BANGI (April 18): Malaysia may roll out the first phase of the diagnosis-related group (DRG) payment system as early as this year, beginning with less complex medical conditions, according to Health Minister Datuk Seri Dr Dzulkefly Ahmad.
He said that the Ministry of Health (MOH) is currently undergoing “very intense engagement” with key stakeholders — including the Ministry of Finance, Bank Negara Malaysia, private healthcare providers, and insurance and takaful operators — to formulate a locally customised DRG model.
“The DRG will take a long time to complete in full, but what we’re talking about is at least beginning with several simple, less complex diseases,” he told reporters at a press conference here on Friday.
“Even before it is fully ready, we can start implementing parts of it. We hope to begin with something simple by this year.”
The DRG system, which categorises diseases using the International Classification of Diseases (ICD), is intended to serve as a value-based payment model aimed at controlling medical inflation, particularly in the private healthcare sector.
Dzulkefly said the government will develop a Malaysian-specific version of DRG, rather than importing existing models from other countries like the US.
As opposed to the traditional fee-for-service model that involves itemising each charge, the DRG is a healthcare pricing system that sets a fixed amount based on the complexity of the case. Many advanced countries, including the US, South Korea, Japan, and European nations, have adopted the DRG system.
He emphasised that the system will be shaped through collaboration among policymakers, clinicians, practitioners, health economists, and both public and private sector players.
“I have been addressing this issue since I returned to the ministry,” Dzulkefly added. “With the pace of medical inflation and the urgency raised in Parliament, we are expediting discussions to formulate a DRG system that is truly suited for Malaysia.”
According to Dzulkefly, the phased implementation would start with clearly defined disease groupings, with more complex conditions added progressively once the foundational framework is established.
In 2023, Malaysia saw medical cost inflation rise by 12.6%, more than double the global average of 5.6%.