Diagnosis-Related Group-based Payment System and its Reform Plan in Korea

Abstract

Although Korea has been using a diagnosis-related group （DRG）-based payment since 1997, the system is applied only to a limited number of patients and providers, mainly due to the strong opposition among providers. Recently, health care authority in Korea released a new plan for expanding the coverage of the DRG system, but, this plan too came under severe criticism from both providers and experts. The present paper assesses the current DRG system as well as the new plan, and suggests policy directions and strategies to extend the current system. Because the health care industry is founded on a long-standing fee-for-service （FFS）system, payment reform will be difficult, and strategies aiming to expand the current DRG-based payment system must be prepared to withstand possible negative effects and provider backlash.