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What will Zhejiang’s reform of medical insurance payment bring about? One way to crack expensive medical treatment

On July 17, the reporter learned from the press conference on the payment reform of the basic medical insurance in the county medical community that the province will fully implement the reform of the medical insurance payment method under the total budget management: for the inpatient medical services, DRGs (disease related groups) payment method will be adopted; for long-term, chronic disease inpatient services, payment by bed per day will be adopted; for outpatient medical services, explore the combination of, per-capita payment will be used with signed services by family doctors.

At the meeting, the "Opinions on Promoting the Reform of the Payment Method by the Basic Medical Insurance of the County Medical Community" (hereinafter referred to as "Opinions") were officially issued. Yang Ye, director of the Zhejiang Provincial Medical Insurance Bureau, said that the introduction of the Opinions marked Zhejiang as the first province in the country to comprehensively start the payment method reform for the medical community, and also the first one to promote the DRGs method of payment for inpatient medical services in the whole province.

The change in the payment method of medical insurance will touch all aspects of medical services. What are the impacts on hospitals, doctors, and patients? What does this “self-targeted” reform mean for Zhejiang?

One way to crack expensive medical treatment

DRGs points-based payment for inpatients

For the reform of the medical system, the people are most concerned about how the high drug costs will come down.

One thing people have always been complaining about is the "expensive medical treatment". Even with the implementation of the zero-difference rate of drugs and medical consumables across the country, it is not uncommon to see one spending hundreds of dollars treating a flu. The reason is closely related with payment method of the medical insurance system.

The highlight of this reform is the implementation of the DRGs points-based method of payment for inpatient medical services to promote the medical community and doctors to control medical costs.

What is the DRGs points-based method? Different from medical insurance's current settlement method for hospitals, the DRGs points-based method is to divide the diseases into several groups according to the disease type, severity, treatment and other factors, and then set the points of each group according to historical data. For each patient the hospital takes in, a certain point value will be added to the hospital. The value of each point is obtained by dividing the total annual expenditure of the medical insurance fund by the total number of points for all the hospitals in the coordinating area. By the end of the year, the medical insurance departments will settle the actual amount of pay each hospital is to obtain by multiplying the total points of a hospital by the point value.

"It is equivalent to the score system of the former production teams. The medical insurance departments calculate the points while the hospitals earn them," said Ma Weihang, an inspector from Zhejiang Provincial Health Commission. The DRGs method is intended to encourage hospitals to take in more patients, use more cost-effective drugs and materials, reduce unnecessary examinations to save medical costs and increase hospital income, so as to raise doctors' salary, and motivate doctors to become "gatekeepers" for the people's health and medical insurance funds.

In fact, some areas in Zhejiang have taken the lead in piloting. Not long ago, Mr. Yuan, who lives in Duohu Street, Jinhua City, had an emergency and was hospitalized at Jinhua Central Hospital. As a careful person, he found that the attending doctor was very detailed when filling out the medical record on his home page, which was completely different from what he had when he was hospitalized a few years ago.

This is related to the DRGs payment reform of Jinhua City. Because the information on the home page of the medical record is the source of DRGs, this also requires the doctor to be accurate in the diagnosis, to finalize the treatment plan for the patient, and not to waste any money.

In July 2016, Jinhua Medical Insurance Bureau carried out multi-composite payment reforms for the inpatient medical services of 7 major hospitals in Jinhua City based on the DRGs payment as the core, together with measures of total budget, disease grouping, point scores, and intelligent assessment. They call this “point-based disease group method”.

In 2018, Jinhua City further improved the disease group system based on the analysis of the data of more than 1.15 million cases in 8 coordinating areas of the city in 24 months (30 months in urban areas). Through communication and negotiation with the medical institutions, based on international and domestic grouping techniques, they formed 634 disease groups, which achieved full coverage of inpatient diseases in Jinhua City.

In order to determine the criteria for disease group payment, Jinhua City uses big data to set the average historical cost of each disease group in the 18 months before June 2016 (30 months of operating data in 2018) as the average payment standard for each disease group (the payment includes all medical expenses including medical insurance funds and personal payment), which forms a cost “ruler” recognized by medical insurance departments, hospitals, doctors, and patients. At the same time, learning from the experience of disease group payment abroad, they gradually form a market cost standard agreed by all parties.

