Patient classification system that categorizes patients who are medically related with respect to principal diagnosis, presence of a surgical procedure, age, presence or absence of significant complications, treatment, and who are statistically similar in length of hospital stay. Medicare hospital insurance payments are based on fixed dollar amounts for a principal diagnosis as listed in DRGs regardless of the amount of charges accrued. See all patient diagnosis-related group (APDRG or AP-DRG) and inpatient prospective payment system (IPPS) .