Free Custom «Vocabulary Coding System Exercise» Essay Sample

Free Custom «Vocabulary Coding System Exercise» Essay Sample


One of the fundamental ingredients in medical coding today is the diagnosis-related group (DGR). The DGR is a coding system that has been extensively used in the classification of hospital cases. Originally, there were 467 listed groups that were merged into a single group through the use of the vocabulary DRG coding system. The DRG system is a product of the Yale University. It was developed collectively by John D. Thompson, MPH, and Robert B Fetter, Ph.D., of the Yale School of management and Yale School of Public Heath respectively. The university received enormous support in terms of finance and material from Centres for Medicare & Medicaid Services (CMS), formerly known as Health Care Financing Administration.

The first version of the DRG was implemented in 1980. Subsequent changes have been witnessed over the years following the upgrade of the system. Today, the most current version of the DRG grouper is AR-DRG version 6.0x. Upgrading of the current version has been extensive and the system contains a broader range of features compared to the original version. Some of the features added to AR-DRG version 6.0x include its ability to use up to 30 diagnoses and further 30 procedures in its calculation, hence improving speed of the classification process.


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The DRG was created as a homogenous unit to be applied in hospital activities in price binding. The system was originally developed for the purpose of assisting hospitals with identification and classification of all ‘products’ that all patients received. In this context, the DRGs were viewed as a central reimbursement system that would act as an effective alternative to cost-based systems. However, as the health sector witnessed further growth and developments, patients’ needs also increased significantly. This prompted application of a more diverse and sophisticated classification system to meet increased hospital demands. Therefore, the DRG systems were forced to expand their objectivity from the original purpose to a more demanding level of precision. To date, there are various types of DRG in circulation in hospitals and other Medicare settings.

DRGs to the Case-Mix Index

On the one hand, the diagnosis-related groups system function is to classify an enormous list of diseases and other medical conditions into manageable groups. The main aim of the system is to ensure there is an averagely similar relationship between the cost of treatment and the patient’s disease/condition. For each DRG, the hospital is funded depending on the number of patients’ episodes registered in the centre. On the other hand, the case mix index refers to different types of patients that are treated in hospital and their speciality. In terms of payment and billing services, the method used encompasses two coding systems. The criteria used for billing and payment point out that the greater the case mix/speciality is, the greater is the variety of the DRGs recorded. Therefore, the case mix index identifies the number of episodes per each inpatient and types of patients treated in the hospital so as to determine the amount of funding that case mix pays the hospital.

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Level of Acceptance and Use

Implementation of the DRG system on the national level across many public hospital settings has represented a ‘revolutionary’ mark in the healthcare sector. The level of acceptance has gradually increased over the years, leading to a broader application of the systems across many hospital settings. According to reports, application of the DRGs in the payment and billing systems comprises up to 30% of all hospital discharges data today. The coding system has gained adequate approval from the federal government that has shown a tremendous amount of financial support for the health sector. The DRG is extensively used in the principle payment method, largely reimbursing hospitals for whatever costs they incur in inpatient care. The use of the DRG-based payment systems is frequently employed due to their ability to increase efficiency and reduce costs of the delivery of health services. The DRGs were initially implemented in high-income countries only. Gradually, low-income countries have started adopting the system in order to gain high hospital efficiency that can be reached by shortening average length of time patients stay in hospitals.

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Classification Structure

Over the past two decades, a number of diagnosis-related group classification systems have evolved. The evolution process has been in line with changing patients’ demands and development of new medical challenges facing the healthcare setting on a daily basis. A general classification structure of the DRGs follows a sequential approach. A discharge summary is drawn up and completed by a doctor as soon as a patient is discharged. Thereafter, the Health Information manager in charge reviews medical reports. This entails reading the discharge summary, operation and progress reports and thoroughly checking investigative reports provided. At the end of the review, the medical record is coded following the ICD-10 AM coding systems and the codes are put into the hospital’s computer system. At this point, the ICD-10 codes run through the refined DRGs Grouper software, which is put in place, and the correct DR is allocated at the end of the process. Finally, the Case Mix Index is drawn, and funding is translated to hospital budgeting.

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Application of the DRG requires comprehensive knowledge and adequate training. Many employees handling the data coding and billing systems are vaguely familiar with how best to handle the DRG documentation requirements. Therefore, the DRG systems face a shortage of skilled experts and professionals capable of effectively analysing coded data. Another limitation of working with the DRG coding system is that the DRG groupers lack a common set of data and formulas that can be shared among all states in the nation. Each state is forced to maintain its individual documentation of information, hence making comparability efforts from one state to another extremely difficult.

In terms of billing and payment services, occurrence of the DRG errors poses a great risk to hospital financial systems. The DRG errors commonly occur along the pathway from the moment a patient is admitted to the moment payment of accounts takes place. Such errors are a result of inaccurate reporting by physicians, which is a risk that can damage financial year budget of a hospital. Due to the lack of effective data reviewing systems, the DRGs are potential risk factors in areas where integrity of entities is not monitored and reviewed thoroughly.

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