In America, and Australian, Diagnosis Related Groups, known as DRGs is a method to identify and classify inpatients that have the same resources within hospitals based on Clinical Pathway. It has numbering/coding system used like a menu for determining the cost. The co morbidity and/or co mortality of a di-sease is called the Casemix, where it has numbering/coding that shows the degree of severity, which the cost linearly increased. Therefore the financing is based on the in-patients’ ”recovery” (cost of treatment per diagnosis), and not based on the utility of the medical and non medical treatments ( fee for services). One of the issues arise in Indonesia’s health financing system is that it does not have the costing model for health care financing, for inpatients from ad-mission to discharge (cost of treatment per diagnosis). Therefore the financing system used is based on fee for services. Using Australian DRG as reference, the concept of Indonesia–DRG / INA–DRG is developed by the researcher with Graduate Students in the Public Health and Hospital Administration Program, Postgraduate Studies Faculty of Public Health University of Indonesia, in Thesis.