Will a ‘Diagnosis-Related Group’ System Help?

Will a ‘Diagnosis-Related Group’ System Help?

LI SHIGONG

Beijing’s new health care reform scheme was formally announced on June 12. The reform will actively probe the various payment methods and a pilot program of the diagnosis-related group (DRG) system will be launched in hospitals.

A DRG system means fxed payment. The health authorities fix the cost each disease requires in hospital care. Even if the actual cost of treatment is less than the set price, the hospital would still be reimbursed in full. It’s hoped the new payment scheme can encourage hospitals to improve effciency and patient care as the hospital would keep any extra money.

Under the current system, patients pay for every item of service they receive. In order to make greater profits, some hospitals tend to exaggerate the extent of diseases by carrying out series of unnecessary and expensive physical examinations, resulting in high service fees. In order to offset the shortcomings of this fee charging system, the DRG system was first launched in the United States, soon followed by other countries such as Australia and Hungary.

The Beijing Municipal Health Bureau said, in 2010, around 50 clinically and clearly defned illnesses will be covered by a DRG scheme. The pilot program is being conducted in two prestigious local hospitals.

Several hospitals in Anhui and Fujian provinces reportedly have also carried out similar reforms.

Health care reform experts point out a DRG system means standardizing the treatment of serious diseases. Although hospitalization expenses in big and mediumsized cities may be quite different, the cost of surgical operations differs only slightly. Thus, it’s feasible to fix the medical treatment cost.

But some people are worried because of differences in medical equipment and varying levels of doctors’ competence in different hospitals, the better hospitals will become filled with patients while other hospitals won’t receive enough patents if they adopt same charging standards. Besides, patients with ordinary ailments cost little while patients in serious conditions tend to cost a lot, and it is possible hospitals will reject seriously ill patients.

A great reform

Luo Ruiming (www.xinhuanet.com): It’s not like shopping, where shoppers may go to different stores to compare prices and services before making purchases. There is no fixed price for medical treatment. Different hospitals and even different doctors in the same hospital will charge differently. Because there is no one set price, doctors are free to do whatever physical examinations and provide whatever prescriptions. As a result, the price stays high.

Doctors have their reasons to sell more than sufficient medication to patients: Selling more medication means the hospital can make more money, which further means the doctor who prescribes the medicine will be better rewarded. Moreover, some pharmaceutical companies pay hospitals a certain proportion of the sales incomes: The more medicine sold the larger the commission will be. Although these practices are illegal, doctors and hospitals do so covertly.

The DRG system will not solve all the problems of medical service charges overnight, but it’s the best way to make it cheaper for patients to go to see doctors at present. As service standards and costs are made public, so the payment process is made transparent, and doctors will fnd it diffcult to do whatever they wish.

Zhao Guangrui (hlj.rednet.cn): As there exists big differences in service and medicine charges for the same disease in different hospitals, if there is a fixed price for the treatment of a certain disease, the gap will surely shrink.

With a fixed price mechanism, unscrupulous doctors and hospitals won’t be as free to do whatever they want to, or they will be held to account for openly violating the system.

The DRG system will help patients know prices more clearly. In the current situation, they know sometimes they are overcharged, but they don’t know what is a reasonable payment level. They don’t know how to disagree with doctors and hospitals. With the support of this new system, theybecome informed and will know how to resist hospitals’ arbitrary fee charges.

The DRG system will also encourage hospitals to behave so as to win in market competition. When there is a fxed price, if a hospital exceeds that, patients will turn to hospitals adhering to the set one. As a result, hospitals that cheat patients will lose revenue.

This is an effective new system that will help to cut down on high health care fees.

Liu Hongbo (Beijing Daily): It is often a case that having a cold cost a patient 1,500 yuan ($220), which is more than 10 times the average treatment cost. With relatively serious diseases, doctors may charge a lot more than is actually necessary. For example, for cancer, the fee charge in one hospital may be 10 times that of another.

