KUALA LUMPUR, July 8 — The first phase of the diagnosis-related group (DRG) payment model will begin next year, initially covering minor medical cases, Health Minister Datuk Seri Dzulkefly Ahmad announced.

The model, which standardises hospital billing by grouping patients based on diagnosis and procedures, will be gradually expanded to more complex cases over time, according to a report published in The Star today.

"This implementation will be linked to the planned introduction of basic medical and health insurance or takaful products,” Dzulkefly said at a press conference yesterday.

Patient classification under DRG will follow the World Health Organisation’s International Classification of Diseases framework.

Oversight of the implementation will fall under the joint ministerial committee on private healthcare cost, co-chaired by Finance Minister II Datuk Seri Amir Hamzah Azizan and Dzulkefly.

The committee was formed to address rising private healthcare costs and curb medical inflation.

Dzulkefly said the proposed system has been well received by industry stakeholders and that while challenges may arise, the ministry is confident it can adjust as needed.

"There may be glitches or hiccups when DRG is implemented but I believe we will be able to finetune it with the support from all stakeholders,” he said.

Under the DRG model, each patient category will have a fixed payment rate, replacing the current system where charges vary by services rendered and duration of hospital stay.

Dzulkefly also clarified that the ministry’s Rakan KKM initiative is not a privatisation of public healthcare but a government-backed effort to expedite non-emergency procedures.

"Rakan KKM is not a privatisation programme as it does not use private funds but is a government investment financed by government-linked investment companies,” he said.

He added that emergency patients will continue to receive equal treatment, while those with elective cases can choose faster services through Rakan KKM or remain in the standard queue.

Proceeds from the programme will be channelled back into improving public healthcare facilities.