In 1984, expenditures for health care in the United States were nearly $350 billion, more than 10% of the gross national product, and continued increases exceeding the general economic growth are projected. Cardiology and cardiovascular surgery represent a large part of this cost, reflecting the many new diagnostic and therapeutic procedures developed over the past 2 decades. Previous cost containment attempts failed because they provided no incentive to reduce spending for advanced technologies and procedures. A method of payment based on a case mix of 467 diagnosis related groups (DRGs), average duration of hospital stay and location of hospitals has been developed for Medicare. A 4-year trial using this method in New Jersey resulted in lower hospital costs per capita than in the rest of the country. In October 1983, a 3-year phase-in for all Medicare payments by the DRG method began. The 43 DRGs assigned to cardiology and cardiovascular surgery are among the highest-weighted for large reimbursement; thus, with the great number of aging patients with cardiac diagnoses, cardiology represents a very large share of the cost of medical care today. Because the quality of care can be determined and compared directly with costs, cardiology DRGs lend themselves to careful analysis. Three components will be examined. Coronary bypass surgery is the largest single reimbursement, thus the rationale for its use should be carefully studied. Coronary care units have markedly increased hospital costs for acute myocardial infarction, but have also improved care.(ABSTRACT TRUNCATED AT 250 WORDS)