Malaysia will implement the Diagnosis-Related Groups (DRG) system by 2027. This fixed-fee, diagnosis-based hospital payment model is part of the government’s plan to address rising private healthcare costs.

The Ministry of Health had initially targeted mid-2025 for the rollout. However, Deputy Health Minister Lukanisman Awang Sauni told the Dewan Rakyat that the timeline has been extended to allow for system development, cost modelling, hospital data integration, and pilot testing.

Interim Version to Begin in 2024

An interim version of the DRG system will begin at selected private hospitals this year. While using a slightly different calculation method, it will be compatible with the eventual nationwide platform.

Under the DRG model, itemised hospital bills will be replaced with fixed fees based on a patient’s diagnosis and procedure category. Patients will be charged set rates regardless of actual treatment costs, with the aim of curbing escalating healthcare expenses.

Rising Costs Prompt Urgent Reforms

Private healthcare costs in 2024 contributed to insurance premium increases of up to 70%. In response, Bank Negara Malaysia placed a cap limiting premium hikes to 10% for three years, while longer-term solutions such as DRG were explored to address medical inflation.

Lukanisman also confirmed that the government plans to introduce a basic Medical and Health Takaful Insurance scheme in 2026. This standardised coverage will serve as a platform to support and sustain the DRG payment system once implemented.

No Plans for Patient Tribunal

In response to a question from Pulai MP Suhaizan Kaiat on whether a patient tribunal would be set up to handle disputes, Lukanisman said the Ministry of Health has no such plans.

Complaints about private hospitals are currently managed by the Private Medical Practice Control Section (SICAPS) under the Private Healthcare Facilities and Services Act 1998 (Act 586).

How Private Hospital Complaints Are Handled

Under Section 36 of Act 586 and Regulation 40 of the 2006 subsidiary legislation, patients may lodge complaints about unreasonable charges or poor service. Investigations may result in warning notices, fines, suspension, or revocation of a hospital’s licence.

Private hospitals are legally required to provide cost estimates to patients upon request before treatment begins.

Between 2021 and 2024, the Ministry of Health received 817 complaints about private hospitals, with 188 cases, or 23%, related to charges.

Next Steps Towards Implementation

The Ministry of Health will continue pilot testing and system integration ahead of the full DRG launch in 2027. The interim rollout this year and the Medical and Health Takaful Insurance scheme in 2026 are expected to lay the groundwork for a more sustainable and transparent healthcare billing system.

Follow us on our official WhatsApp channel for the latest money tips and updates.

• TAGS:
• Diagnosis-Related Groups System
• Fixed Fee
• Healthcare
• Lukanisman Awang Sauni