Economics & Development

This note provides guidance on refining Diagnosis-Related Group (DRG) grouper algorithms to improve fairness in payments for healthcare services. Drawing on international experience, it explains how DRG systems classify hospital cases and outlines considerations for adjusting the number and configuration of DRG groups across different country contexts. The note highlights the role of DRGs in promoting efficiency through prospective payment mechanisms while emphasizing the need for strong coding, costing, data systems, oversight, and budget controls.

This note discusses medical necessity and how payers incorporate this concept into their clinical care and claims review processes. It complements related briefs on the claims management process, clinical pathways, and contracting.