Yoshio Mitsumori02.27.07
In examining these demographic and institutional trends, some conclusions can be made. Both trends are heavily affected by factors such as the increasing elderly population and decreasing fertility rate. The growth of the elderly population particularly will impact the country’s overall medical expenditure—the MHLW predicts that the national medical expenditure will reach up to 65 trillion Yen in 2025 (roughly $530 billion), which is almost double the amount spent today.
As this column has noted in the past, the growing medical expenditures currently is a top political concern in Japan. To reduce costs, the MHLW has enforced many cost-containment measures, such as reimbursement cuts, increased co-payments and so on. In one trial, the MHLW introduced its Diagnostic Procedure Combination (DPC) system in 2003 to bundle payment of in-patient medical fees per diem—regardless of how many examinations or drugs are administered per day. The DPC system classifies diseases into 1,440 categories and sets a fixed medical fee according to disease category. Nearly 360 hospitals (190,000 beds—20% of total beds) have adapted this DPC system since its inception.
Unfortunately, the DPC system has not yet succeeded in reducing Japan’s medical expenditures. The MHLW, recognizing this, has started investigating the potential utility of changing the current DPC system from “Per Diem” to “Per Admission.” This means that the fixed amount would be set per admission, meaning costs are covered no matter how long the patient stays in the hospital. This proposed system is much closer to the United States’ diagnostic-related grouping system, but the big difference is that any surgical costs—including medical disposables—would not be included in the DPC. Those still would be paid through a cost reimbursement method.
The MHLW’s investigation currently has not focused on the surgical portion of a hospital stay. By introducing a new DPC system, the MHLW instead intends to foster more effective medical service by reducing unnecessary or excess treatment and shortening the length of stay to be more on par with the levels seen in the United States and Europe.
The MHLW hopes to introduce this new DPC system at the next revision of medical remuneration in April 2008. The tactical game already has been developing behind the scenes in preparation for the next biennial price revision of medical materials in April next year. The government intends to reduce prices again, but the industry will try to prevent further cuts. Together with introduction of a new DPC system, the issue of medical payments will continue to be a hot-button issue this year among stakeholders such as medical professionals, insurance organizations and the medical device and pharmaceutical industries.