A key factor for a more rapid move towards universal health coverage is the efficient use of resources, coupled with increased resource mobilization and improved pooling. Substantial efficiency gains could be made by reforming hospital payment mechanisms, (1) especially since expenditure on hospital services comprises one of the largest shares of total health-care spending in all countries, regardless of their income level. (1,2)
Payment systems based on diagnosis-related groups (DRGs) are one type of such hospital payment mechanisms, along with capitation payments, global budgets and a combination thereof. Although DRG-based payment systems are now mainly understood as a reimbursement mechanism, their original purpose was to enable performance comparisons across hospitals. (3-5) Today DRGs are used primarily by purchasers to reimburse providers for acute inpatient care, but in principle they can also be used to reimburse them for non-acute inpatient care. By definition, DRGs classify cases according to the following variables: principal and secondary diagnoses, patient age and sex, the presence of co-morbidities and complications and the procedures performed. Cases classified as belonging to a particular DRG are characterized by a homogenous resource consumption pattern and, at the same time, DRGs are clinically meaningful. Thus, cases within the same DRG are economically and medically similar. (2,3) DRG-based payment systems are often referred to as "case-based" or "case-mix-based", yet DRG-based and case-mix-based payment systems are not the same. Even though the two overlap and are separated in practice by fluid boundaries, a DRG-based system is different in that it is based on a DRG grouping algorithm. (4) In fact, the two core design characteristics of a DRG-based payment system are: (i) an exhaustive patient case classification system (i.e. the system of diagnosis-related groupings) and (ii) the payment formula, which is based on the base rate multiplied by a relative cost weight specific for each DRG. (2)
Since the 1990s, payments based on DRGs have gradually become the principal means of reimbursing hospitals for acute inpatient care in most high-income countries. (5) The most frequent reasons for introducing DRG-based payments are to increase efficiency and contain costs. (5) Street et al. have reviewed the little evidence that is available on the impact of different DRG-based payment systems in high-income countries in Europe. (6) Their findings suggest that DRGs generally help to increase hospital efficiency by reducing the average length of stay but that they also increase case volumes.
Meanwhile, more and more low- and middle-income countries have begun to explore or have established DRG-based payment systems, mostly for the reimbursement of acute inpatient care. With the exception of country papers or manuals on how to introduce case-based payment and DRGs, (5,7) there is no comprehensive overview of DRG practices in low- and middle-income countries. This paper addresses this gap in the literature by being the first to provide a comprehensive overview and assessment of DRG experiences in low- and middle-income countries. Its purpose is to compile country experiences and to explore the design and implementation issues that low- and middle-income countries face. Ultimately it will be a source of policy lessons for policy-makers in other low- and middle-income countries who are deliberating on whether or not--and, if so, how--to move towards a DRG-based payment system. Because the evidence is scanty and impact evaluations are few, this paper cannot review the impact of DRG-based payment systems. It can only provide illustrative examples of policy lever effects, primarily from countries that have already established a DRG-based payment system.
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The following section briefly outlines the methods and core design components that we followed in assessing countries' experiences with DRG-based payment systems. …