Diagnosis-related groups: implications for psychiatry

The escalating cost of medical care in most industrial countries has given impetus to several different strat egies designed to impose limitations on cost and introduce efficiency into health care systems. In the United States of America, legislation was passed in 1983 to introduce a system of prospective payment for Medicare hospital expenditures. This change was a departure from the previous cost based reimburse ment method and was based upon a categorisation of medical conditions into discrete groups termed diagnosis-related groups (DRGs). The intention of the American Congress in passing the legislation was to encourage hospitals to reduce cost without sacrificing quality of care. DRGs were developed as a measure of case-mix in acute in-patient medicine and were expected to have the following attributes: they should be medically meaningful: classes of patients should be grouped together on the basis of variables that are commonly available in hospital discharge abstracts; and there should be a manageable number ot'diagnostic groups