What is the fixed fee for the Diagnosis Related Group (DRG) based on?

The fixed fee for the Diagnosis Related Group (DRG) is based on a negotiated price for various cases. This pricing structure is established to provide a standardized payment system for hospital services. Each DRG is assigned a specific payment amount that is predetermined and does not vary based on the actual costs incurred by the hospital or the length of stay of the patient. Instead, it is calculated based on the expected costs of delivering care for groups of similar patients, taking into account factors such as diagnosis, treatment, and the average resources used.

In this system, hospitals receive a fixed payment for each patient treated within a specific DRG category, regardless of the actual expenses incurred during their treatment. This allows for budget predictability and incentivizes hospitals to manage their resources efficiently, as they retain any savings that result from managing care costs below the established payment amount.