Embed Size (px)
Citation preview
i
i
ABBREVIATIONS
ADB Asian Development Bank
CCMS Center for China Cooperative Medical Scheme
FFS fee-for-service
HMIS health management information system
NRCMS New Rural Cooperative Medical Scheme
PPM provider payment method
PRC People's Republic of China
TA technical assistance
THC township health center
UEBMI Basic Medical Insurance for Urban Employees
URBMI Basic Medical Insurance for Urban Residents
ii
CONTENTS
I. Background .................................................................................................................................................. 1
II. Lessons from Research on Theory and Practice of Provider Payment System Reform ............................ 4
III. The Current Situation of PPM under NRCMS ......................................................................................... 11
3.1 Overview .............................................................................................................................................. 11
3.2 Challenges ............................................................................................................................................ 12
IV. Field Intervention .................................................................................................................................... 14
4.1 Selection of intervention and control counties .................................................................................... 14
4.2 Selection of interventions .................................................................................................................... 15
4.3 Organization and implementation ....................................................................................................... 15
4.4 Impact evaluation ................................................................................................................................ 16
V. Capacity Building ...................................................................................................................................... 19
5.1 Holding workshops .............................................................................................................................. 19
5.2 On-the-spot observing and study: Study tour abroad .......................................................................... 20
5.3 Learning by doing ................................................................................................................................. 20
VI.Policy Recommendations from the TA Project ........................................................................................ 21
6.1 A PPM has to be put into a general framework of health reform and PPM is a component
of health reform. ............................................................................................................................................ 21
6.2 While initiating a PPM, reformers have to take into account local realistic conditions in a
comprehensive manner. ................................................................................................................................ 23
6.3 In order to avoid detour, it is necessary to draw lessons by means of experiment, and then
generalize and spread its experiences. .......................................................................................................... 25
6.4 Objectives of the PPM must be emphasized completely: quality, accessibility, and cost
control. .......................................................................................................................................................... 25
6.5 A standard contract form should be developed. .................................................................................. 25
6.6 It is needed to strengthen capacity development and technical support to PPM reform. ................... 26
VII. Brief Summary ........................................................................................................................................ 26
1
IMPROVING PROVIDER PAYMENT METHODS TO
INCREASE THE PURCHASING CAPACITY OF THE
NEW RURAL COOPERATIVE MEDICAL SCHEME
I. Background
The New Rural Cooperative Medical Scheme (NRCMS) has covered more than 95%
of rural residents in the PRC since 2008 and kept in the level, however, the financial
protection is still low. For instance, with the per capita premium of CNY113, only 41.5%
of individuals’ medical expenses were reimbursed by the scheme in 2009.①
Catastrophic
medical expenses②
occurred in 13.8% of households, and 12.6% of annual income was
spent on medical purposes in rural PRC in 2011.③
The growth in total health expenditure has exceeded the growth in gross domestic
product. During the Eleventh Five Year Plan (2006–2010), the total national medical
services and medicine expenditure rose 13.5% per year, and was higher than gross
domestic product (9.7%) by 3.8 percentage points. The total national expenditure in public
hospitals increased by 19% from 2009 to 2010, and it was much higher than the growth in
gross domestic product over that period, which was10.3%. Expense per inpatient
increased even faster. The expenditure rose 9.6% in 2011, compared to 2009; the growth
in medical examination expenses was especially pronounced, and increased by 12.6%
from 2009 to 2011.
①Official NRCMS statistics, Center for China Cooperative Medical Scheme, 2010.
②When 40% of one household’s disposable income is spent on medical purposes.
③Qun Meng: Trends in Access to Health Services and Financial Protection in China between 2003 and 2011: A Cross-sectional Study.
The Lancet Chinese Edition, 2012(6):160-170.
Why was payment
method reform put
on agenda? It has
been a serious issue
in the PRC to curb an
escalating health
care cost and provide
residents with more
financial protection.
2
The PRC government has carried out a new
financial policy,①
which regulates local
governments to have to provide township health
centers (THCs) with full budgets which cover all
salary and investment in capital construction, and
an essential drug scheme. This program includes
policy regarding purchasing dugs by bidding and
zero mark-ups②
while prescribing and selling
drugs in health centers. However, the trend of
increasing expenses in THCs has not been curbed.
This shows that this policy may not cooperate with
each other to work well or that it is necessary to develop ad use more policy tools, such as payment methods. The
data obtained from a survey conducted by the Center for China Cooperative Medical Scheme (CCMS) showed that
the average expense per inpatient rose by 12.4% in 2010 in contrast to 2009, and expenses on drugs grew by
10.6%.
In the health sector, a payment method – fee-for-services (FFS) – has been used since 1950s in the PRC. Its
disadvantages have taken a toll on the PRC health sector, and policy which could mitigate its influence has not
developed enough.
①Central Committee of Communist Party of China and State Council: Opinion on Reforming Health and Medicine Institution (March,
2009).
②No mark-up can be added when selling drugs.
3
The social medical security system
including Basic Medical Insurance for
Urban Employees (UEBMI), Basic Medical
Insurance for Urban Residents (URBMI),
NRCMS, and Medical Assistance, covers
almost all of the PRC’s population.
Therefore it has formed a strong market
purchase power. This furnishes a support
condition to initiate a provider payment
method (PPM) reform.
Central and local governments have
strong political willingness to reform
payment methods. Governments spend a
large sum on subsidies as premium for
social medical security, including NRCMS.
For NRCMS, the government pays for
about 80% of the premium. In order to
alleviate pressure of growing government
expenditure, it is necessary to keep medical
costs steady. At the same time, the PRC
government has emphasized the importance
of improving people’s livelihood, making
high medical service prices a sensitive topic.
Controlling medical costs remains an
important priority for governments. In
reality, governments release documents on
PPM, e.g. Notification on developing pilot
experiment of paying for disease categories, ①
Guideline of carrying forward
NRCMS’PPM②
and Suggestions on
propelling further a PPM of medical
insurance.③
Although there are a lot of experiments
on reforming payment methods all over the
country as described in section three below,
there are only a few models which prove to
be qualified and could have a positive
impact on providers’ behavior by improving
medical resource utilization. Health reform
calls for models that are amenable to be independently assessed by external evaluators, in such context, the Asian
Development Bank (ADB).
①National Development and Reform Committee (March, 2011).
②Ministry of Health (April, 2012).
③Ministry of Human Resources and Social Security (May, 2011).
4
II. Lessons from Research on Theory and Practice of Provider
Payment System Reform
Provider payment system reform is not a new topic internationally and domestically;
however, it is new to NRCMS. Before the implementation of provider payment system
reform in NRCMS, it is necessary to research the concepts, measures operation points
and potential effects of PPMs. It is also essential to identify and learn from international
experience, including practical experiences.
