Designing a DRG-based hospital reimbursement for efficiency, effectiveness, and high quality

Introduction

Diagnosis Related Groups (DRGs) are a case-based hospital payment mechanism that converts coded clinical and administrative data into clinically meaningful, resource-relevant groups to determine prospective reimbursement. A well-functioning DRG system must simultaneously (i) classify patients fairly (clinical coherence and resource homogeneity), (ii) price cases credibly (cost accounting and weight setting), (iii) control incentives that can degrade quality or induce volume inflation, and (iv) assure data integrity through governance, auditing, and quality measurement. International experience - including long-standing US Medicare prospective payment - shows that DRGs can improve transparency and managerial efficiency but also create incentives for shorter stays, coding inflation (“upcoding”), and strategic behavior unless counterbalanced by strong expenditure controls, quality monitoring, and anti-fraud capacity.

1. Conceptual foundations

DRG systems were developed to define hospitals’ “products” and to support prospective payment: rather than reimbursing reported costs, payers set a fixed amount per discharge/case, adjusted for the DRG’s expected resource use. Medicare’s inpatient prospective payment system (IPPS) is a canonical example; its core logic multiplies a base payment rate by a DRG relative weight, with additional policy adjustments layered on top.

Because DRG assignment and pricing are mechanically dependent on coded diagnoses and procedures, the coding system, coding quality, and grouper logic are not technicalities: they are central determinants of equity, efficiency, and vulnerability to gaming.

2. Design principles for an efficient, effective, high-quality DRG reimbursement system

2.1. Start with explicit policy objectives and a complete incentive map

A DRG system should be designed against explicit objectives (cost containment, access, quality, equity, innovation uptake, transparency), because design choices (severity adjustment, outliers, volume caps, quality incentives) generate predictable behavioral responses. The WHO’s DRG guidance explicitly warns that incentives must be considered so that people-centered care - not solely economics - remains the objective, and that monitoring of quality impacts must accompany claims monitoring.

Principle: every payment incentive must have a countervailing control when plausible harm exists (e.g., shorter Length of Stay (LOS) → readmissions; higher severity payment → upcoding).

Note: Length of Stay (LOS) is a key healthcare metric calculating the duration (in days) a patient occupies a hospital bed, measured from admission to discharge. It serves as a vital indicator of hospital efficiency, resource utilization, and patient care quality. The formula is generally: Date of Discharge - Date of Admission.

2.2. Clinical coherence + resource homogeneity (“fair grouping”)

The classifier must create groups that are:

  • Clinically coherent (clinicians recognize the group as a meaningful condition/procedure cluster).
  • Resource-homogeneous (variance of cost/LOS within DRG is acceptably limited).
  • Stable yet updatable (not changing so frequently that budgeting becomes chaotic, but updated often enough to reflect practice/technology changes).

European comparative work emphasizes that while “DRG” is a shared concept, system “building blocks” vary widely and materially affect performance and incentives.

2.3. Severity and risk adjustment that is clinically anchored and auditable

A payment DRG system should incorporate severity in ways that are:

  • Clinically defensible (secondary diagnoses should represent genuine complications/comorbidities, not documentation artifacts).
  • Auditable (clear rules; present-on-admission logic where available; clinical validation pathways).

Severity-refined systems (e.g., APR-DRG with severity of illness/risk of mortality concepts) aim to improve fairness for complex patients but also expand the “surface area” for coding manipulation unless validated.

2.4. Credible weights and prices require standardized cost accounting

Payment weights should be based on standardized cost data (or robust cost-to-charge methods where necessary) and recalibrated regularly. Medicare explicitly uses DRG relative weights as multipliers of base rates, and weight methodologies are periodically revised and documented.

Cross-country comparisons highlight that differences in cost accounting approaches are a major barrier to comparability and fair pricing.

Principle: no DRG reform should proceed without a cost-accounting “minimum viable standard” and data governance that make weights reproducible.

2.5. Outlier, transfer, and innovation policies are not optional add-ons

Prospective case payment needs explicit policies for:

  • High-cost outliers (stop-loss / fixed-loss thresholds).
  • Transfers and short stays (to limit inappropriate early discharge and “quicker turnover” gaming).
  • New technology add-on payments / transitional mechanisms, so innovation is not suppressed by outdated weights. European evidence shows substantial heterogeneity in how DRG systems incorporate technological innovation, often via short-term add-ons plus systematic updating mechanisms.

