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3M APR DRGs are the standard for inpatient classification.
3M sets the standards with more than 35 years of experience. Nobody understands severity and risk-adjustment methodologies better. We built them. We develop and refine them. We know how they impact your organization. And we can show you how to use them to improve quality of care, lower costs and improve population health.
3M APR DRGs are the only inpatient classification methodology that is suitable for all patient populations, including sick and healthy newborns, pediatrics and obstetrics. These populations represent 41 percent of privately insured stays and 52 percent of Medicaid stays, but just 0.3 percent of Medicare stays. The Medicare program has specifically advised other payers not to use Medicare DRGs as they were designed specifically for the Medicare recipients and are not inclusive for these populations.
3M APR DRGs define "the product of a hospital." Each of the 332 base 3M APR DRGs classifies patients based on clinical similarities and their use of hospital resources. Further, each base 3M APR DRG is divided into four levels of severity of illness, for a total of 1,330 3M APR DRGs (including 2 error DRGs). This clear and understandable structure enables insight and communication with clinicians.
The logic to assign a patient to one of four severity levels depends on the number, nature and interaction of complications and comorbidities (CCs) for that base 3M APR DRG specifically. By contrast, in the Medicare DRG methodology, each base DRG has at most three severity levels, which are assigned based on the simple presence of a CC or a major CC. As a result, the 3M APR DRGs are a more accurate measurement of severity even for cardiac, respiratory and other patient types often covered by Medicare.
3M APR DRGs are closely integrated with other 3M methodologies used to measure hospital performance in terms of potentially preventable complications, potentially preventable readmissions and mortality. These quality measures, as well as efficiency measures such as cost per stay, are risk adjusted using 3M APR DRGs to enable impartial comparisons across hospitals and other inpatient populations. 3M APR DRGs are also used to define inpatient stays in measuring population health (i.e., potentially preventable admissions) and as anchors in defining episodes of care.
All about 3M APR DRGs
3M APR DRGs have become the standard across the U.S. for classifying hospital inpatients in non-Medicare populations. As of February 2023, 29 state Medicaid programs use 3M APR DRGs to pay hospitals, as do approximately a dozen commercial payers. More than 2,400 hospitals have licensed 3M APR DRG reimbursement calculation software to verify payment and analyze internal operations.
The 3M APR DRG methodology classifies hospital inpatients according to their reason for admission, severity of illness and risk of mortality.
3M APR DRGs are used by payers, hospitals and researchers. Payers often use 3M APR DRGs as the basis for an inpatient prospective payment method and as the risk adjustor in measuring hospital quality. Hospitals often use 3M APR DRGs in combination with 3M reimbursement calculation software to predict and verify expected reimbursement. Hospitals and researchers use 3M APR DRGs to understand utilization, measure quality and calculate efficiency measures such as risk-adjusted cost per stay.
Here are a few examples of how the 3M APR DRG patient classification methodology can bring value to health care organizations.
3M APR DRG grouping logic is the same for every payer, although different payers choose different configuration options and may follow different update schedules. Each payer that uses 3M APR DRGs makes its own decisions about prices and payment policies. For hospitals, other providers, health plans and other organizations that seek to understand, predict and verify expected payment, 3M makes available software that emulates payer-specific grouping, pricing and payment policy. As of 2021, this payment prediction software is available for approximately 30 payers nationwide.
See what payer-specific grouping and payment prediction software is available by state.
3M also makes available reimbursement calculation software for national payers that do not use 3M APR DRGs, including Medicare DRGs and TRICARE DRGs.
3M APR DRGs are integrated with other 3M patient classification methodologies.
3M has aligned the service line definitions between 3M APR DRGs for inpatient care and the 3M™ Enhanced Ambulatory Patient Groups (EAPGs) for outpatient care. This alignment allows analysis of charges, cost, payment and utilization by service line across both inpatient and outpatient settings.
3M APR DRGs are used to risk adjust the 3M™ Potentially Preventable Complications (PPCs) and 3M™ Potentially Preventable Readmission (PPR) methodologies. 3M PPCs measure the incidence of a wide range of inpatient complications while 3M PPRs are a well-accepted measure of the quality of both inpatient care and post-discharge follow-up in the community.
3M APR DRGs are used to define 3M™ Potentially Preventable Admissions, which are a measure of population health.
3M APR DRGs are used to define certain 3M PFEs. For example, 3M APR DRG 301-1 Hip Joint Replacement triggers Patient-focused Episode 3011 Hip Replacement Procedure.
