The Diagnosis-Related Group (DRG) system was created as a
means of classifying medical conditions or hospital cases into an estimated 500 groups, based on a criteria that integrates elements like hospital resource use (McMahon, Fetter and Thompson, 1986).
The theory behind the development of the DRG system is that it would provide a basis for projecting possible resource allocation and the systems was later integrated into the Medicare
prospective payment system (P.P.S.) (McMahon, Fetter and Thompson, 1986). The DRG system is based on the criteria first created by Robert Fetter at Yale University in the early
1980s, backed by the then Health Care Financing Administration (HCFA), now know as the Centers for Medicare and Medicaid Services (CMS). Because the process of projecting costs for health
care and Medicare payment systems had become so complex, the need for the DRG system was defined by the need for more effective projections about costs. In essence, the
use of the system of diagnostic-related groups provides a fixed fee for each type of medical care or procedure, regardless of whether the costs that are expended for each individual
case fluctuate from this standard (Long Island Business News, 2002). The diagnostic-related groups (DRGs) are not only defined by specific conditions (like angina or diabetes), but also by
specific criteria that alter outcomes relative to patient health when viewing the same illness in the presence of varying mitigating factors (Long Island Business News, 2002). For example, diagnostic
groups relate medical diagnosis, but are further broken down into categories that note an awareness of medical factors that can influence patient outcomes, including the medical diagnosis, the treatments utilized,
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