ABSTRACT

Introduction MS-DRGs represent Medicare’s latest incarnation of DRGs, which were initially implemented for fiscal year 1984. is is a complex prospective payment system used to pay for hospital inpatient services referred to as an IPPS (inpatient prospective payment system). We discuss this topic at a conceptual level, addressing the salient features of MS-DRGs. A complete discussion of MS-DRGs or any other implementation of DRGs would involve thousands of details. Various forms of DRGs are pervasive in healthcare when reimbursing for inpatient services. In our discussions, please refer to Chapter 3, “Anatomy of a Prospective Payment System,” for a general outline of common features of any PPS. We refer to some of the specific discussions in Chapter 3, including the cost report, cost-to-charge ratios (CCRs), the geometric mean, and associated topics. is chapter is filled with acronyms; be sure to check any acronym used with the acronym listing provided in Appendix B.