The Diagnostic Related Groups' costing methodology can be quite effective in keeping medical claims in check. And to the eventual benefit of the insured. Image Credit: Shutterstock

The Dubai Health Authority’s update of its Diagnostic Related Groups (DRGs) process is another big step towards reducing health insurance costs. And more importantly, patient outcomes.

Hard-working HR teams should get a refreshed sense of control of their insurance policy throughout the year – and allow them to work closer with their adviser to optimise the network mix to their budget.

What are DRGs?

DRGs is a system used internationally that categorises patients with similar diagnoses, helping manage costs and reimbursement rates. In theory, it means treating ‘X’ condition should cost ‘Y’ amount. This level is set when a patient is initially reviewed and diagnosed, regardless of the amount of follow-up treatment.

Treatment cost starts with a ‘base rate’, then hospitals can multiply that rate to a certain maximum – a so-called negotiation band. There are a few factors determining the multiplier, but the success rate of the hospital treating the condition is a big one.

With the procedure for the next set of steps standardised – along with the price tag – there is less occurrence of hospitals either charging for each line item (or use of a machine, let’s say) or do more billable treatment than is necessary.

What’s new about DRG?

The DHA adopted its DRGs policy in 2020 to try and stem rising inflation in medical costs. From launch, there were a limited number of DRGs (each one with a specific code) on the Authority’s systems when hospitals submitted claims, meaning certain treatments had no objective costing procedure.

Further, there had been evidence of hospitals still applying different cost methods of billing or including extraneous items.

From July 1, however, all in-patient and day-case claims submitted through the regulator must be made using the DRG procedure. The DHA’s Adjudication Manual has been updated, as has its online portal to widen the number of DRG codes. Submitting through this procedure is the only way.

Countless procedures for in-patient services will be costed as agreed.

Truly a new chapter in health insuring

This is great news. I frequently speak with HR teams who’ve experienced nothing but increases each year to their staff health insurance costs above and beyond their claims history.

Those who know me know I love hearing from companies experiencing higher insurance costs generally - learning their approach and tackling the issues.

Solutions can range from relatively immediate changes – such as a switching to a more suitable insurer or adjusting the network across the different tiers of hospitals – to more transformative changes around prevention, staff engagement, and the strategic use of benefits by management.

There is no doubt that if we have more certainty on medical costs for every patient that steps through those hospital doors, companies benefit.

Hospitals – now on a more level playing field in terms of revenue per procedure – will compete on the basis of excellence of treatment. Of course, employees will benefit – HR leaders will be able to really scrutinise the success rate of hospitals for common procedures and include them on their network without necessarily hiking their overall policy expenditure.

These are exciting times – though I still encourage companies to work closely with their insurance adviser to learn how to benefit from this change. Where costs can be saved, it potentially frees up funds to invest right back into their employees.