A classification based upon an individual's medical diagnosis at the time the individual is admitted to a hospital for treatment that is funded by Medicare and which determines in advance how much Medicare will reimburse the hospital for treatment regardless of the length of the hospital stay. The DRG classification is part of Medicare's Prospective Payment System (PPS), designed to help contain costs. This has resulted in shorter hospital stays and an increase in nursing home admissions since its implementation in 1984. Also called Diagnosis Related Groups.
An inpatient classification system used by the US Dept. of Health and Human Services/Health Care Financing Administration (HCFA) to determine hospital reimbursement for Medicare patients. The DRG system categorizes patients with similar medical diagnoses, treatment patterns, and statistically comparable lengths of stay in a hospital, and attaches a reimbursement rate to each DRG. Some managed care plans use the DRG payment method for setting payment rates and selecting providers.