2.6. Expenditure control must address volume incentives

Case-based payment creates strong incentives to increase admissions and reduce length of stay because marginal revenue is largely independent of additional inpatient days once the case is “paid.”

Therefore, a high-quality DRG system should embed expenditure controls such as:

  • global budgets/sector caps with activity corridors,
  • volume growth limits by service line (e.g. MDC/DRG),
  • rate setting that is budget-neutral at system level,
  • targeted prior authorization for high-growth DRGs,
  • systematic monitoring for admission substitution (inpatient ↔ day-case).

(These are widely used internationally; Belgium-specific application is discussed in Section 6.)

Note: A global budget/sector cap is a top-down expenditure limit for hospital care over a defined period (usually a year). An activity corridor is a band around an agreed activity level (e.g., number of weighted cases) inside which hospitals can increase/decrease activity without triggering strong financial penalties or renegotiation.

2.7. Quality integration: “paying for cases” must not pay for avoidable harm

Quality measurement should be integrated in three ways:

  1. Surveillance: detect adverse trends (mortality, complications, readmissions) as DRGs change behavior.
  2. Adjustment: targeted penalties/bonuses to neutralize harmful incentives.
  3. Transparency: public and internal benchmarking using risk-adjusted metrics.

AHRQ’s Quality Indicators (QIs) are a prominent example of standardized, evidence-based measures designed to work with inpatient administrative data and include documented empirical methods (risk adjustment, smoothing) and implementation guidance.

However, AHRQ-linked documentation and reviews also stress limitations: administrative-data indicators can be sensitive to coding variation across hospitals, which is directly relevant in DRG environments.

2.8. Transparent governance and “maintainability” (a living system)

A DRG system is not a one-time classification project; it is a continuously maintained socio-technical infrastructure. Governance should ensure:

  • transparent rule changes and versioning,
  • stakeholder input (clinicians, hospitals, payers, patients),
  • published technical documentation,
  • conflict-of-interest (COI) protections (especially around weight-setting and grouper updates).

3. Benefits and disadvantages of DRG reimbursement

Benefits

  1. Cost discipline and managerial efficiency: fixed per-case payment rewards efficient organization (within quality constraints).
  2. Transparency and comparability: standardized case-mix measurement enables benchmarking across hospitals and over time.
  3. Better information infrastructure: pushes improvement in coding, data quality, and activity reporting (valuable for planning, epidemiology, and quality surveillance).
  4. Supports performance management: enables service-line planning, length-of-stay management, and quality improvement targeting.

Disadvantages / risks

  1. Volume incentive: case-based payment can increase admissions and shift care settings unless capped/managed.
  2. Shorter stays with potential downstream harm: incentives to reduce Length of Stay (LOS) can interact with readmission penalties and quality outcomes; policy literature notes the fiscal tension between fixed DRG payments and readmission penalties.
  3. Gaming and fraud exposure: upcoding, DRG “creep,” documentation inflation, and strategic patient selection (cherry picking, lemon dropping) are persistent risks; WHO guidance explicitly anticipates “gaming and coding creep.” 
  4. Administrative burden and inequity from coding capacity differences: hospitals with stronger coding/Clinical Documentation Improvement (CDI) and EHR infrastructures may appear “sicker” and be paid more unless auditing equalizes.
  5. Mispricing risk: if cost accounting is weak, weights can be distorted - leading to systematic under/overpayment and service distortions.

4. Data quality measures and Donabedian-aligned controls (structure–process–outcome)

4.1. Required data structure (minimum viable dataset)

A DRG payment dataset minimally needs:

  • patient demographics (age/sex), admission type and source, discharge status,
  • principal diagnosis + secondary diagnoses (with POA status where implemented),
  • procedures (type, timing, sometimes surgeon/service line),
  • ICU use, transfers, LOS, and key administrative flags (day-case vs inpatient).

Belgium’s Minimum Hospital Data (MZG/RHM) is an example of a legally mandated basic administrative/medical/nursing dataset supplied by non-psychiatric hospitals to FPS Public Health, supporting policy and financing uses.

Belgian guidance documents also specify a structured diagnosis file with variables such as a diagnosis coding system indicator and a POA-related variable with defined values.

