Indian health system in pre-DRGs era

Why is it a pre-diagnoses related group (DRG) era in India?

The major public health schemes in India, including PMJAY, face the challenges of cost escalations, value-based service generation, data management, lack of quality measurement technological solutions and increasing hospital acquired infections. The government is contemplating new models of reimbursement for mitigating these challenges. In addition, private payers are also considering novel reimbursement models to overcome the challenges of cost escalations, data management and quality improvement.

The Indian health care sector is expected to be worth $372 billion by 2022. The current market share of private and public health systems is 70 percent and 30 percent, respectively. The public health system is financed by the federal and state governments, whereas the private health system is financed either by out-of-pocket expenditure or by health insurance payers including private, public and non-profit payers. The health insurance sector is projected to cross $27.43 billion (2 trillion INR) by 2030. The penetration of health insurance is expected to reach 50 percent in the near future.

The Indian health system encompasses two types of reimbursement systems, fee-for-service//charge-based reimbursement that is used in the private health sector for the uninsured population and a package-based reimbursement system/pre-DRG-based system used by both public and private health system for the insured population. The government health insurance reimbursements are based on the pre-defined health packages set by the Ministry of Health and Family Welfare (MoHFW)/National Health Authority (NHA). The private health system reimburses on a pre-defined, package-based system, the prices of these packages are based on the charges incurred by the health care providers.

Path to DRG-like system

The public health system is shaping up to be ready to adopt a DRG-like system. As a first step, NHA has already revised the list of Health Benefits Packages (HBPs) from HBP 1.0 to HBP 2.0. Discussions to implement the learnings from international health systems has commenced and the Indian government has launched National Digital Health Mission (2020) to digitize all health records and adopt international coding languages like ICD-10 WHO, ICD-10 PCS and ICHI. Various forums have already started discussing the introduction of “Indian DRG-like system.”

The private health system already uses electronic health records (EHR), ICD-10 WHO and ICD-10 PCS for coding and reporting. The big hospital chains are looking for solutions to digitize handwritten prescriptions into EHR systems. This continuous endeavor of competing with the best hospitals in the world and quest for potential solutions to the previously mentioned challenges can pave the way for a DRG system in the private sector.

DRG implementation into the Indian health system appears to be approaching fast, although the lack of integrated data sharing platforms, mandatory data and coding standards, mandatory EHR adoption, stringent data privacy regulation, uniformly accepted technologies for telemedicine, capacity improvement for apt documentation of doctor-patient encounters and competent storage infrastructure need to be tackled soon.

Dr. Naveen Sharma is the clinical consultant for international markets at 3M Health Information Systems.