Final answer:
The Diagnosis-Related Group (DRG) system was implemented for the hospital inpatient setting to classify cases for the purpose of controlling healthcare costs and standardizing hospital billing, especially for Medicare and Medicaid patients.
Step-by-step explanation:
The Diagnosis-Related Group (DRG) system was implemented for use in the hospital inpatient setting. This system is used to classify hospital cases into groups that are expected to have similar hospital resource use. DRGs are assigned by using algorithms that consider primary and secondary diagnoses, surgical procedures, comorbidities, complications, and patient demographics such as age and gender. The creation of DRGs was part of an initiative to control healthcare costs and provide more effective management of hospital billings for Medicare and Medicaid patients. By grouping cases into DRGs, hospitals receive a fixed payment per case, incentivizing more cost-effective care.