Knowledge base

Diagnosis Related Group (DRG) Fraud

hospitals are paid a specified rate for each Medicare in-patient treated, based upon the diagnosis related group (DRG) assigned to each patient. The hospital is charged with the responsibility of assigning the correct DRG to an in-patient based on that patient’s discharge or principal diagnosis. The principal diagnosis is defined as “that condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.” Different DRGs pay different rates. The total reimbursement rate per in-patient is determined by the DRG assigned to each in-patient and other geographical and hospital specific factors and relative weights. The DRG system is vulnerable to fraud and through DRG upcoding, where a provider falsifies the DRG to increase reimbursement.

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