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THE NEW DIAGNOSIS RELATED GROUP REIMBURSEMENT SYSTEM DECREASES MEDICAL COSTS AND CHANGES SOME PHYSICIAN TREATMENT BEHAVIOR

Ling-Jan Chiou*
Department of Health Business administration, Meiho University, Taiwan, R.O.C.
*Corresponding author: This email address is being protected from spambots. You need JavaScript enabled to view it.

Te-Chin Hsu
Department of Health-Business administration, Fooyin University, Taiwan, R.O.C.

Ping-Ju Tsai
Department of Surgery, Yuan’s General Hospital, Taiwan, R.O.C.

Abstract

Findings regarding the effect of the diagnosis-related group (DRG) reimbursement system on medical costs and length-of-stay (LOS) have been inconclusive. This hospi-tal-based study assessed the effect of a newly implemented DRG reimbursement system on medical costs, claims, LOS, and the behavior of physicians using transurethral re-section of the prostate (TURP) to treat patients with benign prostatic hyperplasia. We retrospectively collected one regional hospital’s claims data (reported medical costs, claims, and LOS) for the treatment of patients with TURP for three years prior to and four years after a DRG was implemented. One hundred eighty patients (63 before, 117 after) were included. Compared with pre-implementation calculations, the implementa-tion of DRG significantly reduced medical costs (in cost points 37867.43 ± 5219.77 vs. 35588.78 ± 4763.34, p< 0.01) in both descriptive and regression analyses, in which it accounted for 4.7% of the variance. It shortened LOS in our descriptive analysis (4.22 ± 1.04 vs. 3.87 ± 1.04, p < 0.05). Laboratory fees and radiation fees were found to be the most reduced by DRG (by 909.15 and 184.37 cost points; both p < 0.001). Com-paring costs and claims, we found the new DRG increased hospital revenues, though not significantly. Some physicians’ prescribed radiation and laboratory fees changed in response to the new DRG. DRG significantly decreased medical costs and changed the treatment behavior of some physicians, suggesting physician treatment behavior may be targeted for further improvement in revenues.

Keywords: Diagnosis-related groups, Healthcare Costs, Length of stay, Physicians

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