4.2. Data quality measures (DQMs)

Data quality measures for Diagnosis-Related Groups (DRG) focus on ensuring that clinical documentation, coding (ICD), and patient data are accurate, complete, and consistent to facilitate proper reimbursement and clinical analysis.

For DRG payment, the essential DQMs are:

Completeness

  • required-field completion (principal diagnosis/procedures, discharge status, specialty episode segmentation where relevant),
  • missingness thresholds triggering rejection or escalation.

Validity and conformance

  • code validity against the correct version of the coding system (version control),
  • format and cross-field logic checks.

Accuracy (coding correctness)

  • coder agreement testing (inter-rater reliability),
  • re-abstraction audits,
  • diagnosis/procedure-to-clinical documentation concordance.
Note: A re-abstraction audit is a data-quality audit where an independent reviewer re-abstracts (re-codes) the same patient encounter from the original source documentation, and the results are compared to the hospital’s submitted coded record/claim.

Timeliness

  • submission deadlines linked to payment cycles and audit windows (timeliness).

Consistency over time

  • monitoring of sudden shifts in case-mix index (CMI), severity distribution (e.g. SOI, ROM), and MCC (Major Complication/Comorbidity)/CC (Complication/Comorbidity) (or analogous) rates - flagged for review.

AHRQ’s QI methods documents emphasize that administrative-data measurement requires disciplined empirical methods (including risk adjustment) and that such measures are designed to highlight potential quality concerns and track change over time.

Note: Case-mix index (CMI) is a single summary number that reflects the average “resource intensity” (complexity/costliness) of a hospital’s treated inpatient cases over a period, based on DRG weights.

Note: In APR-DRGs SOI (Severity of Illness) reflects the extent of physiological decompensation / organ system loss of function (how sick/complex the patient is). ROM (Risk of Mortality) reflects the likelihood of dying (during the stay / in-hospital risk, depending on the implementation).

4.3. Structure, process, and outcome controls (Donabedian)

Avedis Donabedian’s structure–process–outcome (SPO) model remains the dominant paradigm for health-care quality evaluation and is directly applicable to DRG data governance.

Structure controls (capacity and governance)

  • national coding standards office and version control,
  • certified coder workforce requirements,
  • independent cost-accounting standards and audit authority,
  • secure data pipelines and privacy-by-design.

Process controls (how data are produced and validated)

  • standardized abstraction workflows,
  • clinician query standards (ethical, non-leading),
  • automated edits and rejection rules,
  • routine coding and clinical validation audits,
  • feedback loops to hospitals and coders.

Outcome controls (what the system achieves)

  • payment accuracy (over/underpayment estimates),
  • coding accuracy rates and denial rates,
  • stability and plausibility of CMI trends,
  • quality outcomes (risk-adjusted mortality/complications/readmissions) tracked alongside DRG reforms.

5. Evidence-based approaches to fraud and gaming in DRG systems

5.1. Threat model: common manipulation patterns

DRG-relevant gaming spans:

  • Upcoding/severity inflation (adding/choosing diagnoses that raise payment weight),
  • Documentation inflation (clinical notes engineered to justify higher-paying codes),
  • Procedure miscoding (incorrect procedure codes/timing),
  • Admission and discharge manipulation (avoid transfer reductions; fragment episodes; premature discharge).

Systematic reviews describe multiple manipulation pathways and emphasize that “DRG creep” is not only simple miscoding but also broader organizational and clinical strategies.

5.2. Prevention: make the “right thing” the easy thing

Core prevention controls

  1. Clarity and stability of coding standards, with rapid publication of interpretations (e.g. AHA-CC).
  2. Present on Admission (POA) capture (where feasible) to separate comorbidities from complications; Belgium’s basic POA framework operationalizes POA-style logic with defined categories.
  3. Clinical Documentation Improvement (CDI) governance: CDI should improve clinical truthfulness and specificity - not maximize revenue; this requires query compliance rules and auditability.
  4. Segregation of duties: coding, CDI, billing compliance, and audit functions should not be subordinated to revenue targets.
  5. Education + certification: prevention is cheaper than audits when workforce quality is high (see Section 7).
Note: Present on Admission (POA) is a required data element for hospital inpatient claims indicating if a condition existed before an order for inpatient admission occurs, including those developing in the Emergency Department or observation. It distinguishes pre-existing comorbidities from hospital-acquired conditions (HACs) to improve quality reporting, risk adjustment, and reimbursement accuracy.

