Diagnosis-related groups of illness, or DRGs, is a system begun in the U.S. in 1983 to classify hospital cases into categories with each expected to have similar hospital resource use—developed for Medicare as part of its prospective payment system. DRGs are assigned based on International Statistical Classification of Diseases (ICD) diagnoses, procedures, age, sex, discharge status and the presence of complications or comorbidities. DRGs are used to determine how much Medicare pays the hospital, since patients within each category are similar clinically and are expected to use the same level of hospital resources. Private payers also have adopted DRGs. Before prospective payment, Medicare reimbursed hospitals on a fee-for-service basis. And since the inception of DRGS, there have been several iterations. For example, prior to 2008, hospitals treating more severely ill patients in certain DRGs than those of the average hospital often did not receive payment levels commensurate with the costs of treating such patients. This prompted the CMS to adopt the Medicare Severity Diagnosis Related Groups (MS-DRGs) in 2008 to better align payment levels with a DRG that more adequately considers differences in patient severity of illness.