DRG reform could reduce costs, improve quality

A review of Europe's diagnosis-related group payment codes suggests the United States could cut down on healthcare costs by refocusing its own DRGs, according to a new study in Health Affairs.

"We believe that numerous features and innovations of European hospital payment systems can serve as models of better ways of paying for hospital care in the United States," states the article, written by researchers at the Berlin University of Technology in Germany.

DRGs used in many European countries tend to promote cost transparency, and make it easier to determine which patients are likely to use more or less healthcare resources, the authors note.

Moreover, most hospitals are laboring under global budgets that cover patient care. In Germany, for example, if a hospital exceeds its budget one year, payments based on DRGs are reduced the following year.

The Health Affairs article shows many DRG systems also take physician fees into account. Hospitals that follow specific best practice guidelines for caring for stroke or other seriously ill patients may receive higher payments  to ensure better quality.

There has been some cost-shifting to patients in these systems, particularly with the application of user fees. But in England, for example, such increases are pegged to the national inflation rate, according to the article.

However, there tends to be resistance to change payment systems in the United States, even to the current DRG system. In Florida, for instance, the state's hospital association is lobbying to block a potential switch from fee-for-service to DRG-based payments for the Medicaid program, reported the Fort Lauderdale Sun-Sentinel.

For more:
- here's the study abstract (subscription required for full access)
- read the Sun-Sentinel article

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