5.3. Detection: layered analytics + targeted audits

Statistical surveillance (“signals”)

  • outlier detection on DRG weights, severity levels (SOI, ROM), and short-stay high-severity patterns,
  • abrupt shifts in high-paying diagnoses/procedures (e.g., respiratory failure, severe malnutrition spikes),
  • provider-level trend breaks compared with peers.

Targeted record review and DRG validation

  • Medicare’s Program Integrity Manual (Chapter 6) describes DRG validation as verifying the accuracy of ICD coding of diagnoses and procedures that affect the DRG and requires trained, experienced coders using accepted coding principles.
  • Office of Inspector General (OIG) audits illustrate the real fiscal magnitude of incorrect coding that changes DRGs; for example, the OIG reported substantial overbilling associated with severe malnutrition coding that altered DRG assignment in audited claims.

Clinical validation

Some payment integrity frameworks distinguish “coding validation” (is the code assigned per rules?) from “clinical validation” (is the documented diagnosis clinically supported?). This typically requires clinician reviewers and explicit clinical criteria. (Jurisdictions differ in how formalized this is; the key is to define it transparently and provide appeal pathways.)

5.4. Enforcement and system learning

Effective anti-fraud in DRGs combines:

  • proportional sanctions (repayment, penalties for repeated behavior),
  • evidence based corrective action plans,
  • publication of audit themes (so the system learns),
  • protection against perverse effects (audits must not punish legitimate improvements in documentation quality).

The WHO guidance is explicit: gaming should be expected; therefore, systems must be designed with monitoring of quality and claims from the start, not added after problems emerge.

6. Jurisdiction-specific blueprint: Belgium

6.1. Current Belgian baseline (from published sources)

Belgium uses a basic integrated hospital discharge data system and DRG-based case-mix tools in governance and financing:

  • The Minimum Hospital Data (MHD/MZG-RHM) integrates hospital discharge data; Sciensano’s Belgian burden-of-disease protocol notes the integrated system launch and situates APR-DRG use in Belgium.
  • KCE reports describe that a major reform in July 2002 replaced per diem financing logic by using national average length of stay per pathology group (APR-DRG) to distribute a large part of a closed-end national hospital budget (operating costs).
  • Belgian FPS guidance indicates that diagnosis coding in MZG/RHM transitioned from ICD-9-CM (through 2014) to ICD-10-BE from MZG/RHM 2015 onward, and it documents POA-related registration logic through variable definitions.
  • An APR-DRG is assigned broadly to inpatient and day-care stays in Belgian analytical contexts, per KCE reporting on hospital capacity and datasets.

These sources support a pragmatic conclusion: Belgium has some key prerequisites already in place (mandatory national discharge dataset; APR-DRG grouper use; ICD-10-BE era coding; POA-style data elements). The blueprint below builds on those foundations.

6.2. Blueprint for “next-stage” Belgian DRG development and payment design

A. Governance and institutional design

Establish or formalize a competent Belgian Coding Coordination & DRG Maintenance Organization (BCD-DMO) with statutory authority for:

  • coding standard maintenance (national interpretations, education bulletins, FAQ,version control),
  • grouper governance (APR-DRG versioning, clinical review panels),
  • weight-setting governance (methods, transparency, external audit),
  • national audit strategy and analytics (see 6.3),
  • linkage with quality measurement (6.4).

This is consistent with the “DRG as living infrastructure” principle and with Belgium’s demonstrated reliance on centralized datasets and DRG tools in financing and planning.

B. Pricing and expenditure control (to neutralize volume incentives)

Given KCE’s emphasis that case-based systems create incentives to increase admissions and shorten LOS, Belgium should embed expenditure control measures structurally in the payment model rather than relying on retrospective correction.

A coherent package would include:

  1. Sector expenditure target (cap) + activity corridors by major service lines (APR-DRG's).
  2. Evidence based outlier policy (high-cost stop-loss) and short-stay/transfer policies that reduce profitable edge-cases.
  3. Budget-neutral annual recalibration of weights and base rates with published methodology.
  4. Planned transition sequencing: begin with “shadow pricing” (informational DRG prices) and partial DRG payment components, then scale as cost-accounting maturity and evidence based audit capacity reach defined thresholds.

