DRG systems around the world and the ways of financing


              In European countries, DRG systems occur to be the most utilized type of Patient Classification Systems (PCSs) and are defined as systems that use routinely collected patient discharge data to classify patients into a manageable number of groups (DRGs), which are intended to be clinically meaningful and economically homogeneous

              DRG systems in European countries are mainly used as a payment mechanism to ensure transparent financing of healthcare facilities. The payment mechanism of DRG systems begins with a patient classification performed by grouping software, which classifies cases (patients) into DRG groups by using a designed classification algorithm. To obtain a correct grouping, the algorithm needs to consider all variables significantly affecting all costs that are placed on the healthcare provider per patient. These include information about the patient or the healthcare provider, the nature of the treatment, etc. Each final DRG thus contains a group of cost- and clinically similar cases and its complexity concerning the consumption of resources is evaluated by the DRG weight. In the context of setting the DRG weight of a particular DRG accurately, the quality of data that are being received from hospitals is of high importance, because those play the key role in the evaluation of hospital funds´ spending and form the base for recalculating DRG weights. Moreover, development and regular updates are necessary for the proper use of DRG systems, including new groups formation and payment rates updates so that the introduction of new technologies and medical treatments is reflected in the DRG system. This may be observed as a gradual increase in the number of final DRGs, except the Dutch DBC system, with the opposite tendency resulting from the initially high number of groups (100 000 in 2005, 30 000 in 2010, goal is to reach 3 000).


As it was already mentioned, DRG systems are the most widespread Patient Classification Systems (PCSs) in Europe. According to their origin, European DRG systems can be in general divided into two groups:

- the American HCFA-DRG system (Health Care Financing Administration DRG) is used in countries like Estonia, Finland, France (GHM), Germany (G-DRG), Ireland, Portugal, Spain, or Sweden

- self-developed DRG-like systems whose DRG groups are not strictly associated with diagnosis and these are the systems of Austria (LKF), England (HRG), the Netherlands (DBC), and Poland (JGP). 

Despite the fact the basics of almost all European DRG systems are quite similar, each system, whether taken over or self-developed, is adapted to the specific needs of a country's healthcare system, which results in an obvious diversity.


The first of the apparent differences is the number of defined final DRG groups, which varies in the range of 650 and 2300. The exceptions are Poland with 518 groups formed and the Dutch DBC system with a total number of up to 30 000 DBC groups (valid for the 2010 version).

Significant diversity is shown in the diagnoses and medical procedures coding. The coding of diagnoses is based on the international standard, the WHO's International Classification of Diseases (ICD), which, however, does not prevent specific coding adjustments to be found in every single country´s coding system. Much more significant differences are manifested in the coding of procedures, which is due to the missing international standard. Therefore, not only a form but also the final number of coded procedures is very variable among countries.




In HCFA-DRG-derived systems, DRG groups are organized within the MDC (Main Diagnostic Category), the number of which is usually around 25, as these are categories associated with the organ systems or disease entities. MDCs are further divided into 2-3 segments - operative, medical, non-operative/other, which are further divided into basic DRG groups, and then to final DRG groups. The structure of DRG-like systems is similar, but in some systems, such as English and Polish, the equivalent of MDC are the so-called chapters, and in addition to the final DRGs, in the first stages of the grouping process add-on groups are defined for cases provided with special medical services or treated in a specialist department.

Systems derived from HCFA-DRG PCSs use the classification algorithm that follows six common steps designed to fit a case to the appropriate final DRG group. The process starts with a primary check of the data collected on cases, which ensures (1) the exclusion of cases with incorrect or missing information from the further classification. In the next step (2) high-cost cases are selected and classified into so-called Pre-MDC groups. Cases are then, based on the main diagnosis (HDg), classified to one of (3) the MDCs, which leads to the subsequent classification of cases within the MDC into a (4) a particular segment (operational, medical, non-operational/ other). An important step in the grouping process is considering (5) case characteristics, including the complexity of the case, secondary diagnoses, type of medical procedures performed and their combination, age or hospitalization, and treatment settings, which ultimately leads to cases being classified into one class (AP-DRG, All-Patient-DRG), or the basic DRG group (other systems) best reflecting the costs of a particular case. In the last step of the classification algorithm, the case is placed into (6) the final DRG group, which expense-wise specifies the case within the basic DRG group/class.

Unlike HCFA-derived DRG systems, the main role in the classification process within the newly developed DRG-like PCS systems - HRG, JGP, and LFK systems - play provided health services. However, the classification process itself stays relatively similar.

A completely different system among the newly developed PCSs is the Dutch DBC, which groups cases by gradually considering specific parameters within four to five dimensions.


Considering all the variables that directly affect the expenses spent on patient treatment during the hospitalization time is an essential part of the grouping process.

Grouping is significantly affected by the main diagnosis and procedures provided. The term "main diagnosis" has a different meaning in different systems. Either it can be understood as the main reason for the patient hospitalization or as the diagnosis that stands highest in the system-defined hierarchy.

Relevant parameters are likewise the hospitalization time and the type of discharge, as well as demographic data, of which the patient's age is perhaps the most influential. The exception can be found in the NordicDRG system, in which, compared to other systems, gender is the variable strongly impacting the process of grouping.

In all systems except DBC and LKF, secondary diagnoses greatly affect the grouping process. However, the difference is in the way in which the individual systems deal with several secondary diagnoses at once – for example, while in the G-DRG the cumulative effect of all secondary diagnoses applies, the so-called PCCL (Patient Clinical Complexity Level), in most other DRG systems, the costs related to the case are determined only by the secondary diagnosis of the highest severity. Another approach is shown in the GHM system, as the cumulative effect is the result of the consideration of both serious secondary diagnosis, age, length of hospitalization, and possible death at hospitalization. On contrary, the Dutch DBC system does not take secondary diagnoses into account when grouping, instead, the patient with the treated secondary diagnosis is assigned to the relevant new DBC group.


At the first sight, given the comparison of DRG and DRG-like systems, the vision of a common European DRG system may seem impossible to obtain as the comparison only confirms the great diversity present across the systems. However, looking from the other perspective, the identified differences point to those areas within the systems that need to be focused on the most to create a common and uniform system. A huge advantage is that many of the already run-in systems can serve as a basis for the development of a common Euro-DRG. The Euro-DRG system is therefore a vision of the distant future but with great effort and strong political support, the utopian-looking idea is very much attainable.