DRG hospital funding

Inpatient care provided in hospitals underwent a major change in 2012. Since then, hospitals have no longer been funded through per diem flat rates but through the services they provide for patients. Prior to 2012, the same services were paid for differently depending on the canton. Today, they are paid for on the basis of uniform national tariffs known as diagnosis-related groups (DRG). SwissDRG AG, a non-profit company combining service providers, insurers and the cantons, is responsible for introducing, refining and updating inpatient tariff structures. SwissDRG classifies services into case groups on the basis of the main and subsidiary diagnoses, severity and other criteria as well as the treatments provided. This results in a flat rate for each case group that is reimbursed by the health insurer.

The purpose of this system is to create greater transparency, promote economic efficiency and correct existing misplaced incentives. Resources are used appropriately for needs and more efficiently because hospitals are paid only for the services they provide. But there is a natural limit to funding by means of per case flat rates.

Flanking measures necessary

It is not possible to represent medical treatments perfectly in all areas even in an optimally differentiated system. Systematic funding shortfalls arise with medical innovations and therapies because it takes around five years for a new medicinal product or a new treatment method to be included in and paid for through the per case flat rate system. Also, therapies for small groups of patients that can be provided at only a small number of specialised hospitals distort the case groups and lead to underfunding in specialised centres and overfunding in other hospitals. Additional payments are therefore needed for new examination and treatment methods to ensure comprehensive and rapid access to therapies. Without this kind of flanking measure, such as additional payments, access to new therapies would be delayed and regionally variable.

Choice of hospital and treatment

Individuals with basic insurance have been able to choose the hospital in which they wish to be treated since 2012, when this right was introduced as part of the hospital funding system. Under the current dual system of hospital funding, the public sector (cantons/communes) and the health insurers contribute separately – and in some instances independently of each other – to the funding of inpatient care. The cantons pay for 55 percent of inpatient costs with their revenue from taxation, while the 45 percent paid for by the health insurers comes from the insurance premiums.

However, this system creates misplaced incentives in terms of treatment choices. Since the cantons shoulder 55 percent of the costs of inpatient care and only 45 percent is paid for by the health insurers, and ultimately by those who pay the premiums, inpatient treatment is a more attractive option for the insurers. This is because outpatient treatment – which is often medically possible and less expensive – is paid for in full from insurance premiums. The uniform funding of inpatient and outpatient health services that is currently being debated in parliament would put an end to this distortion. It would become more attractive to choose outpatient treatment, which is often equally good in medical terms, and this would have a positive effect on overall costs.