C. Cost accounting standardization

Adopt a national minimum cost-accounting standard suitable for DRG weighting (e.g., mandated cost center definitions, step-down rules, capitalization treatment, physician cost handling). Cross-country evidence shows that cost accounting variation is a core obstacle to fair DRG pricing and comparability.

The most suitable cost-accounting standards for calculating DRG (Diagnosis-Related Group) weights are those that utilize patient-level costing (PLCA), combining bottom-up micro-costing with standardized, mandatory national costing guidelines. 

Key Standards and Methods for DRG Weighting

  • Bottom-Up Micro-costing: Regarded as the most accurate method, this approach identifies the specific resources used by each patient (e.g., number of lab tests, minutes in the operating room) and multiplies them by their respective unit costs.
  • Time-Driven Activity-Based Costing (TDABC): A highly advanced form of micro-costing that uses time as a key driver to allocate costs, which is considered ideal for increasing precision in DRG costing.
  • Standardized Cost Matrix: A required, uniform structure for cost reporting that ensures all hospitals define and allocate costs (especially overheads) in the same way, allowing for valid national comparisons  (e.g., InEK in Germany).
  • Clinical Pathways Integration: Incorporating service lines or clinical pathways into the cost matrix (adding a third axis to the traditional cost-center/cost-type matrix) enhances accuracy and managerial relevance. 

Components of a Robust DRG Cost System

  • Direct Cost Allocation: Directly assigning labor and material costs to a specific patient.
  • Indirect Cost Distribution: Using standardized drivers (e.g., floor space for building costs, patient days for nursing) to allocate overhead costs.
  • Data Validation/Plausibility Checks: Rigorous, standardized, and mandatory checks by a central authority to ensure data quality.
  • Inlier Definition: Trimming cases with extreme, non-representative lengths of stay (outliers) to ensure the DRG weight reflects the standard treatment cost. 

6.3. Belgian fraud detection and prevention architecture

Belgium can operationalize a two-layer defense:

Layer 1 - automated, national surveillance (continuous)

  • Competent AI- and statistics driven anomaly detection on severity distributions, POA patterns, and DRG-weight drift by hospital and service (MDC, DRG, LOS, SOI, ROM, ICD-10-CM, ICD-10-PCS, POA, case-mix in combination with nomenclature, medication,  ...),
  • peer-group benchmarking using MZG/RHM and NIHDI-linked datasets (the feasibility depends on legal/data governance arrangements, but Belgium already links basic MZG/RHM with NIHDI data in published analyses). 
  • trigger lists for “audit-prone” diagnoses/procedures and abrupt coding shifts (using Office of Inspector General-style logic as an evidence-informed comparator).

Layer 2 - targeted audit and clinical validation (discrete)

  • DRG validation by certified coders understanding and following published rules (mirroring the principle articulated in CMS program integrity guidance: trained and certified coders validate ICD-10-CM/PCS coding that affects DRG).
  • clinical validation panels for high-impact disputed diagnoses, with explicit evidence based criteria and appeal.

Prevention

  • mandatory coder training and certification thresholds (Section 7),
  • Clinical Documentation Improvement (CDI) query compliance standards,
  • publication of audit themes and corrective education.
Note: Clinical Documentation Improvement (CDI) is a systematic process of reviewing and enhancing medical records to ensure they are accurate, complete, and specific to the patient’s actual condition. CDI specialists bridge the gap between clinical care and coding, translating provider notes into precise documentation for improved patient outcomes, quality reporting, and appropriate reimbursement.

6.4. Quality measurement: an “AHRQ-QI inspired” Belgian approach

AHRQ QIs demonstrate how administrative inpatient data can be used to measure quality with explicit empirical methods (risk adjustment, smoothing) and transparent documentation. 

Belgium could implement a Belgian Hospital Quality Indicator (QI) Suite built from:

  • MZG/RHM-coded diagnoses/procedures and POA information (where appropriate), 
  • linkage to outcomes available via national datasets (mortality, readmissions where measurable),
  • published methodology notes addressing known limitations of administrative-data indicators (coding variation bias).

Crucially, quality indicators should be used both as guardrails (detect harm from DRG incentives) and as payment adjustments only after statistical reliability and fairness are demonstrated.

