Certified Revenue Cycle Representative (CRCR) Practice Exam

What is one purpose of the DRG payment system?

1. To increase the number of services covered by Medicaid

2. To standardize payments for similar patient conditions

3. To ensure all hospitals receive equal funding

4. To reduce the documentation required for billing

The correct answer is: To standardize payments for similar patient conditions

The DRG (Diagnosis-Related Group) payment system is fundamentally designed to standardize payments for similar patient conditions, which is reflected in the correct answer. This system classifies hospital cases into groups that are expected to have similar hospital resource use, facilitating a fixed payment for each group regardless of the actual services delivered. This promotes efficiency because healthcare providers are incentivized to manage resources effectively and reduces the variation in payments for the same type of care, leading to a focus on quality and efficiency in treatment rather than on the volume of services provided. In this context, the other options do not accurately reflect the purpose of the DRG payment system. For instance, the system does not aim to increase the number of services covered by Medicaid, nor does it strive to ensure that all hospitals receive equal funding; payments can vary based on individual hospital performance and conditions. Additionally, while reducing documentation might simplify processes, it is not a primary goal of the DRG framework; instead, DRGs necessitate precise documentation to correctly classify and reimburse patient care based on the grouping criteria. Thus, the focus remains on the standardization of payments for similar conditions, underscoring the critical nature of the DRG system in the healthcare revenue cycle.