The paper is aimed at giving a closer look at its achievements as well as discussing on its descendants and its impact on reimbursement.
Human life is invaluable. Knowing the importance of human life is the important aspect of any government. With this aim as the motive, the US government started the Medicare program based on which people who are aged 65 and above can get their medical expenditure taken care of, by the government. As years passed by, the cost of reimbursement increased into exponential proportions. In order to maintain stability, the government under the influence of its health department, introduced a new system which determines a fixed cost of reimbursement for the patient based on the criterion of the disease. This system is called as the Prospective Payment System, with its working purely based on the grouping of diagnosis, which is called as the Diagnosis –Related Groups (DRGs).
In order to standardize the advance payment that is subsidized for a distinctive set of medical cases, across all the hospitals in different states, grouping of cases was introduced. According to which the medical patients are classified into a defined set of diagnosis-related groups and are assigned to that till the end of their hospitalization. This was actually introduced to prop up the Prospective Payment System which is described below. (Bielby, 2010)
A PPS classifies the patients into one fixed group of DRG based on their initial diagnosis by the hospital doctors. So, once they are allotted a DRG, the government allots a fixed amount of money for the respective DRG to the hospital. The money is equivalent to the expenditure of the case for a period of 100 days. If in case the patient gets discharged within a period of 40 days, then his/her 100 day period gets revived again for the next cycle. Additionally, if only fewer amounts of money gets used up for the patient, then rest of the money stays with the hospital. On the contrary, if the expenditure