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Development of a Diagnosis Related Group-System Based Global Budget Payment Mechanism
Registry ID: PHRR170817-001620
Secondary Identification Number: None

Scientific Title

Development of a Diagnosis Related Group-System Based Global Budget Payment Mechanism

Project Description

The Development a Diagnosis Relate Group (DRG) system based Global Budget Payment (GBP) mechanism is a policy research that aims to provide empirical evidence on how this change in Provider Payment Mechanism (PPM) will affect PhilHealth payouts to facilities. This study aims to demonstrate theoretically, the potential changes that PhilHealth could expect should they consider moving towards this PPM.

The study will have two parts: (1) quantitative analysis of benefit payouts, using historical claims as the base, and (2) policy consultations to identify major policy milestones that may be required both for DOH and PhilHealth to move into this direction.

For the quantitative analysis, secondary data will be requested from PhilHealth. Samples will be requested for hospital facilities at different levels (Level 1-3), locations (Urban/ Rural) and ownership (Private/Public including a DOH hospital representative). The historical claims of PhilHealth will be used to determine the baseline case mix which will be used to project PhilHealth payouts given the anticipated change in PPM.

Policy analysis through key informant consultations will be done to identify the potential barriers and enablers should this policy change be considered both by PhilHealth and DOH.

No primary sample from individuals will be collected, and personal patient information (Name, Address, etc.) in the historical claims will not be used in the study. This study will serve as a baseline for future PPM reforms that is in the pipeline in support of the Philippine Health Agenda.

NUHRA Details
NUHRA Regime NUHRA Classification NUHRA Priority
2010 - 2016 Health Financing Financial Risk Protection
Project Duration
Start Date Duration in Months Target Completion Date Actual Completion Date
2017-06-01 6 2017-12-01 2017-10-31
Project Status


Implementing Agency (Primary Sponsor)

Name of Institution Classification Region LTO #
Alliance for Improving Health Outcomes, Inc. Private Business NCR

Cooperating Agency (Secondary Sponsor)

Name of Institution Classification Region LTO #
Philippine Council for Health Research and Development, Department of Science and Technology Government NCR

Funding Agency (Sources of Monetary or Material Support)

1. Philippine Health Insurance Corporation

Contact for Public Queries

Name: Email Address: Phone Number: Postal Address:
Karlo P. Paredes, RN, MPH, PhD 0917 536 2446 #7-G 7th Avenue, Cubao, Quezon City

Contact for Scientific Queries

Name: Email Address: Phone Number: Postal Address:
Karlo P. Paredes, RN, MPH, PhD 0917 536 2446 #7-G 7th Avenue, Cubao, Quezon City

Investigating Team

Name Expertise Affiliation
Karlo Paolo P. Paredes, RN, MPH, PhD Public Health, Health Economics, Health Financing, Health Systems Alliance for Improving Health Outcomes, Inc.
Alvin B. Caballes, MD, MDE, MPP Health Services, Policy, and Financing; Surgical Services Alliance for Improving Health Outcomes, Inc.
Katherine Ann V. Reyes, MD, MPP Health Policy and systems analysis, Health system strengthening, Public health situation analysis, Research design and methods, Evalaution, Management, Proposal writing, Facilitation, Teaching Alliance for Improving Health Outcomes, Inc.
Miguel F. Manalastas, MD-MBA None Alliance for Improving Health Outcomes, Inc.

Health Condition(s) or Problem(s) Studied

The Philippine Health Agenda aspires for a health system that is responsive, and capable of providing financial protection. As such, it puts at the forefront as one of its guarantees universal health insurance, that will ensure financial freedom when accessing services. Some key aspects of this reform body include strategic purchasing through maximum pooling of funds to a national single purchaser that can negotiate for better prices for better care for patients, and also determination of an essential list of services to be prioritized for coverage by the government.  

By strategically identifying alternative payment mechanisms, complemented by proper stakeholder consultations, PhilHealth can identify policy enhancements to further this health care financing agenda, particularly towards substantially gaining efficiency in paying for healthcare services, decreasing wasteful and unequal spending, incentivizing better care provision, and securing stronger provider payment system.

Further shifting to a more effective provider payment system is an alternate policy option of PhilHealth relative to the prevailing all case rates set-up to help the agency achieve equitable and a more efficient financing of health services. A Diagnosis-Related Group (DRG) payment system is similar to the current All Case Rates (ACR) in terms of predictability of cost coverage but differs in diagnosis payment design. DRG payment system clusters “related” diagnosis to a single rate, possible reducing the disease codes from current thousands (ACR) to only hundreds of diagnosis related groups. Depending on the design to be adopted, a DRG system could further simplify claims and promote more rational provision of health care. This shall be complemented by a Global Budget payment scheme, to leverage its advantages in cost containment.

Primary Outcomes

This study seeks to compare the existing ACR set-up of PhilHealth, with a simulation of a DRG-system based global budget payment. It shall look into quantitative aspects in particular financial and payout estimates, as well as qualitative aspects in particular potential stakeholder uptake, and policy concerns.

While these comparisons shall be made, the technical assistance shall not formulate recommendations for or against the new payment mechanism. Instead, it seeks to provide evidence-based inputs that will help guide the transition, and identify potential bottlenecks that need to be addressed in order to actualize this reform.

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Non-clinical Studies

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