Sichuan Launches New Medical Insurance Policy for County-Level Integrated Healthcare Consortiums with Global Budgeting Reform
On June 19, the Sichuan Provincial Healthcare Security Administration, Department of Finance, Health Commission, and Department of Human Resources and Social Security jointly issued the “Opinions on Advancing the Reform of Medical Insurance Fund Management in Close-knit County-level Medical Communities (Trial).” The Opinions specify that a single global budget management system for medical insurance funds will be implemented within close-knit county-level medical communities. Any surplus shall be retained by the medical community as revenue from medical services to support the development of healthcare services, while any deficit shall be borne by the medical community itself. The reform aims to achieve a local consultation rate of over 90% within counties by the end of 2022, with the proportion of outpatient and emergency visits and hospitalizations at primary care facilities increasing by no less than 5 percentage points compared to pre-pilot levels. By 2022, the actual out-of-pocket medical expense burden for patients receiving treatment within their counties should be controlled at approximately 30%.
Specific reform measures also include: advancing family doctor contract services, leveraging medical consortia as the platform to strengthen, expand, and substantiate family doctor services, and establishing health insurance contract service packages for family doctors; supporting shared medical services by incorporating shared services within medical consortia into the scope of health insurance reimbursement; implementing centralized procurement of pharmaceuticals and medical consumables; and exploring reforms in payment and fee collection mechanisms, such as piloting these reforms within medical consortia by integrating Diagnosis-Related Group (DRG)-based payments, case-based payments, and per-diem payments. Guided by outcome-oriented principles, the “Opinions” set forth requirements for assessing performance in health insurance management reforms within medical consortia. Regarding the scope of assessment, annual evaluations are conducted for the “global budget payment” system and family doctor health insurance services, with each medical consortium as a whole and each family doctor team as a whole serving as the respective units of assessment; big data is utilized to enhance assessment efficiency.
Previously, the Shenzhen Urban Medical Group model was introduced; now, Sichuan is exploring global budget control under its medical consortium framework. Within these medical consortia, different healthcare institutions engage in tiered cooperation, while also fostering internal competition. Although this policy document does not explicitly specify the scope of implementation or the pilot period, observing the reform’s effectiveness will inevitably require time. It may take two or three years before a retrospective review is conducted.
The first expectation is to establish a performance-based compensation scheme aligned with the phased objectives of the reform, and to strengthen its implementation and resource allocation. This will stimulate highly efficient and appropriately directed responses. The second expectation is to leverage this opportunity to enhance the value efficiency of medical services in public hospitals, establish transparent mechanisms within medical consortia, and constrain potential conflict-of-interest chains. The third expectation is to act diligently within one’s capacity, avoiding excessive intervention.
County-level medical communities are the implementation of the task to densify the healthcare network. For each county-level medical community, advancing total budget control within its mechanism is like placing tiles one by one on the roof, often encountering inherent bottlenecks: first, fragmented scenarios make it difficult to statistically measure reform outputs and limit effectiveness; second, there is suspicion of interfering with patients’ right to choose their healthcare providers—is the target of achieving a 90% consultation rate within the county reasonable?
Third, medical service capacity within counties and county-level medical consortia may currently be insufficient, with nearby major cities (such as Chengdu and Chongqing) exerting a strong siphon effect on patients seeking general medical care. Fourth, various counties and county-level medical consortia tend to reduce openness to external competition, easily leading to rigid competitive boundaries. Taken together, these factors suggest that the model combining county-level medical consortia with global budget control may fail.
Here, we present two examples from Shanghai’s healthcare reform to illustrate this:
After the implementation of capitation payment in Pudong District, Shanghai, community medical institutions assumed responsibility for the payment and management of expenses incurred at secondary and tertiary hospitals. Empirical analysis results indicate that medical costs at secondary and tertiary hospitals continued to rise rapidly. The primary reason is that community health service institutions lack effective cost-control tools. Once patients are referred to higher-level medical institutions, the initial-contact community institutions find it difficult to monitor and constrain unreasonable diagnostic and treatment behaviors at secondary and tertiary hospitals.
Analysis: The scope of the previous payment reform in Shanghai’s Pudong District did not cover the medical consortium mechanism or the district-level jurisdiction. Sichuan’s policy document aligns with the Shenzhen model, thereby eliminating this risk at the mechanistic level. The new policy for county-level medical consortia in Sichuan demonstrates a certain degree of pioneering innovation.
As of June 5, 2020, 11 medical institutions in Shanghai had officially launched internet-based diagnosis and treatment services, enabling real-time online settlement through medical insurance. Although Shanghai’s internet-based medical insurance reimbursement system was still in its early stages, it exhibited several notable features: first, comprehensive coverage across medical and health institutions at all administrative levels; second, full inclusion of both general and specialized hospitals; and third, complete integration of departments offering both traditional Chinese medicine and Western medicine.
Internet-based medical insurance settlement is a new development. Drawing on the unexpected lessons learned from the capitation payment reform in Pudong New Area, Shanghai’s healthcare reform has placed greater emphasis on creating space for pilot initiatives. Can genuine, high-stakes innovation emerge from closed, insular circles? Is the county-level ecosystem large enough to support such innovation?
First, the segmentation of services under a global budget. For instance, gradually distinguishing between Traditional Chinese Medicine (TCM) and Western medicine, as well as between primary care institutions and hospitals, to enable refined matching and management. Such classification inevitably requires a substantial physical space encompassing a certain number and hierarchy of dentists, TCM practitioners, primary care providers of Western medicine, and Western medicine hospitals. Only within this framework can market operations and business competition function under the global budget, rather than relying on direct allocation.
Second, there is a strong commitment to addressing unreasonable practices identified through feedback and making dynamic adjustments. Such feedback may originate from healthcare professionals within hospitals or from the broader patient population. Ultimately, these inputs reflect demands for balanced interests and individualized care. Needs that allow for compromise and are necessary should be accommodated, while those that leave no room for compromise and are inconsistent with the direction of reform should be guided proactively.
Third, initiate reforms in position-based compensation and conduct reviews of medical service quality. Position-based compensation reform will act on the supply side. In countries and regions where pilot programs have yielded results, global budgeting has never functioned effectively in isolation; only with continuous momentum provided by complementary reforms can the fire of global budgeting be kept alive. Ensuring and improving the quality of medical services will attract a steady stream of patients to return to local providers, thereby delivering tangible benefits.
Finally, we propose a methodological approach: After implementing global budget control within county-level medical consortia, closely monitor patients’ annual healthcare expenditures covered by medical insurance within the consortia, as well as their total annual medical expenses incurred outside the consortia (including both insurance-covered amounts and out-of-pocket payments). The ratio of the former to the sum of both components is recommended as a key consideration for adjusting budgets during mechanism development.
Only in this way can the service competition awareness of county-level medical consortia be directly and effectively promoted. Medical and health institutions at all levels within the county-level medical consortium will maximize self-improvement and support their peers; patients in the county encountering severe and critical diseases will be prioritized for active services, such as rehabilitation, within the consortium. If a county-level medical consortium can attract patients from outside the county to seek medical treatment, it would purely reflect its competitive appeal and generate additional revenue.
Author: Ma Wanqi