Diagnosis-Related Group

What Does Diagnosis-Related Group Mean?

A diagnosis-related group (DRG) is a classification of hospital patients grouped together for the purpose of health insurance billing. DRGs enable both hospitals and insurers to understand the patient’s diagnosis and the financial implications associated with that diagnosis.

Insuranceopedia Explains Diagnosis-Related Group

Some diagnosis-related groups (DRGs) are associated with more expensive claims than others. For instance, a cancer diagnosis typically places a patient in a more costly DRG compared to a patient with a broken ankle, which would fall into a less expensive group. Because high-cost DRGs like cancer can leave patients responsible for large bills, some people carry critical illness insurance to help cover expenses their regular plan does not pay.

DRG classifications also affect what patients owe through their premiums, deductibles, and co-pays, since the group a hospital stay falls into determines how much the insurer reimburses and how much the patient is left to pay.