Health financing for universal coverage

DRG-based payment systems in low- and middle-income countries: Implementation experiences and challenges

Discussion Paper 01/2012

Inke Mathauer and Friedrich Wittenbecher

Publication details

Number of pages: 55
Publication date: 2012
Languages: English
WHO reference number: HSS/HSF/DP.E.10.2




This discussion paper provides an in-depth overview of DRG-based payment systems in low- and middle-income countries. This fills a research gaps as it is the first in its kind. Evidence is presented of how DRG-based payment systems have been implemented in low- and middle-income countries, and what challenges they face to operate in their institutional environment. Of equal interest is their institutional design, e.g. the number of groups, type of costing, purchasing arrangements and related thereto the scope of fragmentation, expenditure ceilings and monitoring/review features.

This overview reveals that DRG-based payment is increasingly applied across the world, with 13 low- and middle-income countries with national DRG-systems in place in Eastern Europe, across Asia and one in the Central American region. 12 other low- and middle-income countries across all regions are in the process of developing and piloting DRGs. Another 9 countries are in the explorative stage.

Patterns emerge with regards to the role of government financing and presence of a public purchaser, the number and scope of DRGs, the choice of DRG variant, the approaches to adapt a DRG variant to a country context, and DRG piloting processes. Challenges relate to the technical complexity of a DRG-based payment system, and more so to wider health financing institutional design issues that are crucial for desirable DRG incentives to become effective.