According to Designing and Implementing Health Care Provider Payment Systems:
How-To Manuals,①
a provider payment system could be defined as the mechanism used
to transfer funds from the purchasers of healthcare services to the providers. Also,
provider payment systems could be defined widely as transfer mechanisms combined
with all supporting systems, such as negotiation, contracting and health management
information system (HMIS).
①The World Bank: Designing and Implementing Health Care Provider Payment Systems: How-to Manuals (edited by John C.
Langenbrunner, Cheryl Cashin and Sheila O’Dougherty). Washington, D.C. 2009.
What lessons and
information have we
acquired from the
literature review?
5
In theory, PPMs can be
categorized by the basis of
payment and the time payment
rates; alternatively, budgets are
set and the actual payment is
made. The narrowly defined
provider payment system has
six typical categories: line-item
budget, FFS, capitation, per
diem, case-based payment, and
global budget. All of these six
PPMs have their own
advantages and disadvantages
and have different incentive
and constraint mechanisms for
the provider of medical
services.
Globally speaking, in the beginning, the main methods to purchase medical services paid providers are
line-item and FFS. In the 1970s and 1980s, with the rapid growth of medical service usage and medical expenses,
main developed countries/regions began to reform their provider payment systems. The main goals of the reform
are to regulate providers’ behaviors and improve the efficiency of medical security funds. According to the
experiences of provider payment system reforms in the U.K., Germany, U.S., Hungary, Australia, and Taiwan,
provider payment reform is effective. All these countries/regions have taken reform measures based on the
characteristics of their healthcare system and the goals of their respective medical security systems. They have
achieved positive effects in regulating medical services, ensuring that the growth of medical expenses does not get
out of hand, and remains steady and sustainable.
At present, provider payment system reform
aiming at regulating medical services is still
underway and has three trends: first, the basic units of
payment have become more aggregated. The units of
payment cover more and more services. Integrated
payment units give healthcare providers more
autonomy and make the purchaser manage the
payment system more actively. Second, the single
PPM gradually turns into the mixed payment method
including multiple payment methods. Third,
prospective payment methods①
have better effects on
cost-control and gradually become the mainstream of
provider payment system.
①Prospective payment methods are payment methods that the purchaser prepay or promise to pay a fixed amount to healthcare
providers before the actual occurrence of medical expense.
6
Besides provider payment system reform aiming at regulating medical services and controlling medical
expenses, many countries/regions have taken reform measures aiming at improving service accessibility. This
ensures that people in remote areas can access medical services, and promotes the provision of priority services.
For example, countries like Croatia pay for outpatient services by the capitation method and pay for preventive
healthcare and other priority services by the FFS method. In the U.K., NHS pays special allowances to practitioners
in remote or poor areas and gives additional subsidies once they treat patients. In Taiwan, the Bureau of National
Health Insurance launched the Medical Benefit Improvement Plan for mountains and off-island areas. The
objective of this plan was to increase medical services in these areas and improve the accessibility and quality of
medical services for these areas.
In the PRC, UEBMI, which was established earlier than NRCMS, has also implemented provider payment
system reform. Regions such as Zhenjiang City, Wuxi City, and Huai’an City in Jiangsu Province have actively
explored global budget, case-based payment, and disease point payment methods. Some internal materials provided
by local authorities showed that provider payment system reforms in these regions have achieved some success,
such as improved self-discipline of health facilities and slower cost escalation of medical costs.
The findings from theoretical research presented in how-to manuals and experiences of typical
countries/regions have provided some references on provider payment system reform in NRCMS. The situations in
the PRC and some possible measures are listed in Table 1.
First, the implementation of a provider payment system reform will inevitably lead to interest adjustments
among stakeholders. However, provider payment system reform doesn’t necessarily mean a zero-sum game in
which the gains of one part are exactly balanced by the losses of the other parts. In fact, it could be a game that
could benefit all parties. Before the implementation of a provider payment system, it is necessary to inform the
government, NRCMS executive agencies, and medical institutions of the potential benefits of reform. This will
decrease resistance to reform and incentivize them to work together to promote it. This is an important prerequisite
7
for the smooth development of provider payment system reform in NRCMS.
Second, at present, the PRC’s medical institutions do not have enough autonomy and are facing many
restrictions in pricing, internal distribution, personnel evaluation, and budget control. To ensure the smooth
implementation of provider payment system reform, we must first amend policies and regulations such as the
separation of revenue from expenditure①
to enhance medical institutions’ autonomy. We must also try to transform
incentives for medical institutions into motivations for internal medical staff. This will provide the basic conditions
necessary prior to the implementation of provider payment system reform.
Third, each PPM has its advantages and disadvantages. Mixed provider payment systems are necessary to
optimally balance multiple objectives such as controlling costs, improving the efficiency and quality of health
services, and meeting the needs of patients. For these reasons, the mixed payment method should be the direction
chosen when considering provider payment system reform methods in NRCMS.
Fourth, when provider payment system reform fails to cover all medical service providers and all medical
services, medical institutions will shift costs among service items or patients. Therefore, provider payment system
①The separation of revenue from expenditure means that the total income of grass-root medical institutions should be turned over to
financial authorities and their current expenditures on basic medical treatment and public health services should be approved by
government and paid fully by public financial funds. The separation of revenue from expenditure is a reform measure proposed by
the PRC’s central government in 2009 which plans to be applied to grass-root medical institutions such as THCs. The main purpose
of this reform measure is to change grass-root medical institutions from for-profit organizations to non-profit ones. Before the
implementation of separation of revenue from expenditure, grass-root medical institutions could retain the surplus and should take
the losses by themselves. Therefore, the implementation of separation of revenue from expenditure could weaken grass-root medical
institutions’ enthusiasms for controlling costs and increasing incomes and may have negative effects on provider payment system
reform.
8
reform should try to achieve full coverage to counteract medical institutions’ behavior of shifting costs and ensure
that provider payment system reform achieves practical results.
Fifth, medical service resources in rural areas, especially remote or poor areas are relatively limited. Provider
payment system reform in NRCMS mainly aims at controlling medical expenses. This may place medical
institutions in remote or poor areas in a less favorable situation and could negatively impact service accessibility for
local residents. The implementation of provider payment system reform in NRCMS should also pay attention to the
impact on service accessibility and measures should be taken in order to improve the medical service accessibility
in remote or poor areas.
Sixth, the implementation of provider payment system reform must get the response and cooperation of
medical institutions. Medical institutions will be willing to negotiate with management and executive agencies of
NRCMS only if NRCMS has strong negotiating power. At present, NRCMS is mainly pooled on the county level.
Therefore, NRCMS has large influence and strong negotiating power on hospitals on the county level but less
influence and limited negotiating power on hospitals on prefectural, provincial, or higher levels. The negotiating
power of NRCMS could be strengthened by increasing the size of pooling funds through improving the pooling
level (e.g., pooling at provincial level rather than county level) or carrying out horizontal collaboration with other
basic medical security schemes.
