DRG - Diagnosis Related Group ~ ARLearningOnline

DRG:

DRG is a system designed to determine how much money will a hospital get paid for a particular treatment.
It is applicable for inpatient visits only.
It covers all charges associated from the time of admission to discharge.
For example - When a patient is admitted to a hospital and undergoes open-heart surgery. So, for open-heart surgery, a fixed payment amount is decided under DRG systems which will be paid to the hospital based on the care and resources, regardless of how much money it actually spends treating a patient.
If a hospital treats a patient for less money than the fixed reimbursement amount then the hospital makes money on that hospitalization. If a hospital spends more money on treatment than the fixed reimbursement amount then the hospital loses money on that hospitalization. This is called the Case Mix process.
Each inpatient hospital stay is assigned to one and only one DRG.
It does not include physician services. Physician services can be billed separately.
It is necessary to assign the correct DRG for a particular service to get accurate payment.

DRG system payment depends on the following factors:

DRG-Related Weight:

DRG Related Weight is assigned to each DRG which is useful in calculating hospital reimbursement amount.
The average relative weight is 1.0. DRGs with a relative weight of less than 1.0 are less resource-intensive to treat and are generally less costly to treat. DRGs with a relative weight of more than 1.0 generally require more resources to treat and are more expensive to treat. The higher the relative weight, the more resources are required to treat a patient with that DRG.

Hospital Payment Calculation:

Hospital payment = Hospital Base Rate * DRG Related Weight
Hospital base rate & Related Weight are decided by CMS. It changes every year and you can find these values on the CMS website.

DRG - Diagnosis Related Group