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FEATURE: Hospital payment system on hold

After waves of protests from the medical community, the Bureau of National Health Insurance (BNHI) has slammed the brakes on the implementation of a radical new payment system for hospitals that was scheduled to take effect in the new year.

On Wednesday, the bureau posted an official notice stating that its Diagnosis-related Group project, nicknamed Tw-DRG, had been shelved for the immediate future.

"We have not given up on the project," said Shen Mao-ting (沈茂庭), the manager of the department of medical affairs at the bureau. "But the voices of protest from large hospitals have been strong."

Some public health experts and medical advocacy groups said they were disappointed by the move, which they see as the BNHI bowing to pressure from those in the medical community unwilling to accept a tool that will bring greater transparency and efficiency to hospital practices.

"After endless expert panels and six years of deliberation, it looked like we were finally going to get some serious reform in the way hospitals are compensated," said Taiwan Health Reform Foundation (THRF) director Hsiao Min-hui (蕭敏彗). "But now that Tw-DRG is back on the shelf, how much longer will we have to wait?"

Under the now-suspended plan, hospitals would no longer be reimbursed on a fee-for-service basis for most patients. Instead, each patient would be classified into one of 969 diagnostic groups and a hospital would be paid the same pre-determined amount for each patient in the same group regardless of how many medical resources were expended on their care.

Payment levels were then further qualified by other factors, such as the patient's age.

Some patients who suffer from conditions that are more unpredictable in the course of their treatment, such as cancer and AIDS patients, would continue to be treated on a fee-for-service basis.

"We know from countries that have previously adopted DRGs that it is an effective tool for cutting waste and improving medical practices," said associate professor Lee Yue-chune (李玉春) of Yang-Ming University. "We have to expect self-interested behavior from medical care providers. As long as we pay them on a fee-for-service basis we are going to see over-medicalization and not enough attention on preventative care."

Dissenting voices have been the loudest from large hospitals, bureau officials said.

Large hospitals argue that they often end up with the cases that are the most difficult to treat because they have the best facilities. The DRG system does not take into account the higher cost of treating these patients.

"Unlike many overseas countries, such as the US, the size of our hospitals varies from tiny 50-bed hospitals to large medical centers," Shen said. "There is a bigger difference in level of equipment and a greater imbalance in the kind of patients they can treat."

The system can be distorted when the most difficult patients gravitate toward the large medical centers, Deputy Minister of the Department of Health Chen Shih-chung (陳時中) said.

"When we do the calculations, it's clear that every large medical center in Taiwan will come out behind if Tw-DRG is implemented as planned," Chen said. "Are they all being wasteful with medical resources? Perhaps. But if not, it means we need to work with Tw-DRG to reflect the fact that they're working with patients that are more difficult than the average patient in their diagnosis group."

When asked about how Tw-DRG might be unfair to large medical centers because of the concentration of difficult cases to larger facilities, supporters of Tw-DRG said the problem was not an insurmountable one.

"If seriously ill patients are not adequately addressed by the system, go ahead and adjust it. If additional time is needed for negotiations with big hospitals, that's fine. But give us a timetable," Hsiao said. "The BNHI officially announced the implementation of Tw-DRG on Feb. 1. So they've already had 11 months to fix those problems."

"What we have here is a situation where pressure brought to bear by the medical community brought the project to a halt," Hsiao said.

Lee was one of the experts consulted by the BNHI when designing Tw-DRG.

"Of course there is still room for fine-tuning on the technical side," Lee said. "What is more troubling to me is the fact that the medical community seem to have dug their heels in against the system."

Shen said it is not possible to say for sure when Tw-DRG will finally be implemented. However, he said he hopes negotiations with representatives of large hospitals will bear fruit "within six months to a year."
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