Seventh, the negotiation mechanism in the
implementation of provider payment system reform
of NRCMS is currently suboptimal. The
management and executive agencies of NRCMS
dare not participate in negotiation and have no
experience negotiating with other stakeholders. The
negotiating capacities of management and
executive agencies of NRCMS need to be improved.
It is necessary to establish dialogue and negotiation
mechanisms between the purchasers and providers
of medical services on an equal footing across the
country. Management and executive agencies of
NRCMS should make the improvement of
negotiating capacities an important priority of
capacity building and pay close attention to it.
Eighth, the construction of the HMIS should
be carried out along with provider payment system
reform. An effective HMIS is crucial, since it plays
a fundamental role in organizing and streamlining
the business processes of health care, and in
providing a vital communication link between
purchasers and providers through which business
transactions can flow.①
An HMIS with perfect
functions and stable operations could provide
information on the operation of medical institutions
①The World Bank. 2009.
9
and PPMs, and would make quality measurement and contract monitoring more feasible. Also, the establishment of
a more in-depth HMIS will be helpful in decision-making and negotiations, and will provide ample support for the
smooth implementation of a provider payment system reform. The HMIS consists of a provider system, a purchaser
system, and a link between the two systems. Functions of each component can be improved gradually, but overall
planning is necessary before the beginning of construction and reform.
Table 1 Reference of Literature Review and Possible Measures in PRC
Lessons Situations in China Possible measures
It is necessary to raise the
understanding of all parties before the
implementation of a provider payment
system reform.
Some parties, especially medical institutions believe that
provider payment system reform will damage their
interests.
Raise the understanding of government, NRCMS
executive agencies, and medical institutions;
eliminate their resistance to reform by
demonstration or training.
Medical institutions must have sufficient
autonomy to respond to the incentive
signals released by a new provider
payment system.
Medical institutions haven’t enough autonomy and are
facing many restrictions in pricing, internal distribution,
personnel evaluation, and budget control.
Amend policies and regulations to enhance medical
institutions’ autonomy. Transform incentives for
medical institutions into the motivations of internal
medical staff.
Each provider payment method has its
advantages and disadvantages and
mixed provider payment systems are
necessary to optimally balance multiple
objectives.
Most regions apply single provider payment method for
inpatient and outpatient services respectively.
Keep exploring provider payment system reform,
summarize experiences and lessons in time, and
provide guidance to local provider payment system
reform.
Provider payment system reform should
try to achieve full coverage.
Provider payment system reforms in many regions cover
only a small portion of patients or medical institutions.
Promote provider payment system reform to cover
all medical service providers and all medical
services.
Provider payment system reform in
NRCMS should also pay attention to the
impact on service accessibility.
Medical service resources in rural areas, especially
remote or poor areas are relatively limited. Provider
payment system reform in NRCMS, which mainly aims at
regulating providers’ behavior, may place medical
institutions in remote or poor areas in a more
unfavorable situation, and have a negative impact on
service accessibility of local residents.
Pay medical service providers in remote or
impoverished areas by the FFS method or give them
additional subsidies to encourage the provision of
priority services in these areas.
The implementation of provider
payment system reform must obtain the
response and cooperation of medical
institutions at county, prefectural and
provincial level.
NRCMS in the PRC mainly covers rural residents, and the
funds of NRCMS are pooled on the county level in most
regions. Therefore, the size of NRCMS funds is relatively
small. Medical institutions on the prefectural or
provincial levels may ignore the proposition of a
provider payment system reform proposed by NRCMS.
Increase the size of NRCMS funds by raising the
pooling level of NRCMS funds from the county level
to the prefectural or provincial level and integrate
NRCMS, UEBMI and URBMI. Make NRCMS a more
important purchaser for medical institutions on
prefecture or province levels.
The management and executive
agencies of medical security schemes
should master negotiating skills and
should be able to achieve their goals
through negotiation.
The management and executive agencies of NRCMS do
not participate in negotiation and do not know how to
negotiate with other stakeholders.
Carry out studies on issues such as the prices and
costs of medical services and medicines to provide
technical support for negotiations. Strengthen
training and train a number of negotiators as soon
as possible to meet the needs of provider payment
system reform.
The construction of the health
management information system should
be carried out along with provider
payment system reform.
The hospital information systems in THCs in most
regions have not been established at this time. Data
which is necessary for provider payment system reform
in these regions is mainly in hardcopy forms.
Make an overall planning of the HMIS building and
actively promote the improvement of the HMIS as
soon as possible.
FFS = fee-for-service, HMIS = health management information system, NRCMS = New Rural Cooperative Medical Scheme, PRC = People’s Republic
of China, THC = township health center, UEBMI = Basic Medical Insurance for Urban Employees, URBMI = Basic Medical Insurance for Urban
Residents.
Source: The World Bank: Designing and Implementing Health Care Provider Payment Systems: How-to Manuals (edited by John C. Langenbrunner,
Cheryl Cashin and Sheila O’Dougherty). Washington, D.C. 2009.
10
During the implementation of provider payment system reform, we should not only pay attention to
institutional design, but also informal institutions, which are closely related to provider payment system reform. For
now, there are some negative factors associated with the implementation of provider payment system reform in the
PRC. One of the main problems is that administrative authorities frequently intervene in economic activities. For
example, provider payment system reforms in some regions are enforced by management agencies of medical
security schemes or by the local government. Medical institutions in these regions could only accept reform
measures and contracts drew up by their local government. The other main problem is that contracts and
agreements cannot be effectively implemented. Barriers to effective implementation include power, friendships, or
moral principles, which tend to dissuade parties①
from abiding with the law or regulations. Unfortunately, the
institutional design of the current provider payment system makes reform a challenging process to carry out. The
implementation of a provider payment system reform in NRCMS must acknowledge the negative effects of
informal institutions and actively promote a change in informal institutions which resist the reform.
①Such as local governments, health facilities and NRCMS executive agencies.
11
III. The Current Situation of PPM under NRCMS
A national survey by mail and field visits was done to obtain information regarding
the current situation of PPM under NRCMS.①
3.1 Overview
Among 2,126 counties (cities, districts), 80.10% (1,703) reported to have piloted
payment methods to contracted health facilities other than FFS under NRCMS (see Table
2; the total number of counties implementing the payment reform program is larger than
the true number of counties due to double counting).
Table 2 Distribution of Payment Methods in Use in the Country (by October 2011)
Inpatient Outpatient
Total Number of counties Case payment
with fixed rate Capped case payment
Per diem Capped payment
Others(fixed charge per outpatient)
Global budget Capped payment
Eastern 180 151 21 118 39 58 136 703 566
Central 554 303 41 246 107 87 480 1818 949
Western 192 125 38 60 24 224 167 830 611
National 926 579 100 424 170 369 783 3351 2126
Source: National survey on PPM reform under NRCMS, CCMS, 2011.
