Abstract
In order to curb spiraling health care costs, the federal government implemented prospective reimbursement to hospitals for inpatient services for all Medicare admissions. Beginning in the 1983 fiscal year, hospitals were paid a single rate for each Medicare admission, regardless of the cost involved in the care of any particular patient. This rate was determined by the diagnosisrelated group (DRG) into which the admitting diagnosis is classified.'2 In theory, DRGs should reduce unnecessary inpatient laboratory testing, procedures and services; discourage physicians from keeping patients in the hospital beyond what is medically justifiable; and encourage the use of the less expensive ambulatory setting for delivering health care.
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