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

• Published in: BMC health services research 2019-10, Vol.19 (1), p.776-776, Article 776
• Main Authors: Choi, Jae Woo, Kim, Seung-Ju, Park, Hye-Ki, Jang, Sung-In, Kim, Tae Hyun, Park, Eun-Cheol
• Format: Article
• Language: English
• Subjects: Adult; Aged; Diagnosis related groups; Diagnosis-Related Groups - economics; Difference-in-difference methodology; Effect evaluation; Fee-for-Service Plans - economics; Female; Health insurance; Hospitals; Humans; Insurance; Insurance Claim Review; Length of Stay - statistics & numerical data; Male; Mandatory DRG policy; Mandatory Programs; Medical care; Medical care quality; Medical economics; Medical research; Middle Aged; Patient care; Patient Readmission - statistics & numerical data; Pricing; Program Evaluation; Quality management; Quality of Health Care - statistics & numerical data; Republic of Korea; South Korea; Young Adult
• ISSN: 1472-6963; 1472-6963
• DOI: 10.1186/s12913-019-4650-8

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. We 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. Most 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. Our 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.