KUALA LUMPUR, Nov 14 — The Ministry of Health (MOH) is considering implementing a diagnosis-related groups (DRG) payment system to regulate private hospital bills.
Health Minister Dzulkefly Ahmad said that while the system is still under consideration, it represents a potential path forward for more standardised and predictable billing.
“Although it has not been put in place, I will want to believe that this (DRG) is the way forward. Whether through DRG or, in fact, people are now moving towards case-related groups (CRG) – that would be really value-based,” Dzulkefly told reporters at the launch of the Association of Private Hospitals Malaysia (APHM) Factbook 2024 yesterday.
“It is still a work in progress. I’ve spoken to my medical advisors, Abu Bakar Suleiman, and we are really looking into this. This is the way forward for us. For now, I wouldn’t say it’s laissez faire but it’s almost like that.
“So that would be a better way to get to understand how you are charging…whether it’s DRG and later on CRG, we would be in a better position to mitigate this medical inflation,” Dzulkefly added.
Diagnosis-related groups (DRG) payment system involves paying a fixed amount based on the complexity of a case, rather than itemising each charge. This would mean that hospitals receive a set amount (e.g., RM21,000) for a patient’s treatment and must manage resources within that budget. This fixed payment model could help regulate medical costs by limiting excessive charges while maintaining quality of care.
Case-related groups (CRG) payment system is a method used in health care financing that classifies patients based on the type and complexity of the medical case they present. Under CRG, payments to health care providers are made based on the type of medical case, rather than on individual procedures or services provided. This system aims to standardise payments and improve the efficiency of health care delivery.
The move comes as Malaysia grapples with an inflation rate of around 12.5 per cent for medical services, making it one of the highest in recent years. While there have been measures to regulate doctors’ fees, Dzulkefly said it is “alarming” how hospital fees have increased “very significantly”.
“The impact to the rakyat is high, so there must be further discussion to ensure the prices of medical services in private healthcare can be more reasonable,” Dzulkefly said. “The MOH would urge private health care to do more to control these increasing health care costs for the benefit of the rakyat.”
In August, Mark O’Dell, the CEO of Life Insurance Association of Malaysia (LIAM), told CodeBlue that if the MOH mandates the use of DRGs, it could enforce regulations similar to those for doctors’ fees. Under the Private Healthcare Facilities and Services Act (PHFSA) 1998, consultation fees for private clinics and hospital specialists are already capped at prescribed rates.
O’Dell pointed out that DRG rates could be adjusted based on factors like geography and hospital capabilities, citing similar approaches used during public-private collaborations such as in the Covid-19 pandemic.
APHM president Dr Kuljit Singh, meanwhile, defended the private hospital sector, stressing that many misconceptions exist about private health care.
“Many harbour the misconception that private hospitals are driven solely by profit. Such narratives detract from the significant contributions we make towards patient care and national health. In reality, our industry is strictly regulated to ensure safety and quality.
“Price transparency stands as a cornerstone of our practices, challenging the impression of profiteering,” Dr Kuljit said.
Dr Kuljit also highlighted that private hospitals are among the top ten contributors to Malaysia’s gross domestic product (GDP), generating RM12 billion in economic activity.
In addition, private hospitals contribute RM2 billion in insurance payments for health care treatment and are seeing notable growth in medical tourism.
