Dubai will change the way that private hospital treatment is paid for to cut down on overcharging and unnecessary procedures.
Health insurers will pay a predetermined amount for a service, rather than foot the bill that a particular doctor or hospital sends it.
Dubai Health Insurance Corporation said the overhaul had been four years in the making and that insurers and hospitals had signed up.
Saleh Al Hashimi, chief executive of the corporation, said the introduction this month would "undoubtedly help both providers and payers and most importantly benefit patients".
“It will further drive up efficiencies in inpatient care, improve quality of care across the spectrum and encourage cost reduction which will help build a robust and dynamic health sector," he said.
The complex system calculates the cost of medical procedures for each insured patient.
It uses algorithms to fix base fees for treatments of a range of health conditions.
The system, known as a Diagnosis Related Group, should prevent one hospital charging far more than another for the same service.
The payment covers all charges associated with an inpatient stay, from arrival to discharge.
Officials last year said it would later be brought in for all outpatient services.
How it works
This new system unifies the codes insurers use to pay hospitals - so they are all paying out for the same level of treatment.
Until now, one hospital may call a heavy cold an "upper respiratory tract infection", while another may call it flu, with a different code and choice of treatments for each.
Now, they are all unified with the same code for similar diagnosis, so it is clear what treatment is required and what will be paid for.
Any hospital with a charge substantially greater than the average for that cost of treatment would be flagged to the authorities.
It encourages hospitals to be more efficient, move patients through the system quicker so hospitals get paid faster by the insurer.
The system is similar to those already in use in Canada, Germany, New Zealand, Australia, Singapore and Hong Kong. It was first conceived in the 1960s to prevent private hospitals keeping patients in unnecessarily and charging by the day.
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Insurers have long accused hospitals of charging for unnecessary procedures and tests, using expensive branded drugs and over-prescribing, creating a culture of waste.
But hospitals said a recent cautious approach to health insurance has led to delays in approvals on high risk surgeries, forcing some patients overseas for medical procedures.
In 2019, Abu Dhabi hospitals were mandated to give patients a full breakdown of medical bills in a bid to improve transparency in the health sector.
Under the changes, providers were told bills must include detail of provided treatment to educate patients on the real cost of healthcare to empower them to question any costs.
It is hoped the changes in Dubai will lead to further efficiencies in overall healthcare and related insurance premiums as the new system beds in.
Mr Al Hashimi said he wanted to see a shift toward clinical excellence and away from simply payment for a service.
“Hospitals will become more efficient, leading to improved patient outcomes and increased patient satisfaction while reducing waiting time for approvals.”