DRG codes: Medicare inpatient payment and volume, 2024

A DRG code is how Medicare buys a hospital stay. Rather than itemize every test, drug, and bed-day, the program assigns each inpatient admission to one MS-DRG — a Medicare Severity Diagnosis-Related Group — based on the patient's diagnoses and procedures, and pays a single bundled rate for that group. The code is the price tag. Knowing what each one pays, and how often it is billed, is the entry point to almost any question about Medicare hospital spending.

This is a reference. It aggregates the CMS Medicare Inpatient Hospitals by Provider and Service public-use file — one row per hospital per DRG — up to the national level, for every MS-DRG present in the most recent program year. For each code it reports four numbers: how many times Medicare paid it (discharges), what hospitals billed for it (average covered charges), what Medicare actually paid (average Medicare payment), and how many hospitals reported it (provider count).

What the 2024 file shows

The 2024 release covers 540 distinct MS-DRGs, billed across 2,906 hospitals over 4,952,481 discharges. Discharge-weighted across all of them, Medicare paid an average of $15,166 per stay — against $92,408 in average billed charges. The gap between what hospitals charge and what Medicare pays is 6.1×, and it holds, with wide variation, across nearly every code in the file.

Two facts make the reference useful at a glance. The volume is concentrated: the busiest handful of DRGs account for a large share of all discharges, and they are overwhelmingly medical — sepsis, heart failure, pneumonia, kidney infection. The cost is concentrated somewhere else entirely: the most expensive DRGs are rare surgical and cellular therapies that almost no patient receives. A DRG that tops one ranking rarely appears on the other.

A DRG code is a price the government sets, not the hospital. Across 540 of them, Medicare paid roughly a sixth of what hospitals charged.

The highest-volume DRGs

Ranked by national discharges, the top of the 2024 reference is a list of common, acute medical admissions. Sepsis without prolonged ventilation, with a major complication or comorbidity (MCC), is the single most-billed Medicare DRG in the country.

The per-stay Medicare payments here cluster between roughly $6,000 and $16,000. None of them is individually expensive; they matter because they recur hundreds of thousands of times. The two sepsis codes alone — DRG 871 and DRG 872 — account for more than 680,000 discharges, the largest single clinical category in Medicare inpatient care.

The costliest DRGs

Rank the same reference by Medicare payment instead, holding to DRGs with at least 1,000 national discharges so the top is a stable reference rather than a handful of cases, and the list changes completely. These are transplants, cellular therapies, and extended critical care.

The costliest single code, CAR T-cell immunotherapy (DRG 018), averages $434,771 per stay — 29 times the all-DRG average. It was billed by just 49 hospitals across 1,360 discharges. The provider-count column is the tell: high-cost DRGs are performed at a narrow set of academic and specialty centers, while the high-volume DRGs above are billed by more than two thousand hospitals each.

Charges, payments, and the 6.1× gap

The two dollar columns in the reference measure different things, and the distinction is the most common source of confusion about hospital prices. Average covered charges are the hospital's list price — the amount it billed. Average Medicare payment is what Medicare actually paid under the DRG rate. Charges are set by the hospital and are rarely paid in full by anyone; the DRG payment is administratively set and is what changes hands.

Across the whole 2024 file, charges run 6.1× the Medicare payment — $92,408 against $15,166. The multiple is not uniform: it is widest on the high-charge surgical DRGs (CAR T-cell therapy billed $2.19M against a $435K payment, roughly 5×) and on common medical DRGs alike. We documented the facility-level version of this charge-to-payment spread, and how it varies hospital by hospital, in the hospital charges by DRG study. The reference here is the national counterpart: one row per DRG, every DRG in the file.

How to read a DRG code

MS-DRGs are not arbitrary. The numbering follows the body system and the kind of care, and most codes come in graded pairs or triples that encode severity:

1. The base group is a clinical category — sepsis, heart failure, joint replacement, a transplant.
2. The severity tier is appended as a suffix in the description: with MCC (major complication or comorbidity), with CC (complication or comorbidity), or without CC/MCC. Each tier up pays more, because sicker patients cost more to care for.
3. The payment follows the tier. DRG 871 (sepsis with MCC) pays $15,524; its sibling DRG 872 (sepsis without MCC) pays $7,681 — the same condition, half the rate, decided by the complication coding.

