Medicare introduced diagnosis-related groups (DRGs) to:

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Medicare started a reimbursement program based on DRGs. Under this system, payment for hospitalization, surgery, or other treatment is specified according to the diagnosis. Lengths of hospital stays are also determined by the diagnosis and are typically short. Since being introduced by Medicare, the DRG system has been adopted by insurance companies in the private and group sectors as well, resulting in industry-wide changes. As a result of the DRG system, clients are discharged from the hospital sooner and sicker, a situation that has created an increased need for subacute care and home health care.

Medicare Introduced Diagnosis-Related Groups (DRGs) To