5.1 Medical Cost Optimization Plans

Japan is implementing a variety of cost-optimizing measures in order to suppress excessive increases in medical costs. Among them are Medical Cost Optimization Plans, which set out general targets and medical cost estimation methodology. In line with the targets and methods indicated in the National Medical Cost Optimization Basic Policies, each prefectural government must also prepare its own Medical Cost Optimization Plan.[1]

The initial National Plan was executed in two phases. The first phase spanned FY2008 to FY2012 and the second, FY2013 to FY2017. The goals of these five-year phases were to “reduce the length of average hospital stays” and to “improve the implementation rates of Specific Medical Examinations.” A third phase was created following the completion of the second, slated to last from FY2018 to FY2023. With optimization as the stated goal, this six-year phase will continue to promote efforts to improve the implementation rates of Specific Health Examinations, while newly including “efforts to prevent the worsening of diabetes,” “promotion of the use of generic drugs,” and “the appropriate use of pharmaceuticals (including issues related to redundant prescriptions and concomitant use).” The new phase also takes into account hospitalization cost estimates based on the results of promoting functional differentiation of hospital beds.

The Concrete Direction of the National Medical Cost Optimization Basic Policies from 2018 Onwards

At the end of FY2017, a Ministerial Notice was issued on the Basic Policies for Medical Cost Optimization. In terms of a concrete direction for these policies, the notice discussed the calculation formulas used by prefectures to estimate medical cost targets (outpatient expenses and inpatient expenses) as well as efforts taken by prefectures to promote the optimization of medical costs (numerical target-setting when possible). Specific issues discussed in that notice are listed below:


・Outpatient Medical Expenses

Prefectural medical cost targets are to be set based on historical trends. From FY2023 these targets will reflect the effects of medical cost optimization efforts. These effects will be reviewed in two stages. In the first stage, Japan will review medical cost reductions achieved via efforts to meet national targets for Specific Health Examinations and Specific Health Guidance implementation rates as well as targets for the use of generic drugs. In the second stage, Japan will work to reduce regional disparities in medical costs per capita by strengthening incentive measures for health-promotion such as the implementation of point-based healthcare systems and also by promoting efforts to reduce redundant prescriptions.


・Inpatient Medical Expenses

Japan will estimate inpatient expenses based on the outcomes of efforts to differentiate hospital beds by function and promote collaboration among medical facilities. Regarding the functional differentiation of hospital beds, Japan will work to shorten the amount of time that patients spend in advanced-acute and acute beds and lengthen the amount of time spent in recovery beds. In terms of regional disparities among inpatient expenses, because a strong correlation exists between hospitalization costs and the numbers of beds in each region, prefectural governments are being asked to formulate Medical Cost Optimization Plans consistent with their Regional Medical Care Visions. Ultimately, Japan will aim to cut hospitalization costs in half.


・Visualizing Regional Disparities

The National Government will conduct data analyses using Japan’s National Database (NDB) to bring into view prefectural disparities among medical costs, generic drug usage, and redundant prescriptions / concomitant drug usage. Summarized results from these analyses will be provided as datasets to prefectural governments as reference material for analyses.


[1] Ministry of Health, Labour and Welfare “Revision of Basic Policies for Medical Cost Optimization / Plans for Medical Cost Optimization” http://www.mhlw.go.jp/file/05-Shingikai-12401000-Hokenkyoku-Soumuka/0000148008.pdf (Accessed 2017, Nov.27)