Bulgaria under the guidance of the Minister of Health is undertaking a major reform of its health system. One input to the reform is a joint study with the World Bank on health financing in Bulgaria (The World Bank Diagnostic Report). The report evaluates the strengths and weaknesses of Bulgaria's health financing system in terms of the three health financing functions of revenue raising, risk pooling, and purchasing of services. It assesses each of these financing functions in terms of the health financing goals of improving health outcomes, financial protection, and consumer responsiveness in an efficient, equitable, and sustainable manner. The assessment of the health financing system documented significant strengths in the system, but also major challenges in terms of the purchasing function and current hospital payment practices. These challenges included unsustainable growth in hospital spending
lack of incentives for efficiency, quality, or cost control, and strong incentives for hospitalization over treatment in less expensive outpatient settings. Fundamental problems with the current hospital payment system using Clinical Care Pathways (CCPs) were highlighted. The purpose of this report is to provide information to Bulgarian decision-makers on how Bulgaria can move towards implementing a DRG-based hospital budgeting and payment system. The report was prepared by a team of Bulgarian and international DRG experts who have been involved in the country's DRG assessment and planning since its inception. The report is intended for a wide-ranging audience that includes high-level policy-makers who are weighting the benefits of implementing DRGs, technical staff who may be tasked with implementing the Action Plan, and other key stakeholders who may be less familiar with the use of case-mix as a mechanism to provide payment to hospitals.