KUALA LUMPUR, May 29 — The government has “delayed” mandating a diagnosis-related groups (DRG) payment system for private hospitals, despite touting it as a solution to reduce hospital charges.
The Ministry of Health (MOH), in particular, had been flogging DRG to show its role in curbing medical inflation, after Bank Negara Malaysia (BNM) announced interim measures in December 2024 to limit health insurance premium increases to 10 per cent.
Insurance companies have reportedly been ignoring the central bank, as Bayan Baru MP Sim Tze Tzin continued highlighting cases of medical insurance premium hikes, particularly for senior citizens who were hit with age-bracket repricing of up to 50 per cent.
IHH Healthcare Berhad, a major private hospital group, confirmed yesterday an earlier report by The Edge on how the government’s plan to introduce DRG will skip private hospitals in the first phase.
DRG, already delayed to the end of this year, will instead be “piloted” in select public hospitals to cover outpatient, sub-acute, and chronic conditions, The Edge reported.
“DRG works well in the public sector, where there is standardisation of rooms, facilities and amenities. While the MOH has not ruled out implementing DRG in private hospitals, it has deferred the plan. More study is needed,” IHH Healthcare group CEO Dr Prem Kumar Nair reportedly told a media briefing yesterday after the company’s annual general meeting.
Dr Prem reportedly said implementing DRG – which is a reimbursement model of fixed payments per episode of care, rather than the current fee-for-service model – would be difficult for private hospitals due to their varied service levels and pricing.
CodeBlue previously reported that the MOH has been implementing DRG in its hospitals for years, beginning with a pilot in six MOH hospitals in 2010 before full expansion to all 149 MOH hospitals in 2023.
Despite having had the DRG system in place at dozens of hospitals for nearly a decade, the MOH has only ever used historical budgeting for its ministry-wide allocations.
If the government’s intended so-called “pilot” of DRG in public hospitals is to target university hospitals, tertiary centres like Universiti Malaya Medical Centre (UMMC) have implemented DRG since 2020.
Neither Health Minister Dzulkefly Ahmad nor the MOH announced the abandonment of DRG for private hospitals.
Instead, Dzulkefly wrote on Facebook last Tuesday, in a post on the EU-Asean Health Summit, that Malaysia is currently in the early phase of implementing a patient classification system based on diagnosis and procedures, or DRG, “for public hospitals to increase efficiency and transparency in treatment charges”.
The DRG idea was introduced not because of public hospital charges – which are heavily subsidised for Malaysians – but because of huge private hospital bills and complaints from health insurers.