7. Training, skills, and certification standards

7.1. Belgian Coding Coordination & DRG Maintenance Organization: curriculum and certification requirements

A Belgian BCD-DMO needs multidisciplinary capability across (i) clinical classification, (ii) reimbursement design, (iii) analytics/audit, and (iv) education. A practical curriculum blueprint:

Domain A - Advanced clinical coding & standards governance

  • ICD-10-BE diagnosis coding and national guidance processes (Belgian FPS guidance documents the ICD-10-BE era and versioning context).
  • Present on Admission (POA) framework governance using (international) POA rules.
  • procedure coding system governance (Belgium-specific; not inferred here beyond the existence of structured procedure data fields in MZG/RHM domain documentation).

Domain B - Grouper logic, DRG refinement, and update cycles

  • APR-DRG logic, severity (SOI, ROM) refinement principles, change control, and impact assessment (follow international evidence based criteria).

Domain C - Health economics and cost accounting

  • DRG weight derivation, trimming/winsorization, outliers, budget neutrality, and sensitivity analyses.

Domain D - Audit science and fraud analytics

  • Internationally verified DRG validation methodology, sampling, provider profiling, and escalation protocols (drawing on established integrity frameworks such as documented DRG validation requirements).

Domain E - Adult education and certification governance

If Belgium adopts an “approved trainer” concept, AHIMA’s train-the-trainer model is a documented reference point: the ICD-10-CM/PCS trainer track emphasizes adult learning and presentation skills and specifies experience/credential prerequisites (e.g., multi-year coding experience and credentials). 

Belgium could adapt this as a Belgian Approved Coding Trainer standard aligned to coding systems and legal context (avoiding the usual Belgicisims).

Quality requirements

  • international standard formal exam + practicum (teaching demonstration; coding/audit casework),
  • continuing education requirements,
  • periodic recertification tied to guideline changes and audit findings.

7.2. Belgian medical coding teams: curriculum and certification standards (benchmarking to AHIMA CCS/CCA)

If Belgium wishes to benchmark competence to international standards, AHIMA’s published Certified Coding Associate (CCA) and Certified Coding Specialist (CCS) exam content outlines provide a transparent competency map:

  • CCA domains include clinical classification systems, reimbursement methodologies, health records/data content, compliance, information technologies, and confidentiality/privacy.
  • CCS domains (mastery-level) include coding knowledge/skills, coding documentation, provider queries, regulatory compliance, and information technologies.

A Belgium-specific high-quality curriculum for hospital coders should therefore include:

Core biomedical foundation

  • anatomy/physiology, pathophysiology, pharmacology, lab/imaging fundamentals (to support accurate abstraction and code specificity).

Coding craft (Belgian ICD-10-CM/PCS versioning)

  • ICD-10-BE coding rules and version control (Belgian FPS guidance is based on ICD-10-CM/PCS use from MZG/RHM 2015 onward).
  • Present on Admission (POA) assignment rules using international POA guidelines; documentation expectations for clinicians.
  • procedure coding and sequencing rules per Belgian datasets (without asserting the specific classification if not documented in accessible sources).

DRG and reimbursement literacy

  • how grouper inputs drive (APR-)DRG assignment, severity levels, and payment weights,
  • common denial reasons and audit triggers.

Compliance, privacy, and ethics

  • GDPR-aware handling of health records,
  • ethical provider query standards,
  • fraud awareness and whistleblowing channels.

Quality and audit readiness

  • internal coding audits, peer review, error taxonomy, inter-rater reliability, and corrective action.

Certification approach

  • Belgium can either (a) recognize an international credential as a competency benchmark (e.g., CCA/CCS), using the published domain outlines as mapping tools,
  • and/or (b) create a Belgian certification aligned to international coding systems, DRG logic, and legal frameworks, with continuing education tied to ICD-10-BE code/grouper updates.

8. Why a European DRG standard matters (and what “standard” should mean)

European DRG systems are “heterogeneous” in key building blocks - classification variables, costing, price setting, and incentives - despite shared conceptual foundations.

The EuroDRG project (EU-funded) explicitly framed the question of whether harmonization is feasible and useful in a context of increasing cross-border care and the need for systematic comparison. 

