DRGs are a system of classification for inpatient stay for use in measuring case mix (the types of patients a hospital treats) and costs developed at Yale University in the 1970’s. The DRG system divides all possible principal medical diagnoses into 23 mutually exclusive categories known as Major Diagnostic Categories (MDCs) (see encyclopedic entry: Major Diagnostic Categories) which generally identify the affected organ system. DGRs then consider whether a patient is a medical or surgical patient (those requiring an operating room), providing sometimes many more layers of definition based on any surgical procedures performed for the latter category. Each type of patient is further evaluated for effects that complications, age, comorbidities, and discharge status have on use of resources in the inpatient setting.


DRGs are the basic unit of payment for Medicare hospital reimbursement and for some states and health plans as well. DRGs are published and maintained by the Centers for Medicare and Medicaid Services (CMS) (see encyclopedic entry: Centers for Medicare and Medicaid (CMS))