The impact of a diagnosis-related group-based prospective payment experiment: the experience of Shanghai

Abstract

The purpose of this study is to examine the impact of the 2004 and 2005 Diagnosis-Related Group (DRG)-based Prospective Payment Experiments (whereby a ceiling was set on per case payments for 15 DRGs) of the health insurance system in Shanghai using Differences-In-Differences (DID) and Differences-in-Differences-in-Differences (DDD) empirical strategies. The results show that the Length Of Stay (LOS) of all inpatients suffering from the target diseases during the two test periods responded quickly to the experiment (even though only insured inpatients living in Shanghai were eligible for the DRG-based experiments), thus implying that the DRG-based prospective payment system does not induce physicians to significantly reduce inpatient expenditures but does induce them to reduce the LOS of those suffering from the target diseases. Moreover, costs were shifted to uninsured inpatients suffering from the target diseases: their overall inpatient expenditures increased by 33.6 percentage points more than that of uninsured inpatients during the nontest period in 2005. Thus, the experiments were of limited effectiveness, and cost-shifting to uninsured inpatients was observed during at least the latter test period.

The impacts of DRG-based payments on health care provider behaviors under a universal coverage system: A population-based study

“…We also found new studies reporting the effects of DRG payment after the year of 2000 in Asian countries [21,[23][24][25], European countries [26][27][28][29][30][31], and for international comparisons [8,9]. These studies yielded similar findings to those conducted in the United States.…”

“…Third, several studies have used either a pre-and post-design without a comparison group [18][19][20][21]24,27,29,32,33] or an equivalent control group post-design [31]. Only a few studies have employed a difference-in-differences (DID) design to examine this issue [23,25,30]. The present study used a DID design with a propensity score matching (PSM) approach to examine the impacts of the DRG payment scheme on changes in health care provider behaviors under Taiwan's universal coverage system.…”

“…Second, a number of studies conducted outside the United States were based on selected groups, such as a limited number of geographic areas or hospitals [21,[23][24][25][26]28,29,31]. This study employed a nationwide, population-based dataset to examine this issue.…”

Developing case-mix standards with the Diagnosis-related Groups for payment reforms and hospital management in China: A case study in Xiamen city

“…More importantly, hospitals were found engaging in cost-shifting strategies by which they raised outlays on uninsured patients to compensate for reduced revenues on insured patients. [15] This tells scholars and policymakers that the implementation of scientific payment arrangements may not necessarily lead to immediate cost relief for all patients. An effective DRG-based payment reform must proceed with appropriately aligned incentives and accurate estimation of medical outputs and costs.…”

“…Many past studies evaluating the pilot payment schemes have reported positive effects, mainly in reducing LOS and curbing costs. [13][14][15] Behind the impressive outcomes, however, lie a variety of unintended consequences associated with the DRG payment mechanisms. For instance, Zhang's study in Shanghai, using different-in-difference strategies, discovered several opportunistic behaviors of hospitals intended to safeguard profits.…”