DRG is a widely adopted model across countries including Canada, Germany, New Zealand, Australia, Singapore and Hong Kong.

What is DRG?

The DRG is an internationally vetted billing system that uses algorithms to fix base fees for medical procedures thereby streamlining payment protocols and bringing in greater transparency and accountability.

DRG helps health insurance companies categorise hospitalisation costs. Rather than paying the hospital for each specific service that was provided, a private insurer will pay the hospital a predetermined amount based on the patient’s DRG, which is based on a variety of metrics — including patient diagnosis, prognosis and various other factors.

DRG will help reduce rising cost of health care

The move came into effect this month, though it has been in the pipeline for more than four years during which, active consultation and stakeholder engagement with the private sector took place.

Humaid Al Qatami, the Director-General of DHA, highlighted the benefits of DRG for the overall health sector in Dubai and said that it would increase efficiency, further improve provision of health care and reduce health-care costs.

He said that in addition to controlling the rising cost of health care, eliminating waste, helping resource distribution objectively and equitably, generate creative incentives and deliver cost-effective and high-quality health care, DRG will also help with enhancing transparency and benchmark and monitor quality across hospitals and countries.

It will also help maintain high standards of medical practises, clinical pathways and protocols that will help ensure hospitals and health-care providers adhere to unified protocols of health.

A boon to patients

Saleh Al Hashimi, CEO, Dubai Health Insurance Corporation, said: “The implementation of DRG will undoubtedly help both providers and payers and most importantly it will benefit patients as it will further drive up efficiencies in in-patient care.

It will help improve quality of care across the spectrum and it will encourage cost reduction, which will help build a robust and dynamic health sector.” Al Hashimi added: “We believe that DRGs will cause a paradigm shift from being a fee-for-service market environment to a pay-for-performance and get rewarded for clinical outcomes.

Payers will have to continue to get creative with offerings to cater to different sections of the market and some may eventually create a niche for themselves, while providers will have to compete on quality outcomes. The implementation of DRGs focuses on benefitting patients as it will lead to improved efficiencies and quality of patient care.

In the DRG payment model, bundle payments encourage hospitals to be more cost effective in their care delivery. As a result, the cost of health care and premiums will reduce overtime. Hospitals will become more efficient, leading to improved patient outcomes and increased patient satisfaction while reducing waiting time for approvals.”

Moreover, Al Hashimi added that the health sector will also benefit due to planning and research as DRG will provide evidence-based data that can be used to device public health policies with an aim to improve the health and wellbeing of the community.

Measurable benefits of DRG

Efficiency:

1. Reduces the length of stay for in-patient cases.

2. Reduces medical expenditures.

3. Reduction in unnecessary services.

Quality of care:

1. Reduction in readmission rate.

2. Improves patient safety.

3. Adherence to clinical guidelines.

Medical Coding:

1. Increase in accuracy of medical coding.

2. Improvement in clinical documentation.

3. Lower rejection rates.

Management of Complex Cases:

1. Better understanding of patient profiles.

2. Better resource allocation.