After the payment standard of the disease group is determined, they no longer further allot the total annual medical insurance budget to various medical institutions, but regulate the sum through “points”, that is, to settle the payment standards for various medical services such as disease groups, bed days, and various items in the form of points according to the relative price relationship.

After nearly three years of DRGs payment reform, Jinhua City achieved the win-win goal for the three parties: the insured, the medical institutions, and the medical insurance funds. The data show that the average hospitalization expenses in Jinhua City continued to decline, and the growth rate of patients' self-financed medical expenses decreased simultaneously. In 2017, the negative growth of self-financed patients in Jinhua City reached 7.46%, reducing the cash burden of the people by nearly 100 million yuan.

“Whether you realize it or not, DRGs method of payment plays a regulatory role in the rational use of drugs, examinations, hospitalizations, and charges by medical personnel,” said Yuan Jianlie, president of Jinhua Central Hospital. DRGs method has promoted the change from quantity-based payment to quality-based payment for inpatient medical services, which has helped the doctors to regain their labor value.

On May 20 this year, the National Medical and Health Protection Bureau convened a video conference for the national pilot areas of the DRGs payment, which has selected 30 pilot cities, and Jinhua City of Zhejiang is one of them.

Improve satisfaction

Signed family doctors paid by head

For outpatient medical services, this reform will explore the feasibility of signed family doctors paid by head.

"Paid by head" is to cover the cost of head to the medical community according to the corresponding population in a certain area. Priority will be given to those who sign a contract with a family doctor, which will be convenient for the people to seek medical treatment, and can achieve the purpose of curing the disease with the lowest medical expenditure. At the same time, this will appropriately expand the reimbursement ratio in and out of the coordinating areas and the medical institutions at different levels, and guide the insured people to see the doctors at the grassroots level according to regulations, forming a pattern of graded diagnosis and treatment.

For more than a year, Uncle Zhang, who lives in Dipu Sub-district of Anji, feels most happy as his family doctor Little He frequently came to see him and reminded him to "take medicine for high blood pressure" and "to exercise more and eat healthy." It turns out that this is related to the reform of the payment method for “medical insurance premiums” in the county.

In 2018, taking advantage of the medical community construction, Anji County formed 3 medical communities out of the 15 township (sub-district) health centers and 125 village-level medical service stations, headed by the People's Hospital, the TCM Hospital, and the Third People's Hospital of the county. At the same time, by clever use of medical insurance as a guide, it takes the lead in the province in piloting the “pay by head” reform of medical insurance".

The county includes annual pooling funds of the Resident Medical Insurance and the Employee Medical Insurance into “pay-by-head” budget. Excluding the insurance premium for major illness, the service fee for the contracted family doctor, the farmers' health checkup funds, and the 3% risk fund, the remaining funds go to the quota of the 3 medical communities which are decided by the number of the “heads” each medical community contracts with. The quota will be used to pay for the annual medical expenses of the outpatients and the inpatients in the medical community which are eligible to claim for the pooling funds.

In order to encourage medical institutions to properly control fees, Anji County has drawn a number of “bottom lines” in the top-level design. For example, “the more the total expenditure of medical insurance is reduced, the more the annual salary will be increased, otherwise it will be deducted according to the same proportion;” “For the medical community which has no surplus in medical insurance quota, the president of the lead hospital will lose his annual performance salary. If in the second year it still has no balance, the president of the lead hospital will be removed from his position;" "For a member hospital of the medical community, if it has no surplus in medical insurance for two consecutive years, the president of the hospital will be fired" ... These rules, clearly specified in the implementation plan of Anji, have brought a lot of pressure to the leading hospitals of the medical community, so that they have to take the initiative to control the fees.

“With more than a year of implementation, the members of the medical community have basically formed the habit of controlling medical fees,” said Zhu Hui, deputy director of the Anji County Medical Insurance Bureau. The most striking result is that the income structure of public hospitals has improved and the income of the medical staff has increased accordingly. It is reported that the total medical expenses of public hospitals in Anji County increased by 4.97% in 2018, far lower than the provincial standards of 10%. The average cost of emergency department, the average cost of hospitalization, the proportion of medicines, the consumption of sanitary materials of 100 yuan, and examination income decreased year-on-year. At the same time, the salary of medical staff in the medical communities has increased by an average of 10,000 to 20,000 yuan.

