Diagnosis-related group
Encyclopedia
Diagnosis-related group is a system to classify hospital
cases into one of originally 467 groups. The 467th was "Ungroupable." The system of classification was developed as a collaborative project by Robert B Fetter, PhD of the Yale School of Management, and John D Thompson, MPH of the Yale School of Public Health. The system is also referred to as "the DRGs," and its intent was to identify the "products" that a hospital provides. One example of a "product" is an appendectomy. The system was developed at Yale, in anticipation of convincing Congress to use it for reimbursement, to replace "cost based" reimbursement that was used up to that point. DRGs are assigned by a "grouper" program based on ICD
(International Classification of Diseases) diagnoses, procedures, age, sex, discharge status, and the presence of complications or comorbidities
. DRGs have been used in the US since 1982 to determine how much Medicare pays the hospital for each "product", since patients within each category are similar clinically and are expected to use the same level of hospital resources. DRGs may be further grouped into Major Diagnostic Categories
(MDCs).
at Yale University
with the material support of the former Health Care Financing Administration (HCFA), now called the Centers for Medicare & Medicaid Services (CMS).
DRGs were first implemented in New Jersey
, beginning in 1980 with a small number of hospitals partitioned into three groups according to their budget positions - surplus, breakeven, and deficit - prior to the imposition of DRG payment.
The New Jersey experiment continued for three years, with additional cadres of hospitals being added to the number of institutions each year until all hospitals in the Garden State were dealing with this prospective payment system
.
DRGs were designed to be homogeneous units of hospital activity to which binding prices could be attached. A central theme in the advocacy of DRGs was that this reimbursement system would, by constraining the hospitals, oblige their administrators to alter the behavior of the physicians and surgeons comprising their medical staffs. Moreover, DRGs were designed to provide practice pattern information that administrators could use to influence individual physician behavior.
DRGs were intended to describe all types of patients in an acute hospital setting. The DRGs encompassed elderly patients as well as newborn, pediatric and adult populations.
The prospective payment system implemented as DRGs had been designed to limit the share of hospital revenues derived from the Medicare program budget, and in spite of doubtful results in New Jersey, it was decided in 1983 to impose DRGs on hospitals nationwide.
In that year, HCFA assumed responsibility for the maintenance and modifications of these DRG definitions. Since that time, the focus of all Medicare DRG modifications instituted by HCFA/CMS has been on problems relating primarily to the elderly population.
In 1987, New York state passed legislation instituting DRG-based payments for all non-Medicare patients. This legislation required that the New York State Health Department (NYHD) evaluate the applicability of Medicare DRGs to a non-Medicare population. This evaluation concluded that the Medicare DRGs were not adequate for a non-Medicare population. Based on this evaluation, the NYDH entered into an agreement with 3M
to research and develop all necessary DRG modifications. The modifications resulted in the initial APDRG, which differed from the Medicare DRG in that it provided support for transplants, high-risk obstetric care, nutritional disorders, and pediatrics along with support for other populations. One challenge in working with the APDRG groupers is that there is no set of common data/formulas that is shared across all states as there is with CMS. Each state maintains its own information.
In 1991, the top 10 DRGs overall were: normal newborn, vaginal delivery
, heart failure, psychoses
, cesarean section, neonate with significant problems, angina pectoris, specific cerebrovascular disorders, pneumonia
, and hip
/knee replacement
. These DRGs comprised nearly 30 percent of all hospital discharge
s.
The history, design, and classification rules of the DRG system, as well as its application to patient discharge data and updating procedures, are presented in the CMS DRG Definitions Manual (Also known as the Medicare DRG Definitions Manual and the Grouper Manual). A new version generally appears every October. The 20.0 version appeared in 2002.
In 2007, author Rick Mayes described DRGs as:
Before the introduction of version 25, many CMS DRG classifications were "paired" to reflect the presence of complications or comorbidities (CCs). A significant refinement of version 25 was to replace this pairing, in many instances, with a trifurcated design that created a tiered system of the absence of CCs, the presence of CCs, and a higher level of presence of Major CCs. As a result of this change, the historical list of diagnoses that qualified for membership on the CC list was substantially redefined and replaced with a new standard CC list and a new Major CC list.
Another planning refinement was not to number the DRGs in strict numerical sequence as compared with the prior versions. In the past, newly created DRG classifications would be added to the end of the list. In version 25, there are gaps within the numbering system that will allow modifications over time, and also allow for new MS-DRGs in the same body system to be located more closely together in the numerical sequence.
s (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.