However, strictly speaking, only inpatient case payment, inpatient per diem, and outpatient global budget can
contribute to risk pooling and regulating provider behavior in any real sense. Reform programs based on these
methods are truly in line with the policy, while others are not payment methods, but are administrative means.
Excluding administrative means, local NRCMS payment reform programs can be shown as in Table 3.
Table 3 Local NRCMS Payment Reform Programs (by October 2011)
In- and outpatient Inpatient Outpatient
Total Inpatient case +inpatient per diem +outpatient global budget
Inpatient case +outpatient global budget
Inpatient per diem +outpatient global budget
Case +per diem
Case Per diem Global budget
Eastern 4 25 1 14 137 2 30 213
Central 14 53 1 23 437 1 27 556
Western 2 129 1 2 57 31 93 315
National 20 207 3 39 631 34 150 1084
Source: National survey on PPM reform under NRCMS, CCMS, 2011.
①Based on the literature study, the research team developed the Survey Form on the Provincial NRCMS Payment Reform Program in
September and sent it to 28 provinces (prefectures, municipalities). This was performed to learn about local reform programs and
their issues (altogether there are 31 provincial units in the PRC, but in 3 of them, Tianjin Municipality, Chongqing Municipality,
and Ninxia Hui Autonomous Region, the NRCMS program has been assigned to local human resource and social security agencies,
so data on NRCMS in these provincial units were inaccessible). 23 provinces (prefectures, municipalities) sent back the forms in
due time, with a response rate of 82.14%. These provinces (prefectures, municipalities) have reported on valid data from 2,126
counties (cities, districts). Given regional differences and diversities in payment reform program design, the research team went to
Shan’Xi, Yunnan, and Anhui Provinces to investigate local practices and experiences of NRCMS payment programs and find out
issues and problems.
What is the current
situation of NRCMS PPM
across the PRC?
12
3.2 Challenges
NRCMS payment reform is still at its beginning. According to a study by the United Nations Children’s Fund,
although some counties claimed that they have adopted case payment, they did not effectively implement it.
Effective implementation was judged primarily based on conditions covered, prices defined, and evaluation
conducted. Furthermore, localities that implemented provider payment reform, encountered hardships and
challenges in terms of program design and actual implementation. For example, estimation workload is quite heavy
and challenging for health institutions to implement in a standardized way. The current NRCMS management
personnel are not stable and shortage in personnel has interrupted the fine-tuned management process and
improvement of management skills. As a result, the management staff has difficulties maintaining overall
supervision and control. In some places, information systems are underdeveloped, which also have certain impacts
on payment reform programs.
Besides technical issues concerning program design and implementation, the following hardships and
challenges related to institutional context and socioeconomic situations exist for those areas that have implemented
payment reform:
The first challenge is the technological and natural monopoly of the rural health market. Market structure
(namely competition and selection) and health providers’ rights to select or refuse patients will weaken or enforce
incentives created by PPMs. In rural areas, county health institutions usually are superior in technical strength and
occupy a comparatively larger share of service volumes. In this way, they enjoy a technological monopoly. On the
township and village level, health facilities enjoy a natural monopoly. Local governments own these facilities and
guarantee their full entitlement in NRCMS contract to ensure access to services. Therefore, competitive
mechanisms cannot be implemented in such situations. Such features of the rural health market make it difficult for
the NRCMS agencies to negotiate with health institutions on an equal basis, so that economic leverages – such as
being forced to adopt a pre-paid mechanism – cannot be fully played out.
The second problem is the conflict between administrative measures and negotiation mechanisms used in
payment reform. Coexisted with monopoly features of health market, the PRC’s provider payment reform has a
strong degree of administrative enforcement. Health insurance agencies, as semi-official institutions, usually order
health institutions to abide to implemented policies, which has resulted in misunderstanding, non-acceptance, and
even various forms of
resistance. As mentioned above,
negotiations on payment should
be held between parties on an
equal basis, and each party’s
interests should be carefully
attended to, otherwise the
reform can hardly be carried
out. Unfortunately, this
negotiation mechanism runs
contradictory to administrative
measures taken by the health
insurance agencies.
13
The third issue is conflict between
health reform policies and payment reform
programs. To explore full potentials of new
payment methods, it is necessary that health
institutions be enabled in order to develop
full management skills. Some management
measures and tools (such as power over
investment decisions, and management and
use of income) are vital and should become
part of the provider payment program.
However, some current health reform
policies contradict with the requirement of
provider payment reform. For instance,
some basic health institutions have started
pilots on the separation between income
and expenditure, leaving health institutions
with no power to “keep the balance”. The
result is that economic incentives of many
payment methods cannot fully work.
What’s more, NRCMS financial regulation
and accounting measures are designed
based on FFS, and lack evidence in
supporting other kinds of methods.
The fourth concern is adoptions of
payment methods need to be strengthened.
Issues will arise in implementation even
with signed agreement. On one hand, local
governments may interfere when health
institutions over spend to ensure that health
facilities do not suffer a large financial loss,
out of the consideration of local health
cause. On the other hand, health facilities
with a technological monopoly often
maximize their interests by shirking binding
mechanisms imposed by payment methods,
such as pushing away critical cases to save
money, so that payment reform cannot make
the defined impact.
14
IV. Field Intervention
The technical assistance (TA) chose two counties to run a pilot study. The pilot was
prepared in 2011 and implemented from January to December 2012.
4.1 Selection of intervention and control counties
A quasi-experimental epidemiological study design was adopted. C. County of Jiangsu
Province in the eastern part of the PRC and N. County of Anhui Province in the central part
of the PRC, where no actual PPM reform measures were adopted when the TA started, were
chosen as the experiment group. Before the intervention, a case payment approach was in
use by both counties①
as required by local health authorities, but it was poorly enforced.
The TA intervened to assist local health authorities to reform the PPM systematically under
local NRCMS. The two counties were selected based on the administrative capacity and
willingness of local NRCMS managers, the sophistication of the hospital information
system and management information system of NRCMS, and the feasibility for experience
promotion.
The selection of a control group for the pilot proved to be difficult. The Ministry of
Health required all counties to explore PPM reform from 2011 and, as shown by the
national survey, few counties had not tried to reform their FFS payment methods under
NRCMS when the TA was implemented. Additionally, local health policies were
undergoing very rapid changes due to the new round of health reform, and a strict control
group study was no longer an option. Nevertheless, two counties were selected as a
potential control group.
