Diagnosis-related group reimbursement (DRG) is a reimbursement system for inpatient charges from facilities. This system assigns payment levels to each DRG based on the average cost of treating all TRICARE beneficiaries in a given DRG.

A diagnosis-related group (DRG) is a patient classification system that standardizes prospective payment to hospitals and encourages cost containment initiatives. In general, a DRG payment covers all charges associated with an inpatient stay from the time of admission to discharge.

A patient classification scheme that provides a means of relating the type of patient a hospital treats to the costs incurred by the hospital. This is the form of reimbursement that the CMS uses to pay hospitals for Medicare and Medicaid recipients. …

The TRICARE DRG-based payment system applies only to hospitals. Under the TRICARE DRG-based payment system, payment for the operating costs of inpatient hospital services furnished by hospitals subject to the system is made on the basis of prospectively determined rates and applied on a per discharge basis using DRGs.

DRGs are defined based on the principal diagnosis, secondary diagnoses, surgical procedures, age, sex and discharge status of the patients treated. Through DRGs, hospitals can gain an understanding of the patients being treated, the costs incurred and within reasonable limits, the services expected to be required.

Overview of Plans Using DRGs Almost all State Medicaid programs using DRGs use a system like Medicare’s in which participation in the program is open to all (or almost all) hospitals in the State and the State announces the algorithm it will use to determine how much it will pay for the cases.

In case of aforementioned European Union-funded research, 12 low- and middle-income countries have DRG-based payment systems and another 17 are in the piloting or exploratory stage.

This system assigns payment levels to each DRG based on the average cost of treating all TRICARE beneficiaries in a given DRG. The TRICARE DRG-based payment system is modeled on the Medicare inpatient prospective payment system (PPS). A grouper program classifies each case into the appropriate DRG.

A grouper program classifies each case into the appropriate DRG. The grouper used for the TRICARE DRG-based payment system is the same as the Medicare grouper with some modifications, such as neonate DRGs, age-specific conditions and mental health DRGs. Refer to the TRICARE Reimbursement Manual for more details.

Related Group (DRG) Prospective payment rates based on Diagnosis Related Groups (DRGs) have been established as the basis of Medicare’s hospital reimbursement system. The DRGs are a patient classification scheme which provides a means of relating the type of patients a hospital treats (i.e., its case mix) to the costs incurred by the hospital.

As of Feb. 9, 2021, TRICARE adopted the Centers for Medicare & Medicaid (CMS) NTAPs reimbursement methodology for new services/technology not yet in the DRG, under the hospital Inpatient Prospective Payment System (IPPS).