"The burden of medical treatment for the people has been further alleviated, and their sense of acquisition has been further strengthened. The satisfaction of the people has reached 95%," an official the Anji County Medical Insurance Bureau said.

Deepen new medical reform

Stimulate medical system reform with medical insurance payment reform

The "Opinions" require that the total budget management should be fully implemented to form a binding incentive mechanism.

The total budget management is based on the income and expenditure of the previous year's medical insurance funds in each of the coordinating areas (Zhejiang has 71 coordinating areas), taking into account the economic growth level, the next year's income budget, major policy adjustments, the quantity, quality, and capacity of medical services, and other factors to determine the total budget for the next year's health insurance fund. Once this total budget is determined, different payment methods can be decided.

According to reports, the total budget management is based on the principle of “keep the surplus for self use and make up for over-expenditure” in an appropriate proportion. For the hospitals, if the “cake” or quota they get is eaten up or overspent, they have to make up for the balance from their own pocket, but if there is a surplus, they can reserve it for self use. This puts a "tightening spell" on the hospital's management of fees. And to explore the reform of various medical insurance payment methods under the total budget management, the "tightening spell" will become even more tightening.

In the face of this "self-targeted" reform, is Zhejiang ready?

“Zhejiang has the courage indeed,” said Wang Pingyang, deputy inspector of Zhejiang Medical Insurance Bureau, “This is not only the experience of the province to comprehensively promote the construction of county-level medical communities, but also the practice of reforming the payment method of medical insurance in various places of Zhejiang. It is inseparable from the stable operation of the medical insurance fund of our province and its high level of medical informationization."

In 2017, our province began to promote the construction of medical communities. At present, 70 counties (cities, districts) in Zhejiang Province have comprehensively launched the reform towards medical communities, and 208 county-level hospitals and 1,063 health centers have formed 161 medical communities. These medical and health units throughout the province have integrated medical reform with reforms in medicine and medical insurance. With the reform of the medical insurance payment system, there can be no turning back for the supply-side reform of the medical communities.

In addition, the experience of reform in medical insurance payment methods in various places of the province provides a fresh sample for the reform across the whole province. The reporter learned that since September 2017, the province has successively launched the pilot reform of the medical community payment methods. The 11 pilot counties (cities, districts) have boldly explored and actively innovated. After nearly two years of hard work, they have achieved many successful experiences.

Jinhua, Quzhou and Taizhou have successively piloted the DRGs point method payment, and Anji has achieved obvious results in piloting the “pay by head” reform. The growth rate in the expenditure of the medical insurance fund has been significantly reduced. The problem of expensive medical treatment has been further alleviated, and the hospital income has increased. This indicates that the reform is promotable and reproducible.

On June 28 this year, the Reform Committee of the Provincial Party Committee reviewed and approved the “Opinions”, which provided a guideline for the comprehensive initiation of the reform of the medical community payment methods.

An official from the Provincial Medical Insurance Bureau said that the reform of medical insurance payment methods is an important policy tool for promoting the construction of medical communities. The core of this reform is to decentralize, which means the medical insurance departments will be more devoted to management of budgets, evaluation, and supervision, and less to interventions in the internal affairs of the medical communities, so as to support them to improve the overall efficiency through internal resource allocation, and promote the medical communities for self-management.

Next, the province will rely on this reform to fully release the dividends of institutional reform, further strengthen departmental collaboration, strengthen policy coordination, and establish supporting mechanisms, such as the grading diagnosis and treatment system, so that ordinary people may have easy access to medical resources and get medical treatment nearby. Preferential medical insurance policies will be provided for patients who seek medical consultation at grass-root medical units, so as to constantly improve the people's sense of gain and security.

The reporter learned that before the end of September, the Provincial Medical Insurance Bureau and the Health Commission will formulate and issue the DRGs grouping standard and the point-based payment methods, and each city shall formulate the implementation rules for the reform. By the end of December, all coordinating areas under the Health Commission will develop a grading diagnosis catalogue and two-way referral management methods to ensure that reforms are in place.

"After a three-year effort, we hope to comprehensively build a medical insurance fund budget that is more reasonable, more scientific in classification, more synergistic in support, and more effective in allocation of resources, so as to provide a Zhejiang sample for the national medical reform work." Yang Ye said.


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