The most important aspect of the 1983 changes to Medicare that introduced diagnosis-related groups (DRGs) was

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Switching from retrospective to prospective payment for hospitals through the use of DRGs was a major change to Medicare that aimed to control escalating healthcare costs. Under the new system, hospitals were paid a fixed amount for each patient based on their diagnosis, rather than being reimbursed for the actual cost of treatment. This provided an incentive for hospitals to provide more efficient and effective care, as they would keep any savings from staying under the fixed payment amount. The other options listed were also important changes, but not as significant as the switch to prospective payment.

The Most Important Aspect of the 1983 Changes to Medicare