Methods of medical billing
First, you should know how medical fees are calculated in order to understand the arguments being presented on both sides. DRG is a billing concept whereby fees are combined in order to consolidate all expenses into one overall bill. This means that every treatment that takes place from the time you enter a hospital to the time you leave the hospital is tied into one. In contrast “fee for service” is a billing system based on the number and type of treatments a patient receives. The fee for service system includes doctors’ fees, inspection fees, and medicine costs. In other words, it just adds up each separate fee.

Features of “fee for service” and “DRG”
From 1997 to now, Korea has conducted medical billing through the fee for service system except for the seven conditions group. However, the government tested DRG for the first time in 1997 in an attempt to reduce medical costs, and it has run selectively since 2002. Thus, the government has opted for compulsory implementation. Let’s learn a little more about both systems.
The fee for service system reflects each treatment individually, so fees increase as treatments increase. The strength of this system is that because each treatment is itemized, it is easy to see exactly what is being paid for.Every OECD member nation runs some form of DRG with minor differences between countries. Korea began implementing DRG for the seven conditions group from July of this year. Patients who are afflicted with these seven conditions are assorted into 78 grades. The grades are assorted between patients who have a general condition but are able to undergo similar treatments. There are also 312 different billing types depending on the kind of treatment facility. There are four different designations of medical institution (clinic, hospital, general hospital, and upper general hospital). Patients are billed based on the guidelines established for each grade. However, there is a difference in follow up hospital treatments. In other words, when patients have surgery and go into the hospital, they are obligated to pay a predetermined sum of money following minor or major procedures.When considering the issues based on patient and consumer rights, DRG should be implemented right now. Nonetheless, the government and the Korean Medical Association were locked in a serious battle of the issue. Here are the reasons why.

Pros and cons of DRG
There have been many debates between the government and the Medical Association due to the mandatory implementation of DRG in July. Let’s examine the claims of each side. The government has asserted that the greatest benefit of DRG is the reduction of the burden of medical costs. The reason is that patients will only need to pay 20% of actual medical fees because health insurance will cover more. In addition, doctors will be discouraged from recommending superfluous treatments because additional treatments will not result in additional payment. This will also give patients a much better idea of what their overall treatment costs will be. This will allow them to budget the cost of treatment easily. Finally, the work will be done quickly because procedures will be simplified. The Medical Association disagrees and asserts that DRG can lead to poor medical quality. The doctors state that they should treat patients on a case by case basis, and DRG will prevent them from treating patients individually based on specific areas of need. If treatment skills are standardized it could result in poorer medical treatment. Secondly, although new techniques are developed, the application of these techniques will be difficult because newly developed techniques come at a higher cost. Therefore, the development of medical techniques will be deterred and the patients’ selection rights will be restricted. They also pointed out that cases of short-stay patients will increase, so if they don’t receive treatment during an adequate term, there will be a chance that a patients’s condition could get worse.

Mixed views of each side
The government made counterarguments that expensive fees do not always relate to improvement in medical quality to counter the assertions of the Medical Association that medical quality will suffer under this system. As a result, based on data from treatment of the seven conditions which applied DRG from 2002 to 2007, there is little difference in the percentage of patients who were readmitted after treatment. They also pointed out that most specialized hospitals have taken part in DRG voluntarily. In addition, they promised to evaluate medical service levels where DRG has been applied to monitor for deterioration in treatment standards. As for the argument that DRG will bring about the degradation of medical innovation, the government asserts that they will regulate new medical technologies except in the areas where DRG has been applied since 2002 and let patients receive the necessary treatments. Research into new medical technologies is planned for and funding will be provided through DRG. Third, they insisted that they have used DRG for 15 years including the pilot project to counter the argument that there is insufficient data about DRG, and pointed out that 80% of hospitals and clinics are already taking part in DRG work. Finally, they stated that they will expand the number of conditions included in the plan by targeting operations that are most frequently done. In addition, the length of hospital stays as well as the medical fees of participating hospitals were not shown to be disproportionate in the short run based on a survey of the medical profession.
The Medical Association also makes some convincing counterarguments. They insist that medical fees will actually increase under the DRG system. The reason is that the burden of health care will remain on the people and increases in health insurance premiums are inevitable. Moreover, they insisted that patients should never be charted by grades. All patients have varying diagnoses and many diseases are not yet identified, so they insisted this should be a target of criticism. They protested more and more regarding the declining quality of medical treatment. Finally, they said when medical fees are calculated uniformly, they cannot help engaging in routine treatment and they also insisted there are some cases where patients should pay high expenses for high quality services. The Observer interviewed a doctor at N hospital in Daegu in order to better understand the claims of the doctors in person.

Q) What do you think about DRG?
A) I think DRG is a system that doesn’t fully account for the diversity of patients and diseases. In other countries, when a medical insurance company contracts with a medical institute, they make a bid with the institute and the company that offers the lowest DRG amount is generally awarded the contract, so they can reduce expenses. However, the matter of poor medical quality can occur because Korea has already implemented health insurance by force.

Q) Have you used cheap materials since DRG was put in place?
A) Our hospital has not, but I think some hospitals will use cheap materials more often.

Q) How do you think DRG should be complemented?
A) Compulsory participation can cause medical facilities to lower standards, so the government should improve the medical billing system realistically and allow the medical institutions to select between fee for service and DRG freely.

The Medical Association has accepted DRG provisionally, but if the government expands the scope of DRG, the debate will continue. However, the most important thing is that every policy should be a policy to benefit the people regardless of how payment is rendered. Finally, you need to ask yourself, “How much do you know?” This debate is centered on the public health and welfare. Nevertheless, if people don’t know about the relevant points of the debate, it is the same as giving up your rights.