EuroDRG
  Diagnosis-related groups in Europe: towards efficiency and quality

  A project funded under the 7th EU Framework Programme

Background

Reimbursement mechanisms are key to the performance of any health system, and the demands placed on them are correspondingly high. They must allocate resources fairly among different providers of care and motivate actors within the system to behave efficiently – all while being easy to implement and minimizing administrative costs.

Prospective payment systems based on diagnosis-related groups (DRGs) are designed to overcome some of the drawbacks of more traditional methods of hospital reimbursement. They seek to reimburse providers fairly for their work while encouraging efficient delivery and discouraging the provision of unnecessary services. As such, they have become the reimbursement mechanism of choice for inpatient care in most European countries.

Nevertheless, experience with various European models over the years has shown that DRG systems present their own unique challenges. Which methods best capture the true costs of treatment? What level of reimbursement is necessary to guarantee high-quality care while keeping costs in line? And which incentives can be built into the system to promote efficient care? These and similar questions have been the subject of ongoing debate among physicians, researchers, health insurers, and the general public. Indeed, DRG-based payment systems throughout Europe still pose considerable technical and policy challenges, and many unresolved issues in their implementation remain.
The great heterogeneity of European DRG systems, which was clearly demonstrated by the HealthBASKET project within the 6th EU Research Framework Programme, compounds these challenges – but also offers unique opportunities for comparisons across countries and over time. A key conclusion of the HealthBASKET project was that structural variables, such as regulation, market structure, and teaching status, may play an even more important role than treatment patterns in causing cost variations within individual episodes of care. Many European DRG systems may thus be heading in the wrong direction by focusing almost exclusively on refining DRG classifications.

The project

The Europeanization of health services represents one of the biggest challenges facing national health systems in the years to come. Increased patient mobility will place growing pressure on the different, and often incompatible, DRG systems used by the various EU Member States. Any modifications to national DRG systems should thus be made with an eye towards the EU as a whole. Indeed, calls for a Europe-wide system of DRGs are now more salient than ever.
Designed to address precisely these challenges, the EuroDRG project analyses health systems in ten difference countries: Austria, Estonia, Finland, France, Germany, the Netherlands, Poland, Spain, Sweden, and the United Kingdom. The first phase of the project focuses on the determinants of hospital costs and DRG-based payments in the inpatient sector. Special emphasis is placed on (1) identifying ways to calculate these payments in an adequate fashion, (2) examining hospital efficiency within and across European countries, and (3) identifying factors that affect the relationship between the costs and quality of inpatient care. The second phase of the project seeks to develop and implement the first Europe-wide hospital benchmarking system as a means of identifying common issues and systemic factors that will be crucial when designing successful policies for the slowly emerging pan-European hospital market.