KUALA LUMPUR (Aug 12): Malaysia will only roll out the Diagnosis-Related Groups (DRG) system — a fixed-fee, diagnosis-based hospital payment model — by 2027, as a solution to rising private healthcare costs.
Originally set for mid-2025, the DRG rollout is now delayed to 2027 to allow time to build the system, finalise cost models, integrate hospital data and run pilot tests.
Deputy Health Minister Lukanisman Awang Sauni told the Dewan Rakyat on Tuesday an interim version of the DRG, which will use a slightly different method but will be compatible with the national system, will start at selected private hospitals this year.
"The government will begin implementing the DRG by introducing a basic Medical and Health Takaful Insurance (MHIT) in 2026," he said during the Minister’s Question Time. "The basic MHIT will serve as a standardised platform to ensure the continuity and effectiveness of the DRG-based payment system."
The DRG model replaces itemised bills with fixed fees based on a patient’s diagnosis and procedure. Patients are charged set rates according to these categories, no matter the actual treatment cost, to help control rising healthcare expenses.
In 2024, private healthcare cost increases saw insurance premiums rise by up to 70%, prompting Bank Negara Malaysia to cap increases at 10% for three years while it sought a more sustainable solution to medical inflation.
In response to Suhaizan Kaiat (PH–Pulai), who asked whether a patient tribunal would be established to handle disputes, Lukanisman said the MOH has no plans for such a body.
Complaints about private hospitals are handled by the Private Medical Practice Control Section (SICAPS) under Act 586.
Under Section 36 of the Act and Regulation 40 of the 2006 subsidiary legislation, patients may file complaints about unreasonable charges or poor service. Investigations can lead to penalties, including warning notices, fines, suspension or revocation of a hospital’s licence.
Private hospitals are also legally required to provide cost estimates to patients upon request before treatment.
From 2021 to 2024, the MOH received 817 complaints about private hospitals, of which 188 cases (23%) were related to charges.
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