Diagnosis-related Group (DRG) vs. Capacitated Payor System

Evaluation of Payor Systems
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Evaluation of Payor Systems
The diagnosis-related group (DRG) constitute a patient categorization structure that standardizes potential reimbursement to healthcare facilities. It predominantly promotes cost control initiatives. Generally, the DRG payor system incorporates all charges linked to inpatient stay from admission to discharge time. The merits of the DRG payor system are seen in its capacity to enhance transparency and efficiency and reduced average stay length. The demerit of the DRG reimbursement systems entails creating financial incentives towards earlier healthcare center’s discharges. Occasionally, such processes fail to meet clinical benefit priorities (Mihailovic, Kocic, & Jakovljevic, 2016). In the capacitated payor system, prepayments to medical groups or physicians are made centered on pre-delineated services. Some of the merits of capacitation include encouraging physicians to limit redundant healthcare services that increase costs while failing to generate value, making costs more foreseeable for healthcare payers, and offering physicians and other medical practitioners predictable cash flow every month. Nevertheless, the capacitated payor system is no without...