Implementation Manager (IM) Specialist CHTS Practice Test

What is the primary purpose of DRG in medical billing?

1. Determine severity of illnesses

2. Classify hospital cases into groups

3. Assess treatment outcomes

4. Report patient demographics

The correct answer is: Classify hospital cases into groups

The primary purpose of Diagnosis-Related Groups (DRG) in medical billing is to classify hospital cases into groups. DRGs are used as a management tool for hospitals and payers, establishing a set reimbursement rate based on the diagnosis. This system helps ensure that hospitals are compensated for the care provided while managing healthcare costs. By grouping cases that have similar clinical characteristics and are expected to require similar amounts of resources, DRG facilitates standardized payments. This classification aims to streamline billing processes and encourages hospitals to operate efficiently, as they are incentivized to provide care within the allocated reimbursement. While determining the severity of illnesses, assessing treatment outcomes, and reporting patient demographics are important aspects of healthcare, they serve supportive roles in the broader context of patient management and billing rather than being the primary aim of DRG. The focus of DRG is fundamentally on grouping cases to assist in financial planning and resource allocation within the healthcare system.