Hospital
A hospital is a health care institution providing patient treatment by specialized staff and equipment. Hospitals often, but not always, provide for inpatient care or longer-term patient stays....
cases into one of originally 467 groups. The 467th was "Ungroupable." The system of classification was developed as a collaborative project by Robert B Fetter, PhD of the Yale School of Management, and John D Thompson, MPH of the Yale School of Public Health. The system is also referred to as "the DRGs," and its intent was to identify the "products" that a hospital provides. One example of a "product" is an appendectomy. The system was developed at Yale, in anticipation of convincing Congress to use it for reimbursement, to replace "cost based" reimbursement that was used up to that point. DRGs are assigned by a "grouper" program based on ICD
ICD
The International Statistical Classification of Diseases and Related Health Problems is a medical classification that provides codes to classify diseases and a wide variety of signs, symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or disease...
(International Classification of Diseases) diagnoses, procedures, age, sex, discharge status, and the presence of complications or comorbidities
Comorbidity
In medicine, comorbidity is either the presence of one or more disorders in addition to a primary disease or disorder, or the effect of such additional disorders or diseases.- In medicine :...
. DRGs have been used in the US since 1982 to determine how much Medicare pays the hospital for each "product", since patients within each category are similar clinically and are expected to use the same level of hospital resources. DRGs may be further grouped into Major Diagnostic Categories
Major Diagnostic Category
The Major Diagnostic Categories are formed by dividing all possible principal diagnoses into 25 mutually exclusive diagnosis areas. MDC codes, like DRG codes, are primarily a claims and administrative data element unique to the United States medical care reimbursement system...
(MDCs).
Purpose
The original objective of diagnosis related groups (DRG) was to develop a classification system that identified the "products" that the patient received. Since the introduction of DRGs in the early 1980s, the healthcare industry has evolved and developed an increased demand for a patient classification system that can serve its original objective at a higher level of sophistication and precision. To meet those evolving needs, the objective of the DRG system had to expand in scope. Today, there are several different DRG systems that have been developed in the US. They include:- Medicare DRG (CMS-DRG & MS-DRG)
- Refined DRGs (R-DRG)
- All Patient DRGs (AP-DRG)
- Severity DRGs (S-DRG)
- All Patient, Severity-Adjusted DRGs (APS-DRG)
- All Patient Refined DRGs (APR-DRG)
- International-Refined DRGs (IR-DRG)
History
The system was created by Robert Barclay Fetter and John D. ThompsonJohn D. Thompson
John Devereaux Thompson, R.N., M.S. was a nurse and professor at the Yale School of Public Health who co-invented the diagnosis-related groups that provided a basis for changing the system for hospital payment....
at Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
with the material support of the former Health Care Financing Administration (HCFA), now called the Centers for Medicare & Medicaid Services (CMS).
DRGs were first implemented in New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
, beginning in 1980 with a small number of hospitals partitioned into three groups according to their budget positions - surplus, breakeven, and deficit - prior to the imposition of DRG payment.
The New Jersey experiment continued for three years, with additional cadres of hospitals being added to the number of institutions each year until all hospitals in the Garden State were dealing with this prospective payment system
Prospective payment system
A prospective payment system is a means of determining insurance payments based on predetermined prices, commonly from Medicare. Payments are typically based on codes provided on the insurance claim.Examples of these codes include:...
.
DRGs were designed to be homogeneous units of hospital activity to which binding prices could be attached. A central theme in the advocacy of DRGs was that this reimbursement system would, by constraining the hospitals, oblige their administrators to alter the behavior of the physicians and surgeons comprising their medical staffs. Moreover, DRGs were designed to provide practice pattern information that administrators could use to influence individual physician behavior.
DRGs were intended to describe all types of patients in an acute hospital setting. The DRGs encompassed elderly patients as well as newborn, pediatric and adult populations.
The prospective payment system implemented as DRGs had been designed to limit the share of hospital revenues derived from the Medicare program budget, and in spite of doubtful results in New Jersey, it was decided in 1983 to impose DRGs on hospitals nationwide.
In that year, HCFA assumed responsibility for the maintenance and modifications of these DRG definitions. Since that time, the focus of all Medicare DRG modifications instituted by HCFA/CMS has been on problems relating primarily to the elderly population.
In 1987, New York state passed legislation instituting DRG-based payments for all non-Medicare patients. This legislation required that the New York State Health Department (NYHD) evaluate the applicability of Medicare DRGs to a non-Medicare population. This evaluation concluded that the Medicare DRGs were not adequate for a non-Medicare population. Based on this evaluation, the NYDH entered into an agreement with 3M
3M
3M Company , formerly known as the Minnesota Mining and Manufacturing Company, is an American multinational conglomerate corporation based in Maplewood, Minnesota, United States....
to research and develop all necessary DRG modifications. The modifications resulted in the initial APDRG, which differed from the Medicare DRG in that it provided support for transplants, high-risk obstetric care, nutritional disorders, and pediatrics along with support for other populations. One challenge in working with the APDRG groupers is that there is no set of common data/formulas that is shared across all states as there is with CMS. Each state maintains its own information.
In 1991, the top 10 DRGs overall were: normal newborn, vaginal delivery
Childbirth
Childbirth is the culmination of a human pregnancy or gestation period with the birth of one or more newborn infants from a woman's uterus...
