What is the name of the federal reimbursement method established in 1983 to contain health care costs, based on grouping of conditions, cost per condition, and standard treatment?

• A. Diagnostic Related Groups
• B. Capitation Model
• C. Global Budgeting
• D. Cost-plus Reimbursement

Answer: (A)

Grouping inpatient stays into fixed payment categories was created by Medicare in 1983 to control costs. Each stay is assigned to a diagnostic related group based on the patient’s diagnosis and procedures, and each group has a fixed payment that reflects the average cost of treating that condition with standard care. Hospitals receive this set amount regardless of the actual resources used, which encourages efficiency and consistency in treatment. This approach fits the description of a federal reimbursement method based on grouping conditions, a cost per condition, and standard treatment.

The other options don’t match this idea: a capitation model pays a flat amount per patient over a period, not per condition; global budgeting sets a total budget for a facility or system rather than per condition; and cost-plus reimbursement reimburses actual costs plus a markup, not a fixed payment by condition.