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Reforming Medical Insurance Payment Methods in China

Medical insurance payment methods reform is known as the key of healthcare reform. The reform and innovation of medical insurance payment system has received widespread attention along with the re-establishment of the National Medical Insurance Administration. At the 8th U.S.-China Health Summit, four medical insurance experts, researchers and practitioners delivered in-depth discussions and suggestions.

JIN Weigang, President, Chinese Academy of Labour and Social Security

"Reforming Medical Insurance Payment Methods"

Recently, the National Medical Insurance Administration released the new drugs negotiation results: 17 drugs will be covered by medical insurance, which reduces more than 50% and even up to 71% of expenses in average. The covered drugs are mostly for cancer therapies, including innovative drugs, and 10 of which were newly-released in the year of 2017.

The nation-wide drug negotiation for health insurance coverage aims to improve national medical insurance system and facilitate universal health care. The negotiation could minimize the insurance expenses and medical payment. For covered drugs that were negotiated at the national level, all medical insurance covered regions must follow the rule by including these drugs in the preferred drug catalogue. The drug negotiation has provided strong support for the reform of the medical payment method and solved the problem of affordability of innovative drugs.

The next step is to promote the standardization and normalization of drug negotiation. Although there has been three rounds of national drug negotiation, many innovative drugs and expensive medical devices haven't been covered yet, so we hoped to further use the negotiation mechanism to adapt the needs of healthcare and medical insurance development.

HUANG Xinyu, Department of Healthcare Management, State Medical Insurance Administration

"Directions of Reforming Medical Insurance"

China needs to improve the efficiency of using health insurance fund. The core was to create a value-based healthcare purchasing mechanism. With a controlled amount of health insurance fund, the money would be applied for better medical services, more effective drugs, and newer therapeutic methods.

The goal of medical insurance payment method is to let hospitals with high efficiency, good management and excellent services stand out. Hospitals will have competitors in the future and those who want to be leader needs to improve efficiency and save costs via reasonable payment method. In this case, medical insurance could keep a benign relationship between patient and physicians.

In addition, with the introduction of negotiations and the involvement of relevant parties, disagreements would be resolved before the agreements. As the result, physicians would actively participate in the process for an equal and fully responsible agreement among the parties.

The health insurance payment method reform can't be achieved overnight. Inefficiency in personnel management and the disunity of healthcare technologies are both obstacles for the reform. The success of the reform requires collaborations among related parties to collectively establish a new and suitable payment method in China.

GU Xuefei, Deputy Director, Health Insurance Research Office, China National Health Development Research Center, National Health Commission of China.

"Health Care Reform: From Passive Payment to Strategic Purchasing"

The particularity of health insurance is that it doesn’t pay the insured person with cash, but with medical services. Because of the uncertainty of medical services and moral hazard, healthcare often played the passive role.

The way of preventing such moral hazard was to have payment method reform. By performing the reform, health insurance shifts from a passive payer to a positive buyer.

Strategic purchase involves governance mechanism, service package, payment method, evaluation, etc. Health insurances shift their attention from paying medical treatments, to health outcomes. For example, Luohu district of Shenzhen city installed anti-sliding grips for seniors over 65 years old. Though it’s not a medical service, it might reduce the fracture rate of the elders.

SUN Xizhuo, President, Shenzhen Luohu Hospital Group

"Establishing an Integrated Healthcare System with Chinese Character: The Case of Shenzhen Luohu Hospital Group"

In the past, hospital and doctors thought the more patients, the better, because patients bring higher revenue to the hospital. But problems came along as well such as excessive medical care, inefficient hospital operation, soaring medical costs and unsustainable health insurance funds

Nowadays, with the medical insurance payment system reform, we think the fewer patients, the better.In January 2016, Luohu district in Shenzhen city started a pilot reform. The reform targeted at contracted residents in the district. The reform calculated the total payment of basic serious illness health insurance fund for the previous year and also included the local supplementary health insurance fund, plus the city's average growth rate value of healthcare expenses. The health insurance calculation was then packaged and delivered to the Luohu Hospital Group. If there was surplus at the year-end liquidation, the surplus would be given to the hospital group as an award.

This payment mode was a breakthrough in medical service hospitals. Only when hospitals pay attention to residents’ health, enhance preventive healthcare, and reduce residents’ prevalence rate, in-hospital rate, and expenses, hospitals could earn more. In this case, patients and hospitals are moving toward the same direction.

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