Use of diagnosis-related groups by non-Medicare payers.
Carter, Grace M
Date of Pub
Jacobson, Peter D; Kominski, Gerald F; Perry, Mark J
Medicare's prospective payment system (PPS) for hospital cases is based on diagnosis-related groups (DRGs). A wide variety
of other third-party payers for hospital care have adapted elements of this system for their own use. The extent of DRG use
varies considerably both by type of payer and by geographical area. Users include: 21 State Medicaid programs, 3 workers'
compensation systems, the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), more than one-half of the
Blue Cross and Blue Shield Association (BCBSA) member plans, several self-insured employers, and a few employer coalitions.
We describe how each of these payers use DRGs. No single approach is dominant. Some payers negotiate specific prices for so
many combinations of DRG and hospital that the paradigm that payment equals rate times weight does not apply. What has emerged
appears to be a very flexible payment system in which the only constant is the use of DRGs as a measure of output.
Data Collection : Diagnosis-Related Groups/economics/statistics & numerical data/utilization : Health Benefit Plans, Employee
: Health Services Research : Insurance Carriers/trends : Insurance, Hospitalization/standards/trends : Managed Care Programs
: Medicaid : Models, Organizational : Prospective Payment System/statistics & numerical data/utilization : Rate Setting and
Review/methods : Support, U.S. Gov't, Non-P.H.S. : United States : Workers' Compensation