Are Diagnosis Related Groups based on the admission or discharge diagnosis?

Answer 1

No

Here is a more descriptive answer for you. If the claim is being submitted after discharge, the DRG is based on the final diagnoses codes. If the claim is an interim claim (non-discharged), the DRG is based on admission diagnoses codes. Keep in mind that there are guidelines which limit the provider ability to submit interim claims, so most will be based on final diagnosis.