New hospital insurance system to start next year

A radically different payment system for hospitals will be introduced next year, the Bureau of National Health Insurance (BNHI) announced yesterday.

BNHI officials said that the new system would reduce inefficient use of medical resources and shorten hospital stays, although critics said the system was open to abuse and that patients might suffer.

Instead of hospitals being reimbursed on the current fee-for-service basis, the new system revolves around hospitals being paid the same pre-determined amount for each patient in the same diagnosis-related group (DRG), even though the amount of medical services the patient used might be different. The system, called the "Taiwan DRG" (Tw-DRG), would be phased in slowly over four years, starting next year, the officials said.

"I have seen the Taiwan DRG referred to in the media as `same disease, same payment,' but this is highly misleading," Lee Chun-fu (李純馥), chief of the medical management division's payment standards section, told a press conference.

"Patients suffering from the same disease could end up in different groups depending on the seriousness of their condition or their number of complications. The point of DRGs is to group patients that could be expected to expend a similar amount of resources," Lee said.

All hospital cases will be divided into one of 969 diagnostic groups. Payment levels are further qualified by factors such as the age of the patient. Many cases will still be treated on a fee-for-service basis, including cancer and HIV patients, those with rare diseases and those who are hospitalized for more than 30 days, owing to the high variance in the course of their treatment.

A major concern for the success of the new system is making sure that medical care providers do not exploit the system, either by "upcoding" less serious patients into a high-paying group or by dumping difficult patients on other care providers, said Tsai Yi-hung (蔡逸虹), a specialist committee member in the medical management division.

"Rigorous monitoring will be key to making Tw-DRG work," she said.

"We are not using DRGs as a cost-reducing measure; the idea is to reward efficiency," Lee said.

"We will pay hospitals the average sum for all patients in the same group. If they can achieve a positive outcome while trimming unnecessary tests, they get to pocket the difference. Those who are inefficient would absorb the costs," Lee said.