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Joy Hicks

Term of the Week: Diagnosis-Related Groups (DRGs)

By April 20, 2011

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Diagnosis-Related Groups or DRGs are the basis for per episode payments made to the medical office on inpatient hospital visits.

DRGs are assigned a classification based on a combination of ICD-9 diagnosis codes, CPT and HCPCS procedure codes, complications or conditions present on admission (POA), discharge status, age and sex. DRGs also determine that the number of days, per episode, be within a certain time period which is the average length of stay (ALOS) necessary for adequate treatment.

Under special circumstances, the medical office may receive a cost outlier, which is an adjustment to the DRG payment to exceed the normal payment rate. These circumstances may be due to complications resulting in exorbitant costs from treating a patient that requires more costly care.

The complexity of DRGs can make coding inpatient claims a challenge. Proper claim coding plays an integral part in getting accurate DRG payments and the success of the medical office financial goals.

For more glossary terms, go to the Medical Office Dictionary.


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