Prospective payment rates based on diagnosis related groups (DRGs)have been established as the basis of Medicare' s hospital reimbursement system.The purpose of the DRGs is to relate a hospital's case mix to the resource demands and associated costs experienced.The patient characteristics included in the definition of each DRG relate to a common organ system or etiology,and each DRG should contain patients,who are similar from a clinical perspective,with a similar pattern of resource intensity.DRGs were divided by principle diagnosis,major surgery,major complication and/or comorbidity,age,sex,birth weight etc.Using a grouping software(version 18)by DRG definitions used in the United Stated,we encoded the hospital discharge data of all secondary and senior hospitals in Beijing.After analyzing the DRG grouping,as well as rationality and weighting of these DRG groups,we concluded that it was feasible to encode Chinese data using US DRG definitions with specific adjustments accommodating to relevant conditions in China.