MS-DRG, IR-DRG and AR-DRG: how the three DRG systems differ

At a glance

The differences that decide which one you need are ownership, mandate and code set. Everything else follows from those three.

What all DRG systems have in common

Every family takes the same minimum dataset — principal diagnosis, additional diagnoses, procedures, demographics, discharge status — and maps it onto a single payment group through an ordered set of rules. Every family partitions surgical from non-surgical episodes, adjusts for complications and comorbidities in some form, and is versioned on an annual or near-annual cycle.

So the operational disciplines transfer even when the classification does not: complete documentation, disciplined coding, and a grouper whose version matches what the regulator is measuring you against. What does not transfer is the code set and the group definitions themselves.

MS-DRG — the US Medicare system

MS-DRG is maintained by CMS and is in the public domain, which is one reason it is the reference implementation most literature is written about. Cases are grouped from the principal diagnosis plus additional diagnoses and procedures, with age, sex and discharge status affecting a small number of groups.

Severity is expressed through complications and comorbidities: a base group typically splits into versions with an MCC, with a CC, or with neither. For FY2026 there are 770 MS-DRGs.

It is not a Gulf market, and it is not a NANO product target. It matters here because it is the highest-volume term in the family and the definitional anchor most readers arrive through — which makes it an editorial target rather than a commercial one.

• MS-DRG explained

IR-DRG — the system the UAE uses

IR-DRG is maintained by Solventum, and its use is governed by a commercial agreement with them. It was designed to be applied across health systems with different coding conventions, so the same episode produces the same IR-DRG regardless of which coding system described it. Its inpatient logic derives from the All Patient Refined methodology, it carries three severity levels, and — unusually among DRG families — it groups ambulatory encounters as well as admitted ones, covering day-case interventions, emergency attendances and other acute outpatient activity.

Abu Dhabi’s Department of Health made IR-DRG the accepted method for inpatient claiming from 1 January 2013. Dubai’s DHA mandated DRG submission on eClaimLink from 1 September 2020, choosing IR-DRG because it works with the ICD-10-CM and CPT coding Dubai already ran.

NANO AIR-DRG produces IR-DRG output for that submission. It is NANO’s own grouper; Solventum maintains the IR-DRG classification itself.

• IR-DRG in the UAE
• NANO AIR-DRG

AR-DRG — the system Saudi Arabia uses

AR-DRG is maintained by IHACPA, the Australian government pricing authority, and is underpinned by the Australian coding standards: ICD-10-AM for diagnoses, ACHI for procedures and ACS for the coding rules themselves. Version 12.0 was approved in April 2025 and prices admitted acute care episodes from 1 July 2026.

Saudi Arabia adopted AR-DRG through the Council of Health Insurance as a payment mechanism, with NPHIES as the exchange layer and the Saudi Billing System alongside it. Providers in the Kingdom currently group on AR-DRG Version 9.0.

Version support and certification are separate questions and should be stated separately. IHACPA has certified grouper software only since V10.0, and NANO DRG is certified by IHACPA through AR-DRG V12.0. The Saudi edition groups on the Version 9.0 in force in the Kingdom.

• AR-DRG in Saudi Arabia
• NANO AR-DRG for Saudi Arabia

APR-DRG, and where it fits

APR-DRG adds two dimensions MS-DRG does not carry separately: severity of illness and risk of mortality, each on a four-level scale. That makes it better suited to risk adjustment, outcome comparison and non-Medicare payer contracting than to being a single national payment classification, and it is the methodology IR-DRG’s inpatient logic derives from. You will meet it in quality reporting and commercial payer contexts rather than as a regulator mandate in this region.

Why a Gulf provider group may need two at once

This is the situation the comparison actually exists for. A group operating hospitals in both Saudi Arabia and the UAE is not choosing between classifications — it is required to satisfy both. Saudi Arabia groups on AR-DRG from ICD-10-AM and ACHI. The UAE groups on IR-DRG from ICD-10-CM and CPT. Those are different classifications fed by different code sets, and no amount of preference changes either mandate.

In practice that means running two coding conventions, two grouper versions and two submission paths, and being able to reconcile them well enough that group-level reporting means something. Doing it on two unrelated systems is where the cost lands: two sets of rules to keep current, two audit surfaces, and no comparable view of casemix across the group.

NANO DRG is the AR-DRG grouper certified by IHACPA through AR-DRG V12.0, and supports ICD-10-CM, ICD-10-AM and ICD-9-CM with a crosswalk to ICD-10-AM. NANO AIR-DRG produces IR-DRG output and does not require the record to be fully coded first. Both run on one platform, which is the whole argument.

• NANO DRG
• NANO AIR-DRG
• NANO AR-DRG for Saudi Arabia

What this means for coding and documentation

Whichever family you are measured against, the constraint is the same: the group is derived from the record, so the record is the revenue. Two hospitals with identical patients and different documentation practice will be paid differently under any DRG system.

Where the families differ is what your coders have to know. Moving between ICD-10-AM/ACHI and ICD-10-CM/CPT is not a mapping exercise a tool can fully absorb — the conventions differ, not just the codes — so a group working across both needs coding capability in both, and terminology management that keeps the two consistent where they meet.

• What is clinical documentation integrity?
• NANO AI CDI 360
• DoctorSense
• Terminology management