MANILA, Philippines (Apr. 2026) — The way PhilHealth pays hospitals is about to change significantly, and a government think tank is throwing its weight behind the shift.
The Philippine Institute for Development Studies (PIDS) has expressed support for the country’s transition to a Diagnosis-Related Groups (DRG) payment system under the Universal Health Care (UHC) Act, as global experts gathered in Manila for a regional workshop on the reform.
Under the current setup, healthcare providers are reimbursed for each individual service rendered. The DRG model replaces that with fixed payments per case, based on clinical characteristics and expected resource use — a system designed to reduce unnecessary procedures, control costs, and better align hospital incentives with actual health outcomes.
The data problem
The transition won’t be seamless. A PIDS study found that around 10% of PhilHealth inpatient claims from 2018 to 2023 could not be classified under DRGs due to incomplete or inconsistent clinical data. The study also flagged fragmented data systems, weak integration of clinical and financial records, and limited real-time monitoring capacity as broader system gaps that could affect payment accuracy and provider performance tracking.
“The move to DRG systems would have more impactful implications for our providers,” said Dr. Valerie Gilbert Ulep, PIDS Senior Research Fellow and Director of the Health Economics and Finance Program (HEFP). Hospital participants at the workshop echoed this, pointing to the need for capacity building, improved health information systems, and better alignment between payment policies and on-the-ground realities.
Regional context
The three-day Asia Regional DRG Workshop and Knowledge Exchange, held from March 25 to 27, 2026, was organized by the World Bank and the Government of Japan, drawing experts from Vietnam, Thailand, Malaysia, Singapore, Japan, Mongolia, China, Germany, and Australia. PIDS co-hosted the event, facilitating discussions that linked international experience with the Philippines’ own reform timeline.
PIDS, through HEFP, continues to support PhilHealth in implementing UHC reforms under the Responsive, Integrated, and Sustainable Health Financing (RISE) Mission Project.
