Effects of a mandatory DRG payment system in South Korea: Analysis of multi-year nationwide hospital claims data

Jae Woo Choi,Sung-In Jang,Tae Hyun Kim,Hye-Ki Park,Eun-Cheol Park,Seung-Ju Kim

doi:10.1186/s12913-019-4650-8

Abstract

BackgroundIn 2002, a voluntary diagnosis-related groups (DRGs) payment system was introduced in South Korea for seven disease groups, and participation in the DRGs was mandated for all hospitals beginning in 2013. The primary aim of this study was to compare results reflective of patient care between voluntary participation hospitals (VPHs) and mandatory participation hospitals (MPHs) governed by either the DRGs or fee-for-service (FFS) payment system.MethodsWe collected DRGs and FFS inpatient records (n=3,038,006) from the Health Insurance Review and Assessment for the period of July 2011 to July 2014 and compared length-of-stay, total medical costs, shifting services to an outpatient setting, and readmission rates according to payment system, time of DRGs implementation, and hospital type. We analyzed the effects of mandatory introduction in DRGs payment system on results for patient care and used generalized estimating equations with difference-in-difference methodology.ResultsMost notably, patients at MPHs had significantly shorter LOS and lower readmission rates than VPH patients after mandatory introduction of the DRGs. Shifting services to an outpatient setting was similar between the groups.ConclusionsOur findings suggest that the DRGs payment policy in Korea has decreased LOS and readmission rates. These findings support the continued implementation and enlargement of the DRGs payment system for other diseases in South Korea, given its potential for curbing unnecessary resource usage encouraged by FFS. If the Korean government deliberates on expansion of the DRGs to include other diseases with higher rates of complications, policymakers need to monitor deterioration of health care quality caused by fixed pricing.

Highlights

In 2002, a voluntary diagnosis-related groups (DRGs) payment system was introduced in South Korea for seven disease groups, and participation in the Diagnosis-related groups (DRG) was mandated for all hospitals beginning in 2013
After adjusting for principal diagnosis, patient- and hospital-characteristics, we discovered that the average LOS of Mandatory Participation Hospitals (MPH) patients reduced, compared to Voluntary Participation Hospitals (VPH) patients (Table 3)
In our broad observational study, we found that patients treated at MPHs had significantly shorter LOSs and lower readmission rates than VPH patients following mandatory participation of the DRGs and that shifting services to outpatient settings was similar between the patient groups

Summary

Introduction

In 2002, a voluntary diagnosis-related groups (DRGs) payment system was introduced in South Korea for seven disease groups, and participation in the DRGs was mandated for all hospitals beginning in 2013. The primary aim of this study was to compare results reflective of patient care between voluntary participation hospitals (VPHs) and mandatory participation hospitals (MPHs) governed by either the DRGs or fee-for-service (FFS) payment system. The Korean government preliminarily adopted a pilot program of the DRGs payment system that reflected national average treatment charges among patients in particular disease groups from 1997 to 2002. Korea implemented a voluntary DRGs payment system for groups of seven disease and gained participation from about 61% of all hospitals nationwide [8]. As of 2012, the government executed mandatory participation in the DRGs system, beginning with relatively small medical institutions (clinics or hospitals), followed by larger hospitals (general hospitals or tertiary hospitals) in 2013 [9]

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