In order to boost the quality of patient care and the efficiency of medical care in hospitals, starting in January, 2010, Taiwan’s National Health Insurance payment for hospitalization is about to enter the era of Tw-DRGs (Taiwan version of Diagnosis Related Groups) payment system, a payment standard with more incentives for efficiency compared to the current fee-for-service system. The hospital cases introduced this time total up to 155 DRGs, accounting for 17% of the total cost of all hospitalizations. In the future, different DRG items will be introduced in succession depending on implementation status.

        As to the implementation schedule, the BNHI will gradually introduce DRGs over five years. In the first year, the 155 DRGs based on the original inpatient case payment system will be the first to be implemented, with the cost of medical care being about NT$ 24.7 billion which accounts for 17% of the total cost of all hospitalizations and 7% of the 2010 hospital global budget (more than NT$ 330 billion).

        The implementation of Tw-DRGs is beneficial to hospitals that make proper use of medical resources. Under the DRGs payment system, the BNHI pays hospitals a flat fee based on the one-time hospitalization period. If hospitals spare no efforts to take care of patients with efficient provision of medical services, and reduce unnecessary surgery, medications and examinations, they can reduce medical costs. On the contrary, if a patient’s hospital stay is extended or adverse events occur as a result of medical negligence and mismanagement by hospitals, medical costs will then increase proportionally, and hospitals will not get paid under the new payment system.

        In addition, if a patient’s cost of medical care exceeds the upper limit of the flat fee due to the higher severity of illness, the BNHI will further pay the hospital 80% of the amount above the upper limit.

        Implementing DRGs helps to ensure the quality of patient care. Under the new system, in order to boost medical efficiency and reduce costs, hospitals should develop patient-centered clinical paths when treating patients so that patients may receive better quality of care with better efficacy.

        There are concerns that the implementation of DRGs payment system will lead to medical institutions screening patients, and then critically ill patients will have nowhere to go. In fact, the BNHI has worked out complementary measures, including: (a) some severe diseases are not covered by DRGs, e.g. cancer, psychiatric patients, hemophilia, AIDS, rare disorder patients who are hospitalized over 30 days, ECMO cases, kidney transplant complications and patients’ subsequent hospital stays as a result of the complications; (b) to avoid affecting the rights of patients under emergent rescue, devices called IABPs (Intra-aortic balloon pumps) implanted in clinical patients with cardiogenic shock are not included in the flat fee of DRG payment, and hospitals may file claims by actual expenses; (c) as for cases of early transfer to other hospitals or automatic discharge from hospital, different payments will be made in accordance with whether the number of days hospitalized and medical services provided by hospitals are reasonable; (d) to protect patients’ rights, the BNHI will establish monitoring indicators, e.g. the rate of return visits to the emergency room after discharge and the rate of re-admission after discharge, so as to observe whether patients are forced to be discharged prematurely; (e) the BNHI will confirm the adequacy of medical services and monitor public complaints through professional reviews; depending on circumstances, investigations may be conducted and penalties levied in accordance with Regulations Governing Contracting and Management of National Health Insurance Medical Care Institutions.

        After the implementation of Tw-DRGs, the procedures to seek medical care and diagnosis/treatment received will remain the same as before, and hospitals should provide patient-centered inpatient medical services with better efficiency. When the right to seek medical care is affected due to changes in hospital management, affected persons can lodge complaints with branches of the BNHI or local health bureaus; the BNHI complaint/service hotline is 0800-030598.