, heart failure, psychoses
Psychosis
Psychosis means abnormal condition of the mind, and is a generic psychiatric term for a mental state often described as involving a "loss of contact with reality"...
, cesarean section, neonate with significant problems, angina pectoris, specific cerebrovascular disorders, pneumonia
Pneumonia
Pneumonia is an inflammatory condition of the lung—especially affecting the microscopic air sacs —associated with fever, chest symptoms, and a lack of air space on a chest X-ray. Pneumonia is typically caused by an infection but there are a number of other causes...
, and hip
Hip replacement
Hip replacement is a surgical procedure in which the hip joint is replaced by a prosthetic implant. Hip replacement surgery can be performed as a total replacement or a hemi replacement. Such joint replacement orthopaedic surgery generally is conducted to relieve arthritis pain or fix severe...
/knee replacement
Knee replacement
Knee replacement, or knee arthroplasty, is a surgical procedure to replace the weight-bearing surfaces of the knee joint to relieve the pain and disability of osteoarthritis. It may be performed for other knee diseases such as rheumatoid arthritis and psoriatic arthritis...
. These DRGs comprised nearly 30 percent of all hospital discharge
Discharge
Discharge in the context to expel or to "let go" may refer to:* A military discharge, issued when a member of the armed forces is released from service* Termination of employment, the end of an employee's duration with an employer...
s.
The history, design, and classification rules of the DRG system, as well as its application to patient discharge data and updating procedures, are presented in the CMS DRG Definitions Manual (Also known as the Medicare DRG Definitions Manual and the Grouper Manual). A new version generally appears every October. The 20.0 version appeared in 2002.
In 2007, author Rick Mayes described DRGs as:
CMS DRG version 25 revision
As of October 1, 2007 with version 25, the CMS DRG system resequenced the groups, so that for instance "Ungroupable" is no longer 470 but is now 999. To differentiate it, the newly resequenced DRG are now known as MS-DRG.Before the introduction of version 25, many CMS DRG classifications were "paired" to reflect the presence of complications or comorbidities (CCs). A significant refinement of version 25 was to replace this pairing, in many instances, with a trifurcated design that created a tiered system of the absence of CCs, the presence of CCs, and a higher level of presence of Major CCs. As a result of this change, the historical list of diagnoses that qualified for membership on the CC list was substantially redefined and replaced with a new standard CC list and a new Major CC list.
Another planning refinement was not to number the DRGs in strict numerical sequence as compared with the prior versions. In the past, newly created DRG classifications would be added to the end of the list. In version 25, there are gaps within the numbering system that will allow modifications over time, and also allow for new MS-DRGs in the same body system to be located more closely together in the numerical sequence.
MS-DRG version 26 revision
MS-DRG Grouper version 26 took effect as of October 1, 2008 with one main change: implementation of Hospital Acquired ConditionHospital Acquired Condition
A Hospital Acquired Condition is an undesirable situation or condition that affects a patient, that arose during a stay in a hospital or medical facility...
s (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 version 27 revision
MS-DRG Grouper version 27 took effect as of October 1, 2009. Changes involved are mainly related to Influenza A virus subtype H1N1.See also
- Case mix indexCase Mix IndexCase mix index is the average diagnosis-related group weight for all of a hospital's Medicare volume. It can be used to adjust the average cost per patient for a given hospital relative to the adjusted average cost for other hospitals by dividing the average cost per patient by the hospital's...
- Diagnosis codesDiagnosis codesIn healthcare, diagnostic codes are used to group and identify diseases, disorders, symptoms, human response patterns, and medical signs, and are used to measure morbidity and mortality...
- Medical classificationMedical classificationMedical classification, or medical coding, is the process of transforming descriptions of medical diagnoses and procedures into universal medical code numbers...
- Risk of mortalityRisk of mortalityThe risk of mortality provides a medical classification to estimate the likelihood of inhospital death for a patient. The ROM classes are minor, moderate, major, and extreme. The ROM class is used for the evaluation of patient mortality.-References:...
(ROM) - Severity of illnessSeverity of illnessSeverity of illness is defined as the extent of organ system derangement or physiologic decompensation for a patient. It gives a medical classification into minor, moderate, major, and extreme...
(SOI) - Pay for Performance
External links
- Official CMS website
- Agency for Healthcare Research and Quality (AHRQ).
- DRG and ICD (Canada) from the MCHP research unit of the University of Manitoba's Faculty of Medicine.
- Diagnosis Related Groups (DRGs) and the Medicare Program - Implications for Medical Technology (PDF format). A 1983 document found in the "CyberCemetery: OTA Legacy" section of University of North Texas Libraries Government Documents department.
- Mayes, Rick, "The Origins, Development, and Passage of Medicare's Revolutionary Prospective Payment System" Journal of the History of Medicine and Allied Sciences Volume 62, Number 1, January 2007, pp. 21-55