Implications of DRGs for Clinicians

IN March 1983 Congress enacted a sweeping change in the payment mechanism for Medicare. The four-year transition (1984 to 1987) from retrospective, cost-based reimbursement to prospective pricing by diagnosis-related group (DRG) for most inpatient services will transform the economic incentives for physicians, hospitals, and insurers.1 2 3 Clinicians must become more knowledgeable about the new system and more active in influencing its further refinement. The purpose of this paper is to highlight what we think are the most critical issues in the implementation and improvement of the DRG-based payment system.Surgical versus Medical Treatment RegimensMany considerations come into play in physicians' . . .