ESTIMATING THE TRUE COST OF TYPE 2 DIABETES MELLITUS CARE PER ENCOUNTER_A CASE-BASED COSTING APPROACH_PRELIMINARY FINDING

Abstract

Primary care financing commonly relies on capitation models, which may inadequately capture heterogeneity in patient complexity and service intensity. Case-based costing offers an alternative approach by estimating average costs according to patient categories, incorporating variations in diagnosis, service type, and utilisation patterns. Thus, the objective of this study was to estimate encounter-level costs to support efficient resource allocation and inform primary care financing reform. A department-based case grouping approach was developed using diagnosis, prescription, and laboratory procedure data from clinics expenditure records and international classification of disease (ICD)-10-coded patient data extracted from electronic medical records namely TPC-OHCIS. Direct and indirect facility expenditures were estimated using a top-down costing. Patient-level Type 2 Diabetes Mellitus (T2DM) activities were multiplied by unit costs to estimate encounter costs and calculate the Case Group Weight (CGW). Data analysis was performed using STATA version 14. A total of 243 T2DM patients were included, with a mean age of 61.76 years. The average encounter cost was RM150.20 per T2DM visit. Cost components included overhead costs (RM29.16), laboratory services (RM23.46), imaging (RM0.18), medications (RM62.63), and direct costs (RM1.78). The mean base rate was RM104.64, while the mean CGW was 1.692, indicating T2DM encounters were 69% more resource-intensive than the average outpatient case. Encounter costs ranged from RM28.71 to RM708.15, reflecting substantial variation in resource utilisation. Case-based costing captures actual resource utilisation and service intensity, providing alternative evidence to support policy-level reforms in primary care financing, including payment models, funding mechanisms, capitation, and strategic purchasing.