Table 4 Comparison between Y. County and C. County
Proportion of agricultural population (%)
Proportion of the population over 60 (%)
GDP per
capita（CNY）
NRCMS participation
rate （%）
Fund utilization
rates（%）
Number of contracted medical facilities
Per capita annual outpatient visits
Hospitalization
rate（%）
C. 47.35 24.11 160298 103.78 89.48 45 5.03 15.65
Y. 57.47 27.68 59214 99.85 82.81 20 0.39 7.71
GDP = gross domestic product, NRCMS = New Rural Cooperative Medical Scheme.
Source: Official NRCMS statistics, Health Bureau of C. County & Health Bureau of Y. County, 2013
The original control group for C. County was committed to the TA in the beginning but the local health
authority refused to provide comparative data in the end, since the local health authority has concerns that its image
would be affected after comparing results of PPM reform between the two counties, and no sanctions were exerted
to the control group for such behavior because no budget was set for the counties in the first place. Y. County was
selected as an alternative, which is within the same prefecture②
as C. County in the eastern part of the PRC, after
carefully considering factors such as geographic location, socioeconomic sophistication, population structure and
effectiveness of existing PPM reform measures.③
Although some parameters were indeed substantially different
between the two counties, Y. County was the only choice.
①Thirty diseases with easily defined costs in C. and 17 diseases with easily defined costs in N. fell into the scope of case payment.
②The prefecture is Suzhou Prefecture, located in Jiangsu Province.
③A global budgeting approach and case payment methods were used in Y. County during 2012, but the reform was poorly enforced.
How do we run a pilot
study in order to carry
a reform forward
successfully?
15
Table 5 Comparison between N. County and J.County
Proportion of agricultural population (%)
Proportion of the population over 60 (%)
GDP per
capita（CNY）
NRCMS participation
rate（%）
Fund utilization
rates（%）
Number of contracted medical facilities
Per capita annual outpatient visits
Hospitalization
rate（%）
N. 85.01 15.71 22721 100.8 76.39 29 1.93 5.17
J. 68.38 12.31 32385 100.0 64.74 19 3.21 7.84
GDP = gross domestic product, NRCMS = New Rural Cooperative Medical Scheme.
Source: Official NRCMS statistics, Health Bureau of N. County & Health Bureau of J. County, 2013
J. County was chosen as the control group for N. County and willing to provide comparative data. It locates in
Hubei Province in the middle part of the PRC and shares similar parameters with N. County, which made it a better
control county.①
4.2 Selection of interventions
In consultation with local NRCMS managers, based on the operation of NRCMS in these two intervention
counties, both C. County and N. County agreed to adopt global budgeting for outpatient expenses and different
types of PPMs reform for inpatient expenses. In C. County, case payment continued to be applied in public county
hospitals and THCs. All of the other cases fell into the scope of a per-diem approach. In N. County, case payment
continued to be applied in public county hospitals and THCs. All other cases in public health facilities fell into the
scope of episode-based payment categorized by medical departments, and all other cases in private hospitals
adopted a per-diem approach.
Table 6 Intervention Applied in C. County and N. County
Outpatient service
Inpatient service
Diseases with easily defined costs
Other diseases: in public county hospitals and THCs
Other diseases: in private hospitals
C. Annual global budgeting Case payment for 30 diseases per-diem payment per-diem payment
N. Annual global budgeting Case payment for 17 diseases episode based payment in different departments
per-diem payment in different departments
Source: PPM Reform Plans, Health Bureau of C. County & N. County, 2012
4.3 Organization and implementation
In 2011, NRCMS managers in C. County and N. County decided to carry out the intervention with the
persuasion and encouragement from the TA group, who paid multiple rounds of field investigation and provided
training through workshops on selection of PPM. The two counties finished data analysis, made detailed
intervention plans, negotiated with contracted health facilities to determine rates, and upgraded the hospital
information system and NRCMS Settlement Information System used by health facilities and NRCMS executive
agencies. Health facilities adjusted internal regulations including remuneration distribution and performance
assessment. From 1 January to 31 December 2012, interventions were piloted in the two counties. Quarterly,
half-year and annual evaluations were conducted.
①Same with Y. County, a global budgeting approach and case payment methods were also used in J. county during 2012, and the
reform was poorly enforced.
16
4.4 Impact evaluation
4.4.1 Data collection and analysis
The limitations of the study must be kept
in mind – there was no strict control group.
On one hand, PPM reforms had taken place in
the control group, although the reform design
was not good as in the intervention group. On
the other hand, it was difficult to eliminate the
influence of the capacity of local health care
cause and fast-changing policy environment
due to the new round of health reform.
Variables monitored can be found in
Table 7. Data for all NRCMS enrollees for the
counties①
for the whole year were retrieved and analyzed from the Hospital Information System, NRCMS
Settlement Information System and report forms for annual and quarterly monitoring, which made population data
rather than sample data and therefore no statistical analysis needed to be done.
Table 7 The Variables to be Monitored for the Evaluation of the Intervention Effects
The Contents of the Variables Data Source The Variables to be Monitored
The control of the costs
HIS, NRCMS
Settlement
Information System,
report forms for
annual and quarterly
monitoring
Total amount of medical expenses, average medical expense, cost reimbursed by NRCMS for
each admission costs for drug sales and cost for examination by major medical equipment.
The change of the medical behavior Average length of hospital stay, referral rate to health facilities outside the pooling area, and
separation of inpatient costs*
The quality of service
Re-admission rate within 30 days of discharge, compliance of admission and discharge
diagnosis, hospital acquired infection rate and the result of treatment (cured, improved,
not-cured and referred)
The benefit level and satisfaction Out-of-pocket cost, the actual reimbursement ratio and the patient satisfaction to the
medical facilities and to the health services
* Separation of inpatient cost: re-admitting patients to reduce total medical costs.
HIS = hospital information system, NRCMS = New Rural Cooperative Medical Scheme.
Source: Study Protocol for the Pilot under the TA
4.4.2 Intervention effects
The intervention received positive effects, both in C. County and N. County, as compared with the control
group, Y. County and J. County. After the intervention, growth of total outpatient costs was -1.48% in C. County
and 105.82% in Y. County, while growth of number of outpatients was 2.58% in C. County and 144.25% in Y.
County, with no dramatic change of enrollees in number. The increase of outpatients in C. County awaited
long-term observation to make sure there was no split of prescriptions.
①Include data for patients seeking care outside of the counties.
17
Although inpatients tended to be hospitalized in higher level of hospitals, the inpatients in C. County were
more committed to seek service in suitable levels of health facilities than those in Y. County (Figure 1). The
average increase of inpatient costs was twice as high in Y. County compared with C. County. Although the medical
behavior in C. County had no significant changes, the quality of service did not fall. Compared with Y. County, the
disease burden of inpatients in C. showed a larger decrease (Table 8).
