With National医保 Set to Go Live for Internet Healthcare, Is the Sector Poised for Takeoff Again?

On August 30, the National Healthcare Security Administration released the “Guiding Opinions on Improving Pricing and Medical Insurance Reimbursement Policies for ‘Internet+’ Medical Services.” The announcement quickly went viral on social media. VCBeat (WeChat ID: vcbeat) promptly interviewed multiple internet healthcare companies to jointly explore industry trends under this new policy guidance.

Internet healthcare has developed rapidly since 2014, gradually transitioning from a phase of exploratory trials to one of standardized development.

In April last year, the landmark policy “Opinions of the General Office of the State Council on Promoting the Development of ‘Internet + Healthcare’” was issued, establishing the positioning and development direction of internet-based healthcare. In September last year, following the release of the “Administrative Measures for Internet Hospitals (Trial),” the “Administrative Measures for Internet-Based Diagnosis and Treatment (Trial),” and the “Specification for the Management of Telemedicine Services (Trial),” clear regulations were established for core industry aspects, including the construction of internet hospitals and the conduct of internet-based diagnosis and treatment.

Since the beginning of this year, as provincial-level regulatory platforms for internet medical services have been successively established across various regions, the number of licensed internet hospitals has surged. After years of development, the industry has gradually formed a business model covering healthcare, pharmaceuticals, and insurance. However, this “insurance” component primarily involves commercial insurance, while public health insurance has yet to incorporate internet medical services into its coverage system. In contrast, for offline consultations, public health insurance serves as a major payment method. Consequently, there is a widespread consensus within the industry that the lack of integration with public health insurance reimbursement has become a significant barrier to the sector’s growth.

In June this year, the General Office of the State Council issued the "Key Tasks for Deepening the Reform of the Medical and Health Care System in 2019," explicitly requiring the formulation of policy documents on pricing for internet-based medical consultations and their coverage under basic medical insurance. The National Healthcare Security Administration was designated as the responsible entity, with a deadline emphasized for completion by the end of September. Subsequently, the National Healthcare Security Administration disclosed the progress of the document's formulation in multiple responses to suggestions from deputies to the National People's Congress. On August 30, the document was officially released, one month ahead of the required timeline. This demonstrates that the accelerated policy implementation has brought certainty to the industry.

“The payment side of internet healthcare has always been a bottleneck for industry development,” said Qu Xiaoliang, Deputy Director of Wuzhen Internet Hospital. In the past, internet medical services were almost entirely paid out-of-pocket by patients, which indeed hindered the widespread adoption of internet healthcare and ran counter to the principle of broad coverage under health insurance payments. “The new health insurance policies are of great significance!”

Nowadays, the internet healthcare industry offers a diverse range of services, primarily including online consultations, family doctor services, and health management. Online consultations alone are categorized into various formats such as text-and-image, video, and telephone consultations, as well as specialized service models like one-on-one expert consultations, multi-to-one team-based consultations, multiple inquiries for a single condition, and expedited consultations with guaranteed response times within a specified period. The outcomes of these services vary significantly. For follow-up visits concerning chronic diseases, the process may ultimately lead to prescription issuance and medication delivery. However, for conditions requiring in-person evaluation or diagnostic tests, physicians may refer patients to offline facilities for further examination or treatment. Meanwhile, there is considerable variation in pricing for these services, ranging from a few yuan to tens of yuan. In summary, internet healthcare encompasses two major categories of services: consultation and diagnosis/treatment. There remains ongoing debate regarding which services are eligible for coverage under national medical insurance and which are not.

However, regardless of the circumstances, achieving integration with the medical insurance system first requires the standardization of diagnosis and treatment items, namely, the clear definition of priced medical service items.

The National Healthcare Security Administration’s “Guiding Opinions on Improving Price and Medical Insurance Payment Policies for ‘Internet Plus’ Medical Services” specifies the basic conditions that must be met for the inclusion of “Internet Plus” medical service price items, comprising five points:

“Internet+” Medical Service Price Item Access Criteria, Source: National Healthcare Security Administration, Graphic by VCBeat

The five basic requirements mandate that clinical pathways be clearly defined and yield substantial therapeutic effects. In other words, online interactions that constitute mere “inquiries” without formal “diagnosis,” and thus fail to produce tangible outcomes, do not meet the access criteria.

“The five principles for medical insurance reimbursement of internet-based diagnosis and treatment can be regarded as the fundamental definition of ‘core clinical services.’ These principles have been carefully deliberated by the National Healthcare Security Administration, thereby enabling a clear distinction between ‘online consultation’ and ‘online follow-up visits,’” stated Qu Xiaoliang. For instance, under the principle requiring “substantive therapeutic effect,” if strictly enforced, cases where no electronic prescription is issued after a follow-up visit—only providing guidance or recommendations for examinations—may be excluded from reimbursement. “Healthcare is a continuous service, and the principle of per-visit payment is reflected in the interpretation of these five principles.”

