Critical appraisal of the DRG system. Problem areas for DRG reimbursement in the U.S.A

Abstract

This Prospective Payment System (PPS) utilising Diagnosis Related Groups (DRGs) which was introduced for the reimbursement of acute care hospitals for Medicare patients in the U.S., was adopted primarily to control the rapidly rising costs of health care and, as an initial effort to retain the solvency of the Nation's Medicare Hospital Insurance Trust Fund. It is this factor, an overall decrease of health care dollars to health care providers and not the DRG system, which has generated the most criticism and concern. The DRG system, as a method to accomplish control of the expenditure of health care dollars and the method of implementation of this system in the United States, also generates criticism and concern from health care providers. One thing is certain, health care providers in the United States have seen just the beginning of what promises to be a rapidly changing environment driven by the need to control costs. The challenge will be to provide quality health care in a price competitive environment. This paper attempts to explore some of the criticisms and concerns of health care providers that result from the threat to reduce health care dollars and the methodology implemented to accomplish that objective.