This is why two codes that look almost identical can sit far apart in the reference, and why the with MCC variants dominate the volume rankings: the sickest version of each common condition is both the most expensive to treat and, among Medicare's older and frailer population, often the most frequently billed.

Across all 540 DRGs, the median code is billed by 53 hospitals and carries a median Medicare payment of $15,170 — almost exactly the discharge-weighted national average, a coincidence that reflects how the common medical DRGs anchor the middle of the distribution. 260 of the 540 DRGs clear 1,000 national discharges; the long tail below that is the rare-procedure and rare-diagnosis codes.

Methodology

Every figure is a direct aggregation over one public, row-level-signed Postgres table: inpatient_utilization_summary, built from the CMS Medicare Inpatient Hospitals by Provider and Service public-use file (MUP_IHP). The table carries one row per hospital (ccn) × MS-DRG (ms_drg_code) × program year (data_year); it is RLS Pattern B, public read. The snapshot used here was pulled 2026-06-11 and covers program year 2024, the most recent annual release.

The program year is resolved as max(data_year) at query time, never hard-coded, so the reference advances when CMS publishes the next file. Per-DRG aggregates are computed by GROUP BY ms_drg_code over the hospital-level rows. Dollar averages are discharge-weighted — sum(metric × total_discharges) / sum(total_discharges) — so a small hospital does not count the same as a large one, and the result reproduces the per-stay average a payer would observe nationally. Provider counts are count(DISTINCT ccn) per DRG. The charge-to-Medicare multiple is the ratio of total billed charges to total Medicare payments, both discharge-weighted.

CMS suppresses any hospital-DRG cell with fewer than 11 discharges; those cells arrive null and are excluded from every weighted average rather than imputed. The exact SQL is in the reproducibility block below, and the row-level signing contract is documented in the provenance methodology. Methodology version: drg-reference/v1.

Limitations

• Medicare fee-for-service only. The file covers traditional Medicare Part A inpatient stays. It excludes Medicare Advantage, Medicaid, and commercial admissions, so the volumes are a floor on total US inpatient activity, not the whole.
• Charges are list prices, not transactions. Average covered charges are what hospitals billed, not what anyone paid. They are useful as a relative signal across DRGs, not as a measure of cost.
• Suppressed small cells. Hospital-DRG combinations under 11 discharges are withheld by CMS and excluded here. For rare DRGs at low-volume hospitals, the national totals understate true activity by an unknown but small margin.
• One program year, one snapshot. The reference is point-in-time: program year 2024, snapshot 2026-06-11. DRG definitions and payment weights are revised annually, so figures are not directly comparable across years without re-basing.
• Descriptions are abbreviated. MS-DRG titles in the tables are shortened for readability; the code is the authoritative key, and the full CMS long title governs.
• A payment reference, not a quality signal. These figures describe what Medicare pays and how often, never how well any hospital performs. No facility is ranked, scored, or surfaced by name in this study.

Sources

• CMS — Medicare Inpatient Hospitals by Provider and Service — the inpatient DRG public-use file (MUP_IHP), program year 2024, the sole source for this reference.
• CMS — Medicare Inpatient Hospitals methodology — CMS's own definition of charges, payments, and the suppression rule for small cells.
• CMS — MS-DRG classifications and software — the official MS-DRG grouping logic and annual definitions manual.
• 42 CFR Part 412 — Prospective Payment Systems for Inpatient Hospital Services — the regulatory basis for DRG-based inpatient payment.

The companion dataset page for the CMS Medicare Inpatient Hospitals file lists the full schema and refresh cadence; broader hospital-finance context sits in hospitals running low on days cash on hand and who owns America's hospitals and which model makes money.