Since the goal is to achieve tangible therapeutic outcomes, online migration may be most compelling for chronic disease follow-up consultations and prescription issuance. Patients with chronic conditions require long-term medication, large drug volumes, and frequent follow-ups. In the past, internet healthcare already alleviated the inconveniences faced by these patients, such as repeatedly visiting hospitals for registration, queuing, prescription, and medication pickup. Once online follow-up consultations become eligible for medical insurance reimbursement, the demand for convenient medical care among this population can be substantially addressed. Meanwhile, if more chronic disease patients are incentivized to seek follow-up consultations and prescriptions online, it will also accelerate the outflow of hospital prescriptions and the online sale of prescription drugs. Just a few days ago, the newly revised Drug Administration Law lifted the ban on the online sale of prescription drugs.

Tan Wanneng, Brand Director at Chunyu Yisheng, believes that from the perspective of promoting the implementation of “Internet + Healthcare,” this marks another supporting policy about to take effect and signifies that medical insurance is poised to integrate into the “Internet+” ecosystem, following the earlier integration of medical services. With the potential liberalization of online sales of prescription drugs, internet-based diagnosis and treatment—exemplified by follow-up visits for chronic diseases—are expected to achieve an online “tri-medical linkage” (integrating medical care, health insurance, and pharmaceuticals) within the regulatory framework. This will enable such patients to consult doctors, purchase medications, and claim medical insurance reimbursements without leaving their homes.

How much benefit can internet healthcare enterprises derive from medical insurance reimbursement? This question must be addressed by examining the establishment of internet hospitals. The “Administrative Measures for Internet Hospitals (Trial),” issued last September, mandates that internet hospitals must be established in reliance on physical medical institutions. Internet hospitals built before last September, some of which were not affiliated with physical hospitals, have been required to reapply for setup and practice registration in accordance with the new regulations. For internet hospitals newly established after September, the affiliated physical hospitals vary in level and type; some are general hospitals, while others are specialized hospitals.

The current policy guidance on medical insurance proposes the implementation of fair pricing and reimbursement policies for both online and offline medical services. For "Internet+" medical services provided by designated medical institutions, if the service content is identical to that of offline medical services covered by medical insurance reimbursement and the charging standards align with those of corresponding public medical institutions, such services shall be included in the scope of medical insurance reimbursement and paid accordingly upon completion of the requisite filing procedures.

This also means that internet hospitals can be included in the reimbursement scope only if they are established based on medical institutions designated for basic medical insurance, or if the physical medical institutions on which they rely apply for and obtain the designation for basic medical insurance. “This initially clarifies the principles for designating internet hospitals: first, reliance on physical hospitals with tiered and classified management; second, continuation of offline services online; third, establishment of price ceilings; and fourth, mandatory approval for any new additions,” said Qu Xiaoliang.

Although for-profit medical institutions providing legally compliant “Internet+” medical services may independently establish pricing items for medical services, thereby enjoying a certain degree of flexibility, basic medical services that constitute entirely new “Internet+” offerings and are subject to government-regulated pricing must be evaluated by provincial-level healthcare security administrations. These administrations shall determine whether to include such services in the scope of medical insurance reimbursement by comprehensively considering factors such as clinical value, price levels, and the capacity of medical insurance funds. Therefore, if an internet healthcare enterprise establishes a for-profit medical institution in reliance on a physical medical entity, even if it is designated as a medical insurance provider, additional time will be required before its services can be included in the medical insurance reimbursement scope.

Tan Wanneng, Brand Director of Chunyu Doctor, believes that the flexibility of policies has pointed out a direction for enterprises, mainly depending on how companies make their choices. “At this stage, the limited internetization and various attempts at the ‘three medical’ levels are valuable and have released considerable dividends to social institutions. However, we cannot expect instant success, after all, what the policy encourages is innovation, not everyone opening hospitals.”

While health insurance reimbursement can bring benefits to the industry, its ultimate goal is not to provide subsidies to support industry growth. The overall trend in health insurance is cost containment. Therefore, support for internet healthcare aims to improve patients’ medical experience while effectively controlling costs, thereby harmonizing the interests of all stakeholders.

The guidelines explicitly call for promoting cost reduction and efficiency improvement in medical services. Prices for online and offline services should align with their utility, maintaining reasonable price ratios and levels to reflect a balance between incentivizing service provision and preventing misuse. Reasonably determining global budget control indicators remains a key priority.

