National Healthcare Security Administration Launches DRG-Based Payment National Pilot Program

To the Healthcare Security Administrations of all provinces, autonomous regions, and municipalities directly under the Central Government, and to the Human Resources and Social Security Bureaus of the Xinjiang Production and Construction Corps:

To earnestly implement the decisions and arrangements of the CPC Central Committee and the State Council, and to fulfill the requirements set forth in the “Guiding Opinions of the General Office of the State Council on Further Deepening the Reform of Basic Medical Insurance Payment Methods” (Guo Ban Fa [2017] No. 55, hereinafter referred to as Document No. 55), we are accelerating the national pilot program for Diagnosis-Related Groups (DRG)-based payment and exploring the establishment of a DRG payment system. Accordingly, our Bureau has decided to organize and carry out the application process for the national DRG pilot program. The relevant matters are hereby notified as follows:

I. Attach Great Importance to Advancing the Pilot Program for DRG-Based Payment

Advancing the reform of healthcare insurance payment methods is a key function assigned to the National Healthcare Security Administration (NHSA) by the Central Committee of the Communist Party of China and the State Council. It constitutes an important component in improving the healthcare security system with Chinese characteristics and represents a long-term task in advancing the reform of the medical and health system. This reform is of great significance for standardizing medical service practices, guiding the allocation of medical resources, and controlling unreasonable growth in medical expenses. To implement the requirement set forth in Document No. 55 that “the state will select certain regions to pilot diagnosis-related groups (DRG)-based payment,” the NHSA is currently formulating DRG standards tailored to China’s medical service system and healthcare insurance management capabilities, and has launched DRG-based payment pilots in selected cities. Healthcare insurance administrative departments at all levels must attach high importance to this initiative, actively participate in the DRG-based payment pilot programs, accelerate the enhancement of refined healthcare insurance management, and gradually apply DRGs to actual payments while expanding their scope of application.

II. Work Objectives

In accordance with the three-step work deployment of “top-level design, simulation testing, and implementation,” pilot cities participating in DRG-based payment reforms have been deeply engaged to jointly determine pilot plans, explore implementation pathways, and formulate and refine nationally unified policies, procedures, and technical standards for DRG-based payments, thereby generating pilot outcomes that are referenceable, replicable, and scalable.

III. Scope and Conditions

In principle, each province may recommend one to two cities (with municipalities directly under the Central Government considered as a single entity) as candidate cities for national pilot programs. Pilot cities shall meet the following conditions:

First, the local governments of the pilot cities attach great importance to and support the pilot work, demonstrating a strong willingness to participate in the reform of the DRG payment system or having already implemented DRG-based payments; the healthcare security administrative departments are capable of undertaking the national pilot tasks, leading the formulation of local supporting policies, and coordinating the advancement of the pilot program; and the healthcare security operational management agencies possess strong organizational, management, and service capabilities.

Second, the pilot cities’ medical insurance information systems feature relatively uniform coding for medical insurance drugs, diagnostic and treatment items, and consumables; they are capable of providing complete, standardized, and compliant medical insurance settlement data from the past three years; and they possess the hardware, network infrastructure, and operational maintenance capabilities required to install DRG grouper software, supporting interoperability with healthcare institutions’ information systems and the DRG grouper to ensure the timeliness, completeness, and accuracy of data transmission.

Third, pilot cities must have at least three medical institutions that meet the conditions for conducting DRG-based payment pilots. The hospital leadership and medical staff of these pilot institutions should demonstrate strong initiative in reform and accurately grasp its essence; clinical workflows should be largely standardized, with a robust team of medical record coders and sound medical record management systems; they must be able to provide complete, standardized, and normatively structured healthcare-related data from the past three years, which is essential for case grouping; and they should possess the capability to modify HIS system interfaces to enable data exchange with health insurance administration systems and grouper software.

Fourth, the healthcare security departments in pilot cities have maintained strong collaborative relationships with local health commissions, finance departments, and other relevant authorities, as well as with pilot hospitals within their jurisdictions, and have established routine consultation and communication mechanisms.

5. The medical insurance funds in the pilot cities have been operating steadily, with a certain surplus.

IV. Work Requirements

All provinces shall actively promote and participate in the national pilot program for Diagnosis-Related Groups (DRG)-based payment, establish and improve working mechanisms, and guide cities intending to apply for inclusion in the national pilot in conducting preliminary preparations, such as baseline surveys and data collection, as well as in submitting their applications.

Provincial-level healthcare security administrations shall submit written applications, and deliver both the written applications and the summary information tables to the Department of Pharmaceutical Services Management of the National Healthcare Security Administration by December 20. Our Administration will conduct a comprehensive evaluation to designate the pilot cities for national DRG-based payment and carry out subsequent work.

Office of the National Healthcare Security Administration

December 10, 2018