3M APR DRGs are available in the following 3M products:
Licensees of the 3M APR DRG methodology have access to the following documents on the 3M Customer Support website:
3M experts are available to advise provider organizations, health plans, government agencies and other interested parties on how to obtain maximum value from using the 3M APR DRGs. For example, 3M consultants can help hospitals implement clinical documentation integrity (CDI) programs and use 3M APR DRGs to measure and improve their own cost efficiency and quality of care. 3M consultants can also help payers design payment methods based on 3M APR DRGs and demonstrate how to use 3M APR DRGs to understand patterns of utilization, charges, cost and payment.
The unit of analysis is an inpatient stay at an acute care hospital. All the data required to assign a 3M APR DRG can be obtained from a standard inpatient hospital discharge record, such as the UB-04 form or the X12N 837I electronic transaction. Data fields that are particularly important for 3M APR DRG assignment include all diagnosis codes, present on admission indicators, ICD-10-PCS procedure codes and procedure code date.
3M APR DRGs were first released in 1991. The 3M APR DRG logic uses claims data to assign patients to one of 332 base 3M APR DRGs that are determined either by the principal diagnosis or, for surgical patients, the most important surgical procedure. Each base 3M APR DRG is then divided into four severity of illness (SOI) levels, determined primarily by secondary diagnoses that reflect both comorbid conditions and the severity of the underlying illness, creating the final set of 1,330 3M APR DRGs. The 3M APR DRG logic computes both an admission severity of illness and a discharge severity. The present-on-admission (POA) indicator for each secondary diagnosis is a required data field for computing the severity of illness at the time of admission.
For example, 3M APR DRG 139-1 is Other Pneumonia, severity of illness 1 (minor) while 3M APR DRG 139-4 is Other Pneumonia, severity of illness 4 (extreme). Each base DRG also has four risk-of-mortality levels. Although severity of illness is often correlated with risk of mortality, the two concepts are different and it is possible for a patient to have a high severity of illness but a low risk of mortality. Acute cholecystitis is an example.
The clinical logic is maintained by a team of 3M clinicians, data analysts, programmers and economists. The logic is proprietary to 3M but is available for licensees to view in an online definitions manual.
Each year 3M calculates and releases a set of statistics for each 3M APR DRG based on our analysis of large national data sets. These statistics include a relative weight for each 3M APR DRG. The relative weight reflects the average hospital resource use for a patient in that 3M APR DRG relative to the average hospital resource use of all inpatients. Please note that payers and other users of the 3M APR DRG methodology are responsible for ensuring that they use relative weights that are appropriate for their particular populations. The 3M APR DRG statistics also include data for each 3M APR DRG on relative frequency, average length of stay, average charges and incidence of mortality.
3M APR DRGs can be rolled up into broader categories. The 332 base DRGs roll up into 25 major diagnostic categories (MDCs) plus a pre-MDC category. An example is MDC 04, Diseases and Disorders of the Respiratory System. As well, each 3M APR DRG is assigned to a service line that is consistent with the outpatient service lines that are defined by the 3M™ Enhanced Ambulatory Patient Groups (EAPGs). An example is service line 01.7, General Medicine – Pulmonary.
3M releases a new version of the 3M APR DRGs every October 1, to reflect updates in the ICD-10 diagnosis and procedure code sets and to include enhancements to the clinical classification logic.
Learn more about 3M APR DRGs
Please note that documents not published by 3M do not necessarily reflect 3M recommendations and have not been approved by 3M. These documents are listed here for the information of readers interested in the various ways that 3M patient classification methodologies have been applied. Also note that listing these references does not imply endorsement of 3M methodologies by individual authors, other organizations or government agencies.
Some articles and reports are available from the publishers at no charge, while others require a fee.
This methodology overview details how 3M APR DRG classify hospital inpatients according to their reason for admission, severity of illness and risk of mortality.
3M™ Enhanced Ambulatory Patient Groups (EAPGs) a specifically designed bundled payment appropriate for all ages of patients and the health care provided to them. 3M EAPGs are most appropriate for Medicaid and commercial populations, for example, neonate, maternity and dental care can be accommodated in 3M EAPGs.
Read about the beginnings of 3M DRGs in case mix and resource use theory, to their implementation for payment and now for their current utilization for quality within and outside the hospital.
The 3M DRG experience offers lessons about the effectiveness of financial incentives, the likelihood of adverse effects, the usefulness of case mix measures, the risks of growing complexity and the example that sensible policy need not be the domain of any one political party or other entity.
3M researchers analyzed 30-day mortality after a surgical procedure for two million Medicare inpatients in 2018. Even after clinical risk adjustment, extensive variation in quality outcomes was found across states and hospital types. Hospitals with higher surgical volumes tended to have better quality.
In 2013, California Medicaid reformed its inpatient payment method, with clinical grouping based on 3M APR DRGs and payment policies determined by the state. The payment method is extensively documented on this webpage, including the 2013 policy design document and annual interactive pricing calculators.
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