Impact of bundled payment system change on average length of stay among surgical patients : from diagnosis related group to Korean diagnosis procedure combination

Abstract

Background: Since the introduction of the National Health Insurance (NHI) in 1977, Fee-For-Service (FFS) has been the primary payment system for medical services and supplies in Korea. A new payment system, the Diagnosis Related Group (DRG) system, was officially introduced in 2002 for seven principal diagnoses to providers on a voluntary basis. Since July 2012, all public hospitals (39 medical institutions) have been participating in the Korean Diagnosis Procedure Combination (KDPC) payment system for 550 principal DRGs.

Objectives: The purpose of this study was to examine the impact of the change in payment systems from DRG to KDPC on the average length of stay (LOS) for surgical diagnoses. This study aimed to compare these two bundled payment systems and provide evidence for the development of a proper reimbursement system.

Methods: NHI claim data was used. Hospitals that consistently participated in the DRG payment system from January 2007 to June 2012 and the KDPC payment system from July 2012 to June 2014 were defined as case hospitals. Hospitals that consistently participated in the DRG payment system from January 2007 to June 2014 were defined as control hospitals. We conducted 1:2 sampling using the propensity score matching method for age, sex, Charlson Comorbidity Index (CCI), sub-DRG, and admission date (month). A total of 36,240 case admissions and 72,480 control admissions were included in the analysis. Segmented regression analysis of interrupted time series between cases and controls was conducted.

Results: LOS increased by 0.025 days per month (p = 0.0055) for three surgical diagnosis-related admissions due to the bundled payment system change. The difference in LOS between cases and controls was not statistically significant 12 and 24 months after the change (12 months: difference = 0.162, p = 0.4210; 24 months: difference = 0.465, p = 0.1052). LOS among emergency admissions also increased and showed an increasing tendency under the KDRG. For appendectomy admissions (G08), the difference trend in LOS between cases and controls was an increase of 0.015 days per month (p = 0.0033) after KDPC implementation compared with before implementation. For hernia procedures, the difference trend in LOS between cases and controls was an increase of 0.040 days per month (p = 0.0058) compared with before implementation. For hemorrhoid procedures, no significant change in LOS was observed before and after KDPC implementation. Among high severity cases, LOS significantly increased. Across all admissions, the trend change increased with case severity (CCI 0, 1: 0.022, p = 0.0142; CCI 2, 3: 0.026, p = 0.0288; CCI ≥ 4: 0.055, p = 0.0003). For appendectomy admissions, only the CCI ≥ 4 subgroup exhibited a statistically significant trend change in LOS between cases and controls (0.077, p = 0.0044). For hernia procedures, all CCI subgroups exhibited a statistically significant trend change (CCI 0, 1: 0.033, p = 0.0361; CCI 2, 3: 0.049, p = 0.0045; CCI ≥ 4: 0.043, p =0.0379 ).

Conclusion: Average LOS for surgical DRG admissions increased following the change in payment system from DRG to KDCP. This LOS increase was observed specifically for complex procedure admissions and high severity cases. Although both payment systems are optimized to decrease LOS, incentives to reduce LOS are stronger under the DRG system than under the KDPC system. Therefore, these findings suggest that incentives under the DRG lead to excessive LOS decrease in Korea. We suggest that policymakers and stakeholders should focus on the development of an appropriate reimbursement system that focuses on more than cost containment, saving resources, or LOS reduction. More evidence and studies that focus on associations between payment systems and medical outcomes, resource spending, and quality will be needed to achieve this goal.