Impact of DRG payment on the length of stay and the number of outpatient visits after discharge for caesarean section during 2004-2007

Abstract

Objectives: The purpose of this study was to examine the impact of Diagnosis-Related Group (DRG)-based payment on the length of stay and the number of outpatient visits after discharge in for patients who had undergone caesarean section. Methods: This study used the health insurance data of the patients in health care facilities that were paid by the Fee-For-Service (FFS) in 2001-2004, but they participated in the DRG payment system in 2005-2007. In order to examine the net effects of DRG payment, the Difference-In-Differences (DID) method was adopted to observe the difference in health care utilization before and after the participation in the DRG payment system. The dependent variables of the regression model were the length of stay and number of outpatient visits after discharge, and the explanatory variables included the characteristics of the patients and the health care facilities. Results: The length of stay in DRG-paid health care facilities was greater than that in the FFS-paid ones. Yet, DRG payment has no statistically significant effect on the number of outpatient visits after discharge. Conclusions: The results of this study that DRG payment was not effective in reducing the length of stay can be related to the nature of voluntary participation in the DRG system. Only those health care facilities that are already efficient in terms of the length of stay or that can benefit from the DRG payment may decide to participate in the program.