The Ministry of Health (MOH) is currently collecting data to develop a treatment payment mechanism based on Diagnosis-Related Groups (DRG).
Health Minister Datuk Seri Dr Dzulkefly Ahmad explained that DRG is a classification system that standardises medical cases according to three key components: diagnosis, treatment procedures, and the severity of the illness. The goal is to ensure that case classifications and treatment payments are fair, transparent, and clinically justified.
He said that the data collection phase is still in development, focusing on creating algorithms and establishing treatment cost ranges for each medical case in hospitals.
“For example, for an appendix surgery of similar severity, payment rates will be determined according to the DRG group, preventing unreasonable cost differences between hospitals,” he said.
Dr Dzulkefly added that the initial implementation focuses on collecting both clinical and financial data to build the DRG algorithm and determine reasonable treatment costs. At present, the programme is in the minimum data collection phase, with private hospitals undergoing training and capacity building to ensure technical and operational readiness.
The minister was responding to Rodziah Ismail (PH-Ampang), who inquired about the current status of DRG implementation in the private healthcare sector and asked about regulatory measures to prevent insurance or takaful operators from influencing medical decisions in private hospitals.
Dr Dzulkefly said DRG adoption in the private sector is part of a nationwide, cross-agency initiative under the RESET strategy, monitored by the Joint Ministerial Committee on Private Healthcare Costs (JBMKKS). So far, 80 out of 104 registered hospitals have participated in 23 training sessions, reflecting strong engagement and commitment from private hospitals.
“Emphasis is placed on standardising clinical and financial data as the foundation for an effective and sustainable DRG system,” he said. “DRG is expected to catalyse the shift toward value-based healthcare while promoting cost efficiency, transparency, and prudent resource use, discouraging excessive claims by private hospitals.”
Dr Dzulkefly also stressed that MOH takes interference by insurance/takaful operators or Third-Party Administrators (TPAs) seriously, as it could compromise clinical decisions. He noted that any action undermining a medical practitioner’s ability to treat patients may be deemed inconsistent with the Private Healthcare Facilities and Services Act 1998 (Act 586).
