a wordDRG

A bucket. Every inpatient stay is sorted at discharge into one group by diagnosis, procedures and complications, each group carries a weight, and the weight times a base rate is what the hospital is paid — the same amount whether the stay ran short or long. It is the unit most national hospital tariffs in the world are now built from.

The American statute is the moment the idea became money. The Social Security Amendments of 1983, Public Law 98-21, approved on 20 April 1983 at 97 Stat. 65, carries Title VI, "Prospective Payments for Medicare", and section 601 pays for inpatient hospital services on prospective rates. It did not switch over in a day: for discharges "on or after October 1, 1983, and before October 1, 1984, the 'target percentage' is 75 percent and the 'DRG percentage' is 25 percent", moving to half and half, then a quarter and three quarters, across three years.

CMS states the mechanism in one line: "Each DRG has a payment weight assigned to it, based on the average resources used to treat Medicare patients in that DRG", with an extra payment for outlier cases "designed to protect the hospital from large financial losses due to unusually expensive cases".

What the rate does not buy is written into the regulations. Physician services paid on a fee schedule are excluded from inpatient hospital services under 42 CFR 409.10(b)(3), so the doctor bills separately. Organ acquisition costs, nurse-anaesthetist costs and approved education costs are paid on a reasonable cost basis outside the rate under 42 CFR 412.2(e). Transfers are paid differently again under 42 CFR 412.4.

Germany adopted the same machinery on a different schedule: section 17b of the Krankenhausfinanzierungsgesetz requires a flat-rate, performance-based payment system for general hospital services, applied voluntarily from 2003 and compulsorily for somatic hospitals from 2004.

For a patient crossing a border the DRG is most often met as a refund. Ireland's Health Service Executive publishes a DRG guide for its cross-border schemes: I04B, knee replacement, is priced at 16,505 euro, "Includes: Unilateral Knee Replacement with bone graft to Tibia / Fibula, Unilateral Patella Resurfacing. Excludes: Bilateral Knee Replacement, Revision of Knee Replacement". The footnote states that the price is for an inlier stay — one falling between the published low and high boundaries — and that a stay above the high boundary earns a per-diem addition. The scheme itself "does not cover other costs such as travel, accommodation or translation costs", and the patient pays the foreign hospital first.

As of 17 September 2026 a DRG on this site is always named as a payer's unit, never as a price a patient is charged. Where a state refunds a traveller against one, the record names the code, the amount and the date.