Which statement correctly describes DRG pricing in Medicare?

• A. DRG pricing reimburses a fixed amount based on diagnosis
• B. DRG pricing varies with actual costs per patient
• C. DRG pricing is based on daily room rates
• D. DRG pricing is determined by patient satisfaction scores

Answer: (A)

DRG pricing in Medicare is a prospective, fixed payment for each hospital admission, determined by the diagnosis-related group assigned to the patient’s stay. The amount is set in advance and stays the same for all patients in that DRG, regardless of the actual costs or services used during the hospitalization. This means the hospital is paid a predetermined sum based on the diagnosis and related factors, not the specific cost incurred for an individual patient.

This approach is not driven by actual costs per patient, daily room rates, or patient satisfaction scores. Daily room rates could affect other payment arrangements, and patient satisfaction might influence quality programs, but neither sets the base DRG payment. (Note: there can be adjustments for unusual cases where costs are exceptionally high, but the fundamental idea is a fixed payment per admission based on the DRG.)