Benefits of greater European standardization

  1. Comparability and benchmarking: consistent grouping/costing enables credible cross-country performance comparisons and joint learning.
  2. Supports patient mobility and cross-border billing clarity: standardization reduces transaction costs and disputes.
  3. Enables secondary use of health data at scale: the European Health Data Space (EHDS) aims to create a common framework for access, exchange, and reuse of electronic health data across the EU - interoperable activity and outcomes data are more useful if classification systems are aligned.
  4. Reduces vendor lock-in and improves transparency: common specifications facilitate open methods and auditability.

What should be standardized first (pragmatic sequence)

A “European DRG standard” is most realistic as an incremental convergence on:

  • common minimum datasets and definitions,
  • minimum cost-accounting standards,
  • transparent grouper logic documentation and versioning,
  • mappings between national coding variants and a shared reference (noting that WHO ICD-11 evolution may become relevant, but implementation remains uneven).

Conclusion

A DRG reimbursement system can be efficient and policy-useful only if it is engineered as an integrated system: classification integrity, credible costing, expenditure control, quality surveillance, and fraud-resistant governance must be designed together. Evidence and guidance emphasize that gaming should be expected; therefore, robust monitoring and audit capacity are design prerequisites, not afterthoughts. 

Belgium already possesses basic enablers- national discharge data infrastructure (MZG/RHM), APR-DRG use, ICD-10-BE-era coding, and POA-style variables - so the strategic next step is to formalize a professional, independent and competent national maintenance and audit organization, strengthen standardized cost accounting, and integrate quality indicators and anti-fraud analytics in a transparent, continuously updated framework aligned with emerging European data governance (EHDS).

The avoidance of "Belgicisms" - used only within the Belgian healthcare system - is essential in medical coding and grouping to ensure international standardization, accurate reimbursement, and consistent clinical data analysis. Utilizing localized coding and grouping systems isolates Belgian coding and grouping practices from international standards (WHO ICD-10, WHO ICD-11, SNOMED-CT, LOINC, WHO ATC, APR-DRG or EuroDRG), leading to errors and bias in data aggregation, inter-hospital comparisons, and cross-border research. 

Bibliography (selection)

Agency for Healthcare Research and Quality (AHRQ). AHRQ Quality Indicators – Empirical Methods (v2025).

Centers for Medicare & Medicaid Services (CMS). Inpatient Prospective Payment System (IPPS): Base payment rate multiplied by MS-DRG relative weight (overview page).

CMS. Medicare Program Integrity Manual, Chapter 6 (DRG validation requirements).

Donabedian, A. “Evaluating the Quality of Medical Care” (reprint). Milbank Quarterly (original 1966 framework).

European Commission. European Health Data Space (EHDS) Regulation page.

Council of the European Union. Press release on adoption of EHDS regulation (Jan 2025).

Geissler, A. (2012). “DRG systems in Europe. Incentives, purposes and differences in 12 countries” (heterogeneity of European DRGs).

Geissler, A. et al. (2015). “Heterogeneity of European DRG systems and potentials for a common European DRG system.”

Kahn, M. G., Callahan, T. J., Barnard, J., Bauck, A. E., Brown, J., Davidson, B. N., ... & Schilling, L. (2016). A harmonized data quality assessment terminology and framework for the secondary use of electronic health record data. Egems, 4(1), 1244.

Weiskopf, N. G., Bakken, S., Hripcsak, G., & Weng, C. (2017). A data quality assessment guideline for electronic health record data reuse. Egems, 5(1), 14. (3x3 Data Quality Assessment (DQA))

Belgian Federal Public Service (FPS) Public Health. MZG medical data guidelines and supplemental documents (ICD-10-BE era; POA variable definitions).

Belgian Health Care Knowledge Centre (KCE) (2024). Expenditure control measures in DRG-based hospital payment systems (incl. Belgium context and incentive discussion) (KCE Report 392).

Office of Inspector General (OIG), U.S. HHS (2020). Hospitals overbilled Medicare by incorrectly assigning severe malnutrition diagnosis codes (audit report and summary).

World Health Organization (WHO). Diagnosis-related groups (DRG): A Question & Answer guide on case-based classification and payment systems.

Sciensano. Belgian National Burden of Disease study protocol (context on MZG and APR-DRG use).

AHIMA. CCS Exam Content Outline (effective 05/01/2024); CCA Exam Content Outline; Train-the-Trainer Programs.

EuroDRG (EU CORDIS) (2024). Project reporting summary (harmonization/comparability rationale). 

Van Osta, P. An essay concerning a new Healthcare.

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