Medicare DRG

The amount of money facilities receive for providing inpatient services to Medicare patients (Part A billing) is a fixed amount determined by a prospective payment system. The prospective payment is calculated by taking factors like diagnosis, age, sex, discharge status, and comorbidities, and then predicting the likely amount of hospital resources which will be consumed by a patient encounter or hospital case. Medicare groups all hospital cases into one of around 500 diagnosis related groups, or DRGs, and the actual payment amount distributed to hospitals for services rendered is determined by the assigned DRGs. The rules of this prospective payment system are outlined in the CMS or Medicare DRG Definitions Manual, which is sometimes commonly known as the Grouper Manual. Medicare has used DRGs to determine Part A reimbursement payments since 1983.

Medicare DRGs intentionally paint with a broad brush, and attempt to describe all patients in an acute hospital setting. The Medicare DRG includes such diverse patient populations as the elderly and the newborn, and other systems such as the APDRG, or All Patient DRG, have been developed in an effort to extend the Medicare DRGs and create a prospective payment system for non-Medicare populations. Other prospective payment systems that have been created in the United States to build upon the original Mediare DRGs include:

• Refined DRGs (RDRG)
• Severity DRGs (SDRG)
• International-Refined DRGs (IDRG)
• All Patient Refined DRGs (APRDRG)

Although PracticeAdmin was originally designed to facilitate Part B billing, it is possible to create UB-04s in PA and do some Part A billing. Click Here for more information on Part A billing using PA.