Diagnosis-related group (DRG)-based case-mix funding system, a promising alternative for fee for service payment in China

Abstract

Fee for services (FFS) is the prevailing method of payment in most Chinese public hospitals. Under this retrospective payment system, medical care providers are paid based on medical services and tend to over-treat to maximize their income, thereby contributing to rising medical costs and uncontrollable health expenditures to a large extent. Payment reform needs to be promptly implemented to move to a prospective payment plan. The diagnosis-related group (DRG)-based case-mix payment system, with its superior efficiency and containment of costs, has garnered increased attention and it represents a promising alternative. This article briefly describes the DRG-based case-mix payment system, it comparatively analyzes differences between FFS and case-mix funding systems, and it describes the implementation of DRGs in China. China's social and economic conditions differ across regions, so establishment of a national payment standard will take time and involve difficulties. No single method of provider payment is perfect. Measures to monitor and minimize the negative ethical implications and unintended effects of a DRG-based case-mix payment system are essential to ensuring the lasting social benefits of payment reform in Chinese public hospitals.

The suitability of a DRG casemix system in the Maltese hospital setting

“…Casemix classification system is driven by socio-political, cultural and technical factors [44]. Such development is influenced primarily by the intended scope and use of the planned classification system, the underlying population size and the quality and depth of the available coded data [45].…”

“…Indeed, among the priorities identified in Azzopardi-Muscat et al, [24] is the strengthening of the health information system in order to support improved monitoring and evaluation of the health care system. It is also the view of the European Commission, in its country report for Malta [44], that there is an immediate need for improvement in data collection on expenditure, resources and care utilisation, and in the methods used for carrying out of evaluations of quality of care. The limitations in terms of data collection cannot but be acknowledged [2] and the established WHO Small Countries…”

Fee-for-Service

“…Consequently, overtreatment and overprescription caused by the FFS payment system were widespread in China, leading to rising medical costs. In order to contain the continuing growth of health expenditures, the Chinese government was called upon by the World Bank to convert its health system from a purely FFS system to a mixed payment system as early as 1997 (Zhao et al 2018).…”

Vitamin D deficiency and treatment versus risk of infection in end-stage renal disease patients under dialysis: a systematic review and meta-analysis

“…Local government financing is allocated at the provincial level every year, based on the the number of hospital beds. However, government allocations cover less than 10% of funding for most public hospitals (85). The major proportion (more than 90%) of funds for public hospitals comes from fees for medical services and medicines.…”

“…There has been little exploration on whether in-hospital outcomes (admission rates, lengths of stay, mortality during admission) or economic burden differ between these patients. This has implications for how medical resources are allocated at a societal level, especially in the context of the DRGs in China: Payment/reimbursement to the hospital from government is the same if patients are admitted for the same cause, regardless of comorbidities (85).…”