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TW-DRGs Improve Healthcare Quality, Efficiency and Fairness

  • Data Source:Ministry of Health and Welfare
  • Created:2014-06-19
  • Last Updated:2017-02-03

Under the current National Health Insurance (NHI) global budget system in our country, payment is still mainly based on fee-for-service. This tends to encourage hospitals to provide excessive medical services and thus unnecessary waste, on which reform is truly necessary. Also, the current National Health Insurance Act mandates that diseases of the same category should be paid at the same rate, or under the case-payment plan. Therefore, with reference to the experiences of other NHI countries in their implementation of the DRG system, from 2010 we started to introduce the first phase of TW-DRGs with 164 groups. Phase 2 is expected to start in July this year (2014) to introduce another 254 groups, adopting the ‘package payment’ approach for prospective inpatient care to promote the development of clinical pathways in hospitals and strengthen the management mechanism, in order to improve the quality of care and efficiency, and to achieve fairness of payment among peers. 

During the implementation process of the aforementioned TW-DRGs, the National Health Insurance Administration (NHIA) invited hospital groups for communication and coordination on many occasions. In accordance with regulations of the National Health Insurance Act, it also invited insurance contracted medical service providers, the insured, experts and scholars to hold joint meetings for the drafting of medical service payment items and criteria through concurrent resolution. The resolution was then submitted to the Ministry of Health and Welfare (MOHW) for its approval, publication, and implementation; in no way was it solely decided by the NHIA. 

The TW-DRGs payment system divides the inpatient into different groups based on a series of their conditions, including diagnosis, surgical procedure or treatment, age, gender, with or without comorbidities or complications, discharge status, and so on. The use of medical resources of each group is taken into account in setting its payment rate in advance. Therefore, the DRG is not a system that applies one single rate to hospitals, regardless of the level of severity of the disease and the method of treatment. As a result, depending on various factors such as diagnosis, whether there is a comorbidity or complication, whether surgical procedure is performed, and so on, the same disease may fall into different groups, and have different payment rates. Furthermore, different bonuses may be added according to the severity of disease in different hospitals. It is far from applying one single rate to the same disease, as claimed by outsiders. 

In addition, to protect patients’ medical interests and safety, as well as prevent cases from being passed around, critically ill patients, such as those with cancer or hemophilia; under hospice care or ECMO treatment; with psychiatric illnesses, AIDS, rare diseases, coagulation factor abnormalities, organ transplant complications and subsequent hospitalization; and those hospitalized for more than 30 days, are excluded from the scope of TW-DRG application. In other words, these cases remain in the current fee-for-service payment scheme. Also, to prevent the impact on emergency patients’ interests, cases of intra-aortic balloon pump (IABP) are also excluded from the application of Phase 2. 

Since the implementation of TW-DRGs, the NHIA has endeavored to guard public interests and medical expenses by ways of regular monitoring and counseling. According to its statistics, a comparison of data after the implementation of TW-DRGs (2013) to those before its implementation (2009) shows that the average length of hospital stay per person has gone down (from 4.39 days to 4.15 days, with 0.24 days reduction); in addition, the TW-DRG transfer rate of hospitalized cases, rate of returning to emergency department (ED) within 3 days, and rate of readmission within 14 days also decreased (-0.06%, -0.06%, -0.24%), showing that the efficiency, quality, and accessibility of healthcare services have all increased after the implementation of TW-DRGs. In addition, an academic study commissioned by the NHIA shows that the implementation of the DRG system has not reduced the level of patient satisfaction with medical care. 

To ensure that public health services are not affected under the DRG system, after the introduction of Phase 2 DRGs, the NHIA will continue the current mechanism of regular monitoring on four aspects, namely medical efficiency, cost transfer, medical accessibility, and effectiveness, to protect patients’ medical interests.