DHA looks set to transform healthcare billing and health insurance with IR DRG
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DHA looks set to transform healthcare billing and health insurance with IR DRG

Mandatory health insurance regulations have been fully in place in Dubai for just over a year now (with the last phase being implemented in July 2016). In an effort to ensure that health care and in turn health insurance remain as affordable as possible for the foreseeable future, the Dubai Health Authority has been working on a number of initiatives, the latest being a new healthcare billing practice called international refined diagnosis-related group (IR DRG). In this article, we take a look at this new practice, what it means for you, and the potential impact it will have on your health insurance.  

What is IR DRG?

International-refined DRGs, or IR DRGs is an international standard based on an American medical billing standard called diagnosis-related groups. Before we look into IR DRGs it would first be a good idea to define the basic idea behind DRGs and how they work.

DRGs first emerged as an idea from Yale University in the 1970s that focused on helping hospitals to better control inpatient treatment costs and ensure that only medically necessary care is provided. To this day, it is the method used by Medicaid in the US to bill patients and reimburse hospitals for this care.

The main concept behind this system is that it groups similar medical procedures together for the purpose of billing. In the US, there are 999 DRGs that cover all aspects of inpatient care. If you are curious what they look like, you can find them on the Centers for Medicare & Medicaid Services' DRG code page.

When a patient goes to receive care they are assigned one DRG that is based on a number of factors including:

  • Age of the patient
  • Sex of the patient
  • Procedures
  • Status of patient at discharge
  • Diagnoses

A government or organization overseeing healthcare can then set a fixed reimbursement fee, based on the group, that they will pay the hospital.

In other words, DRGs work by essentially grouping specific types of medical treatments together (e.g. pneumonia), looking at the average cost of treatment along with other historical data and setting a price for this care.

This price should be what the person receiving the treatment pays (other incidentals such as additional food, some medication, etc. might be added on top). In turn, this amount is also what the hospital receives from the overseeing body e.g., the DHA in Dubai or Medicaid in the US.

An IR DRG takes this concept and tweaks it slightly to make it more usable outside of the US. In most cases there are three major things that set IR DRGs apart from the older DRGs:

  • They can be used for both inpatient and outpatient care (DRGs were designed to work with inpatient care only).
  • Care can be divided into three severity levels with higher bills allowed for care that requires more treatment.
  • They are based largely on the costs of procedures - Many DRGs are based largely on the cost to diagnose.

When will IR DRG be employed in Dubai?

Dubai's IR DRG system was actually announced in late 2016. According to an article published by the DHA back in December of last year, the switch of Dubai's hospitals to IR DRG will take place in three phases.

The first phase started in early 2017 and is being carried out with hospital accommodation only. Starting in early 2018 the DHA plans to roll this system out to all systems while piloting it with outpatient care first. Finally, in 2019 the system will be fully integrated.  

How will this impact me?

The impact this change will have on you, the person who actually receives care, is hard to tell from where we are currently standing. But, from previous cases, there have been a number of benefits that a switch to an IR DRG can bring to end-users.

Possibly the biggest benefit this system can bring for all users is based on the main reason it was designed: It essentially forces hospitals to provide treatment that is only medically necessary, and reduces the chances of over prescription of medication.

Think about this benefit this way: When you go to the hospital with a slight headache, you will be treated only for a slight headache and billed as such under this system. In systems that use a different billing method, you might see extra treatments ordered.

This is especially true if you are using your health insurance to cover the cost, some doctors might order unnecessary medical procedures like MRIs, prescribe more costly medication, etc., in order to try to get the cost of treatment up, and therefore the amount they get from the insurer up.

Altogether, this means your hospital bills could be smaller or at the very least fairer.

The other benefit this could bring to people is that it makes the system more transparent. Because the cost of treatment is more or less standardized, hospitals can bill you far more accurately and will be better able to provide you with an actual cost of treatment ahead of time. This can be a big help, especially if you know you will be needing more costly care.  

Will IR DRG have an impact on my health insurance in Dubai?

This move won't just have an impact on the hospitals however, health insurers will also be affected. As mentioned above, one of the major benefits this system brings is price transparency. This can have a drastic positive impact on health insurance plans as insurers will have access to exact, or near exact costs of care.

By studying historical treatment data and cost expectations, insurers can create more accurate health insurance premiums and work to better manage premium inflation. In theory, this should mean lower average premium increases and possibly plans that better meet the coverage needs of people based in Dubai.

That said, it will still be at least one to two years before we start to see any influence the switch to IR DRG billing will have on both healthcare and health insurance in Dubai. In the meantime, it is still important to secure health insurance that meets your coverage needs. If you are looking for a plan, why not talk with the advisors at UAE Medical Insurance? We can help you find a plan that's right for you.    


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