Case-mix payment in Japanese medical care

The Japanese medical care system, highly rated internationally, has recently experienced a crisis that has placed a burden on all of its citizens, providers, and payers, due to the expansion of medical expenditures in rapidly aging society with the stagnant economy. To address this, in April 2003, Japan implemented a case-mix payment system, instead of conventional fee-for-service payment, based on an original case classification with 2552 groups (Diagnosis Procedure Combination: DPC), with inpatients from 82 special functioning hospitals. This system contains two parts: per diem prospective payment for hospital's fee with a three-level step down according to average length of stay for each diagnosis group, which is adjusted to secure the previous year's remuneration in each hospital; fee-for-service payment for doctor's fee based on national fee schedule. The payment system reduced average length of stay, but did not change inpatient expenditures and increased outpatient expenditures. The in-hospital mortality rate, although un-adjusted, did not changed, but the readmission rate increased mainly through an increase in planned, not accidental, readmissions. For the expansion of this system, ongoing program refinement, reflecting the results of data analysis, is indispensable.