Table 8 Intervention Effects in C. County (Inpatient Service)
C. County Y. County
Average inpatient cost (CNY)
Average lengths of stay (days)
Re-admission rate within 30 days of discharge (%)
Indicator of financial burden*
Average inpatient cost (CNY)
Average lengths of stay (days)
Re-admission rate within 30 days of discharge (%)
Indicator of financial burden*
2011 4666.6 7.9 3.4 13.6 4343.4 9.9 0.5 20.2
2012 4942.4 8.9 3.2 12.5 4985.8 9.9 0.6 21.4
(%)/Growth 5.9 1.0 -0.2 -1.1 14.8 0.0 0.1 1.2
Source: Official NRCMS statistics, Health Bureau of C. County & Health Bureau of Y. County, 2013
*Indicator of disease burden: Percentage of average out-of-pocket cost in the average annual net income of rural residents (%).
After the intervention, in N. County, outpatients were more determined to seek service in suitable levels of
health facilities than those in J. County. The number of outpatients increased significantly and the average
outpatient cost fell considerably in N. County, implying a better cost control effect than in J. County. Whether the
substantial rise in volume of outpatients was the stimulation of the zero mark-up drugs policy or should be
attributed to the phenomenon of separating prescriptions to gain profits awaits further analysis. The reimbursement
ratio improved considerably in the two counties based on the reduction of average outpatient cost, which indicates
improved outpatient benefit.
0% 20% 40% 60% 80% 100%
2012
2011
2012
2011
Y. C
ou
nty
C. C
ou
nty
17.38
21.88
51.99
53.52
59.11
52.32
44.87
43.50
23.51
25.79
3.13
2.98
Figure 1: Distribution of Inpatients in C. County and Y. County, 2011–2012 (%)
THCs
county hospitals
hospitals outside ofthe county
18
Distribution of inpatients in N. County was not as rational as in C. County, even not rational than in J. County
(Figure 2).Because of the low quality and poor management of hospitals, and lack of referral system in N. County,
nearly 55% of inpatients chose hospitals outside of the county and this trend continues, despite the intervention.
The inpatients who were hospitalized outside of N. County were not affected by the reform of PPMs, so their
average inpatient cost was not effectively controlled. Although the average inpatient cost in N. County increased by
2.6% after the intervention, the average inpatient cost in THCs and county hospitals decreased by 11.7%, indicating
that the PPM in N. County began to show signs of effective cost control. It appears that the increase in average
inpatient cost in N. County mainly came from hospitalization outside of the county. The average inpatient cost in J.
County increased, and discharged patients increased considerably. The substantial growth of inpatients may imply
readmissions.①
The reform in N. County has changed medical behaviors and maintained medical quality, leading to
a substantial improvement in inpatient benefits (Table 9). In N. County, episode-based payment categorized by
departments and per-diem payment effectively suppressed the rise of inpatient cost. Two payment methods
impelled medical behavior changes, shortened the lengths of stay, improved the benefit level of inpatients, and
alleviated the disease burden. Which payment method is more suitable for N. County still requires further study.
Table 9 Intervention Effects in N. County (Inpatient Service)
N. County J. County
Average inpatient cost (CNY)
Average lengths of stay (days)
Infection rate (%)
Indicator of financial burden*
Average inpatient cost (CNY)
Average lengths of stay (days)
Infection rate (%)
Indicator of financial burden*
2011 2959.5 7.2 0.5 14.4 2106.8 8.1 1.0 10.6
2012 2613.4 7.2 0.4 6.7 2162.8 8.1 1.4 7.0
(%)/Growth -11.7 0.0 -0.1 -7.7 2.7 0.0 0.4 -3.6
Source: Official NRCMS statistics, Health Bureau of N. County & Health Bureau of J. County, 2013
*Indicator of disease burden: Percentage of average out-of-pocket cost in the average annual net income of rural residents (%).
①Health facilities may let one inpatient be hospitalized more than once for different conditions in order to claim more from NRCMS.
0% 20% 40% 60% 80% 100%
2012
2011
2012
2011
J. C
ou
nty
N. C
ou
nty
42.19
38.3
6.31
4.51
47.08
49.29
38.67
40.72
10.73
12.41
55.02
54.77
Figure 2: Distribution of Inpatients in N. County and J. County, 2011–2012 (%)
THCs
county hospitals
hospitals outsideof the county
19
Satisfaction to the intervention was also positive. For health facilities, managers saw the inevitability for PPM
reform and were ready for the challenge. Eventually the facilities coped well in shifting gears and changing internal
regulations to meet the requirements of the intervention. Recommendations they reflected to the TA group were
also deeply thought out –they suggested that there should be room for FFS arrangements for a few extreme cases
with very expensive treatments to keep health facilities motivated to participate in the reform. NRCMS executive
agencies widely thought it was difficult to design the strategy for reform and determine the rate for payment at the
beginning, but they believed that the reform would be successful in the long run in spite of some difficulties. The
managerial capacity has been strengthened, and operating efficiency and quality of NRCMS fund were enhanced.
Overall, patients were satisfied with the reimbursement of inpatient expenses, however, patients with severe
diseases and extremely high medical expenses and limited income were expecting a higher reimbursement ratio.
Outpatients generally hoped to get a higher reimbursement ratio. All patients thought it was convenient to check
medical expenses, and the list of expenses was clear. But the enrolled farmers knew little about the policy of
NRCMS and PPM reform and needed a more detailed policy explanation.
V. Capacity Building
Capacity building was one of the most important objectives of the project. When
referring to capacity in the project, what is meant is the capacity to manage a medical
security system (NRCMS in this case). This is concerned with capacity of analyzing and
managing disease risk, collecting and analyzing information, communication and
coordination, and monitoring and evaluation.
The project team carried out three kinds of activities to promote local persons’ and
team members’ capacity: holding workshops, making an on-the-spot observation and study,
and learning by doing.
5.1 Holding workshops
The project team sponsored four workshops from July 2011 to October 2012 in C. County and N. County.
Participants included government officials, officers of health bureau, financial bureau and civil affairs bureau, and
managers and medical professionals of hospitals and health centers. The training contents were arranged according
to local demand, and were concerned with reasons why we had to develop a PPM and defining a payment method
and its reform. Other considerations
included finding the method of
designing reform alternatives and
choosing a scheme according to the
realistic conditions, determining
how we could operate the reform
successfully, discovering how we
could monitor and evaluate the
reform effectively, and so on. On
the base of training practice the
project team developed training
material on PPM.
How did we develop the
capacity of local
personnel and project
team members?
20
5.2 On-the-spot observing and study: Study Tour abroad
The project sent a delegation
of five to France and Italy for a
study tour on the medical security
system and provider payment
system reform during 18–27 June
2012. The tour was conducted in
order to learn more about the
health reform process, the reform
of the diagnostic related groups
payment system, the large-scale
department construction of
hospitals and the hospital
information system construction,
etc. Information was gathered through seminars with officials and key informants, and visits to health facilities.
