DRG in health care stands for diagnosis-related groups and is the basis for establishing medical reimbursements. According to the American Academy of Orthopaedic Surgeons, DRGs are an applied theory of industrial management in health care. The basis of DRGs is the concept that health care or care of the patient is a product supplied by the hospital.
With a DRG-based system in place for Medicare, the payments for health care are usually made by the government while the providers are hospitals and physicians. Initially the DRG system focused mainly on the Medicare population. Wikipedia emphasizes that this prospective payment system influences physicians and medical staff members by providing a relationship between the similar diagnosis of patients to the hospital costs that are incurred.
The American Academy of Orthopaedic Surgeons reveals that the initial DRG system was limited to just under 500 codes of diagnosis. Care that was given to the patients was analyzed for the resources used for treatment. This system helps the hospitals estimate expenses per patient.
According to Wikipedia, there are several different DRG systems that have been developed in the United States: Medicare DRG (CMS-DRG & MS-DRG); Refined DRGs (R-DRG); All Patient DRGs (AP-DRG); Severity DRGs (S-DRG); All Patient, Severity-Adjusted DRGs (APS-DRG); All Patient Refined DRGs (APR-DRG); and International-Refined DRGs (IR-DRG).