Objective: How implementing diagnostic-related grouping (DRG) payment affected the use of opioids and psychotropics by hip fracture patients following hospitalization remained unknown. Design: A retrospective, pre-post design, cohort study of data excerpted from Taiwan’s National Health Insurance Research database (NHIRD). Setting and participants: Adults aged ≥ 65 years first admitted for hip fracture surgery from 2007 to 2012 were identified and divided into two 1:1 propensity-score matched groups: pre-DRG (2007–2009); DRG (2010–2012). Measurements: The outcome measures were use of opioid and/or psychotropic drugs within 30 days, 90 days, 180 days, and 365 days after discharge. Results: Data of 16,522 subjects were excerpted, and 8,261 propensity-score matched subjects each classified into the pre-DRG and DRG groups. After adjustment, the DRG group was significantly more likely than the pre-DRG group to have used antipsychotics after discharge from hip fracture surgery (≤30 days, ≤90 days, ≤180 days and ≤365 days). The DRG group also had significantly higher prescription rates of benzodiazepines and antipsychotics during the observation period. Moreover, the DRG group was less likely to use non-steroidal anti-inflammatory drugs (≤30 days, ≤90 days, ≤180 days and ≤365 days) and more likely to use acetaminophen (≤30 days, ≤180 days, and ≤365 days). Conclusions: In conclusion, DRG implementation in Taiwan substantially increased post-acute prescription of antipsychotic and psychotropic agents for hip fracture patients, and changed use of analgesics, which may result in suboptimal quality and safety for these patients. Further research is needed to evaluate the long-term outcomes of DRG implementation, and the potential benefits of appropriate post-acute care bundled with DRG payment.