What was learned included legislation regarding the guarantee of citizen’s health rights and fair enjoyment of
medical security, the establishment of an appropriate health administrative system, the adoption of a mixed prepaid
payment system to providers, and prioritization of an enhanced medical quality and efficiency in payment system
reform.
5.3 Learning by doing
“Learning by doing” was performed throughout the entire process of the project in order to encourage people
to develop a reform, and it was also combined closely with training workshops. On one hand, local persons
prepared and implemented their own reform, including not only collecting and analyzing information, but also
designing reform alternatives, and finally making a decision and operating a reform plan by themselves. On the
other hand, the project team members kept in touch with local people closely, communicated with each other and
provided suggestions frequently, especially through holding workshops. This was a process that local people and
the project team members learnt from practicing together. For example, the process of wading across a river by
feeling the stones provided a method for locals and project members to learn from each other. It was expressed by
local officials that “we now understand what payment method is and its reform, and we understand how to prepare,
design and implement a reform of payment method so that we are able to run a similar reform in other places”. At
the same time the project team members also knew how to operate a payment methods reform in a realistic setting,
and their capacity has been strengthened.
21
VI. Policy Recommendations from the TA Project
6.1 A PPM has to be put into a general framework of health reform and PPM is a
component of health reform.
A health reform pushes PPM to be put on the reform agenda. The PPM is related
to reforming financial mechanisms (including health insurance system), reforming
public healthcare organizations, and implementing the essential drug policy. It also
depends on the development of technical regulation, such as a clinical pathway, and
other technical conditions, such as a management information system. It is essential to
ensure that the complex relationship and interactions of all factors in the health reform
remain clear. For example, PPM would push a public hospital reform to progress, but
conversely, only if public hospitals transform their management mechanism, and
optimize their personnel allocation system, can they adapt to a new bundled payment
method. In some places it is said that the so called “global budget” method has been
adopted. However hospitals simply allocate the “total amount” to different
departments, and then departments reallocate the subtotal to individual doctors in order
to avert risk, but do not do any change on the merit system, hospitals’ income
allocation, accounting and so on. This results in “everyone protects himself or herself
from risk”, and professionals manage to shift risk to patients. This obviously runs in
the opposite direction of the reform.
What experiences have
we gained from carrying
out the TA project and
what suggestions can
we provide after running
the project?
22
The health insurance system has been transformed and its management structure is also changing. It is clear to
unify the purchasers across the country to form a single purchaser so that a very strong market power can be shaped.
This is a positive signal for reforming payment method. For the project we selected pilot counties where Health
Bureaus are now in charge of both healthcare delivery system and NRCMS.①
Our experience has proved that this
management structure is advantageous to coordinate providers and purchasers better, balance the interests of both
sides, and reduce friction between them. No one would doubt there is a game regarding the differing interests
between providers and purchasers of health care. At the same time, only if they cooperate with each other can they
play their own role and realize their objectives well. In other words, the relationship between providers and
purchasers need not necessarily be a game of zero-sums and they can be co-winners. Under the guidance of this
idea the PPM can be carried forward sustainably.
To make stakeholders believe a
win-win situation would be achieved
under PPM is key to motivation. The
FFS method has been implemented for a
long time, and has resulted in distorting
provider behavior (e.g., prescribing very
expensive drugs and non-necessary
examinations), from which providers
benefit. While some restrictions are
imposed on it and a bundled method was
introduced, it is undoubted that this
reform is undesirable from a provider
point of view. Although purchasers and
government are willing to reform
payment system and have a strong
motivation force, only if providers also
join in a common effort, can the reform be put into practice. In other word, it is a necessary condition that providers
be convinced to cease to resist the reform. This idea means the reform has to provide incentives to providers, so
that they believe the reform will benefit them. This implies that interest groups have to compromise on a reform
scheme. For instance, while we calculate the “price” of a bundled unit, we use expenditure data of FFS. It implies
that the benefit, which providers got in terms of FFS, is accepted, although everyone knows it includes some
unreasonable elements. This is the cost associated with gaining providers’ participation and support for the reform.
At the same time the reformer gets a chance to control future rapid cost escalation.
We also notice the current situation, in which the medical insurance system is divided and ruled by different
bureaus. This produces a pressure on the health bureau in two sample counties because there is a contender, the
social security bureau. After unifying and becoming a single buyer, if the health bureau supervises the medical
system, close attention should be paid regarding how to maintain a strong motivation force to push the reform
forward.
①In most counties, the Health Bureau is in charge of both health care delivery system and NRCMS; and in a few counties, the Health
Bureau is only in charge of the health care delivery system and the Social Security Bureau is in charge of NRCMS.
23
We must understand the
importance of PPM, but we should
not generalize its function, and do not
think that the reform alone could
solve the issue of “getting medical
service is very difficult and very
expensive”, or solve almost all
problems of public hospital reform.
The PPM can only undertake its own
function, that is, to influence provider
behavior (including internal
management mechanism) with
adapted incentives, to increase
efficiency and mitigate cost growth,
and also to attain other objectives of
health care, i.e., quality of care and
accessibility.
6.2 While initiating a PPM, reformers have to take into account local realistic conditions in a comprehensive manner.
6.2.1 What capacity is needed from a purchaser?
A purchaser requires the following capacities:
First, capacity to measure risk. Measuring diseases risk is a basic step to design alternatives. On this base
people can calculate the cost of a new payment unit.
Second, a high-efficient management information system. There is a preliminary computerized information
system and enough medical record data at least so that it is possible to measure disease economic risk. Furthermore,
the level of complete and detailed data influences a choice of a new payment unit.
Third, capacity to develop, sign, and carry out a contract. It also includes abilities of communication,
negotiation, and consultation, because significant negotiation and consultation takes place both during the
developmental stage and implementation of a contract.
Fourth, capacity to monitor and ensure healthcare quality. It is an essential task for a buyer and must be
especially emphasized to monitor and evaluate quality, no matter which payment method is implemented. We have
to pay attention to total quality, procedure quality, and outcome quality. So far the quality issue has not been valued,
and monitoring means, including indexes of evaluating quality, methods to measuring the value of these indexes,
channels to collect quality data, and so on, remain to be developed.
Fifth, capacity to monitor and assess purchasing strategy. During implementation of a PPM reform, reformers
have to keep monitoring and assessing the process from beginning to end, so that the reform requires executive and
evaluation capacity.
6.2.2 Using mixed payment methods, but not single unit.
So-called mixed methods or a hybrid system means that a few methods are used simultaneously by a purchaser.
We all know that every method has some advantages and weaknesses and no one prevails over others absolutely.
24
Therefore, a mix of a few methods is employed in order to avoid disadvantages of a single method. However, no
matter which kind of hybrid system we use, we are only able to search for a satisfied or acceptable balance between
overuse of health care and underuse of health care. In the two pilot counties, both C. County and N. County, the
hybrid system has been adopted separately.