Within this framework, it is also worth considering what additional services internet healthcare companies can provide to achieve “cost reduction and efficiency improvement.” Previously, platforms for rational drug use, health insurance audit and supervision, and prescription sharing have already emerged. These platforms not only enhance pharmacists’ efficiency in prescription review but also enable timely monitoring of prescribing practices that fail to comply with health insurance regulations.

Wang Hang, CEO of Haodf.com, was invited to attend the press conference held by the National Healthcare Security Administration on the “Guiding Opinions on Improving Price Formation and Medical Insurance Reimbursement Policies for ‘Internet Plus’ Medical Services.” At the event, he stated that there are three core areas of innovation driven by information technology in the healthcare sector: the application of internet technologies, transformation of service workflows, and the replacement of low-efficiency tasks with intelligent technologies. These applications will inevitably enhance efficiency, enabling the system to handle a larger volume of services while simultaneously reducing service costs.

Wang Hang further proposed that the next step is to explore how to leverage the advantages of the internet platform model. On such platforms, patients access individual physicians’ online services, with each physician taking responsibility for their own professional conduct and long-term personal brand. Given the characteristic of full-process digital traceability in internet-based services, individual physicians’ clinical practices and cost patterns can be recorded and analyzed, thereby enabling health insurance economic evaluations at the physician level. This will ultimately lead to the establishment of a more refined health insurance agreement system featuring “designated health insurance physicians,” which offers higher-quality services and more precise cost containment.

Implementation of the policy requires detailed rules to drive it forward. The recently issued guidance proposes that medical service price items be managed primarily at the provincial level, with a three-tier management system involving the national, provincial, and municipal levels. The National Healthcare Security Administration is responsible for standardizing principles for project establishment, item names, service connotations, pricing units, pricing descriptions, coding rules, and other aspects, and for guiding provincial-level healthcare security departments in carrying out work related to medical service price items.

Regarding medical insurance reimbursement, provincial-level healthcare security administrations are required to determine the corresponding reimbursement scope by comprehensively considering factors such as local clinical value, price levels, and the fund’s payment capacity. In other words, the National Healthcare Security Administration and provincial healthcare security bureaus will formulate detailed implementation rules concerning medical service pricing items and the scope of medical insurance reimbursement.

In fact, several provinces had already undertaken practical initiatives in this area prior to this.

For example, in August this year, the Fujian Provincial Healthcare Security Administration and the Health Commission jointly issued the “Notice on Improving Policies Related to Fees for ‘Internet + Remote Diagnosis and Treatment’,” which stipulated fees for remote consultations, remote diagnoses, and follow-up visits at internet hospitals. It specified that 30% of the fee for remote consultations would be covered by basic medical insurance, with a cap of RMB 90 per session; fees for remote diagnoses and follow-up visits at internet hospitals are not yet included in the medical insurance coverage. The notice also stated that adjustments would be made in accordance with relevant policy documents issued by the National Healthcare Security Administration once they are released.

Fujian Province’s Price Standards for Internet-Based Medical Services, Source: Official Website of the Fujian Provincial Healthcare Security Administration

In May 2018, the Social Insurance Administration of Tongxiang City, Zhejiang Province, issued the "Notice on Adding Designated Medical Institutions for Basic Medical Insurance," incorporating Wuzhen Internet Hospital into the network of designated institutions for basic medical insurance in the city. Insured employees in Tongxiang can now seek treatment at Wuzhen Internet Hospital with expenses reimbursable through medical insurance. In 2016, Sichuan Province released the "Guiding Opinions on Accelerating the Development of 'Internet + Healthcare' Services," under which relevant diagnostic and treatment services provided by institutions such as Sichuan WeDoctor Internet Hospital were also included in medical insurance reimbursement coverage.

In March 2017, the Yinchuan Municipal People’s Government of Ningxia issued the “Interim Measures for the Administration of Medical Insurance Personal Accounts and Outpatient Pooling in Internet Hospitals in Yinchuan City.” Medical expenses incurred by Yinchuan residents for text-and-image consultations, telephone consultations, disease counseling, and remote consultations conducted through the Yinchuan Smart Internet Hospital may be paid using funds from their personal medical insurance accounts. For expenses falling within the scope of the “Three Catalogs” of basic medical insurance, payment may be made from the pooled fund.

Furthermore, provinces such as Guizhou and Jiangsu have also explored health insurance reimbursement for internet-based medical services.

Given the varying levels of medical technical expertise and the differing statuses of medical insurance funds across provinces, cross-regional medical insurance settlement for internet-based healthcare services remains undefined. Consequently, local medical insurance authorities will gradually formulate or adjust pricing items for internet-based medical services and define the scope of medical insurance coverage based on local conditions. At that time, the specific role of medical insurance payments in the internet healthcare industry will become clearer. VCBeat will continue to closely monitor the formulation and implementation of subsequent detailed regulations.