If patients have no access to basic information, their rights won’t be well protected. Health care is a professional job and patients can’t quite follow what’s exactly going on. They don’t know what medicine and service is necessary and what is not.

The DRG system offers patients the right to be properly informed with the support of the state.

People often consider it is better to sacrifce all they own to keep their life, so once they become seriously ill, they might give all of their property to hospitals if they save their life. This is the worst kind of trade. The DRG system will somewhat control this kind of bad trade.

Liu Kemei (Guangming Daily): Under the DRG system, there is a fixed price for treating patients having the same disease whatever procedures and medications the hospital uses. With such a system, doctors and hospitals will have the incentive to provide cost-effcient and effective treatment while the long-time problem of expensive medical care in China will be alleviated.

Some people worry while the new payment scheme will help patients save money, it could impel doctors to simplify treatment procedures or opt for cheaper and less effective medication. But pilot programs for this system have proved this concern unfounded.

It’s reported after the Hospital Affiliated to the Jining Medical Institute in Shandong Province started a pilot program of the DRG system in 2004, average treatment cost has dropped by 33 percent. As one of the first pilot hospitals for the system in Henan Province, the No.1 Hospital of the Xinxiang Medical Institute had handled 1,958 cases under the DRG system by the end of November 2007, which saved patients an estimated total of 590,000 yuan ($86,800). There was not one conflict between hospitals and patients in these cases. Successful pilot programs from different places in China like these best demonstrate the advantages of the DRG system.

Hidden risks

Tang Jun (The Beijing News): Internationally, the implementation of the DRG system means a medical insurance agency will pay a set price to hospitals for each disease requiring in-hospital care after the patient receives effective treatment. The payment doesn’t alter with length, procedures or costs of medical care.

In theory, it sounds like ordering food at a restaurant. The customer orders a dish he or she wants and doesn’t have to worry about cooking procedures. The bill will be paid if the dish suits the palate. But the practice of medicine is much more complicated than cooking food.

A medical insurance agency is supposed to pay a fixed price for a medical condition if the patient is effectively treated. Defining the effective treatment of a patient is more complex than commenting on food. There must be clear criteria on the effective treatment of patients and standard procedures to deal with cases where patients die during treatment.

Another hidden risk of introducing the DRG system is that it might affect the quality of medical care. If every disease or condition has a fixed price, hospitals won’t be interested in adopting new technologies. They might refuse to take in patients with more serious conditions or intentionally misdiagnose minor conditions like a cold as pneumonia to charge more. To prevent this, medical insurance agencies must send professional personnel to supervise the practices of hospitals at all times and also take every means possible to prevent the supervisors from becoming corrupt.

There is no universally acknowledged best health insurance system and the effectiveness of the DRG system has yet to be tested by time.

Jia Rujun (hlj.rednet.cn): The DRG system is a little bit like “contracting engineering projects.” When the total budget of a project is fixed, contractors are tempted to drive down the costs by reducing the use of materials or manpower. We cannot help suspecting if the same situation will occur in hospitals and whether doctors will use cheaper and less effective medication on patients or discharge patients from the hospital before they have fully recovered.

The DRG system is designed to control the treatment cost with a single disease and no complications. But what should a surgeon do if he finds a tumor in a patient’s abdomen during an appendectomy? Should the surgeon stop the operation to explain the extra costs to the patient or the hospital frst? Without regulating all possible situations, introducing this system could give rise to a higher degree of conflict between patients and hospitals.

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The media say the DRG system has been implemented in many countries as an effective method of guaranteeing medical cost effectiveness. Since people in China have been complaining about difficult access to medical treatment and heavy costs for a long time, we should try any method likely to solve the problem. But before we put any new scheme into practice, we must frst consider whether it suits China’s particular conditions. After all, our marketoriented health care reform, which was also adopted from other countries, has proved a failure. We cannot afford another round of failed reforms.

Many schemes proved effective in other countries turn out to be ineffective in China. This might have told us that when learning from the health care reform experience of other countries, we also need to study these countries’ advanced legal systems and effective management systems and schemes for our beneft.