A kind of mix could be a combination in which a buyer pays for different providers using different types of
methods. For example, NRCMS in N. County pays for private hospitals using the per diem method, and for public
hospitals using the case-based unit method. It is important to observe its development and impact on private and
public organizations’ behavior respectively.
6.2.3 To achieve “universal coverage”.
So-called “universal coverage” here has a few meanings: firstly, new bundled methods have to cover all cases
in a hospital; secondly, the PPM should cover all healthcare organizations that NRCMS contracts with; thirdly, all
purchasers (payers) should be involved in the reform. Only if the universal coverage is realized, is it possible that a
reform can influence health care providers’ behavior effectively, prevent providers from shuffling and transferring
patients, especially serious cases, to other hospitals. It is noticeable that in some places it is said that PPM has been
carried out, but for most cases hospitals still charge patients by FFS. Universal coverage is hard to achieve in this
way.
Presently, there are multiple payers
and they use different payment methods
in a hospital. This mixture is different
from the one mentioned above. This will
result in differences in treatment
between patients who are beneficiaries
in different medical insurances due to
the disparity of incentives to providers.
Furthermore, it could initiate an inequity
feeling among patients.
It is a vital principle to realize
“universal coverage”, but at the same
time it should abide by the “exception
principle”. Generally speaking, a
hospital could have to deal with extremely serious cases unavoidably, and the bundled payment rate could not be
enough to reimburse the cost of these cases. For these special cases, if NRCMS still insists on paying for providers
in the bundled rate, a rational provider would reject these patients. However if NRCMS applies the "exception
principle", that is, paying for these cases in FFS, this will stimulate providers to take care of their patients,
providing more time for patients to be cured and recover. In practice a proportion of these cases should be
estimated in terms of historical record; generally the proportion should be less than 5%.
6.2.4 While initiating a reform, it is more operable to start from simple form to higher level gradually.
In N. County, the PPM started with episode-based payment in different departments, where a unit rate was
based on the average of all cases in a department in the same level hospitals (secondary or primary health centers).
It was a preliminary version. After running for 1 year, NRCMS has recorded more detailed information, so that it
can divide all cases in a department into a few subgroups according to severity of conditions, and calculate new
25
unit rates respectively. Obviously there is smaller variation in a subgroup. It is a process to achieve this.
Currently, it may be better to choose a capitation or global budget for outpatient services, and per diem or
case-based unit for inpatient services.
6.3 In order to avoid detour, it is necessary to draw lessons by means of experiment, and then generalize and spread
its experiences.
A PPM needs some conditions and preparations. It was proved in practice that objectives of the reform could
not be achieved if we neglect an objective environment and act in haste. Indeed it has happened in some places that
a lot of resources were spent on reforming payment methods, but the reform had limited impact on providers’
behavior. Indicators of health care quality and cost maintenance were not improved, due primarily to the lack of
information and capacity to measure risk. Other problems included not being able to mobilize administrative
resources to be involved in the reform, or limited coverage of cases, and so on. For these places it may be necessary
to gather additional resources to resume the reform. The PPM should take note of the experiences from NRCMS
itself, that is, firstly a pilot study should be taken, and then the reform is extended across the whole country after
evaluating and summarizing experiences.
The pilot study in C. County and N. County has been making progress. It is essential to get additional financial
support to continue observing the effects of the PPMs being tested and sum up their experiences, and extend it to
other counties after an external assessment.
6.4 Objectives of the PPM must be emphasized completely: quality, accessibility, and cost control.
If one only considers a PPM as a means of controlling medical cost, and neglect its effects on healthcare
quality and farmers’ accessibility to quality health care, the reform could be pushed into a wrong way. Even for the
issue of cost control, the objective should be achieved in terms of enhancing efficiency of health care resource
utilization with appropriate incentives to providers, but not at the cost of health care quality. Therefore, while
evaluating a PPM, we firstly have to adjust quality indicators, and then compare expenditure changes before and
after reforming. If one simply compares costs before and after, it will result in a major bias.
At the beginning of the reform, the issue of medical quality must be emphasized and scrutinized. Reformers
must establish an index system on monitoring and evaluating medical quality, which includes not only aggregate
indexes, such as "inflection rate in a
hospital", but also indexes for specific cases
or doctors. In the pilot study, ADB provides
financial support, and although we recognize
its importance, we have not found out a good
way to resolve the issue. Further research
should be conducted on this topic. If
additional resources can be identified, the
measurement of quality of care should be
revisited.
6.5 A standard contract form should be
developed.
A normalized purchase of health care
services should be identified by a
26
standardized contract. Presently, in many places local governments or steering committees announce a regulation
on NRCMS implementation. The regulation is usually mapped out by the office of NRCMS, and a contract
between purchasers and providers is based on the regulation. However, it has been observed that there is obvious in
coordination between rights and obligations, or vague items, or a lack of specific quality management measure, and
so on. It is therefore an urgent task to develop a standard contract form. Of course, there may be great differences in
different places in social and economic development, and one contract form could hardly apply to all counties.
However, it is necessary to develop a primary standardized contract form which covers the most basic items related
to the purchase of health care services. Local reformers can add new items to adapt to their own conditions.
6.6 It is needed to strengthen capacity development and technical support to PPM reform.
There are some differing views on the reform and it is necessary to achieve a consensus by conducting
researches and communication. First and foremost, it is essential that training workshops to be held widely.
Government officials, administrators of the Health Bureau and Financial Bureau, staff of NRCMS office, managers
of health organizations and professionals of health care, and the remaining people involved in the reform should all
participate in this training. The training content should be comprehensive and include why the reform is necessary,
what the reform is, how the reform is designed and will be implemented, how the reform is concerned to other
reforms in the health sector, how an evaluation is to be carried out, and so forth.
When a reform starts it is needed to provide necessary technical support according to local demand. This can
prevent from wasting social resource unnecessarily and losing credit of the local government and NRCMS.
VII. Brief Summary
A payment method is essentially an economic incentive and it is designed to mitigate cost growth by
improving resource utilization. However, the objectives should not be confined to cost maintenance, and quality
and accessibility issues should not be ignored. Not one payment method is perfect, and a mix of multiple methods
is often adopted. However, no matter how complicated the mix is practiced, the PPM can only alleviate
over-services or under-service. Choosing a reform scheme depends on a local situation. Now we are facing an
important task to change the FFS method and pursue the use of a mix of bundled and prospective methods.
Payment method reform has been implemented nationwide in the PRC. This is the first step of a long march.
We are facing a lot of challenges, which include difficulties achieving a consensus in theory or scientific perception,
problems designing and implementing a reform according to specific local conditions in practice, and learning from
pilot studies (such as the ADB-funded TA) and then generalizing them for the whole country. In short, for payment
reform to be successful we have a long way to go.
1
